Mr Hammond: I say two things to my hon. Friend. First, the overwhelming majority of respondents to the consultation supported the proposal to change the name of the Territorial Army, better to reflect the role that it will play in future. The second thing is that—he will just have to take my word for this—at senior level there has

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been a sea change in the attitude in the Army. The Army now understands that it has to grip this as its problem and deliver the solution. I accept that there is still more work to be done in the middle ranks of the Army officer corps, to persuade people to adopt the integrated model for the future. That is a work in progress.

Jim Shannon (Strangford) (DUP): I thank the Minister for his statement and concur with the statement made by my right hon. Friend the Member for Lagan Valley (Mr Donaldson) on the closure of the Armagh unit; I express my disappointment at that as well. However, the announcement that Kinnegar in Holywood will become a centre for reservists is good news, which I welcome. Civilian staff there have been uncertain about their position in recent months. Can the Secretary of State confirm that Kinnegar will not be subject to any run-down or loss of civilian personnel as it becomes a centre for reservists in Northern Ireland?

Mr Hammond: My understanding is that, at the moment, Kinnegar is mostly used as a storage facility and the number of civilians employed there is relatively small. However, I cannot guarantee—this is part of another statement, in a sense—that as that role decreases there will not be some changes in the civilian staffing level. However, if the hon. Gentleman would like me to write to him with further details of the overall position affecting Kinnegar, I will be happy to do so.

Mr Tobias Ellwood (Bournemouth East) (Con): I declare an interest as a member of Her Majesty’s armed forces reserves in the Military Stabilisation Support Group. As the Army rebalances its regular-reserve ratio, I hope that emphasis is placed on not only war-fighting skills but nation-building, peacekeeping, upstream intervention and stabilisation, where reservists can bring their civilian skills to the fore. May I also ask the Secretary of State what more could be done to ensure that the Army stabilisation activities that qualify against Development Assistance Committee rules can be claimed against the official development aid target?

Mr Hammond: As my hon. Friend will see when he reads the White Paper—the document that the shadow Secretary of State was waving a few moments ago—we do indeed emphasise that the role of the reserves in future will include participation in stabilisation and conflict-prevention operations.

On eligibility for ODA-compliant funding in these operations, recently my hon. Friend kindly sent me a paper that he has written suggesting areas that might be ODA-compliant. I have passed it to officials so that they can look further at whether there might be avenues to pursue.

Mark Garnier (Wyre Forest) (Con): I am grateful to the Secretary of State for his statement, although I regret the closure of the Shrubbery TA centre in Kidderminster. Can my right hon. Friend assure me that the neighbouring King Charles I secondary school combined cadet force unit is safe? Can he also confirm that the 30 or so reservists who are currently based at the Shrubbery TA centre will be given financial support for travelling a greater distance?

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Mr Hammond: On that last point, as I have said already, a home-to-duty allowance is payable for travel between home and the place of duty. Over and above that, the Army will be looking on an individual basis to ensure that, within reason, anyone whose unit is closing, relocating or re-roling, and who wishes to transfer to a different unit, will be supported. We expect that to be done at local unit level, engaging with individuals to try to retain them in the reserve service if we possibly can.

Sir Alan Beith (Berwick-upon-Tweed) (LD): Instead of withdrawing entirely from a rural centre such as Berwick-upon-Tweed, which will lose its TA centre, Royal Logistics Corps and Fusiliers component, should not Ministers be looking at flexible ways of organising training and recruitment in rural areas, so as not to close off that source of recruitment?

Mr Hammond: I have looked at the situation in my right hon. Friend’s constituency. The driver is that the Pioneers, both regulars and reserves, are being withdrawn from the Army’s order of battle, so the Pioneer unit based at Berwick will no longer have a role to play. However, we hope that many of those serving in that unit will re-role and move to Alnwick, where the Army reserve centre will continue.

Mr Andrew Turner (Isle of Wight) (Con): Drill Hall and Jersey Camp, the TA facilities on the Isle of Wight, are shared by our very strong cadet forces, who number more than 200. Given the unique transport challenges facing the island, the loss of those facilities would be a terrible blow to those young people. Will my right hon. Friend meet me and a group of constituents to discuss the matter?

Mr Hammond: I sense that the Minister for the Armed Forces is anxious to meet my hon. Friend. I can say this: if the facility has 200 cadets, the vacation by the reserves will not make any difference to the cadets’ continued use of it. It will remain in use by the cadets, as will be the case for a significant number of the bases being vacated.

Mr Speaker: The hon. Member for Pendle (Andrew Stephenson) has beetled forward by two Benches from his normal position; I am grateful that I am nevertheless able to see and recognise him.

Andrew Stephenson (Pendle) (Con): Thank you, Mr Speaker.

There is a lot to welcome in today’s statement, particularly the incentives for small and medium-sized enterprises. Last Friday, I organised a jobs and apprenticeship fair at Colne municipal hall. More than 1,200 people attended and I am pleased to say that there was a great deal of interest in both the regular and reserve forces. What more does the Secretary of State believe right hon. and hon. Members across the House can do to help deliver the plans and ensure that we recruit more reserve forces in our local areas?

Mr Hammond: I am grateful to my hon. Friend for the work that he is obviously already doing in supporting the reserves agenda, which is about raising awareness of reserves, particularly in communities where reserve units are significantly under-recruited—essentially getting behind a “use it or lose it” challenge to those communities. We

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have now created a space and will be putting in place a substantial recruiting drive. Those units need to show that they can make a sustained militarily significant contribution to the Army reserves.

Amber Rudd (Hastings and Rye) (Con): SME support is essential for the success of the growth of our reserve forces, so I really welcome the financial and procedural package that has been put in place for them. What support or advice has the Secretary of State received from business organisations such as the Federation of Small Businesses to ensure that we get exactly the right package to encourage our employers to support this issue?

Mr Hammond: The FSB has been involved with us in the consultation process, along with many others. I am glad to be able to say that it, along with the other four major employer organisations, has signed the corporate covenant that my right hon. Friend the Minister for the Armed Forces launched last Friday, which includes a pledge to support reserve service. In this White Paper we explicitly recognise that reserve service impacts on different types of employer differently, and the offer that we make has to be tailored to recognise that. That will make a significant difference to our relationships with small and medium-sized employers.

Mr Robin Walker (Worcester) (Con): The 214 Battery Royal Artillery in Worcester has a magnificent new TA centre right at the heart of our city. Its officers and gunners have seen a great deal of service in Afghanistan. The whole city is very proud of having this military presence right at its heart. Can my right hon. Friend confirm that in making his difficult decisions on basing, he has paid attention to the quality of facilities available at TA centres and to the historic role of our county towns in supporting recruitment to the armed forces?

Mr Hammond: My hon. Friend tempts me, but I have to say in all honesty that the driver has been the structural requirements of the Army Reserve. There is no point in keeping a TA centre because it is a shiny new building if it does not fit into the structural laydown that the Army needs to deliver military effect in the 21st century, so that has been the overriding consideration.

Alun Cairns (Vale of Glamorgan) (Con): HMS Cambria in my constituency has a long, proud history in supporting the unit from the communities of Barry and Sully in Cardiff South and Penarth. The statement talks about a unit in Cardiff that is to be new or renewed, but it is not yet clear whether it is the same unit or another one in place of it. Will the Secretary of State clarify that?

Mr Hammond: It is an additional unit.

Mr Philip Hollobone (Kettering) (Con): Employer support will be crucial. There is a Queen’s award for business, a Queen’s award for technology and a Queen’s award for exports. Might there not be a Queen’s award for supporting the armed forces reserves?

Mr Hammond: We explored that in the consultation. We have decided to proceed via the corporate covenant, which already provides for recognition for employers who support the services broadly, including the reserve service, and provides them with a logo that they can put on their letterhead.

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Julian Smith (Skipton and Ripon) (Con): I, too, welcome the measures that the Secretary of State has announced for business. However, for our smallest businesses across the UK—our one, two or three-man bands—losing a key worker will pose a particular challenge. May I urge him, as he develops the White Paper, to give special credence to their views and those of employers who are not represented by the business organisations we discussed earlier?

Mr Hammond: The FSB has of course been involved in this process. My hon. Friend’s point is absolutely valid. It will not be right or practical for all SMEs to employ a reservist, and we must recognise that fact. It will be easier for larger businesses. Many SMEs, perhaps including some very small ones, will be keen to employ a reservist, perhaps for a particular reason. We have to be flexible and tailor our package to respond to the needs of individual employers and employer types.

Mark Pawsey (Rugby) (Con): May I express my disappointment at seeing on the list of surplus sites the Territorial Army centre at Edward street, Rugby?

I thank the Secretary of State for listening to the representations on reservists by businesses, particularly small businesses, many of which stand to lose a key member of staff for a substantial period. I particularly thank him for his provisions regarding greater predictability of call-up.

Mr Hammond: I am grateful to my hon. Friend. I am sorry about the disappointment regarding Rugby. As he will know, the reserve unit there will be consolidated at Coventry—another example of consolidation to create critical mass.

My hon. Friend is absolutely right that predictability of liability for call-up is one of the key issues for smaller employers. If, at the beginning of the year, we can give them proper notice of training periods, and as lengthy notice as possible of a period of high liability for call-up, they can plan accordingly.

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Henry Smith (Crawley) (Con): Last Saturday, Crawley borough council rightly signed its military covenant. That was, in part, a sign of the great respect in my constituency for the Royal Electrical and Mechanical Engineers Territorial Army centre. Will my right hon. Friend say a little more about how he sees the REME reserves developing?

Mr Hammond: The Royal Electrical and Mechanical Engineers are one of the resources on which we will be relying more in future for reserve capabilities than we have in the past. My hon. Friend gives me the opportunity to use this as another specific example. We will be looking to ensure a basing laydown for REME units that reflects the nature of the work force in different areas. We clearly need to recruit to REME reserve units in areas where there are significant numbers of electrical and mechanical engineers in the work force. That is the right way to build the integrated whole force of the future.

Guto Bebb (Aberconwy) (Con): There will be genuine disappointment in the town of Llandudno in my constituency at the news that the Territorial Army centre in Argyll road will see its services relocated to Colwyn Bay, but I think that that disappointment will be tempered by appreciation of the fact that it will remain a strong presence within the county of Conwy. However, it should be noted that the centre in Argyll road is also home to two vibrant cadet units which use the facilities on a regular basis. It would be appreciated in the town of Llandudno and in the wider constituency if we could have some certainty that those facilities will still be available for those two cadet forces.

Mr Hammond: Our commitment to the cadets is clear and enduring, and we will not throw them out on the street. We may at some point re-provision those facilities. That will depend on the individual site and whether the location is suitable to continue in the long term as a stand-alone cadet facility. We will find alternative facilities for them in the vicinity if, over the longer term, the decision is taken to close the building.

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Points of Order

1.56 pm

Thomas Docherty (Dunfermline and West Fife) (Lab): On a point of order, Mr Speaker. Further to the exchange with the Secretary of State for Defence regarding the site at Kilmarnock, as I understand it, he confirmed that this is a 10th new or reopened reserves site. That is a direct contradiction of the figures given in the belated statement and in the exchanges with, for example, my right hon. Friend the Member for East Renfrewshire (Mr Murphy) and the hon. Member for Moray (Angus Robertson). Can the Secretary of State give any indication as to whether that information was accurate? When he writes to you, Mr Speaker, will he also be encouraged to explain what on earth has gone on with the sudden appearance of this 10th site?

Mr Speaker: If the Secretary of State wishes to respond, he is welcome to do so.

The Secretary of State for Defence (Mr Philip Hammond): Thank you, Mr Speaker. I cannot answer the hon. Gentleman’s question from the Dispatch Box, but I will of course write to him as soon as I get back to the MOD. I am not sure that it does represent what he is suggesting it represents. Some of the sites in question are complex. I am happy to write to him and copy the letter to you, Mr Speaker, as soon as I get back to the MOD.

Mr Speaker: I happily accept that offer from the Secretary of State. As he will know, I am principally concerned with matters of order and good form. Although in a human sense, no doubt, particular sites are of interest, they are not within my sphere of competence, and he knows that. What I am interested to hear about is the handling of the matter. He has given me a commitment on that, and I am grateful for it.

Mr Jim Murphy (East Renfrewshire) (Lab): On a point of order, Mr Speaker. My hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty) has just raised a point of order about Kilmarnock being on the list of reopened or opening sites. The only place in Scotland that is determined as a location appears to be in Edinburgh, which is nowhere near Kilmarnock. It seems that every Member of the House, including Ministers, was reading this list for the first time.

I seek your guidance, Mr Speaker, because I was handed a copy of the Secretary of State’s oral statement as I arrived towards the end of Prime Minister’s questions, which is why I did not thank him for advance sight of it. The written statement was provided late. In fact, I have an e-mail from the House of Commons Library confirming that it arrived at 12.55 pm. That is well after the Secretary of State spoke and well after I spoke. When the House of Commons Library receives it only at

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12.55 pm, something deeply untoward has happened. At 1 pm, a few minutes later, the supporting paperwork arrived.

Then, in the midst of all that, at about the same time, the hon. Member for Suffolk Coastal (Dr Coffey), the Parliamentary Private Secretary to the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), took it upon herself to scurry round the Chamber with a poor photocopy of documentation that we should have been provided with earlier. It does not have Kilmarnock on the list, so it was not only a rushed photocopy circulated informally but perhaps also incomplete.

My point of order, therefore, is to ask whether you would look kindly, Mr Speaker, on a request by the Minister for the Armed Forces to make a supplementary statement tomorrow in light of the fact that the weighty impact assessment arrived only in the past couple of minutes. No Member apart from myself and, I suspect, the Secretary of State is in possession of the impact assessment of the measures announced today. Would you look kindly, Mr Speaker, on a request by the Minister for the Armed Forces to make an additional statement tomorrow, so that this sordid mess can be clarified once and for all and so that we can have proper scrutiny?

Mr Speaker: What I would say to the right hon. Gentleman is that it is a matter for Ministers to decide whether they wish to make oral statements to the House. As he will be aware, the convention whereby a Minister delivering an oral statement begins it by saying, “With permission, Mr Speaker, I should like to make a statement”, is just a convention and, frankly, a courtesy that is, I think, on the whole appreciated by the House, but Ministers can make statements to the House when they wish. The right hon. Gentleman may wish to wait to see whether there is an offer of a statement, but there are various parliamentary devices open to Members to deliver the scrutiny that they think a particular measure warrants and everything ought to be looked at on a case-by-case basis. Perhaps I can leave it there for now.

Bill Presented

Defence Reform Bill

Presentation and First Reading (Standing Order No. 57)

Mr Secretary Hammond, supported by the Prime Minister, the Deputy Prime Minister, Danny Alexander, Secretary Vince Cable, Secretary Chris Grayling, Francis Maude, the Attorney-General and Mr Philip Dunne, presented a Bill to make provision in connection with any arrangements that may be made by the Secretary of State with respect to the provision to the Secretary of State of defence procurement services; to make provision relating to defence procurement contracts awarded, or amended, otherwise than as the result of a competitive process; to make provision in relation to the reserve forces of the Crown; and for connected purposes.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 84) with explanatory notes (Bill 84-EN).

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Drink Driving (Repeat Offenders)

Motion for leave to bring in a Bill (Standing Order No. 23)

2.1 pm

Rehman Chishti (Gillingham and Rainham) (Con): I beg to move,

That leave be given to bring in a Bill to allow the Magistrates Court discretion to refer a third or subsequent offence for drink driving to the Crown Court for sentencing and to grant the Crown Court the jurisdiction to give a custodial sentence of up to two years.

When a driver gets behind the wheel they have a responsibility for their own and other road users’ safety, but public safety is put at risk by those who choose to drink and drive. Studies have consistently shown that someone’s ability to drive is impaired by having alcohol present in their blood and that the risk increases as more alcohol is consumed. This risk to public safety has been recognised in law for almost 90 years since the first drink-driving offence was introduced in 1925.

The current statutory provisions governing drink-driving make it an offence to drive or attempt to drive while unfit through drink or with excess levels of alcohol in the bloodstream. Currently the maximum sentence an offender can receive is six months in prison, which is the same for a first, second, third, fifth, sixth or even seventh offence. I believe that that needs to change so that those who continue to reoffend will face tougher sentences and those who persist in driving after drinking over the legal limits will be deterred from doing so.

There has been a huge shift in the public’s attitude towards drink-driving over the years and we should not lose sight of the significant achievements of successive Governments in tackling this issue. In 1979, 28 people were killed or seriously injured every day in drink-driving accidents. Thirty years later the number has fallen to four a day, despite the volume of traffic increasing by 80% since the 1980s. By combining education and enforcement through the THINK! campaign run over Christmas and during the summer, road safety has improved. However, more still needs and has to be done.

The figures show that in 2011 almost 10,000 casualties occurred when someone was driving while over the legal alcohol limit. Sadly, 1,570 people were killed or seriously injured in drink-driving accidents in 2011, which was up on the previous year. More people are in fact killed as a result of drink-driving than of knife crime, yet the maximum penalty for carrying a knife is four years in prison compared with the significantly lower six months for drink-driving.

Worryingly, many drivers continue to ignore the risks and get behind the wheel after drinking, with 8% of drivers admitting that they have driven in the past 12 months believing that they were over the legal limit. According to a recent AA/Populus survey, one in five motorists has admitted to risking drink-driving at Christmas. Nearly 20,000 extra breath tests were carried out by the police last December and more than 7,000 of those breathalysed were found to be drink-drivers. In Medway, which includes my own constituency, more than 30 arrests were made during the Christmas crackdown.

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It is clear that the current law is not a powerful enough deterrent for many people, as 12% of offenders, some of whom will have been disqualified and uninsured, will go on to drink and drive again. The reoffending rate is even greater for high-risk offenders, including those who have previously been disqualified twice for drink-driving offences, with three out of 10 of them repeating the offence.

I say to the Under-Secretary of State for Transport, my hon. Friend the Member for Wimbledon (Stephen Hammond), who is in his place, that the same proposals that I am outlining today could also be applied to those who drive while disqualified, which is linked to drink-driving. In a recent case in Medway, a driver was caught an astonishing five times in 11 years but still escaped a prison sentence.

The latest review into drink-driving laws in 2010 by Sir Peter North noted that it is a minority of drivers who persist in drink-driving. The coalition Government’s response to the North review stated that many drink-drivers are well above the limit—a staggering 40% of those caught are two and a half times over the lawful limit.

To tackle this problem, it is the behaviour of that minority of hard-core drinkers that needs to be targeted. As the Secretary of State for Transport at the time of the North report, my right hon. Friend the Member for Runnymede and Weybridge (Mr Hammond), told the House in a written ministerial statement:

“Their behaviour is entrenched and displays a flagrant disregard for the law and the safety of other road users.”—[Official Report, 21 March 2011; Vol. 525, c. 45WS.]

The Government’s response indicated that the biggest deterrent is the perceived risk of the severe consequences of detection. Under the plans that I am outlining today, there would be a serious deterrent not to drink and drive.

How would the proposal work in practice? On a first offence, the vast majority of drink-drivers receive a non-custodial sentence usually consisting of a fine and driving ban. On a second offence or in aggravating circumstances, we would expect the magistrates court to give a harsher sentence ranging from a community penalty to a custodial sentence. On a third offence, the magistrates court would have the discretion to refer the case to the Crown court, where the offender could receive up to two years’ imprisonment. This measure would provide the courts with the additional tools they need to tackle those who persist in flouting the law.

The principle of increased sentences for repeat offenders proposed in this Bill has already been applied to other crimes. The Powers of Criminal Courts (Sentencing) Act 2000 provides a minimum sentence of three years for a third burglary offence. The system has also been adopted in other countries. In New Zealand, a motorist caught over the limit for a third or subsequent offence faces two years’ imprisonment. In the Australian state of New South Wales, people can receive a two-year sentence for subsequent offences. In America, many states have imposed more than one-year prison sanctions on those who reoffend three times or more.

It is clear that in order to reduce further drink-driving casualties we need to take a tougher stance. This proposal will send a clear message to those who continue to drink and drive that they will face up to two years in prison if they persist in exceeding the legal limits and continue to

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put innocent lives at risk. This Bill will mean that we continue to have not only some of the toughest drink-driving laws, but some of the safest roads. I commend the Bill to the House.

Question put and agreed to.


That Rehman Chishti, Keith Vaz, Kate Hoey, Steve Baker, Lorely Burt, Gordon Henderson, Valery Vaz, Gareth Johnson, Angie Bray, Mr David Ruffley, Henry Smith and John Stevenson present the Bill.

Rehman Chishti accordingly presented the Bill.

Bill read the First time; to be read a Second time on 22 November 2013, and to be printed (Bill 85).

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Estimates Day

[1st Allotted Day]

Estimates 2013-14

Department of Health

Health and Care Services

[Relevant Documents: Eleventh Report from the Health Committee, Session 2012-13, Public expenditure on health and care services, HC 651, and the Government response, Cm 8624, and uncorrected oral evidence taken before the Health Committee on 2 July 2013, on Implementation of the Health and Social Care Act 2012, HC 119-iii.]

Motion made, and Question proposed,

That, for the year ending with 31 March 2014, for expenditure by the Department of Health:

(1) further resources, not exceeding £50,475,001,000, be authorised for use for current purposes as set out in HC 1074 of Session 2012-13,

(2) further resources, not exceeding £2,414,054,000, be authorised for use for capital purposes as so set out, and

(3) a further sum, not exceeding £50,292,107,000, be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Anne Milton.)

2.10 pm

Mr Stephen Dorrell (Charnwood) (Con): It is one of the more endearing characteristics of the House of Commons that although the motion before us and those that follow it involve £517 billion of public expenditure, it falls to a Back Bencher to make the case on behalf of the absent Financial Secretary. It is obviously a minor detail that the House of Commons should be asked to approve £517 billion of public expenditure. Also, I suspect that all parties in the House are on a one-line Whip on this minor matter.

Having made that observation on the slight absurdity of parliamentary process, I will begin by saying a word about the approach to public expenditure and health policy that the Health Committee, which I have the honour to chair, has adopted since the beginning of this Parliament. We have our differences within the Committee; it would be absurd to pretend otherwise. We were elected from different party platforms and have different views about how health care can best be delivered in our society. However, from the beginning of this Parliament, we have taken the view that there is not much point in using the Select Committee as the platform for elaborating those differences, because there are many other platforms where they may be amplified. We have sought consciously to explore areas of common ground in the delivery of health and social care, and to establish where there can be cross-party agreement.

The easy way to achieve that objective would be to avoid all the difficult political questions. We have consciously not done that—we have dealt with the difficult questions. We have talked about commissioning in the context of the Health and Social Care Act 2012. We had a hearing this morning on the developments in the Care Quality Commission. We have not sought to avoid difficult territory, but when we are in it, we look for areas of

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common ground. That means that we are not grandstanding on health policy, but seeking to develop a coherent or, given what I will go on to say, integrated view of how health care ought to develop on a cross-party basis.

Against that background, it is significant that we have had a consistent and serious view since the beginning of this Parliament on the questions that are raised for those who work in the health and care sector by the pressures on public expenditure that exist in this Parliament and, I believe, will exist for the foreseeable future. It is not a coincidence that the first substantive report that we issued in this Parliament was on public expenditure. In that report, the Committee coined the phrase “the Nicholson challenge”, which has passed into common parlance, to refer to the challenge faced by the health and care system to deliver quality care against the background of rising demand and, roughly speaking, flat real-terms budgets.

That challenge was articulated first not by the Select Committee or the coalition Government but by Sir David Nicholson, a distinguished public servant, in his capacity as chief executive of the national health service in May 2009. It was endorsed by the previous Government. The Committee has sought to explore the success of the coalition Government in meeting that challenge and to bring to the surface some of the choices and challenges that are implicit in the phrase “the Nicholson challenge”. Incidentally, we know that the challenge lives beyond Sir David Nicholson.

Let us be clear what we are talking about. Since May 2009, the core issue has been that resources are growing extremely slowly, if at all, while demand continues to rise. One does not need a degree in mathematics to know that if demand for health and care services rises, as it has in this and every other country for the last 50 years, by roughly 4% per annum and there is no new money coming into the system, the only way in which demand can be met is by increasing the efficiency with which the resources are used by an equivalent percentage each year. In other words, the Nicholson challenge is how to deliver health and care to the required standard—I will come back to that point—4% more efficiently year on year.

I emphasise that it is not my view, nor the Committee’s view, that there are no political choices to be made about the level of resources that are committed to health and care. It falls to the Government of the day to make those choices every year when resources are voted on, as we are doing this afternoon on the estimate of £105 billion. That represents a political choice. However, members of the Committee read the newspapers, understand the laws of arithmetic and understand the broader political environment in which we live. We hear it when the Leader of the Opposition says that an incoming Labour Government would have to live with the spending plans of the current Government, at least for their first year in office. That is, to put it mildly, an exercise in expectation management by the Leader of the Opposition.

It is against that background that the Committee recommends in paragraph 16 of the report on health and social care:

“In our view it would be unwise for the NHS to rely on any significant net increase in annual funding in 2015-16 and beyond. Given trends in cost and demand pressures, the only way to sustain or improve present service levels in the NHS will be to

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continue the disciplines of the Nicholson Challenge after 2015, focusing on a transformation of care through genuine and sustained service integration.”

That is an example of a recommendation that was reached on a cross-party basis. We are not signing up to decisions about funding, but saying that the health and care system faces a huge challenge to deliver more integrated services if it is to meet the quality and economic standards that are likely in any political scenario.

Andrew George (St Ives) (LD): I thank my right hon. Friend for the way in which he is introducing this subject. He will acknowledge that the Nicholson challenge and the need for year-on-year efficiency gains of 4% were originally proposed under the last Labour Government. There is therefore continuity from the previous Government, through the coalition and on to any subsequent Government. Does he agree that the result of the efficiency gains must not be that NHS rank and file staff are subjected to lower regional pay and conditions, as was proposed in one region of the country?

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

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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.”

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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.

Dr Phillip Lee (Bracknell) (Con): Talking of efficiency, is my right hon. Friend as shocked as I am to hear that the Department of Health spent almost £74,000 on outside consultancy to prepare for just one Public Accounts Committee hearing? If that is the case, the Department might want to lead from the front on efficiency.

Mr Dorrell: I am sure that my hon. Friend will forgive me if, faced with an estimate of £103 billion, I do not go through every £70,000 of expenditure. However, he has made his point.

This is where I believe the Committee has held the Government to account, although not always comfortably for the Government of the day. There is no solution to the Nicholson challenge purely through adjusting the numbers—to use a non-emotive phrase. It has been reported to the Committee that in the first two years of the Nicholson challenge, 73% of the efficiencies that have so far been delivered are attributable as follows: 16% to pay freezes, which is the point made by my hon. Friend the Member for St Ives (Andrew George)—yes, holding down wages does reduce the cost of delivery and is, in the short term, a form of economic efficiency, but it is not a long-term solution to the Nicholson challenge—and, most implausibly, 45% to just changing the tariff between the commissioner and the provider. That is not an efficiency; that is an internal transfer, a bookkeeping entry, accounting, make believe. Another 12% over the two years is put down as “other”, which is an old accounting technique for concealing not very much, usually.

John Pugh (Southport) (LD): Was the right hon. Gentleman able to establish exactly how much was saved through smarter and better procurement?

Mr Dorrell: That is not listed, and so is probably among “other” and is not very much towards £5 billion. The 4% efficiency gain translates to £5 billion of recorded savings. The two biggest items are £2.5 billion through tariff efficiency and £850 million through pay freezes. We have not yet made much progress towards the process of reimagining care which, from a Committee standpoint, we regard as so important.

I do not propose to detain the House by going through the detail of what reimagined care needs to look like, but the headlines are clear and becoming

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increasingly familiar. It is complete nonsense for us to imagine that community health and care can be provided efficiently to a high quality if we retain the distinction between primary health care, community health care and social care. Primary care is divorced from community health care purely as a result of a political fix by Nye Bevan and the British Medical Association in 1947. I was not born in 1947—indeed, not many Members were born in 1947. How much longer do we have to live with the structural absurdity that was not even a plan in 1947? It does not look like much of a plan now. Reimagining high-quality efficient care to enable people to live longer, healthier and fuller lives and avoid going to hospital unnecessarily is the core challenge that the Committee believes needs to be put at the door of policy makers in the Department of Health and in NHS England.

I will conclude by picking out two key recommendations from the Committee’s report, and I am pleased to be able to say that one has been picked up by the Opposition. I am pleased to endorse their policy of developing the role of the health and wellbeing boards—created by my right hon. Friend the Member for South Cambridgeshire (Mr Lansley), the former Secretary of State for Health—as the agencies best placed to develop genuine reimagination at local level of what fully integrated, joined-up health and social care should look like. It is often described as the Burnham plan. I am happy to endorse it, because the Select Committee wrote it first and we did it building on the institution created by the coalition through the Health and Social Care Act 2012. I strongly endorse the development of the health and wellbeing boards, and so, I believe, do my colleagues on the Committee.

Joining up budgets and creating single commissioning budgets through the health and wellbeing boards is only part of the answer if that single budget then allows resources to leech away through the local authority system without checks on the limits of the definition of the services that are being secured. That is why our report recommends not just joined-up budgets and the development of the health and wellbeing boards, but an extension of the ring fence, which so many of my colleagues on the Conservative Benches do not like, so that it covers not just NHS spend but social care spend too. We did that because it makes no sense to make the case for a single health and care system, and then imagine that transfer of resource out of the NHS budget into the social care budget as free to be spent anywhere else in the local authority world.

The commitment to a ring fence makes sense only in the context of a single integrated service if it covers the whole of the integrated service. That is why I strongly welcome the announcement made by my right hon. Friend the Secretary of State for Health that increased resources from the NHS budget would be made available to social care, but only—as he made clear to the Committee yesterday—subject to that resource transfer first satisfying NHS England and Ministers, who are ultimately accountable to this House, that it will be used for social care and not for other local authority services.

I have sought to identify what I regard as the key issue facing the health and care system—the Nicholson challenge—and to recognise that it is not just about economics, but about quality. The only way we can respond to those two challenges is by rethinking a set of institutions that grew up for a different world and a different time. I welcome the fact that the Committee’s

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recommendations and analysis, which have been developed over three years, have been endorsed both by Labour Front Benchers, who have picked up our proposal on health and wellbeing boards, and by the coalition in the announcement my right hon. Friend the Secretary of State made last week about resource transfer, subject to an effective ministerial guarantee of a ring fence. If the Select Committee has done nothing else, it has identified common ground on which those on the Front Benches seem to be gathering.

2.37 pm

Barbara Keeley (Worsley and Eccles South) (Lab): I thank the Chair of the Select Committee, the right hon. Member for Charnwood (Mr Dorrell), for the way he opened the debate.

The context of our debate on public expenditure for health and care is, as we have heard, not just the substantial upward cost pressure on the NHS, but substantial cuts to the budgets of local councils, which are affecting their social care budgets. Adult social care directors tell us that £2.7 billion has been cut from care budgets since 2011, representing a significant 20% of those budgets. That level of cuts now means actual service reductions, as well as increased charges for service users—a fact brought home to me week in, week out by the cases I am now seeing in my constituency. My local authority of Salford had maintained eligibility criteria of “moderate” until this year and has been pushed by cuts into changing it to “substantial”. That is very sad.

Often what are described as efficiency savings in social care budget cuts are actually cuts to the fees paid to care providers. Some 45% of the adult social care directors polled by the Association of Directors of Adult Social Services said that they did not increase fees to care homes to cover inflation this year, while nearly half said that providers in their areas were now facing financial difficulties as a result of savings made in fees paid to councils. In many cases, this has led to the poor care that we have had described in so many reports, and to which the right hon. Member for Charnwood has just referred. We hear of care tasks timed down to the minute, and paid care workers earning less than the minimum wage because they are not paid for travel time or costs.

The social care directors also warned that worse cuts are still to come, given that further cuts to local council budgets are still planned. Sandie Keene, the president of ADASS, warned Ministers that further cuts could have seriously adverse consequences for families. She said:

“it is absolutely clear that all the ingenuity and skill that we have brought to cushioning vulnerable people as far as possible from the effects of the economic circumstances cannot be stretched any further, and that some of the people we have responsibilities for may be affected by serious reductions in service—with more in the pipeline over the next two years.”

Not surprisingly, the Local Government Association has warned the Government that they need to ensure protection for adult social care in future. Zoe Patrick, chair of the LGA’s community wellbeing board—so perhaps the most senior wellbeing board in the country—has said:

“We need an urgent injection of money to meet rising demand in the short term and radical reform of the way adult social care is paid for and delivered in future, or things will get much worse.”

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Both the LGA and the Society of Local Authority Chief Executives have warned that the planned cuts will get in the way of implementing the Dilnot proposals and the measures in the Care Bill. They also say that the Government’s impact assessment for the Bill significantly underestimated the likely cost to councils of the new duties under the Bill—an issue that came up repeatedly on the Joint Committee considering the draft Bill. I hope that as the Care Bill makes it way through Parliament—and certainly by the time it reaches the Commons—issues to do with the cost on local authorities will be dealt with.

Some £1 billion of funds from NHS budgets was earmarked for transfer to councils responsible for adult social services in the 2010 comprehensive spending review. However, three years into a four-year process, much of the funding continues to be spent in a short-term way—there was much focus in our report on that fact—and not on the systemic transformation that social care needs if it is to ensure sustainable services in future. Let me give an example. Of the £648 million transferred in 2011-12, 18% was used just to maintain eligibility criteria, with £284 million spent on offsetting pressures and cuts to services and another £149 million allocated to working budgets. As we have heard, that is not the sort of systemic transformation that the Health Committee would like to start seeing.

Of course, this firefighting is not surprising given the cuts to local council budgets, which I have touched on, but it is not sustainable if our aim overall is the transformation necessary to achieve the integration of health and care services. We have seen a downward spiral in social care funding. It is clear that more must be done to move from using scarce resources when they are allocated as a sticking plaster to cover the costs. They should instead be used to build more joined-up services. With another £2 billion a year moving from the health budget to social care from 2015, it is extremely important that we start to get this right. I fully support the call made in the Committee’s report for a ring fence to protect social care funding. That is important.

As for health spending, the Department of Health says that it managed to save £5.8 billion in 2011-12, but evidence provided to our Committee by the National Audit Office shows that much of that was made through one-off savings, such as pay restraint and other staff cost savings, reducing payments to NHS providers and some savings that were truly one-off, such as land sales, which cannot be repeated. Those savings are not sustainable and cannot continue in the long term. There is an argument, which we keep coming back to, that a lead needs to be taken as soon as possible to transform how services are delivered.

I welcome the suggestion of a pooled budget for health and social care services to help older and disabled people. I see that as a move in the right direction. Indeed, the shadow Health Secretary, my right hon. Friend the Member for Leigh (Andy Burnham), has repeatedly made the point that integration is the future direction of health and social care. Mike Farrar, the chief executive of the NHS Confederation—I guess this was the expression of an NHS view—said of pooled budgets:

“This allocation should help address the need to join up services and provide the right care for people, allowing them to

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stay in their own homes. But NHS organisations will want to have strong assurances that the money going to social care does the job it is meant to do.

Rather than see local health and social care budgets as separate, we need to support integrated care by bringing together providers and commissioners to look at how we can spend our money to the best effect.”

That must be what we start to see.

Creating joint budgets has the potential to facilitate a move towards more joined-up working, but as the right hon. Member for Charnwood outlined, there need to be safeguards. In fact, we need to be clear that the money intended for social care should definitely be spent on it. Labour’s whole-person care approach is a vision for a truly integrated service—not just battling disease and infirmity, but aspiring to give people a complete state of well-being across all the services, physical, mental and social. Shared budgets are one small step towards that, but we want to see a people-centred service, strengthening and extending the NHS in this century, not whittling it away.

Let me turn to the long-term funding of social care to avoid catastrophic costs falling on certain groups of people, particularly those with long-term conditions or dementia. Support will be given in such a way that people must meet thresholds and a spending cap. First, people must meet eligibility criteria, which, we know now, the Government plan to set at the “substantial” level. Secondly, they must fall below a means-tested threshold. I understand that the upper level is to be set at £100,000, but the lower level is still set at £14,250, with an assumption that assets between those thresholds attract interest, which affects the calculation of social care funding.

After all that there is the cap, set at the—in my view—high level of £72,000, plus accommodation costs of £12,000 a year. I feel that the £72,000 that individuals must contribute to their care before they exceed the cap is not as it seems. That is how the figure is expressed, but the metering will take account only of the costs that the council would pay for care. Many thousands of families are already paying a top-up for care. Cuts to council budgets, which I touched on earlier, will continue to depress the rate at which they pay towards providers, yet that is the rate that would be taken into account in the calculation of the metering.

My hon. Friend the Member for Leicester West (Liz Kendall) has analysed the plans and said that

“families will face losing even more of their homes than they do now”.

Since she pointed that out, we have learned that in 2016, with accommodation costs of £12,000 a year and councils at that point paying about £500 a week, it would take about five years to reach the care cap. Even at that point, we now know that care needs would have to be at the “substantial” level. Families using nursing homes charging more than the local authority rate will therefore have to pay the extra cost, as they do now.

I have had constituents paying £40,000, plus interest, for care costs, which were taken out of the value of their home, which was eventually sold for only £60,000. There are people in my local authority area who have homes valued at only the £50,000, £60,000 or £70,000 mark who surely will look at the cap set by the Government and think that it would help them. It is unfair not to tell people that what they think is a cap set at £72,000 will, for many of them, turn out to be much higher.

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The Health Committee has committed to look at the implications of the Government setting the cap at a level higher than that recommended by the Dilnot commission. I hope that the review shows that this is not a policy to brag about straightforwardly, as the Prime Minister did today. I understand that the number of people likely to be helped by a cap set at that level is around 110,000. I am sure that many people would be surprised by that low figure. However, I am pleased that the direction of travel for Government policy is towards what the Health Committee has repeatedly set out in its reports on social care and the whole-person approach set out by my right hon. Friend the Member for Leigh. Pooled or joint budgets are a small step on the way. I hope that Government policy will start to move further towards addressing some of the other vital issues in social care that I have outlined. Unless we solve those issues in social care, we cannot move forward on the whole picture.

2.48 pm

David Tredinnick (Bosworth) (Con): I wish to run through some of the points in our report for the benefit of the House and to suggest that there is one area of supply to the health service that is not being considered enough. At the moment we have two legs on the stool, rather than three.

Before I do that, I would like to congratulate my right hon. Friend the Member for Charnwood (Mr Dorrell)—I used to know him as the Member for Loughborough, which might cause some confusion—on his speech. He is ever modest to say that the Committee came up with the term “Nicholson challenge”. I firmly remember that it was he who came up with it. It is absolutely to his credit that, as a former Treasury Minister, he has focused absolutely on the costs; and here we are today, addressing estimates and how we deal with the ever-increasing demand for health services.

Although they have come up already, there are a couple of points that we must bear in mind. They include the devastating impact of the potential 6p on income tax if we do not get this right and the difficulties—although some of my hon. Friends might dispute this—of achieving a 4% efficiency gain.

We have seen the impossibility of solving the problem through public sector pay restraint alone, and tinkering with tariffs is another issue. How do we cope with that? Tinkering with the tariffs will not solve the problem; we have to go for a full integration of services. That issue was well illustrated by the ghastliness of the Mid Staffs experience, the Winterbourne experience and the Morecambe Bay experience—those unbelievable failures in the health service. Apart from the financial requirements, that points us in the direction of the importance of delivering improved services through integration.

We really must focus on structures and the delivery of care. The primary response of the NHS to the Nicholson challenge should be, as the Committee said, to prioritise fundamental service redesign. That will lead to better quality care for more NHS patients. Paragraph 82 of the Committee’s report states that it is

“inconceivable that this performance can be delivered—together with quality improvement that is…required—if planning proceeds within traditional silos.”

We have to break down the old system and start afresh.

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Of course, the Health and Social Care Act 2012 is the foundation of this new approach. It is a Bill that had a somewhat tortuous passage through the House, with some reconfiguration, but it has delivered enormous opportunities. Yesterday, when the Health Secretary came to the Health Select Committee, I was struck when he explained to us the savings that the 2012 Act has already achieved. Although the reconfiguration is hugely costly in itself, running to over £1 billion, the fact is that the savings are already in place. My right hon. Friend the Member for Charnwood highlighted the importance of bearing down on costs, and this is already being realised through the reconstruction that the Health and Social Care Act 2012 has provided.

The Conservative party is ever the party of choice, and we made it quite clear—in deference to my Liberal colleagues I should say that the coalition made it clear—that we want patient choice. That is essential. Through the Health and Social Care Act 2012, the health and wellbeing boards and personal budgets—they are somewhat overlooked but have proved to be incredibly successful—we have the structure to provide for patient choice.

What we have not really addressed or seen yet is what the patients will choose to ask for. There is a supply-side issue here in the range of services, treatments and therapies that are—or are not—currently available through the health service. If we are further to reduce costs, and broaden choice, we are going to have to put what I would describe as the third leg on the stool. We have the integration of health and social care, but what is also important is the integration of the range of therapies available in this country that are not necessarily statutorily regulated and available within the health service as we speak.

You may recall, Madam Deputy Speaker, that many years ago I had the honour of serving on the Committees considering the osteopathy and chiropractic Bills, which subsequently became Acts. That legislation which brought statutory regulation to osteopathy and chiropractic, brought them more fully into the mainstream health service. The Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter)is, I am reliably informed, tasked with dealing with the next great challenge, which is herbal medicine. He may not be overwhelmingly delighted to know that there is a one and a half hour Adjournment debate next Tuesday in Westminster Hall, where we will discuss this issue in some detail.

When we talk about 13-year spans in this place, it usually refers to 13 years of Conservative government. It has also been 13 years, however, since the House of Lords Science and Technology Committee report on complementary medicine, which recommended the statutory regulation of herbal practitioners. We must address this issue, as we will next Tuesday in some detail, but let me set out the stall by pointing out that three quarters of the population are using herbal medicine, homeopathy or other types of alternative medicine.

Steve McCabe (Birmingham, Selly Oak) (Lab): The hon. Gentleman mentions 13 years, but it is only three years since the House of Commons Science and Technology Committee delivered a damning report, saying that there was no evidence base for homeopathy at all. Does the hon. Gentleman think that we should address that before we try to use precious NHS resources in this way?

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David Tredinnick: There are two separate issues here: herbal medicine and homeopathic medicine. The Science and Technology report was very controversial. I now have the honour to serve on the Science and Technology Committee, and we have been looking at these issues. Let me tell the hon. Gentleman that in France, 70% of the population and all pregnant women use homeopathy. Some doctors are trained in both types of medicine, and they tend to prescribe fewer allopathic drugs for their patients, which works out much cheaper. There is a lot of research to be done on that. Homeopathy is, of course, widely used across the world, including in the United States and in India. I think this country has a lot of catching up to do. That is why, as I said to the Secretary of State yesterday, I have stuck with this issue over the years.

I would also say to the hon. Member for Birmingham, Selly Oak (Steve McCabe) that there is a huge injustice here. Just as we had racial prejudice in the past, we seem to have a similar kind of prejudice here based on the worst possible “turf war” considerations. I think I had better leave it there, Madam Deputy Speaker, as I might be indulging your patience.

The former Secretary of State for Health said in 2011 that he thought statutory regulation was the way forward. I have to say to my hon. Friend the Under-Secretary that he should consider going down the route of the Health and Care Professions Council; I think there is some talk about the Professional Standards Authority. As the Minister reflects on the challenge he faces, he should remember that many people in this country are affected by this, and that we are looking to him to come up with a workable solution.

I leave him with one thought on this subject. By chance, I spoke in a recent meeting to Lord Wilson of Tillyorn, the last but one Governor of Hong Kong. He brought statutory regulation of herbal medicines into Hong Kong. He said that he did so not just because it was better to have a properly regulated discipline that would help to avoid the misuse of prescribing, but also because of the turf war between the medical establishment and the herbal community. I think that there is a real danger—I shall expand on it next week—of the Minister being pressurised by people who are doing so only because of vested interests, which I think is very sad.

I applaud the direction in which my right hon. Friend the Member for Charnwood has taken our Select Committee in focusing on the need to bear down on costs in the health service and to shine a bright light on this phenomenally difficult challenge of increasing demand and how we pay for it. I have suggested that while it is brilliant to have the integration of health and social care, if we are to satisfy the demands of people—through the different boards under the Health and Social Care Act 2012 and through personal budgets—we are going to have to look more seriously at the other therapies that are available but are not regulated or brought into the health service. The Minister really must try to grasp the importance of herbal medicine because practitioners cannot get the supplies they need to be able to practise as they should. I wish him well in his endeavours.

2.59 pm

Grahame M. Morris (Easington) (Lab): It is always a pleasure to follow the right hon. Member for Charnwood (Mr Dorrell) who chairs the Health Committee with

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such authority and distinction. He gave a thoughtful and helpful explanation of the Committee’s report, and made some suggestions about integrating commissioning and budgets. My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) and the hon. Member for Bosworth (David Tredinnick) also highlighted several issues, and I am proud to serve with them on the Health Committee.

We need to look at the background of what is happening because in many respects, the Government have created a situation in which the NHS is in crisis. I often refer to how we measure satisfaction with the national health service, and one established measure was the public satisfaction survey. We have seen a record fall in public satisfaction with the NHS under this Government.

The hon. Member for Bosworth referred to evidence that the Secretary of State gave yesterday to the Health Committee, in which he cited the cost savings that reorganisation had brought about. However, we must also think about some of the hidden costs of that reorganisation such as clinicians’ time. How many clinicians carrying out a management function in clinical commissioning groups in other providers find that their time is not accounted for properly? What about the opportunity cost in skills and training applied for the benefit of patients if those clinicians are engaged in a management capacity? What about the loss of experience for managers at every level? Some people may have spent a number of years working in the health service and taken an interest in structures, but we seem to be going round in circles. We broke up what we described as large monolithic structures, formed separate mental health trusts and separated community services. It seems that the wheel has now turned full circle and we are realising the benefits of efficiencies of scale and integration.

With the new structure, however, we have lost some management expertise in commissioning, organising and troubleshooting—again, that point was highlighted effectively by the Health Committee. The Secretary of State and his team respond that there has been a cost saving, but in fact the vacuum had to be filled by new structures. Strategic health authorities—an unloved institution—were swept away, but local area teams were created. It is necessary to have a strategic dimension to plan health care, particularly restructurings and reorganisations.

In my view and, I suspect, for many Members across the House, this top-down reorganisation—it was not initiated by people on the ground—has impacted on front-line services and resulted in considerable expense and disruption at a time when the NHS is facing unprecedented pressures due to budgetary constraints and growing demands on the service. We have seen that manifested at the coal face, the fulcrum, in the crisis in accident and emergency departments. Unless we seriously address those issues, there is a risk to the long-term financial stability of the NHS.

Yesterday in Committee I put on the record a rather controversial point about the Government’s claim to be maintaining funding in real terms, despite NHS inflation, which is higher than inflation in the normal economy. As right hon. and hon. Members have said, there are also a number of financial manoeuvrings—I do not know whether that is an accounting term. One concern relates to how the underspend is reallocated or returned

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to the Treasury, and I suspect that despite assurances from Ministers, we have seen an actual reduction in funding.

Let me draw the House’s attention once more to the letter sent to the Secretary of State by Andrew Dilnot CBE, chair of the UK Statistics Authority, following representations by my right hon. Friend the Member for Leigh (Andy Burnham). Mr Dilnot wrote that

“we would conclude that expenditure on the NHS in real terms was lower in 2011-12 than it was in 2009-10.”

Mr Dorrell rose

Grahame M. Morris: The right hon. Gentleman has risen to the bait and I will happily give way.

Mr Dorrell: The hon. Gentleman might like to read the next sentence from the same letter.

Grahame M. Morris: I am grateful for that. We have argued for a number of months about the real position, and we have had a number of debates in the House about whether there has been a real-terms increase or a small decrease. I heard the arguments about NHS inflation and so on as recently as yesterday.

Mr Dorrell: The next sentence.

Grahame M. Morris: I will not read that out because I will come on to the issue in a moment. First I want to talk about integration, so I will press on. Statistics published in Public Spending Statistics in July 2012 show that real expenditure on the NHS fell by 0.02% in 2011-12 and 0.69% in the fiscal year before that. I understand that those are small percentages, but we are dealing with a budget of £105 billion, including the capital element, and I think the public would be concerned because those sums are not insignificant. Those percentages equate to £740 million over two years, and we should think about what that money could buy. In my area, one of the first schemes to be cancelled when the coalition came to power was a new hospital. It was not funded through a private finance initiative but through Department of Health capital resources. That hospital would have cost £464 million, but we are still waiting for it. The figures I mentioned would have built two such hospitals.

Mr David Ward (Bradford East) (LD): When talking about budgets, the focus is all on integrating health with social care, so we cannot really consider the overall picture unless we also look at local authority budgets.

Grahame M. Morris: That is an excellent point, and my hon. Friend the Member for Worsley and Eccles South mentioned evidence presented to the Health Committee that showed that £2.7 billion of expenditure or allocations has been removed from local government budgets and social care. That has had a huge impact on the service and resulted in changes to eligibility and thresholds, and charges for transport and other things.

Mr Jim Cunningham (Coventry South) (Lab): I apologise to my hon. Friend for arriving a minute after the start of his speech. The hon. Member for Bradford East (Mr Ward) raised an interesting point about social care, particularly in relation to local authorities. Given the one-third cut, plus the 10% cut, in those budgets, I see a major

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problem for local authorities in buying care for elderly people. Indeed, it has been a major problem over the past two or three years.

Grahame M. Morris: That is an excellent point. I am sure that Members across the Chamber will have experience of that. On Friday gone, we had a crisis meeting of the county MPs and senior politicians in my local authority area of County Durham to determine how to cope with a further tranche of cuts. The situation is becoming serious. It is said that the allocations have been ring-fenced, but the local authorities’ discretionary spend is all being absorbed into social care and expenditure for children and the elderly, and there is very little room for manoeuvre.

Mr Kevan Jones (North Durham) (Lab): Will my hon. Friend give way?

Grahame M. Morris: I will give way to my hon. Friend.

Madam Deputy Speaker (Dawn Primarolo): Order. The hon. Member for North Durham (Mr Jones) has only just come into the Chamber. Interventions are normally about facilitating those who have heard the debate, and it is not appropriate just to walk in and intervene. The hon. Gentleman is experienced enough to know that that is the case.

Grahame M. Morris: Okay—

Mr Jones: Will my hon. Friend give way?

Grahame M. Morris: Am I allowed to give way to my hon. Friend, Madam Deputy Speaker?

Madam Deputy Speaker: This is a timed debate. The courtesies of the House, which have been circulated to Members of Parliament a number of times, are not about walking in, spending a few minutes in here, then intervening. Of course the hon. Member for Easington (Grahame M. Morris) can give way if he chooses to do so, but he might want to bear in mind that other Members who have been in the Chamber for some time are still waiting to speak. That was the point I was making.

Grahame M. Morris: With all due respect, Madam Deputy Speaker, I know that my hon. Friend was at the same meeting as me on Friday, and he will probably have a relevant point to make about that, so if you do not mind, I will give way to him.

Mr Jones: With respect to the Deputy Speaker, the point I wanted to make was that at the meeting last Friday we were told that Durham county council has to take £210 million out of its budget. Does my hon. Friend think that areas such as ours, which has a growing elderly population, will face more pressure than some others?

Grahame M. Morris: Absolutely. The pressures are becoming intolerable. Some of our great northern cities, such as Liverpool and Middlesbrough, seem to be shouldering a disproportionate share of the cuts, and it is a difficult task to try to balance the budgets and deliver the services that people require. There has been a

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discussion about whether the councils are in a position even to deliver their statutory requirements.

As the right hon. Member for Charnwood said, the NHS has been set productivity targets of 4% per year, as the Government seek to make savings of £20 billion over the lifetime of this Parliament. As the report identifies, the Government believe that those savings can be made in part by prioritising competition over co-operation. I find that questionable, and we need a cost-benefit analysis of the consequences in regard to the value for money of outsourcing. There has been a lot of criticism of PFI schemes, and questions have been asked about whether they provide value for money for the public purse. To date, efficiencies have largely been achieved by freezing staff salaries and cutting the tariffs paid to NHS providers. Neither of those is sustainable, and both fail to meet the spirit, if not the letter, of the Nicholson challenge.

There are signs of falling morale in the NHS, and that is due in no small part to the Government’s attacks on pay, pensions and conditions of service. It is not helpful that Ministers seek to blame NHS staff for problems caused by the Government’s cuts and reforms. These are not the innovative changes that we need to see from a restructured NHS. In the main, we are seeing the picking of low-hanging fruit. Some of the cuts are rash and damaging, and they are being made to satisfy the Government’s need for cuts across the board.

I understand that the current Secretary of State for Health has joined his predecessor in receiving a vote of no confidence from the health care professionals at the British Medical Association conference. I only hope that the next Secretary of State for Health will seek to work with health care professionals, not against them.

The NHS Confederation’s survey of NHS chief executives indicated that 74% of respondents believed that the NHS’s financial situation was either the worst they had ever seen or “very serious”. Despite the Government’s claim to have ring-fenced funding, which has been called into question, NHS executives are not confident that the situation they face is good for their organisations or their patients, with 85% expecting things to get worse in the next fiscal year.

There is no doubt—the figures are there in the report—that the NHS is facing the biggest financial challenge for a generation, as a result of unprecedented demographic changes, an increasing demand for health and care services, co-morbidities, and people living longer with chronic illnesses such as diabetes and dementia. The Nuffield Trust has warned that, unless we improve the way in which services are delivered, growing care needs will result in a shortfall of up to £29 billion a year in NHS funding by 2020.

The NHS faces new challenges in the 21st century. The last Labour Government corrected the chronic under-investment following 18 years of the previous Conservative Government. Investment in the NHS trebled under Labour. We built more than 100 new hospitals, replaced much of the ageing infrastructure, and developed the new walk-in centres, primary care centres and a new generation of modern community hospitals. There were extended GP opening hours, and more doctors and nurses than ever before.

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Mr Jim Cunningham: Does my hon. Friend agree that, unless something realistic is done about the health service, we could find ourselves back in a pre-1997 situation, with a shortage of beds and with people sleeping on trolleys?

Grahame M. Morris: I am grateful to my hon. Friend for that intervention. There is certainly a crisis in emergency care. The causes of that are multi-faceted, and I certainly do not agree with the Secretary of State’s analysis that it is simply the result of the change in the GP contract in 2006. Some of his comments to that effect have caused great offence to the medical profession. We are in crisis in many respects, including in the area of recruitment. It has been pointed out in recent evidence to the Select Committee that the NHS is not recruiting enough people into emergency care, or enough GPs. We are storing up bigger problems for the future if we do not have the necessary cohorts of trainees going through medical school.

A new approach is needed if we are to meet today’s challenge of the rising demand for health care in an ageing society. We will certainly need more co-operation, not more competition. We will need to see the integration of health and social care services, not more fragmentation, and we will need more whole-person care. In many respects, the Government’s reforms will make that harder, with markets fragmenting services and an open-tendering free-for-all meaning more providers dealing with smaller elements of a person’s care, without the necessary overall co-ordination.

We know about joint budgets. We have seen the Government transfer resources from the NHS to social care. However, what we need is a single budget. I should like to see a national health and care service, a co-ordinated service that focuses on an individual’s physical, mental and social care needs from home to hospital. We need a new focus on prevention: people who are at risk of being admitted to hospital should be identified and supported in their homes. The Select Committee has been looking into the policies and interventions that have enabled that to be done in other countries. We need to end costly migrations from home to hospital, and from there to expensive care homes where, in many cases, the individual must bear a huge financial burden. That is good for neither the taxpayer nor the individual. The integration of services will allow significant savings to be made. Investment in early intervention will limit more costly hospital admissions, as well as helping people to lead healthier lives.

There is a real choice. While the coalition Government are pushing for a free market in health care, Labour is calling for the full integration of health and care services. While the coalition talks of choice, it is delivering fragmentation. In contrast, Labour supports co-operation between doctors, nurses, social workers and therapists, all working together with a single point of contact.

There are huge risks, and the first news stories about them are beginning to surface. If we do not deal with the present situation, the need for fees may arise, and we may end up with a two-tier system. Top-up payments for treatment may be required, especially as more private companies enter the market. We may even see the re-emergence of an insurance-based free-market private health care system. I believe that we should remain true

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to the founding principle of the NHS: that it should be a health service funded from general taxation and provided free at the point of use. Ministers may shake their heads, but they should remember their last promise, that there would be no more top-down reorganisations.

The NHS, whose 65th birthday we celebrate this weekend, is Labour’s greatest achievement. We created it, we protected it, and we saved it after years of Tory neglect and under-investment. We must continue to protect and transform our most cherished public service, so that we can meet the challenges that we face in the future.

3.22 pm

John Pugh (Southport) (LD): It is an honour to follow the hon. Member for Easington (Grahame M. Morris). We all appreciate his style, even if we do not share his conclusions and his fears. Let me also congratulate the right hon. Member for Charnwood (Mr Dorrell) on the Health Committee’s excellent report. Indeed, I congratulate all the Committee’s members, who must be among the most diligent and assiduous members of any Select Committee in the House, and many of whom are in the Chamber now.

On the occasion of our last debate on the estimates, I made the huge strategic mistake of trying to talk about the estimates, and was ruled out of order for doing so. That was a schoolboy error. I shall therefore draw a veil over the £50 billion of expenditure that we are notionally considering, and limit myself to a few brief observations.

The bottom line is that the NHS faces huge demographic and financial problems. Having wasted two years reorganising it, we have now secured universal agreement on what we must do. The way forward seems clear to me, and it seems good. We must integrate care, reduce the cost burdens on the acute sector, and remodel the acute sector to allow that to happen. We must encourage self-management and co-management of chronic disease. As was pointed out by the hon. Member for Easington, we must encourage local co-operation. We must share data: that is very important, but it has not been mentioned so far. We must pool resources—that has been mentioned—and develop networks for the treatment of strokes, cardiac conditions, cancer and so on. No one disagrees in the slightest with that analysis.

There is general support for personal health budgets, which were mentioned by the hon. Member for Bosworth (David Tredinnick), although it is not entirely clear whether they will complicate or solve the financial challenges that we face. There are other no-brainers on which we happily agree. We want to encourage medical research, and we want better public health.

The goal is clear, and there is little argument about it in the Select Committee or in the House. What is not clear, however, is exactly how all this is going to happen. We refer frequently to a string of laudable actions: empowering patients, conducting pilots, providing incentives for integration and co-operation, issuing mandates—that is rather a new thing—setting quality standards, establishing frameworks, and commissioning services. A word that we do not use much however—although it was heard in the speech of the hon. Member for Easington—is “management”. That has become almost a discredited word. We talk about disease management, but we are less happy to talk about system management, except

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when we talk about micro-management. The sin of non-delegation is clearly a bad thing, but references to management tend to occur only in that context. We boast about culling managers, but what we need now is good executive management. If we are to implement the aims to which we have all signed up, we shall need not more managers, but better management and better managers.

Ministers, and Governments in general—all Governments—have recently been rather good at thinking up policies, making announcements and changing structures, labels and names, but at times they appear to have forgotten that the main business of Government is to govern, and to engage in the day-to-day business of making things happen. They neglect the day job, or become unaware of the need to carry it out. That is the reason for the constant gap between announcement and delivery. That is why there is all the teasing at Prime Minister’s Question Time about programmes that are announced but not implemented.

I was delighted when the Secretary of State sent Department of Health officials into hospitals for work experience, so that they could observe real-time implementation. The Under-Secretary of State himself has real experience of hospitals, and knows what it is like to suffer under the policy mandates of a variety of Governments. However, there is a vacuum at the moment. There is a lack of local levers, which prevents us from achieving the integration at local level that we want. There is a gap in local leadership, especially when it comes to making integration happen. There are more organisations around, but there is less strategic control and command. As we heard from the hon. Member for Easington, the strategic health authorities have gone.

When taken to task about problems of that kind, many people—including, possibly, the members of the Health Committee—cite the health and wellbeing boards, saying that they are crucial to making it all happen and bringing it all together. I wish them luck and I hope that they can do that, but they are a variable mix at present. They are not kitted out or resourced to be proper health boards. They have no genuine executive power, no budget and no real authority.

We need people who can get the local networks right, get the parts of the NHS machine working together, and ensure that procurement is organised rationally, data are shared, resources are pooled and good practice is spread. We need people who can get a grip on the new agenda and see it through. However, on the current landscape, it is not obvious who those people are, or whether they have the capacity to do what is needed.

3.28 pm

Steve McCabe (Birmingham, Selly Oak) (Lab): I recognise that there is almost no prospect of a return to the 4% annual rises in the health economy that we had got used to, and the right hon. Member for Charnwood (Mr Dorrell) explained the impact on income tax of such a move. The Institute for Fiscal Studies reported that to return to that would require a budget freeze on every other Government Department for the foreseeable future, even allowing for significant growth in our economy. We have to recognise that the NHS will have to make do, therefore.

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The NHS is currently halfway through finding efficiency savings of more than £16 billion up to 2016. The savings are coming primarily from pay restraint, administrative cuts and reductions in centrally determined payments. In the long run, pay restraint may lead to a shortage of essential staff and, of course, poor pay and conditions is a factor in the poor-quality social and residential care we already see. As my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) pointed out, social services directors say that reductions in payments to care providers are leading to a fall in the quality of the care they are able to commission, and that often leads to a cycle of admissions to hospital.

Although it is politically convenient to scapegoat administrators, even the Minister must recognise that there is a limit to efficiency savings in administration. In these circumstances, the decision to waste so much on a top-down reorganisation now looks a little stupid.

Richard Fuller: The hon. Gentleman has raised the issue of low pay in certain sectors. He will know from the evidence of the Select Committee report that 16 of the 42 trusts stated that pay amounts to at least 50% of the total cost pressures. Does he think there is a case throughout the NHS for looking at managing down the pay of the more highly paid, so that those on the bottom can get higher increases?

Steve McCabe: There is some merit in looking at that, but when the people at the top end are scarce, we must be careful not to lose them to other countries. That is a challenge.

Today’s announcement about charging foreign nationals was strange in the sense that it seems to undercut existing private providers such as BUPA. I am not quite clear how that will save money. I fear it is the kind of posturing that may well end up costing us money, rather than saving money.

Like others, I welcome the Chancellor’s decision to allocate £3.8 billion to the joint NHS social care budget, but I would like to know an awful lot more about how it will be allocated and spent. In particular, I would like to know how the Minister hopes to measure its impact on medical services such as accident and emergency and hospital beds.

I would like us to have a statement on the proposed pathfinder integrated care pilots, because many of us are curious to know where that is going. It seems to me that there is not an awful lot of point in proclaiming the virtues of pooled budgets unless we know exactly what the Secretary of State thinks he is going to achieve. We have an idea from the Health Committee about where it thinks that might go, and the shadow Secretary of State has sketched a vision, but so far we have had an announcement from the Chancellor about making money available yet we do not have any idea what the Secretary of State hopes to achieve through that measure.

I would like to make one suggestion to the Minister: he should take a look at the home from hospital care service, which I understand operates in several parts of the country, and which was inspired by the work of Geraldine Amos almost 40 years ago now. In Birmingham, that service helps people move from hospital back into their own home and community and, of course, frees up

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hospital beds. It is quite a limited service in Birmingham at present, as it is currently financed by a grant from Birmingham city council, and I am not sure how much longer that will last, given the pressure on local authority budgets. That is, however, one example of how quite a small amount of money can be used to make quite a big impact in getting people back and settled at home, and trying to stop repeat admissions and bed-blocking. The recent NHS Confederation survey of chairs and chief executives revealed that 50% of respondents believed that the financial pressures have affected waiting times and access in the past 12 months and that 70% believe that waiting times and access will be affected by the continuing financial pressures in the next 12 months. So it is slightly strange that we have heard so little from the Government about how they plan to redesign services so that they are able to unlock more sustainable efficiencies for the future.

Given the answers I have received to some written parliamentary questions, my impression is that far from having a vision for the NHS, Ministers are seeking to evade responsibility for it. I have lost count of the number of written answers I have received advising me to contact this body or that body when I have asked the Minister for basic information and figures. We need a bit more clarity about the Government vision, and local communities and their representatives, including local and national politicians, should be properly engaged in that vision. That is one area where we could all be in it together; we could all be party to some kind of change programme, which would help us to redesign the services and to plan an NHS that will have to operate with fewer resources in future.

My recent experience of trying to obtain straight answers on the future of the NHS walk-in centre at Katie road in my constituency does not fill me with any optimism. Why on earth should clinical commissioning groups be allowed to keep private and secret a report on the future of walk-in centres, given that the report was not even commissioned by them? Why should the local Members of Parliament not be given access to that report? Why on earth set up a body such as HealthWatch if it does not get automatic access to it?

I would really like to know a bit more about that Government vision, and I would be particularly interested to know what they want to do to manage some of the growing pressures to which hon. Members have referred. I would like to know the Government’s policy with regard to the greater prevalence of long-term conditions such as diabetes and dementia. Like the hon. Member for Southport (John Pugh), I think it is hard to see the impact of health and wellbeing boards in that area, not because they are not bringing the right mix of people together, but because their chairmen are currently engaged in a line-by-line review of budgets designed to exclude everything that is not a statutory obligation. It is difficult to see how such bodies will be the ones with vision about long-term conditions when that is the level at which they are currently operating.

The Secretary of State should give a clear commitment to tackling the problem of conflicting incentives in the NHS. Acute trusts are paid for their activity through the tariff, while primary care and community care is paid through block contracts which actually serve as a disincentive to activity. I welcome the news that Monitor and NHS England are to examine this problem, but we need some response to it fairly quickly.

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In conclusion, I recognise that we are discussing the estimates made possible by the economic circumstances of the country, but it remains the responsibility of the Secretary of State to provide vision and leadership for the NHS, even in such difficult times.

3.39 pm

Priti Patel (Witham) (Con): I welcome today’s debate and I, too, want to pay tribute to my right hon. Friend the Member for Charnwood (Mr Dorrell) for his comments. He clearly made some strong and valid points about expectations of the NHS and the required pre-requisite of expectation management. Yes, the debate is about funding and finance, but it is also about some of the significant challenges we face as a society and a country because of our changing demographics and our ageing population.

I pay tribute to the Government for prioritising investment in the NHS and in health and social care and for committing to increase spending on the NHS and health to more than £115 billion for the next comprehensive spending review period. I also welcome the measures they have introduced to focus resources on the front line and in particular to clamp down on NHS bureaucracy—my hon. Friend the Minister will know my views on that. I believe that the importance of making £20 billion of bureaucratic and efficiency savings should not be underestimated.

As we have heard, increasing demand on services requires more spending, but targeted specifically at the front line. In my constituency, a scandalous deficit in health care provision built up while Labour was in power as resources were soaked up by NHS bureaucracy. Across the former East of England strategic health authority, the number of senior managers doubled between 1997 and 2009 from 1,300 to 2,700.

Mr Kevan Jones: Does the hon. Lady think that there has been any sense whatever in the top-down reorganisation? I know that in many areas managers have taken large redundancy payments from primary care trusts only to be re-employed weeks later by GP commissioning groups.

Priti Patel: The answer to the hon. Gentleman’s question is yes. In the east of England, and certainly in Essex, there have been significant changes. The change to the structure has been specifically welcomed because resources are now going to the front line, which, for my constituents, is the most important thing.

The numbers of administrators and managers grew vastly in the PCTs that used to cover my constituency. I am afraid that we did not have one PCT—we had several. The number of managers and senior managers at the Mid Essex primary care trust and its predecessor trust increased tenfold from 10 to 102, while at the North Essex primary care trust the number went up from 25 to 84. By the time the Labour party was kicked out of office by the British public, the proportion of administrative staff had risen to one third, and between those two PCTs something like £25 million was spent on management costs alone—money that could have been much better spent on providing front-line services to my constituents and to constituents elsewhere in Essex and across the eastern region.

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Although bureaucracy increased, health service provision in Witham town suffered as NHS managers completely neglected the area in favour of spending money elsewhere. As a result, Witham town’s GP surgeries are bursting at the seams. Almost 30,000 patients are registered across four practices with just 13.5 full-time equivalent GPs. That means that there are 2,200 patients registered per GP, nearly 50% more than the national average of 1,500 patients per GP.

My constituents report that they are struggling to register with a GP and are facing insufferable delays in getting appointments. One wrote to me, saying:

“Two doctors’ surgeries in Witham have refused to take me on, because the books are closed for new patients.”

Another said that they

“waited 12 days for an appointment with my GP. In the end, I was diagnosed with appendicitis.”

Unfortunately there will only be more such cases, exacerbated not just by our changing demographics but by housing growth, which creates greater pressures on existing practices. On Witham’s Maltings Lane estate, 1,700 new homes will be built, increasing the local population by more than 4,000. Other sites have been identified for development over the next decade, quite rightly bringing new homes and affordable homes to my constituents.

When Labour was in power, opportunities to bring in new medical facilities through section 106 agreements and other funding arrangements were completely spurned by the PCT managers, who neglected and ignored the situation and the strains of a growing population in the community. New GP practices could have been opened and new facilities to provide treatments and assessments could have been brought in to save my constituents from travelling to Chelmsford, Colchester or even Braintree, which involves considerable distances. That demonstrates how patients in my constituency were not being put first. It was bureaucracy that was being put first by the army of bureaucrats in charge of running the local NHS in my part of Essex at that time.

The Minister will understand the legacy of problems left to the town. I also pay tribute to him—like the Secretary of State, he has received a fair amount of correspondence and is well aware of the issues. One of the biggest challenges for the NHS today, with the increased investment that it has, quite rightly, received from the Government, is ensuring that the savings in bureaucracy that this Government are making are reinvested in providing new local health care services in Witham in particular. I hope that my hon. Friend will give a commitment to support our local efforts to increase health care provision in Witham, to ensure that my constituents of today and those of tomorrow, gained through new housing growth in particular, receive and benefit from a 21st century health care service.

With more money than ever being invested in the NHS, it is essential that those who are responsible for spending decisions and run our local NHS are also held to account. Accountability and transparency are key. We in the east of England have had from our ambulance trust the worst ambulance service in the country. It was run by a board of non-executive directors who failed to provide the trust with the leadership, skills and expertise required to address endless shortcomings and delays in ambulances attending to patients. Lives were put at

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risk, but despite the failures, a damning governance review and a “failing” report from the Care Quality Commission, the board bit the bullet and resigned only last Friday morning, following substantial pressure from MPs in the east of the region, including my hon. Friend the Minister, and a Westminster Hall debate last week. The situation was shameful and scandalous, because the board refused to go until the pressure became too much for them.

None of us can avoid the need for accountability and transparency. We have seen in Mid Staffordshire with the Francis review, in Cumbria, in the East of England with our ambulance trust, and now with the Tameside hospital trust—I think the chief executive resigned this afternoon—what can happen when NHS managers and directors get it wrong. They have to be accountable for their failures. Transparency is required. I recognise that the Government are taking this seriously and hope that at the end of the debate my hon. Friend the Minister will give details of steps that will be taken to remove failing directors and managers and, importantly, to replace them with people who have the skills and capabilities to put patients first and to deliver value for money. A huge amount of taxpayers’ money is used to pay for the NHS. It is only right and proper that all of us, including the public, should feel confident that the money is being well spent.

3.48 pm

Dr Phillip Lee (Bracknell) (Con): The nature of this debate is such that one can talk about anything to do with the NHS, be it local or national, in the context of the estimates of costs. The figures in the documents are immense—£1 billion here, £50 billion there; perhaps we need to plant some money trees in this country—and will only increase, as we all know. It has been interesting to listen to Members on both sides of the House this afternoon. Everybody accepts that demands are rising. Obesity is increasing—26% of adults are obese and the proportion is rising—and our population is ageing, so that by 2030 almost 25% of the population will be over 60. On top of that, there are advances in medical technology and the costs thereof to deal with—today’s cancer drugs can cost upwards of £5,000, £6,000 or £7,000 per month per patient.

Given those demands and costs, maintaining the current service will inevitably become nigh on impossible. I sense, even in the Chamber, and certainly outside it, that the public are beginning to realise that. I will say a few words about that before going local and discussing some of the things I have been suggesting in my region, and “region” is the key word here, rather than constituency.

The figures are really quite shocking. It has been suggested that by 2025 around 25% of the NHS budget will be spent on type 1 and type 2 diabetes alone. Only this morning a colleague told me that he had been diagnosed with type 2 diabetes. It affects all groups in society. Around 21% of the population smoke and around 28% of the adult male population drink too much—the figure is about 20% for women.

The number of prescriptions in 2009 was 886 million. The total cost of the NHS drugs budget in 2009 was between £13 billion and £14 billion, and it increases by £600 million each year. We are getting cleverer at inventing

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new drugs and classes of drugs, so I suspect that those costs will continue to increase, because it is human nature for someone to want the very best drug, the drug that will cure their cancer or extend their life.

Cases of dementia are set to double over the next 10 years, which will have a profound impact on health and social care. There will be a huge impact on the economy, as families will increasingly have to spend more time looking after the vulnerable, rather than going to work. The ramifications are immense.

I have detected some recognition in the Chamber today, particularly from my right hon. Friend the Member for Charnwood (Mr Dorrell), that there needs to be some cross-party agreement on this. I suspect that we will be arguing over the next 10 to 15 years about how we pay for health care. I have been brave enough to suggest that relying solely on general taxation to fund health care is not practical in the medium to long term. It is difficult politics—trust me, I saw my Twitter account explode at that point—but I think that we are likely to have a debate on that, and an argument, across the House, and that is as it should be.

However, where we should not disagree is about the way health care is structured in this country. I think that for both parties—it is a plague on both houses—the introduction of the market into hospital health care and the use of private finance initiative contracts, particularly over the past 10 years, has made it extremely difficult to reconfigure hospitals in certain parts of the country, which is unfortunate.

I have also heard that the introduction of competition law and its possible implications with regard to reconfiguration is also looming large in the national health service. Government Front Benchers might want to look at that, because I am persuaded—I have spoken about this on many occasions—that in future we will need fewer acute hospitals but more community hospitals. The majority of care will increasingly be offered closer to home, or indeed in the home, but the clever stuff, such as the life-saving stuff shown in the television series that the BBC is currently broadcasting on Thursdays, cannot and will not be offered in the number of district general hospitals that we currently have. Anybody who thinks that it can be does not understand. I suggest that it is increasingly becoming good politics to save lives, not to defend the indefensible, and I think that Members on both sides of the House should reflect on that.

One example from that television series was a nasty accident involving a head-on collision 30 minutes north of Addenbrooke’s hospital. The injured did not go to the local hospital, which had recently opened, because it could not care for them; they went 30 minutes down the road to be treated at Addenbrooke’s. In other words, a hospital that had been built in the past few years was already not fit for purpose. We should reflect on that.

Reconfiguration is essential, and it has been shown—not least in respect of London stroke services—to save lives and improve care. That should be replicated across the country.

Mr Kevan Jones: The hon. Gentleman is speaking a lot of sense. The stroke unit in the north of County Durham has just been specialised, and the results are already showing the benefits, although in parts of the region there was a lot of opposition to the move.

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Does the hon. Gentleman think that long-term health should be managed not only by doctors but by pharmacists and others, who can play a key role?

Dr Lee: I am pleased that services are improving in County Durham; as the hon. Gentleman knows, I have family roots in his part of the world that go back centuries. I am not persuaded of the role of pharmacies, although I am persuaded of the role of pharmacists. I distinguish between the two because I personally think that all GP surgeries should be dispensing drugs. I do not see why the taxpayer should be subsidising pharmacies.

It is no surprise to me that Boots was the biggest ever private equity buy-out in the history of British industry, given that the taxpayer is outside the front door: “Come here for your amoxicillin, and while you’re here you can get your shampoo, conditioner and royal jelly.” I am not convinced about the role of pharmacies in the longer term; pharmacists most certainly have a role and should be included. Community pharmacists should be checking drugs, particularly when patients have polypharmacy—when they have a multitude of medications, another pair of eyes is always appropriate.

To return to the reconfiguration, in my locality we have a number of district general hospitals. Historically, Bracknell itself has been under-served by acute services since it was created in the late ’50s or early ’60s. We have seen services diminish in the area for a variety of reasons and under Governments of both parties, and we are sensitive about that.

Before I was elected as Member of Parliament for Bracknell—I stress that it was before I was elected—I suggested as part of my campaign that we needed to close hospitals in the area and consolidate to improve clinical outcomes. I am not aware that my result at the election was adversely impacted by that. Having worked in the area as a GP for a number of years and looked after 50,000 patients, I guess that people trusted what I was saying, and I recognise that.

I was trying to argue that we could consolidate acute services on a single site and improve community hospital services in appropriate locations around the region. I stress the word “appropriate”, as the problem is often that, for a variety of legacy reasons, hospitals are in inappropriate locations. They are not often on motorways, but on land bequeathed before the war. In my part of the world, the Astor family bequeathed the land for Heatherwood hospital. The local farmer outside Slough bequeathed some land because his daughter was looked after well. People thought, “Okay, we’ll build a hospital in the middle of a farm field nowhere near the population that it seeks to serve.”

There is a legacy problem. There is some need to close and relocate, while in some parts current locations can be enhanced. In my locality, there is the problem with Heatherwood hospital. I must put on the record something bizarre that frustrates me. It is “blue on blue”; if I was in a defence debate, it would be called friendly fire. The Royal Borough of Windsor and Maidenhead has called for a judicial review of the relocation of a minor injuries unit just three miles down the road, would you believe, to Bracknell—an urban centre in a better location and away from a place opposite the Royal Ascot racecourse. That judicial review will delay the move and cost money. I find that baffling and bizarre. It is evidence of the problem that I guess all

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colleagues of both political colours experience in local politics with regard to health care and trying to change services for the improvement of clinical outcomes, because it is not about cost, although obviously that is a factor, but about improving clinical outcomes. That frustrates me, and I will certainly be dealing with it robustly in local terms. At the moment, it is in the best interests of the general public to have fewer acute hospitals.

Andrew Percy (Brigg and Goole) (Con): My hon. Friend is making an interesting point. Does he agree that in applying solutions such as those he is espousing, we must be careful that we do not apply an urban solution to rural areas? Moving an A and E three miles might be acceptable, but moving it 30 miles would not be acceptable to a lot of us.

Dr Lee: My hon. Friend is right: in a rural location the distances become further. I do not know the particular situation in his region, but I would suggest that there are probably location issues with regard to existing hospitals.

Moving neatly on, that is why—yes, you heard it here first: a Conservative calling for a Soviet-style central plan—I have called for a national plan for acute and emergency care. By definition, we cannot have a market interfering in that; we need to look at it in the round and say, “Where would we put these hospitals? Where are the motorways? What is the population density? Where is the rural location? Where is the urban location?” The problem is that if we reconfigure in isolation—I have seen this locally—it has a knock-on effect on other hospital services which then say, “Where are we getting our patients from?”

We should have a national plan that everyone from both parties has bought into. We should have—dare I say it?—a cross-party party committee looking into this. We should take it out of the political exchanges that we all engage in. We know what is going to happen in certain quarters in 2015—it will become a political football. I know that my hon. Friend the Minister is very aware of this. That is dreadful when we are talking about saving lives. Let us try to take this out of party politics. We can have robust exchanges, on principle, about payment, about how services are commissioned or not commissioned, and about whether there should be top-down reorganisation, but the fundamental question of where hospitals—acute and community hospitals—are located should be decided nationally; otherwise we could have perverse decisions whereby some services wither on the vine and we end up with gaps in emergency and acute care across the country. I make a plea for some cross-party activity on this.

Let us put the national health service’s budget into context. This country has debts and liabilities in excess of five times the size of our economy, and the situation is getting worse. Almost 40% of spending is on health and welfare, and it is growing. We know that that will happen; we have heard it this afternoon. Let us be realistic: there is only so much we can afford. I genuinely want a service that is based on clinical need. I genuinely want somebody to arrive at the appropriate location and get the very best care available. I fear that if we continue along this path of denial as regards how the service is paid for and, more important, structured, we

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will end up with more and more scandals. There are more in the pipeline. The chief executive of Tameside hospital has just resigned.

The public out there want more from us. They want us to make some difficult decisions, for sure, but using evidence, not party politics. I make that plea to everybody. If we can do that, we can structure a service that becomes the envy of the world; it is not that at the moment. However long I end up staying in this House, if that is achieved in the time I have been here, I will retire a happy man.

Mr Deputy Speaker (Mr Lindsay Hoyle): Before I call the Front Benchers, may I remind Members that if they are going to bring mobile phones into the Chamber they must be on silent and that they should not wait for them to ring? This is not the first time I have said that, but I certainly want it to be the last. Has the hon. Member for Strangford (Jim Shannon) taken that on board? Excellent.

4.4 pm

Andrew Gwynne (Denton and Reddish) (Lab): May I begin by thanking the Health Committee and its Chairman for the report and the clarity with which he presented its findings, and Members from all parties for the thoughtful way in which they have debated the issues today? The right hon. Member for Charnwood (Mr Dorrell) is known for his diligence and attention to detail, and his speech clearly illustrated those instincts.

Before I address the points raised by the report, let me put on record our gratitude to the many thousands who work in our health service. As we approach the 65th anniversary of the NHS, we should take a moment to pay tribute to those staff who are doing a tremendous job, often in difficult and challenging circumstances.

With the indulgence of the House, I would also like to place firmly on the record my support for and appreciation of the dedicated doctors, consultants, nurses, carers and support staff in Tameside general hospital, many of whom will be feeling battered and bruised today. Tameside general hospital serves most of my constituency and today’s media reports highlight some of its failings. Deep-seated issues need to be grappled with urgently, but we should also recognise and listen to the many decent, good and hard-working staff who work there, because they often have many of the solutions and have not been listened to in the past.

I also apologise for leaving the Chamber briefly during the speech of my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley). There was no discourtesy intended to either her or the House: I was dealing with the BBC’s breaking news that both the chief executive and the medical director of Tameside general hospital have resigned, which I support. Sadly, it has come three years too late—I called for it to happen three years ago—but, nevertheless, it is a step in the right direction to ensure that Tameside general hospital has a safe and secure future.

Barbara Keeley: We heard from the hon. Member for Southport (John Pugh) about the value of executive leadership. Our conurbation of Greater Manchester has one of the best and safest hospitals in the country.

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The Salford Royal hospital is the seventh safest in the country and has an excellent chief executive. Today the leadership of Tameside hospital has changed and I hope that the people of Tameside will end up with an excellently led hospital. I agree with the hon. Member for Southport. My example shows the difference between a hospital that is well led and one that is not.

Andrew Gwynne: I agree with my hon. Friend. Had she been listening to BBC Radio Manchester this morning, she would have heard me making precisely that point. The situation at Tameside is incredibly frustrating for me and my hon. Friends the Members for Stalybridge and Hyde (Jonathan Reynolds) and for Ashton-under-Lyne (David Heyes). Whenever we meet the chief executive and chair of Tameside hospital—we do so frequently—they always give us excuses as to why Tameside is different from the rest of Greater Manchester because of the industrial legacy and poor health outcomes in the borough, but one could make exactly the same arguments for Salford: there is no reason why one part of Greater Manchester should have an excellent hospital while another has one with long-term problems.

Following that slight indulgence, I want to turn to the report and focus on four key areas. First, the right hon. Member for Charnwood made some pertinent points about the Nicholson challenge. To be fair, in previous reports the Health Committee has taken the consistent view that the Nicholson challenge can be achieved only by making fundamental changes to the way in which care is delivered. It makes that argument in this report too. It states:

“Too often…the measures used to respond to the Nicholson Challenge represent short-term fixes rather than long-term service transformation.”

The Select Committee is right about that.

If we are to sustain the breadth and quality of health and care services, we need a fully integrated approach to commissioning—something that the right hon. Member for Charnwood and others have spoken about powerfully. The Opposition agree with that. I hope that the right hon. Gentleman will agree that we have put forward bold proposals for a genuinely integrated NHS and social care system that brings physical health, mental health and social care into a single service to meet all our care needs.

We know that that approach works. In Torbay, integrated health and care teams have virtually eliminated delayed discharges. Partnerships for older people have helped older people to stay living independently in their own homes and have delayed the need for hospital care—something that my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) rightly referred to. Where physical and mental health professionals have worked closely together, they have shown that a real difference can be made.

An integrated, whole-person approach is the best way to deliver better health and care in an era when money remains tight. As the Committee’s report notes,

“the care system should treat people not conditions.”

The right hon. Member for Charnwood was right to point out that developing the role of health and wellbeing boards is the best way to plan such integrated care. He reaffirmed that he is “happy to endorse” the Burnham plan. We were happy to hear that. He is right that there is an issue with single commissioning budgets without

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checks on local government. As somebody who has a background in local government, I think that he is right about the need to extend the ring fence to social care spending. Unless those budgets are protected, there will be a temptation to siphon off the money that is needed to provide the integration that we all want to see.

Mr Dorrell: I do not want to detain the House, but will the hon. Gentleman confirm that the Opposition support the proposals set out by the Chancellor last week that will provide exactly that principle?

Andrew Gwynne: I will come on to the Chancellor’s proposals. We do have concerns because there is an immediate care crisis that needs to be tackled now. There are also wider issues. My hon. Friend the Member for Worsley and Eccles South rightly raised the concern of local government that it will not have the funds to implement the new requirements in the Care Bill. We need reassurances about that.

My second point is about the cost of the Government’s reorganisation, about which my hon. Friends the Members for Easington (Grahame M. Morris) and for Birmingham, Selly Oak spoke eloquently. In the update from the Government last autumn, the overall cost was up by 33% or £400 million, making a total of £1.6 billion so far. What is that money being spent on? A full £1 billion has been spent on redundancy packages for managers, 1,300 of whom have received six-figure pay-offs and 173 of whom have received pay-offs of more than £200,000, all while the number of nursing posts has been cut by more than 4,000—six-figure pay-outs for managers; P45s for nurses.

The really unfortunate thing is that the reorganisation has diverted money and attention away from the front line. The Committee’s report notes that the reorganisation has

“had an impact on the NHS budget”.

I do not want to get into that debate. I will leave it to the UK Statistics Authority, which confirmed that spending on the NHS was lower in real terms in 2011-12 than in 2009-10, albeit marginally. We have seen reductions in NHS spending. Mental health spending has been cut in real terms for two years running, cancer spending has fallen in real terms and social care budgets have been slashed.

Let me now turn to the funding crisis in social care. The Library’s analysis, which is borne out by the Local Government Association’s statistics, shows that Government funding reductions have forced local authorities to reduce their adult social care budgets by £2.7 billion over the last three years. They have had to slash services and increase charges in order to balance their books, leaving thousands of vulnerable older and disabled people facing a daily struggle to get the care and support they desperately need.

That is why what the Chancellor announced last week in the spending review is at best a sticking plaster, or if I am feeling generous, a plaster cast. Sadly, it will not solve the financial pressures on councils, break the flow of funds into the acute sector or address the fundamental problem of two systems operating to conflicting rules.

To be fair, the Government have started talking Labour’s language of integration—the right hon. Member for

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Charnwood would say that it is the Select Committee’s language—but as the Committee notes, the only way to achieve what we want to see is by making fundamental system changes, which brings me to my final point, which is the Department of Health underspend.

I note that the Committee has raised concerns about the operation of the Department of Health policy on underspends and budget exchange. The small print of this year’s Budget revealed that the Department of Health is expected to underspend against its 2012-13 expenditure limit by £2.2 billion. That would be the biggest underspend of any Department in this financial year. Page 70 of the Budget document appears to show that none of this has been carried forward to be used in subsequent financial years as part of the Budget exchange programme. Perhaps the Minister could explain why—at a time when the NHS is facing its biggest financial challenge, when 4,000 nursing posts have been lost and when there is a crisis in A and E—they have decided to hand the full £2.2 billion back to the Treasury. Can the Minister also confirm that this means the underspend for 2012-13 would be 2% higher than the 1.5% figure that his Department says is consistent with “prudent financial management”?

We think that people will struggle to understand why this money has not been spent on the NHS. That is why we proposed that the Treasury exceptionally allows a £1.2 billion “end-year flexibility” carry-forward of around half of this year’s under-spend. We would ring-fence this money for social care budgets this year and next, to tackle the immediate crisis, with £600 million allocated for 2013-14 and a further £600 million allocated for 2014-15. With that extra investment, we could relieve the pressure on A and E and help to tackle the scandal of care services being withdrawn from older people who need them, enabling more people to stay healthy and independent in their own homes, and help families being squeezed by rising charges for care.

I thank the right hon. Member for Charnwood and members of the Committee—and other hon. Members on both sides of the House—for the sterling and thorough work that they have done and the powerful arguments they have made, especially on integration. They are right to highlight those issues, because it is the only way in which the NHS and care services will be able to make the necessary step changes to meet the challenges of an ageing society within the financial constraints we face. It is just as important that we get it right in terms of outcomes for patients, because the care services they receive will be greatly strengthened and improved through integration.

4.18 pm

The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter): It is a pleasure to close this debate and to respond to my right hon. Friend the Member for Charnwood (Mr Dorrell) and to his Committee’s report. I had the great privilege of serving under his chairmanship before I was appointed as a Minister, and he has been perhaps the greatest advocate of joined-up and integrated care, both as a distinguished member of previous Governments as Secretary of State for Health, and in all the work he has done as Chair of the Health Committee. His work has helped to lead to the great emphasis that the Government are placing on integrated and joined-up

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care, both through the Health and Social Care Act 2012 and in the statement by the Chancellor last week.

Friday marks the 65th anniversary of the NHS. I am proud to work in the NHS and to look after its patients. I think every Member in this House wants to see a health service of which we can all be proud. We are proud of our health service, but this 65th year of the NHS has also been marked by many challenges, which were outlined in the Mid Staffs report, the response to Morecambe Bay and in the comments on Tameside hospital made by the hon. Member for Denton and Reddish (Andrew Gwynne). We have to respond to those challenges, and the Government are taking strong steps to ensure that we deliver and stamp out the small pockets of poor care in the care system.

If we are to deliver a health service that is fit for the future, it has to be a joined-up health and care service. We can no longer afford to see the NHS and the social care sector as silos in their own right: we have to have a joined-up integrated approach. It is for that reason that we are proud to have increased the NHS budget by £12.7 billion. We are driving integration with that budget increase. We are encouraging local authorities and the NHS to collaborate in treating the needs of patients, and to address the problem highlighted by the Select Committee of people being passed, like pass the parcel, from one part of the system to another without any joined-up thinking or integrated care. I know that Members on both sides of the House want an end to that. In the spirit of consensus, we all want a health and care system that truly looks after the needs of individuals and is not run by the different financial and cultural silos of the whole.

We have heard strong contributions from hon. Members on both sides of the House in what has been a consensual debate. If we are to tackle the challenge outlined by Sir David Nicholson in 2009, when the previous Government were in power, to make 4% efficiency savings year on year just to stand still and to meet the increasing demand of an ageing population and the increasing health care expectations of patients, then we need consensus. To meet the challenge, we have to see a fundamental service transformation and redesign. We also have to see a far more productive NHS. Productivity gains and efficiency savings have to be made, while the challenges outlined by the Mid Staffs case and others are just as true today.

My hon. Friend the Member for Witham (Priti Patel) outlined clearly the importance of cutting back on bureaucracy and waste in the NHS where possible. Under the Health and Social Care Act 2012, £1.5 billion of bureaucratic savings will be put back into front-line care on an annual basis. She was right to highlight the importance of clinical leadership in delivering better services. There is good evidence that clinical leadership is not just about improving patient care. We can improve productivity through clinical leadership by improving the procurement of services and goods in the NHS. Procurement of services and goods makes up £20 billion of the NHS budget. There is good evidence that strong clinical engagement and leadership will help us to deliver greater productivity.