NATIONAL HEALTH SERVICE (INVALID DIRECTION) BILL

HC Deb 11 March 1980 vol 980 cc1158-290

Order for Second Reading read.

3.42 pm

The Secretary of State for Social Services (Mr. Patrick Jenkin)

I beg to move, That the Bill be now read a Second time.

This is not a Bill that should give pleasure to any right hon. or hon. Member in any part of the House. I have already offered my full and unqualified apologies to the House for having to bring in this measure and I repeat that apology now. Nothing that I say on this occasion is intended in any sense to detract from that apology or from the clear ministerial responsibility that I accept. The House will, however, expect me to explain how we reached this position and why this Bill, however regrettable, is necessary.

The purpose of the Bill can be very briefly stated. In layman's language it is to regularise the position affecting the Lambeth, Southwark and Lewisham area health authority (teaching) from the date last year when I sought to appoint commissioners to manage the affairs of the area up to 31 March of this year, when the members of the authority will resume control of its affairs.

This Bill is necessary because I have accepted fully the view of the High Court, which held that my direction appointing commissioners to take charge of the affairs of the authority was invalid, because the section under which I sought to act required that I should specify a time limit. My reason for so acting I shall discuss later, but the results of the judgment are clear. The appointment of commissioners was invalid and consequently any decisons taken by them or by officers of the authority acting under their direction, if not regularised by law, are open to challenge.

For instance, staff whose contracts of employment were terminated might be able to claim reinstatement and back pay. Firms supplying goods or services to the authority might seek to raise the contract price or, conversely, they might be in some doubt whether they would be entitled to payment for having performed the contract.

The contracts of newly appointed staff would be invalid, and this might affect not only current remuneration but future pensions. Payments from public funds could well be held to have been made without proper statutory authority. Formal agreements entered into by the commissioners or on their behalf, would be without legal effect and would have to be renegotiated. Indeed, anyone—patients, staff, clinicians, and even members of the public—who could claim to have been adversely affected by anything that happened between 1 August last year and 31 March this year might be able to take action in the courts not only against the commissioners but against officers of the authority who had acted in accordance with the commissioners' instructions, or possibly me—though I am not clear about that.

Mr. Stanley Orme (Salford, West)

Does not the Secretary of State agree that there may be justifiable claims for damages against the commissioners and that this Bill should not preclude those claims?

Mr. Jenkin

That is a matter that the right hon. Member for Salford West (Mr. Orme) will seek to argue, but I think that the view that the House might take is that it might depend upon what one might well call the merits of the case. I shall come to that in a moment. I see that a number of amendments have already been tabled in accordance with the order passed by the House, and no doubt we shall be able to determine that question later.

The method chosen by the draftsman to avoid all this is to provide that the instrument that purported to be a direction given by myself with respect to the functions of the authority shall have effect and be deemed to have had effect as if it had been a valid direction under Section 86 of the National Health Service Act 1977 for the eight months between 1 August last year and 31 March next. The effect of this will be that every action of the commissioners or of those acting on thier behalf will be as legal and binding as if they had been validly appointed by a lawful direction under the Act.

The Bill is thus a retrospective one. and that is inevitable. It is retrospective because it seeks to protect all those involved in actions which they and I thought were valid and which now turn out to be invalid. I did what I thought was lawful. Now that the High Court has ruled otherwise I have accepted its ruling and seek only to ensure that those who have unwittingly acted unlawfully should not be penalised.

Mr. Douglas Jay (Battersea, North)

Will the right hon. Gentleman make one fact clear? Did he take the advice of the Law Officers of the Crown before he reached his unfortunate decision?

Mr. Jenkin

The right hon. Member for Battersea, North (Mr. Jay) has held high office in past Governments and I think that he knows that it is not the practice, in government, to indicate whose advice has been taken. I see that I have the support of the right hon. Member for Norwich, North (Mr. Ennals). It has never been the practice to disclose on whose advice a decision has been taken. I have said before in the House that I am answerable to the House for the conduct of the National Health Service. I took the decision to make a direction and I accept the responsibility. I am answerable to the House for that.

Mr. David Ennals (Norwich, North)

I am sure that the right hon. Gentleman will agree that on an issue as important as this, in which quite clearly he could be challenged in the Courts, he would not have done otherwise than to have referred to the Law Officers.

Mr. Jenkin

I am sure that the right hon. Gentleman will understand if I do not comment on what he said. It seems to me that any comment would be bound to breach the convention.

Mr. Michael English (Nottingham, West)

We must realise that the professional reputations of eminent people are at stake. It is common knowledge in the legal profession that neither the Attorney-General nor the Solicitor-General was consulted, and that they were not responsible for the advice that was criticised in the judgment of the Court. That judgment was given by a judge who was a former junior Treasury counsel. Let us at least be clear that the Law Officers of the Crown were not responsible for this mess.

Mr. Jenkin

The hon. Member will not expect me to comment on Temple gossip. The constitutional position is as I have described. It is not the practice, nor has it been, for Governments to disclose upon whose advice a Minister has taken action.

The Bill is retrospective because it is right to protect those who thought that they were acting legally and who acted in good faith. There was nothing in the judgment which suggested that I or anybody else acted other than in good faith. I did what I thought to be lawful. The court has ruled that it was not lawful. It is not right that those who unwittingly acted unlawfully should be penalised.

The Bill has been carefully drafted to limit its effect and to achieve a narrow but necessary end. It validates those actions which were thought at the time to be valid. It does not make lawful anything which would have been illegal, even if the direction had been valid. It may be a matter of semantics, but I attach importance to the fact that the Bill does not even declare that my direction was valid. That would contradict the verdict of the court.

As I made clear in my statement on 26 February, since the judgment I have sought to act with proper respect for the courts and the rule of law. Accordingly, the Bill does not state that my invalid direction is valid. The Bill says that the instrument purporting to be a direction shall have effect as if it had been a valid direction. The effect may be the same, but the language preserves the integrity of the court's judgment.

I have already argued that the Bill is necessary to protect the commissioners and those who acted on their behalf. It is equally necessary to protect the members of the authority when they resume control. Otherwise, the authority would be continually involved in litigation and therefore hampered in the real task of running the area. I hope that the House will accept that it is in everybody's interest that the protection afforded by the Bill should be made available. As I said in reply to the intervention by the right hon. Member for Salford, West, I conceive that the attitude which hon. Members may take to the Bill and to my actions in the affair could turn on the judgment about whether I was justified in seeking the remedy which I sought last August.

It is, therefore, right and proper that, in commending the Bill to the House, I should say something about the history that led to the making of the purported direction. The Lambeth, Southwark and Lewisham area consists of a mixture of teaching hospitals, older community hospitals and a wide spread of community services. It has its full share of the inner city problems of primary care. In particular, it exhibits to a marked degree the uneasy co-existence, cheek by jowl, of inner city deprivation and institutions engaged in high medical technology such as open heart surgery and kidney and liver transplantation. In that it is no different from a number of other inner London health authorities. I call in aid a point made by my predecessor, the right hon. Member for Norwich. North, who pointed out to the chairman of the authority, in a letter dated 31 August 1978, that the problems facing Lambeth, Southwark and Lewisham AHA(T) are not unique or such or as to merit any exceptional dispensation.

Mr. Christopher Price (Lewisham, West)

The Secretary of State says that the Lambeth, Southwark and Lewisham health authority is no different from other regional health authorities in London. Can he name another area health authority which has three teaching hospitals?

Mr. Jenkin

The Kensington, Chelsea and Westminister authority has three teaching hospitals, including Westminster and St. Mary's hospitals. That area also experiences inner city deprivation. A former Minister, Dr. John Dunwoody, has made his position clear. He has been most loyal in abiding by the cash limits imposed upon that authority.

Under the process of distributing resources progressively to health authorities in accordance with their assessed needs, the Lambeth, Southwark and Lewisham authority was, over the years, destined to experience a reduction in its allocation from the South-East Thames RHA. The region was fully committed to the last Government's policy of securing a more equitable distribution of resources within the region. That meant switching resources from London—mainly from Lambeth, Southwark and Lewisham—and from the Greenwich and Bexley area to health authorities in Kent and East Sussex.

In accordance with that policy, there was a modest reduction in LSL's allocation in 1976–77. That caused an immediate row between the area and the regional authorities. In 1977–78 the region decided to make no reduction. Indeed, it allowed a slight increase in the allocation to LSL in order to give the authority time to plan for a reduction in the following year. When 1978 came the area continued to challenge the region's calculations.

In April 1978 a motion was passed rejecting the reduced allocation which would only result in cuts in services and redundancies amongst staff". In due course that was followed by the now celebrated meeting at Westminster hospital between the right hon. Member for Norwich, North, the regional chairman, Sir John Donne, and the vice-chairman of the area, Sir John Prideaux. At that meeting Sir John Prideaux, on behalf of the area, said that it had set its face firmly against any reductions in services to patients and that it would not accept the region's allocation of finance.

I have no doubt that the right hon. Member for Norwich, North considered the position carefully. On 5 July the right hon. Gentleman announced in a written answer that he endorsed the region's view. He called upon the area to plan to reduce its annual spending by about £3 million in 1979–80 and to make significant progress to that end in 1978–79. I shall not read the whole of the right hon. Gentle-mans reply because it was long. However, I shall read one passage if only to demonstrate the common ground that has existed between successive Governments on this difficult issue. The right hon. Gentleman said: I must make it absolutely clear that all health authorities must control their expenditure within the cash limit allocations. This is an essential feature of the Government's control of public expenditure…Health authorities throughout the country have been generally successful in controlling their expenditure. Moreover, in so doing, several authorities in London, facing problems similar to those of Lambeth, Southwark and Lewisham have been able to achieve substantial economies in the past two years. I do not accept that Lambeth, Southwark and Lewisham cannot achieve a similar result."—[Official Report, 5 July 1978; Vol. 953, c. 227–8.]

Mr. Christopher Price

Is the Secretary of State aware that I and a number of my colleagues attended several meetings at that time to discuss the whole problem? There was never any element of common ground on emergency procedure. If there was a threat of action, it was to be dealt with properly under section 17. There was never any suggestion that there would be a resort to such naked violation.

Mr. Jenkin

The hon. Member can make his speech later. The question whether there was an emergency was for me to decide. I acted in good faith. I could not be said to have acted unreasonably. It is not established that I acted unreasonably. Simply because of the narrow and essential point—and I make no excuses about it—because we did not know when the emergency was likely to end and we did not establish a time limit, it was held that the section was not properly invoked.

Mr. English

The text says: Bearing in mind the advice the Secretary of State was given it has not been established"— it is clear that the advice given to the Secretary of State was bad. The text continues: in consequence of this advice the Secretary of State failed to give proper consideration to the possibility of giving a section 17 direction". The judge took the point which the Secretary of State conspicuously seems to wish to evade, namely, that he asked, but never ordered, the authority to keep to the cash limits.

Mr. Jenkin

I do not evade that. I pay full credit to the hon. Gentleman. He was the first in the House to wake up to the fact that a Bill of this kind would be necessary, although we recognised that it would be necessary if we did not appeal.

I do not know whether the hon. Gentleman read the long affadavit which I swore and which was in evidence to the court. I set out at some length the reasons why, having considered section 17, we decided not to use it. I am not sure what point the hon. Gentleman seeks to make. I considered whether section 17 would be right. Recently in reply to a question from my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), I explained precisely why we decided not to use section 17. The reason was primarily the time factor. We were already one-third of the way through the year. We should have had to allow further time to pass before we could make a direction under section 75 which would not merely have suspended the authority but sacked it. That was why we did not do so. But it is not fair to argue that I did not consider it. I considered it carefully.

Mr. English

Was there proper consideration?

Mr. Jenkin

Proper consideration—I recognise the judge's view. We considered it. In my affadavit I explained how we considered it and why. The judge said that it was improper. I am not trying to evade anything. I hope that the hon. Gentleman will feel that his comment was slightly unfair.

Those events occurred in July 1978. The right hon. Member for Norwich, North made his position abundantly clear. I might have said exactly the same in the same place.

By October it became clear that the authority would not comply with the right hon. Gentleman's decision over spending, which was by then estimated to be running at no less than £5.3 million. The right hon. Gentleman again intervened. He asked the area to reduce its expenditure by at least £1 million in the remainder of that year and to plan so that its expenditure in 1979–80, the current year, would not exceed the 1977–78 level in real terms.

After quoting the authority's draft plan, the right hon. Gentleman, in a letter dated 8 December, said: The inference to be drawn from such statements is that the authority has no intention of complying with the objective I made known to it in July". Pausing there, perhaps that is the point at which the right hon. Gentleman might have considered that a direction would have been appropriate. However, that will be for him to decide. He had by then come to the conclusion that the area health authority could not and would not abide by its cash limits. I shall read the next couple of paragraphs as they set out clearly what was the position. The letter went on: Health authorities are authorised to spend only funds voted by Parliament. As Secretary of State I am responsible finally for controlling that expenditure. Lower down it said: This expenditure is also subject to cash limits, a discipline to which the Government and Parliament are committed as necessary for the control of public expenditure. I should therefore be failing in my duty if I did not insist on this discipline being observed by your authority, in common with all others. I would rightly be held answerable by Parliament for such default. In plain terms, your authority seems intent on spending money which is not its to spend. This cannot continue. It would be wholly improper, for the reasons I have given above; and it would be intolerably unfair to other health authorities who have kept to their budgets". The right hon. Gentleman finished his letter with some words which the House will wish to note: I trust that—even at this late stage—your authority will accept its duty to act promptly and effectively in response to the requirements I have set out above. Should it fail to do so however, I must make it clear that I shall have no alternative to using the statutory powers of direction available to me, to secure compliance with those requirements". The right hon. Gentleman did not at that stage specify which statutory direction he would have used. However, there was a clear indication that he would have intended to use them. I suspect that the right hon. Gentleman would have had the same advice that I had.

In spite of that clear warning, the authority continued to equivocate. It gave instructions to reduce the current overspending of £5.3 million by £1 million, but added a rider to a letter which the chairman wrote to my predecessor on 12 December that: In doing this Teams should have regard to the authority's continuing instructions that there should be no cuts to patient services and staff.

Mr. S. C. Silkin (Dulwich)

Was the letter quoted by the Minister before him when he made his decision? I refer to the letter in which my right hon. Friend clearly said that he might be issuing a second directive.

Mr. Jenkin

The right hon. and learned Gentleman knows how these matters go—a series of submissions and papers. Probably the whole correspon- dence was available in my file during my consideration. Whether I read it on the day that I decided to make the direction I cannot now recollect, but, I suspect, probably not on that day.

Mr. Silkin

May we take it that the right hon. Gentleman had in mind that the alternative of the section 17 direction was not only open but had been already suggested?

Mr. Jenkin

Advice given by my officials to the right hon. Gentleman would have been privileged. They would not disclose that to me. That is the conventional position. I suspect that I had seen the correspondence on this matter as it was in the public domain.

I referred to the rider added by area that there should be no cut in patient services and staff. Clearly the right hon. Gentleman was unhappy with that. Shortly before Christmas he wrote again. He expressed deep misgiving about the rider. He called on region and area to turn their attention to the position from 1980–81 onwards and to report to him by the end of March 1979.

That was in essence the position which I inherited when the present Government took office. There was a consistent refusal by the authority to live within its income, despite repeated warnings from my predecessor, and indeed the threat to make a direction. Indeed, so far from making reductions at its May meeting last year the authority was warned by its officers that the expenditure trend appeared to be increasing. I ask the House to note that that was well before the Budget.

At last, on 11 June, the area instructed its districts to live within the allocations made to it and to report to the authority in July on the implications of containing expenditure within approved limits—that is, to make the plans that would be necessary to cut its spending. At the same time, the area agreed to curtail regional and supra-regional services and also, in principle, to reduce staffing levels by natural wastage and in consultation with staff sides.

That was not before time. At a joint region-area meeting held on 5 July, exactly a year after the written answer by the right hon. Gentleman to the hon. Member for Lewisham, West, he instructed it to remain within its cash limits. The area treasurer forecast overspending amounting to £5 million in 1979–80 on top of the overspending of £4.3 million the previous year. In the meantime there had been the Budget.

Mr. Ennals

I hope that the Minister will not stop his bit of history there. I hope to catch Mr. Speaker's eye later and add one or two other points. Surely the Minister does not overlook the fact that by June 1979 the authority had taken the necessary steps to ensure that its expenditure in 1979–80 would be held to the 1977–78 level in real terms. That was required of it. That was what it agreed to do. That was recorded by the learned judge in giving his conclusions.

Mr. Jenkin

I am coming to that. One needs, however to put a gloss on it. Inevitably it ties up with the cash limits which the Labour Government imposed on that area health authority and all other health authorities at the beginning of the year. The cash limits—5 per cent. for pay and 8 per cent. for prices—were not adequate to cover the inflation which was already apparent: 13 per cent. was forecast by 5 May. Of course, the authority would have had to make further cuts.

It is right to give the House the figures on VAT. I said that the overspending was estimated at £5 million for 1979–80. The increase in VAT, the only Budget change to affect the position, amounted to between £1½ million—the Department's estimate—and £11 million—the area's estimate—or a little over one-fifth of the total anticipated overspend. That meant that four-fifths of the overspend had absolutely nothing to do with the Budget.

The area team of officers prepared a programme of economies which would have brought the overspend under control, and the members planning group from the area endorsed the officers' recommendations. That was after the Budget, on 16 July. On 24 July, my hon. Friend the Minister for Health wrote to the chairman making it plain that health authorities' cash limits would not be increased to cover the effects of inflation, though there would be increases in respect of the costs of pay settlements, apart from the area's share of the sum of £23 million which the previous Government had already decided to withhold.

Three days later my hon. Friend the Minister wrote to Sir John Donne, the regional chairman, with a copy to Mr. Hardy, the area chairman, emphasising that there could be no relaxation of the requirement that cash limits must not be exceeded. I should like to quote one paragraph from that letter, because it made the position crystal clear: In this context I feel I must let you know that if the AHA(T) fails to take the decisions required at its special meeting, the Secretary of State and I are determined that the necessary powers will be used as quickly as possible in the appropriate way to ensure that its expenditure will be brought under control". We intended to use them in the appropriate way and it was a matter of regret that we failed.

Mr. Reg Race (Wood Green)

rose—

Mr. Jenkin

No, I shall not give way. I wish to proceed with my speech.

We all know what then happened. On 30 July the area accepted the need to find cuts of £2 million, but declined to endorse the decisions that would have been necessary to make the full savings required, as recommended by the officers and as agreed by their own members' planning group. By 19 votes to 7, a motion was carried declaring that there would be no reduction in patient activity levels below those pertaining in 1977-78, and that no reductions in services or staff to accommodate the under-funding of the inflation allowance for 1979-80 would be made without the express authorisation of the area health authority.

Despite the concluding words, there could be no mistaking the intent. All those present knew that this was an intended act of deliberate defiance by the majority of the system of cash limits, established by the previous Labour Government, and carried on by the present Government.

Given this long history of refusal to abide by the spending limits imposed on it by successive Governments, I have not the slightest hesitation in declaring to the House that I was totally justified in taking action to bring the matter under control.

The House may legitimately criticise me for my failure to take action in a way that was both lawful and effective. It cannot—certainly right hon. and hon. Labour Members cannot—fairly criticise me for acting decisively when I did. There was support from surprising quarters. The Guardian, a newspaper that does not often support the Conservative Party, expressed its view succinctly. Referring to me, it said on 1 August, the day after the area's decision: He should sack the 33 members and replace them with a commissioner. That was the verdict of The Guardian, and that was what I did—or purported to do—that day. On the next day, under the heading Mr. Jenkin and the rebels", it wrote: The facts which Mr Patrick Jenkin set out in his press conference yesterday perfectly justify his decision to suspend the rebel authority. … Having overspent last year and got away with some of it, the rebels clearly felt emboldened to try again. … If they had done their own dirty work, they would at least have been able to say what should have been saved. Now they have lost that right. The impact throughout the rest of the authority was nothing but salutary. I recently received a letter from Mrs. Avril Fishwick, chairman of the Wigan area health authority. She has given me permission to quote from her letter. She said: Once the dust has settled, I feel sure that all the steps you took, both last year and this, will prove to have been the right ones at the time. It may have been wrong in law to sack Lambeth but, my word, it had a salutary effect on the rest of us. Indeed it did, and no other health authority has been tempted to go down the same route. It was because the Lambeth, Southwark and Lewisham area health authority consistently refused to—

Mr. Roland Moyle (Lewisham, East)

Is the right hon. Gentleman now claiming that he has obtained some benefits from his illegal action and that he is proud of it?

Mr. Jenkin

I am proud that I decided to act when I did. That action was long overdue.

As an interim measure I asked the region to fulfil the role of commissioners, but on 6 August I appointed Sir Frank Hartley as chairman of the commissioners, with Sir John Prideaux and Miss Peggy Nuttall, former members of the authority, who had voted with the minority together with Professor Temple-man and Dr. David Williams, who together constituted the five commissioners Their remit was made abundantly clear. It was to bring the area's spending within the cash limits for 1979–80, and to do it in such a way that the area could reasonably expect to abide by whatever spending limits might be imposed for the following year.

I should like to express on behalf of the Government our deep gratitude to Sir Frank and his colleagues for the vigorous and determined way they set about their task. Certainly no shred of blame attaches to them for the fact that we have to have this Bill today. That responsibility is mine and mine alone.

As I told the House on 3 March, I am given to understand by the commissioners that last month they were on course to ensure that the area's spending would be within the cash limits in this financial year, within £100,000 either way. The commissioners are in no doubt that the underlying rate of spending will still need to be cut back next year, 1980–81, if the threat of overspending is to be permanently removed. The House will know, too, that there are some urgently needed developments in priority services, which have had to be postponed this year. Perhaps I should tell the House briefly how the commissioners have achieved their target. First, they put a stop to new developments. Secondly, they ensured good housekeeping, principally by close monitoring of districts' performance, and by giving priority to revenue savings schemes in the capital programme. Thirdly, they made a few decisions, specifically aimed at reducing patient services as a means of achieving the essential cost savings.

They worked to the target originally set by my predecessor to hold back patient services this year to the levels of 1977–78, but the effect of the cash limits whch he had set meant that a few services would have to be reduced below that level. That inevitably involved the commissioners in a 'number of difficult decisions.

No one has ever pretended that it would be otherwise. The real difficulty for the commissioners arose because they were forced to find savings for the full year, when they had had to start nearly halfway through the year, against the rising trend of expenditure to which I have already referred. The authorities' refusal to cut back at the beginning of the year without doubt made the cuts more drastic when they came.

Hon. Members may argue, and perhaps they will argue this afternoon, that savings could have been found elsewhere. If so, they owe it to the House to say where.

I turn to the point of the right hon. Member for Bermondsey (Mr. Mellish). No one welcomed the transfer of inpatient services from St. Olave's to other hospitals and the temporary closure of part of that hospital. The decisions to limit the kidney transplant and cardiac services in the King's health district also presented particular difficulties. The temporary closure of St. John's hospital, Lewisham, also aroused bitter opposition. However, it must be recognised—I do not know how far the right hon. Member for Lewisham, East (Mr. Moyle) recognises it—that the days of St. John's hospital were numbered in any event.

Mr. Moyle

We recognised that the days of St. John's hospital were numbered. I had in fact agreed with Stan Hardy that when the Lewisham development phase was completed St. John's would close. I am prepared to go on record as having said that. However, the reorganisation has meant that the abortion ward is now next to the labour ward, which is not satisfactory.

Mr. Jenkin

I recognise that, and at one time I faced the same problems in one of the hospitals in my constituency.

I hope that it will be reassuring to the House to know that none of the reductions in clinical activity was intended to be permanent. They were intended to be short-term measures. The decisions were taken as being the most appropriate way of securing the needed changes in the current year. None of the cutbacks has been of a nature to prejudice decisions which the restored authority might wish to take for next year. The only permanent closure has beeen that of the Holmhurst hospital in the St. Thomas' health district, with the transfer of its patients to the South-Western hospital. The St. Thomas' community health council did not object to the closure.

As far as St. Olave's is concerned, I can fully understand that the temporary closure was a very bitter blow to the right hon. Member for Bermondsey, who has been closely associated with this much-loved hospital for many years. I shall not repeat all that was said to him by my hon. Friend the Under-Secretary in the Adjournment debate a fortnight before Christmas. Perhaps, however, I can tell the House that following a meeting in my office with the right hon. Gentleman—and I hope he will allow me to refer to it—I secured the agreement of Sir Frank Hartley to a statement, which I authorised the right hon. Gentleman to use in any way he thought fit. What I authorised was: The transfer of in-patient services from St. Olave's is essentially a short-term measure. The Commissioners recognise that St. Olave's Hospital is a valuable asset for the NHS and they will be considering as soon as possible what the future use of the hospital should be. The Secretary of State certainly does not envisage that St. Olave's should remain closed for any longer than is necessary. It may well have to care for a different type of patient in future, but he is convinced that the hospital should be given a viable and useful role in the longer-term plans for the district once the present financial difficulties have been resolved. I hope that that helped the right hon. Gentleman in the very real difficulties I know he faced in his constituency, and I hope that it will not be long before the services are again available in that hospital.

Those then, are some of the important controversial decisions which the commissioners have taken. The House may feel that, difficult though they were, those decisions were inescapable.

However, the judgment of Mr. Justice Woolf clarly ruled that, necessary or not, those decisions were reached without proper legal powers. The House will recollect my response. Following the judgment on 25 February I embarked on immediate discussions, first with the regional chairman and the chairman of the commissioners, then, within a day or two, with the chairman of the health authority, Mr. Stan Hardy, and then, on Friday 29 February, with a majority of the members of the authority, because I wished to explore carefully the implications of restoring the authority in accordance with the decision of the court.

Not only the chairman of the authority but every one of the nearly two-thirds of the members of the authority who attended the meeting gave me their assurance that, if restored, they would abide by the cash limits established for the area. Although this is not a matter for the local authorities which were the applicants in the case, it is right to put on record the fact that through their solicitor they too recognised the obligation of the authority to abide by cash limits.

There has been some suggestion that I should perhaps have acted even more swiftly to restore the authority. The hon. Member for Nottingham, West (Mr. English) perhaps made such a suggestion the other day. However, it was the applicants who suggested that it would obviously make for an orderly transfer if this were to take place at the end of the financial year. This seemed to me to be sensible and I was willing to accept it. I should also place on record my gratitude to Sir Frank and his colleagues, who, despite the difficult situation, have agreed to remain in office until 31 March in a caretaker capacity.

But today I have to ask Parliament to regularise the position arising from the unlawful direction which I made. I ask the House to recognise that it would create an impossible situation, not only for the commissioners but for the restored authority, if we did not pass this Bill. Given what has happened, an Act of Parliament is essential, and I ask the House to give the Bill a Second Reading.

4.26 pm

Mr. Stanley Orme (Salford, West)

The Secretary of State has at times this afternoon attempted to put a gloss on the situation, but the basic fact is that he broke the law. He did not take sufficient advice, certainly from the legal officers. It is interesting to note that the name of the Attorney-General appears on this Bill, but apparently he was not consulted at the time about the action which the Secretary of State took. In effect, this is a sorry day for our legislation.

What a difference from the days of May. June and July of last year when the Government attempted to impose their cash limits and—the right hon. Gentleman has admitted it today—to bring other authorities under control! The Lambeth, Southwark and Lewisham area health authority was used as a whipping boy in his attempt to impose his policy in regard to cash limits upon other authorities.

Mr. Patrick Jenkin

I must dispute that absolutely. No other authority in the country had a history remotely comparable to that with which I regaled the House a few moments ago.

Mr. Orme

Why did the right hon. Gentleman quote the letter from the chairman of the Wigan area health authority with such approval this afternoon if that is the case? The chairman of the Wigan area health authority said this had had an effect upon other authorities, and the right hon. Gentleman used that letter this afternoon.

Mr. Jenkin

The right hon. Gentleman has asked me a question and I think we must get the answer absolutely clear. What the right hon. Gentleman has to address himself to is what would have happened if I had not acted and Lambeth, Southwark and Lewisham had got away with it yet again. Would I then have been able to hold the line with a number of other authorities which were facing comparable difficulties in other parts of the country?

Mr. Orme

Certainly any action that I would have proposed would not have been illegal, and I think the Secretary of State needs to take that into account. There is no doubt that the Secretary of State must take the blame for his action. As a result of this decision we have seen the closure of two major London hospitals, which he has talked about, redundancies and, of course, the suspension of a democratically appointed area health authority.

The right hon. Gentleman tried to blur the effect of the change of Government last year and the effect that VAT had on the situation. No doubt my right hon. Friend the Member for Norwich, North (Mr. Ennals) can defend himself, but he is exonerated in the judgment of Mr. Justice Woolf. It is interesting to see what he says: However with considerable reluctance it did comply with Mr. Ennals's requirements and it is not disputed before me that it achieved the saving of £1 million during the remainder of the year 1978/79 and that, by June, 1979, it had taken the necessary steps to ensure that its expenditure in 1979/80 would be held to the 1977/78 level in real terms. This improved position was however changed by the budget proposals announced on the 12th June 1979. That is what Mr. Justice Woolf said.

Mr. Jenkin

With the greatest respect, I sought to explain exactly what the position was. The fact of the matter is that the level of services for 1977–78, which the right hon. Member for Norwich, North has said is the benchmark for the spending in 1979–80, would have been perfectly all right had the cash limits which the right hon. Gentleman himself set for the authority been sufficient to cover that volume of spending. They were not; they m no way covered the volume of spending. Therefore, even to comply with the right hon. Gentleman's cash limits even before the budget would have required further cuts in patient services. The right hon. Gentleman is shaking his head, but I am bound to tell him that it is true. That is the position. The budget merely added, in our estimate, another £1 million to an overspending that was already E5.3 million.

Mr. Orme

That is not an insignificant sum, and the interesting thing is that the right hon. Gentleman did not raise the cash limits to take account of VAT. That is the whole basis of the argument we are using here this afternoon. The Secretary of State does not take that into account.

We must direct our attention to this Bill. We shall be returning to some of the pertinent points at Committee stage and on Report, when we shall be pressing on the Government certain actions which we believe they should take in the interests of many people who have been damaged by the illegal action and by the action of the commissioners. I want to refer to the problems that have been created by the action taken by the Secretary of State under section 86—very different action from the consultations my right hon. Friend held and the patient and measured way in which he dealt with the area health authorities.

My hon. Friend the Member for Lewisham, West (Mr. Christopher Price) was not slow to put forward what he believed to be the correct point of view at that particular time, but at no time was action of this type contemplated by the previous Government or by my right hon. Friend. That must go firmly on record.

Many of my hon. Friends who represent London constituencies will want to address themselves to the problem of the London hospitals.

Mr. Bob Dunn (Dartford)

Does the right hon. Gentleman acknowledge that the overspending of £9 million over two years caused considerable difficulties for the rest of the South-East Thames regional health authority area, especially in the industrial areas of northern Kent?

Mr. Orme

I want to address myself specifically to the London scene. Under RAWP, and with the transfer of resources, it was hoped that there could be better distribution throughout the country. Resources cannot, however, be transferred at a time of major cuts. That is exactly what the Government have done, because the imposition of VAT acts in the same way as a major cut.

The Secretary of State will not address himself to the question of the London hospitals, but this subject was debated in Committee on the National Health Services Bill and is relevant to this issue because the authority has three major teaching hospitals. It is interesting that the other authority involved in this issue is also in London.

The Royal Commission on the National Health Service proposed a full-scale inquiry into the London hospital scene, and I endorse that recommendation. The VAT increase did not assist the inner city areas, which is where the main burden fell. Two reports have recently been published. There is a discussion document issued by the London Health Planning Consortium and the Flowers report "London Medical Education: A New Framework". The opening paragraph of the discussion document puts the issue in a nutshell: Probably the most crucial issue facing London's health service is the change which will be needed during the next 10 years and beyond in the disposition of its acute hospital services. London's acute hospitals are heavily concentrated in the centre where the population has been declining for many years. That decline is expected to continue. Change is needed to correct the imbalances created by population migration and to ensure that good services are maintained for those who continue to reside in London—with a special need to improve and develop services for the elderly, mentally ill and mentally handicapped, and improve primary care services—while at the same time providing better services in other areas. The situation in the London area is serious. These two reports, backed by the report of the Royal Commission, highlight the problems we face with the teaching hospitals, migrating populations and health expenditure. This leads me to call upon the Government to set up without delay a wide-ranging inquiry into the London hospitals. If the Government are not prepared to do that, I give them fair warning that we shall campaign vigorously for such an inquiry. We believe that an inquiry is justified by the changes that have taken place in medicine and in the teaching hospitals, without going into the merits or otherwise of the two reports that have been presented to Parliament. The Secretary of State in refusing to accept the need for such an inquiry for which we have pressed is doing a disservice to London.

Mr. Christopher Price

Does my right hon. Friend recollect that one reason why St. Thomas' hospital and other London hospitals have been in the wrong position for the population which they should serve is the desire of consultants to be within easy reach of Harley Street so as to be able to support the private medical system on which the Tory Party is so keen?

Mr. Orme

These are matters which should be considered by the inquiry for which I am asking. It will be extremely difficult to assist areas such as the North-East and the North-West with the redistribution of resources unless we get the London hospital scene right.

Mrs. Peggy Fenner (Rochester and Chatham)

The right hon. Gentleman said, honestly, that one reason he believed that an inquiry was necessary was the concentration of teaching hospitals in London and the declining population of London. Does the right hon. Gentleman concede that the declining population to which he referred has not just disappeared and that many people have moved from London to North Kent? Does he agree that it is impossible to consider what is happening in inner London without also taking into account North Kent, to which many people have moved and which is entitled to be properly funded to take account of the increased population?

Mr. Orme

Perhaps the hon. lady will support me in advocating more expenditure on the National Health Service and opposing the imposition of VAT and other factors. More expenditure is needed. We cannot turn our back on Lambeth, Southwark and Lewisham. The problems are there and they have to be resolved in the longer term. The area health authority was honestly grappling with those problems against a difficult background.

Mr. Ronald W. Brown (Hackney, South and Shoreditch)

My right hon. Friend referred to two reports being presented to Parliament. They will not be presented to Parliament. Ministers will not answer for the reports, because they claim that they are not theirs.

Mr. Orme

I accept my hon. Friend's correction. The reports are available through the House of Commons but they are not reports to Parliament. If a full inquiry were set up those reports would be germane to the inquiry and could be taken into account. It is not sufficient for the inquiry to deal solely with teaching hospitals or the breaking up of medical areas. It needs to deal with the much wider question of the whole of the health services covering London. Those reports would play an important part, but they would not be the sole basis for such an inquiry.

No doubt some of my right hon. and hon. Friends will quote extensively from Mr Justice Woolf's. judgment. He fully expected that the Minister would appeal against his ruling, but the Secretary of State has not appealed. It is evident that he has not appealed because he thinks that he would not be successful in such an appeal. That highlights how wrong was the decision. The right hon. Gentleman cannot put a gloss on it this afternoon.

We believe that the Bill is retrospective legislation. I expected Government Members to be on their feet decrying retrospective legislation. We remember the Burmah-Total Refineries Trust Bill in some detail. But no; apparently Government Members go along with this Bill because it is their Secretary of State who made the mistake. We make it clear to the Secretary of State that we shall not divide against the Bill tonight. It would have been easy to do so, but we want the area health authority back into legitimate office. If we do not get satisfactory answers no doubt we shall seek to divide the House on some of the new clauses and amendments when we discuss the Bill further on Thursday.

I believe that I am entitled, at this stage, to put one or two further questions to the Secretary of State and the Minister who will reply on behalf of the Government, regarding the two hospitals that have been closed. The Secretary of State said that this was temporary and said to my right hon. Friend the Member for Bermondsey (Mr. Mellish) "It will not be long". We are entitled to know how long. When will these two hospitals—especially St. Olave's—be reopened? We are entitled to know, and we shall certainly press this issue.

I am disturbed by the Secretary of State's statement on cash limits. Though he may be laying down cash limits for the coming year, it would be wrong for the cash limits imposed by the Government through the commissioners to have to be observed by the returning area health authority. Perhaps the right hon. Gentleman would like to say something about that. He has probably seen the statements of Mr. David Townsend and another member of the AHA who feel that they should not be left to carry the can, restrospectively, in respect of cash limits that the right hon. Gentleman laid down with the commissioners. It is in order for him to suggest the cash limits for the next financial year but he has given no clear indication about the cash limits for this financial year. That affects the opening of St. Olave's hospital.

Mr. Patrick Jenkin

The right hon. Gentleman will know that I tried to say that, although, as he knows, the financial year has not yet ended and it will take a few weeks after the end of the financial year for the accounts finally to be drawn up, the report I had from the commissioners indicated, give or take £100,000 either way—which is a small margin in a budget of £130 million—that they hoped to be on course to Jive within the cash limits this year. That is the point I sought to make. I am not sure that I entirely understood the point made by Mr. Townsend, because I gave the AHA the same information on 29 February.

Mr. Orme

This is an issue that perplexes us. We want to know the Government's real intentions. I understand that Mr. Townsend and his colleague were not at the meeting that the Secretary of State had with members of the suspended AHA.

Mr. Jenkin

Mr. Townsend, Mr. Grant and Mr. Prentice, who I think have been the leading spokesmen for the local authority group, were all there.

Mr. Orme

I accept that. However, the Secretary of State will perhaps give the matter further consideration. It is a crucial point. The AHA may be under some misapprehension, when it returns to office, about where the commissioners' decisions leave it. The Government, having made a mistake of this magnitude, should put money in to put matters right. That is the reality, and the Secretary of State should take account of it.

I should like to follow that by asking the Secretary of State whether he will take steps to reimburse the borough of Lewisham for any costs it may incur in any legal proceedings that might be brought in consequence of the Government's action. That is a valid question and I believe that we are entitled to an answer.

I heard the Secretary of State say today that, in effect, he was trying to set aside actions by patients and workpeople. He cannot do that. Some people may have been severely disadvantaged by this decision. We would like to know what steps the right hon. Gentleman will take to consider justifiable claims by patients or potential patients whose position has been prejudiced since the commissioners illegallly assumed power. What about a person who has been transferred to another job who might have had promotion or an improvement in conditions in the offing? Will those conditions be maintained under the Bill? What about pension rights? We are talking about a period of several months during which the commissioners were illegally in control. We are also talking about people's livelihoods. They could be jeopardised by the decision that was taken by the Secretary of State.

We would like to know whether the Secretary of State is to meet the community health councils in Southwark and Lewisham. They have done a valiant job during the period that the AHA has been suspended. They were the only democratic bodies left to represent patients in that area. The Secretary of State owes it to the councils to meet them.

Mr. Martin Stevens (Fulham)

Is the right hon. Gentleman saying that the CHCs are elected? What makes them more democratic than other bodies?

Mr. Orme

I am sure that the hon. Member is aware that CHCs are representative of the community. In most local authority areas local authority people are members of the CHCs. These councils represent patients. They are one of the few bodies within the National Health Service specifically there to represent patients. They have no vested interest in either the medical profession or staff associations within the NHS. That is why I emphasise that the Secretary of State should meet the CHCs.

We shall return to some of the more detailed points during Committee stage and on Report on Thursday. It is not good enough for the Secretary of State to reiterate his apology and say "I am sorry. I was wrong." He has a responsibility to many of those who have been disadvantaged. He has a responsibility to the hospitals that have been affected. If he wants to wipe the slate clean he must take action which will reimburse and assist in the rehabilitation of this AHA. If it resumes office in a bloody-minded manner and there is conflict, we shall not resolve the problems.

The House will note that the Secretary of State is removing the dilemma he experienced, because in the Health Services Bill that is at present before the House he intends to take powers to dismiss area health authorities. Who can tell? Perhaps some judge might rule against him again in future if he takes similar action.

Mr. English

Is my right hon. Friend of the opinion that the power in the new Bill, directed at every authority—it is really a section 17 direction to every authority put in statutory form—is being introduced because the Secretary of State forgot to make a section 17 direction in this case?

Mr. Orme

There may be a great deal of truth in what my hon. Friend the Member for Nottingham, West (Mr. English) says.

The introduction of the Bill today tells a miserable story. It highlights the bungling of the Secretary of State and underlines the damage done to the Health Service in the London area. I hope that the right hon. Gentleman will listen to what the House has to say and take whatever action is necessary to put matters right. It is his duty and responsibility to do so.

4.50 pm

Mr. R. A. McCrindie (Brentwood and Ongar)

It is no doubt regrettable that Parliament is required to have this Bill before it. No doubt it was correct for the Secretary of State to offer his apology to the House. However, I suggest to my right hon. Friend that this is no occasion for him to appear before the House in sackcloth and ashes. On the contrary, it seems that a great deal of what he has done is proper and correct and that we are required to consider the Bill on only the narrowest possible basis.

No doubt many hon. Members will seek to catch your eye, Mr. Deputy Speaker, to make speeches relating to the interests of their constituencies within the South-East Thames regional health authority. My interest in addressing the House is very much wider than that. It is one based on my interest in and feeling for the National Health Service. It is based on a feeling that we must have fairness within the Health Service.

I suggest that the real background against which the debate should be considered is that of the history of overspending by the Lambeth, Southwark and Lewisham area health authority. It is not as though the overspending had recently appeared and had to be corrected. In 1978-79 cash limits were exceeded by no less than £4 million. As I listened to the right hon. Member for Salford, West (Mr. Orme) inveighing against my right hon. Friend, I could have been forgiven for thinking that this was something which the area health authority had done for the first time. That is not so.

The House will recall that the authority had already exceeded cash limits and that the Labour Government then in power took no action. Had that Labour Government taken action when the issue was first brought to their notice, the situation that we are now discussing would never have arisen. There was no firm approach to the overspending of the authority when it came before the Labour Government in 1979. I suggest that emboldened by the feebleness of the previous Labour Government, financial extravagance became almost the order of the day. It was undertaken to such a degree that without action by my right hon. Friend the money available to the authority would have run out before the end of the financial year.

If action had not been taken, the estimated overspending would have been £5 million in 1979–80. There is no doubt that the authority anticipated that the Government would step in if it overspent and would pay the wages and the other bills and maintain services to patients. What would have happened if the Government had been prepared to do what there was a perfectly respectable precedent for doing if they considered as such the conduct of affairs by the previous Labour Government? Money would have had to be found from somewhere to meet the deficit consciously undertaken by the authority. Alternatively, the Government would have been obliged to abandon their cash limits policy.

If the Government had taken the first approach, the "somewhere" from which the money would have had to be found would have been other area health authorities. If the other authorities were complying with the Government's cash limits policy, it would have been grossly unfair to have forced them to become responsible for part of the bill of an authority which was consciously spending in excess of its cash limits. If cuts had had to be made by other authorities as a result of having to find money for Lambeth, Southwark and Lewisham, it would have been grossly unfair and my right hon. Friend would have been faced, and rightly so, with an upsurge of feeling throughout the country as other authorities realised what was happening.

Mr. David Crouch (Canterbury)

As a member of the South-East Thames regional health authority since its inception, I can tell my hon. Friend that cuts were not having to be made but were being made. They were not being ordered to be made by my right hon. Friend; they were being made. Peter was being robbed to pay Paul. The Kent and East Sussex authorities had their figures altered in front of me in council of the AHA to meet the overspending of the rebellious Lambeth, Southwark and Lewisham group.

Mr. McCrindle

I am grateful to my hon. Friend. I shall alter the tense in which I was delivering my remarks. Instead of "would have been" I shall say "were being". I hope that that meets my hon. Friend's intervention.

If one authority had got away with it, surely the dam might have burst. If one, why not all the others? If that had happened, the Government's cash limits policy would have been in ruins.

It is interesting to note that the decision to defy the Government's cash limits policy was not unanimously taken within the authority. I understand that a group of its members made recommendations to the authority which, if implemented would have maintained services while staying within the cash limits. It is instructive to note that those recommendations were rejected.

Mr. Christopher Price

Which decision passed by the authority was a decision to defy? Will the hon. Gentleman repeat the words of any resolution that can in any way be interpreted as a decision to defy the cash limits?

Mr. McCrindle

I was about to repeat, for the benefit of the House, a quotation that appeared in The Guardian. If the hon. Member for Lewisham, West (Mr. Price) will bear with me, the quotation does a great deal to pinpoint popular feeling about the defiance of the authority. My right hon. Friend has used a part of the quotation from The Guardian. I shall quote a full paragraph because it is instructive. I refer to the edition of The Guardian of 1 August 1979. The paragraph states: If, after looking at the figures, the Secretary of State … concludes that the Lambeth, Southwark and Lewisham health authority has received a fair proportion of resources, his decision is relatively straightforward. He should sack the 33 members and replace them with a commissioner.".

Mr. Christopher Price

It is important in this House that facts and not opinions are stated. The leading article from which the hon. Gentleman quotes appeared in The Guardian after the press conference given by the Secretary of State, which I attended, which was the basis of the illegal decision that he took. Will the hon. Gentleman repeat any words of a resolution passed by the authority that could be construed as a decision to defy cash limits?

Mr. Patrick Jenkin

rose—

Mr. McCrindle

Does my right hon. Friend wish to intervene?

Mr. Jenkin

The hon. Member for Lewisham, West (Mr. Price) has asked a fair question and I intervene in the speech of my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) to give him the answer. The answer appears in a letter written to me by Mr. Stan Hardy on the day following the decision taken on 30 July. He refers to the main motion being put to the vote and carried by 19 votes to 7. I read the main parts of that in my speech. Mr. Hardy adds: the press representatives left the meeting. …. In fact we continued in an attempt to salvage as much as possible of the ATO's paper. Although we tried hard the subsequent vote deleted recommendations 3.1, 3.2 and 3.3. It was made clear that the majority was not prepared to accept the necessary votes to bring it within the cash limits.

Mr. McCrindle

I remind the House that this is my speech in which certain interventions have been made. If the hon. Member for Lewisham, West catches your eye, Mr. Deputy Speaker, he will no doubt be anxious to pursue the line that he has introduced. I hope that he will have taken on board the points made by my right hon. Friend the Secretary of State.

Mr. Orme

I interrupt briefly to inform the hon. Gentleman that what his right hon. Friend has read out is not a resolution of the AHA saying it will defy cash limits. The hon. Gentleman cannot point to a resolution to that effect.

Mr. McCrindle

Hon. Members will no doubt put their own interpretation on the matter, and the Minister in replying to the debate, will perhaps have further words to say. I have attempted to prow to the House that in all the circumstances given the most generous interpretation of events, the Secretary of State had no option but to invoke section 86 of the 1977 Act. It is also fair to remind the House that the Secretary of State is on record as saying that, in invoking that section, he did not accept that massive cuts in patient services would have been necessary for the area health authority to stay within its orbit. A reduction in services but no massive impact would seem to have been the most likely outcome if the area health authority had been prepared to toe the line.

The commissioners, when appointed, acted swiftly. In a short time, the whole matter had been brought under control, proving, if any proof was necessary, that it could be done. However, as we know —this is why we are discussing the matter yet again—the area health authority challenged the decision and, as we also know, the High Court found for it on a very limited point. I was pleased that the Government not only accepted the judgment, in these days when it is fashionable to challenge the decision of courts, but also decided, in the interests no doubt of the patients, not to appeal. Now the area health authority is to be reinstated. It is easy, in these circumstances, to speak of victory on one hand and defeat on the other. It is much more important to realise that, as a result of what has happened, over the last few months, in this unhappy saga, one or two facts stand out.

The Government took the action that was clearly necessary. I suggest that had the Labour Government still been in office and had their cash limits policy still been in force, they would have been entitled, and required, to take the same action. Equally, the action having been taken in a defective form, the legal judgment should be accepted by the Government. It is important to recognise that the ultimate objective of the Government of requiring cash limits to be accepted has been achieved. It has been achieved in a very circuitous way. It has been achieved in a way that has caused great hardship and great concern, as I have heard the right hon. Member for Bermondsey (Mr. Mellish) say on many occasions. But it has been achieved, so that the rule of law, which should not be lightly dismissed, and the authority of Government, whatever party is in office, have been reaffirmed.

As something of an optimist, I am inclined to say that all is well that ends well and to commend the Bill to the House. All is indeed well if the Secretary of State can be persuaded to resist calls by the Opposition that this is a matter that calls for his resignation. On the contrary, my right hon. Friend has been found to have acted properly over a wide area. He is correct to have accepted the judgment of the court. I hope that my right hon. Friend will not heed calls for his resignation. He has much good work to perform in the Department.

5.4 pm

Mr. Robert Mellish (Bermondsey)

I respect the speech of the hon. Member for Brentwood and Ongar (Mr. McCrindle). I admire those who show party loyalty, particularly when there is trouble. That is the test of a Back Bencher. No matter how bad the issue or how difficult the times for his Front Bench, the hon. Gentleman has shown his willingness to fight. Good luck to him. I do not blame him for adopting that attitude.

The hon. Gentleman's argument, of course, does not impress me. I shall not attack the Front Bench. I should like hon. Members, especially those who represent the Medway towns, to listen to my case and to see the matter in a different perspective. I should like to go back to the beginning of the story. I should perhaps begin "Once upon a time …" I was made by Aneurin Bevan a founder member of the regional hospital board when the National Health Service was introduced. I was also made a member of a local hospital management committee. That structure of the National Health Service, more perhaps by luck than judgment, was as near perfect as could be devised. Teaching hospitals—their heartaches, problems and difficulties—were kept separate.

I spent the whole of what are called the terrible Tory years between 1951 and 1964, and some time before, when the Labour Party was in power, within the Health Service. I know something of what I am talking about. I was a member of a regional hospital board and became a member of the board of governors of both Guy's hospital and King's College hospital. I was chairman of a hospital management committee. The finances of those bodies were conducted with a care and attention that was a credit to the nation.

The then Conservative Government instituted a report under the chairmanship of Professor Guillebaud. Professor Guillebaud, whom I met many times, questioned me as chairman of the hospital management committee. He marvelled that, even with the large finances involved, we were able to control the sub-heads so carefully. It was not difficult. We received X amount of money from the regional board and broke it down into sub-heads such as maintenance and catering. Salaries were a separate issue. They were not controlled by local management committees. All the important matters concerned with the running of the hospital were put under sub-heads. Each month the finance officer had to present an account of what had been spent under sub-heads and to show whether there had been overspending or underspending.

I am spelling this out in detail. I wish to impress upon the House what was happening not many years ago. Finance was under control. Of course, there have to be limits. The regional allocation was determined on the basis of need within the region. I was very much involved. Guillebaud did a first-class job and took a long time.

I should like to tell a story of press democracy, or lack of it. After 18 months, when Guillebaud was about to report, the Sunday Express ran an article claiming "Guillebaud shock" and "Millions misspent". I read that and thought "Oh, my God!" I asked myself how we had overspent. I believed that something must have gone badly wrong. On the Wednesday, Guillebaud reported, saving the complete opposite. Guillebaud's findings were on the lines of "Brilliant" and "Outstanding". The report stated that it was an extraordinary credit to the nation that the finances of the health authority were under control.

I expected to see another article the following Sunday apologising for the mistake and admitting that the newspaper had reported Mr. Guillebaud incorrectly. Not a word of apology appeared in the following Sunday's edition. Being naive, I wrote to the editor. I pointed out that the initial article had been proved incorrect and that no mention of the misstake had been made. I asked him why not. The editor said that he was sorry but that he could not print my letter due to lack of space. That is democracy we all live with it.

The hospitals used to operate through regional boards, teaching hospitals and hospital management committees. There were no layers in between.

Mr. Laurie Pavitt (Brent, South)

My right hon. Friend's story is most illuminating. However, does he recall that the late lain Macleod accepted the Guillebaud report when he was responsible for the NHS and that he altered the Conservative Party's policy for the next four elections in favour of the NHS?

Mr. Mellish

My hon. Friend has anticipated my remarks. I wish that he would leave me alone. I remember that the late lain Macleod—that brilliant Conservative—endorsed the continuation of that policy.

A madman then appeared on the scene. There is no other adjective for him. I warned the Conservative Party that it had a Rasputin monk in its midst. I warned it that the man was a menace. However, he is still a member of the Government and he still causes havoc. I refer to the Secretary of State for Industry.

Mr. Stevens

On a point of order, Mr Deputy Speaker. Is it in order for the right hon. Gentleman to describe my right hon. Friend the Secretary of State as being mad?

Mr. Deputy Speaker (Mr. Bernard Weatherill)

It is a parliamentary expression that is frequently heard. I believe that the expression forms part of the right hon. Gentleman's argument, to which I am listening most carefully.

Mr. Mellish

I shall qualify my statement by saying that the Secretary of State is politically mad. [AN HON. MEMBER: "Mentally afflicted?".] That is probably true. However that is a matter of political judgment. I am not qualified as a doctor. I have enough trouble as a Member of Parliament. In the nicest sense, that mad-man—

Mr. Deputy Speaker

I think that I prefer the phrase "political madman".

Mr. Mellish

That political madman introduced a new system. I asked him at the time why he was doing so. He said that he wanted to gain more community involvement. I asked him why. I also asked him what he meant by "community involvement". He replied that he wanted the public to feel that they were part of that great service. I pointed out that as chairman of a hospital management committee I was keen to involve the public. I mentioned that I had held a public meeting. I invited the matron and the superintendent of the hospital to attend. We advertised the meeting by means of huge posters throughout the borough. I pointed out to the Secretary of State that only 22 people turned up at that meeting. Of course social workers were there. That lot knew all the answers. The only member of the public who was of any importance got up and said that one of the doctors in the room had taken out his appendix instead of taking off his leg. In other words, the idea that the public should be involved in the running of each hospital is stuff and nonsense.

The public want first class hospitals. They do not want to attend public meetings or to find out whether steak and kidney pies are served on Wednesdays or on Fridays. That was the right hon. Gentleman's idea. I am glad that some hon. Members who represent Medway towns have remained in the Chamber. The right hon. Gentleman changed the health system and smashed it to pieces. It is true that he left the regions. However, he got rid of the teaching hospitals' boards of governors. He amalgamated those hospitals and put them into areas. He put another layer underneath and called it the community health council. I shall not discuss the community health council because I do not know what it does.

I am aggrieved because Guy's, St. Thomas', King's and Lewisham—a large teaching hospital—should have had their own boards of governors and special control of their finances, yet they were put into one area. A committee was installed to control that area. I understand and respect teaching hospitals. However, their finances cannot be controlled in that way. The finances of teaching hospitals have nothing to do with the finances of hospital management committees.

There is a patient in my constituency about whom his doctor said "For God's sake, Mellish, get rid of him. Get him out of this area. He is costing us £19,000 a year, because he has a certain type of blood disorder." Of those patients seen at Guy's hospital, 60 per cent. do not come from the local catchment area. Many of them come from Medway towns. If someone in Gravesend has a serious accident and fractures his skull he will need the best surgery available. Where is he sent? He will be sent, quite rightly, to Guy's where the finest possible surgeons are on duty 24 hours a day. The average parent does not give a tuppeny damn where those services exist, as long as their children can get treatment on a 24-hour basis.

Those hon. Members who represent Medway towns are concerned because the area health authority has overspent. That is not the right approach. One should ask a simple question: why did it overspend? The Secretary of State said that he had made a comparison. However, it was a bad comparison. Guy's, King's and St. Thomas' are the largest teaching hospitals in Britain. There are no other teaching hospitals of such quality or size. No other teaching hospitals have the same expenditure. I was at Guy's when Lord Nuffield was a member. If it had not been for his personal generosity, I do not know what Guy's would have done. In those days Guy's received endowment funds of El1 million to £12 million. Lord Nuffield gave Guy's a cheque for £1 million in order to build a new surgical block. Guy's was amalgamated by the present Secretary of State for Industry, and a disaster course was set.

I have great sympathy for Stan Hardy. That authority tried to control accounts. His position was not fair. I hope that the Secretary of State will forgive me if I disclose that Stan Hardy received me with great courtesy and understood my views about the closure of my hospital. We never overspent. However, we had the misfortune to be in an area that overspent. That is why I feel so angry. Sir Frank Hartley was told to make savings of £½ million. He told me that he could do so only by closing my hospital. I told him to get off my back. He could not close Guy's, St. Thomas' or King's and so he closed my hospital. My hospital had been looking after psychiatric and geriatric patients.

When the Secretary of State realised that overspending had taken place, he should have got in touch with people such as myself.

The truth was that control within a hospital and area of that size was impossible. The Secretary of State looked at this as a balance sheet argument. Income and expenditure had to level out. If that is all there is in this argument, I want no part of it. One must have compassion and sense as well.

The Secretary of State's mistake was in not recognising that his predecessor had destroyed any hope of control in these areas. If he then claimed that it was done successfully in other areas, I would reply that that is no argument. Neither is it a justification.

Let us look at the RAWP formula of the previous Government. This formula is not consistent with the imbalance in the area that we are discussing. That is why there was a lot to be said for having an entirely separate London inquiry. In my constituency I probably have the largest proportion of elderly people in the country. Therefore, my area needs special types of facilities and care. The one hospital that was providing these facilities was shut down. How barmy can one get?

I am not suggesting that the Minister is saying anything improper. He can only repeat the figures that he is given. Sir Frank Hartley claimed that savings of the kind required had been made. I challenge that claim, not on the basis of party politics, because that is no fun. For example, it was claimed that the closure of St. Olave's hospital would save £643,000. But that figure was given on the assumption that the whole hospital was closed.

What about the outgoings? First, it costs £150,000 a year to maintain it as an empty building. Only a Tory Government could work that one out. Only the middle part of the hospital is shut, but £150,000 a year is needed to maintain the building. The patients that were there were too ill to be discharged, so they were transferred to Guy's and New Cross. Where was money saved there?

What about the catering staff? Were they sacked? No; they, too, were sent to Guy's and New Cross. Therefore there was no saving on the payroll there. If Sir Frank Hartley were sitting in this Chamber I would have him. Of course he has produced a balance sheet setting out the figures and he has made claims about savings. He has given these to the Secre- tary of State, who has believed them. But the Secretary of State would believe anything. I urge him not to believe these figures. He should not believe that it will cost £650,000 a year to reopen St. Olave's. The central heating is being maintained, and one ward in the hospital, which is brand new and which cost £40,000, has not yet been opened. Can anyone explain the logic of that? The Secretary of State must be suspicious about the figures.

What are the needs of the area? What services and beds are available? What are the possibilities of an area health authority being able to control such finances? If firm decisions can be reached on those questions, one is well on the road to genuine financial control.

I do not believe that the Secretary of State is any less compassionate than I am. I have never believed that. I have received nothing but courtesy from him. He has agreed with me that it is a shame to close St. Olave's hospital. He knows the history of the hospital.

In my area we were very proud of St. Olave's. We removed the word "infirmary" from its title and we uplifted every ward. The whole community was proud of the hospital. Then a political madman comes along and shuts it down on the basis of unrealistic figures. One again I urge the Secretary of State not to believe these figures of savings. He should look again at the needs of the area. On that basis and that alone he can justify his finance.

I understand the point of view of people from the Medway towns area, but it is a myth to suggest that because there was overspending in this part of London that money could have been transferred to the Medway area. Life is not like that. The truth is that the overspending occurred, not because of the whims of evil people, but because the finances were uncontrollable.

5.25 pm

Mr. Roger Moate (Faversham)

We have heard a very passionate and powerful speech from the right hon. Member for Bermondsey (Mr. Mellish), who has tremendous concern for his area and for London generally, and a great deal of experience of the Health Service, past and present. I do not think that we would have expected any less from him. However, I wonder whether he really understands how this issue is seen from the point of view of the Medway health district—the district of which my constituency is part. I make this point not for parochial reasons but because it demonstrates the whole problem of financing the National Health Service and the importance of applying the cash limits that the previous Secretary of State tried to impose.

Obviously we deeply regret the fact that we have the Bill at all. Nothing that I say should be taken as intended to undermine the fact that we believe fundamentally in the principle that every Minister must act within the law. However, I believe that the action that the Secretary of State took was politically justified and I believe that in the end it will be regarded as right and good for the Health Service as a whole. I make no apologies for saying that.

My right hon. Friend has apologised to the House for the action that he took. I believe that the manner in which he has introduced this legislation, the fact that he did not appeal—he could have appealed and spun things out over many months—and the way in which he has conducted the matter is a great credit to him. It is the way in which Ministers should behave.

In a way, this is a triumph for the rule of law. While obviously we see this as a defeat for us in the courts, nevertheless it is no small thing that in this country individuals can challenge the actions of a Minister and assert that he is outside the law. The courts can uphold the rights of those individuals and Parliament then acts quickly to put the situation right. We can be proud of this.

I believe that my right hon. Friend was justified in what he did. He acted with the decisiveness which his predecessor should have displayed. Listening to the right hon. Member for Salford, West (Mr. Orme), one would have thought that this problem began this year. He asserted that no statutory action had been contemplated before. That is not the case. A letter was read out which clearly stated that the previous Secretary of State had contemplated taking statutory action to enforce cash limits. We know the whole history, going back year after year, of this particular teaching area exceeding its cash limits. The previous Secretary of State, pleaded, cajoled and threatened, yet nothing happened.

Mr. Ennals

That is not true.

Mr. Moate

The right hon. Gentleman will no doubt tell us about it when he speaks. He waved the big stick when there was planned overspending of up to £5 million by this area. That cannot be disputed. The right hon. Gentleman has asserted that some of that was due to VAT and the underfunding of the inflation of 1979. One accepts that. Nevertheless, the bulk of that overspending related to matters inherited from the previous year.

The right hon. Member for Salford, West believes that the answer is to put in more cash. No doubt that has always been his position. He would allow that overspending to continue. That was also the point made by the right hon. Member for Bermondsey, who felt that the spending should continue because of the particular nature of the area.

Mr. Mellish

The whole structure is wrong.

Mr. Moate

There would be a lot of sympathy for that point of view if the right hon. Gentleman had not used some rather extreme language about my right hon. Friend the Secretary of State for Industry. There is a great deal of scepticism about many reforms or so-called reforms that have been introduced into this House over the years by successive Governments.

The old efficiency and the old compassion seem to have disappeared. They have not disappeared because people have become less compassionate, but they have become submerged by new bureaucracy and by sheer size and scale.

What would have happened had the previous Secretary of State, or my right hon. Friend, allowed overspending to continue? That area would have pleaded that it was a special case, and would have overspent on a large scale—going well beyond its cash limits. What would have been the position in such areas as the Medway health district, and many other areas throughout the country?

Mr. Mellish

Nobody has asked the question "Why did that authority overspend?". I understand that the vast overspending was on the teaching hospital concept. What does the hon. Gentleman believe that the authority could have done about that other than shut the teaching hospitals?

Mr. Moate

I shall take that point steadily, as it is the main point that I wish to make. I wish to contrast the picture in that area with the picture in the Medway health district—which is true of other parts of the country. That authority had an overspend problem, of about £273,000. Previously I and some Medway Members went to see the previous Secretary of State, the right hon. Member for Norwich, North (Mr. Ennals) to argue that in our region we were faced with the impossibility of implementing the RAWP targets because of the sheer size and scale of the teaching problem. Out of a total budget of £450 million, about £130 million goes to the teaching area. Almost 30 per cent. of the budget goes to Lambeth. Southwark and Lewisham, which have only 20 per cent. of the population.

One accepts that that is a historic position, but much of the population of inner London has moved, and is continuing to move, to north Kent. How can we obtain those extra resources to fund what is acknowledged to be a deprived area?

Mr. Ronald W. Brown

Many of the people from the Medway area go to Bart's hospital, which is not in their area and has nothing to do with their region.

Mr. Moate

I agree that many people from Kent travel to London to take advantage of the special facilities in the London teaching area. That is taken into account, and is summarised by the ghastly name "SIFT".

Mr. Moyle

"SIFT" is the short name for the special implement for teaching. My hon. Friend referred to the cross-boundary flow of patients, and that is allowed. However, there is an argument about whether it meets the correct requirements of the situation.

Mr. Moate

Many hon. Members made that point over the years to the right hon. Member for Norwich, North. Of course there is a cross-movement of population. There is a movement of those seeking mental treatment in parts of Kent. We have a large number of extra facilities in that respect. Many of those seeking treatment come from the London area.

Taking into account all those considerations, the previous Government applied cash limits which, I presume, they thought were fair. What would be the position if one area overspent and ignored the cash limits, and other areas did not? Is that fair? We are not talking about some new God of monetarism or some new financial control, but simply about the fairness of the way in which the Government demand that their spending policies are applied. Is it fair for one area to overspend and for another to make sacrifices?

I wish to make the point once again about what happened in the Medway area last year. We had to make savings of about £150,000 to £170,000. It was essential to find that sum of money. The proposals that were put forward required the closure of 10 per cent. of the total number of beds in that area.

Mr. Ronald W. Brown

Is that all?

Mr. Moate

The hon. Gentleman may well say "Is that all?", but that area was already short of 900 beds, according to the RAWP target. I quote the 1978 figures that I gave in an Adjournment debate on the Swale hospital in 1978: only £78 is being spent per person in Kent compared with £108 in Greenwich and Bexley and £122 in Lambeth, Southwark and Lewisham. That is the discrepancy. We are talking about the application of the cash limits. The RAWP target states that we should have 1,900 beds, but we have only 1,000. It is generally acknowledged that it is a deprived area.

In my constituency two of the hospitals—and we have little more—were originally workhouses. They are marvellously manned, but are very old. We are desperately short of hospital facilities. We are told to save £150,000, and to do so we have to close 100 beds. What did the population do? We are a fairly poor area, despite the general image of a rich South-East. There was the most superb and heartwarming response by the public. Nearly all of the closures were averted by public subscription. Individuals clubbed together and subscribed money—not large amounts but many small amounts.

The Sittingbourne hospital was threatened with closure, and £30,000 was required to keep it open. That money was raised through raffles, draws and local efforts. The same happened in the Medway towns. They raised £45,000—the poor people, not the rich people—by clubbing together to save their wards from closure.

Why should they have to go to those extreme efforts to avoid the closures, while other areas say "We shall ignore the cash limits because we are a special case. We shall overspend not by a few hundred thousand pounds but by £5 million"?

Mr. Race

Does the hon. Gentleman accept that the closure of wards and beds in his area has exactly the same effect as would be the case in Lambeth, Lewisham and Southwark, namely, that the patients who would have been allocated those beds —whether acute, medical, geriatric, psychiatric or whatever—would not have been treated at all, or would have been treated inadequately by the community or by their families? Does he accept that closures, whether in his area or in Lewisham, Lambeth and Southwark would have that effect?

Mr. Moate

That must be seen against the background of an effort by the South-East Thames region to apply the principles of RAWP. That involves a redistribution of resources within the South-East Thames area. I know that it is difficult for hon. Members who serve London constituencies to accept—but it is generally accepted—that the teaching area in London has more resources than it should have.

It is a cruel proposition. I appreciate that each hon. Member will fight for the hospitals in his area. If Opposition Front Bench Members are saying that there should have been no cuts in the teaching area, they are saying that RAWP should be thrown overboard. If we are to apply RAWP and redistribute resources within the region, somehow we must cut back in the teaching areas and redirect the resources to the deprived areas. The refusal to implement cash limits, for whatever reasons—good or bad—implies that there is no respect for RAWP, and that the deprived areas will stay deprived and that the teaching area will stay as it is presently structured.

I have much sympathy with the points made about the need to consider the whole method of funding. In my Adjournment debate on the Swale hospital I said: Comparatively, the teaching area of Lambeth and Lewisham is, in theory at least, over-funded by £23 million. I say 'in theory' because in practice I am beginning to think that the RAWP formula is in many respects unworkable and should be reviewed. It might work well in a period of increasing resources, but I question whether it really can work in a period of restriction. Can it really work when poorer districts can be helped only by the closure of hospitals in other districts?"—[Official Report, 15th March 1978; Vol. 946, c. 599.] That was in 1978. That position has been going on year after year after year. Should we let it continue indefinitely?

The previous Labour Government were seen as something of a pushover as regards their cash limits, but nevertheless they passed on to this Government cash limits which had to be applied. The cuts that were applied in our area were not imposed by a Conservative Secretary of State, but arose from the cash limits that had been imposed by the Labour Government.

Labour Members may not agree with what I have said, but they should understand why it is that people in my area say that the Secretary of State was absolutely right to take stiff and stern action against the other area which was distorting the finances of the whole region. It is obviously a matter of the deepest regret that the advice was legally unsound and that the action was invalid. Nevertheless, I believe that the results which will flow from that action will be beneficial. Although I am sure that it was not intended, I believe that areas will now be more aware of their responsibilities. I hope that the Secretary of State will be ready to use the powers under the new Health Services Bill to ensure that other areas toe the line, not for the sake of some Treasury edict, but to ensure that there is fairness in the way in which Health Service finances are applied.

I believe that the decision not to appeal was a wise and helpful action on the part of my right hon. Friend. I understand that an atmosphere of greater co-operation has been established between the Department, the teaching area and, presumably, the region. That should mean that in future the area will keep within its cash limits. I believe that that will be beneficial for the people of Medway health district, for the people of Kent and, more generally, for the National Health Service as a whole.

5.41 pm

Mr. Christopher Price (Lewisham West)

Throughout this whole saga, I as a Lewisham Member was made aware of the views of my Labour colleagues, when they represented some of the Medway towns. It has never been my view, and I do not think that it has been the view of my colleagues, that our fight for our health service in inner London should in any way deprive the Medway towns of their needs. That effect has arisen only because of the ludicrous RAWP formula which the Labour Secretary of State imposed on the Health Service, and for which I criticised him on the first day that he introduced it. I shall continue to criticise it. As the Royal Commission points out, that is one reason why we need an inquiry into the London health service.

Mr. Ennals

Does not my hon. Friend agree that that was a proper principle to follow in other parts of the country such as the Northern region, the North-West region and the Trent region, which have achieved a much faster rate of growth because of their traditional deprivation? Was not that a proper thing for a Labour Secretary of State to do?

Mr. Price

I agree with the hon. Member for Faversham (Mr. Moate) that in a period of rapid expansion that might have been a way of doing it. But the problems of lack of control over certain areas of the Health Service compared with massive deprivation in other areas and specialities—for example, if one contrasts heart transplants with geriatric and psychiatric problems—were in my view much more massive than any regional or geographic deprivation. I believe that the speciality disfunction should have been tackled first, or certainly at the same time, and very much more vigorously, before one started such a rough and ready geographical formula which has caused so many problems.

I do not want to pursue that matter just now, because my right hon. Friend the Member for Bermondsey (Mr. Mellish) said that he would not criticise the Secretary of State. I shall. I am glad that the right hon. Gentleman is still in his place, because the whole impression given by Conservative Members is that Mr. Justice Woolf's judgment was one little item among many. The hon. Member for Canterbury (Mr. Crouch) called it "the niceties of the law", and some Conservative Members feel that the Secretary of State has made one tiny error which has caused a great deal of good. That impression must be put right, because exactly the opposite is true.

At a time when the Defence Estimates massively go through the cash limits it is well to remember that they do not receive the treatment which the Lambeth, Southwark and Lewisham cash limits have received. The truth is that the Secretary of State's action on 1 August—when virtually every hon. Member was on holiday and when only the Secretary of State and myself were still attending to these matters—was a political act of panic. He was completely deceived by his own propaganda about the attitude of the members of the area health authority, particularly about the borough of Lambeth, in the sort of way in which the whites in Rhodesia were deceived about Mr. Mugabe.

There was no decision, and the Secretary of State knows it, to defy cash limits. The resolution which was passed by the area health authority did not have that meaning at all. All it said was that before any reduction in patient services took place, the members of the area health authority would like to supervise that reduction in patient services rather than delegate it to their bureaucrats. Knowing both sets of individuals, I must say that I do not blame them.

I hope that when the Under-Secretary of State replies, he will put the record straight. Certainly, the judge put the record straight. He made it quite clear in his judgment that he did not accept the view of the Secretary of State that, had he given a direction, the area health authority would have defied it. He said: Little time had elapsed since then"— he was referring to the Budget and the extra money which the AHA had to find, and he added: the AHA(T) were by no means unanimous; the legal position was not clear; and a specific duty"— under section 17— could well have altered the AHA(T)'s attitude". Therefore, the judge who surveyed these matters decided that the Secretary of State was wrong. Clearly, one reason why the Secretary of State took the action that he did was to attempt to make a little political capital out of Lambeth, and to try to increase Lambeth's reputation for defiance, which was quite unjustified. Secondly, it was an act of panic, because he did not know what else to do. I agree that the same situation existed the year before, but on many occasions my right hon. Friends the Members for Bermondsey and for Lewisham, East (Mr. Moyle) and I met Members of Parliament from the community to discuss how the problems could be solved. The Secretary of State did not deign to do that once, and he knows it. That was the reason why he got himself into this legal problem.

Mr. Bob Dunn

If members of the area health authority knew that the cash limits were set by the Government, and through them to the region and down to the area health authority, and made proposals that would cause expenditure in excess of those cash limits, were they not defying the cash limits as set down by the Government?

Mr. Price

No, they were not. The officers had produced a plan which involved certain cuts. At the relevant meeting, the AHA agreed to certain cuts but deferred consideration on other cuts because it wanted further information. The members wanted to take those decisions themselves. As the month of August was approaching, as increased VAT had suddenly been slapped on in the Budget, and as there had not been enough time they wanted further time to consider the matter. They are not people who go on long holidays during August, like some other people. They were prepared to carry out this operation throughout the month of August, to make the cuts properly in an orderly manner and to accept their responsibility, which was imposed on them by law and not on the bureaucrats whom they employ.

Mr. S. C. Silkin

Whether or not the members of the authority were defying the rules on cash limits, is it not a fact that they were not defying any statutory obligation placed upon them because the section 17 statutory direction—which was within the power of the right hon. Gentle- man—had never even been tried? Was that not the very point made to the right hon. Gentleman by his right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) the former Minister of Health?

Mr. Price

I have not always agreed on matters of law with my right hon. and learned Friend the Member for Dulwich (Mr. Silkin) but on this occasion I wholly agree with him. My right hon. and learned Friend should have heard the gasps of astonishment at the press conference on 1 August when all the journalists present were expecting a section 17 direction to be issued by the Secretary of State but when the Secretary of State announced the completely unknown section 86 direction. Such a direction, as I understand it, had never been used in the past and was never discussed in 1973 when the National Health Service Reorganisation Act went through the House.

That section was assumed to apply only to floods, emergencies and acts of God. The Secretary of State gave a very feeble explanation even then as to why he had chosen section 86 rather than section 17 and had my right hon. and learned Friend heard those gasps of astonishment he would have been even more certain that the wrong section had been used.

Mr. Patrick Jenkin

I do not know what the hon. Member is referring to, but I have absolutely no recollection of being asked about section 17 at that press conference or in any of the subsequent broadcasts.

Mr. Price

If the right hon. Gentleman refers to the verbatim record which was taken by one of his minor female functionaries in a corner at the press conference, he will see that one of the questions he was asked was why he had used that particular section of the Act. Implicit in that question was the further question why he had not used section 17. Section 17 was the only other possible section that he could have used.

Mr. Ennals

The right hon. Gentleman referred to a letter of mine in which I said that I would have no alternative but to use the statutory powers of direction available to me. When questioned about the letter, the right hon. Gentleman said that he was not certain that he had read the letter with care but that it was in the pile of papers put before him. He must have known that there were powers of direction available to him.

Mr. Patrick Jenkin

The right hon. Member will realise that what I purported to do under section 86 was to give a direction. There was no indication whatever in his letter as to which section he was referring to.

Mr. Price

I feel as the right hon. Gentleman must previously have felt. I am wondering whether this is my speech. There were two possible directions that the Secretary of State could have given. One was under section 17 and the other was under section 86. He chose to give the direction under section 86. No one had ever heard of that section and the Secretary of State gave a long and feeble explanation at the press conference as to why he had chosen it.

It is all very well for the Secretary of State to say that what he said to the Law Officers is confidential and that he cannot confirm or deny that he consulted them. It is now well known that the Law Officers were not consulted. What the Secretary of State is really saying is that the High Court of Justice can canvass his reasons and the legal advice that he was given and examine the minutiae of what happened day by day and hour by hour at the end of July and the beginning of August but that the High Court of Parliament, this House of Commons is not allowed to do that. It is important on an issue such as this, where the rights of Parliament and the rights of the courts come close to each other, that Parliament should at least have equal rights with the courts to canvass the exact advice received by the Secretary of State.

The Law Officers may not have been consulted in August but they certainly became worried in December. The right hon. Gentleman will remember that in December the Law Officers asked the Leader of the House for a debate on the issue of quoting Hansard in court. That request got stuck because of the efforts of my hon. Friend for Nottingham, West (Mr. English) and it is now one of the remaining Orders of the Day. The only reason why that debate was requested was to slide Hansard into court before Mr. Justice Woolf and when that did not work the right hon. Gentleman came to the House with a long series of quotes from Hansard that he has had to quote since.

Mr. Patrick Jenkin

That is absolute rubbish.

Mr. Price

If it is absolute rubbish it is one of the biggest coincidences that I have ever come across. I agree that the case is full of coincidences. It is a nice coincidence that Mr. Justice Woolf as Harry Woolf, succeeded in the Tame-side case in the Divisional Court while Mr. Tom Bingham QC failed before the House of Lords.

I come back to the reasons given by the right hon. Gentleman for his decision. He gave two reasons to the court and the court disbelieved them both. His first reason was that there was not time to make the savings he wished to make under a section 17 direction, that he would not have known which savings to make under such a direction and that the authority would have taken no notice of him if he had issued a section 17 direction. All those reasons were disbelieved by the court. There could be legal argument about this but in effect the court went behind the judgment of the Secretary of State. The court did not question the bone fides of the right hon. Gentleman but it did not believe his reasons.

I wish to present to the House what I believe are the real reasons. I admit that I am speculating here, because without more knowledge of the legal advice given to the Secretary of State one cannot go on hard facts. The first reason, I believe, why the Secretary of State did not wish to use section 17 was that he was frightened that his order might be defied. He knew that if his order was defied and he sacked the whole of the area health authority membership—as he had the right to do under section 85 of the Act—the local authorities could have reappointed a second eleven of councillors to the authority who might have kept up exactly the same attitude to the Act as their predecessors.

The Secretary of State may have felt that there was a flaw in the law but he clearly wished to avoid the political embarrassment of another Clay Cross which would highlight the extent of the cuts in the Health Service that the Government wished to make. He hoped to get things done quietly rather than with a lot of noise. The latter would have been the proper procedure. That was the first reason. If I am wrong I can be told I am wrong either by an intervention or in the reply to the debate.

Mr. Patrick Jenkin

Since the hon. Gentleman invites me to intervene I am bound to say that I have never heard such a farrago of nonsense. Hitherto I have re-guarded the hon. Gentleman as sometimes erratic but on the whole as a reasonable man. He is talking absolute nonsense. His reasons are pure invention. I would like that to be on the record.

Mr. Price

The right hon. Gentleman's intervention might have been somewhat more plausible if Mr. Justice Woolf had not thought that the Secretary of State was talking nonsense when he gave his reasons to the court. We have had no other reasons from the Secretary of State for his refusal to use section 17 other than those he gave to the court. Mr. Justice Woolf disagreed with them and ruled them out of court. Therefore, they could not be real reasons.

There is another possibility—that the Secretary of State did not want to take on his shoulders the responsibility for closing St. Olave's and St. John's hospitals—the direct result of making cuts in the Health Service. The strategy of the Government is to lumber other people, including local councillors and commissioners, with the job of making cuts while they stand back and talk about Friedmanism and monetarism. The Secretary of State has not intervened to say that that is nonsense so I suspect that what I say has much in it. We have had no explanation why the Secretary of State got it wrong. He used the section of the Act which nobody expected him to use. The reasons that he gave to the court could not be believed. The House must therefore speculate why he acted as he did.

I support the call by the Opposition Front Bench for an inquiry into London hospitals and the London health service. The position was difficult before 1973. That position was appallingly compounded by Health Service reorganisation by the man whom we are not allowed to call "a mad man" but whom we can call "a political mad man". The Flowers report refers to the necessity to make great changes. The Lambeth, Southwark and Lewisham area is worse placed than any other London area to cope with the problems.

The Secretary of State referred to the three teaching hospitals in the Kensington, Chelsea and Westminster area. The rate base in that area for community health services and general social services is enormously stronger than it is in the particularly deprived three South London boroughs which we are discussing. The financial problems with which the area has been wrestling for some time were intractable. There was no real desire to defy cash limits. Something had to be done—something still needs to be done—to reorganise so that the health service in south-east London can be organised more coherently.

The real problem is illustrated in an article in New Society by Jill Turner. That article emphasises that the really uncontrollable part of Health Service expenditure is in the teaching hospitals. The article describes King's as the international centre of excellence. It states: In a penthouse suite of research labs, the sun streams in on white walls, soft armchairs, potted plants and Arab ornaments. This is the Sheikh Zaid centre, the court of Dr. Roger Williams, international king of liver research. Built with the sheikh's money, the research is funded by foundations and government research sources, but the cost of putting those research findings into practice on the ward below falls on the NHS. Roger Williams will not give figures for the cost of a day on an artificial liver machine. He says it would not be helpful. But after a week on it, he claims, someone brought in at death's door after an overdose will be able to function with their own liver and can return to normal life … Dr. Williams's ward is full of what he rightly describes as 'desperately ill people'… His liver failure unit is the only one of its type in the country. People are rushed here from all over the British Isles—two thirds of the unit's patients come from outside the south east Thames region. But Dr. Williams has been unable to get separate funding as a national specialist centre. Under RAWP, the area does get some credit for patients from elsewhere, but only for the cost of an average patient: that might be£92, a figure brought down by many minor operations, while the area regularly spends £2,000 and more on highly specialised treatment for outsiders. That is one example of several in that article of what went wrong. This issue affects whichever party is in government. My point is that when my right hon. Friend the Member for Norwich, North (Mr. Ennals) was Secretary of State he recognised that and tried to draw everybody together to consult and to solve the problem. However, when the present Sec-cretary of State was appointed he rushed to law. He has lost valuable time in attempting to solve a problem which should have been grappled with many years ago.

The right hon. Gentleman objected earlier when I said that St. Thomas' hospital was built on its present site because of its proximity to Harley Street. He knows that it was wrong to decide to build St. Thomas' there. It was built there because of pressure from the consultants.

One would not believe that West Lewisham is in an area which is breaking cash limits. Why is the Bell Green health centre in my constituency, which was planned in 1972 and finished last year, still closed? When will it be opened as a proper health centre? There is another health centre in a similar position in Lewisham, East. May we have a guarantee that Sydenham children's hospital will be retained and be no longer threatened? When may we expect the next two stages of Lewisham hospital to be finished? We would not have objected to St. John's hospital closing so much if the proper wards in Lewisham and Hither Green hospitals had been built to cope with the operations transferred from St. John's.

The cuts forced on the area health authority resulted in valuable capital being under-used. They led to chaos in the area. Abortions now take place virtually side by side with births at Lewisham hospital. The disruption is unacceptable.

I agree with everything that my right hon. Friend the Member for Bermondsey said about the history, but I do not think that the Secretary of State, much as I admire him in many other ways, can escape his responsibility. He rushed into litigation. He made a difficult matter worse. He lost six months of the time needed for a complete re-examination of the London health service. I hope that he will respond to the demand for an inquiry.

Several Hon, Members

rose—

Mr. Speaker

Order. At the beginning of the debate I thought that it would be easy to call everyone who wished to be called. However, if everyone else takes 28 minutes that will be exceedingly difficult.

6.10 pm

Mr. Bob Dunn (Dartford)

May I first congratulate my right hon. Friend on his frankness and honesty in coming to the House on 3 March and also today to discourse on the unfortunate episode now under debate. The Lambeth, Southwark and Lewisham authority is mad, bad and dangerous to know". It has behaved in a selfish, unfair and malicious way which has affected my constituents and those of the other Kent Members who have already spoken.

We are discussing an area health authority that has defied the Secretaries of State of two Governments and has overspent by £9.3 million in two years. The Opposition seem to blame everyone but the members of the area health authority concerned for the sorry state in which we find ourselves. The simple fact is that if the Lambeth area health authority had not overspent by £9.3 million we should not be discussing this Bill today.

It is worth placing on record the facts that led up to this debate. In 1978–79 the Lambeth, Southwark and Lewisham authority was required to make cuts in view of the economies laid down by the then Labour Government and as a result of the drift of the population outwards, especially to North-West Kent. The Lambeth authority rejected the proposals to make cuts laid down by the then Secretary of State and set about initiating projects and policies involving breaking the cash limits set by the region. Indeed, it broke the cash limits last year to the tune of £5 million. To his credit, the right hon. Member for Norwich, North (Mr. Ennals) insisted—albeit slowly—that the Lambeth authority should reduce its overspending to £4 million and required it to repay the overspending in the following three years. The decision to overspend caused the regional health authority to reduce its expenditure elsewhere in the region, in Kent and East Sussex, and to turn to the Department of Health and Social Security for an emergency loan to cover the debt. It is a fact of life that the overspending undoubtedly affected the growth of health facilities and prevented the necessary improvements to hospitals in my health area, the Dartford and Gravesham health district.

There are nine hospitals in my health district, six of which deal with mental illness and handicap. The first is the Bow Arrow hospital, which has 66 beds. It offers a geriatric service and a service to the younger chronic sick. It was built in 1893. The second is the Livingstone hospital, with an acute service offered. It has 32 beds. It was built in 1894. The third is the Joyce Green hospital, which has 572 beds. It offers a geriatric and psychiatric service and a small mental health unit. It was built in 1903. The fourth is the West Hill hospital, which is a general hospital with 180 beds. It was built in 1860. The fifth is the Darenth Park hospital. It has 930 beds, and deals with problems of mental handicap. It was built in 1878. The sixth is the Stone House hospital, which deals with problems of mental illness. It has 355 beds and was built in 1866. The Mabledon hospital has 137 beds. It deals with mental illness and was built in 1915. That is the second hospital to be built in this century out of the nine.

The eighth hospital is situated in the constituency of my hon. Friend the Member for Gravesend (Mr. Brinton). I refer to the Gravesend and North Kent hospital. That was built in 1854. The ninth hospital is the St. James' hospital, which is also in Gravesend and is a geriatric unit with 64 beds. It was built in 1847.

I invite any members of the Opposition who have spoken today to come to North-West Kent and see the nature of those hospitals—the decayed and derelict parts that are no longer used; the facilities under which people with severe handicap problems and mental illness are kept and treated. Although apathy is stirred up, nothing takes place. Development is stultified because of the greed of the Lambeth, Southwark and Lewisham area health authority.

The improvements that should have been made to those hospitals were not made as funds were not available and because the Kent area health authority spent its time working within the cash limits set by the present and previous Secretaries of State.

Mr. S. C. Silkin

We all recognise the point made by the hon. Gentleman. The hon. Member for Fulham (Mr. Stevens) will remember going with me to visit the St. Francis hospital, in my constituency. That has the same problems. Does the hon. Gentleman realise that the dilemma in which he was put creates enormous pressure on the London teaching hospitals? That dilemma must somehow he resolved.

Mr. Dunn

I accept, in part, the point made by the right hon. and learned Gentleman. It is simply a fact of life that we cannot ask people to obey cash limits set by Governments or statutory authorities if one authority goes its own sweet way, ploughing its own furrow and incurring increased expenditure. If nationwide 89 health authorities obey the cash limits but one does not, inevitably the 89 will question the logic of the cash cuts and ask why the rebel authority is escaping penalties. In a time of scarce resources everyone must make and take cuts.

There have been no improvements to the hospitals in Dartford for many years and I cannot therefore listen to tales from the Opposition about the deteriorating service in central London and ignore the deterioration of service in the Dartford and Gravesham health district. We are already prepared to accept the necessity for cuts as part of the Government's overall strategy and therefore I must accept the necessity of bringing the members of the Lambeth area health authority into line. It is unfair to my constituents to tell them that certain parts of London can escape Government cuts but that we in Dartford must accept a downturn in services.

Whatever comments are made about members of the Lambeth, Southwark and Lewisham area health authority—whether they are mad, bad and dangerous to know"— the fact remains that the members of the Lambeth authority acted selfishly, unfairly and maliciously to the detriment of my constituents.

Mr. Christopher Price

Rubbish.

Mr. Dunn

It may be rubbish to the hon. Gentleman, but we all feel deeply about the nature of the problems facing US.

A 16th century Exeter poet, Bishop King, had nine children. His wife died after the ninth child was born. He wrote a poem, which said: Accept, thou shrine of my dead Saint, Instead of dirges this complaint". He was concerned not so much about the fact that his wife had died as with the fact that she had left him with nine children. That is analogous to the action of the Lambeth, Southwark and Lewisham authority, which has behaved in a most selfish and improper way. It is not concerned about the effect on other people in the region, for it is prepared to absorb scarce financial resources for the benefit of its own people, to the detriment of my constituents. Therefore, I have great pleasure in supporting the Bill.

6.18 pm

Mr. David Ennals (Norwich, North)

I agree with the hon. Member for Dartford (Mr. Dunn) to the extent that he justified a principle to which I referred in an intervention in the speech of my hon. Friend the Member for Lewisham, West (Mr. Price). I refer to the principle of redistribution. There is a great disparity between the health standards and resources available within and between regions. It is part of the responsibility of the Government to ensure that there is fairness in the distribution of resources.

It is sad that we are to spend two days or a day and a half debating this little Bill. I know that the Secretary of State feels the same. The Opposition would have been much happier if we had been able to discuss many other subjects relating to his Department, whether the Flowers report, the report of the London health planning consortium or the Royal Commission's proposal that there should be a special inquiry for London. I agree with that. London is a special problem. Because of the special demands that are made on London's teaching hospitals, we have to look at London in a different way. But today we have to discuss this pathetic little Bill. The Secretary of State has told the House in all honesty that he regretted his action. He could not have been more frank. Had I found myself in the same position, of having been repudi- ated by a court, I would have felt obliged to do the same. If on any of the three occasions when they were challenged my actions had not been upheld by the judge, I should have apologised to the House, but in each case they were upheld. That is the difference between my period of office and the rather short period of the right hon. Gentleman.

Mr. Ronald W. Brown

If my right hon. Friend's actions had not been upheld, there would have been many cries from Conservative Members for his resignation.

Mr. Ennals

That is true. That is a fair intervention. If, during my period as Secretary of State I had made such an apology to the House, my Front Bench colleagues would not have discussed the matter. They would have demanded my resignation. They did that on several other occasions, but for quite different reasons. Conservative Members must respect the fact that we are treating the matter in a proper way.

I wish, however, that I had some reason for believing that the right hon. Gentleman had learnt something from his experience over the last five months. Nothing that he has said suggests that he has. He still combines great regret with his own form of aggression. He will recall—if he does not recall it, I shall remind him—that on 26 February when he made his statement I asked him a question. I said: Does he not accept, therefore, that he has acted with some arrogance, brusquely and illegally, and has created great confusion in one of the largest areas in London as a result of the action that has now been repudiated by the High Court? The right hon. Gentleman replied, in his aggressive way: If the right hon. Gentleman had had a little more guts earlier the situation might never have arisen."—[Official Report, 26 February 1980 Vol. 979, c. 1147.] I wish to spend a little time examining that charge, as the learned judge examined it. The right hon. Gentleman and I were faced with similar problems, and we acted in different ways to deal with a real problem, and a challenge to the Secretary of State. The Labour Government, as has been rightly said, established the system of cash limits as an essential form of discipline on spending authorities. But we played fair. We did not simply use the cash limits as a means of cutting. Cash limits were established on the basis of a fair and reasonable calculation of likely price levels and movements, subject to the adjustment of the rate of inflation. It is well known that when we set the cash limits at 8.5 per cent., at a time when inflation was even lower than that, we played fair. The whole system of cash limits is now being brought into disrepute by the Government in many ways. They are simply using cash limits as a means of cutting back on services.

Mr. Patrick Jenkin

rose—

Mr. Ennals

I shall give way in a moment. As my hon. Friend the Member for Lewisham, West said, this is part of the business of simply shuffling the cuts on to other people who have to take the responsibility.

Mr. Jenkin

If that is so, why did we inherit from the previous Labour Government a cut of£23 million in relation to payment of awards under the Clegg Commission—that the right hon. Gentleman negotiated and agreed with his Treasury colleagues, and that the present Government are still having to fund?

Those pay awards had to be met, and that was a direct cut from the cash limits for other services.

Mr. Ennals

The right hon. Gentleman inherited from the Government of whom I was proud to be a member an inflation rate that is about half its present level. It may turn out that it was even less than half. If anyone has failed to show guts, it is the right hon. Gentleman for failing to secure for the National Health Service enough funds to maintain existing circumstances, let alone to improve them. Even the regions that had been traditionally deprived—to which I gave a boost in a faster rate of growth—are now squeezed, not only until the pips squeak, but until the patients suffer.

Last week I visited a number of hospitals in the North-West region, as a member of the Select Committee. In 1978–79 the region had a growth rate of 3.8 per cent. because it was a deprived region. Now the growth rate is 0.6 per cent., which is less than nothing. The right hon. Gentleman knows that we need to be able to give a 1 per cent. growth rate in order to be able to cover the needs of elderly people, and the change in the population rate.

I return to Lambeth, Southwark and Lewisham. There was a problem to be dealt with. If the area overspent its allocation, the whole process of the reallocation of resources would fail. Moneys were held in the regional coffers which could provide funds for those parts of the region that were deprived.

Mr. Stevens

The right hon. Gentleman contrasts the growth rate in the North-West with the present growth rate, which he said is 0.6 per cent. Was that 0.6 per cent. figure a figure introduced by him when he was Secretary of State, or is it a new figure? We should know the truth.

Mr. Ennals

The regions are now suffering from the consequences of an inflation rate that has doubled, with no provision of new funds. He knows that. It is all very well for the Secretary of State to laugh. He knows well the level of inflation when his Government came to power. He knows the level of inflation now, and that the difference has to be borne largely by the health authorities.

In giving his version of the facts, the right hon. Gentleman was pretty selective. I wish to draw also on the words of Mr. Justice Woolf in his ruling. He said: On 8 December 1978, the then Secretary of State, Mr. Ennals, wrote to the area health authority (T) pointing out that it was then estimated that the AHA(T) had embarked upon a course which would involve the spending of £5.3 million in excess of its authorised cash limits. He required the AHA(T) to bring its expenditure under control… He asked the AHA(T), by a resolution, to commit itself to a substantial reduction of the forecast excess, and to this extent to instruct its officers to take immediate steps to reduce the excess by not less than£1 million in the remainder of the financial year. The learned judge continued: The Secretary of State also required the authority to ensure that its expenditure in the year 1979–80 was held to 1977–78 real terms and asked the AHA(T) to instruct its officers to prepare the necessary plans". I cannot pretend that that demand was warmly appreciated, even by some of my hon. Friends. However, as Secretary of State one has responsibilities and I exerted those responsibilities.

I quote again from the learned judge: He described his action"— that is, my action— as the essential minimum steps to re-establish financial control, and he added that the financial planning assumptions for the years beyond would need to be considered later in the light of funds available to the NHS as a whole.

Mr. Patrick Jenkin

The right hon. Gentleman said that he was quoting the learned judge. He was in fact quoting the next paragraph of his letter.

Mr. Ennals

I am not saying that the learned judge misquoted what I had said. The learned judge went on to say: It was subsequently agreed by the Secretary of State. That was myself. The right hon. Gentleman himself has quoted the letter so there is no point in my going through it. The learned judge was going through the history of the case in order to show what happened up to a certain stage. He went on—

Mr. Jenkin

rose—

Mr. Ennals

May I just continue this statement? After that I will give way as often as the right hon. Gentleman wishes. The learned judge went on: The A.H.A.(T) was clearly very unhappy about having to reduce its expenditure and felt that it would have a serious effect on the health services within its area. However, with considerable reluctance it did comply with Mr. Ennals's requirements and it is not disputed before me that it achieved the saving of£1 million during the remainder of the year 1978–79 and that, by June, 1979, it had taken the necessary steps to ensure that its expenditure in 1979–80 would he held to the 1977–78 level in real terms. It had, therefore, not only said that it would meet the requirement I put before it but had in fact met that requirement.

Mr. Jenkin

The right hon. Gentleman has gone past the point, but I think the House could have been misled, because he said a paragraph or two back "I now turn to the comments of the learned judge" and then proceeded to read out that these were the essential minimum steps to re-establish financial control", and then went on. The point I was seeking to make was that those were not the comments of the judge; they were the next part of the right hon. Gentleman's own letter. He was attributing to the judge a judgment on his own action which in fact was his own statement.

Mr. Ennals

I was quoting exactly the words that the judge used: He"— that is, myself, as Secretary of State at that time— described his action"— that is, my action as Secretary of State at that time— as the essential minimum steps to re-establish financial control'. I was reading exactly what the learned judge said. It can be seen from the records. I wish the right hon. Gentleman would listen to me; I listened to him. The quotation continues: This improved position was, however, changed by the budget proposals announced on the 12th June 1979. As a result of the proposals contained in the budget, it soon became apparent to the AHA(T) that still further measures would be required to reduce expenditure. My actions were clear and they were decisive. They may not always have been popular, but they were clear and decisive. We achieved an agreement and, as my right hon. Friend the Member for Salford, West (Mr. Orme) said, it came after a lot of discussion which I had with the officers and also with members of Parliament, and it was put into effect. It was done properly and legally, fully respecting the dignity of that properly constituted area health authority.

But the right hon. Gentleman, as I have said, did no such thing, because there is no question at all but that it was the Budget measures and what became a dramatic increase in the level of inflation that affected that area health authority especially, which I had required substantially to reduce its expenditure because I was concerned with redistribution in other parts of the region. It was at that time, as the learned judge said, that the Budget proposals came in and led to a dramatic increase in inflation.

Mr. Jenkin

The judge did not say that.

Mr. Ennals

I have quoted exactly what the learned judge said. He said: This improved position was, however, changed by the budget proposals announced on the 12th June 1979. It is all very well for the right hon. Gentleman to complain from a sitting position, but that is what the learned judge said, and he was adjudicating on the performance of the Secretary of State himself. He said: As a result of the proposals contained in the budget, it soon became apparent to the AHA(T) that still further measures would be required to reduce expenditure. On the 10th July 1979, Mr Hardy, on behalf of the AHA(T), wrote to the Secretary of State informing him of the resolution passed by his authority asking, inter alia, for additional funds. He then went on to indicate that the underfunding was expected to come to over £3¼ million and to say"— this is a quotation from Mr. Hardy— this would be an enormous cut which would be a serious problem in itself, but coming on top of their existing financial difficulties"— difficulties which it accepted, because I had required it of the AHA— which they had been struggling very hard to combat, compounds the problem.

Mr. Jenkin

The point that I made in my speech was that the effect of the Budget was to add, on our estimate, £1 million, and, on the area's estimate, £1½ million, in VAT to an overspending that was already substantially over£5 million. So the Budget accounted for one-fifth of the over-spending. Four-fifths was due to other causes.

Mr. Ennals

I cannot say whether it was one-fifth, one-quarter, one-third or one-half. The public know what the effect of VAT was, and VAT was not in any way relieved for health authorities. The right hon. Gentleman thinks he has lots of guts and he is throwing these accusations at me. Why did he not seek to ensure that health authorities were somehow protected from the effects of VAT? He knows perfectly well that it was the action of his own Government in the Budget and subsequently that created these great problems.

I do not need to take any longer, because the learned judge cleared me absolutely, indicated the line that I had taken, recognised the problems faced by the area health authority and criticised as illegal the actions taken by the Secretary of State. So I think I was perfectly right to say that the right hon. Gentleman acted arrogantly, brusquely and illegally.

Before sitting down, I want to put a few questions to the right hon. Gentleman. Did he seek to persuade the area health authority to make any further adjust- ments? Did he have a meeting with the area health authority? Did he have a meeting with the Members of Parliament concerned? Or did he simply decide for himself that that was what he was going to do and do it regardless?

Secondly, how long did the right hon. Gentleman intend the Commission to act in place of the area health authority? We now have within this Bill a period up to 31 March. Was it the intention of the right hon. Gentleman that the Commission should act for a particular period and that then the area health authority should take over its responsibilities? If that was his view, why did he not state it at the time instead of creating all the furore he did? I ask him again: did he consult the Law Officers and, if not, why not?

I might ask at the same time what the Minister of State was doing to try to help in dealing with these problems. At various times the right hon. Gentleman has been critical of my right hon. Friend the Member for Lewisham, East (Mr. Moyle) the former Minister of State, who will be winding up. He, of course represents a constituency that was affected by the actions which I took and by the actions which the right hon. Gentleman has taken.

What was the right hon. Gentleman's Minister of State doing? The right hon. Gentleman took great pride in the delegation he was going to practice; great responsibilities were to be handed over to his Ministers in order that he could sit and survey the overall scene. I see that he has stopped sitting and surveying the overall scene; he is bringing a miserable little Bill to Parliament today on this subject. His Minister of State, I gather, has even walked out of the Committtee on the Health Services Bill, for which he has a responsibility, and has now taken himself off to China. I hope that he has a very productive time there. But there are responsibilities that fall upon Ministers and I ask myself where his Minister if State was. If I may paraphrase on old saying, "Where was Gerry when the light went out?" [AN. HON. MEMBER: Brushing his teeth.] I am not alluding to the old joke about the right hon. Gentleman; I am just referring to the Minister of State. I hope not only that the right hon. Gentleman has learned some lessons from this—it is awfully difficult to talk to him when he is carrying on a permanent conversation.

I hope that the Secretary of State will take every action to help the area health authority when it resumes its responsibilities after 31 March, and that he will not try to make it difficult for the authority. To the extent that he shows his co-operation and understanding the more likely the authority is to fulfil its obligations, so that other areas within the region will get the resources they so desperately need and which have been argued for by his hon. Friends.

6.40 pm

Mr. David Crouch (Canterbury)

Some right hon. and hon. Members sought to argue the case for the Bill on two fronts. On the one hand they said that the Secretary of State acted illegally. I accept that. I think we all accept it. My right hon. Friend the Secretary of State certaintly accepts that he acted illegally. The second front on which many Labour Members have sought to attack my right hon. Friend and the Government is that he should not have acted at all. I cannot accept that. No one can say that he should not have acted at all.

The former Secretary of State acted in 1978 when he saw this crisis looming. He seems to have forgotten that he acted then. He required this rebellious area health authority to come into line, but not completely. He saw that the authority was overspending by £5 million and more. That was a crisis point and he took action. Let us give him the credit for that.

I must declare my interest as a Member for a region, the South-East Thames region, which helps to administer the area we are talking about. I know that in 1978 the Minister stepped in without delay and took action, but he did not take the whole action. He told the authority to come into line and to do its best to cut spending by £1 million in the current year, to come down from over-expenditure of £5.3 million to £4.3 million. He told the authority that it owed the £4.3 million to the deprived areas in the region in Kent and East Sussex and other parts of the South-East, and it must start repaying the £4.3 million in the financial years 1980–81 and 1981–82. I did not criticise the former Secretary of State for that action at that time, but he did not take strong enough action. By taking less than a half measure to put it right—a quarter measure, perhaps—he encouraged the authority to think that it could stand up to the Secretary of State and win; that a rebellion could pay off.

The right hon. Member for Norwich, North (Mr. Ennals) was disingenuous when he said that the problem started last June with the Budget. It is misleading to the House and to those outside who read our debates to suggest that it started with the application of VAT at 15 per cent.

Mr. Ennals

I did not say that. By going through the statement made by the learned judge I showed that this had been a problem over the years. I showed also that the authority had agreed with the requirements that I imposed. It was the learned judge who said that the improved position—the position I described—was changed by the Budget. I did not say that it started then; I said that it got dramatically worse because of inflation which had to be borne by that authority and other area health authorities throughout the country.

Mr. Crouch

Of course the Budget made things look more difficult not just for this area but also for the other 89 areas in England and Wales. It was difficult for the whole National Health Service. I would be the first to admit that Lambeth, Southwark and Lewisham area health authority has massive problems of decay and decline in an inner city area. I can find excuses for the authority saying that it cannot observe strict cash limits. Its position was made more difficult perhaps by the increased VAT. I have lived with these figures and arguments for years. The area health authority has massive problems of decay and decline and the loss of 400,000 people in the past 15 years, a great many of whom have gone into East Kent and Sussex. The Greater London Council refers to "decanting" people from the centre to areas where they can find places to live further out of London. That is what happens in my constituency in Kent and also in East Sussex, as is shown by the way the population has risen in those areas.

Hon. Members representing Kent constituencies have said that there has been an increase in the problems of the outer areas within the South-East Thames region. They too, have their problems and they too will have a crisis, but they are not in rebellion. As a member of the South-East Thames region I recollect that two or three years ago all the Kent Members of Parliament came to the region and argued strongly that something must be done to recognise the plight of East Kent. They wanted an extra £35 million, and they pointed to another area in the region which was overspending.

Overspending in this area has been going on for years. Although I say that there is some excuse for it, it is a running sore in the region well known to the Secretary of State and his Department. It was embarrassing for the former Secretary of State at the time because his Minister of State wanted to support him in his overall policies under RAWP. The right hon. Gentleman was a good member of his Cabinet, a Cabinet which introduced spending cuts called cash limits—

Mr. Ennals

If I may say so, cash limits are not spending cuts. That just shows the error which the hon. Member has fallen into as a result of the behaviour of the Conservative Government. "Cash limits" is the definition of the sum available to be spent within a budget. Over the years there have been adjustments of cash limits as the rate of inflation has changed. Cash limits were never intended as a means of squeezing authorities. The hon. Gentleman slipped into a trap.

Mr. Crouch

I slipped into the trap of giving way too often. I shall not do that again, because the right hon. Gentleman is eager to seek an opportunity to recover the position that he lost so long ago. I am not talking of squeezing. Cash limits mean setting the belt at a certain size and not adjusting it. There were some who were trying to expand the belt. The Labour Government introduced cash limits and the right hon. Gentleman was a good member of the Cabinet who approved that policy. He wanted to see that the policy was observed and worked by those who were under his delegated authority—

Mr. Ennals

Play fair.

Mr. Crouch

I am playing fair. There was one area that was not. The former Secretary of State's Minister of State, the right hon. Member for Lewisham, East (Mr. Moyle) wanted to support him but had constituents to worry about. It was a very delicate matter to put a restriction on Lewisham, because Lewisham is represented by the former Minister of State. Of course it was difficult. As I said earlier, the previous Secretary of State offered only a part solution to the problem.

The consequence of his allowing this rebellion to succeed was that it grew and it festered. When my right hon. Friend succeeded the previous Secretary of State he saw that he had a crisis on his hands. Notwithstanding the excuses that I have made for the AHA(T) in Lambeth, Southwark and Lewisham, no one should imagine that that authority was behaving responsibly. It refused to accept the cash limits and then refused to accept this device to operate RAWP of which the right hon. Member for Norwich, North has been such a strong supporter.

The redistribution of resources was a redistribution across the country to serve deprived regions in the North-West and elsewhere. Therefore the Southern and Thames regions had to be robbed a little. We had to rob the Paul of London to pay for the Peter of the North. This meant some constraint on those areas within the Thames region.

I said that there were considerable problems in this area. There might have been some excuse for the AHA to say "We cannot live within these tight constrictions. Look how difficult it is to live with and manage three great teaching hospitals." Teaching hospitals are centres of excellence and research. They are large acute hospitals. Their revenue consequences are considerable. They demand a great deal out of the budget. One recognises all that.

What one does not excuse is the failure of the AHA(T) to observe what the present Secretary of State required them to do when he saw that a crisis was imminent. Overspending had been going on for years and it had to stop. The Secretary of State was prepared to take action last August and did so. Now we know that in law that decision was incorrect. But my right hon. Friend has made an unqualified apology. All that the Bill seeks to do is to recover a proper legal base.

The Secretary of State, notwithstanding his—shall I say—legal indiscretion, is determined that this difficult area shall play its part in future by living within its budget. My right hon. Friend is doing no more than the former Secretary of State would have wanted to do but did not succeed in—I nearly used some phrase that he does not like—bringing it off.

6.52 pm

Mr. Ronald W. Brown (Hackney, South and Shoreditch)

I am surprised that with his basic knowledge and background the hon. Member for Canterbury (Mr. Crouch) was able to get through his speech without mentioning the problems of the teaching hospitals and how he sees the difficulties. I am surprised that he did not offer some suggestions to the Secretary of State as to how he should review matters. The hon. Member knows, as I know, that the problem we have to tackle in London is the problem of the teaching hospitals. That is our basic problem.

This is a sad story. I am happy to tell the Secretary of State that I do not intend to call for his resignation, although I underlined in my intervention that Conservative Members would have been screaming the place down for the resignation of my right hon. Friend the Member for Norwich, North (Mr. Ennals) if he had been in the same position. But we are trying to find a solution, and I pay tribute to the fact that the Secretary of State came to the House and honestly made his statement. However, that does not absolve him from the trickery that he is now up to.

I do not accept that, simply by offering back the chairmanship of the AHA to Mr. Hardy, we shall alter matters. Somebody will have to close three more hospitals and the right hon. Gentleman knows that. He knows that the only way in which we shall resolve the present problem is to save money by closing hospitals.

I have taken the Secretary of State through my constituency many times. I have listened to the hon. Member for Rochester and Chatham (Mrs. Fenner) screaming out about the closure of beds. The hon. Member for Faversham (Mr. Moate) was horrified to think that 40 beds were to be closed. I tried to intervene in his speech to say that in my constituency the Secretary of State is seeking to close four hospitals, not 40 beds. It is a simple arithmetical parameter.

An area health authority that has a teaching hospital in its district is faced with an overspending every year—not last year, the year before, or next year, but every year. The only way that overspending can be resolved is by closing a hospital. My own district is overspent every year by £1½million, which is equal to the closure of one hospital.

Three years ago the Government decided to resolve the problem by closing a hospital, though my right hon. Friend the Member for Norwich, North, when he was in office, gave an absolute assurance that when the first hospital was closed the funds on the sale of that hospital would be directed to the other hospital that had to pick up the problems arising from the closure. That assurance was given to me from the Government Front Bench.

A year later my district was overspent by a further £1½million. As usual, the area health authority looked around and said "We will close another hospital". This time it closed the hospital that was to get the money from the previous closure but which never in fact received it. Now we are having a hassle and that hospital has been closed under the usual title of "temporary closure".

My right hon. Friend the Member for Bermondsey (Mr. Mellish) asked the Secretary of State when St. Olave's hospital, which has been closed temporarily, would reopen. I have news for my right hon. Friend. There is about as much chance of that hospital being reopened as he has of flying in the air. It will never be opened. There is no way it can be opened, because every year will produce a deficit; therefore, every year the Government will have to continue closing hospitals.

In my constituency two hospitals have already been closed. Two more are about to be closed. Soon there will be none to close. We shall then have the finest health service in the world because we shall not have any hospitals and we shall, therefore, not need to treat any patients, which presumably will not cost any money. It is a ridiculous situation.

I have intervened in the debate tonight because I believe that this AHA, having been given back its rights to operate, has been offered a pretty poor penny. It will immediately be faced with the problems that the commissioners were able to solve this year. They solved the problem of overspending this year by closing three hospitals. But next year the AHA will be faced with exactly the same problems of further overspending of at least £1½ million because the area in question has the same pattern as my own area. If there is overspending of £1½ million, the only answer will be to close a hospital. The problem can be solved in no other way.

Therefore, I believe that the AHA should be told by the Secretary of State what is on offer to it from him. The Secretary of State said to the House this afternoon "I have had an assurance from Mr. Hardy and all the members of the AHA that they will stay within their cash limits in future." Did he explain to them what that meant? Did he tell them that it would mean closing more hospitals? That is the only way that that AHA will be able to stay within its cash limits. Did the right hon. Gentleman explain to the AHA that it could expect to have overspending in that area of well over£3 million?

Mr. Ennals

When the Secretary of State spoke to Mr. Hardy, did that gentleman indicate that he knew what the cash limits for next year would be? Had Mr. Hardy been privy to knowledge that was not made available to other health authorities, many of which are waiting with bated breath to know what funds will be available in the coming year?

Mr. Brown

My right hon. Friend preempted what I was about to say. I do not know the cash limits for the future. I am waiting to hear about them so that I can determine what they will be in my own region. What I am anxious to know is the prospectus that was offered to Mr. Hardy and what he accepted. Am I to understand that he had it spelt out that the commissioners had overcome the immediate overspending problems of past years by closing three hospitals? Has he been assured that there will be no overspending for the coming year? Has he been told what the overspending will be? The hospital service in that area will continue in the same way in 1980–81 as in 1979–80. It will not alter. It will follow the same pattern, which is engrained. If it has consistently gone into arrears each year in the past, it will be in arrears next year.

Has Mr. Hardy undertaken with his colleagues to close another hospital if there is overspending of £1½ million? Unless he has been told what the future looks like, and unless he has been told what is expected of him, he has bought a pig in a poke. The area is being misled if it is being asked to believe that the solution offered by this rather tatty and sad Bill is a resolution of the problem.

Mr. Patrick Jenkin

My speech was long enough and I did not want to repeat what I said. I was asked on 3 March by the right hon. Member for Bermondsey (Mr. Mellish) whether my statements meant that St. Olave's could be reopened I made it clear that the restored authority would be free to review any of the decisions that had been made by the commissioners provided—that is what was accepted—that they remained within the cash limits that would be determined for them. It was on that basis that on 29 February the five members of the authority who were present accepted without dissent that they recognised and acknowledged the discipline of cash limits.

Mr. Brown

I am grateful to the right hon. Gentleman. However, he has not answered the problem that I was putting to him. He knows from his experience in the Department, albeit for only nine months, that the spending pattern of area health authorities in London is set. It has been set for a long time. It does not alter. I can tell him what the expenditure of the area health authorities in the North-West Thames region will be next year within his term of plus or minus £100,000. We are talking about a standard pattern. The only factors that we do not know are how much money will come from the Government, how much inflation will eat into it and how much delay there will be before we are told how much money will be made available. Those factors are the indeterminates. With those exceptions, it is a standard pattern.

Many of the areas in my region have gone into arrears. In the district that is responsible for my constituency there has been a deficit of £1½ million a year. That will continue. There is nothing that can be done apart from closing a hospital.

Did Mr. Hardy accept from the Secretary of State that he would have to close a hospital? It is pious nonsense—the right hon. Gentleman knows it—to say that the hospital may be reopened. If we are getting into debt year in and year out, what expectation is there of reopening? I have asked the right hon. Gentleman and his Ministers to tell me when they are proposing to reopen the closed hospital in my constituency. I refer to St. Leonard's hospital, which was closed temporarily. The right hon. Gentleman knows that it will not be reopened. He knows it and I know it, but he keeps trying to fool me. He tells me that it may be reopened at some time and that it is up to the area health authority. He knows that it cannot be done. He is misleading himself and he is misleading many others. The authority is getting into debt every year and every year it will have to do something under his system or under the system advocated by my right hon. Friend the Member for Norwich, North.

The only thing that the authority can do is to close a hospital. Of course, that strategy has its limitations. Is the Secretary of State in the business of social services and the National Health Service to close hospitals? He must realise that that is what he will do if he implements his policy. He tells my right hon. Friend the Member for Bermondsey that it is a matter for the area health authority. He knows that that is fraudulent. He knows that that will not happen. I am concerned about the cavalier way in which he makes these statements. He knows that what he says cannot come to pass.

Mr. Orme

I am following closely my hon. Friend's argument. Is he aware that we have not yet seen the full balance sheet from the commissioners? We do not know exactly what the position will be on 31 March. That will have to be taken into account by Mr. Hardy and his colleagues.

Mr. Brown

That is why I asked the Secretary of State whether he had given that information to the incoming auth- ority. I repeat that we are aware of the pattern. As a result of the cumulative debt over two to three years, it was necessary to close three hospitals. That is the price that had to be paid. In London it saves £1½ million if a hospital is closed. If an authority has overspent by £1½ million, the parameters mean that it is necessary to close a hospital. That is done "temporarily". It is not said that it will be a permanent closure. The hospital is closed "temporarily" and £1½ million is saved permanently. The right hon. Gentleman refuses to address himself to that issue. He should recognise that legislation does not allow a "temporary" closure if it is to be permanent.

The right hon. Gentleman even sent a letter to regional chairmen advising them on the procedure of temporary closures. To his credit, he told them that a hospital should not be closed temporarily if it was not intended to reopen it. However, the authority had no choice. It was necessary to save £1½ million, so the hospital was closed. There is no chance of its being reopened—[Interruption.] The right hon. Gentleman says "Not true", or "Nonsense". Will he undertake to give me a date for the reopening of St. Leonard's hospital in my constituency? If he will not, he is not telling the truth. He knows that that is the position. If he cannot give me that answer, he has no ground for claiming that the temporary closures will not be permanent.

Mr. Race

Is my hon. Friend aware that the Minister of State has refused to give an undertaking to tell health authorities that temporary closures should not be made permanent and that he refuses to put a time limit on the temporary closures of hospitals?

Mr. Brown

I am aware of that. I keep on advancing that argument in my constituency area, which is suffering badly from closures and the policy of the right hon. Gentleman.

The Secretary of State appears to have turned his face against an inquiry in London. I believe that he is wrong to do so. There is a necessity for an inquiry. We have heard this afternoon Conservative Members making assertions that are clearly not true. Aithough many of my hon. Friends who represent London constituencies try to educate them, they do not wish to be educated. The only way in which we shall be able to obtain and present the facts is by holding an inquiry into the situation in London. In that way the background may be properly examined and a proper solution found.

It has been argued that North Kent faces a range of problems that cannot be resolved. I intervened to say that many people from North Kent come to Bart's hospital, which is in the district covering my constituency. Bart's hospital receives about 65 per cent. of the district's money. However, Bart's deals with only 15 per cent. of those from the district. How can that be sensible? How can that be right? How can it be just?

It may be said that North Kent is being cheated, but in my constituency vast sums are contributed and yet 85 per cent. of those living within the area have to receive treatment elsewhere. It is no good bandying figures about and giving the impression that we are not interested in the prime product—the prime product being sick people. It seems to me that those are the last people we are talking about, yet the service is for them. It is for those who are sick and needy and require help.

The Secretary of State must understand that if he is not prepared to hold an inquiry into the London situation we shall go on bandying words about week after week and month after month and never get to grips with the problem of helping those people the Secretary of State should be helping. The right hon. Gentleman said on the last occasion that this matter was raised that he did not want an inquiry because two reports—those of Flowers and the London Health Planning Consortium—were to be issued. We have had both reports. With great respect, they should form part of a London inquiry.

Paragraph 48 of the consortium report deals with my constituency. The right hon. Gentleman knows from his experience and the visits to my constituency by the Minister of State that the paragraph nowhere near approaches a solution of the problem facing my area. I call on the right hon. Gentleman to review the situation regarding an inquiry. An inquiry would satisfy everyone that the facts had been examined critically. The right hon. Gentleman cannot continue to walk away from the problem of the teaching hospitals and their funding. I would not like to see any reduction in the status of those hospitals as places of excellence. It would be crazy to want to destroy them. On the other hand, they must be properly funded in a way that will not cause trouble.

If the facts were examined, some means could be found for taking teaching hospitals out of the hurly-burly of arguments about the transfer of money from here and there and the closing of other hospitals, not because beds are not needed but simply to save £1½ million. I feel sorry for the Secretary of State. No one wishes to introduce a Bill of this nature. I do not accept the claim that the right hon. Gentleman has all the guts and that my right hon. Friend the former Secretary of State did not have any guts. I had enough rows with my right hon. Friend when he was Secretary of State. I did not believe that my right hon. Friend understood our problems. I believe that he could have held an inquiry into the London situation. He did not.

I hope that arising from the situation tonight the Secretary of State will undertake to hold an inquiry into the London situation, both to resolve the problems and to provide a proper health service for the people of London.

7.12 pm

Mr. Richard Alexander (Newark)

Probably one of the biggest hazards in politics is that one is always liable to be proved wrong after the event. This has happened to my right hon. Friend in the last month or so. But, in August last year, it was far from clear that the Secretary of State had made a decision that was wrong in law. Probably not one citizen in a million and not one lawyer in a thousand, at that time, entertained the slightest doubt about his correctness.

The authority had a history of vast overspending—a figure of £9.3 million over two years. Only £1 million of that amount, at the outside, could be attributed to the increase in VAT in the last Budget. Even so, on those figures, the overspending was vast. It had continued with impunity under the previous Government.

It is easy to urge a local authority, if one is a back-bench member of it, or a pressure group within it, to engage in overspending. It is popular. It is easy to do. It is wrong. I have done it myself within my own authority. I knew that what I was urging my authority to do was wrong. My area health authority chairman very properly directed me accordingly. He would have found that much more difficult—this was in 1979—had the Lambeth area health authority got away with it again, this time under a Conservative Secretary of State.

We have heard tonight that the area health authority was not just fighting its own corner but depriving other health authorities within its region and within the country, including my own area of Nottinghamshire, of their share of a small cake.

To my recollection, when the Lambeth, Southwark and Lewisham area health authority, in July, planned yet more overspending, there was hardly a voice, apart from members of the AHA themselves or the Left wing of the Opposition, that did not urge the Secretary of State to take firm action. My right hon. Friend was urged to sack the members of the authority and to replace them with commissioners. I do not recollect any voice at that time saying that this was wrong in law, or that the Secretary of State had no powers. The decision was very publicly made. Even the Secretary of State's lawyers believed that powers existed. Until the learned judge dropped his bombshell about two weeks ago, very few considered the possibility that the decision might have been wrong in law.

Mr. Moyle

The hon. Gentleman is making assertions that have no foundation in fact. He has not quoted the actual resolution of the area health authority. He does not know its attitude, Secondly, legal action was commenced by the London borough of Lewisham on several matters during the month of August. If it had not been for the cause list of the High Court, the cases would have been heard much earlier.

Mr. Alexander

I accept what the right hon. Gentleman says. Apart from the lawyers acting for the health authority, very few voices informed the Secretary of State that what he was doing was wrong in law. Very few Opposition Members were saying it.

My right hon. Friend took advice that turned out to be wrong in law. In every case that goes to the courts, from the small debtor's court up to the House of Lords, there are two people who go before the judge, both believing that they are correct in law. Fifty per cent. are always wrong. When the Secretary of State heard of the judgment, he came immediately to the House and made a statement. He also said that he would not appeal against that decision. Instead of being criticised as a weak, ill-advised Minister, my right hon. Friend should be branded as a man of courage. The simplest course would have been for him to say that he would appeal, as does any trade union leader who loses his case in a court of first instance. My right hon. Friend could have done so at public expense. He could have done so while the sub judice rules prevented further comment in the House or elsewhere. He did not take that course because he is a man of courage, prepared to come to the House and explain that the advice he was given and the decision he made was wrong.

My right hon. Friend could have taken the easy way out. That easy way would have been to appeal and to hide behind the sub judice rules, stifling all criticism until the point had been covered by the relevant clause in the Health Services Bill. A trade union leader would have taken the issue to the Court of Appeal. If he had lost, he would have taken the matter further. He would have taken it to the House of Lords.

Mr. Frank Dobson (Holborn and St. Pancras, South)

Quite right, too.

Mr. Alexander

The Secretary of State was prepared to say that he would not take it any further. He accepts that he is legally wrong. The Bill is necessary and it is also courageous. I think that all parties will agree that I have never been a sychophantic supporter of the Government.

Mr. Dobson

The hon. Gentleman has seen the error of his ways.

Mr. Alexander

I followed the issue concerning the Lambeth, Southwark and Lewisham area health authority quite closely during those months. My right hon. Friend has proved to be a man of great courage. Without hesitation, I shall support him in the Lobby tonight.

7.20 pm

Mr. S. C. Silkin (Dulwich)

A wide-ranging debate has been hung on a short peg. I make no complaint about that. I have listened to speeches that have dealt with the background and reality of those problems affecting the hospitals and social services in the South-East. Such problems are closely linked with the future of London's teaching hospitals. Even if there had been no Bill, the debate would still have served a useful purpose. However, the case has clearly been made for a further in-depth inquiry. I hope that the House will forgive me if I do not stray into such interesting pastures. Indeed, those pastures were enlivened by the remarks of my right hon. Friend the Member for Bermondsey (Mr. Mellish). I shall confine my remarks to the Bill.

I was a little surprised that the hon. Member for Newark (Mr. Alexander) applauded the courage of the Secretary of State in bringing forward this Bill, rather than taking the matter to the Court of Appeal. He would have needed more courage to face the House if he had appealed and failed—as he would have done. He would have needed yet more courage if he had been given leave to take the case to the House of Lords. I regret that the Bill is needed. However, I shall not oppose it. Whatever its technical form, it is clearly a Bill of indemnity. It will relieve the Secretary of State and others of liability for acts—in the past and in the future—which they have, and had, no lawful power to perform.

The purpose behind the Bill is hidden by the verbiage of its title and by its language. I am sure that only the well-known modesty of the Secretary of State prevents the Bill from being given its correct title, namely, "The Patrick Jenkin Relief From Liability Bill". The Bill shows mercy to the Secretary of State and to those others who have acted, and who will act, in accordance with what the Bill calls "his invalid directions". Perhaps that phrase should be changed. Perhaps it should say, "invalid or chronically disabled directions". If there had been no Bill, the Secretary of State and others would have been held personally liable for any expenditure that had not been authorised by law.

That raises a difficult question. The right balance between the competing values, namely, the value of mercy and that of observance of the rule of law, was well expressed on Second Reading of the Housing Finance (Special Provisions) Bill. The hon. and learned Member for Cleveland and Whitby (Mr. Brittan), now Minister of State, Home Office, said that, in order to discover whether the balance struck should find favour with the House, it was appropriate to ask two questions. He continued, First, are the people on whose behalf we are asked legislatively to show mercy proper objects for the receipt of that mercy in so exceptional a form? Secondly, is the infringement of the rule of law really minor—one with plenty of precedents—or is it, in the context of today's society, a serious one that must be considered as something to embark upon only in the most exceptional circumstances? I shall deal with the hon. and learned Member's second question first. Is the infringement of the rule of law created by the Bill of indemnity a minor one, with many precedents, or is it a serious infringment that should be embarked upon only in the most exceptional circumstances?

Despite the language used by some Conservative Members, who have spoken as if the issue were of mere doubtful legality, the House can have no doubt that the infringement is serious and that it is to be embarked upon in exceptional circumstances. Why do I say that? When the Secretary of State illegally deprived the area committee of its statutory functions and when he handed those functions to his own nominees, he made a fundamental attack on democracy. Men and women had been lawfully appointed by Parliament to carry out certain functions. However the Secretary of State sent out a paper that purported to deprive them of their rights, powers and duties, although he had no semblance of legal power.

It is irrelevant that that authority had acted in a way of which the Secretary of State disapproved. We are used to such actions under dictatorships, but not in a democracy. But the Bill does not merely say that the Secretary of State has erred and that he wishes to be forgiven. It says that he will go on sinning and that he asks to be forgiven for his future sins, provided that they do not continue beyond 31 March. The members of the area committee are, and always have been, empowered and required to carry out their duties in accordance with the law. They have that right today. It is only forbearance that prevents them from using it.

Instead of recognising that judicial decision, the Secretary of State has relied on this Bill to indemnify him from a continuing illegality.

Mr. Bob Dunn

I am concerned about the right hon. and learned Gentleman's remarks. He has not said anything about the obligation that rests on the members of the Lambeth, Southwark and Lewisham area health authority, or about their obligations to other authorities and people in the same region. It is all very well to talk about the law in that sense, but what about the authority's moral obligations to others?

Mr. Silkin

I regret having given way. I have already said that the background to this issue has been thoroughly canvassed. The hon. Gentleman has made his own speech. As I have said, I understand that the Secretary of State did not like what the area health authority had done. However, that is no excuse for acting illegally. Instead of recognising that judicial decision, the Secretary of State has relied on this Bill to indemnify him from a continuing illegality. I do not know what precedents exist. Perhaps the Attorney-General will tell us. It certainly increases the seriousness of what Parliament is being asked to do.

The Attorney-General (Sir Michael Havers)

I am grateful to the right hon. and learned Gentleman. The only reason I intervene is to explain that the date at the end of the month was agreed so that there could be a proper changeover. It was also the date suggested by counsel for the local authority after the victory in court. There is no question of imposing it upon the area health authority. That authority readily agreed to the date for commonsense reasons.

Mr. Silkin

As I said, it was the forbearance of the area health authority which made that possible. The authority could have said that it was determined to get on with its job. But it agreed that that should not be the case. Therefore, when we are considering whether a precedent should be established by a Bill of this kind, we must take account of the fact that, even though the area health auth- ority may be prepared to do it, Parliament is being asked to approve not only what has been done in the past, but what will be done in the future. I find a curious antithesis between what Parliament did in 1975 and what the Secretary of State, by his unilateral action, purported to do in 1979.

In 1975 Parliament relieved councillors of the possible need for a hearing before the court to obtain relief from losing office. In 1979 the Secretary of State removed these men from office without the benefit of any hearing or trial, and he did so illegally. He made no distinction between the moderates and the immoderates, the sensible and the foolish. All were sacked and all suffered the same damage to their reputation. I know many of them personally, because this is my borough. They are honorable men who were placed in extreme difficulty and who honourably tried to resolve that difficulty. But they were sacked just the same. There was no inquiry under section 84 of the Act; there was no direction under section 17, which has been refered to frequently in this debate. Indeed, had there been a direction under section 17 and had the authority then acted in default of the direction, then immediate remedy was available under section 85. Instead of any of those actions, an illegal action was taken. It purported to be taken under section 86, but it was a highhanded action by which the Secretary of State placed himself above the law. It is for that that he comes to ask for Parliament's foregiveness today.

That brings me to the first of the questions that were put by the hon. and learned Member for Cleveland and Whitby in 1975. Is the Secretary of State a proper object for mercy in so exceptional a form? Let there be no doubt, this is exceptional. I recall the long, often bitter and tedious arguments over precedents during the 1975 debates. The Government of the day cited the action of a former Secretary of State for Wales, the right hon. and learned Member for Hendon, South (Mr. Thomas) in sanctioning retrospectively illegal spending on school milk. At the time the right hon. and learned Member said in reply to the late Mr. Crosland: The right hon. Gentleman will be aware that there was provision by statute for the Minister to take a certain course, and for the course which I took, in respect of school milk. However, there is no such provision by statute in respect of a deficiency found under the Housing Finance Act."—[Official Report, 24 March 1975; Vol. 889, c. 46–130.] Certainly there is no statutory provision here. That is why we must have a Bill.

Then the Chamberlain Act of 1927 was cited as a precedent for relieving 97 councillors of liability in order to wipe the slate clean. The present Solicitor-General argued at extreme length in Committee in an effort to show that that was not a precedent. On Third Reading, after describing it with studied moderation as "a fatuous argument", he said: I remind the House, as the Committee were reminded several times, that what Neville Chamberlain said was this: 'when anyone is introducing a gradual change in procedure which brings into operation a completely new method of dealing with these troubles in the future, one might fairly take the opportunity of wiping the slate clean as far as the past is concerned.' —[Official Report, 15 June 1927; Vol. 207, c. 1033.] This Bill introduces nothing so far as the future is concerned. Neither does the Bill before the House today. It introduces nothing so far as the future is concerned. It is pure indemnity.

All the arguments that were used by Conservative Members to show that there were no precedents for 1975 apply to the Bill now before the House. In a further example of studied moderation, the present Solicitor-General said: If we pass this Bill it will be… to borrow the words of Mr. Levin,'… to proclaim that those who spit upon the law may do so with impunity provided that they do so in a sectional political interest; "—[Official Report, 14 May 1975; Vol. 892, c. 609–610.] Mr. Levin has remained strangely silent about this Bill.

Let me assure the Secretary of State that I do not accuse him of spitting on the law for a political interest. Certainly, he had a strong political interest, and certainly his action was high-handed in the extreme. But spitting on the law is a vulgarism which I decline to repeat. I accept fully that, although the Secretary of State is to be relieved of liability for some unquantified amount of illegal expenditure, he was, as the learned judge said, badly advised. The House is entitled to know who advised him so badly. I have no doubt whatever that the Law Officers could not possibly have advised him in this way. I am certain they must have advised him on this Bill of indemnity—it is backed by the Attorney-General—but I have no doubt that they advised the Secretary of State after the litigation was concluded that he had no hope whatever of success if he went to the Court of Appeal.

Mr. English

I am grateful to my right hon. and learned Friend for his support of my belief that the Law Officers were not consulted in this case. Does he think that the legal section of the Department was consulted—that Mr. Knorpel was asked for his opinion?

Mr. Silkin

I hope that my hon. Friend will allow me to develop my point. I do not want to mention any particular names on the question of advice.

Perhaps it is too much to hope that some of the distasteful words that were uttered in 1975 will be eaten by the Law Officers in 1980. I recall in particular the doubts that were expressed as to whether I would have supported—as I do today—a Bill had it been one to indemnify my political opponents. What interests me more is the advice given to the Secretary of State before he perpetrated his illegal act.

Who advised the Secretary of State so badly? Did he take legal advice at all? Is it conceivable that he should have perpetrated an act of such enormous consequence—it is not a minor act to sack people appointed under parliamentary authority—without the benefit of legal advice?

The right hon. Gentleman is an expert in brushing teeth in the dark, but surely even he does not use a sharp, cut-throat razor in the dark. If he did seek legal advice why—on a matter of such consequence—were not the Law Officers asked to advise? It was a serious constitutional action. It was plainly a matter on which the Law Officers should have been asked to advise. I have no doubt that they were not so asked.

The Secretary of State must take responsibility for the failure to seek the advice of the Law Officers. It is a failure which indicates astonishing incompetence in a man whom we know to be of great ability. It is for that incompetence that Parliament is now being asked to pass a Bill to indemnify him.

In those circumstances, some Members might call upon the right hon. Gentleman to resign. The word has been mentioned on the Floor of the House today. During the 1975 debate that call was made only too frequently to me. Lord Denning, of whom I have some knowledge, is fond of saying that he has every virtue except that of resignation. I make no such large claims for myself. I claim no virtue except modesty for the many things about which I have to be modest.

I say to the Secretary of State "Do not resign unless you can carry the rest of the Government along with you". That would be a true act of indemnity for the error that was made 10 months ago. I hope that nobody on this side of the House will call on the right hon. Gentleman to resign, let alone subject him to the campaign of vilification that was my lot in 1975.

I believe the Secretary of State to be an honourable and able member of the Government, who badly need such men. That is why I shall support the Bill in the Lobby tonight.

7.43 pm

Mr. Martin Stevens (Fulham)

I rise to support the Bill and my right hon. Friend the Secretary of State. May I say at the outset a word of gratitude to Opposition Members who have said that they will not divide against the Bill and who, as in the case of the right hon. and learned Member for Dulwich (Mr. Silkin), have indicated their support for it? We should recognise that that is a magnanimous and generous gesture on their part.

While the atmosphere is cordial, perhaps I could say what a pleasure it is to speak immediately after the right hon. and learned Member for Dulwich, and after the hon. Member for Hackney, South and Shoreditch (Mr. Brown). It is rather like a guest night of the old boys of Camberwell borough council. As we are debating matters south of the river, it emboldens me to participate without feeling a total outsider.

The right hon. Member for Salford, West (Mr. Orme), when opening the debate for the Opposition, said that, were he to be Secretary of State, he would never perform an illegal act. "Never" is a big word in politics, and as he would be, in those circumstances, receiving advice from the same quarters as those of my right hon. Friend and his predecessor the right hon. Member for Norwich, North (Mr. Ennals) I fear that he is being unduly optimistic.

We have to ask ourselves whether my right hon. Friend's action—illegal though it turned out to be—was an action which, in itself, was beneficial to the public. In rising to his defence—as have many of my hon. Friends—I believe that his action had a beneficial effect.

Mr. S. C. Silkin

I am interested to hear the hon. Gentleman's point. Will he make the same point about illegal action by trade unionists?

Mr. Stevens

We can all distinguish—it is only a matter of common sense—between persons who commit an illegal act through reckless and wilful defiance of the law, and those who commit an illegal act in good faith because they have been wrongly advised by their lawyers. A trade unionist who makes an illegal mistake because he has been wrongly advised would deserve—like any other honest citizen—nothing but sympathy and friendship. A trade unionist who arrogantly and blindly breaks the law because he is determined that nothing shall set the limits on his behaviour but his own selfish desires is not in the same class. If the right hon. and learned Gentleman is seeking to draw a comparison between the conduct of my right hon. Friend and another famous case in which he was involved, the analogy must be rejected—and I do so.

We have heard from many Members about the terms and conditions on which the members of the area health authority may have agreed to resume office. We have been asked whether pledges have been given about the funds available, and whether, in agreeing to observe the cash limits, they have had some pre-knowledge of those cash limits.

I have not the faintest notion what my right hon. Friend said to Mr. Hardy, or what Mr. Hardy said to him. I imagine that Mr. Hardy and his colleagues said that they were willing to conduct themselves within the boundaries laid down, just as the other 89 area health authoritites have done in the past, and continue to do today. I do not see why hon. Members should expect any greater concession to have been made to the members of that authority than is made to other authorities.

That is at the heart of the problem which faced the previous Secretary of State and his successor, my right hon. Friend. Whatever the problems faced by the Lambeth, Southwark and Lewisham area health authority—and nobody denies that all public bodies of that sort face such problems—it chose to arrogate to itself privileges that it denied to others. Because it grabbed more than its fair share other authoritites had to go without. Many hon. Members have made that point already.

There was a further benefit from my right hon. Friend's action. In the case of the Ealing, Hammersmith and Hounslow area health authority—which covers my constituency—I have not the slightest doubt that, if he had not taken such action, that authority would not have agreed to work within the required cash limitis. The decision that it took—and for all I know, many other authorities took also—to conform to the desires of my right hon. Friend was taken only because of his robust gesture.

I do not regard the use of statutory powers as being arrogant or ruthless. If they are arrogant and ruthless they should not be on the statute book.

Labour Members have said that the Secretary of State's action in seeking to devolve powers, responsibilities and duties to the area health authorities is in some way a dereliction of duty by the Government. We should recognise exactly what it is that my right hon. and hon. Friends in Government are seeking to do, and with a considerable measure of success. They are saying, not just with regard to health, that the Government cannot and ought not to seek to make all the decisions in the land. That is something which has developed over recent years. When every problem is laid on the shoulders of the Government, and when it is said that the Government must make some rule against a certain kind of behaviour or in favour of it, the citizen will feel that he has the choice whether or not to behave in that particular way.

People talk about the Government determining what is socially acceptable. With regard to the Government making all the decisions for all the citizens—practical, commercial, industrial, Functional and moral—I hope that over the coming years that attitude will gradually be rolled away. That is wrong. It emasculates society, and it leaves the ordinary citizen simply painted on the backdrop of our community, feeling himself to be without any right or duty to make up his own mind on anything at all. What the Secretary of State was saying to this and to other area health authorities is "You make the decisions within the cash limits, and let the neighbours who live next to you, and who know you, judge whether you have made the correct decision. If you have made the wrong decision, let them criticise you, because you are in a better position to make the decision about this hospital or that". When Labour Members say that the Secretary of State is closing a hospital, and when he says that he is not, they should realise that he is not. He is giving local people the responsibility for making those decisions, and the sooner we recognise that the better it will be for the health of our country.

Mr. Dobson

The poisoned chalice.

Mr. Stevens

My final comment may be a controversial one. The conclusion to which many of us have sadly come is that the reason why cuts are taking place, or look as if they may be about to take place, is not that the money is not available, but because too large a proportion of the money is being consumed by those within the Service—I am thinking particularly of the ancillary workers—who are grossly over-manned. There is no question but that that is the case.

I am not asking anyone to accept a lower reward or to be made redundant. But if only the ancillary workers, who parade up and down the streets, waving banners protesting against the cuts, would realise where the true blame lies and would accept, if only temporarily, some diminution of the absurd, in some cases grotesque, demarcation agreements which they were able to parley themselves into under the previous Secretary of State, a great part of what are called "cuts" would not be apparent at all.

For example, in my borough, the social services budget for next year has been increased by a record 26 per cent. to £15 million. But the wages of the manual workers within the service have risen 27 per cent., well above the level of inflation. The total wage part of the budget has increased by 40 per cent. That is what has lead to the cuts—not the actions of the Secretary of State, but the actions of people who are grabbing as individuals—just as the health authority in Lambeth did as an authority—more than their fair share of what is going.

While we are a free society such people must have the same obligation and duty as the rest of us. Therefore, in supporting the Bill, I welcome the opportunity which this discussion has provided to ventilate some of the problems of the Health Service today, which in the light of what has been said will, I hope, gradually begin to improve in the future.

7.55 pm

Mr. John Tilley (Lambeth, Central)

I am always glad to listen to advice from the hon. Member for Fulham (Mr. Stevens) that we should tighten our belts a little more. However, I shall not allow myself to be diverted from the main issue in the way in which the hon. Gentleman suggested.

It has been suggested by some Conservative Members that Labour Members held different attitudes to this issue when Labour were in government from the attitudes that they have held in recent months. I should like to make my position clear. I entered the House in April 1978, the first date to which the Secretary of State referred when he recounted the history of this issue. I have opposed the level of cash limits imposed on the health services in the Lambeth, Southwark and Lewisham area just as strongly under a Labour Government as I have under a Conservative Government. I believe that the cash limits approach is wrong. As has been said, while RAWP was of doubtful use while services were expanding, it is certainly detrimental and unfair when cuts are taking place. In addition, the limited cuts which the Labour Government imposed, and the massive cuts which the Conservative Government have since imposed, make a mockery of the inner city policy, which is intended to increase resources for health, education, housing, employment and other services in those areas. Therefore, I think that I have been quite consistent on this issue.

I should like to draw attention to some of the revelations in the debate as to why the Secretary of State took the action that he did, and what the consequences have been. The Secretary of State and his hon. Friends have clearly said that the intention was to make this area health authority a whipping boy in order to discourage the others. Indeed, they have proudly boasted that that illegal act had that effect.

Secondly, in view of the remarks made by my right hon. Friend the Member for Bermondsey (Mr. Mellish), it is clear that the cuts made by the commissioners were much harsher in their damage to the Health Service than would have happened had the area health authority members been allowed to continue on the course on which they had embarked at the end of July when the right hon. Gentleman intervened.

I should like the House, perhaps for the first time, to spend a few minutes looking at what we are asked to condone, and at what has happened in that area in terms of the health services, because that is what we are trying to put right tonight. It may be recalled that, when the Secretary of State made a statement on this issue, I asked what he would do to put right what had been done with regard to patients who had not received the services that they might otherwise have received had the commissioners not existed. The right hon. Gentleman said that it was not a very helpful question. It was not supposed to be a helpful question to him; it was supposed to be a helpful question to those patients. I did not receive an answer then, but I hope that I shall receive an answer tonight.

The Minister was quite wrong when he suggested that the commissioners had been able to make just a few cuts in patient services. Sir Frank Hartley told King's College hospital community health council commissioners in December that they could find savings of only between £20,000 and £30,000 from the elimination of waste. That is welcome, but such a figure on a turnover of £142 million a year was clearly nowhere near enough.

It has been difficult for local people to find out the exact nature of the cuts because of the secrecy surrounding decisions and the lack of consultation. In contrast to what was said by my right hon. Friend the Member for Bermondsey about CHCs, I pay tribute to the community health councils for St. Thomas' and King's. They have done a difficult job in co-operating with the commissioners. CHCs have been a vital link between local people and the commissioners. Often they have been the only available channel of communication.

Within the King's College hospital district alone 121 hospital beds were closed between August and October 1979. That loss of beds in my area represents a fair-sized hospital. The majority of those closures happened at St. Francis's hospital and at St. Giles hospital. At St. Francis's hospital 57 geriatric beds were closed and the CHC estimates that 180 old people had to stay at home and become the responsibility of the social services as a result.

Can the Minister say whether the local social services will be indemnified for the extra burden placed upon them irrespective of whether any attempt will be made to provide extra services to compensate for the considerable decline in health among many of those old people who last winter could not get the geriatric hospital care they needed?

By the second week of January this year cardio-thoracic services were pegged at 1978 levels. Surgeons were told that they might perform only 21 more operations in the face of a waiting list of 70 people. Therefore, at least 49 people have suffered. The heart surgeon at King's College hospital, Mr. Macarthur, said in a letter to The Times on 17 January that he did not know what would happen to These people who are slipping farther and farther down the queue, but I am sure that their prospects of a return to health cannot be good. I suggest that that was a considerable under-statement of the situation.

There was a reduction in the number of pacemakers available when the budget for cardiology was reduced from £150,000 to £106,000. Dr. David Jewitt, the head of the cardiac department at King's Col- lege hospital said that at least three patients—two men in their fifties and a woman of 64—had suffered massive heart attacks because they could not be admitted for essential operations. Those are the people who have suffered most from the Secretary of State's illegal decision and they are getting no help from this Bill. They are none the less the people to whom this Government owe the greatest moral responsibility. We should all press the Government to say what they propose to do to put these matters right.

But for the British Kidney Patient Association stepping in with funds, kidney transplant operations would have stopped altogether. Private funding solves problems in the short term, but there are serious long-term financial implications for the future of the NHS. After the closure of geriatric beds at St. Francis's hospital no move was made to replace them by an expansion of the district nursing service. That might have gone some way to meet the local need.

We should remember what is happening to people while we are discussing the legal aspects of the issue. On 8 February a story appeared in the South London Press concerning a woman who was trying to save the life of her husband who had been told that every day he lived was a bonus. Mrs. June Brooke has now joined forces with former heart patient Morris Sumray to fight the cuts which have slashed the number of heart operations at King's from 350 in 1979 to 50 for the first quarter of 1980.

Mr. Brooke fell ill on 4 December. Doctors at King's College hospital told him that without surgery to bypass blocked arteries he could die at any time. Mr. Brooke has six children and takes 24 tablets a day. He is unable to work. His wife said Leslie has been a good father and husband. What right has the Government got to decide who can live and who dies? With the cutbacks it is not certain if he will even be able to get an operation after six months. My fight is not just for my husband but for everyone affected by the health cuts. Nobody gave the Government this power of life or death. Mrs. Brooke was speaking before the court decided that the Secretary of State's action was illegal. How right she was when she said that nobody had given the power of life or death to the Government! Parliament certainly did not give that power to the Government.

There is another story of people selling their family heirlooms in order to contribute to a cash appeal to finance heart operations at King's College hospital. I applaud the kind of voluntary efforts about which the hon. Member for Faversham (Mr. Moate) spoke. He described how the community helped Sittingbourne hospital survive a temporary crisis. The situation in the Lambeth, Southwark and Lewisham area has gone far beyond voluntary help during the months in which the commissioners have been in power. The right to health and to hospital services in that area has been replaced by charity and poor people now have to raise the money for their operations.

In another case quoted by the South London Press surgeons are reported as saying: Patients will die because of the cuts in the health service and waiting lists will be dangerously long. Dr. David Jewitt warned last week that of the 100 people on the waiting list for open heart surgery 30 might die from heart attacks while waiting for their operations. Without saying to the Secretary of State "We told you so" and reminding him that, when he took his decision last summer, we said that people would die as a result and without being emotive—the right hon. Gentleman would say we were hysterical—we cannot escape the fact that as a direct result of the action of the commissioners the health of many ailing people in my constituency has deteriorated.

We have not heard a word from the Government about what they propose to do about that.

There are more cuts in the pipeline. I received a parliamentary answer last week that revealed that the commissioners have already decided to close the Belgrave Children's hospital in Lambeth. That is exactly the kind of small informal hospital with a long tradition of local service that plays an important part in the local community. When the area health authority team assumes responsibility once more on 1 April it will find it difficult to reverse that decision, for the reasons spelt out so clearly by my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown).

We must not only empower the AHA to reconsider all the decisions and to have access to all the records, but there is a strong moral case—even within the current constraints on Government spending—for extra money to be given to the area in order to put right what little can now be put right as a result of the damage that has been done.

The enthusiasm for the decision by Kent Members is misplaced. Many of the major specialties are centred at King's, Guy's and St. Thomas' hospitals. They benefit the entire region. People from the Medway towns and Kent generally who need serious operations go to those hospitals. A loss to the inner city area is a loss to the whole region. We need a clear policy for the funding of regional specialties. At present funding is on an historic basis and little account is taken of the catchment area. That is why the districts suffer.

The development of specialties has not been accounted for sufficiently. Because of the strict application of cash limits the choice is between not fully funding the services and cutting services for local people. We must not cut high-technology services the long-term benefits of which have not yet been proved, unless the resources are diverted to the Cinderella services for the mentally ill, the mentally handicapped and the elderly. If that is not done, everybody will lose.

The slow erosion of the health services in the area that I represent is a sorry story. Much has been lost already. The Lambeth, Southwark and Lewisham area suffers acute health deprivation. The standard of health care is high, but the need is also high. There is a high rate of perinatal mortality and general morbidity. A community's general health is governed not by the level of health care, but by class and social environment. Those who suffer because of environmental deprivation are being asked to suffer even more because of the cash limits. King's College hospital is the second largest employer in my constituency. Any cuts in expenditure at King's mean not only fewer services for my constituents who are in medical need, but fewer jobs.

The Bill is an amnesty for those who broke the law unwittingly, on the Secretary of State's instructions.The Bill absolves those people, and I support it for that reason. However, the responsibility for the orginal mistake rests with the Secretary of State. As a result of his misjudgment, hospitals have closed and people have suffered from lack of treatment. Some people may yet die and some may have died already as a result of the Secretary of State's decision. He made a mockery of the Conservative's claim to support law and order.

It is a nonsense for Government Back Benchers to say that we are talking about a triumph for the rule of law. A gallows confession like that is ridiculous. The Secretary of State thought that he would be able to apply the smack of firm government to the weakest members of our society in one of the most desperately deprived areas of Britain. His attempt has gone sadly wrong. He is the only outlaw, as my right hon. and learned Friend the Member for Dulwich (Mr. Silkin) said. My right hon. and learned Friend said that the quality of mercy could not be strained sufficiently to be applied to the Secretary of State, but my right hon. and learned Friend let the Secretary of State off at the last minute. I shall not be so kind.

I hope that the Government will learn from their experience a lesson about the dangers of interfering with local democracy. I hope that they will reflect on the dangers that they face in law, morality and in public opinion if they try to impose their wishes on locally elected and/or locally supported representatives. The Secretary of State has accepted responsibility.

Mr. Patrick Jenkin

I am sorry that I missed the initial part of the hon. Gentleman's speech. The hon. Gentleman referred to public opinion. Did he notice the result of the local authority by-election in Lambeth last week when two seats were up for re-election? Compared with May 1978, which was a good year for the Conservatives, the two seats were held with a swing to the Conservatives. Candidates canvassed and campaigned on the health issue.

Mr. Tilley

The Secretary of State's memory is shorter than mine. The year 1978 was not a good one for the Conservatives. In May 1978 the Labour Party won the council in Lambeth. The right hon. Gentleman is not correct. In the last few months Labour has won seats in Lambeth by-elections with greater swings to Labour than the swings the other way in the last by-election.

In the last seven months, articles in the local press and petitions sparked off by the decision to make health cuts show that there is no doubt that the public believe that health services should not be cut. The popular belief is that the Secretary of State was high-handed and selected an area which is least able to defend itself and provide for itself.

The Secretary of State cannot hope that the Bill will be passed and believe that that is the end of the matter. He has a wide responsibility, not merely to tidy up the mess. Even if the Secretary of State cannot manage to persuade the rest of the Cabinet to go with him, he should resign.

8.18 pm

Mr. Reg Race (Wood Green)

I am interested in the tone of the debate, because it contrasts sharply with other debates in which Secretaries of State and Ministers have been accused of pursuing policies to the detriment of patients. The Secretary of State's actions in relation to the Lambeth, Southwark and Lewisham authority were to the detriment of patients. Hon. Members have been soft with the Secretary of State.

I well remember reading copies of the Official Report when the Conservative Party was in opposition. Conservative Shadow spokesmen made long, bitter statements about the way in which Labour Ministers were carrying out their responsibilities. They said that the rights of patients should be respected and come first. Indeed, the Government published a document called "Patients First". Significantly, no Government supporter today mentioned the way in which patients were treated as a consequence of the Secretary of State's action. None of them bothered to mentioned that small point. There is therefore a degree of hypocrisy and humbug from Government supporters on these questions.

One of the most important points that we must discuss is the question of the conditions under which the area health authority was asked to resume its statutory powers. I am sure that there was a certain amount of arm-twisting from the Secretary of State on that. I refer to the points made by the Secretary of State in his argument on cash limits earlier in the debate and the way in which the successor area health authority would be committed to the cash limits in 1980–81. The Secretary of State said that one of the reasons why the area health authority got into difficulties in 1979 was the unrealistic level of the Labour Governments National Health Service cash limit. However, the Conservative Party supported the 5 per cent. pay policy which was the basis of the NHS cash limit. The Secretary of State cannot bring the cash limit imposed by the Labour Government to bear in this argument.

No one in the House ever, to my knowledge, complained when cash limits were underspent. Cash limits were significantly underspent throughout the public services in the first three years that they were imposed. The underspending was so large—£7,000 million, if my memory is correct—that the Treasury published a paper explaining it.

It is hypocritical of Government supporters to criticise an area health authority for overspending on its budget within the overall budget of a regional health authority but to remain silent on the problem of underspending cash limits, which is at least as serious as the problem of overspending. In global terms, the underspending of cash limits has been far more significant to the economy than any overspending by one health authority.

As to the cash limits which the Lambeth, Southwark and Lewisham area health authority will be asked to go back on, no reduction in patient services need take place in the first two years that it is in office. This is the reason for advancing that point of view. The Lambeth, Southwark and Lewisham area health authority, in common with every other area health authority in London and throughout the country, will be subject to reorganisation. The present authorities will be abolished by the Health Services Bill and district health authorities will be appointed in their place. We do not yet know what will be the boundaries of the district health authorities in the Lambeth, Lewisham and Southwark area. We do not know them for any part of the United Kingdom.

Therefore, it is utterly irresponsible to send the Lambeth, Southwark and Lewisham health authority back into office on a cash limit which it is known will mean further hospital closures in the immediate future and the non-opening of the hospitals that were temporarily closed in the period that the commissioners were in power, and when it is also known that district health authority reorganisation will take place. Following that reorganisation, a district health authority may say "To carry out our functions under the National Health Service Act 1977 we need the hospitals and community health facilities that were previously closed by the area health authority" Therefore, it is absolutely sensible that the area health authority in Lambeth, Southwark and Lewisham should return to a cash limit whereby it does not have to make massive cuts in patient services in the next few years.

When hospitals are closed on a large scale—a point referred to by my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown)—patients are deprived of treatment. Whether a hospital is closed in Faversham, Canterbury, Rochester, Hackney or Haringey, unless there are alternative facilities for those patients it automatically follows that they do not receive treatment. That is what will happen in Lambeth, Lewisham and Southwark, and yet there has been silence on the Conservative Benches about what the Government propose to do about it. They are simply saying that they must shut down as many services to the public as is necessary in Lambeth, Lewisham and Southwark in order to stay within the Government's cash limit policy. They are totally ignoring the effect that that will have on the people of the area, on the rate of illness, and on the death rate.

One of the other important points in the debate is the prospect of reorganisation in the London health area. I have already mentioned the problem of reorganisation of district health authorities. We have seen the Flowers report and the two other reports from the consortium on the London health service. My right hon. Friend the Member for Salford, West (Mr. Orme) was correct when he said earlier that, in the light of developments in Lambeth, Lewisham and Southwark, and in the light of the complexities that have arisen, there should be an independent inquiry into the reorganisation of the London health service.

It is inconceivable that the problems that we have faced in Lambeth, Lewisham and Southwark, and the problems that we shall face in other health areas in the rest of London in the next few years, should be dealt with by an advisory group that will not necessarily take evidence, will not necessarily publish its findings, and will not necessarily report to the House. I am sure that many hon. Members will agree that a reorganisation of Lambeth, Lewisham and Southwark and all the other parts of the London Health Service on that basis is wrong. The Secretary of State would be compounding his error on Lambeth, Lewisham and Southwark by pursuing that sort of policy.

I wish to make two precise points about the position after the Bill is enacted. My hon. Friend the Member for Lambeth, Central (Mr. Tilley) asked what provision the Government would make, if any, for dealing with cases where patients would have received treatment prior to the commissioners taking office, and prior to the arrangements made by the commissioners. It is clear that many hundreds of people in Lambeth, Lewisham and Southwark were deprived of hospital treatment and other forms of NHS treatment, contrary to the letter of the law under the 1946 and 1977 Acts.

It is possible that individual patients would be able to sue the Secretary of State if they believed that their medical condition had worsened as a consequence of the actions that he took unlawfully at that time. I shall be interested to hear the Under-Secretary of State's comments when he replies. I am sure that many patients in Lambeth, Lewisham and Southwark may have been contemplating legal action against the Secretary of State because they were deprived of services, and because of the illegal actions that he took at the time. l shall be interested to find out whether the Government are prepared to provide any redress to those patients.

The second problem is that of NHS employees, of whatever grade. If, for example, a person who was employed at St. John's hospital, Lewisham, retired early in the interests of the service—as was his right under the appropriate legis lation—and received a pension on the basis of his approved years of service in the NHS, will it now be open to him to argue with the NHS employment authorities for an improvement in his conditions of service or pension to take account of the illegal actions of the Secretary of State in putting in commissioners and closing down the hospital and causing these people to take earlier retirement on terms which clearly are less advantageous than would have been the case if the area health authority had continued in existence? What are the Government proposing to do about that question?

I want to finish my remarks by referring to the points that were made earlier by several hon. Members from Kent constituencies. It seems to me that increased and improved resources for the Health Service in Kent cannot be obtained by arguing for reductions in the level of health care in the inner London area. They ought to address their remarks to the problem of getting increased and improved funding for the NHS as a whole and persuading the Government to allow these resources to come forward in the forthcoming budget. It would be far better for them to argue in that way than to argue for reduced services in inner London where patients and staff would clearly be affected by the conscequences of those changes, instead of arguing for an immediate transfer of resources to Kent.

I think that every hon. Member on this side of the House would approve of a policy that meant Kent getting better hospitals and better community services, but I am bound to say that one of the reasons for its having bad hospital services at the moment is that before the NHS Act came into force in 1948 the Conservative-controlled local authorities in Kent and elsewhere provided very little health care on a municipal basis. What people are suffering from now is the consequence of 40 years of Tory misrule in their area. They have absolutely nothing to complain about in that respect.

It was of course, the Labour Government who introduced the RAWP proposals to try to shift the internal distribution of resources in the South-East region in their favour. But, as many hon. Members on this side of the House have said, that can be done only on the basis of expanding and improving the health budget and levelling health resources and health care upwards in Kent rather than deflating the level of health care resources in inner London to the level of those in Kent.

Therefore, I believe that the way in which we should go forward is by passing the Bill, but in such a way as to give the area health authority freedom to operate within a generous cash limit for the next two years, taking cognisance of the very serious practical individual problems that undoubtedly will arise when the area health authority has to deal with the individual patients and workers who have been seriously affected by the illegal actions of the Secretary of State.

8.34 pm

Mr. Laurie Pavitt (Brent, South)

We are discussing a Bill to rectify a disastrous mistake made by the Secretary of State, who has quite rightly come to the House and apologised for it. The debate has not only concerned the major mistake that led to this Bill and the way in which it was made but has revealed a trenchant criticism of what was done. As a loyal member of the Government, the right hon. Gentleman is only pursuing his Government's policy. The indictment is not so much against the right hon. Gentleman as against the Government's policies for the National Health Service.

My right hon. Friend the Member for Bermondsey (Mr. Mellish), in a robust speech, put this matter in context and explained how he was involved with the area health authority in the early days. There has emerged in the discussion a great deal of difference between the Secretary of State and a previous Secretary of State, the late lain MacLeod, whose policy was so different. The policy pursued by the right hon. Gentleman is a complete reversal of the consensus opinion that held sway in previous years. He admitted that he had adopted this policy to discourage the others.

Part of the Government's policy in tackling trade union problems is to pick out a trade union to clobber—in this case the steel unions—and embark on a confrontation which they hope will make other unions toe the line. The Secretary of State has pursued similar tactics and strategy to those that the Government are pursuing on almost every other issue. To take education, for example, the Government are no longer following the policies of Lord Butler. The Education (No. 2) Bill is part of the general pattern showing the profound change in Conservative Party politics.

Overspending measured in one year by an area health authority is nonsense. If the overspending of one year is deferred for two years, the consequence is that far more public expenditure will be incurred to fill the gap. The general understanding is that area health authorities work on a three-year basis. During the time of the previous Administration, agreement was reached to carry forward over-expenditure or under-expenditure so as to take a rational rather than a rigid approach at the end of the financial year. That policy has not succeeded in this case.

It would be interesting to have a breakdown of the February expenditure figures for each year. What usually happens is that, although a department in a hospital can carry forward money that is left over, it does not do so because it knows that it might go in the following year to another specialty or department. Each February and March there is a tremendous amount of expenditure on all the services in the NHS, and I feel sure that an analysis of the £5 million referred to by the Secretary of State would show that some of the overspending was unnecessary. Very often, to attempt to control the way in which expenditure is made is to be penny wise and pound foolish.

I give a typical example of what happens in all area health authorities. The holding down of public expenditure on the employment of ambulance drivers produces a shortage of ambulance drivers, and money has to be spent on minicabs and other services to replace those ambulance drivers. There has been a rundown of the employment of hospital pharmacists. The consequence was that in Lambeth and elsewhere prescriptions had to be made up by outside pharmaceutical services at twice the cost. Often the straitjacket on overspending is a temporary one which leads to gross overspending later.

It has been rightly acknowledged that VAT contributed to the overspending in Lambeth by almost £1 million last year. When the Under-Secretary of State replies, I should like him to give the figures for the pay claims of nurses and others that were absorbed during this period. I do not believe that they have been included in the figures for the overspending. I should be grateful if the Under-Secretary would inform us about that because the pay claims that were awarded would have been a sizeable sum for the area health authority to find.

I am always scared of lawyers and chartered accountants. Some time ago when I had to have my accounts audited I remember a chartered accountant saying to me "Give me all your books. What kind of result do you want me to show? Do you want to show a profit, a loss, or a break-even"? I suspect that could have happened here. I hope that my right hon. Friend the Member for Norwich, North (Mr. Ennals) was able to ameliorate this in the case of this area. What seems to have happened is that the accountants dominated what should have been a compassionate service. The commissioners appointed by the Secretary of State took the easy way out and closed two hospitals.

If we consider the two hospitals that were closed, we can see that when an authority is administering a whole range of community services—general practioners, pharmacists, opticians, dentists and so on—and is called upon to make a large cut, the quickest way is to remove one large item. If it can delete one item which costs £20,000, it saves a lot of trouble in choosing 20 different sectors for minor cuts of £1,000 each. Consequently, the quickest way to cut public expenditure is to close a hospital.

There is a quicker way than that. Most of our expenditure in the Health Service is on the over-65s. If we could persuade people to commit suicide at that age, we would have funds that would last for a long time. Money can always be saved by cutting services, closing hospitals, not having district nurses and meals on wheels. All these things were possible in the Lambeth area. But if an authority has to maintain these services and the rate of inflation is 20 per cent., it is extremely difficult. The first figures that the Secretary of State gave to us covered a period when inflation was less than 10 per cent. But the last year's overspending took place when inflation was in the region of 16 per cent. to 18 per cent. That was not the fault of the Lambeth authority. It did not cause the inflation but it had to cope with the consequences.

This Bill is really an attempt to apologise to the area health authority for having expected its members to work in impossible circumstances and then deciding to sack the lot of them because they could not cope with conditions that were outside their control.

A number of my hon. Friends have mentioned the three major teaching hospitals. Everybody admits that the 1974 reorganisation was a great disaster for the NHS. One of the objects of this area health authority having the designation (T) after its name was to integrate teaching hospitals into the local areas and to take them out of the ivory towers in which they were situated. What has happened is that the area has been unable to use its resources as it would have liked because of the domination of the teaching hospitals.

It is interesting to note that the three hospitals in the area about which we are talking have capital funds still in existence. St. Thomas's hospital has a capital endowment fund of £17,886,810, and Guy's hospital has a capital endowment of £8,751,685, while King's hospital, which is much smaller, has a fund of £1,745,172. That makes a total of approximately £28 million. At current rates the interest on these three sums would have absorbed the whole of the overspending. So until we have more figures it is difficult to know why, on the straightforward overspending of X number of pounds, the Secretary of State took the step that he did without a more detailed analysis.

It is interesting to consider the internal expenditure of Guy's hospital. Several years ago I fought a campaign for the junior hospital doctors at Guy's. The poor souls had no married life. They had to live in the hostel because they were residential. If they were married, their wives lived elsewhere. When the rebuilding took place a number of units of accommodation were made available. I discovered that only three of the residential officers occupied the units of accommodation. The rest of the units were occupied by consultants as pied-aterres because it was convenient for them to have a base from which to work in London.

I understand that detailed examination of that sort is not our province on Second Reading. However, it is the background against which the Bill is before us. Many of the problems that have arisen will be discussed in Committee. A number of the important safeguards that my right hon. and hon. Friends are seeking will feature in our amendments.

There is a good deal of material in two reports that are not parliamentary property, namely. the Flowers report on the London teaching hospitals, and the report of the London Health Planning Consortium. The reports refer to the three hospitals to which I have referred and provide very useful statistics which can enlighten our understanding. Until the Government advise us of their intentions, we shall have no knowledge of how the Lambeth health authority will be affected by these two reports.

The Secretary of State took highhanded action. He was autocratic. The commissioners were installed. They had to wield a blunt axe. In the absence of a more meaningful approach, more damage has been done in the area health authority in a short time than in the previous 20 years.

8.47 pm

Mr. Frank Dobson (Holborn and St. Pancras, South)

I shall try to be brief in my contribution to what I think hereinafter will be known as the War of Jenkin's Cock-up rather than the War of Jenkin's Ear. I shall take as my theme two pledges made in the Conservative manifesto. It is the obligation to carry out the two pledges that has led to the Secretary of State sitting in the doghouse this evening.

One of the pledges was to uphold Parliament and the rule of law". The manifesto stated: It is not our intention to reduce spending on the Health Service The right hon. Gentleman finds himself in his present position because the Conservative Party has not upheld the rule of law and because it has reduced expenditure on the Health Service by diverting, in this year, £45 million from the NHS from increased VAT payments.

I am sure that the Conservative Party did not intend to go back on its commit ment to uphold the rule of law. However, we have had three shambles already in my short period in Parliament. We heard the Government tell us that they intended to do nothing about Anthony Blunt and all the stinking mess that that affair represented. We have had the decision by the Attorney-General and the Director of Public Prosecutions to do nothing about sanctions-busting by the wealthy and the powerful. We now have a Secretary of State who acts outside his powers. In a parliamentary version of "Please, Mister, can I have my ball back? ", the right hon. Gentleman introduces the National Health Service (Invalid Direction) Bill. Practically everyone who read the title assumed that the "invalid" related to those whose health was badly affected. We can only hope that the political health of the Secretary of State is badly affected by what he did in Lambeth, Lewisham and Southwark.

The decision that the right hon. Gentleman took, and what he did, was so plainly illegal that he did not even decide to appeal. That epitomises how illegal the action was that he took in putting out the AHA and installing commissioners. Such action is not unique. It is not an aberration. There are serious faults in the administration of the Department of Health and Social Security, in its lawyers and in the implementation of Health Service legislation.

These matters have come to affect my constituents in a rather peculiar way. Some of them go to hospitals, quite reasonably, which are outside the boundaries of my constituency in an area that is covered by the Soho and Marylebone community health council, by the Middlesex hospital and by the various units connected with that hospital. I shall give a brief recital of questionable advice and activity on the part of the Secretary of State and his legal advisers to show that I am not referring to an isolated incident.

In early July, the Soho and Marylebone community health council, representing the interests of local people, challenged the regional health authority over the so-called temporary closure of hospitals. In submitting that challenge, the council threatened High Court proceedings to restrain the health authority from making the so-called temporary closures. In early August, the chairman of the regional health authority wrote asking the council not to take this action as it would be a waste of money and would involve going to court and spending money on lawyers. It will be realised that I am summarising what happened.

On 16 August, the regional health authority chairman wrote to the Minister for Health telling him what was happening in relation to Soho and Marylebone. On 22 August, the Secretary of State wrote what can only be described as a "Dear Betty" letter to the chairman of the regional health authority setting out his views on the question of the CHC seeking to establish what was the law in relation to the so-called temporary closure of hospitals without proper consultation.

The Secretary of State said that the question of temporary closure did not matter even if it became a permanent closure because the cuts—this must have been a joke—were in the interests of the Health Service. That is a curious interpretation of what is in the interests of my constituents. They did not consider that it was in their interests that hospitals serving them should be closed. They did not even think that such action was in the interests of the Health Service.

It is even more ironic that the Secretary of State should say to the good lady who is chairman of the regional health authority: Certainly I would not regard it as appropriate for a CHC to rush into litigation when other channels are available to resolve any points on which it had genuine doubts The right hon. Gentleman went on to offer: It is open to CHCs to seek the advice of the RHA and, if need be, the Department on such matters. It will be agreed, I think, that, in the light of the Bill before the House, to suggest that the Soho and Marylebone community health council should go to the Department of Health and Social Security for advice on legal problems would be like asking Crippen to advise on crime prevention. The council did not do so.

On 24 August, the letter I have described was given to the vice-chairman of the CHC. I emphasise that the letter was given. It was not posted. It was done in haste. The vice-chairman acting properly, then called a meeting of the community health council on 30 August. In the light of the fact that the Secretary of State was inviting it not to take legal action, that there were threats from the regional health authority and that funds might be stopped, so preventing the council meeting, through public funds, the cost of the lawyer who had been consulted, the CHC decided to pursue the matter no further.

The point that seems to arise is that the DHSS and the regional health authority have still not released funds to the CHC necessary to pay the firm of solicitors from whom it sought advice on the legality of the action. They are still blocked. It is said that the payment is coming through, but, to date, the DHSS has influenced the RHA and the RHA has refused to provide the funds. The CHC was acting in good faith to protect the interests of people it was established to represent. It had every right in law, as the Secretary of State knows, to seek such legal advice. The right hon. Gentleman is using the pressure that he and his officials have brought to bear on the regional health authority to prevent those funds being paid. It seems that, since the legal officials of the DHSS are not worth a light—if they advised the Secretary of State on the Lambeth, Lewisham and Southwark issue—he should authorise immediately those payments.

Mr. Ronald W. Brown

I cannot sit here in silence. I am a member of that regional health authority. I received no such instructions from the Department of Health and Social Security. It is a matter of regret that some of my colleagues on that body decided to take action contrary to the way I voted to resolve that problem.

Mr. Dobson

I wish to register my objection to the way in which the Secretary of State brought pressure to bear in order to prevent legally constituted bodies from gaining legal advice. They therefore could not take the legal action that would have enabled them to do their jobs. Obviously, the Lambeth, Southwark and Lewisham area health authority was doing its job better than the Secretary of State when he issued that famous directive.

Following the advice issued to all regional health authorities, expressing the view that the Secretary of State had already expressed to Soho and Marylebone, the commissioners fought a court case. The community health council for Guy's went to court on the question whether a temporary closure was substantial. The DHSS lost that case. Nevertheless, it found it necessary to issue revised guidelines to ensure that people did not get into trouble. The DHSS and the Secretary of State gave tawdry performances.

I need to be convinced that we should not vote against such a tawdry measure. Innocent parties have suffered. If this measure is not passed, innocent parties will not suffer. Indeed, the only people to suffer would be those slovenly solicitors who gave such advice. If solicitors were not responsible, an overbearing Secretary of State is to blame.

8.56 pm

Mr. Michael English (Nottingham, West)

I shall refer to the remarks with which the Secretary of State opened the debate. He has given the impression that the judgment was an accident. The Secretary of State broke the law. The end of the learned judge's judgment is very short. He said: I will now summarise my conclusions on the questions I posed and with which I have dealt as follows: The paragraph is then divided into four sub-paragraphs. Only the fourth pararaph has been mentioned by the Secretary of State. The judge there said the Secretary of State had made a direction of unspecified duration under section 86 which in law he had no power to make". The preceding sub-paragraphs are more important, yet the Secretary of State did not refer to them. The first sub-paragraph is perhaps on his side. It states That bearing in mind the advice the Secretary of State was given, it has not been established that he acted unreasonably in giving the direction which he did. That is something that the Secretary of State could refer to. He probably does not do so, because it is phrased in a negative manner. The body of the judgment says on this point: I regret that the Secretary of State did not seek clarification. The judge pointed out that the Minister of State had acted extremely reasonably in relation to the area health authority. However, the judge said that, although the Secretary of State had not been proved to have acted unreasonably, he regretted that he had not sought to clear up the meaning of a resolution which had been passed by the area health authority. The Secretary of State had assumed that the resolution was totally negative, although it was not.

More importantly, the learned judge continued: the advice on which he acted was seriously misleading in two respects. I shall not discuss those respects in detail as they have already been debated. However, does the Secretary of State think that he contributes to the efficiency of government by wheeling out the hoary old saw that he is responsible and that he will not say who gave him such bad advice? That practice should cease.

In the United States of America and in most democratic countries, one knows who gave good or bad advice. There is here a desperate desire to conceal inefficiency, and it is deplorable. In the United States civil servants have longer salary scales, which can be accelerated for good civil servants and retarded for bad ones. It does not sack civil servants much more than we do. However, the Government of the United States pay people according to their merits. If we were to use that system here some in this Department would be given a lot less pay.

We know that the Department did not consult the Law Officers. Could we be told in the speech in reply whether the Department consulted its own lawyers? Were Mr. Knorpel and his staff consulted, or was this advice given by arts graduates who thought that they understood the law? That is what one wonders in this case.

After dealing with the misleading advice, the third branch of the judgment says: The consequence of this advice, on the evidence before me, is that (a) the Secretary of State failed to give proper consideration"— the Secretary of State missed out the adjective "proper"— to the possibility of giving a s. 17 direction or directions to deal with the problems with which he was faced". in other words he chose to sack the authority before he had even ordered it to obey his instructions.

I have found myself in this situation in relation to Committees of this House. I once wrote a polite letter to the Inland Revenue but found its representatives unwilling to come before a Committee that I was chairing. I inquired about the proper procedures, which is what the Secretary of State should have done. I was told that I could not do anything until I had ordered representatives of the Inland Revenue to attend. A mere polite letter asking them to do so was not an order in the legal sense of the word. I received the exact advice that should have been given to the Secretary of State. Of course, as a result my Committee passed a resolution that I should be empowered to issue such an order and that was enough. Once the Inland Revenue was ordered to do something it did it. But it would not do it just because polite letters had been written or telephone messages passed on.

In this debate we are not really talking about cash limits, of which I happen to approve. We are talking about the duties of the Secretary of State to tell people what amounts of money they should spend and we are talking about the duties of members of an area health authority to do their best for the patients and staff entrusted to their care. They were negotiating with the present and previous Secretary of State and their junior Ministers. In these negotiations they had reached a certain set of conclusions and had approved six points and rejected three others. This is all mentioned in the judgment.

The Secretary of State again refers to his own affidavit. The judge tears it to shreds. I shall not go into the details because time is short. The fact remains that the Secretary of State did not actually order the authority in terms of the law to do what he wanted it to do. He wanted to sack the members of the authority rather than tell them what to do. He did not want the responsibility for the cuts to be placed upon him. He wanted to say that the authority was disobeying him when it was not and he did not want to be responsible for telling it what to do. He just wanted the publicity of sacking it. That is the implication of this judgment.

The last branch of the third point in the judgment is that the Secretary of State misdirected himself about the true effect of s. 86". This is very simple. I should have thought that anybody, when using a particular power to sack an authority, would have actually read the power that he was using. Section 86 says: If the Secretary of State—(a) considers that by reason of an emergency"— it is very clear to me and I should have thought to a layman in the House what an emergency in the Health Service might mean; it could be an epidemic of some kind, a case of smallpox or a hospital fire— it is necessary, in order to ensure that a service falling to be provided in pursuance of this Act is provided". Surely if the Secretary of State had read that he would have thought that this was not quite what he was doing, at that time.

Mr. Patrick Jenkin

According to the learned judge's decision it was just a matter of the period. That was the only point on which the judge decided. The hon. Member should have noticed that the judge actually recorded on a preceding page of his judgment that Mr. Blom-Cooper, the applicant's counsel, conceded that he was not relying on the failure to specify as it was not a mandatory requirement. Is not the hon. Member being a little hard on the Department for having failed to take the same point?

Mr. English

I take the point made by the learned judge. I am trying to explain to the Secretary of State that, in adidtion to that point, the judge made three other points in three sub-paragraphs, one of which has two branches. He finished in the third paragraph by saying: The combined effect of these defects is that he failed to exercise his discretion properly and the direction is vitiated by this failure. He said that before he came to the last item, when he said: He made a direction of unspecified duration under section 86 which in law he has no power to make. The judge gave more than one reason, but the Secretary of State wishes to listen to only one reason and not to the others.

9.6 pm

Mr. Roland Moyle (Lewisham East)

It has been a sad and unecessary debate, in the sense that it need never have occurred. It has been based on a squalid little Bill. I say that despite the fact that for the people of Lewisham there will be a happy outcome in that our area health authority will be restored.

I wish to leave my position on the Opposition Front Bench and become a constituency Member of Parliament. I place on record a tribute to the officers of the community health council who, in the absence of a properly constituted area health authority, were the sole democratic link between my constituents and such management of the Health Service as there has been in that area. The secretary of that council performed a full and unremitting role.

I pay tribute also to the officers of the London borough of Lewisham, especially those in the legal department. If the Secretary of State is ever short of a spot of legal advice for the future, I can recommend no other to him than the legal department of Lewisham council.

The debate is unnecessary because, with reasonable Government policies and sensible action by the Secretary of State, the unhappy period to which the Health Service in South-East London has been subjected need never have happened.

I admit immediately that when the Secretary of State took office he faced a problem, and nobdy would try to deny that. However, it was not a critical problem. It was the same problem that I and my right hon. Friend the Member for Norwich, North (Mr. Ennals) had to contend with, namely, that it was a highly complex area health authority which was overspending, although it was reducing that overspending.

The Secretary of State crashed into the problem like a bull into a china shop. That is the first indictment which should be made. The whole story of the relationship between the Secretary of State and the area health authority was one, as I said on the day that the judgment was announced, of bungling and incompetence.

It is not surprising that as the debate has continued and as more and more Conservative Members have listened to the Government's case being deployed, fewer and fewer of them have felt that they could support the Conservative Front Bench. We have not had a Conservative contributor to the debate for the past one and a quarter hours.

The Secretary of State's action begins to make sense only if he believed, when he took office, that as far as the Health Service organisation was concerned all was for the best in the best of all possible worlds, and if he made the arrogant assumption that those who differed from him were wrong. Perhaps he did feel that way, because he belongs to the same party as the right hon. Member for Leeds, North-East (Sir K. Joseph), who, as a member of a previous Conservative Government, constructed the Lambeth, Southwark and Lewisham area health authority. That is at the root of all the troubles from which the authority has suffered.

I wish to summarise the authority's component parts. It consists of three major teaching hospitals—they are three big and prominent hospitals—crammed with the most complicated and advanced equipment that medical technology has to offer. In addition, they are crammed with not simply leaders of the medical profession but whole squads of medical profession leadership, all concentrated in three sites. That makes a big concentration of medico-political muscle power in three areas. Therefore, they constitute a substantial management problem for anyone who is in control.

On top of that, the three teaching districts were coupled with a very ordinary hospital district in the form of Lewisham. There is nothing particularly extraordinary about Lewisham. It has a run-of-the-mill district general hospital in terms of physical provision. It is a good district general hospital within its limits, but it is an ordinary one. Its general funding is very much the same as the average for the rest of the country.

In addition, the teaching area contains substantial areas of inner city deprivation. There are areas of considerable housing multi-occupation. There are areas which are substantially multiracial. Of course, that adds to the medical complexities, because some of the immigrant populations have diseases which are not common to the indigenous population, just as the indigenous population has some medical ailments which are not common among the immigrant population. In many areas, particularly to the north and west of Lewisham, there is an ageing population. There are also weak social services and weak provision for general practitioners. In addition, there is a general absence of psychiatric provision. As well as having to cope with all those problems, that area was supposed to be the well-spring of funds for the rejuvenation of Kent and East Sussex.

Incidentally, it is worth while saying that there were one or two other areas in the country which were constructed on similar lines. There were very few of them. It was just a matter of chance as to whether the disaster struck there or in Lambeth, Southwark and Lewisham. Lambeth, Southwark and Lewisham was the area where the troubles set in.

When my right hon. Friend and I came to the conclusion that there was continual and chronic overspending, we did not—this is what the Secretary of State did—go in with all guns blazing from the hip trying to shoot our way out of the problem. My right hon. Friend—and I pay tribute to him—talked to the area health authority. We understood and appreciated its problems. The fact that I live in the area and represent it helped in that regard. We adjusted the area's cash limits. Incidentally, that is a course of action which the Secretary of State is setting out to remove from himself under clause 5 of the Health Services Bill which is even now in Committee. We adjusted the cash limits, because the key to the RAWP policy is not the targets that are set under it, but the speed with which one works towards those targets. There is considerable room for flexibility and manoeuvre in doing so.

At the end of the exchange of correspondence, to which the right hon. Gentleman referred, as did my right hon. Friend, we came to an agreement with the area health authority that in the financial year 1978–79, it would reduce expenditure by £1 million. In the financial year 1979–80, it would hold to the levels of expenditure in real terms that it had in 1977–78, and in 1980–81 and 1981–82 it would work towards the targets that had been set under the RAWP policy.

I make no apology for turning to page 11 of Mr. Justice Woolf's judgment. It has been quoted before, but I want to quote it again, because it is a key to the situation, and it is a judgment of an outside party.

Mr. Patrick Jenkin

What about the one-fifth of overspend?

Mr. Moyle

I was just about to come to that point. Incidentally, the learned judge, who is not a secret chairman of a NUPE branch or anything of that sort, said: However, with considerable reluctance it did comply with Mr. Ennals's requirements and it is not disputed before me that it achieved the saving of £1 million during the remainder of the year 1978–79". That was a result of the persuasion of my right hon. Friend and myself. The learned judge added: it had taken the necessary steps to ensure that its expenditure in 1979–80 would be held to the 1977–78 level in real terms". The judge then goes on to say: This improved position was however changed by the budget proposals announced on the 12 June 1979. It is no good the right hon. Gentleman talking about the fact that only one fifth of the overspending was due to VAT. Here was an area health authority which had a difficult brief. It had substantially overspent in the past but was now cutting back its expenditure.

In such cases it is the marginal costs that are important and in this case marginal costs were increased by about 20 per cent. by the announcement of the Chancellor of the Exchequer on 12 June. The right hon. Gentleman would have us believe that that is a minor matter. The Budget was the last straw that broke the camel's back.

The right hon. Gentleman and not my right hon. Friend was in charge at that stage. The Secretary of State did not pause to think. He was bounced. I can hear the phrases now—"Critical situation", "The whole National Health Service watching", "Never control another health authority if something not done" I can imagine the things that were said to the Secretary of State. The trouble was that the right hon. Gentleman failed to exercise his own judgment. I could have told him that if he sacked the members of the area health authority there would be trouble. But he never asked me.

Before taking any action my right hon. Friend asked my advice. My right hon. Friend before he took any action in relation to the area health authority had all the members of the Lambeth, Southwark and Lewisham boroughs in to consult him. Every step that he took he took in full consultation and with the support of all of us. The right hon. Gentleman could have done exactly the same thing and probably have received the same support if he had adopted that line but he did not.

Instead, the right hon. Gentleman refused to ask the advice of the Attorney-General. It is an open secret that the Attorney-General was not consulted. It is doubtful whether the right hon. Gentleman took the advice of his own lawyers about what was going on. Why did he not ask the advice of the Attorney-General? There was no mad rush. The Attorney-General was available to be asked, but the right hon. Gentleman did not ask him.

We then come to the basis on which the Secretary of State took his decision.

Mr. Crouch

I am not sure what argument the right hon. Member for Lewisham, East (Mr. Moyle) is pursuing. Is he saying that my right hon. Friend should not have taken action to restrict an authority which was overspending by £5.3 million and even after the restraint of £1 million was still overspending by £3.4 million? Or is the right hon. Member saying something else? Is he saying that my right hon. Friend took the wrong legal action? It is either one thing or the other.

Mr. Moyle

The hon. Member was not present when I began my speech. I am demonstating that the right hon. Gentleman faced the same problem that we faced and that he set about solving it in totally the wrong way. If we require further confirmation of that fact let us turn to page 17 of the judgment of Mr. Justice Woolf, where there is a reference to the affidavit sworn by the right hon. Gentleman. The judge said: In paragraph 6 he indicates the material which was before him when he made his decision. It included a transcript of part of an interview given by one of the members of the A.M.A.(T) on television which is in dramatic terms (that member disputes that the record of the part of the interview which is before the Secretary of State properly represents the whole of the interview), and cuttings from newspapers. Those cuttings have striking headlines and references to confrontation and the situation being a test case. I would assume that the Secretary of State did not pay undue attention to those newspaper reports because they do appear to be out of accord with the report which he received from his own officer who attended the meeting on 30th July". The judge is there saying in a polite way that the right hon. Gentleman took a substantial part of his decision on the basis of television interviews and newspaper cuttings. That is how I read it. That is not the basis upon which Secretaries of State should take decisions.

That in itself would not be so bad if we did not find on page 22 of the judgment that Mr. Simon Browne, Treasury counsel, stated that the terms of that sub-paragraph are explained by the Secretary of State's understanding of the terms of the resolution of 30th July as creating an absolute prohibition on reductions in patient activity. He contends that the Secretary of State could reasonably have come to his interpretation and I accept this though I regret that the Secretary of State did not seek clarification". That is a key passage.

The Secretary of State regarded the area health authority's action as an act of defiance. He made no attempt to contact the area health authority. He made no attempt to persuade it about the wisdom of adopting a different course of action. The chairman of the area health authority, Mr. Stan Hardy, has been loyal to the Secretary of State. Last August he said that the first communication that he received from the Secretary of State was the letter which sacked or suspended him.

Mr. Patrick Jenkin

That is not fair. Perhaps because of the right hon. Gentleman's constituency interest he did not, when in office, conduct correspondence with the area. I undrstand that and respect his view. However, my hon. Friend the Minister for Health and I did not pursue that pattern. Mr. Hardy received a number of letters from a my hon. Friend the Minister for Health making the position clear. I quoted from some of them in my speech this afternoon. I ask the right hon. Member to withdraw his remark.

Mr. Moyle

I shall certainly not withdraw. Mr. Stanley Hardy is a man of considerable honour. The first communication that he had from the Secretary of State who sacked him—the man who is responsible for the National Health Service—was the letter which sacked him and his area health authority.

Reference has been made to the area health authority minutes. Nobody has yet quoted the resolution which was passed by the health authority. If the Secretary of State had read that resolution he would have seen that there was considerable dubiety about the line to be taken. The resolution stated: With regard to the report of the meeting of the Members' Planning Group of 16th July, there shall be no reduction in patient activity levels below those obtaining in 1977–78 and that no reduction in services or staff to accommodate the underfunding of the inflation allowance for 1979–80 and the increased VAT for 1979–80 will be made without the express authorisation of the AHA(T). There was considerable scope for reductions provided that those reductions were approved by the AHA(T).

There were plenty of opportunities for the Secretary of State to check his headlong path to destruction. I do not see how he can claim that he acted entirely unwittingly. It was an incompetent and bungling job. It is no wonder that the Secretary of State dislikes the idea of an inquiry into the London health services. Such inquiries conducted on an impartial basis do not reveal him in a particularly good light.

We are talking not of incompetencies in the depth of the Department, but of incompetencies and transactions that passed daily across the Secretary of State's desk. We are not talking about a Sir Thomas Dugdale suddenly discovering that some of his junior officials have made a mess of things.

Incidentally, the argument falsifies the claim that the National Health Service has not been cut. Its expenditure has been cut by Government action to raise costs and prices by damaging amounts and by not increasing cash limits.

Mr. Patrick Jenkin

The right hon. Member continues to make false statements. We have increased the cash limits to the health authorities by over three times as much as we have asked them to cut. We have done this by funding the pay awards for doctors and dentists, the ancillaries and nurses.

Mr. Moyle

The Secretary of State has done nothing about the increases which the Chancellor of the Exchequer imposed upon the health services as a result of increasing VAT.

The Government came to power mouthing hypocrisies about supporting law and order. Yet, the Secretary of State has been living in sin for the last six months. That would not have been so bad because he apologised to the House and introduced the Bill to put things right. However, we have heard speech after speech from Government Members saying that it was jolly good that the Secretary of State broke the law. Government Members show that when the chips are down their interest in law and order is minimal. They are prepared to take advantage of the illegal actions into which they have stumbled. It is ridiculous. The hon. Members for Brentwood and Ongar (Mr. McCrindle), for Dartford (Mr. Dunn), for Newark (Mr. Alexander), for Faversham (Mr. Moate) and for Fulham (Mr. Stevens) said so. That concludes the history of disasters which set in when the Lambeth, Southwark and Lewisham area health authority was suspended by the Secretary of State.

In spite of this sorry and dismal story there is in the area concerned a desire to let bygones be bygones. [HON. MEMBERS: "Monstrous."] I should not have thought that it was monstrous to allow bygones to be bygones. There is a highly responsible attitude in the area. I think that Sir Winston Churchill's motto was "In victory, magnanimity". The area health authority is prepared to be helpful. It would like to work with the Secretary of State in administering the health services in the boroughs of Lambeth, Southwark and Lewisham.

Mr. Crouch

What is not monstrous is the fact that the area health authority accepted the direction of the Secretary of State to work to the new budget and to live within the cash limits that the commissioners established. The right hon. Gentleman suggested that it should have gone on overspending and that he would have done nothing about it.

Mr. Moyle

There are none so deaf as those who will not hear. I said that the problem was not the overspending. We did not disagree with the Secretary of State on that. The problem is the way in which the Government tried to settle the matter. The Secretary of State was totally unsuccessful. He has had to come to the House with a Bill of indemnity, in contrast to the progress made by my right hon. Friend.

There will be a new situation. The right hon. Gentleman, much to the displeasure of the Opposition, inserted clause 5 into the Health Services Bill. We will resist that. Given the majority that the right hon. Gentleman still enjoys in the House, it is highly likely that clause 5 will become law. That clause imposes legal obligations on cash limits. We have to accept that. It is likely, as the Health Services Bill goes through, that the Lambeth, Southwark and Lewisham area health authority will be reorganised, in common with most area health authorities in the country. That will be happening over the next year or two. There is plenty of opportunity for a fresh start.

The hon. Member for Canterbury (Mr. Crouch) may be interested to know that no directions have yet been issued by the Secretary of State to the area health authority. I stress this point. If the authority has directions issued against it to cover an interim period, it will come to the conclusion that the Secretary of State is singling it out as a naughty boy to be set up, only to be knocked down again. I strongly urge the Secretary of State, as I already urged in private to the Minister, that directions should not be issued to the area health authority. It knows what is the score. It wants to work with the Secretary of State. On that basis I hope that there will be no tying down of the area health authority with formal shackles. A new situation is coming along.

The Opposition will not vote against the Bill. As well as relieving the Secretary of State from some problems, the Bill also stabilises the position of many innocent people who acted in good faith, to their advantage perhaps, but who need protection from having that position adjusted. If we voted against the Bill, it would be misunderstood in the country.

A number of groups have been disadvantaged as a result of decisions taken by the commissioners in the six months in which they have been in office. On Thursday we shall move amendments to the Bill designed to protect some of the most disadvantaged groups. As matters come to light, in the process of the Bill through the House and the usual procedures, I hope that the Secretary of State will give an undertaking that he will introduce further amendments to the Bill to take care of other disadvantaged groups if they come to light in that period.

From the Front Bench I stress the importance of an inquiry into the London health services. The matter has already been raised at the Dispatch Box by my right hon. Friend the Member for Salford, West (Mr. Orme). We raised it in Committee on the Health Services Bill. The Flowers and the London Health Planning Consortium reports by themselves are not good enough, no matter how good the quality of the reports, and there is some criticism of that.

Sir Richard Wey, dean of the King's College school of medicine, said that he did not have the opportunity to give evidence to the Flowers committee. But no matter how good is the quality of the reports—they may turn out to be good; I confess that I have not read them—they are on too narrow a basis. They do not cover the general practitioner services. They do not cover the boundaries of the various organisations, the regional health authorities in London, they do not cover a host of other problems faced by the London health planning groups. They do not cover the ultimate future of the postgraduate hospitals.

Mr. Ronald W. Brown

There is some doubt about how far the Treasury has been involved behind the scenes with the Flowers report. I tried to put a question on that to the Secretary of State for Education and Science. I finally received an answer showing, in my view, that there is clear evidence that there has been collusion with the Treasury. It has made available, it is said, vast sums of money for the BLQ solution that no one knew were available until the day before the Flowers report went to print. The addendum to the report was put in as a result of that. The Treasury has clearly been involved in the issue.

Mr. Moyle

That underlines the problems with which we are faced.

The people of London—I take my share of the responsibility—have never had a policy for the Health Service in London put to them for debate. We should embark upon that exercise. It cannot be fulfilled by the advisory group, by the Flowers committee or by the health planning consortium. For that reason, and because the Royal Commission decided to recommend that there should be an inquiry into the Health Service Labour Members support that policy. I urge it upon the Secretary of State as a way in which he can solve the real and substantial problems that he will face in London during his period in office.

9.32 pm

The Under-Secretary of State for Health and Social Security (Sir George Young)

A very wide range of issues and conflicts has been raised during the debate, and I shall try to deal with as many as possible.

There has been the conflict between the areas of London with declining populations represented by the hon. Members for Lambeth, Central (Mr. Tilley), Lewisham, West (Mr. Price) and the right hon. Member for Lewisham, East (Mr. Moyle), and the areas outside London represented by my hon. Friends the Members for Faversham (Mr. Moate), Canterbury (Mr. Crouch) and Dartford (Mr. Dunn) where the numbers are increasing. There has been the conflict between the needs of the teaching hospitals, and the needs of the areas in which they are located, raised in a moving speech by the right hon. Member for Bermondsey (Mr. Mellish).

The main conflict that has been discussed has been that between the members of an area health authority, determined to spend money which is not theirs to spend, and Governments of both parties committed—in theory, at any rate—to financial discipline. The debate has revolved around the main question whether the posture of the previous Administration was correct, or whether the posture of this Administration was right.

Most of the facts are not in dispute. The relevant documents are widely available and the verdicts on the previous Administration's approach is found by looking at the financial position of the area health authority in July 1979, two months after we took office. That authority had a debt of £4.3 million, and it was heading for a deficit in the current year of £5.35 million. That was over a year after the previous Secretary of State, in a written answer on 22 May to the then hon. Member for Rochester and Chatham, Mr. Bean, said: I have also reiterated that once an allocation has been finally made by an RHA, after full discussion with its areas, this must be accepted by the AHA concerned and its services must be adjusted accordingly."—[Official Report, 22 May 1978; Vol. 950, c. 385.] That was after the written answer on 5 July to the hon. Member for Lewisham, West, which said: I must make it absolutely clear that all health authorities must control their expenditure within the cash limit allocations. This is an essential feature of the Government's control of public expenditure. I have therefore urged upon the chairman the necessity for the AHA(T) to plan its expenditure within the limits which I have identified above."—[Official Report, 5 July 1978; Vol. 953, c. 227.] Over a year after, a letter which the right hon. Gentleman wrote, again to his hon. Friend the Member for Lewisham, (Mr. West) said this: This disincentive to overspending by public authorities is an essential ingredient of the Government's counter-inflation policies. To grant any concessions in this respect not only puts those policies at risk but would also be illreceived—and rightly so—by the great majority of health authorities who have kept expenditure within their budgets. Those were the words of the previous Administration and must be contrasted with the financial position of the AHA when we came into office.

Labour Members have alleged that the position was dramatically changed by the Budget. Of the £5.35 million to which I have just referred, at most £1.5 million was due to VAT. The majority of the shortfall was due to action taken by our predecessors, including the decision to squeeze the National Health Service by £24 million through partial funding of pay increases.

Mr. Ennals

The hon. Gentleman seems to be challenging the judgment of the learned judge, who made it perfectly clear that the area health authority not only had made the savings that I had required of it in the previous year, but was up to date in reduction of its expenditure in the current year. I made that clear in my speech. It was then that the learned judge said that the situation was changed by the Budget. The hon. Gentleman must be challenging the conclusions reached by the judge.

Sir G. Young

Nothing I have said so far in any way challenges what the learned judge said in his judgment.

I come to what I consider to be the crucial events—that is, first, the meeting of the members' planning group on 16 July and then the AHA's subsequent response. This provides us with some indication whether the AHA was going to stick to its cash limits. I refer to the papers that went to the members' planning group on 16 July, and I quote from them: The area team of officers holds firmly to the view that the authority has a fundamental obligation to keep within its revenue allocation for 1979/80. The worsened financial situation caused by the Budget, inflation and fuel prices makes the target more difficult to achieve but does not alter the principle. It must always be remembered, too, that the AHA (T) has a commitment to repay its £4.3 million debt in future years and the need to create further revenue savings to meet the revenue consequences of various capital schemes. The officers said this towards the end of the paper, having listed seven resolutions: The alternative still appears to be increasing overspending, financial chaos and the replacement of the present authority by an alternative administration. It is essential that large-scale and effective action is taken now. Every day's delay compounds the problem. They ended by saying: Finally, it is essential to convince the RHA and the DHSS of the sincerity and effectiveness of the authority's intentions. This should be a prime objective of the members' planning group both on July 19th and subsequently. The seven recommendations in that paper were accepted by the members' planning group.

We then turn to the meeting of the LSL area health authority, when three of those motions were turned down. The first one, on a motion proposed by Mr. Prentice, the meeting rejected by 9 to 3, the second was rejected by 14 to 3 and the third by 14 to 3. The rejection of the planned economies and the absence of any alternative plans would have meant starting from scratch to prepare alternatives, which, because of the delay, would necessarily be more stringent and in the eyes of the majority on the AHA would be open to precisely the same objection of principle as their predecessors.

That was the position on 1 August when my right hon. Friend had to make a decision.

Mr. Christopher Price

The exact nature of the resolutions passed by that meeting is the crux of this whole problem and was accepted as such by the judge. Would not the hon. Gentleman agree that it is partial and unfair simply to read out the three resolutions which were not accepted at that meeting without at the same time putting them in the context of the general resolutions passed by the members of the AHA, in which they did nothing to defy cash limits, as has been stated on a number of occasions during this debate, but simply reserved unto themselves the final decision as to those three items? Those resolutions did not cut out those three items for good, but simply deferred consideration of them. Does not the hon. Gentleman agree that that is a fairer account?

Sir G. Young

In opening the debate, my right hon. Friend the Secretary of State referred to that resolution and tried to put it in context. I have been explaining that in the view of the members' planning group seven resolutions were crucial, and I explained why they were crucial. Three were rejected. That meant that essential economies to bring cash spending under control had been rejected.

Mr. Ennals

rose—

Sir G. Young

I must make progress and try to deal with many other points that have been raised.

My right hon. Friend set out in his affidavit the reasons why he acted as he did. Not once in the debate have Labour Members explained what they would have done. Would they have gone on ducking the issue as they did previously, postponing decisions and hoping that something would turn up? Would they, perhaps, have acted under section 17? If they had done that, half the arguments put forward by Labour Members would have fallen to one side because cash spending would have been cut. We are entitled to know from the three ex-Ministers who were in the Department concerned exactly what they would have done if confronted with the problem I have described.

Our view is that we could not allow that situation to continue because it might have led to other area health authorities feeling free to do likewise.

The special pleading in which the right hon. Member for Lewisham, East indulged when trying to maintain that this was a special case was rejected by his boss, the then Secretary of State, in a letter to the hon. Member for Lewisham, West dated 31 August, part of which reads as follows: The problems facing Lambeth, Southwark and Lewisham AHA(T) were not unique or such as to merit any exceptional dispensation. So much for the special pleading we have just heard. One of the problems which the Secretary of State might have had while in office was this forceful representation from his junior Minister.

We have been pressed throughout the debate for a special inquiry on London—

Mr. Ennals

The Minister has just made gross allegations against my right hon. Friend the Member for Lewisham, East (Mr. Moyle) He said that no doubt the Minister of State at that time was counselling me to do something other than what I did. I hope he will withdraw what he said, because my right hon. Friend stood solidly and loyally by the decisions I took as Secretary of State.

Sir G. Young

We have just listened to a speech made by the right hon. Member for Lewisham, East, in which he made quite clear why, in his view, the problems facing this area health authority were unique.

Mr. Moyle

rose—

Sir G. Young

No, I cannot give way—

Mr. Moyle

On a point of order, Mr. Deputy Speaker. Is there any protection I can have, as the Minister is not giving way, from the misrepresentation of my speech?

Mr. Deputy Speaker

That is not a very promising start for a point of order.

Sir G. Young

I listened to the speech by the right hon. Member for Lewisham, East which made the position quite clear. He started by saying that he was speaking as a constituency Member and that in his view the problems facing this area health authority were unique. All I have done is to quote a letter from his boss which made it clear that in his view the problems were not unique.

Mr. Moyle

The Minister has completely misunderstood everything I said. I did not say that I was speaking as a constituency Member of Parliament. I said only that I was speaking as a constituency Member of Parliament to place on record at the beginning of my speech our appreciation of the officers in the area concerned. I specifically said that there were one or two other areas in the country which had similar problems to those of the Lambeth, Southwark and Lewisham area health authority. If the Minister reads the record tomorrow he will see that I said it was only a matter of chance where the disaster struck, and it happened to strike in the Lambeth, Southwark and Lewisham area.

Sir G. Young

I repeat what I said. In the view of his boss, the Secretary of State, the problems facing Lambeth, Southwark and Lewisham were not unique or such as to merit any exceptional dispensation.

Many Opposition Members have pressed us for an inquiry into the London situation. The London problem has been with us for years and the previous Government recognised this when they took action to set up the London Health Planning Consortium. The right hon. Member for Lewisham, East referred to its latest report "Towards A Balance". He did not mention the reports that preceded it on specialist services and the important profile on hospital services issued last November. Nor did he mention that the consortium has set in motion a study of primary care services due to report later this year.

All these activities were set in motion when the Labour Government were in office. Now the Opposition want yet another inquiry. London university set up the Flowers working party a year ago. I understand that the university intends to take a decision within the next six months.

My hon. Friend made it clear in Committee that the Government believe it is better to build on the considerable amount of work already done and he announced the intention of establishing an advisory group in London to bring together all the work that has been done and to advise my right hon. Friend on the decisions to be taken. Another long-drawn-out inquiry is only a recipe for delay.

Mr. Pavitt

rose—

Sir G. Young

London's problems are real and urgent. What we need are decisions and not debate.

Mr. Pavitt

rose—

Sir G. Young

I must try to answer the points that were raised during the debate.

I turn now to the question whether it is possible for action to be taken against the commissioners. As my right hon. Friend said, what we are doing today does not make lawful anything that would have been illegal even if the appointment of the commisioners had been valid.

I understand that costs were awarded against my right hon. Friend by the judge. That covers that point relating to the London borough of Lewisham.

Mr. Moyle

What about St. John's and St. Thomas's?

Sir G. Young

I am referring to the case that has just taken place. I will deal, if I may, in a letter with the case that I think referred to the CHCs and a previous judgment. I will write to the right hon. Gentleman about that.

There have been no redundancies since the commissioners took over. A number of hon. Members referred to the future of St. Olave's and other institutions. It will be entirely up to the area health authority, when it is reconstituted, to deal with those matters.

The right hon. Member for Salford, West (Mr. Orme) asked whether my right hon. Friend would meet the CHCs. I have consulted my right hon. Friend and he will be happy to meet the CHCs from this area.

The right hon. Member for Lewisham, East made what I thought was a disgraceful speech. I think that when he reads it in Hansard in the morning he will be ashamed of it. It did his reputa- tion no good. To describe my right hon. Friend as a bull in a china shop is a serious error of judgment. He is one of the most conscientious Members of the Cabinet and he takes decisions such as this only after the most careful consideration. If the right hon. Member for Lewisham, East had listened to the speech made by his right hon. and learned Friend the Member for Dulwich (Mr. Silkin) he would know that that is exactly what he said.

I turn to the points made by the right hon. Member for Norwich, North (Mr. Ennals). Again he failed to tell us what he would have done last July if he had found himself in the same situation. We know what he did. He did absolutely nothing. I listened to his speech and he repeated on several occasions "Of course there is a problem to be dealt with". But the one thing that he did not do when in office was to deal with it. If he had acted with authority and firmness earlier, this whole saga might have been avoided.

The hon. Member for Lewisham, West challenged the whole basis of the RAWP formula. He was shot down before he even took off by one of his right hon. Friends who immediately defended RAWP. We concede that the RAWP formula should be looked at. We are revising the national RAWP formula to increase the allowance to teaching hospitals, and a special allowance will be given to take account of the higher costs in London.

Within the Thames region several recommendations have now been accepted to take better account of inner city deprivation, costs of dental schools and high costs of specialist services provided to other areas and regions. These changes will combine to increase the targets of the teaching hospitals in inner London. My hon. Friends the Members for Faversham, Dartford and Canterbury made forceful speeches from the Back Benches reminding the House of the long history of this saga, of the problems that we inherited and outlining what might have happened to other area health authorities if action had not been taken and if financial discipline had broken down.

The right hon. Member for Bermondsey made a moving speech. Towards the end of his contribution he accepted that it was wrong for health authorities to overspend. We had helpful contributions from my hon. Friends the Members for Newark (Mr. Alexander) and Fulham (Mr. Stevens). The hon. Member for Lambeth, Central spoke about his constituency and the impact of the commissioners' action. He said nothing about the impact of the actions of Lambeth, Lewisham and Southwark AHA(T) on other areas during the previous two years. For all the hon. Gentleman's comments about the unpopularity of the Government's policies, I remind him that there was a swing to the Conservatives of 0.25 per cent. in a recent by-election for Lambeth council.

A number of hon. Members have said that hospitals in the Lambeth, Southwark and Lewisham area had to accommodate patients from outside that area. I have made a few inquiries. Of the patients from Kent and Surrey, 88.9 per cent. are treated in Kent and Surrey and only 2.8 per cent. are treated in Lambeth, Southwark and Lewisham. The cross-boundary flow is relatively small.

The hon. Member for Brent, South (Mr. Pavitt) asked whether the nurses' pay award had been fully funded. The answer is that it has.

The argument that has been constantly advanced by Opposition Members assumes that patients and staff have suffered because of the appointment of the commissioners. That argument assumes that if the AHA had remained in charge it would not have made the cuts needed to stay within the cash limits. That admission underlines how necessary it was to take action if the overspending was to be contained.

The right hon. and learned Member for Dulwich referred to the 1975 legislation. I assume that he was referring to Clay Cross. The effect of the 1975 legislation appears 10 have removed retrospectively a penalty which at the time it was applied was known and upheld by the courts to have been legally imposed. In this case my right hon. Friend is accepting the court's ruling after the event and is seeking Parliament's approval to regularise the position following action on his part which at the time it was taken was not known to be illegal and in respect of which the court held that he had acted in good faith, although he had been misdirected. I submit that there is no direct parallel between the two cases.

It might be helpful if I read to the House a message that I have received from Mr. Sidney Hamberger, the chairman of the North-Western regional health authority following a meeting held this morning of his regional health authority chairmen. The message registers strong support for the line taken by my right hon. Friend in requiring the Lambeth, Southwark and Lewisham area health authority to comply with agreed national financial policy.

The area chairman expressed concern at the grave dangers that would confront the health service if self-selected areas were to embark on a policy of financial anarchy. The message stated: This can only be detrimental to the best interests of the Service and at the expense of those authorities which under grave pressure agreed to accept financial discipline. The Secretary of State has the full support of the North-Western regional area health authority chairmen in this matter". The right hon. Member for Salford, West said that my right hon. Friend had a responsibility for people in Lambeth, Southwark and Lewisham. Of course he has. He also has a responsibility for those who live in Kent and Sussex. He is answerable in the House for public expenditure, and that is why he acted. Despite all the arguments advanced by Opposition Members, nothing has been said that changes our view that direct intervention in the affairs of Lambeth, Southwark and Lewisham was essential once the area health authority had openly declared its defiance of the system of cash limits.

Opposition Members would have had greater conviction and more justifiable cause for complaint if the Government had not acted and had allowed one area health authority to continue to overspend while all others were seeking to keep their expenditure within cash limits. The court has ruled that the particular action taken to remedy the situation was unlawful in not setting a time limit to the duration of the commissioners' powers. For that the House has the right to be critical. The Bill seeks to rectify a mistake in the execution, not in the principle, of our action. We have heard a good deal of the difficulties and recriminations that flowed from the fateful decision of the area health authority. Restoring financial discipline and eliminating a predicted overspending of over £5 million was an enormous task for anyone starting when four months of the financial year had already elapsed. This inevitably involved the commissioners in some painful decisions about where services should be held back.

Mr. English

The hon. Gentleman has made the same omission as the Secretary of State. The hon. Gentleman said that this direction was regarded as unlawful because it was of unspecified duration. That is one reason. The other is that the Secretary of State failed to exercise his discretion properly. The learned judge gives two reasons. The one I have quoted last the judge gives first.

Sir G. Young

I have listened carefully to what the hon. Gentleman says. The two points are related. The first follows from the second.

These actions inevitably involved the commissioners in some painful decisions about where services should be held back. They were the sort of decisions that many other authorities had to face, though perhaps not on quite the same scale. This has been a difficult period for all concerned with the provision of health services in that area. I hope that I can end on a note of hope.

On the basis of financial returns at the end of February, the commissioners have estimated that their expenditure will be broadly in balance at the end of the financial year. Thus, when the area health authority resumes its duties on 1 April, it will inherit a much improved financial position. It would be idle to pretend that all problems have been solved. Some difficult decisions have yet to be taken. The members of the health authority have expressed their readiness to accept the discipline of cash limits. My right hon. Friend has expressed his regret over the need for this Bill. Given those sentiments, I am sure that hon. Members on both sides of the House will wish to make a fresh start in this difficult situation. I hope that it will be possible to put recriminations behind, and to start afresh and apply our energy and initiative to meeting the real needs of patients.

This Bill is an important and necessary step not only to secure an early and orderly resumption of duty by the area health authority but also as a means of avoiding adding to its burden. For that reason I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Le Marchant.]

Committee tomorrow.