NHS Funding (Hansard, 8 February 2000)

§ Lord Clement-Jones
asked Her Majesty's Government:
When they propose to raise the United Kingdom's ratio of health spending to gross domestic product to the European Union average, and how.

§ The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath)
My Lords, the Government have already provided substantial extra investment for the National Health Service. As my right honourable friend the Prime Minister has said, we are entirely confident that we will be able to sustain those increases in funding over time and match the European Union average as a proportion of gross domestic product devoted to healthcare.

§ Lord Clement-Jones
My Lords, I thank the Minister for that clarification. It is similar to the formula he used in the debate last week. However, it is clear that a real annual expenditure rise of 5 per cent committed to, or aspired to, by the Prime Minister will not hit the European average of health spending in six years. What will the Government now do? Will they admit that the Prime Minister got his arithmetic wrong and that a great deal more money is needed? Will they continue to pull the wool over the public's eyes? Alternatively, will they take a principled stance, forgo the 1p cut in income tax in April, and spend the money on the health service?

§ Lord Hunt of Kings Heath
My Lords, the answer is none of those. We have made it clear that we are 506 committed to modernising the National Health Service. Historically, the NHS has had around 3 per cent growth per year. However, that has not been consistent. The figure has been up and down— boom and bust. As a result, there has been no long-term planning. In the current comprehensive spending review we have made a quantum leap to around 5 per cent in real growth. That is a measure of our commitment to funding the NHS and our determination to modernise it.

§ Earl Howe
My Lords, the crude average of European health spending is around 8 per cent. The weighted average, allowing for sizes of population in each European Union member state, is around 8.6 per cent. Which target are the Government aiming for?

§ Lord Hunt of Kings Heath
My Lords, I understand that in 1997 the EU total average healthcare expenditure as a percentage of GDP was 8 per cent. I repeat what I said and my right honourable friend the Prime Minister explained. Resources for the NHS will be matched by a determination to modernise the health service. He also made clear that levels of public spending are dependent on economic performance. However, as he said in another place on 19th January, if we continue to manage the economy properly we shall be able as a nation to afford to get in these real term increases which will over time bring us up to the EU average.

§ Lord Barnett
My Lords, what has the Treasury informed the Department of Health about the sustainable rate of growth over the next five years?

§ Lord Hunt of Kings Heath
My Lords, I cannot tell my noble friend that because I am not party to those discussions.

§ Lord Goodhart
My Lords, does the Minister accept that the 8 per cent is a simple mathematical average which treats Luxembourg as being the same size as Germany? If the average is weighted for population, the correct average is 8.6 per cent and not 8 per cent.

§ Lord Hunt of Kings Heath
My Lords, that is one of a number of explanations written by economists and others. So far none has agreed with the other. Many factors come into play when considering these matters: rate of growth in GDP; and spending on health and changes in spending on health in other countries. What is not in doubt is our commitment to the NHS, its sustainability and the necessary funding of the service.

§ Lord Campbell of Alloway
My Lords, I have listened to the Minister. However, the Question asks whether the Government propose to raise the ratio of health spending to the European ratio. What is the answer: yes or no?

§ Lord Hunt of Kings Heath
My Lords, I repeat what my right honourable friend the Prime Minister said to 507 the House of Commons on 19th January. If we continue to manage the economy properly we will as a nation be able to afford to get in these real term increases which will over time bring us up to the EU average. The noble Lord tempts me to comment on details of discussions within the comprehensive spending review which are taking place at present. He knows that I cannot do that.

§ Lord Rotherwick
My Lords, recently it has been stated that in their modernisation of the NHS, the Government have seen the benefits of community hospitals. When increasing the budget for the NHS, will the Government find more funds for reopening those community hospitals that they have now closed?

§ Lord Hunt of Kings Heath
My Lords, I cannot comment on specific hospitals. However, the noble Lord will recall the speech made last week by my right honourable friend the Secretary of State in which he acknowledged the role of intermediate care and the problems of people inappropriately placed in medical wards within our hospitals. Shortly we shall be publishing the results of the national beds inquiry. We shall address those issues in response to that inquiry.

Lord Bruce of Donington
My Lords, does my noble friend agree that in order to provide adequate expenditure on the health service—in accordance with what the Prime Minister originally indicated—it will be necessary to revise the priorities of expenditure in the economy as a whole? However, does he further agree that these matters remain in the hands of the Treasury, who have made their view quite clear, requiring little elaboration beyond the necessity for a revision of priorities?

§ Lord Hunt of Kings Heath
No, my Lords, I believe that this Government's commitment to the National Health Service is absolutely clear. We have indicated our commitment and given visible demonstration of it by the record resources we are currently putting into the health service. We shall continue to sustain the National Health Service.

§ Baroness Nicholson of Winterbourne
My Lords, while accepting that we are paying for two decades of underfunding by the previous government, does the noble Lord nonetheless feel comfortable with the fact that German executives working in the City of London have automatic clauses in their contracts stating that if they fall ill while in the United Kingdom they will immediately return to their country of origin? How soon can that situation be corrected?

§ Lord Hunt of Kings Heath
My Lords, the noble Baroness is quite right to speak of the gross underfunding of the health service during the period of the last government's administration. However, we should note that the Opposition's answer at the moment is to put their trust in private health insurance. I am sure that the British people will put 508 their trust in this Government to sustain the NHS, to provide the resources it requires and to ensure that a first-class quality service is delivered.

§ The Lord Privy Seal (Baroness Jay of Padddington)
My Lords, the clock shows that we are eight minutes into Question Time. I am perfectly happy to continue with this Question if the noble Lord, Lord Hurd of Westwell, is happy to have the time spent on his Question constrained.

§ Lord Hurd of Westwell
My Lords, I believe that the whole House is eager to hear the noble Lord, Lord Winston.

§ Lord Winston
My Lords, my question is simple and, I believe, can be answered with a "yes" or "no". Is it the impression of my noble friend that the efficiency of our proportion of GDP spending on the health service is every bit as great as it is in the rest of Europe?

§ Lord Hunt of Kings Heath
My Lords, my noble friend raises an important question. The fact is that the NHS is an extremely efficient system of healthcare. In comparison with social insurance systems in other countries, we find that they spend much more of their resources on bureaucracy and administration. The cumulative effect of that places great burdens on, for example, German and French employers. In effect, those systems have become a tax on jobs. We have a good system in the NHS. We should sustain and support it.