Public Services

HL Deb 10 April 2002 vol 633 cc469-510

6.45 p.m.

Baroness Sharp of Guildford

rose to call attention to the state of the public services; and to move for Papers.

The noble Baroness said: My Lords, like many noble Lords, I took advantage of the Easter break to travel abroad. On this occasion I visited Andalucia in southern Spain, a land of olive groves, sheep, goats and pigs being herded by the side of the road. In many senses the trip reminded me of the early visits I paid to France in the 1950s as a schoolgirl and a student. In those days we were told to be careful about drinking the tap water. Unless you travelled first class, you sat bolt upright on uncomfortable leather-cloth seats in the trains. We shared buses with chickens and geese. Public conveniences for women were few and far between and were always dirty and smelly. The schools we visited as exchange students had large classes and were poorly equipped, in particular for the sciences and the arts. Roads in the towns were often potholed and poorly maintained, and some noble Lords may remember that to make a long-distance telephone call meant queuing for hours at the post office.

I would return home happy about the exchanges that I had made and the wider experience that I had had, but also pleased to come back to a world of hot baths, flushing toilets, fast and reasonably comfortable suburban trains and working telephones.

Some 45 years on, it seems that the roles have almost reversed. Ours is now a country in which tourists, rightly or wrongly—I think probably wrongly—are told to be careful about drinking the tap water. The trains are often late, frequently dirty and covered in graffiti. If you can find a public toilet, it will be dirty and smelly.

A new train service runs from Madrid to Seville. The journey takes two-and-a-half hours instead of what used to be an eight-hour journey. However, it still takes a very long time to travel to Manchester, an equivalent journey. New roads sweep across the mountains, opening up many little white hill-top villages, creating ever more traffic, but also bringing tourists and prosperity. There are new schools which, from what I could see of their sports fields, are well equipped. The staying-on rates through to 18 are higher in Spain than they are in Britain. If we are to believe those writing to The Times, new hospitals and medical centres offer treatments and facilities which are at least as good, if not often better, than those available in this country. However, I am glad to say that I did not have to avail myself of any medical treatment while on holiday.

I know it is easy to exaggerate the differences. In such countries there remains a degree of rural poverty which we do not see in Britain today. There are many aspects of life which remain primitive and unsatisfactory. However, overall there is a question to be asked: how is it that a country like Spain, a latecomer to growth and still considerably poorer overall than the UK, manages to provide a quality of public service that often exceeds that available in our country? In effect this is the subject of today's debate and I shall suggest that the answer lies in three different issues.

First, I suggest that it lies in our failure to spend enough money on public services. Noble Lords will know that that is the theme song of the Liberal Democrats, one that we have sung for a long time. We advocated a penny on income tax for education. That symbolised our recognition, long ago when it was first introduced in our 1992 manifesto, that we need to improve the quality of our public services and that that could be achieved only by spending more money and, if necessary, by raising taxes to meet that expenditure. Britain is not a heavily taxed nation and, in our view—now vindicated by a great deal of focus research work—people are prepared to pay money up front for better public services if they can be assured that that money is going to those services.

My second theme is linked to the first but is significantly different. It is that we have specifically starved the public services of capital investment with the result that the public sector infrastructure in this country has been disproportionately squeezed and that this has had a detrimental effect on the delivery of public services.

My third theme is that, while the sums spent can make a significant difference, money is not the only problem. The public services today face a major issue of morale. The answer lies not in more public service agreements and yet more performance targets and indicators, but rather in decentralisation and restoring to the services, and to those who work in them, a sense of pride and ownership.

As to my first theme—the failure to spend enough money—successive governments in this country have failed to put resources into the public services to maintain satisfactory standards. I shall illustrate this theme by looking at two different areas. First, the area of health, a matter which will be picked up later by my noble friend Lord Clement-Jones. In the UK we now spend 6.5 per cent of GDP on health compared to France at 9.6 per cent, Germany at 10.7 per cent and the USA at 13.9 per cent.

In terms of practising physicians—that is both GPs and hospital doctors because there are differences between countries in this respect—we have 1.7 practising physicians per 1,000 members of the population, precisely half that of Germany, which has 3.4 practising physicians per 1,000, France 2.9 and the USA 2.6—which illustrates one of the things that we do know in this country; that is, that USA medicine is extremely expensive and that Americans do not get good value for money. In terms of nurses, we have 4.5 nurses per 1,000 of the population, France has 5.9, Germany 9.5 and the USA 8.1. We have 4.5 in-patient beds per 1,000 of the population compared to France's 8.7 and Germany's 9.6.

In the light of these statistics, it is not surprising that we are now exporting patients to hospitals in Germany and France to relieve the backlog on waiting lists in the UK. What is impressive is that France, which spends roughly half as much again on healthcare as we do, seems to manage to get a lot more than half as much again out of its expenditure.

There is a further set of statistics that I should like to bring to your Lordships' attention. Surveys relating to satisfaction with health services indicate that two of our European partners, Denmark and Finland, who respectively spend 8 per cent and 7.4 per cent of GDP on health compared to the UK's 6.5 per cent—so not that much more—nevertheless gain a very high satisfaction rating for their services. This possibly is something to do with the way they are organised. Their health services are decentralised and run locally in conjunction with social services. It may be a lesson that we should look at.

As the House knows, I have a considerable interest in the area of education. It is another area where, in comparative terms, the UK spends relatively little. OECD education indicators for 2001, which actually reflect the 1998 statistics, put the UK as spending 4.9 per cent of GDP on education compared to Germany at 5.5 per cent, France at 6.2 per cent and the US at 6.4 per cent. Class sizes in primary and secondary schools in the UK were larger than in nearly every other European country and, significantly, early years provision was much worse than in most countries.

Considering that the Major government in the years 1990–95 spent on average 5 per cent of GDP an education, it was immensely disappointing to those of us who put a high emphasis on education that this Government, when they came to power, managed to spend during their first four years a lower proportion of GDP on education than the Major government. I know that more money is going in now and that we should give credit where it is due. New money is at last flowing into the classrooms and the recent PISA study from OECD, as well as the chief inspector's report, congratulated the UK on its improving educational standards. I believe that educational standards are now beginning to improve. The concentration on early years schooling and the new emphasis on literacy and numeracy seems to be paying off.

But, as in the medical field, the problem now is n at money but people. We have not been training enough teachers and we have frightened away far too many from the profession to be able to meet the ambitious targets for smaller class sizes. We are not recruiting enough new teachers, especially at secondary level, to replace those who have left. A staggering 40 per cent of those who start teacher training have dropped out after three years. As many of your Lordships know, this issue has now reached crisis proportions, particularly in London and the South East, add threatens to overwhelm other achievements.

Nor should recent successes make us complacent. Long years of under investment means that Britain has one of the highest illiteracy rates in Europe. As the noble Lord, Lord Moser, indicated in his report, one in five adults in this country has difficulty in reading and writing. Belatedly we have increased the numbers going into higher education, but we still have far too many youngsters leaving school at 16 with little or nothing by way of qualification. It should be a matter of shame to us all that each year as many as 30,000 youngsters leave school in this country with no qualifications at all. We remain a country where far too many people have low skills and far too few intermediate and higher level skills, and where it s expensive and difficult for those who have low skills to acquire higher level skills. Sadly, Britain remains a country where education divisions are still too great and where money flows, and continues to flow, to those who have.

I turn to my second theme which is the failure to invest in services—I refer to capital spending as distinct from current spending. Health and education are both labour-intensive services where the quality of service provided depends on the quality and number of people working in them. As to the issue of capital expenditure, it is a question of looking at the capital provision and the run-down of the social infrastructure. It is my contention that throughout the last 25 years of the 20th century the state failed in its minimum duty to maintain the public sector infrastructure and that this has had a knock-on effect on many aspects of life in our country.

Let me turn again to some statistics. I apologise for introducing so many. I am indebted here to some work undertaken by the Institute of Fiscal Studies, which has published a booklet, Twenty-five years of Falling Investment?—Trends in capital spending on public services. This documents the fall in gross public sector capital investment from an average of 8 per cent of GDP in the 1960s to an average of 2 per cent in the 1990s. The period encompasses three major changes. First, the collapse of local authority investment, mainly associated with housing, which ranged from 3.5 per cent to 4 per cent of GDP in the 1970s but dropped to less than 1 per cent in the 1980s. Secondly, the inclusion in the early figures of nationalised industry investments—particularly BT, British Gas and electricity investments, all of which shifted into the private sector with privatisation. Again, these constituted between 3 per cent and 4 per cent of GDP. Finally, central government investment, which until the 1990s had been maintained at just over 1 per cent of GDP but by the end of the 1990s had collapsed to less than 0.5 per cent of GDP.

Looking at these figures by programme, the most noticeable casualty has been housing, where in 1972 local authorities and social housing groups together completed 172,000 dwellings, whereas in 1998 the comparable number was 30,000. My noble friend Lady Maddock will speak further about the housing figures. Another major casualty has been the transport sector, where investment fell from 1.6 per cent of GDP to 0.5 per cent of GDP. My noble friend Lord Bradshaw will pick up this issue.

Few sectors escaped unharmed. The backlog of maintenance on school buildings in 1997 was calculated to be some £20 billion. A similar figure has been mooted for hospitals. It is notable that in spite of the very considerable effort on the part of the Government and the Wellcome Foundation to upgrade the scientific infrastructure, the JMC report published last week as part of the Government's transparency review in the run-up to the Comprehensive Spending Review has estimated that a minimum of £4 billion needs to be spent on university laboratories to bring them up to scratch. I am delighted to see that the noble Baroness, Lady Warwick, will speak on this issue.

My third theme is that the problem is not just one of money; it is one of morale. Sadly, in many public services we have now reached a point where more money alone does not solve the problem. We see it most poignantly in the health and education services, where we are now pumping in more money but cannot recruit staff. Salaries in both sectors are beginning to catch up, but the long-term effects of low investment, poor working conditions and an ethic of blaming the public sector workers for the ills of the service have made careers in these services unattractive to the young. Perhaps most disturbing are the poor retention rates of those who are recruited.

I have talked to some of the young people who have left these professions. The big turn-off has been the unnecessary bureaucracy. Teachers do not resent the time that they spend on lesson preparation; but they do resent the vast increase in the amount of time required for record-keeping and endless form-filling. The fun and creativity is being driven out of teaching by these increasing demands from the centre for conformity to norms dictated by the centre.

Last October, we had a fine debate in this House, led by the right reverend Prelate the Bishop of Oxford, about the concept of public service. One point to emerge was that there still exist in this country many for whom the concept of public service is extremely important, but they have found themselves turned off by the managerialism that is now dominating the centre. The new managerialism that has come to dominate government—with its targets, performance indicators and public service agreements—is doing precisely that.

Perhaps I may conclude by quoting a statement made by the noble Baroness, Lady O'Neill, in one of her Reith Lectures. When asked why she was giving the lectures on the subject of trust, she said: I had come to think that our new culture of accountability was taking us in the wrong direction. We are imposing ever more stringent forms of control. We are requiring those in the public service and the professions to account in excessive and sometimes irrelevant detail to regulators and inspectors … We need to free the professionals and the public service to serve the public". My Lords, I beg to move for Papers.

7.2 p.m.

Lord Faulkner of Worcester

My Lords, I congratulate the noble Baroness, Lady Sharp of Guildford, on securing this debate. Debating the state of the public services gives us all a broad canvas on which to paint. I hope that the noble Baroness will forgive me if I concentrate on one particular public service, our railways, rather than attempt to range across the whole field of subjects to which she has referred with such eloquence.

This is a good moment to take stock of the Government's transport policy, and to consider whether the ambitious targets they have set for the growth in rail passenger and freight usage over 10 years—targets reinforced by the SRA's strategic plan in January—can still be met given the difficulties of recent months. It is also an opportunity to consider whether we can have any reasonable expectation that the quality of service—punctuality, reliability, cleanliness—will improve over the coming months and years.

Clearly, on many parts of our railway system the quality of service desperately needs to get better—although perhaps I may be allowed one slight word of criticism of the noble Baroness's remarks. It really is not fair to compare the worst aspects of one country's rail system with the best of another. In each country there is a mix of quality; in some areas the quality is excellent—as it is in parts of the British system—and in some it is appalling. That is true of the continental railways too. However, I agree with the noble Baroness that there is definitely a need to improve the quality of the service.

Only this week, I have heard Americans in London complimenting us on our ability as a nation to organise great national pageants with consummate skill, and at the same time expressing utter amazement that, although we can organise those, we cannot get our trains to run on time. It was put to me on Monday that, if Black Rod were in charge of the railways, they would never be late, the trains would go where they were told, and everyone involved with the industry would be immaculately turned out in the smartest uniforms imaginable. I fear that it will take us a little while to achieve perfection on that scale, but are we heading in the right direction? My view is that we are, and that there are two reasons why that is so.

The first is that the Government—here I mention specifically the Secretary of State, Stephen Byers—have grasped the Railtrack nettle. I can think of no recent case where a Minister has been subjected to such vitriolic and substantially unfair criticism in the media and elsewhere as Mr Byers has. Therefore, I was interested to read Simon Jenkins' column in The Times on 27th March. Mr Jenkins is not known as new Labour's strongest supporter in the media. He wrote: Mr Byers is not finished. He may well be remembered as the man who brought sanity to a rail industry which the Tories crippled". He went on to comment that from the moment the 1993 Railways Act was passed, fragmenting British Rail into Treasury-friendly pieces, renationalisation was only a matter of time. Now it has come to pass". Mr Jenkins said that Mr Byers, must find a structure that lets managers manage. He must find capital that is secure, cheap and vet has a built-in incentive to efficiency. This is hardly rocket science. Private procurement works in local government under a regime of which arrogant central government seems oblivious. [Herbert] Morrison sought the same goal and came up with the same body, a not-for-profit arm's-length public corporation. It rebuilt the postwar railway, re-equipped it for diesel and cut it to a viable core-and-branch network". I have no doubt that there is substantial support on these Benches at least, and certainly in the railway industry, for the approach that the Government have adopted towards Railtrack, for the steps that have been announced to get the company out of administration as early as possible, for the appointment of John Armitt as chairman, and for the establishment of Network Rail as a not-for-profit successor company.

The statement from Network Rail on 25th March contained a number of commitments which those of us who care about the railways had been longing to hear for many months. First, any operating surplus will be invested in the rail network. It will concentrate on the maintenance and renewal of Britain's railway, in a spirit of co-operation and partnership with industry stakeholders. It will offer a fresh start for the industry—an opportunity to endorse a better way of working, bringing the industry together for the benefit of all rail users. There will be an early exit from administration. There will be investment funded al a low cost of capital, the avoidance of any suggestion of putting profit before safety, and delivery of engineering excellence. So, sorting out Railtrack—the most disastrous legacy of the 1993 privatisation—is the first reason for optimism.

The second reason is the new direction being provided by the Strategic Rail Authority. Here, I express my support for the leadership that is being given by its chairman of only four months, Richard Bowker. I am conscious that, so far as the media and the industry are concerned, Mr Bowker is still on his honeymoon. He would be wise to recall one of the sayings of a distinguished former railways boa:7d chairman, Sir Peter Parker, which I am sure the noble Lord, Lord Bradshaw, will recall; namely, that, a halo is only nine inches away from being a noose". Yet we can but admire the range of initiatives that have come from the SRA in the short time that Mr Bowker has been in charge: the publication of the strategic plan on 14th January; the new 20-year Chiltern Railways franchise, which will lever in £371 million of private finance, and the two-year extension for GNER; a commitment to reduce the number of franchises; the signing of a "concordat" between the SRA and the office of the Rail Regulator, which should bring an end to the ill-informed suggestions that the two organisations should be combined and that the role of independent economic regulator should be abandoned; and, most recently, Mr Bowker's visionary concept of a new north-south high speed line, with a line speed of over 300 kilometres an hour, transforming journey times between the major cities of England and to Scotland, and based on the evidence already established by W S Atkins that the growth in rail travel will continue beyond the strategic plan time-scale.

Despite these positive developments, which I believe can lead us to be hopeful about the future, our railways continue to be bedevilled by a combination of negative and ill-informed press comment on the one hand, and by the industry's capacity to shoot itself in the foot on the other. I shall take a couple of examples of the latter first. Yesterday, I received a letter from the Rail Passengers Council begging support for a last-ditch campaign to stop the train operating companies from changing the current conditions of the Network Railcard from 2nd June. I should declare an interest as one of the 360,000 holders of those cards, which encourage off-peak travel in the south-east of England. The change, which is being pushed through with the most minimal consultation with passenger representatives, will make the railcard virtually useless on Mondays to Fridays within a 35-mile radius or central London, principally through the imposition of a £10 minimum fare. There is no doubt that the new conditions will reduce the number of people travelling by train. They will add to congestion on the roads and will make it harder to meet the Government's target of a 50 per cent increase in rail passenger numbers by 2010.

That is the first of the industry's own goals that I wish to mention. The second is Railtrack's crazy decision to close completely a 25-mile stretch of the West Coast Main Line between Milton Keynes and Hemel Hempstead every weekend between 10th August and Christmas. Chris Green, the chief executive of Virgin Trains, is right to compare this blockade to shutting the M1. He says that it is being done to suit Railtrack engineers rather than passengers. Surely it is not too late for the new management of Railtrack and its successor company to have another look at the issue and perhaps follow Mr Green's advice by shutting the tracks at night and leaving two open during the day.

Those of us whose memory goes back to the days of British Rail know that it is almost impossible for our railways to get a decent press, but today it seems that there are more examples of unfair, ill-informed media comment than ever before. For example, the reality is that railways are 15 times safer than car travel, yet we are rarely reminded that 3,000 people are killed every year on our roads. If we were serious about reducing casualties we would be looking at ways of investing in new track and new trains and in increasing capacity in ways that encourage people to leave their cars at home. Yet to read some newspapers, you get the impression that you are taking your life in your hands every time you get on a train.

Much more can be said on the subject and I am sure that we shall return to it before long. Meanwhile, I conclude by reiterating my support for the efforts that the Strategic Rail Authority under Mr Bowker's leadership, the not-for-profit successor of Railtrack and the Government are making to undo the damage caused by the fragmentation and privatisation of the industry.

7.12 p.m.

Lord Clement-Jones

My Lords, I congratulate my noble friends Lady Sharp and Lord Ezra on initiating today's important debate. My noble friend Lady Sharp has outlined the facts that have given rise to a crisis of public confidence and self-confidence in our public services. The NHS is a classic example. I shall deal with several elements in the current debate on the NHS and healthcare: first, the need for adequate and predictable funding; secondly, effective delivery; thirdly, properly devolved structures; fourthly, the achievement of high and consistent standards; and fifthly, and most importantly, responsiveness to patient needs.

Since the last general election, parts of the media and, of late, the Conservative Party, have vociferously argued that a new system of funding for the NHS is needed and that without it the NHS will not be able to deliver the quality of healthcare that we require. Before we consider the merits of that argument, let us get the debate in proportion. The OECD has indicated that the key problem in the outcomes that the NHS delivers compared with continental systems is due not to methods of funding, but largely to a historic lack of investment in the NHS. After extensive study, the Liberal Democrats have concluded that the health insurance provided through taxation remains a better model in terms of efficiency, equity and outcomes than continental social insurance and contribution systems and best enables us to continue to ensure universal access to medical care irrespective of ability to pay.

Clearly, Derek Wanless came to the same conclusion in his work. For that agreement with the Government we must be thankful, faced with Tory threats to dismantle our current funding system.

However, it is clear that we need a better and more visible linkage between the overall government tax take and the bill paid for the NHS. As my honourable friend Matthew Taylor has recently said, we are working on proposals that will provide that linkage in a way that is sustainable in the long term, through some form of hypothecation with a source of taxation that is predictable and transparent to the taxpayer.

Even with a more transparent system of funding and more resources, we need to improve the way in which we deliver healthcare. While my party does not accept that private sector management is vastly superior to that in the public sector, we recognise the benefits of diversity of provision where appropriate, if it helps to improve rather than to restrict capacity and if quality can be maintained. That does not always have to be via the public sector, but public service standards of quality, transparency and accountability need to be maintained. In looking at new ways of delivery, the fixation of the Government—and in particular the Treasury—on the private finance initiative has been particularly inglorious. PFI has never been properly evaluated. The Public Accounts Committee and the Institute for Public Policy Research have looked at PFI hospital schemes and found little innovation or value for money and a lack of genuine risk transfer in those schemes. We have also now found that there are accounting problems. There is no such thing as off balance sheet financing for such hospitals. Potential windfalls well beyond anything that could originally have been anticipated are available to the consortiums that build PFI hospitals.

To cap it all, as my noble friend Lady Sharp has said, there is the effect on people—their terms, conditions and morale. To stack up the financial justification for a PFI scheme often involves fewer facilities, beds and staff and worse conditions for them.

So why do the Government consider support for PFI to be a test of financial probity or political credibility? Why do they persist in favouring such schemes over publicly financed schemes, or even alternative PPP schemes? It is vital the there is a choice of procurement models in the modern NHS. It can be by various forms of PPP, provided they are properly evaluated to show value for money. We badly need to enhance the procurement skills of staff in the NHS to do what is right for their trust, rather than expecting them slavishly to follow Treasury models, which cannot and should not be one-size-fits-all.

On organisational structures, the truth is that cultural change is far more important than structural change in achieving results. The recent thought-provoking King's Fund report The Future of the NHS, produced by a committee chaired by the noble Lord, Lord Haskins, rightly claimed that the current system is over-politicised, over-centralised and lacks responsiveness. The report is particularly convincing when advocating the need for decentralisation of real power to trusts and PCTs. Clearly, we need a genuine scheme of devolution for the NHS. However, the current scheme proposed by the Government under the National Health Service Reform and Health Care Professions Bill gives more rather than less power to Ministers.

For devolution to be effective and genuine, we need strong, accountable bodies supervening between government and local delivery responsible for health service strategy, which would include the essential aspects of capacity planning and capital investment. There need to be geographical entities with recognisable boundaries that enable joined-up strategy with the whole range of other public services—housing, education, transport, environment and social services. That will not be the case with the new strategic health authorities. However, those conditions are clearly met by regions. When regional assemblies are created, a further condition of accountability will be met. Regions would have the critical mass to ensure sufficient expertise in specialist commissioning and public health.

It is also crucial to ensure that in any structure there is the maximum integration between health and social care. Devolving to that level would have the advantage of being able to keep delivery bodies in place at lower levels, such as primary trusts, hospital trusts and care trusts, without further major upheaval.

One of the aspects highlighted by my honourable friend Dr Evan Harris today that militates against adequate models of devolution is the current target culture, in which the Government insist on setting hundreds of centrally driven targets that distort clinical priorities and focus efforts on systems instead of patients. At the same time as devolving delivery, however, there has to be in the very structure of devolution a clear commitment to continuing national standards of both treatment and professional competence. Devolution may imply different priorities region by region, but there should be a set of common national minimum standards.

In debating the National Health Service Reform and Health Care Professions Bill, I referred to the chart recently issued by the BMA showing the sheer complexity of the NHS and professional governance system, part of which is already in place and part of which is due to take effect in relation to quality definition, monitoring, reporting, quality assurance, maintenance, improvement, lapses and disciplinary systems. The system includes more than 21 different elements.

In its recent "Quality Initiatives" booklet, the BMA charts all the various initiatives. Disappointingly, however, while saying that, we risk being overcome by initiative fatigue", it does not propose a concrete scheme of simplification. The current regime is undoubtedly excessive. Alongside devolution, therefore, there must be a simultaneous commitment to simplification. The Kennedy report on the Bristol Royal Infirmary recognised that there is confusion in monitoring the quality of care, but it recommended the creation of yet another body—the National Patient Safety Agency.

In addition to simplification, the setting of clinical governance and performance standards should be separated from the delivery of healthcare. Yet the Government plan to take more and more control over professional bodies such as the GMC, the Nursing and Midwifery Council, and even the council for the regulation of healthcare professionals. The latter council will essentially be the Health Secretary's surrogate in controlling the health professions. In his recent British Medical journal article, Sir Denis Pereira Gray, chairman of the Academy of Medical Royal Colleges, pointed out the dangers.

Even when it comes to inspection and bodies such as the Commission for Health Improvement, the Secretary of State calls the shots on the criteria by which hospital trusts are to be judged. The regulatory system must be publicly accountable and transparent. For that reason—and with an increasing number of healthcare professionals, not least Professor Kennedy in his report into the Bristol Royal Infirmary—we are advocating that those regulatory bodies and CHI should be subject to direct overview by Parliament through a Select Committee and not by the Secretary of State.

I should like, finally, to say a few words on responsiveness to patient needs. Because of the nature of the NHS, responsiveness is not achieved through market mechanisms. Rather, as the Kennedy report pointed out, it must be achieved through partnership between patients and healthcare professionals. That entails openness, honesty about risk and proper information for patients. The Audit Commission established that poor data, whether about costs or outcomes, are a key problem in the NHS, making valid comparisons of performance almost impossible. Yet the structure for patient representation and consultation proposed in the current NHS Bill represents a backwards step. The new bodies will be fragmented and potentially ineffective.

Despite increased funding, current government plans for reorganisation Of the health service are inadequate and will not deliver accountability, consistency, high morale or high-quality services. The new NHS reforms will have to be unscrambled almost before the ink is dry on the Bill. It is hardly surprising that most health professionals live in dread of the next government initiative.

7.23 p.m.

Lord Chan

My Lords, I add my thanks to the noble Baroness, Lady Sharp of Guildford, for securing this debate on the state of the public services. The noble Lord, Lord Clement-Jones, has spoken extensively on the National Health Service, but I shall confine my observations on the NHS to a personal perspective. I declare an interest as a non-executive director of the Birkenhead and Wallasey primary care trust. Previously, I served a three-year term in a similar position in the Wirral and West Cheshire Community NHS Trust. I am also a member of three NHS modernisation task forces in the North West. I have gleaned the material for this speech from those connections. I should also like to focus on three specific issues: structural change, standards of service, and shifting the balance of power.

The NHS, our largest public service, is again undergoing major structural change, the most significant of which was the establishment, 10 days ago, of more than 420 primary care trusts in England. PCTs have the power to commission secondary care services and they are also responsible for public health functions. Those responsibilities were formerly exercised by the 93 health authorities which were abolished at the end of March. Other changes include the creation of 23 strategic health authorities to manage the performance of PCTs and the merger of our eight regional NHS offices into four, each with a new director of health and social care.

The new primary care trusts have comprehensive powers and responsibilities to provide both clinical and public health services, and they have been welcomed both by staff and by community groups. A welcome has been extended also to the fact that the Secretary of State will directly allocate funding for PCTs. However, the structural changes have at least two negative consequences. The most significant consequences are the stress levels affecting NHS employees and the fact that budgets are being provided directly to PCTs.

Increased stress levels among health professionals and other employees are due partly to changes in the employing authorities and the consequent need to cope with new relationships in a restructured NHS. For some, those stressful adjustments have had to be made after 20 years of continuing structural changes within the health service. NHS staff complain of insufficient time to adapt to successive cycles of change, and some have asked for early retirement at a time when the service desperately needs their skills. I hope that the Minister will have something to offer to alleviate the high stress levels experienced by NHS staff.

The direct allocation of budgets to PCT boards creates opportunities for local innovation and rapid response. However, this financial year will be particularly difficult for some PCTs in needy areas because they must work with deficits inherited from health authorities. I belong to the board of one such PCT. Surely such deficits are the worst way of starting a new and promising structural change. Moreover, they add to the stress felt by NHS staff.

There is no doubt that standards of services have improved significantly because of the introduction of national service frameworks for key diseases—notably coronary heart disease, cancer, diabetes and mental health—and for groups such as older people. There will soon also be a framework for children. General legislation such as the Human Rights Act 1998 and the Race Relations (Amendment) Act 2000 have started and will continue to contribute to better standards of care. Similar benefits will come when the Disability Discrimination (Amendment) Bill is enacted.

Those policies have been of the highest standard, but their implementation has been patchy. In mental health, local implementation teams have been established in partnership with the community and with encouraging results.

Promoting good practice for adoption in public services requires time, training of staff, public cooperation and community participation. Partnership with community and voluntary bodies with an interest and expertise in improving health services is being developed locally in local strategic partnerships and with leadership from local authorities. Local initiatives succeed when partnerships including community and patient groups are truly equal and all parties receive respect for their participation.

Bureaucracy should therefore be kept to a minimum, and partnerships should be given time to develop and blossom. Politicians and civil servants should resist the temptation of being impatient for quick results and of interfering by issuing new targets from the centre. Technical jargon should be kept to a minimum. When it is used, it should be clearly explained. "Franchising", for example, is a new term being used in the NHS. For the public, however, "franchising" is something to do with establishing fast-food outlets. Such terms need to be explained.

"Shifting the balance of power" has provided the rationale for the most recent structural changes in the NHS. While no one would argue against the principles of the policy, one dimension has not received much publicity or emphasis. That is a greater emphasis on public and patient groups participating in public health initiatives such as quitting smoking and preventing our children from being pressed into taking drugs at dance clubs.

To that list should be added the need to be responsible for sensible intake of alcohol and the avoidance of binge drinking. The misuse of alcohol contributes to a significant proportion of the use of our health services. It also contributes to disorder on the streets and crime. Should it not be a priority for public health education in primary care in the local community—all the more when we have fewer doctors than our European neighbours?

Complaints by patients have been mentioned by other noble Lords, but I assure your Lordships' House as a complaints convenor in a community trust that more letters of compliment and thanks than complaint are regularly received in the NHS.

The state of our public services, particularly the NHS, is like the proverbial curate's egg: some very good, some not as good as they should be. The way forward requires structural changes in the NHS to come to an end. Time must be given for health professionals and other staff to implement good policies and to seek patient and community participation. Interference and targets from the centre should be kept to a minimum and local flexibility permitted. Patients' expectations need urgent attention. Above all, adequate funding for primary care trusts is essential for a better health service.

Those suggestions are supported by the group mentioned by the noble Lord, Lord Clement-Jones—the King's Fund—in the discussion paper, The Future of the NHS—a framework for debate, published in January this year.

7.32 p.m.

Lord Bradshaw

My Lords, in addressing the problems of the railways alluded to by the noble Lord, Lord Faulkner, we should turn to the setting up of the company limited by guarantee which is to be the successor of Railtrack, and the future of the Strategic Rail Authority. We should try to avoid the confusion and delay which have beset investment in the London Underground.

The Labour Government have been in office for five years during which an immensely complex scheme has emerged for modernising the Underground. I will not dwell on that issue except to say that time, money and effort have been expended in financing the future of the Underground while the operational capability of the system has substantially worsened. We need to avoid at all costs a similarly flawed proposal for the future of the railways.

From the very outset of the privatisation process we have witnessed the development of a system where lawyers, accountants, merchant bankers and every form of consultant have waxed fat while investment in the infrastructure has declined. It has reached the stage where rolling stock construction—where a competitive international market exists—costs in real terms about the same per seat provided as at privatisation. Infrastructure work, on the other hand, costs between two and three times as much as it used to. That is a significant change, well supported by available figures.

As well as the dead-weight costs of the performance regimes, the safety culture, and Railtrack itself, the bidding system for work is anything but clear. We need from the new system a clear direction of management—to which the noble Lord, Lord Faulkner, referred—whose basic task is to maintain and improve the network. It is far from certain that a company limited by guarantee will provide that service. If it consists of only a few people how is it proposed that they should be appointed?

It is not obvious that a stakeholder board with diverse interests would provide the clear direction and asset management desperately needed in our railway system. On the other hand, a few executive or non-executive directors, appointed by government or through an agent such as the Strategic Rail Authority, would look surprisingly similar to the board of a nationalised industry; for example, the former British Railways Board. That would not necessarily be a bad thing as high salaries are not necessarily accompanied by good management, but the source of its funding is crucial to whether its borrowings will count as part of the PSBR.

As sources of funding, the new body will receive track-access charges from the train operating companies. Those charges may or may not be raised as part of an interim review by the rail regulator. We need to ask ourselves whether it is appropriate that a personalised regulator should decide, through a charges review, the amount of money to be paid from the taxpayer to the railways. That is not the job of a regulator; it is a matter of pure economic regulation, as is the case with the Civil Aviation Authority. The flow of track-access charges, if certain, may be securitised.

The body will also receive grants of the type provided in the 10-year plan. It may decide to allow contractors to raise funds for isolated schemes securitised against future revenues, but probably backed by some form of government guarantee. Without an equity base it is difficult to envisage any other form of funding which will cost what is regarded as an acceptable amount of money without a government guarantee.

Perhaps we should consider an option where franchises are let on a vertically-integrated basis with the franchisee taking responsibility for maintaining and developing the infrastructure. That will requite long franchises which provide for rolling the franchise forward as time progresses, subject to performance criteria. It opens the possibility for the franchisee to approach the market to fund improvements.

There will no doubt be objections from those who say that it would be impossible to safeguard the rights of other operators, particularly freight operators. There are two answers: first, freight funding through the Strategic Rail Authority will be tied to the provision of adequate rights of way for freight. Secondly, while my proposals see no place for a regulator, they see a place for an arbitrator to decide upon allocation of space according to the priorities of government if the parties do not agree.

So what is left? First, the Strategic Rail Authority the principal source of funds and landlord or franchises. It should be a strategic authority and plan for the future, as the noble Lord, Lord Faulkner, mentioned. Secondly, we have the new owner of Railtrack: a company limited by guarantee. It is important that it should have a managing board appointed by the Strategic Rail Authority with a clear remit to manage the infrastructure. It may have a council which meets occasionally but such a council should not have the responsibility of managing. The difficulty is in finding the money and ensuring that it is well spent. The board may need, for example, to revisit group safety standards where the costs of enhancement are being driven ruinously high.

Once we are satisfied the money is well spent, we must ask ourselves whether pre-planned engineering delays, to which reference has been made, should give rise to payment because the work is carried out for the ultimate benefit of the train companies. Beyond that, extra funds should be provided by the Treasury as this is by far the cheapest source of funds. But, first of all—and very urgently—we must satisfy ourselves that the money is well spent.

I must mention the matter of strikes on the railway. I do not believe that strikes sit easily with the concept of public service. Employees and their trade union representatives may feel that they are not well rewarded or even adequately rewarded. However, I do not believe that the users of public services—who, in the end, are you and me—deserve to be inconvenienced, sometimes severely, as a result of strikes in pursuance of wage claims or other disciplinary matters.

Unions and employers should be obliged to take their disputes to a form of binding arbitration. We live in the 21st century, not the 19th century where working conditions were primitive. I suggest that the Government should tell trade unions that arbitration is the modern, civilised way to settle disputes, not by the crude instrument of strikes. If trade unions will not agree to this change, the way should be opened for those affected by strikes to seek redress for such damages in the courts. Protection for trade unions for the effects of their actions should be withdrawn.

In the last resort we seem to face a choice. We either manage the railway infrastructure properly through a board that is appointed for its engineering and operational skills and we fund it properly and accept that a part of its funds will come from the public sector, or we moulder on with the present expensive collection of consultants, lawyers, merchant bankers, and others, who do not run the railway, demand very large fees, and, in the end, come running to government for salvation. Enough is enough. We want clear, straightforward answers from the Chancellor of the Exchequer, and from the Government.

7.42 p.m.

Lord Mackenzie of Framwellgate

My Lords, I begin by congratulating the noble Baroness, Lady Sharp of Guildford, on initiating this debate. As a public servant for 35 years in the police service, obviously I can talk about that service and the qualities that I believe it has in this country. My experience also stretches to other public services with which the police service works. Over 35 years I came to know many people in the ambulance and hospital services, and in all the public agencies that provide the important services that we all value. It is a tradition in the police service that you join not to make money but to provide a service. That was the reason for my joining many years ago in the 1960s; it certainly was not a case of wanting to make money and receive a fat wage. I do not believe that members of the police service have ever been overpaid.

The police service has been a public service since 1829 in the Metropolitan area, and since the 1940s in the counties and boroughs of England and Wales. As president of the North East Police History Society, I feel qualified to comment on the crises that the police service has been through over the years. Rather surprisingly, police officers were denied the right to vote until 1887. So, in a sense, I have come right round in a circle because I do not have the right to vote at present.

In 1918, the Desborough Committee was established. The crisis at that time led to the police strike of 1919. The noble Lord, Lord Bradshaw, talked about strikes on the railway. Members of the police service do not have the right to strike. Quite honestly, I do not believe that they would want it. Indeed, it would be a disaster beyond imagination if members of the police service, on whom we all rely, withdrew their labour. However, as I shall outline, we have crises from time to time.

The Lord Oaksey report of 1949 resulted in the Police Council being established in 1953 in an effort to try to resolve differences. Such arguments usually revolved around income, payment and salaries. As a result of the 1960 crisis, which I well recall, the Willink Royal Commission was established. At that time, police service pay had fallen behind by something like 30 per cent compared to average industrial earnings, but that shortfall was put right. In 1977–78 we had the Edmund-Davies inquiry, which was established for the same reason. It was set up by my noble friend Lord Merlyn-Rees. Again, the problem was resolved, albeit temporarily. So, for various reasons, public services pass through what seem to be cyclical crises. That is the point that I am trying to make.

Under the previous Conservative government in 1992 we had the Sheehy inquiry, which was set up to look into the remuneration and conditions of service of the police. Again, this resulted in a massive demonstration of opposition at Wembley Arena, which noble Lords may recall. Most of the provisions in the Sheehy report were dropped. I heard comparisons made by the noble Baroness, Lady Sharp, with public services abroad. I believe certainly in this area—that the British police service compares admirably with any police service in the world. I speak as someone who has spent a good deal of time in America with the FBI and with many services in Europe. For all its faults, the British police service certainly ranks among the best in the world. More importantly, I am sure that the British public appreciate that fact.

The Police Reform Bill, which is currently going through its various stages in this House, has been seen as a problem area in terms of the police service. I am playing host to some police officers this evening. I believe that we should put this matter into perspective. I have been discussing the legislation with the Police Federation. I have been reminded that it is important to remember that the Bill has 79 clauses. The federation whole-heartedly supports 48 of those clauses; it supports, with some amendments, Clause 21; there are a further 10 clauses that it would wish to delete. Overall, support from the Police Federation is there. We should not run away with the idea that there is massive opposition to the Government's proposed police reforms.

It is also important to remember that, by 2003–04, we shall have spent £9 billion on policing, which is a massive amount of money. Indeed, there has been £1.6 billion each year over the past three years, which is a 21 per cent increase. Manpower in the police service rose by 3,066 to January 2002, making a total in the service of 128,748, which is the largest annual increase for 20 years. This is not a service in crisis.

The criminal justice system, which is part of the public sector, obviously affects the policing service. The Government's pledge to reduce by half the time spent between arrest and sentence has been achieved—a pledge redeemed, as was the case with the method for dealing with anti-social behaviour. Again, 466 anti-social behaviour orders have been brought into effect since September 2001. That is not a great number, but it is increasing. If we make the procedures easier to follow, I am sure that more of them will be used to reduce such behaviour on some of our estates.

Moreover, the crime rate is down by 21 per cent since 1997, which is quite a dramatic reduction when one compares it with the rises over previous years. These are important statistics that arise as a result of the British Crime Survey. The figures as regards victimisation are the lowest for 20 years. Therefore, the perception that crime is a major problem is quite often not the truth. I am not minimising the problems of street crime and all the terrible cases about which we read, but statistics are important and the facts are well worth considering. Domestic burglary is down by 35 per cent, vehicle crime is down by 24 per cent and violent crime is down by 23 per cent since 1997. Those are important points of which noble Lords should take account.

The police service is not composed of wreckers, as has been suggested in some newspapers. It requires, and has, the support of the public generally. We must remember another factor which is often forgotten; namely, that the British police service continues to be unarmed in the face of violent crime and crime involving arms, whereas many other police forces throughout the world are armed. Certainly, I understand that the police wish to remain unarmed, unless they are driven to become armed due to an increase in violent crime. However, the police are armed on specific occasions. Occasionally things go wrong when firearms are used. We must accept that, from time to time, mistakes will he made but we should pay tribute to the vast majority of officers who go out unarmed on the streets day in, day out throughout the year to face whatever is involved in doing their duty.

In conclusion, the funeral of the Queen Mother constituted the finest example of public service and, in a sense, its power. I refer to the organisation over eight or nine days of, for example, the events in Westminster Hall. The majority of that was carried out by loyal public servants devoted to their duty who provided a service timed absolutely perfectly to a "t". It was the epitome of public service. The police should not be a party issue. The danger is that we may be viewed as denigrating public servants. We should not be viewed as doing that. I am sure that noble Lords would not dream of doing that. However, there is a danger in criticising all the time. The police consider that they are not being given adequate support. We need to give them support, not denigrate them. We should celebrate public service.

7.52 p.m.

Baroness Maddock

My Lords, I am grateful to my noble friend Lady Sharp for securing and opening this important debate on our public services. A great number of our public services are provided by local councils, parish councils, district councils, unitary, county and metropolitan authorities. It is to local authority provision of services that I wish to address my remarks.

In the 19th century and early in the 20th century local authorities provided many more services than they do today. They often provided gas, electricity, water, sewage disposal and also limited health facilities. Today citizens expect local authorities to provide much more than they do, or have the power to do. Many of us who have been local councillors or Members of Parliament know how confused the general public are about who provides what locally.

When I was a councillor in Southampton, Top Rank closed the ice rink as it could make more money by developing it for housing. Everyone asked why the council had closed the ice rink. The then council leader thought that he could do something about that. A big meeting was held and he promised everyone that the people of Southampton would be skating again within a year. There is still no ice rink but the council leader is now a junior Minister in the Government. I am net quite sure what that means.

One facility traditionally provided by local authorities was the bus station. However, the bus station in Southampton was also closed. Since transport deregulation that has been a rather difficult issue for local authorities. In town after town we have seen bus stations sold off for development and buses have to use stands in the streets. Local authorities have no power to make operators use bus stations or to contribute to the costs of provision of those facilities. Indeed, they often do not want to. When a bus station is closed the letters page of the local newspaper is full of letters in which people ask why the council has closed the bus station. That is an important point when we are trying to provide good, integrated local transport. Given that the Minister who is to reply to the debate has transport as part of his portfolio, I hope that he will be able to enlighten us a little on what the Government think they may be able to do about that.

While I am on the subject of transport I want to touch on two other connected areas. One concerns another service provided by local authorities; that is, transport to and from school. I now live in Northumberland. The local authority says that it does not have the money to provide school transport for 16 year-olds staying on at school. I refer to a big rural area. Yet the North East underperforms on practically every indicator one wishes to look at, particularly as regards pupils staying on at school and skills. I understand that the local authority now thinks that it may be able to provide funding of £1 a head in this regard. This is not a rural area where one can get into a car and take one's child on a short journey to school or pay a small bus fare. The journeys involved may comprise 10 or 15 miles in an area where the number of children staying on at school is low.

Secondly, on the theme of roads and transport in Northumberland, there is a huge network of roads to maintain. At this time of the year potholes are obvious. Often letters appear in the local papers in which people complain about the state of the roads. Those letters became somewhat hysterical last year when the local county council was awarded a charter mark for its road maintenance department. Letters appeared in the local papers and it transpired that the charter mark was awarded for the way in which the department was run on its limited budget and for the way in which it carried out its duties, not for the state of the roads.

The areas I have highlighted demonstrate how a lack of funding for essential services holds back many of the desired outcomes we want in other areas. Local authorities are held back by central government control and by various regulations. That means that they cannot make sensible decisions and choices for their areas. That is why we on these Benches have for many years repeatedly called for a power of general competence for local authorities and for an ability for local authorities to raise funds themselves to provide local services for those who elected them. The latest round of council tax rises shows the dilemma of local authorities. As we all know, most of the funding for local authorities comes from central government. However, they are told that if they want to provide extra services they can do so but of course they have to put up the council tax. The gearing effect is such that the amount of council tax people pay is disproportionate to the amount of money raised.

A few weeks ago we debated local authorities in this House. Other pots of money can be obtained from government. My noble friend Lord Shutt of Greetland referred to them as "special offers". That is a rather good description. However, if local authorities devote a lot of time to special offers, they devote much less time to delivering the services that people need.

Finally, I turn to housing. My noble friend Lady Sharp pointed out that the real area of underspend in recent years has been housing. We have huge levels of disrepair in the private sector and in the social housing sector. We have large numbers of homeless families in temporary bed-and-breakfast accommodation and a huge under supply of affordable housing. Local authorities have been unable to spend much of the money that they obtained from the right-to-buy scheme and from stock transfer. In this area as in others local authority morale is poor. There is a perception that central government are keen to give local authorities responsibilities—indeed, I support some of that before I am accused of saying one thing and doing another—but are not prepared to fund, or allow local authorities to fund adequately, such services and blame councils when matters go wrong.

Concerns are now being raised that the decent homes standard is about to become the latest example of that approach to public spending. As a policy the standard is an enlightened one. It states that poor quality homes should be improved to a specified level by a specified date delivering to tenants a home of at least adequate standard. But now the Government believe that 98 councils may struggle to reach the standard by 2010. Indeed, Roy Irwin, the chief inspector of housing, stated last week: I suppose based on the evidence, it's debatable at the moment"— that is, whether the councils can reach the standard— because the performance of authorities on repairs and maintenance is not always as good as it should be, by quite a long way in some cases. At best they can keep the property in the state of repair it is today but that's not good enough to meet the decent homes target". Where is the money going to come from to allow local authorities to do that? The Government could free up capital receipts and money from the right-to-buy and stock transfers. However, the news this last week was that tenants in Birmingham have voted against stock transfers, which means that not all is going swimmingly in that area, either. Many fear that capital from the right-to-buy and from stock transfers is being earmarked by the Government for an £8 billion fund for the housing market renewal fund. That is for private sector housing in areas of poor repair, particularly where there has been mass abandonment of houses.

If we want decent local public services from our local authorities, we cannot go on as we currently are. As my noble friend Lady Sharp said, the Government cannot run everything from the centre. Local authorities should have much greater freedom to manage their affairs locally and raise money locally. They should also have access to capital markets in relation to their own council credit rating, not in relation to a rating that is inspired by the Government or which involves rules that are laid down by the Government. If we really want the people of this nation to engage in the political process, we need to be clear about who runs what and where the money comes from. We must ensure that we do not have the fudge and muddle that we see gathering pace all the time.

8.1 p.m.

Earl Russell

My Lords, 50 years ago, when such things happened rather more often than they do now, a young man from Christ Church was being "viva-ed" for a fourth in theology. He was asked, "Have you a vocation, Mr Smith?". He replied, "Yes, but I was out at the time".

The public services are beginning to resemble that situation because they seem to be becoming the services in which no one wants to work. We are 40 per cent below complement for nurses in a number of London accident and emergency departments. It is not surprising if occasionally people are not able to do all that they should.

I recognise and am deeply grateful for the amount of dedication that I have observed among those still working in the National Health Service. Most of them tell me, especially if I see them off duty, that they cannot go on doing what they do for very much longer. That includes people as diverse as my own GP and a number of nurses.

I recently happened to get into conversation quite casually with a serving police officer. He and his sister had started comparing notes about what it was like working under Mr David Blunkett. That is the answer to the noble Lord, Lord Faulkner of Worcester, who I regret to say is no longer in his place, and who complained about treating this issue as a single problem. If one talks to people in any branch of the public services, it becomes clear that they recognise that they are all going through the same experiences and that those experiences mean that they no longer wish to go on working in their job.

I declare an interest as a serving public service worker and I do so in thankfulness that this is the last Session in which I shall have to do so. I thought that I should never live to hear myself say that. That sense of vocation that distinguishes the public services was valuable in terms of making public service workers go that extra mile. Without that, I should not be alive—that has been the case in several situations that I have been through. It is also worth many pounds to the Treasury. If the Treasury destroys that sense of vocation among public service workers, it will find that it has committed a very expensive error.

When we talk about a single field, we are also talking about the question of centralisation, to which my noble friend Lady Sharp drew attention. It is highly likely that large parts of her speech will form part of our next manifesto—I certainly hope so, but that is yet to be determined.

My GP was questioned vigorously by a representative of NICE—who, to increase my GP's indignation, happened to be a nurse, not a doctor—about why he was prescribing what she thought were the wrong sort of antibiotics to people with chest infections. Doing so costs more. He replied, "Will you compare the rate of death from pneumonia in my practice with those in practices in comparable areas?" The differences were enormous. In my GP's practice, there was not a single case.

I have not supervised a PhD thesis since 1984. The question whether a PhD thesis is fit for submission is between the candidate, the supervisor and, in cases of disagreement, senior colleagues who have the confidence of them both. That is not something on which Her Majesty's Government are competent to hold an opinion. The longer that I have investigated that question, the more certain I have become that a PhD in one subject is not the same animal as a PhD in another and should not take the same length of time. Moreover, one does not know what one is going to find out. Who knew that he would find gold in Klondike, and how could he forecast how long it would take before he did?

Accountability is another matter that causes trouble. It is used as if it were a single thing, but it is not; it is a whole lot of different things, which can be exercised in a whole lot of different ways. The important point about it is that one should be accountable to someone who is capable of judging the thing that is being accounted for. For example, let us consider making a person who repairs car engines accountable to me. Unless I happen to be the customer and have the right as a free citizen to take my car elsewhere, there is no way that I can be a competent person to account to regarding the repair of car engines. Equally, if the repairer of car engines is put in the opposite position and is trying to hold me accountable for my academic work, I doubt whether he is going to do very much better than me.

The Government must take into account the fact that they are not competent to recognise an improvement in education when they see one. They simply do not have the necessary skill. That is ultra vires in the plainest sense of that phrase. Nor can the Government claim to be a proxy in judging the standard of teaching for the consumer, the patient or anyone else. Those people know what is done to them and the Government do not.

When I was at Yale, the great weapon of accountability for teaching was the Yale course critique, which was published by the undergraduates for the undergraduates. I was to a large extent accountable to them, and I was happy with that arrangement. Their judgments were on the whole consistently fair, well informed and balanced. One could often see the result of a very lively debate within the class. I am not happy with the Government setting themselves up as a proxy in that regard, when they have no idea what the relevant people think and in many cases imagine that they think the exact opposite of what they really think.

However, I am properly accountable to Her Majesty's Treasury for the spending of public money and with regard to the motives and purposes for which it was granted; but I am accountable in that way only. The sickening stripping away of the ability to decide how one does one's job is at the heart of the loss of vocation among our public services.

The noble Lord, Lord Mackenzie of Framwellgate, is not in his place any more. But I have also heard policemen complain about their inability to do their job either because too many people are looking over their shoulder—I do not complain of that if it is the law looking over their shoulder because that is what the law is for; if it is the Minister, that may be a different matter—but also much more often because they simply do not have the funding to do the job.

Mr Nigel de Gruchy remarked last weekend that we are told to do one thing, then we are told to do the opposite, but never with enough funding to do it. The Department for Education and Skills unwisely described him as "intemperate". If the people at that department believe that those remarks are intemperate, they should come and have lunch in my college and listen to anyone from Nobel laureates down to first-year undergraduates. They will hear from any of them remarks a great deal more intemperate than those.

Unless the Treasury can give up its obsession with accountability, we shall not have anything that works. There must be more money. Money is not the answer to everything, but where it comes from and how it is distributed does matter. The least correlation between the money spent on health and satisfaction is in the United States, where 40 million people have no health insurance. That is not very surprising. The greatest correlation between spending and satisfaction and the highest level of satisfaction from spending is in Denmark, where health spending is controlled by 14 counties and two cities. It is local enough for genuine public opinion to be genuinely heard by real people. I believe that that is an instructive contrast.

8.12 p.m.

Baroness Warwick of Undercliffe

My Lords, I join others in thanking the noble Baroness, Lady Sharp, for bringing this debate before us today. I hope that noble Lords will forgive me if, rather than touring the horizon as the noble Baroness, Lady Sharp, did, I concentrate on one area only. I want to address the state of higher education. In doing so, I declare an interest as the chief executive of Universities UK.

The main point I want to make is that universities provide a vital public service. However, it is one that has been for far too long overlooked and it is now, indeed, a public service in financial crisis. Perhaps I should indicate in what ways our universities provide that public service. Most obviously, universities educate our doctors, our nurses, our teachers and other professionals without whom the delivery of almost every other public service of which we have spoken today would be impossible.

Universities also help to drive the UK's competitiveness by turning out highly qualified graduates for an employment market that increasingly demands the skills that only a university education can provide. Universities also improve UK competitiveness through the research that they undertake. The knowledge generated by that research is at the heart of a productive economy. Universities work with business to transfer new technologies which ensure real-world application of their research findings.

Finally, the public service vocation of our universities has led them to play a leading part in striving for a fairer and more inclusive society. Universities UK is working towards a society in which the family in which you are born does not dictate the opportunities that are open to you in life.

Many noble Lords came to the launch last month of Universities UK's publication, Social Class and Participation in Higher Education. That report showed just how hard universities are working to attract students from non-traditional backgrounds—the very students who, in the past, might never have considered that university was for them. But the irony of all this success is that universities have become a Cinderella public service.

Of course, universities are autonomous institutions that derive funding from a variety of sources. They can attract investment from industry and raise money by marketing services commercially. But they have an important role in delivering a variety of public services and they rely on government to fund them for this side of their activities. Unfortunately, universities and those who work in them have often not received the recognition that they deserve. That is the case despite universities offering outstanding value for money to the UK. Figures can show that the sector now generates something like £35 billion each year across the economy. That, of course, is in addition to the many social and cultural benefits that the sector creates. Proper investment will be repaid many times over. Continuing neglect will have dire consequences.

How might the Government enhance this public service? I should say straight away that universities work hard to avoid the "Oliver" criticism that they are always holding out the begging bowl, saying, "More, please". But there is no getting away from it. Universities need more investment if they are to perform the public service functions that the Government expect of them.

The forthcoming spending review is the Government's opportunity to show that they value higher education; certainly that they value higher education as highly as they do any other public service. Higher education staff certainly need the same sense of pride and appreciation that the noble Baroness, Lady Sharp, urged us to offer other public services. In its submission to the spending review, Universities UK has shown, and backed up with evidence, that the HE sector needs more than £9 billion over the next review period. That is, indeed, a very large figure. But it is not a figure chosen at random; nor is it a deliberate exaggeration of the sector's need. It is a hard-nosed assessment of what it will cost to meet the Government's own priorities.

Perhaps I may give your Lordships five key points showing why government need to invest in this public service. First, they need to do so to ensure wider participation in higher education. If we are to reach the Government's target of increasing and widening participation to 50 per cent by 2010, universities will need to provide an extra 30,000 student places each year. Recruiting and retaining students from nontraditional backgrounds costs money. One way in which the Government could recognise that would be to increase the so-called "postcode premium" to 20 per cent.

My second point is that investment is needed to enable universities to fulfil their part of the Government's National Health Service plan. Universities will train the medical and health professionals whom the Government want to recruit. There needs to be adequate funding for that work or those professionals will simply not be available to the National Health Service.

Thirdly, as many noble Lords will know, the state of some of the teaching and research facilities in our universities is deplorable. Under-investment over the years means that the sector now needs to repair, modernise or replace outdated or crumbling buildings and equipment. In addition to that investment, the shortfall in funding for the research assessment exercise outcome must be met. It has been enormously demoralising that the effort put in to produce the substantial increase in performance in research has been met by what has effectively been a cut in resources for hundreds of departments. Not only that, but the consequences of under-funding the RAE would be enormously damaging to the longer-term development of UK research.

My fourth point is that, like many other public services, as several noble Lords have already emphasised today, universities desperately need to be able to reward staff properly if they are to avoid the type of shortages already being experienced among school teachers and nurses. That is especially true in fields where the private sector and other parts of the public sector offer stiff competition.

Finally, universities are looking to the future and wish to nurture their links with business and communities. But they need help from the Government to build on their success in opening up their work to increased collaboration with industry. We all know that there will be many strong competing pressures for the limited resources available in this spending round. Today's debate has helped to highlight many of those needs. I hope that my noble friend the Minister will agree that the Government, having clearly identified the importance of higher education for the long-term prosperity of the UK, should now have the courage of their convictions and invest significantly for the future.

I was delighted that my right honourable friend the Prime Minister only recently reaffirmed the Government's belief that higher education was essential to the country's economic well-being. I cannot think of any area that will give better returns or better value for money—"something for something", as the Treasury mantra goes. In my view, investing public money in higher education will no doubt be money well spent.

8.20 p.m.

Baroness Harris of Richmond

My Lords, I, too, am grateful to my noble friend Lady Sharp of Guildford for instigating this debate. We all want better public services for our local communities. One of the most important of those services is policing. It impacts directly on the feeling of well-being and quality of life in so many different ways.

As the noble Lord, Lord Mackenzie of Framwellgate, reminded us—I am sorry that he is not in his place—at present we are in the middle of discussing an ambitious programme of reform of police services. We are having interesting and vigorous debates about the Bill's content and there will be more opportunity to examine and criticize the Government's proposals next week. Therefore, I do not intend to rehearse the issues today, which are more properly reserved for debate in your Lordships' Chamber. However, I want to look at some of the broader issues around police reform.

I want to put on record my welcome and support for much of what the Government are seeking to do, although I am not convinced that they are implementing their proposals in the right way. Other aspects of their proposals give me considerable cause for alarm. From my years of chairing my local police authority and also being a deputy chairman of the Association of Police Authorities (APA), I hope that I can bring practical knowledge and experience of the state of our policing services and the scope and need for reform.

First, I take this opportunity to pay tribute to the excellent work done by our police services throughout the country. I have first-hand knowledge of that in my home force of North Yorkshire. While, indeed, there is scope for reform, let us not forget that in the face of constantly rising demands and increasingly difficult decisions we have a police service which is still admired, and rightly so, throughout the world, for its professionalism and expertise.

Underpinning that service is the democratically-elected and partly-appointed system of police authorities which scrutinise and hold to account the work done by police officers on behalf of our communities. They too deserve our thanks for the professionalism they bring to their role and their commitment to delivering an efficient and effective policing service. I am particularly indebted to one of the APA senior policy advisers, Fionnuala Gill, and to the clerk of the North Yorkshire Police Authority, Jeremy Holderness, who have furnished me with some relevant facts and figures which I shall share in a moment with your Lordships.

If there is one thing which all our public services have in common, it is that their most valuable resource is their staff, the people who provide those services on behalf of us all. The quality of those services, including policing, is crucially dependent on those who deliver the service. I believe that it is fair to say that successive governments have failed to recognise the significance of valuing those who provide our public services. Certainly, that is the case in the police service.

I shall give your Lordships an example of that. Successive reports by Her Majesty's Inspectorate of Constabulary have confirmed that leadership is a critical success factor in good policing. There is still much to be done in terms of ensuring that we identify and select the right people as leaders, not just in the highest ranks, as chief constables and assistant chief constables, but also those charged with delivering policing in our neighbourhoods at basic command unit level. Equally important is the support which we give to those leaders by making sure that they have the training, assistance and resilience they need to carry out their demanding role.

Of no less importance is the need to ensure that those who work at the sharp end, on the ground, have the right training, the right skills and the right equipment, to enable them to do their job effectively. Under-investment in policing over many years means that that is not always currently the case. I know; I have been a reluctant party to some of those decisions over the years, which later I came bitterly to regret.

In so far as the Government's proposed reforms seek to address those issues, they are welcome, but if we want high-quality policing, we must invest in those on whom we rely to deliver it. The new duties on public authorities under the Race Relations (Amendment) Act 2000, which come into force in May, represent a further step forward in ensuring that those of minority ethnic backgrounds are given the same job and promotion opportunities in our public services. This Government's commitment to that agenda is strongly supported by these Benches.

The integration and cohesion which is desperately needed in some of our communities, as witnessed by the disturbances last summer, can be furthered only if all sectors of the community have equal access to the employment opportunities available within the public sector as well as to the services delivered.

If there was one issue which was a constant concern throughout my time as chair of my local police authority, it was the availability of resources for policing. Difficult choices always had to be made about priorities and allocation of resources. I recognise that there is not a limitless pot of public funding—and the demands for money for policing are matched by similar demands across the rest of the public sector, whether it be health, education, social services or another area. However, in North Yorkshire this year the police authority will use almost 21 per cent of its revenue budget to pay for pensions. The authority has some 1,400 contributors paying 1,800 pensioners, which puts North Yorkshire somewhere near the top of police authorities in terms of the ratio of pensions liabilities to total spend. That simply cannot go on. That is rather like having a bath full of water, but with the plug out: measly amounts of water trying to top it up make absolutely no difference, and the water flows out continuously.

Another particularly frustrating factor over the past five years has been the increased central control over resource allocation through, as we have heard, the proliferation of ring-fenced challenge funds, bidding rounds and various streams of funding for a plethora of initiatives such as the Crime Fighting Fund. Yes, the Government are putting in more money nationally, but the majority of that money is for specific additional initiatives and does not help core funding at all; nor does it meet the full cost of the extra officers it is supposed to create. Thus the call on the local council tax payer is more pronounced.

It also involves the completion of endless form filling and considerable bureaucracy. That all takes officers off the streets and away from their real task. Instead of getting our public services to compete with each other for various pots of money, would we not do better to go back to basic principles and allocate resources according to need? Now, there is a novel idea! Should we not, in accordance with the Government's principles, allocate resources and then delegate responsibility and control over them to those who are accountable to local communities?

This creeping centralisation is a feature not just of funding but of the Government's wider approach to the public sector, including policing. Certainly, it is a worrying feature of the police reforms. The Government have stated unequivocally that they want more levers, more control over how the police operate locally.

We recognise that there are some issues where there must be national standards or consistency throughout the country, but we also want policing which is sensitive and responsive to the communities it serves. That can be achieved only if the style, nature and priorities for policing are set locally by the police authority in partnership with the chief constable.

It is time that we recognised absolutely that local communities should determine the nature and style of policing in their area. After all, that is what our system of policing by consent is all about. We have found in North Yorkshire that residents are beginning to identify and resent the Government's shifting of responsibility for funding these essential public services on to them through local taxation. We are not having an open and honest debate about this at national level. Policing cannot and does not work without the support of local people. They must have a say in what is proposed if confidence is to be rebuilt.

In all aspects of reform of our public services, we need to see a shift away from control by Whitehall towards greater local decision-making and accountability to local people. That is the only way to empower our communities and to ensure that local services meet local needs.

8.29 p.m.

Baroness Knight of Collingtree

My Lords, I have time and the intention to make only one point. With our ability to organise national events better than any other country in the world, why, oh why, can we not organise simple things in our hospitals?

It is now years since in another place I made an impassioned plea for sick people, lying in hospital beds, to be treated with courtesy and allowed to keep what dignity they had left. To put people in mixed wards is very upsetting and offensive, particularly to older patients, but often to younger ones too. The only acceptable place to have a mixed ward is in an intensive care unit. Patients there are too ill to know what is going on around them or who is lying next to them. But for alert patients it really is degrading and deeply uncomfortable.

I thought that mixed wards ended a long time ago. I was horrified to find that that is not the case. When I realised earlier today that I had a small opportunity to make this point I grasped it. This practice must be ended if we are to have any thought or care for the patient's feelings.

There is one other linked matter. I ask the Minister to stop staff in hospitals calling patients by their first names. For older people it can be extremely offensive to be called Jim or Mary by doctors or nurses young enough to be their grandchildren. When Mary is in the next bed to Jim, the sick person is robbed of every shred of dignity and modesty.

Is it not enough that people have to wait so long for treatment, and possibly even have to go abroad for it; that wards and corridors are too often filthy and unclean; and that a cancer patient's life span is shorter here than in every other country in Europe? At least we should have the decency to treat sick people with politeness and sensitivity.

I say to the Minister: "You are very powerful, my Lord, you could stop this happening. Please do it—at once".

8.32 p.m.

Lord Ezra

My Lords, after hearing that admonition to the Minister—of which I am sure that he has taken full note—I am pleased to congratulate my noble friend Lady Sharp on having initiated this most informative and wide-ranging debate. She introduced it with a speech which was well constructed and extremely well informed and which formed the backdrop for what other noble Lords have said today.

The state of the public services has now moved centre stage both in public and political consideration. Today's debate is, therefore, very timely. During the course of the various contributions, we have had a number of criticisms. There have even been some plaudits. But above all, and what is most important, there have been a large number of constructive suggestions. I saw that the Minister was taking copious notes. I am sure that he will bear all those points in mind and no doubt speak about some of them when he winds up.

We all know what the problems in the public services are due to years of under-funding by governments of both complexions. I do not identify any particular government for that. But what struck me as far worse than the under-funding, which was a problem with which everyone in the public sector had to contend—and I had many years of it in a nationalised industry—was the stop/go approach. That was really worse than anything else. It was the unsustainability of inadequate funding that really made it all very difficult.

There are therefore two ways in which this has to be put right. First, the funding must be adequate; but, secondly, and above all, it must be available on a sustainable basis. I believe that this is the intention of the Government. If so, I welcome it. I hope that they and successive governments will keep to it.

We are at present going through a transitional phase in our public sector. We are moving, I hope once and for all, from the under-funded stop/go regime of the past into a new regime of adequate funding and sustainability. But, like all interim measures, it is fraught with difficulty. Many of the difficulties now being experienced in this transitional phase have been mentioned today.

I do not underestimate the problems which any government face in trying to change a whole system. If there is any criticism it is that perhaps they aroused too many expectations, particularly in the heady period of elections because these things do take time as the Government are now learning.

Today we have heard positive suggestions about improvement in a number of the main public sector operations—in education, health, railways, police, local authorities and housing. I shall try to identify some of the ideas where there seems to have been some consensus on what needs to be done. I have referred to the level of funding and to the need for sustainability. My noble friend Lady Sharp referred specifically to capital expenditure in the public sector, a vital element on which we have also suffered as well as on day-to-day funding.

The other issues that have come out are those of centralisation and decentralisation. The Government's view on that has been clearly stated in their recently published document entitled Reforming our Public Services. They make no bones about the fact that they favour decentralisation and flexibility of public services. But what has been said by many today is that, while that might be the stated objective of government, it is not in all cases so far being achieved. So we must perhaps expect, and we hope that we shall get some reassurance from the Minister, that the Government are determined to bring about thin decentralisation.

The question of hypothecation has been raised. That has always been a matter for major debate in which the Treasury and governments generally have shown that they were opposed to it, whereas many people involved in specific sectors have argued for it I think that there is a case for reconsidering this issue If the country is going to be asked to dedicate more taxes for public services, I think that they must know where the money is going, at least to some degree. No one would argue for total hypothecation. There would be serious drawbacks in that. But some degree of it seems to be desirable in the present situation.

The participation of the private sector is also one that has created a fair amount of debate and even controversy. It is a question of whether the provision of essential services should be totally provided by the state or whether there should be a mixed provision. There is a strong argument for saying that there should be a mixed provision, so long as it is clearly thought out. Some doubts were expressed about the way in which some PFIs and PPPs have been engaged upon. Many of us have had serious doubts about the application of the PPP to the London Underground where we do not believe that there is justification on financial grounds.

Management structures have been mentioned. This is an area where there is a good deal of concern. It is tied of course to the question of centralisation and decentralisation; the number of decisions that get remitted from the various departments to the services concerned; and the doubts which have entered the minds of management in the public services as to what role they really should be playing. There is in no doubt that the role of management needs to be reinforced. I was much struck by a phrase in the positive contribution made by the noble Lord, Lord Chan, when he said that structural changes must now come to an end.

Perhaps I may give a word of advice to the Government based on many years of service in the public and private sectors. Major structural changes create real problems in an organisation. To have too many of them successively is demoralising and takes the eye off the ball. The objective should be, having established funding on an adequate and sustainable basis and set up a decentralised and accountable management structure, to leave people to get on with the job.

8.41 p.m.

Lord Saatchi

My Lords, I am grateful to the noble Baroness, Lady Sharp, for initiating the debate and for the manner in which she opened it. As the noble Lord, Lord Ezra, said, it was an impeccably constructed speech. When I first started this job, I was told that it was important that, after one had given a speech, in the Bishops' Bar they would be able to answer the question: what did he say? In the case of the noble Baroness, it was crystal clear.

She introduced a debate the importance of which cannot be in doubt to any of your Lordships. As the noble Lord, Lord Ezra, said, it concerns the central stage of the political debate. Perhaps I may also thank the noble Baroness for the timeliness of her debate. It takes place exactly a week before the Budget, which will deal with many of the most crucial issues concerning our public services: taxation, spending, linkages, earmarking, hypothecation—some of the things that the noble Lord, Lord Clement-Jones, said that he wanted.

The noble Baroness made three clear and simple points. First, like the noble Baroness, Lady Warwick, the noble Earl, Lord Russell, and the noble Lord, Lord Ezra, she said that she wanted more current spending on public services. Secondly, she said that she wanted more capital spending on public services.

On those first two points, perhaps I may ask the Minister, when—as I am sure that he will—he tells us of the munificence of the Government's spending plans for the public services, to consider the case of health. Whatever measures are likely to be introduced in the Budget next week, how will the real gap between spending on health in our country and that in the average of the Eurozone be made up? It will certainly not be made up in any way by what may be announced next week.

That is because the actual gap between spending on health in the UK and the average of the Eurozone is three percent of GDP. Our spending is about 7 per cent; their average is about 10 per cent. Three per cent of our GDP, which is about £1,000 billion a year, is about £30 billion a year. If anyone is in any doubt about the mystery of why what appears to be a stream of new spending on the public services has little impact on their quality, it is because the sums being spoken of are a drop in the ocean compared to the scale of the problem.

The third point made by the noble Baroness was that money alone was not enough—I think that was her phrase. She said that in order to achieve improvement in morale and a return to the public service ethos—the vocation mentioned by the noble Earl, Lord Russell—there will have to be reform, decentralisation and so on. She wanted to know that the extra money to be spent was to be well spent, as the noble Lord, Lord Bradshaw, said. We certainly echo that view.

At the beginning of her speech, the noble Baroness, Lady Sharp, went back 45 years to illustrate her three points. If I may, I shall ask her to allow me to take her back a little further to reinforce her points. Next week, Budget week, will be the 90th anniversary of the night of the sinking of the Titanic in which 1,500 people died. During the past few weeks, in a compelling analogy, Dr Mary Shaw and her colleagues from the department of social medicine at Bristol University compared the present situation in our public services to that on the deck of the doomed Titanic.

In their study published in The Lancet, the researchers from Bristol remind us of the shocking fact that during the sinking of the ship the first-class passengers were more likely to survive than the rest. That was not because the rich passengers were fitter and stronger, but because their social position meant that they were located on higher decks and had better access to lifeboats. The third-class passengers, on the other hand, were less likely to survive because their access to lifeboats was more limited. According to the Bristol team, so it is in our public services today.

They found that middle-class people who are better off and more highly educated than their working-class counterparts are more likely to escape from areas with low-grade public services. They were likely to leave such areas en masse because of the literally deadly combination of low income, poor housing, poor health care, poor schools and low-paid jobs. Only those who were relatively well off could afford to move out of such areas, while poorer people had to stay put and endure the conditions, according to the research.

If proof of this is required it can be found in the differential death rates from cancer. Thousands of poor people are dying from cancer because they do not have the same chances in our public services as the rich. So says the first major study of cancer and socio-economic factors, Professor Michael Coleman's report, Cancer Survival Trends in England and Wales, 1971–1995. That was a massive study that followed 3 million adults and 18,000 children in England and Wales diagnosed with cancer between 1971 and 1990 and followed their progress until 1995.

The research shows that more than 12,700 deaths could have been avoided in patients diagnosed between 1986 and 1990 if inequalities in cancer care did not exist in England and Wales. The director general of the Cancer Research Campaign said that the report highlighted, what appears to be a catalogue of terrible injustices". The research suggests that the reasons may be that poorer patients go to the doctor when their cancer is more advanced, have worse access to treatment and are less likely to follow recommended treatments. Apparently, they also tend to get more aggressive forms of cancer—possibly because of poor diet and a greater propensity to smoke.

The report found that England and Wales had a worse survival rate for most cancers than the USA and Europe. However, extraordinarily, the most affluent people in England and Wales had similar survival rates to the European average. It found that the disparity in survival rates between rich and poor was between 5 per cent and 16 per cent for adult cancers including breast, bowel and malignant melanoma. The rich were 16 per cent more likely than the poor to survive for five years after getting tongue cancer. The list goes on.

What is worse, that fact is well-known to the public and is the reason why there is now such a depth of disquiet—shown in practically every survey that we read. Most people now believe that they will be required to pay for private health insurance, private pensions, and so on and they are nervous about what that means.

Many noble Lords, including the noble Baroness, Lady Sharp, spoke about the morale of people in the NHS. The noble Lord, Lord Chan, spoke about stress suffered by NHS staff and the noble Earl, Lord Russell, referred to what he called the sickening stripping away of the sense of vocation. I hope that what I have added to that feeling is that it is an appalling fact that the poorest people receive the worst services—not for them any of the dignity and courtesy to which my noble friend Lady Knight of Collingtree referred.

That would be bad enough, but the poorest people also pay the most in tax for the services that they receive. That is the most appalling injustice of all. The poorest 10 per cent of the population—3.6 million—earn less than half the national average. They are below the Government's official version of the poverty level. They pay a record figure of between 57 and 63 per cent of their income in tax. The least well-off pay the highest rate. It is a mad world in which the poor pay higher taxes than the rich.

The requirement to pay income tax has never reached so low down the income scale. Some 3.6 million people of working age earn less than half the national average. They suffer not just because their incomes are too low, but because they are then taxed on them. The poorest people have the heaviest tax burden for the worst services. Next week, we will hear that the Government's solution to the problems in the public services will be more tax. I doubt that people will find that convincing. The problems in our public services are now, as many of your Lordships have said, so deep-seated that only radical thought can solve them. Our political leaders have a great national task to perform. They must rescue poor people from the lower deck of their "Titanic".

Earl Russell

My Lords, I hope that the noble Lord, Lord Saatchi, will not be in too much of a hurry to say that money is not the answer. Unit costs have been reduced for 26 years, I think. We cannot put that right overnight.

Lord Saatchi

My Lords, I thank the noble Earl. I did not say that I thought that money was not required—of course it is. I hope that I have pointed out that the scale of the sums required to bring our standards up to those of others is so vast that it makes the tinkering that takes place completely inadequate.

The poor people whom I have described pay the most tax and receive the worst services in return. They should not have to accept for another day that deadly combination of high tax and the worst public services.

8.54 p.m.

The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Lord Macdonald of Tradeston)

My Lords, I too would like to thank the noble Baroness, Lady Sharp of Guildford, for this debate on the state of our public services. It has been a useful exchange of views, highlighting once again the volume of experience and sweep of knowledge that we have in the Chamber. I shall try to cover the major points raised but, given time constraints, I shall not be able to deal with all of them. I shall write in reply to any material points not addressed.

I accept immediately that we have a great deal more to do to improve life in this country. Thanks to the decisions taken since 1997, there has been real progress. I shall try to persuade your Lordships of that. That progress will accelerate in the coming months and years.

Our first job was to put the economy right. A strong and stable economy has produced over a million more jobs. Because there are more people than ever in work and action was taken to reduce the national debt, the country can now afford record and sustained investment in our public services to employ extra staff and modernise equipment and infrastructure. So the Government are committed to creating accessible high-quality and properly funded public services during this Parliament to ensure that we provide equality of opportunity for all our citizens. That is our goal for this Parliament, and we are pursuing it with, I hope, a relentless focus.

We need responsive high-quality public services that visibly provide value for money. They should be locally accountable, transparent and built around the needs of the users or consumers—our citizens—who pay for them through their taxes. We must provide people with the best value for their hard-earned money.

I shall pick up some of the points made by the noble Baroness, Lady Sharp of Guildford. I enjoyed her impressionistic tour of European horizons but, as was said by my noble friend Lord Faulkner of Worcester, it is never easy to find the right comparisons. In France, for instance, doctors earn about half of what they would earn in the United Kingdom. French nurses are much underpaid in comparison with ours. Operational costs there are higher than ours. As for the trains, to which my noble friend referred, there is not the regularity and convenience of service in France that can be found on British railways. If noble Lords would like to try a trip on the Berlin metro or go through Switzerland, through Zurich or Geneva, they could admire the surprisingly creative graffiti on those railways.

Noble Lords ask why are our public services poorer. Surely, we can agree that it is because of decades of under-investment. The noble Baroness, Lady Sharp of Guildford, referred to the 6.5 per cent increase for health. That is slightly below the figure that we would use, 7.3 per cent. I hope to address some of the other issues that were raised, such as the morale of staff and recruitment problems, when I talk about the principles of reform. The noble Baroness is wrong to say that we cannot recruit more staff because of the decline in morale or because of conditions. In fact, staffing throughout the public sector has increased by 140,000 since 1997, and it is rising. In the health service, we have recruited 31,000 more nurses since 1997. We achieved our targets for nurse recruitment two years before the deadline that we had set. We are making progress. The Budget next week will no doubt be a tight settlement for some departments, as ever, but we will see that progress sustained.

As the noble Lord, Lord Ezra, said, I have taken copious notes. What I cannot reply to now I shall share with colleagues and reply to noble Lords. I defer to the noble Lord, Lord Ezra, for his wide experience of business. He has been a distinguished public servant. I listened to him with great respect. He was right to draw attention to the problem of stop-go investment and the lack of sustained investment over the years. The most effective services will come not just from investment but from investment and reform. We must have both, and that is what the Government are pursuing.

Investment in the key services is now at record levels but, as the noble Lord said, it must be sustained. In the past, halting investment and progress, only to jump-start it when things improved, caused all the damaging dislocation that we have seen, nowhere more markedly than on the London Underground. As a result of the sound economic management that the Chancellor has imposed, we have been able to provide much additional investment for our public services. For example, we have the biggest, most sustained four-year increase in health spending, with the highest ever percentage of GDP—7.3—going in in 2001–02. We have increased UK education spending to 5 per cent of GDP for 2001–02. Those levels of investment mean that there are more resources and more people to serve the public, including the 140,000 that I mentioned.

Baroness Maddock

My Lords, the Minister talks about the extra public servants, but we are aware that many teachers and nurses leave their profession rapidly. Many trained teachers go to do other jobs. Do the Minister's figures include people who are leaving the professions?

Lord Macdonald of Tradeston

My Lords, I shall turn to some of the details of recruitment into teaching, for instance, where not only do we have more teachers but we have more teachers in training as well. I believe the noble Lord, Lord Mackenzie, said that we have more police now than ever before and more local government employees.

Earl Russell

My Lords, I wonder whether I could ask the Minister, not again, to quote that figure about recruitment for teacher training. Most of the people who come to ask me to write letters for them for that profession say, "I do not intend to do it; it is only just in case I cannot get anything else".

Lord Macdonald of Tradeston

My Lords, I shall note that less than scientific observation from the noble Earl, Lord Russell. However, let me point to the contribution made by the noble Baroness, Lady Warwick of Undercliffe. I have listened, obviously with some trepidation, to the scale of funds that she felt were required. Of course, I am unable to anticipate the Budget or the spending review, but I am sure that we would all support the Prime Minister in his emphasis on the importance of higher education. The Chancellor and the Secretary of State for Education will be locked in discussions about how to try to satisfy some of the needs which will have been put persuasively by the noble Baroness and by Universities UK.

As regards the achievements so far, I would ask your Lordships not to underrate what has been achieved. I listened with admiration to the gloomy elegance of the noble Earl, Lord Russell, and, indeed, to the remarks about the "Titanic" from the noble Lord, Lord Saatchi. I believe that there is in the United States a National Association of Pessimists which holds its AGM every year on the anniversary of the sinking of the "Titanic". I am told that its motto is, "Behind every silver lining there is a black cloud". I believe that that has loomed behind many of the speeches that we have had today.

On a positive note, in education we have been focusing on standards, choice and behaviour, and we have improved the standards in numeracy and literacy in primary schools. There are now 75 per cent of 11 year-olds reaching the required standard in English, compared with more than 50 per cent in 1997. We have reduced class sizes—fewer than 1 per cent of children between the ages of five and seven are now in classes of 30 or more. We have 11,000 more teachers in post and there are record numbers of students in higher education—87,000 more than in 1997. Participation in adult basic skills courses has risen more than 600,000, surpassing the targets that we set in the Learning Age Green Paper. Therefore, there are positive aspects in education and we must not be so doom laden.

I now turn to health. We have been putting the National Health Service on the road to recovery with increased investment, increased resources and better treatment. We are two years into the National Health Service Plan, but I would recommend to noble Lords the report of the chief executive of the Department of Health which came out today. The report indicates that average waiting times for in-patients and out-patients have fallen, as has the maximum waiting times. Last year 80,000 patients waited more than 15 months for an operation; today, only two people are waiting more than 15 months. However, I am told that the Conservative Party has challenged that and claims that there are four people waiting rather than two.

Another figure suggested in the report is that only 500 patients are waiting more than six months for an out-patient consultation. Last year there were 400,000 patients. There are shorter waiting times for patients with serious conditions such as cancer and coronary heart disease. In the ambulance service, 28 of the 32 services have hit the target of responding to 75 per cent of the most urgent calls in eight minutes. I could go on; I have a couple of pages of examples like that—positive changes that have happened in the National Health Service.

I welcome the supportive comments made by the noble Lord, Lord Clement-Jones, about the work being done by Derek Wanless. I hear what noble Lords say about the hypothecation, but we believe that it has drawbacks which outweigh its advantages. We recognise the benefits of diversity of provisions. The noble Lord, Lord Clement-Jones, suggested that there would be fewer beds and staff because of a fixation on PFIs and PPPs. By my figures, that simply is not true. There are more staff available now than ever before and we have more beds. Therefore, that is just not so.

I agree that there should be better procurement skills. We have set up an Office of Government Commerce, very well led by Peter Gershon from the private sector. We are trying to build in procurement skills and management skills right across the Civil Service, as well as across the rest of the public sector. Therefore, we, too, in government worry about targets, and targets that perhaps are not as exact as they should be, just as one would in business. Again, let me say that if you cannot measure things it is very difficult to manage them. The Treasury did reduce the number of targets quite markedly between its first spending review and the second. Therefore, I believe that a process of refinement is going on there. I shall turn to some of the issues raised by the noble Lord when I deal with the question of public sector reform later.

I shall just skip quietly over my pages and pages of examples of progress in the health service and turn to the issue of crime, which was dealt with by my noble friend Lord Mackenzie of Framwellgate. Even in crime, one of the most intractable areas faced by any government, as your Lordships will have heard we are making progress. Surely, it is as striking to noble Lords as it is to me to hear the noble Lord, Lord Mackenzie, say that crime, according to the British Crime Survey, has fallen by 22 per cent since 1997. Burglary has fallen; car crime has fallen; and, indeed, violent crimes have fallen. All have fallen quite markedly.

That clearly is not the general view held outside, and we in Government will certainly have to work much harder, especially in high profile areas such as street crime. We are trying to bring together those who have a stake in that problem and work with them to try to tackle the problems—working closely with the police in the areas which are suffering worst.

As the noble Lord said, police numbers have risen by the largest amount for the past 20 years. A Police Standards Unit has been set up to measure performance accurately and to tackle variations in performance between police forces. I am sure that the noble Baroness, Lady Harris of Richmond, would point to the areas of pensions and early retirement as matters where the variations between forces are rather bewildering. National standards would, I am sure, be welcomed by the police as much as by the Government and local government.

I accept that there is too much bureaucracy and that the police suffer from it. As the Minister responsible for deregulation, I work with the Regulatory Impact Unit and its public sector team, trying to ensure that the police are allowed more time to work out of the station, where at present they spend almost 50 per cent of their time locked in unproductive paperwork and other matters. I agree that much has to be done together and I welcome the noble Baroness's support for the generality of the present proposals.

Turning to transport, again I am delighted to say that no longer do I have any ministerial responsibilities. However, as my noble friend Lord Faulkner of Worcester pointed out, we have taken decisive action over Railtrack. I understand the problems of the closure of the West Coast Main Lire and the Network Railcard. However, I believe that the much improved atmosphere within the industry will help us move towards resolutions of those kinds of problems. The work being done by Richard Bowker at the Strategic Rail Authority will aid in that, as will increasingly the work of Ian McAllister and John Armitt. I know to my cost that the noble Lord, Lord Bradshaw, is an expert in these matters, but I am sure that he would accept that, whatever may be his reservations with regard to the new structures, we now have in place people who are deeply committed to the priorities of engineering and adequately resourcing the railways in a way that perhaps was not the case in the past. For that reason, I too welcome the new expertise being brought to bear on why the costs of construction have risen so grotesquely and why they seem so disparate when compared with the charges made for a mile of rail improvement in other countries.

We look to transport as an area where the biggest effort and investment must be made. Some £180 billion is still committed over the next 10 years. The Transport Plan, of which I was a part author, has within it mechanisms which allow it to be repositioned year on year. Obviously that work is under way at the moment.

I hope too that we shall see a resolution to the problems of London Underground in the near future so that the proposed £16 billion of investment for enhancement over the next 15 years can begin to move forward. However, again there are important areas of progress even in transport. Some 1,700 more train services are now running each day compared to 1996. We have seen a 22 per cent rise in the rail passenger kilometres travelled over the past four years. Journeys on the London Underground went up by 25 per cent between 1997 and 2001. Furthermore, noble Lords will be interested to hear that the satisfaction ratings of passengers using the London Underground are as high as they ever were. In some ways the Government are victims of their economic success. If a million more people are put into work, they then have to travel to work every day and that has exacerbated our problems.

I listened with great interest to the balanced and informed contribution of the noble Lord, Lord Chan. I accept that stresses are inevitably caused by structural change. We shall certainly bear in mind all of those issues and look to his areas of the national frameworks and the benefits that they can bring, as well as to shifting the balance of power towards greater involvement on the part of citizens and patients.

I shall conclude by pointing out that our programme of reform, which we believe must accompany our increased investment plans, will be based on both national standards and greater accountability. It will also be based on devolution, as the noble Lord, Lord Ezra, pointed out. It will encourage flexibility and an end to the rigid practices of the past. It will also try to increase choice.

I listened to the remarks of the noble Earl, Lord Russell, with great interest. Clearly his vocation is one of prophecy, but the pervasive gloom and profound anomie which he sees for the future is not a landscape that I would share. If he wants to talk about nurses working in accident and emergency departments, I should tell him that I was recently at the Homerton Hospital. There cannot be many tougher areas in London in which to run an accident and emergency unit. The staff there have been making splendid progress and I thought that their morale was high. The sense of vocation that the noble Earl wishes to encourage was surely encouraged by the Prime Minister in his speech at Newcastle, which resounded through the public service sector. So we can devolve and delegate more power locally as long as it delivers high national standards. Clearly, there will be tensions between the two, but we hope to keep those tensions in balance.

I should say to the noble Baroness, Lady Knight, that mixed wards are an unfortunate situation that we inherited from the party previously in power. We are trying our best to remove them. I cannot share her stand against over-familiarity and friendliness. I find that even civil servants are now calling me "Gus". I am sure that if staff are asked civilly they will be very happy to call people by their proper names. I take the noble Baroness's point.

Perhaps I should end by saying to the noble Lord, Lord Saatchi, that I welcome his conversion to the cause of the poor and the underprivileged. I believe that the policies of the previous government acted as agents for much of the social squalor we inherited. His conversion is welcome but it is not yet to me convincing. I believe that there has been an attack of political amnesia, which was redeemed by the elegance and diffidence of the noble Lord's delivery.

The Government's priority is to improve public services during this Parliament.

The Deputy Speaker (Lord Lyell)

My Lords, the time allotted for this debate has now expired. Does the noble Baroness, Lady Sharp, wish to withdraw her Motion?

Baroness Sharp of Guildford

My Lords, I thank all those who have participated and the Minister for his reply. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.