HC Deb 15 January 2002 vol 378 cc155-69 3.32 pm
Dr. Liam Fox (Woodspring) (by private notice)

To ask the Secretary of State for Health if he will make a statement about his proposal to allow NHS managers to establish non-profit-making companies to manage hospitals, as outlined in today's edition of The Times.

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

The NHS plan that we published in July 2000 set out how power and resources would be devolved to front-line NHS services. It said: NHS organisations will be rewarded with greater autonomy and national recognition including greater freedom to decide the local organisation of services.

The proposals for foundation hospitals are rooted in the NHS plan. They come about as a consequence of discussions that we have had with the best performing NHS hospitals. Those hospitals are already beginning to get greater freedom and more resources. For hospitals which are not performing well—the poorest performers—we will consider franchising their management to bring in fresh blood.

The best performers, however, have now put to us proposals for a change in their structures, not to take them out of the national health service but to have greater freedom to improve care for NHS patients as part and parcel of a modern health service. These proposals clearly draw on precedents in other parts of the public sector such as schools or further education colleges and the growing interest that there has been in recent years in public interest companies and mutuals as an alternative to either purely state-run public or shareholder-led private structures.

Our three-star hospitals have now asked us to look at whether such models could be applicable to local health services to form foundation hospitals within the health service but run more independently than now. I think it right that we should examine the case that they have made.

We will consider the applicability of foundations not just to the best hospitals but to the best primary care trusts. Over the next few months we will be working with them to examine the legal, financial, governance and accountability issues.

While this will only ever be voluntary not mandatory for the health service's best performers, alongside new incentives, more devolution and greater patient choice it will help make for a different sort of NHS: where there is more diversity and less top-down control, with a framework of national standards in place and a means—[Interruption.] The right hon. Member for Bromley and Chislehurst (Mr. Forth) is getting very excited—it is easily done. With a framework of national standards in place and a means of independently inspecting them, there is now the opportunity to set free the best hospitals and the best primary care trusts to improve NHS care for NHS patients.

Patients will remain NHS patients, treated according to NHS principles, with care that is free and available according to need—not as some Members advocate, according to their ability to pay. Those are the right values for the NHS. It is not NHS values that need to change, but NHS structures.

Dr. Fox

Only a few weeks ago we were told by the Prime Minister that we were at the end of the era of spin, but here we are for the second day in a row having to drag a Secretary of State to the House. In The Times this morning, the Secretary of State tells us that it was the most important speech in his time as Health Secretary. If that is true why was that speech not made to the House of Commons? If it is not true, it is indicative that the spin goes on.

Well, the right hon. Gentleman has the headlines and we rather like those headlines; or in new Labour speak we rather like the direction of the journey—it is in our direction of travel. There is more than a little suspicion that this is yet another example of the Secretary of State, when under pressure, adopting the "Blue Peter", 'Here's one I made earlier'" approach to policy, so let us see if we can get some details.

The Secretary of State wants to give management more freedom—but does he? Management would generally assume that four things were needed to give proper freedom: to be able to borrow from the markets; to set strategy; to set pay and conditions; and to contract for services independently. How many of those will be given in the foundation hospitals?

In his speech this morning the Secretary of State said, in reference to further education colleges, that buying and selling of assets is one of their freedoms. Will these foundation hospitals be able to buy and sell assets? How many of these hospitals does the Secretary of State intend to see by the time of the next general election? Will they still be subject to the star rating? What if they lose a star? Will they be brought back under central control? If so, how—and what legislation will be required? How much freedom will they have in determining pay and conditions?

The Secretary of State said in his speech that four functions will be left for the Department of Health: setting strategic direction; the integrity of the whole system through IT and staff training; developing the values of the NHS through education, training and policy development; and securing accountability for funding and performance, including reports to Parliament. There was nothing at all about pay and conditions as one of the functions for the NHS, so perhaps the right hon. Gentleman can enlighten us on that point.

What will any freedom on pay and conditions mean for the current negotiations under way with GPs and consultants over their contracts, or the 18-month negotiations with the nurses over their pay and career development? What does the Secretary of State mean when he says that we will have to find new ways of money flowing around the system to sharpen incentives to respond to patients"? Is that money following the patient, or is that money following the patient? That is exactly what the Secretary of State set out to abolish.

When it comes to asking for meanings, what exactly did the Secretary of State mean when he said that we need: Customisation wherever it can be made but standardization where it is appropriate. What on earth did he mean when he said that we need: Management through hierarchy alongside management through networks? We have not the faintest idea what any of that meant.

This response has not been thought out; it is a panic response by the Secretary of State to orders from No. 10 to try to regain the agenda on the public services. We have had the Health Bill. We have had the NHS plan. Today we have before us the National Health Service Reform and Health Care Professions Bill and now we have the master plan. We are used to having votes of no confidence in Ministers but not usually by themselves in their own Bill on the same day that they are considering it.

This is not about the future of the NHS: it is new Labour, new year, new panic, new policy.

Mr. Milburn

The hon. Gentleman made five substantive points. As for being dragged to the House, I understand that the House will have an opportunity this afternoon and this evening to discuss NHS reform in copious detail. [HON. MEMBERS: "No."] Tomorrow, on a Liberal-Democrat motion, hon Members will discuss health issues and, on Thursday in Government time, they will have the opportunity to discuss changes to structure and culture in the NHS, when we produce our response to the Kennedy report on the inquiry into events at the Bristol royal infirmary.

The hon. Gentleman says that he could not understand the speech that I made this morning. If he spent a little more time talking to NHS staff at home, rather than running down the NHS abroad, he might be able to keep up. As for the issues that the hon. Gentleman raises, yes, we have set out today proposals for greater independence for the highest performing hospitals. He asks how many. I said in my statement and, indeed, in my speech that that would be a matter of voluntary discretion. It would depend on the number of hospitals or primary care trusts that wanted to move in that direction.

The hon. Gentleman always urges on me less day-to-day management, less interference and less centralisation, but he does not seem to like it when it happens. As for the sort of powers, resources and responsibilities that the foundation hospitals and others—the primary care trusts, too—will have, as I said in my statement, we will discuss those issues precisely with the primary care trusts and the hospitals. As for pay and conditions, I believe in a very simple principle: if NHS hospitals that have done really well and are performing the best in the NHS, providing high-quality care to NHS patients, want to give extra rewards and more pay to the staff—whether a porter or a cleaner, let alone a doctor or a nurse—whom they employ, they should be free to do so.

The hon. Gentleman seemed to allude to the internal market. I shall tell him the difference between these proposals and the internal market. The internal market involved using one club—competition—to try to lever up standards. It did not induce competition, and it certainly did not lever up standards. The difference is that we now have in place a clear framework of national standards, national service frameworks, the National Institute for Clinical Excellence, which evaluates new treatments and new drugs as they come on to the market and into the NHS, and an independent means of inspecting them.

We want to see high standards everywhere, but we also recognise that the NHS cannot be subject to day-to-day running from Whitehall, as it has been for 50 years; it has to have power, resources and responsibilities located in the hands of doctors, nurses, porters, cooks, cleaners and mangers—the people who actually deliver NHS care to NHS patients. The big divide in British politics is between those of us who say that NHS values should be maintained, but its structures changed and the Conservative party, which says that NHS values must be abandoned and that the people must pay for their treatment.

Mr. Frank Dobson (Holborn and St. Pancras)

I am reluctant to say what I am about to say or to ask the questions that I am about to ask, but will my right hon. Friend bear it in mind that the fact that some NHS hospitals are outstandingly successful demonstrates that NHS hospitals are capable of doing a first-rate job without their management being franchised to the private sector? Will he also bear in mind the fact that private sector health care managers are unlikely to have appropriate experience, as most private hospitals are small, low-tech and have few, if any, emergency admissions compared with a very large NHS teaching hospital, which probably has more emergency admissions, involving great complexity, than the private sector hospitals' total admissions, and perhaps 1,000 doctors on their staff? Will my right hon. Friend guarantee that absolutely none of those outside managers come from such private sector disasters as Railtrack, Equitable Life, Marconi, or the accountants, auditors or management consultants associated with those private sector disasters?

Finally, will my right hon. Friend at least give some thought to the fact that the public service ethic managed to maintain the national health service through all the Tory years of underinvestment and malignant policies? In those circumstances, would it not be right to give the public service ethic the opportunity to flourish with the extra resources that are now available?

Michael Fabricant (Lichfield)

That was an endorsement, wasn't it?

Mr. Milburn

I am glad that the hon. Gentleman is alive and awake for once. [Interruption.] God, Conservative Members are in a tetchy mood today—they really are. I understand why the hon. Member for Woodspring (Dr. Fox) is tetchy; he has been brought back from his inter-railing holiday in Europe. He is bound to be a bit uncomfortable. However, I do not know about the rest of them.

As far as my right hon. Friend's points are concerned, yes, the NHS has very many outstanding managers. There is absolutely no doubt about that. He has some of them in his area; thankfully, I have some of them in my area, too. It is right that NHS managers should be given opportunities, particularly when they are running high performing NHS organisations that have a track record of success. However, if we have poorly performing NHS organisations, it seems to me highly appropriate that we use the expertise of such managers and garner that for the benefit of other NHS patients.

However, we must also look more broadly than that. What patients everywhere—and not just those in some places—deserve is the best quality management and the best quality services. I simply do not believe that good quality managers begin and end at the public sector's door. We should consider using high-quality management wherever it exists to improve care for NHS patients.

On my right hon. Friend's point about Railtrack, he is right. What the Conservatives did when they sold off the rail network was catastrophic. [Interruption.] My right hon. Friend asked about Railtrack. [Interruption.]

Mr. Speaker

Order. There was a request to hear the Secretary of State and we must give him a hearing. [Interruption.] Let me decide whether he is in order.

Mr. Milburn

I know that Conservative Members do not want to hear about Railtrack.

Mr. Speaker

I do not want to hear about Railtrack, either. [Laughter.]

Mr. Milburn

In relation to my right hon. Friend's question, the fundamental difference between what the Conservatives did with the railway network and what we are proposing is that they sold off lock, stock and barrel public sector assets and sold them to the highest private sector bidder. There is no question whatsoever, under any of these proposals, of selling off NHS assets. What we are doing is franchising the management of NHS organisations that are not performing as well as they should.

I could not agree more with my right hon. Friend when he says that the public service ethos should be maintained at all costs. I think that the best way of strengthening the public service ethos is to get the investment in, but to make some fundamental reforms too.

Dr. Evan Harris (Oxford, West and Abingdon)

Is not the Secretary of State creating a two-tier system of hospitals? The first is for those hospitals that he judges to be performing well and to which this most centralising of Government claim to be giving independence. The Commission for Health Improvement is being charged with inspecting these hospitals based on performance criteria laid down by him—political hoops that hospitals will be asked to jump through. The commission will have to examine how well they are doing not whether it is worth their time doing that. In providing freedom to pay more to staff in better-off hospitals that are doing well, is not the danger that they will simply recruit staff at the expense of the poorer hospitals that have been even more under-resourced by the Government?

On the so-called failing hospitals, does the Secretary of State recognise that, by his criteria, hospitals could be judged as failing because they put patients and clinical priority before politics and political targets? They will be judged to be failing if they suffer from the Government-induced crisis of bed blocking due to underfunding of social care and the crisis in the care sector.

The Secretary of State used a comparison with schools. Does he not recognise that naming and shaming to shift the blame from him creates a crisis in confidence that will worsen staff retention in the health service? If it comes to bad managers being removed, he need look no further than himself as the worst manager of a centralising Government who try to micromanage the whole health service.

Mr. Milburn

Thanks for the glowing endorsement. The hon. Gentleman raised, I think, only one substantive issue—who would determine the ratings of individual hospitals. He could have mentioned primary care trusts, too. That will be a matter not for Ministers, but for the independent Commission for Health Improvement. No doubt he will have an opportunity to raise those issues this afternoon, either on Report or Third Reading of the National Health Service Reform and Health Care Professions Bill.

On paying staff the same, I do not know about the hon. Gentleman, but I spend part of my week in the north-east of England and more than half of it in the south-east, and I have noticed a big difference between the two. I do not know whether the hon. Gentleman has also noticed it, but house prices are different, the labour market is different and, by and large, there is full employment down here. To argue that somehow or other we should simply pay everyone the same regardless of the labour market conditions is absurd.

The hon. Gentleman knows that trusts in his area are rightly paying staff more in order to recruit doctors, nurses and other staff. He seems to be arguing for a uniformity that we have not seen for many years in the national health service, but all that would do is plunge NHS trusts in many parts of the country into growing, not diminishing, problems of recruiting and retaining staff.

Miss Julie Kirkbride (Bromsgrove)

May I give a broad welcome to the Secretary of State's comments? May I also congratulate him on finally understanding that if we are to have a health service fit for the 21st century, the old Stalinist structures have to be dismantled?

We can understand why the right hon. Gentleman did not want to come to the House today, given the grim faces of Labour Back Benchers. Will he spread a little more happiness by telling us whether, in the negotiations that he intends to have with health service managers and workers and the private sector, he will also consult the health service trade unions on his proposals to end national pay bargaining?

Mr. Milburn

I do not think that the hon. Lady is up to date. We have been negotiating with trade unions, as the hon. Member for Woodspring said, for the past two years on a new national framework for pay and conditions in the NHS which would also allow for local flexibility. The hon. Lady called the NHS "Stalinist"—

Mr. Simon Burns (West Chelmsford)

No, she did not.

Mr. Milburn

She did; Conservative Front-Bench spokesmen were not listening to their Back-Bench colleague. That is precisely what the hon. Lady said. It seems to me that the Conservative party is becoming more like a modern-day Trotskyist sect. Condemning everything it does not like, including the NHS, is Stalinist.

Mr. David Hinchliffe (Wakefield)

As a moderniser, I welcome the idea of devolving decision making nearer to the patient. My concern with the Secretary of State's proposals relates to the clear parallels that can be drawn with what the Conservative Government announced in the early 1980s in terms of the introduction of the internal market and the consequences of that, and the introduction of private sector management. Some of us suffered from private sector managers in our localities. Bearing in mind the concordat that establishes the relationship with the private sector and what the Secretary of State proposes for management, can he tell those of us who have anxieties about the direction that the Government are taking whether any limits will be placed on the involvement of the private sector in the NHS under the Government?

Mr. Milburn

I know that my hon. Friend has a well-deserved reputation as a Labour moderniser on such matters. I agree that devolved decision making is the way forward. The right combination of national standards needs to be in place. However, we have to accept that none of us as Ministers delivers one iota of care. The care is delivered outside Parliament by doctors, nurses, therapists, cleaners, cooks, porters, managers and other staff. We surely need resources and power to be located in their hands rather than ours.

There is a fundamental difference between the situation that my hon. Friend describes in the early 1990s and now. It is worth remembering how far we have come in just four years. When we got into office there were no national standards, no means of inspecting standards, no means of levering in good practice to replace bad and no means of evaluating new drugs and treatments when they came on to the market. For the first time, we have national standards and independent inspection, and it is right and proper that within that framework the NHS should improve services for patients.

The crucial limit to private sector involvement is the fact that, as I said in my opening statement, I profoundly believe, as I know my hon. Friend does, in an NHS that provides care according to the right principles, the right values and the right ethos. I believe that care should be available according to the scale of people's needs, not the size of their wallets. That is the position on the Labour Benches; I am not sure that the same is true on the Opposition Benches.

Glenda Jackson (Hampstead and Highgate)

As another moderniser, may I ask my right hon. Friend whether he agrees that delivering high-quality services to patients is, in the main, dependent on a well skilled and highly trained work force? If managers are brought in from the private sector, how will he guarantee that they do not replicate the activities of their colleagues in the wider world who have, in the main, turned their backs on in-house training and simply meet their staffing needs by poaching from others?

Mr. Milburn

I do not think that we should try to kid ourselves. In the public sector there are good managers and, sadly, some pretty poor ones, just as there are good and bad managers in the private sector. The best managers, whether they are in the public or the private sector, recognise that if they are to provide improved services to customers or, in this case, to patients, they must invest in their staff and make sure that there are more staff and that they are skilled. That is what I expect to see in all parts of the public services, and it is certainly what we need in the NHS.

Mr. Julian Brazier (Canterbury)

In between all the new plans, initiatives and restructuring, can the Secretary of State find the time to visit the Kent and Canterbury hospital? I understand that last Friday, just before my arrival at the accident and emergency unit, the hospital had squirrelled away most of the people waiting on beds in corridors. Eighteen remained, some of whom had very serious conditions and some of whom had been there for over 24 hours. That is totally unsuitable care. Ten consultants appeared, at a few hours' notice, to say that the crisis in capacity cannot go on. When will the Secretary of State take action on the crisis in acute health care in east Kent?

Mr. Milburn

The hon. Gentleman talks about a crisis in capacity, but he really must have a word with his Front-Bench colleagues because the way to solve the crisis in capacity is to invest. That is what we are committed to doing, and it is a shame that the Opposition are not.

Lynne Jones (Birmingham, Selly Oak)

I agree with my right hon. Friend that the NHS is too big to be managed from Whitehall and that it should have access to the best expertise. What concerns me is accountability. There are two ways of getting accountability. The first is through competition, but genuine competition requires a surplus of provision, so that patients can choose who provides their service. Even if that were possible in the NHS, surely it is not desirable purely because of considerations of efficiency and expense. The second way to get accountability is through elected representatives, but sadly it seems that that is not an option, as is demonstrated by the National Health Service Reform and Health Care Professions Bill, which we will be considering later today. What will my right hon. Friend do about the accountability deficit in the NHS?

Mr. Milburn

On the first point, my hon. Friend is right to say that the only way to expand informed choices for patients is to increase capacity in the NHS. As she is aware, from July this year we will be able, for the first time, to give direct choice to NHS patients. Those who have been waiting six months for heart surgery will be offered the choice of continuing to wait, probably longer, for treatment at their local hospital or, provided that it is clinically appropriate, travelling further to get treatment elsewhere. That will not only increase public confidence in the NHS but drive change and provide incentives for hospitals to treat more patients to higher standards. As for issues of governance, my hon. Friend is right that NHS trusts have quite wide-ranging powers of autonomy, but they are constrained by the current governance structures. Effectively, we appoint five non-executive directors and blithely assume that that is representative of the community's interests. Like my hon. Friend, I believe that that is not necessarily so. We shall want to discuss with the best performing hospitals and primary care trusts whether we can change the accountability structures for the best performers to strengthen the relationship between local health services and the local communities that they serve.

Mr. John Redwood (Wokingham)

Will the Secretary of State confirm that under his interesting scheme some NHS hospital trusts will be able to buy and sell assets on their own account without seeking Government permission and will be able to borrow money against those assets without needing Government guarantees or permission? Is that the position?

Mr. Milburn

As for buying and selling assets, NHS trusts can currently do so. However, under the current regime, which, I recall, was initiated under the right hon. Gentleman's Government and which we have continued, an NHS trust that sells assets of spare land, for example, is not allowed to keep the proceeds for itself. We should consider a different regime for the best performing hospitals; if those that have spare capacity, land and assets want to sell them, they should get the proceeds.

Ms Julia Drown (South Swindon)

Can the Secretary of State assure the House that discussion of organisation and reorganisation in that fashion will not divert attention from the key task of delivering the NHS plan? To that end, can he assure the House that he will debate those issues with the NHS modernisation board and patient groups which, I understand, have not discussed or floated them to date?

Will my right hon. Friend also explain to the House the difference between franchising management and dealing properly with NHS management? There are procedures to deal with managers who do not perform; I hope that the House agrees that that minority should be properly dealt with and disciplined if necessary. How does my right hon. Friend envisage managing trusts in which, say, 80 per cent. of the managers are good but 20 per cent. are bad? At what point should the whole lot be franchised out, thereby losing some very good NHS managers along the way?

Mr. Milburn

As I have said, I agree with my hon. Friends that the NHS has some very good managers; I know that it is unfashionable to say so, but that is what I believe. We have some outstanding managers who do a difficult job in extremely difficult circumstances; they manage large, complex organisations and, as we can see from some of the best performing hospitals and primary care trusts, they do so admirably. However, I am afraid that, as in any public service, there are always some that are good, some that are indifferent and sadly, some that are just not up to scratch; I do not think that we should hesitate to say so.

As my hon. Friend the Member for South Swindon (Ms Drown) will know from her own constituency, it is all too often the case that the poorest services end up being in the poorest communities. We should not sanction that situation; we should have the courage of our conviction and say that where management is not up to scratch, we are prepared to change it. The management, in this case, is the leadership of the organisation; we have chief executives and directors of finance to provide leadership in those organisations. If it is not being provided and services are poor, there have usually been persistent problems with organisation, culture, attitude and so on over a period of many years. We should say that that is not good enough and that we are prepared to change it.

Mr. Peter Luff (Mid-Worcestershire)

On the earlier subject of Trotskyism, may I politely remind the Secretary of State that he is the real Trotskyist because he is keeping the national health service in a state of permanent revolution? However, if the Government abolished grant-maintained schools, why are they introducing grant-maintained hospitals?

Mr. Milburn

Just as a small historical correction, if my memory serves me right, permanent revolution was more a feature of Maoism than Trotskyism. I am willing to admit that I could be wrong; the hon. Gentleman may be much more of an expert than I am, or was, on that sort of issue. If he cares to look at public services, whether in FE colleges, schools or whatever, he will see that we have a national framework of standards and diversity of provision. That is delivering the goods in improved standards in education, better outcomes for children and so on. We need to apply precisely the same disciplines to the national health service. We have a clear framework of national standards, which my right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) was partially responsible for putting in place. We have independent inspection. We have the right ethos, the right values and the right principles. In order to deliver improved services for patients, we must empower the NHS front-line.

Mr. Dennis Skinner (Bolsover)

What are the special qualities that the private sector seems to have, as opposed to those who have dedicated 50 years to the national health service as a public service?

Mr. Milburn

As I said to my hon. Friend the Member for South Swindon a moment ago, we have some outstanding people working in the NHS as managers, and some outstanding hospitals and primary care trusts. However, my hon. Friend the Member for Bolsover (Mr. Skinner) will know from his constituency experience, as I know from mine, that sadly, in local government services and sometimes in the health service, the fact that service providers are located within the public sector does not necessarily mean that they deliver the best of services. I am interested in what the patient gets. NHS patients should get high-quality care. What we should expect to see in all our constituencies in all parts of Britain is the highest quality of care for patients, regardless where the care is provided.

Hywel Williams (Caernarfon)

What are the implications, if any, of the Secretary of State's proposals for the NHS in Wales and Scotland? In a written question on 26 June, I asked the right hon. Gentleman what discussions he has had with the National Assembly concerning the use of private management in the health service in Wales."—[Official Report, 26 June 2001; Vol. 370, c. 76W.] His answer was one word: "None."

Mr. Milburn

That remains the position.

Mr. Mike O'Brien (North Warwickshire)

I welcome my right hon. Friend's proposals to give greater freedom and power to succeeding managers, but like my hon. Friend the Member for South Swindon (Ms Drown), I am concerned that those ought to be balanced by proposals to make it easier to remove failing managers in the NHS.

Mr. Milburn

My hon. Friend is right. In these debates there is always a danger that we assume that every hospital will become a foundation hospital, or that every slightly under-performing NHS trust will lose its top management. That is not the case. We have other means to improve performance in the NHS, such as incentives or an NHS modernisation agency to lever up standards and to spread good practice. We have a wholesale set of reforms coming in, but sure, in the exceptional cases where there is a problem with poorly performing NHS organisations, we should not hesitate to change the management team.

Mr. Andrew MacKay (Bracknell)

What is the real reason for the Secretary of State not making a statement to the House about a policy initiative that is clearly very significant? Could it be that he realised that there would be considerable support from the Opposition and no ringing endorsement from Labour Members, who look extremely upset?

Mr. Milburn

Anyone doing my job is grateful for ringing endorsements from any quarter.

Mr. Gareth R. Thomas (Harrow, West)

As someone who represents one of Labour's new heartland seats, may I encourage my right hon. Friend to come again and visit Northwick Park hospital, where I could introduce him again to first-class management? Those managers are keen to persuade him of the case for more investment in maternity services to revolutionise the quality of care currently available at Northwick Park's maternity unit. I encourage my right hon. Friend to take no lectures from the Opposition, who axed two thirds of the accident and emergency provision available to my constituents, and whose proposals for new charges for access to GPs seem to strike at the heart of the NHS principles.

Mr. Milburn

My hon. Friend is right. This morning I listened with interest to the Opposition spokesman, the hon. Member for North-East Hertfordshire (Mr. Heald), refusing to rule out charges to visit the GP's surgery. [Interruption.] The hon. Member for Woodspring ought to keep an eye on his colleague because that hon. Gentleman was touring the studios—it was on BBC News 24, I think, or it may have been Sky News—and repeating the interview. There is a fundamental difference between the Opposition and the Government. They want to charge; we say that services should be provided free. My hon. Friend is right—the Labour party is building up the national health service, whereas the Conservatives would run it down.

Mr. Crispin Blunt (Reigate)

I am intrigued by what the Secretary of State said about the undesirability of micromanaging the health service from Whitehall, given that it was only last month that he pre-empted negotiations between BUPA and the Surrey and Sussex Healthcare trust about the provision of elective surgery at the East Surrey hospital site, which will now be undertaken by BUPA in the old Redwood hospital. Can I now hold on to the hope that, as those elective operations will now be administered and managed by BUPA, there is a possibility that the whole East Surrey hospital could be managed by BUPA, which is a not-for-profit organisation?

Mr. Milburn

I would not have thought that that would be the case, but I can say that the negotiations between the health service and BUPA are going very well.

Mr. Gordon Prentice (Pendle)

It is not true that my right hon. Friend is a Trotskyist, although he is perhaps a Leninist in terms of policy being decided by the few and not the many. My specific question is this: who decides which assets will be sold? For NHS trusts located in the south-east, where property and land values are very high, there is an invitation to asset-strip.

Mr. Milburn

My hon. Friend is completely wrong. If he bothers to look at the star ratings that we produced late last year—I urge him to do so—he will see that there is a clear balance between the north and south in terms of NHS trusts with a three-star rating. We must get away from the idea that, because a trust serves a poor area, it is rather like a school serving a poor area and it can be assumed that it must inevitably have poor standards or organisation. That is simply not the case. It is an important incentive to improve performance for people running the services, whether they are in the north or south or in an NHS trust or primary care trust, that, if they want to make changes to local health services that are to the benefit of NHS patients—we must remember that they will continue to be inspected and annually assessed on their performance—they have the freedom to do so.

Mr. David Tredinnick (Bosworth)

The right hon. Gentleman said that he would like more diversity in the national health service. Is that comment linked to the briefing that he gave to journalists before Christmas, which suggested that Ministers were calling for herbal cures on the national health service? The story was published in three or four national newspapers. Does it represent a change of policy at the Department? Is the Department now looking for an integrated health care service and is this development a part of that strategy to roll out more availability of different treatments through a new-style national health service with more diversity and more power given to managers?

Mr. Milburn

As I have told the hon. Gentleman on very, very, very many occasions, both in Health questions and other health debates—[Interruption.] I have read the headlines, honestly. I say to the hon. Gentleman that he will have a much happier life if he does not believe everything that he reads in the newspapers. I try not to believe everything that appears in the newspapers, because it would drive me completely crazy. On the particular issue that he raised, he knows the position: it is a matter of local discretion in deciding the services that are provided to NHS patients.

Derek Twigg (Halton)

My right hon. Friend will know about the difficulties that we have recently faced in Merseyside in relation to poor management practices, although he will also know that there is lots of good management practice as well. On that basis, I welcome the move to ensure that we have more devolved powers and that decisions can be taken locally. While massive investment is taking place in the health service, the public expect massive change in the management efficiency. That is why I welcome the proposal to give management power and discretion to local hospitals. On accountability, the PCTs will have the bulk of NHS money to spend in the not-too-distant future. How can he ensure accountability to the PCTs, making sure that those hospitals deliver efficient and good services in the locality?

Mr. Milburn

I agree with my hon. Friend. The simple answer is that primary care trusts will hold the budgets, and they will make the decisions, especially when they receive more and more of the NHS budget. By 2004, they will have three quarters of the total budget, and they will determine which services to commission from which provider. I should be surprised if every primary care trust, aided and abetted if possible by the Department, the Modernisation Agency and the Commission for Health Improvement, did not have a clear eye not only on the quality of services but on value for money, including, as my hon. Friend rightly said, the organisation and management of every hospital. Primary care trusts must do that when discharging their functions on the accountability of public money.

My hon. Friend knows that we publish reference costs every year. They spell out the difference in the cost of treatment between NHS hospitals. I should be surprised if primary care trusts did not increasingly use the reference costs manual as a bit of a Bible for commissioning services. It clearly spells out the differences in efficiency between hospitals. That is at least partly due to differences in efficiency in the management of hospitals.

Rev. Martin Smyth (Belfast, South)

The Secretary of State will know that there are differences between not only areas but management styles. Does he agree that the larger hospitals have an advantage? Time and again, they have gathered more money from the health service but not always performed at the level that they should. That is to the detriment of other hospitals. Has he studied the results of the change of management strategy over the years? We have changed names and paid managers more money, but they have not undertaken the required management. We brought in outside managers, and they did not last the pace. Does he believe that a change of management will transform the health service? He speaks about not-for-profit trusts, but will large trusts continue to exist, eat up the money and rob other parts of the health service of the necessary cash to maintain the required standards?

Mr. Milburn

Like the hon. Gentleman, I believe that we all want high-quality management and services in every part of the United Kingdom. There is no doubt that we need to foster a new generation of NHS managers. It is inevitable that there has been a fixation today on poor NHS management, but we should bear it in mind that we have some fine NHS managers. I can give testimony to that. When we provided the star ratings last year and considered the different performance of NHS hospitals, there were three times as many three-star NHS trusts performing at the highest levels as no-star hospitals. Of course, that is fundamentally due to doctors, nurses and other staff, but it is also due to the managerial leadership in those three-star trusts. We should not be frightened of saying that. I agree with the hon. Gentleman that we need better management in all parts of the NHS, and more management when appropriate. Management and leadership hold the key to many of the changes that we need to unlock in local health services.

Mr. Henry Bellingham (North-West Norfolk)

I thank the Secretary of State for his interesting statement. It has not escaped Conservative Members' attention that his best proposals were lifted from the last Conservative manifesto. Imitation is a form of flattery, but I want to ask a specific question about our local hospital. If it opts out and imposes better pay and conditions for its staff, but is subsequently taken back into mainstream NHS management, what will happen to the pay and conditions? Will they be reversed? Will the pay be docked?

Mr. Milburn

I notice that the hon. Gentleman and the Conservative party speak the language of opt-out, while we speak that of one NHS, one set of values, principles and standards, and one inspection. [Interruption.] Since the hon. Gentleman is so keen on private sector organisations, he would do well to examine successful examples. He will find that they are held together by a common ethos, but that they give local autonomy to local services when there is an interface between the service and the local consumer. That happens in the best private sector organisations, and must also happen in the NHS.

I read the Conservative party manifesto for the last general election; it was devoid of content.

David Taylor (North-West Leicestershire)

It will be no surprise to the Secretary of State that his announcement will stick in the throats of many Labour Members like an unchewed pretzel. Will he reassure Labour Back Benchers that he is not performing a soft shoe shuffle through the private operation of public assets to their eventual private ownership? Will he reflect on the experience of our antipodean cousins? Private management of public hospitals in Australia has been shown to be fraught with problems and difficulties and has led a Committee of the Australian Parliament to recommend: No further privatisation of public hospitals should occur until a thorough national investigation is conducted and some advantage for patients can be demonstrated for this mode of delivery of services. No such advantage has been demonstrated in practice or in the Secretary of State's statement.

Mr. Milburn

Nobody is advocating the privatisation of NHS services. I am not; the Government are not; nobody is. Indeed, it is quite the reverse. We want patients everywhere, not just in some places, to get high-quality NHS care according to the right NHS principles: care that is provided free according to need, not to the ability to pay. That is the right set of values. However, I simply do not believe that we can continue with the age-old structures, and assume that a national health service of 1.2 million people treating 20 million patients a year can somehow be run from a single office in Whitehall. That simply will not deliver the goods for patients.

Dr. Richard Taylor (Wyre Forest)

I know that the Secretary of State is aware of a recent vote of no confidence in their managers, both at trust and health authority level, by a vast majority of consultants across the whole of Worcestershire. What does he propose to do about that?

Mr. Milburn

In keeping with the spirit of devolution, that is a matter for the management in Worcestershire. If the hon. Gentleman is concerned about that issue, he should raise it locally rather than with me.

Mr. John Baron (Billericay)

Will the Secretary of State tell the House what criteria will be used to ascertain which hospitals are deemed to be failing, and which will become more autonomous? Will that depend on the star rating system? If so, as hospitals move up and down that rating system, will that signify a change of control?

Mr. Milburn

Yes, that will depend on the star ratings. Last year—the first year that we used the star ratings—we used certain criteria. I said at the time that the star ratings were far from perfect and that they needed to be improved—and indeed they do. This year, when we do the star ratings, with the involvement of the Commission for Health Improvement—and in future years with growing CHI involvement—the hon. Gentleman will see that the star ratings give a much more rounded assessment of performance, not only in primary care trusts but in NHS trusts too.