National Health Service: Administrative Change

HL Deb 09 February 1994 vol 551 cc1604-41

5.14 p.m.

Lord Dean of Beswick rose to call attention to the case for proper evaluation of the costs and benefits of administrative changes in the National Health Service; and to move for Papers.

The noble Lord said: My Lords, I shall give a reason for raising this particular topic. Only two or three weeks ago a health debate was initiated by the noble Lord, Lord McColl, in which he referred to whingeing against the National Health Service and the publication of sensational information which was misleading, wrong, and harmful to patients. I accept those criticisms if and when people misrepresent the real situation. But my role is not to criticise the health service. I am a great admirer of the health service. I want to put on record my personal thanks for the treatment I have received in the past couple of years for serious eye problems. I pay tribute also to the doctors at Tameside General Hospital, Greater Manchester, who helped my wife recover from her recent serious illness and to the_ surgeons who performed the operation at the Wythenshawe hospital, Manchester.

I am not taking part in a witch hunt against the health service. I am among its greatest admirers—from the consultants down to the people doing the more mundane jobs on the wards. I do not believe that the noble Lord, Lord McColl, is justified in saying that those who dare to criticise are whingers. As recently as in the last two weeks two eminent consultants in the Manchester area, Dr. Tweedie, at Withington, who, I believe, is an orthopaedic surgeon, and Dr. Gough, a paediatric neurologist and consultant at the Duke of York children's hospital, are both on record as asking for more resources. If top medical men who ask for more resources in order to deal with their problems are classed as whingers, then let us have a bit more whingeing. The wording of my Motion relates to making information available to patients at the right time so that they know what is going on.

The most recent attempt to benefit the health service —the big stride into the future—has been the introduction of computers. I must, however, point out events that should not have happened and should have been prevented. Some of what went on in Wessex should certainly have been avoided. The matter should have been dealt with; it should not have been kept under wraps. It may well be a question of the rapidity with which Secretaries of State for Health have moved on. We have had six Secretaries of State for Health in 12 years. To claim that someone, however bright, can master in two years a service such as the National Health Service, cross all the t's, dot all the i's and find out what is going on, is absolute nonsense. No international or multinational employer would run a company in that way. It may well be that that is one of the weaknesses of the system and of government in general, not only this Government. I am sure that two years is not sufficient time to get to grips with matters. In that time Ministers are merely serving an apprenticeship; they are only starting to learn what the job is all about. That may be one of the reasons why such events occurred.

I was alerted to what happened in Wessex by a four-line report in the stop press of the Manchester Evening News. One may ask: why Manchester, which is 200 miles away? I read the report as we broke for the main Recess in 1992. It said simply that Wessex Regional Health Authority would not proceed any further to recover £43 million that had been lost in computer deals. I put down a Question for answer when the House returned. I wish to make clear that I am not attacking the present Minister, the noble Baroness, Lady Cumberlege. She was not involved in any of this. She is a more recent acquisition. Nevertheless, she knows what I am talking about. The Answer that I was given was that the Government knew that something was wrong in 1988, so they changed the chairman, who quickly appointed a new manager. I accepted that as "game, set and match". But somebody from down south had seen the shots of me asking the question in the House. I was sent a copy of the press release by the Wessex Regional Health Authority, which indicated that it did not intend to pursue the matter and retrieve any more money because there was doubt as to whether the sum recovered would be worth it.

A district auditor's report was referred to, and after numerous phone calls I obtained a copy. It was critical of the new chairman's actions. I want to make clear that the chairman of whom I speak, the chairman from 1988, in some respects had a bad deal from the press, which spoke as though he was responsible for the original £63 million mis-spent. He was not. By the time he got there the overwhelming majority of that sum had been wasted by the previous chairman, Sir Bryan Thwaites. The discipline that he received was a going away gift of £10,000 when he stood down.

The report showed that the new chairman had acted in a rather cavalier manner. In fact two years elapsed before a new manager was appointed—Mr. Ken Jarrold —and they started to rumble what was happening. The report showed, for instance, that under the auspices of the new chairman a new computer had been purchased for £3 million when it could have been bought for less than £1 million. No fail-safe clauses were instructed to be placed in the contract. According to the report, he was responsible for not inserting the fail-safe clauses.

Moreover, one of the sections—I believe it was the computer section of Wessex—was moved sideways as a private company. What was called a soft landing was agreed for the staff under which 104 salaries were to be paid for a period to people who had moved to the company. Those salaries continued although, in fact, when heads were counted, the number turned out to be only 64. That was the type of situation that went on after 1988.

Your Lordships' House has no way of dealing with such a situation. I made sure that the Public Accounts Committee would be kept informed. Strangely enough, without any collusion or co-ordination, the new Member for Southampton, Itchen, which is in Wessex, took part in a debate in the other place and for 10 minutes spoke in detail about nothing but what had happened in Wessex because he had been briefed by Computer Weekly. The Minister in another place, Dr. Brian Mawhinney, thought that the matter of all that money going missing was so important that he did not even refer to it.

However, when the Public Accounts Committee finally sent for the people from Wessex on the first occasion, it was suddenly alerted that there was another auditor's report, which the department, the Secretary of State and the chief official, Sir Duncan Nichol, were not prepared to make public. It resulted in the then chairman, Sir Robin Buchanan, the new manager, Ken Jarrold, and Sir Duncan Nichol having to appear before the committee. I sat for over four hours listening to the evidence. It was absolutely mind boggling.

Mr. Bob Sheldon, the chairman of the Public Accounts Committee, who has done a superb job on behalf of the taxpayers of this country and public authorities, opened the meeting by saying that it had been requested that the evidence given that day should be heard in camera. Mr. Sheldon said that in no way should that be the case. It would be public.

It was like listening to a horror story. It went back to 1982. Four companies, which I shall not name, were bidding for the computer system. Company A won it. But an intervention by a consultant based in Westminster—I go no closer than that; all the evidence is in the two reports of the Public Accounts Committee —resulted in the contract being taken away from Company A and being switched to another company. When it was decided to give the second company the contract, the committee dealing with the matter was not quorate. Not only that, an employee who was in the pay of the computer company to which the contract had been switched was an appointed member of the regional health authority dealing with it. When some of the junior officers of the authority pointed to the impropriety, they were brushed to one side. All that is in the evidence. It resulted in a huge sum of money being lost. Much of it was returned, but I believe that there is still over £20 million adrift.

Some of the actions taken under the new chairman worried me. For instance, I should have thought that the services of the person responsible—the main brain behind the loss of £60 million—would be terminated forthwith. But, no; a retirement agreement was reached. The man who was totally responsible for pushing the matter, the regional manager, was rewarded with a going away present of £111,000.

In another case, a young woman who had worked for two years at the regional health authority was given £78,000 as a going away present. If noble Lords believe that I am stretching the elastic a little far, they have only to read the report. I have not named any names but they are all there.

That money, denied to the people of the area, could have been very well used. In the past I have asked how we look into the matter of probity in the public services. I have switched my attention to the National Health Service and what I believe is called the Supplies Authority. I made the point that the then chairman of Wessex was also the chairman of the National Health Service Supplies Authority. He had been appointed on a two-year contract which commenced in October 1991 and finished last year. I do not accuse anyone of trying to mislead but last week the noble Baroness, Lady Robson, on questioning why that person was appointed in view of the Wessex situation, was told that the appointment was made before all the facts were known.

He was originally appointed in October 1991 for two years. He was re-appointed last October when the views of the Public Accounts Committee were made known. I have great respect for people across the political divide in regard to probity. I do not defend a lack of probity anywhere, whether it is in local Labour authorities, Conservative authorities or public bodies. But I have not had the support of any one Member from the other side. No one has stood up to be counted. That is very sad. They know all about the matter because I have made sure that they know, but no one has bothered.

In the few minutes left to me I wish to talk about the National Health Service Purchasing Authority. I raised the point that four out of five non-executive directors were already employed in the National Health Service in other appointed capacities. I said that it seemed strange that here was a situation where the buyer will be the seller and the seller will be the buyer. I asked about the audit provisions, if any. I was told that an internal audit would be carried out by Peat Marwick. I emphasise that that is an internal audit. I suggested that the final audit should be done externally. We are talking in the near future of a turnover of about £3 billion a year, which is not peanuts. I then questioned who the members would be. The noble Baroness, Lady Cumberlege, was forthcoming and straightforward in answering the questions I asked. She said that they would form an audit committee of non-executive members, but that the chairman would not be on it.

In one of my supplementary questions I made the point that we had a situation where the Government had introduced legislation to stop people in local authorities twin-tracking; but that we now had three people who were treble-tracking. They are not only the buyers in their capacity of serving the health service, perhaps as chairmen in an area; they are also the seller as a member of the purchasing corporation. How do we deal with that situation in a legal sense? How does one take oneself to court? There must be a precedent for that.

Those people should not form the nucleus of an audit committee. They are too close to the problem. It would not stand the test of time in the private sector. I do not cast any aspersions on people as individuals—I do not know any of them. All I am saying is that it is not right that people should be checking up on themselves.

There are no sanctions to deal with those people who are appointed. I shall not be sidetracked into talking about people at Wessex who are before the court and who were paid servants and officers and not appointed members. They are before the court at present and are being dealt with, and I do not wish to refer to that matter. Local councillors, if they do wrong, can be surcharged. Those who serve a health authority, if they do wrong, cannot be surcharged. Last week I made a strong plea —I say this in a general sense and not just for the health service—for the Government to consider seriously the question of surcharging health authorities as they do local authorities.

I pay tribute to Mr. Bob Sheldon, the chairman of the Public Accounts Committee, for his work in this matter. The Department of Health recently circulated a code of conduct in regard to what it intends to do in the future, which indicates that it obviously has not been doing much in the past. However, before it is finalised—the replies must be in by 1st April—perhaps the department will look at the one produced by the Public Accounts Committee which was published last month and which indicates how probity and straight dealing can be made to work in the public sector. If that is studied it may be found that the department does not need to produce its own. That could be used for any spending department under the control of the Government.

I am grateful for the opportunity to put forward my case—perhaps not as lucidly expressed as your Lordships will read it in the Official Report. I do not believe that anyone involved in tendering for any type of contract would want to be faced by the jiggery-pokery that went on in Wessex in the awarding of the first contract. I am grateful for the time to express my serious anxieties about those matters. I beg to move my Motion for Papers.

5.34 p.m.

Baroness Miller of Hendon

My Lords, it was Oscar Wilde who defined a cynic as someone, who knows the price of everything and the value of nothing". That is why I was glad that the noble Lord, Lord Dean of Beswick, asked for details of benefits as well as costs in this useful debate that he initiated. I am glad also to hear of the good attention that he received recently in a National Health Service Hospital when he was ill.

I am by no means certain that the changes in the National Health Service can be compartmentalised into administrative and non-administrative. I am not certain if an unarguable meaning of the term "administrative costs" can be found. I also do not believe, though I fear that it sometimes seems so, that administrative changes are solely for the benefit of the administrators. And who is an administrator? These days we have even given up the time-honoured name of "matron" and now call them "managers".

I am certain that in responding to the debate my noble friend the Minister will be able to satisfy the most curious among us about the purely administrative costs that can be separately identified. I should therefore like to speak about the benefits. I do so as the chairman of a family health services authority. My authority is one which is coterminous with both the district and the borough in which it is situated. I am responsible for the primary health care of upwards of 300,000 people with a budget of some £40 million. Even ahead of legislation to amalgamate family health service authorities and districts, my authority and the district began working together as a single agency to improve our efficiency and service.

There has been a major cultural change in the philosophy of the National Health Service. In the past, most patients' sole contact with the doctor was when they were ill. We were more concerned with treating those who had fallen sick rather than keeping them well. It is now realised that what we really had was more of a "national sickness service" than a National Health Service. That is why there is now a greater emphasis on the promotion of good health and the prevention of disease as well as looking after and curing the sick. That is why there is an emphasis on reaching targets for immunising children; why GPs are encouraged to vaccinate vulnerable patients against 'flu and why they are given targets for cervical smear tests. Cervical cancer deaths are falling rapidly. The HIB campaign for the prevention of meningitis in children has had an enormous take-up in the 12 months it has been available. Previously, less than 5 per cent. of the target group received breast screening; now it is over 75 per cent.

Developing health care in that way and evaluating its effectiveness needs to be managed. I have no doubt that some book-keeper could work out the cost, but I doubt that it is possible to fill in the other side of the balance sheet and say how much is saved in people not becoming ill or not dying. GPs are encouraged to train for and carry out minor surgery, for which they receive special payment. That has now reached levels in the cities that were only previously achieved in rural areas. I am not sure how your Lordships define "minor surgery"; my understanding is that a minor operation is one that someone else has!

Whatever the cost, it certainly saves patients from cluttering up the waiting list with things like warts and cysts, or using their local hospital emergency room as a glorified doctor's surgery. GPs are encouraged to upgrade their own surgeries; to computerise their patients' records and prescription regimes, and to employ qualified practice nurses who can in turn give professional help to the doctor in running, for example, hypertension clinics or doing blood tests. All that work is done with financial help from the family health service authorities, which also provide training for primary health care teams, group practice managers and receptionists.

All of that can be called administration. The benefit to patients in improved and personal service is hard to measure in a ledger. Heart, hypertension, diet and smoking clinics are another obvious major benefit to those patients who have the good sense to use them. Apart from showing some patients that smoking is the cause of their problem, the benefit of regular check-ups has been to pick up numerous previously unidentified diabetics, asthmatics or blood pressure cases.

Family doctors are also able to arrange for physiotherapists to attend at their surgeries to deal with groups of patients by appointment. That is an obvious benefit to those who, by the very nature of the treatment that they need, welcome not having to travel to their local hospital once or twice a week to receive it. Some enterprising GPs are even organising visits by specialists to their surgeries instead of the patients going to the hospital. Of course, that costs much more to arrange and to administer, but I doubt that one will find any patient complaining.

The administrative changes have enabled individual FHSAs to exercise their own initiative in matters of health care. My own authority, for example, introduced the concept of "High Street Health". We paid for local pharmacists to be trained in elementary diagnostic and health promotion techniques. This means that a patient who comes in asking for some non-prescriptive medicine can be checked to see whether he is really asking for the right medicine, and more importantly perhaps, whether he really should see his doctor instead of trying to treat himself. My colleagues in Lambeth have produced the very imaginative scheme of a mobile minor surgery to provide help for local GPs. Fund-holding practices, which by definition are the larger group practices, are providing numerous services for their patients in their surgeries and in their clinics, and in the process are substantially reducing hospital waiting lists.

The National Health Service is spending money on the training of paramedics on the basis that more lives will be saved by treating accident victims on the way to a specialised unit rather than simply carting them off to the nearest emergency room, which may be all right to treat a broken arm, but which simply may not have the trained staff and equipment on hand 24 hours a day to deal with a major complex trauma. This technique has been pioneered not only, as one might expect, in the United States but in the Royal Belfast Hospital.

Of course we must have proper oversight, as the noble Lord, Lord Dean, desires. We must eliminate extravagance and waste. We must ensure that the taxpayer gets value for the vast sums we spend on the National Health Service. But what we do not need is constant shroud waving. I only hope that the enlightenment that your Lordships will derive from this debate will be one step along the road of stopping treating the National Health Service as a sort of political football, instead of being the standard that so many countries try to attain. I hope there will be recognition of the major benefits that are now starting to flow from the administrative changes; changes, my Lords, for the benefit of patients.

5.42 p.m.

Lord Rea

My Lords, the noble Baroness, Lady Miller, gives an upbeat picture of what is going on now, particularly in primary healthcare. Some things that she says are true and are welcome; but she ascribes what has happened to the recent administrative changes in the National Health Service. As a general practitioner who has been working in the National Health Service for most of my professional life, I can say that most of the things she described and most of the examples she gave as following on the changes that have taken place, were taking place in my practice long before any of the recent reforms were introduced. In fact the operation of the new contract is being found extremely difficult by many doctors, who were not fully prepared for it. Those doctors in poor areas who do not have good practices have been falling very much behind in their achievement of the targets set and have been finding life very difficult.

But that takes me away from my main theme, which is to look at the overall changes that have taken place since the National Health Service and Community Care Act came into operation in 1991. Those of us who took part in the many hours of debate on the National Health Service and Community Care Bill as it passed through the House will remember an amendment, which had support from all sides of the House, moved by the noble Baroness, Lady Cox. This had the backing of all the Royal Colleges of the health professions. It did not oppose the main thrust of the Bill but proposed that it should be introduced first in one regional health authority —East Anglia was suggested—and the results carefully and scientifically evaluated there for several years so that lessons could be learnt and modifications made before being introduced generally. But of course the Government could not accept the amendment.

As a result, the whole country is now being used as a guinea-pig for a scheme which is based more on market oriented dogma—I could use the word "philosophy" but I think "dogma" is more appropriate —than any evidence that it might be of benefit to patients; or for that matter be any cheaper or more cost efficient. In fact, long before the Bill was brought in there was evidence from the other side of the Atlantic of the exact opposite: that administrative costs would rise and that costing every treatment was fraught with difficulty and caused more problems than it solved. Professor Alain Enthoven of Stamford University, whose study of the NHS gave birth to the internal market, was surprised and quite shocked that no pre-testing of his ideas was undertaken.

That is the background to the discussion we are having today. The Government make no bones of the fact that more administrators are now working at all levels of the health service, saying that the largest enterprise in Europe—the NHS—needed better management. Their answer to the argument that the real problem of the NHS was underfunding was that it was no use just throwing money at the problems; fundamental changes were needed, ignoring the fact that the United Kingdom spent a lower proportion of its GDP on health than almost any other developed country and had health statistics which were better than many, especially the United States, the highest spender of them all.

Since the Bill became an Act it is worth looking at how overall spending on the NHS has developed. In the 1980s funding increased in real terms by about 1 per cent. per annum. Since 1990 it has increased by 3.5 per cent. per annum. The trend of increasing numbers of patients treated has been more steady and has not increased as rapidly as the recent rise in spending. In fact, in parenthesis, I should say that hospital community health service activity, as it is given to us, may be a doubtful measure since, as my noble friend Lady Jay pointed out in our last debate on the National Health Service, it is based on "completed consultant episodes", so that one hospital admission may be counted as several different episodes if several specialists are involved. In addition—this has long been a criticism —these episodes may involve the same patient being admitted repeatedly because rapid turn-round times mean that patients are discharged before their condition is fully stabilised. I am not necessarily against this if the community care services are really adequate; but, unfortunately, they are not, and this in itself is another reason for readmissions and an apparent increase in health service activity.

The increase in funding for the NHS is welcome; but where has the money gone—on patient care or on managers? The percentage of National Health Service expenditure on administration has increased from 6 per cent. in the early 1980s to 11 per cent. of the total now (not up to the 22 per cent. which is spent in the United States, but high enough) and costs of senior managers have increased from £150 million in 1990 to nearly £500 million in 1993—a three-fold increase—which I assume also includes the cars and drivers to take them from meeting to meeting. Some noble Lords will remember the Evening Standard headline a couple of months ago, which was based on the answer to Dawn Primarolo's question in another place, that there are now nearly 3,000 more managers but 5,000 fewer nurses in London than three years ago. A sub-headline stated: Nurses replaced by men in grey suits". The answer to that in part at least was that many senior nurses are now classified as managers; but even if that explains some of the reduction, there remained a heavy net deficit of nurses. Sadly, the 3,000 managers almost certainly cost more than the 5,000 nurses lost to the London health service. One has to ask whether, if NHS funding had increased as it has in the past three years but had been spent under the old system, a higher proportion would have been spent on patient care. It is clear to me that it would.

To recap on this point, National Health Service funding has been at a higher level than it was before 1991, but only a fraction of that increase has gone into patient care. I suggest that that extra money has been found to prevent a politically unacceptable breakdown of the service which the changes would have precipitated at previous levels of funding.

In London, the situation since Tomlinson remains very uncertain. I have most direct experience of the situation in Islington. Under the pressures of the internal market, last year the director of purchasing for the district health authority threatened to withdraw funding for the accident and emergency departments for the University College and Middlesex Hospital which would virtually have meant the end of all acute services in those hospitals. She asked general practitioners to refer their patients to the Royal Free Hospital or the Whittington Hospital Trusts, which are less accessible and less popular than UCH/Middlesex. But their unit costs were lower. That was despite the specific recommendation in Tomlinson and in the specialty review, that UCH/Middlesex should be preserved as a centre of scientific and clinical excellence.

That met with such a barrage of opposition from local residents, GPs, hospital workers and many others, that the Government have agreed to provide an additional tranche of about £10 million of central funding to allow work to continue. The manager concerned has said that she knew all the time that this bailing out operation would occur, but was using the threat to force economies on the hospital. Whether that is true or not, it seems a crude, blunderbuss way of managing a much valued service with high international, scientific prestige.

Local residents still feel that the University College Hospital has closed. The familiar, ugly but much loved Victorian cruciform building, where many thousands of nurses and doctors have been trained—including myself —is now an empty shell. I do not particularly regret that. It was an inconvenient building in which to work, and it had really served its purpose over the past century. But routine admissions of eight specialties are now in abeyance since this year's contracted work had been done by some departments as early as last September. So no work is going on in those departments despite the fact that patients are wanting to be treated and the waiting lists are increasing.

One might ask: what has happened to the concept that more popular and efficient hospitals would be rewarded with more work and that money would follow the patient? Sadly, cost rather than quality seems to be the criterion. Not enough allowance has been made for the higher cost of running hospitals with a high teaching and research commitment such as UCH/Middlesex. SIFTR (special increment for teaching research) is a relatively crude measure. It should be made more sensitive to actual costs in teaching hospitals. I very much hope that the noble Baroness can report some progress on the discussions which I know are going on on this matter.

I see that my time has come to an end. In conclusion then: the health service does not need managers who are going to be in one place for a short time and who then move on, furthering their career. It needs dedicated people who will spend a major part of their career getting to know the district and its problems in order to function effectively. Luckily, there are hundreds of thousands of health workers working beyond the hours for which they are paid, seeing that most patients get the care that they need despite, rather than because of, the flurry of expensive administrative activities which surround them.

5.55 p.m.

The Lord Bishop of Chester

My Lords, I suppose that the Church is essentially neutral in the arguments about the reorganisation of the National Health Service. All of us who work in this field are well aware of the fact that the situation varies very considerably. Even across the thousand square miles of my diocese, there are some areas and NHS trust hospitals, for instance, which are applauded and others severely criticised.

But I do not believe that the Church can be neutral about benefits and care. We, and the Christian ethic, would certainly support action against waste, but it is also concern for treatment and efficiency not to be at the expense of the patient's full humanity. Many of us work with and alongside those engaged in the National Health Service; namely, doctors, surgeons and nurses. We admire the care and the enormous goodwill and concern for patients, yet also have to experience the stress, strain and frustration, particularly for nurses, in many situations.

However, although acknowledging the increasing expectations of patients for tests, treatments and drugs, the cost factor often seems to outweigh the need or benefit factor. In turn that leads into a significant suspicion that the purchaser-supplier system is not delivering fairly or efficiently. There is a clergy-wife in my diocese at this moment with severe back trouble. Her local trust hospital, which is some distance from Chester but within my diocese, buys in a given number of scans each year from the part of the hospital which runs the CAT scanner. For the rest of the time the scanner is available to the private sector, including the private hospital next door. When the allotted number of scans for the year is taken up, patients like the clergy-wife cannot have a scan unless either her fundholding GP (it is not an option open to non-fundholders) pleads to the family practitioner committee or the like for money so that the GP can go to the private sector to buy in a slot on the scan from that hospital or another or, as has happened in this particular clergy-wife case, a consultant had to plead for an emergency scan from the hospital.

Surely this extraordinary situation should not happen. Buying in a set number of scins assumes an accuracy in the prediction of need not possible to mankind. Who can prophesy how many heart attacks there will be in this House over the next 12 months? In a revision of trust funding, I suggest that could be met by compulsory reserve funds to meet genuine needs without the unseemly and dehumanising requirement to beg for treatment. Acting in good faith, senior members of the medical profession encouraged their colleagues to take part in an experimental programme entitled Resource Management Initiative which ran from about 1987. Six pilot sites were identified, one in my diocese.

The evaluation which followed was considered by many doctors in my area to be rushed and inadequate; that resource management was rolled out to many other sites before its efficacy had been proved on the ground. A steam roller took over. Pleading by members of the medical profession for a proper experimental trial of the purchaser-provider system seemed to have been swept aside. If it had been heeded, the present problems of that aspect might have been avoided. Surely now is the time for an overhaul.

The evaluation of costs is fairly easy, but the evaluation of benefits is not easy. A stronger effort to evaluate benefits would avoid bizarre situations like that of the clergy-wife whom I have mentioned. It would strengthen the many good improvements in healthcare that have come from NHS reorganisation.

5.59 p.m.

Baroness Fisher of Retinal

My Lords, my noble friend Lord Dean of Beswick referred to Wessex Regional Health Authority. I have just finished reading the Public Accounts Committee report about West Midlands Regional Health Authority. It tells the same story that my noble friend told: with one hospital being £12 million short and the region as a whole £20 million short. It is fortunate for those who are named in the report that all received nice little presents on leaving the National Health Service, including the chairman. What worries me is that both cases relate to computer systems mismanagement. One wonders whether it would have been better if the authorities had gone to a car boot sale. They could not have done worse than the systems that they got, which never worked from the day that the experiments started.

However, what worried me even more was that we have a man called Duncan Nichol who does not seem to know what is going on. I understand from reading the West Midlands report that he is at the top of the tree—

Lord Dean of Beswick

My Lords, he was.

Baroness Fisher of Rednal

My Lords, I see—he was. He did not know what was going on. In fact, he said of the West Midlands affair, "Yes, it is a shambles". We in the West Midlands knew that seven or eight years ago. We could have told him. The affair just ran on and on and on. Do not the Government have a "grapevine" to tell them what is going on in the health service? They seem to have grapevines about a lot of other things. Why do they not have one for the National Health Service?

I should like to emphasise what my noble friend Lord Dean said about public sector accountability, integrity and probity. They are a "must" when Ministers are making appointments. We have come to realise that, in its financial dealings, the private sector operates in exactly the opposite way to what we expect as regards public expenditure from taxpayers' money. When Ministers are considering appointing staff to regional hospital boards, district health authorities and trusts, it is important that those involved clearly understand the way in which they must deal with the finances. It should be laid down specifically. As my noble friend said, those involved should be subject to the same conditions as local authority representatives.

There are now no elected members on NHS district health authorities. Key powers and resources are increasingly passing to the NHS trusts, the membership of which is again determined on an appointment basis. I had nothing else to do on Sunday so I switched on the television and, lo and behold, the President of the Board of Trade was in front of me. I thought that I would listen to what he had to say. I became really stirred up by his message which was "Push the power back to the people. Give people a bigger stake in society". But of course, we give those opportunities only to some of the people.

One must look at the new commercial attitudes in the health service. We must ensure that it is recognised that long-term care beds are as important to the chronically sick as the marvellous and famous operations that hospitals can carry out these days. We cannot easily push aside those people who will need good care, good nursing and, every now and again, the medical treatment that applies to their chronic health problems.

However, the duty of care which is specified in the Act of Parliament is interpreted by the NHS to mean, "Only within the resources available". That means that if a health authority cannot provide that care, says that it cannot, closes the beds and pushes the patients out, somebody else will have to pick up the burden. Normally, it falls to the local authorities, who are likewise short of cash. However, even if they wanted to, they cannot overspend because they would then become rate-capped. What is going to happen when the NHS trusts say, "We want only the people we can help quickly so that we can get rid of them quickly and keep all our beds full 24 hours a day and twice a day if possible"? That happens in some private hospitals. I live next to one in Birmingham so I know how that one operates. It tries to have a through-put of three patients per bed per day.

As the balance of care shifts from hospitals to the community, I advise the Minister that that change must be handled sensitively. We must accept that the proposals are long term. We need a real and constructive debate regarding funding and provision for what we call the chronic cases.

We have seen mental hospitals being closed and we all know that most of those closures have been unsatisfactory. Many noble Lords of all parties have spoken in this House about the difficulties caused by the speeded-up closures of mental hospitals. Patients are not receiving the care that they should. We must ensure that the indifferent care that some of those who have left mental hospitals have received is not experienced by those who need chronic health care. Care in the community needs an input from the National Health Service. The buildings, personnel and hospitals must be planned with the local authorities, charities and voluntary organisations. They all need to be brought together to ensure that they become partners in what we call community medicine. Care in the community cannot mean being looked after by a neighbour or relation who can come only once a week or by a designated nurse who can call in for only one hour on one day with somebody else coming in the next day.

I turn now to Birmingham, an area which I know much better than London or any other area. Birmingham has deprived area status. The statistics show that the rates of perinatal and infant death there are well above the national average. We must ask ourselves why. There are relatively high levels of asthma in that city. We used to think that asthma was caused by factories belching out smoke, but the factories are not there any more. They have been replaced by other buildings and a lot of unemployment. Statistics from the East Birmingham Hospital show that the incidence of childhood accidents there is twice the national average. The incidence of diabetes is also high in the Birmingham area, although I understand that with proper control it is possible to reduce the mortality rate.

What are we doing? What is the hospital service doing? Birmingham has had a lot of bother with all the changes that have taken place in the past eight years. Things have been changed and rechanged and are still not yet settled. Is it possible for the Minister to set up a health audit so that we can see, year on year, the incidence of those illnesses that occur because of deprivation, poverty, unemployment and bad housing?

I turn now to the problem that we have seen on our television screens of people lying in hospital corridors as they wait for service. Three weeks ago a large public meeting was held in Birmingham. Over 1,000 people went to the town hall to hear medical officers answer the public's worries and concerns about Birmingham's hospitals. One of the questions related to the shortage of casualty officers in emergency wards. One surgeon stood up and stated publicly at that meeting, "I am concerned about the service to the public". I feel sure that the Minister will want to ensure that that matter is taken up. I repeat that somebody who was named stood up at a public meeting to express his concern about what is going on at the sharp end.

I understand that if applications are accepted in April, 27 hospitals and other units in the West Midlands region will become NHS trusts. Only one hospital has not made an application for trust status. I am worried because that is an acute hospital. I have a question which is difficult to ask. Can a general practitioner who is not a fund holder get his patients into NHS trust hospitals or will he and all such practitioners have to send their patients to that one acute hospital? I do not know the answer, but I was asked to raise the question.

What of the future for the NHS? I say loud and clear tonight that it needs to be in safer hands than those of this Government.

6.11 p.m.

Baroness Seccombe

My Lords, debates on the National Health Service have become a regular feature of this House. They have begun to take place on a monthly basis; indeed, to my noble friend the Minister, who has the privilege of replying to them, they must seem even more frequent than that.

But such debates do provide us with an opportunity to assess the effects of the reforms on the National Health Service in what is to be hoped a rather more calm and measured manner than is sometimes the case outside this House. If we are to evaluate the effect of the NHS reforms we must first agree upon our terms of reference.

Many measurements of the success or otherwise of the reforms have been used during the course of this debate and elsewhere. But I am sure that noble Lords on this side of the House would agree that the most important measurement should not be the change in the number of beds or hospitals; nor should it relate to the number of staff employed, nor even the number of managers; and it should not be concerned with the size of the budget. Important though some of these measurements may be, the efficiency and effectiveness of the National Health Service should be judged primarily by the quantity and quality of the patient care that it delivers. This fundamental point should be obvious to all. Indeed, it was once the stated opinion of the spokesmen of both the main political parties. But all too often it has been obscured in the recent debates on this issue.

The NHS reforms have now been in operation for almost three years. They have progressed far. By April, for example, NHS trusts will be responsible for more than 90 per cent. of the hospital and community health services budget, and one in three patients will be covered by fund-holding GPs. The impact of the reforms on the quality and quantity of patient care seems clear.

In particular, the primary concern of the public when asked about the NHS is not that they may suffer poor quality treatment—far from it. Those who use it praise it, as we heard from the noble Lord, Lord Dean. But they may have to endure a lengthy wait for treatment. As my noble friend Lord McColl put it so clearly in his opening speech on 12th January, it is this length of time which patients have to wait for treatment which matters most to them—not the total number on the waiting list.

Since the health service reforms were introduced in April 1991 the number of patients waiting over a year for treatment has fallen by nearly 100,000. And over the past five years the average waiting time for treatment has fallen by four months. Clearly these are very substantial improvements.

Meanwhile, hospitals are treating more patients—about 1 million more each year than they were before the reforms were introduced and about 3 million more a year than when this Government took office.

Clearly such improvements may be due in part to the generous financial settlements which successive Secretaries of State for Health have achieved for the NHS in recent years. The Opposition quote frequently their figure of £1.2 billion, which supposedly has been the cost of implementing the Government's NHS reforms. Quite apart from the fact that they include in this figure, for example, the cost of employing 100 extra consultants to provide care directly to patients they ignore the point that there has been an overall increase in health spending of some £9 billion since the reforms were introduced.

Clearly this is a substantial sum. But if we are to judge the success of health policy itself we must try to isolate the effect of this increase in funding. Since 1979 the number of patients treated in hospital has increased by nearly three times as fast as spending, when spending has been adjusted for inflation in the health service. Since the introduction of the reforms, efficiency has increased even more quickly.

In addition, although the needs of the staff who work for the NHS are important, the health service is now orientated more towards the needs of the patients themselves. Even more fundamentally, the health of the nation has improved in recent years. This is a sign not only of a more health-conscious and prosperous society but of a more health-orientated health service. The health reforms provided a basis on which both the Patient's Charter and the Health of the Nation initiative could build.

Clearly, we have a substantial amount of evidence on which to evaluate the effect of the reforms. I am sure it is the hope of those on this side of the House that all noble Lords will feel able to acknowledge it.

Lord Chappell

My Lords, before the noble Baroness sits down, I should like to ask her this. Will she say what she thinks the Government should do to recover the public money that has been wasted in Wessex?

Baroness Seccombe

My Lords, we should wait to hear what the Minister has to say in reply.

6.16 p.m.

Baroness Dean of Thornton-le-Fylde

My Lords, I am obliged to my noble friend Lord Dean for putting forward this Motion for debate. The costs and benefits of administration need to be evaluated. I agree with the noble Baroness, Lady Miller of Hendon, that we should speak out in support of the health service. The criticisms are put forward in a constructive way that is concerned with the health service that we dearly love, dearly need and dearly support. That is the case across all parties; this is not a party-political issue.

The integrity and commitment of the staff who work in the health service and the care that they give is not challenged or criticised by me or, I am sure, by any Member on this side of the House. It is against that background that this kind of debate needs to take place. I say to the noble Baroness, Lady Seccombe, that the issue will be debated time after time because it goes to the heart of the kind of nation that we have and the health provision that we need to make for the people.

The UK spends approximately £580 per capita per annum on health provision. Germany and France spend more than £1,000 and Italy spends in excess of £700. So the fact that we are spending less makes it even more important to ensure that what we spend is spent properly and has a direct impact on patient care. We should not spend on administration £1 more than we need to ensure the efficient running of the organisation.

Ministers are fond of trotting out figures about the reductions in waiting lists and in the unit costs of the number of patients treated. But I question whether that is totally related to the introduction of the internal market. Could not that have been done without the major changes which are being driven through the health service? Could not targets have been set for waiting lists? After all, the Citizen's Charter was brought about by a central initiative by the Secretary of State for Health. Furthermore, the waiting list initiative is not directed to the internal market but was brought about by a central initiative.

The National Health Service reforms are the most fundamental since it was founded. And yet, it is quite incredible to believe that an organisation which is the largest employer in Britain, with a million employees, faced those fundamental reforms without having in place before they started any mechanism with which to evaluate the changes as they were being driven through. I suggest that those changes were introduced for ideological reasons and they were put in place without those measurement provisions going alongside them.

Before I deal with the evaluation, perhaps I may deal with the reports in the media and the Public Accounts Committee and the surveys the health service unionUNISON—and the Royal College of Nursing with regard to waste in the health service.

I gather that it cost something like £1.2 billion to introduce the changes which we are facing. That is a lot of money. Whether that is too high or too low an estimate, a lot of money was certainly spent on the introduction of the changes. I wish to highlight certain areas in which instances of waste have occurred. I know that the Secretary of State visits hospitals, and I welcome that. But I wonder whether the reported £15,000 spent by Charing Cross to clean the hospital before she visited it was absolutely necessary.

Nottingham Health Authority has been criticised by the district health auditor for reaching an agreement with a private company called Regency Park to set up and to run a drug and alcohol unit which the district auditor said spent £1.8 million unlawfully. I wonder whether that could have happened before the changes to the internal market.

St. Thomas's lost £370,000 when the Belmont Ambulance Service went into liquidation. I am concerned, as I am sure are other noble Lords, about press reports that Guy's is letting out hospital apartments because it must get money from somewhere and it is to be moved to St. Thomas's. It was reported yesterday that senior consultants are resigning because of the changes which are taking place. When the London Ambulance Service's computer-aided dispatch system failed, it cost the health service £1.5 million, which could have been spent on patient care.

My noble friend Lord Dean referred to the evaluation of the benefits and I agree that there must be an objective evaluation of the costs and the benefits. I wonder where those benefits are. We were told that the money would follow the patient; but does it? Certainly local purchasers decide where they will award the contracts, but the patient has no say in that. I should mention fund-holding GPs. It is said that there is now a two-tier system and that is denied by the Department of Health. However, we read reports of a two-tier system whereby GP fund-holders are receiving preferential treatment for their patients in hospitals because those hospitals are desperate for the funds which they receive for the treatment.

Indeed, I was interested to note that Dr. David Todd, who is president of the Association of Fund-Holding Practices, said that he would not take any more patients who have learning disabilities because they are expensive to look after. I wonder whether we shall begin to read reports—and I hope we do not—about doctors refusing to treat patients who have expensive health requirements.

We read reports about increased bureaucracy. Civil servants will know how easy it is to castigate people for that. However, there has been an increase of something like 246 per cent. in senior managers between 1989 and 1992. I wonder whether that was a good use of National Health Service budget money.

I do not criticise managers as a group. By and large, their integrity, commitment and professional ability is to be admired. But if you set up an internal market which requires the creation of a team of people to negotiate with the hospitals from which they will purchase contracts and which requires the hospitals, in turn, to set up a team of high calibre managers to negotiate the costs of those contracts, of course it will be necessary to increase bureaucracy. I wonder what benefits we receive from that.

I do not believe that the changes have helped staff. Many on low wages have even received pay cuts. There is job insecurity and there are redundancies and casualisation. I hope that the Government's acceptance of the Pay Review Body's report last week does not mean that the hospitals will have to fund that increase without any additional resources, because that may well stretch the line to breaking point.

I gather that a closed conference of insurance companies is taking place today which deals with the cost to them and their clients of stress among the workforce. The levels of stress of health service staff should be taken into account when evaluating the changes which the health service faces.

When the Minister replies, will she tell us what evaluation is to be put in place? I have the document from the Secretary of State relating to codes of conduct and accountability, to which responses must be in by April. That has come almost three years after the first wave of trusts. In it the Secretary of State refers to the implications of the Cadbury corporate governance report. If one is talking about the private sector and company reports, it is important to note that the private sector must take into account its responsibilities to its stake holders. I agree with the noble Baroness, Lady Seccombe, that the main stakeholders in the health service are the patients and it is with them that the accountability must lie.

Of course, companies have a shareholders' meeting once a year. At that once-a-year shareholders' meeting not only are the accounts presented—as will be required, rightly so, under the new accountability provisions—but a board of directors is also elected. There is no election of directors for trust hospitals. It may be that that should be looked at and, indeed, I urge the Government to do so. The requirement to have one meeting per year does not really provide a benefit from the changes for the local community.

Another area which exercises my mind is that GP fund-holders are upgrading their surgeries, and rightly so, especially in London. They are all introducing computer systems. Why does not the Minister look at the pilot scheme which is taking place in north-east Westminster where Kensington, Chelsea and Westminster GPs are, as a group, looking at computer provision? That would save money.

6.28 p.m.

Lord Kilmarnock

My Lords, I am grateful, as I am sure we all are, to the noble Lord, Lord Dean of Beswick, for giving us the opportunity of this debate. I am not going to follow him into the labyrinth of the Wessex saga although, of course, I deplore it and I share the noble Lord's high opinion of the work of the Public Accounts Committee in another place. I wish to pursue the wording of the Motion on a wider front.

I am a supporter of the reforms, not because I wish to see the National Health Service destroyed but because I want it to survive and be effective within the cost constraints which will confront any government in the future.

Recently, there was considerable controversy over the additional management costs occasioned by the Government's reforms. Those have been unfavourably contrasted with the slower growth in funds for clinical services. I have with me a sheaf of a couple of dozen press articles from the past three months or so, virtually all of which are critical of the new management arrangements.

I have been persuaded that the National Health Service was previously undermanaged. That has been accepted, even on the Left; for example, in an article in the Guardian on 10th January by Will Hutton. In the Independent on 24th November of last year a journalist wrote: The sham accountability typical of the service's management until Margaret Thatcher set her sights on it was hardly appropriate to run a school tuck shop let alone a state service with an annual expenditure of £26 billion". I presume that figure referred to England because, of course, it is higher for the United Kingdom.

Under the present structure it seems obvious that if health authorities are to act as purchasers, and trusts and other bodies as providers, there will be a need for additional management on both sides of the transaction. However, as regards actual costs, we seem to be in a slippery area. It may be that much of the uncertainty derives from a confusion over definitions, as I believe has already been suggested. Who is a manager? Who is an administrator and who is not? Have some people who were previously classified as medical staff, such as senior nursing officers, been moved into the administrative category, as I believe is the case, and if so how many? We need to know these things.

I do not believe it is good enough for the Government to hide behind the twin formulas that this information is not available centrally or could only be collected at disproportionate cost, because there is public concern on this whole question of managerial costs. Whether or not that concern is misplaced remains to be seen. This is a field in which Parliament has a legitimate interest.

Basically there are three sets of figures which have attracted my attention and have, I suggest, contributed to the general confusion. The first is that general and senior managers now make up about 2 per cent. of the workforce and their salaries account for about 1.3 per cent. of the total budget. This information was kindly given to me by the noble Baroness Lady Cumberlege in a Written Answer on 7th December last. If you add in the overheads associated with these jobs, this presumably squares with the Prime Minister's recent reply to Mr. John Smith that, administrative costs in the health service are about 2 per cent. of total costs". He went on to add that few companies can match that.

However, on the previous day, in a Written Answer in another place, Dr. Mawhinney listed, administrative costs as a percentage of total revenue expenditure for the NHS in England in a table running from 3.7 per cent. in 1986–87 up to 4.6 per cent. in 1990–91 and falling back to 3.4 per cent. in 1992–93.

Shortly afterwards, on 16th December, Mr. Blunkett, the Opposition health spokesman in another place, issued a press release accusing the Prime Minister of having misled Mr. Smith and estimating, administration as a percentage of the budget for the NHS in England in the year 1992–93 at 10.8 per cent. I believe that was probably the figure to which the noble Lord, Lord Rea, was approximating.

Somewhat confused by now, I turned to the Annual Abstract of Statistics for the United Kingdom 1994, table 3.3 on page 45, where I found that figures for administration of, hospitals and community health services and family health services have only increased modestly in real terms over the past eight years. In 1985–86 the relevant sum, in round figures, was £475 million for administration out of a total of £16 billion, while last year the comparable figures were £1,250 million and £32 billion respectively. This is, of course, a rise in real terms but not a dramatic one. In the earlier of those two years the administrative proportion was about 3 per cent. of the total and in the latter—that is, last year—about 4 per cent. These percentages are not far out of line with those given by Doctor Mawhinney on 6th December for England only.

Moving one's eye down this table one finds that the item called "departmental administration"—which presumably covers the Department of Health and its outposts—was little more in real terms last year than it was in 1985–86 and stands in still at about 1 per cent. of total expenditure. However, the rather cryptic item described as "other central services" shows a sharp rise from £283 million in 1985–86 to £71 1 million last year, which represents a significant climb in real terms. I hope the noble Baroness can throw some light on that, because I am afraid I have failed to identify its component parts.

If these three items are taken together—hospital and community health and family health services; departmental administration; and other central services, whatever they may be—they account for approximately 7.5 per cent. of total National Health Service expenditure in the UK last year, which falls almost exactly halfway between what I shall call the Mawhinney and the Blunkett estimates.

My central estimate of 7.5 per cent. might be thought not unsatisfactory for such a large and complex organisation, particularly as it subsumes administrative costs, which were always there and which will therefore reduce any increase that may be attributed to recent reforms. Mr. Blunkett's estimate may seem too high for comfort, though perhaps not grounds for panic, in view of the uncertainty over reclassification. But, either way, it is obviously unsatisfactory that we do not really know whose figures are correct.

I understand the argument for devolution, for allowing devolved bodies to hire the staff they believe they need and to pay them rates that reflect local labour market conditions. I applaud that. But devolution needs to be accompanied by accountability and by openness as to both costs and benefits. Not many people are going to have the time or the determination to pick their way through regional or trust accounts. I believe the Government owe it to the public—and to themselves if they wish their reforms to succeed—to help the public understand what is going on and why. If they do not, they are in grave danger of losing the argument. The Mawhinney-Blunkett gap needs to be bridged.

If costs are difficult to measure, so are benefits, as the right reverend Prelate said. The Government will be able to claim better bed usage, more patients treated, a greater proportion of day patients, shorter waiting lists in some specialties, and so forth. But we need to ask ourselves to what extent this higher turnover of patients is beneficial and I will come back to that shortly.

I now wish to make two suggestions. First, if it is truly too difficult or too expensive for the Government to collect the information I am trying to tease out, they should in my view commission some research into management costs from a competent body. The agency that springs to mind is the Audit Commission. Mr. Foster, the controller, is reported to have told a conference at the end of last year that there was a strong case for an overall study; what he called a "total piece of work". He added that such a study would inevitably be highly politically charged, I do not know that that necessarily rules it out. As I have said before, the NHS is not suddenly going to bow out of the political arena, and therefore politicians should have the proper tools for their discourse. If a large study would take too long or cost too much, some comparative studies of a number of sample districts could be the best way ahead.

If the Economist of all papers could express a fear that management may be diverting resources away from patients—as it did on 9th October last year—there is obviously a case for sharp scrutiny. I understand that the Secretary of State commissioned an inquiry into this allegation and it was carried out by Kate Jenkins, formerly of the Government's Efficiency Unit. Has that ever been published? I am bound to say I have not seen a copy and I do not know whether it is in the public domain.

There is a second piece of research, perhaps more important in the long run, which I believe should also be commissioned. This should scrutinise the outcomes and value to patients of hospital admissions and it should include medical practice variation, which causes hospitalisation to vary so widely up and down the country. I should have thought that would be a proper task for the director of research and development whose department was set up—largely at the instance of your Lordships' House—with the precise aim of providing the NHS with a tool for investigating its own practices and procedures.

The research should seriously investigate whether real benefits are being derived from increased admissions and also look at the performance-related bonuses received by managers in relation to their targets. Are the targets the right ones? Should we perhaps reward fewer admissions rather than more? We do not know at present, but after such a piece of research we might conclude that we should continue to reduce beds—that of course has been the trend for many years —and that we should aim for fewer admissions and more community treatment. Of course, attitudes play a large part here. Some glamorise hospitals as temples of healing while others regard them as places of inconvenience and suffering. If the latter view came, over time, to prevail the government of the day would no longer have to fight an endless political war over ward closures and would be able to put more money into public health and preventive medicine with the strong probability of a better outcome in terms of the health of the nation.

Before noble Lords start throwing up their hands and protesting "Not more research. Not more statistics", they should pause to reflect that we are a measuring society. We guide ourselves by every conceivable kind of measurement. You have only to look at Social Trends —which would hardly have been published by the ancient Greeks—to see what I mean. I therefore believe that the Government have a duty to provide us with as much and as accurate information as they possibly can in the field we are discussing this evening, or to commission it from someone else if they cannot do so. It is in their interest to do so because it is also the information that they require to assess the success of their policies and to secure public approval for them.

6.39 p.m.

Baroness Gould of Potternewton

My Lords, I too am grateful to my noble friend Lord Dean of Beswick for initiating this debate. As the noble Baroness, Lady Miller of Hendon, said, we have seen a basic philosophical change in the National Health Service. However, we would fundamentally disagree on the consequences and form of that change.

I wish to concentrate my brief remarks on one of the consequences of that change in relation to provision for the long-term sick, as mentioned by my noble friend Lady Fisher of Rednal. It is now the established policy of the NHS not to provide long-term nursing care for seriously dependent patients but instead to discharge them into private nursing homes at the patient's expense. I never envisaged that the NHS would resort to that. It is done in the name of good financial administration—or the cost factor, as it was referred to by the right reverend Prelate the Bishop of Chester. I make no apology for not dealing with financial details, as some other noble Lords have. Rather, I wish to concentrate my remarks on a specific case which we heard of recently and the effect on patients.

I felt a great sense of outrage when I read the report of the ombudsman on that particular case, not only because of the effect of the events on that particular patient and his family but also because the case involved a great hospital like the Leeds General Infirmary. In his damning report the Health Service Commissioner, Mr. William Reid, found Leeds Healthcare and Leeds General Infirmary guilty of a "failure in service", which was caused by the financial decisions taken as a result of the reforms of the health service.

The tragic case which was investigated by the ombudsman involved a man who had spent 18 months in a neurosurgical ward at the LGI (which is now managed by an NHS trust). His family were told by the hospital that he was to be discharged as his condition was no longer "life threatening". This man needed full nursing care, being doubly incontinent, with no mobility, and unable either to communicate or to feed himself. He also had a kidney tumour, cataracts in both eyes and was subject to occasional epileptic fits.

Against the wishes of his wife (which is a breach of the regulations) this patient was discharged to a private nursing home. His wife was told that she would have to pay £16,000 a year for private treatment, the Leeds health authority interpreting Department of Health guidelines to mean that it did not have to pay nursing bills once the patient had left the NHS ward. After some help from the DSS, the woman ended up paying treatment fees of some £6,000 a year—£336 a week.

We are told that the purpose of neurosurgical wards is to provide only active treatment and that the policy of Leeds Healthcare and of other trusts is to make no provision for the continuing care of such patients. Health chiefs in Leeds have admitted that regardless of who is responsible for the patient there are no NHS beds anywhere in Leeds for people who have suffered from brain damage. Of course patients should not be placed in inappropriate wards and may well have to be removed to be cared for elsewhere, but there has to be a clear understanding—by the patient, the patient's family and the staff—of the procedures for discharging such patients, and who is responsible for paying for their future care.

Leeds Healthcare has now apologised to the patient's wife who, with the help of the Leeds Community Health Council, reported the plight of her husband to the ombudsman, and is making her an ex-gratia payment for the nursing home costs she has incurred over the past three and a half years. It will pay the costs in future. It has also agreed to consider other similar cases where patients have been forced to pay for care after being asked to leave NHS beds. The question is: why did it not pay it in the first place?

It is a tragedy that it was necessary for the man's wife, at a time of great stress, to have to take her case to the ombudsman to get free care for her husband. She took that action only after discussions with the health authority had broken down. But without her action other patients would have continued to be denied that care, care that is theirs by right.

However, Leeds acted no differently from other health authorities. Two years ago, following a case involving the Cambridge health authority and as a result of other similar cases, the health ombudsman called on the NHS to provide long term health care for patients with chronic conditions —a call that was ignored. The NHS Chief Executive stated that there was a duty on the health service to provide care without charge but "within the resources available", and Ministers declined to review the position. I hope that today the Minister will be able to indicate to us the number of other patients in this country who are similarly having to pay themselves for their long-term care and whether a study is being made to review their cases.

The majority of people assume that as long as they pay their taxes and their national insurance contributions, they will receive the care that they need when they need it. That is what they think they are paying for. They have no knowledge of the various pieces of complex legislation brought in by the Government and the effect that they will have on their lives. People suffer a terrible shock when they discover that the help that they expected is no longer available to them. In the words of Philip Hunt, director of the National Association of Health Authorities and Trusts, most people are not aware of what the NHS rules are.

The need for clarity has become greater with the implementation last year of the National Health Service and Community Care Act. Thousands of patients have fallen into the gap between the health and social services, resulting in people, many of whom are themselves elderly and in poor health, being forced into poverty and into selling their homes and personal belongings in order to find nursing home fees for elderly relatives.

The statement by the Minister—the noble Baroness, Lady Cumberlege—that there is a clear obligation on health authorities to pay for the continuing healthcare of seriously ill patients is therefore welcome. We hope that the reality of that statement will mean that there will be an open debate on long-term care, clarification of the boundaries of the responsibilities of the NHS and a clear definition of the term "seriously ill". Appreciating that the ombudsman's ruling will have severe cost implications for the service, there must also be an understanding of where the resources are to come from to provide the care which the Minister so rightly says is the obligation of the NHS.

I must stress that this is not a question of the nature of the care provided but of the availability of that care on the NHS. It is a question of a commercial health service which is profit driven and of providing care when people most need it. The Government have an absolute responsibility to provide that care. Urgent action is required to ensure that there is a reversal of the slow but steady drift away from providing care and services under the NHS.

The so-called reforms in the health service have created waste on a massive scale, as we have heard from so many noble Lords today. A total of £1.8 billion has been wasted on extra bureaucracy, computer scandals and a luxurious new management centre. That £1.8 billion could have been spent on better services for patients, better equipment for hospitals and the financing of long-term care.

6.48 p.m.

Baroness Robson of Kiddington

My Lords, I should also like to thank the noble Lord, Lord Dean of Beswick, for introducing the debate. On behalf of all the noble Baronesses who are taking part in this debate, I should also like to thank the two noble Lords who have been courageous enough to join us in the debate.

Much has been said this afternoon by various Members of your Lordships' House with which I agree. A noble Baroness opposite mentioned that we seem to have these debates fairly frequently. We have them because we are all concerned. We want to know the real answers. We have them, too, because we know that the people we meet around the country are deeply anxious about what is happening to the NHS under the new purchaser/provider system. They are anxious because they do not know who to believe. They do not know whether the information available from the statements by the Secretary of State is true or whether they should believe the numerous letters to the press written by doctors based on their personal experience. They read that a third of NHS beds have closed since 1981 and are still being closed in England at the rate of about 10,000 a year. However, they are then told by the Secretary of State that those beds are no longer needed. I am aware that there is a change in medical care. I accept that perhaps not all the beds were needed, but I claim that we run the risk of going too far.

Noble Lords may have read the letter in the Guardian of 14th January from Professor John Ward of Central Sheffield University Hospital Trust who has been forced to close 48 medical beds. As a result, GPs can only obtain a bed in the hospital by sending their patients to casualty. We complain that such patients fill up the casualty wards. In the Guardian of 25th January, two GPs from Sheffield wrote that that was the only way in which they could get their patients into the hospital. Before they resorted to that action, they had spent between half an hour and an hour telephoning everywhere seeking a bed for their patients. That is time that they could have used looking after some of their other patients. There is doubt about whether we have the required number of beds.

The noble Baroness, Lady Masham of Mon, asked a Question on 2nd February relating to the Chelsea and Westminster Hospital. At col. 1264 of the Official Report, the noble Baroness replied that, 163 beds have not been brought into use pending the review of services at Hammersmith and Charing Cross Hospitals". That may be so, but those hospitals were built at enormous expense. There must have been some plan relating to those 163 beds which suddenly are not required. Perhaps the Minister will clarify that point.

Other noble Baronesses have referred to statistics on hospital activity published in November. The total number of finished consultant episodes rose by 3.6 per cent. There is serious doubt in all our minds about what the term "finished consultant episodes" means. We all know that a finished consultant episode does not necessarily mean that the patient is leaving hospital. Are we comparing those statistics with previous numbers of patients in the hospital? That is not a fair comparison. More patients are not necessarily treated, because a single illness can lead to a number of so-called finished consultant episodes.

The noble Baroness, Lady Dean of Thornton-le-Fylde, referred to accountability. There are two forms of accountability. There is the accountability of the health service to the Secretary of State in Parliament. That enables MPs to ask Questions in the House; it enables us to ask Questions in the House. But how often do we receive the reply that such figures are not held centrally. That answer is not sufficient. I believe that accountability to the people is desperately important. All the new health service trusts should have public meetings and should involve the community that they look after instead of sitting behind closed doors. Above all, the trusts should give proper access to community health councils which do not have an automatic right to enter trust premises. Prior to creation of the NHS trusts, they had a right to enter those premises. Those are important points.

Finally, all chairmen and some members of RHAs, and all chairmen and some members of DHS trusts, are appointed by the Secretary of State or the Department of Health. When we hear the history of events related by the noble Lord, Lord Dean of Beswick, it raises serious questions about the judgment of and criteria used by the Secretary of State and her predecessors when they appointed those involved. I call on the Secretary of State to account for the principle of selection used. I ask her to dispel the suspicion, if she can (the suspicion is there) that pliability and political correctness, rather than independence of mind and a willingness to confront both managers and Ministers, are the main qualifications required.

Reference has been made to the increased cost of managers in the health service. In London the number has grown by 109 per cent. in four years. In the South West Thames Region —it is my old region and was also that of the Minister—I am told that the number has grown by 187 per cent. When challenged, the Minister often replies that those are not all new roles: they consist of both doctors and nurses who now undertake managerial roles. It does not matter who they are. The point is that, if they are doing managerial tasks, they are not engaged in hands on care. They are working as managers. Are their salaries included in the increased cost of management, or are they still taken from the medical and nursing salaries?

Only two weeks ago we had a debate on quangos initiated by my noble friend Lord Bonham-Carter. I have always suspected that the Department of Health was in the forefront of creating quangos as a means of pretending to deal with problems instead of taking decisions. Since becoming Secretary of State Virginia Bottomley has created 20 of these quangos, one for every month that she has been in office. She calls them task forces. Each sometimes has as many as 14 members, a chairman and representatives from government ministries. The cost of those quangos is conservatively estimated to run into millions. Those task forces usually become established as a result of some disquiet about tragedies or mismanagement in the NHS. One of the task forces was established in July last year, I suspect as a result of the scandal over the Wessex computer and the West Midlands scandal.

The task force reported in January under the title Public Enterprise Governance in the NHS. The report was published for consultation until 8th February. It is a good document, but I do not believe that work by a large number of people over a period of six months was necessary to produce it. I wish to quote some basic facts from the document, which says that the principles are: accountability, probity and openness. Under "Integrity", the report says: As a result, the task force calls for the NHS to adopt explicitly and formally, at a national level, a commitment to traditional public service values. It believes the sanction of dismissal should be used against anyone—chairman, director or employee—who fails to abide by those values". The report states, under the heading "Making Boards Effective" that they should meet regularly, retain full and effective control and monitor executive management. You, I or anyone could have sat down and written that prescription for how to run the various trusts and DHAs. The recommendations are all important, but they are hardly new. Yet it took 14 people six months. I hope that we can avoid such things in the future.

7 p.m.

Baroness Jay of Paddington

My Lords, I am very grateful indeed to my noble friend Lord Dean of Beswick for introducing this debate. As several noble Lords have mentioned, we have discussed the health service quite often in your Lordships' House recently. However, the question my noble friend has raised today really goes to the centre of all our discussions. It is: are we or are we not getting a better health service as a result of the extraordinarily expensive upheaval which has gone on in the last few years?

Of course, there is need for a proper evaluation, both at the local level—as my noble friend Lady Fisher suggested —and at the national level. The new system is, after all, now in its third year. There was discussion, before it was introduced, about the potential need for pilot programmes. I think that many of us who were not able to take part in debates in your Lordships' House at that time would have supported that suggestion.

Today, however, we are faced with a system which is up and running and which, I think it is widely agreed, has been expensive. The noble Baroness, Lady Cumberlege, and some of the noble Baronesses sitting behind her, persist in doggedly asserting that the costs of the introduction of the new system are greatly outweighed by the benefits. It is up to them, as the noble Lord, Lord Kilmarnock, suggested, to prove to those of us who are perhaps more sceptical that the benefits—particularly those to patients—are as clear and obvious as the costs certainly are.

Unfortunately, one of the major problems about the administrative changes is that it is difficult to obtain accurate and comparative information about what is going on. Noble Lords have mentioned the interesting debate last month in your Lordships' House, initiated by the noble Lord, Lord McColl of Dulwich, about the need for improved public information systems in the NHS. Several speakers referred then, as they have done today, to the secrecy of independent trusts which prevents both local and national data being easily available.

As the noble Lord, Lord Kilmarnock, said, on other occasions noble Lords have been frustrated by ministerial replies which so often state that the facts requested are not centrally available or are not gathered in the form requested. I must say that in addition to that particular problem, I was unpleasantly surprised to hear the Secretary of State for Health just last week in another place query the cost of parliamentary Questions on health. It almost seemed as though she was denying the right of Members of both Houses to seek information which I feel should automatically be in the public domain.

The internal market systems are themselves making it extremely difficult to assess those systems. We were told yesterday by the noble Baroness, Lady Cumberlege, that Professor Alan Maynard of York University, a leading health economist, is now looking at some of the complicated questions of funding and capitation. Professor Maynard wrote recently that, the effects of the reforms are unknown due to the Government's decision not to evaluate them". I do not know whether that decision reflects complacency or fear of what a proper evaluation might discover. Luckily, we have other sources of information and other means of evaluation. The National Audit Commission, now led by Mr. Andrew Foster, who was previously deputy chief executive of the National Health Service, seems to be leading the way on this. Mr. Foster is clearly becoming what I suppose one might describe as an effective gamekeeper turned poacher. He publicly stated a few months ago that there are legitimate questions to be asked about whether we are getting value for money from the administrative changes. The National Audit Commission has set up a series of inquiries to investigate trust hospitals and healthcare quality. They should produce interesting, hard evidence of precisely what is going on by the end of this year.

In the meantime, what do we know and how do we evaluate it? Noble Lords, particularly my noble friend Lord Dean of Beswick, in introducing the debate, and my noble friend Lady Fisher of Rednal, have rightly drawn attention to the appalling examples of scandals among certain health authorities which have now become a national disgrace, nationally noticed and recognised. It is important that we do not ignore those facts which have been revealed—the facts to which noble Lords have drawn attention in Wessex and the West Midlands. We must try to put those facts in the context of the national picture.

Perhaps we should, again, go back to some of the more mundane facts and put on the record once more some of the more practical examples of the enormous costs of the administrative introductions and changes to which the Motion draws attention. We know that it cost £40 million of health service money to set up the first wave of trusts. We know that £73 million was spent on advertisements and on establishing the so-called "corporate identity" of the trusts. Noble Lords have referred to the enormous explosion in people employed at senior levels in the National Health Service. My noble friend Lord Rea talked about the figure increasing by an astounding 230 per cent., as did my noble friend Lady Dean. We are told that some of that substantial increase is because nurses have been regraded as managers. If that is true, it is the most extraordinary own goal by those people who seek to tell us that the reforms are producing more benefits than they are producing costs.

The costs of the senior managers rose from £30 million in 1988 to £494 million in 1993. However many nurses were regarded as being part of the senior management echelon I cannot believe that they were instrumental in pushing up the costs in that way. The national pay norms for nurses were 1.5 per cent. but managers' salaries increased by approximately 9 per cent.

It is unfair to suggest that the increase in managers is largely reflected in regradings. My suspicion is that when one wants to look for accuracy it is perhaps reflected in the rather brief but bitter letter in the Guardian yesterday. It states that in the newspaper's recent advertising columns for jobs the Department of Health was said to be seeking for the National Health Service a director of human resources at £90,000 salary. The advertisement added: An understanding of the NHS would be an advantage". The writer of the letter says: That explains everything we need to know about the NHS! At the Conservative conference last autumn, the Secretary of State, perhaps reflecting some of the concerns about the enormous inflation in the numbers and salaries of managers, said that we must have tough controls on the costs of administration. Later in the autumn we had the Statement, which was the follow-up to the Langlands review, talking about the abolition or gradual phasing out of the regional health authorities. The Government congratulated themselves on reducing the bureaucratic, heavyweight nature of the regional structure. But, in fact, just three weeks ago, Mr. Alan Milburn, Member of Parliament in another place, succeeded in achieving, by his own efforts in writing to the regional health authorities, the information that only 12 per cent. of the recent growth in the number of managers had been at a regional level. In the 12 health regions he surveyed he found that 1,072 new managers were employed and had been recruited for the regional health authorities whereas there were 8,610 new managers working in local trusts. The idea therefore that somehow all will be well once the regions are abolished is simply untrue.

When the Secretary of State introduced the new management proposals she spoke of a "light touch" in relation to management organisation through the regions. That raises the question mentioned several times this evening of whether the idea of a "light touch" sits well with the question of accountability.

Several speakers have referred to the report of the Public Accounts Committee, Proper Conduct of Public Business, which talked about the need for the health service to be more tightly, rather than more lightly, managed. Several noble Lords have referred to the new codes of conduct and accountability which the Secretary of State has recently introduced. But as the Public Accounts Committee said, it is not looking for more detailed rules. Perhaps I may quote again: We emphasise we are not calling for any more detailed rules. Almost every case that we have examined involved breaches of existing rules of guidance". What it was seeking—what we all seek—is a change in the atmosphere and the nature of the conduct of public business in the health service and indeed in many other areas of public life. So although, like the noble Baroness, Lady Robson, I welcome the codes of conduct and accountability which have been produced, I believe that they do not get to the root of the problem, which is the question of the change of culture which has happened and the change back to public service values which we need.

Obviously many noble Baronesses have concentrated on hospitals. But my noble friend Lord Rea also mentioned some of the issues in primary care and the increases in the costs of organising the new GP fund-holding system. Again, how do we know how much they cost? Where is the proper evaluation? One pressure group, the National Health Service Support Federation, has identified some figures. It says that an estimated £55 million a year is being spent by purchasers and providers negotiating and managing fund-holding contracts and budgets. Management allowances totalling £49.8 million were given to English fund-holders between 1990 and 1993. The group says that budget underspends retained by fund-holders added up to £14.5 million in 1991–92. Those are all costs which no doubt the Minister may challenge. But the problem remains that of access to information and evaluation.

Against all those costs how is the benefit to be measured? The Government always say that more patients have been treated. But the question raised by my noble friend Lord Rea and other noble Lords is whether the volumes of activity measured really reflect an increase in the number of patients being treated. I ask the Minister in her reply to explain again whether the increase in the volume of activity is a genuine reflection of the increase in the number of patients treated.

I turn to the question of waiting lists, which is more real to patients than the rather Alice in Wonderland world of government statistics on activity. We are told by the noble Baroness, Lady Seccombe, as we were in the earlier debate by the noble Lord, Lord McColl, that waiting lists are largely an irrelevance. But there is no getting away from the fact that the numbers waiting over a year for treatment rose by over a quarter between April and October last year. I am sure that the Government will not say that that is a benefit.

The fundamental problem with the whole system is the cost of two-tier fund-holding. From the patient's point of view, which should never be lost sight of, we should always address the question of whether or not the costs of creating GP fund-holding have also created a system where we get an inequitable health service. As already stated, the BMA showed that 42 per cent. of hospitals give preference to patients from fund-holding GPs.

We must have an open, nationally based evaluation of all the costs of introducing the internal market. That evaluation should be led by the Government. It should not be information painfully extracted through individual Questions in this House or the other place, or assembled by individual MPs and voluntary organisations. However—and I believe that this is fundamental to the public service ethos of the NHS—the evaluation must not simply be a financial profit and loss account. The bottom line judgment on the health service is about improved patient care and the improved health of the nation. If the administrative changes mentioned in my noble friend's Motion do not secure those improvements, then none of the additional £1 billion cost can be justified.

7.15 p.m.

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

My Lords, I am very grateful to the noble Lord, Lord Dean of Beswick, for this opportunity to set before the House the remarkable record of the Government in improving the National Health Service, particularly since the reforms of the service.

The noble Baroness, Lady Jay, is absolutely right when she says that it is important that the benefits outweigh the costs. But the NHS needs to be seen in context. To be effective it must be part of the culture of today's society. What was organisationally right in 1948 is irrelevant today. It could no longer remain a towering monolith, over-administered and chronically under-managed; it had to join the enterprise culture which pervades today's world and which delivers the services that people want.

It was Sir Roy Griffiths who in 1983 was commissioned to examine the management of the NHS and who left us in no doubt that it was monolithic, inefficient and a low achiever; and that what was needed was more and better management. But moving out of the greyness of socialism into the light of enterprise, is a shock.

Managers, doctors, nurses and those in ancillary services now have to show measurable results. Trust hospitals have to prove their worth and GP fund-holders their skills, not only in providing a wider range of local treatments but in their use of hospital facilities. This is accountability but not of course commercial activity. The difference between the NHS and private enterprise is that health services are not measured in pounds profit, but the effectiveness of treatments delivered. The NHS has had to become not a patronising "take it or leave it" state service, purveying political pills, but a cooperative between the people dedicated to providing the service and those who use it.

Unlike private enterprise the NHS uses public money and must always be accountable to Parliament and to the people. It has to be transparent in all its dealings. Managing in a goldfish bowl is daunting, but essential where taxpayers' money is concerned. The Audit Commission, the National Audit Office, the Public Accounts Committee, MPs, internal auditors, the non-executives and chairmen of trust boards and health authorities and community health councils all have a watching brief. But it is not the watchful eyes of the auditors which have made health authorities want to be more open; it is their wish to purchase the services which people want.

As a consequence they not only hold public meetings but hold their meetings in public. They produce leaflets and newspapers, have established focus groups, drawn up community care plans in partnership with local people, conducted satisfaction surveys and consulted directly and through the media. They are conscious that they are champions of the people and have to purchase the services which not only provide value for money but are quality services which people want.

Trusts, anxious to win contracts also recognise the importance of not only making their services acceptable to purchasers but of involving local people who will in turn influence purchasers. As never before, trusts are finding out what users think, be it in hospital or the community, for dissatisfied patients will lose contracts.

A great deal was said this evening about the two cases that have arisen in the Wessex and West Midlands regional health authorities. I should like to pay a tribute to the noble Lord, Lord Dean, who has been assiduous in his determination to ensure that at least the Wessex computer issue has been kept under constant review. We would not in any way want to take away from the seriousness of what has happened in either region or ignore the issues that have been raised. The Public Accounts Committee carried out a very thorough investigation and we have made a formal response. As the committee acknowledged, extensive remedial action has been taken by the National Health Service Management Executive and the two regional health authorities involved to ensure that the lessons have been learnt and the events criticised by the committee will not happen again. A new investment appraisal process has been introduced for information technology projects. As noble Lords mentioned, the Secretary of State is currently consulting the National Health Service on a code of conduct and accountability based on the recommendations of the corporate governance task force. It will be implemented in April if that consultation is agreed.

The noble Lord, Lord Dean of Beswick, mentioned the role of Sir Robin Buchanan. Most of the problems with the computer systems happened before Sir Robin became chairman of Wessex. He co-operated fully with the investigation and encouraged his regional general manager to take the necessary remedial action. He was criticised in two minor areas and he accepts those criticisms. But I agree with the noble Lord that some of the coverage was unjustified and even unfair.

The noble Lord also mentioned the National Health Service Supplies Authority. I should just like to say that that authority has been a great success since it was set up. It has achieved savings for the NHS of £84 million and has reduced operating costs by £20 million a year.

The noble Baroness, Lady Fisher, implied that the investment in computer systems in the West Midlands was wasted. But at no time did the district auditor say that the money had been wasted. In fact he said that the hospital information support system is probably an essential development in hospital management and the decision to implement it was correct. However, I am sure that the noble Baroness will be pleased to know that a detailed mid-term review of the project is being carried out by Coopers & Lybrand. They will carry out a full value-for-money assessment and report to both the National Health Service Management Executive and the chief executives of the hospitals comprising the Midlands consortia involved in the project.

The enterprise of the NHS management has improved productivity well beyond the high standards set by British industry; and we have only just begun. Tonight my noble friends, and in particular my noble friend Lady Seccombe, have clearly and succinctly pointed out that the statistics are impressive.

The increase of 32 per cent. between 1978 and 1991 in output per person employed in the hospital and community health services compares with an increase for the UK economy as a whole of 23.2 per cent. In the 1980s we increased the number of extra people treated from 1 per cent. per annum to 2 per cent. Now we are moving up a gear. Since the reforms the increase has been not 2 per cent. but 5 per cent. per year; or to put it another way 417,000 extra patients treated every year. That is the equivalent of treating the entire population of Somerset every year; or, in deference to the noble Lord, Lord Dean, who I know is a supporter of Manchester City FC, a capacity crowd at Maine Road not just tonight or tomorrow night but for 12 nights running.

Last year we set the NHS the target of increasing productivity by 1.75 per cent. above the increase in resources. The service has exceeded that target. This year the target is 2 per cent. and looks certain to be achieved. For the coming year the target is 2.25 per cent. and we fully expect that to be beaten again, thereby releasing a further £450 million to be spent on patient care. That is enough to buy nearly 118,000 hip replacements or to equal the annual turnover of a major commercial business like the Legal and General Insurance Company.

Taken against the more modest performances of the Lloyd's insurance markets and the main clearing banks in the same period, the health service has embraced the enterprise culture with flair, care and responsibility, and with the determination to succeed.

We introduced the Patient's Charter so that we had standards by which to judge the service. Before the reforms there were 51,000 people awaiting treatment for more than two years. Today, there are none. The average waiting time for treatment was nine months. Now it is five months.

The noble Baroness, Lady Dean, questioned whether that would have happened without the reforms. I have to say, as one who has been responsible, that waiting lists do need management. I know also that the reforms have had enormous impact in terms of the competition that they have generated. Credit for that must go not only to the clinicians but also to the managers. Eighty-three per cent. of people are now assessed immediately they enter the Accident and Emergency Department, which is good progress toward the 90 per cent. target. Eighty per cent. of out-patients are seen within 30 minutes. That is a huge improvement, but we must do better. I can only begin to touch on an endless list of good news and progress being made by the National Health Service. Other noble Lords have also raised those issues this evening.

What we have done in the reforms is to take a gently administered service and quite fundamentally change it into an actively managed service. In order to continue to do that, we need more and better managers. A health service which each year spends £647 for every man, woman and child in the country, £230 more at today's prices than in 1979, and a health service which is spending £100 million every day needs managing.

The increases in the numbers of patients treated, shorter stays in hospital, the reductions of waiting times, more doctors, more nurses, new trusts and new GP fundholders all need management. Yet senior and general managers account for only 2 per cent. of the NHS workforce and 3 per cent. of the wage bill; and whereas 10 years ago 60 per cent. of staff were involved in direct patient care, the figure today has increased to 65 per cent.

As my noble friend Lady Miller pointed out and the noble Lord, Lord Rea, acknowledged, many nurses have been reclassified as managers when they still have a clinical role. Student nurses are no longer counted in the nurse workforce figures; even once all the adjustments are made, the numbers of nurses and midwives rose by 6,490 between September 1989 and 1992.

As my noble friend Lady Miller of Hendon said in her very knowledgeable speech, we are determined to bear down on unnecessary administrative costs. We have taken decisions to sweep away a level of administration by abolishing the regional health authorities. We intend to reduce the number of health authorities by allowing family health service authorities and district health authorities to merge. We are streamlining both the NHS Management Executive and the Department of Health. We are determined to allow decision-making to take place as closely to patients as possible.

The noble Baronesses, Lady Dean of Thornton-leFylde and Lady Jay, criticised the money spent on implementing the reforms. In other places the Government have been attacked for spending £1.18 billion on the reforms. That is considered by the Opposition to be a waste of money—money that should have been put into patient care. The premise upon which that is based is that by simply increasing the numbers of doctors and nurses in the health service the problems will be solved.

But industry and commerce have proved time and again that increasing resources is not enough. It is the efficient management and use of resources which is of paramount importance. Returning to the figure of £1.18 billion, what the Opposition also fails to mention is that it includes £103 million for 100 extra consultants and their support staff, and, which is much more important, £150 million to initiate quality initiatives and £221 million for clinical audit.

The purpose of the NHS is to give the most effective treatments, treatments that give the best results; and the best results can only be achieved by continuous scrutiny and assessment of an individual's performance. Clinical audit, with doctors and other professionals critically analysing their care, is now undertaken regularly and systematically —which gives the lie to the cheap jibe that we know the cost of everything and the value of nothing.

The noble Lord, Lord Rea, and the right reverend Prelate the Bishop of Chester asked why no formal academic evaluation of the NHS reforms has been carried out by the Government. Other Members of your Lordships' House also raised that point tonight. But the NHS is an enormously complex organisation, and the reforms have been described as one of the largest exercises in change management ever carried out. The reforms involved a number of strands: the separation of purchasers and providers; increased delegation to trusts; improved audit arrangements; and the development of fund-holding. It is unrealistic to think that a formal evaluation could be undertaken in a reorganisation of this magnitude. We simply could not have waited upon the results of a long academic exercise before taking the steps that we considered necessary.

The problem with pilot schemes is that they take a year or so to set up; and must run for three or four years at least in order to prove their effectiveness. They then take another year or so to evaluate, and after five or six years the world has simply moved on. So we preferred an evolutionary approach with local people deciding for themselves whether they want to become trusts or fund-holders. In three years we have been amazed at the developments that have taken place. As my noble friend Lady Seccombe said, over 90 per cent. of hospital budgets will be held and managed by trusts, and one in three of the population will be part of a GP fund-holding practice.

I can assure the noble Baroness, Lady Fisher, that GP fund-holders do have access to all National Health Service hospitals. They are part of the NHS, as are trusts. The noble Lord, Lord Rea, and the noble Baroness, Lady Jay, criticised the costs of fund-holding. However, the administrative costs represent only around 2 per cent. of fund-holding budgets. Fund-holders have generated real benefits for patients both in reducing the cost of hospital treatment and improving the quality of service that patients receive. And we are getting better at evaluating what we do. There is a new drive to translate research funding into clinical practice. Purchasers are critically assessing the effectiveness of the treatments that they buy.

I agree with the noble Lord, Lord Rea, and the noble Baroness, Lady Dean of Thornton-le-Fylde. Of course many of the changes cannot be ascribed solely to the reforms. Medical advances are occurring all the time. But the reforms have set a framework and provide a new impetus towards improvement. Again, it would be unwise of the Government to say that because of the reforms more people are alive and well. None the less, real improvements are taking place.

As my noble friend Lady Miller of Hendon said, with her day-to-day knowledge of primary care, we are also trying to alter the emphasis of the NHS towards promoting health and preventing disease. The noble Baroness, Lady Fisher—I know a doughty fighter for the people of Birmingham—pointed out some of the sickness rates in the city. That is why we launched a major policy initiative entitled "Health of the Nation", which was warmly acclaimed by the World Health Organisation. Part and parcel of that policy is careful monitoring—indeed, we have just published a report entitled One Year On.

The noble Lord, Lord Kilmarnock, mentioned the financial efficiency of the National Health Service. I am not in a position to know the press cuttings that he has. But I know that the Audit Commission identified significant improvements in financial performance in the NHS in its 1993 national management letter to the NHS policy board. The number of district health authorities rated as good or very good increased from 49 to 84 per cent. in 1991–92 when compared with the previous year. Similar improvements were identified for family health service authorities and 85 per cent. of first wave trusts were rated as good or very good in the area of financial control.

Lord Kilmarnock

My Lords, perhaps the noble Baroness will forgive me. I was not criticising the general message that emerged from the annual abstract of health districts that I read out. Can the Minister identify for me—perhaps in writing—the item I raised on other government expenditure as I was unable to identify to what it should be attributed?

Baroness Cumberlege

My Lords, I am aware that many questions were raised tonight, not all of which I shall be able to answer during the course of the debate because time is moving on and the debate is time-limited. Perhaps I can take up that specific point with the noble Lord outside the Chamber.

The noble Baroness, Lady Gould of Potternewton, cited the recent case that had been investigated by the health service commissioner concerning a severely disabled patient in Leeds. As the noble Baroness said, the Leeds General Infirmary apologised and made an ex gratia payment and reviewed its policy. But I stress that those events occurred before the Community Care Act was introduced. In future, before people are discharged from hospital they must be assessed, and the assessment must be carried out in consultation with both the patient and carer. As the noble Baroness said, the policy is quite clear and it is something that we shall be monitoring with due diligence.

The right reverend Prelate the Bishop of Chester mentioned an individual who had to wait for an investigation. I am always prepared to take up individual cases. But I make the general point that prior to the reforms, people also had to wait for treatment and the NHS had a long history of running out of money before the end of the year. We are trying to manage that position so that it does not happen in the future. When visiting hospitals, that is always the question I ask; and I can say that progress is being made.

The noble Baroness, Lady Robson of Kiddington, asked specific questions about the Chelsea and Westminster Hospital and the 163 unused beds. When the hospital was designed it was anticipated at that time that the accident and emergency department would close at the Charing Cross Hospital, which clearly would have a major impact on the new hospital. But as the noble Baroness said, that is subject to review at the moment, and your Lordships will be aware that there will be some decisions concerning London made in the near future.

The noble Baroness also suggested that integrity and independence of mind should be the criteria for appointments to non-executive positions on health authorities and trusts. The noble Baroness is absolutely right. That is why three speakers in the debate tonight hold appointments made by my noble friend the Secretary of State, and two of them sit on the Opposition Benches.

Baroness Jay of Paddington

My Lords, I know that it is a timed debate, but perhaps the Minister will allow me to intervene. Several times in the recent past she has publicly referred to my being a member of a local health authority. I should like to place on record that I do not regard myself as being someone who has had the advantage of Government patronage. I have been on the health authority for over 20 years and served for a long time before it became a paid position. It is also the case that when it was suggested that I become chairman of the district health authority, I was politically vetoed.

Baroness Cumberlege

My Lords, I am in no way critical of the appointment of the noble Baroness to the health authority. I appreciate that she has made a major contribution to the National Health Service over 20 years or possibly more. I am not critical; I merely praise my noble friend the Secretary of State who reappointed her on one or more occasions.

Like those industries which fail to reform, the NHS would not survive without change. People do not want to work for inefficient, badly-managed organisations that belong to the past. The NHS is and must remain part of today's world. The proof of the change is that more people are receiving treatment; they are shown greater respect; costs are being contained; we are meeting the needs of modern medicine; closing out-of-date buildings and opening new ones. Nothing demonstrates the commitment of this Government to the NHS more vividly than our determination to give the most treasured service the best management that money can buy. We are proud of every penny spent and deplore those who would dare to wish that the NHS should be sold short.

7.38 p.m.

Lord Dean of Beswick

My Lords, perhaps I can first thank the Members of your Lordships' House who took part in the debate. There were differing views but nevertheless it was an interesting discussion. I am sure that we shall return to it as the effects of the changes about which we have been speaking unfold. I thank the Minister also for the way in which she replied to the debate, so long as she does not hold me responsible for the rather perilous situation in which Manchester City finds itself—at the bottom of the Premier League.

I can give her an assurance that, with regard to the question of the Wessex Regional Health Authority, I pronounced its benediction and it can go to bed. But I disagree with her on one small point. The Minister indicated that I said Sir Robert Buchanan had been badly treated in some respects by the press. He pleaded blame for the lot when he was responsible for only a minor part. I do not think the Public Accounts Committee thought that it was trivia or that he was wrong about some rather serious matters. Nevertheless, that is finished with. Once again I thank all those who have taken part in what has been an interesting debate. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.