NHS: Pay Award Funding (Hansard, 22 February 1999)

§ Baroness Hayman
My Lords, health authorities were allocated average funding increases of 6.5 per cent. for next year. Above this, an additional £100 million from the modernisation fund will support local recruitment and retention and the modernisation of the nurses' payscales. It is our assessment that no additional funding will be needed to meet the costs of the awards and to succeed in recruiting and retaining the staff that the NHS needs.

§ Baroness Gardner of Parkes
My Lords, I thank the Minister for her reply, but I cannot accept that no additional funding will be required. Can the Minister tell the House where the funding will come from to pay the many people within the NHS who are due for pay increases but who are not covered by the pay review boards?

§ Baroness Hayman
My Lords, as I said, the average increase for every health authority in the country is 6.5 per cent. for next year. The pay increase that the NHS review bodies recommended averages out at about 4.8 per cent. A tranche of that—something like 0.8 per cent.—will be met by the £100 million from the modernisation fund for the specific issues around local recruitment and retention. Within that very generous overall increase, it is our belief that there is room to fund these awards, including the non-pay review body awards.

§ Lord Clement-Jones
My Lords, I am sure that the Minister has seen the figures produced by the NHS Confederation. It estimates that, as a result of having been able to budget for only a 2.5 per cent. increase, despite the 4.8 actual increase that the Minister mentioned, and because only £100 million will be coming from the modernisation fund, there will actually be a 0.9 per cent. shortfall. Does the Minister agree with that figure?

§ Baroness Hayman
No, my Lords, I do not agree with that figure for the reasons that I gave earlier. It is interesting to note that now we are being accused of putting only £100 million from the modernisation fund into the pay bill. I thought the line of argument proposed earlier was that all the money from the modernisation fund would go into the pay bill and we would not be able to use it for modernisation.

§ Baroness Pitkeathley
My Lords, does my noble friend agree that while it is natural for all noble Lords to be concerned about the funding of the health service, 839 it is important to remember that some of the new developments, such as cutting the number of local commissioning bodies from 4,000 to 500, the development of NHS Direct and the development of technology within the NHS, will enable us to make far better use of the available resources?

§ Baroness Hayman
My Lords, my noble friend is absolutely right. That is why it is important that we safeguard the modernisation fund as it allows us to unlock savings within the service to plough back into patient care. That is why the £50 million that is being spent on implementing the information strategy, the £30 million that is being spent on modernising A&E departments, and the £40 million on other capital improvements—including schemes to improve waiting times and, of course, the introduction of NHS Direct—together show ways in which we can provide a higher quality service at a lower cost.

Earl Howe
My Lords, during recent weeks we have seen a number of announcements about NHS spending. How are the Government keeping a tally of the balance of uncommitted funds in the modernisation fund? Is the noble Baroness able to tell the House what amount of the fund remains uncommitted?

§ Baroness Hayman
My Lords, I reassure the noble Earl that, as regards the £1.2 billion of the modernisation fund, the money that we have spent and allocated to staff development, recruitment and retention, to which I alluded earlier, will not prejudice the other blocks of money clearly allocated to tackling waiting times, the modernisation of A&E departments, NHS Direct, primary care, public health issues such as smoking cessation, and improving mental health services. We are keeping a running tally and the figures add up.

§ Lord Elton
My Lords, following the reply given by the noble Baroness to her noble friend in the previous answer but one, to what extent are the savings she referred to offset by the increased costs from the development of new and expensive surgical procedures, which seems to be rapid, and the actuarial rise in life expectation which enormously increases the number of customers for the health service?

§ Baroness Hayman
My Lords, those are not simple questions to which simple answers, in terms of money, can be given. The noble Lord suggests that technological advances in surgery result in greater expense. They can, of course, also result in less expense. For example, in the case of laprascopic surgery, people have to spend less time in hospital. The costs of some new and seemingly expensive drug treatments can be offset against not having to admit people into hospital in the first place. Therefore, they can result in a saving of money. These are the complexities involved in running a health service with the demographic and technological demands that there are upon it.

§ Baroness Gardner of Parkes
My Lords, will the Minister clarify the percentage she announced is to be 840 given as an extra amount? I understood that that was not just for pay but applied to all the expenses in the health service. Will she clarify that that is the case?

§ Baroness Hayman
My Lords, I am happy to clarify that for the noble Baroness. It is a 6.5 per cent. average funding increase across the board, on which there will be other demands as well as the demands of pay. I suggested that there was some headroom there. We have to consider also in the equation the cost savings that can result from efficiency savings.

§ Lord Rowallan
My Lords, will the Minister confirm that some of the money that was recently diverted from the original five good causes in the lottery towards the new opportunities fund—of which health forms a major part—will now be put towards this extra cost to the NHS?

§ Baroness Hayman
My Lords, if I understand the noble Lord's question, I cannot confirm that. The basis on which new opportunities funding would be made available to the NHS is clearly based on the ground of additionality for additional resources. We have seen that in regard to the healthy living centres which are an innovation. The proposals that are out for consultation at the moment involve improving cancer services across a range of areas in partnership with local communities. That is in addition to the baseline funding which has already been announced.

§ Baroness Pitkeathley
My Lords, I must declare an interest as the chair of the New Opportunities Fund. Does my noble friend agree that the money allocated is done so clearly on the ground of additionality and also to sustain the long established tradition of co-operation with the voluntary sector and community groups which help the NHS with regard to its services to patients?

§ Baroness Hayman
My Lords, I am happy to confirm that. I think all of us who have been associated with the health service know how grateful it is for the support of charitable bodies and local communities in fundraising to enhance the services that are provided by the NHS.