HL Deb 08 February 1993 vol 542 cc477-9

6.25 p.m.

The Earl of Strathmore and Kinghorne rose to move, That the draft scheme laid before the House on 18th January be approved [17th Report from the Joint Committee].

The noble Earl said: My Lords, this scheme sets out to update and improve the method of allocating Scottish Hospital Trust endowment income. This endowment income is used to assist in the care and welfare of NHS patients and staff and examples of use include the purchase of equipment, children's toys and games, Christmas activities and hospital radio services. In devising the scheme, the main concern was to ensure, as far as possible, an equitable distribution of income among health boards and among health boards and NHS trusts where this was relevant while maintaining a connection with the original sums endowed.

The Scottish Hospital Trust was established in 1971 and the legislative provision is now consolidated in Schedule 6 to the National Health Service (Scotland) Act 1978. Its purpose is to administer and maximise investments from endowments previously managed by regional hospital boards and boards of management. The endowments transferred to the Scottish Hospital Trust were all made before 1947 and pre-date the establishment of the NHS.

The original capital from endowments transferred to the Scottish Hospital Trust is invested by the trust. Income distributed among health boards is that derived from such investments. The current method of allocating Scottish Hospital Trust income is based on £3 per hospital bed plus a share of the balance, allocated in proportion to the health board's share of the total capital funds as transferred to the Scottish Hospital Trust. Initially the bed allocation accounted for the main apportionment. However, the bed method now accounts for less than 10 per cent. of the total income allocated to health boards, the investment portfolio having substantially increased in value over the years. Presently, the endowment fund is valued at £24.2 million and £1.6 million of revenue derived from this fund was available for distribution among health boards for 1991–92.

This new scheme will allow for the division of Scottish Hospital Trust income among health boards and NHS trusts on the basis of the originating capital as transferred to the Scottish Hospital Trust in 1972. It will be for health boards and NHS trusts to reach agreement with each other on the identification and final proportion of such capital. Given that the endowments are very old, the schedules held by the secretaries to the Scottish Hospital Trust, currently Messrs. W & J Burness, WS, will assist in this process. Other relevant documents which the health board and trusts themselves may have will also assist in this process. I should emphasise that the scheme only provides a method for distributing the investment income derived from endowment capital held by the Scottish Hospital Trust to health boards and NHS trusts and that such income is for the benefit of NHS patients and staff. The endowments themselves are not being distributed and will still remain, as they presently do, under the management of the Scottish Hospital Trust. It is also a condition of the scheme that in applying the income, health boards and NHS trusts will take account of any terms and conditions of use attaching to the original endowment.

The new scheme will update the method of distribution in force since 1974 and give NHS trusts relevant endowment income as provided for in the National Health Service and Community Care Act 1990. I commend the scheme to the House. I beg to move.

Moved, That the draft scheme laid before the House on 18th January be approved [17th Report from the Joint Committee].—(The Earl of Strathmore and Kinghorne.)

Lord Carmichael of Kelvingrove

My Lords, I am grateful to the noble Earl for his elucidation of the scheme. He will know that it has already been considered by the Statutory Instruments Committee in another place. The important point that was stressed—the noble Earl hinted at this himself—is that the scheme is based on the money left by Victorian philanthropists and others who felt that they owed something to the hospitals in their areas. The money was meant to provide additional help and services mainly for poor patients who could not afford to pay anything themselves. They were people who were not covered by hospital trusts, trades union funds or the rather primitive forms of insurance funds.

I wonder whether the Minister can help me on one point. When I was reading through the proceedings of the Statutory Instruments Committee I was slightly surprised that £24.2 million was raising only £1.6 million in interest. It seemed to me that for a sum like that to attract an interest rate of only about 3.2 per cent. the money had not been as well invested as I would have imagined. Even building societies' present grudging interest rates are more than that. Perhaps the Minister would care to add to that. Perhaps I may also ask the Minister whether he is able to confirm what his honourable friend Mr. Stewart at the Scottish Office said in another place. His words were that a cast-iron guarantee could be given because in paragraph 3(1) the reference to paragraph 7 of Schedule 6 to the 1978 Act made it clear that the income must be spent on the direct services provided by the National Health Service, that is, they would not be spent on private medicine even within the National Health Service. I wonder whether the Minister is now in a position to answer those questions. Other than that, I am pleased with what he has so far elucidated.

The Earl of Strathmore and Kinghorne

My Lords, in reply to the noble Lord, Lord Carmichael of Kelvingrove, a total of £1.6 million was distributed to health boards and hospitals for the financial year 1991–92. That included a figure of about £358,000 from the previous financial year's revenue.

As regards the question of interest, I do not believe that the entire £1.6 million is interest. We are looking at investment portfolios, not purely money on deposit. I understand the noble Lord's point about the rate of return on capital funds, but I stress that the fund is administered by professional investment managers. It may be that they have not been doing as good a job as perhaps they should.

I assure the noble Lord that nothing in the scheme alters the basic proposition that the funds with which the scheme is concerned are for use in the NHS, reflecting as far as possible the terms of the original bequest. I hope that goes some way to answering the noble Lord's second point.

On Question, Motion agreed to.