HC Deb 22 November 1989 vol 162 cc218-24

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fallon]

10.1 pm

Mr. Michael Jack (Fylde)

I am grateful for the opportunity to initiate this Adjournment debate on the subject of the funding of the Blackpool, Wyre and Fylde district health authority. I am grateful for the support of my hon. and learned Friend the Member for Blackpool, North (Mr. Miscampbell), my right hon. Friend the Member for Blackpool, South (Sir P. Blaker) and my hon. Friend the Member for Wyre (Mr. Mans).

At a time when my right hon. Friend the Chancellor of the Exchequer announces a £2.5 billion increase in funding for the National Health Service, my right hon. and hon. Friends and I find it unacceptable that we have to face a £2 million shortfall in the funding of our own district health authority. It is that same sense of concern, shared by my right hon. and hon. Friends, that has brought to the House of Commons representatives of our local health authority and other local people who are equally concerned about the matter.

It is important at this early stage in the debate to set out the reasons why there is a £2 million shortfall between the budget that is required to keep our services at the current level and what would represent a major cut in the provision of health services. Some £910,000 has had to be put to one side because the district health authority has to anticipate a possible under-funding of pay settlements. A further £210,000 has had to be put on one side because of cuts in the receipt of funds from the regional health authority. That is the result of new methods of allocating moneys to the region on a capitation basis. Without any consideration of the individual needs of the district health authority, they have instituted a straight across-the-board cut in the district's funding. Finally, the district is committed to £450,000 of vital work, which will have to go if the £2 million cut comes to pass.

I intend to outline what those inescapable items are. In obstetrics, £92,000 is required to meet the English national board standards for midwifery in the obstetrics unit. Without spending that money, the largest district health authority in the north-west would lose its right to train midwives.

There is a large number of elderly people in Fylde, and the sum of £45,000 is required for clinitron beds to give them the care that they so desperately need. The intensive care unit requires a further £73,000 because the Royal College of Surgeons has identified the fact that its staff ratios are below national standards. Matters such as losses and medical compensation require a further £20,000 to be put aside. If one adds those figures together and bears in mind the continuing threat to important services such as our cardiothoracic unit and our ward 31, which deals with mentally ill people, it is obvious that if we do not restore the £2 million deficit vital local services will disappear.

It is important to explain the reasons for all this. First, we must identify the role played by the regional health authority and the effect that the new method of funding its services will have on us. In simple terms, the size of the cake that the regional health authority gets determines the size of the slice given to Blackpool, Wyre and Fylde district health authority.

Some important questions need to be asked about the funding of the north-west region. Our region apparently has one of the highest standardised mortality ratios in the country. That is an indicator of the health load that the north-west has to bear. The regional health authority has established from its investigations that there is a large acute sector work load. If my hon. Friend's funding arrangements are not reconsidered, the authority will be unable to cope with that work load.

That problem is amplified by a strange statistical quirk in the operation of the mortality index. Can my hon. Friend the Minister explain why he has chosen to use the square root of the mortality index to determine the funding for the north-west region? It is most surprising to discover that the use of that statistical technique has depressed funding in the north-west, whereas the Thames regions have become gainers under the new scheme. Under the old resource allocation working party system of funding the regions, the Thames regions were well above their RAWP targets, whereas the north-west region never reached its target. Yet it seems that, under the new system, which is supposedly more responsive to local need, Thames regions and others are again to be treated favourably at the expense of the north-west.

Sir Peter Blaker (Blackpool, South)

Does my hon. Friend agree with my interpretation of the problem? In recent years, the district has received substantial allocations of capital—about £28 million—which have improved our capital resources for the first time in my 25 years in Parliament, and we are grateful for that. What we need now are the resources to use those capital resources properly.

Mr. Jack

My right hon. Friend makes a pertinent observation as usual. We are certainly not among the whingers. We support the way in which the Government are looking after the National Health Service, and we support their changes. Equally, we argue that we want to make the best of the capital and resources that we have in our district health authority.

I commend to my hon. Friend the Minister a booklet produced by the north-west region, which lays down clearly the arguments that I have advanced to him. We seem to be losing, while the Thames regions gain at our expense. Will my hon. Friend re-examine this question and consider other ways of increasing funding for the north-west region?

Why do I say that we can justify increased funding in our district health authority? For the past 10 years, we have suffered from a historic deficit of under-funding. Whatever the RHA says, under the RAWP method, under the regional health authority's own so-called annualisation grids and even under the new capitation arrangements, we have been under-funded. It is interesting to note that the district health authority has already calculated the funding that it would expect if it switched tomorrow to full capitation. Remarkably, it would gain £12 million. Nine million pounds of that is lost as a result of cross-boundary flow, leaving a net gain to our district of £3 million—precisely the sum which all the other measures of funding show that our local services are short of.

We also need more funding because the use of population statistics based on the 1981 census does not clearly identify the growth in the number of elderly people who are being imported into the area. The Fylde coast is a delightful part of the country for people to retire to. However, the large number of people aged over 80 corning to rest homes and nursing homes places an enormous burden on our district health services which my hon. Friends and I contend is not properly recognised in any funding arrangement.

My hon. Friends and I also have a suspicion, which we want the Minister to ask the Health Service management to investigate, that Manchester is over-favoured. Everyone in my district health authority, including clinicians, administrators and managers, has said the same thing. They cannot all be wrong.

Mr. Keith Mans (Wyre)

May I suggest another area of under-funding from which our district suffers? A considerable number of holidaymakers come to Blackpool and the surrounding area every year and they make use of our health facilities. In August, no less than 20 per cent. of the total number of people who use the casualty department at the district hospital in Blackpool come from outside the district. Some of them remain as in-patients, others stay only overnight. Very little account is taken of those extra costs. Even under the new funding arrangements, I understand that no allowance has been made for the people using the casualty facilities. Allowance will be made only for people who spend some time in the Victoria hospital.

Mr. Jack

I thank my hon. Friend for his perceptive observation, and I know that the Minister will take note of it.

All those elements of under-funding affect a vital measure of activity in our district health authority—the hospitalisation rate. The reason that we have a low hospitalisation rate, exceeded by 13 other district health authorities of the 19 in the north-west, is purely and simply that we do not have the resources to provide the level of health care that our people deserve. I emphasise that that is not a reflection of inefficiency by the district health authority. That was verified by independent research by Lancaster university.

Of equal importance was the region's own acute sector survey, which identified an enormous potential growth in acute sector medicine. It identified the fact that, up to 1993, an extra 105 beds will be required to cope with the extra 4,600 patients who will have to go through the acute sector. To date there is no sign of revenue or capital to provide those beds.

The orthopaedic specialty provides further anecdotal evidence to identify why the funding needs urgent review. I can state without exaggeration that it is possible for someone to have to wait three and a half years from his first in-patient examination to having his operation. That is unacceptable.

I received a letter from the district health authority describing the problems in general surgery and anaesthesia. The letter states: The number of Consultants per catchment population is one of the lowest in the country. This situation is not changed by including senior or principal doctors. The Discharges per Consultant on the other hand are one of the highest in the country. In Out-Patients, the number of new Out-Patients seen by each Consultant is one of the highest in the country, as is the actual clinic size. In terms of the Beds-per-Consultant each has responsibility for a larger number of beds than anywhere else apart from eight Districts. If that is not a tribute to the dedication and skill of the doctors, nurses and clinicians in our district health authority, I do not know what is. When I consider the costs of what they and others in different parts of the country do, I find that expenditure per consultant episode is £341, compared with £462 nationally. The all-acute medical specialties measure shows a local figure of £484 compared with £555, whatever moneys are spent in Blackpool, Wyre and Fylde to the best effect and to give excellent value.

The White Paper on patient care states that one objective is to enable hospitals which best meet the needs and wishes of patients to get money. That simple message is well understood in our local health services. All hon. Members would praise the work of our clinicians, nurses and doctors, but, without resources, they will not be able to deliver an adequate standard of health care, let alone increase services in Blackpool, Wyre and Fylde. I urge my hon. Friend the Minister to re-examine our funding and see what he can do to help us.

10.15 pm
The Parliamentary Under-Secretary of State for Health (Mr. Roger Freeman)

I congratulate my hon. Friend the Member for Fylde (Mr. Jack) on a forceful speech in defence of the best interests of his constituents. As my hon. Friend has noted, our hon. Friend the Member for Wyre (Mr. Mans), our right hon. Friend the Member for Blackpool, South (Sir P. Blaker) and our hon. and learned Friend the Member for Blackpool, North (Mr. Miscampbell) are present. Their support for our proposals is much appreciated. They have the best interests of their constituents at heart. I hope that I can give a measure of reassurance and confidence for the future of the Blackpool, Wyre and Fylde health authority.

In October, at the invitation of my right hon. Friend the Member for Blackpool, South, I met the community health council for Blackpool, Wyre and Fylde in Blackpool and learnt of its initial concerns for next year. I promised my right hon. Friend a written response, but I hope that he will accept my reply to this debate as a full response to the points that he raised with me.

My hon. Friend the Member for Fylde raised three issues. First, he asked why the provisional planning allocation issued in July showed that the north-west was receiving a reduction in real resources compared with other regions. I will explain that differential distribution. From 1 April next year, we intend to move to a weighted capitation system of funding for the regions. That will mean a fairer basis of allocating funds between the 14 English regions. We will allocate revenue funds on the basis of the resident population in a region, weighted by a number of factors. I refer to morbidity, which is the relative health of the population; demography, which is the relative age—obviously, the older or the younger the age profile the greater the health requirements—and the relative cost of providing services. An additional factor which should benefit the north-west is that if regions have an above-average number of long-stay patients, mentally ill and mentally handicapped patients, we will make an adjustment in the allocation.

My hon. Friend asked why we are using the square root applying to the factor of morbidity. We have not yet made any allocations.

My hon. Friend referred to planning assumptions. When we make the firm allocations, which, I hope, will be next month in December, I shall put to my right hon. and learned Friend the Secretary of State the need to explain the basis of the weighting clearly. We have not yet made the allocations, but when we do we will take into account the various factors that have been raised. I believe that my hon. Friend the Member for Fylde will agree that this is a fairer and more automatic system and will mean that the particular requirements of Blackpool health authority will be as much taken into account as the needs of, say, Woking or Newcastle. I believe that the funds will be allocated on a fairer basis.

As far as the allocations—

Mr. Norman Miscampbell (Blackpool, North)

rose—

Mr. Freeman

If I might first finish this point, I shall be glad to give way.

As far as allocations to districts are concerned, it is bound to take longer to move to a weighted capitation system. It will take a number of years simply because if we moved in year one, which is 1991, to that basis of allocation, there would be significant changes for individual districts which might cause them difficulty in adapting their health care services to meet the new basis of allocation. Although it is a matter for the regions, I can confirm that regions will certainly take other factors into account, additional to those that we take into account when making allocations to the regions such as, for example, social deprivation. As my hon. Friend the Member for Wyre pointed out, the impact of tourism is not fully compensated to the district through the contract system. That seems a relevant factor for the regions to take into account.

We expect to issue advice and guidance shortly to regions about how they should make allocations to the districts. As I have said, I believe that it will be a fairer system for Blackpool and I note the comment of my hon. Friend the Member for Fylde that for Fylde it could mean a £3 million increase in resources. I do not comment on that figure; I simply note it.

Mr. Miscampbell

Of course, I welcome the fact that my hon. Friend is encouraging a recognition of the problems which were raised by my hon. Friend the Member for Fylde (Mr. Jack) However, will he also encourage the regional area to come to an early decision and to put Blackpool out of its suspense because it is important that we know where we are going?

Mr. Freeman

I am happy to give my hon. and learned Friend that assurance We are expecting to make our own allocations to the regions shortly and we then expect the regions in turn to make their allocations to their districts as quickly as possible. That will inevitably take several weeks because they will have to take several factors into account, but I note what my hon. and learned Friend has said and endorse his request or wish that the regions should act as quickly as possible.

I turn now to the second of the three factors raised by my hon. Friend—his concern at the reduction of 0.3 per cent. in the planning assumptions for resources for the north-west. I am happy to tell him that that planning guideline is no longer relevant and that it will shortly be replaced with firm allocations as a result of the Autumn Statement on 15 November which stated that, for the hospital and community health service, the increase in cash terms next year will be 8.5 per cent. and in real terms, after an assumed 5 per cent. rate of inflation, it will be approximately 3.4 per cent. That 3.4 per cent. increase in real terms must be compared with the planning assumption that we were using for July for the national average of 1.25 per cent., which was the lower end of the range of assumptions. Using the national figure of 1.25 per cent., the north-west region had a figure of minus 0.3 per cent. The figure for the growth in hospital services next year is not 1.25 per cent.; it is 3.4 per cent.—that is 2 per cent. more than was used in the planning assumptions.

Although I cannot give an indication tonight of what the allocation to the north-west region will be, I can assure the House that it will be a positive number. There will be real growth in the resources that are allocated to the north-west.

Each year, in July, we issue planning guidelines. In recent years, when firm allocations have been made in the late autumn, the actual outturn is significantly higher than that used in the planning. For example, this year, 1989–90, we issued planning guidelines in the summer of 1988 of 0.8 per cent. When it came to allocating money for 1989–90, the actual growth for the north-west was 2.5 per cent., significantly higher than the guidelines. Some hon. Gentlemen may question why we issue planning guidelines which turn out to be cautious and which cause concern in certain quarters. In my judgment and in the judgment of my right hon. and learned Friend the Secretary of State, it is better to start the planning process with cautious and prudent figures. If it turns out in negotiations with the Treasury that more money is available than originally planned, so much the better. It is better to start in a cautious mode.

My hon. Friend the Member for Fylde also referred to in-year pressures, which is the cost of funding pay and prices above the 5 per cent. rate of inflation, and mentioned cost improvement programmes. I shall deal with both of those issues as they are related. I agree that it is prudent for districts to set aside part of their resources each year for in-year pressures. Although the Government fund review body awards—we will not know what those review body awards are until January—non-review body awards, for example, the Whitley council awards for administrative and clerical workers in the Health Service or awards to the support workers, may have to be found out of the growth moneys available to the Health Service. In 1990–91 if the pay and price inflation for those sectors is above 5 per cent. the additional cost must be found out of those growth moneys. I understand that the region has advised reserving about 1.3 per cent, which is a prudent estimate, but set against that are cost improvement programmes, which we expect each district health authority to enter into. My hon. Friend did not mention that for the Blackpool, Wyre and Fylde health authority.

I am sure that it would expect to achieve certain cash improvements and improvements in the efficiency of its operations. As I understand it, the region is expecting to achieve cost improvement programme benefits of 1 per cent., which is a prudent figure.

If one sets against the in-year pressures, assumed to be about 1.3 per cent., cost improvement programme benefits of about I per cent.—even setting aside income generation—there will be a net cost of 0.3 per cent. I agree that that must be found from the increase in resources.

Mr. Jack

I accept my hon. Friend's point about the cost improvement programme, but even if £500,000 can be saved within the Blackpool, Wyre and Fylde health authority that still leaves it with a potential deficit of about £1.5 million. I ask my hon. Friend to convey to the chairman of the North Western regional health authority the strength of our arguments tonight.

Mr. Freeman

My final point relates to the £2 million shortfall. I followed the analysis of my hon. Friend which was also presented to me by the community health council of Blackpool. That analysis presents an unduly pessimistic interpretation of the situation. I have already said that the region will receive growth moneys in real terms next year and not a reduction in resources. That will be reflected in the allocation to Blackpool. I confirm that, next year, we expect the North Western regional health authority to start the process of moving to a weighted capitation system of funding for Blackpool. Instead of minus 0.3 per cent., a positive figure will be produced, although I cannot give it to my hon. Friend at this stage. If one adds to that figure the cost improvement programme benefits in Blackpool, which are not in the £2 million, I would expect to see a valiant effort by Blackpool. I do not expect service reduction packages to be presented to the authority. I am expecting genuine cost improvement programmes that will generate real cash and real efficiency.

Growth moneys, plus the cost improvement programmes, should be able to finance not only the pay and price in-year pressures, but service development. My hon. Friend referred to a number of important areas and doubtless one of those is the inheritance of commitments entered into in previous years. I feel certain that the legitimate service developments, necessary for the people of authority, will be met.

Let me summarise precisely where the Blackpool, Wyre and Fylde health authority should find itself in 1990–91. I believe that the end result of the district allocation exercise that will be undertaken by the region early next year will mean that the authority will, at the least, be able to maintain this year's patient activity levels. There should be no reduction in patient activity levels in that authority. I hope that the authority will, through additional resources and as a result of good management, improve upon the maintenance of the past year's patient activity level.

Question put and agreed to.

Adjourned accordingly at half-past Ten o'clock.