HL Deb 15 June 1989 vol 508 cc1519-21

3.32 p.m.

The Countess of Mar asked Her Majesty's Government:

Whether they intend to make good the shortfall of £490 million in this year's National Health Service budget which is due to inaccurate inflation0 forecasts.

Lord Henley

My Lords, this year £19 billion will be spent in our hospitals and community health services throughout the United Kingdom—£15 billion in England alone where health authorities have received cash increases averaging 9.2 per cent.

The Countess of Mar

My Lords, I do not think the noble Lord has really answered my Question, just as he did not answer the question I asked him last week. Are the Government going to make good the £490 million which is estimated by the National Association of Health Authorities to be short because inflation was not forecast correctly?

Lord Henley

My Lords, I rather suspected that the noble Countess was basing her figures on those of the National Association of Health Authorities. The Government consider that the figures used by the NAHA are artificial and bear no relation to what has happened in the health service. The crucial points are the amount of money put in by the taxpayer, which is over 40 per cent. more in real terms since 1978–79, and the services we provide to patients.

Lord Ennals

My Lords, is not the Question about the direct effect on the funds available for health authorities as a result of inflation? Will the Minister say just what is the figure by which health authorities are going to be underfunded because of the higher rate of inflation? Does he accept that unless there is some replacement of those funds, health authorities are bound to provide a poorer service than they had planned to do? Surely the Government must do something about that.

Lord Henley

My Lords, health authorities will not be underfunded as the noble Lord has suggested. We suspect that the NAHA has used RPI to judge inflation. However, that is not the correct figure to use. The correct figure to use would be the health service index, which is a slightly lower figure—

Noble Lords

It is higher!

Lord Henley

My Lords, it is lower, not higher.

Lord Tordoff

My Lords, if the shortfall is not £490 million, will the noble Lord tell us what is it?

Lord Henley

My Lords, there is no shortfall.

Lord Ennals

My Lords, is it not quite clear that if there is a higher rate of inflation health authorities are not able to buy the same amount of services or to pay the money for the same services that they would have done if the rate of inflation had been as anticipated? That being the case, surely the department must know the figure and must have taken a decision on whether or not to replace that missing money.

Lord Henley

My Lords, as I stated in my first Answer, Her Majesty's Government have increased funding by 9.2 per cent. On top of that, there are further savings that health authorities themselves can make. There have also been increases to their funds made available by changes in superannuation. I believe they are now paying £287 million less.

Lord Trafford

My Lords, does not my noble friend agree that it has been widely welcomed that the resource management initiative will help very considerably to answer the question as regards the true level of funding as well as the true required level of funding, so that future discussions on this subject will be based on agreed facts rather than on different interpretations of different facts? Such an initiative is therefore to be welcomed.

Lord Henley

My Lords, I thank my noble friend for that remark. I hoped that our figures were generally accepted.

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