Social Services Committee (Hansard, 15 November 1989)

§ Mr. Kenneth Clarke

The Government's response was published today. It notes the large degree of agreement between the Committee and the Government both on the need for reform of the NHS and on our specific proposals for change. The Committee's clear endorsement of the fundamental aims of the White Paper "Working for Patients", namely, that the NHS will continue to be a comprehensive service open to all regardless of means and financed largely out of taxation is welcomed. We also welcome the Committee's support for many of the key proposals in the White Paper. These include the proposals for devolving more management responsibilities to the local level, extending patient choice, resource management, medical audit of the quality of care, making more efficient use of capital, increasing the number of NHS consultants and removing the "efficiency trap" by ensuring that resources are linked to workload.

The Government's response fully addresses the Committee's concerns about funding. First, it reaffirms the assurance that the necessary funding to introduce the NHS reforms will not be at the expense of patient care. We have made available an additional £82 million this year to assist with implementation. Secondly, the Committee has not recognised that spending on the NHS in the United Kingdom has increased massively—from £8 billion in 1978 to £26 billion in 1989. This represents an increase in real terms of 40 per cent. As announced in the Chancellor's Autumn Statement, the Government's spending plans mean that gross expenditure on the NHS will increase to over £28 billion in 1990–91, an increase in resources over 1989–90 of £2.6 billion. The equivalent figure for England is £23.3 billion, an increase in resources of more than £2.2 billion or 5.5 per cent. in real terms. This increase is well in excess of the Committee's recommended increase of around 2 per cent. each year. The increase will also raise the overall increase since the Government came to power in 1979 to 45 per cent. in real terms.

The Committee's other concerns are largely about the pace and process of implementation of the proposals in "Working for Patients", rather than the overall direction of change. We believe that the Committee's concerns about the availability of information systems to cost treatments and about the need for pilot projects are misplaced. Implementation of the proposals in "Working for Patients" will be an evolutionary process. Subject to parliamentary approval, the Government intend to have in place the central elements of their reforms by April 1991. These include the reshaped health authorities and FPSAs. Their chairmen and members will need to lead the 346W implementation of the new arrangements for the NHS and their task will be very different from that of chairmen and members of the current authorities. The Government have decided therefore to follow the Committee's recommendation that non-executive members of health authorities and FPSAs should be remunerated. Other key elements will include, for example, the first NHS trusts, the first practice budgets for fund-holding GPs and the new system for contracting for services within the NHS. The subsequent development of these programmes will be informed by the experience gained from the first participating hospitals and practices.

The Government are supporting a number of projects throughout the country with the aim of developing information, financial and management systems by April 1991. The system for contracting for services will initially operate largely on the basis of existing information. At first many services are likely to be provided under "block" contracts with hospitals agreeing to provide a defined level and range of services in return for an agreed level of resources. More sophisticated forms of contracting and the associated supporting information and costing systems will develop as the experience of the NHS with contract funding grows.