Lords Sitting of 30 May 1951

Preamble
The House met at half past two of the clock, the LORD DENMAN on the Woolsack.
Prayers
2.37 p.m.
BRIGHTON EXTENSION BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
BRISTOL CORPORATION BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
LONDON COUNTY COUNCIL (CRYSTAL PALACE) BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

BUSINESS OF THE HOUSE
LORD SHEPHERD: My Lords, as the Message from the Commons referred to on the Order Paper has not been received, I should like, with your Lordships' per-mission, to move 'the Motion standing in the name of the noble Viscount the Leader of the House in the following terms:
"That in the event of a Message being received from the Commons that they have passed the British North America Bill, Standing Orders Nos. XXI and XXXIX be considered in order to their being dispensed with to-morrow for the purpose of giving the Bill precedence over the other Notices and Orders of the Day and of passing the Bill through its remaining stages."
It is expected that the Bill will be received from the Commons later this afternoon, and that it will be read the first time at to-day's Sitting, and the purpose of this Motion is to enable the Second Reading and subsequent stages to be taken to-morrow as the first Business. A Commission is arranged for six o'clock to-morrow for the purpose of giving the Royal Assent to this Bill. Will noble Lords please note that the term "America" should be used in place of
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the term "American" as printed in the Motion standing on the Paper?
Moved, That in the event of a Message being received from the Commons that they have passed the British North America Bill, Standing Orders Nos. XXI and XXXIX be considered in order to their being dispensed with to-morrow for the purpose of giving the Bill precedence over the other Notices and Orders of the Day and of passing the Bill through all its stages.—(Lord Shepherd.)
VISCOUNT SWINTON: My Lords, we shall be glad to give those facilities.
On Question, Motion agreed to, and ordered accordingly.

METEOROLOGICAL FORECASTS
2.40 p.m.
THE EARL OF SELKIRK: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask His Majesty's Government whether their attention has been drawn to the report in the issue of The Log, the official journal of the British Airline Pilots' Association, for May 1951, criticising the meteorological forecasting on the North Atlantic route.]
THE CHANCELLOR OF THE DUCHY OF LANCASTER (VISCOUNT ALEXANDER OF HILLSBOROUGH): My Lords, the criticisms to which the noble Earl refers concern forecasts of terminal conditions at aerodromes outside the United Kingdom, and by international regulations a forecast for a terminal airfield is prepared by the meteorological service of the country responsible for the airfield.
THE EARL OF SELKIRK: My Lords, while thanking the noble Viscount for his reply, may I ask him, first, whether this does not refer also to Shannon, in respect of which we have some agreement in the Irish Treaty; and secondly, whether His Majesty's Government have not a responsibility to operating companies in this country to ensure that those operating companies shall have the best possible information available?
VISCOUNT ALEXANDER OF HILLS-BOROUGH: My Lords, if there is a complaint it should be sent to the countries concerned. I have forgotten the

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numbers of the appropriate I.C.A.O. regulations, but the matter could be taken up, and, so far as I know, no such complaint has been sent up to date with regard to any of the operations affected by the forecast referred to. That is all the information we have, and it would be unsatisfactory to take up matters on the basis of an article where no actual record is available of any official complaint having been made.
LORD BALFOUR OF INCHRYE: My Lords, may I ask the noble Viscount whether the Minister is aware that com-plaints have been received from pilots as to meteorological forecasts in this country; and secondly, whether he is satisfied that all is well in the meteorological forecast world at the present time?
VISCOUNT ALEXANDER OF HILLS-BOROUGH: My Lords, there was a departmental inquiry not long ago into the state of our own meteorological forecasts. It disclosed nothing fundamentally wrong with the existing system, but the whole matter is subject to continual effort to effect improvements. Therefore, my answer to the second part of the noble Lord's question is that, whilst we are reasonably satisfied that the position is satisfactory, we are keeping constantly under review the experience gained to see whether any improvements can be carried out.
THE EARL OF SELKIRK: My Lords, does not the noble Viscount think that this report itself might have been the subject of some analysis by the meteorological authorities? The report states, I believe, on behalf of the reliable B.O.A.C. pilot that the meteorological information is most inadequate and thoroughly un-reliable. Are not those remarks rather disturbing? Does not the noble Viscount consider it possible that an inquiry might show that the status of the Meteorological Services is not adequately recognised at the present time.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I do not quite know what the noble Earl expects the Department to do. Here is an anonymous article referring to flights and forecasts upon dates unnamed. It seemed to me that there is a contradiction within the article itself, and if we are to make inquiries on the basis of such articles, it seems to me that
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we shall never be finished in our inquiries and shall never get a satisfactory answer.
VISCOUNT SWINTON: My Lords, I do not want to prolong this discussion. I agree, if I may respectfully say so, with what the noble Viscount has said. General criticism is an impossible thing to inquire into. On the other hand, one can test the efficacy of the Meteorological Service only by individual experience and individual complaints.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I agree.
VISCOUNT SWINTON: I feel that the noble Viscount is right, and that it is the business of a company, if they find the service faulty on any occasion, to bring any defect to the attention of the Ministry. But in the interests of both the air lines' safety and the Meteorological Service itself, will the Ministry of Civil Aviation make sure that the air lines do recognise that it is not only their right but their duty to report promptly to the Ministry individual cases of failure, or believed failure, so that they can be investigated? I am sure that would be the right thing to do.
VISCOUNT ALEXANDER OF HTLLS-BOROUGH: I am sure that it would be quite the right thing to do to bring the noble Viscount's remarks to the notice of the Ministry for consideration as to whether anything further needs to be done at the present time. But perhaps, in view of the point raised, it might be as well to put on record in Hansard in your Lordships' House a fact that ought to be known by every pilot reporting to his company. I quote now from I.C.A.O. document No. 5714, which states categorically:
"Complaints regarding meteorological services made by operating companies should be made to the Meteorological Service of the State in which the company is registered, which will take the necessary action. When this procedure involves considerable delay, complaints may be made directly by the company to the Meteorological Service concerned, and the Meteorological Service of the company's State informed simultaneously."
In view of the noble Viscount's last remark, I am sure that a complaint by any company in this country who suffered the kind of thing complained of in this anonymous article would be very carefully considered and taken up by the Air Ministry.
THE EARL OF SELKIRK: May I thank the noble Viscount for his further explanation? Perhaps he can let us know whether any use had been made of this procedure, because it is disturbing to hear of things of this sort.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: I will ask the Air Ministry to let me have some examples, if possible, where complaints have been made by British operating companies. If there is anything in the complaints I will send details to the noble Earl.

ADMINISTRATION OF HOSPITAL FINANCES
2.49 p.m.
THE MARQUESS OF READING THE MARQUESS OF READING rose to ask His Majesty's Government whether they will appoint such a Committee as they may consider appropriate to inquire into and report upon the operation of the system under which the finances of hospitals coming within the scope of the National Health Service Act, 1946, are at present administered; and to move for Papers. The noble Marquess said: My Lords, this particular Motion has been on the Order Paper for some time, but it comes up for discussion at what is, I suggest, an opportune moment, since I observe that two days ago the Minister of Health, when addressing a meeting of the National Union of Public Employees, asked for suggestions to be made to him whereby economies in the National Health Service could be effected. It seems not unreasonable or inappropriate that your Lordships should for this purpose turn yourselves this afternoon into a branch of the National Union of Public Employees and respond to the Minister's appeal to the best of your ability.
May I begin by indicating, and thereby I hope eliminating, certain matters with which this Motion is not concerned? It is no part of my argument this afternoon to suggest that there should be any reduction of the services rendered by hospitals to the public. It is no part of my argument to suggest that the public making use of those services should be invited or compelled to make any greater financial contribution than at present. Further, it is not necessary for the purpose of this Motion that I should advocate any one particular alternative to the existing
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system rather than another. What I am asking for is no more than this: that His Majesty's Government should institute an inquiry into the operation of the present system, of course with the inference that if, as the result of that inquiry, it is found to be inadequate and a more suitable system can be found, the recommendation should be in favour of such system as the Committee would prefer.
My Lords, more and more nowadays we hear talk of the public purse, and less and less do people seem to realise that in fact there is no such thing as the public purse; that there is merely an aggregate of private purses, to the contents of which the Government help themselves to the extent to which they need finance in the interests of what they consider to be the national requirement of expenditure. In his recent Budget statement the Chancellor of the Exchequer committed himself to the pronouncement that there was no longer any source from which economies could be made. It is in the hope that we may be able to rescue him from that attitude of somewhat sombre defeatism that we should like to inquire for a short time this afternoon into the workings of the hospital services, because in our view it is at least possible that by a revision of the financial system a very substantial retrenchment could be effected. I say "substantial" advisedly, because in this matter we are dealing with very large figures—so large that the mere mention of them would make the whole series of Victorian Chancellors of the Exchequer rotate frenziedly in their graves.
When the appointed day was fixed as July 5, 1948, an estimate for the total cost of the National Health Service was prepared, and it worked out at something like £198,000,000 for the nine months that remained of that particular financial year—that is, from July 5, 1948. to April 5, 1949. Before that period of nine months had elapsed a further estimate was necessary, and already in that preliminary period the estimate had mounted from £198,000,000 to £276,000,000. Without going through the intervening period, let us remember in this context that when we are talking about the finance of the National Health Service as a whole, we are to-day, in the light of the figures for 1951–52, talking of a sum of just under £470,000,000 gross, or a net expenditure of just under

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£400,000,000. Of that sum, again, the original estimate for the first nine months having been in the nature of £120,000,000 for hospital and specialist services (and you cannot disentangle the two for this purpose), the bill that we are now confronted with for a year's working in 1951–52 has soared to the level of something like £285,000,000. So when your Lordships are invited to examine the expenditure upon this service, you are, as I say, dealing with very substantial figures in which economies, if they are effected, ought to be capable of production on no negligible scale.
I can perhaps best present what I say to your Lordships if I deal with it under four heads: in the first place, to indicate what was apparently the intention as regards the scheme when the National Health Service was introduced; secondly, to indicate what I understand to be the scheme at present in operation; thirdly, to point out what seem to us to be the defects of the existing system; and fourthly, to specify, though not to select one from another, what appear to be possible alternatives, such as the Committee for which I am asking might be called upon to consider. When this system was under discussion in 1946, a White Paper was issued outlining the form which the service was to take. Although I desire to treat this matter objectively, it is possible that some note of criticism of the statements made by the then Minister of Health may creep into what I say in this particular connection. It is, of course, equally possible that that may be met with a lower calorific content of disapproval than would have been likely a few weeks ago.
In the White Paper which was issued, the regional boards and the management committees were promised—and this is the quotation:
"a high degree of independence."
They were to enjoy:
"as much financial freedom by a system of block annual budgets or otherwise for local initiative and variety of enterprise as general principles of Exchequer responsibility make possible."
The real qualification is, of course, in the latter part of that undertaking, and when the Bill was before the House the Minister himself spoke of a global budget within which management committees
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would have discretion to spend what they wished on what he called "this and that"; to which he added that if they spent more on one thing they spent less on another; otherwise, said he, with great truth and foresight, bureaucracy would arise. That was the promise that was held out to those responsible for regional hospital boards and management committees when this scheme was about to be brought into operation—a considerable degree of freedom in expenditure, giving opportunities for local initiative and local variety of needs.
Let us now for a moment consider what, as I understand it, is the system which in fact is now in operation and has been in operation since this scheme first came into being. What is now required is that there shall be estimates, first, of course, by individual hospitals, submitted to the hospital management committee which is responsible for a group of hospitals. Those estimates should be examined and, if necessary, revised, first by the hospital management committee and then by the regional hospital board, and then transmitted to the Ministry for further examination and ultimate approval, either with or without reduction. Those estimates, as I understand it, are not conceived or carried out on very broad lines. There are, I believe, some forty different headings under which each hospital has to prepare its financial estimate for the year. That estimate is prepared originally in the early autumn— about September—and it then makes its way by devious and somewhat interrupted routes to the Ministry, where, on approval, assent is given. Then, in the following September, half way through the financial year, a revised estimate has to be submitted, again, I take it, under these forty separate headings. That, again, is in due course examined, commented upon, scrutinised and finally approved or disapproved by the Ministry of Health. The final approval of the accounts of the budget for the year is not given by the Ministry until such time as a statutory audit has taken place. Even what I would call the intermediate approval is given at indeterminate and, more or less, incalculable times, according to the length of period which the Ministry finds it necessary to brood upon the statement submitted to it. So there is little certainty as to dates before the members of a hospital board.
During last year there have been certain refinements of and additions to the requirements of the Ministry in regard to this matter of estimates. A ceiling, I understand, has been imposed upon the amount which the hospital service is to cost. That has involved a considerable number of arbitrary reductions in estimates. It has also carried with it a new and additionally complicated procedure whereby every month accounts have to be submitted to the Ministry showing whether under any one of those headings it is expected that the original estimate will be exceeded, showing what has been spent, what has been ordered and what is awaiting payment, and showing also the appropriate estimate for that particular heading. That is a system which certainly cannot be said to err on the side of simplification, and the number of persons, both at the Ministry and in the hospitals themselves, who must be engaged in poring over these figures is, I should think, inevitably a considerable one.
That being an already complex and involved system, as appears merely from the statement of it, what on rather further analysis are some of its obvious disadvantages? May I say this at the outset of this part of my examination? One of the great difficulties at the moment in dealing with this matter of hospital costs is that there is no uniform costing standard. In the past, certainly, as regards London hospitals, as many of your Lordships who were treasurers of hospitals or members of boards of governors of hospitals in London will remember, a very valuable statistical summary was published annually by King Edward's Hospital Fund, and anyone responsible for a hospital's finance and administration could, by turning to that publication, ascertain, by comparison of his figures with the figures of other hospitals of a like medical character and of like or similar geographical situation, whether or not his figures were in excess of normal, or fell below the average, or were more or less on the same level. If one opens the last Report—that for 1947 —of King Edward's Hospital Fund, one sees, for instance, the heading "General Hospitals, Children." One finds a number of hospitals set out with the cost per occupied bed. Items, under the headings of "provisions," "surgery and dispensary," "domestic," "salaries and wages,"
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"miscellaneous administration" and so forth, are all broken down in relation to the cost per bed of those hospitals which are grouped together as being hospitals with the same purpose and of a like type.
Nothing of that kind exists to-day. It is true that this covered only the limited field of the London area, but at the same time, from what I have heard, I am sure it was of great value to hospital administrators all over the country in setting a standard of the kind of figure to which they ought to be working in order to be in line with others in a similar field. That summary is not published any more, nor has anything else taken its place. I believe that King Edward's Hospital Fund is now carrying out some investigation as to costing on behalf of the Ministry, and the Nuffield Foundation is also carrying out some investigation in the provinces, as distinct from London, on the same lines. From what I hear, it is very doubtful whether that investigation is really proceeding on the same lines or is designed for the same end as the figures which used to be produced by this scheme.
May I make one other remark—and I say it without intending any reflection on or disparagement of officials of the Minis-try of Health? They have had an extraordinarily difficult task quite unexpectedly thrust upon them. In the years before the introduction of the National Health Service they were not concerned with the economic aspect of hospital administration. They had many duties upon their shoulders, but this was not one of them. It is obviously an extremely burdensome and, I should have thought, embarrassing, task for them to have to deal with all this multiplicity of sub-divided headings of accounts sent up by hospitals, and to criticise the estimates submitted by those in daily charge of hospitals. It would, I suppose, be so revolutionary as to be almost anarchic to suggest that there might be some interchange between officials of the Ministry of Health and those responsible for the day-to-day administration of hospitals which would make each class more adequately informed of the difficulties and problems confronting the other.
Let us look a little more closely into the form of these estimates. It is quite inevitable that if people who are preparing estimates know that they will be subjected, or may be subjected, to cuts by

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superior authorities, they will go some way in advance to discount that danger. If you give a small boy ten shillings when he returns to school and tell him that if he has not spent it at the end of the term he will be required to return the balance to you, the inference is that he will make sustained and successful efforts to dispose of the entire sum before the day of reckoning comes. In the same way, human nature being what it is, and not what it ought to be, if hospital management committees and hospitals know that an estimate which is put forward will be subjected to possible reductions at various stages of its progress, they will start with a precautionary inflation of their estimate so as to discount the risk of reductions.
There is more to it than that. I understand that in the estimate as prepared and as confirmed there is, under the present system, no allowance for what may be called, under a general heading, contingencies. Therefore, for example, if a hospital finds that during the currency of its estimate period it has to produce a bigger sum for wages, or take on more porters, or whatever it may be, it has to make similar reductions in other and perhaps not less essential services. It has nothing in hand to deal with problems which may arise from day to day and which could not possibly have been foreseen; nor has it overall anything in hand to deal with the steady increase in the cost of living which is putting up prices to-day in so many directions.
The hospital management committee system is a group system, and that again has the defect that allocation through the hospital group committee is an allocation embracing all the hospitals in that group. Suppose that one of the hospitals, by careful administration, succeeds in saving a certain amount, perhaps a few hundred pounds, which it intends to devote, let us say, partly to repainting the nurses' home and partly to buying some desired piece of equipment. There is no guarantee that that saving will ever be at the disposal of the hospital which has been successful in effecting it, because the finance is group finance, and although one hospital may have saved £500, two other hospitals in the same group may be each £250 down on their estimates. The result is that the £500 saved is filched
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from the saving hospital and thrown into the hands of the careless hospital. That is a most objectionable system, not only in principle but also in practice, because inevitably it frustrates and discourages the people who are making a serious effort to save public money and to use it in a proper priority of needs. That is one point. Take now the question of the hospital which, by careful administrative process, succeeds in being in a position to open more beds or take in more out-patients. The opening of more beds or the taking in of more patients requires more money. They do not have more money; they have only the money allocated to them from central sources for that year, and however anxious they may be to do it, there is no source from which they can open necessary and urgently required beds for public use. I suggest that that again is a serious defect in the system.
There is also this feature, to which I have already referred—namely, that at the end of a financial year, if a hospital has been so provident as to save something on its allocation, is it allowed or encouraged to spend that money the next year, to carry over the amount it has saved and put it to a useful purpose in next year's expenditure? Not at all. Back the money saved has to go to the Treasury at the end of the year. There is no active encouragement to hospitals to save money in order that they can hand it back at the end of the year to the Treasury. Inevitably what happens is that those hospitals which have a certain amount of money in hand to-wards the end of the financial year look round for some object, not always the most necessary, upon which they can spend the money they have in hand, rather than hand it back to the Treasury. It may be very naughty, but it is also very human, and we are not going to persuade people to do anything different from that. The result is that in the last few weeks of the financial year the hospitals look round for something which it would be nice to have and also (and this is important) something the date of delivery of which is only a short period ahead. They order what they want. But dates of delivery are not wholly to be relied upon in these days, and it may be that by the end of the financial year the articles ordered do not come forward.

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Then what happens is that the hospital which has ordered the articles cannot pay for them out of the money saved the previous year; so it has to be burdened in the newly beginning financial year with expenditure which it undertook only to get rid of money which would otherwise have had to be handed back to the Treasury.
It may be said that hospitals ought to show a greater sense of responsibility, but these committees are only an aggregate of human beings, and they behave in a corporate form in much the same way as they would behave in individual form. The weakness of the whole existing scheme is, first, that it is centralised; secondly, that it is rigid; and, thirdly, that it is wasteful. These are considerable objections, apart altogether from the fundamental objection to a system which completely divorces the responsibility of those who pay out the money, on the one hand, and the responsibility of those who provide it, on the other. The system which is in operation has gone a very long way from the kind of system which was outlined in the words which I have given your Lordships by the Minister in the early days of the scheme. In fact, there is no global sum put at the disposal of hospitals by the Ministry; there is little or no opportunity for local independence, or local variation of needs and the whole system is rigidly controlled from the centre.
If it be thought that I have overstated the case, I would call in aid a publication which certainly cannot be accused of approaching the matter from the same perhaps more prejudiced angle from which I look at it. There was published a short while ago (and I refer to it in order that it may do my task of summing up my argument) a document called The £ s. d. of the National Health Service. It is described as "A Socialist Medical Association Pamphlet," and is priced at 2d. It bears the sub-heading: "Some urgent and radical reforms," and is said to be, "By the Administrators' Group of the Socialist Medical Association." I do not know whether in his more untrammelled capacity the noble Lord, Lord Haden-Guest, was one of those administrators, but perhaps one would not wish to press him unduly on the subject.
I look in particular at a heading in this pamphlet called, "Problems of finance control." I feel it is worth reading at some length, because it so eloquently supports the points which I have been endeavouring to make to your Lordships. Under that heading, the pamphlet says:
"The principles which should govern the operation of the hospital system within the National Health Service are public accountability with the maximum operational freedom at local level."
I respectfully and entirely agree. It goes on:
"Unfortunately the methods pursued during the initial years of the new service have scarcely been such as to achieve these ends. Although much was said during the formative years … about the allocation of global sums to regional hospital boards, which in turn would allocate to hospital management committees on the basis of broadly conceived estimates of needs, this has not been done … Instead of the system of global budgets we now have the rigid, highly centralised financial régime prescribed by Regulations in 1948. By means of these a niggardly control on a year-to-year basis is established. No provision is made for the keeping of cost accounts in a form which would enable authorities to com-pare their expenditure on a departmental basis from one period to another with a view to preventing waste and effecting genuine economies. Worse still, no incentive is offered to long-term planning, and careful husbanding of resources to this end, since there is absolute prohibition of the keeping over of balances at the end of the financial year."
In a later paragraph the pamphlet says:
"Having shackled the service with a rigid system of financial control, calculated to discourage local initiative, the Ministry has increasingly shown alarm at the rising costs, and in a series of panic measures has added further shackles which have only intensified the problem."
I endeavoured, in the case which I have been making, to observe a nice restraint in my criticism, which certainly did not reach the peak of virulence which is introduced into this publication by the Socialist Medical Association. But the pamphlet does in essence, and indeed with great point and force, make substantially the same points that I have been endeavouring to make this afternoon.
The fourth matter with which I said I would deal briefly is the question of alternatives, to which some attention is paid in the last wards of this pamphlet. One of the great difficulties is that this is year-to-year planning, and it is extremely difficult for a hospital to confine itself in its programme merely to a period of

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twelve months, with no certainty of being able to plan ahead. There are, I conceive, various alternative possibilities. One is something in the nature of the block grant system which was established under the Local Government Act, 1929; another is a sort of block grant system over a period of years, such as is now applied to university finance, with successful results; and a third is, possibly, some formula worked out on the cost per individual treated, either as out-patient or as in-patient, over a period of time. There are obviously certain alternatives which ought to be considered. There are, I hope I have shown, very blatant defects in the present system, defects so obvious and fundamental that I most earnestly hope that the Government will see their way not to procrastinate or put off discussion on this Motion, but to accept the suggestion that I am making for the appointment of a Committee; to make sure that the Committee is composed of people well qualified to carry out what will be an onerous but essentially worth-while task; and thereby to effect, or at least open up the possibility of effecting, a real saving in what is at present a most costly branch of the public service. I beg to move for Papers.
3.28 p.m.
LORD AMULREE: My Lords, I feel that we owe a great debt of gratitude to the noble Marquess, Lord Reading, for bringing forward this Motion. The debate that we are to have this afternoon will be of particular value at the present time, when we have the great increase in all prices generally, and when one is told that the expenditure under the National Health Service Act must have imposed on it some kind of ceiling— which I feel is a very proper and sensible thing to do. However, we must be careful in making economies to make sure that they are real and genuine economies, and not false ones. It would be quite easy, in the case of the National Health Service, to make a number of false economies. For example, one would save a good deal of money if certain departments were shut down; one would save money by shutting down hospital wards, or by cutting hospital staffs. But the effect of that would be to make it only a second-rate Service, instead of a first-rate Service. And I am sure that that is not the inten-
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tion of the Government. What is more, if that were done I am sure that the country as a whole would not be a party to it. Therefore, one has to find some means of effecting real and genuine economies in the running of the Service.
I do not desire to detain your Lordships for long, because the points have been put so clearly by the noble Marquess who moved the Motion that there is little new for subsequent speakers to say. I should like to support very strongly the plea made by the noble Marquess for the Government to appoint some independent Committee to inquire into the cost of hospital services generally. It is a matter which needs inquiring into in considerable detail. It will take a certain amount of time and we have not a great deal of time to spare. That is why I feel that it would be much better if some independent Committee were established, rather than that it should be done by a department of the Ministry or the Treasury, because they are busy with other matters and have not the time to consider any of these matters in the quietness and calmness which they require. The noble Marquess pointed out—and I entirely agree with him—that the two defects of the present system are the enormous incentive to put in an application for more money than is required and that hospitals have to hand over any money saved. When the financial year is drawing to an end, a scramble goes on to spend the money. One is forced to buy something which is not wanted, rather than give the money back to the Treasury. It is very difficult for people not to buy some little thing, though that is not the intention of this system at all.
The noble Marquess quoted a speech made, I think, by the Minister about the finance of the Service. I came across another speech made by the Parliamentary Secretary to the Ministry of Health, speaking in another place on May 1, 1946. He went at some length along the same lines as the Minister, but he ended by saying:
"There will be a wide discretion concerning that global sum, and not, as some critics tell us, central control over the detailed items of financial expenditure."
That was said on May 1, 1946, and we are now just past May 1, 1951. So far as I can see, there is now pretty well central control over the financial expenditure. The matter is not at all simple, because

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it is very difficult to find any convenient yardstick which will cover all the various types of hospital in the country. Quite obviously, a teaching hospital in London will require more money proportionately to its patients than will some small cottage hospital in the country, because it supplies many more services than the smaller hospital. That is why one was pleased to see that the Ministry had requested the Nuffield Provincial Hospitals Trust and the King Edward's Hospital Fund for London to make an inquiry into hospital costing. I rather doubt whether that inquiry will provide the final answer to the question, however, because I do not think it will take into consideration the differences in the running of the various types of hospital which I have already mentioned.
There are a considerable number of matters with which the Committee for which the noble Marquess has asked could deal. The noble Marquess mentioned several, and I would refer again to one, in particular, with which he dealt. It was that it should be possible to arrive at the cost of in-patient treatment and out-patient treatment in the various types of hospital. It should be possible for each hospital to be paid what one might call a capitation fee. There is perfectly good precedent for that, because general practitioners are paid a capitation fee. Such a system would ensure that hospitals tried to achieve a reasonably quick turnover of their beds, because the more patients treated the more money they would receive, which is what we want to see happening now. We are told that there is a long waiting list for beds, and one wants to make sure that there is no unnecessary delay in the treatment of patients; that beds are not kept occupied longer than necessary. That is why the capitation system is one which I rather favour, although I have no particular reason for saying so. The noble Marquess also mentioned block grants. They appear to me to be a good way of financing hospitals, because they are subject to a five-year revision and make it possible to look ahead a little beyond March 31 of the current year. It is very difficult to plan hospital work on an annual basis, because (unfortunately for the hospitals, perhaps) patients who are taken ill do not fit into convenient chronological
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periods; and if a hospital has a longer period to think about its patients and what it requires, that will result in an increase in the Service and a much more easily run Service.
There is one other point that I wanted to mention, showing the curious way in which some of the finances work. There is a system by which certain consultants on the staffs of hospitals are paid an extra amount of money above their salary or fees. These are called merit awards, and they are given to people of great eminence and superiority. That can affect the running of the hospital. Supposing some doctor is granted a merit award of £5,000 a year, that £5,000 becomes an additional burden on the maintenance charges of that hospital for the year, and for all future years that he remains with the hospital. Because of that fact, the hospital will be penalised in another way, for the extra money required to make up that sum is taken from the hospital. That is not a very reasonable way of dealing with the matter. To look at it from a not very practicable point of view, if a person is receiving a merit award of £5,000—and he is probably making a certain amount of money apart from that—a very large amount of that sum will go back to the Treasury in income tax or sur-tax. It is very largely a paper transaction from the Treasury point of view, although from the hospital point of view it may be a serious cut. There are a number of matters of that sort which I think a Committee such as the noble Marquess has suggested could investigate, and I support him very strongly in the plea that the Government will allow such a Committee to be set up.
3.40 p.m.
LORD SHEPHERD: My Lords, we who sit on these Benches do not complain of the action taken from the Bench opposite in placing a Motion upon the Order Paper asking for a review of the finances of the hospital system in this country. As a matter of fact, we welcome the occasion because, although in these institutions, as in all institutions where men and women are involved, faults can be found, there are few institutions in this country to-day of any kind, public or otherwise, where better arrangements are in force governing the finances which have to be found by the taxpayers, or by the purchasers or customers of com-

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modifies. We rather expected to-day that we might not find it necessary to defend the Government and the hospital services against suggestions that things have been changed; but although it has not been said, clearly the inference is plain.
Quotations have been made from speeches, and from articles which appeared before the passing of the National Health Service Act, in which Ministers and others have aired opinions and views which seemingly have not materialised. But we who sit on these Benches to-day have to answer not so much for what occurred before the passing of the Act as for what emerged as a result of the decisions of Parliament. Further we have to administer the hospital service on the basis of the law and its requirements. We have had this discussion to-day as if the hospital service were something separate and apart. We have heard of the King Edward's Hospital Fund, of the regional hospital boards, of the hospital management committees, and of other people connected with the service: but not a word has been said about the senior partner of the hospital services of this country—the senior partner being Parliament, in its position as a representative authority for all the people. I shall have something to say about that after I have made one other remark about the speeches that have been made. The noble Lord, Lord Amulree, suggested that there was little to be said following the speech made by the noble Marquess, Lord Reading. I agree that the noble Marquess made a most effective speech; I think he is to be congratulated upon his Parliamentary performance. But if all the problems that we have to discuss are those contained within the speech of the noble Marquess, I think the Government and the hospital services can congratulate themselves upon it.
I want now to begin the speech that I hoped to make to your Lordships. I will deal in the first place with the senior partner—Parliament—because if we can recall to ourselves the part played by the senior partner in the hospital services, we shall come to the conclusion that much of what is now complained of in the management of the hospitals is inevitable. Parliament, as noble Lords are aware, deals with the raising of money and its expenditure, and does so in great detail. The Estimates which come year by year
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before Parliament for consideration from all sections of the public Services cover hundreds of pages; and I am sure that Parliament would not agree to any change of circumstances which would enable great blocks of money to be voted without an examination of the purposes and without full knowledge of the details involved. If it be true that Parliament exercises functions of that kind; if it be true that Parliament refuses to work under any other system, then it is obvious that the details placed at the disposal of the Chancellor of the Exchequer and of the Minister of Health must be great enough in order that those two Ministers should be able to tell Parliament what it is they require in terms of money, and upon what Service the money is to be expended. Indeed, it may be said that the position of Britain has been built up on the ability of Parliament to deal in detail with the finances of the country. I believe that if Parliament refused to do so, its grip would be very much less than it now is. I am sure that if I were to ask any noble Lord opposite whether he was in favour of taking away from Parliament the right to examine the facts in detail, he would at once reply: "No, certainly not." Parliament must be provided with the material on which it can govern the country.
THE MARQUESS OF READING: I am sorry to interrupt the noble Lord, but is he going to say where this material is to be discovered?
LORD SHEPHERD: I will come to that in a few minutes. I allowed the noble Marquess to make his own speech without interruption and I hope I may be allowed to make mine in the sequence in which I have it on paper. Parliament settles the law; Parliament settles the taxes; Parliament also has to choose between one payment and another. It may desire not to turn down a whole scheme, but only part of a scheme. Parliament may also introduce conditions into the payment of certain sums. Parliament must therefore have the material in a form to reach its conclusions. Here I want to say a word or two about the Minister of Health and his responsibilities, because I gather the suggestion is that a much better way of dealing with the duties of the Minister of Health would be not to bother him with details of expenditure over which he is answerable to Parliament but that he should be made

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the receptacle for applications for grantsin-aid on a global basis. That, I understand, is the proposal which is being put forward for the Government's consideration.
THE MARQUESS OF READING: I am sorry to interrupt the noble Lord again, but I said most particularly at the outset of my speech that I was not speaking in favour of any one alternative rather than another, and I mentioned the block grant merely as one of the matters which might be considered. I am not going to be pinned to that particular alternative now.
LORD SHEPHERD: The noble Marquess was most emphatic in his condemnation of the present system, on the ground that it was too detailed in character and pinned down the hospital authorities' expenditure on these details. If the noble Marquess objects I can only assume that he is in favour of a system of a global character—a system which must be an opposite system to the one now in operation. I would not wish to impute to the noble Marquess more than he himself is willing to accept; but I can only tell the House what the impression of his remarks was upon me and, I think, upon other noble Lords sitting on these Benches. If that be the right interpretation to put on the speech, then there must be some global proposal which the noble Marquess desires to put forward for our consideration. There can be no alternative.
May we examine for a moment the duties of the Minister?—because this will be an indication as to how far he can go without information. I think he is the leader of the hospital services, and I say that advisedly. He has been appointed by Parliament to lead the development of the hospital services for the benefit of our people. He is surrounded by a considerable staff of men and women who are anxious to build up a system that will be helpful to all of us. Moreover, he is being pressed by deputations and by visitations to go forward to a greater extent than has been possible up to the moment. He interprets the desires that are put before him, and he takes upon himself after agreement a kind of leadership. Parliament has, however, given him powers, and therefore, in addition to being a leader of the hospital services, he becomes a director when the need arises. He consults the
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hospital services in a hundred different ways, and encourages people in all localities to do their best. He even goes to a trade union meeting, as the noble Marquess has stated, and appeals to that meeting for co-operation in improving the financial arrangements of the service. He receives the views of the hospital services in every locality, and perhaps the best way in which he receives the views of the hospital authorities is through the estimates which they place before him year by year, because those estimates represent the aspirations of the persons who have been responsible for building them up. In the negotiations and discussions that subsequently take place, these authorities have the opportunity of winning the Minister over to their side in respect of them. But none of these things could be possible unless the Minister of Health had the detailed information required for this service.
The Chancellor of the Exchequer is in a different position from the Minister of Health. He is the watchdog of Parliament. He is the keeper of the public purse. He it is who has to advise Parliament on matters of taxation. He it is who governs the expenditure. Therefore, when the Minister of Health, having received the estimates of the hospital services in the country, goes to the Chancellor of the Exchequer, the Chancellor of the Exchequer may be persuaded that the hospitals require so much money for their purposes. But if the Minister of Health, in going to the Chancellor of the Exchequer, had no details at his disposal, and if the Chancellor of the Exchequer was being pressed or was in any difficulty about finding the money, the Minister of Health would find himself in great trouble in persuading the Chancellor of the Exchequer that so much money would be required. Then, subsequently, when the Chancellor of the Exchequer wanted to go to Parliament to ask for the money, he would be in a very poor way indeed unless he had placed before Parliament in detail the requirements of the hospital services.
I want now to say a word about the financial arrangements that are actually in operation. The noble Marquess seemed to indicate that we started with one system and now find ourselves working under a new system. I understood him to say that, to begin with, we were

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promised something in the nature of a global grant; and indeed he made quotations in support of his point. He then informed the House that we now find ourselves working under a system where estimates are the basis of the finance. The impression I gathered from that statement was that, from his point of view, we have been travelling downhill and that we are now functioning under a system of which the public know little and Parliament not much more.
THE MARQUESS OF READING: I have not said that; I have not said anything of the kind.
LORD SHEPHERD: I am putting forward only my impression.
THE MARQUESS OF READING: I cannot help the noble Lord's impression.
LORD SHEPHERD: I would draw the attention of the House to this important fact: that except for one or two modifications, the system of estimating the costs of the hospital services is the same to-day as it has been from the commencement of the scheme.
THE MARQUESS OF READING: I said so.
LORD SHEPHERD: The estimates of which we have had complaint to-day are based on the Order of 1948 and have governed the hospital services from the beginning. So that to-day, if there are any special changes, we have to consider those changes as being something separate. But we have to remember that we arc still on the same plans and under the same auspices as we were when the Act itself commenced.
THE MARQUESS OF READING: My Lords, I am reluctant to interrupt the noble Lord, as he did not interrupt me, but he must be a little more accurate in representing what I said. I said specific-ally that this system in operation to-day was the system which had been in operation since the scheme began. But what I also said was that before the scheme began, in the White Paper introducing the scheme and in the debates on the Bill, the Minister had made statements which at that time looked as if a different system was in contemplation.
SEVERAL NOBLE LORDS: Hear, hear.
LORD SHEPHERD: My Lords, if I have misunderstood the noble Marquess, I will not pursue that point any further, but when the noble Marquess talked of what was promised and said that we now find ourselves under a different system, I gained the impression that he had over-looked the fact that we were working under a system determined by Parliament in the Order of 1948.
The question will arise as to whether this Order gives the Minister too much authority, and whether it is too rigid in its character. The noble Marquess was quite right in saying that at a given time in the year the hospital management committees are called upon to submit their estimates to the regional boards. That, I suggest, is the performance of an act that ought not to be too difficult, because, even though they were not called upon to give their estimates to the regional boards, or to the Minister of Health, they themselves would, for their own purposes, produce estimates of their income and expenditure for any forth-coming year. So really what the Order insists upon is this: that, in addition to compiling estimates for their own satisfaction and to enable them to manage their own institutions, they produce the estimates for the regional boards and for the Government.
It is quite true that there has been a recent change—namely, that each month the hospital management committees are now called upon to give a record of their receipts and expenditure for the previous month. This record goes to the regional boards and to the Minister as well. But I think it would be right to take note of the reason. A year ago, at the suggestion of the Minister, Parliament did two things: one was to say to the hospital authorities that there should be no supplementary estimates, and that the original estimate that had been approved must stand for the whole year; and secondly, that this system of monthly record should be instituted in order that the Minister might be constantly informed of the expenditure of the hospitals. The reason for that change was the need to rearm this country because of the danger in Korea, and the need for spending vast sums of money in order to achieve that purpose. Parliament had to find ways and means by which its nor-mal expenses could be kept down, and

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the hospital authorities had to pay their share. Therefore, if the estimates to-day are much more strictly dealt with than was the case a year or two ago, it is due not to any change of policy on the part of the Government or of the Minister, but to a change in the circumstances of the country which has made it necessary for us to rearm.
May I now say a few words about the merits of the global grant and the grant which is made following upon the laying of estimates? I have already indicated that in my opinion Parliament would not agree to hand out £200,000,000 to £250,000,000 a year for the running of the hospitals without knowing some of the details of the expenditure, and for that reason alone I believe it would not be right that the Government should indicate to your Lordships that at this moment they are in favour of such a policy. They do not believe that the Opposition in another place would themselves agree to a change of that character, because the Opposition in any House of Commons is a body of men who want to discuss in detail what the Government are committed to, and will refuse to allow an opportunity of that kind to escape them by such a proposal as this being passed through Parliament. The alternative is that there should be the estimates as I have indicated. I now want to tell your Lordships what in my view is the value of those estimates to the boards and to the Committees.
The Minister looks upon the hospital service as a developing institution and likely to call upon Parliament for greatly increased grants in the next few years, unless rearmament renders such development out of the question. Inevitably, normal developments will cost a good deal of money because of increasing prices. All the management committees and regional boards are equally anxious that the hospitals within their authority should be developed, and for that purpose they will require money from the Government. The most effective way in which application could be made is by enabling them to put through estimates upon the basis of which they could make out their case to the Minister. It would be useless for the Minister to go to the Chancellor of the Exchequer and say, "I have been informed by such-and-such a regional
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board that instead of £100,000 for next year as they had for last year, they will this year require £150,000." If the Minister went to the Chancellor of the Exchequer with a case of that kind and was unable to support it, I can see at once that the Chancellor would not only hesitate but would refuse to make such a grant. The benefit of the estimate, therefore, is that it gives a freedom to the hospital services that undoubtedly they will lose if they are restricted merely to asking for grants without supporting their case with the facts.
It is suggested that under the present system of estimate, authorities, being human, will always ask for more than they are likely to get, because they believe the Chancellor of the Exchequer will cut them down. May I suggest to your Lordships that in a service of this kind, where money is being found by another authority, even if there are no cuts there will always be a tendency to ask for as much as can be obtained. Merely to get rid of these estimates and bring in block grants would not reduce the claim of the hospital services who are anxious to develop their hospitals for the services that they want to build up. The last thing I want to mention upon this point is the subject of priorities. In the straitened circumstances of our time, we all agree that Parliament, the Chancellor of the Exchequer, the Minister of Health or the authorities themselves, must be able to establish something in the nature of priority. The working of the priority system would be impossible were it merely a case of a block grant being applied for. It can be properly carried out only when full estimates are placed before the authorities who have to give the decision.
Now I want to deal with the point made by the noble Marquess about the balances that may exist at the end of the year in various parts of the hospital services, and the suggestion that these balances are spent rather than returned to the Treasury. Perhaps I ought to point out that these balances are not balances of cash; no return of cash to the Treasury is called for. These balances are balances of authority to spend. If, therefore, a hospital authority has not exhausted its authority to spend and there is a balance of that authority, that balance is not returned; it merely lapses. It no longer exists at the end of the year. That is

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an important point to note, because it has been a principle of government in this country since the Restoration.
LORD LLEWELLIN: Since the restoration of what?
LORD SHEPHERD: Since the Restoration of the Monarchy in Great Britain. Since then it has been a principle of government in this country that unspent authority to expend money shall lapse at the end of the financial year. The body which held such an authority to spend and required an authority for the next year would have to apply for it the next year. I hope it is not going to be suggested that a policy that has stood the test of centuries and which applies to the whole of the Government's services should not also apply to this particular Government service. If it applies to the Army, the Navy and the Air Force, there seems to be no reason why it should not apply to the hospital service as well. It is not a return of cash; it is merely a return of authority.
The suggestion has been made that under the present system a good deal of money may be wasted as the result of buying at a late hour. That is not necessarily the case, and, in any event, there is no guarantee that money spent at the beginning of the financial year will be wisely expended. Money used for buying at the beginning of the financial year may be quite wastefully spent. But the tendency at present to spend these balances of authority to spend is actually encouraged by the regional boards, and encouraged, to some extent, also, by the Minister himself, because we are living in a time of rising prices. If a hospital management committee find they have unspent authority on a given section of their hospital work, there is a danger that if the matter is left until next year prices will be very much higher. Therefore, the suggestion may be made to the authority that they should spend now and, if you like, stockpile, in order to save what may be a much heavier cost next year. That may seem somewhat strange; but, on the other hand, if we were living in a time of falling prices and there was a balance at the end of the year, I venture to say that none of our hospital management committees and none of our regional boards would want to spend that balance, being confident that in the following year
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costs would be lower and that by waiting the public purse would be saved. So this question of spending balances towards the end of the year has to be determined not by principle but by the circumstances which may exist at the time.
Now—and these will be my closing words—I come to the points relating to the request for the appointment of a committee of inquiry. I do not think that on the basis of the speeches to-day a case has been made out. Although a request has been made for the establishment of a committee, there appears to be no recognition of the fact that there are committees in existence at this moment which deal with the hospital services. With your Lordships' permission, I will give you some particulars of these committees, and I hope that at the conclusion of my remarks thereon the House will find it unnecessary to go forward with the noble Marquess's Motion to-day. First of all, the whole of the accounts of the hospital service, as presented to Parliament by the Minister, are submitted for investigation by the Public Accounts Committee of another place. Noble Lords will not need to be informed by me that on occasion those accounts come in for very close scrutiny indeed. Reports of the Public Accounts Committee are always published, and what they contain, therefore, becomes public property.
Then, in addition to the Public Accounts Committee in another place, there is the Estimates Committee; that is the Committee which examines the proposals of the Government prior to the introduction of the Budget. The Estimates Committee have been extremely interested in the hospital service, and they are at this moment very active in-deed in giving attention to the expenditure upon that service. In 1949 this Committee reported very fully on the ambulance service, and their Report has been published. This year the hospital service comes in for review by the Estimates Committee, and, in the course of that review, the following bodies will be called to give evidence before the Committee—officers of the Health Department, representatives of two regional boards and representatives of three hospital management committees. Both the Royal Colleges—the Royal College of Physicians and the Royal College of Surgeons—will be represented before the Committee. King Edward's Hospital Fund and the

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Nuffield Provincial Trust are also to be represented. Lastly, but by no means least, the B.M.A. will be represented. So the fact is that at this moment there is actually provided by the Estimates Committee of another place the kind of investigation into the financial conditions of the hospital service for which the noble Marquess has been asking. It is, there-fore, somewhat startling for the Govern-ment—these being the facts—to find that another committee is asked for in order that the same ground may be covered.
In addition to the Estimates Committee in another place there is, as noble Lords are aware, a Central Health Services Council, and this body, as those of your Lordships who have read the morning Press will know, has just reported on its work for the past year. One of the items its members have had under discussion has been the administration of the hospital service, and they have reported that whereas the present arrangements are not sacrosanct it would, in view of the short time that has elapsed since the beginning of the hospital service, be deplorable if at this moment any great change were made in that service. The Central Health Services Council has been much interested in another point which has been mentioned by the noble Marquess—namely, the costing system on a bed basis. During the present year, at the request of that Council, King Edward's Hospital Fund for London and the Nuffield Provincial Hospitals Trust for the provinces have been making some investigations in a selected number of hospitals. Preliminary work was carried out by these bodies last year, and departmental accounts on a basis adapted to the circumstances of individual hospitals will be prepared during the year 1951–52—that is, the present year—for 108 separate hospitals of widely different types controlled by four boards of governors and nine hospital management committees.
So whilst it is true that, at the moment, we have not in operation the costing system of which the noble Marquess spoke when he dealt with King Edward's Hospital Fund, we are in the process of making the necessary inquiries to see whether that system can be applied all round. It must be recognised, however, that in the present circumstances of the hospital service conditions vary so much from hospital to hospital and from district to district that a general costing
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system such as he has in view might not be altogether practicable. From what I have said, it will be apparent that in regard to the hospital service inquiries appear to be the order of the day. I ask noble Lords to be content with that for the time being and to await the results of the discussions that are now taking place. At the conclusion of the period, should there appear to be need of further inquiry, I am sure that the Minister would be prepared to give every consideration to the claim.
4.20 p.m.
LORD WEBB-JOHNSON: My Lords, your Lordships may have expected that I should bring you some fresh information as the result of experience in the management of hospitals since the passing of the Act. But as soon as the Act was implemented, the then Minister of Health took immediate steps to remove me from the board of management of the hospital which I planned and which I had served for forty years. However, that is by the way. Although I have not had practical experience in the management of hospitals under the Act, there is no question that the impressions which I have gathered are not purely personal, but are shared by thousands in this country. No one can enter a hospital without seeing a change in the number of officials operating it, people not directly dealing with patients but with administration. Yet there is less work to be done on the administrative side, because in the old days of voluntary hospitals the administrative staff had to raise the money to run the hospitals, and they had to assess the income of patients to see whether they should make some contribution towards the service. As I go round and see this army of workers, I often wonder whether more advantage should not be taken of voluntary service. Take, for example, one service which is largely based on voluntary work—namely, the library service to the hospitals. That is maintained at a very moderate price per occupied bed paid by the Minister, because there are 4,000 voluntary workers at headquarters, quite apart from those in every hospital.
These are my immediate introductory reactions. I should like to congratulate the noble Marquess, Lord Reading, on such an able review of the problems that worry a good number of people of this country. I do not think he should be

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regarded as making any attack on the Government. Surely the anxiety is shared by all noble Lords, on whichever side of the House they sit. The noble Marquess has given us a most able review. There is living a distinguished Lord of Appeal who once said that there was a difference between the law and surgery: the barrister was always anxious not to leave anything out; the surgeon had another anxiety! The noble Marquess need have no anxiety about his review. I do not think he has left anything out. Indeed, he left very little for us to say. What I am surprised at is that the noble Lord, Lord Shepherd, representing the Government, should have been so touchy about this. Surely the impression abroad that some of this colossal sum which is being spent is being wasted should be a cause of anxiety to those responsible for the public funds. I thought it was obvious to all that an overhaul of the administration and of the system of financial control was urgently needed. Now that the Ministry has moved down to Savile Row, surely they can appreciate that even the best cutters and fitters make a misfit sometimes. Why should not the suit be tried on again? Why should it not be altered? And if it is beyond adjustment, let us have a new suit, particularly if it is in exchange for a misfit.
I am well aware, as I imagine are other noble Lords, of the investigations that have been carried out, and are being carried out, by the devoted servants of the King Edward VII Hospital Fund and of the Nuffield Provincial Hospitals Trust. But the noble Lord, Lord Shepherd, did not tell us that in the early stages they reached the conclusion that it was essential there should be a costing system. He did not call our attention to the 1950 report of the King Edward VII Hospital Fund, which pointed out that unless there was a costing system, so that costs in the departments in different hospitals could be compared, there was no possibility of reaching a yardstick and controlling expenditure. It must be applied to departments, to the dispensaries and wards, and not to items such as salaries and wages, showing where economies are possible and showing where any change is effected in administration or service, what difference that has made to the cost. There is no doubt that the
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general impression of these two great organisations is that the cost can be lowered and that the Service can be improved.
I agree with what the noble Marquess has said about the lack of incentives to saving. I will not go into details now, but the very laying down (or should I say the erection?) of a ceiling, has encouraged economy. There is a good deal to be said for having a round sum and a good deal to be said for a quinquennial estimate. I agree with the noble Lord, Lord Shepherd, that there must be budgets and estimates on which to base grants, but if the universities can be given grants based on quinquennial estimates, surely that system can be extended to other departments. Although it has been pointed out that it is universal throughout the public services that any item granted and not expended is returned to the Treasury, the authority being withdrawn, I should have said, from the experience I have had in other services, that there was in the existing services of long standing a tendency to rush expenditure at the end of the year, because if they did not do so the authority to spend was withdrawn.
I do not intend to detain your Lord-ships much longer because, as I have said, I think the noble Marquess has given us an extremely good review. The Government are covered to a large extent by the fact that these inquiries are in progress, but I do not think it is altogether satisfactory when the noble Lord who replies for the Government tries to make us feel that all is well; because there is a general feeling throughout the country that all is not well. I hope that any other noble Lord who speaks for the Government will rather take the view that the Government are just as anxious as we all are that, where there are faults, they should be corrected, and that the Government should not regard everything as being all right. To give one instance: one item in administration that wants careful examination is the running of the group hospital management committees. In previous debates we were told that these were created because a unit of 1,000 to 1,500 beds was an economic unit. If the running of an economic unit requires addition of over forty extra personnel, and an expenditure of over £20,000 a year for new administrative offices, that means

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that a great deal of money is taken away from the services to the patients.
Lastly, I should like to say this. Do not let us think this is just a matter of money. This is a matter of service. Every pound that is wasted in the administration and running of the hospitals is taken away from the patients. Almost every bit of accommodation that is taken up by the offices of the hospital management committee—I do not say in every case, but I know of many cases—is suitable for patients, and could be used for their treatment. In point of fact, in some cases these committees, with their administrative officers, are installed in what were active wards, and in other cases they are installed in new wards which cannot be opened because they are full of officers. Another serious result of the high cost of hospital beds is that that cost is used as a basis for what shall be charged to those who are prepared to pay for themselves. The result of the high cost to-day is that many patients who are ready and anxious to pay for themselves cannot afford to do so, because the cost in the private wings, the charge for which is based on the general hospital cost, is so high. It is not only to the disadvantage of the patients but also to the disadvantage of the reputation of British medicine when those distinguished colleagues who come to visit us from abroad find that patients who are willing to pay cannot get into the hospitals.
4.32 p.m.
LORD STAMP: My Lords, there is one point that has been made by the noble Marquess who moved the Motion, and by the noble Lord, Lord Amulree, which I should like briefly to re-emphasise, as I feel it is of great importance. I refer to the disadvantages of the central control of minor budgetary details. Now, as has been pointed out, since hospital boards have to obtain permission from the Minis-try before any expenditure can be incurred, individual items, often trivial and numerous, have to be considered separately by Ministry officers. Sometimes the permission is not obtained until shortly before the financial year ends, and the result is that it may not be possible to use the money for its official purpose. As the noble Marquess, Lord Reading, pointed out, there is a considerable temptation to seek the Ministry's permission to spend it on less important
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things rather than to lose it, which tends to over-spending and extravagance. I am sure that this occurs frequently.
A further disadvantage is the waste of time involved by the hospital authorities in having to obtain this necessary per-mission for the numerous individual items of expenditure, and the large number of officials who must be required at the Ministry to deal with such applications. The cost of this large secretariat must inevitably add to the burden of the cost of the National Health Service, which is a matter of serious concern to us all. In my view, and in the view of many well qualified to judge, much more could be left in the hands of the hospital governing bodies. As has already been suggested, they might well be given a block grant each year to cover their requirements. However, this should be done on the strict understanding that no supplementary grants will be considered; indeed, applications for supplementary grants might even be regarded as evidence of inefficient financial management—except, of course, where applications might be necessitated, for example, by the introduction of fresh salary and wages scales of which the hospital board had no previous knowledge.
It should also be possible to carry over money not spent in one year to the next, without jeopardising the size of the grant in the succeeding year—I know that that difficulty is a worry to many hospital managements. In this way the money would be spent to the best possible advantage, as and when the need arose, and only when expenditure was fully justified. There are those who would say that too much responsibility would be given to hospital boards by this arrangement, and that they are not qualified to undertake these responsibilities. I believe that, in the great majority of cases, when the hospital boards were constituted the nominations were wisely made by the Ministry, and that thoroughly competent bodies were set up. They are not com-posed in the main of doctors—notoriously bad business men—but of laymen, many of whom are successful business men in different walks of life. If safeguards to ensure wise spending are necessary, surely they can be provided in the form of regular inspection of the hospital accounts by Ministry officials, who I believe have

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the right to attend hospital board meetings when financial affairs are being discussed. I believe that reforms along these lines would go far to remove the handicaps to official financial management from which the hospitals are at present suffering, and either the proposed Committee, or some other Committee, would serve a most useful purpose in considering, and if possible initiating, such changes. In any case, I feel that this debate has been most valuable in emphasising what are obvious defects in the present organisation.
4.38 p.m.
LORD DOWDING: My Lords, I had not intended to intervene in this debate, but there is one point upon which I should like to say a few words. I am a member of a hospital management committee, and from the inception of this scheme it has always seemed to me that there has been one basic defect in organisation, which should be considered, either by the Committee which the noble Marquess, Lord Reading, is recommending to-day or by one of the other Committees which it is maintained can do the work equally well. I refer to the number of groups which a regional board has to administer. In my time I have had a good deal of practical experience in the setting up of organisations in military commands, and so on, and as a rule one tries to give a formation commander not more than about seven or eight subordinate formations to look after. It depends, of course, on the nature of his command, and there may be occasions when a formation commander can administer twelve subordinate formations with success.
We in our hospital group committee have a dozen hospitals to look after. I should not like to say that the way in which we carry out our duties could not be improved upon, but I think I may claim that we manage the job fairly satisfactorily. Our regional board, how-ever, has no fewer than fifty-two hospital management committees to administer. I suggest that it is quite beyond the capacity of any body of men, however efficient and hard-working, to cope with that number of subordinate formations. I think I am right in saying that the practical effect has been to set up a quite unauthorised intermediary organisation, which is dealt with by county councils. I
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do not want to detain your Lordships further. I merely put forward the suggestion that, if there are Committees dealing with this point, they should consider very carefully the enormous number of management committees which have to be coped with by a regional board.
House adjourned during pleasure, and resumed by the Lord Chancellor.
4.41 p.m.
LORD HADEN-GUEST: My Lords, I think we can all agree on one matter at any rate, even if we do not agree on others—that we have had an extremely useful and informative debate. I must congratulate the noble Marquess on the case he has presented, which was of very great interest. I am sorry that the noble Lord, Lord Amulree, is not in his place at the moment, because he made a slight error when dealing with the question of merit awards which, if not corrected, may lead to considerable misapprehension. A merit award to a consultant means in fact that his total salary is raised to £2,500, and not to the sum of £5,000 mentioned. It is raised to that sum from what he had before, presumably £1,500, so that the total increase in remuneration is £1,000. On a budget of a hospital management committee— not, of course, on a budget of one hos-pital—with, say, a budget of £1,000,000, that is not a very extravagant amount.
LORD WEBB-JOHNSON: Will the noble Lord forgive me if I correct him? The salary which a whole-time specialist may receive is as much as £2,500, but that sum may be brought up to £5,000 by a merit award.
LORD HADEN-GUEST: The information I gave to the House was information which I received officially, and I have no doubt that that applies in a larger number of cases than the figures given by the noble Lord, Lord Webb-Johnson. I think that what I have said constitutes substantially the facts of the case.
I welcome very much indeed what my noble friend who has just spoken said on the subject of the work, particularly since he took the view which I take in the matter: that one ought not to look at this thing primarily from the money point of view and consider it from the different

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headings of expenditure, but that one ought to consider it from the point of view of the work which has to be done. I think it would have put the whole debate more in perspective if the noble Marquess who initiated it had made some reference to the general medical practitioner services, as well as to the hospital services: it is very difficult indeed to cut the medical services of the Nation into two compartments. I do not say that it is not possible to do so, because, of course, the figures are quite separate, but it gives a wrong impression if the hospital service is considered as if it were the main feature, although I agree that it is an extremely important one. The noble Marquess directed attention to financial freedom. But there must also be—as I think he will agree—financial control, because there can be too much freedom. The noble Marquess has, I believe, been associated with hospital work for many years, and he will remember that in the bad old days, when there was no hospital centralisation, and sometimes very little hospital control, the grotesque over-expenditure and the very bad conditions in many hospitals were well known. Now that matters are getting on to a more definite and formal basis we have our own special problems; but they are problems which can be solved by common sense and the application of business principles, whereas those in the past were almost beyond belief.
I will not detain the House by referring to conditions which existed in the earlier years of the century. I should like to draw attention to one very simple fact which appears to have been overlooked by some noble Lords to-day. It is that the National Health Service came into existence only in July, 1948. It is less than three years ago since this vast change was made in the National Health system, and now nearly all the doctors in the country are in that Service—either in the national general medical service or in the hospital service. The hospitals for the most part are in the Service, although a few—some of them religious institutions—are exempted. There has been built up in that time a Service which has already produced very remarkable results in the health conditions of the country. Let me mention one simple fact which is sometimes overlooked by people who are
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not in the medical profession—I hope that on this matter my noble friend Lord Webb-Johnson will agree with me. Whereas under the panel system of treatment there were 20,000,000 people entitled to receive medical aid without actual cash payment, under the National Health Service there are 43,000,000. The point is not only the increase in the numbers, but the fact that under the present system there are a large number of women and children who, under the panel system, would not have been entitled to treatment, because they had not the kind of cards necessary. Those people are now going to doctors and hospitals and receiving treatment; they are being improved in health to an extent which at the present time is having a marked effect on the national physique and expectation of life. It also has a very considerable effect on the increase in the cost of the National Health Service, including the hospitals. It has been of the greatest benefit to all the wives and children of working-class people throughout the country: they have not to pay for medical services which they now have but which they did not get before because they could not afford to pay for them. That extension is worth paying for in itself, and it has led to a great improvement in the health of the country.
I will not refer to the dental and ophthalmic services available to all, but I will refer to the consultant services, because they come very much into the hospital services with which the noble Marquess has been dealing. The noble Marquess talked about the hospital services, but he did not mention one of the greatest. It was perhaps not his desire to deal with the medical aspects of the matter, but I do so now for a few moments because I think it is of the greatest importance. The consultants in the country who, before the National Health Service came into existence, were largely concentrated in the large towns, are now spread over the regions, which previously had very few indeed. For instance, in the South-Western region, which includes Devon, Cornwall, Somerset, Gloucestershire and part of Wiltshire, there are now 248 consultants. I should imagine that in that area four years ago there may have been fifty at the most. In the whole of Wales, which is mostly rural,

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there are 219 consultants, and the consultants are also scattered over other parts of the country. This is part of the planning which is carried out by the Ministry of Health, and it is that planning which takes the place of what used to be the planning of individual hospitals.
I notice that the noble Marquess, Lord Reading, suggested that the individual hospital could not now plan what it proposed to do a long time ahead. I agree that that is true to a large extent, but the hospital could plan a good deal more if it worked more closely with the Ministry through the hospital management committee and through the regional hospital boards. I think there is a good deal of room for improvement in our methods of administration. I sympathise with the noble Lord, Lord Webb-Johnson, on this question of administration: I believe that we can cut out some of the cost of administration. But I think any noble Lord would be surprised if it were possible for a Service which was started only two and a half years ago to have reached perfect condition already. It seems to me that we should not be going in the right direction if we were to set up a Committee to overhaul this very young system, especially as adequate means of overhaul, as already indicated by my noble friend Lord Shepherd, are already in existence and in operation. I myself was in consultation only a few days ago with a representative of the Nuffield Trust, with a view to seeing what more could be done in the way of getting a survey of expenditure. I believe that the Nuffield and King Edward Hospital Trusts, in their costing experiments, will be doing a very useful service which will provide much valuable information.
I have mentioned these matters of finance but, after all, the National Health Service does not exist simply in order that it may keep perfect accounts. I am sure the noble Marquess, Lord Reading would never dream of suggesting that. It exists in order that it may give the best possible service. I want to put on record—because it is a fact which I myself did not altogether expect, and I do not suppose that Lord Webb-Johnson expected it—that there has been reported this year a reduction in the total number of tuberculosis cases notified. That is a striking fact, especially when we
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remember that a new method of diagnosis by mass miniature radiography has been set up all over the country, which of course means that new cases have been discovered which would not have been discovered before. The National Health Service is doing a good work in building up the physique of the nation, and for this alone it is worth every penny we are spending on it—and more. The noble Marquess may feel that perhaps I am too enthusiastic, because I am myself a medical man. He quoted sayings of the Socialist Medical Association which he had read with care—and I was interested to see that he had done so. He asked whether I had not been a member of the committee which drew up the document.
THE MARQUESS OF READING: I carefully refrained from pressing the question.
LORD HADEN-GUEST: I certainly was not a member and I do not propose to say whether or not I agree with their conclusions. The noble Marquess, I have no doubt, has before now been a vice-president of an association without necessarily associating himself with all that is done by the association—and that is my position. I think it would be a mistake for us to set up a special Committee, since an organisation to review expenditure and experimental costs is already in operation. I think we may say, having heard the speeches this afternoon, that this matter has been approached without partisanship or Party bias, and I hope now that the noble Marquess will feel satisfied and will not press his Motion.
4.54 p.m.
LORD SALTOUN: My Lords, I did not intend to intervene in this debate, but one remark which has fallen from the noble Lord, Lord Haden-Guest has moved me to do so. I hope that when the Government decide on any costing scheme for hospitals they will take great care to see that it is based on the most practical experience. One of my jobs during the war was that of keeping accounts and making returns for one of the local hospitals, and I had experience of the extraordinary results which followed from applying to a hospital a system of costs devised for a different hospital. I suggest that no system should be arbitrarily imposed from above; otherwise the effect may be very serious.

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The matter should first be carefully examined professionally. It seems to me that to frustrate these regional boards all over the country who are keen to make improvements and effect economies is like going out shooting with a well-trained, well-broken retriever and keeping him on a lead. I think that that is a good parallel, and I very much regret the Government's answer to the noble Marquess.
4.55 p.m.
THE MARQUESS OF READING: My Lords, I am obliged to both noble Lords who have spoken from the opposite Benches for what they have said. One of them told me what I ought to have said and the other what I ought not to have said. Between the two I am sure I shall have learnt a useful lesson. The noble Lord, Lord Shepherd, gave a dissertation on the subject of Parliamentary procedure which was no doubt very valuable to many who, like myself, never had the advantage of being in another place. If the financial system upon which the hospitals are working at present is not the right one, let us see whether we cannot try another. It was said that it was good for the souls of the hospitals that they should have to produce estimates of their expenditure. But are they to produce an estimate showing what they hope to get, or an estimate showing how they propose to spend what they are given? These are the two opposite angles of approach. In the one case they would prepare estimates showing all they hope to get and in the other case they would have to show how they would propose to spend the amounts they received.
It would be interesting if the noble Lord, Lord Shepherd were to attend, in addition to the meetings of the other bodies to which he made reference, a meeting of the Socialist Medical Association, and then to tell your Lordships whether he was any more successful in convincing that body than he was in convincing me that the cases which they and I put forward are very different. In fact, the cases are very much of a parallel. The noble Lord, Lord Haden-Guest, paid a glowing tribute to the Health Service,
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from which he obviously derived the greatest satisfaction. I do not wish in any way to minimise the facts he mentioned, but they bad no relevance to the discussion I was raising this afternoon. Nor does it seem to me to be in any way a criticism of the terms of my Motion to say: "Oh, you are dealing only with hospitals; you ought to have dealt with the entire Service." Very different financial considerations attach to different aspects of the Service, and the case which I was making on hospitals might well have been entirely irrelevant to the case of the remuneration, for instance, of the private practitioner. It was because I was dealing with hospitals that I endeavoured to confine myself, perhaps misguidedly, to the subject of hospitals.
We have had a debate in which a number of noble Lords have provided useful suggestions. I do not agree that at the moment the matter is being adequately dealt with by existing bodies. I do not agree that we ought to sit down complacently and say: "This system is going on for only three years. Therefore, we can leave it alone and do nothing." I do not agree that everything is ideal, as was suggested in the somewhat complacent sketch which, not for the first time, has been given of the activities of this particular Service. I think there is room for reform. I hope very much that the Government will keep an eye upon the activities of these committees which they say are working. If the Government do not, I can assure them that we shall. I ask leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

BRITISH NORTH AMERICA BILL
Brought from the Commons; read la, and to be printed.

WEST RIDING COUNTY COUNCIL (GENERAL POWERS) BILL
Brought from the Commons; read la, and referred to the Examiners.
House adjourned at three minutes past five o'clock.