Health and Care Services

Debate between Richard Fuller and Stephen Dorrell

Wednesday 3rd July 2013 Commons Chamber

[Mr Dorrell]

I will come on to the impact on pay later. My hon. Friend is right that the challenge antedates the election of this Government and that it increasingly looks beyond this Parliament, as did last week’s public expenditure announcements. There are specific challenges implicit in the Nicholson challenge for the coalition and for the Opposition. To my colleagues in the Conservative party, who sometimes ask why we have a ring fence around the national health service, I simply say, “Understand what you are asking.” We are already strapping ourselves to the mast indefinitely into the future of meeting a rise in demand of 4% per annum without substantial growth in real resources. Looking back, we see that the national health service has delivered a 1% efficiency gain trend rate over its first 60 years, and the national average for the rest of the economy is 2%. We are expecting the health and care system to deliver a 4% efficiency gain. To anyone believing that we are likely to be able to meet demand for health and care to acceptable standards against a background of reduced resources—in other words, more than a 4% efficiency gain year on year—I say, “Do the maths.” That is the challenge to the Conservative party.

[Richard Fuller (Bedford) (Con)]

Will my right hon. Friend give way?

[Mr Dorrell]

Will my hon. Friend forgive me if I complete the challenge so as to be even-handed, as the Chair of a cross-party Committee should be?

Some Labour Members may wish to look for ways to avoid the difficult questions posed by the Nicholson challenge, but we need to remember that if we were to try to meet demand without addressing any of the efficiency questions—to take it to the other extreme—we would need £5 billion a year of new money over and above keeping up with inflation. That is more than 1p on income tax year on year, or 6p on income tax in the lifetime of a Parliament, to meet demand in the health service, unless we address the Nicholson challenge.

The conclusion that the Committee puts to the House is that the Nicholson challenge is unavoidable. Anybody who takes any serious interest in health and care has to address it. Nobody seriously believes that any Government will put up income tax by 6p in the pound in the life of one Parliament simply to fund health and care, and nobody in my party seriously thinks that we can avoid meeting demand for health and care. If we cannot avoid meeting that demand, we have to deliver a 4% efficiency gain out of the service merely to allow it to live within the current real resource available to it. That is the Nicholson challenge, and it is why the Committee—from a cross-party standpoint—has said, from the beginning of this Parliament, that it is the most important challenge facing the health and care system.

[Richard Fuller]

I wish to challenge my right hon. Friend on the 4% efficiency requirement that is, essentially, the 4% increase in demand that we expect. I am a big believer that history is a good guide to the future, and I understand the changes in demography that will push that challenge. How much of the demand comes from a quantum increase in demand and how much from a price increase for the inputs into the health budget?

[Mr Dorrell]

I do not wish to detain the House for the whole of the time available for this debate, but my hon. Friend raises an important question about how that demand is made up. The interesting thing about the drivers of demand—rising expectations, the cost and availability of modern medicine and the implications of an increasingly elderly population—which each new Front-Bench spokesman reveals as a newly discovered truth, is that they were first discovered by Rab Butler when he became Chancellor of the Exchequer in 1951. He set up a commission to ask whether the health service was an insupportable burden. The conclusion reached then, and by every successive Government since, in this and in similar processes in other countries, is that demand can be met, but it requires a serious analysis of the nature of the demand and how resources are used effectively to deliver it.

There is a danger in discussing health and care as if they were purely an economic question, especially for those of us who have been employed in the Treasury—like you, Madam Deputy Speaker, and me. There is a danger of sounding like a Treasury Minister and implying that the economic questions are the only issues in this regard. I need only offer names to the House to demonstrate that economics is not the only issue here—Winterbourne View, Mid Staffordshire and Morecambe Bay. Our system faces huge challenges, not just to do with economics but in respect of the quality of service that is delivered on a daily basis. Put simply, it is not enough just to go on delivering the service as it is now because, too often, it fails. Implicit in the Nicholson challenge is the requirement to face profound quality challenges, as they exist in the system, at the same time as squaring the financial circle I have been describing. In some quarters, it is suggested that that is a counsel of despair—that the circle is unsquareable.

The Committee disagrees, which is why the report states, at paragraph 30:

“At a time when steadily rising demand for health and care services needs to be met within very modest real terms funding increases for the NHS and even tighter resource constraints on social care, the Committee remains convinced that the breadth and quality of services will only be maintained and improved through the full integration of commissioning activity across health and social care.”

In other words, it is the Committee’s cross-party view that it is the integration—the reimagining of what health and care need to look like—that is the answer to the questions posed both by the Nicholson challenge and the quality challenges implicit in the names that I mentioned. It is important to be clear why that is the Committee’s view.

Efficiency, as implicit in the context of the Nicholson challenge, is not just about buying a bit more cleverly or holding down costs. It is about understanding what the demand is that we are trying to meet and putting in place the structures—incidentally, I do not mean the management structures—for the delivery of care that are likely to be able to meet the demands placed on them, not over the last 50 years but over the next 20. It is reimagining and driving a process of change through the health and care system that is the only realistic challenge to the financial and quality challenges that I have articulated.