NHS Financial Deficit (Hansard, 15 December 1999)

§ Lord Clement-Jones
asked Her Majesty's Government:
What they anticipate the NHS financial deficit will be in this financial year.

§ The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath)
My Lords, the latest forecast of income and expenditure for health authorities and NHS trusts is a deficit of £197 million.

§ Lord Clement-Jones
My Lords, is not the Minister being unduly reticent in his reply? Some of the forecasts that have been made have been of a deficit this year of £400 million with an accumulated deficit of over £1 billion, with worse to come next year. Is it not time, rather than denying the extent of the deficit or preventing it being published by finance officers of the NHS, for the Secretary of State to accept that the NHS is severely under-funded and that he should do his best to secure greater funding in the Comprehensive Spending Review next year?

§ Lord Hunt of Kings Heath
My Lords, the figure I have given is the best forecast we have. I believe the noble Lord is referring to the accumulated deficit of £1 billion talked about by the Healthcare Financial Management Association. I am glad to say that it is indulging in realms of fantasy. The House will well know that, in relation to resources for the NHS, through the Comprehensive Spending Review we have put in a large amount of additional growth money—4.9 per cent increase in real terms this year. Through that we are enabled to provide real improvements to the National Health Service. Thirty-seven new hospitals are either being built or are in the process of being built. There is much greater access to services. The NHS is undergoing a fundamental modernisation programme which we are funding.

§ Baroness Gardner of Parkes
My Lords, can the Minister tell us what proportion of that deficit will be for the London area alone? Is it much worse off than other parts of the country? In view of the fact that no government are able to adequately fund the National Health Service, is it not time to look at new ways of doing so?

§ Lord Hunt of Kings Heath
My Lords, London has a number of trusts which are facing financial pressures. We are working closely with them to ensure that they take the action that is necessary. In relation to alternative systems of funding, I am not persuaded by the arguments. The system that has been in place since 1948 has served the NHS well. We have the most cost-effective healthcare system in the world. We have shown, by the additional resources that we have
213 invested in the service, that we can sustain the NHS, make it fit for the future and have one of the best and most modern health services in the world.

§ Earl Howe
My Lords, is it not the case that the much publicised new money that the Government announced for the NHS will be largely swallowed up over the coming two years by cost pressures that cannot be avoided? Will the Minister confirm, for example, that additional pension contributions alone are set to absorb an extra £650 million over that period? That is on top of the huge costs arising from new legislation such as the EU working time directive.

§ Lord Hunt of Kings Heath
My Lords, there are elements which come into the budgets of the health service every year; for example, pensions, pay, the working time directive or indeed the rising cost of generic drugs. That is part of the life of the National Health Service. With a three-year Comprehensive Spending Review, it is not always possible to estimate exactly potential increases in budget. However, within the resources that we have made available, I am confident that we have the capacity both to meet those unexpected pressures and to introduce significant improvements in services.

§ The Countess of Mar
My Lords, can the Minister say whether awards for damages against NHS hospitals come into that total budget? If they do, can the noble Lord say how much such awards amounted to during the past year and tell us what Her Majesty's Government are doing to address the problem?

§ Lord Hunt of Kings Heath
My Lords, the noble Countess is certainly right to refer to important and, I think, worrying trends in relation to clinical negligence awards. Within the deficit figure that I mentioned there is certainly provision for the potential future cost of litigation which has been started. The latest figures that I have show that in the 1997–98 summarised accounts for the NHS costs charged to expenditure for clinical negligence amounted to £144 million.
This is a matter of great concern. We have to be very careful in terms of avoiding defensive medicine. We also believe that the more effective clinical governance that we are introducing and the development of evidence-based medicine, will, over time, enable us to tackle these issues.

§ Lord Pilkington of Oxenford
My Lords, in the allocation of resources, can the Minister say whether he has given attention to the appalling situation of the elderly in many of the hospitals, as has been revealed in recent press reports?

§ Lord Hunt of Kings Heath
My Lords, we are very concerned to ensure that older people being cared for in the NHS receive a first-class quality service. My honourable friend, Mr John Hutton, has made it clear that the Commission for Health Improvement will, as a priority, focus on services for older people in its first inspection round. We are establishing a national 214 service framework on services for older people which will start work next year. It will focus on the very issues raised by the noble Lord.