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Lord Warner: It seems to me that the amendment is based on a good deal of optimism from those on the Benches opposite who feel, clearly, that they will be back in government at some stage and will be able to use it, if agreed, to put into effect yet another attempt to bring back a version of GP fundholding.

It is perhaps worth recalling history. After all the efforts of the previous government to introduce GP fundholding and all the financial incentives given to GPs to become fundholders, we still ended up with only 50 per cent. or so of the population cared for by GP fundholders. Therefore, we still had a situation in which about 50 per cent. of the GPs in this country resisted those blandishments and were caring for their patients outside fundholding. Of those who had accepted fundholding, a good many did so with the greatest reluctance and felt that they were put under undue pressure to pursue that particular line. We must bear that in mind and the fact that fundholding was not the great triumph that it is presented as by those opposite. It was actually a very divisive approach to primary care for patients and it was rejected by very many of this country's GPs.

Lord Skelmersdale: I do not need to say, "Before the noble Lord sits down", because this is Committee. However, does he not accept that, by law, many GP practices were not allowed to become fundholders--I am referring to the smaller practices--and that therefore his figure of 50 per cent. is not terribly helpful in illustrating his case?

Baroness Hayman: The noble Earl said that this was a "modest" proposal and the noble Lord, Lord Skelmersdale, said that it was an "unusual" amendment. Perhaps we shall have a new concept in your Lordships' House--that of the modest and unusual wrecking amendment. This amendment, just like the previous amendment on which we have just voted, goes to the heart of a very firm manifesto commitment which was repeated in our White Paper on the NHS.

I must advise the noble Baroness, Lady Fookes, that I did not need a brief marked "resist" to know that I should resist this amendment as the manifesto is dear

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to my heart--it is not quite written word for word on it--and I know absolutely what we said in it about ending GP fundholding--and I know that we have not wavered from that. Therefore, I echo the words of my noble friend Lord Warner.

The noble Lord, Lord Skelmersdale, kindly offered the Secretary of State--unusually, as he said--additional powers. A Labour Secretary of State does not want to have additional powers to recreate fundholding because we do not believe that it is the right way forward for primary care within the NHS.

As I have said, we have a clear commitment to abolish the internal market and GP fundholding in particular and to replace them with modern arrangements founded on the principles of co-operation and partnership. It is on those principles that our plans for primary care groups and primary care trusts are based.

The fundholding system, in which individual GPs were allowed to take on powers, functions and a budget, was in fact a centrepiece of the old internal market. We recognise that although some GP fundholders used those arrangements to deliver benefits for their patients, that was done (almost by definition) because they were available only to some patients and were therefore achieved at the expense of others. Abolishing that system is crucial to the delivery of our commitment to improve the quality of healthcare overall and for all patients.

Primary care groups, and in due course primary care trusts, will allow GPs and other professionals to work together to improve the health of, and to address the health inequalities in, their local communities. The arrangements will build on the experience not just of GP fundholders but of multi-funds, total purchasing and GP commissioning groups. They do so crucially without the competition embedded in the fundholding system and extend the influence of GPs and nurses across the full range of the health service.

It has been argued that the amendment would provide an alternative for those GPs who feel that they have been in some way coerced into a primary care group or that they will be coerced into a primary care trust when the Bill has received Royal Assent and primary care trusts are first set up. It is absolutely true that all GPs are members of a primary care group. However, in practice, that is little different from what has been a long-established practice in the health service. I refer to GPs being on the list of a particular health authority, from which they could not opt out. They were, by definition, party to its commissioning arrangements if they were not fundholders. In both cases, they are essentially geographically based and, short of moving into other areas, GPs have only marginal choice about the group to which they are attached.

However, GPs are, and will be, free to decide how actively they participate in the development of their primary care groups. We are looking to former fundholders to be among those leading the primary care groups forward. Many of them have demonstrated energy, enthusiasm and a commitment to patients in

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developing innovative services or commissioning arrangements. We want to harness those attributes. Many fundholders have responded to that challenge.

However, it is not only fundholders who have something to contribute. I refer to the nurses who will lead primary care groups and to the other GPs who, for clear and committed reasons of principle, did not want to be fundholders but who have been leaders in developing services in their own authorities.

We are convinced that we can extend good practice and innovation to all patients rather than start a process of levelling down. Success would be much more difficult to achieve if we were to allow the continuance or re-creation of islands of singleton fundholders. The new arrangements and the old systems are not compatible. Allowing the two to continue in parallel or, indeed, in competition for any substantial period would be a recipe for both confusion and bureaucratic excess.

As the noble Earl pointed out, we are looking to reduce bureaucracy in order to make savings for the health service. That will be achieved not only by using across the board the funds that sustained GP fundholding for a minority of the population so that they provide the funding for primary care group management for the whole population, but also by other measures such as encouraging co-operation and benchmarking across the NHS which can save a great deal of money, by abolishing extra-contractual referrals (ECRs), by moving to longer-term service agreements and by doing away with some of the enormously wasteful and frustrating paper-chases which were the consequence of the internal market.

The noble Earl also asked about the incentive framework to provide incentives for individual GPs within PCGs to make efficiency gains. Practices will be entitled to 50 per cent. of any savings they achieve against their indicative budgets. That entitlement will apply even if other practices in the PCG overspend in total. We have built into the system an incentive for the PCG as a whole as well as for the individual practices within it.

Primary care trusts will be established by the Secretary of State. Progression to trust status will be locally determined, based on local views. The Secretary of State will be able to establish primary care trusts only after local consultation. The views of the primary care groups, the local GPs and other professionals, as well as those of the wider community and of the NHS locally, will clearly be key considerations for the Secretary of State in deciding whether to establish a primary care trust. It is our assumption that the support of the relative primary care group would be required--and GPs have a majority on PCGs.

The Committee should note that this amendment would fundamentally undermine the changes which we are committed to deliver. Like the previous amendment, essentially it looks backwards and harks back to a discredited system rather than looking forward to making the new system work. I urge the Committee not to support it.

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4.45 p.m.

Earl Howe: I suppose that we should be thankful for some small mercies in that at least the Government are not wavering from one of their manifesto commitments. I put it to the Minister that she has been guilty of at least a little loose terminology. This is not a wrecking amendment. I deliberately have not tabled any wrecking amendments to this Bill. The amendment seeks to grant a reserved power to this or any future Secretary of State. It does not prevent the Government ending GP fundholding and fulfilling their manifesto commitment.

I do not believe that the Minister covered my point about the Government's objective of saving £1 billion for the health service by cutting bureaucracy. I wonder whether she can comment on that and whether she still believes that that is an achievable target. It would be wonderful if it were, but I wonder whether the noble Baroness still believes that.

Secondly and specifically, does the Minister believe that devolved budgets will be possible at practice level within the primary care groups and primary care trusts? Setting aside the amendment for a moment, does the noble Baroness believe that that is a realistic proposal for the new structures that will be put in place? Before I decide what to do with this amendment, I wonder whether the noble Baroness could answer that point.

Baroness Hayman: I can say to the Earl, Lord Howe, that there will have to be some element of devolution here in the sense that there will be indicative budgets, as I suggested in my reply about the savings and the incentives for efficiency gains. In order that people can make proper comparisons and assess their own practice on matters like prescribing, it will be necessary to know at practice level how an individual practice is doing and to be able to make comparisons. So in terms of information that kind of devolution will have to go on in order to make the situation work.

It is very early in our deliberations to start bandying words and I would not wish to do so, but I have to say to the noble Earl that when we have a clear and unequivocal manifesto commitment to abolish fundholding and I see two successive amendments trying to recreate, either for a longer period or as a reserve power, that which we said in our manifesto we wanted to abolish and said very clearly that we were going to abolish--and we would be accused of ducking and weaving if we had put in some reserve power that we could pull back at a later time--it seems to me that we are undermining that fundamental manifesto commitment. I must make clear that we are not willing to do that. I do not quite understand what other manifesto commitments we were going back on, as mentioned by the noble Earl. Perhaps they will be listed later this evening, but I am not aware of any.

So far as concerns the billion pounds of savings, we are still looking to that target as well as to the target reductions, including those for health authorities, NHS trusts and GP fundholder management costs that were set in May 1997, with 84 further targets of £73 million

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in 1998-99, which were announced in 1997, and for cumulative savings to date that are already around a quarter of a million pounds.

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