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Dr. Evan Harris: Selly Oak.

Mr. Hutton: I was referring, of course, to my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones). It is a very fine part of Birmingham, and I have visited it.

It is not clear from the new clause who would be responsible for commissioning and delivering health care services. Moreover, it assumes that all the functions being allocated to PCTs will be new to them. That thread of misconception underlay most of the arguments presented by Opposition Members, as many of the functions to be directly conferred on PCTs are being exercised by them already, on behalf of their health authorities.

The main difference is that the Bill will mean that PCTs will assume responsibility for all family health services. I accept that that is a substantial change, but many of the arguments about the readiness of PCTs to discharge their

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new responsibilities overlook the fact that many have already been established successfully, and have been delivering their wider commissioning responsibilities for some time.

In Standing Committee, I made it clear that we anticipated that all primary care groups will have gained PCT status before October 2002. In fact, 86 new PCTs have been approved by Ministers for April 2002, and 58 further applications are still with Ministers for approval. I expect that the vast majority of those will be approved in the very near future. Therefore, given that 164 PCTs are already in operation, it is clear that the majority of the country will be covered by April 2002.

In Committee, I referred to 11 primary care groups that were still consulting on the proposals. Of those, 10 have now applied for PCT status. Their submissions are with Ministers and have been included in the figure of 58 applications that I mentioned earlier. The remaining PCG intends to apply for PCT status, and that application will be considered as soon as possible.

Therefore, to suggest that PCTs lack the capacity to deliver their new responsibilities simply ignores the truth of the matter. Better support is already being given to practices and clinicians, and services are better integrated and more effective. There is better access, and decision making is carried out closer to patients and local communities.

In the debate, an extensive reliance was placed on the tracker survey commissioned out by the national primary care research and development centre at Manchester—another excellent academic centre—in collaboration with the King's Fund. As Opposition Members rightly noted, the survey covered 72 of the 481 primary care groups established in 1999. The survey covered a three-month period between October and December 2000.

I do not dispute the accuracy of the data at the time, but it is historic information. The Opposition rested their entire case for new clause 1 on the results of a tracker survey, and I think that that was a total mistake. Given the information available, and the concerns that have been raised about the performance of PCGs and PCTs, the hon. Member for West Chelmsford would have had a reasonable argument if the Department of Health had done nothing. However, no mention was made of the effort that has been put in since the tracker survey was published to provide better and more effective support to PCGs and PCTs, as they take on their new responsibilities.

Those efforts continue to be made. The new leadership centre proposed in the NHS plan will play an important role. In addition, Barbara Hakin, an outstanding PCT chief executive from Bradford, is leading the management development programme for new PCT senior managers. Her excellent services are beginning to make a significant and positive contribution.

Some people will always say that a reform of this magnitude is wrong, or a source of concern. I do not doubt for a second the legitimacy of such arguments, or the right of people to express them. Of course people who are worried about reform should express their unease, but the view should not be formed that other people—equally eminent and respectable—have not expressed positive and supportive views about the pace and direction of change.

The argument this afternoon has been very one sided, as it was in Standing Committee. It is fine for Opposition Members to express their concern, but they should also

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acknowledge the positive developments that have taken place and the progress that has been made. If the Conservative party wants to be an effective Opposition who scrutinise legislation properly, Conservative Members must be able to make both sides of the argument, as that would certainly improve the quality of legislative scrutiny.

It would also be wrong to assume that PCTs are not getting the support that they need, as I have tried to make clear. Therefore, I believe that new clause 1 is mistaken, and I am not entirely sure of the motivation that lies behind it. It was designed as an amendment that would help the Government's reform programme, but we must beware of Greeks in that situation.

With respect to the hon. Member for West Chelmsford and to other hon. Members, the arguments in favour of new clause 1 are not persuasive, and I cannot ask Labour Members to support it.

Mr. Francois: Either by accident or design, the Minister has said very little about strategic health authorities. Does he accept that it is integral to the Government plan that the SHAs must succeed? Is not it also a part of the plan that merging other health authorities into SHAs is a deliberate attempt to reduce head counts and thus to free up more money for patient care? Everyone realises that there will be job losses as a result of the mergers. Is not the Minister asking people to work flat out, on an incredibly tight timetable, to get the SHAs up and running, even though those same people have no idea whether they will have a job in the surviving organisation in a few months time? Is not—

Mr. Deputy Speaker (Sir Michael Lord): Order. The hon. Gentleman has made his point.

Mr. Hutton: The hon. Gentleman has certainly done that, but I was not referring in detail to SHAs, as the amendments are about PCTs. I was trying to explain the Government's thinking about the establishment of PCTs, and about whether that should be delayed. I have mentioned the duty of consultation on SHAs—

Mr. Francois: On a point of order, Mr. Deputy Speaker. This group of amendments comes under the heading "Establishment of Strategic Health Authorities and Primary Care Trusts".

Mr. Deputy Speaker: That is not a point of order for the Chair.

Mr. Hutton: I do not want to delay our proceedings. We are talking about new clause 1; the hon. Gentleman interrupted me when I was talking about new clause 1, which is about primary care trusts and not strategic health authorities. I dealt with the arguments on strategic health authorities when I referred to Government amendment No. 23 and the amendment that has been proposed to it. I am not short-changing the House, nor am I ignoring the arguments that the hon. Gentleman has been trying to deploy.

The hon. Gentleman is right that organisational changes may mean that people lose their jobs as a result. The NHS has a responsibility; we will discharge it to make sure that we act fairly in relation to the employees at all times

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during the process of change. There are exciting new opportunities presented by the reforms for which we seek the House's support, particularly in relation to the new roles and responsibilities of primary care trusts. The hon. Gentleman, who takes a close interest in these matters, will know that many currently working in health authorities are looking towards employment in the new primary care trusts and will find employment in that area.

The hon. Gentleman's wider point about what should motivate the Government as they consider these reforms is fair. What motivates us is a simple desire to improve the quality of the national health service. We will do that, in this instance, by making the NHS more streamlined, less bureaucratic, more focused on patient care and making sure in the process that we get better value for the record investment in the national health service. That is an entirely appropriate responsibility for the Government and Ministers to discharge, so I shall certainly not apologise to the hon. Gentleman or to anyone else for those considerations.

Amendments Nos. 8 and 9 deal with funding arrangements under the new system. Amendment No. 8 would require the Secretary of State to take into account the assets and liabilities contained in the balance sheet when determining allocations to primary care trusts. This area is inevitably technical and complex, but I will try, as far as possible, to keep the issues simple, not only so that the House can understand them but so that I can.

Usually only those assets and liabilities associated with the functions assumed by the PCTs will transfer to them. The process is that PCTs agree with the relevant health authorities and, where appropriate, NHS trusts the balances that will transfer. These amounts will normally be straightforward and attributable to specific PCTs. However, there may be cases in which that is not appropriate or practicable. That might include any small outstanding health authority running cost charges which cross boundaries—utilities bills, for example—or there may be circumstances in which an under or over- performance on service agreements, such as maternity services, might have arisen. In these circumstances, other equitable methods will be used, such as a simple apportionment.

Turning to the financial consequences of transferring a liability to a PCT, as we would expect in any public or private sector body, there will always be amounts due in income and amounts due to be paid at the year end. In the case of health authorities, most of those sums will be moneys owed to and from other NHS bodies. PCTs will inherit these balances from health authorities. I think that that is fair and reasonable. The overall resources available to PCTs for spending on health care in-year, however, will be unaffected by these inherited balances.

Cash will, of course, be required by the PCT physically to discharge the liability at some point in the future. However, that is largely a question of timing and can be taken into account if necessary when agreeing the cash financing of the PCT. As a strict consequence, the amendment is unnecessary.

The practical effect of amendment No. 9 would be to require the Secretary of State to take into account the health needs of a primary care trust's population when he makes an allocation. We all accept that different parts of the country and different localities have different health care requirements and needs. I agree with the

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hon. Member for Oxford, West and Abingdon on that. It is partly a reflection of deprivation but may also be a result of geography. The national resource allocation formula that we use to determine fair shares for health authorities and primary care trusts recognises this. It is already used to establish fair share targets for primary care trusts, and while allocations are still made to health authorities, they are required to pass resources on to primary care trusts in accordance with national guidance.

We have asked the Advisory Committee on Resource Allocation to review the operation of the formula at primary care trust level. When in future we allocate resources direct to primary care trusts, we will have a national formula that takes into account the health needs of a primary care trust's population. We will have a pace of change policy to bring primary care trusts towards their targets, or fair shares, determined by the formula.

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