HC Deb 06 December 2001 vol 376 cc481-96 1.18 pm
The Secretary of State for Health (Mr. Alan Milburn)

With permission, Mr. Speaker, I wish to make a statement about the resources that will be available to local health services in all parts of England next year. Today I am allocating revenue resources to local health authorities for the financial year beginning April 2002. I have written to all Members today, giving information about the health authorities in their constituencies.

The national health service is currently the fastest growing health care system in any major European country. Under this Labour Government, it is growing twice as fast as it grew under the last Conservative Government. With the additional resources announced by my right hon. Friend the Chancellor of the Exchequer last week, it will grow by a further 6.8 per cent. in real terms next year.

As the House knows, however, that follows decades of underfunding. No one should believe that a few years of extra investment, even on this scale, can put right decades of underinvestment. The NHS plan that we published last year is, rightly, a 10-year programme of investment and reform.

Major problems remain in the health service, of course, but there is progress too. Last year there were almost 5,000 extra heart operations, and waiting times for treatment are falling. Because prevention is as important as treatment, the number of cholesterol-lowering drugs being prescribed has risen by a third in just one year. Nine out of 10 cancer patients are now being seen within two weeks; many used to have to wait for months. The maximum waiting time for any hospital operation is already down from 18 to 15 months in three quarters of NHS trusts, and all trusts will be in that position by next spring.

This is the first year in 30 in which the number of general and acute beds in our hospitals is rising rather than falling. Ten new hospitals are already open, as part of the biggest hospital-building programme that the NHS has ever seen. Most important of all, the NHS today has 17,000 more nurses and 7,000 more doctors than it had when we came to office, with thousands more to come.

There is a long way to go, but the people working in the NHS are doing a great job to improve services for patients. Now we can build on the progress that they are making.

Last year at this time, I indicated that all health authorities could expect to receive a minimum revenue increase of 6 per cent. in 2002–03. That 6 per cent. is more than health authorities received in four of the last five years under the Conservatives. In fact, I am now able to go further than I was planning to do at this time last year. Rather than growth of a minimum of 6 per cent. next year, I can tell the House that no health authority will receive less than 9.3 per cent. growth next year.

The next financial year will be the last under the existing formula for deciding how NHS resources are distributed to local health services. From the following year, there will be a new formula and, subject to Parliament, resources will go directly to locally run primary care trusts for the first time, as part of the Government's wider programme to devolve ever more power and resources to the NHS front line.

The resources that I am allocating today for 2002–03 are being distributed according to the existing formula. As the House is aware, that formula has been widely criticised for failing to get health services to the areas of greatest health need. It has also been criticised for failing to reflect fully the additional costs that the NHS has to bear in those parts of the country where labour market and housing costs are highest. Last year, I announced two major changes better to reflect health needs on the one hand and labour market costs on the other. I am building on those changes for the year ahead.

First, health inequalities scar our nation. Poverty and deprivation bring not only excess morbidity and mortality, but extra costs to local health services. Next year, for the first time, I have reflected in the formula the costs associated with tackling high rates of infant mortality alongside the costs associated with conditions such as cancer and heart disease. The resources to tackle health inequalities within health authority budgets will therefore rise next year by 14 per cent. The £148 million that we are making available to recognise the areas of greatest health need will benefit towns and cities in the north and midlands as well as the poorer parts of the south of England.

Secondly, I am increasing the resources available within health authority budgets to help the local NHS in those parts of England where living costs are highest. This year, for the first time, we introduced cost of living supplements for 100,000 qualified nurses, midwives, health visitors, therapists and radiographers who work in the highest cost parts of the country. In London, staff receive up to £1,000 a year on top of their salaries and London weightings. Elsewhere, they receive up to £600 a year more. Those cost of living payments are already helping the NHS to recruit and retain staff.

I have received a number of representations from right hon. and hon. Members, and from local health services, from areas where the supplements are not yet available. I have decided, first, to increase to more than £100 million the resources allocated to fund the cost of living supplements. They will continue to be paid to the areas currently receiving them. However, I have decided that from next year, in addition, the scheme will be extended to cover East and West Kent, North and South Essex—[Interruption.] I am glad to see that the hon. Member for West Chelmsford (Mr. Burns) is pleased for once—Northamptonshire and East Sussex, Brighton and Hove. Every health authority in London and the south will now receive extra resources in recognition of the higher costs that they face.

Every part of the country will benefit from the significant increases in funding for health authorities that I am announcing today. The average health authority budget will rise by £39 million or just under 10 per cent. Health authorities will be expected to work with local primary care trusts on deciding how best those resources are spent. Within those allocations there are extra funds for cancer, heart disease and mental health services alongside new resources for information technology and for primary care.

In addition, more than £400 million will be available to secure extra capacity to treat more NHS patients. It will be for local health services to decide how best to spend those resources, but they may be spent in NHS hospitals, in the private and voluntary sectors, and in community and social services.

The extra resources will need to secure improved services in the priority areas that count most for patients—better emergency care, shorter waiting times for treatment, and improvements in cancer, heart, mental health and elderly care. By the end of the next financial year, we expect nine in 10 NHS patients to be able to see a GP within 48 hours, and the maximum waiting time for a hospital operation to have fallen from 18 months today to 12 months. That is still too long, but it is the shortest maximum waiting time in the history of the NHS and a staging post towards shorter waiting times still.

Investment alone, however, will not secure the improvements in care that staff are striving to achieve and which patients rightly want to see delivered. The NHS will need to use these extra resources to drive forward the NHS plan reform programme. There are now national standards for the first time, and an independent inspection regime to assure them. There are more freedoms and more rewards for the good hospitals, alongside more help, support and—where necessary—intervention for the worst. Resources and power are being devolved to front-line services and staff, and there is now a more sensible relationship between the public and private sectors which means that we can provide more NHS care for more NHS patients.

These reforms are about putting the patients first. Our aim must be to create a more decentralised, more diverse and more responsive health service, capable of offering patients better services and greater choice.

Today, we are publishing proposals that will for the first time give patients an explicit choice over where they are treated in the NHS. As we said in our election manifesto, the investment and reforms that we are making mean that, by 2005, every patient needing hospital treatment will be helped by their GP to choose not just the date but the location of that treatment. The resources that we have now mean that we can make a start next year on introducing this new system, under which patients will be choosing the hospital, rather than hospitals choosing the patient.

We will start with those patients who have been waiting longest for treatment, and with those who have the most serious clinical conditions. Today, as the House is aware, thousands of patients have been waiting for a heart operation for more than six months. Waiting times are shortening, but they are still too long.

Therefore, I can tell the House today that, from the middle of next year, every patient in England who has waited for a heart operation for six months will be able to choose between hospitals—in the public sector or the private sector, in this country or abroad—that can do the operation more quickly. The choice will be theirs.

The initiative for heart surgery marks the start of a wider programme to improve patient choice and speed up treatment. Other pilots will be developed over time.

We will be discussing these proposals with patient, professional and health-care organisations so that the proposals can guarantee high clinical standards for patients and good value for money for taxpayers.

Many patients may choose not to exercise a choice. Many will prefer to wait at their local hospital, even if that means a slightly longer wait. Some patients will prefer to travel to get faster treatment, but the point is that, for the first time, the choice will be the patient's. Moreover, that choice will no longer be between waiting longer for treatment or paying for treatment.

There are two distinct views about the future of health care in our country. The Opposition seem to believe that more and more people should have to pay for more and more treatments. In contrast, the Government say that patients should be able to choose without having to pay.

The principles of the NHS are the right principles for Britain. They are that treatment should be free at the point of use, paid for through general taxation, and supplied according to need rather than a person's ability to pay.

The investment and reforms that we are making will create a service delivering quicker, higher-quality care for millions of NHS patients. The resources that I have announced today will mark a further step towards a better and faster health service—a national health service for all the people of our country.

Dr. Liam Fox (Woodspring)

I am grateful to the Secretary of State for that statement, and I am glad that it was he who made it. No one was sure whether he would deliver it, or whether it would be the Prime Minister or the Chancellor of the Exchequer, as it is increasingly unclear who in the Government makes health policy. However, I am not sure whether the Secretary of State's function today was to be piggy in the middle, or tethered goat.

Given the publicity from the Secretary of State this morning, people will be surprised to discover that the promises on a six-month waiting maximum and the choice to be available thereafter will apply only to heart patients. That is welcome, but it is rather different from the spin being applied this morning by Ministers and members of the press. It is more about saving Ministers' skins than patients.

In 1998, the Chancellor told us that Labour would be spending £21 billion extra over the next three years. Indeed, the Prime Minister told us in July last year that the NHS had already benefited from the biggest sustained increase in its history. Has anyone noticed any difference? Patients are waiting longer to see their general practitioner, to be seen in accident and emergency departments and to have operations. Now we are told that simply spending more money will make a difference.

In his spending statement last year, the Secretary of State said that improved co-operation between health and social services would mean lower rates of delayed discharges from hospitals in all parts of the country."—[Official Report, 14 November 2001; Vol. 356, c. 807.] Yet, by the Government's own admission, the number of delayed discharges—or blocked beds—has soared. There are nearly 6,500 blocked beds in England alone. Some 15 per cent. of all beds in Birmingham are blocked, with 19 per cent. in Hampshire and 18 per cent. in Brent and Harrow.

Last year, the Secretary of State told us that the increased money would mean real progress in the Government's NHS targets. Waiting to be seen in accident and emergency departments would take an average of 75 minutes and the maximum wait for out-patient appointments would be three months. Yet the Audit Commission tells us that not only are things getting

worse, since 1998 they have been getting much worse. There are now 400,000 people on the waiting list for the waiting list. No progress has been made. The Labour party chairman said that, under Labour, the NHS is going backwards.

Last year, the Secretary of State said that £4 billion more would be available for front-line services. Some £3,732 million was made available. However, pay review body staff costs came to £500 million and to £250 million for non-pay review body staff. Medical price inflation was £300 million, the new pension contribution rates cost £372 million and the waiting times initiative came to £400 million. The maximum amount that was available for front-line services was £560 million. Indeed, if the national service frameworks cost more than the estimates, there may well have been a negative figure for core functions.

That is why the right hon. Member for Hartlepool (Mr. Mandelson) said in The Guardian today of the Government's spending: where is the evidence it will make the difference they want and not simply be frittered away, as many will fear, on bureaucracy and burgeoning wage bills? The government's political difficulty is that both this confidence and evidence have not been helped by a perception… that the government's response to underfunding is to say it will simply spend zillions more taxes on a system that looks as yet completely unreformed. Can the Secretary of State answer some specific questions? How much does he estimate, in today's settlement, for the costs of change? The Bill reorganising the NHS, which is passing through the House, will cost money. How much? What estimate is in the settlement for pay effects for the next year? What estimate is there for the cost of drugs currently being approved by the National Institute for Clinical Excellence? What estimate does he make for the cost of reducing working hours for doctors? What estimate does he make for the costs of waiting time initiatives? What cost does he estimate for the national health service frameworks? How much does he estimate will be spent by the NHS in the private sector in the coming year in what he describes as a more sensible relationship with the private sector? The Prime Minister has not been very good at his sums this week. I hope that the Secretary of State will do better when he gives us answers to those questions.

We can have no longer have confidence in what the Secretary of State promises. He talks about decentralisation, yet is centralising the financial relationships. He talks about choice, yet his party abolished extra- contractual referrals and fundholding, which gave genuine choice. He talks today of more money, yet 40 per cent. of NHS hospital trusts in England are forecasting a deficit this year, with their financial position likely to worsen in 2002.

Before the Labour party came to office, it promised that things could only get better. In the NHS they are actually getting worse.

Mr. Milburn

I am grateful to the hon. Gentleman—for what, I do not know, but at least for only a brief series of questions. I will run through the issues that he raised.

On delayed discharges and bed blocking, the hon. Gentleman is aware that we have allocated a further £300 million for social services. Indeed, my right hon. Friend the Secretary of State for Transport, Local Government and the Regions was able to announce further rises for social services for the next financial year. The interesting question for the hon. Gentleman is whether he is prepared to match those funding increases. He certainly failed to come up with the answer to that question before the election; perhaps he can do so now.

The hon. Gentleman asked where the money went during the last financial year. It has gone on paying for more staff, better wages and more buildings. An extra £300 million is being made available for new drugs for cancer and heart disease. We are making efforts to get rid of Nightingale wards in our hospitals. More operations are being carried out and waiting times are falling. There are improvements in cancer and coronary heart disease services. For the first time in 30 years, there are more hospital beds and a huge hospital building programme.

The hon. Gentleman asks about the overall costs of our programme for change—devolving power from health authorities to primary care trusts. In fact, that will save money: £100 million, which we will invest in child care services. He asks how much money we shall be committing to waiting times initiatives—as he calls them—and to building up NHS capacity in order that NHS hospitals can perform more NHS operations on more NHS patients: the amount will be about £400 million.

The hon. Gentleman asks about the role of the private sector. As he is aware, I announced at a recent meeting of the Select Committee on Health that we would be doubling the amount of money available for the NHS to contract with private sector hospitals to carry out more NHS operations. If local primary care trusts and strategic health authorities want to do more, that is a matter for them. The hon. Gentleman constantly urges devolution, so I hope that he will support it when it happens.

However, the hon. Gentleman did not express in his statement the attitude of the Conservatives towards the national health service. He did not say whether he supports the Leader of the Opposition and the shadow Home Secretary who called the national health service Stalinist. Is that the hon. Gentleman's view? Does he believe that the national health service is Stalinist? I remind him what the national health service is: the national health service—[Interruption.]

Mr. Deputy Speaker (Sir Michael Lord)

Order. The Secretary of State should be answering the questions, not asking them.

Mr. Milburn

I have answered a load of questions put by the hon. Member for Woodspring (Dr. Fox). I have answered the questions about NICE. I have answered the questions about how much money will be going into waiting initiatives—[Interruption.]—how much money is being invested in waiting.

The most basic question—the hon. Gentleman will not ask it because he dare not—is whether the Conservatives would match our spending plans. The answer to that question is that they would not, because they do not want to build up the national health service—they want to run it down.

Dr. Brian Iddon (Bolton, South-East)

The poor health of my constituents has been cited in several reports—from the time of the Black report to the present day. My right hon. Friend knows that I have constantly made representations to him and his predecessor about the fact that the Wigan and Bolton health authority was second from bottom on meeting funding targets in 1997. The position has not advanced greatly since then. Can my right hon. Friend give my constituents an assurance that those gross inequalities in financing will be addressed as a result of the excellent statement that he has just made?

Mr. Milburn

I am grateful to my hon. Friend for his comments. He has been a constant advocate of reform of the formula—rightly so. We all recognise that the current formula is far from perfect, although I suspect that it will be difficult to find a perfect formula. However, the changes that we have made mean that this year the Wigan and Bolton health authority will receive an increase in funding for local health services of 10.17 per cent.—the largest increase for any health authority in the north-west. I hope that that is a step towards addressing the concerns that my hon. Friend has constantly raised.

Dr. Evan Harris (Oxford, West and Abingdon)

The additional funding announced by the Secretary of State is welcome. It is right that such increases should come from general taxation and not from an increase in charging—either from new charges or an increase in existing charges. An honest approach would have been for the Government to say before the election that tax rises were needed, rather than skulking back just afterwards with that admission.

Is the right hon. Gentleman concerned that the only taxes that the Government have said that they will not put up to pay for that much-needed investment are fair taxes—direct taxes—and they will instead use indirect, regressive and stealth taxes?

I cautiously welcome the changes in the formula, because health inequalities need to be tackled and we need to ensure that living costs are recognised, but the Secretary of State seeks to have it both ways. He says that he wants to delegate more power to local primary care trusts, while taking a huge centralising decision yesterday so that all the guidance from the National Institute for Clinical Excellence—

Mr. Deputy Speaker

Order. The hon. Gentleman ought now to ask a question.

Dr. Evan Harris

Can the right hon. Gentleman defend his statement that he is decentralising when the Minister in the House of Lords announced that the first call on all this funding will have to be to pay for the NICE guidance? Does he recognise that maximum waiting times are arbitrary and that they create clinical distortion, as they force more urgent patients to wait longer while treatment is given to the politically prioritised patients, who are embarrassing to the Government? Of course, patients should not wait long, but that should be a clinical decision, not a political one.

Does the right hon. Gentleman accept that giving patients choice is of limited value when they do not have quality services to choose from, when they do not have access and when it is not fair? He talks in his document about patients choosing not to choose and preferring not to travel, but he will know that some patients are too sick to take up the option of travelling that he wants to provide. Can the right hon. Gentleman guarantee that the private sector will provide value for money, when he has to pay over the odds for agency-based staff and more expensive private sector staff? Does he recognise that there are no doctors and nurses hanging around waiting to do that work in the private sector? They will be recruited from the pool of doctors and nurses serving the NHS, further limiting capacity.

Finally, at the last Health questions, I asked the right hon. Gentleman how he will guarantee the quality of treatment abroad. How will he provide for relatives to travel abroad? Who will patients sue? Who will the Government blame? How will consent be given in other languages? The document gives no answer, except that suitable arrangements will be made to enable a relative or friend to accompany the heart surgery patient abroad. That is a new kind of rationing—people can be visited by only one friend or relative.

Mr. Milburn

That was pretty tame stuff. I am surprised by the hon. Gentleman's position on NICE and the financing of drugs, because I understood that the Liberal Democrats were concerned about the fact that NICE had sometimes made recommendations and not every health authority had taken them up. He is either against the lottery in care or he is not. Which is it? [Interruption.] He says that he is against the lottery in care. That is good news, so I look forward to hearing him support the Government's proposals.

On maximum waiting times, the hon. Gentleman knows as well as I do that patients' biggest concern about the NHS today is not the quality of care that they receive when they go into hospital, or even when they go to their GP's surgery, but the wait for treatment. It is proper that we address that. Of course, the most serious and urgent conditions should come first. That is why we have taken the right step, through the choice initiative, which is to make choice available to the patients who suffer from the most serious clinical conditions: those waiting for heart operations.

In my discussions with constituents and when right hon. and hon. Members have raised the issue, I have been struck too many times by the very real dilemma faced by people who have a bit of savings. Those who have bothered to save all their lives and then realise that they need a heart operation face the awful dilemma of either having to wait for treatment or to pay for it. The only choice that they have right now to get a shorter waiting time is to opt out of the NHS.

I believe profoundly that people should have the choice of being able to stay in the NHS, rather than having to leave it. Yes, that is new, it will be difficult to do, and the hon. Member for Woodspring (Dr. Fox) asked about the maximum six-month wait and so on. That is what we need to achieve, but we shall start with the heart patients and test other approaches and pilot schemes in other parts of the country in due course. We have to get it right. It is right to take a cautious approach but I hope that patients will welcome our initiative, which will be introduced from the middle of next year.

The hon. Gentleman is right to ask about value for money and the private sector. The answer is that we need to negotiate a good deal on behalf of patients and taxpayers, and that is precisely what we shall do. However, I could not stand here as the Secretary of State for Health and say that, for some ideological reason, we cannot use private sector capacity to treat NHS patients even if that capacity means a better deal for them. We are taking the right approach because what counts is the interests of patients. Their interests should come first.

Mr. Chris Pond (Gravesham)

Is my right hon. Friend aware that my constituents in Gravesham will certainly welcome his statement, especially his extension of the cost of living supplement to Kent? He will know that that will provide us with a real opportunity not only more properly to reward the staff who work so hard in the service, but to compete effectively with London boroughs in the recruitment and retention of staff.

My constituents will also welcome the fact that my right hon. Friend has shown clearly that he sees the NHS as a service with a future that is worth investing in as a publicly funded service free at the point of use and not as a Stalinist creation to be privatised and impoverished.

Mr. Milburn

I very much agree with my hon. Friend. When I referred in my statement to the representations that I have received, I was thinking of him and Members on both sides of the House who have made representations about Kent, Essex and other places. It is right that we close the gaps in the cost of living supplement.

I represent a north-eastern constituency, and I know that the cost of living there is different from that in the south-east. I also know that there are huge inequalities in parts of the north and the midlands that do not always pertain in all parts of the south, so it is important that we get the balance right.

On my hon. Friend's more general point, there is a big debate taking place in the country and it is the right debate to have. We recognise that, for decades, the NHS has not had the resources that it needs, and we need to plug the gap. The question is how best we do that. Labour Members say that the best way is investing in the NHS and reforming it. We do that through general taxation. People will conclude that the Labour party and this Government are the party of choice for patients in the NHS while the Conservative party is the party of charging for patients.

Peter Bottomley (Worthing, West)

Will the Secretary of State take this opportunity to pass on to all the staff in the NHS—the ancillary, nursing and medical staff—our thanks for what they do for 365 days a year? Will he also acknowledge that the pressures on patients are also pressures on staff?

As we do not yet know the allocations for our areas, we cannot talk about them even though, given the Secretary of State's description, we await them with interest. However, we know that he is not announcing new money today, because it was announced last week by the Chancellor and in the public expenditure statements.

How soon does the Secretary of State believe that there will be a significant change in the performance of health authorities with patients waiting more than a year for treatments? I think that I am right in saying that 19 out of the 20 authorities with patients in that position are, in effect, Conservative areas. For example, in the West Sussex and West Surrey health authorities, one in 10 patients wait more than a year. However, 19 out of 20 authorities where no one waits more than a year are Labour areas. I do not wish to make a party point about that, but how soon can that discrepancy be changed? It is not the politicians but the patients who suffer.

My final point is that, although we often talk about hospitals—

Mr. Deputy Speaker

Order. The hon. Gentleman has had more than his share of time. Before I ask the Secretary of State to reply, may I remind the House that this is a very important statement. An awful lot of Members wish to contribute and many of them will be disappointed unless everyone asks one question briefly. I hope that the answers will be brief too.

Mr. Milburn

I shall be very brief, Mr. Deputy Speaker.

I am sorry that the hon. Member for Worthing, West (Peter Bottomley) has not yet received the letter that explains the increases for his area. In West Surrey, the increase will be 9.57 per cent. and, in West Sussex, it will be 9.58 per cent. I think that he will agree that it is a pretty large increase in funding.

The hon. Gentleman raises considerable issues about how best we distribute NHS resources. We are trying to resolve the tensions by making major changes to the formula for the next financial year, and we are undertaking a fundamental review of the existing formula as a whole. I hope that the review will be concluded later next year, so that it can be implemented from the 2003–04 financial year. The review will need to pay particular attention precisely to some of the issues that he rightly mentions, such as how we get money to the areas of health need while recognising that different parts of the country have different health costs to absorb.

Mr. Eric Illsley (Barnsley, Central)

I warmly welcome my right hon. Friend's statement, especially the increased funding and the review of the formula on which it is based. He will be aware that Barnsley health authority is the lowest funded in Trent and one of the lowest funded in the country, despite our levels of need. Does he know that Barnsley faces a £2.1 million shortfall in April next year? Will he reassure me that today's settlement will allow Barnsley health authority to deal with that shortfall and have the money for the new initiatives that it wants to introduce?

Mr. Milburn

Yes, I very much hope so. In fact, Barnsley will receive an increase of 10.05 per cent., which is the second largest in the Trent region. I know that there are funding pressures on the NHS; as my hon. Friend knows, there always are. I hope that the statement, the allocation and the guidance that we will issue to the NHS will give enough room for local flexibility so that decisions can be made locally on how best to spend the considerable resources for the benefit of the community that he represents.

Mr. Christopher Chope (Christchurch)

Can the Secretary of State tell me why he has rejected and ignored the petition presented to the House by me on behalf of thousands of health workers in Christchurch, Bournemouth and Poole, which asks for the cost of living supplement to be extended to cover that part of south-east Dorset? Does he recognise that his announcement worsens the situation in which a nurse who lives in Christchurch, where housing costs are much higher than they are in Salisbury or Southampton, has a financial incentive to work in those cities rather than at the local hospital?

Mr. Milburn

I understand the concerns of the hon. Gentleman, his constituents and NHS staff who work in his area, but we have to proceed a stage at a time. This is the first year in which we have had cost of living supplements. We have not had them before, and certainly not under the Government of whom the hon. Gentleman was a member. We are extending them next year. They will continue to be evaluated and we will consider making further changes to them. The geographical coverage of the supplements and the professional groups who benefit from them will be extended if there is a good case for doing so.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

My right hon. Friend will know that south Cheshire, as an area that has been consistently underfunded for many years, will welcome the settlement. Will he ensure that if private health care facilities are used, and support for travel and other facilities is provided, the costs will be transparent, so that taxpayers know whether they are really getting good value for money or whether that money should have been spent in NHS facilities?

Mr. Milburn

Yes, there should be transparency. I am aware of the deficits and the problems that have been long apparent in south Cheshire. That is why this year we increased next year's funding by 9.86 per cent., which is a substantial increase in resources for my hon. Friend's health authority area. I am sure that that money will be used to good effect.

On the use of the private sector, we need to ensure that we get the best value for money, but it is also worth recognising, as I am sure that my hon. Friend does, that NHS hospitals often do not have the spare capacity. As a consequence, the patient and the Government face a dilemma: should we tell patients to wait longer or say that we will use the spare capacity for the benefit of NHS patients? I think that patients will conclude that the latter course of action is the right one to take.

Mr. David Heath (Somerton and Frome)

I am increasingly worried by the number of letters and calls that I get from my constituents, especially those who live in the area served by the Royal United hospital of Bath, where the normal waiting time for orthopaedics is 18 months. Although the extra £400 million is extremely welcome, will the Secretary of State explain whether that is additional to the normal allocations and, if not, will it be targeted at specialisms and areas that place the greatest stress on the system? In providing the element of choice, which he suggested in his statement, how will he avoid the pitfall that occurred in the education system, with people being displaced from their local and regional hospitals in favour of people from elsewhere?

Mr. Milburn

On the amount of money that is available to tackle waiting lists and the expansion in capacity, the £400 million is embedded in health authority allocations. Each health authority will get a fair share of that and be able to make use of it. We can use that money to increase capacity in a number of ways: to create additional operating theatres or beds, to employ additional staff and to make operations and treatment available outside normal working hours. There is capacity in the NHS and outside it, and it is right that we use that to carry out more NHS operations and thereby reduce waiting times.

The hon. Gentleman made a good point about choice. It is right to offer patients greater choice because, as he acknowledged, some hospitals have long waiting lists and others have short ones. The problem for patients is that they cannot exercise choice and, in effect, the hospitals choose the patients rather than the other way round. That is precisely what we want to change, and we will do so gradually, in a way that tackles precisely some of the problems and challenges that he raised.

Dr. Howard Stoate (Dartford)

May I tell my right hon. Friend that the so-called burgeoning wage bills mentioned by the hon. Member for Woodspring (Dr. Fox) are, in my constituents' opinion, much-needed pay rises to improve recruitment and retention of essential staff? How is my right hon. Friend progressing with his plans to set up fast-track elective surgery units throughout the country? Does he have any plans to build one in north-west Kent to service my area?

Mr. Milburn

I knew that there would be a sting in the tail. My hon. Friend is right—we cannot have it both ways. We cannot complain about some NHS resources going into pay packets. Few right hon. and hon. Members regard NHS staff as overpaid. Most NHS staff did not enter the service to make a mint; indeed, I know of no member of staff who entered the NHS with that aim. People enter the service for other reasons, and it is right that we reward them properly. We must have a fairer pay system to make sure that rewards go to the right staff.

Diagnostic and treatment centres are very important because, as my hon. Friend is aware, they will separate elective work from emergency work so that we can protect planned operations and, indeed, emergency work. Those centres are planned for different parts of the country. We will be inviting expressions of interest, not only from the NHS but from the private sector, so that we can locate those centres in parts of the country where we know that we need to do most to reduce waiting times for treatment.

Rev. Martin Smyth (Belfast, South)

The Secretary of State will be aware that the statement deals particularly with England and Wales, but this is a national health service, and the principles set out in his latest publication will be applied throughout the kingdom.

I thank the Secretary of State for the extension of patient choice. Relatives have been able to travel to visit those who have had operations, and most patients who have had serious operations do not want many visitors but relaxation and rest. May I press him to consult the Chancellor and those dealing with the devolved regions about the fact that the amount of money going to health care is going down, as a percentage, under the Barnett formula?

Mr. Milburn

Those issues are properly the responsibility of the Assembly and of my right hon. Friend the Chancellor. I am grateful for the hon. Gentleman's support for the extension of choice. That is an important principle, and we will consult on it with patient and professional groups and the NHS to ensure that we get it right. That change will not happen immediately, but the policy will be gradually introduced from the middle of next year. It will make a fundamental difference to the relationship between patients and NHS services. The NHS is there to serve the patient, and for the first time patients will have the opportunity to choose the NHS service.

Dr. Stephen Ladyman (South Thanet)

I should have thought that the statement would receive lavish praise from everyone in the House, but it should especially be praised by those of us with constituencies in east Kent. It recognises the additional costs in east Kent and even indirectly recognises the fact that many of my constituents can get to France more easily than they can get to London.

My only concern, which I would like my right hon. Friend to clarify, is that social services tell me that they do not get access to much of the funding going to health authorities, and yet it is their care for the elderly that could do most to unblock beds. Will he ensure that we strike the right balance between money going to social services and that going to the NHS?

Mr. Milburn

My hon. Friend makes an important point. He will know that resources for social services are to rise by 6.5 per cent. in cash terms for the next financial year, and that health services and social services now have the legal powers to pool their budgets or to form a single organisation. I would encourage more health services and local social services to do that—to pool their budgets, co-operate rather than compete with one another, and consider the possibility of forming local care trusts.

Like all of us, my hon. Friend recognises that our constituents do not care whether the funding comes from the health service or from social services. All they want is the package of care. Too often, health services and social services have been nudging resources and responsibilities backwards and forwards, when they should have been concentrating on the needs of the patient.

Mr. Julian Brazier (Canterbury)

Although I welcome the extension of the cost of living supplement to Kent, does the Secretary of State realise that all the options for east Kent's acute hospitals involve breaking up our cancer centre? Under any of the four options, complex chemotherapy will not be possible in Canterbury, as it is now, and radiology in the brand new linear accelerator will not be provided with the kind of medical cover that is available at present. Does he intend east Kent to become the first region to have its cancer centre closed?

Mr. Milburn

The hon. Gentleman has raised such issues with me before, and he knows that they are a matter for consultation. It is inappropriate for me to comment on them now. We will await the results of consultation, he will make his representations, as will others, and Ministers will make the appropriate decision. I am glad that he welcomed the increase in funding—an increase of 9.85 per cent. He should talk to those who represent his party on the Front Bench and ask whether they would be prepared to match those increases. I suspect that they would not.

Joan Ryan (Enfield, North)

First, at my local hospital, Chase Farm, there is a support group called Heart Throbs, who do fantastic work supporting people who need heart operations and their families throughout the process. The group will be extremely pleased with the news today about heart operations, as a number of its members have not survived while waiting for them.

Secondly, we often hear managers in the health service knocked, but many areas of the health service are under-managed. That prevents us from achieving the capacity necessary to provide the hospital services that our patients need. Some of the financing being made available today will rightly be spent on managing our health service. Does my right hon. Friend agree that we should pay tribute to the health service managers who choose to work in the NHS rather than in any other office, because they are committed to the NHS?

Mr. Milburn

I pay tribute to my hon. Friend's local voluntary organisation, which is clearly doing a good job of work. She will see in the consultation paper that we issued today our plans to involve the voluntary sector—such as those organisations offering care and support for heart patients—in the new initiative to offer choice to people. If people are to exercise choice, it is important that they do so in an informed way and that the options are fully explained to them. One of the best ways of doing that is by involving the voluntary sector, not just the statutory sector.

On my hon. Friend's second point, NHS managers do a brilliant job of work, sometimes in difficult circumstances. As we delegate and devolve resources and responsibilities from Whitehall and from health authorities to local primary care trusts, it will be important that the trusts have adequate management resources to ensure that they can fulfil their responsibilities and give local communities the services that they deserve.

Mr. Desmond Swayne (New Forest, West)

What satisfaction does the Secretary of State take from the ambition expressed by the Chief Secretary to the Treasury in the House earlier today to match by 2004 the European average health expenditure as it was two years before the end of the last century?

Mr. Milburn

I take some satisfaction from it because it is an ambition to expand the NHS, while the hon. Gentleman's policy is to contract it.

Mr. Kevin Hughes (Doncaster, North)

I warmly welcome my right hon. Friend's statement and congratulate him on securing a great deal from the Treasury; that must have been pretty difficult—[Laughter.] Opposition Members obviously have no experience of the Treasury; at any rate, they are out of touch with it.

What guarantees can my right hon. Friend give my constituents that, this time, more of the extra money going in reaches the front line? That will mean that my constituents will not have to wait, either to see a GP or for an out-patient appointment with a consultant.

Mr. Milburn

My hon. Friend makes an extremely good point. The settlement is very generous indeed and the extra resources available for the next financial year will make a real difference to patients and the NHS. As he said, it is important that the resources get to the front line and make a difference. When he sees the planning guidance issued to the NHS to accompany the announcement of the resources, he will see that it is a slim document with a limited set of priorities for local health services. They should have the flexibility to concentrate on the things that matter to patients: making sure that emergency services are available for people when they need them; getting accident and emergency waiting times down; and ensuring that the waiting times to see GPs and consultants are brought down. As he knows, those are ambitious plans, but we can achieve them only if we keep investing in and reforming the NHS.

Mr. Paul Goodman (Wycombe)

Does the Secretary of State believe, in connection with today's spending announcement and, indeed, future spending announcements, that spending on health would be better financed either wholly or partly by a hypothecated health tax?

Mr. Milburn

I am a keen supporter of funding the NHS through general taxation.

Mr. Andrew Miller (Ellesmere Port and Neston)

My right hon. Friend's statement will be most welcome in my constituency, following the statement earlier this week by my right hon. Friend the Secretary of State for Transport, Local Government and the Regions. Building on capital investments in mental health, oncology, day surgery and so on in the area, today's statement is a tremendous step forward.

I should like to ask my right hon. Friend about the plans for next year that he mentioned. As he is aware, in some polarised areas, the formulas that distributed money through the old standard spending assessment were hugely problematic because they dealt with averages rather than pockets of deprivation. Will he ensure that his new formula on distribution to primary care trusts does not make the same mistake as the Tories' SSA formula and addresses the needs of deprived communities?

Mr. Milburn

My hon. Friend makes an excellent point. It is important, as we put the new formula in place, that cash goes to the areas of greatest health need; we must do that. We have already made a health inequalities adjustment to the existing formula. I expect precisely the same considerations to be embedded in the new formula. It is important that health authorities, given the resources that are available to them this year, apply an appropriate pace of change policy to their local primary care trusts and the money that they get, so that we can begin to close the gap between those PCTs that are over capitation and those that are under capitation. In that way, we can get a fairer settlement, not just for health authorities but for the new PCTs.

Lawrie Quinn (Scarborough and Whitby)

Today's announcement will be welcome in North Yorkshire. Can my right hon. Friend tell the many people in my constituency who have difficulty finding an NHS dentist whether it will help them, in conjunction with the new PCT that will be set up at the beginning of next April?

Mr. Milburn

Substantial extra investment is going into North Yorkshire for investment in health services; there has been an increase of 9.84 per cent. for 2002–03, which is a big sum of money. It will be for local PCTs and the strategic health authority to decide how best to deploy that money. Some of it is earmarked for national priorities which, we believe, are patients' priorities: waiting times, primary care, and investment in cancer and coronary care. But the overwhelming bulk of resources will be deployed by local PCTs and health authorities. They must address the pressing health needs of their local communities. If there is a need to invest in dentistry, they will have to look at that.

Roger Casale (Wimbledon)

I thank my right hon. Friend for his statement and for the massive cash injection that he has given to Merton, Sutton and Wandsworth health authority, which serves my constituency. Some years ago, after years of being starved of resources by the Tories, that health authority published an annual report entitled "The River Runs Dry", simply to get its message across. He is absolutely right to say that, as we build capacity in south-west London by investing in more nurses, doctors and surgeons, it is vital that we take forward fundamental reform of the way in which the NHS identifies and responds to health care priorities and needs in our local communities.

Does my right hon. Friend agree that there is a special responsibility on some of the new organisations that are being called into existence by his reforms within the NHS family—such as the Nelson and West Merton primary care trust in my community—to work with community health trusts, which will be wound up because of the reforms? We must ensure that the new organisations pick up the good experience and expertise within existing organisations and, at the same time, develop their own best practice and spread it to other organisations in the local health community.

Mr. Milburn

I very much agree with my hon. Friend's comments. Substantial investment—about 9.8 per cent. growth in the next financial year—is going to the local health service in his area. It is very important that that money is used wisely and well. We shall seek particularly to ensure that strengthened partnerships between local primary care trusts, local government and the private and voluntary sectors provide first-class services to patients.

The national health service cannot do it alone. As we know, health and social services are two sides of the same coin, and the work of the national health service—in conjunction with that of the private, voluntary and local government sectors—is equally important in resolving some of the health inequality and deprivation problems that exist in my hon. Friend's constituency, as they do in all hon. Members' constituencies.