HC Deb 19 November 1996 vol 285 cc883-92

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

6.15 pm
Mr. Cynog Dafis (Ceredigion and Pembroke, North)

I have been accorded a status this evening to which I would not dare aspire. I have been described as the hon. Member for mid-Wales, and even as the hon. Member for Wales. There may be a sense in which my party represents Wales, but I claim only to be the hon. Member for Ceredigion and Pembroke, North. However, what I have to say tonight applies and is relevant to a large part of mid-Wales.

I am grateful to the Under-Secretary of State for Wales, the hon. Member for Cardiff, North (Mr. Jones), for being here tonight to respond to this important debate, and for the courteous hearing that he has given me in the past on this subject. I am also grateful to him for the letter that I received today in response to my most recent one to him—although it did not give me much comfort, except in one detail.

The Under-Secretary will know that I have been expressing concern about the future of the hospital service in my constituency since June 1995, in correspondence and in questions in the Chamber. He will also know that, all along, I have avoided alarmism in this discussion.

Those who attended the well-attended public meeting that I convened in Aberystwyth on 27 September—which led to the formation of the Ceredigion hospital services working group—will confirm that it would have been perfectly possible to create a mood of alarm, but that I avoided doing so. However, I must say that I am becoming alarmed at the direction of events and the likely consequences of the funding crisis—that is no overstatement—that is now affecting the Ceredigion and Mid-Wales hospital trust.

Before I come to discuss the crisis, can I first emphasise the excellence of the service provided by the trust? I wish to emphasise the district general hospital at Bronglais, Aberystwyth, and the three community hospitals at Aberaeron, Cardigan and Tregaron.

Bronglais provides a wide range of services, led by its own consultants, to a very high standard—of that there can be no doubt. The quality of service is matched by its efficiency, as its position in the NHS Wales performance tables on waiting times clearly shows. It has met its patients charter requirements successfully, and won the Healthy Hospitals competition in 1995. It is now preparing for King's Fund accreditation and the Investors in People award in 1996–97, and it has every confidence of success. It has set itself an impressive list of targets for the next financial year.

It is worth asking what lies behind that success. The trust's new chairperson, Eleri Ebenezer, who came to the job at the beginning of this financial year, identifies a number of factors in her foreword to last year's annual report. She says: Since my arrival in April 1996. I have been extremely impressed by the dedication and enthusiasm of the staff I have met so far. Such things are often said, and they sound like clichés, but I think that there is truth in what is said about the hospital and the trust.

The foreword continues: the affection, support and esteem of the community for the Trust is excellent, with people having great pride in their local hospitals and health services … The trust also appreciates the strong support provided by the Community Health Council, the County Council, the University and the voluntary organisations in Ceredigion and Mid Wales. The three community hospitals in turn are cherished by the localities they serve, by virtue of the same dedication and quality of care. However, the service, in terms of both quality and, crucially, range, is in danger.

Until a week or so ago, the Ceredigion and Mid-Wales trust, alone among the trusts in the Dyfed Powys health authority, had failed to agree a contract with it, arguing that the authority's offer was £400,000 short of what was needed. Knowing that, if conciliation found in the trust's favour, the authority would go to pendulum arbitration, which could result—that being the nature of such arbitration—in its getting nothing, the trust accepted an improvement of only £150,000 on the offer.

The additional sum of £150,000 that was agreed 10 days ago is in the form of a loan, and £320,000 of this year's health authority contract is what is known as brokerage—a loan that must be repaid. The implications of the settlement will be grave.

The health authority faces serious difficulties. It is responsible for, among other places, the constituency of the hon. Member for Brecon and Radnor (Mr. Evans), who is here today; I am sure that he is interested in the matter.

For various reasons, the health authority will have to find a total spending reduction of between £9 million and £10 million by the end of the decade; that is partly because Powys health authority, the predecessor authority, accumulated a deficit of, I believe, £2 million up to the end of last year. There is some feeling in the Dyfed part of the new authority that it should not have to carry the consequences of that deficit, but I do not want to be divisive and pursue that matter tonight.

Because of the need to pull back £9 million-plus, there will be year-on-year cuts until the end of the century, with little if any scope for efficiency savings to be made without reducing service quality. What I said about the efficiency level of Bronglais is relevant to that, and I emphasise that Bronglais has among the lowest management costs in Wales. It is small wonder that the health authority says: the situation could lead to Trusts failing and services being put in jeopardy. Within that dismal picture, Bronglais district general hospital—I want that term to mean what it says—as a small hospital, serving a sparsely populated rural area, has its own specific problems, operating as it must in the competitive environment of the national health service market. Specifically, it is required to service any capital development to the extent of 6 per cent. and to provide a 6 per cent. return not only on new capital development but on asset value.

Unless there is a recognition of those specific problems—there should and can be such a recognition—and unless provision is made, as it must be, to cope with them, Bronglais will find it increasingly difficult to maintain a sufficient capital programme to replace equipment and keep abreast of new developments in technology and other facilities. The effect on staff recruitment and the marketability—we have to use that terminology—of the hospital's services could be to set up a spiral of decline. I have described to the Minister in the past how that could occur.

The strategy document of Ceredigion and Mid-Wales trust, "Ceredigion 2000", contains a SWOT—strengths, weaknesses, opportunities, threats—analysis. Among the threats, it identifies the fact that fundholders now have far greater discretion in purchasing decisions and that they—and especially those at the outer periphery of the area—might be tempted to purchase services elsewhere.

On capital development, lest anyone should mention the private finance initiative, let me express my total scepticism as to its relevance to the health service in general and to a small hospital in rural Wales in particular.

Mr. Dafydd Wigley (Caernarfon)

Is my hon. Friend aware of the way in which the PFI has been used to hold back for months, if not years, the work that should be taking place on the new community hospital in the neighbouring area of north Meirionnydd and eastern Dwyfor? That is a warning to anybody who goes down that road.

Mr. Dafis

I am aware that the attempt to find a PFI solution involves delay. The new development at Bronglais is extremely welcome, and can go ahead only because it is revenue neutral. It is the last capital development to get under the fence before PFI came in, and I doubt whether it would be proceeding if PFI had been in place earlier.

In attempting to protect the district general hospital at Bronglais, the trust will inevitably be tempted—this is the crunch for the moment—to close community hospitals, despite its intention, stated in February 1994, to strengthen the role of community hospitals as part of its community services strategy. If it closed a community hospital, it would immediately save the 6 per cent. charge that it has to make on the asset value of that hospital.

I remind the House of the various statements, including one by the former Secretary of State for Wales, the right hon. Member for Wokingham (Mr. Redwood), that community hospitals are valued and are to be retained, and that their closure should not be on the agenda. On that subject, the health authority said in one of its documents: there has to be rationalisation"— a euphemism for closure, of course— of some peripheral hospitals if we are to manage within the current base budget. Any such move would provoke a fierce and entirely justified public response. The Cardis, together with the people of north Pembrokeshire, who use the hospital at Cardigan, would rise in revolt, and that would be a fearsome spectacle.

The health authority is responding to the crisis by initiating a strategic review of its services. There is nothing wrong with that, and certainly there is nothing wrong with considering ways of increasing co-operation between trusts and hospitals. I am all in favour of that at the expense of the competition principle that underpins so much of Government policy. However, we must resist any cost-cutting exercise that would reduce the range of specialist services provided by Bronglais's specialists.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

I congratulate my hon. Friend on obtaining this important debate, and acknowledge the hard work he has done to protect the services in Ceredigion and Pembroke, North. On Bronglais hospital, many of my constituents in the south of Meirionnydd have to travel to Aberystwyth for essential health services. Is he aware of the great difficulties they would face if they had to travel to places such as Carmarthen? The distances involved are unreasonable. Bronglais serves south Meirionnydd as much as Ceredigion and Pembroke. I hope that the Minister will respond usefully and reasonably.

Mr. Dafis

I am grateful to my hon. Friend for making that important point. I am talking not only of the welfare of Ceredigion but of a necessary and highly valued service to many people in Machynlleth and parts of Meirionnydd and Montgomeryshire. It is essential for that large area that the hospital should be kept as it is.

Trust chairman Eleri Ebenezer, speaking of the great pride in their hospital of people in the trust area, said: They particularly appreciate that they do not have to travel over fifty miles to the nearest of our neighbouring Trusts' General Hospitals for treatment and care. The nearest general hospital is in Carmarthen, and there is also ysbyty Gwynedd and, to the east, Shrewsbury. It would be unacceptable and unreasonable for people to have to travel to those. She continues: As a small trust, the strategic importance of our location cannot be denied.

Aberystwyth, in its strategic location, serves a wide area of mid-Wales. That is the bottom line. The position of Bronglais as a district general hospital delivering at least its present range of consultant-led services with its own consultants must be protected. Bearing it in mind that it serves the biggest part of mid-Wales, anything else is unthinkable. That should be non-negotiable.

It is worrying that the health authority suggests that the trend towards increasing specialisation, and the ever more rigorous requirements of the royal colleges in respect of the number of treatments that need to be undertaken and on the number of consultants who have to work together, must imply increasing centralisation of services. I am unhappy about such talk. That assumption must be challenged. Centralisation is not the way forward.

In dealing with Bronglais, the royal colleges have shown a sensible and accommodating flexibility in the numbers game—which I dare say makes some sense in an urban setting—and they must continue to do so. It would not be acceptable to apply urban norms to vastly different rural settings.

I remind the Minister and others that the Government's recent White Paper, "A Service with Ambitions", gave as one of the five elements of quality the accessibility of the service, in terms of distance, time, physical access, language and understanding". Almost all those factors, and especially language and understanding, apply importantly to the position of Bronglais. It should not be part of the agenda of a service with ambitions to centralise away specialisms from places such as Aberystwyth in the way it has.

Cancer care at Bronglais is a case in point. A highly regarded and valued service is provided, working in association with Singleton hospital at Swansea and the Royal Marsden hospital. That service is seeking designation as a unit as one of its targets for next year. It should achieve that. It would be unacceptable for the people of mid-Wales to have to receive that care at a distant hospital.

There is talk of restructuring the trusts in the health authority. Of course, there can be no question of the Ceredigion and Mid-Wales trust being swallowed by another trust. Any restructuring should bear in mind the need and potential for strengthening the trust. There may be an opportunity for that, with the proposals for the Derwen mental health trust. Proposals were put out for consultation last week, and they must be considered in the context of the need to strengthen the Ceredigion and Mid-Wales trust.

All that I have said must mean, setting aside other considerations, that the Ceredigion and Mid-Wales trust needs more money. It is as simple as that. That issue cannot be ducked for next financial year; I presume that it is too late for this financial year. The problem must be addressed in the context of the needs of Dyfed Powys health authority, which serves a vast area in Welsh terms. It serves 470,000 people and must, of necessity, maintain four district general hospitals even though in simple population terms two would serve. The nature of the area demands that; it is acknowledged that four are needed.

It is unreasonable for the health authority to have to work with a diminishing budget for the next four years. How can it possibly manage in such circumstances? The formula is, of course, being reconsidered. I do not want to argue that one health authority should take money away from others, but Dyfed Powys health authority needs more money. The special conditions and circumstances that operate there must be acknowledged in the funding provided, and especially in respect of that for the trust serving Ceredigion and mid-Wales.

The decisions that will be taken over the next few weeks, first in the Budget and then in the Welsh Office financial settlement, are highly relevant. For that reason, I beg the Secretary of State for Wales, with all due courtesy, to pay careful and urgent attention to my remarks. The matter is crucial. I assume that the health authority is making, and has made, strenuous representations to the Welsh Office about the situation. I hope that it will not simply agree to implement the cuts. Its function should in part be to demand and argue for the additional funding that it certainly needs.

We are told that the NHS is everywhere under strain, but I speak for my patch and for a large part of rural Wales. Unless this crisis is tackled—and I do not exaggerate—the implications for this strategically vital institution and the people it serves will be very serious.

6.38 pm
The Parliamentary Under-Secretary of State for Wales (Mr. Gwilym Jones)

I am grateful to the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) for giving us an opportunity to debate this important subject. I well know his concern for the Ceredigion and Mid-Wales NHS trust and for Bronglais hospital in particular. In turn, as he acknowledged, Bronglais hospital achieves excellence and if there were to be a deterioration in that, my hon. Friend the Member for Brecon and Radnor (Mr. Evans), some of whose constituents are served by the same hospital and trust, would be even quicker to my door than the hon. Gentleman has been.

I must also thank the hon. Gentleman for not pursuing the opportunity to raise the subject last Friday, as that would have precluded me from representing the United Kingdom at an important European conference in Ireland on employment and regional development. I am grateful to him for that. It was not the first time that Plaid Cymru has kindly facilitated the representation of Wales abroad, and that is always appreciated.

Although the funding of the Ceredigion and Mid-Wales NHS trust is the hon. Gentleman's prime concern, before I focus on the trust and Bronglais hospital, it may be desirable for me to outline to the House the present arrangements for hospital income and the role that the Welsh Office has in the matter.

As my right hon. Friend the Secretary of State for Wales stated earlier this month at the Welsh Association of Health Authorities and Trusts conference, the NHS budget in Wales increased last year from £2.2 billion to £2.3 billion. Since 1979, the average annual increase in the NHS budget has been well above inflation. Furthermore, it is on record that the NHS will receive an increase over and above the level of inflation every year for the next five years. My right hon. Friend has agreed to match that in Wales. The health service in Wales is and will continue to be a priority.

The overall thrust of my right hon. Friend's message, however, is that there will be no relief from improving efficiency, management, communication with the public and standards. It cannot be accepted that a health service spending £2.3 billion a year cannot find more savings in addition to those already achieved.

I remind the hon. Gentleman that the large figures that he bandies around are fanciful and have no connection with reality. My right hon. Friend will be announcing the details of his Welsh spending plans next month.

NHS trusts, by their very nature, control their own affairs, and receive no direct revenue funding from the Welsh Office. They receive by far the greatest share of their total income from contracts with health authorities and general practitioners for the provision of health care. A small proportion of income derives from non-patient-related activities, such as the funding of medical training and income generation schemes.

In the case of the Ceredigion and Mid-Wales NHS trust, 94 per cent. of its income derives from patient activity, with the remaining 6 per cent. coming from other sources. Dyfed Powys health authority provides the largest element of contract income, although the success of the fundholding scheme means that an increasing proportion of patient activity is commissioned directly from general practitioners. That is a welcome development, and there are already well-documented benefits for patients throughout Wales.

Capital expenditure by an NHS trust—to expand, replace or develop some of its capital assets—can be funded from four main sources. First, a NHS trust can fund from its own depreciation reserves. Those reserves occur as an element of depreciation is included in contract prices for patient activity and is utilised to offset the cost of replacement assets. Secondly, when revenue surpluses are generated, there is the flexibility to use those surpluses to finance capital expenditure.

The Welsh Office provides a third source, via long-term loans to finance authorised capital expenditure which cannot be met by the means already described. That would involve the inclusion of interest costs of the loans in prices for patient activity.

Finally, capital expenditure can be generated via the private finance initiative, which is by far the most exciting and innovative method of capital provision. Increasingly, hospitals are making use of the private finance initiative as a means of acquiring improved capabilities without the need for capital expenditure. The private finance initiative also offers the opportunity for more innovative means of health care provision, with commensurate increases in efficiency and effectiveness.

I am sure that the House will agree that the private finance initiative represents a major new opportunity for the NHS in Wales to explore and exploit the most modern and effective methods of health care provision. Frankly, I am amazed by the hon. Gentleman's scepticism, and I completely refute the assertion by the hon. Member for Caernarfon (Mr. Wigley).

In no way does the PFI represent a means of engineering delay. It has quite the opposite effect, for it expands the ability to undertake large capital projects and means that more such projects will proceed earlier than they would have done by traditional and conventional methods. Indeed, the chairman of Powys Healthcare NHS trust told me that prospective partners had shown more interest in the private finance initiative projects at Newtown Bronllys than in most other PFI candidates to date, so the claims that PFI has no relevance or interest in rural areas are clearly misplaced.

Let me turn to what is expected from a hospital in terms of its financial performance. Naturally, it should balance its books year on year. What is required, in effect, is that the hospital's revenue expenditure should be contained within the income that it can expect to receive, essentially from its health authorities and GP 'fundholders and from other means. The target is well understood, and all but a handful of hospitals in Wales have achieved that break-even position.

I am sure that it has not escaped Members' notice that the financial performance of the NHS in Wales has lately been the subject of media scrutiny that is all too often inaccurate and misleading. Particularly, I refer to the flawed report produced by the University of Wales college, Newport, on behalf of the BBC. It contains a large number of inaccuracies, and has caused great concern among patients and staff at hospitals in Wales, that are unfairly reported as being in deficit at the end of the last financial year.

Contrary to the report, overall hospital financial performance in Wales in 1995–96 was represented by a surplus of £2.61 million. The report wrongly incorporates technical accounting adjustments, which have no detrimental effect on the trusts' finances, into the overall picture. That error could have been corrected easily if those involved had taken the trouble to check the figures with Welsh Office or hospital officials or read the annual reports of the hospitals that were criticised in such a sensational and unfair way. The media could easily have given the true picture had they the will to do so.

Ceredigion and Mid-Wales NHS trust has broadly satisfied its requirement to break even over the past three financial years. It is anticipated that this year's financial performance will be much the same. I recognise that this is a difficult year for Bronglais hospital, and the effort that is being made is a reflection of the continuing commitment and hard work of all the staff involved.

Furthermore, I am pleased to confirm what the hon. Gentleman said—that the Ceredigion and Mid-Wales NHS trust performs above the Welsh average for most of the patients charter targets. The number of patients treated in 1995–96 continues to increase, with the largest increase of 26 per cent. being in day cases. That is in line with Welsh Office targets. Staff at the trust are to be commended for the high-quality care that they provide for the people of mid-Wales.

I am aware that the hon. Gentleman has particular concerns about the funding of the hospital together with its long-term viability. As I said, I met him last month to discuss those very issues. It was a very informative and productive meeting, during which we discussed various points of concern regarding the Ceredigion and Mid-Wales NHS trust, Bronglais hospital and the hon. Member's request for additional funding to the health authority to be earmarked for the hospital.

On the question of additional funding to Dyfed Powys health authority specifically for Bronglais hospital, I can only reiterate to the hon. Gentleman that it would not be appropriate, because, as I have stated on a number of occasions, it is for the health authority to judge where the resources allocated to it for the health care needs of the local population should be spent.

Additional funding could be provided only at the expense of other parts of Wales. I am sure the House will recognise that that would compromise our commitment to equity of health care provision across Wales.

I do, however, acknowledge that Dyfed Powys health authority is facing a challenging period in terms of its finances, and in order to help the authority I have agreed loans totalling £2.5 million. That sum is made up of a previous loan of £800,000 from 1995–96 that was made to the former Powys health authority, together with a further £.7 million being provided this year.

I have also agreed that the repayment of those loans should be deferred to the year 1999–2000. That will allow the health authority to establish firmly a comprehensive strategy for commissioning health care before repaying the loans. In agreeing those arrangements, I have requested regular monitoring reports from the Dyfed Powys health authority.

As I am sure the hon. Gentleman will know, Dyfed Powys health authority has undertaken a review, with the assistance of all the NHS trusts in the health authority's geographical area, and I readily commend that initiative. It provides an opportunity to identify more efficient use of resources and it is expected that a list of recommendations will be submitted to the Welsh Office some time in December.

Mr. Dafis

The Minister tells us that it is for the health authority to allocate resources, and I understand that. Surely, however, the Welsh Office has a view on the specific need for the district general hospital at Bronglais to retain the range of services that it currently provides through its own specialists. In addition, surely the Welsh Office has a view—as I am sure the Government do—on the position of community hospitals. Would not the Minister regard it as unacceptable if the trust had to choose between those two priorities—the retention of community hospitals or the protection of the range of services available at Bronglais?

Mr. Jones

First and foremost, I say to the hon. Gentleman—as I have told him before—that we remain and will continue to remain committed to the provision of acute health care at Bronglais hospital. It is not, however, possible for me or anyone else in my position to attempt to second-guess all the decisions in the decision-making process that should occur within the health service in Wales.

There has to be a proper place for health authorities, which have now been reformed and rationalised, with great economies achieved by cutting the number of bureaucrats in the Welsh health authorities. It is their responsibility to identify the health needs of the communities in their local areas. They in turn make arrangements with NHS trusts up and down Wales to provide all that health care.

I am confident that that is the right level on which decisions should be made, are made, and will continue to be made. Dare I describe it to the hon. Gentleman as a process of real devolution, which we have brought about in the NHS in Wales and in many other fields of activity in Wales? Real devolution is a guiding principle of this Government—we believe in it, and we practise it.

Together with the health authority and Bronglais hospital, the Government will maintain their commitment to providing modern hospital health care for the people of Ceredigion. I can continue by saying to the hon. Gentleman that one obvious example of that commitment is the approval and funding of the reprovision of facilities for the elderly and mentally ill from North Road hospital, which is an inadequate and antiquated location, to a purpose-built facility at Bronglais hospital. The new scheme will include in-patient and day hospital facilities, together with associated X-ray and urodynamic services. That scheme is progressing as planned, at a projected cost of some £8.4 million—a significant commitment indeed.

In addition, Bronglais hospital has been allocated a further £900,000 capital expenditure in 1996–97 for the provision of improved pathology services and other equipment needs. The trust's commitment to the latest technology is demonstrated through its key involvement in the Telemedicine project, which received widespread publicity at national level. The trust also became the first in Wales and the second in the United Kingdom to go live on the Internet in 1995.

It is appropriate to remember at this point that this month we witnessed the 50th anniversary of Parliament passing the legislation to set up the national health service. It is a tribute to the many thousands of doctors, nurses and staff who have healed the sick and cared for so many of our fellow citizens over the years that our health service is regarded with such affection today.

When the legislation passed into law, my party gave the national health service its full support, and that support has continued ever since—indeed, for 34 of the 48 years of the life of the NHS since 1948, it has been Conservative Governments who have raised the taxes and given the money to keep the NHS running as a universal, national service that is freely available to all.

Spending on the national health service in Wales has increased by nearly 85 per cent. since the winter of 1979, when the Labour party was last in power. We have increased the resources available to the NHS by record amounts. There are more nurses, midwives, doctors and dentists than in 1979. We are proud of the expanded and improved NHS that we enjoy today. This Government have presided over the biggest hospital building programme in the history of the health service. In Wales, we spend more on the health service for every man, woman and child than is spent in England, particularly for areas with more marked health needs.

Our improvements have allowed us to continue to expand the NHS in Wales. New hospitals are coming for St. David's and the Royal infirmary in Cardiff, Baglan, Bronllys, Newtown and Ynys y Plwm near Llantrisant, and there will be a new cancer centre in north Wales.

On its 50th birthday, we can look back with pride at a health service that works. It works because it has adapted, while remaining true to its founding principles. It works because it has a Conservative Government who are committed to real increases in health spending.

This Government have continued to demonstrate their commitment to the development of a health care system in Wales that not only meets the needs of today but is designed to take the service well into the next millennium. That can be truly effective only if all the component parts of the NHS in Wales work together with a strategic view of the way ahead.

It cannot be denied that health care provision in Ceredigion and mid-Wales faces particular pressures, but I have every confidence that Dyfed Powys health authority and local GPs will want to ensure that their local hospital is used for the best and fullest benefit of the population in that rural area. That is exactly in line with the extract from the trust chairman's report describing the way in which the community regards both Bronglais hospital and the trust, which the hon. Gentleman quoted with great pride. Working together, they will see the way forward as one of co-ordination and co-operation for fulfilling the accepted objective of always striving to provide the people of Ceredigion with the best possible quality of health care.

Question put and agreed to.

Adjourned accordingly at three minutes to Seven o'clock.