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Baroness Robson of Kiddington: My Lords, may I also thank the noble Baroness for repeating the Statement made by her right honourable friend in the other place. I agree with the noble Earl, Lord Howe, on two statements he made in his opening remarks. He mentioned his unbounded admiration for the robustness of the staff and the people working in the NHS in view of the greater demands which they have met in recent years. I agree with him. He quite rightly claims that to some extent his party can take credit for some of the changes that have taken place. But it must also take the blame for certain things.

One of the sad aspects of the health service is that this is about the eighth reorganisation of the service since 1974. Therefore, apart from paying credit to the staff of the NHS for the work they do, we must also pay enormous credit to them for the way in which they have kept their allegiance to the organisation during all those changes. It must have been very difficult for them.

As each change has taken place it has meant an increase in management costs. I know that the Statement says that this new reorganisation will reduce those costs, but I find that very difficult to accept. It is stated on page 8 of the Statement that the reorganisation will save the NHS £1 billion. That seems unbelievable. We are not moving towards reducing management costs; in my view we must be increasing them.

By removing GP fundholding we are creating groups of about 50 GPs who will get together to arrive at an agreed statement and demand what they need. In order to do that management structures will have to be set up. Fifty GPs cannot possibly meet round the table and hope to come to a conclusion. They will have to be served by some form of management. GP practices which are not at present fundholders will have to employ a manager. There will be a need to instal up-to-date computers in every practice, just as fundholding groups do at the moment. That is not going to save money. The same situation will apply to the primary care groups. In commissioning services for a particular area they will need a full-scale administrative structure behind them. I would like an explanation as to how we shall save £1 billion by changes of this kind.

I also find it difficult to accept that the internal market will be removed. I cannot see that there is much difference between the providers in the hospitals, as proposed for the future, and the present situation. All I can foresee is that they will have to deal with a larger number of commissioning groups. Instead of 100 health authorities there will be at least 500 local

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commissioning groups. I therefore find it difficult to accept that there will be the savings that we are looking for.

However, I welcome one statement. That is the extension of the length of contract to be negotiated, which is to be for a period longer than one year. I believe that that will save money and time. It is a good measure, and one which we have been asking for for years. However, I have another request for the Government to consider when they look further into the proposed reorganisation. It is not enough to have GPs and community nurses working together providing what is called a unified health service. I believe that all social care needs to be included. I do not believe that greater control over the NHS budget by GPs will break down the "Berlin Wall" between health and social services. That will only be eradicated when health and local authority budgets are merged, as the Liberal Democrats have long advocated. I regret that it is impossible to go into all the details of the Statement, but I very much look forward to the main debate on the measures in this House.

Baroness Jay of Paddington: My Lords, I am grateful to both the noble Earl and the noble Baroness for their extremely authoritative remarks. I join with them in admiration for, and very much underline the points which were emphasised in the Statement about, the flexibility, skill and resilience of those who work for the NHS in the quality of care that they provide and have provided over a long period of years.

The point about the increase in bureaucracy which both the noble Earl and the noble Baroness thought might result from what is contained in the Statement goes against the point that I made about the reduction in costs of £1 billion a year. That has been very carefully costed. I know that the noble Baroness was concerned that that figure was not broken down in detail in the Statement; however, it is broken down in some detail in the White Paper. If you reduce enormously the transaction costs of individual contracts between individual health authorities and local health providers, as the new system will; if you cap management costs in both health authorities and local commissioning groups; if you abolish extra-contractual referrals and ask everyone to work to a national reference system of pricing for particular treatments; and if you work, as we intend to do, to an agreed and well worked out budget of £3 per patient within each commissioning group, the sum mentioned is not at all unrealistic. It has been appropriately costed. That sum will be demonstrated to have been saved by the end of this Parliament. The simple fact of reducing the number of commissioning bodies, which I mentioned in the Statement, from nearly 4,000--I believe that the absolute figure is 3,700--to 500 across the country must in itself reduce the administrative and management costs at a stroke, as it were.

I appreciate the points made by both the noble Earl and the noble Baroness about the capacity of the local commissioning groups to assume such a very broad agenda. Perhaps I should point out that--again, in contrast with the previous major changes in the health

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service to which the noble Baroness referred--this will be an evolutionary change. As I said in the Statement, the programme is devised to progress along a 10-year timeframe. We do not expect that every local commissioning group or every local group of GPs will be able to assume full responsibility at the beginning of the process. As is clearly demonstrated in the White Paper, we accept that there will have to be a well structured, evolutionary process from a position where a GP group might be acting simply in an advisory capacity to its local health authority to a position where that local GP group might assume the powers to run local services or, indeed, even the local community trust.

I am not quite sure where the noble Earl and noble Baroness found the figure of 50 GPs sitting around a table. That was certainly not mentioned in the Statement and, as far as I can recall those 81 pages, it does not appear in the White Paper. I should emphasise in general terms that it is intended that there should be great flexibility with regard to the local commissioning arrangements. There will be differing responsibilities and different degrees of authority assumed depending on the skills that can be demonstrated. The groups will be flexible in size and type, again depending on the nature of the community served and the geographical region.

The whole emphasis of the White Paper is that we want to re-establish the National Health Service in terms of national service frameworks, national quality standards, and as a national organisation for clinical effectiveness and for cost effectiveness. However, we expect that local people will want to choose the way in which their local commissioning group and local health authority function. There will be no diktat from the centre about how that should be done, but we shall require it to be carried out within the new statutory general framework. Perhaps the noble Earl and the noble Baroness are looking for something slightly more rigid than appears in the White Paper.

We are extremely keen to promote the amalgamation of social care and health care. That is why there will be a new statutory obligation on both NHS trusts and local GP commissioning groups to form partnerships--not simply with other health service providers, but with other providers and with the leaders of other agencies, both in the statutory and voluntary sectors, at local level.

The noble Baroness had a good point about the funding structure of local services. We shall want to explore that in the development of this work. As both the noble Earl and the noble Baroness will be aware, 42 primary care commissioning group pilot schemes are currently being established to try to develop some of these arrangements in ways which seem to us to demonstrate best practice in different parts of the country.

In the context of the amalgamation of health and social care and the involvement of other agencies such as those relating to education and the environment at a local level, perhaps I should mention the health action zones. They appear in the White Paper but not in the Statement because they have previously been

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announced. They will bring together all the different functions in 10 pilot projects which will, again, start next year.

Overall, I must reinforce our belief that this change will be effective in reducing bureaucracy. It will enable local initiatives to continue to flourish. Those local initiatives must, however, be contained within the national quality frameworks which will enable us to get away from the lottery of care, which was one of the unfortunate results of the internal market.

The noble Earl said that this change was being made for presentational purposes. He referred to "The new NHS". Perhaps I may draw his attention to the first page of the White Paper which shows that that title has been derived from that of the original White Paper on the NHS in 1948. That White Paper was called "The New National Health Service". Presentational skills may have been less important then.

4.25 p.m.

The Earl of Onslow: My Lords, I wonder whether the Minister will help me a little. From the Statement one gained the impression that she had inherited from the previous administration a collection of tents in a swamp in Bangladesh. I can promise the Minister that the last time that I had to go to hospital I was advised to use the National Health Service. In Surrey, the NHS and our local GP service--I do not know whether it is fund-holding--is of such quality that it should be emulated and copied in all areas. It ill behoves the new Administration to downgrade the achievements of the last government in making the NHS worthy of an enormous amount of admiration. I say that as somebody who applied for an appointment with a specialist the other day and the appointment came through so quickly that I had to postpone it. That is the efficiency of our local health service. It ill becomes the party opposite, which has suddenly become Her Majesty's advisers, to imply that what went before was not absolutely super--because it jolly well was!


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