HC Deb 10 July 1992 vol 211 cc783-90

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

2.31 pm
Mr. Richard Burden (Birmingham, Northfield)

I am grateful for the opportunity to debate a matter that is of great importance to my constituents in Northfield and to the people of South Birmingham as a whole.

The issue could hardly be more fundamental. It concerns the future of health services for the people of Birmingham as a whole. The present South Birmingham health authority was formed in 1991 as a merger of the old Central health authority and the old South Birmingham health authority. It covers about half the city and a population of more than 400,000.

Unfortunately, controversy over plans for health services in Birmingham has not been uncommon in recent years. In 1989, the regional health authority adopted a major hospital building programme for the city. It would have involved, and still plans to involve, the closure of about 20 hospitals and the centralisation of hospital services on about four mega-hospital sites. The cost is in the region of £500 million. The plan is called Building a Healthy Birmingham. It has been highly unpopular from the outset, for it involves closure of the general hospital. If that went ahead, Birmingham city centre would be left without a major general hospital. A campaign against its closure has been mounted by a local newspaper, the Birmingham Evening Mail. The campaign is supported by the city council.

In the South Birmingham area, the plan involves the concentration of hospital facilities on a new mega-hospital site, the current Queen Elizabeth hospital campus. If the plan went ahead, the new hospital would be inaccessible to many South Birmingham residents and would involve the downgrading of Selly Oak hospital. the main district general hospital to the south of the city.

Dr. Lynne Jones (Birmingham, Selly Oak)

Does my hon. Friend agree that women would be particularly adversely affected by those changes, as they would bring the closure of both the women's hospital and the Sorrento maternity hospital? The reasons for closing the Sorrento are called into question in a recent Select Committee report on maternity services—to which we still await a response from the Secretary of State for Health. However, she appeared to welcome that report in her recent speech on "Health of the Nation".

Mr. Burden

One problem with the Building a Healthy Birmingham plan is not the proposals it contains but the project that it might delay. Although it is surrounded by controversy, a number of changes ought to be made—such as the early renovation and rebuilding of the children's hospital and the renovation of the elderly services M block at Selly Oak hospital—which was condemned as long ago as 1987.

Perhaps the biggest objection is the plan's lack of accountability. Decisions originated behind closed doors and consultation—in so far as it took place at all—was cursory. When the health authority seemed to respond to consultations on points made by the people of Birmingham, any changes made were reversed a few months' later.

In the midst of all that, we are told that South Birmingham health authority is facing a major financial crisis. Precise information is difficult to obtain, but according to the latest RHA figures that I have, it is dealing with an inherited deficit of £4 million and a recurring deficit of £6.5 million a year.

Decisions appear to be handed down from on high, little information is given to the public, and major question marks remain over the financial and managerial competence of West Midlands regional health authority, headed by Sir James Ackers. The first news of that crisis filtered out in early March.

We know that £15 million was given to South Birmingham health authority to see it through its initial problems. The form that money took is still the subject of debate. The RHA is clear that that £15 million was a loan, made with the Government's knowledge. When I raised the issue with the Under-Secretary of State for Health, he replied in a written answer on 22 May that RHAs have no powers to grant loans to district health authorities. We have no clear answer to what that £15 million was all about. I hope that we will receive one today.

Dr. Lynne Jones

In a letter to the hon. Member for Birmingham, Edgbaston (Dame J. Knight), the Minister for Health stated that the £15 million was a loan. There seems to be some confusion in the Department.

Mr. Burden

I hope that the Under-Secretary will take the opportunity to clear up that controversy today.

A report on the financial crisis facing South Birmingham health authority was commissioned from KPMG Peat Marwick, but it has not yet been made available to Members of Parliament or to the people of Birmingham. In advance of that happening. they are asked to accept hospital closures. The royal orthopaedic hospital at "The Woodlands" and at its other site in Broad street is scheduled for closure, and so is Birmingham accident hospital in the city centre. Both services are to be transferred to the general hospital which, according to the RHA's plan, is itself marked for closure in a few years' time.

There are question marks over the financial wisdom of those plans. More than £2 million has been spent on the accident hospital in recent years, to see it through the next decade. We do not know what will happen to that money. In the case of "The Woodlands", thousands of pounds have been raised by the people of Birmingham to provide a magnetic resonance imaging scanner. It would cost £250,000 to move that installation to the general hospital.

Consultants have questioned the clinical wisdom of the plans. They think that inadequate theatre provision at the general hospital development will undermine services. They warn of cross-infection, and that regional specialties also will be undermined.

The plans have been questioned by health service professionals. They are also deeply unpopular with the people of Birmingham, who are afraid that, as with the Building a Healthy Birmingham plan as a whole, they will he faced with decisions handed down from on high and will not be listened to. The evidence is already there. Even though the hospital closure plans are, we are told, only at the proposal stage, bed closures are already being called for by hospital managers, over 400 jobs are due to be lost from the acute sector in one year, beds will close in the royal orthopaedic hospital and managers are telling staff that there will be an increased throughput of private patients to boost income. What clearer example could there be of the effect of the Government's health reforms? Beds are closing and private patients are increasing. Why is it that the Government always deny what the Opposition have said all the way through—that the health service reforms are a way to bring creeping privatisation into the health service?

Outside the acute sector, there is also a major impact on care. Services to the elderly and the mentally ill are both affected by the financial crisis. In the children's sector, the cottage unit that provides much-needed respite care for the families of sick children is scheduled for closure two clays a week as a result of the financial crisis. The fear is that, once again, the changes that people in Birmingham want to see will have to take second place to the financial stringencies being imposed from on high by the regional health authority. In other words, the renovation of my block at Selly Oak will he put back once again and people will have to wait still further and longer for the children's hospital to be rebuilt.

Perhaps the worst thing of all is that the South Birmingham health authority, while making these changes, does not seem to know what the impact of them will he. I quote from a financial strategy for 1992 published a month ago which says: It will he necessary for the Authority as purchaser to make a judgment in due course about the impact of the proposals on service to the resident population. Here we have a plan to close hospitals and to shift services around before the health authority even begins to know what the effect on patients will be.

We should not be forced to accept this and I have four proposals to make. First, the people of Birmingham have put up with this kind of thing for quite long enough. On Tuesday of this week, the Birmingham city council called for a full inquiry into the way that the West Midlands regional health authority is being run. I endorse that call and I hope that the Minister will give it his blessing as well. That inquiry should be independent, and it should look in detailed and broad terms at the way that West Midlands regional health authority is being run.

We have seen a catalogue of disasters through the Build a Healthy Birmingham plan in all its incarnations over the past few years to the privatisation of the regional health authority's management services division, QA Business Services. When it was run by the region, it made a profit but after privatisation, it went bust within 18 months. Surely it is time for a proper look at what is going on in the health authority.

Secondly, I should like the Minister to confirm that he agrees that the hospital closures and other proposed cuts should not go ahead until all the facts of the financial crisis in Birmingham are made publicly available. That should include publication of the KCMG Peat Marwick report into the financial crisis. When those facts are made fully available, there should be time for real consultation to take place. We do not want the panic response that we have seen already from health service managers.

Thirdly, the full facts of the loan-if indeed it was a loan—given to South Birmingham health authority in February or March this year should be made available. People in Birmingham have a right to know how that £15 million came to be given, and what the terms of repayment, if any, there are.

Fourthly, will the Minister accept that the South Birmingham health authority example is the most clear proof that there could be of where the Government's approach to health care is leading us? It is to an accountant's paradise where those who suffer are all too often the patients and the staff. That is the kind of health service in which power is increasingly centralised, decisions are made behind closed doors and ordinary people—the people for whom the health service was set up -are excluded from real decision-making.

I ask the Minister to accept that there must be a review of what is happening. Surely health authorities must be made more accountable to the public whom they are supposed to serve, and surely the hon. Gentleman will accept that, in the case of Birmingham, no amount of accounting wizardry, leading only to deficit, further deficit and financial crisis, can remove the need to put right the chronic underfunding which has existed for many years in the Birmingham health service. That has to be put right if the people of Birmingham are to receive the standard of health care that they deserve in the acute sector, the community sector and other sectors.

2.45 pm
The Parliamentary Under-Secretary of State for Health (Mr. Tom Sackville)

I congratulate the hon. Member for Birmingham, Northfield (Mr. Burden) on securing a debate on this important issue. I am glad to have the opportunity to respond to his remarks about the financial situation of South Birmingham health authority, although I am not surprised that he has concentrated his attention on the financial difficulties that the authority faces rather than on its considerable achievements. Those difficulties should be put in context.

In 1991–92, the allocation made to the new South Birmingham health authority increased by 10.5 per cent. in 1991–92 and by a further 9 per cent. in 1992–93. Both those increases are above the prevailing rate of inflation and, together with the commitment of the authority's staff, they have allowed the district to deliver continually improving services to the people of South Birmingham.

Dr. Lynne Jones

If there has been such an increase in expenditure, surely the Minister will share our concern at the effect of budgets on services. The chair of the health authority assured the people of Birmingham in May that the crisis would not cause any diminution in services. Yet there has been a ban on new psychology referrals, physiotherapy classes at the accident hospital have been closed, there have been ward closures, and mental health and dental health services have been reduced. Residents from a geriatric hospital have been moved to another geriatric hospital instead of to the purpose-built nursing home to which it was intended that they should go.

Surely the Minister appreciates the concern in Birmingham over the financial mismanagement that has led to all that, and the fact that we still do not know what caused it. We want to get to the bottom of the affair, and I support the demand by my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) for an inquiry.

Mr. Sackville

I can tell the hon. Lady only that the allocations to South Birmingham have been considerable compared with those to other districts. She will know that activity levels of treatment and operations have continued on an upward trend—in recent years there has been an increase of about 17 per cent. for in-patients and of about 65 per cent. for day cases. Waiting lists in the region as a whole have continued to fall. In terms of the money allocated to the district that is a good record.

There has also been considerable capital investment in the district and much more is planned over the next decade, as has already been said. The Building a Healthy Birmingham strategy, which will cost about £500 million over 10 years, includes a number of major projects in the district centred on the Queen Elizabeth and Selly Oak hospitals. The benefits are already apparent. In 1991 a new cardiac unit was opened at the Queen Elizabeth hospital, costing £2 million, and early this year the Queen Elizabeth psychiatric hospital, which cost £13 million, received its first patients.

There have also been a number of developments in the community sector. The new Greet health centre was opened in February 1992. It was built and equipped at a cost of £ 1 million. The centre, with all its modern facilities, will provide for the specific needs of the local community. There has been a complete refurbishment of the Yardley Wood health centre, which now provides modern community health facilities for its 10,500 patients.

Despite these achievements and the record level of funding, it is well known that South Birmingham has had serious financial difficulties. For the benefit of hon. Members, and to dispel some of the misconceptions surrounding the situation in South Birmingham, I shall outline the problem and the action that has been taken to resolve it.

South Birmingham overspent its budget in 1990–91, and this led to unacceptable delays in paying suppliers' bills. Unfortunately, due to problems in the production of the authority's accounts and some failings in financial reporting, the extent of the overspend was not recognised until very late. As a result, the authority found itself well into the 1991–92 financial year faced with the legacy of the previous year's overspending and continuing overspending in the current year. Various figures have been quoted about the size of the financial problem. It is now clear that at the end of 1991–92 the district was faced with a cumulative deficit of £10.5 million and a continuing overspend of £5.4 million.

With a deficit of that size discovered late in the year, it would have been entirely unrealistic to expect the authority to identify and institute savings measures to balance the budget immediately. That would have required emergency reductions in the services which is exactly what we have sought to avoid, and severe delays in payments to suppliers. To avoid that, the regional health authority made a temporary addition to the district's cash limit. In health authority jargon, that is known as brokerage. It was sufficient to allow the authority to maintain services and to pay bills on time. The arrangement was in line with accepted NHS practice whereby surplus funds in one authority are effectively transferred to another that has cash-flow problems so as to make the best use of the total resources available to the NHS. The transaction is reversed later.

In respect of South Birmingham and, indeed, other authorities where similar transfers took place, the arrangement was open and above board. The arrangement did not resolve the underlying problem as it was designed only to give the district time to identify the root cause of the difficulty and to determine a strategy to remove it.

At the same time, the RHA commissioned two reports, the first to be produced by the independent firm of accountants, KPMG Peat Marwick, to review the factors that had created the problems and the deficiencies in financial management and reporting that had delayed senior management action.

The second report was to be produced by the DHA. It was called upon to produce a strategy for delivering a more efficient pattern of services that would allow the authority to restore a financially balanced position.

The KPMG Peat Marwick report will be considered by the RHA on 16 July, It was commissioned by the RHA and it will decide whether it should be made public. It is a management document which goes into considerable technical detail and I am grateful for the opportunity to outline the main conclusions and some of the action that has already been taken in response to them by the district and regional health authorities.

The South Birmingham health authority was created on 1 April 1991 from the merger of the former South and Central Birmingham health authorities. Both former districts had experienced financial difficulties in recent years, with which the respective authorities had been grappling. It is clear from the KPMG report that more attention should have been paid to managing the merger and ensuring that both authorities had in place proper procedures to integrate their systems. This has been recognised by the region and it is being taken into account in considering proposed future mergers.

The merger only exacerbated a problem that was already there. The report points to weaknesses in financial reporting and monitoring in South Birmingham which led to the district running a deficit for some time. That had resulted in the full extent of the problem not being recognised until late in the year. The report stresses the importance of authorities planning for a balanced financial position without having to resort to short-term measures, and having in place systems to monitor that.

Hon. Members may recall that in recent years the NHS management executive has made it a priority of health authorities to eliminate underlying financial deficits. An authority cannot run from year to year living beyond its means. Sooner or later the problem will become unmanageable and the authority will be faced with short-term cuts or ceasing to pay bills. It is far better to plan for a balance and to monitor carefully so that potential overspends can be identified and the authority can respond quickly.

Dr. Lynne Jones

If that has not been the case in the past—and it has been identified as a problem—does not that demonstrate mismanagement in South Birmingham health authority? Is there to be any accountability for that mismanagement?

Mr. Sackville

The Government have made it clear that from a technical point of view the merger was badly managed in terms of computer systems and accounting. If the hon. Lady is asking for heads to roll that is another matter. We have no evidence of any necessity for that.

There have been attempts to blame the financial problems—and we heard some more today—of South Birmingham on the reforms. That is preposterous. The KPMG report shows that within the district there was a failure to appreciate the complexities of the new NHS financial management regime, but that represents a management failing, not a failure of the reforms. Throughout the country hospitals and health authorities have grasped the opportunities presented by the new system without any loss of basic financial control. The problems in South Brimingham, unfortunate as they are, would have had to be faced regardless of the reforms.

In terms of the future, the main issue of concern for the people of Birmingham is what caused the problem and what impact the recovery plan will have on their hospitals and the quality of service that they have come to expect. Perhaps I can reassure hon. Members. A plan for resolving the problems in South Birmingham was put to the authority and agreed by it on 17 June. The breathing space given by the short-term financial support last year allowed the authority to produce a considered plan which, although stimulated by the overspending problem. is designed to bring real long-term benefits to the people of South Birmingham and is consistent with the Building a Healthy Birmingham strategy.

Dr. Lynne Jones

The Minister will appreciate that these matters are of great significance to the people of Birmingham. Does he think that the plan to close the accident hospital by the early part of 1993 and to transfer services to the general hospital, which the health authority says will require the spending of £6.5 million to facilitate the transfer, is feasible? Is not it yet another example of mismanagement and lack of planning foresight? Because of the loss of planned beds there is a real fear in Birmingham that in the event of a major incident such as the 1974 Birmingham pub bombings or a major coach or car crash, there would not he sufficient accident places to admit the victims.

Mr. Sackville

I remind the hon. Lady that we are discussing the bringing forward of long-term plans which will take all those factors into account. As she knows, the plan centres on removing the significant duplication of services between the five major hospitals in the district—Selly Oak, Queen Elizabeth, Birmingham general, the royal orthopaedic and Birmingham accident.

In that way, it is proposed that the overspending will be removed not by cutting services but by removing the costs of duplication and providing services more efficiently in the short and long term. It proposes that services currently provided by the royal orthopaedic and Birmingham accident hospitals will be transferred to the general hospital and that most of the acute medicine and general surgery provided by the general hospital should move to Selly Oak and the Queen Elizabeth. That will offer benefits by bringing together divided specialties under one roof and in premises that are more suitable and less expensive to run and maintain. The key message for the people of Birmingham is that there is no intention to reduce services in either quality or quantity—the plan proposes to close buildings, not services.

Anyone who knows Birmingham's hospitals will agree that it is high time for the excellent services that they provide to be housed in an estate of the best modern standards, located in the right places to meet the needs of today's populations. The health service cannot go on performing heroics in Victorian buildings scattered across cities, especially when those buildings are in a patchy physical condition and expensive to run.

Unfortunately, as with most plans involving the rationalisation of services, that will result in the closure of some much-loved local hospitals. However, it is well known that many of the existing, single specialty hospitals in Birmingham are old and expensive to run. Many are also at the end of their useful life in relation to providing modern health care. All proposals to build new hospitals or close existing ones will be carefully considered within the Department of Health before approval is given and that will take into account the outcome of local consultation on individual proposals. I understand that formal consultation on the proposals to close the Birmingham accident hospital and the royal orthopaedic hospital has now begun. The health authority will consider the comments at the next meeting on 21 October.

The motion having been made after half pastTwo o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at one minute past Three o'clock.