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Chemical Weapons

3.31 p.m.

Lord Rea: My Lords, I beg leave to ask a Question of which I have given private notice, namely:

What Her Majesty's Government's position will be at the special meeting of the Organisation for the Prohibition of Chemical Weapons to be held at The Hague on 21st April, when it is anticipated that the United States will seek to unseat its long-standing—and highly effective—director-general, Sr Jose Bustani.

Baroness Symons of Vernham Dean: My Lords, I can confirm that a special conference of states parties to the chemical weapons convention will convene in The Hague on 21st April 2002 at the request of the United States to consider the appointment of the director-general of the Organisation for the Prohibition of Chemical Weapons. Her Majesty's Government are still finalising their position. However, your Lordships should know that, at the meeting of the executive council of the Organisation for the Prohibition of Chemical Weapons on 22nd March, the United Kingdom supported a vote of no confidence in the director-general.

Lord Rea: My Lords, I thank my noble friend for that Answer. However, does she agree that the real American objection to Sr Bustani is not to his failings, but to his very success? For example, he has increased the number of signatories to the chemical weapons

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convention from 87 to 140 in the past five years. Such is his success and his reputation for impartiality—quite apart from asking searching questions about the United States' own chemical weapons—that it is thought that he might be able to persuade Iraq to join and to adhere to the chemical weapons convention, rather than to allow the return of UNMOVIC, which Iraq considers to be US dominated. If that were the case, would it not remove a major pretext for US military intervention in Iraq, which appears to be the policy of the hawks in the United States Administration?

Baroness Symons of Vernham Dean: My Lords, I am afraid that I cannot agree with a great deal of my noble friend's conjecture. The director-general did indeed have some successes in the work that he undertook during his first period of office in establishing the OPCW and in establishing a world-wide verification regime. But, sadly, the organisation encountered financial difficulties early in 2001, for which the director-general must take a measure of responsibility. I cannot agree with the supposition that his period of office has been one of great success when those financial problems led, last year, to his not being able to maintain the appropriate level of inspections world-wide of military and commercial sites. As I understand it, towards the end of last year, the number of inspections fell by almost 50 per cent of the normal annual schedule. We made representations to the director-general on several occasions last year about our concerns at the decline in verification activity. I believe that that is what lies at the heart of the current difficulty.

Lord Avebury: My Lords, is the Minister aware that it is grossly unfair to serve these accusations in public on the director-general, when he has been given no formal opportunity to rebut them, either in the conference of states parties or in the executive council? Is it not contrary to natural justice that he should be charged in this public manner without being given an adequate opportunity to rebut the charges? Does the Minister agree that, if the US is allowed to intimidate and coerce other states, as it has done, into dismissing an international civil servant, it will undermine the independence of all international institutions? Do not the Government see a pattern developing with the attempts by the US Administration, not only against the director-general of the OPCW but also to undermine Mr Hans Blix, the head of UNMOVIC? Does the Minister further agree that, if this procedure continues, no international institution will be able to claim full independence?

Baroness Symons of Vernham Dean: My Lords, I hope that the noble Lord is not bracketing me in what he describes as unfairness. When I am asked a Question in this House, I must give the Answer that I believe is accurate and which accurately reflects the position of Her Majesty's Government.

I indicated to the House that the Government are still finalising their position. The reason is that the Secretary of State has not come to a final decision.

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However, I felt it right in the circumstances to indicate to your Lordships how we had voted at the executive council. To have done anything else would have been misleading. I felt it right to give your Lordships some of the reasons for doing so, as I was asked to do. Her Majesty's Government were not alone with the United States in reaching that decision on a vote of no confidence during the executive meeting in March. Seventeen countries out of the 40 represented voted for a motion of no confidence; 18 abstained; and five opposed the motion of no confidence. That is a fairly telling list of votes.

Lord Richard: My Lords, is my noble friend aware that it would perhaps be more profitable for the House to consider the British reasons for not accepting this gentleman and for voting for a motion of no confidence in him, rather than over-speculating as to the motivation of the United States in this matter? Will my noble friend reiterate and clarify the reasons why the British Government could not support him?

Baroness Symons of Vernham Dean: My Lords, as I indicated, the organisation encountered some financial difficulties early last year. As I understand it from the briefings that I have received, those difficulties were rooted in structural problems within the organisation and in the fact that some states parties had not paid their contributions on time; and there was a degree of mismanagement in the organisation. We and other states parties wanted to get to the bottom of the problem. As I have indicated, we were concerned about the verification procedures and about maintaining the level of verification, both military and commercial. We asked the director-general to co-operate with an effort to get to the bottom of the problems, and I understand that he did not co-operate in the way that we would have expected.

Baroness Williams of Crosby: My Lords, will the Minister confirm that both the United Kingdom Government and the United States Government made their contributions to the organisation on time?

Baroness Symons of Vernham Dean: My Lords, I shall have to check on that point. The United Kingdom Government have a very good record in these matters, and I shall check on the further matter.

Lord Bruce of Donington: My Lords, it is often the custom in this House for reference to be made to briefings. Will the noble Baroness give the House an assurance that members of the Government do not invariably rely on briefings, but on what they themselves think?

Baroness Symons of Vernham Dean: My Lords, I hate to disabuse the noble Lord, but I will be frank with him and tell him that I was not aware of the difficulty until I saw the Private Notice Question of the noble Lord, Lord Rea. I would not expect to be aware of the difficulty because it does not lie within my specific area of responsibility. However, my right

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honourable friend the Secretary of State is aware, as is my honourable friend Mr Bradshaw. They have front-line responsibilities for the matters, but I argue for them in your Lordships' House. I would not wish any noble Lord to be under any illusion at all: I have relied on official briefings in giving my answer to your Lordships.

Lord Rea: My Lords, my noble friend spoke of the organisation's financial difficulty in fulfilling its inspection tasks. Is she aware that the United States put a cap on its funding, but was then one of the nations that failed to pay its dues?

Baroness Symons of Vernham Dean: No, my Lords, I was not aware of the United States' position in that respect; nor am I aware of the funding coming forward from any other individual country. However, I can say that the United States, Japan, Germany, Italy, France and the United Kingdom together provide 70 per cent of the organisation's funding. I have not been able to answer in detail the question put by the noble Baroness, Lady Williams, or that put by my noble friend. I shall, if I may, take away those points, write to the noble Baroness and my noble friend, and place a copy of the answer in the Library of the House.

NHS Plan

3.41 p.m.

Lord Hunt of Kings Heath: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State. The Statement is as follows:

    "Mr Speaker, with permission, I wish to make a Statement on the next steps on reform and investment in health and social services. I am today laying before Parliament a Command Paper setting out these next steps, copies of which have been placed in the Vote Office.

    "The NHS Plan we published in July 2000 set out a 10-year programme to rebuild and renew the health service in our country. It diagnosed the NHS problem in this way: the principles of the NHS are right—on this side of the House we believe in an NHS free at the point of use, funded from general taxation, based on need not ability to pay. But the NHS today is the product of decades of under-investment. It is also the product of a failure to reform. Staff—the greatest asset that the health service has—work flat out in a system which still too much resembles the 1940s.

    "The NHS Plan set out a 10-year programme of investment and reform: clear national standards, more devolution of resources, greater flexibility for staff and more choice for patients. With the economy stabilised and the public finances sorted out, the 2000 spending review was able to give the NHS the largest-ever real-terms increases in resources.

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    "Two years later, anyone who says there are no problems in the NHS have clearly got it wrong, but those who say there is no progress have also got it wrong. Yes, there is a long way to go; it is a 10-year plan. But those who point to an NHS black hole should in fact be pointing to dozens more hospitals, hundreds more beds, thousands more doctors, tens of thousands more nurses, and a better health service as a result.

    "In July 2000, we acknowledged that three years' sustained funding was not enough. My right honourable friend the Prime Minister had already said in January 2000 that we needed to match EU levels of spending. Yesterday, my right honourable friend the Chancellor of the Exchequer put NHS finances on a sustainable footing, not for three years but for five. Years of failure in the past to invest are now being replaced with years of investment for the future.

    "Today, I can tell the House what this investment will give us: 35,000 more nurses, 15,000 more doctors, 40 new hospitals, 500 primary care centres. As investment grows, so the capacity of the NHS will grow.

    "Investment in the NHS must be accompanied by changes in the way the NHS works. Ours is not an unconditional offer. Without the reforms we will not get the best use of the money for the taxpayer and we will not get the improvements in service for the patient. Where we have had the courage to invest, we must now have the courage to reform. Our formula is simple: investment plus reform equals results.

    "So, first, building on the national standards already in the NHS Plan, I can tell the House today that we will strengthen the system of inspection and audit to improve accountability to patients and the public. Where more resources are going in, people have the right to know what they are getting out. We will establish a new commission for healthcare audit and inspection to inspect and raise standards in healthcare across our country. But we are clear: we need higher standards in NHS hospitals, and there must be higher standards in private hospitals, too. The commission will assess the performance of every part of the NHS so that the public will see that every extra pound in the NHS buys something better for patients, gets something more for taxpayers.

    "Similar arrangements will be made for social care. We will discuss the details of both with the National Assembly for Wales.

    "The new commission will be independent both of the NHS and of Government and will be more independent than the current fragmented system. It will report annually to Parliament, not to Ministers, on the state of the NHS, the performance of the NHS, and the use to which NHS resources have been put. The Government should not be judge and jury on the NHS. The commission will be the judge, the British people the jury.

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    "Secondly, we can now go further in extending devolution in the NHS, building on what has been achieved to date. The health service should not and cannot be run from Whitehall. The NHS is delivered in hundreds of different communities by over 1 million staff. The relationships are between the local patient and the local doctor, and the local community and the local hospital. But these relationships will not work properly until central control is replaced by local accountability. After 50 years, the time has come when the sound of bedpans being dropped in Tredegar should only reverberate in Tredegar.

    "With national standards and inspection in place, power, resources and responsibilities now must move to the NHS frontline. When we came to office, GPs controlled just 15 per cent of the total NHS budget. Today, primary care trusts—with GPs and nurses in the lead—already control half of the budget. Within just two years, they will control three-quarters. Just as the new commission will report nationally, so PCTs will need to report locally on how NHS resources have been spent.

    "The best primary care trusts, just like the best NHS hospitals, should enjoy greater freedoms and more rewards. We will establish new foundation hospitals and foundation primary care trusts—fully part of the NHS, but with more freedoms than they have now. They will have more powers, including a right to borrow, to expand their services for patients.

    "Thirdly, further to the new powers we have given to nurses and others, we will radically alter the way staff work and introduce a new system of financial incentives across the whole health service. We will put in place new contracts of employment—not just for nurses and other staff, but for GPs and, yes, for hospital consultants too. Our objective is to liberate the potential of all members of staff, reward those most who do most in the NHS, and, crucially, to improve productivity across the whole health service.

    "New incentives for individual members of staff will be matched with a new system of financial incentives on NHS organisations. The hospitals that can treat more patients will earn more money. Traditional incentives work in the opposite direction. Indeed, it is often the poorest performers who get the most financial help.

    "We will therefore introduce a new system for money to flow around the health service, ending perverse incentives, paying hospitals by results. The incentive will be to treat more NHS patients more quickly and to higher standards.

    "Fourthly, patient choice will drive this system. Starting with those with the most serious clinical conditions, patients will have a greater choice over when they are treated and where they are treated. From this summer, patients who have been waiting six months for a heart operation will be able to choose a hospital—whether it is public or private—which has capacity to offer quicker treatment.

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    "This level of investment means that we can grow NHS capacity as fast as it is possible. I can also say today that it is our intention to draw into this country additional overseas capacity so that we can further expand NHS services to NHS patients.

    "As capacity expands, so choice can grow. Within three years, all patients, with their GPs, will be able to book hospital appointments at a time and a place that is convenient to themselves. The reforms we are making will mark an irreversible shift from the 1940s take-it-or-leave-it, top down service. Hospitals will no longer choose patients; patients will choose hospitals.

    "Reductions in waiting times to get into hospital must be matched by cuts in waiting times to get out. Older people are the generation who built the NHS and who have supported it all their lives. This generation owes to that generation a guarantee of dignity and security in old age. Bed blocking denies both.

    "In recent months the extra resources we have made have reduced the number of elderly patients whose discharge from hospital has been delayed. I am grateful for the help local councils have given us in addressing this problem. But here the long-term solution is not just investment; it is reform.

    "So I can tell the House today that in order to bridge the gap between health and social care we intend, as they have done in Sweden and elsewhere, to legislate to give local councils responsibility from their 6 per cent extra real terms resources for the costs of beds needlessly blocked in hospitals. Councils will need to use these resources to ensure that older people are able to leave hospital when their treatment is completed.

    "If councils reduce the current level of bed blocking so that older people are able to leave hospital safely when they are well, they will have freedom to use these resources to invest in extra services. If bed blocking goes up, councils will incur the costs of keeping older people in hospital unnecessarily. There will be similar incentives to prevent hospitals seeking to discharge patients prematurely. In this way we will provide local councils with the investment and the incentives to improve care for older people.

    "Taken together the NHS Plan and the next steps announced today amount to the most radical and fundamental reform programme inside the NHS since 1948. I want to pay tribute to the staff in the NHS, not just the nurses, doctors and consultants, but all the staff—the different medical disciplines, the ancillary staff, the secretaries, receptionists, porters and cleaners. They represent the very best of British public service and I believe that as a nation and as a Parliament we should be proud of the work they do. I know and understand the enormous pressure they are under as the NHS makes these changes. But I know, too, that they share this basic goal: to rebuild the NHS around the needs of its patients.

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    "This programme of investment and reform will mean each year, every year, waiting times will fall. Last year the maximum wait for a hospital operation was 18 months. Today it is 15 months. By this time next year it will fall to 12 months. By 2005 it will be six months. And by 2008 it will have been reduced to three months. By then the average waiting time for a hospital operation will be just six weeks. No longer will people have to face the dilemma of having to wait for treatment or having to pay for treatment.

    "As a party and a government we are committed to providing opportunities to all in our society and not just some. So there will be more effort to prevent ill health as well as treating it—25,000 lives a year saved by the investment we can now make in preventing and treating heart disease alone.

    "The balance of services will shift with more patients seen in primary and community settings, not just in hospitals. Social services will have resources to extend by one-third rehabilitation care for older people. Councils will be able to increase fees to stabilise the care home market and secure more care home beds. And more investment will mean more old people with the choice of care in their own homes rather than simply in care homes. Yesterday's Budget and today's NHS reforms mean that the NHS Plan will be delivered.

    "I want to make two further points, however. It is a 10-year plan, as we said in July 2000. By the time of the next election, there will be real and significant improvements. But this cannot happen overnight. It takes seven years at least to train a doctor and up to 15 years to train a consultant. Expectations will be high but they also need to be reasonable and people need to understand that a 10-year plan is exactly what it says: a plan that will take time to be delivered in full. But at least now public and patients will be able to see improvements made stage by stage and independently of government, audited, monitored and inspected.

    "Secondly, on one thing there is a consensus. Britain needs to spend more on healthcare. There is no mystery why in Germany there are not waiting lists. They have spent more and have done so for years.

    "We can debate endlessly the systems of finance. But one thing is beyond debate: the level of finance had to be raised. And once that is accepted, the choice is not between a system funded out of general taxation, that results in higher national insurance, and some other system that comes for free. Importing the German system of social insurance would cost the equivalent of an extra £1,000 per worker per year, the French system £1,500 per worker per year.

    "We on this side of the House believe in the NHS in our heads as well as our hearts. We believe it to be the best and fairest system of providing true health insurance because it is based on the scale of the person's need not the size of their wallet. It is the best insurance policy in the world.

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    "It is now for those who want to see the NHS not reformed but abandoned, who routinely call it Stalinist, to say honestly what their alternative is, what it would cost and how families and pensioners would pay for it.

    "Yesterday we made a choice and we ask the British people to make the same choice. We are proud of our NHS and the people working in it. We are giving it the money it deserves. We are making the changes it needs. Investment plus reform equals results. We will be happy to be judged upon them".

My Lords, that concludes the Statement.

3.56 p.m.

Earl Howe: My Lords, the House will be grateful to the Minister for repeating the Statement, which is self-evidently of great significance for the NHS as well as for taxpayers.

The full implications of this announcement will emerge only over the next few days and weeks. The Statement is long on generalised aspirations and rather short on detail. However, several things are clear. The Government have embarked on a route which is make or break. Not only have they shut off any debate about moving away from a monopoly funding stream for healthcare, and thus distanced the UK from almost every other developed country, they have also staked everything on substantial tax increases, which they told us at the election they would not impose. The macro-economic effects of these plans are perhaps a matter for another occasion, although they are already exciting concern from respected economic commentators.

The health effects, on the other hand—the health gains, the improvements in services, the improvements in productivity—are the things on which the Government will eventually be judged. If they are not to be perceived as pouring ever increasing amounts of money into a black hole, then it is necessary for them to show that the reforms to the system, which the Statement makes so much of, really have created the kind of health service that is capable of deploying the new money efficiently and effectively for patients.

On the real extent of these much trumpeted reforms, I entertain considerable doubts. One of the most striking passages in the Statement was that relating to greater freedoms being conferred at the NHS front line. The Minister spoke of foundation hospitals and foundation PCTs. Can he say what exactly these organisations will be? What legal form will they have? Who will appoint their board members? What constraints and what freedoms will they operate under? I am all for greater autonomy, but what will it actually amount to and how many NHS bodies will benefit?

The power of foundation trusts to borrow was mentioned. Can the Minister say whether this means that they will be able to borrow from the market? Will there be a Treasury guarantee for such borrowings and what will be their effect on the PSBR? Borrowing necessarily implies repayment. How will such

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repayment be provided for? Will borrowing just be a way of anticipating future cash allocations, thus storing up difficulties for later years? When will we have full details of what is proposed?

The White Paper speaks about financial incentives and penalties. I found that section pretty baffling, but one of its features is apparently to be that if a trust fails to deliver its targets, money will be taken away from it. How will this work? How will it be possible to avoid a situation where money that is taken away gives rise to cuts in capacity, which in turn lead to a downward spiral of delivery against objectives?

The Statement referred to a new system for money to flow around the health service. Will the Minister say what is meant by that, if it is not what we have long advocated and what the Government abolished when they came to office; namely, money following the patient? How exactly will that be achieved?

To deliver reform on the appropriate scale will require investment in IT. The Government admit that they have not spent enough on IT to date and in particular that there has been inadequate progress in delivering electronic patient records, which is one of the key building blocks for an efficient, patient-centred service. If there is to be greater devolution within the health service, how will the Government ensure that the right IT systems are commissioned?

I turn briefly to accountability and audit. The Statement referred to the independence to be conferred on the new commission for healthcare audit and inspection. Will the Minister say who will set the budget for the commission and from where its funding will be drawn?

Finally, I turn to the shortage of beds. It seems extraordinary that a Government who have been willing to countenance—not to say engineer—a drastic downsizing of the care home sector should now be seeking to shift the blame, and the burden, for bed blocking on to local authorities. Can the Minister confirm that the Government intend to make council tax payers foot the bill for bed-blocking problems? How can that be a fair deal when, as we know from some parts of the country, there is a drastic shortage of care home beds—a shortage that was brought about quite deliberately by the Government's policies?

It is perhaps a cause for some small comfort that the Government recognise that money alone cannot deliver the improvements in healthcare that we all wish. That also requires reform. The test for them is to turn their rhetoric on reform into reality. I for one profoundly doubt whether the scale of the reform will be anything like sufficient to ensure that the substantial new sums that are earmarked for healthcare will add commensurate value to the NHS and the patients whom it serves.

4.2 p.m.

Lord Clement-Jones: My Lords, I, too, thank the Minister for repeating the Statement that was made in another place.

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We on these Benches welcome the references in the Chancellor's Budget yesterday on health funding and some—I stress that word—of the Secretary of State's Statement. I believe that that extra funding represents a victory for patients and "game, set and match" in terms of the arguments that the Liberal Democrats have been making, in some cases since the 1997 general election.

First, we on these Benches welcome the announcement of more resources for healthcare and believe that it should be funded from general taxation in a transparent and accountable manner. We have been making that argument for a considerable period. We believe that that represents the fairest form of social health insurance. That is in stark contrast to the position of those on the Tory Benches. We believe that Mr Wanless has actually got it right.

Secondly, I stress the need for social care funding to keep pace with NHS funding, which will ensure that hospital beds are freed up and that older people in particular can be cared for properly in the community. Whether the figure is 19,000 or 30,000 beds, the fact is that there has been a drastic reduction over the past three years. It is good that the Government have finally recognised that fact and that local authorities will now have the ability to fund domiciliary and residential care. In addition to that great change of heart by the Government, I hope that they will examine very carefully the arguments for providing free long-term personal care. They have already come quite a way in our direction; it takes just a little extra to come even closer.

Thirdly, I stress the need for the independent audit of standards and the need to establish whether money has been reaching the areas for which it was allocated. I referred to that in my last Starred Question. Throughout the passage of the National Health Service Reform and Health Care Professions Bill we have argued strongly for an independent audit body. It is good to see the Secretary of State and the Chancellor taking note of debates in this House. I trust that the Select Committee to which the audit body will be accountable will follow very closely the proposals that we made from these Benches and which were supported by those on the Conservative Benches. Whoever said that arguments in politics do not have happy outcomes?

Many matters, however, need to be clarified. What is the timing for putting the initiatives into practice? The NHS, as I have pointed out on many occasions, is groaning under the weight of new initiatives. We have beacon hospitals and earned autonomy, and now we have foundation hospitals. So it has gone on in many different areas.

We argued at the outset—at Second Reading of the National Health Service Reform and Health Care Professions Bill—that that Bill should be delayed. We did so in our very confident belief that those reforms were half baked and would rapidly be superseded. So it has proved to be. The Bill has already been superseded by the Secretary of State's Statement. Will the Minister arrange for the Bill to be delayed so that

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the new audit body, which we welcome—it appears that it will be a combination of a number of different audit bodies—can be included? Or is he planning to table amendments on Report next week? That would involve a fairly superhuman effort. That demonstrates the way in which the Department of Health and the Secretary of State in particular currently operate. We get initiative piled on initiative and legislation piled on legislation. When will it ever end?

When will the merger with CHI take place? The National Care Standards Commission is barely up and running—I refer to the acute hospital inspection side—but it will be merged with CHI. When will CHI be merged with the new body? Even if the body is not going to be merged, there are already 21 mechanisms in the health service for clinical governance. We should be thankful for small mercies and pleased that we do not have a 22nd mechanism. There is a plan for some simplification of the system for clinical governance.

Much time has been lost—five years to be precise—on the argument for funding the health service transparently from general taxation. The Government are no longer dissembling in that respect. We need to ensure that professionals and managers are allowed to get on with the job in the health service. Will the Government now desist from setting any more targets? Those that we have are ambitious enough, despite the Government's spin, the reports of chief executives and so on. Will the Government now ensure that money that is allocated to the health service gets to the intended services? Apart from through the Audit Commission, how will that be done?

Finally, I pay tribute to the NHS as a body and to NHS staff. I know that they will welcome the Chancellor's additional funding. However, they will have extreme reservations about the Secretary of State's Maoist approach to management. That approach involves hyperactively changing every initiative before it has had a chance to take effect. I hope that, in implementing these initiatives, the Secretary of State will take all of that into account.

4.8 p.m.

Lord Hunt of Kings Heath: My Lords, I thank the noble Earl, Lord Howe, for what I believe was a welcome to at least the announced allocation of resources to the NHS in future. Sadly, he did not say whether the Conservative Party would make a similar commitment of resources to the NHS. I agree with him that there is much detail in the proposal to be debated. We look forward to hearing more about his party's intentions.

The noble Earl's first substantive point was whether the current system of funding the NHS was the right one. I am delighted that my right honourable friend the Chancellor of the Exchequer made it abundantly clear that we believe that the current system of funding is indeed the right one, provided that that is accompanied by the reforms that are contained in the Statement. The Budget and the review documents that were published yesterday contain detailed information on alternative systems of funding. For instance, on

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funding by private insurance in the United States, those documents show that premiums average around £100 a week and are set to rise by £13 a week on average next year. As a result of those costs, that system insures only some of the people for some of their care.

Those documents also show that, on social insurance, the narrower base for contributions in France means that a typical employer pays £60 a week. That can place many costs on employers, it can have an impact on the economy and it affects employers' ability to create new jobs.

The report also shows that charging for clinical services, which would involve a healthcare system based on medical charges whereby patients would pay rising bills for individual operations and treatments, would mean, in effect, that the sick would pay more for being sick. It is the Government's view not only that the NHS system of funding is the most equitable, but that by offering the most comprehensive insurance policy to meet rising costs from medical advances, a reformed NHS can give people the greater security that they need.

I agree with the noble Earl about the crucial nature of this announcement and the future facing the NHS. There is no question but that this is a make-or-break situation for the National Health Service. It must show that it can change and reform and meet the expectations of the public with the resources that will now be made available.

The noble Earl asked about productivity. That is why we are introducing more freedoms into the system. We are introducing the right kind of financial incentives to make people behave in a way that will deliver the type of reform programme that I have described.

The noble Earl also asked for specific details about foundation trusts. I believe he will understand that I am not in a position to give precise answers because we still have to work through many of the details. However, I am convinced that if we are to have ownership of decision-making at local level, if we are to energise people and ensure good leadership in those who run the trusts, and if we are to get more people involved locally in what they do and support what they do, it is right to create foundation trusts.

It is extremely significant that the discussions that we have had with the chief executives of our most successful trusts indicate that they are very enthusiastic about the kind of freedoms that can be given when we create foundation trusts. In my view, an important potential of foundation trusts is that they are seen far less as agents of central government and far more as locally owned organisations which owe their accountability to the people whom they are there to serve.

The noble Earl asked me about financial incentives. At present, successful NHS trusts can exceed the activity that had been agreed with commissioners. However, in essence, there is no resource to pay them to do the extra work. It must make sense to incentivise

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the health service in order to ensure that those who can do more receive the rewards for doing so. Of course, it must be done in such a way that perverse incentives do not arise, and it must be done in relation to effective referral protocols. But surely the emphasis should be placed on rewarding those who do well rather than providing excuses for NHS organisations which do not.

As someone who has spent his career in the health service, the one point that I would make is that there is a great deal of difference between different organisations. We must not approach the NHS from the point of view that all organisations must be treated in the same way and that all are as good as each other. The work of the Commission for Health Improvement readily identifies enormous differences in the quality of work that is being done.

There is no doubt that the health service has invested inadequately in IT. I very much hope that the package announced yesterday by my right honourable friend the Chancellor will enable the proper investment to put into IT. I believe that, while the thrust of what we are saying today concerns devolution, IT is one area where there needs to be central leadership. We shall give that leadership. We shall also ensure that organisations are aided through advice and support to enable them to make the best of their IT. I consider IT to be fundamental to the reform process.

With regard to inspectorates, I am not in a position to respond to the noble Earl in relation to resources. Of course, we need to work fully through the details, but I assure the noble Earl that we shall resource the new inspectorates adequately because we want them to do a very good job. He will also have noted that we intend them to be more independent. I believe that noble Lords who have debated this issue in the National Health Service Reform and Health Care Professions Bill will welcome that very much.

If I may say so, the noble Lord, Lord Clement-Jones, started in a very constructive mode. I believe that he claimed that the announcement was all due to Liberal Democrat policy. I certainly welcome his support for the general funding of the NHS. I believe that we have done rather better than the penny on income tax proposed by his party. I also welcome the comments that he made about social care funding. If there is one thing that we have learnt, it is the importance of integration between decisions in health and social care. Clearly, if we are to deal with the issue of delayed discharges, we must have an integrated approach. I do not agree with him about personal care. I passionately believe that the money is better spent on intermediate care. That is where we shall spend that money.

The noble Lord, Lord Clement-Jones, echoed the theme that the noble Earl, Lord Howe, often raises; that is, that the Government are guilty of weighing down the NHS with too many initiatives. In the planning priorities guidance for next year, we have recognised the need to focus the NHS on the issues that really matter. The Statement which I have repeated today focuses on the issues of waiting and choice—

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matters which are very important to the public. The new initiatives that we have announced—the financial incentives and the freedoms for trusts—are all designed to focus the NHS and to move away from a system where too many priorities are involved.

However, in many debates—and, indeed, today—when the noble Lord talks about ensuring that money is directed to the services which are important, he is as guilty as anyone of seeking to micro-manage the health service from the centre. We resist that temptation. We wish to give much greater flexibility at local level. Of course, it is important to ensure that services such as those for cancer are funded adequately at local level. It will be the role of strategic health authorities to performance-manage that. However, I consider it to be most important that we give as much freedom as possible at local level.

Finally, the noble Lord asked about the progress of the current National Health Service Reform and Health Care Professions Bill. We are extremely satisfied with the Bill as currently drafted. We consider it to be important and we shall certainly proceed with it. We look forward to its Report stage in a few days' time. Of course, some of the measures that we have announced today will require primary legislation, but the noble Lord knows that I cannot possibly comment on when that might come before your Lordships' House.

4.18 p.m.

Baroness Pitkeathley: My Lords, during my five years in your Lordships' House there have been few Statements that I have welcomed as wholeheartedly as I do this one. Indeed, it has already raised morale. I know that because this morning I spoke to some of the dedicated staff to whom I and many others owe our lives. I particularly welcome the increased incentive to bring about co-operation between health and social services. I believe that the phrase "bed blocking" is unfortunate, and I am glad that my noble friend used the term "delayed discharge" instead.

However, I want to ask my noble friend whether he agrees that, when it comes to promoting co-operation between health and social services, carrots are better than sticks. Can he give me an assurance that any penalising of either health or social services will be kept to a minimum? Further, can I ask him for an assurance that encouragement will be given to build on the excellent work and relationships established by the National Care Standards Commission and an assurance that it will not replaced by the new commission?

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