NHS Reform and Health Care

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Mr. Hutton: I am trying to follow the hon. Gentleman's argument. On what does he base his argument that we are taking away money from other trusts to reward the good performers? As he knows, the performance fund is distributed on an entirely equitable and similar basis.

Dr. Harris: I am not sure what the Minister means by an entirely equitable and similar basis. My understanding is that a performance fund is a top-slice held centrally, rather than being dispersed in the weighted capitation allocations; perhaps the Minister will clarify that. If a performance fund is allocated to reward what the Government judge as good performance, it might be allocated according to the normal weighted capitation allocation formula. If it is allocated more variably to those trusts, in the case of PCTs, that the Government deem to be better performers, that funding will not be available to be allocated equitably—using that word to support my own argument—through weighted capitation allocations.

The money in the allocations is shifted towards those that are below target. I am not complaining about that, but I am concerned that the allocation of funding, however small or large, solely on the Government's judgment of performance is likely to be more politically motivated than clinically motivated and is, in any event, likely to relate significantly, if not entirely, to the resources of the PCT.

11 am

Mr. Hutton: To be honest, the hon. Gentleman has genuinely misunderstood the way that the performance fund works. I am following his argument carefully, but it might help if I pointed out that all organisations receive a fair share of the fund, regardless of their performance rating. Those shares are based on the national weighted capitation formula. The benefits that accrue depend on whether the trust has three stars or no stars. They can use those funds as they see fit. No one is penalised; everyone gets a fair share.

Dr. Harris: I am grateful to the Minister for his clarification. That was not my reading of either the explanatory notes or the Library briefing. I know that he is not responsible for the Library briefing, which are usually estimable. Paragraph 63 of the explanatory notes states:

    ``Section 97C (3)–(6) is a new provision to allow performance payments direct to Primary Care Trusts. The provision allows the Secretary of State to increase the allotments made to a Primary Care Trust if they have, over a period notified to the Primary Care Trust, satisfied objectives notified as objectives to be met, or performed well against criteria notified to them as criteria relevant to their satisfactory performance of functions. The additional sums''—

not the additional discretion over sums—

    ``may be subject to conditions. If those conditions are not met the Secretary of State may reduce the Primary Care Trust's allotment, in the current year or following years—in effect he can recover the additional sums paid, wholly or in part.''

As I understand that, it supports what I said, rather than what the Minister said. I would be grateful if he could clarify whether the explanatory notes have misled me, however inadvertently. The Library briefing states that current provisions, rather than a new power

    ``which enable the Secretary of State to subject part of these allegations to performance criteria, and to claw back some or all of the performance-related part of the allocation if performance is unsatisfactory are retained, both for Strategic Health Authorities and for PCTs.''

The difference is that these are retained powers rather than a new provision, as paragraph 63 of the explanatory notes implies. That may just be a quibble over words.

I think that I have made a substantive point here. If I have continued to misunderstand the Library briefing, the explanatory notes and what the Minister has just said, clearly it is just too early in the morning. I hope that the Minister will be able to explain why he believes that the concerns I am raising, regardless of their merit, are groundless.

Mr. Heald: We are sympathetic to the amendments, although we would not support them in a vote, as there are some drafting problems. The basic principle behind them must be right. PCTs have the freedom to spend their money in the interests of patients in their area. Although we think it necessary to have a small element of control—the words ``sole discretion'' might be further than we would want to go—the principle must be right.

On Second Reading, my hon. Friend the Member for Woodspring (Dr. Fox) said:

    ``The Bill will do nothing to stop the flow of centralised direction and instructions. It will strengthen the hand of the Secretary of State to interfere at local level. The Secretary of State will allocate the money to the PCTs so that he can determine what they will do. He can withhold money; he can set resource limits as well as cash limits; he sets performance rewards. It is micromanagement of policy, and it is folly.''—[Official Report, 20 November 2001; Vol. 375, c. 209.]

Throughout the country, there will be complaints from PCTs that their funding is not adequate. Whitehall will decide what it should be. That cannot be anything other than a centralisation of power, and it is a silly one, because everyone knows that the Secretary of State in Whitehall is never any good at setting individual local figures, or at least not as good as a body closer to home. That will be a real rod for the Government's back in the long term. We sympathise with amendments Nos. 150 and 151, but again there are issues about the detail.

Mr. Hutton: I certainly will not advise my hon. Friends to support these amendments, for a number of important reasons. Amendments Nos. 149 and 150 would make it impossible for the Secretary of State to make additional payments, based on performance, to strategic health authorities or PCTs. However, it is important for him to have those powers to improve the performance of the NHS as a whole. That is one of his primary responsibilities. It would be foolish to deny the Secretary of State the opportunity of delivering on the responsibilities that he owes to the House, patients and the public as a whole. I shall return to that point, because the hon. Member for Oxford, West and Abingdon clearly misunderstood the nature of the performance fund and how the money is disbursed.

Amendment No. 151 would limit the Secretary of State's powers to adjust a PCT's initial allocation during the year. That would be absurd. Equally, amendment No. 148 would prevent the Secretary of State from imposing conditions on any of the allocations, so that PCTs could spend them entirely as they chose. I understand the point about devolution, and we subscribe to it, but in some cases it will be important for the Secretary of State to have an influence on the use of funds. Ultimately, that is his accountability to the House.

The hon. Member for Oxford, West and Abingdon has always said that the Bill is about shifting the blame. However, the powers make it transparent and explicit that the Secretary of State has important responsibilities that he must discharge. The hon. Gentleman cannot have it both ways. He cannot claim that we are shifting the balance of power but then criticise the Secretary of State for exposing himself to criticism when he exercises those powers and responsibilities. That is a classic Liberal Democrat statement and position, but it is utterly contemptible. [Hon. Members: Oh!] I enjoyed that.

Mr. Burns: Keep taking the pills.

Mr. Hutton: I will.

I know how much it sucks to be told by a Minister that an amendment has a technical deficiency, but I can also tell the Committee how much it pleases a Minister to identify one. There is a rather horrid technical deficiency in amendment No. 148. It would not have the effect that the hon. Gentleman has waxed lyrical about unless proposed new section 97C(8) were omitted from the Bill, and his amendment would not do that. The new section deals with the Secretary of State's power to give directions with respect to the applications of sums.

With a certain lack of conviction, the hon. Member for North-East Hertfordshire made a point about the acquisition of new powers and the stealth gain by the Secretary of State. However, we already have powers under section 2 of the Health and Social Care Act 2001 that enable us to make additional payments to health authorities based on their performance in previous years or during the same year. The measures in clause 7 to which both hon. Gentlemen take such exception simply extend existing powers to allow those payments to be made to strategic health authorities. That is perfectly logical and sensible, because they are broadly the successor bodies.

The Secretary of State has the power to determine how much to allot to each strategic health authority and, in doing so, he can consider a range of factors. It is open to him to pay more to a strategic health authority—I should have thought that the hon. Member for Oxford, West and Abingdon would like that to happen mid-year or at any other time after the initial allocations were made—if he takes the view that additional amounts will help to improve unsatisfactory performance. The hon. Gentleman has been banging on about some of those problems, but he wants to take away that power.

We have no current plans to allocate performance funds to strategic health authorities, but we wanted to retain the option to do so if we felt it to be necessary. For example, we might want to use the performance fund to give strategic health authorities money to incentivise performance on a local health economy basis. That could be a constructive use of the resources.

Subsections (3) to (6) of proposed new clause 97C will mirror for PCTs the existing powers to allow payments to be made to health authorities. That is necessary because of the way in which commissioning funds will be disbursed through the NHS to PCTs, not to health authorities. The measure is not, in the words of the hon. Member for Oxford, West and Abingdon, the acquisition of new powers, but the logical extension of existing powers to the new organisations that have commissioning responsibilities.

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Prepared 29 November 2001