National Health Service: Future

HL Deb 06 December 1989 vol 513 cc863-936

3.23 p.m.

Lord Hunter of Newington rose to call attention to present uncertainties about the future of the National Health Service and possible solutions; and to move for Papers.

The noble Lord said: My Lords, for some reason it has been difficult to get a full understanding of the Government's proposals about the health service and their possible significance. It would be argued by many that little evidence has been provided on a number of important matters. Requests for further studies have been consistently refused. At the beginning I believe that the Secretary of State was concerned that medical protests were just a device to get rid of proposals. However that may have been, I feel certain that that is not the situation now.

In the United States the control by the medical staffs over quality assurance and peer review is being challenged by hospital boards and administrators driven by economic pressures. Changes in health care delivery may force the medical staffs to change their style of practice. This battle in the United States continues. In 1982 the state of California adopted a controversial law which allowed payers of health care services to contract with selective groups of hospitals and physicians.

What is happening in the United Kingdom? Here also there are pressures on the financial situation and everyone must accept that resources for the National Health Service are limited. In addition, efficient management is required in such a large, complex organisation. It must also be accepted that managers must have a clear understanding of the special situation which exists in the National Health Service and establish the right relationship with the principal spenders, the doctors.

The White Paper seemed to suggest that this was the British version of the California experiment. What was the reaction of the medical profession? On 15th November 1989, 83 per cent. of the total staff of the Borders General Hospital in Scotland informed Mr. Forsyth, the Minister for Health, as follows: We the undersigned, having considered the Government White Paper Working for Patients, are opposed to its proposals believing they would have a detrimental effect on the care of our patients". Because of the relation between doctors and patients the fact is that much of the expenditure is initiated by them. Attempts by management to control the expenditure, as I have said, have given rise to tremendous problems in the United States. What should happen here in order to avoid the problem, or can it be avoided?

The situation is not helped by the fact that the Secretary of State has seen fit to impose a new general practitioners' contract. That imposition has not led to violent political action by the British Medical Association. Anyone reading Dr. Michael Wilson's statement about the matter will realise that the committee of the British Medical Association, whatever its faults, has decided firmly against any form of action which would be damaging to the patients. It believes that, in order to protect patients' interests, which remain paramount, and to sustain general practice in the National Health Service for the future, it will subject key aspects of the contract to a careful audit. I quote: We will continue to impress on department officials the contract's harmful effects on patients".

The outline of the new contract must be known to most noble Lords. The proposals in the White Paper for the reorganisation of general practice are based on the more detailed list of duties and responsibilities for general practitioners contained in that contract. One wonders whether this is the end of the independent contractor status of general practitioners.

Consultants are also concerned. Perhaps I may quote from one of the presidents of a royal college: What is proposed is a series of tightly packed contracts where the amount and standard of work is closely spelled out. Such a system is in stark contrast to the ethics in medicine which demand commitments from doctors in and out of hours. Much of their committee work and management duties are in unpaid overtime".

In addition, what is the future commitment for teaching and research? So far we have had only a few reassuring statements.

In some senses it could be argued that management has dictated the duties of doctors similar to the situation existing in the United States which has given rise to so much conflict. Why has that been done? What about the existing contract? Was it satisfactory? Did it recruit high-quality doctors, and were they content with their lot?

To examine this situation further one has to look also at the changing role of family practitioner committees and their successor, the proposed family practitioner services authority. Anyone concerned with the National Health Service in its first 20 years and the steady deterioration of standards which took place in general practice will remember vividly the effects of the general practitioners charter of the mid-1960s. Since that time recruitment has improved and that improvement has been maintained. Some of the best doctors have gone into general practice.

In 1985 the membership and the accountability of family practitioner committees were changed and they were declared to be adminstratively independent of district authorities and directly accountable to the Secretary of State over a whole range of responsibilities. Why was this done? The planning and management of these services have relied upon the professional ethos of independent contractors, and successive governments have boasted as to how succesful they have been. Recently, as part of the Government's proposals, the Family Practitioner Services Authority has had a changed membership resulting in reduced contact with local government. It has become responsible to the regional health authority. This is happening at the time of implementation of the Griffiths Report, the success of which depends so much on the right relationship between the health service and local government social services.

The proposals seem to envisage the doctor in isolation dealing with a whole range of new responsibilities and getting financial benefits from achieving vaccination rates at a certain level. No real picture of the team in general practice has been developed or encouraged. Laying down the detail of doctors' hours and responsibilities may be necessary so that the costing systems can be effective. We are told that the contracts in the first instance will be based on presently available data.

It is suggested that large practices should have their own budgets, and that they should be able to contract with hospitals. From reading this proposal, it is obvious to me that the assumption has been made that general practice in the future will be a blown-up version of the present position, and that the dependence on hospitals will remain substantially the same. There is no real discussion of the enlarged role of the professions allied to medicine in assisting, for example, consideration of public health matters.

All this is very sad. Perhaps I may give a simple example. It is not envisaged that large group practices will have modern technology. One important and urgently needed step is to find out how many patients are needed to justify the use of various types of equipment in, or example, the diagnosis of cancer. Neither is it envisaged that consultants will visit group practices under contract arrangements, and that patients will receive a range of treatments there. That would be a marvellous service. To have imposed such a dull, unimaginative and doctrinaire contract in a successful situation seems to be the essence of folly.

What will the future recruitment of general practitioners be like? Future arrangements in the health service should strengthen the central role of general practice. Will the Government today commit themselves quite unequivocally to this objective? I am saying that, while recognising the need for evolution and change, one must keep the best and most successful parts of the existing system until there is evidence that change is desirable or necessary.

In contrast to this reckless plunging into the unknown by the Government over the general practitioners, the proposals regarding hospitals and independent hospital trusts are ones on which an enormous number of experiments have been done, through boards of governors, and so on, since the beginning of the National Health Service. Though a great deal of work is required to get the technology in place, and a great deal of detail is required on contracts, the basic proposal is one of which we have wide experience. One is glad to see practical proposals about doctors carrying out private practice in hospitals. One is sad not to see the proposal orginally contained in the National Health Service Act for amenity beds. This is more important than private practice in hospitals. The patient should be allowed to pay for special accommodation. He may need privacy in an intimate family situation. The objections to the hospital proposals seem to be largely based on the fear of a two-tier system for hospitals, which was largely demolished by the emergency medical service between 1939 and 1945. It is also based on the possibility of departure from nationally agreed salary scales. I am sure other noble Lords will discuss these matters.

What are the next stages in development? Is it possible to put the National Health Service on to an evolutionary path? The view is widespread among noble Lords that this is vitally important. The Journal of the American College of Physicians has stated: They—the top administration—are starting to realise that if you don't care for the people who work in the hospitals (or the NHS) there is no way that physicians and other employees can pass on the caring to patients". In the past, caring was the prime concern mainly of doctors, nurses and others in contact with patients. It was a personal responsibility. The proposed new management systems require collaboration between management and those concerned with patients. This is welcome, but the Government will have to adopt a very different attitude to that adopted in the past year if a successful policy is to be agreed. Future developments depend not on orders from the Department of Health, but on the feeding of vital information to the management board, and on information derived from research and development studies, including clinical audit. Policy recommendations can then be based on evidence. These recommendations would be concerned not only with the running of the service, but with patient care and management.

The Journal of the American College of Physicians has also stated: If the administration sets the priorities first. and then consults the doctors, there is objection. But if they say, you the clinicians, must set the priorities—this is acceptable".

I was glad to hear from the chief medical officer that in Guy's Hospital and Southampton Hospital studies this is the case. The clinicians are actively involved in the decision-making process. But to achieve it, a substantial amount of data will have to be made available to clinicians so that they will fully understand the problems. All this is time-consuming, and on occasion may take clinical experts away from their primary highly specialised role and thereby cause staff shortages. The key sounds simple but is complicated. How does one produce the proper rate of growth of services, and how does one distinguish between the good and the wasteful? That is very simple but also very difficult.

The Select Committee on Science and Technology realised this when it examined medical research with particular reference to the NHS. Clinical audit in a small hospital or group practice is fine for maintaining the standards of clinical care, but a machinery is necessary to feed important findings into the system. This would include findings on medical management. The Department of Health's medical advisory committees is not sufficiently widely based for this. A new communications channel is needed, That is what I believe to be a basis for evolution. Without it there is a danger of going from one crisis to the next and of continuing conflicts when governments change.

The House is awaiting the Government's response to the report of the Select Committee on Science and Technology, and also the report of the steering group chaired by Sir Christopher France, which has been concerned with the sharing of costs between the Departments of Health and of Education in teaching and research centres. In the past few weeks, discussions with the presidents of the royal colleges have proved unsatisfactory because Ministers have felt unable to discuss the points which were worrying the colleges and failed to answer their anxiety satisfactorily. Unfortunately, this means that anxieties have not been relieved. The present fear is that the Government, having imposed the general practitioners' contract, intend now to impose the recommendations of the White Paper.

The Government's handling of the National Health Service and Community Care Bill in this House and in another place could be the next important step. It could mean the difference between success and failure in regard to the healthy development of the NHS and also public confidence in the Government. When one reads of the turbulent happenings on the medical front of recent years proposed by government action after a health service review which was conducted in secrecy, one wonders whether the whole matter is not just a prelude to privatisation; that is the fear.

The Bill which will be before the House of Commons refers to the development of community service following the Griffiths Report. I have previously argued strongly in this Chamber in favour of those proposals. Griffiths said: There must be a clear framework within which local and health authorities are working out their own process of co-ordination". He also said: It is a matter of choice whether a person needing long-term care finds himself in a geriatric ward or in a nursing home or a residential home, all with different costs".

The community care proposals are a great challenge to local government, expecially in relation to the co-ordination of services and the close collaboration with voluntary agencies of the National Health Service. Noble Lords may wish to make reference to that aspect during the debate, but the matter is so important that I wonder whether it does not justify a debate of its own at some future time. I beg to move for Papers.

3.41 p.m.

Lord Nugent of Guildford

My Lords, perhaps I may begin by thanking the noble Lord, Lord Hunter of Newington, for giving us the opportunity to debate this most important subject this afternoon. I should also like to thank him for his extremely comprehensive introductory speech,. He will of course understand that the limitation of time will prevent me from covering such a wide range of subjects as he has. In fact, I intend primarily to speak about the hospital service upon which the noble Lord commented encouragingly as regards the progress being made.

In the GP service I recognise that there are major unsolved problems which I hope that the Government may yet succeed in solving; but the measure of conflict between Ministers and professionals is quite clearly totally unproductive. As it is now nearly a year since the publication of the White Paper, we now have an opportunity to comment upon the matter and to review what has been done. I think everyone will agree unequivocally that the aim of the White Paper is to ensure a better service for patients and better value for taxpayers.

In my view my noble friend Lady Hooper is entitled to congratulations for what the Government have achieved over the past 10 years. After 40 years of existence it is indeed the time to make a general review. It is a courageous attempt. The ideas in the White Paper are good and valuable. My noble friend can claim that over the past 10 years substantial improvements have been made since the actual expenditure for next year is £28.7 billion which is an increase in real terms of 45 per cent. That is a very large figure. The Government must be given credit for that fact, judged by any standards.

The number of hospital patients has increased from 5.3 million to 6.6 million; the number of nurses has increased by 67,000; and the number of doctors has increased by 14,000. These are substantial increases, and my noble friend is entitled to take credit for them. However, we now need to know—and this is what we hope the new approach will establish—what those figures represent in terms of quality of life for the millions of patients concerned; in other words, the outcome in hospitals.

First, we want to know how much unused capacity exists in the hospitals. We all know that there is the anomaly at the end of the financial year where because some hospitals have overrun their budget—and these are usually the most progressive ones—they have to close down beds; whereas, other less progressive hospitals have unspent funds. Those are ridiculous anomalies and we would like them to be eliminated somehow.

Therefore after 40 years of existence, some of the service is excellent; but much of it is not as good as it might be. As I understand it, the reform is a major attempt to replace the existing system of hospital financial allocation which is on a capitation basis, assisted by the RAWP system on capital allocation, by a system which reflects more nearly the treatment provided for patients and the final outcome; in other words, as my noble friend Lord McColl said a few days ago, "the money to follow the patients".

To that end the health service has developed a new concept known as the resource management initiative, or RMI. That attempts to evaluate the outcome for patients in terms of better prospects of survival, improved quality of life and avoidance of disability. Those are the vital factors. Of course, these are the products of all hospital treatment and care, to be set against the huge inputs of professional services, surgery, drugs, capital, and so on. Part of the objective is to develop a more accurate diagnostic classification.

The six hospitals chosen three years ago for the initial trial have achieved encouraging results. As my noble friend Lord McColl, of Guy's Hospital, has been one of the principal leaders in the project, I hope that he will give us some account of how this has been achieved in practice.

This important experiment has two factors one of which was referred to by the noble Lord, Lord Hunter of Newington. It is the fact that clinicians have been involved in the management. That is clearly a vital factor in the matter. However, alongside that is the development of a comprehensive information system for each hospital; that is, RMI or resource management initiative. The Government now plan an extension to 50 more selected hospitals as a halfway house to eventual extension of all the remaining 260 health service hospitals as soon as possible.

I wish to make three points with regard to this new initiative. First, perhaps I may say to my noble friend that it is constructive, it is imaginative and it would bring increasing benefit to patients and to taxpayers alike. Secondly, the Government's presentation of this new initiative in Working for Patients is that self-government for hospitals is the primary objective, and that the resource management initiative is only the stepping stone to the ultimate objective. I believe that noble Lords should see that this is really a mistake. Some hospitals wish to become self-governing, and with appropriate safeguards I accept that that will be achieved; but clearly many are filled with great anxiety at the prospect and they are evidently apprehensive about the discharge of their core activities at this stage of great uncertainty about systems of contracting.

There would be no harm in making the resource management initiative the primary objective and letting the option of self-governing hospitals be available afterwards for those who wish to take it. Thirdly, in my view the development of a comprehensive information service for a hospital is a major undertaking. The excellent report of the Select Committee of another place has made some interesting remarks on the resource management initiative. Members of the Select Committee visited the United States to study the American system of hospital management and finance.

In the United States each hospital is paid by the Federal Government according to the work done. They have a long experience of effective management and accounting. The product is the diagnostic related group which makes the basis of those payments. No doubt the resource management initiative will produce a similar characterisation.

The Select Committee concluded in the light of its study that starting from scratch it would take each hospital four or five years to develop the RMI system. Her Majesty's Government responded to the Select Committee's report in a comprehensive reply, but on that point I find them unconvincing. The Government still conclude that the exercise can be done more quickly. I should add, with all humility, that I have had a little experience of introducing a modern information accounting system into a private religious hospital of which I am chairman. For a number of reasons the problem is much simpler, but even so it took about three years to do.

Innovation of that kind affects every person working in the hospital and great anxieties arise. The full co-operation of the staff at all levels can be won only by much careful information training and cutting corners will be disastrous. The longer timescale is essential. I hope that my noble friend will take that point on board.

I welcome the Government's undertaking to provide the extra funds needed to introduce RMI. The total cost will be heavy, and each hospital will need to be fully provided with funds. I shall not go into the detail of all that will be required because time does not allow. That major development in all our hospitals will cost a great deal, but when finished it will ensure better patient care and better value for money than ever before.

I congratulate my noble friends in government on their first-class initiative, but I warn them not to spoil it by excessive haste and by making self-governing hospitals the sole objective. With those words, I give encouragement to my noble friends for something which has been well started.

3.54 p.m.

Lord Ennals

My Lords, we are once again indebted to the noble Lord, Lord Hunter, for giving us an opportunity to air our concerns and uncertainties, including today's report that three-quarters of all health authorities are heading for a deficit this year with further cuts in services. Despite the fact that the Bill begins its process in another place, it is important that the House feels itself to be involved in the debates about the Bill. I am sure that we have an importan1 role to play. Although the Bill is in another place the issues are ones upon which we can concentrate today.

I agree with all the concerns expressed by the noble Lord, Lord Hunter. I should like to follow them up, but, as the noble Lord, Lord Nugent, said, time is short. I believe, and no one will doubt it, that the NHS part of the Bill is ill-conceived and damaging. I want to see some major changes—that is the objective—not to defeat it but to improve it.

In the debates on the gracious Speech I urged the Government to take seriously the grave concern felt by all those, with a minute exception, who work in the NHS, and the public. This morning I was at a conference and I heard a speech by one of the most distinguished presidents of one of the royal colleges, who said: The NHS faces disaster if this Bill is implemented. The question is: can Parliament rescue the NHS from this disaster? That is the issue that we should keep before us.

When a few days ago the Prime Minister refused to meet a deputation from the medical royal colleges, the BMA, and the royal colleges of nursing and midwives, Mrs. Margaret Bain, president of the Royal College of Midwives said: The Bill gives no evidence that any of our concerns have been heard or understood". Those words came from her heart. All the professions with which I have been in contact feel deeply and have said that they seem not to have been heard, let alone responded to, by the Government.

I know that the Minister's reply will be that the nurses and doctors have it all wrong; for some reason the doctors have been wilfully misleading the public. The Government seem somehow to have convinced themselves that people are moving their way and that eventually the professions will see that the Government were right. I beg the Minister when she replies and in any of her other thinking to recognise the depth of concern and uncertainty which exists throughout the service and throughout those involved in it, including the patients.

I shall come first to what I believe is the most crucial and controversial area of uncertainty, which, as the noble Lord, Lord Nugent, said, is the Government's proposal for self-governing hospitals. The fear is that the plan is unproven by any pilot projects. In three to four years' time we may have learnt from the six hospitals in which there have been experiments, but we do not know at present. The plans would mean a return to the pre-NHS days of a two-tier health service—the well-off versus the poorly funded, the highly skilled versus the run-of-the-mill and high tech versus basic provision.

The Government want to introduce financial competition into the delivery of care. There will inevitably be winners and losers. That is the law of the market place. But that runs contrary to the provision of equal health care for all, which is the basic principle upon which the NHS has been run until now. The separation of the purchasers of the service from the providers of the service and the introduction of competitive contracts are untried and complex. Funding by means of contracts with the commissioning authorities seems bound to lead to a distortion of the priorities within hospitals. It will be costly to administer. We already know that 4,000 extra people will be needed to run the new system and it will be a drain on the resources needed for patient care.

There are many worries about the opt-out proposals. There is not time to go into them all. We clearly know the views of the royal medical colleges, supported by the nurses and nearly every other profession within the NHS. Put shortly, and I steal just one sentence from a document produced by all the royal colleges and others associated with them: We conclude that the creation of self-governing hospitals, as proposed in the White Paper"— one might now say "in the Bill"— will be seriously divisive and result in two categories of hospitals, competing for patients within limited funds". As a former Secretary of State, I have to say that I do not believe that I could have continued to push those proposals through in the NHS in the knowledge that they were opposed by all the leaders of the professions. It cannot be done because we have to have their co-operation to make things work in the health service.

Ten weeks after the submission of the proposals from the conference of colleges, I must ask the Government what their reply has been. That document contained some constructive proposals as well as many sharp criticisms. Will the Secretary of State publish the reply so that we may see the Government's answers during the course of our debates? What influence have their views and the views of other professions had upon the legislative proposals? My impression is that so far they have had none.

Another question that arises is what arrangements will be made to obtain the views of the staff of local hospitals before they go self-governing. What assessment will be made of the views of the public served by those hospitals, or will decisions be taken, as happened in Eastern Europe, by a handful of people?

My next question relates to core services. Working paper No. 1 led us to believe that there would be a list of core services to which all patients would have local access. There is no definition in the Bill. The wording of Clause 5(3) is hopelessly vague. It is left for the Secretary of State to decide. It appears that self-governing hospitals, freed from health authority control, will be able to decide for themselves whether to provide non-profit-making services, such as provision for geriatrics and the mentally ill. If I am wrong, the Minister will no doubt say so in her reply.

One of the Secretary of State's stated objectives in presenting the White Paper was to decentralise decision-making to the lowest reasonable level. I must ask: what has happened to that laudable objective? The Bill before us, in the words of one commentator, is, a nightmare, a legal, bureaucratic and ideological shambles". Whether that is right or not, perhaps I may say that the Bill does not set out with any clarity what the Secretary of State believes to be the most important development in the history of the National Health Service. Instead, it confers upon him colossal—I use the word advisedly—increases in powers to run the National Health Service. It prescribes central controls where none is needed and deregulates where firm national standards are absolutely required. Most of the details of the Government's proposals are not included in the Bill. In clause after clause, issues are resolved by giving more and more power to the centre. Almost everything is left to regulation, to orders, which are not open to amendment in another place and by tradition not even open to vote in your Lordships' House.

To give an example, even the medical practitioner committees which approve the movement of GPs across the country are to be cut down to size. Clause 20(4) says: At the end of the section there shall be added the following subsection—The Secretary of State may give directions to the Medical Practices Committee with respect to the exercise of its functions; and it shall be the duty of the Committee to comply with any such directions". My Lords, now you know. If I had time, I would go through case after case where power is taken away from local people with experience and given to the Secretary of State.

The last point which I have time to raise concerns organisation. There was no question of structural change when the Government proposed their White Paper. Now it seems that the Department of Health has plans for widespread mergers. I saw it even suggested that the present district health authorities be reduced to 90 purchasing authorities, almost like the old area tier, without the districts added. If by subterfuge we are to move back a stage in reorganisation, with all the jockeying for power that that would mean, we should know. I hope that in her reply the Minister will say what action the Government propose to take on this very important structural proposal.

4.2 p.m.

Lord Winstanley

My Lords, normally I would wish to say a great deal on this very topical and important Motion so ably moved by the noble Lord, Lord Hunter of Newington. However, I put down my name to speak with some reluctance for two reasons. First, as some noble Lords know, I have spent the last few months in and out of hospital learning a very difficult lesson—how to behave like a patient. That is not an easy lesson for a doctor to learn. Also, I have developed a small speech defect and I was anxious not to burden your Lordships with my words until I had fully recovered. I therefore hope that if I am not as distinct as I might wish, I shall be forgiven.

Secondly, I have used my period of enforced silence to listen to speeches from all parts of your Lordships' House. They have been of extraordinarily high quality, and during the debate on the loyal Address in particular displayed very great wisdom and were of a quality that I certainly never heard in many years in another place. Listening to those speeches made me feel proud to be a Member of your Lordships' House but also a little humble about my own somewhat pedestrian contributions.

However, I could not stay silent on a subject of this kind. In the main I shall focus on general practice. I spent many years as a general practitioner in the National Health Service. First, however, I wish to comment more generally.

The Motion refers to the, uncertainties about the future of the National Health Service". Who is uncertain? Clearly, as we know, many patients are uncertain. Their uncertainties are perhaps aggravated by the kind of arguments and debates we have had and by things that they have been told. Doctors are uncertain; nurses are uncertain; other professionals who work in the National Health Service are uncertain. I believe that there is a great deal of uncertainty within the Department of Health itself. It cannot be otherwise. If one decides to make major changes, to reform a structure which has served our nation well for upwards of 40 years, one really must take a great deal of care and proceed with caution.

As my noble friend Lady Seear said some time ago in a debate on this subject, governments very rarely get everything right first time. That is why so many have said, "Why on earth do the Government not carry out pilot studies into some of these schemes so that they find out how they work in practice before they decide to apply them generally?" I say that again. The answer of the Secretary of State has always been, "Well, we are having pilot schemes. No practice is forced to have a budget and those which do decide to opt for budget status will in a sense be pilot studies". He also says that no hospital is forced to opt for self-governing status. Maybe. He says that those which do will be pilot studies.

These are not genuine pilot studies from which one can make real deductions and proper comparisons. We really need to study a whole area, so that we compare like with like and see how the proposals work. I am sorry that the opportunity to do that has not been grasped.

I have a few anxieties about research. I know that the noble Lord, Lord Nelson of Stafford, will speak later. He prepared an admirable report on priorities in medical research which has already been debated. My anxieties are prompted once again by a letter which I received and which I am sure many noble Lords have received from the Committee of Vice-Chancellors and Principals of universities. They are extremely anxious about the situation of research. In one part of the letter for example they say: Schedule 2 enables and empowers National Health Service Trusts to undertake and commission research' and 'to make facilities and staff available in connection with training'. It does not require them to do either". The committee rightly says: The planning of medical education"— and presumably research as well— cannot be left on such an unsatisfactory and unpredictable basis". I agree. I am also closely connected with an organisation known as ARMS, the Association of Researchers in Medicine and Science. It is deeply concerned about the difficulties of recruiting people of the necessary calibre to work in medical research. That is in the main because so many are recruited on short term contracts with no security of tenure and no proper career structure. We are not getting the people of the necessary calibre. That point is admirably illustrated by a letter which appeared in The Times recently from the headmaster of Abingdon School. He wrote that, two of the very ablest scientific and mathematical boys at present in this school have been recruited into a career as … accountants. The inducements offered included £1,000 per annum in addition to any university bursary, summer vacation employment at £11,000 per annum, a starting salary after university of £20,000 and the prospect of earning £100,000 per annum by the age of 30 The headmaster goes on: Faced with inducements of this sort, is it surprising that our best and brightest scientists … are lured into the sterility of money manipulation?". It is not surprising. But it is deeply regrettable. I shall leave that subject because I am sure that it will be dealt with by others. However, I hope that research will be left within the National Health Service and not with civil servants in one department or another. It should be in the hands of the doctors who do the work.

Let me move on to general practice. The principal cause of difficulties that have been announced and are talked about constantly by doctors is the move back to a system of payment by capitation. There was time when the doctors' payment was all by capitation. I was working at that time. The incentive there is to build up a bigger list in order to obtain more money.

The answer of the Secretary of State to that has been that it cannot be so. The right honourable Kenneth Clarke says, rightly, that the number of doctors is increasing, and the total number of patients is reducing. Therefore it is impossible that list sizes could increase. I accept that so far as it goes. But what the Secretary of State overlooks is that it inevitably means that a larger number of doctors will be chasing a smaller number of patients.

I worked at a time when remuneration was almost wholly by capitation and there clearly was an incentive to keep one's own patients. Doctors hardly ever spoke to any other doctors. There were no local rotas, we did not dare allow another doctor to see our patients in case he took them. With the coming of the charter to which the noble Lord, Lord Hunter, referred, we had a big change: pay went much more towards the basic practice allowance and other items. Things changed then. Doctors began working with a new spirit of co-operation. They worked together in establishing rotas and other items. It would be regrettable if we went back to the bad old days, but I say to noble Lords opposite, many of whom believe in competition and who think that competition is clearly valuable, that it was my experience that the doctors who built up the biggest list were rarely those who provided the best medicine. They were often merely the doctors who gave patients exactly what they wanted in terms of certification and other things. I warn that there is a lesson there.

I am also worried about community care. As a former general practitioner, I am conscious of the fact that at the end of the day if community care fails it is the general practitioner who will have to pick up the pieces. It is he who in the end will have to shoulder the burdens. Despite what is stated in the Bill, I fear that local authorities will not have the resources or the ability to discharge the functions now laid upon them. As regards some of those functions, I fear local authorities may feel prevented from giving adequate publicity to the kind of things they are now required to carry out, lest these should be regarded as political and prohibited by recent enactments in Parliament. If community care does not operate satisfactorily, I fear that GPs will be the sufferers in the end. That matter needs to be looked at with great care.

Why do we need a new device for controlling prescribing costs involving indicative prescribing budgets and other such things? There has always been provision for controlling extravagant or wasteful prescribing. That already exists within existing legislation. I have operated under that legislation. Every quarter every GP used to receive an analysis of his own prescribing costs, given as an average of the national average and as an average of the local average so that he could tell whether his prescribing was more costly or less costly than that of other GPs in his own area. If his prescribing was constantly over the mark, he or his partners would consider it and try to reduce it, as would the family practitioner committee or the executive council.

Finally, the regional medical officer would visit the GP and tell him what steps he should take. If that did not work, the GP could be called before a medical services sub-committee to be questioned. I was a member of such a committee. If the GP could not provide satisfactory answers to the committee and improve his performance, he could be fined heavily. The provisions already exist for controlling extravagant prescribing. Why do we need this new machinery which is so complex and difficult to understand?

The Government will be judged by the effect of what they are now doing on general practices. Our institution of the family doctor is unique in the world today. No other nation possesses the family doctor system whereby one doctor looks after the whole of a patient, not a whole lot of doctors who each look after different bits of a patient. We have the system whereby one doctor looks after a patient and his family. That system does not exist in the United States, the Soviet Union or anywhere else other than Britain. If it ceases to exist in this country, that would constitute a savage blow to the National Health Service.

I say with all possible respect to the noble Baroness, Lady Hooper, who is to reply that I personally greatly regret that Lord Trafford cannot reply to the debate, and the circumstances which make that impossible. Many doctors are speaking in this debate who will make professional criticisms of what is now being done and it would have been helpful if a distinguished doctor with a professional understanding of those criticisms could reply to the debate. Nevertheless, I welcome the opportunity to hear the noble Baroness although I thought it was appropriate to make that point.

4.14 p.m.

Lord Porritt

My Lords, I believe there are about 14 Members of your Lordships' House who are on the active list and over 90 years of age. It is hardly surprising that we do not see many of them with the notable exception of the noble Lord, Lord Houghton of Sowerby. I must say that I enjoy, appreciate and envy the cogent diatribes of the noble Lord. However, nothing in the world would make me try to emulate the noble Lord. I must say, however, that I am myself rapidly approaching the portals of that eminent club, the nonagenarian club. That is quite a mouthful! I hope your Lordships will therefore bear with me if I voice a few thoughts which go wider than the White Paper and its consequent legislation on the NHS which has been so much to the fore in recent months and has been the sole subject of this debate so far.

I am grateful to the noble Lord, Lord Hunter, for the wording of his Motion. I think the words "uncertainties about the future" allow me to consider how they have arisen and do not call for detailed discussion of the said White Paper and its eight somewhat dubious offspring. Having known the NHS since before it was founded, and worked in it for a great many years, I can only look on the White Paper as yet another attempt to achieve the impossible, the full funding of a comprehensive health service.

This is the fourth major reorganisation in 14 years. That fact alone underlines the immense difficulty of the problem. It is a courageous political effort which adds a commercial element to the managerial restructuring of a few years ago and which brings with it a host of yet more expensive employees and their no less expensive facilities and equipment. It was produced with the minimum medical consultation and projected—I use that word advisedly—on to the profession with what can, at the kindest, only be described as unseemly and tactless speed. Hence, despite its "curate's egg" composition, the very wide objections it has raised within the profession as a whole, even within its most senior and highly respected bodies, can be understood.

Doctors are not trained to ingest market trading, internecine competition, cross-border financial deals, commercial budgeting and complicated accounting. Generally speaking, it makes them sick. That is why I think the title of the White Paper is misleading. It should be recognised and appreciated for what it is: another brave attempt to reach the unattainable goal. However, it is only a part of an extremely complicated whole and therefore it is a rather puny effort.

Let us look back for a few minutes as a preface to looking forward. I am sure nobody in this House, or anywhere else for that matter, would query the original ideal of the National Health Service. I do not think anyone would disagree that the National Health Service has done incalculable good for thousands of patients over the time it has existed. Furthermore, we should be grateful to this Government, as the noble Lord, Lord Nugent, said, for their generous financial provision to the health service in recent years. Why then is the service still failing to produce the required and expected results?

The National Health Service was founded on a false premise. The "jewel in the crown" of the welfare state was flawed from the start. It was thought that a population when given so-called free medical advice and treatment would steadily become a healthier population and so require less and less expensive medical care. As our American friends say, "No way"! It is against human nature to refuse a free gift, and that is what our patients have been increasingly doing over the years. They have accepted their rights but refused their responsibilities.

To cope with that apparently ever-increasing throng of apparently satisfied patients—or customers as they are now so sadly called—we have in Britain produced a completely new kind of doctor. He is a very good, well trained, hard working and scientifically orientated doctor, but one who has to a large extent given up his rugged individuality and is more inclined to accept unquestioningly multiple rules and regulations. He is essentially materially and commercially motivated, not humanly motivated. I think it is vitally important that we appreciate these changes in both patients and doctors. It may well be that present systems of health care are both adequate and acceptable in today's world. That would surely affect any efforts to reorganise the service.

Two other factors make it ever more difficult to balance the NHS books. I shall call them the D factors. The first is demography, the ever-increasing clientele of older and more demanding patients. The second is a double D—discovery and development. There is no doubt that the advances that have taken place in medicine in the form of new technology, new instrumentation and new drugs over the past two or three decades can only be described as miraculous. However, they are also very expensive. We have now reached the stage at which it is frankly financially impossible to provide the optimum care and treatment for every patient requiring it. So we are perforce practising selective medicine. The tragedy is that selection is carried out by politicians through the vast armies of civil servants, managers, accountants and business employees who have accrued to the NHS over the years. None of them has even a rudimentary training sufficient to make the selections reasonable.

I come back to a statement that I have made more than once in this House. In 40 years we have not yet appreciated the fact that one cannot nationalise a profession: a company, a corporation or an institution, yes; but not a profession.

I feel that the Bill which we shall shortly debate, based on the already much debated White Paper Working for Patients, is nothing like sufficiently radical if we are to reach the goal that we originally set out to achieve—a really comprehensive and financially viable health service. After years of experimentation and trial and error, it may—and I sincerely hope that it will—produce some minor improvements. However, I cannot help feeling that it is a puny effort and will not stem the tide of vast, ever-increasing expenditure.

Lest your Lordships should feel that I have talked of nothing but gloom and doom, perhaps I may make two positive suggestions and fulfil the request of the noble Lord, Lord Hunter, to look to the future. I cannot call them constructive because they would involve the—I hope quiet and orderly—dismantling of the service as we now know it. I believe that in any event the service will be of a quite different nature by the end of the century. Nor will either suggestion be popular, either with the medical profession or with their lords and masters the politicians, especially the party politicians. I hope that, radical as they are, my suggestions may prove worthy of an open-minded and more than superficial consideration.

To my mind one of the most fundamental mistakes made at the inception of the service was the payment of general practitioners on a capitation system. We are the only country in the world—and there are few now which do not have some form of health service—which adopts that system. It de-personalises the patient and turns him or her from an individual into a number. It weakens, if it does not ruin, the doctor-patient relationship which is the essence of good medical practice.

The alternative is some form of fee-for-service reimbursement system, backed by grants and allowances as required for certain classes of patient and covered by an insurance scheme, helped—dare I say it—by a certain degree of privatisation. It would be complicated, perhaps, but many other countries are now doing that successfully. Why should we not try it too? In other words the first suggestion is a straightforward process of "decapitation".

If the Government then wish to continue their philanthropy, which I trust they always will, let them limit their responsibilities to the provision of accommodation and facilities, including equipment, and let a free medical profession run the service, as it has done for hundreds of years. That would at one fell swoop halve the financial outlay and put the responsibility for medical care where it really belongs: with the medical profession. It would ensure a friendly, competitive atmosphere in practice, much healthier than that envisaged in the proposed business methods, stimulate recruitment, widen the scope of research and restore some of the dignity of an ancient and very worthy profession which has been badly battered over the past 40 years. One hopes that such a move would produce a population of happy, satisfied patients—even ageing ones—cared for by happy, satisfied doctors and a healthy health service, both comprehensive and financially viable.

I admit that that is an iconoclastic suggestion. However, after 40 years and four major attempts at reconstruction which have introduced cohorts of non-medical staff and involved gargantuan expenditure without success, are we not in dire need of a completely new approach? Such an approach would wipe the slate clean and introduce a fresh atmosphere and a new emphasis away from business to doctrine, away from commercialism to humanism, away from politics to medicine. I pray for that day.

4.26 p.m.

Lord Colwyn

My Lords, it is a great pleasure to follow the noble Lord, Lord Porritt. Despite his opening remarks I hope that we shall all have the opportunity of hearing him for many more years.

Ever since the start of the National Health Service—or perhaps more specifically, over the past 20 years during which I have had the privilege of addressing your Lordships on health matters—I have heard and read many varied critiques of modern medicine. This afternoon will be no exception. They have all had the common theme that the system of Western medicine is in crisis. Hardly a day goes by without some reference to the subject in the newspapers, on radio or on television. But are your Lordships, the politicians and the news reporters really talking about health or something different altogether? Anyone who has paid any attention to the question will have realised that in virtually every instance the uncertainty has nothing to do with health but is instead concerned with the financial crisis in the NHS.

The service has always had financial difficulties. We know that however much money is directed into the service, by whichever administration, it will always have financial problems. I have said many times in this Chamber that the assertion that the health service could function without crisis with unlimited resources is a total fallacy. The solutions which the noble Lord, Lord Hunter, seeks will not be financially based.

Despite the high levels of spending on the NHS our standard of health has not improved substantially. Demand for services has increased and the system has evolved as a sickness service with very little to do with health. The Journal of the Royal Society of Medicine has recently given details of the Pioneer Health service—I think that it was called the Peckham Report—which in 1934 to 1938 reported the fact that 86 per cent. of males and 96 per cent. of females had disorders of some kind. A BUPA survey of 10,400 workers aged between 25 and 44 reported in the Daily Mail on 29th October 1988 showed that now only 83 per cent. of males and 75 per cent. of females were unfit. That is not a statistic that we can be proud of.

Given the unhealthy lifestyles of most people and the extent to which we constantly abuse our bodies with social and clinical drugs and inappropriate diets and the many varied stresses associated with our environment, it is not surprising that many people feel run down or even ill for much of the time. Unfortunately there are few signs that the NHS is doing anything to rectify the situation or even that it is capable of doing so.

The root cause of that inability to change can be found in the dominance of health care services by allopathic medicine, since it sets the tone for all official attitudes towards health and medicine in this country. The emphasis of the basic importance of each individual doing as much as possible to maintain his or her own health, rather than being dependent on the GP or specialist, is the main aim of alternative and complemetary medicine. By looking at causes rather than treating symptoms, and by encouraging individual responsibility rather than dependence on increasingly expensive professional services, it has to be a logical concept for health care in the future.

In her speech at the seventh colloquium on conventional medicine and complementary therapies at the Royal Society of Medicine on 13th June 1986 my noble friend Lady Trumpington, the then Parliamentary Under-Secretary of State at the Department of Health and Social Security, said: It will come as no surprise to anyone to know that I wholeheartedly support the freedom of the individual to seek the benefits of alternative medicines and therapies. This is a view I share with other health Ministers and has been repeated on a number of occasions". The White Paper makes no direct comment on the future of alternative and complementary medicine or the role that the therapies might play in a reformed NHS. Most therapists work on a private basis and the increased interchange between the public and the private sectors that is envisaged in the White Paper may well see an increasing number of patients being referred to complementary practitioners by general medical practitioners who will be controlling their own budgets. I am sure I have no need to remind your Lordships that, as a very broad generalisation, alternative and complementary treatments help the body to deal with the disease process itself by eliminating stress and boosting the immune system. This is something that complementary therapists have been promoting for may years.

Ironically, conventional medicine, despite its past attacks on complementary medicine, may finally be coming to the same conclusion. The Sunday Times reported last weekend on a new treatment being developed at the London Hospital which uses the body's own immune responses to attack certain cancer cells. Millions of people in this country suffer unnecessarily simply because they are not being directed towards health promotion nor towards the many alternative therapies and natural medicines which are known to be much safer, more therapeutic and usually much less expensive.

The basic principle of the NHS was that good health care should be available and freely accessible to all who need it, when they need it. This ideal requires a universal service or national insurance system that will cover all the population. An increase in the number of practitioners who work privately decreases the number who are available to the public service. Patient choice becomes limited if some services are only available privately or are unaffordable. There cannot be free and equal patient choice while only one system of healing is included in the NHS. I think that there is a strong argument on grounds of equality for saying that alternative and complementary healers should be available on the National Health Service if patient choice is to be extended. Acceptance within the system would of course have to include arrangements for accountability.

In her speech my noble friend Lady Trumpington referred to the freedom of choice and consumer protection. She continued: The trick is to get the balance right: just enough of one so as not to reduce the other to an unacceptable level. The licensing arrangements under the Medicines Act illustrate how we try to ensure that a wide choice of medicines is available which are safe and effective. Yet no such arrangement exists in respect of alternative therapies. Some people argue that it is the Government's responsibility to register alternative therapists. It may come to that one day, but if it does it will be because the alternative community has been unable to put its own house in order". I am delighted to be able to tell my noble friend the Minister that steps are being taken to do this, and I should be very interested to hear her comments on the Government's attitude to possible links between the different health care systems in the context of the changes foreseen in the White Paper.

I know that my noble friend Lord Ferrier would have wished to speak in this debate today to repeat his long-standing plea that chiropractic and osteopathy be available within the NHS. He is not in the best of health at the moment and has been advised not to travel to your Lordships' House. The chiropractic and osteopathic professions have much to thank him for, and I know that your Lordships will join me in wishing him a full recovery and a speedy return to these Benches after Christmas.

I should also be grateful if the Minister could give me any further information about the proposed drafting of a directive relating to homoeopathic remedies, which has been put off until the end of the year; and here I declare an interest as the president of the Natural Medicine Society. In accordance with EC requirements, the product licences of right for herbal remedies are now being reviewed. Apart from one expert at the medicines control agency on herbal pharmacy, there is no one who is an expert on herbal remedies. It is not surprising therefore that of the licences of right so far reviewed 40 per cent. have either not been submitted or have been refused. This means that over 2,500 remedies have been lost. There are still 1,000 remedies to be reviewed. It is vital that the Government ensure that the directive is appropriate and sufficiently liberal to fulfil the requirements of the UK. In particular, the Government should ensure that all such remedies are included in the European Homeopathic Pharmacopoeia, which is being prepared at EC level and which is vital to the practical implementation of the directive which incorporates it.

The licensing system will clearly require assessment of the criteria for all these medicines, and it is important that at both UK. and EC level appropriate experts are appointed who understand these medicines. I hope that the Government will reconsider the answer given to Mr. Peter Rost on 24th November and appoint suitable people at the earliest opportunity, while there is time for them to contribute usefully to the formulation of UK and EC policy.

I have omitted any detailed comments about the National Health Service and Community Care Bill. I look forward to debating that in the near future as there are many points to be made about undergraduate medical and dental teaching, about postgraduate teaching and essential research and development work that the university schools provide for the NHS. I believe here is an urgent need for the Department of Education and Science to work closely with the Department of Health as equal partners to ensure that the contributions of academic medicine and dentistry to the NHS are not reduced.

In conclusion, I must apologise for this is a busy time of year for me and I have a long-standing engagement at the St. John Ball early this evening. I should be most grateful if the Minister would write to me if there are any points in my speech which she feels she can comment on.

4.37 p.m.

Lord Wallace of Coslany

My Lords, the main reason for hospitals being in the state they are in today is underfunding; that is basically the cause of a great deal of the hospitals' trouble. I agree that the Government have given more money to the health service, but it is not enough.

I should like to quote from personal experience. In Bexley Health Authority, a further £443,000 in cuts in services was recently announced and a ban on all routine operations at Queen Mary's Hospital, Sidcup, was also imposed. Queen Mary's is a fine hospital with dedicated staff. At the moment it is overspent by £205,000, mainly clue to the fact that it is too successful and is treating too many patients.

The bills are still mounting. The finance director of the health authority hopes to have £45,000 by freezing appointments of staff, and to delay the payment of bills until mid-February next year. About 20 per cent. of health authorities are carrying out this practice of delaying payment. The bills have to be met and this is simply a desperate measure. The financial stringency at Queen Mary's mainly developed in 1986 and has got steadily worse.

In May 1986 one ward was closed to save money, but in July 1987 it was reopened because of a government grant to ease the waiting lists. In September 1988 it was closed again and so far has not been reopened. No government grant is available. In June 1989 the health authority borrowed a considerable sum from the regional health board to update the telephone system. The money has to be paid back to the region, and I cannot understand that. Why does the region have money to lend and why has it become a moneylender? Is this a new idea? It is certainly new to me.

I could give the House much more detail, but the fact remains that a fine, modern hospital, with dedicated staff and an excellent record, is slowly but surely being reduced in its efforts—not because it is inefficient or badly managed but because the money provided is inadequate. Not one of the changes involved in the Government's proposals will alter that situation.

One of the factors affecting hospital revenue is that pay awards mainly go on hospital costing. Any new pay award can knock the budget for six. Surely a better way can be found. I know that that is a very sore point with many managers in various hospitals.

I make no apologies for bringing forward the acute position of my own hospital, efforts on whose behalf are supported, by the way, by Mr. Edward Heath as well as Mr. Townsend MP and Mr. Evennett MP, the Members for the area concerned. I understand that they saw the Minister yesterday with, I hope, good results. Some changes are needed but the wholesale changes proposed by the Government will worsen the position. More money will be spent on administration. At the moment it is a mere 4.5 per cent. of total expenditure; but it is likely to reach the figure of 21 per cent., as experienced in the United States.

Today the National Health Service is dominated by politics with too much power in the hands of Ministers and no parliamentary scrutiny. Already the Health and Medicines Act gives such power to the Minister. There is too much of party politics in the National Health Service today at all levels and it must be reduced.

The National Health Service has already been blighted by too many changes. The introduction of the area health authorities was costly not only in finance but in the loss of experienced staff. That reorganisation was changed again subsequently to the present system, with further financial loss and the loss of experienced staff. In short, there has been too much tinkering with the service—if you like, change for the sake of change.

Now the situation is much worse and I see no signs of improvement. I fear the effect of further widespread changes. Certainly there will be greater bureaucracy. Most certainly it will not meet the greatest need, which is for more money. Expenditure will increase but not on hospitals.

District hospitals serve their community. They are a part of the community. They belong to the people that they serve. Drastic changes in the development or otherwise of those hospitals should not be made without the full consent not only of medical and nursing staff but above all the people they serve. There has not been adequate consultation and discussion on the wide, sweeping changes. I accept that a fully comprehensive health service has to be paid for. I believe that the public at large are willing to pay the price.

In fact the National Health Service has become a fact of life for the great majority of people. The objective at the beginning was service. It should be freely available to those in need, irrespective of class, colour or creed. That is the great ideal behind the National Health Service. May it be safe in our hands.

4.43 p.m.

The Lord Bishop of Manchester

My Lords, earlier this year in our general synod of the Church of England in York there was a debate. There were a number of speakers who expressed deep anxieties about the present situation in the National Health Service. A consultant surgeon from Doncaster took the opportunity to knock the Church of England. He said: "Many people think that the Church of England has the idea that the NHS is an extension of the Kingdom of God whose constitution is written on tablets of stone and that the eleventh commandment is 'Thou shalt not change the NHS'". I hope that that is not true. I am sure it is not true for those who are critical of the present proposals. We have already heard some very thoughtful and informed speeches in this debate.

The great problems facing the NHS are widely appreciated. A point that has been made more than once is that there is no way in which one can satisfy all the demands which may be made on a comprehensive health service of this kind. There is also appreciation that there must be an attack on waste and inefficiency.

I thought that the noble Lord, Lord Porritt, explained very clearly just why the NHS suffers such exceptional strains: an ageing population, the development of remarkably expensive hi-tech medicine and things of that kind. Any government would have to take seriously all those problems. Those of us who are critical of the present proposals must welcome what has been done in recent years for the NHS. The noble Lord, Lord Nugent, shared the figures with us towards the start of this debate.

We believe that there is a need for proper resource management. The doubts centre on whether the main ideas behind the White Paper and the Bill that is now presented are correct and will meet the very real problems. There are doubts about the idea of bringing elements of competition into the National Health Service in that way.

I heard a consultant speaking about the proposal for self-governing hospitals. He said: "When I see a patient in those circumstances coming through my doors, I see that that will mean more money for my hospital". But will it indeed mean that such self-governing hospitals will cover the whole range of services that are required especially in local areas? It seems to many of us that competition is not appropriate for a great co-operative enterprise such as the NHS. So when we debate this Bill I hope that thoughtful consideration will be given to the limits that ought to be imposed on competition.

I should like to confine the rest of my remarks to three major issues. It is only possible to mention them very briefly. First there is the question of overall funding. Have we reached the limits for the funding of the NHS from taxation? Secondly, there is the question of low morale in the National Health Service, which is undeniable at the present time. Thirdly, would it not be a little strange if we ended a debate of this kind without mentioning the current dispute in the ambulance service?

There is chronic under-funding. The problem is that it is assumed that we have reached the limits of what people are prepared to pay for a health service by way of taxation. I do not believe that that is so. If it is believed that we have reached the absolute limit, one is tempted to go down the other road and ask what are the alternative sources of funding for the NHS, and in particular one tries to get more money from private sources.

In the Greater Manchester area there is an example of that which is most disturbing at the present time. The plans are not yet formulated but there is a proposal for closing two children's hospitals, one in North Manchester and one in Salford, and for building a new children's hospital in the centre of Manchester. I do not want to go into the technical considerations. I think that a good many paediatricians in that area will be very pleased with the prospect of a new hospital complete with the latest equipment to cope with the special problems of children. What is disturbing is that it is mooted that half the money for building the hospital should come from private sources.

I believe that individuals, firms, companies and others should indeed contribute toward hospitals in such an area. Certainly it should be through taxation because that is the proper way in which it should be done. It seems to me quite mistaken to rely on private funding, if that is the suggestion, for getting new resources into the National Health Service.

There was a very effective intervention by one of our inner city clergy in a debate in my own diocese on the National Health Service which took place earlier in the year. He described his feelings of deep distress at seeing nurses rattling tins in the Salford precinct in support of raising money for the NHS. He made an appropriate comment: "Surely I have a much better suggestion. What we really need to see is people rattling tins in our shopping precincts for Trident and let the NHS be properly funded". That seems to me to be a perfectly legitimate point. Taxation is indeed the right way to fund that great enterprise.

I also find very disturbing the current philosophy which believes that somehow private is better than public over a whole variety of fields. I regret to say that I even heard the Chancellor of the Exchequer saying in a radio broadcast, "I believe that money is much better left in the pockets of the people where they will use it properly rather than in government hands". That is essentially to undercut much of the valuable work which government should be doing through education, through collective provision, and through our health service. And woe betide us if that philosophy should take a grip on the nation. It has too much of a grip now, though surveys show that the philosophy is not generally applied. However, for the Chancellor of the Exchequeur to make such a statement seems utterly depolorable.

I believe that a little breast beating by the Churches would be appropriate at this point. The Churches did a great deal through their teaching of Ithe Christian Gospel to pave the way for the coming of the NHS. We have not taught a proper theology of taxation and what it means. We need to do much more of that in the years ahead, because good collective provision, properly and democratically decided upon in the community in the various fields of education, health and the social services is of fundamental importance. The Churches ought to have a role to play. We have not done so very well.

Perhaps I may speak on the question of morale. It is not simply a matter of how much people in the NHS, are paid whether at senior level as consultants, or at the level of those who clean or do the cooking—although, let it be noted, some of the lowest paid people in our society are working in the NHS. It is a question of how to encourage a better spirit, better morale, in those working for this great enterprise. I believe that more attention should be paid by government, among others, to ways of improving morale among NHS employees so as to make them feel that they are valued and that they have a job that is really worth doing and worth encouraging. Far too often the noises that come out are negative.

As has already been mentioned, some sections of our society, in the City of London or wherever it may be, are receiving far too great a proportion of the nation's wealth, which is going into private pockets while we are not paying adequately those who perform such great services to our community and especially to those who are ill.

Let me end with a brief comment on the ambulance dispute. I am sure that I speak for all in the Chamber when I say how distressed we are at these continuing problems. The primary concern must always be the proper care of the sick, the elderly, the disabled and those involved in accidents or crises, for whom the emergency services provided by the ambulance crews can literally mean the difference between life and death. I have had personal experience. I know from recent experience what it means to have a skilled ambulance crew calling in the middle of the night to help a member of the family. The police and army deserve to be congratulated upon what they are doing in desperate situations, but they cannot possibly continue to fill in and replace the normal service. Christmas, when the emergency services are stretched, is approaching.

We must all hope and pray for a speedy resolution of this dispute. It is not a dispute where the Government can stand at arm's length and say, "It is up to the employers to settle it", for the Government themselves hold the purse strings. I ask the Minister tonight to make some reference to the matter and to say what new initiatives are planned in order to break this distressing deadlock.

4.54 p.m.

Lord McColl of Dulwich

My Lords, what I had proposed to say this afternoon is no longer relevant. As this is a debate, perhaps I ought to try to reply to some of the comments that have already been made.

The noble Lord, Lord Nugent of Guildford, very kindly mentioned Guy's Hospital and the success that we have had in making a proper use of the resources that we have. The problem started about 10 years ago when two months after the end of the financial year we found that we were £5 million overspent. The adminstrators wished us to cut patient activity by 22 per cent. I thought that that was an interesting figure. They said that they thought that it was about right. When challenged they had no figures to back it up. We had to point out to them that the only way to save £5 million with any certainty was to reduce by 500 the number of people employed. That we did humanely and in an ordered way, and saved the money. We treated the same number of patients and the hospital became cleaner. We thought that that was an important lesson.

I should say that the revolution at Guy's was very much the work of Professor Cyril Chantler, who is a very eminent nephrologist. He managed to do all of his managing work together with his clinical work and enjoyed doing both. The idea that clinicians are too important to be involved in management is just not acceptable. They ought to be involved in management because they are responsible for the spending of so much money.

I should like to deal with the question of there not being enough resources. I do not understand what people mean when they keep talking about the cuts. Ten years ago we had £7 billion in the NHS. Today we have £28 billion and for the life of me I cannot understand how that can be construed as a cut.

I should like to draw attention to what happens in most hospitals in this country when a patient with a stab wound is admitted. We do not know the qualifications of the person who has done the stabbing. We do not know the length of the knife. We therefore are compelled to open the abdomen to have a look inside. That is a major operation. It presents no problems. But if one goes to another hospital in another country they may have 100 stabbings of the abdomen in an evening and there is no way that they can perform 100 major operations. They therefore find a more satisfactory way of dealing with the situation with the same amount of money. It is up to the medical profession to use the money available in order to serve the needs of the community. I think that there is an important lesson there.

My friend, the noble Lord, Lord Ennals, for whom I have the greatest respect—and he is a perfect gentleman—says that he could not possibly force through legislation against the will of the medical profession. I believe him because I know him to be a gentleman. But perhaps I may remind him that his predecessor tried to force through legislation on phasing out the private pay beds against the total opposition of the medical profession. If we go back a little further, I understand that Aneurin Bevan forced through his legislation with total opposition from the BMA. So such things do happen from time to time.

I should like to draw attention to the subject of profitable services. We keep hearing that these self-governing hospitals will make a profit. I understood that a profit was something that was distributed to shareholders. I think that what is meant by a profit is not making a loss, which is rather a different matter.

At the moment I have a budget in my directorate of £3 million. As a Scot I would not dream of overspending. I therefore make sure that we are never overspent. But to do that one must be careful and hardworking. One has to have an accounting system. At the moment the NHS does not have that. There is no commitment accounting in the NHS to speak of. It is slowly being developed. Such accounting is absolutely essential if one is running a business that amounts to £28 billion.

Perhaps I may deal on a local level with some of the problems that we are experiencing. All is not well with the NHS as it is run at present. If one goes down to Kent there is a lovely little cottage hospital called Edenbridge Hospital. The local people are very angry because the local health authority wishes to stop surgeons operating there. I happen to work there for nothing because I enjoy it. We take the students down, and it is a great day out twice a month. The local health authority wishes to stop the operating in order to save money. However, having worked it out it found that it was not saving money by doing so. It left the question for a few years, raised it again, and has recently decided to close the surgery because if says that it is not safe. The reason for telling your Lordships about that is that the local community health council should be protecting the people of Edenbridge and stopping the action of the local health authority. However, it is not tough enough. The proposed district health authorities will be tough enough. They will incorporate the functions of the community health council in their work and protect local people from such closures. That is a most important point to make.

The cottage hospitals up and down the country are wonderful places, with tremendous morale. They carry out many tasks such as looking after the chronic sick, the disabled, those who have had strokes and so forth. However, for two or three days a week they like a bit of excitement in the form of surgery and there is no earthly reason why that cannot be done on a safe basis. We must consider the morale of those who work in the service.

There is another little hospital with which I am associated called the Mildmay Hospital in the East End of London. In 1982 it was closed down because it was surplus to requirements. It was reopened in 1985 with the kind permission of a junior health Minister called Kenneth Clarke as a kind of self-governing hospital. The fascinating aspect was that we then went to the local district health authority and asked, "What would you like us to do?" In other words, the relationship was immediately changed. We had previously been at loggerheads. The upshot is that we look after the chronic young sick and for that we are paid per head.

A year ago we thought that there was a need for a hospice for those dying of AIDS. We went back to the local authority and asked, "What do you think of the idea?" It gave us the go—ahead and again it pays us. The unit was up and working within a year. You cannot do that within the NHS; you can do it in self—governing hospitals.

This afternoon we have heard a great deal of doom and gloom about the White Paper. However, in conclusion I remind your Lordships that there are many parts with which we all agree. For example audit, achieving a balance of proper staffing structure which gives junior hospital doctors a fair deal. Also 100 new consultant posts all fully funded up to £0.5 million each and that is terrific. Patients are to be treated with more respect and not kept waiting for hours in the out—patient clinic. Money will follow patients. All those are good aspects; the controversial aspects are the self—governing hospitals and GPs' budgets. It is perfectly reasonable to try out those new proposals. Lastly, I point out that, although a surgeon should never confuse surgery with prophecy, it is my belief that when the Bill is passed and the whole scheme is up and running the amount of private practice will decrease.

5.3 p.m.

Lord Pitt of Hampstead

My Lords, I should also like to thank the noble Lord, Lord Hunter of Newington, for giving us the opportunity of discussing the National Health Service. The proposals for the reform of the service raise several worries. The most important is the fact that it will create a two—tier service, not only in hospitals but also in general practice.

My noble friend, Lord Ennals, has already dealt with the way in which the opting out will create a two—tier service in hospitals. A similar situation is likely to exist in general practice. The practice which holds its own budget will be free to negotiate with any hospital, whether national health or private, for the treatment of patients, whether in—patients or out—patients. Therefore patients in a budget—holding practice will have the increased choice because the facilities of both the private and public hospitals will be open to them. However, in the case of a patient whose doctor is not in a practice holding its own budget the choice is restricted to hospitals with which the district health authority has a contract. Most patients will have less choice than they have now. At present their doctor can send them to the consultant of his choice in the public hospital of his choice. Thus, in the interest of preserving and perhaps enhancing patient choice, general practitioners will need to find a way of becoming budget holders.

That will have a knock—on effect to the finances of the district health authority and its ability to finance accident and emergency services. It will also affect the hospital services of patients whose doctors are not budget holders because the economy of scale will be a factor.

Then there is the question of the control of the drug bill. The suggestion is that there should be an indicative budget and not a cash limited budget. It is a limitation not unlike rate capping which was used to control local authority expenditure. Of course, it depends on the formula that is used. Your Lordships know that I was most critical of the formula used for rate capping. It resulted in the most deprived boroughs being rate capped. If an unsatisfactory formula is used for rate capping the drug bill, there may be an under—estimate of the amount required and a consequential difficulty for those in need of drugs.

Practitioners with their budget can subsume the excess cost of drugs by making adjustments in other areas of their budgets. Therefore, those who are not budget holders will have to carry the burden themselves and could end up paying for the drug out of their own pocket. Thus, there is another way in which there could be two levels of practice. Those who are budget holders will have more choice of hospitals and consultants. They may also be better able to cope with the indicative drug budget. Those who are not budget holders will be restricted in their choice of hospitals and consultants and will have more difficulty in coping with the indicative drug budget.

However, there is a trap into which the budget holder can fall. The under-funding of the National Health Service has been exacerbated by the habit of all governments—not only this one—of allowing for a lower level of inflation than that which occurs and then refusing to give additional grants to health authorities in order to make up the difference. They have also habitually accepted pay awards and then funded only part of them, leaving the health authority to fund the rest. If government continue to behave in that way—and I do not believe that the leopard ever changes its spots—general practitioners who are budget holders will find themselves in the position in which the district health authorities now find themselves and end up having to meet the cost of having their patients adequately treated.

The Motion calls for some remarks about solutions. Frankly, I believe that the health service proposals are fundamentally flawed and therefore should be abandoned. The market is the wrong vehicle for managing the National Health Service. The market throws up losers as well as winners, as my noble friend Lord Ennals said. Arid the health of the community cannot afford losers.

We require a service-orientated philosophy and not a market orientated one. Let us build on what we have. The National Health Service needs better funding and better resource management. I was very glad to hear from the noble Lord, Lord McColl, what is being done about resource management initiatives through which we shall be able to create a better way of managing resources.

We should also decide upon adequate funding of the service. Although great play is made of how much is spent by this or that government, the fact remains that as a percentage of our GNP we are spending a lower percentage than other governments with which we should be comparing ourselves, namely, France and Germany and also the United States which spends about 50 per cent again more than we do. Let us try and do what is required to remedy the service.

I have information from a registrar friend of mine about the state of his hospital. That will not be helped by the proposals in the White Paper which may be the basis of legislation. The hospital will not opt out of health authority control; it will be one of the district health authority hospitals. In fact, if the doctors in that area take my advice and become budget holders—I believe that if this scheme comes in that is what they will have to do—then that hospital will be worse off because the district health authority will not be able to deal with or fund it properly. Therefore, let us try and look at the service as we should like it to be. Let us see how we can try to achieve the service we want.

5.12 p.m.

Earl Baldwin of Bewdley

My Lords, shortly before I came into the Chamber this afternoon I misread the annunciator to say, "Prayers for the future of the NHS". For a moment, I thought quite seriously of scrapping my speech in favour of what might have been a more effective solution.

I should like to speak on a topic which does not feature at all in the current proposals for the reform of the National Health Service. I want to speak precisely because it does not feature, and it is arguable that it should feature. A survey published in the Lancet four years ago referred to it as, a growing and substantial subsidiary health care system in the UK". It is a system referred to variously as alternative or complementary medicine, addressed admirably a few moments ago by the noble Lord, Lord Colwyn.

Unfortunately, it is still an emotive subject among many in the orthodox medical world. However, the facts which emerge from recent surveys are that one in three people in this country are interested in complementary medicine. I believe that there was a poll the other day, which I have not yet found, which increased that figure to something like three in four people. One in 10 medical consultations are with a complementary practitioner and 50 per cent. of GPs wish to train in or refer their patients to complementary practitioners. That involves a good slice of health care and one which I believe it is appropriate for the Government to take account of in their thinking from now on.

I include my remarks under the heading of "possible solutions" in the Motion of my noble friend Lord Hunter. The solution most urgently needed is how to contain the health service budget while catering for the health needs of the nation. I can offer no magic formula but I can perhaps try to give a few pointers. Complementary therapies are at their most effective in the management of non-specific chronic illness. It can be quite an eye-opener to see what, for example, acupuncture, chiropractic, homeopathy or osteopathy can do where orthodox methods have failed. Hence the high degree of satisfaction which the public consistently reports with those approaches. The successes, where they occur, are all the more remarkable where the patient has come as a last resort, having been to see the appropriate specialists with a complaint which has become chronic and is thought to be intractable.

The costs are much less. When the survey which I mentioned was carried out, practitioners' fees were roughly half the total cost (including drugs) per consultation in the family practitioner services, and the position has probably not changed much since then. That is where a significant impact could be made. Not only can patients be treated more effectively for a certain range of conditions but it can be done at greatly reduced cost. A more integrated use of many thousands of complementary therapists would have the added advantage of taking some of the overload off hard-worked professionals in the health service. GPs would then have more time for consultation at the surgery and the working hours of hospital doctors could be reduced.

I should also mention one other factor in favour of complementary medicine. It is a good deal safer than its orthodox counterpart. Iatrogenic illness is variously reported as being responsible for between 10 per cent. and 15 per cent. of all hospital admissions. That is a rather horrifying figure, even without the financial aspects which add several hundreds of millions of pounds to the health service bill. The instances of damage to patients' health from complementary medicine are, by contrast, very few and far between.

A more integrated use of complementary medicine for the benefit of the national health is not a pipedream. It is desired by a large section of society which includes many—and possibly now a majority—of those in primary health care. It has the benefits which I have outlined. Perhaps the greater freedom of GPs to control their own budgets will result in an increase of referrals to acupuncturists, herbalist, osteopaths, and so on. We shall have to wait and see. However, there are difficulties to be overcome which I shall mention quite briefly. I am sure that they can be overcome if there is a will to do so.

One of those difficulties is funding. Complementary medicine is in the private sector perforce, and only those who have the money can benefit from it. If it is to make the contribution to the country's health which it has the potential to do, a way must be found of making it freely available to all. I am aware that homeopathy is an exception to that but I know from experience that the practical difficulties of having that treatment on the NHS are formidable.

Dare I say in this company that there may be an argument for the eventual doing away of the present medical monopoly in terms of state registration so that other systems can co-exist on an equal basis and there can be genuine freedom of choice. It is not unknown as a model of health care in other parts of the world where health is not noticeably worse than ours. I float that as something for the future while not expecting the medical profession to receive the idea with rapture. There are other possible ways round the funding question but I do not believe that this is the time to go into that.

The second issue on which much else depends is that of quality control in the complementary therapies. How do we know that a practitioner has been properly trained? How do we know just what his or her therapy can and cannot achieve? For the former, I confirm what the noble Lord, Lord Colwyn, said—that moves are well under way among the major therapies for validation of standards of training; that is, for those who do not already have CNAA validation. That is a long process which will be rigorously undertaken.

For the latter, the key is good research. I speak here as a council member of the Research Council for Complementary Medicine. Good research does not come cheaply. Some of your Lordships may have followed the week-long series in The Times last month on complementary medicine and may perhaps have seen the letter from Professor Ginsburg on 20th November when he noted that the situation would be transformed, if only as little as one per cent. of the public and charitable money spent on medical research were devoted to complementary medicine". I commend this thought to the noble Baroness the Minister for her consideration while expressing gratitude to her department for the small but welcome amount of help the council has already received towards its administrative costs.

That is all I wish to say. I believe the ideas I have expressed offer some possible solutions to the problems of an uncertain and overstretched health service. They are long range rather than short range, but none the worse for that. I hope that the Government, who have been silent so far on this aspect of health care, will receive them seriously.

5.20 p.m.

Baroness Young

My Lords, I begin by thanking the noble Lord, Lord Hunter, for introducing this debate. It is a valuable opportunity to discuss at this early stage the National Health Service and the proposed reforms.

I should like to start by taking up a point made early in the debate by my noble friend Lord Nugent and congratulate the Government on having the courage to look very deeply at the National Health Service 40 years on. What the Government are doing is the same kind of exercise which is conducted by all governments in industrialised countries today, certainly in our European Community partners. As the noble Lord, Lord Porritt, quite rightly pointed out, we suffer from having to cope with two difficult but quite separate problems. The first is the undoubted problem of ageing populations. The statistics show that the growing elderly population will continue to grow right on into the 21st century. This is a fact that we know and have to meet. It is also true that as people grow older they need more medical care.

The second problem is the very rapid advance of medicine today, very expensive, very successful medical advances from which so many thousands of people have benefited. As a consequence the expectations of people are immensely high. They are perhaps not as high here as in the United States where last week I heard one woman say that it is every American woman's right to have a perfect baby. That may be a complete fantasy, but nevertheless the idea that we should all enjoy perfect health at the expense of a health service provided by somebody is an ideal which everybody has before them. It presents all governments with very real problems with which they have to grapple. It is therefore courageous and right that the Government should look at a lot of these problems and that we should examine fairly the kind of solutions which are being put forward.

In common with all your Lordships I have been deluged with memoranda from a number of very eminent sources, many expressing great concern about these proposals. I have also tried to take some soundings of my own and I am glad to say that there are many consultants and senior medical staff who welcome the proposals and who see much good in them. However, there are many who are also concerned.

What we simply cannot do is what the right reverend Prelate the Bishop of Manchester proposed—just spend more money to deal with these problems. I do not believe that we have reached the limit of expenditure on the health service. It is always dangerous to make predictions in political life, but one prediction I make is that any government will spend more on the health service every year. There have been no cuts in expenditure whatever. Expenditure on the National Health Service since 1979 has risen by 45 per cent. in real terms, so we now spend over £28 billion—an all time high. There can, therefore, be no question of cuts. But we still need more, and many of your Lordships who have spoken have argued for more. I have no doubt that as year succeeds year more will come, but expenses will rise with the elderly population and with ever more medical advances. The problems of the health service are not problems of failure but problems of success.

I therefore welcome what is said in the White Paper. With such large sums of money and so great a demand it is essential that the system should be well managed. It is no use poking fun at management and saying that that is not what is needed. Since leaving the Government I have had quite a lot to do with business. One thing I am certain about is that a really well managed enterprise delivers to customers, to patients or to anybody else a much better service than a badly managed one. It is therefore essential that we ensure that we get the best management of these resources in the interest of the patients. We should address ourselves to the kind of problems that will make that possible.

I am very pleased that attempts are being made to get rid of waste. I am one of the few people taking part in this debate who is not medically qualified, but I give an example of waste, one which has been raised in connection with prescribing. Only last week I saw a small child who was ill happily being made better by the use of antibiotics, but at the end of the course half a bottle of whatever it was was thrown away. If that is repeated throughout the country, that is waste. It is that kind of thing we need to look at. There is no point people saying it is impossible. We must try harder. It is the kind of waste which the ordinary person can recognise and which one can do something about. There are many illustrations of that nature which I will not go into this afternoon.

I say to my noble friend that I support the proposals in principle: the importance of management, attempting to get rid of waste and removing inequalities in the service across the country. It is not true that the service is just the same in every part of the country. It is better in some parts than in others. I speak as someone who is a great supporter of the National Health Service. The life of one of my close relatives was saved during the past year by the National Health Service, and for very sick people there is no service that is better. However, when you are not in that state but need medical care, there are problems. Those of us who have stood with elderly people in the out-patients queue know how long you can wait and feel that the health service could do better.

There are, therefore, many problems which the White Paper addresses and which deserve our fullest support. This is not, however, a Second Reading debate on the National Health Service Bill, which we will have on another occasion. I should therefore like to devote the remaining part of my time allowance to two topics which have not been fully aired this evening but which give me some cause for concern and which I hope my noble friend when she comes to reply will look at.

The first has been touched on by some speakers. It is the question of medical education and teaching hospitals. Universities train doctors and dentists for the health service. They do most of the research which leads to advances in treatment. University clinical staff also look after patients, so the relationships between universities and teaching hospitals are very close. It is most important that this valuable asset—the closeness of the working relationship—is in no way damaged by the proposed reforms, and there are a number or worries. One that has already been raised is that in the Bill there is no requirement for National Health Service hospitals which become self-governing to provide the necessary resources and support for medical and dental teaching. This is a real anxiety. If we cannot have an answer this evening I hope my noble friend will look at this.

If one looks at the matter from the point of view of a teaching hospital—and where I live, in Oxford, there is a large teaching hospital—there is a concern that the additional cost of teaching and research will be funded in such a way that it cannot compete on level terms with non-teaching hospitals. It is important to understand that the more complex mix of patients which is inevitable in a teaching hospital results in higher capital costs as well as higher revenue costs. Hospitals are still quite unclear as to how these resources are to be found and the problems answered.

As regards the universities, I believe there is also concern about the composition of the proposed boards of directors. I am sure that that is a matter that we shall debate at length, particularly concerning the number of university representatives as well as the conditions of service and the consultants' contracts. I shall not go into all these details today but I flag them because they are matters that will need to be looked at.

It is important that medical education is seen to play a fundamental part in the health service. It often falls between two stools; that is to say, it is partly looked after by the Department of Health and partly by the Department of Education and Science. I very much hope that the latter will recognise that it has a very important role to play in ensuring that the standards of medical teaching and research are both defended and promoted and, above all, maintained. Without that recognition the basis of a good health service will fall away.

The other issue I wish to raise is a completely different one. It is what I believe the Government have described as non-conventional capital finance. I believe that rather curious term means that capital which is raised on commercial terms is to be labelled "unconventional". I hope if I have misunderstood that my noble friend will correct me. It raises a very important issue. The National Health Service has benefited enormously by a great deal of private giving. Grateful patients and others often wish to raise money privately which for all the reasons I have given the health service cannot provide at that moment.

As I understand the Bill, one of the Government's aims, which I fully support, is that health authorities should operate efficiently and flexibly in an open market situation. I can understand that when this comes about the Treasury will insist on cash-limiting the free capital it provides the National Health Service. It always has and I imagine it always will. It is right to establish clear criteria for market funding. But it seems illogical to require authorities to meet demanding internal rate of return criteria on market-funded projects and then to claw it all back from the free capital.

It is such an important point that I raise the matter now. It is hard to imagine a more powerful disincentive to the development of a businesslike approach to health care. It demolishes a major potential attraction of self-government. Perhaps for that reason some would support it. We need to be quite clear that, when we are urging and looking for more efficient ways, we encourage self-help and ways of using in a sensible manner the capital that can be raised and not losing it as soon as we have gained it. It is an important point and I hope that my noble friend will look at the matter if not this evening then in the course of the passage of the Bill or perhaps she will write to me about it.

I conclude by saying as I did at the beginning that I welcome the general thrust of these proposals. I agree with what my noble friend Lord McColl said about the health service today. I have no doubt that we shall debate details but I am sure that we are setting out on the right path.

5.34 p.m.

Lord Hatch of Lusby

My Lords, in thanking the noble Lord, Lord Hunter, for the opportunity of debating this subject, I must confess to him that I am using his debate to raise one issue only. It may be typical of what is happening in the National Health Service. It is an important issue and, as I have given notice to the noble Baroness of it, I hope that she will be able to give the House some answers to the questions that I shall put to her.

I am referring to the position of the National Heart Hospital. I have been a patient at that hospital for 12 years now so I can speak with personal knowledge of its excellence. It is a world-famous hospital. The work that has been done there is incomparable with anywhere else in the world. Sometimes one wonders whether this Government appreciate the excellence of our institutions when they treat them in the way that we have seen them do on numerous occasions.

The National Heart Hospital will be virtually closed at the end of this year in order to move from its present buildings to Brompton as it is part of the Brompton group. I was in the hospital yesterday listening and talking to the people there about what is happening. What concerns me is that during the removal there may be a dislocation over a number of months. That dislocation of the excellent work that is being done in the hospital could damage it in the future. It is almost certain to reduce for a period the cardiac work of the hospital. That may damage it permanently, but I hope not. I ask the noble Baroness what is going to happen after the end of this year.

Already the hospital has been told that the group is overspending—but overspending how? It is overspending by doing too much work and by using too many of the services of the first-class surgeons, nursing staff and cardiac auxiliaries. What is of immediate concern is that even now, in December 1989, that hospital has not been told what resources will be allocated to it from the beginning of the next financial year at the end of March, less than four months hence.

How can it plan what it is going to do in these very disturbed circumstances? The hospital will have to share the buildings, theatres and resources of the hospital in Brompton. The result will be that more work will have to be done when the move takes place in order to maintain the position it has today. That is not going to happen. There will be more intensive use of the theatres available, difficulty in moving staff, difficulty in getting nurses and, above all, difficulty with the services of the cardiac auxiliaries, many of whom are at present working on a locum basis. They have already been told that they are to be given notice at the National Heart Hospital.

There is bound to be extra strain on the resources to be used by that hospital after its move. The in-patient work is certain to be reduced when two hospitals are sharing the facilities now allocated to one. Certainly for the next six months that in-patient work is going to be reduced. It will mean lengthening waiting lists and in particular, some of the younger people on the waiting list for cardiac operations will have to wait 18 instead of 12 months.

As my noble friend Lord Pitt has pointed out, despite the figures that have been given this afternoon, it is the case that the National Health Service has not been fully funded if one takes into account the rate of inflation, the increasing expenditure on research and development and, above all, the increasing expenditure necessary for higher technology. I wish to know from the noble Baroness what are the Government's plans. The noble Baroness, Lady Gardner, who is on the board of the Brompton group, will, I believe, add something on this subject later on. I think I can say that we want to know what resources the Government will provide in this difficult period for an outstanding British hospital.

Even now, under the present conditions in that ramshackle building, the National Heart Hospital in Westmoreland Street, the consultants say that they are not able to carry out the amount of National Health Service work they are prepared to do, not because they will not allocate the time but because there are not the resources to pay for it. Those who divide their time between private practice and National Health Service practice have told us for years—I have raised the matter before in the House—that they would do more work for the National Health Service in that hospital if the resources were available. They are not available, and so a part of the time that could be devoted to National Health Service patients is simply being wasted.

Everything that I have heard over the past few days and weeks about this serious situation leads me and those involved in the administration and conduct of the hospital and in surgery, nursing and cardiac work to consider that the very best they can do over the next six months is to limit the damage that is inevitable. I ask the noble Baroness to address herself to this issue and to let the House and the public know where the Government stand in regard to the provision of resources for what is one of the greatest hospitals in the British Isles.

5.41 p.m.

Lord Carr of Hadley

My Lords, I too should like most warmly to thank the noble Lord, Lord Hunter, for giving us an opportunity to debate this subject today. It is valuable that we should have it in advance of the inevitably more detailed and, I fear, more adversarial discussions on the Bill when it comes before the House.

I fear that the noble Lord may not take much pleasure from the first part of my remarks, but I believe that he may be better pleased by the second part if he finds time to read what I have to say. In my general remarks I want both strongly to support and also strongly to warn the Government. I am not one of those who believe that all the NHS needs is much more funding, even if that were accompanied by some relatively minor evolutionary changes. I believe that radical changes are needed and that the Government's main proposals are very much in the right direction. It is right to give patients more choice. It is right to set up self-governing hospitals. It is right to experiment with budget-holding general practices, which I believe have within them the potential, if liberally and sensitively developed, to do more constructive good for the health service than any other single proposal. It is a proposal with great potential if rightly developed.

I know from my business experience—I am talking not about profitability but about service to customer—that where one strongly decentralises the management of an organisation and makes sure that the organisation is more driven by consumer demand than by producer preference, one gets an immense release of energy and a noticeable improvement in the service that the consumers of that industry receive. I am sure that the same would happen if one applied those principles effectively within the National Health Service. Therefore I most strongly support the thrust of the Government's main proposals. But at the same time I warn most strongly about the dangers and difficulties inherent in putting these proposals into practice. Great skill and sensitivity will be needed from the Government in implementing their policy. I have to say frankly that we have been lacking such skill and sensitivity up to date in the way in which the matter has been presented. It is about this area that I want principally to speak. I want to give the Government two strong general warnings.

My first warning is about the danger of not succeeding more effectively than has so far been the case in gaining the understanding of those who work in the health service. At the moment the degree of understanding is in my view dangerously low. This has to be worked on very hard before the main proposals begin to be implemented. It will be too late after the process has started. It has to be done before. I do not say that if the Government work very hard on this they will succeed in winning prior agreement from all or even most of those involved. But I do say that much more can and must be done to make sure that there is a proper understanding of exactly how these general proposals will work in practice and of exactly how the Government intend to guard against the ill-effects which many people within the service genuinely fear. Lest there be any doubt about it, the fears are genuine; and they have not yet received sufficiently detailed and concrete information about how their fears will be guarded against.

In the time available I want to speak about doctors. I do so because for one reason or another I have always had a good many friends and personal contacts within the medical profession. I happened to marry a doctor's daughter, which strengthened the contact I had. I am dismayed by the doubts, fears and frustrations expressed to me over recent months by so many of my medical friends. I use the word "friends" because I am talking about people who have spoken to me not in a lobbying capacity but on the basis of personal contact and friendship. Their fears are deeply felt and real. They may not be justifed but they are deeply felt and real. They are not phoney and they are not just lobbying attitudes.

I realise that Ministers and their officials have had many meetings and have tried hard. Yet doctors feel strongly and sincerely that their fears and questions have hitherto been met far too much by general statements of belief and by assertions of good intentions, both of which may be welcome, and far too little by specific information and detailed, concrete argument and explanation.

Perhaps I may refer to a few of of the doctors' fears. They fear that pay freedom in independent hospitals may drain off much-needed staff from NHS hospitals and produce a two-tier system of good and significantly inferior hospitals throughout the country. They fear the effects of the proposals on teaching, training and research. There is also the fear that district health authorities, in drawing up their plans for the health of their districts, will get their medical and expert advice from general practitioners and directors of public health and not at all, or scarcely at all, from the specialists in hospitals. They fear that they will be debarred from or will not be invited to make an input.

There is also the fear that GPs who are free to refer their patients to what they believe is the best available hospital in each case will under the new system face undue financial pressure to send their patients to the hospitals with which their district health authorities have contracts. One of the GPs in my home area of Gloucestershire is a most dedicated and skilful young doctor who gives a great deal of attention to this aspect. He is worried about this and cannot so far get adequate and certain answers to his fears.

I am not for one moment saying that there are no satisfactory answers to those fears or to many others which I have not mentioned; nor am I saying that the fault for the failure in communication is all that of the Government. However, I am saying that regardless of where the blame may lie the Government urgently need to establish a real and deep dialogue with the medical profession. I must also utter a warning that unless they do so successfully the successful implementation of their proposals will be seriously jeopardised.

My second general warning concerns the complexity of the managerial task in implementing these proposals. The successful implementation of a decentralised system requires very skilful, professional management. It does not provide such skill on its own; it requires it to make the system work. It also requires very sophisticated but not too voluminous management data. From what I hear, the NHS is seriously short of both those commodities at present.

Further, a successful decentralised organisation requires a firm understanding of and an adherence to two basic principles: first, the decisions and controls which remain centralised must be keep to an absolute minimum, but those which are centralised must be very firmly centralised; and, secondly, as much as possible must be decentralised to the lowest possible level and what is decentralised must be genuinely decentralised. Moreover, those holding decentralised authority should not be constantly interfered with and crawled over by government departments, and so on. What worries me is that both those principles strike me as being absolutely foreign to the culture of British government, regardless of which party is in power. Further, I doubt that this culture will be easily or quickly changed.

The conclusion to my general warnings is quite simple. I say to the Government: yes, pursue your major proposals with determination; but please pursue them gradually with great deliberation and care and on an experimental basis. No company would launch a major new product without the most careful testing and pilot marketing. There is much in the proposals that will be good, but my guess is that there will be some teething troubles. For all that matters to our patients, please do not let us have teething troubles all over the country at the same time.

5.52 p.m.

Baroness Masham of Ilton

My Lords, I hope that some of the suggestions put forward by your Lordships today will be listened to by the Government. I say that because uncertainties are damaging to the morale of any organisation. Good morale is especially essential for the health service if it is to function in a humane and efficient way. An uncertainty hanging over general practitioners who will not hold their own practice budgets and their patients is that of not knowing if the general practitioners will still have freedom of choice to send patients to the consultants they feel are most suitable.

General practitioners in rural areas often have to use specialising services outside their own locality. I shall give your Lordships an example. A schoolboy aged 16 had leukaemia. The family lived in Yorkshire and the boy was sent to hospital in Leeds. He was treated in a ward which had only geriatric patients. The family and the GP were most distressed. However, the GP was able to obtain a bed for the boy at St. Bartholomew's Hospital in London where the stresses of the family were understood. The family felt that they were receiving the very best treatment.

Freedom of choice is very important in a few particular cases. If such choice is taken away, doctors will lose initiative and job satisfaction. Having to send patients to where the district has contracted beds but where the GP considers the consultants not to be the best for the patient and where he knows the results will not be of the highest standard would mean a second-class service. Moreover, if the treatment goes wrong, who takes the blame?

I have raised this important matter previously in the House. I am grateful to the noble Baroness, Lady Hooper, for writing to me. Her letter says: GPs will be asked to specify the referral patterns they want to see secured. In turn district health authorities will provide them with the maximum information about the services available". However, what happens if the doctor and the district authority do not agree? Patients are individuals who sometimes have very complicated complaints. Often they become ill at weekends. How will the doctor contact a district administrator on a Sunday? The Minister's letter continues: There will inevitably be occasions when GPs wish to refer patients to hospitals which do not hold contracts. The district health authority will maintain a contingency reserve for such referrals". I should like to ask the Minister what happens when this contingency plan runs out. Many people work or go on visits a long way from home. They may have accidents or suffer severe illness. Can the Minister give a clear assurance that the National Health Service will still be national and treat emergencies wherever they occur. In other words, will the money follow the patient or will the patient be left to die in the street?

I should like to receive a categoric commitment from the Government that supra-regional specialists will be protected. Many people depend on those specialising facilities. They are their lifeline, and they are cost effective. If patients receive the correct treatment initially much harm and expense is saved in the long run.

I shall give your Lordships an example of one such specialty where the treatment units are all supra-regional. They treat patients from all over the country. I refer to spinal units. They give expert treatment to people with spinal injuries resulting in paralysis. Many people break their backs or necks in sporting mishaps, road traffic accidents, industrial accidents or by falling down the stairs or out of trees. These excellent units attached to general hospitals are at present nationally funded. The system needs to continue at least until the reorganisation settles down and until the transfer of money from districts or regions is a reality.

Patients who have such catastrophic injuries must stay in hospital for several months. The nursing is very specialised and rehabilitation takes time. The prevention of pressure sores is of paramount importance as is the care of the bladder and of the bowels. Can the Government give an undertaking that those services will not diminish and that they will in fact prosper and grow?

Many concerns have been brought to my attention by individuals and by organisations dealing with people who have chronic long-term conditions. I refer to organisations such as the Psoriasis Association, dealing with serious skin conditions, and the Spinal Injuries Association. People in those categories and indeed many others have little choice. The situation could become worse.

Insurance companies dealing in private health will not take such people on their books for anything related to their disability. Therefore these individuals fear that they may experience great difficulty if they want to change their doctor because of capitation. They fear that they will become unpopular because they take time and because their drugs and equipment cost extra money on an ongoing basis. When such people apply to join a practice, it is easy for someone to say, "I am sorry, our books are closed".

There is the greatest concern about the uncertainties in relation to the incontinence service. A Government Minister, the noble Baroness, Lady Trumpington—she has given me permission to mention this matter in the debaie—made her maiden speech on the subject of incontinence. Two weeks ago I received a letter from a widow living in the Rotherham health district. She is 78 years of age. She writes that she has suffered several strokes and haemorrhages and that she is sometimes doubly incontinent. The nurses have told her that they can no longer supply her with incontinence pads.

I cannot tell your Lordships what anguish and desperation this kind of inhumane decision causes very vulnerable people. They are struggling against many difficulties to remain living in their own homes in the community. I contacted the health authority and that lady's case has been reconsidered. She wrote to me and said, "What about the others?". If that is what efficiency savings are about in some health districts, they seem to be downright stupid and cruel.

I should like to bring to your Lordships' notice a great frustration felt by some orthopaedic surgeons. Many of the general rehabilitation services have already closed. Farnham Park closed in 1988; Camden Road is now only for geriatrics; and Garston Manor has changed use. What is now happening is that the acute beds are being blocked. Patients go home unable to cope. They lose confidence instead of having the job satisfactorily finished. The operation is only half the job; the building up of the body afterwards and getting fit to face work or live a normal life in the community is the other half. It would be wise to consult the surgeons and look again at the future needs of general rehabilitation.

At present, because of the forthcoming decisions on the health service and the provision of care in the community, many uncertainties surround the services for those addicted to drugs and alcohol. Such addiction is a major factor in the break-up of family life and the loss of days at work. Those running the services, which often come under mental health provision, feel themselves in a vacuum of uncertainty. Drug and alcohol services come a long way down the list of the many priorities in the NHS. We need healthy young people to do useful jobs. They should not be throwing their lives away on substance abuse.

So serious are the uncertainties that people in the non-statutory sector feel that, if the White Paper is implemented in full, by 1991 most residential and nursing care for those suffering from drug and alcohol problems, other than those who have their own insurance scheme or a sizeable income, will disappear. Perhaps the Government will try to understand that predicament and ring fence the money for those services. If they have to compete with all the other needs those people may end up in our over-crowded prisons and be unable to kick the habit of addiction as the help needed will not be provided.

The great cloud of uncertainty that hangs over the world at present is that of the AIDS virus. A growing number of women and children are falling ill. We have the emotional stress and sadness surrounding the families and friends of those who are dying of AIDS. There is also stress felt by the young doctors and nurses working on the wards. The problems that AIDS is bringing need to be reviewed constantly.

6.3 p.m.

Lord Nelson of Stafford

My Lords, I add my thanks to the noble Lord, Lord Hunter of Newington, for introducing the debate. He mentioned research and development in the NHS and the report of your Lordships' Select Committee, of which I had the honour of being chairman, which reported on priorities in medical research. The noble Lord, Lord Winstanley, also referred to that point and so I shall confine my remarks to that aspect of the NHS.

I shall begin by drawing your Lordships' attention to the fact that it is now some 20 months since that report was published. We still await the Government's response, but there is a hope on the horizon because my noble friend the Minister told the noble Lord, Lord Kilmarnock, in the debate on the loyal Address that we could expect a reply in the new year. We live in hope that it will be the type of reply to which we are looking forward. It has been a long time.

For the convenience of your Lordships I shall take this opportunity to summarise the findings of the committee because many noble Lords will probably have forgotten them. We were impressed by the work of the Medical Research Council and the way it dealt with and administered the funds available to it. Those funds were directed primarily to science-led proposals put forward to it. Your Lordships will remember that the MRC is outside the NHS. It is part of the Department of Education and Science. We were also impressed by the excellent research work done by the medical charities which was directed towards the purposes for which their funds were collected. We were impressed by the work done by the pharmaceutical industry, its work being directed towards the commercial interests of the firms involved.

I shall remind your Lordships of the scale of the research done in those three areas. The figures quoted in the report were for 1985–86, but I do not believe that they have changed much. The MRC was spending £121 million per annum, the pharmaceutical industry £490 million per annum and the medical charities £110 million per annum. All of that work is of course outside the NHS.

In contrast we were disturbed by the position inside the NHS. I shall quote the figure for the NHS for the same period. It was £18 million. There seemed to us to be a complete lack of understanding within the NHS of the role of research which concerned us a great deal. It lead to a number of serious omissions which I shall summarise.

There were inadequate procedures for initiating need-led research as distinct from science-led research coming from the MRC. There was a requirement for need-led research coming up through the NHS which was not being dealt with adequately. There were inadequate procedures for protecting clinical research work to enable research to be brought to a practical conclusion in the interests of patients. That clinical research came under constant funding pressures on the one hand and patient demands on the other. It was not protected, and that was detrimental to patients because the research work did not result in added patient care as quickly as it might. As the noble Lord, Lord Winstanley, said, inadequate attention was paid to the training and career prospects of research workers in the NHS. That is serious because one cannot attract good young people into the service unless there are good career prospects. That was not happening. There were inadequate procedures to ensure that the results of research work were applied throughout the NHS and so the service was not receiving the full benefit of the research done.

Finally, there was quite inadequate health service research—what I would call operational research. As my noble friend Lord McColl of Dulwich has told us we are talking about a £23 billion business. It seems inconceivable for a business of this size not to have adequate research work on the operational side to answer such questions as: "Are we doing the right thing?", "Can we do it better?", "Are there other ways of doing it?" and so forth. That seemed to us to be an inadequate, stupid policy. No one in business would think of running a business of that size without having a research arm to guide policy decisions and administrative practices. All these seemed to us to be important issues which required attention.

We hope that those issues will receive attention from the Government in their reorganisation. To bring about those changes within the NHS—not within the department but outside—we saw the need to appoint a senior person who could take responsibility for seeing that those things were done, but as the health service was organised at that time there was no administrative procedure for managing it. We therefore recommended in our report the setting up of a national health research authority. Since then the Government in their wisdom—and I congratulate them on it—have recognised the weakness of the administrative procedures and have appointed a management board and a chief executive. I would say that these are excellent moves which I am sure will be beneficial to the National Health Service.

That enables us therefore to look at a different way of meeting these weaknesses on the research side. Our thinking in that respect is that there is now an obvious role for a research director on the management board. That is a practice which again is carried out by most companies running businesses of any size and certainly of this size.

I wish to make it clear that we saw research as being an essential tool of management and therefore part of the executive function. The research director should be part of the executive team responsible for the running of the National Health Service. I say this because I have heard some suggestions that the weaknesses which we identified could be met by appointing a research adviser. No, my Lords, I do not think that this can be done by a research adviser. He must be part of the executive team, playing a role with the executives in the effective use of research as an essential tool of management, as part of the management of the National Health Service.

To sum up therefore I should say that our conclusion was that within the National Health Service "research" as an essential management tool was inadequately used. While outside the National Health Service medical research was of the highest standard, inside there was considerable room for improvement in its application to the needs of the service. This could be rectified by the appointment of an officer with this responsibility, but it must be somebody of adequate status. He would only be of adequate status if he had the necessary authority to play his part in the management team of the health service.

I hope that when we receive the Government's reply to the committee's recommendations we shall learn that they accept our diagnosis and our solution to the problem. My noble friend the Minister knows our views on this; we have discussed them with her. I am not necessarily suggesting that she should take the matter further this afternoon but we look forward to the Government's reply in due course. We hope that it will be favourable and that the Government will have taken note of what has been said. For the reasons which I have mentioned there is tremendous scope in these fields for the improvement of the National Health Service and its efficiency but most important of all the improvement of patient care, which is the Government's aim. The changes we recommend could play an important part in meeting that objective.

6.13 p.m.

Lord Monkswell

My Lords, I too wish to thank the noble Lord, Lord Hunter of Newington, for bringing the debate before us today. The interesting point is that the uncertainties that face the National Health Service are: will it be properly funded? will it be privatised? The only solution to those uncertainties is for the people of this country to elect a Labour Government. That makes for a very short debate so I thought it would be quite useful to develop that a litte.

One of the problems I wish to talk about is the fragmentation of the National Health Service. We have a situation where some hospitals do not provide a full range of services. The hospital services are separate from the community services. The community services themselves are divided between the doctors, the pharmacists, the opticians and the dentists on the one hand and the community nurses, the midwives and health visitors on the other side. If we look at the family doctor service, that itself is fragmented because of the overuse of deputising services in some areas. So at every level the National Health Service is fragmented.

Comprehensive health care depends on the proper integration of a wide range of professional expertise and equipment and facilities. But changing patterns of population, changing patterns of ill-health and changing medical knowledge require changes in the pattern of health care delivery. Unfortunately, the Government's plans do not address these problems. Effectively they seek to fragment the health service even more. We shall have two types of GP provision, two types of hospital provision, with none of the integration that is required.

I wish to pick out two specific elements of the Government's proposals which we need to look at. First, there is the way in which the Government seek to tackle the use of the deputising service. It is recognised that the deputising service which the GPs, the family doctors, make use of is counter-productive. It is quite useful if used in very small amounts, but it is counter-productive when it is overused. The Government plan effectively to increase the cost to the GPS of that deputising service. I suspect that all the other controls will effectively come off. The net result of that will be, yes, some doctors may use the deputising service less, but others unfortunately, I suspect, will use it more.

Another problem is the way in which the Government are approaching clinical audits. I suggest that clinical audits have always been with us. It is the process of doctors discussing their diagnosis, their treatment and the outcome with their fellow professionals. They have always done that; enlightened physicians have always done that. Given the scale and scope of change in medicine over the years, it is probably quite useful for the medical profession to formalise the process of clinical audits. It is probably useful for the administration of the health service to provide support facilities.

Unfortunately, however, the plans of the Government are to use clinical audits as a tool of managing the profession. That, I suggest, will be very damaging indeed, not only to the development of the profession, because the procedure which should be used as a tool to develop the profession and develop medicine will be used for a totally different purpose and therefore the tool will be destroyed.

The other problem with which we are faced is that we shall end up with medical treatment being determined not by the doctors but by the non-medical managers of the health service. One of the essential points about the National Health Service is the provision of high-quality services to local people. In the area I come from we have many problems, as every area has. I should like to highlight two of them, and perhaps I may explain my situation.

I live in one part of south Manchester and I represent on the local council another part of south Manchester. I am also a member of the family practitioner committee which oversees the activities of the local family doctors. One of the unfortunate side effects of the Government's proposals is that a number of older GPs are leaving the profession before they see the problems hitting them. They cannot stomach the proposals of the new contracts or the changes that they see coming into the National Health Service. They are retiring and saying that they want nothing more to do with the system. These doctors have surgeries in their own homes, but they do not even want to continue with that.

We cannot argue against that, but we are left with a problem because the district health authority has the ability to build premises from capital expenditure. The family practitioner committee, on the other hand, has no authority to expend capital and build anything. So the doctors who are left to provide the service have effectively to do it themselves.

This is a very unsatisfactory state of affairs because of the unique situation in south Manchester, where the city council owns the whole of Wythenshawe—that is the area I am talking about. So the city council is left to try to pick up the pieces. We are doing what we can, but I suggest that these problems will continue until there is an integration at local level of the operation of the health service.

A further problem I wish to refer to concerns the provision of hospital services. In south Manchester we have two district general hospitals serving two distinct communities, Withington and Wythenshawe. The hospital in Wythenshawe also serves parts of south Trafford, north-east Cheshire and parts of Stockport. Those two hospitals also provide the very important casualty resources required by the emergency plans of Manchester's international airport, Ringway. To save money the district health authority basically wants to close the casualty unit at Wythenshawe. It is interesting to note that it takes half the time to get from Ringway to Wythenshawe Hospital than from Ringway to Withington Hospital. But, nevertheless, the health authority wants to close the Wythenshawe casualty unit. That, incidentally, is totally impartial evidence provided by the local police establishment.

Other proposals seek to concentrate some of the hospital services on one site or the other. The net result is to destroy two district general hospitals. We have heard that there is special financial provision made for hospitals in the vicinity of Heathrow, Gatwick and Stansted. I make a plea this afternoon that south Manchester, and particularly the casualty units at Wythenshawe and Withington, should also receive the special extra funding required by the emergency plans of the international airport situated nearby.

Last week I attended a packed out public meeting in Wythenshawe on these proposals. The chairman and the general manager of the health authority presented their plans to unanimous condemnation. Right at the end of the meeting the district manager said that he believed the public attending the meeting were being parochial. He said that if it had been decided to build the new district general hospital in Wythenshawe and close the one in Withington, the public would have been quite happy with that. The response of the meeting was unanimous and immediate. To cries of, "No, we are not selfish", that suggestion was opposed completely.

6.25 p.m.

Lord Mancroft

My Lords, other noble Lords have already mentioned this, but I wish to repeat that we should be grateful to the noble Lord, Lord Hunter, for tabling this debate. It is particularly useful to be able to debate this huge subject calmly, before the Government's forthcoming Bill reaches us. I intend to devote most of my few remarks to a small but I think important area of proposed reform, which is the role of the private sector in health care. At this stage I must declare an interest as I am a partner of the National Health Service. Before any noble Lords dive for cover at the thought of Mancroft wandering around in a white coat attempting to treat any aches and pains that noble Lords may have, please let me explain.

In October this year a company of which I am a director entered into what I believe is the first ever partnership agreement between a limited company and a health authority to provide facilities for both private and national health patients on an equal, first come first served basis. The health authority will purchase bed space at a discount of 20 per cent., which practically speaking means that it will pay for beds at the rate of £100 a day in an area where its own beds cost £125 a day. Without looking any further, that is a good deal. It does, however, cause one to wonder why, with all the economies of scale of health authorities beds are quite so expensive. I have so far been unable to find a satisfactory answer to that.

But the deal goes further than that. As a true 50–50 partner, the health authority receives 50 per cent. of the profit of this venture. That profit will go towards providing more beds at a cheaper rate in subsequent years. When our little clinic is full, with maximum income and running at its most economic level, the health authority will reach what is called a zero revenue situation. In our language, that means that revenue will equal expenditure. That is a state most of us have been longing to reach for years. The health authority may further recoup costs by selling beds to other health authorities. The overall income and profits will pay for any expansion that may be required by force of demand. Thus the health authority will only be asked for a capital investment at the start. It will receive that back within two years at the outside.

This facility is being set up to provide treatment for addiction to drugs and alcohol. Those subjects were mentioned by the noble Baroness, Lady Masham. It follows a method of treatment called the Minnesota model which is currently only available in the private sector. The National Health Service has no staff qualified to practise this form of treatment. Because of the multidisciplinary nature of the treatment, I am told that it is doubtful that it would ever work within the rigid structure of the health service as it is at present. We are therefore providing an additional desperately needed service that the health service by itself is unable to provide at a cost far lower than the health service could possibly achieve.

At present the patients we plan to accommodate are a serious burden on the health service. General practitioners find them expensive and time consuming. Casualty wards and psychiatric wards are full of them and the old style psychotherapy units simply do not work. Therefore these patients go round and round the system. By stopping this awful cycle we hope to make beds, time and money available for other patients. This is of course a pilot scheme, but when we have shown by independent research how it can work we hope it can be extended all over the country. There is no reason why these partnerships cannot be extended into other areas of medicine, bringing private money and expertise together with national health patients. Instead of the public sector subsidising private beds, which has always been the criticism in the past, private money will subsidise national health patients in national health beds.

It has taken two years to set this project up and we have learnt a great deal during that process. We have received much good will from the Department of Health and from the Ministers in that beleaguered department. They have been farsighted in their approach and I wish to extend my thanks for that to my noble friend the Minister. We have received help well beyond the call of duty from health authority administrators, but much of what we have learnt has quite frankly appalled us. The administrators are clearly massively overworked, partly because the management systems are hopelessly inadequate and partly because their office facilities and administrative back-up are about 25 years out of date. They cannot be expected in those circumstances to produce the service that the nation demands and that we are discussing today.

More importantly, the management is structured in such a way that no one has ultimate responsibility or is accountable. The result is a complete inability to make the simplest of decisions. Because the structure is so overloaded the left hand never knows what the right hand is doing so that if a decision is made it takes for ever and a day for that decision to be implemented.

The day-to-day accounting system is one which my accountants have told me went out of common usage 15 years go. The solicitors retained to advise the health authority that I have dealt with would only act when an unequivocal undertaking was received as previously they had had to resort to law to be paid. The secretary of the authority himself admitted to me that the authority had lost all discounts with local suppliers due to its failure to pay its bills.

The Government's solution to those problems is theoretically the right one. It is, in short, to commercialise the National Health Service. The Opposition hardly waited to hear the details before throwing up their hands in horror. They have howled about privatisation and principles. Noble Lords may have noticed that when people talk about principles they always seem to mean money; in other words, spending cuts. As we all know, there have not been any spending cuts.

My noble friend Lord Nugent of Guildford gave us the figures on spending. Those vast increases have only been made possible by the successful wealth-creating policies of this Government. It is extraordinary that the Labour Party with one breath should accuse the Government of frittering away national assets and then with the next criticise the Government for not throwing good money after bad down the drain of the National Health Service. The Government quite righly want to put the plug in that drain before turning on the tap.

What commercialisation means is paying closer attention to the balance sheet, spending efficiently in a cost-effective way, and making sure that one receives value for money. The administrators to whom I have spoken do not believe that that is a bad idea. However, my fear is not theory but practice.

Try as I may, I can see no way in which the present structure will ever be anything but crisis led. I am afraid that the whole system is too far gone for this kind of repair work. The health service cannot work with its old system and I do not see how it will be able to work with a botched up repaired system. However, let us try by all means.

This is not really a political issue. I do not believe that there is a single Member of your Lordships' House who does not want the best for our health service. We have collectively the will to succeed. But this is a very complex issue and needs much deliberation. Like many of your Lordships, I am ready to be sold the Government's idea if they will listen to mine. However, we must go slowly and carefully and it will be counter-productive if the Government try to push through new legislation at their usual breakneck pace. If the Government want your Lordships' help—and I think that they do—they must proceed at your Lordships' pace. More haste, less speed should be the order of the day.

There is much that is good in the Government's proposals but I shall need a little persuading about some of them. I shall try to keep an open mind and I sincerely hope that the Government will too.

6.33 p.m.

Lord Butterfield

My Lords, perhaps I may add my appreciation to my noble friend Lord Hunter of Newington for initiating this debate. I am very intrigued by the reference on the Order Paper to present uncertainties and possible solutions.

I have listened to the speeches with great interest. I was very touched by the appeal of the noble Lord, Lord Hatch, on behalf of the National Heart Hospital. I am sure that that will warm the hearts of my colleagues who work there. I was very conscious of the penetrating criticisms made by the noble Lord, Lord Pitt. To keep the balance, I was delighted to hear what the noble Lord, Lord Nelson, said about the importance of research in the NHS. I was delighted too with the remarks of the noble Baroness, Lady Young, particularly concerning teaching. I bow to my collegue with whom I worked in another place, the noble Lord, Lord Carr, and acknowledge his remarks.

One uncertainty concerns whether we should try to improve management and then put in the money or let the money come first and hope that management follows. I hope that the noble Baroness, Lady Hooper, will remember that many people working in the National Health Service are very worried that a disproportionate amount of resources will be invested on the management side.

While I am impressed by what I see of the work of young managers in the hospital in which I still work—Addenbrooke's in Cambridge—and in the authorities in East Anglia with which I am concerned, there is no doubt that those young men are working much harder and faster than many of us realise. They have set themselves very exacting standards. I am intrigued by the remarks that we must not go too fast, but I should like the House to know that the managers believe that they can meet the deadlines.

The White Paper produced much controversy and friction. Half a million nurses work in the hospitals and at the beginning their points were recorded very carefully. More recently the general practitioners and currently the consultants in the royal colleges are indicating their uncertainty and stressing the need for reassurance.

When the NHS was first proposed I was a medical student at Johns Hopkins University in America. I was very much in favour of the service. That support led to my being called a very left-wing doctor. I suppose that it is the furring up of my arteries which makes me confess that while in the early stages of the White Paper's life I was very dubious about the proposals for the provision of private insurance for old people like myself by their relatives, about the general practitioner budget (which I thought might distort resources in local hospitals), and about the trust hospitals (which I feared would be outside the NHS), and so on, bit by bit I have been won over on almost all of those points. Like many speakers this evening I see much good in the White Paper. I very much hope that we shall give it a chance.

One concern emerging from conversations with many of my colleagues is that trust hospitals will operate outside the NHS with the risk of a two-tier service. Part of my reply is that there is such a spectrum of hospitals and, within hospitals, such a spectrum of quality of service that the leading hospitals may have to be left to work out their own arrangements. I refer to hospitals such as Guy's and bow to my former colleague there, the noble Lord, Lord McColl. Very important experiments are being worked out by the young men in those hospitals. I believe that there are misunderstandings. The Royal College of Physicians is very worried about the level of salaries that may develop in the leading independent hospitals. My understanding of a telephone conversation yesterday with Professor Chantler, the éminence of the new developments, is that there is no intention, at least in the foreseeable future, to have salary differentials if the consultants at Guy's were to agree to opt for trust status.

On the other side of the argument, while I was vice-chancellor at Nottingham University we presided over variations in salaries for our professors. Therefore, salaries may be used in different circumstances to achieve the desired result.

I am very worried about morale up and down the country. Many of the relationships inside hospitals have been rather soured, often by misunderstandings. I hope very much that the noble Baroness, Lady Hooper, will bear in mind some very useful work carried out by Professor Reg Revans of Manchester University, who invented a phrase in management, "action learning". He was able to show in a study of 12 hospitals in the 1960s and the 1970s that if you got the people on the administrative side, the nursing side and the medical side pulling together and showing willingness to understand other people's views the hospital's performance was improved. I hope that Professor Revans will be able to have his ideas included somewhere, perhaps in the training programme.

As regards research, we await the Government's response. I hope very much that what the noble Lord, Lord Nelson, spoke of will come to be. I had the privilege of working at operational research when I was in the services. I feel that the spirit of that kind of operational research would bring about a great improvement in relations and, I dare to say, an improvement in the management of the service.

I want to talk briefly about diabetics, in whom I am particularly interested. The British Diabetic Association, like many other societies concerned with chronic illness, is worried about the future and about how the district authorities will take care of needs. It was, of course, worried at one time about the possibility that insulin would be unavailable when budgets ran out. However, it has received a letter from the Minister in the other place, Virginia Bottomley. It is rather important that I read this to your Lordships; it may prevent misunderstanding going much further. She wrote to the British Diabetic Association: I can give you an unqualified assurance that the new arrangements for indicative prescribing budgets for general practitioners will not interfere with doctors' clinical freedom to prescribe the drugs their patients need". There may, of course, be escape let-outs in what patients "need", but diabetics know that they need their insulin or their pills. That should be reassuring, and indeed is reassuring, to them.

In the same breath, let me remind your Lordships that every diabetic costs the country between £500 and £1,000 a year. Many might have staved off development of the illness if they had been able to lose weight before the diabetes fully developed. One sometimes wonders whether, if there were to be a saving, it could be shared between the general practitioner and the rather overweight person with relatives who are diabetic. We might get some better slimming in that section of our community, thereby saving us quite a lot of money.

All of us in the health service have been very proud to be part of it. I believe that it should not be beyond the wit of all of us, if we can work together for this great service, to be as proud of it in the future as we were in the late '40s and early '50s.

6.45 p.m.

Baroness Gardner of Parkes

My Lords, I thank the noble Lord, Lord Hunter of Newington, for introducing this debate and for giving us this opportunity to speak. This is a time for change in the health service, and it is a good thing to have change because the service has gone on for such a long time and has been tinkered with again and again. I think it was in 1974 that the noble Lord, Lord Joseph, carried out a reorganisation and brought in the present structure of area health authorities, regions and districts, which now have become districts only; and the hospitals which have survived best since are the ones which retained boards of governors on the postgraduate teaching hospitals. They are now redesignated as special health authorities.

When I have spoken before of overspending in the health service, people have always said to me that it is due to bad management. In the case of some authorities on which I have served, I confirm that that was true—that management was not very impressive, particularly by industrial standards. But as regards the special health authorities, I have been a member of the National Heart and Brompton since 1974 and I do not think that better management than that exists. I have been most impressed.

What is the situation this year? They find themselves with an overspend of more than £1 million. They are not alone in this. All the other special health authorities are in a similar position and the largest element in this overspend is pay inflation. The lowest overspend is the Eastman Dental Hospital with£181,000. The comes Moorfields with £336,000—this is just on pay—the National Heart with £575,000, the Marsden with £712,000. Great Ormond Street with £829,000 and Hammersmith with £1,112,000 overspend. This is simply on the pay element and it is something which concerns me very much.

The noble Lord, Lord McColl, said that he would not dream of overspending, but I can tell him that that authority would not dream of it either. How it has come about is that, having agreed inflation at 5 per cent. and made that allowance, it then found a national pay award of 7.3 per cent. imposed upon it, leaving a shortfall. That missing 2 per cent. takes a great deal of finding. There are many other factors in the non-pay section. The pay section of inflation is the greatest, but there are other inflationary items also on the list. The subject is far too complicated to go into in a short time here. But there are external costs imposed upon these authorities, which are just as efficient in management, just as capable and certainly as conscientious as the noble Lord, Lord McColl, would wish them to be.

This is a matter of some concern, because what answer is there? The committee of the authority on which I serve has had three special meetings of a special committee to consider what cart be done and it has come up with some quite ingenious ways of saving. But when it comes down to the bottom line, it will have to cut services after Christmas by 10 per cent. to 15 per cent. As one of the doctors at the National Chest said at our meeting the other night, "I have 400 waiting for catheters now. All it will mean is that the waiting list will grow longer". It is a tragedy to have expert, unused resources wasted because no one can afford that small amount of money to keep them in use; and yet we see the waiting lists growing.

There will be a change under the White Paper for these hospitals too, and there will be in future a very small board, much more like an industrial board, with paid non-executive directors, only four in number apart from the chairman and one or two others who have to be there, such as one from the research institute. It is interesting that there will be no MPs and no Peers eligible, so clearly my time has finished. I find it curious in that the board is modelled on industry and we are not ruled out from industry; yet we are apparently to be ruled out from the health service. It is also rather a shame that we are to lose that marvellous voluntary element of people who have worked on the boards for years—in fact since the last century—and have given their services free. It is rather like a local authority. The minute you get to the point where you are paying for everything, you get a different sort of person coming forward. There will be a loss of something there.

I must also mention dentistry, because I am the only elected member of the General Dental Council in this House and it would be wrong if I did not mention it. But before I do that, I should like to mention that there is an institute attached to the National Heart and Brompton and it will be quite happy at the fact that patients will come with their money. However, it is very concerned that it will get only the most complicated cases. In order to carry out full research and have a full picture of the heart and lung, one needs basic simple asthma cases. There is doubt that someone will refer those so-called ordinary cases to a hospital which will be more of a specialist hospital and therefore perhaps more costly, because each hospital will be engaged in competing for those services.

To come to my remarks on dentistry, it is time for change in dentistry. On the whole the profession welcomes the change. Earlier this evening I heard one of the other speakers in the debate say that it was time to remove capitation from doctors. I found that remark interesting as it is made just at the time when capitation or part capitation is to come in for dentists. Perhaps part capitation would be an answer for the doctors.

I welcome the continuing care element, but my noble friend Lady Hooper knows that I am very concerned about the continuation of national health dentistry in high cost areas. I noticed in those special health authority figures that there was a very heavy expense for London weighting. Yet so far as concerns dentistry there is no London weighting or weighting for any high cost area. It sounds very attractive that patients will be able to have guarantees for treatment and that they will be the only people with the right to agree to a mix of private and national health treatment. The dentist will no longer have that right; it will be the decision of the patient. That sounds good and it will be good provided that National Health Service treatment is still available.

I have a colleague who has just set up a one-surgery practice near me. It has cost her £90,000 to set up that practice. She believes that in that part of inner London it will probably be the last practice to be set up because of the cost, including the amount of interest to be paid on the money. She worked for years not far from that place. All her patients were there and she wanted to continue in the area when the other practice closed. However, it is a lot of money.

As dentists, we do not have the benefit of the structures that the doctors have whereby, I understand, they can be assisted through low-cost loans to set up in premises. There is no assistance whatever for dentists. That is often not appreciated. I shall myself be retiring just before this legislation is implemented. I heard the noble Lord, Lord Monkswell, talk about the number of older doctors who are about to retire. I do not think those doctors retire entirely because of the changes. I believe that it happens either because one is on the point of retiring, like myself, or because one does not want to bother to take on board a whole new structure for just a short time. I do not think that there is as much significance in those retirements as one might imagine.

However, I hope my noble friend will be able to assure me that when the National Health Bill arrives there will be enabling powers within it for the Government to bring in differentiation, whether they be high-cost areas, unattractive areas or areas where there is a tremendous dental need and one cannot get a dentist to go. At the moment we are concerned at the fall-off. We are desperately short of dentists again. Three years ago we did not know what to do with them because there was such a surplus. So it is very difficult to know what is the right mixture and what to do.

If there is a power in the new Bill to offer flexibility within these decisions and loans for certain areas if need be, just as there is a precedent already for seniority payments, I believe that that would be a very good thing.

6.53 p.m.

Lord Rea

My Lords, my colleague the noble Lord, Lord Hunter, is quite right to emphasise in the wording of this Motion that despite publication of the National Health Service and Community Care Bill there are still far too many uncertainties facing the National Health Service. I should like to talk about the distant future and the plans that we should like to implement in the long term, but so great are the worries immediately concerned with the forthcoming legislation that I shall concentrate on a few points within it. First, I want to have a quick look at the GP contract. I shall then speak about fund-holding practices—GP budget holders—and how hospitals opt to become independent trusts. Finally I shall say a few words about medical research within the National Health Service.

I do not deny that the new contract for GPs contains a number of features which are welcome. They are an advance. We discussed that matter at the end of the last Session. However, what bothers many, in fact the great majority, of general practitioners is whether the new system can be called a contract when one side opposes it and it is imposed by the other side. As the noble Baroness knows, there are still doubts in the minds of many general practitioners about the the legality of the unilateral imposition of a contract. In fact there are moves to question the BMA's legal advice on that point. Surely the essence of the term "contract" implies an agreement between two parties.

Be that as it may, I hope that the introduction of the new working arrangements by family practitioner service authorities will be on a gradual and tactful basis. I see signs of that in my own family practitioner committee. We are however very lucky because we have an excellent and sympathetic chief executive. What many GPs feel is the worst feature of the new contract is the detail in which a learned profession is required to conform to central edicts. That is not restricted to the GP contract. The whole operation of the proposed National Health Service upheaval has been done without consulting the professionals who know most about the needs of the National Health Service and its patients because they work within it.

The new management structures greatly reduce representation of the professions concerned in the regional district and family practitioner service authorities as well as greatly diminishing the number of representatives of the local population as well. I was very pleased to hear the clear voice of the noble Lord, Lord McColl, who is not at the moment in his seat. He said that the profession should be involved in management. I agree.

It seems to me that this Bill goes in the opposite direction. There are more uncertainties than certainties about the proposed provision for fund-holding practices. I have two main worries in this respect. First, there is the impact on the doctor-patient relationship and the situation of trust that largely prevails today. For example, let us consider the case of a patient with 'flu, which is very topical as I have been finding out over the past two or three weeks. It was confirmed in the news this morning that we are in the midst of an epidemic. For some reason many patients think that an antibiotic is necessary. In fact they are of very limited value in a viral illness and GPs—good ones—are reluctant to use them. By not prescribing antibiotics for 'flu they save quite a lot of money on their drug budgets. But many patients still demand antibiotics, although when the doctor says no they accept that the decision is in their best interests. Will they be so ready to accept that decision if the practice has a budget? They will want to know whether the advice is in their interest or that of saving money.

I am also concerned that the money paid directly to the practice by the regional health authority, as it will be, could quite easily leave the health service altogether if, for example, a local, private hospital were to set up a loss leader and undercut the national health hospitals for certain procedures. Can the noble Baroness tell me whether that may occur? The national health hospitals in the districts that are deprived of funds thereby will be in a less good position to offer a more attractive alternative. I feel that that is one way in which fears of privatisation could well become a reality.

I am also concerned by the methods which the Government are using to attract hospitals to opt for independent hospital trust status. Clearly that is not being done in a democratic way. I have been told of one manager who was offered a £10,000 rise if he succeeded in persuading a hospital to opt out. I can give chapter and verse on that but I shall not do so in this House.

A large group of 3,000 consultants has been granted permission to seek a judicial review on whether the Minister has acted ultra vires in authorising expenditure of moneys voted in this year's Budget towards the implementation of a Bill which has only now started its passage through Parliament. I am not talking of the resource management initiative. That is a useful experiment being properly undertaken on a pilot basis in six hospitals. The Secretary of State announced in another place on 11th May that £82 million had been allocated "for implementing the review".

Finally, as a co-opted member of your Lordships' Select Committee on Medical Research I should very much like to endorse the points made by the noble Lords, Lord Hunter, Lord Winstanley and Lord Nelson, our chairman. The recommendations of that committee for setting up a National Health Service research authority could, if followed, provide a scientific basis for the wholesale improvement in the effectiveness of the National Health Service which the Bill proposes.

Recommendation 9.17 states: The National Health Service should be brought into the mainstream of medical research. It should articulate its research needs; it should assist in meeting these needs and it should ensure that the fruits of research are transferred into service". That could best be achieved if a senior scientist is not only present in an advisory role but is a member of the national health executive. The noble Lord, Lord Nelson, made this point clearly. It is very important.

I should also like to emphasise his other point: operational research undertaken by the National Health Service amounts to rather less than 0.01 per cent. of the National Health Service budget. That is surely a minuscule proportion compared with any large industrial organisation which may devote 5 per cent., 10 per cent. or even 15 per cent. of its turnover to research and development.

7.3 p.m.

Lord Auckland

My Lords, I apologise to the noble Lord, Lord Hunter of Newington, for not being present at the opening of his speech due to a board meeting which I had a longstanding commitment to attend. I have already apologised to him personally. However, I shall read his speech, as I am sure will all noble Lords, with the very greatest of interest.

I have given the Minister notice of two brief questions that I should like to raise. In view of the time constraints I shall deal with them briefly. The first concerns hospital casualty departments. I have given my noble friend details supplied by the mid-Surrey Health Authority on local hospitals in the area of Surrey in which I live. However, I believe that it is a national problem, in particular at weekends, especially with the recent weather which results in pile-ups on the motorways and traffic jams. Under such conditions there are a number of accidents. Casualty departments are facing enormous problems, in particular where they have to take on extra doctors. At Question Time recently I asked about the funding for the extra staff needed. Will it come from regional health authority funds or will the shortfall be made up by the Government?

The second question concerns the very welcome £2 billion, referred to in the Autumn Statement, which has been injected into the health service. I believe that the Government are to be congratulated. A National Audit Commission is to' e set up under the White Paper. The debate has been very shrewdly timed because the Second Reading of the substantive Bill begins tomorrow in another place. Will the audit commission have powers at least to persuade on ways in which this money may be used? I have some suggestions to make. There are still too many wards in hospitals—even teaching hospitals—that are closed. Hopefully some of the money will be diverted to obtain more staff to reopen some of these wards.

My noble friend Lord Nelson of Stafford in his very powerful speech as chairman of the Select Committee on scientific research mentioned medical research, which is vital. I hope that more money will be made available. I should like to join him in the tribute that he paid to the pharmaceutical industry for what it has accomplished. Perhaps I may refer to figures relating to bronchitis. In 1984 there were 417,000 bed days needed, compared with 1,262,000 in 1957. I believe that the pharmaceutical industry can take some credit. As one who suffers from sinus trouble from time to time it makes welcome reading.

A matter that I have mentioned in your Lordships' House previously is improvements to nurses' homes in some of these hospitals. Much of this debate is based on morale. One notices that the noble Lord, Lord Hunter, has quite rightly mentioned possible improvements. I believe that that is one area. Many nurses, in particular those from overseas, do not live at home; they live in nurses' homes. I believe that some improvements could be made.

My noble friend Lady Gardner of Parkes mentioned the last reorganisation in 1974. I was then a member of the house committee of a big mental hospital in Surrey. House committees were disbanded and the very large authorities were created. A certain amount has been done to restore the balance, but I believe that something similar to the house committees should be brought back so that there are members who are acquainted with their own hospitals, in particular in areas such as Epsom where there are seven mental hospitals. It would be very useful to have members on the committees who know these hospitals and who can talk to the nurses, the other staff and the patients. I believe that it will help morale.

There is also the very vexed question of nurses' pay. I declare an interest. I have a daughter in the nursing service, as have many noble Lords. The grading system has been very unsatisfactory, in particular for senior nurses nursing part-time who have families. I hope that some of the money available as a result of the Autumn Statement may be used to make up the shortfall.

Another suggestion that is made not only by people of my generation but the young working in the health service is to bring back matron. The district nursing officer and the area nursing officer do marvellous jobs. However, I believe that there are discretionay powers for the reintroduction of matrons. Perhaps I may suggest that it would not be a bad idea in future, since there is reference to solutions in the Motion of the noble Lord, Lord Hunter to bring back matrons. Everybody in the hospital, both staff and patients, know who matron is. I am amazed by the requests I receive to have the term "matron" brought back. I suggest to my noble friend that that might be achieved during the passage of this legislation.

There is no doubt that 40 years on the National Health Service needs reorganisation. By and large the White Paper contains much merit. However, there will be a need for further discussion. The timetable causes a great deal of concern which is felt by those who work in the health service. I hope, as does the rest of the nation, that as the legislation goes through Parliament that will be taken seriously.

It is not only in this country that there is a problem as regards nurses' pay. Finland, a country that I know well and which has some of the finest medical services in the world—I recently spoke to some Finnish doctors—has the same problem. It would be useful to have an international conference on this vexed subject. I do not believe that it is beyond the remit of this country to do something about that. I believe that the debate today is to be widely welcomed.

7.12 p.m.

Viscount Dunrossil

My Lords, I begin by asking for the indulgence of the House because I must leave indecently promptly after my speech in order to fulfil a formal engagement which I accepted long before the date for the debate was fixed. I have already sent my apologies to the Minister.

The Government's claim is that their proposed reforms of the National Health Service are very much motivated by the interests of the patients, the publication Working for Patients, and so on. But for the layman the merits of the arguments for and against the proposed reforms have too often been obscured by noisy rhetoric and even at times descent into personalities. That is confusing for most of us who from time to time are the patients and the taxpayers. Therefore the debate is useful because we have a real interest in the way in which the National Health Service is to be run in the future and the kind and quality of service that it is likely to give us. Therefore I join those noble Lords who have thanked the noble Lord, Lord Hunter, for initiating the debate.

I am sure that the House does not need reminding that in the Government's consciously cost-effective set of proposals for reform, complete with their extensive auditing provisions, the final auditors in the broad sense will be ourselves, the patients, whatever the figures. For that reason I hope that somehow a robust and effective degree of public accountability, preferably with strong regional and local knowledge and sensitivities, will continue to be an integral feature of the National Health Service, however tiresome at times that may be for some experts. It would be a tragedy, and an avoidable one, if this fine service was permitted to degenerate into an authoritative, remote and self-defending bureaucracy entrenched in its own procedures and loyalties.

I have referred to the strong regional and local sensibilities. Therefore perhaps I should provide the House with an instance of what that can mean. If we accept the assumption that the service to us as patients is largely dependent on having a high professional morale within a well-resourced NHS we should at the same time be careful that the remedy proposed for present failings is not applied with such a broad brush that proper and necessary distinctions are not drawn between one part of the United Kingdom and another. In other words, having diagnosed particular ailments in the NHS one hopes that due account will be taken of the individual nature of different regional patients when the national medicines are prescribed.

For example, if a theme of the future NHS is to encourage doctors to enlarge the list of patients in their practice it must be remembered that, whereas it is fine, say, in Fulham, in the far Western Isles of Scotland it is not physically possible. The extra people for a doctor to take into his care simply do not exist, though the clinical needs of the present population and the long distances between them on narrow and winding roads remain constant.

In the interest of patients some continuing future flexibility is clearly called for here. One hopes that a more generous approach can be arranged so that if actual expansion of an isolated practice is not possible, and with it the financial incentives and other advantages which ubran practices have an opportunity to enjoy, the resources made available under the new arrangements should at least be seen to improve rather than deteriorate as at present seems to be the risk. One has to observe that the grouping of numerically small practices is not necessarily a practicable solution in the remote islands.

Apart from the actual size of practices there are one or two other aspects of isolated island doctors' practices with which in a debate of this nature it would not be appropriate to trouble your Lordships in detail. However, they need mentioning and if the Minister would like more details about them I shall gladly make them available in writing.

Briefly, it has proved difficult in the past for proper arrangements to be made to provide isolated island doctors with an associate on financial terms that ensure a fair return to all parties. Although a scheme to help with the problem has been announced and welcomed, there are fears that unless the criteria are widened to include an option of one associate to one practice, the truly island isolated doctors and therefore their patients will not be able to benefit. Such associates could easily be a recently retired doctor or a doctor about to retire. I know of a particularly good example in North Uist. But even that arrangement is now endangered by the proposed new regulations.

There are also other aspects where a degree of flexibility is called for when looking at the remote island doctors in relation to their urban or near-urban colleagues. They may seem minor but taken together they go a long way towards ensuring that the islands can obtain and retain adequate medical staff. For example, one would like to see the regulations for night visits, which involve a lot of travel, amended to extend the hours to which they apply and to be based more on the actual time that the doctors spend away from home.

In the Western Isles the premises of the National Health Service are not up to the standard and are not adequate for the staff required. Perhaps a realistic figure could be added to the local budget as some kind of credit to cover that.

Doctors are supposed to keep themselves up to date and to further post-graduate training. However, present proposals do not seem to make any allowance for that to enable rural doctors far from centres of learning to attend. With respect, that should be looked into so that rural doctors can be reimbursed for the costs of attending the sessions required to qualify for the new post-graduate education allowance, without which they are of course less well off and less qualified.

Finally, there is a strong case for allowing rural and particularly isolated doctors to count suturing as one of the allowed minor surgery procedures if for no better reason than that that could save a great deal of public money which otherwise goes on hospital and transport costs. Of course it also means that the patient is treated on the spot and quickly.

I should perhaps offer an apology for what may seem a rather narrow focus for much of my remarks. However, rural and isolated doctors are very important figures in the lives of the patients they serve. For them there is often no easy or rapid means of consulting other medical practitioners. Therefore rural doctors feel some of the uncertainties to which this Motion refers. I hope that one of the good features of an improved National Health Service will be that those doctors' crucial role in their communities, thought by some to be second only to the vet's, will be appropriately recognised and supported in future planning and management.

7.21 p.m.

Earl Russell

My Lords, in common with all other noble Lords who have spoken, I should like to thank the noble Lord, Lord Hunter of Newington, for introducing this debate, not only because it has given us a chance to participate in a discussion at an early stage of the Bill but also because it is something more as well as something less than a Second Reading debate. I believe that the noble Lord, Lord Carr of Hadley, was right when he said that a Second Reading debate would have been a good deal more adversarial than this debate has been, because it has been a remarkable feature of the debate that almost every noble Lord who has participated has in effect made points on both sides of the House. When I look at the points which have stuck in my memory, they are very often points which one would have expected to come from the opposite side of the House to that from which they came.

There are four general themes which have run right through this debate. One is a concern at what the noble Lord, Lord Mancroft, described as the breakneck pace at which the Government's legislation is being brought in. We could stop to consider the view that it is more important to get it right than to get it in place at once.

The second theme which has run through the whole debate is the realisation that funds available for the treatment of medical questions are not unlimited. There cannot be ultimately, a blank cheque. The noble Lord, Lord Hunter of Newington, drew attention to that problem, as did the right reverend Prelate the Bishop of Manchester in a very powerful speech.

Also, there has been considerable concern running through the debate about the shortage of funds. The noble Lords, Lord Wallace of Coslany and Lord Hatch of Lusby, both mentioned that. I know that the noble Lords, Lord McColl of Dulwich and Lord Mancroft, have both told us that there have not been any cuts. If so, I believe that they have a problem in explaining why there are so many people to whom it feels remarkably like it, because if there have not been any cuts there must have been a quite extraordinary escalation in the process of costs.

The other theme which has run through the debate and to which the noble Lords, Lord Nugent of Guildford and Lord Carr of Hadley, drew attention is the concern at the amount of misunderstanding and lack of communication between the Government and the profession. The noble Lord, Lord Nugent of Guildford, said that that was something which must be utterly unprofitable. I believe that that is something with which all sides of the House agree.

We may think, as the noble Lord, Lord Ennals, reminded us in the debate on the Address recently, about the circumstances in which the review that led to the White Paper was first set up. It was set up because of fairly considerable concern about funding. It was set up because of concern about why the health service was costing so much. You can see that concern in almost every line of the White Paper. It is concerned about what it calls the huge costs of the system.

Here we have a problem which is wider than this decade and this country. We are up against the problem of human inventiveness. People continue to invent new methods of treatment at a much more rapid rate than we gain money to pay for them. Curiously, one of the closest parallels to that is the defence budget, because we invent new ways of killing each other and curing each other with perhaps equal rapidity. In both cases there is a real problem as to the way in which the cost goes on growing and the funds available do not. In both cases it is very tempting to fall back on what is in effect a conspiracy explanation of the problem. As, on the Left, people looking at the defence budget tend to talk about the military industrial complex and think the problem consists of reducing its power, so perhaps on the Right people looking at the cost of the health service tend to utter the words "producers' cartel". They believe that if they can reduce the power of that producers' cartel that will perhaps reduce the cost.

I believe that much of the professional concern about this subject is not necessarily about the contents of the proposals but about the motives which some professionals believe they see behind their introduction. For there is a suspicion that the proposals are being introduced as a deliberate act of hostility and that the sort of hostility which has developed between the Secretary of State and the doctors may not be just a sheer accident but may be a deliberate desire to decrease professional power.

Of course that tends to produce an equal and opposite reaction. In the introduction of a competitive mentality, we have proposals which I believe the noble Lord, Lord Hunter of Newington, said in a bleak but carefully chosen phrase were in stark contrast to medical ethics. Therefore those two factors—a sense of a conflict of ethics and a sense of hostility—are limiting communications and preventing negotiations where they should be taking place.

There is also a sense that there is a difference between the ideal of competition and maximising income and the ideal of service. The noble Viscount, Lord Dunrossil, in his remarks about island doctors pinpointed extremely neatly the difference between those two ideals. That is the reason one finds a rural post office where one does not find a rural supermarket. The objectives are different. A great many professionals are concerned that that difference may be being lost sight of.

In the details of the proposals I shall touch only on the question of academic medicine. I agree entirely with the remarks made by the noble Lord, Lord Nelson of Stafford. It is time that we had a response to his report, which is also, among much else, the most balanced discussion I have heard of the relationship between publicly funded and sponsored research. We need more consideration of what will happen to the knock-for-knock system of uncosted mutual assistance between universities and teaching hospitals. The point about that system is that it is uncosted. It cannot be unscrambled and split into its component parts because, as academics have been saying for a long time, they cannot divide up their time between teaching and research. In this atmosphere, where everything has to be costed, what is going to happen to the knock-for-knock system?

I have drawn attention to the fact that funds are not unlimited. I have drawn attention to the fact that this is not the way to deal with the problem. Then what is? My noble friend Lord Winstanley, speaking on the White Paper last February, suggested that we ought to be thinking about the cost-effectiveness of treatments. There is of course no upper limit as to how many pounds in theory one could spend to save one life. However, where public funds are concerned one has to think about whether that is always the best use. In the days of Aneurin Bevin—I hope that name will compel a certain amount of thought in all quarters of the House—there were some treatments which were not available on the health service. I wonder whether that is a more effective method of limiting costs than this pursuit of an efficiency which appears to many professionals to be something a good deal less than efficient and indeed on occasion to be opposed to it.

7.31 p.m.

Lord Carter

My Lords, I join with other noble Lords in thanking the noble Lord, Lord Hunter of Newington, for introducing this most timely debate. It has emphasised the concern we all share to ensure that the National Health Service delivers the services the patient needs in the most effective way possible. It would be fair to say that most speakers have expressed what one can describe as a measured criticism of the proposed reforms.

It will surprise the Minister that I start by congratulating the Government. I believe they have a genuine wish to reform the National Health Service. Their intention is admirable, but I fear the execution is badly flawed. The prime area of concern—this debate underlines it—is the breathless speed of implementation and the lack of consultation.

Speed has been the thread running through the whole business since the Prime Minister's unguarded remark on television nearly two years ago about a review of the National Health Service. It was a remark, I understand, which came as something of a surprise to her colleagues. The National Health Service review was conducted at breakneck speed behind closed doors and seemed to be designed to produce the answer that the Prime Minister wanted.

We then had the White Paper. It was produced in January 1989 and responses were asked for by May. That allowed four months to respond to what we were told was the biggest reform of the National Health Service in 40 years. On the question of consultation, my noble friend Lord Ennals has referred to the fact that the five professional organisations representing nurses and midwives asked to meet the Prime Minister to express their concern over patient care. She refused to meet them. That sits ill with the statement by the Government in their response to the report of the Social Services Committee in another place on the National Health Service: The Government is prepared to enter into a dialogue with all the relevant interest groups if those groups are prepared to respond". It was said that speaker after speaker, from all sides of the House, asked for more time to implement the reforms. And the eighth report of the Social Services Committee of another place—Resourcing the National Health Service: the Government's plans for the future of the National Health Service—in paragraph after paragraph put forward the need for more time. The report stated: Our major conclusion is that the Government's plans literally cannot work for the interests of patients until the necessary information is available to cost different treatments accurately—leaving aside the equally important measure which is needed, namely that of outcome. We recognise that this conclusion is politically less exciting than attempting to make a wholesome transformation of the structure and organisation of the National Health Service. To lay the basis for possible future radical changes may not seem so dramatic, but it would demonstrate that the reformers had the interest of the consumers at their heart". Later, the report says: the Government cannot proceed with self-governing hospitals until treatments can be adequately costed and then priced". The report continues: Information is necessary to make the market work.… We do not believe that the major changes proposed in the White Paper can be introduced safely until the right information is available about costs and outcome if the aim is to improve patient care". There are a number of other quotations on the same lines which I could read from the report. However, in the response of the Government to the report those paragraphs were more or less completely ignored. My noble friend Lord Hunter of Newington put his finger on it (as he so often does) when he produced the phrase: the need for an evolutionary path of reform.

The noble Lords, Lord Carr of Hadley and Lord Mancroft, and others, referred to the need for accurate accounting and costing in this whole exercise. I am sceptical of the ability accurately to cost treatments and patient care. I have in excess of 30 years experience in management accounting. As a number of your Lordships will be aware, accounting depends on a whole raft of conventions and assumptions regarding the allocation of costs, particularly the allocation of overhead costs.

This may be merely a matter of accounting technique when it comes to management accounting in industry. But the care of patients and perhaps their lives will be affected in the National Health Service if the sums or the accounting conventions are wrong. That is not to decry the value of medical audit, resource and management initiatives. I merely urge again that the maximum time be given to work out conclusions and that considerable caution be exercised in interpreting results as the basis for policy.

We are told that money will follow the patient—a phrase I do not entirely understand. Let me give an example: it is one that I know well. It is that of a patient who is referred from the general practitioner to the district hospital, then to the regional hospital. He is sent to Great Ormond Street for a second opinion and ends by being treated in two hospitals in London—for handicaps of hearing and vision—and in another hospital in Bristol for a congenital heart condition. The pattern of treatment is changing the whole time. Is the doctor supposed to be able to cost all this? Is he supposed to be able to track down all these treatments and to follow them around the hospital circuit?

I am sure we will be told that that is a special case and that special arrangements will be needed in order to deal with the problem. However, even to arrange for the special arrangements will require some costing and some figures to see where the level is on the GP's budget. I am not at all convinced that this is a problem with which the Government have even begun to grapple.

What lies behind the divide between the Government and those of us who are critical of the proposed reforms is a fundamental belief on our side of the House that the market place is a peculiarly inappropriate mechanism for allocating social provision and in particular health care. We know that competition has its place in allocating resources over a vast range of economic activity. But it cannot and it must not be relied upon as the basis of a service which is demand-led, is unpredictable and is intensely personal in delivery.

A number of your Lordships have referred to the American experience. It is no secret that some of those who are advising the Government on the reforms have visited America; they have been to the state of Massachusetts to study the Harvard community health plan which is in operation in Boston. They were there in March of this year. Therefore, it is peculiarly appropriate to read from a study in the prestigious New England Journal of Medicine of April 1988 which states that there are, significant associations between higher mortality rates … and the intensity of competition in the market-place. These findings raise serious concerns about the welfare of patients who are admitted to hospital in relatively competitive markets". The same warning has been given in this country. Professor Alan Maynard, of the York University Centre for Health Economics, said that, unleashing competitive forces in the NHS could, as in the US, increase the number of avoidable deaths and make health care in the UK more of a lottery … where you put strong incentive systems in for people to minimise costs they perform in cheaper ways … we can also see from America that where there are cheaper patterns of care avoidable deaths seem to have increased". I wish to put a number of questions on this aspect. Can we be assured that competition and the market place will provide that all opted-out hospitals give the full range of services when and where they are needed? That point has been made a number of times. I am sure that the Minister will wish to deal with it when she replies. Can the theories and the competition of the market place accurately reflect the wishes of the community regarding the future of their local hospital? As we know, there is no provision in the National Health Service Bill to ask local people whether they want to have their hospital opted-out.

Can competition and the marketplace ensure that standards of care will at all times be given absolute priority over financial and accounting considerations? The Government quite properly take credit for the increases in funds which have been made available to the National Health Service. I have to say in passing that I have the suspicion that between now and the general election we shall see funds literally thrown at the first opted-out hospitals and general practices which adopt the practice budget.

As regards funding, what has been called (by, I believe, Mr. Enoch Powell in the first place) the revolution of rising expectations, together with the advance of medical technology, is taken to mean an infinite, increasing and unassuageable demand for medical services. Although that argument is correct in theory, it surely makes the best the enemy of the good. I shall give a simple example. Nobody expects the waiting list for hip operations to fall from 18 months to 18 weeks or even 18 days. A reduction to 12 months and then perhaps to six months would bring immense relief to those on the waiting list today.

We have to accept this situation when we consider the level of funding. Those of us who wish to see an improvement in the health service are arguing not for a dramatic overnight change and the wiping out of the waiting list because we know that will not happen. However, to halve the waiting list for hip operations would be a tremendous boon to those on the waiting list. We are told that the Government are spending some £28 billion on the National Health Service. Yet a hospital that I know well—the Royal United Hospital in Bath—could recently afford to staff only seven out of 21 intensive care cots.

A mother in Somerset went into premature labour. She was turned away from the Bath Hospital and two maternity hospitals in Bristol. She was in labour the whole time. She was eventually admitted to a hospital in Newport. That was due to the fact that there were no intensive care cots available in Bath or in the two hospitals in Bristol. Is this due to underfunding or bad management? It is a fact for that mother.

Perhaps the Minister can tell us how the proposed reforms can deal with that situation, particularly as the Royal College of Midwives has expressed concern that maternity services are not clearly identified as a core service. My noble friend Lord Wallace gave some practical examples of what is actually happening in hospitals in his area. Despite the recent increase in spending we are still spending about 6 per cent. of GDP on health care compared with over 8 per cent. of a much larger GDP in France and Germany.

I was struck by a remark made by the noble Lord, Lord Nugent of Guildford. He said that the reforms would bring increased benefits to taxpayers and patients. I find it a little hard to understand why we still spend a smaller proportion of GDP on health care than other countries. We shall have reforms that increase the benefits to both the taxpayer and the patient at the same time.

There is another aspect that I would wish to deal with if I had more time. It was raised by the noble Baroness, Lady Masham, and it relates to the needs of the disabled. There has been great concern among the disability organisations about the White Paper on the health service and that on community care. We shall certainly wish to return to these matters in some detail when we debate the Bill. The noble Lords, Lord Mancroft and Lord McColl, referred to cuts. They could not see how there could be cuts if resources have increased in the way that they have.

The local cottage hospital where I live is having the number of beds reduced by 30. We shall be able to carry out only what I believe is called cold surgery. I have already referred to the example at Bath. If it helps noble Lords who find this situation hard to understand, I shall certainly withdraw the word "cuts" and say that a number of patients have seen a marked reduction in services. I ask the Minister and those who support the Government whether the presidents of all the royal colleges have got it wrong?

The Government appear to be genuinely surprised and indeed hurt by the mistrust which undoubtedly exists regarding their plans for the National Health Service. I suggest that they have only themselves to blame. I have mentioned the breakneck speed of the process of reform and the lack of consultation. I must add the belligerent and ill-advised remarks of the Secretary of State for Health.

Why will not the Government listen to the barrage of criticism and agree to give more time, for example, to set up some genuine pilot studies and to show us all that the proposed reforms actually work? What do they have to lose? A glance at the opinion polls show that at the crude and political level they would gain enormously. I believe also that they would gain substantially on the grounds of administrative efficiency.

Let us all see the reforms actually working and then extend them, on the basis of experience, throughout the health service. Until the Government are prepared to show that they are genuinely prepared to listen and respond, they must not be surprised if there continues to be deep concern regarding the outcome of the proposed reforms. Such worries have been expressed most eloquently from all sides of the House in this debate which has shown most accurately the concern expressed by all those who work in the National Health Service and by perhaps the most important people of all, the patients.

7.47 p.m.

The Parliamentary Under-Secretary of State, Department of Health (Baroness Hooper)

My Lords, health matters are certainly high on our agenda this week and I thank the noble Lord, Lord Hunter, for introducing his Motion as he did. Indeed, I am most grateful to all those who have made valuable contributions to the debate and particularly to those who gave me advance warning of specific points which they intended to raise.

On the eve of the Second Reading debate in another place on the National Health Service and Community Care Bill, it has been most useful to discuss these topics, which concern us all. At the outset I should like to touch on the reference in the Motion to uncertainties about the future of the National Health Service. We have always stressed that our reforms are intended to build on the successes of the National Health Service to date in order to equip it for the future.

We are all quite justifiably proud of our National Health Service, but we are not so complacent that we do not seek to improve it. The Government's own commitment to the NHS was underlined by my right honourable friend the Secretary of State when he launched the National Health Service and Community Care Bill two weeks ago. He said: The founding principles of the NHS remain intact. The new changes we are introducing will reinforce them to ensure that they provide the bedrock for the NHS into the next century. The Bill should therefore finally give the lie to all the ridiculous talk of privatisation". Furthermore, we have rarely had such a clear vision for the future of the health service as we have now. The White Paper Working for Patients and the Bill set out a firm agenda for reform. As we discuss our programme with those in the National Health Service whose task it is to implement it, it is an agenda which is becoming increasingly refined and detailed. What we have in the health service today is a combination of three key ingredients for a healthy future—a firm set of objectives, growing resources to match them, and a management and staff who have already begun the task of implementation. To those who ask for what on the face of it sounds a most reasonable request for more time or a pilot scheme—no one has made it sound more reasonable than the noble Lord, Lord Carter—I say that that would only create more uncertainty and furthermore would deny the fact that the impetus for reform is already there and that in many parts of the country the good practices on which we are building are already in place to give us guidance.

The noble Lord, Lord Ennals, put words into my mouth when he forecast how I would reply to his suggestions that the Government have not responded to the anxieties expressed by representatives of the medical professions. I say to him and indeed to others that more than 100 meetings have taken place. Apart from the many conducted by the late Lord Trafford, I personally have heard at first hand the views of representatives of the Royal colleges, and I certainly responded. But—and I address this perhaps particularly to my noble friend Lord Carr—the listening process must be a two-way one and not exclusively on the Government side. We have made it clear that we are also willing to enter into further constructive discussion about how best to implement our plans. I certainly refute any suggestion that hostility has been deliberately provoked. The Government have already replied to the submission from the conference of medical Royal colleges. We would have no objection to its publication.

At this point I want to make it clear that our reforms are not based on the American experience. We are not going down the privatisation road. Our commitment to the National Health Service is absolute.

On funding, the Government's record speaks for itself. The increase in the funds for the National Health Service in the United Kingdom from £8 billion in 1978 to £26 billion in 1989 represents an increase in real terms of 40 per cent. The announcement in the Autumn Statement of an increase of a further £2.6 billion shows that the pattern of real increases in funding is set to continue. But, as has been said, ever increasing resources will not by themselves guarantee the growth and improvements in service provision that the Government wish to see. Increased funding makes sense only where we can be confident that resources will be well spent, bringing the maximum benefits for patient care. We need to move away from a sterile debate about inputs and look rather at outputs, at what is being and can be achieved. Our reforms are designed to create an environment in which this can best be done.

An increased funding system is a cornerstone of our drive towards higher quality care. National Health Service contracts will, for the first time, give an opportunity to specify the quality standards which hospitals will be expected to meet. Careful monitoring of contracts will enable health authorities to check that those standards are being attained. By linking funding more closely to the number of patients a hospital treats, NHS contracts will do away with the disincentive effect of the present system of funding. At present hospitals which provide a high quality and prompt service bear, without an equivalent increase in funding, the cost of their success in the form of ever-increasing numbers of patients. The new contracting system will ensure that in future such hospitals are properly rewarded for their effective service. Our proposals offer a choice of management arrangements, not a two-tier system.

My noble friend Lord Nugent referred to resource management and the Government's initiative. As he said, resource management started as an experiment, and was deliberately developed in different ways at each of the sites. The results have been sufficiently encouraging for the Government to extend resource management to other sites. However, none of the sites has yet achieved full resource management throughout the hospital, and our joint evaluation with the JCC of these six sites is continuing. The Government's response to the House of Commons Select Committee makes it clear that future development of resource management will be from the funds specifically provided for that purpose and not diverted from patient care.

We recognise that decisions on making the best use of resources and developing services are best taken at local level. We need to give managers greater freedom to manage and develop services in the way best suited to local circumstances. So our proposals aim to release providers of NHS services as far as possible from unnecessary central control, while maintaining a comprehensive and truly national health service.

I realise that some have found this balance between greater freedom for managers and staff and new powers for the Secretary of State difficult to come to terms with. Perhaps I may reassure them that there is no inconsistency. The greater operational freedoms will need clearly defined limits to ensure that different parts of the health service do not start to pull against each other. It would be a foolish Secretary of State who did not hold reserve powers to enable him in an emergency to prevent new freedoms from being abused. The powers of direction will be used rarely, if ever, but they are proof of our commitment to the continuation of a comprehensive health service.

This greater freedom at grass roots level emerges most clearly in our plans for units to become National Health Service trusts, which I stress will remain fully within the NHS. National Health Service trusts will derive their income principally through NHS contracts to provide services to other health service bodies. They will have wide-ranging powers, including the right to employ staff and negotiate pay and conditions, to own and dispose of assets, subject to the Secretary of State's approval in the case of larger sums, and to borrow money and invest surpluses.

The aim of these freedoms is to enable trusts to make the most of the resources, staff and facilities at their disposal and so to offer a wide range of high quality services. Flourishing hospitals, managed locally and drawing on the support of local people, will lead directly to benefits for patient care, and especially to the quality of care to which so many noble Lords have today attached importance.

The Bill is clear evidence that the new powers we are giving health service bodies are matched by safeguards to ensure that those powers are exercised so as to bring benefits to the NHS as a whole. National Health Service trusts' establishment orders will set out the NHS functions they will be required to fulfil, including the provision of services for particular district health authorities. And the powers of NHS trusts which I mentioned earlier will be complemented by a range of specific reserve powers for the Secretary of State to ensure, if need be, that NHS trusts continue to carry out all their responsbilities as part of the NHS, and particularly within the requirements of their local communities.

While on the subject of National Health Service trusts, perhaps I may turn to the point raised by the noble Lord, Lord Carter, about core services, a term used only in relation to National Health Service trusts. There has been some misunderstanding. The services under this name will vary from district to district but the services will be designated by the relevant district as being necessary to meet that district's requirements to provide a full and comprehensive service to its local residents.

Lord Ennals

My Lords, does that mean, therefore, that the health authority can require of the trust that it provides those services?

Baroness Hooper

Yes, my Lords. If the authority finds it necessary to provide a certain service, and it is only possible to provide that in the National Health Service trust, it may require it. That is the meaning of core services.

Perhaps I may now turn to the new GP contracts. The noble Lord, Lord Hunter, said in opening the debate that our proposals for GPs do not help. The noble Lord, Lord Winstanley, and other noble Lords expressed concern about family doctors. The new GP contract is in fact designed to ensure that patients receive better services and better value for money. Therefore good GPs have nothing to fear from this proposal. It will reward GPs who attract patients by providing a good range of services. Fears that FPCs will dictate the duties of GPs are misplaced, but they will certainly have an increased managerial role. Expenditure on general medical services has risen by 68 per cent. in real terms over the past 10 years. It is only right that FPCs should be able to monitor expenditure to see that it is used to bring improvements in the quality of patients' care where it is most needed.

As for the GP practice funds, larger GP practices will be able to volunteer for their own practice funds covering their drug costs, a range of practice expenses and selected hospital services for their patients. They will be free to tailor the pattern of those services, including the hospitals where they arrange to send patients, to suit the particular needs of those on their lists. They will also be free to invest savings from their funds so as to improve further the range of their services.

We have removed the obstacles to patients changing from one GP to another, if they so wish, and we are now offering GPs the opportunity to respond to patients' preferences in the services they offer. Further, indicative drug budgets will help GPs assess the effectiveness of their prescribing patterns. I must point out to the noble Lord, Lord Pitt, that the British Medical Association now accepts that there are not cash limits; indeed, GPs will be able to exceed their budgets where they have good cause to do so and where they can justify this action.

Lord Pitt of Hampstead

My Lords, I am sorry to interrupt the noble Baroness, but I must point out that I specifically said that it was not cash limited; I said that this was comparable to the rate-capping procedure.

Baroness Hooper

My Lords, I am most grateful to the noble Lord.

Our opponents see these measures purely and simply as cost-cutting devices, whether they describe them as rate-capping or otherwise. I find it strange that they should have such difficulty with the proposition that careful scrutiny of prescribing activity can and will bring about more effective prescribing overall.

Over-prescribing is not simply wasteful of resources which could be better devoted to other forms of patient care, as my noble friend Lady Young reminded us; it is potentially harmful to patients. We are at one with the medical profession about the importance of responsible prescribing. This proposal will be the means of achieving that aim. If we achieve all this I think that we shall be going a considerable way towards meeting the needs about which the noble Lord, Lord Porritt, so forcefully reminded us in relation to the role of general practitioners.

The need for good management has been emphasised by many speakers in today's debate. Our proposals amount to a new freedom of action for NHS managers, staff and practitioners. It has been suggested that this might bring about fragmentation of the National Health Service. But these new freedoms are to be exercised within the framework of a powerful new role for district health authorities as planners and securers of a comprehensive health service.

As DHAs delegate their operational responsibilities to hospital and community unit level, the decentralisation process advocated by my noble friend Lord Carr, among others, will increasingly concentrate on assessing the health needs of their resident population, planning the best range of services to meet those needs and securing them through NHS contracts. The power to place National Health Service contracts will give districts greater ability to determine the pattern of local service provision and to influence the quality of services.

I should say to the noble Baroness, Lady Masham, that DHAs will certainly have a duty to provide accident and emergency services to anyone in need of them. Further, supra-regional services will be maintained and the funding they receive will be better matched with the work they carry out. I can also confirm to my noble friend Lord Auckland that guidance on planning for emergencies is in fact under review.

At regional level RHAs will continue to have an overview of health service provision spanning primary care and the hospital and community health services. Like DHAs they will have a new membership made up of a mix of executive and non-executive members so as to bring the most effective blend of management skills and experience to the task. Nationally it will remain the role of the NHS management executive to set out clear guidelines for the implementation of the NHS policy board's short-term and strategic objectives for the National Health Service and to monitor proper co-ordination and delivery of services through its accountability review system.

Not unexpectedly your Lordships have shown particular interest in the provision of high quality medical education and research in the NHS. The Government share the view that these activities are crucial to the future of the NHS. That is why the White Paper Working for Patients made a firm commitment to maintaining the quality of medical education and research.

I should like to focus upon a number of measures which we are taking to support this commitment. The existing statutory framework for these activities in the National Health Service Act will remain. However, it is supplemented by a reserve power in the Bill to enable my right honourable friend to intervene in the, we believe, highly unlikely event of a National Health Service trust showing that it is neglecting its teaching and research obligations. I should remind your Lordships that this provision is a direct result of the Government responding to comments that have been made to them on the White Paper.

However, I think that all hospitals, including future NHS trusts, will wish to take part in teaching and research in order to gain a reputation as a centre of excellence which will attract both patients and staff. We shall pay close attention to this in applications made for National Health Service trust status. We shall expect applicants to outline their plans including any changes to their present involvement.

The National Health Service and. Community Care Bill also contains provisions for NHS trusts and DHAs with major teaching commitments to include a non-executive director drawn from the relevant university, medical or dental school.

Further, we are backing our commitment to research and education with improved resources. The so-called SIFT mechanism which covers the excess costs of teaching has been increased and extended to the service costs of research. One effect of this should be that no voluntary or public sector research funder will be required to pay for the service costs of research it undertakes in such locations.

My noble friend Lady Young queried the two separate channels for medical school funding. This question has been considered by an inter-departmental steering group on undergraduate medical and dental education. In its interim report the group recommended that the existing separate channels of funding—that is, from the DES to the medical schools and from the Department of Health to teaching hospitals—provided the best means of guaranteeing an adequate level of funding for undergraduate teaching. In the second phase of its work the group has seen no reason to change its mind.

The noble Earl, Lord Russell, raised the issue of the knock-for-knock procedure. The Government have made no commitment to dispose of the knock-for-knock arrangements. Indeed, my right honourable friend has acknowledged the strength of the system and has agreed that there could be little benefit to either side if it were to be replaced by complex and expensive counter mechanisms. Having said that, the Government accept that their legislative proposals will inevitably lead to the arrangements being re-examined with a view to the services provided being more explicitly identified and quantified.

More important, however, is the fact that I recognise the concern about the delay in the Government's response to the report of the Select Committee on Science and Technology entitled Priorities in Medical Research. I regret this delay, but we have had to take account of the changes proposed in Working for Patients and take time to develop some of the details of our proposals. However, I can now announce that we intend to publish the Government's response earlier than in the New Year and that we shall in fact do so on 14th December. I think that your Lordships will find it to be a very positive response to the concerns expressed in the report and those expressed today that the National Health Service should do more to identify and meet its research needs.

Perhaps I may cover some of the points raised in the debate. The noble Lord, Lord Hunter, asked about amenity beds. We see them as a valuable extension of choice for patients. The Health and Medicines Act 1988 gave health authorities powers to set their own scale of charges for such beds. That will enable them to generate valuable income which can be ploughed back into improved patient care.

The right reverend Prelate the Bishop of Manchester asked about the ambulance dispute. Yesterday the management side of the ambulance negotiating body set out the terms of the latest offer following negotiations with the Association of Professional Ambulance Personnel. The offer is being extended to all staff, but the proposed new rates will be paid only to those who fully perform their contractural duties. It is hoped that APAP's decision to recommend acceptance of the offer will help bring about a rapid settlement and that the ambulance services will soon be back to normal working across the whole country.

The noble Lord, Lord Colwyn, and the noble Earl, Lord Baldwin, spoke persuasively about alternative complementary medicine. The medical treatment provided under the NHS must of course be given by a practitioner registered with the GMC. Such practitioners can offer to use any form of treatment, including complementary therapies, if they consider it to be in their patients' interests. All hospitals will, as now, be free to appoint registered medical practitioners who wish to offer complementary therapies to their patients. Those services will no doubt continue.

I am grateful to my noble friend Lady Gardner for reminding us of dentists' needs. We are aware that costs to dentists practising in London might be significantly higher than in other parts of the country. We are seeking further information so as to form a view.

The plight of the National Heart Hospital has been mentioned. The move will enable its work, currently undertaken in old buildings, some of them Victorian, to be carried out in a modern building with no diminution in the standards of care. The National Heart and Chest Hospitals SHA, of which the National Heart Hospital is part, treated about 10 per cent. more patients than during the same period last year. That has led to expenditure above budgeted levels. The early transfer of in-patient services from the National Heart Hospital has been identified as a way of using resources more effectively. There will be no need to make staff redundant.

Other questions were asked, but I realise that I am running out of time so in conclusion—

Lord Rea

My Lords, before the noble Baroness gets into her final straight will she answer my query? Will fund-holding practices be able to buy services from private hospitals with the funds which have been supplied to them through the NHS?

Baroness Hooper

My Lords, perhaps I might write to the noble Lord on that point. I was about to say that in conclusion I acknowledge fully that I do not have a medical background but our proposals have received support from medical experts today. We are proposing a programme of change based firmly on lessons learnt in recent years. The progress of implementation to date indicates that our confidence is not misplaced. We believe that our reforms will produce an NHS that works better, cares better and so can face the future with confidence and without uncertainty.

Lord Hatch of Lusby

My Lords, before the Minister sits down will she clarify one point about which I asked her? Is she saying that the overspending by the National Heart Hospital and within the Brompton group is due to extra care for patients? I think she said there had been 10 per cent. extra care over the past year. Is that the kind of overspending for which the group is being criticised?

Baroness Hooper

My Lords, that is the reply I gave to the noble Lord. That is my information.

Lord Hunter of Newington

My Lords, I know that your Lordships would wish me to thank the Minister warmly for her magnificent effort tonight. She has done a great deal to improve our understanding of and confidence in how the future may evolve and help us to get rid of some of the anxieties, which are very real. I also thank noble Lords from all sides of the House who collaborated in this matter. Perhaps we are beginning to achieve a basis upon which we can go forward. I thank everyone who has taken part in the debate for their contribution. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.