Sir George speaks in Budget Debate about health in Hampshire
22 Mar 2004
This is the text of Sir George's speech in the House:

Sir George Young (North-West Hampshire) (Con): It is a pleasure to follow the high-quality speech of my hon. Friend the Member for North-East Bedfordshire (Alistair Burt), who focused on the health service but began with some comments about broader issues in the Budget. It is quite difficult to explain to a 69-year-old who may have modest income and modest capital that they will get none of the Chancellor's munificence, whereas a 70-year-old who may be infinitely better off will get the £100. That bribe, as my hon. Friend called it, says something about the Chancellor. For seven years, he introduced complicated, focused, targeted means-tested benefits. Now, at the end of the seven years, he has cast that aside and is bringing in a universal benefit. That seems to say something about the failure of his strategy. He introduced those highly complicated schemes and is now moving from that towards universalism.
I welcome the increase in resources being devoted to the NHS. The Secretary of State said when he opened the debate that we still have a long way to go, which is indeed the case. I got a fax last week from the Southampton University Hospitals NHS Trust about a constituent waiting for a scan appointment at the Wessex neurological centre. I quote what it said:

"The waiting list for such an examination currently runs at around 52 weeks."
The constituent in question had already been waiting for a scan for over a year. At a time when we are all being told that early detection leading to early treatment dramatically increases the prospects of recovery and survival, long waits of 52 weeks after a referral for examination are simply unacceptable.
I know what the Minister is likely to say in response—that extra resources have been allocated, and that it takes time to procure the scanners and to train the staff. I want to look at the claim on resources. This year, there has been a 9 per cent. increase in cash resources for the NHS in Hampshire. With inflation at around 2 per cent., people might think that that left a healthy margin for real terms growth, but they would be wrong because 7.8 per cent. of the 9 per cent. is accounted for by what in health-speak is called "tariff growth."
Tariff growth is the unavoidable increase in existing costs before one thinks about new commitments. It covers the national insurance increase, the reduction in doctors' hours, wage increases, the increased costs of drugs and so on. In other words, real growth is about 1.2 per cent. However, most of the trusts in Hampshire are running at a deficit. The cumulative total of deficits in Hampshire is £20 million. The trusts have been told to use the growth money to address the deficit and that £20 million is about 1 per cent. of the budget, which almost equates to the growth money.
Also, in Hampshire many trusts have survived by transferring capital to revenue in order to balance the books, but that practice will no longer be possible because the Government have stopped it. That will exaggerate the underlying imbalance between revenue and expenditure. Therefore, in effect, there is precious little growth in Hampshire and consultation is about to start on difficult measures to balance the books.
That leads me to a point that I have made before in these debates about the way in which money is distributed. My constituents get less per capita for health than anywhere else in the country—we are now 21 per cent. under the national average, and it was about 16 per cent. when this Government came to office. Therefore, although the totality of NHS resources is increasing, we are getting a reduced percentage of the total available.
Of course, I accept the argument that resources need to be allocated according to need, and that there are parts of England with more severe health challenges than those that face us in Hampshire. What I do not accept, and what I have never seen justified, is that we can get by with £79 as opposed to £100—the average in England. There are wards of deprivation in Andover. Even people on above average incomes get ill. Indeed, health spend is often linked to longevity. Some of the costs in Hampshire are higher than elsewhere. For example, we spend more on agency nurses because of the difficulty of recruiting full-time nurses in a high-cost housing area such as Hampshire. If the funding we received was 85 per cent. of the national average as opposed to 79 per cent., we could probably cope. I urge the Government to revisit the distribution formula and to abandon the unjustified discrimination against the south-east, which we have seen not just in health but in the revenue support grant.
To echo what my hon. Friend the Member for North-East Bedfordshire said about what the Secretary of State did not mention, a lot of reforms are taking place in the NHS at the moment and the right hon. Gentleman did not touch on any of them. An entirely new national programme for IT is coursing through the NHS. He did not mention the new GP contracts and the new out-of-hours service, which in my constituency looks as though it will mean that people will no longer be able to go to Andover hospital after 11 pm. They will either have to call out a GP or go to Winchester. We have the new contracts, the working-time directive and we are moving towards the national tariff and payment by results under the reforms to NHS financial flows. None of those was touched on by the Secretary of State but they are all vital matters that the NHS is addressing at the moment.
Nor did the Secretary of State say one word about foundation trusts. We know that it is a sensitive subject for the Labour party but that is an issue that many of those who work in the NHS are now addressing. With foundation trusts, the Government are confronted with a dilemma entirely of their own making. They have said that all the capital borrowing by those trusts from the City will score as public expenditure, and will have to come out of the NHS Brown envelope. Therefore, the more successful the foundation trusts are in using that freedom to borrow, the greater the penalty the rest of the hospitals will have to pay in having their capital reduced to accommodate that growth. The NHS under Labour is like a hostage ingeniously tied up by his captors. The more he struggles to release the ropes around his hands, the tighter the noose around his neck.
I have two possible "wave 1a" trusts in my constituency, and the one-off grant of £175,000 no way covers the transitional costs, many of which will recur. How much will they be able to borrow? In a letter to me dated 11 March, the Minister of State told me:

"The Independent Regulator sets the prudential borrowing limit for each NHS Foundation Trust on the basis of a prudential borrowing code . . . If you have further questions about the code, you may wish to contact the Regulator".
So the fortunes of the trusts and, dare I say it, of the Government are now in the regulator's hands. What view will he take of the trusts in my constituency that are well run, but that have an excess of expenditure over income for the reasons that I have touched on? The regulator may well say that, because of the accumulated deficit, the imbalance on the revenue account and the backlog of maintenance, the ability to fund debt is very low. They may end up getting less money out of the new system than they would have received, had they remained under the NHS. That would be a severe blow for the Government's health policy.
The message from the regulator is rather stark. I was reading NHS Magazine yesterday. Bill Moyes, the regulator, was quoted as saying:

"Convince us you can cope as independent entities."
He makes it clear that his function is about managing risk, not performance. He asks:

"Are applicants financially strong enough? Are they financially stable?"
Well, towards the end of the year, the Government may have some difficult questions to answer if many of the applicant trusts find that they are worse off under the new regime than they would have been under the old one.
Mr. Lansley: My right hon. Friend and I have discussed this matter, but it may be of interest to him—if not to Health Ministers, who are not present—that I have looked at a "wave 1" trust's service development strategy and it is not entirely in the hands of the independent regulator. That trust, at least, anticipates that nearly £50 million of its depreciation charge—its revaluation reserve on its balance sheet—will be replaced by public dividend capital. Of course, as that involves equity, rather than debt, it may increase its borrowing ratio, but a lot of hospitals elsewhere in the NHS might wonder where that money will come from on the Government's balance sheet.
Sir George Young: My hon. Friend makes a good point, and if I were a Health Minister approaching a general election, possibly 12 months away, I would be deeply worried about ending up with egg on my face because of that new policy, under which the trusts that have been encouraged to apply for foundation status may find that they are worse off.
In passing, I mention the senseless cap on private patient income for foundation trusts. Hospitals in my constituency could increase their income and spend more money on treating NHS patients if it were not for the cap on the percentage of the income that they can generate from private patients—a cap that was not there for the first seven years of the Labour Government. The Government managed perfectly well without that cap until now, but they are now introducing that wholly unnecessary restraint on the ability of NHS hospitals to raise money for NHS patients.
I want to end with a final word about a subject that has been raised twice at Prime Minister's questions. I have visited and kept in regular contact with a national charity, the Macular Disease Society, as it is based in my constituency. It is a membership society for people with age-related macular degeneration. Ministers will be well aware of the anxiety about the delay in introducing the treatment, photodynamic therapy, for wet age-related macular degeneration. Up to 7,500 new cases of that aggressive condition occur each year, and patients can go from seeing well to severe sight damage in three months.
The Macular Disease Society is in close touch with patients, who are still being asked to pay £2,000 a time for up to six treatments, and consultants, whose primary care trusts tell them that they are not yet funded to give the treatment on the NHS. Ministers know that some 50 clinics in the country are currently capable of delivering the treatment, yet Ministers insist that training and staffing issues, not cost, are delaying implementation. The truth is that strategic health authorities and PCTs have been given the freedom to delay paying for treatment up to the end of June, and those who have not made provision in their budgets are doing just that. The result is that patients either have to find £2,000 per treatment, to be carried out by the same NHS consultant, or they start to lose their sight. Consultants across the country can deliver the treatment, but they have been refused the funding.
In many letters to Members of Parliament, Ministers have said:

"We will do all we can to ensure that services which have the ability to expand sooner than the nine month period do so and that new services come on stream as soon as they are able."
When he winds up, I should like the Economic Secretary to tell us exactly what those Ministers have done. The treatment was approved in September last year by the National Institute for Clinical Excellence and the Department of Health, but Ministers still have not given direct orders to SHAs and PCTs to start delivering it through existing clinics and treatment centres.
Although more than 100 patients a week are diagnosed and will be treated in the well-managed hospitals that offer the treatment, others will be invited to pay £2,000 for their first treatment or they will lose their sight and suffer appalling distress. We have made many demands of the Government during the debate, but it would be helpful if the Economic Secretary could say that, between now and June, the Government will take the necessary steps to ensure that the people who have that disease will get the treatment that they need, without having to pay £2,000.
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Copyright Sir George Young Bt. 2015