NHS Funding (Ageing)

Thérèse Coffey Excerpts

Tuesday 25th March 2014 Westminster Hall

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

It is a great pleasure to serve under your chairmanship, Sir Edward. I thank Mr Speaker for granting this important debate. It is a pleasure to see that my constituency neighbour, the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), will reply for the Government. As a practising doctor, it is natural that he is active on local health matters. Before arriving in Parliament, he, together with my hon. Friend the Member for Ipswich (Ben Gummer), campaigned hard to secure better cardiac facilities at Ipswich hospital, which were formally opened by Her Royal Highness the Countess of Wessex last week. I was pleased to join that campaign, although rather late on, because I was selected only three months before the general election. Nevertheless, those facilities are in place. Together, we have continued to highlight issues that affect our constituents, particularly the performance of the ambulance trust and our local hospitals.

I am proud that the NHS budget has risen under this Government and will continue to do so. I am proud, too, that my right hon. Friend the Secretary of State for Health has continued the focus on patients and has been prepared to lift the lid on when a normally high-performing NHS has let patients down. I join him on that crusade to ensure that patients are not sacrificed at the altar of targets, which is a sad, though unintended, legacy of the previous Labour Government.

From my experience as an MP with a rather elderly constituency—more than a quarter of its population are pensioners—I have come to realise that how the NHS has allocated its funding is simply not fair to older patients. That unfairness has become embedded in NHS finances over several years and significantly increased under the previous Government. We have an increasingly elderly population, and we have to tackle that funding issue. Let us remind ourselves that although the Labour party substantially increased health funding during its time in government, it did not sufficiently reform the NHS, and that includes the particular factor in the funding formula that could have helped older patients by focusing more on their needs.

The right hon. Member for Leigh (Andy Burnham) signed off on the £20 billion savings challenge, commonly known as the Nicholson challenge, which was supposed to redirect funding towards coping with demand for NHS services from the UK’s ageing population and the higher costs of drugs and treatment. As the challenge is being followed through, Labour MPs often complain loudly about cuts to the NHS, but they effectively endorsed those cuts by starting those savings when they were in government. The savings are gradually being made, but the only evidence I can see of their helping the ageing population is the Government’s transfer of some NHS money to help with social care for that ageing population, which I welcome. Labour MPs seem to forget that the right hon. Member for Leigh set that in action. Just before the emergency Budget in 2010, he said that it was irresponsible to increase NHS spending in real terms. I do not think it was irresponsible to increase NHS spending, but it is irresponsible not to have addressed a funding formula that does not help the elderly.

The date of 17 December 2013 will go down as the landmark day when NHS England turned its back on the needs of elderly patients, stuck its head in the sand on the dawning impact of an ageing population and crumbled to political pressure from the Labour party. Here was an opportunity for the board of NHS England to put right the funding formula so that the NHS was no longer a postcode lottery and would provide equally for people in need and on access to services. Frankly, I think the NHS bottled it. I do not know why. It ignored the advice of its expert committee. Was it the letter sent to them by the right hon. Gentleman? Blatant political pressure was put on the board of NHS England, and it fell at the first hurdle.

Meanwhile, the Labour party has actively campaigned against the proposed change in the funding formula, which would have started to recognise the increased demands of an ageing population. One of the points made by the right hon. Gentleman in that letter was that he felt that money was being reallocated from certain areas in the north to certain areas in the south. He wanted

“to retain and strengthen the health inequalities and weightings in the allocations formula…and a health service based on need.”

Elsewhere, he has said that the NHS seems to be ignoring the needs of elderly patients. I am concerned that we end up—is this too strong to say?—speaking with forked tongues on this issue. He said:

“A country is defined by how it cares for its older people”.—[Official Report, 14 July 2009; Vol. 496, c. 157.]

He also suggested that the problem of ageing

“will become more pressing as the population gets older…If the system is left unreformed, there are real questions about its sustainability in the long term.”—[Official Report, 8 December 2009; Vol. 542, c. 165-166.]

Since being in opposition, the right hon. Gentleman has said:

“Should we not all set much higher ambitions for the care of older people and, in so doing, learn the most fundamental lesson of all from what happened at Mid Staffs?”—[Official Report, 19 November 2013; Vol. 570, c. 1099.]

He also said:

“The ageing society is not a distant prospect on the horizon. Demographic change is happening now and it is applying increasing pressure on the front line of the NHS.”—[Official Report, 5 February 2014; Vol. 575, c. 282.]

There are a number of times when the right hon. Gentleman has rightly highlighted the challenges facing the NHS.

The Keogh review states that much of the pressure on operational effectiveness

“is due to the large increase in the numbers of elderly patients with complex sets of health problems.”

There we have it. In responding to the Age UK report, the hon. Member for Copeland (Mr Reed)—I am sure he will participate in the debate—said:

“Older patients in the NHS are paying the price of the financial crisis this Government is inflicting on the health service.”

I am not sure what financial crisis he is referring to, given that the Government have increased health spending and are simply putting in place the Nicholson challenge set by the previous Government. He also said:

“Warnings do not come more authoritative than this report. Yet as long as Ministers remain in denial, patients will continue to face the agonising choice of going without treatment or paying to go private. Labour has repeatedly warned of the postcode lottery now running riot in the NHS.”

That is absolutely ridiculous. The hon. Gentleman will have his chance to respond later, but I put it to the House that it is consistently not addressing the funding formula that leads to the postcode lottery for elderly people. It is disgraceful that we allow it to continue in the 21st century. Patients need a board that stands up for them and does not bow to political pressures, from one side or the other.

I thought it might be useful to give a little history on the funding formulas, and I thank the Library for producing the briefing on that. Going back some time, there used to be a weighted capitation formula. That always presented a challenge, because the pace of change showed that it would take more than 20 years to reach an equitable formula. People will know that the urban authorities tend to get higher funding per head than rural authorities. We are still a significant distance from the target under the new formula released in December 2013.

The clinical commissioning group allocations are not the same as those of the primary care trusts, because they have different commissioning roles. Public health has gone to local authorities and specialist commissioning is done centrally. The PCTs started to do a person-based resource allocation, trying to allocate at practice level, recognising that they knew what problems patients had and could fund according to their needs. In 2011, the Department of Health commissioned a Nuffield Trust report to look at approaches to that particular direction, and in 2012 the former Secretary of State for Health, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley), was specific in saying:

“Wherever you are in the country you should broadly have resources equivalent with access to NHS services.”

He also strongly recognised that the age of a patient was the most significant factor in determining their health needs. People mainly use the NHS in the first six months and the last years of their lives. There is no doubt that an increasingly elderly population, as has already been recognised, continues to bring the NHS challenges, with more and more complex needs.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Lady on securing this debate. Does she agree that GPs have a lot to answer for in putting pressure on the NHS? Under the new contracts, they no longer have to look after their patients out of hours, which puts a lot of pressure on the NHS and its finances. Surely we need to look at some way of getting round that.

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[Dr Coffey]

I respect what the hon. Gentleman is saying. There is no doubt that allowing doctors to lose the responsibility for effectively caring for their patients 24 hours a day has caused significant change. An ageing population means that that is increasing and will continue to be a pressure on alternative sources of health treatment. A lot of work is going on and I am pleased that the landmark Health and Social Care Act 2012 will start to tackle some of the issues, but I want to give credit to GPs, who are doing so much more for patients in our local surgeries now than 20 or 30 years ago, mainly because of technology changes, but also through a recognition that we can prevent people from going to hospital by doing more in primary care. That is an admirable change, so I want to praise GPs, while agreeing with the hon. Member for Upper Bann (David Simpson) that rescinding that 24-hour care responsibility was a backwards step for patients. The lack of out-of-hours care was one of the big doorstep issues before the 2010 general election.

Turning to the different formulas, one big change in the 2012 Act was splitting funding for the NHS, with public health going to authorities, recognising the deprivation inherent in different parts of the population. That was the right thing to do. Surrey ended up with £20 a head for public health and places such as Hackney had £115. Westminster, for example, has an even higher allocation, recognising that parts of the borough have significant deprivation, but it was the right thing to do. Local authorities not only got the staff from NHS trusts who focused on public health campaigns, but were also given responsibility for tackling the long-term factors that contribute to health inequalities, be they quality of housing or local employment. Frankly, the NHS was not in a position dramatically to change the levers affecting such inequalities in local communities, so it is right that councils took on that leadership. I hope and pray that they continue to take the initiative, rather than just focusing on public health programmes. It is a real step change in the responsibility of and the opportunity for our local councillors to make a difference.

Meanwhile, the opportunity was there to examine the formula for the rest of the NHS budget. I refer to section 23(1) of the 2012 Act, which inserted a new chapter into the National Health Service Act 2006. Section 13G, “Duty as to reducing inequalities”, of that new chapter states:

“The Board must, in the exercise of its functions, have regard to the need to—

(a) reduce inequalities between patients with respect to their ability to access health services, and

(b) reduce inequalities between patients with respect to the outcomes achieved for them by the provision of health services.”

The effect is twofold, but the latest funding formula has not taken account of the

“ability to access health services”,

and inequalities have been strengthened.

[David Mowat (Warrington South) (Con)]

I thank my hon. Friend for giving way and congratulate her on securing the debate. The problem is not with the formula that was developed by the Advisory Committee on Resource Allocation, but that the board of NHS England inexplicably decided not to implement it. That is what we are now living with.

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[Dr Coffey]

I agree with my hon. Friend. Funnily enough, I do not think that the formula was strong enough in reflecting the demands of age. It could have gone a lot further. The sparsity challenges are also a constant issue for those of us who represent rural seats. There is no doubt that a patient’s health care experience is somewhat diminished when a cardiac check-up means a 200-mile round trip. I realise that we cannot have a cardiac hospital within five or 10 miles of everybody—that might be the case in London, but I will not get into the London health funding debate. There is no doubt, however, that such trips are not helpful with regard to the patient experience. The funding formula has had negative consequences. We have seen a more rapid reconfiguration and regionalisation of services. The quality of care for patients has been affected and there are funding challenges. The problem is particularly acute where there is a high proportion of elderly patients. That is not good enough.

[Sarah Newton (Truro and Falmouth) (Con)]

My hon. Friend is making a powerful case for patient care in rural communities and I wholeheartedly agree with her. Does she agree that the market forces factor is having a negative impact on rural communities in poorer parts of the country where average incomes are much lower? People within the NHS and the care system are often paid national wages, but the funding formula discounts for local wages.

[Dr Coffey]

My hon. Friend makes an interesting point. I have not gone into that level of detail and do not have that level of understanding, but she makes an important contribution to the debate. Local clinical commissioning group and NHS trusts must contend with that challenge and should make that point to the board of NHS England.

I come back to the formula. I said in response to my hon. Friend the Member for Warrington South (David Mowat) that the focus on age may have slightly increased, but that it did not go far enough. The correlation between age and per capita funding increased only marginally between the old formula and the partially adopted current formula. South Sefton receives 40% more per capita than Ipswich and east Suffolk, but it has 50,000 fewer pensioners and a lower proportion of pensioners. Life expectancy in my part of Suffolk is considerably higher than in others, which is good, but that does not necessarily mean that people, in particular the elderly, do not have complex health needs that need addressing. At the moment, the formula continues to discriminate against the elderly and even further against people in rural areas.

[David Mowat]

This is a really important point on which we need clarity. The issue here is not the formula. Indeed, it does not really matter what the formula comes up with, because NHS England will not implement a formula that does not give everybody an inflation-based pay rise. That is what happened. With all due respect, the formula could be anything we liked, but if it will not be implemented, it just does not matter.

[Dr Coffey]

I can understand why the board of NHS England made a decision not to cut per patient funding in different parts of the country. We could get into the politics of the different aspects of what happened under previous Governments when overall funding went up, but parts of the country, such as the one that I represent, did not receive the same increases and seemed to suffer as a consequence, despite overall funding going up.

I am not into playing party politics with NHS or public funding, so I recognise exactly what my hon. Friend says. I guess that is what led to the outcry in the autumn about the “Tory-run NHS cutting funds to northern Labour seats,” which was disgraceful, because it was down to the ACRA’s independent assessment. I recognise, however, that that must be managed. Nevertheless, the board of NHS England bottled it by not being prepared to be a little braver in deciding on the allocations. It also ignored the formula and, as a consequence, effectively decreased the recommendation on the proportion that should go to elderly patients, which was wrong in principle, but I recognise what my hon. Friend says.

Various proposals were suggested—I say this as a constituency MP and not as a Conservative party representative—that could have seen an improvement in the pace of change towards getting a fairer funding formula while still not cutting funds to patients in different parts of the country. I regret the final decision of the board of NHS England. Of the two options proposed, I would have hoped that it would have gone for the first, recognising that it was a unique opportunity to tackle the unfairness, but the board bottled it.

I want to discuss why the issue matters. There are four community hospitals in my constituency: Felixstowe, Aldeburgh, Southwold and the Patrick Stead, in Halesworth. The first three have been highly commended by the Care Quality Commission and they are well recognised and loved in the community. The Patrick Stead also does an excellent job. The CQC made some slight criticism, but, true to form, the hospital addressed that straight away and is back to doing good things. After I was elected to the House, it was understandable that my constituency neighbour, who is now the Minister, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), should be the local expert on health, as he is a distinguished doctor. However, in my own case work, the experiences of older patients in particular, who had not got the care or treatment they needed, kept coming up. That is what got me going on the entire issue.

We have in the past debated the East Of England Ambulance Service NHS Trust. That was a classic example. At the top line things were running fine. The trust was hitting its targets and financially it was very good. It was trying to get foundation trust status, and the chief executive was awarded the Queen’s ambulance service medal. However, at the heart of things, the NHS relied on the meeting of targets, and forgot about patients. As a consequence, elderly people with broken hips waited for hours for an ambulance to arrive, because their condition was not life-threatening. I am pleased about the big shift that has happened only in the past few months: finally we have got rid of the entire board of the ambulance trust. I am sure that they were all good people who wanted to do the best to help guide the trust. Nevertheless, they seemed to be satisfied with hitting targets, and patients were forgotten. The arrival of Anthony Marsh will be particularly useful.

I supported most of the service reconfigurations, as the Minister knows, but there was one I did not support. A proposal to reconfigure stroke services would effectively have removed them from Suffolk. One need not know a lot about medicine to know of the excellent FAST campaign, which I recommend all MPs share with their constituents. That recognises the need to act quickly and get good treatment after someone has a stroke. Ambulances in the east of England were not reaching people quickly enough to help them with the first steps in care. If stroke services had been removed from the county, it would have taken well over an hour to get access to the sort of care that is necessary to enable a stroke sufferer to have a good life. In the case of cardiac services, when people were treated en route and taken to the regional specialist centre in Cambridge, they got higher-quality care, and I support that, but I was concerned about the stroke proposals. That is why I was pleased when the local clinical commissioning groups came together and said, “No. We are going to keep stroke services in the county.”

However, I must admit that our significantly lower funding per head means that that decision has potential consequences in the local NHS. The fact that our funding level is so different is one of my concerns. Despite a small above-inflation increase, which I am pleased about, I contend that we should be doing considerably more to help NHS CCGs to meet the needs of a significantly higher proportion of the relevant population. The constituencies with the highest proportion of people over 85 include places such as Worthing West, Christchurch, North Norfolk and Newton Abbot—largely rural and often coastal areas. By definition, those are often the places away from regional centres of excellence. I am concerned that the funding formula did not address the needs of patients living on the coast.

I have discussed at length my concerns about what the NHS board has not done, but opportunities are coming through, to do with local innovation. The King’s Fund report, “Making our health and care systems fit for an ageing population”, was an important contribution. One of the examples of local innovation to which it referred was at Gnosall GP surgery in Staffordshire, which provides patients over 75 with an annual health review and uses experienced “elder care facilitators” to support patients, helping them to navigate the system and draw up care plans. That is a good example of local innovation. I tabled a parliamentary question on 20 January at column 76W asking about bringing health visitors in for people over 75. I recognise that health visitors’ primary focus is, rightly, young children. However, there may be something that we can do, and perhaps the board of NHS England could think about rolling out the practice I suggest, particularly in parts of the country with a high proportion of elderly patients.

I could speak for the entire hour and a half on this subject, but I will not, the House will be pleased do know. It is regularly talked about. The board of NHS England had a golden opportunity, with the Health and Social Care Act 2012, to step away from the political pressures and do what was right for patients. As I said, I think it bottled it, and I am sad about that. I hope that it will reconsider its decision and think again about the needs of the elderly. Those people have served the country with distinction. We say that we do not want to discriminate by age, but the postcode lottery seems to determine whether elderly patients get the treatment they deserve. The debate will not be settled today. Unusually, perhaps, the Government cannot wave a magic wand and change the formula. It is for the board of NHS England to do that. I hope it will reconsider and truly look after the patients in question. In a few years we will be the ones in their position, and we need to do our bit to address the challenge.

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[Jim Shannon (Strangford) (DUP)]

It is a pleasure to make a contribution to the debate. I congratulate the hon. Member for Suffolk Coastal (Dr Coffey) on bringing the matter before the House for consideration and giving us all the opportunity to contribute.

We are long past the days when people who die at the age of 68 would be considered to have had a good innings. Now, we would shake our head and describe them as in their prime. The rising age of our population has meant an increase in the pension age, with further increases to come. That is something my parliamentary aide has questioned, saying that she will have to work until she is 72. She wonders who will hire her to write speeches and come to the House then. At the age of 35 or thereabouts, she is already thinking of the future.

One of the figures in the press last week, which hon. Members have referred to, was that we in the United Kingdom now have the greatest number of people living to the age of 100 since records began. Approximately 600 people have lived to 105, which is another indication of the statistical trends. Although that is perhaps great for families who use the free grandparent babysitting service offered nationwide—that is what grandparents do—and which has ensured that families get to enjoy time together, with stories and wisdom passing easily down the generations, it has also put a lot more pressure on our NHS. The NHS is not equipped to handle that pressure without major investment or a redirection and reprioritising of funding.

The sheer beauty of my constituency and the area’s strong links to Belfast and other cities make it one of the most desirable places for older people to retire to—indeed, Strangford and the neighbouring constituency of North Down are the top two retirement locations in Northern Ireland. The hon. Member for Suffolk Coastal said that people want to retire to her constituency because it too is beautiful, and quieter and more serene than many places. As they do in my constituency, people might look forward to seeing the sea in the morning and taking walks, because these are the attractions of such locations. More people retiring to such places, however, certainly puts pressure on our local NHS.

If the Government took account of this debate and increased the funding given to the NHS, offering additional ring-fenced funding to the devolved Assemblies, the level of care would be much greater. I look forward to the Minister’s response, as I always do, because he understands the issues and I respect his comments. It is fantastic to read about the available drugs, treatments and therapies, but the fact is that the NHS cannot afford to provide them fully. Any additional funding would benefit not simply the ageing population, but the entire community. There are pressures on the NHS, given the prioritising of funding to the sections where it is needed most, but I am sure I am not the only person in the Chamber to have read the media speculation about the NHS and the ageing population. Statistics from the Institute for Fiscal Studies indicate that spending per patient will have fallen by 9% within four years even if health service funding is ring-fenced and protected.

I have already alluded to the reasons: 2 million more over-65s on the UK mainland, which is a 20% rise, will place far greater demands on the NHS. To give the Northern Ireland perspective, new figures released by the Northern Ireland Statistics and Research Agency show that the number of people aged 65 and over is projected to increase by a quarter, to 344,000, by 2022. That indicates the pressures on the NHS in Northern Ireland, where health is a devolved matter.

[Dr Coffey]

Has the hon. Gentleman seen the figures circulated by the Royal College of Physicians, which show that two thirds of people attending A and E and admitted to hospital are aged over 65? We all recognise that we need to do more to prevent people going into hospital when they might not need to, and certainly to expedite their leaving. Does he recognise that, right here, right now, we still need to allow CCGs to have appropriate funding to address that need?

[Jim Shannon]

I agree with that. If more preventive action is taken at an early stage in surgeries, that will have dividends further down the line. The hon. Lady is quite right and I wholeheartedly agree with her.

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[David Mowat (Warrington South) (Con)]

I congratulate my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on securing this important debate. Although NHS funding has increased in real terms, what matters is the allocation that we get in our communities. We have learned a lot already from hon. Members’ remarks. Personally, one of the most important things I have learned is that my right hon. Friend the Member for Banbury (Sir Tony Baldry) reads the Daily Mirror. I will reflect on that fact.

The issue of ageing has been a known problem in the NHS for some while. It was a problem for the previous Government and there was an attempt to reflect it better in what was then the ACRA formula. Like the current Government, the previous Government did not implement that formula. The direction for travel adjustments that should have been made in the years before the general election were not made and the formula was essentially static.

As an MP for an underfunded area—Warrington is underfunded—I was optimistic that a new Government bristling with talent and enthusiasm for sorting out such issues would fix the problem. As has been mentioned, the Secretary of State asked the independent ACRA committee to make a clinically based decision on how money should best be allocated—of course, allocation can mean that there are winners and losers—based on ageing, deprivation, population and any other salient factors. The consequence was that a new formula was developed and submitted.

To be clear, nobody who wants the problem fixed is expecting a new formula to be implemented immediately. As hon. Members have pointed out, some areas are significantly under-allocated while others are over-allocated. There therefore has to be a process by which we move towards the correct number over a period of years—that is, the direction of travel adjustment—so that big, unmanageable changes do not happen. That would be perfectly acceptable.

Is that what happened, however, when we went to the board of NHS England with the new, clinically developed formula designed by an independent group? The answer is no. The board of NHS England said, “If we implement the formula, there will be winners and losers. Our view”—perhaps this was because of political pressure—“is that the losers complain more than the winners celebrate. We are going to give everybody an inflation increase. With the bit left over, we will give a little more to those furthest away from target.”

One of those areas was Warrington. We are grateful that we got extra money, but it was not enough. I suspect that the situation was similar in Suffolk and Oxfordshire: some extra money was allocated, but not as much as would have been allocated had the formula been implemented.

What does that mean for public health? We are stuck with a static formula, developed around 2002 or 2003. The previous Government made no direction of travel adjustments to it other than for inflation and we are apparently reluctant to make those adjustments as well. That is a pity. A static formula may be politically expedient but it is not right. That is why we have ACRA—to go into the issues and come up with the right answer. The situation, for me, raises the question of why someone would be on the board of ACRA, given what happens to its recommendations.

There are consequences. I have seen the numbers: 34 CCGs are more than 5% underfunded—that 5% is a lot of money in health allocation—and 38 CCGs are more than 5% overfunded. What to me is even more significant is that 84% of CCGs that will have a deficit are underfunded. That is an issue because if we are trying to make people accountable for managing an efficient operation, but start that process by saying that we are not going to implement a formula that would give a fairer allocation, it is reasonable for them to come back and say, “Yes, and therefore we have a deficit.” It hits the whole process.

What is the impact in our constituencies? We have heard about Harrow, Oxfordshire and Suffolk. Warrington is also underfunded. The issue is not necessarily that older folk get worse services, but that marginal or discretionary activities are not carried out in underfunded CCGs. For example, in Warrington we are unable to provide IVF in the way that the National Institution for Health and Clinical Excellence would like because funding is not available. GPs decide how to allocate what funding they have and consequently the people who lose are not always the ones who would be imagined to have lost in the formula. Overfunded CCGs can undertake more discretionary activity than others, and someone should look at which parts of our NHS are spending large amounts of money on alternative therapies such as homeopathy. That is likely to be the result of overfunding, and that is not acceptable.

There was an element of politics. Everyone agrees that ageing is a good proxy of health need, but there is an issue about the weighting that we should give to deprivation. That was in the letter from the shadow Secretary of State for Health that was read out, and it may have been part of his concern. That does not allow for the fact that ACRA was an independent committee and either we accept what it said or we do not. I have some questions for the Minister on that because it goes to the heart of whether the NHS is manageable. If such important decisions are, in the end, made for reasons of political expediency, why do we have an NHS board and senior NHS managers who are supposed to provide the right answers? We would not need any of that; we could just link the issue to inflation or inflation plus a little bit.

[Dr Thérèse Coffey]

My hon. Friend is making a key point. One point about the Health and Social Care Act 2012 was to remove that party political element of manipulating or managing the formula or putting in extra factors. That is where a key opportunity has been missed.

[David Mowat]

I agree with my hon. Friend, but as I said, the issue is not the formula, although it may also be the formula—my hon. Friend and I may not agree on that. I accept the formula, and I would have liked it to have been implemented. I have difficulty in accepting that, for political reasons, it was not implemented.

People in my constituency and elsewhere who are not affluent and do not understand this stuff lose out because the previous Government did not do the distance from target adjustments under the old formula and NHS England has refused to implement the right thing under the new formula. It is hard to justify that. Why have ACRA if we are not going to do what it says, and why have an NHS board if it cannot manage change and do the right thing? That is why big organisations have senior managers who are paid lots of money.

Are there symptoms of waste in the 38 CCGs that are overfunded by 5% or more? Is the incidence of alternative therapies and all that goes with that higher there because they have the money, so why not spend it? Does the Minister really believe that he can hold CCGs accountable for budgets given that how those budgets are allocated is apparently so political and not based on clinical judgements by independent people such as those on ACRA?

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[Mr Reed]

I am even more afraid that it is a fraternity I will never be invited to join.

I thank the hon. Member for Suffolk Coastal (Dr Coffey) for securing this timely debate and for her opening remarks. Particular thanks should go to Government Whips for drafting so much of it. As she knows, the last Labour Government took a malnourished, failing NHS with an annual budget of approximately £30 billion and left it with a budget of more than £110 billion. The Conservative party voted against every increase in that budget. The same Labour Government oversaw the biggest ever hospital building programme in this country. It recruited tens of thousands more doctors and nurses. It inherited an NHS in which Bruce Keogh said people were dying waiting for treatment, and left a service with the lowest waiting times and the highest patient satisfaction rates in its history. Of course, there was much more to do.

I warn the hon. Lady against complacency. If she wants to see a health economy that has been plunged into crisis as a result of the Government’s policies, she should come to Cumbria where a crisis is unfolding, patients are paying the price and the Secretary of State is entirely disinterested in what is happening.

It is incredible to hear that NHS England does whatever it is told by the Labour party. That is extraordinary—this must be the most powerful Opposition of all time. Government Members should consider whether they are in office but not in power. A canard seems to be being established whereby the NHS England board have become the new reds under the bed. That fascinating argument will be rolled out between now and the next election.

[Dr Coffey]

I am not suggesting that anyone on the NHS board made a decision because they supported the Labour party—the reds under the bed. I am suggesting that the Labour party had the opportunity in the legislation to try to break away from party political interference in the formula and it failed to take advantage of that.

[Mr Reed]

I thank the hon. Lady for her intervention. I am not sure that I agree with her. Not for the first time today—I am not laying this singularly at her feet; she knows that I have great respect for her—we have heard the argument that I hear frequently from Government Members about there somehow being an enemy within. That does not deserve significant air time in this Chamber or on any other platform in this House.

It is a mark of how important these issues are that so many hon. Members attend these debates—not just today, but every time I have responded to a debate such as this in Westminster Hall. As we have heard again today, hon. Members passionately represent their constituents, often with moving testimony of constituents’ experiences. Today, we are discussing an issue that will affect many more people in the future.

The NHS is now more than 65 years old and to ensure that it is still here in 65 years’ time, it needs to adapt to the challenges of this new century. In 1948, the health challenges facing the UK were clearly very different from those we now face. As consistent improvements in medical knowledge have enabled more people to live better for longer, we are now tasked with providing a system to cope with an ageing society. Surely we all agree on that. One of the core principles of Labour’s plans for the NHS is that there should be a system fit for the 21st century. My right hon. Friend the Member for Leigh (Andy Burnham) will speak about that and the impact of an ageing society later today.

The hon. Member for Suffolk Coastal has raised on the Floor of the House and in recent Health questions the issue of the NHS funding formula and its impact on the elderly, and in my view the Government’s response has been poor. Late last year, NHS England consulted on a new funding formula based on recommendations from ACRA and we have covered such issues widely this morning. ACRA said:

“The objective of the formula is to provide equal opportunity of access for equal need. The basic building block of the formula is the size of the population of each CCG, and then adjustments or weights per head for differential need for health care across the country. The weights per head are based on need due to age (the more elderly the population, the higher the need per head, all else being equal) and additional need over and above that due to age (this includes measures of health status and a number of proxies for health status). There is also an adjustment or weight for the higher costs of delivering health care due to location alone, known as the Market Forces Factor…This reflects that staff, land and building costs are higher in”

for example,

“London than the rest of the country.”

I can point to life expectancy gaps in Cumbria exceeding 20 years. Healthy life expectancy ages in some areas of the country are well below 60 years and the local population, by default, will be younger than in areas where healthy life expectancy is much higher. Health funding in areas with low life expectancy will be disproportionately affected.

It is right that NHS England listened to the concerns not just of the Opposition, but of medical professionals and others about the funding formula, and it is right that deprivation will be taken into account as part of the formula, but that has not changed the overall direction of travel. Over time, money will still be taken from areas with the poorest health and given to those where healthy life expectancy is longer. I would be grateful if the Minister explained how that is justifiable. It is the very antithesis of the founding principles of the NHS that funding should be allocated disproportionately to more wealthy areas.

The pattern is also demonstrated across the public health spending formula. Areas such as Westminster and Kensington and Chelsea receive in excess of £100 per head more than my own county, Cumbria, despite Cumbria’s having some of the greatest health inequalities in the country.

--- Later in debate ---

[Dr Poulter]

If that was the case—I may have missed it—my hon. Friend has made an important clarification. It is important that we have a formula that is as far as possible beyond reproach and set according to clinical need—the needs of patients. It is important that a number of factors be taken into account when that formula is put in place, as has been articulated clearly by NHS England in the discussions about how the formula is set. Deprivation is a factor. It is important to note that one of the primary drivers for setting the funding formula is now age and the needs of an ageing population. That is an important factor to highlight in this debate.

I shall now deal with some of the points made by my hon. Friend the Member for Suffolk Coastal. She may be aware NHS England has undertaken a fundamental review of its approach to allocations, drawing on the expert advice of ACRA and other external groups. The review’s findings have resulted in a new formula that provides a more accurate model of health care need. Last December, NHS England published the allocations for 2014-15 and 2015-16, based on the new formula. That gives CCGs two years of certainty about what their funding allocation is, which we can all welcome.

I know that my hon. Friend is very busy and may not have had the time or opportunity to review in detail during the past three months the information relating to the new formula, but I hope I can reassure her on the direction of travel. The formula is putting us much more on the trajectory she wants to see. It is independently set and therefore has a lot of clinical merit.

[Dr Coffey]

Will the Minister also recognise that the concept of unmet need was reintroduced in a more significant way than previously, and that that does not necessarily help where we know there are elderly populations with specific conditions that need treating?

[Dr Poulter]

It may be helpful if I outline the way the new formula works and how some of the weighting has changed, which will help to address the point my hon. Friend has just made and shed more light on the direction of travel that is under way.

The new formula uses a new indicator to recognise how health inequality should be reflected, which is based on the standardised mortality rate for those aged under 75. Previously, adjustment has been made on the basis of a measure of disability-free life expectancy. The new indicator is technically better, in that it can pick up pockets of deprivation within more affluent areas. The formula focuses much more on real population need, rather than taking a blanket approach across the population.

The new formula moves to the more powerful method of using individual rather than small area utilisation data—this is fundamental to the formula—to derive estimates of need. The main factors in the model are age, gender and 150 morbidity measures from the diagnoses of admissions to hospitals. That picks up on the point that my hon. Friend just raised. The formula looks at the pressure of long-term illness. Those 150 morbidity measures will pick that up. The increased need for health care in deprived areas is captured in the base formula by directly taking account of much of the increased need in deprived groups. In addition, further adjustments are made for factors such as the claimant rate for key benefits. That ensures that the model captures increased need that is linked to deprivation but is not linked to earlier utilisation of hospital services.

The new formula reflects more up-to-date data on population growth and measures population based on registered GP lists, rather than population projections based on the census. I am sure we can all recognise that where there has been growth in a population or changes are happening at local level, basing the formula on up-to-date GP lists is a much more accurate way of reflecting the health care needs of the local population than basing it on a 10-yearly census.

The new formula also reflects the responsibilities of CCGs rather than PCTs, as my hon. Friend outlined in her contribution. CCGs are not responsible for specialist services or primary care, although of course NHS England is now also taking over responsibility for the GP contract, as she will be aware. As a consequence, it is important to stress that the new formula for allocating funds to CCGs follows the advice provided by ACRA. A strong element of the allocation is focused on age. The primacy of age, an ageing population and the needs of older patients are very much built in, as are the needs of patients with long-term conditions. There is still a strong weighting for deprivation.