Operational Productivity in NHS Providers

Mike Weir Excerpts

Wednesday 1st July 2015 Westminster Hall

[Mike Weir (Angus) (SNP)]

I am glad to speak in this important debate under your chairmanship, Mr Pritchard. I congratulate the hon. Member for Hendon (Dr Offord) on securing it.

Obviously, in Scotland the situation is slightly different, because the NHS is devolved, but many issues cross over, wherever our health services are located. I was very interested in some of the points made. NHS Scotland has produced a framework for efficiency and productivity going up to 2015. We recognise that it is essential to be more efficient and productive, to ensure careful use of the public purse.

To an extent, the situation in Scotland is slightly different, because the NHS budget has been protected from cuts as a result of the Scottish Government’s action. However, we still face inflationary pressures arising from demographic changes and increasing drugs and staff costs, which mean that NHS boards will need to make a minimum of 3% efficiency savings just to break even.

I was interested in what the hon. Gentleman said about the many issues faced by the NHS, particularly in England. I understand that much of the savings to date have been made by freezing staff salaries, squeezing prices paid to hospitals for the treatment they provide and cutting management costs. I wonder whether there is a correlation between those savings and the frauds and difficulties in some hospitals, which he mentioned. We all want to cut management costs, but sometimes there is a cost to doing that, because if management is cut back it cannot have the same hands-on experience of what is going on in all areas of the operation. That has to be weighed in the balance when we consider such savings.

The hon. Gentleman talked about the Carter review and the time spent by people on the frontline, whether with patients or doing other things. Again, that has to be built in. The hon. Member for Coventry South (Mr Cunningham) made a good point about the difference between productivity and efficiency. A staff member could be deemed much more efficient if they just dealt with patients, but down time for staff has to be worked into the system, because any doctor, nurse, or other NHS staff member will be working at a high level for very long periods. There are dangers if down time is not built in.

All of us would want savings made where they can be safely made, but the hon. Member for Bristol South (Karin Smyth) made an interesting point about the King’s Fund, which estimates that another £30 billion of savings will be required by 2020-21. The Government have made much of the fact that they will put another £8 billion into the NHS. Although I am sure that is welcome, it still leaves £22 billion in savings to be achieved through productivity improvements. With the best will in the world, I find it difficult to envisage £22 billion of savings being made through productivity improvements in the NHS. If it can be achieved, that is fair and well, but it does seem a very tall order, as the King’s Fund stated.

An organisation cannot keep freezing staff wages forever; there will have to be a change in that regard. Management costs cannot be cut indefinitely, because, again, management is needed to run the system.

[Mr Jim Cunningham]

Admittedly, it has been some years since I was involved in negotiations relating to productivity, and so forth, but the fact remains that there are consequences if people are not paid a decent wage. I worked in industries where wages were frozen and saw the consequences. The only way to increase productivity in the NHS and maybe save money—I use the word “maybe” advisedly—is by having incentives. That is the only way it can be done. It was not clear, in the speech made by the hon. Member for Hendon (Dr Offord), what percentage of people would have time off. There is a tolerable, acceptable percentage in that regard, but I was not clear what the percentages were.

[Mike Weir]

The hon. Gentleman makes a good point. He is right about incentives. A happy workforce will be a much more productive workforce. There is a danger of putting increasing pressure on the workforce, especially in the NHS, where mistakes can be disastrous and can do a lot of damage in the long term, both to the system and patients. We have to be careful about some of these things. I was interested in what the hon. Member for Hendon said about the cost of agency workers. I think we would all agree on that point. It would be preferable to have full-time staff in the NHS, but agency workers are used for a reason: shortages.

The hon. Gentleman also talked about people from outside the EU working in the NHS, but again, this shows that there needs to be a more holistic Government policy. The Government recently announced an earnings threshold of £36,000, under immigration policy, for those who have been working in this country for six years. Many nurses working in the NHS throughout the United Kingdom are not earning that sort of money and have been in the NHS for many years. The Royal College of Nursing stated that if this policy was imposed, thousands of nurses could leave the NHS and could have to leave the UK. That is not in the best interests of the health service at the moment. When considering efficiency savings and how the NHS can better work for all our constituents throughout the UK, we have to think about such things .

[Andrew Gwynne (Denton and Reddish) (Lab)]

The hon. Gentleman is making an important point. Would it not be counterproductive if NHS nurses left to work abroad? That would leave a massive gap in the NHS workforce, probably requiring an increase in agency workers, which would cost the NHS more.

[Mike Weir]

The hon. Gentleman read my mind: that was my next point. Agency nurses are causing a drain on resources, because we have to employ so many already. That will not get any better if nurses cannot work in the NHS because of immigration policy. These people did not come to this country a few months ago; some have been here for many years. Many of these nurses are working in hospitals in all parts of the UK, whether Scotland, Northern Ireland or England. They are also working in the care system.

The Government are making a bad situation worse, perhaps because of other pressures on them to do with immigration, and are not dealing with the realities of the health service. Training new nurses to take the place of those who may leave will not happen overnight. It takes years to train a nurse properly. If these people have to leave suddenly, they will leave a huge hole in the NHS. That raises a question about the sustainability of the system. In summing up, the Minister might like to consider that; and perhaps he will take the matter up with Home Office colleagues and discuss the impact this policy may have on the NHS.

Efficiency savings are fine where they can be made. We are all looking for efficiency savings, and we understand that there can be some. For example, there are some interesting responses in the Carter review on medicines and prescriptions. Savings could be made there. A lot of medicines can be wasted if prescriptions are too large. Such system changes can save money, but it is wrong to look for the silver bullet that is going to change things and produce the £22 billion in efficiency and improvement savings.

[Mr Jim Cunningham]

If the hon. Gentleman thinks back 12 months or so, he may remember that it took a long time for the Secretary of State to reach an agreement with the pharmaceutical companies because some issues were held up. We should consider that. It seems to me that a gun was held to the Secretary of State’s head on costs.

[Mike Weir]

Again, the hon. Gentleman makes an excellent point. One difficulty with the NHS is the cost of medicines. All our constituents are pushing us to get costly new medicines on the NHS for diseases, including rare diseases. They might be extremely costly in the first instance for good reasons, but demand always increases costs in the system, and it is difficult to deal with that. The pharmaceutical companies have a role to play in that, because much of their business comes through the national health service. If cost savings can be made by negotiating with those companies, that should be done. I am sure that the Secretary of State will at all times try to persuade them on that point, but I am not so sure how well he will do, given the competing pressures from constituents and Members for new drugs to be made available on the NHS. None of these issues are easy, and I have some sympathy for Ministers who are struggling with them, especially given the pressures on all areas of Government spending, but I urge caution in looking for simple solutions.

[Mark Pritchard (in the Chair)]

While it will be unorthodox, it is not irregular for me to call Jim Shannon, who briefly left the Chamber during a very good speech from Karin Smyth that was slightly shorter than I expected.

--- Later in debate ---

[Ben Gummer]

Absolutely. There are examples of that all over the country, but there are also examples of people working together in what might be considered competitive situations, so it is about ensuring that we copy the best and delete the worst.

Before I turn to the shadow Minister’s comments, I want to reflect on the contribution of the hon. Member for Angus (Mike Weir). The SNP spokesperson on health, the hon. Member for Central Ayrshire (Dr Whitford), has used a constructive tone in the Chamber so far, bringing some of her expert experiences as a clinician and also the experiences from Scotland. It is nice to be able to sit here and hear the experiences of people in Northern Ireland and in Scotland, and it would have been nice to have heard from Wales in this debate. Indeed, we do not yet properly learn from the best in Scotland, which would be all to our good, let alone the best in America or India.

The £22 billion in savings is an estimate not from the King’s Fund but from NHS England. It formed part of its plan, devised at the end of last year and some years in the making, which identified £30 billion of additional money that needs to be put into the service over the next five years. It stated that £22 billion could be generated internally—that was Simon Stevens’ estimate—which leaves an £8 billion shortfall. That is what we are pledged to provide. None the less, he, like everyone in the Chamber, has correctly seen that £22 billion is a large number and one that will take a great deal of intellectual and moral work to deliver. I welcome the tone with which everyone has approached this challenge in the debate.

[Mike Weir]

The reference to the King’s Fund was to make the point that it said that this was a tall order, as I think the Minister himself is admitting.

[Ben Gummer]

It is not a tall order, but it is a challenging one. Whoever was sitting in my place, from whatever party, would be facing a similar challenge, no matter how the needs over the next five years were framed. The challenge must be addressed, and it is better addressed if we all come together to do so.

The hon. Gentleman touched on pharmaceutical savings, which I have not yet addressed, and Lord Carter’s comments on them. Lord Carter will make more detailed recommendations later in the year, but the hon. Gentleman is absolutely right that there is much to be done to ensure that we save money on the provision and purchasing of drugs and by not wasting them. Lord Carter is looking at that, and the service is already implementing his initial recommendations.

New drugs are a problem faced by health services across the world. Indeed, it is a profound challenge, because the new drugs coming online are of an expense that has never been experienced in health systems before. They are also for increasingly small numbers of patients, precisely because they are personalised, which drives up the cost even further. That is why the Under-Secretary of State for Life Sciences, my hon. Friend the Member for Mid Norfolk (George Freeman), is bringing forward his accelerated access review and doing some exciting work, trying to use the muscle of the NHS—our ability to be an research lab, effectively—for those developing new drugs, so that we can use the NHS to drive costs down and provide patients with treatments earlier and more cheaply. There is a win-win there, but it requires a fundamental change in the system, which at the moment is not working.

Finally, I turn to the comments of the shadow Minister, mindful of the need to give my hon. Friend the Member for Hendon time to wrap up. I thank the hon. Member for Denton and Reddish for his kind welcome; it was good of him to say that. I hope that over the next couple of years we will be able to thrash out some of these difficult issues in the manner in which he has begun the process. If we do so, we will come to a better understanding of what is needed in our national health service.

The hon. Gentleman asked a number of questions, such as where the £8 billion is coming from. I believe it is coming from general taxation—my right hon. Friend the Chancellor will be providing greater details of that in the Budget next week. The hon. Gentleman also asked where the £22 billion was coming from. NHS England has devised the plan. It is NHS England’s plan to implement, and it will provide further detail about the £22 billion shortly. It will be an evolving plan that will necessarily change over the five years. NHS England is confident that it is achievable, but it will take some incredible heavy lifting by all of us and, dare I say it, the dropping of political shibboleths throughout the House—if one can drop a shibboleth; I am not sure.

The hon. Gentleman raised the issue of provider deficits, which is a problem across the system. He will know that there was a similar issue towards the end of the Labour Administration—in CCGs, rather than in hospitals. It does not necessarily require more money; it requires getting a grip on where the problem is. We have started that with announcements on agency spending. Many trusts in the country are doing well financially. Not surprisingly, they are often the trusts that are also delivering good care, because—to return to the comments of the hon. Member for Bristol South—if the care is right, the money flows from it. That is why Lord Carter’s review and a concentration on care quality will, we hope, produce the savings that we need, not just at this immediate moment to address provider deficits, but to achieve the £22 billion.

The hon. Member for Denton and Reddish also mentioned sales reps and procurement. I absolutely agree that the subject is covered in the report from Lord Carter. The numbers of product lines certainly should come down. I am not sure that the NHS, before having greater responsibility for purchasing, was any better at buying, but we need to be better at it. Procurement is a science. It is not one that I pretend to know a great deal about, but I know that in the end we will always end up in not quite the right place, because we might centralise too much, which takes away decision-making from the trust responsible. That is why we have to get the balance right.

On the cost of competition, the hon. Gentleman quoted a figure of £100 million. However, I understand that the costs of the reorganisation have been outweighed by the benefits, to the tune of about £1.5 billion annually. I think we all agree across the House on the producer-provider split. There will always be a degree of competition in the NHS; it is about getting the balance right between competition and collaboration.

In the last 30 seconds, let me touch on sub-acute services. The hon. Gentleman made his most pointed—and fair—remarks about the need to integrate social care with the NHS. The Government’s contention is that creating a new national structure for health and social care does not produce the end that we all want to see. That is why we want to see local solutions—we believe a good one is already emerging in Manchester—across the country, which will suit different areas according to their needs. In the end, we come back to money. We all know that money will be tight in local government. Our aim over the next few years is to ensure that as much of the resources that we can put into local government are going towards social care. That is the essence of the better care fund, which lies at the heart of what we are doing on integration over the next five years. I know the hon. Gentleman will want to comment on that as we proceed on those lines.

I thank all Members who have spoken in what has been an invigorating debate from which I have learnt a great deal. I again thank my hon. Friend the Member for Hendon for raising these important issues.