Northamptonshire Area Health Authority (Finance) (Hansard, 9 April 1981)

§ Mr. Bill Homewood (Kettering)
I had not long been a Member of the House before the topic that I am raising tonight was brought to my attention, namely, the under-funding of the National Health Service in the area covered by the Northamptonshire area health authority, which includes my constituency of Kettering. Since then I have had an almost constant exchange of correspondence with Ministers on the matter, and I rather expect that the Minister will tell me tonight that the many words that have passed between us during that time have had some effect.
I was informed the day before yesterday that the resource allocation from the Oxford regional health authority to the Northamptonshire area health authority for 1981–82 was only about 1.26 per cent. below target. It is therefore within the 2½ per cent. tolerance level accepted in such cases. Obviously, I am relieved at that, but it does not make me happy for the present or sanguine about the future.
The history of the Northamptonshire AHA's funding suggests that the current efforts of the Oxford regional health authority are too little, too late. The regional authority concedes something to the AHA only after a running battle over many months, during which the capital needs of the Nothamptonshire authority continue to increase. Since 1974–75 the resources allocations to Northamptonshire have been below target, year on year, by 11.9 per cent., 9.09 per cent., 9.29 per cent., 9.94 per cent., 5.83 per cent., 5.24 per cent. and 3.97 per cent. Even this year, when the Northamptonshire AHA will probably do better than in previous years, the resource allocation will be 1.26 per cent. below target.
The total underfunding in those years was 56.52 per cent., or £33 million at current prices. In other words, there has been a loss of seven months' funding in seven years. Those who have controlled the NHS facilities in Northamptonshire have had to spend one-twelfth of their time, on the basis of the target figures, dreaming money out of the air.
During the same period the regional health authority allocated to the Oxfordshire AHA year-on-year fundings above the target of 7.5 per cent., 7.82 per cent., 6.64 per cent., 5.57 per cent., 3.78 per cent., 4.04 per cent., and 5.04 per cent. This year, the funding is 4.36 per cent. above the target. Those figures work out at about five months' additional expenditure over seven years, which represents an enormous sum of money.
The methods used to determine targets were devised by the Resource Allocation Working Party and are not regarded as scientifically unchallengeable. Everyone in the medical world accepts that local circumstances may require those precepts to be ignored at times. However, the RAWP formula is the only attempt on record to provide a guide. If it is consistently ignored between Oxfordshire and Northamptonshire, it must mean that the allocating authority is relying on subjective judgments without recourse to anything except its instincts. There is a feeling 1206 in Northamptonshire that those instincts bend too favourably to Oxfordshire and too unjustly to Northamptonshire.
As I said, this year's allocation to the Northamptonshire AHA is within the 2½ per cent. tolerance. To achieve that the regional authority moved the target so that not much extra money would be required. Apparently it bound itself with about £200,000 above the regional allocation requirements. The regional authority decided to give that sum to Oxfordshire, for no apparent reason, despite the fact that Northamptonshire had overspent by about £800,000 last year.
The persistent underfunding of the Northamptonshire AHA has produced a deprivation that must be put right. I hope that the Minister will offer some help tonight. I do not believe that the county's clinical services have suffered too badly. Medical staff in the county have determined their priorities to ensure that the patient is cared for. However, non-clinical services have suffered, especially the maintenance of hospital buildings.
In the long run that deterioration must be reflected in a decline in patient care, no matter how dedicated the medical staff are. No public service can constantly battle, as the medical world in Northamptonshire has done, against a shortage of funds without that ultimately having an effect on the morale of those required to carry out the service. Since I have been in this place I have received complaints from all quarters of the Health Service in Northamptonshire that the county is a poor relative of Oxfordshire, because Oxfordshire has within its boundaries a prestigious university and training hospitals that are known throughout the world.
In Northamptonshire there is a somewhat sublime admixture of Health Service circumstances. There is a rising population in Northampton new town. In Wellingborough we have a London overspill. In Corby we have yet to discover what the health hazards will be from the alarming level of unemployment. The regional authority's recent allocation paper forecasts an overfunding of Northamptonshire's requirements in a few years' time. My constituents and others in Northamptonshire will be suspicious of that forecast when they examine the Oxford RHA's record of projection over the past few years and when they realise that the RHA produces no facts to support the basis of its projections.
My constituents will be even more concerned to find in the recent RHA's report no reference to the great and persistent overfunding that the Oxford AHA has enjoyed for many years. Apparently it will continue to enjoy overfunding unless the RHA is induced to produce a more equitable position between Oxfordshire and Northamptonshire.
The people of Northarnptonshire are wondering when the RHA will say that they have suffered many years of underfunding, giving rise to the current situation, where it is estimated that expenditure of about £1.5 million is required to bring the dilapidated Northamptonshire Health Service buildings to the general state of those in the rest of the region. One cannot count in money what happens to patients over the years. One can only consider capital projects and say that the buildings are dilapidated. One cannot estimate the cost to individuals of that underfunding over the years.
1207 All my correspondence with the Minister on the matter has produced no effective response. The attitude of Ministers appears to be that RHAs must be right, no matter what evidence to the contrary is laid before them.
All those engaged in Health Service work—at whatever level—in Northamptonshire believe that the service is being shabbily treated by the Oxford RHA on the question of funding. That authority is believed to be heavily prejudiced in Oxford's favour. The Minister should activate some measures to remove what I consider to be a gross inequity for Northamptonshire. I hope that he will say that he is prepared to do that.

§ Mr. Michael Morris (Northampton, South)
The hon. Member for Kettering (Mr. Homewood) has done a credit to all of us in Northamptonshire in raising this subject in the week in which we have had the figures from the RHA.
I support every word that the hon. Gentleman said. I have raised this matter over seven years in the House. To date, we are not much further down the road. My hon. Friend the Under-Secretary will appreciate that we are now the fastest-growing area in the United Kingdom, because we take in 60 per cent. of Milton Keynes. We shall continue to do so until it has its own hospital. We have the fastest bed throughput in the United Kingdom. I believe that we have done more in terms of closing units to meet targets than any other area health authority in the country.
As I said in the Public Accounts Committee last week, before the permanent under-secretary, the five Members in the Northamptonshire area are not satisfied with the deal from the Oxford region. It has not been done equitably and fairly. There is now a complete lack of faith in the management of the Oxford region, even to the extent of covering the whole of the medical profession, the administrative staff, all the local councils and the Members of Parliament.
The time has come when I hope that my hon. Friend will give some words of encouragement to the hon. Member for Kettering. If he does not do so this evening, we shall seek a meeting with the Minister for Health, because the matter must now be put right.

§ The Under-Secretary of State for Health and Social Security (Sir George Young)
I feel somewhat diffident at responding to this debate because I went to the prestigious university that has been blamed for part of the misfortunes of the Northampton area health authority.
There has been a vigorous and courteous exchange of correspondence with the hon. Member for Kettering (Mr. Homewood). My hon. Friend the Member for Northampton, South (Mr. Morris) has been fighting this battle for as long as he has been in the House. I can offer some encouragement to both hon. Members.
The answer lies in what the hon. Member for Kettering said at the beginning of his speech, that the decisions of the Oxford regional health authority are now moving in Northampton's way. The forecasts show that by 1985–86 the Northampton AHA will be 2 per cent. over its RAWP target, having been behind it for many years. Therefore, there are signs of progressive improvement. That is due in no small part to the advocacy of the hon. Members who represent Northamptonshire.
1208 I know that the allocation of funds has been of great concern, and I welcome the opportunity to explain what has been going on. Perhaps I can briefly sketch in the background as to how allocations to help authorities are made. As both hon. Members know, my Department does not allocate funds to area health authorities. We allocate them to the regional health authorities, and we do that in accordance with the recommendations of the Resource Allocation Working Party. The methods used are complex, but, briefly, the allocation process involves weighting regional populations to reflect health care needs and then expressing these in cash term to produce target allocations of the total resources available. Each year, updated targets are compared with regions' existing resources to determine the latest levels of health care provision, and we make a decision on how far we can redistribute, so that each region has its target achieved.
In terms of RAWP, the Oxford region, in which Northampton AHA finds itself, is more or less on target; in other words, its share of the total cake matches its relative need. However, the need is increasing because of the increasing population, and the region's population growth is, indeed, significant. It is the highest rate of growth in the country. Account is taken of the population growth in the allocations made to the region. Although population growth is generally high, it is particularly high in the new towns of Milton Keynes and Northampton, which make a major contribution to the growth, and special account is taken of the needs of these new towns.
For the past four years the Oxford region has received a revenue addition specifically to help the development of health services in Northampton and Milton Keynes. This is the result of a transfer of funds from the Department of the Environment's new towns programme to the Department of Health and Social Security. The two new town development corporations accepted a cut in their capital allocations so as to make this possible. For 1981–82 a sum of £784,000 has been included in the regional health authority's normal allocation, to be shared equally between the two new town developments.
The distribution of capital resources is also made in accordance with the recommendations of RAWP. The limited resources available are shared on a basis of need. The relative need of a region is determined both by the requirements of its population and the extent to which these requirements are being met from the capital facilities already available. Oxford is better stocked than many regions, and has a relatively higher proportion of middle-aged, and hence healthier, groups in its population and fewer in the very elderly group. We take those factors into consideration when we make capital allocations. However, both hon. Members have been complaining about the allocation of capital and revenue resources to AHAs by the RHA, and, as was said, this is the responsibility of the RHA.
It is consistent with our policy that we should delegate these decisions to RHAs. We firmly believe that decisions affecting local services are best taken by those with a full knowledge of local needs and priorities. We expect RHAs to apply the RAWP principles as far as possible in making allocations to their areas. We have given guidance to RHAs on the way in which they should set about doing this. We make it clear that a mechanistic adherence to RAWP formulae may be of less importance in the distribution of resources to AHAs than in the distribution of resources from central funds to RHAs, because local 1209 factors inevitably figure more prominently in the decisions that RHAs have to take when they distribute the funds to the smaller AHAs.
I shall now deal with the points raised about discrimination. It is true that the revenue allocation made to Northamptonshire in 1980–81 was almost 4 per cent. below the area's RAWP target. I know that the RHA aims to bring its areas within a 2½ per cent. band above or below target, and, as the hon. Gentleman said, it looks as if the RHA has now achieved that objective with the current year's allocation. However, the rate of progress towards target is a matter for the RHA, when it has considered all the relevant factors affecting resource allocation in the region.
I have looked into this in some depth, and I am satisfied that the Oxford RHA has applied the RAWP principles fairly strictly in calculating target allocations for its constituent areas, but it has had to give due regard to the very limited moneys available and the competing priorities involved. Additional resources are tight, and from within them the RHA has to plan to meet new needs in new towns, to provide for growth elsewhere, to overcome deprivation that exists and to develop services that are below standard. There have been particular problems, as both hon. Members know, relating to the commissioning of the John Radcliffe hospital in the city of Oxford.
That hospital was planned and construction started before we moved to the new RAWP system, which required the health authorities to find the necessary revenue from within their global allocations. The new hospital was opened in 1979 on a "level transfer of services" basis only—with £¾ million additional revenue costs—and a very large percentage of the region's growth money has had to go towards this. The regional health authority was struggling at the same time to find the revenue to open phase 6 of the Royal Berkshire hospital at Reading. With limited growth money in recent years and a need to fund contributions to major developments already under way, the amount left has been insufficient to have a major effect on the distances from target of the areas within the region, particularly Northampton.
I have raised this with the RHA, which confirms that it shares both hon. Members wish to see Northamptonshire area health authority move to its RAWP target as quickly as possible. I know that there has been a very strong feeling that Oxford area health authority in particular has benefited over the years at Northamptonshire's expense. It is certainly true that Oxford is still above its RAWP target. The regional health authority has, however, had a very difficult task. It has had the problem not only of commissioning the newly-built John Radcliffe hospital but of trying to move Oxford towards target without having to make drastic cuts in the Oxford area's existing services.
Movement has been slow—far too slow for both hon. Members—but the region has been continuing to move in the right direction. The Oxford area was 5.57 per cent. above its RAWP target in 1977–78 but only 4.06 per cent. above target in 1981–82. It is expected that by 1985–86 it will be only 2.3 per cent. above target, which is roughly what Northamptonshire AHA will be above target if the RHA's projections are correct, so the discrimination will have been eliminated. As I said, Northamptonshire, too, has continued to move nearer its revenue target, so I think that it is fair to say that the future prospects look brighter.
As has been pointed out, Northamptonshire is at present having to cope not only with its own population growth but 1210 with meeting the needs of about half the population of Milton Keynes. This has placed a very real strain on the health services in Northamptonshire. However, a start on building the first phase of the new district hospital for the people of Milton Keynes was made last year, and it is expected to be in use by 1984. A second phase is planned to start in 1984 or 1985. These new facilities will ease the pressure on hospital services in both Northampton and Stoke Mandeville hospitals, to which the population of Milton Keynes has to look at present for these services.
Also, an additional 120 beds are to be provided at the Northampton general hospital to meet the needs of the growing population. That development is expected to be completed in 1982. Northamptonshire's capital position has in recent years been better than that of its revenue position. A significant proportion of the region's capital funds has gone to Northamtonshire, mainly on the developments in Kettering and Northampton general hospitals. Further substantial developments at Northampton general hospital are planned.
The news on future revenue funding is also better. The regional health authority has now considered its revenue allocations for 1981–82 and has made refinements in the calculation of targets in the region. This shows that the previous assessment of 4 per cent. underfunding was wide of the mark and that the area approached the start of this financial year only 1¼ per cent. below target. This new assessment—which hon. Members may view with some suspicion—arises in the main from a new method of dealing with services for the mentally handicapped, 'which are well developed in Northamptonshire. The growth money being allocated to Northamptonshire this year will be £675,000, which will mean that Northamptonshire has moved to only 0.64 per cent. below target. I am sure that this will be very pleasing to both hon. Members and to those other Members who have constantly expressed their concern about Northamptonshire's position in the past.
Looking to the future, the regional health authority intends to make provision for a number of planned "steps", if I may call them that, in activity in various parts of the region. These include the provision of services for the mentally ill and elderly severely mentally infirm in East Berkshire—a development of the highest possible priority—provision for commissioning of Witney hospital, completion of the opening of phase 6 of the Royal Berkshire hospital, the opening of the new hospital now under construction at Milton Keynes, and of the next phase of development at Northampton. Over a period the region needs to increase allocations to its relatively deprived areas. It also needs to allow for development of regional services which the individual area health authorities could not be expected to finance.
To accommodate these steps it is proposed that it should, in effect, set up a fund that will be created by allocating part of the increment that it receives this year on a non-recurrent basis to the two areas—Northamptonshire and Buckinghamshire—with special short-term problems arising from, among other things, the need to provide for Milton Keynes pending completion of its hospital.
At its meeting last week the regional health authority considered a strategy which, over the coming five years, will meet these needs. The region intends to meet these pressing needs and at the same time to avoid reductions in allocations to individual areas which could have punitive effects.
1211 I have already mentioned the two major changes in fortune that Northamptonshire can expect over the future years—the bringing into use of a further 120 beds and the reduction in demand on its services when the Milton Keynes hospital becomes operational.
What will be even more pleasing to the hon. Members is that the regional health authority's plans do not envisage that there will be any reduction in allocation on account of this reduction in demand. The prospect is that by the mid-1980s the area will be financed by 1 or 2 per cent. above target. So in five years Northampton's relative position will have moved from 0.64 per cent. below target to something like 1 per cent. above.
Doubtless hon. Members representing other parts of the region will be demanding Adjournment debates, pointing to the favourable position of Northamptonshire, and demanding equal treatment for themselves. When that happens the RHA's attention will be firmly riveted on these other relatively deprived areas in the region, and there, I hope, will develop steps in their allocation, just as is now being done for Northampton. I hope that this news will be welcomed, as there have been some wrongly informed but genuine fears that Northamptonshire would not be on target before the early part of the next century.
1212 The RHA has made a very real attempt at identifying and getting to grips with the main problems. It has plotted a course that, over time, brings a measure of equity and of progress towards declared objectives. I hope that the argument that Northamptonshire has been blatantly discriminated against has been to some extent dealt with in this half-hour. I hope that both hon. Members will be satisfied that the prospects are now much better and that they can now accept that the region is fully appreciative of the problems in Northamptonshire and is planning constructively to ease them.
The effect of population changes between 1981–82 and 1985–86, plus the reversal of patient flows to Milton Keynes, is dramatic for the Northamptonshire AHA. The RHA is sensitive to pressures on services in the various parts of the region and takes account of them in making decisions.
I hope that both hon. Members will now agree that the region is making progress in helping Northamptonshire to reach its RAWP target and so ease the problems that they have both rightly brought to the attention of the House.