NHS Funding (South-East)

HC Deb 12 March 2002 vol 381 cc201-24WH

11 am

Mr. Mark Oaten (Winchester)

I welcome this opportunity to discuss funding for health services in the south-east. The debate is not a bid for more money for the health service; although I passionately believe that more money should come into the health service, the debate has narrow confines and I do not want to get into a party political argument about the extra resources that the national health service needs to enable it to deliver high-quality services. The debate is intended to examine how to allocate the existing money that the Government have to spend on health services—and, specifically, to raise my concerns about funding allocation in the south-east.

The debate is also not intended to present an argument against the well-travelled principle that we need to try to target the parts of the country that have greater needs. I am not saying simplistically that the north is getting too much and the south should get more because I recognise that whatever formula the Government have in place should include a needs assessment. When they came to power in 1997, the Government were right to decide that certain areas in the north of England had great health care needs, and that the formula should reflect that. However, I am concerned that the balance has shifted since then, and that the formula no longer offers a satisfactory way of assessing the health needs of the south-east.

At present, we have a formula that ranges from 83 to 134 per cent., depending on where in the country one is located. North and Mid-Hampshire health authority, which serves my constituency, is at the bottom of the range—it is the lowest funded health authority in the country—and that is why I, and several of my hon. Friends, are here today.

However, the changes in the way that the formula is assessed, and in the way that money will flow down to the primary care trusts and the various new structures, offer an opportunity to review the formula, and that is why the debate is timely. I also stress that there is cross-party support for some of the things for which I am arguing. With regard to the early-day motion, we struggled a bit for that support, but I managed to find the hon. Member for Portsmouth, North (Syd Rapson), along with many Conservative Members who represent constituencies in the south-east and other Liberal Democrat Members who feel strongly about the issue.

Where is the evidence? What can I do to persuade the Minister that there is a specific problem in the south-east that needs to be addressed? Let us start with the argument that hospitals need to become more efficient. The south-east has some of the most efficient and high performing hospitals in the country. With regard to all the various Government standards and targets, those hospitals have been awarded beacon status, and they have been able to get the three-star status.

There are many high performing hospitals in the area. My local hospital, the Winchester and Eastleigh Healthcare NHS trust, has three-star status. It has achieved all the Government's significant targets. It is a beacon site for personnel, information technology and shared services. Auditors have awarded it excellent financial control, and it has above average reference costs. However, although it is, by all accounts, one of the highest performing hospitals in the area, it faces financial difficulties. Therefore, the problem that we face is not about hospitals failing to perform, as they are meeting Government targets.

My next point addresses their financial performance. Can they meet their targets within budget? No. There have been significant financial pressures on health services in the south-east. My hospital has achieved all the objectives to which I referred, and it has been financially prudent, but in 1999 it overspent by £1.4 million, and in 2001—the current financial year—it is £1.2 million overspent. For the next financial year, the projected overspend is £500,000, despite savings of £1.45 million. Many high performing hospitals in the south-east face serious budget difficulties.

Demographic arguments are involved that the formulae have not picked up to the extent that they should have. One relates to the elderly population and is evident in the problem of bed blocking and its associated difficulties.

I am aware that the Government have provided some new money. The Hampshire area received one of the highest allocations to tackle intermediate care and bed blocking. There is no doubt that the crisis is enormous. There is what has been described as a Berlin wall culture between social services and health services, driven by a desperate need to tackle the problem of taking people out of hospital beds and getting them back into the community. The difficulty is that some new money from the Government is capital money that relates to building new facilities, but the revenue required to support those new facilities will be extremely hard to find under the current formula.

The area has an additional problem. Bed blocking is often the result of people trying to access nursing homes and finding that such residential care no longer exists. For some people running such homes, it makes financial sense to sell the home off. Because of current property prices, they can earn much more if the plot of land is converted into houses or flats. I should like the Minister to address the problem of the demographic change involving the elderly population and the acute difficulties of bed blocking.

Mr. Archie Norman (Tunbridge Wells)

Is the hon. Gentleman aware that in west Kent the revenue that we receive per elderly person is one third of that received in parts of east London for care homes? As a result, Kent and Sussex hospital has to open up extra wards for patients who should otherwise be released into care homes. In the past year, the number of patients who had to be brought back for extra treatment following operations rose by 18 per cent., which is among the highest figures in the country. As the hon. Gentleman says, the NHS hospital must pay the price and use its resources and revenues to make up for the fact that we have lost so many care homes in west Kent.

Mr. Oaten

The hon. Gentleman makes an excellent point. The conclusion that I would draw is that the world has moved on. When the formulae were set and the system was devised, we did not have the difficulty of care homes shutting to the extent that they are now. We now have a phenomenal property boom, and land prices in the south-east put extraordinary pressure on the area.

I shall give further examples of why we are under such pressure. The recruitment crisis is particularly acute in the south-east and relates to the difficulties affecting care homes and the cost of living in the area. I am sure that hon. Members present in the Chamber can cite examples of hospitals that have had to recruit from abroad. Although the formula includes a market forces element, I do not believe that that element is keeping pace with the reality of the day-to-day pressures that exist, especially in relation to recruitment. Things are extremely difficult in my constituency because of property prices. With a flat costing £120,000, it does not take a genius to work out that a nurse's salary cannot be multiplied enough to secure a mortgage on a property in the area.

One example of the impact that that has on patients worries me greatly—waiting times for radiotherapy treatment, particularly radiotherapy for head and neck cancers and subsequent treatment. In my area at the moment, not a single patient has radiotherapy treatment within the recommended good practice guideline or what is described as the maximum acceptable waiting period. There are similar stories for other procedures in radiotherapy, and I am extremely concerned about what is happening. The linear units that provide radiotherapy in Southampton cannot cope with the pressure, so Southampton patients have to go to Midhurst, but the machine there has broken down. Many people in the Hampshire area are simply not receiving radiotherapy treatments within the recommended time scales and that scares me. If I were ill, I would be extremely concerned, as many of my constituents are. That is another example of the pressures that we face.

Let me give three more examples. There is also pressure on GP practices. In the last month, three GP practices in my constituency have closed their books. Two reopened their books last week, but they say that they cannot physically accept the number of applications from patients that they are receiving.

One practice in Wickham is located next to the new village of Knowle. The pressure on the south-east to take more homes impacts on the ability of GPs to take new patients. Surely there is a crisis if GPs in the area say that they cannot physically take any more patients. Many GPs link that situation to new developments. If the Government's target of 900,000 homes for the south-east is to be met, surely that influx of people must be reflected in the formula that the Government devise for the future. GPs tell me that if the situation continues, they will desperately need more resources to be able to keep their books open.

Mr. David Rendel (Newbury)

I have a personal interest in this matter in that my wife is a GP in the south-east. Is my hon. Friend aware that there is a problem not only with GPs' having to close their books, but with their ability to recruit new GPs to their surgeries? That ties in with the issue of property prices, because of course surgery values have increased. If a GP has to buy into a practice when they join it, they have to pay into the capital value of the surgery to buy out whoever is leaving, but a new GP often simply cannot afford to do that. One or two practices in my constituency have recently been trying to recruit, but have had not one applicant. They are attractive surgeries, and one might think that, on the whole, surgeries in the south-east were quite prosperous.

Mr. Oaten

My hon. Friend makes an excellent point, which is linked to market forces and the cost of living. The problem has various impacts. The example that he gives of GPs' inability to buy into practices is just another one.

I hope that I have shown that, although we have efficient hospitals, budgets are under stress. A demographic change is causing bed blocking, and there is a difficulty with nursing homes being sold to purchase property in the area. We would all regard the waiting times for radiotherapy as unacceptable. There is a particular problem with GPs' inability to take more patients, and a recruitment crisis. At the same time, we face the prospect of more housing in the south-east.

Those are the difficulties, but what is the solution? I shall suggest some possible ways forward. The Government have changed the way in which funding of the health service will operate in the local region, and the Advisory Committee on Resource Allocation is considering how the formula can be changed. Will the Minister confirm that there is an opportunity to debate how the formula will be set in future?

Another opportunity for change concerns the census data. Many of us in the south-east feel that things have moved on a lot since the last census. I hope that the Minister will confirm that any new formula or system being devised by the Department of Health will be based not on the 1990 data, but on the latest census data available, which I think is the 2000 data. That would help to make the case for some of the demographic changes that have taken place.

Will the Minister comment on the suggestion that fixed costs and administration charges be removed from the formula? Let me explain what I mean. Under the NHS plan, all health areas are required to consider GP appraisals and to have in place good human resources practices. In the Hampshire area, there may be about 100 GPs; in Doncaster or elsewhere in the north, there may be 60. The health authority or primary care trust has a duty to carry out those appraisals whatever, but my authority has only 83 per cent. of the funding to do that, based on the formula.

I am concerned that many of the fixed costs, which have nothing to do with need and which every authority has to deal with, are still based on the formula. Could we not take some of those fixed costs from the formula to assess the need element? At the moment, all the fixed administration costs are based on the formula so that a reduced amount based on need is being given for expenses that are not need-related. I would also like the Minister to look again at the market forces element. It needs to be adjusted; it is too narrow and does not reflect the current property difficulties. A possible solution may be to narrow the current range of 83 per cent. to 134 per cent. Unfairness will exist at both ends of the range and it would be fairer to narrow the range of the formula.

My final plea to the Minister is to implement some of the proposed changes, many of which I welcome. The primary care trust, as I know from my discussions with it, also welcomes many of the changes, while recognising the many transitional costs involved in some of the structural changes that will take place in the health service over the next two years. Will the formula recognise those transitional costs and the fact that some of them are fixed and need additional provision?

I hope that I have, in the 15 minutes for which I have spoken, demonstrated the demand and the need that exist, and suggested a way forward. The matter is critical. The Government have continually to find pots of money to fire-fight and throw at problems in the south-east. Why not get it right in the first place so that the south-east has a decent level of funding, my constituents can feel secure rather than constantly having to panic about health needs, and health authorities in the area are not constantly having to come to the Government and demonstrate a case—which the Government nearly always accept and throw money at? We should put our effort into the formula. We have a unique opportunity and I hope that the Minister will have some suggestions about the way forward.

11.16 am

Dr. Phyllis Starkey (Milton Keynes, South-West)

I congratulate the hon. Member for Winchester (Mr. Oaten) on securing the debate. I want to support, and amplify, some of his comments.

First, I support the hon. Gentleman's argument that we should use the most accurate census figures. As the Minister will know, Milton Keynes is the fastest growing city in the United Kingdom, so I have a particular interest, with all public services, in ensuring that the most up-to-date population figures are used.

Secondly, I shall comment on the hon. Gentleman's remark about demography. It is often argued that the ageing population in the UK adds costs to the health service, most obviously by increasing the number of delayed discharges. However, we also need to consider the health costs of other population groups. Milton Keynes has a particularly young population. We have a high rate of teenage pregnancy and a need for much improved services for sexual health generally—not services that are much used by the most elderly. It is not only the elderly who place additional burdens on the health service, and the formula should take account of that.

Before I comment on the formula, I remind hon. Members of the enormous change for the better in NHS funding in the south-east since the election of a Labour Government in 1997, which I shall illustrate with examples from my constituency. We should not always concentrate on the ways in which the health service does not deliver; we should remind ourselves and our constituents of the improvements that have occurred.

As I said, Milton Keynes is the fastest growing city in the UK. For the past two decades we have had population growth of between 2 and 5 per cent. per annum. Despite that growth, in the decade to 1997 no extra beds were provided at Milton Keynes general hospital. Huge pressure built up on the hospital and its beds over those years, resulting in the usual problems of long waiting lists, high cancellation rates and unacceptably high levels of cross-infection when medical cases were mixed up with other cases.

Since the 1997 election, new beds have been provided at Milton Keynes general hospital and the community hospital, additional consultants have been recruited in particular specialties and additional nurses have been employed. Unfortunately., the nurses have had to come from abroad because there are not enough trained nurses in this country; it takes time to train new nurses. Extra facilities have been provided for ophthalmology and orthopaedics to shorten waiting times, especially for cataract operations and hip replacements. The situation is still not as good as I would like it to be, but we will have a 28-bed unit in the summer, and a diagnostic and treatment centre is planned for 2005.

Waiting times are shorter—for example, the average time that a woman with suspected breast cancer in my constituency waits to see a consultant has more than halved in the past year—but they are still not good enough and more money is needed. We are going in the right direction, however, and people working in the health service in my constituency say that at least they can see light at the end of the tunnel, even if they are not sure how long the tunnel is.

I stress the fact that when we talk about the health service, we need to think beyond hospitals, as well. In the past the lack of resources for the hospital was mirrored in other parts of the NHS. In 1997, for example, Milton Keynes had fewer community psychiatric nurses per head of population than the rest of Buckinghamshire, despite having the highest rate of mental illness in the county. The child and adolescent psychiatry services were so stretched that young people with psychiatric problems had often seriously deteriorated before they received medical help. The provision for young adults with learning disabilities was so poor that the parents of teenagers with those difficulties besieged me with anxieties about what would happen to their children when they became adults, as there was no hope of supported accommodation for them in the community.

The extra resources provided by the Government have started to make a difference—Buckinghamshire had an extra 10.2 per cent. this year—but it cannot make good in five years the consistent underfunding of the previous 18 years. As the Minister knows, my hon. Friend the Member for Milton Keynes, North-East (Brian White) and I complained bitterly about the unfair distribution of resources in Buckinghamshire, which discriminated against Milton Keynes compared with south and mid-Buckinghamshire. I am pleased that gradually that situation has been reversed and extra Government funding has allowed the health authority to provide for Milton Keynes without having to take money away from south or mid-Buckinghamshire.

Against the background of a significant increase in capital and revenue funding, I, too, am concerned about the funding formula, to which the hon. Member for Winchester referred. It is reasonable that the funding formula should reflect need and I am mindful that the south-east is the most affluent region in the country.

The recent report of the director of public health for Buckinghamshire shows that the standardised death rate for the county is 670 per 100,000 compared with the UK average of 729. I commend the director for not resting on his laurels. To provide himself with a benchmark against which Buckinghamshire could measure improvement, he sought comparisons across the rest of Europe and tried to find other regions of similar affluence as a spur to reduce the death rate in the area further. On the basis of need, it is not unreasonable that Buckinghamshire should receive less funding than other parts of the country where the need is much greater.

The real problem for the NHS in parts of the south-east, especially Buckinghamshire, is the high cost of living and the difficulty of recruiting and retaining staff. The extra allowances for some nurses and other staff were helpful, but there is a problem from the bottom to the top: for example, there is great difficulty in recruiting carers and care assistants in Milton Keynes. The council and the primary care trust launched an excellent initiative to reduce delayed discharges, using extra funding from the Department of Health to set up a home care team to rehabilitate people at home after hospital treatment. That project was funded, but there was difficulty in recruiting the necessary home care assistants.

The local economy is extremely buoyant, and there is an active retail sector; the shopping centre has expanded by 40 per cent. in the past year, which has had a huge knock-on effect on employment. Care worker pay rates of £5.70 an hour are uncompetitive locally. Residential care homes in the private sector cannot recruit staff either. Retention and recruitment is a real problem. The formula needs to take account of the comparative wage levels in the local economy because the NHS is competing with the private sector for staff at all levels.

The second problem is the lack of affordable housing. A joint initiative between the hospital trust and a housing trust to provide affordable housing for rent and shared ownership near the hospital has enabled the hospital trust to recruit people for occupational therapy or physiotherapy posts from elsewhere in the United Kingdom. Those people could take the jobs because they knew that they could find affordable housing.

We cannot keep producing ghetto housing for public sector workers. As well as examining whether the funding formula can recognise the extra housing costs, will the Minister talk to her colleagues in the Department for Transport, Local Government and the Regions about the need for more affordable housing, and for more housing generally in the south-east? Unless more land is released for housing, the gap between the affordable housing sector and the private market sector will grow to such an extent that affordable housing will not offer a way for people to step into the private market, but will be a ghetto in which they are maintained for the whole of their working lives.

11.26 am

Mr. Mark Hoban (Fareham)

First, I congratulate my neighbour, the hon. Member for Winchester (Mr. Oaten) on raising the topic in debate this morning. Fareham falls under the Portsmouth health area. I notice that the hon. Member for Portsmouth, North (Syd Rapson) also wants to speak. I suspect that many of our concerns are the same. Our local hospital, the Queen Alexandra hospital in Cosham, is in his constituency. I should like to talk about some of the funding issues that we encounter in my part of Hampshire and the knock-on effects on the care that my constituents have received.

The Portsmouth Hospitals NHS trust announced last October or November that it had a £5 million deficit on expenditure for the financial year. It was able to broker £3 million of that deficit but had to find cost savings to recover the other £2 million. At the time the management identified that it would have to lose 150 jobs through natural wastage, some of which would be in front-line medical services. That is of great concern to local people at a time when health needs are increasing and, judging by some of my correspondence from local people, the level of health care in Portsmouth and Fareham appears to be declining.

In its financial report towards the end of last year the Fareham and Gosport primary care group highlighted the problems that it anticipated. It projected an overspend of £1.4 million and identified ways in which it could reduce that to £620,000, partly through allocation of reserves and partly through savings. Interestingly, because the local hospital had outperformed the national targets for waiting times, it thought that it could save £250,000 by allowing waiting times to slip from 15 to 26 weeks. I do not think that the Government gave it that money to cover deficits elsewhere. It is interesting that hospitals can reallocate money given to them by the Government for specific initiatives to cover shortfalls elsewhere. Even having identified various savings, it is still left with an overspend of £620,000 and, again, it will try to broker the limit. That means that the deficit will roll forward to next year, when perhaps there will he an overspend, too, so the process of deficits will continue to roll on from year to year.

Much has been made of the way in which the Government have increased spending in real terms, but it is interesting to examine how some of that money has been spent. The hon. Member for Bath (Mr. Foster) asked a parliamentary question on 5 March about administrative expenses as a proportion of health authority spending. The answer was revealing: the health authority covering the constituency of the hon. Member for Winchester spent £6.8 million on administration in the financial year 2000–01, which was 1.6 per cent. of its total expenditure. In the Portsmouth and South East Hampshire local authority area, the administration costs for the same financial year were £10.4 million, 2.6 per cent. of that health authority's expenditure.

It could be argued that there had been economies of scale, which accounted for some of the differences between the two health authorities, but the spending on administration was much the same. The difference between them was only £4 million. We must consider the best practice of health authorities in their expenditure on administration. From 1 April, the health authorities will be swept away by strategic health authorities for Hampshire and primary care trusts in Portsmouth to cover Fareham and Gosport. I want to ensure that, in that reorganisation, the money spent on administration decreases, thus enabling more money to be spent on health care. The £4 million difference in administration costs between the two health authorities would have covered most of the deficit on spending for the Portsmouth Hospitals NHS trust of £5 million, so the health authorities and PCTs must consider administration finances as the new structure is introduced.

Hon. Members will have received, as I did, a list of complaints and problems from constituents about the services that they do not receive. Recently, Fareham experienced the withdrawal of podiatry services to a wide range of elderly people, who will need to find private chiropodists. That will badly affect those in their late 80s, who are not sure to whom they can turn to receive that care. There is only one NHS dentist in Fareham, whose lists are now closed to NHS patients. A dental access centre has opened in the town, which has been welcomed by many people who have no NHS dentist. However, the centre does not have a patient list, and people can only make appointments on the basis of needing treatment. I am looking forward to visiting it a week on Friday to see what demand there is in Fareham for that service. I suspect that I shall find that demand exceeds supply.

Recently, the Blackbrook maternity home in my constituency was closed. It was a local facility and greatly relied on by mothers in Fareham for post-natal and antenatal care, as well as for delivering their babies. It is meant to be a temporary closure; it is the second temporary closure in two years and it is causing real worry. The problem was caused in part because maternity care in Portsmouth has been under pressure. When arriving at Portsmouth hospitals to have their babies delivered, women have been turned away and told to go to Chichester or Southampton. That is not an acceptable level of service.

Despite the Government's message about real increases in health spending, the experience of my constituents is that they have not seen that flowing through. That is a fundamental issue, because they are trying to match up their tax increases and the level of spending on the health service with what, to their minds, is the health service's failure to deliver the care that they expect to receive. That goes for all age ranges. I have talked about the closure of the maternity home in Fareham. The hon. Member for Winchester highlighted the issue of nursing homes. That is a real problem in south-east Hampshire.

One of the problems facing the owners of care homes is the impact of the change in standards for nursing and residential homes. In February 2001, I met a group of nursing home owners who said that they were under financial pressure. They viewed the high land values and the offers from property developers as a way out of their personal crises. They were not able to generate the revenue needed to pay for improvements to their homes that had to be made in order for them to stay in business and make a reasonably profitable livelihood.

Most of the dozen care home owners who attended were at the small end of the market, with homes providing up to 20 beds and offering more personal attention and care. Half of them thought that they would sell up in the next five years. More importantly, they believed that their businesses would not be bought as going concerns to provide care for the elderly, but would be sold to property developers, as that is simply the only economic answer for them and for those who want to enter the health care market.

I congratulate Hampshire county council on the work that it has done to try to secure nursing home beds in the county. In the past financial year, it increased nursing home fees by three times the rate of inflation. That was funded not by Government grants but by council tax payers' resources to try to maintain the supply of nursing home beds in the county. The council has done the elderly of Hampshire a great service and should be commended. However, I share its concern that it cannot continue to do that ad infinitum. The Government need to consider the revenue funding for nursing and residential homes to ensure that there is adequate availability of beds in future. As the health service changes, we will need to rely much more on nursing homes.

When I went to the Queen Alexandra hospital last summer to discuss the new hospital plans, it was considering a decrease in the number of acute beds in line with the model proposed by the national beds inquiry. However, that was predicated on the existence of intermediate care beds, either in hospitals or residential and nursing homes. If there are no such homes, we will end up with a much greater problem with bed blocking, as there will be fewer acute beds and more patients experiencing delayed discharges.

There is a fundamental funding problem in Hampshire. We can talk all we want about changing the formulae, but we must also consider how health care is delivered. The Government speak of the link between reform to the NHS and increased funding, but people on the sharp end of the health service in my constituency have noticed that although taxes have risen and health care spending has gone up, reforms to improve the health care that they get have not been introduced. The Government should consider carefully the reforms that they are pushing through to ensure that we free up more money for health care and spend far less on administration.

Several hon. Members rose—

Mr. Peter Atkinson (in the Chair)

Order. Before I call the hon. Member for Portsmouth, North (Syd Rapson), I must tell hon. Members that I propose to start the winding-up speeches at 12 o'clock, so if the three hon. Members who are seeking to catch my eye keep their speeches to about seven or eight minutes, they can all be called.

11.38 am

Syd Rapson (Portsmouth, North)

First, I congratulate the hon. Member for Winchester (Mr. Oaten) on securing the debate, which is about the south-east region, as opposed to the parochial areas that we represent. Like the hon. Member for Fareham (Mr. Hoban), I shall concentrate on what we know and have to deal with. I have an inherent distrust of formulae; having been in local government and having created annual budgets, the potential for manipulation is quite well known to me. We must consider carefully how the formula is structured, and I welcome the words of the hon. Member for Fareham on the subject.

There is tremendous potential for economic expansion in the south-east. It will be the area that everybody looks at. That expansion produces benefits and disbenefits, such as pressures on housing, which can lead to difficulties in getting new general practice surgeries, for example. With regard to that, the cost of property in and around my constituency is so high that accommodation is hard to find. Therefore, economic expansion can also work against us.

We are proud that there have been several major Government announcements about Portsmouth: shipbuilding is returning, space exploration companies are winning major contracts and the Navy is re-gravitating to Portsmouth. Those are good things, and I am making the most of them in political terms, but they produce the same knock-on effect, because house prices rise dramatically due to the pressure caused by people moving in—and all the other problems that have been mentioned also get worse.

I have the greatest admiration for our local health groups. The health authority—as it was—did a tremendous job, and established good relationships. The new primary care trust and the trust are doing a marvellous job, in light of all of the pressures. They are loyal, and they are working within the realms of their ability, but they have worries about constraints on the budget, which restricts what they can do, and they express their concerns to the hon. Member for Portsmouth, South (Mr. Hancock), the hon. Member for Fareham and me, who have regular meetings.

I wish to focus on the small point that the formula must be reconsidered, and the demographics must be looked at. The expansion of the economy, and the benefits that will flow from that, will make things worse. We must to try to re-balance that. If the Minister were to address that point, I would be grateful.

11.41 am

Mr. Archie Norman (Tunbridge Wells)

I congratulate the hon. Member for Winchester (Mr. Oaten) on introducing the debate. It is of great relevance to constituents of hon. Members throughout the south-east of England.

With regard to the issue under debate, the case has been ably made, so I will focus my remarks on the key points. The first and most obvious point is that the crisis in heath care in the south-east was predictable. All the factors that we have talked about are capable of being forecast and understood. During the past three or four years, hon. Members warned the Department and its Ministers that this crisis was likely to arise—particularly with regard to bed blocking. Therefore, the Minister must answer a key question. Does the Department have any radar at all? If it has any capacity to forecast the extent of the problems as they arise, what does she envisage is likely to happen in the coming years? Currently, it is difficult to see why the situation with regard to bed blocking, for instance, might improve in the next two to three years; all the signs are that it will get worse.

Every hon. Member who has spoken has raised bed blocking, and in Kent the problem is on the verge of crisis. There are clear diseconomies: the Department is underfunding care homes and as a result, the NHS is having to take the strain. That has serious knock-on implications for the standards of clinical care in areas such as readmissions and the inability to give people the right level of intermediate care after they have had serious operations.

The problems are being driven by the implementation of new regulations. We have all heard that at first hand, from our visits to care homes, as my hon. Friend the Member for Fareham (Mr. Hoban) has said. We know that the problems are a result of the introduction of measures such as the minimum wage, and of the squeeze between the rising cost base and the opportunity cost of better property prices.

I and most other hon. Members know that, currently, there are care homes that are contemplating going out of business, and some of them are likely to do so in the coming months. Therefore, the problem will get worse, rather than better. In the whole of west Kent, I do not know of a single example of an entrepreneur or businessman who is planning to set up a new care home, so it is extremely difficult to see why this situation will not get worse. The problem goes straight back to the question of subsidies. That was predictable. The Minister might like to comment on that. As she will know, in Kent the Government elderly residential standard spending assessment—the formula per resident over 65—is £351. In Islington it is £917. That produces the appalling inequity in the system whereby London boroughs can purchase the best care homes in west Kent. As a result, patients released in west Kent into care homes must take the second choice of care homes and are often moved a long way from where they live or from their relatives. It is not merely that we do not have enough care homes. We have the second-best care homes. That is creating tremendous resentment among patients and immense frustration among NHS professionals.

The figures show the knock-on effect on the NHS. Last year, there was an 18.9 per cent. increase in delayed discharges in the south-east, which is appalling. It means that the percentage of delayed discharges in relation to the total number of patients is now 9.5 per cent., the highest in the country. What clearer statistical illustration can there be of the extent of the problem and the knock-on implications for the NHS?

The same applies to readmissions. As I said earlier, last year, west Kent had the second largest rise in readmissions in the country, because patients have to be sent home too early without adequate care. The result is predictable. They come back into hospital for further treatment later. There is real suffering among patients and real costs. The problem must be addressed. It is a crisis. It is not something that can be glazed over. It is obvious that the system of funding for care homes needs to be reviewed and that the interface between the two departments needs to be addressed. The crisis needs to be tackled now.

I do not have the figures, but on balance it is probably true that in the past few years the weight of capital expenditure in the NHS has gone into the north and the midlands. If that is true, that has happened for entirely understandable reasons. We understand that there are well deserving cases for new hospitals elsewhere in the country. However, the result is that we have a growing problem in the south-east.

We now have in principle a green light to proceed with a new hospital in Tunbridge Wells for the Maidstone and Tunbridge Wells NHS trust and more investment in Maidstone. That is entirely welcome. It is a big leap forward. However, it is happening treacly slowly. I ask the Minister to consider how fast capital expenditure is being brought to bear. We first submitted a proposal for a new hospital in Tunbridge Wells in 1997. We now have the green light to proceed, but it is five years later. Even on the best possible time scale, that hospital is unlikely to open for another five years, so we are looking at a 10-year lead time to tackle the problem. Can the process of investment in new hospitals and facilities in the south-east be accelerated so that we can have new capital facilities and so that doctors, nurses and staff can start working in conditions fit for the 21st century instead of for the 19th century?

11.48 am

Sandra Gidley (Romsey)

I congratulate my hon. Friend the Member for Winchester (Mr. Oaten) on having secured the debate. Most of my focus will be local. I also congratulate him on being timely. The issue was taken up by last week's Health Service Journal, which states: The projected deficit, submitted to regional offices at the end of last week as part of the annual service and financial framework round, has arisen because the demands on the service are running far ahead of the large increases in funding. Health Service Journal goes on to discuss the south-east, where the problem is most acute. Chris Hurst from the Oxford Radcliffe Hospitals NHS trust said that mental health and information management and technology were likely to suffer as attempts were made to balance budgets, as they were generally seen as soft targets. He did not know how the gap between demands and funds would be bridged. Closer to home, Ian Marriott of Southampton and South West Hampshire health authority said: For the whole of Hampshire and the Isle of Wight, there is a potential deficit of £76m…that comprises a split between the NHS trusts of £17m and primary care trusts of £59m. On top of the £76m it is being asked to find about £30m of cost savings. The confidence on this is variable. My submission says the level of savings is daunting. We are not going to magic these figures away. In any budget there is a margin of error, but not £100m. That comes from a journal that understands such things.

On the issue of local prescribing, I received submissions from local primary care trusts. Advice from the south-east regional office during 2001–02 was that an increase of 5 per cent. would be appropriate. Local people warned that it was more likely to be 8 per cent., and, in effect, the outturn was approaching a 10 per cent. year-on-year increase. There is no sign that those increases in drug spending will be taken into account.

The pressure, however, has been almost entirely caused by certain Government initiatives. The single therapeutic area currently responsible for the greatest increase in expenditure is lipid lowering drugs or statins. The Government rightly boasts of their success in increasing the prescription of such drugs. However, they must appreciate that that comes at a price.

Another pressure is the mandatory implementation of National Institute for Clinical Excellence guidelines. I have no problem with that, because they are funded. However, there is still a robust denial that that will have an impact on spending on other drugs. Perhaps it will lead only to a greater year-on-year deficit.

I echo the sentiments already stated that it is right and proper that areas in greatest need receive most money, but as my hon. Friend the Member for Winchester pointed out, it cannot be entirely fair that the range of funding is so wide—83 per cent. to 134 per cent. An adjustment of only 5 per cent. at each end of the scale would go a long way towards helping the Winchester and Eastleigh Healthcare NHS trust, for example, without imposing any significant challenge for the highest funded, which would still receive 50 per cent. more per capita. That problem must be addressed.

Mr. James Arbuthnot (North-East Hampshire)

The hon. Lady makes important points in an important debate. Does she agree that, although it is clear that people in the area in which we live—Hampshire—are healthier and have better longevity, a certain level of health care, including the time in which one can expect to be treated and a manner of treatment which one ought to be able to expect, should be taken into account in a civilised society when developing a health funding formula?

Sandra Gidley

I entirely agree. It is telling that the majority of hon. Members taking part in the debate are from Hampshire. That must say something.

The Winchester and Eastleigh Healthcare NHS trust has three-star status, so it could be argued that it does not need the money. Putting aside for one moment the argument that the star ratings are based on selective and arbitrary measures, the system is badly overloaded. Most people wait 18 months for a hip replacement, which is also the case in Southampton and South West Hampshire health care trust. Consequently, in order to meet targets, the Winchester and Eastleigh trust spent approximately £1 million accessing private health care. "Aha," I hear hon. Members say, "The Government provide money for that very purpose." They do, but not enough. They provide funding only to the tune of £500,000.

The waiting list for orthopaedics is unfortunately—or fortunately, in a way—a result of the population living longer. We have a long life expectancy in the south of England, and have reached the stage of replacing hip replacements because people are living so long. People should not be penalised for living longer. However long they live, they deserve access to prompt and high-standard health care. That is rapidly becoming more difficult to provide.

Analysis of recent NHS performance indicators shows that the performance of Winchester and Eastleigh trust is below average for both delayed discharges and improvement of 13-week out-patient waits. That shows that the south-east's health care system is creaking under the strain. It is more worrying that although my local trust has retained better than average outcomes for most types of cancer, its performance is slipping from year to year. That aspect cannot be totally unrelated to the difficulty of access to radiography treatment, which my hon. Friend the Member for Winchester highlighted.

I want to mention primary care trusts because, theoretically, they will be in control of a huge proportion of health spending. I have a real fear that much of that money will come with strings attached, and there will be little freedom to spend it. PCTs are set and ready to go. I gather that few of them have appropriate financial expertise available to help them. They have been forced to accommodate a share of the current health authority deficits. Does the Minister agree that that is no way to launch a new organisation? Will she undertake to find funding so that new PCTs start with a clean balance sheet and do not struggle to address problems that are no fault of their own?

The Government have a golden opportunity to redress existing inequalities and to come up with a fairer funding formula that takes into account not only the specific problems of the north, but specific problems of the south and, especially, the deprived rural areas in the south that receive little attention.

11.56 am

Dr. Evan Harris (Oxford, West and Abingdon)

I am delighted to add my tribute to those paid to my hon. Friend the Member for Winchester (Mr. Oaten). He set out a cogent case for the need for more funding for the health service in the south-east. He drew our attention to demography, the problems of the shortfall of social services funding and the problem that much funding that enters the health service is non-recurrent, which makes planning difficult and stores up pressures for the future. He mentioned, as did other hon. Members, the problems of recruitment and retention in the south-east, and discussed waiting times for cancer treatment. He also made an important point about whether fixed costs—administration costs—which should be the same for every head of population, should be subject to the formula.

I want to address many issues that my hon. Friend raised, but he was a little too charitable, in his diplomatic manner, toward the Government when discussing overall funding levels. It must be recognised that almost every—if not every—health authority and trust throughout the country is facing huge pressures. It is difficult to know the areas from which we can take funding in order to improve funding for the areas that south-east Members, including myself, represent.

The health service has been chronically underfunded for not only 18 years, as the hon. Member for Milton Keynes, South-West (Dr. Starkey) said, but for 20 or 21 years. The step change in funding that people thought that they were voting for in 1997 did not occur until 1999–2000. Figures show that the settlements in 1997–98 and 1998–99 were among the most miserly real-term increases of the past few decades. That cannot be disguised and history cannot be rewritten by people who continually talk about 18 years of underfunding, but know that that occurred for 20 years.

It is clear that we were right when we said—both times—that taxation should rise fairly to fund a bigger cake. We could then discuss how the cake should be divided, but a bigger cake is needed. When the Government are faced with that point, they cannot get away with arguing that they have given the health service more funding than our party called for. If one looks at the arithmetic, that is nonsense. We committed ourselves to the Government's spending plans plus extra funding from specific taxation increases. To argue that that is less than the Government would spend implies that, if we were in office, we would simply get a pile of cash and burn it, rather than add to the spending through specific, fair and targeted increases in revenue raising. More funding is required in the overall system.

Then there is the question of how one divides the cake. I think that the Government accept that a formula-based allocation of all the funding does not seem reasonable. I am referring to the fixed administrative costs, which are not related to some of the demography on which the formula depends. The Government top slice funding from the cake and allocate it in their own way, rather than according to a formula. That represents an inherent recognition that the formula-based allocation is not always the best way to allocate funding.

I am a little more cautious than other hon. Members about calling for the difference in funding levels between needy and less needy areas to be narrowed. One could not necessarily justify that before seeing a narrowing of health inequalities. One sad aspect of the Government's record is that we have not seen the narrowing of health inequalities that we all want as quickly as we might have. However, if the Government can deliver on that, the difference in funding levels could be narrowed.

Of course, the Government recognise that the formula sets only the target funding. The allocations then move towards that target as quickly as growth allows. In years of low growth, there is little movement towards the target because the allocations are so flat. I am interested to know whether the Government believe that they are doing enough to move authorities that are underfunded according to the formula more quickly towards their target. These health authorities and primary care trusts will exist throughout the country, and a number in the south-east feel that, if the formula exists, they should at least be moving towards the target more quickly.

The hon. Member for Milton Keynes, South-West made a number of good points. I know Milton Keynes general hospital well and am also aware of the pressure that it is under with the area's expanding population. Like my hon. Friend the Member for Winchester, the hon. Lady talked about the need to use the new census figures as soon as they are available. Similarly, she made important points about creating a housing ladder, not just of affordable housing but from which people can move up.

There is a problem with saying that one area is underfunded because another is overfunded. I remember hon. Members from the Northampton area complaining in 1997–98 that Northamptonshire health authority was allocating all the growth money that they had expected to the Kettering area. Rather than blaming the Government, however, hon. Members from the Kettering area claimed, in an almost simultaneous press release, that Kettering was not getting the extra money because it was all going to the Northampton area. That "robbing Peter to pay Paul" mentality simply will not do.

I believe that similar things have happened in Buckinghamshire, where other hospitals, including those in Aylesbury and Wycombe, are also under pressure. I accept that demographic growth there has not been as great as that of Milton Keynes.

Dr. Starkey

I can assure the hon. Gentleman that the extra money for Milton Keynes has come only from growth money. We have been complaining because we did not see why our historic underfunding should continue, but the fact is that the money came only from growth money and was not taken from other parts of Buckinghamshire.

Dr. Harris

I accept that, but two points need to be made. First, money can be taken from growth money only when there is growth money, and the hon. Lady will accept that, in the first two years of the Labour Administration, there was precious little growth money. Secondly, if money is taken from growth for one area, less is available from growth for another. That is a fact of life, and all areas are suffering extreme pressures. If those hon. Members who represent other parts of Buckinghamshire were here, they would not tell a happy story about full funding.

The hon. Member for Fareham (Mr. Hoban) rightly questioned whether it is sensible to lose front-line staff when there are so many pressures on the health service. How can the Government justify hospitals having to make huge cuts—they are not efficiency gains, cost savings or cost improvements—when they are under such pressure?

The hon. Member for Tunbridge Wells (Mr. Norman) made an important point. Even where places in care homes are available, often better-funded social services authorities can pay a higher price and outbid those in the local area. That is a particular problem on the south coast, where London social services authorities buy beds because it is perceived to be a nice place for people to spend time in rehabilitation, long-term care or residential homes.

It is bizarre that the Government should allow any delayed discharges, which are an abuse of people stuck in hospital beds and a huge waste of resources. That is the nub of the problem; it is not simply a matter of more money. The money could be better spent if funding were given to social services to obliterate delayed discharges, which tie up large amounts of NHS capacity. Money is paid over the odds, particularly on the south coast, for people who could be treated locally to go to France for treatment.

My hon. Friend the Member for Romsey (Sandra Gidley) mentioned the problems of areas that are not Government targets losing out. She quoted the director of finance at the Oxford Radcliffe hospital on the subject of mental health and information and communications technology who said, rightly, that they are soft targets. There are no targets in the Government's performance-indicator game in such areas; they are de-funded to meet other targets. My hon. Friend spoke of her direct experience of the huge pressures caused by demography and the pressures on drug budgets of prescribing new and effective drugs.

There is general underfunding, and more resources are needed. Clinical priorities are distorted because of the Government's insistence that certain targets are met, which means that anything that is not targeted is de-funded and, as The Sunday Telegraph reported, surgeons are asked to do less clinically urgent operations before those that are more urgent. Mr. Rawlins of Bedford hospital said that that distortion of clinical priorities "may be unethical". It is unethical; I have asked the British Medical Association to consider whether it is ethical for doctors to go along with a central diktat to treat less clinically urgent cases for political reasons, rather than on the basis of patient need.

Money could be better spent if it were directed in large amounts to the needs of social services authorities to enable them to afford to place people in care homes. In my constituency, it is not so much a Berlin wall, as the Government said, as a Berlin trench. Both sides are digging for funds; they are both significantly over budget; they get on well together and there is excellent joint working, but if they do not have the funds, there is little they can do.

The Government must recognise that there is a false economy in failing to deal with recruitment and retention problems, especially in the south-east, as hospitals are forced to pay over the odds for agency nurses. Paying nurses a decent amount, or providing increased amounts—more than what is promised—for housing costs and living allowances would be a more cost-effective way of generating a home-grown work force that could afford to stay in the service and was prepared to do so. Those are significant problems, which the Government must face now.

12.9 pm

Tim Loughton (East Worthing and Shoreham)

I welcome you to the Chair, Mr. Benton. I, too, congratulate the hon. Member for Winchester (Mr. Oaten) on securing this interesting and well-informed debate and on his early-day motion drawing attention to the problems of funding health care in the south-east.

I stray into the debate, which has referred mainly to Hampshire health care, with trepidation. However, the points that have been raised will be familiar to all hon. Members in the Chamber. They certainly apply to my constituency of East Worthing and Shoreham. The speeches this morning also show how large and diverse the south-east is. It includes Milton Keynes, Winchester, Fareham, Portsmouth, Tunbridge Wells and my constituency on the Sussex coast. The hon. Member for Milton Keynes, South-West (Dr. Starkey) mentioned the public health director in Buckinghamshire: I should be interested to know what part of continental Europe he contrasts with Milton Keynes when he goes further afield in his comparisons of the success in her county.

The debate has also shown that it is not just a question of funding, important though that is, but that much more complex issues are at work such as the cost of living and recruitment problems. Life is not a bowl of cherries in the south-east as is so often thought. We have great contrasts. Arundel is the healthiest place to live in the United Kingdom and is one of the more affluent parts of the country, but just along the coast, Hastings, with all its health care and social problems, is one of the most deprived areas in the south-east. One of the wards in Worthing is in the top 10 per cent. of deprived wards in the country.

The south-east is the largest region in the country, accounting for 13.5 per cent. of the population. As the hon. Member for Winchester mentioned, it is set to grow disproportionately with the building of at least 900,000 new houses over the next 15 years. It is the fastest growing economic region and the Government intend it to be one of the top 10 economic regions of Europe; but that will not happen with our current infrastructure problems, not least the shortfalls in health care provision and the associated cost of living limitations.

We have a very elderly population and, coming from Worthing, I know more about that than most. Sussex alone has eight constituencies among the top two dozen with the largest number of older people. In West Worthing 42.6 per cent. of constituents are of pensionable age and in my constituency the figure is 32 per cent. Older people bring more health funding requirements with them. It is not just a question of the orthopaedic costs, although I speak as someone whose father has had a hip replacement of a hip replacement and he is only 67. As the hon. Member for Milton Keynes, South-West mentioned, we also have a young population in the region. The younger and older age groups impose the biggest strains on the health service and the funding requirements that go with it. We are seeing the consequences at both ends.

There are enormous discrepancies in the amount of per capita funding that we receive, as my hon. Friend the Member for Tunbridge Wells (Mr. Norman) mentioned. In the forecasts for 2002–03, the per capita funding through health authorities is £1,204 for Camden and Islington, £1,041 for east London, £1,002 for Manchester and £940 for Sunderland. Yet it is £741 for west Kent, £745 for west Surrey and £790 for west Sussex. Those are enormous discrepancies, which cause great problems in our constituencies. There are also great discrepancies within social services funding. Much of it goes towards the elderly. My authority spends an enormous amount above its standard spending assessment. Authorities throughout the country spend £1 billion above what the Government fund them for and think they should spend. It largely goes on extra care for the elderly. The demographics of the situation mean that that problem is getting worse.

As hon. Members have said, the imbalance of the system where the NHS takes the strain for the underfunding of social services, leading to the delayed discharges and bed blocking is worse in the south-east than in any other area. It is more than double what it is in the north-west. Premature discharges from hospitals because of the shortage of beds result in people coming back into hospital as emergency admissions only a few days or weeks later. Again in the south-east we suffer from that more than any other region as figures released just the other week show. Hospital emergency readmissions are climbing all the time.

The position will get worse in the south-east. There is, as my hon. Friend the Member for Tunbridge Wells said, a crisis in care and the health service, particularly in our region. Because of the extra capitation for funding social service places in London, for example, London boroughs place their elderly people into nursing and residential homes in Kent and Sussex. Our local authorities cannot afford to place our own people in local residential homes.

Like my hon. Friend the Member for Fareham (Mr. Hoban), I congratulate Hampshire county council, which has bucked the trend by increasing the number of available residential places—but at great cost to local council tax payers. Other figures, such as those on hospital waiting times and waiting lists, show that, not surprisingly, the south-east again bears the brunt of the problems. The percentages of people waiting for more than 12 months are 10.9 per cent. in west Surrey, 8.7 per cent. in east Surrey and 9.3 per cent. in west Sussex. Disproportionately, three hospitals in the south-east are among the bottom five in the national tables on in-patient waiting times: the Royal Surrey county hospital in Guildford, the Princess Royal hospital in Haywards Heath and the East Surrey and Crawley hospital in Redhill. Which hospitals and health care trusts are among those with the longest trolley waits? They are all within the south-east: Brighton, Surrey and Sussex, Dartford and Gravesham, Maidstone and Tunbridge Wells, and the Royal West Sussex hospital all have well above average trolley wait times. I fear that the situation is getting worse.

We have all heard about pressures on GPs. Worthing has had some of the biggest pressures in the country. Almost a year ago we had a debate in Westminster Hall on the subject and in the summer the Minister kindly came down to Worthing to see the problem at first hand. I fear that nothing has been done and the problem is getting worse. Just about every GP surgery within Worthing has closed its lists. New GPs and practice nurses cannot be recruited to help with that worsening work load.

GP vacancies across the region have leapt up disproportionately in the past year. In east Kent, GP vacancies have gone up from 13 to 29 per cent. In Oxfordshire, the area of the hon. Member for Oxford, West and Abingdon (Dr. Harris), they have gone up from 24 to 62 per cent. In west Kent it has doubled, from 31 to 60 per cent. That is a common problem across our region.

Nursing vacancies have similarly increased, as the hon. Member for Portsmouth, North (Syd Rapson) said. He also mentioned the problem of GP surgeries. The surge in property prices has meant that people are being priced not only out of buying residential homes but out of buying and extending new surgeries. The cost of living in the south-east also means that we have some of the highest figures for nursing vacancies and ancillary staff in the country. As the Audit Commission found, the additional cost of employing agency staff is excessive. Agency staff now cover one in 10 daily shifts in the NHS. The cost to the NHS of employing temporary nurses rose by a record 20 per cent. in 1999–2000 because agency staff typically earn nearly 20 per cent. more than NHS nurses. That is not an ideal situation.

There are also vacancies in social services. If one does not get the social services right, people are neglected, particularly elderly people and they end up as emergency admissions, placing additional pressure on hospitals. Kent, in particular, which is the largest authority in the country, currently has social worker vacancy rates of around 20 per cent. I could touch on many other areas. The hon. Member for Milton Keynes, South-West mentioned the enormous gaps in mental health care, particularly for adolescent mental health services, which is a particular problem in the south-east. My hon. Friend the Member for Fareham referred to the enormous variation in management costs across the country, particularly in our region. It is not surprising that just a few weeks ago the Department of Health had to admit that we have a record number of managers, a record number of low bed numbers and a ratio of 1.15 administration and estate management staff for every one bed in the country. That situation is getting worse and the discrepancies between the regions are enormous.

It is therefore no surprise that in January a leaked memo from Ruth Carnell, the chief executive of the NHS in the south-east, showed an overspend of at least £60 million in health care in the south-east. That money will have to come from somewhere. We have a real problem in the south-east and we need a fair assessment of the demographic and population density pressures on our services. Above all, we need a joined-up approach, not the existing fire-fighting approach mentioned by the hon. Member for Winchester.

12.19 pm

The Parliamentary Under-Secretary of State for Health (Ms Hazel Blears)

In the short time available to me, I shall endeavour to deal with the majority of points raised by hon. Members. If I do not have time to deal with specific points, details or technicalities, I undertake to write to hon. Members.

I congratulate the hon. Member for Winchester (Mr. Oaten) not only on securing this debate, but on the way in which he presented his case. It was a pity that the hon. Member for Oxford, West and Abingdon (Dr. Harris) should have accused him of being over-charitable. A debate is obviously taking place between the two hon. Gentlemen on where they eventually want to position themselves, and we will all be delighted to see the result.

The hon. Member for Winchester made some important points. Indeed, hon. Members representing seats throughout the region raised issues that we all see on our visits and experience in the community. He made some suggestions about the formula, and I shall respond to them in detail.

I pay tribute to the Winchester and Eastleigh trust. It is doing an excellent job; I have seen the presentation made by Mr. David Livermore, the chief executive, on the funding pressures faced by the trust. It is a beacon site, and I am delighted that it is delivering all its targets. I acknowledge Mr. Livermore's drive to try to deliver on budget, and his difficulties in achieving it.

The hon. Member for Winchester asked for the new census data to be used as quickly as possible, as it would ensure a more accurate formula. I am told that we will be using the new census data, but that the administrative processes involved will mean that it is likely to take another two years for it to be fed fully into the formula. However, if I can shorten that time, I shall do so. It is important to all hon. Members that that up-to-date information should be available. Most of us know how fast our communities can change during a 10-year period. It is therefore important to make sure that the information is up to date.

The hon. Gentleman asked whether we could take the fixed administrative costs out of the formula, so that it was targeted at health needs rather than administrative functions. It would probably be a difficult task—these things always are, and formulae are complex—but I could ask the review body to consider that aspect. I would welcome suggestions from the hon. Gentleman and other hon. Members on what fixed costs might be taken into account.

The hon. Gentleman asked about market forces and the pay element of the formula. I am told that the university of Warwick was asked to review the number of pay zones incorporated in the formula this year, and I am told that the number of zones has increased. The market forces factor has been updated as a result, so that it is a little more sensitive to the wage rates that are being paid.

The hon. Gentleman also asked about the transitional costs of shifting the balance of power and whether they would be met. I am informed that £55 million will be provided transitionally in 2002–03 and 2003–04 to meet those costs. Pressure on the delivery of health care would be lessened as a result of being able to meet the inevitable transitional costs. Once the shift in the balance of power is completed, administrative savings of about £100 million will accrue from the reduction in the number of health authorities, but transitional costs are inevitable.

Mr. Oaten

I am grateful to Minister for answering those points so clearly. Will she confirm that although there may be a review to consider the impact that market forces have on wages, the market forces element of the formula should consider also some of the other issues that have been mentioned this morning, such as property prices, because market forces have an impact not only on wages, but on many other aspects of health care provision?

Ms Blears

I take the point made by the hon. Gentleman. Some factors in the formula relate to housing, but they are based more on people's access to basic facilities such as central heating, indoor sanitation and other traditional factors of deprivation that have been included in Government formulae for many years. However, housing costs are not specifically included. The hon. Gentleman makes an important point.

My hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) made the interesting point that, in addition to the number of elderly people in communities, the health needs of young families are also a factor. I hope that hon. Members will be aware that there are competing internal tensions and contradictions in trying to provide fairness for different areas of the country, for different groups in the population and for those with different health needs.

Although many hon. Members have mentioned the increase in the number of elderly people who are living longer and, therefore, causing health costs to rise, life expectancy is lower in some areas of the country than in others, which require extra funding to address the social deprivation that leads to lower life expectancy. As my hon. Friend the Member for Milton Keynes, South-West and the hon. Member for Winchester recognised, including health inequality in the formula and directing funds towards areas of greatest need is entirely proper, although staff recruitment and retention, housing costs and economic pressure in the south-east must also be taken into account.

I hope that hon. Members of all parties will recognise that in devising a formula, it is important to target resources on the areas of greatest need. It is a matter not of counting heads, but rather of directing health service resources to the places where people are more ill more often and die earlier, as well as providing the continuing care that is important for communities.

My hon. Friend the Member for Milton Keynes, South-West acknowledged the progress that has been made on extra capacity in the past few years. To set the debate in context, there has been an increase this year in health service spending nationally of almost 10 per cent., an extra £601 million this year for the south-east, and an increase in social services spending over the past five years of about 20 per cent. compared with an increase in the last five years of the previous Administration of only 1 per cent.

There are pressures. Far too many people wait too long for treatment, far too many people wait in hospital to be discharged and I accept that there are huge pressures in the south-east, but that must be seen in the context of significant and substantial increases in national health service investment. I hope that hon. Members will build a consensus around the need for increased and sustained investment in the health service, not just in the next few years but hopefully, for a long time to come, so that we can redress decades of underfunding.

My hon. Friend the Member for Milton Keynes, South-West is right that we must do more to encourage imaginative housing schemes to give people a first step on the housing ladder. That is incredibly difficult when one considers the average house price in the south-east. NHS Estates is now involved in a large-scale programme of shared ownership and shared equity schemes, trying to utilise parcels of NHS land together with developers so that part of the development provides affordable housing units for staff. We are facing exactly the same problems with teachers, police officers and other public sector workers.

My hon. Friend the Member for Portsmouth, North (Syd Rapson) made some extremely good points on behalf of his community, which took into account the economic expansion in the south-east. That is a driver and the engine of our economy, so it is vital that we deal with the issues of housing and recruitment.

The remarks of the hon. Member for Fareham (Mr. Hoban) must be set in the context of the increased investment in his local area of £48 million this year. He mentioned chiropody and dentistry. I am afraid that hundreds of dentists withdrew from the national health service when their contracts were changed in the early 1990s. That decimated NHS dentistry. We are doing a great deal to bring those dentists back, but it is not easy. I am pleased that he has a dental access centre in his constituency and I hope that he will visit it. We shall do what we can to increase the number of NHS dentists.

The hon. Member for Tunbridge Wells (Mr. Norman) was especially concerned about delayed discharges. I am pleased to be able to tell him that delayed discharges in the south-east have decreased by 183 since last September as a result of the extra £100 million invested last year and the extra £200 million that will be invested in the forthcoming year. I think that, in his area, £2 million was invested this year and £4.5 million will be invested next year. I am not saying that that will solve the problem because we all know what problems exist, but there is increased investment. It is not only about providing increased investment for bricks and mortar. It is also about providing more domiciliary care support in people's homes to keep them independent. An awful lot of elderly people do not want to go into residential care; they want support at home, which is what we are trying to provide.

The hon. Member for Romsey (Sandra Gidley) commented on the funding of primary care trusts. They have been involved in the whole service and financial frameworks round. They will inherit health authorities' assets, as well as their liabilities. From now on, they will be the power and the driving force in health communities. It is right that they will make decisions about priorities in consultation with their local communities.