NHS Plan

HC Deb 18 April 2002 vol 383 cc714-30 1.16 pm

The Secretary of State for Health (Mr. Alan Milburn)

With permission, Mr. Deputy Speaker, I wish to make a statement on the next steps on the NHS plan. I am today laying before Parliament a Command Paper setting out those next steps, copies of which have been placed in the Vote Office.

The NHS plan that we published in July 2000 set out a 10-year programme to rebuild and renew the health service in our country. It diagnosed the NHS problem as follows. The principles of the NHS are right—on this side of the House we believe in an NHS that is free at the point of use, funded from general taxation, and based on need, not ability to pay. But today's NHS is the product of decades of underinvestment. It is also the product of a failure to reform. Staff—the greatest asset that the health service has—work flat out in a system which still too much resembles that of the 1940s. The NHS plan set out a 10-year programme of investment and reform based on clear national standards, more devolution of resources, greater flexibility for staff and more choice for patients.

With the economy stabilised and the public finances sorted out, the 2000 spending review was able to give the NHS the largest ever real-terms increases in resources. Two years later, anyone who says that there are no problems in the NHS has clearly got it wrong, but those who say there has been no progress have also got it wrong. Yes, there is a long way to go—it is a 10-year plan—but those who point to an NHS black hole should in fact be pointing to dozens more hospitals, hundreds more beds, thousands more doctors, tens of thousands more nurses—and a better health service as a result.

In July 2000, we acknowledged that three years of sustained funding was not enough. My right hon. Friend the Prime Minister had already said in January 2000 that we needed to match European Union levels of spending. Yesterday, my right hon. Friend the Chancellor of the Exchequer put NHS finances on a sustained footing, not for three years, but for five. Years of failure to invest in the past are now being replaced with years of investment for the future. Today, I can tell the House what that investment will give us: 35,000 more nurses, 15,000 more doctors, 40 new hospitals and 500 primary care centres. As investment grows, so the capacity of the NHS will grow.

Investment in the NHS must, however, be accompanied by changes in the way in which the NHS works. Ours is not an unconditional offer. Without those reforms, we will not get the best use of the money for the taxpayer and we will not get the improvements in service for the patient. Where we have had the courage to invest, we must now have the courage to reform. Our formula is simple: investment plus reform equals results.

First, building on the national standards already in the NHS plan, we will strengthen the system of inspection and audit to improve accountability to patients and the public. Where more resources are going in, people have the right to know what they are getting out. We will therefore legislate to establish a new Commission for Healthcare Audit and Inspection to inspect and to raise standards in health care across our country. We are clear that we need higher standards in NHS hospitals and also in private hospitals.

The commission will assess the performance of every part of the NHS so that the public can see that every extra pound in the NHS buys something better for patients and gets something more for taxpayers. Similar arrangements will be made for social care. We will discuss the details of both with the National Assembly for Wales.

The new commission will be independent of both the NHS and Government, and more independent than the current fragmented system. It will report annually to Parliament, not Ministers, on the state of the NHS, its performance and, most important, the use to which it has put the extra resources. The Government should not be judge and jury of the NHS. The commission will be the judge, the British people the jury.

Secondly, we can go further in extending devolution in the NHS, building on what has been achieved. The health service should not and cannot be run from Whitehall. The NHS is delivered in hundreds of different communities by more than 1 million staff. The relationships are between the local patient and the local doctor; the local community and the local hospital. However, those relationships will not work properly until central control is replaced by local accountability. After 50 years, the time has come when the sound of bedpans being dropped in Tredegar should reverberate only in Tredegar.

With national standards and inspection in place, power, resources and responsibilities must now move to the NHS front line. When we came to office, GPs controlled only 15 per cent. of the total NHS budget. Today, primary care trusts, with GPs and nurses in the lead, already control half the budget. In only two years, they will control three quarters of it. Just as the new commission will report nationally, so primary care trusts will need to report locally on how NHS resources have been spent.

The best primary care trusts, like the best NHS hospitals, should enjoy greater freedoms and more rewards. We will therefore establish new foundation hospitals and foundation primary care trusts, which will be fully part of the NHS, but with more freedoms than they have now. They will have more powers, including a right to borrow, to expand their services for patients.

Thirdly, further to the new powers that we have given nurses and others, we will radically alter the way in which staff work and introduce a new system of financial incentives throughout the health service. We will put in place new contracts of employment, not only for nurses and other staff, but for GPs and, yes, for hospital consultants, too. Our objective is to liberate the potential of all members of staff, rewarding those who do most in the NHS and, crucially, improve productivity throughout the health service.

New incentives for individual members of staff will be matched by a new system of financial incentives for NHS organisations. The hospitals that can treat more patients will earn more money. Traditional incentives work in the opposite direction. Indeed, the poorest performers often get the most financial help.

We will therefore introduce a new system for money to flow around the health service, ending perverse incentives and paying hospitals by results. The incentive will be to treat more patients more quickly, and to higher standards.

Fourthly, patient choice will drive the system. Starting with those with the most serious clinical conditions, patients will have a greater choice about when and where they are treated. From this summer, patients who have been waiting six months for a heart operation will be able to choose a hospital, public or private, which has the capacity to offer quicker treatment. This level of investment means that we can grow NHS capacity as fast as it is possible to do so.

I can also say today that it is our intention to draw into this country additional overseas capacity so that we can further expand NHS services to NHS patients. As capacity expands, so choice will grow. Within three years, all patients, with their GPs, will be able to book hospital appointments at a time and a place that is convenient to them. The reforms that we are making will mark an irreversible shift from the 1940s take-it-or-leave-it, top-down service. Hospitals will no longer choose patients; patients will choose hospitals.

Reductions in waiting times to get into hospital must, of course, be accompanied by cuts in waiting times to get out. Older people are the generation that built the health service, and they have supported it all their lives. This generation owes that generation a guarantee of dignity and security in old age. Bed blocking denies both.

Mr. John Bercow (Buckingham)

Ah!

Mr. Milburn

The hon. Gentleman ought to get a grip.

In recent months, the extra resources that we have made available have reduced the numbers of elderly patients whose discharge from hospital has been delayed. I am grateful for the help that local councils have given us in addressing this problem. Here, however, the long-term solution is not just investment, it is reform. I can tell the House today that, to bridge the gap between health and social care, we intend to legislate, as they have done in Sweden and other European countries, to give local councils responsibility—from their 6 per cent. extra real-terms increases—for the cost of beds needlessly blocked in hospitals.

Councils will need to use those resources to ensure that older people are able to leave hospital when their treatment is completed. If councils reduce the current level of bed blocking so that older people are able to leave hospital safely when they are well, they will have the freedom to use those resources to invest in extra services. If bed blocking goes up, councils will incur the cost of keeping older people in hospital unnecessarily. There will be similar incentives to prevent hospitals from seeking to discharge patients prematurely. In this way, we will provide local councils with the investment and the incentives to improve care for older people.

Taken together, the NHS plan and the next steps announced today amount to the most radical and fundamental reform programme inside the NHS since 1948. I want to pay tribute to the staff of the national health service—not just the nurses, doctors and consultants, but all the staff in the different medical disciplines, the ancillary staff, the secretaries, the receptionists, the porters and the cleaners. They represent the very best of British public service and I believe that, as a nation and as a Parliament, we should he proud of the work that they do. I know and understand the enormous pressure that they are under as the NHS plans to make these big changes. But I know, too, that they share this basic goal: to rebuild the national health service around the needs of its patients.

This programme of investment and reform will mean that each year, every year, waiting times will fall. Last year, the maximum wait for a hospital operation was 18 months. Today it is 15 months. By this time next year, it will fall to 12 months. By 2005, it will be six months, and by 2008, it will have been reduced to three months. By then, the average waiting time for a hospital operation will be just six weeks. It is our aim that people will no longer have to face the dilemma of having to wait for treatment or having to pay for it.

As a party and as a Government, we are committed to providing opportunities to all in our society and not just to some, so there will be more effort to prevent ill health, as well as treating it. Twenty-five thousand lives a year can be saved by the investment we can now make in preventing and treating heart disease alone.

The balance of services will shift, with more patients being seen in primary and community settings, not just in hospitals. Social services will have resources to extend by one third rehabilitation care for older people. Councils will be able to increase fees to stabilise the care home market and secure more care home beds. More investment will mean more old people will have the choice of care in their own homes rather than in care homes.

Yesterday's Budget and today's reforms mean that the NHS plan will be delivered.

I want to make two further points. First, it is a 10-year plan, as we said in July 2000. By the time of the next election, there will be real and significant improvements. However, that cannot happen overnight. It takes seven years at least to train a doctor and up to 15 years to train a consultant. Expectations will be high—I understand that—but they also need to be reasonable, and people need to understand that a 10-year plan is exactly what it says. It will take time to be delivered in full. At least now, public and patients will be able to see improvements made stage by stage, independently of Government, audited, monitored and inspected.

Secondly, there is consensus in the country on one thing: Britain needs to spend more on health care. There is no mystery about why there are no waiting lists in Germany. It has spent more, and has done so for years.

We can debate endlessly the system of finance, but one thing is beyond debate: the level of finance has to be raised. Once that is accepted, the choice is not between a system funded out of general taxation, which results in higher national insurance, and some other system that comes for free. Importing the German system of social insurance would cost the equivalent of an extra £1,000 per worker per year, and the French system would cost £1,500 per worker per year.

Labour Members believe in the NHS in our heads as well as our hearts. We believe it to be the best and fairest system of providing true health insurance, because it is based on the scale of the person's need, not the size of their wallet. It is the best insurance policy in the world.

It is now for those who want to see the NHS not reformed but abandoned, and who routinely call it Stalinist, to say honestly what their alternative is, what it would cost and how much families and pensioners would have to pay for it.

Yesterday we made a choice, and we ask the British people to make the same choice. We are proud of the NHS and of the people working in it. We are giving it the money that it deserves. We are making the changes it needs. Investment plus reform equals results. We will be happy to be judged on them.

Dr. Liam Fox (Woodspring)

I am grateful to the Secretary of State for his statement. He is right: there is a measure of consensus in the House. We all agree that more money should be spent on health in the United Kingdom. We believe that health care should be available to all irrespective of their means. The Secretary of State's statement must be judged against the criterion set down by the Chancellor yesterday, when he said that the scale of long-term investment would be matched by the scale of long-term reform. Have we had today anything like the indication of long-term reform that comes anywhere close to the increase in funding announced by the Chancellor? Indeed, the Secretary of State's words mark quite a shift in the Government's position. He said in his statement: Without those reforms, we will not get the best use of the money for the taxpayer". However, the Chancellor told The Sun in November: I'm going to insist any additional resources must be matched by reforms so that we get the best value for money. There is not to be one penny more until we get the changes. We believe that reform is needed, but we are not willing to give the Government a blank cheque—especially after a statement such as this, high on waffle and low on detail. I should like the Secretary of State—yes, he can get his pen ready—to give us some numbers, and some of the details of what the plans actually mean.

First, let me ask about national insurance. What will the changes announced yesterday cost the NHS as an employer, and what will be the additional cost in taxes to a consultant, a senior house officer and a ward sister on average salaries?

Where will the new auditors come from to deal with the Secretary of State's new auditing system? Please let them not be the Prime Minister's cronies in Andersen! How many are envisaged, and how much will it all cost? Who will appoint the new auditors? Will they be free to set their own budgets? The last thing we need is a new set of bureaucrats. Perhaps the most important question is this: will the auditors be able to audit private hospitals? That is especially important when NHS patients are being treated in such hospitals. Will we see the Commission for Health Improvement and the National Care Standards Commission merge with the National Audit Office, or any potential mixture involving the three bodies? [Interruption.] I see that the Government Chief Whip is up to her usual intellectual standard today, although that is not saying much.

When it comes to the question of devolved power, the Secretary of State is pulling a confidence trick. He talks of more money being available on the front line, but he does not say that there are so many strings attached that those on the front line are not free to choose how to spend it. Last week I visited the chairman of a primary care group, who told me that of the extra £13 million made available last year only £55,000 was discretionary money that he could choose how to use.

Perhaps the Secretary of State can give us one or two more details about devolved power. He talks of devolved bodies being able to borrow. Where will they be able to borrow from? Will they be able to borrow from the markets? Will the borrowing happen with or without an underwriting by the Government, and how will this affect PSBR calculations?

The Secretary of State said that there would be New incentives for individual members of staff". What sort of individual financial incentives will those be, how much—typically—will they be worth, and at what level will they be negotiated?

I was delighted to hear the Secretary of State talk of money following the patient: I had thought that that was one of the phrases new Labour had banned. At least he is returning to some of the right ideas. But what exactly does he mean by "importing additional overseas capacity"? Who is being imported and from where, and how will the process be funded?

Perhaps the most appalling part of the statement related to bed blocking. For more than three years, the Government were warned about the consequences of their policy of running down care homes in the community. They were warned that when they lost beds in the community they would block beds in the NHS, and that they would see an increase in the number of cancelled operations and a rise in waiting lists as well as inappropriate care. What is the Secretary of State going to do now? [Interruption.]

Mr. Deputy Speaker (Sir Michael Lord)

Order. The Opposition spokesman must be given a fair hearing. We cannot have repeated sedentary interventions.

Dr. Fox

With respect, Mr. Deputy Speaker, some of the sedentary interventions were better than what we have heard from the Government Front Bench.

The Government are shifting the blame, which they always do. The blame for bed blocking now lies with local government, rather than with those who created the problem—central Government. The financial burden and the penalties will be transferred to local government: in other words, council tax payers will be fined for the Government's incompetence in terms of their care homes policy. That is a terrible indictment of this Government.

We seek detailed answers to those questions, because several things have become clear over the past 24 hours: that the Government now believe that one of the ways of helping recruitment and retention is to tax NHS staff more; that the Government have now returned to tax and spend: and that the third way and new Labour are gone.

When the Government came to power, they said no internal market, no money following the patient and no GP fundholding. Having broken their promises on taxes, they have now gone back to many of the reforms that they said in opposition they would never tolerate. They are admitting that they wasted five years for all those who use and work in the health service. They were wrong and we were right. The one word missing from today's statement was "Sorry".

Mr. Milburn

The hon. Gentleman either misunderstood or has not read our proposal on the new independent audit regime. In fact, it will mean less rather than more bureaucracy. We will put together the current arrangements, with the Commission for Health Improvement, the value for money work of the Audit Commission and the private health care work of the National Care Standards Commission, in one single new body. That will make for less confusion and bureaucracy in the national health service, with clearer accountability to the public.

The hon. Gentleman did not say one word about matching extra investment either in the national health service or in social services. It is a bit rich for him to bleat about bed blocking and problems in care homes—which exist—and not to commit his party to matching the extra resources that we are allocating to social services.

On the hon. Gentleman's question about borrowing, we will put in place a new prudential borrowing regime, along the lines of the one that we are considering for local authorities. The details are in the document.

On importing staff, we envisage bringing in spare capacity from abroad—from Europe. The hon. Gentleman is very keen on his travels in Europe. Normally, the purpose of travel is to arrive at a destination. This must be the only instance of travel narrowing the mind. His mind is made up. The challenge for him is threefold: will he match our extra investment, match the extra sources of that investment and match the reforms that we have outlined? The answer for all three is no.

The public will see that, rather than wanting to reform the national health service, the Tories want to abandon it. The hon. Gentleman gave the game away when, in his secret speech in Harrogate, he said that the Tories' strategy was first to talk down the national health service, and then to run it down, as a prelude to their real agenda of selling it off. That is not the right choice for the British people.

Mr. Kevin Hughes (Doncaster, North)

I warmly welcome my right hon. Friend's statement and the reforms that he outlined, but those who will be paying the extra taxes will want a copper-bottomed guarantee that their money will be spent wisely. They will want improvements to be made, and quickly. Will he assure me and the people outside who will pay the extra taxes that this massive investment will find its way to front-line services and not be lost in more red tape and bureaucracy?

Mr. Milburn

My hon. Friend makes an important and telling point. It is important that people who work in the national health service and the managers who are responsible for delivering care understand that the extra resources do not come for nothing—this is not an unconditional offer. The days have gone when public spending worked on the something-for-nothing rule. We are offering something for something and we expect big changes and improvements, but we do not expect them overnight. No magic wand can be waved and no silver bullet can be fired, but people have a right to expect a steady improvement year by year, as capacity grows and the NHS plan is implemented over 10 years, providing more staff, more beds, more buildings, new hospitals and new ways of working backed by the reforms that I have announced today.

When people put more money into the national health service they have a right to expect more out of it. That is why the new arrangements for audit and inspection, which are not supported by the Opposition, and the new obligations on primary care trusts are being brought into being as quickly as possible. Some will require legislation and some will not, but in my view it is important that taxpayers see that extra resources deliver real results for patients.

Dr. Evan Harris (Oxford, West and Abingdon)

On the rise in tax, including a not so brave 1 per cent. on top earners such as the Secretary of State—and the Prime Minister and Chancellor, who are leaving the Chamber to count their money—to give the NHS the funding boost for which we have been calling for years, we would like to resist the temptation to say, "I told you so", but we cannot. Nor can the people who have died while waiting, the patients who suffered poor care during years of underfunding and the elderly who are stuck in hospital and who will still have to sell their homes to pay for the personal care that they thought they would get on the NHS.

The funding is welcome, but it would be more welcome if the Secretary of State apologised for his five years of the 23 years of underfunding and the two income tax cuts, for which the Conservatives also voted, because without them we could be halfway through a 10-year programme of NHS investment rather than at the start.

If the Secretary of State is serious about reform, why does he not consider truly decentralising decision making to publicly and democratically accountable local decision-making bodies instead of simply decentralising the blame and centralising the praise?

On the new financial incentives for hospital performance and the distortions, if the Secretary of State really thinks that doctors and nurses will treat patients better if he stuffs their mouths with gold, he simply does not understand the motivation of public sector health care workers. Does he really think so little of doctors and nurses? If he believes that these new people's foundation, grant-maintained hospitals that give financial incentives for admitting, discharging, operating and not operating, and the creation of an accountant's paradise, will produce no clinical distortions and improve clinical care, he misunderstands doctors and nurses in the health service. He is moving from stethoscope to spreadsheet, and that will damage patient care.

On social services, it appears that the Secretary of State, like Conservative Front Benchers, has just discovered social services underfunding and bed blocking. He has announced that he will suddenly get a grip. Does he not understand that the 1.2 per cent. real growth between 1999 and 2001, as set out in the Wanless report, was grossly inadequate, as was the real-terms cut in social services funding in the previous two years? Is he about to insist that local councils not only punish council tax payers, but cut services to the mentally ill, the vulnerable young and the disabled to avoid his fine? The real-terms increase in funding is only 3.5 per cent. now, rising to 6 per cent. this year. That is around £200 million, which is grossly inadequate for the amount of underfunding in health services.

Finally, can he assure people in Oxfordshire facing £9 million in social services cuts in the fifth year of a Labour Government that they will not have to face more cuts this year? Unless he can make that commitment and unless he apologises, people will not believe that he is serious and the Government will appear even more arrogant than they have to date.

Mr. Milburn

The hon. Gentleman said that my right hon. Friends the Prime Minister and the Chancellor of the Exchequer have left the House, and I now know why they did so. If I were the hon. Gentleman, I would be very cautious about raising national social services funding issues, given that the Liberal Democrats are cutting such funding at a local level. Indeed, as I have told him before—he has failed to answer this charge—the biggest complaint that I heard on my recent visits to Liverpool and Sheffield was the cutting by Liberal Democrats of social services expenditure for the elderly, the disabled, people with mental health problems and vulnerable children; yet the hon. Gentleman has the temerity to complain about a 6 per cent. increase in social services investment.

The problem with the hon. Gentleman and the Liberal Democrats is that they always want more money but never want change. He must recognise what everybody else recognises: if we are to get the best from the resources and improve services for patients, investment and change must go together. It is about time that he learned that lesson.

Several hon. Members

rose—

Mr. Deputy Speaker

Order. This is a very important matter and many hon. Members are seeking to catch my eye. May we please have shorter questions, and perhaps shorter answers?

Tony Wright (Cannock Chase)

On any test, this is a defining moment for the health service, and I congratulate the Government on what they are doing. People simply have to make up their minds: do they want to rebuild the health service, or not?

The Secretary of State talked about giving a guarantee to heart patients who face a wait of more than six months, and about introducing a true insurance approach to the health service. Under such an approach, people pay in and they know what they will get out. In talking about making step changes and step improvements to bring down waiting times, can we not tell people that that is a commitment? Can we not say, "A commission will ensure that we do that, and we will give real patient guarantees, so that we know what you have paid in, and you know what you will get out"?

Mr. Milburn

On my hon. Friend's first point, the decisions relating to the Budget and the reforms were of course important. The simple observation—I hope that it is widely shared—is that if people want world-class health care, it has to be paid for somehow. The issue is not whether we pay for it but, I suppose, how. The argument and debate about that will continue in the weeks, and perhaps years, to come. When people examine the issues carefully—as we have done, and as the British Medical Association did in 2000—they will conclude, not on the ground of destabilising the current system, but on the grounds of principle and of values, that the national health service is the right way forward for the country. However, we must ensure that we grow the capacity, and I am afraid that we must make some big changes.

We want to grow the capacity in stages. The biggest capacity constraint is the shortage of qualified staff, be they doctors, nurses, scientists or therapists. We must be straight and honest with people: it will take time to grow capacity. It is no use the Opposition yelling about a 10-year plan. Yes, it is a 10-year plan, and it will take time to get there. As we improve services and cut waiting times, the offer that we can make to individual patients will of course improve. However, it is important that people understand that an enormous pot of money is now going into the national health service, but that it will be released in stages. We have to ensure that the NHS works for patients, and we will improve the services that they use progressively, rather than overnight.

Mr. Michael Jack (Fylde)

The Secretary of State has put great store by his improved audit arrangements, but who will set the criteria by which success will be judged? Will the auditors set it, or will he set it? In his statement, he also mentioned improvements in waiting times, but not for the first consultant appointment. What will he do to reduce targets for that?

Mr. Milburn

The right hon. Gentleman will be aware, as a Treasury Minister in a previous Conservative Government, that the Audit Commission works very independently. It has done a first-class job and its integrity and independence must be maintained at all costs in the new system. It decides what value-for-money studies it wishes to undertake and, similarly, the new commission will decide which studies it wishes to undertake. There are two forms of standard setting, including the new national service frameworks for cancer, coronary heart disease and mental health, which are drawn up between the Government, the NHS, clinicians who work in the NHS and patients who use it.

On the subject of out-patient appointments, I did mention the cuts in waiting times for in-patient treatment that are taking place. Getting the waiting times for out-patients down has been a long haul, but they are now down below the level that we inherited. As we grow the capacity, put the extra resources in and—crucially—make the reforms, we will continue to bring waiting times down so that by 2005 no one will wait more than three months for an out-patient appointment either.

Dr. Brian Iddon (Bolton, South-East)

Bolton has welcomed the considerable amounts of money that we have received for our health service and our social services department, but a problem remains. In 1997, we were 6 per cent. away from target funding. A letter that I received this week from the Under-Secretary revealed that the new primary care trust began its work 6.02 per cent. away from target funding, so the situation has not improved. I seek assurances for my constituents from my right hon. Friend that in the next five years the real inequalities that exist in areas such as mine will be addressed once and for all.

Mr. Milburn

My hon. Friend will be aware that a review of the way in which we distribute resources is being conducted, both in local government and in the NHS. As I have said before, I cannot give an absolute assurance for Bolton, but I recognise that the area has its fair share of problems, with high levels of morbidity and deep health inequalities. Our new formula for distributing growing NHS resources is designed to address such problems.

Mr. David Curry (Skipton and Ripon)

Will the Minister cast his mind back some five years, when the Labour Government introduced a whole new inspectorate system for local government called best value? That immense gendarmerie is now so complicated and complex that his Government are saying that they must start to dismantle it. What assurances can he give us that the inspectorate that he has announced today will not be such an enormous consumer of management time that it will divert people from the task of looking after patients? Does he realise that he has now announced a sort of amalgam of nationalised and local responsibility, so that nobody will any longer have the faintest idea of where the buck stops? Can he decide whether he or the people who know about it are running the NHS?

Mr. Milburn

For once, the right hon. Gentleman is remarkably confused on the issue. Normally, he is a beacon of light in a sea of darkness on the Opposition Benches. The position is clear. We will not have three bodies inspecting and regulating health care in our country. Instead, one body will inspect and regulate health care to common national standards, whether in the public or private sector, in primary care or in hospital-based care. Nobody, with the best will in the world—even someone with the right hon. Gentleman's creative accounting mind—can possibly make that add up to more bureaucracy when it will mean less bureaucracy.

The right hon. Gentleman knows as well as I do that we must get the right balance of national standards in a national health service, because the last thing that we want to do is to return to the position that the Government inherited in 1997, when there was a lottery of care for cancer services and drugs. We have put that right. What we have recognised, as I have been able to announce today, is that services have to be delivered locally. We need greater freedoms and more rewards for the best. We must step in where there are problems, but we must step back where there is progress.

Mr. Eric Illsley (Barnsley, Central)

Barnsley has exactly the same problem as Bolton: we are moving further and further away from our target funding, and that means a £6 million shortfall, which the primary care trust must address. I very much welcome what my right hon. Friend has said about the independent audit, but will it be empowered to compare health authorities throughout the country in order to show exactly where value for money is delivered, so that in areas such as Bolton and Barnsley, which administer their funding very well, we can benefit from the extra resources going into the service?

Mr. Milburn

The straightforward answer to that question is yes. That is precisely what it will be doing, so that people both locally and nationally, and particularly in this House, have an opportunity to judge how well different health services are doing in different parts of the country. That is a welcome step forward and a recognition that the national health service belongs not to me or even to the people who work in it, but to the British public, who have a right to know how well it is doing.

Rev. Martin Smyth (Belfast, South)

The Secretary of State is well aware that health matters have been devolved to Northern Ireland and Scotland. Can I have an assurance that the increase in health service funding will be allocated at the same level in Northern Ireland? I have to raise the issue because this is a national health service, and over the years Scotland, Northern Ireland and England have shared the situation, providing doctors, nurses and specialists.

I want also to press the Secretary of State on whether he is absolutely sure that there will be less bureaucracy under the independent inspection—or will fewer people do the job, which has not been done well in the past, and we will continue to suffer? The British people are the jury. They have been long-suffering, but are beginning to turn and become more demanding. They will still be demanding if we do not deliver.

Mr. Milburn

It is not really my responsibility to comment on issues either to do with Northern Ireland or to do with finance in Northern Ireland. However, my understanding of what my right hon. Friend the Chancellor of the Exchequer said yesterday is that the funding increases are not just for England but for other parts of the United Kingdom.

Inspection and ensuring that we have the right number of people in place is more than anything else a matter for the new independent commission; that will not so much be a matter for me. It must decide on the level of resources and the number of staff needed in order to do the work that it needs to do, which is about improving standards and accounting for where public money is spent.

Mr. Chris Mullin (Sunderland, South)

Is my right hon. Friend confident that he will have the full co-operation of the royal colleges and the British Medical Association in his effort to reduce waiting lists? He will be aware that those mighty vested interests have in the past been part of the problem rather than the solution. Is it true that the consultants are demanding a 29 per cent. wage increase in return for their co-operation? If it is, will he politely tell them that that is not on?

Mr. Milburn

I do not know about the specific figures but, clearly, negotiations are taking place with the BMA about the future of the consultant contract. There will no doubt be different points of view. It is important that people recognise that, although these are large increases in NHS investment, they must go to the right place so that we can improve services and, of course, motivate staff. As my hon. Friend will recognise, we require some profound changes—not just increases in the number of staff but changes in their working practices. We cannot have ancient, traditional demarcations among those working in the NHS standing in the way of improved patient care.

Mrs. Angela Browning (Tiverton and Honiton)

What is it about the Audit Commission that makes it insufficiently independent or professional to continue to monitor the outcomes of this Government's policy? Why is the Secretary of State dropping the Audit Commission in favour of a body that will be both judge and jury, setting targets and monitoring outcomes?

Mr. Milburn

The hon. Lady has not listened to what I have said; fair enough. Perhaps she can read my statement. I shall briefly explain. The commission will be more independent not less. At the moment, I appoint people to the Audit Commission. She might think that that is a perfectly reasonable, independent system; I do not. In future, the people appointed to the Audit Commission—the commissioners—will be appointed independently from me. What is more, the commissioners will appoint the new chief inspector, who will have overall responsibility for ensuring that standards and accountability work in the NHS.

Mr. Chris Pond (Gravesham)

Does my right hon. Friend accept that his statement will be warmly welcomed by my constituents, not least, I suspect, because one of the new hospitals that he mentioned is likely to be the community hospital in Gravesend? He will be aware that, despite quite substantial increases in resources, we have had considerable problems with social services in Kent. Will he give us an assurance that the annual report to Parliament on delivery in health services will include local authorities that, given the extra resources that they will be receiving, are failing to deliver effectively on social services?

Mr. Milburn

My hon. Friend makes an extremely important point. It is incumbent on all parts of the public services—particularly if extra investment is going into them, as it is into social and health care—to account for how money is spent and, indeed, for how standards are improving. As I said in my statement, just as we will have a new independent commission to ensure that standards are high and performance in the NHS is improving, so we will have a new independent commission for social services—effectively bringing together the social services inspectorate, which is currently part of the Department of Health, and the National Care Standards Commission. Once again, the new commission that will deal with social care inspection will be more, rather than less, independent than current arrangements.

Mr. Andrew MacKay (Bracknell)

Just how will the increases in national insurance contributions and taxation help the NHS in the Thames valley, where due to very high housing costs, we are suffering a desperate shortage of staff and difficulty in recruiting doctors, nurses and all forms of health professionals? Surely such increases will make matters much worse.

Mr. Milburn

All of that was taken into account in discussions on the Budget and the spending review. People are talking about £200 million for the NHS in increased national insurance contributions. To put that into perspective, it is worth remembering that the NHS will be getting an extra £5 billion. The question for the Conservative party is whether it backs that level of investment—yes or no? It is a very simple question.

Dr. Desmond Turner (Brighton, Kemptown)

I too congratulate the Secretary of State on his bold measures. I am particularly glad about the extra resources for social services because, as I am sure he will be aware, one factor that contributes to bed blocking, especially in my part of the world, is a lack of capacity in the private and nursing care home market. Will he consider encouraging where necessary public reprovision of long-term care beds?

Mr. Milburn

In the end, those decisions are best taken not by me, but locally. It will be a matter—[Interruption.] The hon. Member for Oxford, West and Abingdon (Dr. Harris) says no, but he is the one who continues to argue that the NHS, social services and local government are too centralised. Then, he rails against our saying that decisions are best taken locally. It is for social services and the health service to decide how best to spend the resources. There are many models of providing health and social care. Indeed, it would be good if there were more joint ventures between the public and private sectors precisely so that we could reap the benefits of both, and that way improve patient care.

Dr. Jenny Tonge (Richmond Park)

Will the Secretary of State assure the House that the extra doctors and nurses who he has trumpeted this morning will not be recruited either directly by the health service or indirectly through private agencies from developing countries that need them much more than we do?

Mr. Milburn

Yes, we are very clear that we will not be doing that.

Ms Dari Taylor (Stockton, South)

In warmly welcoming the statement, I ask my right hon. Friend how successful innovatory practices are being communicated, as there are many in existence. I bring to his attention the Medical Assessment Unit at the James Cook hospital in Middlesbrough. It is in the process of putting together a multidisciplinary, rapid reaction force—if Members will excuse the use of Ministry of Defence language—with outreach nurses and social services. It is effectively discharging 40 per cent. of patients who would otherwise have remained in hospital. This is an excellent piece of innovatory medicine—other hospitals are discharging only 10 per cent. of such patients. How are these good practices being communicated?

Mr. Milburn

First, throughout the health service and social services, as in my hon. Friend's area, there are many examples of innovation, reform, modernisation—call it what we will. The Conservative party would like to pretend that reform has not taken hold when in fact it has taken hold in all aspects of the health service. The way in which we ensure that we learn from best practice is straightforward. First, we now have a modernisation agency that can help people to improve their services. In that way, we take good practices out of the ghetto and spread them to all so that they are not just for the benefit of the few.

Secondly, it is important to get in place the right incentives. I believe profoundly that we cannot simply tell people to change but must provide the incentive for them to change. The truth is that there has never been a system using the right incentives in the national health service and perhaps in social services too. By changing the way in which money flows around the system, we are trying to put the right incentives in place so that those who do best get most money and those who do less well have an incentive to improve.

Mr. Christopher Chope (Christchurch)

The Secretary of State makes much of this independent inspectorate reporting to Parliament. Can he guarantee that when it does report to Parliament, there will be an opportunity, in Government time, to debate that report on the Floor of the House every year? Can he explain to my constituents how it will improve the morale of people who work in the national health service if their take-home pay is cut by national insurance increases?

Mr. Milburn

On the first issue, that is not a matter for me. I am trying to get rid of powers, not take them on. The Leader of the House deals with such issues. On national insurance contributions, I think that doctors, nurses, therapists, scientists and everyone who works in the national health service recognise that if we want world-class health care, we have to pay for it. The choice that we have made is to put the investment into the national health service. The choice for the hon. Gentleman, with respect, is whether he will match those extra resources.

Mrs. Joan Humble (Blackpool, North and Fleetwood)

I applaud the additional investment, especially in social services, and the announcement of additional resources to care for elderly people. That will certainly be welcomed by residents of Lancashire care homes and elderly people supported in the community. Will my right hon. Friend also discuss with local authorities the need to invest in children's services? There are increasing numbers of children at risk who need support and this is an opportunity to offer them that support.

Mr. Milburn

I agree with my hon. Friend. I am very aware of the pressures in Lancashire, which she has raised with me in the past. We have taken fully into account the problems and pressures that social services face not just in providing better elderly care services but in improving children's care services. I hope that there is an opportunity for social services to plan ahead with confidence for the medium term with a very generous settlement over three years that allows some of these problems to be addressed in a stage-by-stage way. I also hope that social services will recognise that the best way forward for children's care and elderly care is for the health service and social services to work more co-operatively together.

Mr. Richard Bacon (South Norfolk)

Does the Secretary of State agree with Mr. Stuart Emslie, a risk control expert in his Department, that the NHS loses between 16 per cent. and 20 per cent. of its budget each year through fraud and mismanagement? If he does not agree, will he tell us the correct figure?

Mr. Milburn

No, because he did not say that. The figures that the Conservative party bandy about include the costs to the national health service of staff who are off sick. I know that the NHS is a good service, but not even we have been able to solve problems universally of staff sickness for all our staff.

Jonathan Shaw (Chatham and Aylesford)

Although the chief inspector will be independently appointed, may I suggest to my right hon. Friend that one criterion for appointment might be not having been a chief inspector of any other public service?

I know of my right hon. Friend's commitment to mental health services. Waiting for treatment, either in hospital or in the community, can be debilitating for people with a mental illness and their families. Mental health is a primary problem in trying to resolve the issue of rough sleepers. Will my right hon. Friend make a commitment that the additional funding will be aimed at mental health services as well as all the other health services?

Mr. Milburn

It is very important that mental health services get their fare share of the additional resources. It is also very important, in my view, that we keep a clear eye on the key priorities for the national health service, not just to get waiting times down but to improve outcomes from cancer and coronary heart disease and to improve elderly care and mental health services. I say to my hon. Friend, in the spirit of friendship and also candour, that if we try to do everything at once, we will achieve nothing at all. It is very important that we keep focused on the issues that count.

Mr. Crispin Blunt (Reigate)

Before the Secretary of State imposes this new level of audit and inspection, will he undertake to read last night's Reith lecture on the subject? Will he tell my constituents why they should have any confidence in his NHS plan when he has shown himself prepared to corrupt the administration of government, compromise the health care of my constituents and the welfare of health workers in my constituency in order to promote the political interests of the Labour party?

Mr. Milburn

Frankly, those comments are beneath even the hon. Gentleman.

Shona McIsaac (Cleethorpes)

Is my right hon. Friend aware that many hundreds of cancer patients in Grimsby and Cleethorpes have to pay £5 to cross the Humber bridge to gain access to treatment in Hull hospitals? Will anything be done, using the extra funding, to make journeys to hospital much easier for those people? I am finding it hard to convince them that the NHS is based on need, not ability to pay.

Mr. Milburn

I was not aware of the problem that my hon. Friend raises. Again, such decisions are best taken locally rather than nationally. There will be scope, more freedom and, of course, extra resources, for local health services to decide what their priorities are. However, people in the health service must understand that the extra resources do not come easy; there are strings attached. Most importantly, the health service must understand that every penny of extra investment must be properly accounted for. I do not provide the extra investment, the taxpayers do, and they must have a good deal, just like patients.

Miss Julie Kirkbride (Bromsgrove)

I could not agree more with the Secretary of State when he says that the NHS cannot be run by Whitehall. He will be aware of the significant staff recruitment problems that exist in parts of the country. Can he clarify what new flexibility he is prepared to give to foundation hospitals and whether those hospitals will be able to pay in accordance with local labour market conditions as opposed to being constrained by national wage bargaining?

Mr. Milburn

As far as the foundation hospitals and pay systems are concerned, I think that the hon. Lady is aware that we are negotiating with the various trade unions a new system of pay called "Agenda for Change" for the national health service. It will seek to combine a national framework of pay with local flexibility. Foundations hospitals will be able to use those local flexibilities to give appropriate rewards to NHS staff.

Mr. Deputy Speaker

Order. It is important that we move on to the next business. However, we will be returning to debate this subject on Tuesday of next week.