UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 49-iv

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

Public Administration SELECT committee

Choice, Voice and Public Services

Thursday 20 January 2005

RT HON JOHN HUTTON MP and MR JOHN BACON

Evidence heard in Public Questions 391 - 478

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Public Administration Select Committee

on Thursday 20 January 2005

Members present

Tony Wright, in the Chair

Mr David Heyes

Mr Kelvin Hopkins

Mr Ian Liddell-Grainger

Mr Gordon Prentice

________________

Witnesses: Rt Hon John Hutton, a Member of the House, Minister of State, and Mr John Bacon, Group Director of Health and Social Care Services Delivery, Department of Health, examined.

Chairman: Can I welcome our witness this afternoon who is John Hutton, who is the Minister of State at the Department of Health. He is accompanied by John Bacon, who is the Group Director of Health and Social Care Services Delivery in the Department. We are very grateful to you for coming along. The good news is that we are not the Health Select Committee! The bad news is we do everything, that is to say we try to look at some of these issues across government and across departments. We have invited a number of ministers, starting with yourself, to come and help us in thinking about these matters of - as we call them - choice and voice as part of the public service reform agenda. We are very grateful to have had a memorandum from the Government on these matters and a particular one on health issues relating to today's session. I am not sure, John, whether you want to say anything by way of introduction?

Mr Hutton: No, I am very happy, Chairman, to go straight into questions.

Q391 Chairman: Let me start us off by wondering if there is not some kind of difference between the approaches inside government on these matters. I ask this because when I look at, for example, what the Prime Minister says about choice - and I quote from the Government's paper to us - quoting his speech in January 2003, he says: "Choice mechanisms enhance equities by exerting pressure on low quality or incompetent providers. Competitive pressures and incentives drive up quality, efficiency and responsiveness in the public sector". Then, if I look again in 2003 at the Treasury's paper on meeting the productivity challenge it says: "It is important to ensure that choice is not promoted at the expense of equity or efficiency, particularly where there are market failures and capacity constraints." I am not wanting to make a trivial point about are there differences here between Number 10 and the Treasury but the substantive point is, is it not the case that although the Prime Minister seems to suggest it is an easy relationship between choice and equity and efficiency, in fact what the Treasury says is "hang on a minute, there can be real problems here in trade-offs with equity and efficiency"? I would not mind hearing you say something about that to start with.

Mr Hutton: I think that is the $64,000 question, is it not, which goes right to the heart of this whole debate about to what extent choice can lever up quality and efficiency and equity at the same time. I think to be fair it is also the case - I know this because I have read the speeches, I am sure other colleagues have as well - the Chancellor has made very clear his support for choice in public services as well. I think the issue for us is this: unless you take the right steps and do the right things if you are going down this path, there is a danger that you can exacerbate inequities. You might not improve efficiencies and the results and the gains that you want do not materialise, of course that is so. That is why, as we have been developing up the proposals in the National Health Service for greater and extended patient choice, we have been very clear all along that choice is a means to an end, it is not an end in itself. We do not want to develop and extend choice in the National Health Service at the expense of equity or efficiency or responsiveness or any of the other objectives that we are seeking to do. We have done, for example, and we continue to do, a very great deal of work with the NHS, both at Strategic Health Authority level and with local NHS organisations, to make sure that one of the key ingredients to make a success of these reforms - which is access to the right information - tells people what they need to know about different providers and so on and is available to everyone. We recognise that some people might need more help than others in making sense of that information and using it efficiently and effectively. Certainly that was one of the lessons that we learnt ourselves when we started to develop some of the choice schemes, for example, around coronary heart disease which I think have proved a huge success in reducing waiting times for heart operations. Right at the core of that proposal around choice in CHD was patient care advisers, people who have the time, experience and knowledge to take patients through the various options which are open to them, to explain things about the different providers which are available to them so they can make informed and proper choices. Of course there is a risk of those things happening. What you have got to do if you are going to go down this road is identify them and be clear about the values that you are determined to hold on to as you go down this road. We are not going to compromise on equity as we go down the choice road. I do not think there is a simple trade-off between the two. Of course, you can sacrifice one at the expense of the other unless you are careful, but we are going to be careful and we are going to make sure that the choices that some people in our society have always had, which are based on personal wealth, in future become based on personal health. The choices of the few literally become the choices now available to the many. I think that is perfectly possible if you set your horizons at the right place and you fly by the right instruments. If you sacrifice instruments in the process or if you do not fly by the instruments then I think you can have a problem.

Q392 Chairman: Just on the point you made about choice being simply a means, it is just a tool that we can use for certain policy objectives and it is not an end in itself. In fact, I am struck by the fact that the paper that has come to us expressing the cross-government view on this actually does say it is good in itself. Just to give you the quotation, it says: "Choice emerges as both a means of introducing the right incentives for improving services for users and as a desirable outcome in and of itself", that is it is both intrinsically and instrumentally valuable. You have a Government position which says not only is it a useful tool but it is a good in its own right. One of the things we have to think about is which of these it is.

Mr Hutton: Maybe, Chairman, I have not expressed myself clearly enough. Let me go back to the beginning of this argument. We know from the work that we have done in the National Health Service that choice makes a powerful difference to the quality and responsiveness of NHS services, and that is what we want to achieve and secure. Also, we believe that choice is a good thing in itself, of course it is, because I believe in a modern, democratic society choice is one of the defining characteristics of modern citizenship. Choice should not just be about who you elect to govern you but it should also be extended to what choices of services you decide to use. If I have expressed it to you bluntly, let me row back a little bit from that. It is the case, I think, that choice is a good thing as an aspect and future of citizenship, I am sure so, but I know also that it will have a powerful, beneficial effect on improving the responsiveness and quality of NHS services. That is my principal responsibility here as a Minister in the Department of Health, to find the right way of making sure that the NHS gives to the public the services that it wants. I am aware, and I am sure colleagues will be aware, that patients do not really want choice, that is just a myth, all they want is a good local hospital. Of course there is some truth in that but I think the only thing you have to choose between the two is one of the fundamental myths which has helped to confuse the argument here. I think you can have both because there are bound to be plenty of reasons, for example, where you do have a good local hospital but for perfectly sensible reasons you might, as a patient, want to choose to go somewhere else, for reasons of convenience. For example if you are an older person and your family live a hundred miles away you might prefer to have your operation, particularly if you are going to be in hospital for a long period of time, closer to where your family and loved ones are. I think we have to try and balance the two things but I believe very strongly, from what I have seen and what I have heard patients say to me who have been involved in these schemes, that it has been hugely beneficial for the NHS and it is certainly what patients want because the best way to find out what patients want is to ask them, and that is precisely what we have done. In opinion poll after opinion poll they have confirmed they want choice. Yes, they want good local services but they believe, also, that choice can help them deliver that. Most importantly of all, when we have offered choice to patients, very large numbers of them have exercised their right and have exercised the opportunity to go somewhere else to have their treatment. I am rowing back a little bit on my original answer.

Q393 Chairman: You are perfectly entitled to row back a little bit. Let me get you to row back a bit further on something else which is, just as a matter of obvious fact is there not a trade-off between a choice based way of delivering services and an attention to cost-effectiveness? In a system where there is limited funding and, therefore, in that sense limited supply, at some point there will be a trade-off, will there not, between having a service driven by the notion of choice and having a service driven by the notion of cost-effectiveness?

Mr Hutton: No, I do not think so. I think if you look at - which I know you want to look at later - the payment by results mechanism which we are proposing to use as, if you like, the policy instrument to facilitate patient choice, what payment by results and all prospective payment systems do in health care systems is reward efficient providers, not reward inefficient providers. I think choice and payment by results together, and they are two parts of this very important reform, can help promote efficiency in the use of capacity in a health care system.

Q394 Chairman: Can I give you an example to make it less abstract. One of the things which I think is valued by people in some health care systems - France, Belgium, many ones cited - is that people can access specialists directly. If you have a problem you go and see a specialist directly and you get that under your insurance deal. If you want to develop a serious choice based system, and given the fact that is a choice many people would like to exercise, they do not want to go through a gatekeeper for many things, they want to be able to go and see someone who knows about the condition immediately, that will be extremely expensive to do. In going down the choice route, we have retained absolutely the GP gatekeeper model, have we not, and set our face against a kind of choice that would be extremely expensive to implement by people going directly to specialists?

Mr Hutton: I think the French health care system is extremely expensive and has been running at very significant deficits for a long time as a result of that. We are not proposing to do what they do in France here in England. You are quite right, we are not proposing to remove the important gatekeeping role of GPs because quite clearly we have to manage a finance budget. I think there is a way of extending very significant extra choices to the system without sacrificing the obvious objective of all governments, of whatever political persuasion, to maintain the efficiency of the use of resources. I think in a sense it comes down to this, does it not, we are talking about greater choice but we are not talking about an absolute choice, unlimited choice, because we all know in the real world that there are going to be some limitations, some driven by the requirements of efficiency, some driven by other considerations as well. For example, we are not proposing that any patients, whatever their circumstances, whatever the medical opinions might be, can demand any type of service at all. Obviously the service has to be a medically justifiable intervention and we added in, also, further requirements in relation to efficiency that the intervention can be conducted at NHS tariff prices because we save a public resource. I think the fact that you have to engineer efficiency into the system does not mean necessarily that you sacrifice all of the core components of a system of greater choice.

Q395 Chairman: No. I want to put on the record the fact that there is clearly a trade-off between moving in choice directions and issues of cost-effectiveness. The Treasury is quite right to flag that up as a consideration.

Mr Hutton: They are. I had interpreted your remarks - I am sorry - as saying that choice based systems must always be inefficient. I am trying to say the opposite, I do not believe that to be the case.

Chairman: No, I am saying there are constraints on choice insofar as we are concerned with issues of cost.

Q396 Mr Prentice: Maybe they can be inefficient, and I just want to explore that because you talked about dangers and risks in offering greater choice. GPs are the gatekeepers and yet the National Audit Office told us yesterday that about half of GPs know very little about the Government's choice agenda and 61 per cent feel very negative or a little negative about it. Given that GPs have got this pivotal role, should the Government not have done a bit more to explain to general practitioners what its thinking is in trying to bring them round?

Mr Hutton: I am not sure whether those figures that you have quoted relate to GP awareness of the National Programme for IT or whether they relate to their opposition to the principle of patient choice. The evidence that I have is very different. There was a survey, for example, conducted by the Dr Foster Organisation in April 2003 which showed 71 per cent of GPs thought the NHS would benefit if GPs could offer patients a greater degree of choice. Our own DoH research - which we are very happy to provide to the Committee - showed 91 per cent of GPs endorsed offering patients the choice of time and date of appointment and 82 per cent endorsed choice of hospital. I think we need to be clear and it is very clear, also, Gordon, from the NAO report, the support of the BMA and the Royal College of GPs for the principles of patient choice.

Q397 Mr Prentice: I listened to the Today programme this morning and there was widespread scepticism, I think, amongst general practitioners that GPs were spending now 14 minutes per patient consultation as opposed to a previous nine minutes. My central point is that the people who are going to manage all this are not on board. The bit that I quoted earlier goes on to say: "GPs' concerns include practice capacity, workload, consultation lengths ..." that is what I have just been talking about "... and fears that existing health inequalities will be exacerbated." Now that is pretty damning, is it not, for general practitioners to tell the National Audit Office this? The NAO canvassed opinions through a survey, I believe, but that is pretty damning, is it not?

Mr Hutton: I think it would be damning if it was true.

Q398 Mr Prentice: Okay.

Mr Hutton: It is not true. It will not exacerbate health inequalities and, in fact, we know the opposite to be the case from all the choice pilots that we have done, and which we have provided evidence to the Committee of.

Q399 Mr Prentice: How does it work in practice? An ill person goes along to the general practitioner, having listened to the Today programme and to Government ministers like yourself talking about the choice agenda. In this - and I do not say this flippantly - brave new world will the patient be encouraged to ask the GP about the competence of the doctors who are going to treat them in the hospital; the reputation of the hospital or the department in the hospital that is going to treat them; death rates? Will they be able to ask the GP that kind of information because it seems to me that would stretch the length of the consultation quite considerably?

Mr Hutton: There is a huge amount of data available already which answers patients' enquiries about exactly those issues. The idea that we have to prompt patients to ask, for example, is the doctor you are recommending who is going to treat me any good, we do not need to prompt them to ask that, they ask that now. You would ask that question, I would ask it, just about everyone wants to know if they are going to be treated that they are going to be treated by a doctor who has got some relevant experience. I think the difficulty for us, Gordon, is this that it is very easy to knock holes in the argument, it is very easy to look at the immensely complicated operational task in front of the NHS - and it is a big one - of converting effectively a no choice system into a system which delivers more effective choice and to say "it just cannot be done, it is all too complicated so let us just stay with the system that we have now where there is no choice, patients are told where to go for their treatment". Now, given that health is the most important service that any of us consume in our lives, I think the idea that the public services can only offer patients one choice, nothing else is permitted, frankly I think is a desperate poverty of ambition around the public services . I am glad to say it is for that reason that the Government has decided to embrace choice and to find a way of reflecting that mechanism, of introducing it into the NHS. I am very away that GPs have concerns about what this means in terms of the length of their consultations, of course they are right to have those concerns, but the new GP contract that we spent two years negotiating with the GPs themselves, which they endorsed overwhelmingly, does actually remunerate GPs for longer consultations now for the first time, and I think that is a good thing. We know from some of the work around Choose and Book, the electronic booking appointment system, some of the feelings about the length of time it would take GPs to actually confirm a transaction have been exaggerated. GPs are bound to be concerned about that until they have actually got the system on their desk and they can use it because they all work under enormous amounts of pressure. What I would say about that in terms of the point that you have specifically raised about length of consultations and so on, is that we have always envisaged that most outpatient appointments eventually will be booked through Choose and Book, the IT system, but we have never said that all of those appointments will be booked in that way. Even within Choose and Book, the National Programme for the IT booking system, there will be opportunities for patients to go home and think about what service they want to access and to call in through the call centres and call booking management services to make their appointment. The GP will generate the initial inquiry and they can go away and book the appointment at their own time and convenience as well. There are workarounds around these perfectly legitimate concerns but none of them are knockdown arguments against the principle or the value of choice in the NHS.

Q400 Mr Prentice: The target is not going to slip from December 2005 for e-bookings with the kinds of exceptions and caveats that you have expressed?

Mr Hutton: Sorry?

Q401 Mr Prentice: Is there not a target of December 2005?

Mr Hutton: Yes. We want Choose and Book to be available to GPs by the end of 2005 and it certainly will be. We have never committed ourselves to making sure that every secondary care appointment is delivered through Choose and Book by the end of 2005, it will take us longer to generate that. There will be perfectly sensible areas of the NHS where patients will quite rightly choose not to use Choose and Book. In sexual health clinics, for example, those clinics operate on an instant drop-in basis and you will not need to book in advance because you can literally walk through the door and get treated.

Q402 Mr Prentice: I am interested in limits to choice. A lot of people in my constituency are not very well off and 30 per cent of them do not have access to a car. In your submission I think you referred to the national figures. If one of my constituents went along to their GP and wanted to exercise choice and have his or her operation done in some hospital in the South West of England, would my constituent have to bear the travel costs or, as part of the choice agenda, are people going to be reimbursed for the consequences of choice that they properly exercise?

Mr Hutton: It could be. It would depend on exactly what their income is. The NHS operates a low income travel cost support scheme and if they qualify under that then they would certainly get the costs of their travelling paid for by the NHS if they exercised choice, as you say, to go to the South West of England to get their operation. It would very much depend on their own personal means. We do have a low income travel cost support scheme and I am very happy to provide the Committee with details of that, Chairman.

Q403 Mr Prentice: There are sceptics out there who would say that the Government's agenda is really privatisation by the back door and the Government is actually encouraging private sector providers to do NHS work. Do you think it is very unfair for this to be characterised as privatisation by the back door? Would it not be better to say this is privatisation by the front door?

Mr Hutton: We have not done anything by the back door, let me be quite clear about that. We have made it quite clear what it is we are trying to do. If we were trying to privatise the National Health Service, which is an absolutely ludicrous allegation, the NHS today would not be employing nearly 200,000 more people than it did in 1997 when this Government took office, so I think we can really put that particular argument on one side. It is true that we have decided as an instrument of policy, and I am sure the Committee will want to explore this, to use independent sector providers to provide more choice and capacity in the National Health Service. When we have done that we have done it in consultation with the local NHS in order to fill gaps that they tell us they cannot fill themselves in the timescale that is necessary for them to be filled. Remember, in the background to all of this we have the Government's waiting time targets which are increasingly reducing the length of time that people have to wait. Of course, as we know by 2008 the total wraparound time from going to see your GP to having an operation, we say the maximum length will be 18 weeks and the average length will be about ten weeks. In order to do those things, in order to get capacity up to a point where we can deliver that target, we need substantial extra capacity in the system and in particular we need extra surgeons, operating practitioners, nurses and everyone else. The independent sector treatment centre providers are providing that personnel. In the short-term that is the only way that we can boost capacity. These treatment centres have greater significance than that. They are providing some contestability into public services for the very first time in the NHS and I think that is a very, very good thing to do because alongside choice, and this is very, very important too, there has to be rewards and incentives in the system. I believe the three key ingredients to make choice work to be extra capacity, more information for patients and the right rewards and incentives. I believe that it is in this latter category of providing the whole service with sharper incentives that reward good performance but also through a spotlight on poor performance that is the way to drive up efficiency ultimately in the long-term in the NHS. Rather like your opening question, Chairman, yes, of course there are some risks in this. If you are going to throw a spotlight on failure you have got to know how to deal with failure.

Q404 Mr Prentice: I am not a health professional. I have got a persistent cough, I think, but I come to this from an amateur perspective. It concerns me, as I said earlier, that you do not have the general practitioners on board as part of this agenda and we see from the press today and from the Health Service Journal today that managers in the health service are very, very sceptical of the Government's plan. John Carvel in The Guardian says: "John Reid is facing a groundswell of opposition from NHS trust chiefs in England about plans to contract out up to 15 per cent of non-emergency operations and diagnostic tests". 37 per cent of the survey, and you will have seen the piece in the Health Service Journal, said they were being bullied by the Department of Health. Does that concern you?

Mr Hutton: I find that latter allegation totally ludicrous and ridiculous. In relation to your first point when you say that the GPs are not on board with this, I dispute that. The GPs support patient choice. We know from all of the work that the Royal College has done, the BMA and others have done, that the BMA supports patient choice, a point of referral, and so does the Royal College of GPs. I am not at all surprised, however, that there will be some NHS managers who feel concerned about the direction of reform, of course they will.

Q405 Mr Prentice: It is not concern, it is freaked out really.

Mr Hutton: They are bound to be concerned about these reforms if we do create a new market in health care in the UK, new providers providing NHS care free at the point of use, which might well involve some transfer of activity across the service from the NHS to the independent sector. They are bound to be concerned, are they not? Their concern is with their own organisation, naturally so. What we have got to oversee at the centre is the strategic direction of this reform and I think it is absolutely essential that we maintain this new third sector, if you like, in health care in this country because the benefits of establishing this new wave of independent sector treatment centre providers has been enormous. You have been quoting from newspapers today but I would suggest there is a whole series of articles in the Financial Times you might like to refresh yourself with which show the extraordinary impact that the arrival of these new providers is having on the private sector, how it is lowering prices in the private sector substantially, and we are using and taking advantage of those changes for the benefit of taxpayers because we will be buying capacity at much cheaper prices than we have ever done before from the independent sector allowing us to cut waiting times much more quickly for your constituents and mine. I think that is a virtuous circle, not a problem.

Mr Prentice: A couple of days ago we were in Birmingham and we quizzed the Chief Executive of the South Birmingham PCT, which I think is one of the biggest in the country, and he was saying that what the Government is planning is utterly perverse.

Chairman: That was not the expression that he used. This is Gordon's version of what he said, lest it be recorded back that his words were "utterly perverse".

Mr Prentice: No, he did not say that.

Mr Heyes: On the contrary, I thought he was exceptionally cautious in the way he was talking and that was interesting as well.

Chairman: That is my health warning on Gordon's question. I can see a man getting into deep trouble at that point, and not you, Gordon.

Q406 Mr Prentice: He told us in a very measured way that there was some concern that by 2007-08 eight per cent of elective work would have to be bought in by the South Birmingham PCT from private sector providers. He told us that as a way of getting the private sector up and running the contractors for the work would extend for five years and South Birmingham would have to pay private sector providers to do work that it could do perfectly competently itself and more cheaply. If I have got any of this wrong, the Chairman will correct me. That was the gist of it and that was why I said just a few moments ago that it seems utterly perverse.

Mr Hutton: Let me just put the record straight. I think John might want to say one or two words about this because I can feel him twitching. He is the guy with the chequebook so he has to pay for all of this. The idea that we are going to make the Primary Care Trusts pay more than they would currently pay NHS providers is simply not true. They pay the NHS tariff and the Department of Health manages any additional costs from central funds, so the Primary Care Trust is left in exactly the same position it would have been whether it was purchasing that care from the independent sector or whether it was purchasing that care from the NHS, it makes no difference to the PCT at a local level at all. In relation to this idea that we are going to contract for five years, and I assume you were referring to a sort of guaranteed volume and a guaranteed price ----

Q407 Mr Prentice: Yes.

Mr Hutton: We have made no such decisions yet. I am not sure on what basis you were told that was the Department's policy because that is not the Department's policy.

Q408 Mr Prentice: In order to nurture and bring on the private sector there has got to be some kind of guarantee about the volume of work and health service professionals are concerned that work that could be done within the NHS will inevitably go to the private sector because it is the Government's policy to bring in this other third force, I suppose.

Mr Hutton: Just two things very briefly. As I say, we have not made any decisions yet on how we are going to contract for the second wave of operations that the independent sector are going to provide. We have not made a decision on that yet. I agree there are some difficult issues there for us but we have not made a decision yet and we have certainly not communicated that to the NHS by the back door. The second thing I would say about this whole issue about capacity, and I know the Committee wants to get on to this, is anyone listening to that debate would assume that the NHS capacity is either going to stay frozen or it is going to go back, so we have got all of this difficult business to do of taking work out of NHS hospitals and taking it on to the independent sector. Currently we do about five and a half million operations a year. By 2008 that is going to have to rise to nearly seven million if we are going to meet the target of 18 weeks, so we are going to see significant increases in the total amount of capacity we need in the service. We have said, and the Prime Minister has said, we have already purchased about 200,000 and we are going to buy another 250,000. The total is less than half a million out of that seven million.

Q409 Mr Prentice: This is additional capacity, there is absolutely no question of transferring work that is currently being done in the NHS into the private sector, we are talking about additional capacity.

Mr Hutton: We are talking about additional capacity but as part of the eventual deal that will follow through there could be the opportunity as well to transfer some work from NHS facilities into these new treatment centres.

Mr Prentice: Mr Bacon is twitching.

Q410 Mr Hopkins: To quote from the Chief Executive of Nuffield Hospital, which is a private group, he said, along with extra capacity "with doctors we have a structured secondment arrangement with the NHS where we get doctors from trusts", so the doctors are going to be taken from the NHS to produce this so-called extra capacity in the private sector.

Mr Hutton: I think you are confusing two things there. We have got a number of agreements with the Nuffield. We have centralised bulk purchasing which the Department is overseeing where we insist on additionality in relation to staff. At a local level, NHS trusts will have local contracts with Nuffield, for example as a local private sector, to deal with waiting list objectives to make sure that they get their operations done. In relation to that latter category of contracting, yes, it is very likely, almost certain, that those consultants will be some of the same NHS consultants who are working in NHS trusts, but in relation to the bulk purchasing, the contracts that we announced last year that John Bacon helped us negotiate, there was a very strict additionality requirement in relation to extra staff.

Q411 Chairman: Having stopped Gordon let me now reinforce him because he is paraphrasing what was said by a Chief Executive of a high performing PCT who was very supportive of the choice agenda, fulfilling all their commissioned obligations, doing well in the scores, but who was flagging up the fact that they could offer the range of choice providers from within the NHS and he said "the only logic I can really make of this is if there is a long-term objective to make a market then I can understand what this is about, but in the short-term I am being asked to go and make a contract with a private sector who I do not need to make a contract with and to pay them, as it were, to be there as a potential provider even though I do not need them". You can see from the point of view of someone running a PCT this did not make a lot of sense.

Mr Hutton: It is part of a long-term objective to create this sustainable third sector in the NHS. Not an established UK private sector, not the NHS, but new independent sector providers who provide treatment for NHS patients at NHS tariff rates. To do that we need to make sure that there is a sufficient volume of activity in the service to support that new centre that we have created, which has had such a beneficial effect on waiting times and improved efficiency across the NHS. John made clear when the Secretary of State gave evidence to the Select Committee a few weeks ago that this issue about how do we plan for the precise amounts of capacity that are going to be in the new independent sector providers and how much in the NHS is a fiendishly complicated thing and we have asked the NHS to plan at a baseline assuming about eight per cent of activity will be in the independent sector. As John made very clear in the Health Select Committee, having gathered in the plans there now needs to be a set of negotiations at a local level to try to work out precisely what gaps need to be filled and who is going to fill them. John, I do not know if you want to add anything.

Mr Bacon: The Minister has set it out very well. Initially, the primary objective is to work out the total amount of capacity you need in order to deliver the objectives by 2008 from whatever source. There is a baseline plan of how much outpatient diagnostic and inpatient capacity you need. We then need to think about how we stimulate the situation where patients have real choice and I think the point I was going to add to the ones the Minister has made is that from next year, 2006, essentially the volume of activity any of these providers get is driven by patient choice, not by, locking health PCTs into set volumes as we did in the early days of this initiative. We want to get enough capacity in the system to enable the plan to be delivered, we want to give patients a range of choices, and then we want to introduce a degree of contestability so that the providers, be they NHS or the private sector, have real incentive to offer very good services and very convenient services to our patients. Essentially we are moving to a patient driven system here.

Q412 Chairman: Let me just try this another way. When we were asking this PCT about their experience of talking to their client groups about choice, the PCT were talking quite positively but then we said "What about the people who are running these meetings, what do they say?" and it came out that people were not really very interested in choice, they had to concede. One of them said, "Their ears pricked up though when we talked about private providers" meaning they thought they were going to get private treatment on the NHS. If that is the bigger turn-on for people when they sit down in that GP's surgery and he says, "Look, I have got a little menu here of people you can go to and one of them is this private outfit" and someone thinks, "That is good, is it not, I get private health service without paying for it, I will have that", what if everybody starts saying "I want to go to a private hospital?"

Mr Hutton: Personally I think that is extremely unlikely to happen. It comes down to one point that John has just been trying to make. It is an area where we have still got work to do in the NHS and across the public too. We have all grown up with an NHS that is built around what has been alluded to, that organisations have a guaranteed block of business that is always going to come to them, but that is not going to be so any longer. That will be true for the independent sector providers just as it will be for the NHS providers. I think everyone has to come to terms with that and that is going to be a huge challenge. The second thing I would say to the NHS and to NHS organisations is of course you can theorise this to the point of absolute destruction, and I know people are interested in doing that, but I think those three letters - NHS - stand for something very, very important, and I think the public overwhelmingly have confidence and trust in NHS providers. I do not think for a second that because there is one independent sector provider on a menu of, say, four or five, that you can assume that means that 80 or 90 per cent would go down the private sector provider route. I think the NHS has a huge amount to offer in this and we know the vast majority of the public is very, very satisfied with the care that they get from NHS providers. The important thing is that in the new financial regime that will apply to the National Health Service, no provider can take anything for granted and neither should they be able to do so. They will get the business, they will get the patients on the basis of the service they provide, not on the fact that they have got a monopoly in a local market but because patients choose to go there.

Q413 Chairman: I understand that. I do not think this is theoretical stuff, it is real world, how does it work stuff. I thought the Government's broad philosophy was that it did not really matter who provided services, it was the role of the public sector to commission services and to make sure that everybody has access to them. Why on earth are we worrying about the balance between providers? Why should you jib at the idea if everybody wants to go private and they do it at rates that the NHS will pay for? Why should it matter to you?

Mr Hutton: It is a transition that we are talking about, we are going from the old NHS where there was no choice to a new NHS where there is unlimited choice by 2008, and obviously we have to plan to make that transition. Frankly, I think it is impossible to imagine any sort of realistic scenario between now and 2008 where we could put in place this equivalent amount of capacity that the NHS currently has to have it banked up on the theoretical possibility that everyone might exercise that particular chose. That is completely impossible to imagine.

Q414 Chairman: In principle as things develop, as they evolve over the long-term, there is no reason why provision should not move wholesale into the private sector if that is what people want, if that is what choice drives.

Mr Hutton: Indeed. I think it is choice that will drive this.

Q415 Mr Prentice: It is quite possible for hospitals to close then. If patients are not going to a particular hospital there is no point in keeping it open.

Mr Hutton: I think we have to be clear about a number of things in this argument, about how we deal with failure in this sense. I think we have got to have a very clear perspective on this. What we have got to ensure as an absolute and as a guarantee for NHS patients is reliable local access to accident and emergency care. We have got to be clear about that as our objective. Also we have to be clear, therefore, that because choice is a discipline, and it is a new discipline for the NHS and we should back patient preferences and not provider convenience here, if large numbers of patients decide in the local hospitals in your area that they do not want to go and have their dermatology at the local hospital, they want to go somewhere else, they might want it in primary care or they might want it somewhere else, that might have an implication, of course it might, for the continuance of that particular part of the service provided by that hospital.

Q416 Mr Prentice: So that department may just close down?

Mr Hutton: It might do, yes. Why should we say to patients, "You have got to go to a failing service because it is the local service"? I think that is a totally unsustainable position. A service might be providing a poor level of service and part of the work that we will do, and continue to do, is to support providers to provide a better service, and ultimately I think payment by results will provide the incentive to do that, but if having tried and failed, and failed to persuade the patients to go there, it is still the argument that we should nonetheless keep that service there with all the built-in costs ----

Q417 Mr Prentice: It is all highly technical stuff, is it not? Joe Bloggs out there does not have the faintest idea about the competence or otherwise of the dermatology department at a particular hospital. He or she will be advised by other health professionals, like the GP that we started out with. The GP is going to be incredibly influential.

Mr Hutton: I think GPs will be influential too but I think patients ----

Q418 Mr Prentice: They will be lobbied very hard.

Mr Hutton: Patients are perfectly capable of making up their own minds on these things. I do not think you could generalise that this is all too complicated for patients and they will never be able to make head nor tail of it, that is not true. I think patients are becoming increasingly health literate for a variety of reasons: through their own measures; through access to the Internet and so on. There is no doubt that the levels of health literacy are rising. At the end of the day, you are quite right, GPs are influential and it will be part and parcel of a combination of pressures. If the GPs have lost confidence in that service, and that happens from time to time, and patients say "We do not want to go there", then why should we, as taxpayers, keep continuing to pay all of the costs associated with a service that no-one wants to use?

Q419 Mr Prentice: This is fascinating stuff. In the future when we have patient groups being organised on the Internet it would be a really good thing for health provision in the United Kingdom to be driven by what patient groups, brought together on the Internet suffering from a particular condition, decide. It is already happening to a limited extent but over the next five, ten or 15 years this is going to mushroom, is it not?

Mr Hutton: I think patients will gravitate towards the best providers and that is a good thing, not a bad thing, and we should encourage that.

Q420 Chairman: These groups will produce their lists of the top six centres for this condition and when they go to their GP they will pull this thing off from the Internet and say, "Look, these are the places I want to go to for my condition" and the GP will say, "Unfortunately everyone is saying that. It shows on my screen they have got these terribly long waiting lists so you will not be able to go unless you want to wait a long time for it".

Mr Hutton: This is fundamental to the whole argument, is it not? When we say that we want choice, of course we want choice, but not every sick child can be treated at Great Ormond Street Hospital for Sick Children because we know it has a finite capacity. There are other ways to solve that particular problem. For example, Great Ormond Street are looking at, as it were, branding or franchising their product in other parts of the NHS to run local Great Ormond Street Hospitals for Sick Children. There are ways round that. You are quite right, by definition not everyone can be crammed into the same building at the same time, so the choice menu will have to be predicated on a number of assumptions, will it not? One is about capacity and availability and that if you really want to insist on a particular provider you will have to wait and there might be other perfectly good providers who can provide the service with a shorter waiting time that patients might decide to use. There will be a variety of sources of information and some of it will come from organised patient groups, as it does now. You can talk to any number of groups and they do exactly that now and will continue to do that. That is a good thing, patients should have the power to drive improvements in patient quality. Patients will rely on a variety of other forms of information, some of it will come from GPs, some of it will come from other patients who have experienced or been to that hospital, and the reputation of the hospital is very important, the speed of access and their clinical quality. If you guys have not ever been on the NHS Net have a look at it, a lot of that information is available now. It is not some sort of futuristic scenario we are talking about, it is used now. I am sure that the Department will provide for the Committee some information about how many patients actually access that information on a daily basis now. I think you would be quite surprised.

Q421 Chairman: To get back to where we started, and you hear this said often, what a patient wants is not to have to wait very long to get their condition sorted. They want a guarantee that the hospital they are sent to can do the business properly. They might say that is an obligation on the state to make sure those conditions are met and, indeed, the Government is going a long way to make sure that these conditions are being met. To go further and to say, "Ah well, you have now got to start shopping around amongst the different providers and we are going to give you this little list", the question is, is it what they want? That is the first thing. The second thing is would they ever be in a position to have the kind of information sources that would enable them to do if? If I could just finish this by mentioning the NAO report that came out yesterday which was critical in a number of respects, and we may come back to some of them. On the information point it talks about the imperfect state of information sustaining the choice agenda at the moment and it says: "Informed by the experience of choice pilots and Dr Foster research, the Department's view is that it would prefer to roll choice out with the existing limited set of information". The NAO says: "While this is reasonable, it does fall some way short of patients' expressed preferences as noted in Building on the Best for information on outcomes and quality to make choices". The choice scheme that is coming in now is not yet underpinned by the kind of clinical outcome information that a genuine choice making system would need, is it?

Mr Hutton: John will want to come in on this but let me just say one or two things. That is right, there is more information that needs to be made available to the public. Gordon is right as well, I think some of the data that patients need and want to have access to is not available currently in the format that you have just described. I would just say this to the Committee: this is an area where we have to be extremely careful in how information is presented because there is a real danger that a completely unfair and inaccurate presentation can be made. When we are talking about the outcomes of individual surgeons, for example, we need to distinguish between the fact that some surgeons deliberately will take on more complicated cases and, therefore, by definition the success rate may be not as high as a surgeon who does not take on that particular case mix. We have to find an effective way of communicating that, the fact that some doctors do particularly complicated and dangerous procedures, without making it look like that doctor is a dangerous doctor because that would be totally unfair. We are working very, very hard, the officials and also the medical organisations, to find the right way that we can present that information in a sensible and meaningful way. I am hoping in the next couple of years we will be able to do that but currently I think there is a very significant volume of information out there on which patients can make perfectly sensible and informed choices. John might want to add to that.

Mr Bacon: Just to add to a point you were making, Chairman. We have developed, and are continuing to develop, quality and standards frameworks that are the minimum quality that must be offered in any hospital that offers NHS treatment, be that NHS or private sector. So there is a guarantee in that that you can expect that level of quality and standards if you are going to an NHS kite-marked institution, as it were. Those quality and standards are subject to inspection by the Health Care Commission, so there is an independent inspection service which will ensure that those hospitals are reaching that level of quality and standards and their reports will be public and will be available to the public in informing their choice. There is a mechanism in place to ensure that that level is both agreed at the outset and is maintained.

Q422 Chairman: So if I say to my GP, "Who is the best doctor?", then what happens?

Mr Hutton: Who is the best doctor locally?

Chairman: If he says, "You have got this condition, I am very sorry" ---

Mr Prentice: It is a big complaint.

Q423 Chairman: "I can give you four or five choices where you might go" and I am taken aback by the news I have got this condition, so I say "Who is the best doctor then?", then what happens?

Mr Hutton: If you were to ask your GP now, if he said, "Mr Wright, you need to go into hospital. You have got a rash and we need to look at it", he would know from his experience of that hospital which consultant he would prefer you to be seen by. That is true now but obviously in the menu of four or five providers, that GP's experience of those particular providers may be less strong. In that case, the GP, rather like you, will have to rely on the information that is currently available to make those choices. In a sense, the idea that this is going to be a unique set of problems when we extend choice across the NHS is a misreading of the current situation. There are reputations known within local economies between hospitals and GPs about which would be the best consultant to see for a particular complaint. That is the case now and that will certainly continue within the local knowledge networks that exist in local NHS organisations and that is regularly exchanged with patients. In relation to the wider choices that patients eventually will be able to activate, it is true, as I said earlier, that we need to continue to make sure that the widest possible range of information is available to support patient choices because immediately you widen the network of choices then by definition you are going to start standing outside those local knowledge frameworks, those reputational relationships that have been established locally over many, many years and GPs and patients will have to rely on a wider spread of information and data to support the patient choice. As I said, we are working to support meaningful presentation of that data but, as I hope the Committee will be reasonable in accepting, it is important that we get that right for the consequences of getting it wrong are very obvious: reputations could be damaged; we could misrepresent data and unfairly and improperly influence the choices that patients are making. It is a complicated area. There is a lot of work that we are doing with the medical organisations to try to get it right. I think it is true that the cardiothoracic surgeons, for example, have been working with the Department for some time in exactly this area to try to find the right way to present the data in a meaningful way for patients. I am sure there is a way to do that and we remain committed to finding that way.

Q424 Mr Liddell-Grainger: I am intrigued by delivering of patient's choice when a GP is referring. The NAO report says: "The Department believes that choice is affordable. Additional annual infrastructure ...costs are estimated to be £122 million - or 1.4 per cent of the current total expenditure" and then it goes on to say "...it should lead to increased efficiencies in primary and secondary care services worth an estimated £71 million, off-setting some of these costs". How do you cost choice?

Mr Hutton: That is definitely John's territory, I think.

Mr Bacon: I think that the numbers referred to by the NAO relate to the infrastructure costs of establishing the mechanisms to enable patients to exercise choice.

Q425 Mr Liddell-Grainger: Why £122 million? Why not £100 million or £130 million? Why is it £122 million?

Mr Bacon: £122 million is the NAO's view based on the information we have given them of the infrastructure costs of establishing the process. It is just a factual number how much it will cost.

Q426 Mr Liddell-Grainger: They are your figures and they are a factual number. Give us the facts. How do you come to the fact that is the figure?

Mr Bacon: That is the addition of the direct infrastructure costs of setting up the process and the training and development that goes with it.

Q427 Mr Liddell-Grainger: So choice is costing us £122 million?

Mr Bacon: The costs of establishing the mechanisms to enable patients to exercise choice is costing us £122 million.

Q428 Mr Liddell-Grainger: We are not talking about e-booking in this, are we? Is e-booking included in the £122 million?

Mr Bacon: I think it is, yes.

Q429 Mr Liddell-Grainger: I will come back to that in a minute. How do you have an estimated worth of £71 million off-setting some of these costs? What have you off-set?

Mr Bacon: Again, the off-setting costs, as I understand it from the brief opportunity I have had to read the NAO report, are the savings you make from missed appointments, et cetera, that cost the NHS considerable amounts of money. We know from the evidence that we have already that the ability to book a defined date at the time at which you exercise the choice will reduce the number of missed appointments, et cetera, and that will produce a saving and the NAO's estimate is that is £71 million.

Q430 Mr Liddell-Grainger: I think you are about to be passed something. For making up the difference on missed appointments, et cetera, you off-set the cost of £71 million, so you are saving on just efficiencies £71 million but it is costing us £122 million.

Mr Bacon: Yes.

Q431 Mr Liddell-Grainger: Not a great return, is it?

Mr Bacon: You are not building in any of the benefit of the patient's ability to choose.

Q432 Mr Liddell-Grainger: The figures are in here. They are your figures, you provided the information.

Mr Bacon: I am not disputing the figures, I have agreed those.

Q433 Mr Liddell-Grainger: I know that. I am trying to get to the bottom of why you come to these figures because there does not seem to be an awful lot of added value in choice. I am not talking about patient care wise, I am talking monetary wise.

Mr Bacon: The £122 million is set out in detail in the document, so that is where the numbers come from. As the document said, the off-setting costs are the savings that I have mentioned.

Mr Hutton: We need to keep one other thing in mind here. If we are talking about £50 million, we are talking about £50 million out of a budget this year of about £70 billion rising to £92 billion by 2008. In overall terms £50 million is £50 million, of course, but, with respect, I would say that we have got to look at the wider picture here. It is not possible to introduce different systems into the NHS that are necessary to sustain choice, and we have spent the last hour talking about some of them, on the understanding that it can be done for nothing. Obviously there is going to be a cost in relation to this and we work very hard to try to minimise those infrastructure costs because we can only spend the same pound once, we do not have a chance to spend it on patient care or anything else. The collective decision, the judgment that all of us have to make, is whether we take the view, which I understand you do, that patient choice is a good thing in the NHS and, therefore, we need to make the investment to make it happen. The wider benefits for the National Health Service, for all us as taxpayers, are very significant. I think choice, together with payment by results, will support good performance, it will certainly throw a spotlight on poor performance and I think drive inappropriate costs out of the system and fundamentally make sure that we try to get the one really difficult equation right here, which is to match capacity in the system to where people want it to be. So we minimise excess capacity standing empty and make sure that we can optimise sufficiently and use the capacity in the service. We do not always do that now and certainly we do not do it under the present commissioning of the block contracting produces that we use in the NHS. I believe that payment by results and choice, and the evidence from all of the pilots supports this, is a more efficient way of targeting resource to need and to making more efficient use of capacity. If it costs us £50 million to introduce this system, in the overall sweep of things that is not a disproportionate cost and it has to be set aside against the wider benefits that this policy will produce.

Q434 Mr Liddell-Grainger: One of the whole ideas of choice is to make the NHS more efficient, to streamline it and to bring in more capacity, to create more friendly end-usership. What I am trying to get to the bottom of is, you have tried to quantify a figure - and I do not know if the figure is right and I am not entirely sure we are at the bottom of the figure - but there is a cost to all of this. If you are saying - and both Gordon and Tony put it very eloquently - if a department shuts, you will have presumably redundant doctors and nurses, you are going to shift them on to another hospital to try and take up more capacity there, there must be a cost to all of this. You have given a very eloquent political answer, which is very nice, and John gave a very eloquent Department answer, but we are not getting down to the bottom of what the cost is. I come on to the e-booking system. There has been quite a bit of information in the press about this, where it was supposed to have a capacity of X and it actually hit Y, which was quite a big discrepancy. You have put an enormous amount of money into this, many billions I think ultimately, is it actually going to work? Government and computers do not always hit it off, and I am not blaming your Department, I think this is true of every department. Is it actually to work?

Mr Hutton: It is going to work.

Q435 Mr Liddell-Grainger: When?

Mr Hutton: Well, it is working now. I had the very good fortune to be in Barnsley yesterday to meet the GP who has made I think 63 of these appointments.

Q436 Mr Liddell-Grainger: He has got a statistic!

Mr Hutton: I think there has been a fair amount of rather predictable use of that figure to attack the national programme of IT. There is only one story that anyone ever wants to write about IT programmes, and that is "Another IT screw-up", it is the easiest story in the world to write. I would just say a couple of things about that. In relation to the 63 appointments, it is true two years ago we thought we would do 200,000 by now because what we planned to do was to test the scheme in a fairly large number of practices to see what happened. We decided last summer we would not do that but test it in a small number of practices with a smaller number of specialties to make sure we got the gremlins out of the system rather than inflict this on hundreds of practices. That is what we have done, that is what we have tried to do, and that is why the figure of 63 does not look terribly clever in comparison with the earlier figure of 200,000, and everyone can make fun of that and they did. That is life. The system works, is my answer to you. The e-booking system works and we know because we have tested it. The other issue I would say about this is, people have confused a lot of issues and they have assumed because we have made 63 appointments, rather than the 200,000 planned two years ago, you therefore cannot deliver choice in the NHS because the system sucks. Well, the system works, as I said, and there are other ways - as, to be fair to the NAO, they acknowledged in their report - you can work around that issue and make sure you deliver choice in the system. We, for example, have said to the NHS recently, and John will have more information about this because he is overseeing this, that it is possible to complete choice at the point of referral through telephone booking services, what we call indirect booking services, where a GP alerts the hospital the patient wants an appointment, the hospital will contact the patient directly and negotiate the booking with them, probably over the phone but maybe in other ways as well. There are delays in using the booking system, I am not going to pretend otherwise, some of them are to do with technological complications, some are to do with getting the NHS geared up to accept the new software into their own patient administrative systems. Maybe a few months will help. I believe very strongly that that will not compromise the delivery of our choice objectives by the end of this year. Patients will still be offered the choice of four or five providers. I think the large majority of those appointments, maybe up to 70 per cent, will be booked through the new IT system but the remainder will be booked through these work-around devices - indirect booking, call management services as well - so we can still deliver the choice policy but we might have to do it in a different way from the way we thought two years ago.

Q437 Mr Liddell-Grainger: You answered the question to an extent, but I was talking to a doctor who happens to be a personal friend of mine and he is very concerned about centralised booking because he lives in a rural area, his choices as to which hospitals he can go to are limited by virtue of geography, and his concern is that if he comes up with the best alternative - in his case it is Somerset - and says, "You are going to go to Exeter", that is a hell of a long way, it is one and a half hours away. That is the concern they have. Again, it is the delivery - and you are talking about primary care - and if they have not got the choice to refer, or it is an impractical referral through the e-booking system, they may have a problem simply because of the vagaries of technology.

Mr Hutton: I do not think technology will make the booking of that appointment impossible or more difficult, in fact frankly it will make it much easier, but I do accept the wider point you are making, that in some parts of rural England, for example, patients will not have the same access as patients in London and the South East, or Greater Manchester or Birmingham, or even Lancashire, to a range of different providers.

Q438 Mr Liddell-Grainger: Pendle is rural.

Mr Hutton: Yes, and Gordon will be able to correct me, but I would be surprised if there were not a range of providers within an hour's travelling distance of Pendle which patients could consider going to. That is the important point, these will be the choices on offer, you choose; any travel, any movement, you make is your choice, it has not been forced upon you. You cite the example of one of your constituents being forced to go to Exeter, there will be a range of different providers they can choose from. If they want to go to Exeter, they can go.

Q439 Mr Liddell-Grainger: Let us look at one of your scenarios. Tony has quite rightly pointed out that if something goes wrong with a department and the department has to close because it is just not going to work, that department has to move, in my case, to Bristol, Exeter, and you then have no choice, you have to go there. I am not saying that is going to happen but you do not know that and I do not know that, but that is the ultimate choice which is no choice.

Mr Hutton: Let us start at the beginning with this. I think the scenario where the service suddenly gets pulled away and people get no choice, is not going to happen. Moving on gradually to payment by results means that we give poorly performing organisations a chance to get their act together, and that might mean different clinical leadership or different management of the organisation. If we know that is not having the positive or desired effect on that organisation, it would be perfectly possible for a primary care trust to commission an alternative provider to run that service. What we are seeing, for example, from the independent sector providers is innovation in terms of how we deal with these problems and providing capacity in rural parts of the England. For example, I think in Mr Prentice's constituency and certainly in mine we have mobile cataract surgery units which are travelling the country and which have done about 10,000 operations, and we can take a provider to a particular location and overcome precisely the point you have just described about the fixed, established provider having difficulty with the service which no one wants to go to and, as a result, its income has been drastically reduced and they might have to take the steps you have described. There are work-rounds in all the examples you have given, where we can continue to provide choice for National Health Service patients, and that is the job of primary care trusts, and increasingly will be, to make sure patients have access to those choices. They will start to move away from the traditional role and start to be commissioners, they will decide for us what service we are going to have and buy it and commit on a block basis on those contracts. The job of the PCTs in the future will be overseeing choice.

Q440 Mr Liddell-Grainger: We went to Bristol just over a year ago and we went to the Royal Victoria. One of the things you point out is, if they cannot make it work, we will try and get them to make it work and put in management and so on, but one of the things which came out loud and clear from down there were attempts to make people do what they could not do, and this came from senior managers in that hospital. If you cannot make it work, you are stuck, are you not? You can replace management until you are blue in the face, but if it ain't going to work, it ain't going to work. You then have a problem that if you move people to another hospital because that department is being shut down, it is not going to guarantee it will work in another hospital no matter what part of the country you are. So you could be going in a circle of inability to manage.

Mr Hutton: We will not be closing surgical units down. It will be patient choices that decide the future of these organisations. That I know is a completely different mindset for us to think about when we envisage the NHS, but it will not be the case. I can give you this assurance: I will not be making a decision to close the local ophthalmic department in your hospital because I do not think it is good enough. If that unit faces those problems it will not be because of anything I have done; it will be because the patients locally do not want to go there. As I said, there are solutions available to local commissions to try and make sure that that more local option continues to be available to your constituents and, as I said, there are a number of ways in which that can be done. Of course, with any prospective payment system like PBR, attached to choice, which it is designed to facilitate, yes, it could be that that happens There could be circumstances where certain services fail and they fail to the point where they cannot be rescued because no-one wants to go there under any set of circumstances in a viable way. For all of us in public life - and I know this is a completely different set of disciplines; we are not used to applying this in the context of public services - I do believe very strongly that we face a pretty simple choice. If we sign up for choice, if we think our constituents should have free choice across the NHS about where they go, if we think that will help support quality and drive up efficiency, this is the down side and I do not think it serves the argument that somehow I can guarantee there will be no service failure in the new world of choice; there will be. As I said earlier, the most important thing here is to be very clear about how we preserve access to crucial emergency care, and there will be some surgical specialities, orthopaedics for example, where locally the elective side of that service, which roughly accounts for about 22 per cent of the hospital income so a relatively small part, is where choice will operate. It will not operate in the field of emergency care for obvious reasons because patients can go anywhere they want to now anyway. No-one is going to ask you, "Who is your PCT?", when you turn up in an A&E department; they just treat you on the spot. If there was a failure in an elective orthopaedic service, for example, that could raise quite difficult and different issues from a failure, for example, in another speciality like dermatology which is not crucial in terms of maintaining A&E capacity. If there is a service failure in an area like trauma and orthopaedics I think it is going to be necessary for the department to have a way of intervening in those circumstances to make sure that the failure of the elective component of orthopaedics in a local hospital does not have a wash-over effect into the continued viability of the A&E department because you cannot run modern A&E services without trauma and orthopaedic surgical back-up; it is impossible. Obviously, there is payment by results in the area of emergency care as well. People will say, "Why should there be any wash-over? The patients are still coming through the door in A&E. You are getting paid on that basis". The problem could well be around the rostering and staffing arrangements because clearly there would be additional costs for that organisation if all of its orthopaedic surgeons were only rostered to work in accident and emergency as opposed to staffing elective and routine surgery as well, so the cost clearly would rise and it would rise above the tariff rate for emergency work. We would have to consider in those circumstances precisely what we did to maintain access to A&E, for example, in your constituency. I can just let you into a little secret here. In this sense, fine, I might be the minister today; I am a backbencher tomorrow. At the end of the day we are all Members of Parliament. The one thing that would get all of our goats going would be if our accident and emergency department, which is absolutely essential, had to close down because of some accounting problem. It is never going to happen. The responsibility of us in government now with this new system is to construct an effective financial mechanism for making sure that if a surgical speciality and service is affected by a downturn in elective activity and it is crucial for A&E, we find an effective tool, financial if necessary, to make sure that that failure on the elective side does not compromise A&E. To all those people who run around saying that this just means that A&E departments are going to close, I would say it is not going to happen and it has not happened in any other country where they have moved towards prospective payment systems for elective care - Australia, Canada, the United States, other European countries and Germany. What is interesting about the international experience is this, that in other countries they have used payment by results as a way of managing out of the system excess capacity. We are doing it in a totally different way. We do not have any excess capacity, so alongside introducing payment by results we are injecting more capacity into the system. I believe fundamentally that the best way to make sure we do not run the risk of having large amounts of standby capacity sitting there idle, whether it in the independent sector or in the NHS, is to persevere with the reforms on payment by results. It is the best way to make sure that the capacity that is needed is used, because you are not going to get paid for having capacity idle and therefore it is not economic for you as an NHS organisation or an independent sector provider to have wards sitting there empty. Payment by results will not support that. We need to get this balance right between capacity and demand. It is a fiendishly complicated equation to get right but I am absolutely sure, both from the international experience and from our own testing of PBR in the UK, that payment by results is the best way to do it.

Q441 Chairman: Precisely on this, it is true the government has a fallback, has it not, on the amount of funding that is going to come by the payment by results route from April from 70 per cent to 30 per cent? Is this because, whatever system you set up - and we found this when we did our report on targets - you immediately get gaming, and are we not already saying that gaming is going on, if I read the reports right, which is that hospitals, foundation trusts, are taking short term people from A&E into wards because they know they are going to get extra money that way and have you not had to change the system because of this? Does this in turn mean lots more monitoring, lots more regulation, to make sure this does not happen?

Mr Hutton: You are quite right. We have deferred the full implementation of payment by results in relation to emergency work and outpatient activity. We have not deferred it in relation to what we have spent the last hour and a half talking about, which is elective care, the routine operations that your and my constituents might choose that may be necessary for them to use and they can choose from. We are going ahead with full implementation of payment by results for elective care for routine operations. It is true that we have therefore delayed bringing in full PBR in relation to emergency and outpatient activity, and we have done so for a number of reasons, partly those that you have just described. Every system that has moved to prospective payment financing for health care has faced a similar set of problems. If you are coding particular activities and applying for the first time a particular price tag to everything that is coded, of course there are likely to be irregularities. What is very important (and every other country has had to do the same thing) is to introduce it gradually so that volatility in the system is managed and, secondly, to have a clear set of rules around which you regulate precisely that sort of perverse incentive, if you like, that your financial system creates. That is what we need to do. We need longer to do that. That is a fair comment and I am not going to run away from that. We have got more work to do on that. Secondly, I would say that the NHS itself was very clear that, given the volatility, given some of the concerns about the accuracy of the data (which is crucial here in terms of fixing a price and so on), we need longer to get all of that right and it is much better, I am sure, to get it right rather than rush in and get it wrong because the consequences then would be for your constituents and mine. Hospitals could run out of money and that would be in no-one's interest, so it is perfectly sensible to take that time to get it right. Having said all of that, we are still introducing payment by results more quickly in England than in any other country that has attempted these financial reforms in the health care system. We need to do it around elective care because otherwise the choice agenda simply disappears in front of our faces. If you cannot have the money following the patient there is no incentive for the hospital to do the extra work. At the moment you might wait years to get funded for operations that can be done from someone else's primary care trust - hopeless. If there is going to be an incentive it has got to be a real one. I would say we have focused PBR this year on that part of the NHS where it really does need to start to influence behaviour, which is around elective care, but we have to take our time to get it right.

Q442 Mr Hopkins: A little bit of clarification first of all - my father's name was Harold but I do not think I inherited it. On Tuesday evening we saw in the Evening Standard a photograph on the front page of a ward in a London hospital empty with a chain round the handles because for some reason or other patients had been forced into the private sector. You were talking about providing extra capacity. This was capacity that had been closed down and deliberately transferred into the private sector, no doubt for ideological reasons, but is that not stupid and scandalous?

Mr Hutton: If the worst thing that you can say about the NHS in London is that it has now got spare capacity for the first time - guilty. I have no problem with that accusation. It is true: we have spare capacity in some parts of the NHS.

Q443 Mr Hopkins: It has only got spare capacity because we have forced people into the private sector.

Mr Hutton: No, I do not think that is an accurate reflection of what has happened, particularly at Ravenscourt Park. Ravenscourt Park takes NHS patients from a variety of PCTs in London and outside London. Every primary care trust at the moment, sensibly so, is funded to make sure that by the end of this year no patient waits more than six months. That is what they are all going to deliver. Ravenscourt Park could certainly take more patients if NHS trusts were being funded and told that the waiting times had to be four months this year rather than six months, but they are not. It is true that there is spare capacity at Ravenscourt Park, as I said, but I do not think that is a sign of crisis or turmoil, as the Evening Standard presented it. As evidence of excess capacity it is by no means a bad thing; it is something that many of us, and I suspect maybe you, would like to see the NHS have. It has got that capacity now for a variety of reasons. It is far too simplistic to say that the reason why there are not patients being treated in that ward at Ravenscourt Park is that those patients have been diverted into the independent sector. I think that would simply not be the case. Those patients might be treated in other NHS treatment centres or they might be treated in other NHS hospitals that had contracts to do that work. Ravenscourt Park currently works at an occupancy rate of about 70 per cent. It is not bad.

Q444 Mr Hopkins: Some six months ago The Times undertook a review of ordinary people and 71 per cent of the interviewees said that the taxpayer should fund public services such as health, that they should be provided by the government, not private companies, because that is the best way to ensure that everyone experiences the same standard of provision. Is that not completely at odds with what the government is doing in trying to form a market and a hierarchy of provision?

Mr Hutton: No. All of these providers, whether they are NHS or independent sector providers, are providing care according to NHS standards and principles, and they are providing care therefore free at the point of use. If you were to talk to patients who had been to these independent sector providers I think you would get a very different sense of what they felt about the care and service that they had been provided. They have been universally provided to a very high standard and have been greatly appreciated by the patients who have used them. I think there is a danger of ideology creeping into this debate and it has done so in the past to the point that, for example, Labour governments have simply not countenanced using private sector capacity for ideological reasons and that has resulted in patients waiting far longer than they need to for treatment on the NHS. That is not an acceptable state of affairs.

Q445 Mr Hopkins: Was not one of the problems with using the private sector that it is more expensive than the public sector and if the government had spent more money investing in the public sector the private sector would disappear?

Mr Hutton: That has been true historically but that is not the case today. We are finding, for example, in some of the independent sector treatment centre contracts that we have run that the independent sector is able to provide procedures at a cost that is less than that provided by the National Health Service. As I suspect we are all interested in value for money it would also be fairly stupid to turn round and say, "I am sorry. We are going to pay more for that in the National Health Service" for equally ideological reasons. I think we have to continue these reforms for one very simple reason, that if we stop now all of the value for money benefits that we are gaining would be reversed. We would recreate another monopoly on the part of the established incumbent private sector providers and that would ultimately be at a very significant cost to the NHS and to taxpayers. I understand precisely your objection to the use of the private sector under any circumstances whatsoever irrespective of any potential gain for patients. It is not a view that I share. I think it puts ideology ahead of the needs of patients and for that reason the government has decided not to pursue that particular path.

Q446 Mr Hopkins: I assure you that if the private sector could provide good, equitable health care at a cheaper cost I would support the private sector.

Mr Hutton: That is what it is doing.

Q447 Mr Hopkins: Let us take a comparison: a country where overwhelmingly health care is provided privately and one where it is provided largely publicly - America. Is the government not setting on a route towards the American system? It is a piecemeal route. In America health care as a proportion of GDP costs twice as much as our health care does. It is bloated, inefficient and serves only a proportion of the population with a large number of the poor having inadequate health treatment, if any health treatment at all.

Mr Hutton: Again, with respect, I think you are confusing two totally different arguments. There is the argument about who provides and there is the argument about who pays. In the United States the patient pays and then there is a range of not-for-profit and for-profit providers that provide the service. In England we have taken the view that there will be a diversity of providers but the patient will not pay; the government will continue to fund health care free at the point of use through general taxation. You can preserve that principle while having a diversity of different providers, as in fact every other social democracy in Europe does. It is not the case, I would say as strongly as I can, that you can only have free at the point of use services if they are provided by publicly owned services. We know that is simply not true. We know it is not true in a number of different areas. If you look at private nursing homes, 83 per cent of nursing care is provided by independent for-profit providers and three-quarters of the people who stay in those nursing homes get some or all of their care costs met by the state. It is to confuse providers with funding principles to assume that because we are now introducing independent sector providers in the UK it means that we are going to start charging people for their health care or make them take out private insurance. We are not doing that.

Q448 Mr Hopkins: If I read that in Downing Street and other circles papers on co-financing have been circulated, which suggests part-payment by people, would it not be that if you have a competitive market and different providers (some known to be better than others) eventually you start to say, "The better providers we will perhaps ration by price and we will have a little bit of a charge", so that the middle class buy the best health care and the devil take the hindmost: the poor finish up in what will become sink hospitals? Is that not what we are looking at?

Mr Hutton: You can cut it any way you like. The government is not going to introduce charges for NHS care. We have made that absolutely clear. We made it clear in our last manifesto and I am pretty sure it will be in the next manifesto, and people can then decide how they want to proceed and how they want to cast their vote. Of course, if you wanted to introduce co-payment into the NHS you could. You could do that even if all of the care was provided by NHS providers, but we are not introducing charges for treatment at this stage, no.

Q449 Mr Hopkins: The whole argument is built on a myth, is it not, that the NHS is actually inefficient when the NHS by international standards is actually extraordinarily efficient? The problem with the NHS is, is it not, that it has been desperately under-resourced and in terms of bang for your buck you get much more from the National Health Service than, at the other extreme, from the American Health Service. In fact, the Health Service, like the railways before privatisation, worked miracles on a pittance. The problem is that it has not been resourced until recently. Is that not the case?

Mr Hutton: The NHS is an extremely efficient provider of health care, of course, by any international yardstick -----

Q450 Mr Hopkins: So why are we moving towards privatisation?

Mr Hutton: ----- and it stands head and shoulders above international comparisons in terms of value for money, but clearly it is simply not accurate or true to say that it is not possible for the NHS to be more efficient; it is. It is not true to say that we cannot make greater use of our resources; we can. It is certainly not true to say that we should not therefore be pursuing choice for NHS patients because the alternative is what? No choice? You are told where you want to go? I really do not think that that is an ambitious enough proposal or set of ideas for reform of the public services. We have got a simple choice. I believe that if we continue with a public service that says to patients, "We will decide where you go", in stark contrast to every other service that we consume now as citizens, then I think that is going to undermine support for public services. People want choice. We know this because we have asked them and they have exercised it. The challenge for us is to make the NHS more efficient, not say that it cannot be more efficient; it can be, and to use a variety of different ways to do that. If there is going to be choice in the service, as I think there should be, for reasons that we have gone over extensively today and which you may not agree with, then we need more capacity. I think it helps the NHS to improve its efficiency to have a diversity of providers because, remember, they are all going to be paid at the NHS tariff rate. Everyone is going to be paid exactly the same by 2008 for the services they provide, whether they are an NHS trust, a foundation trust or an independent sector provider. It certainly is not the case that by introducing independent sector providers we are somehow going to make the service less efficient - absolutely not. Any organisation - and again this is my experience as a minister - needs the discipline and the reform that choice with a good set of rewards and incentives would introduce in terms of improving the quality of that service for the public. I could be wrong, of course I could. We could continue in the way I think you are suggesting, which is simply to give the NHS all the money it wants, and then say, "Right: we have solved every problem". I do not believe that the problems of the NHS are simply to do with resources; it is how those resources are used. If it were simply about resources, if you go back over time and look at what we are doing now, I think you could say that that is a problem solved. We know perfectly well that this extra investment on its own is not going to solve all these problems that the NHS faces.

Q451 Mr Hopkins: The independent sector, as you politely call it; I call it the private sector, is driven by profit; that is its motive, shareholders, and the NHS is driven by patient care, by the public service ethos and by democratic government. Will the private sector in health care value cash over caring and will that not lead to terrible consequences?

Mr Hutton: No, it will not do that. If it is going to prosper and survive as an NHS provider it has to be producing quality of care. If it does not produce a quality service patients are not going to go there. They are not going to be forced there; I am not going to tell them they have to go to an independent sector provider. Anyone who wants to make a sustainable, long term commitment to health care in the NHS at the moment has only one way to do that, which is to provide a quality service. If they do not they are finished.

Q452 Mr Hopkins: So you reject what 71 per cent of the population are saying in a survey, that they want all hospitals to be guaranteed to be equal in the public sector, providing an equal public service for everyone? You want a market where there will be winners and losers, where we will have to develop a fear - you will have to engender a fear amongst patients that one hospital is worse than another and where we ought to be dreadfully fearful of our local hospital because it is not good and we want to choose another one. At a time when people are often in a state of injury do you really want to have them fearful about their particular hospital?

Mr Hutton: Everything we know about patient choice confirms the fact that patients are quite happy to go to an independent sector provider. They have chosen independent sector providers; they like the choice being available to them. We are not forcing anyone to use any particular provider. It will be their choice and they can vote with their feet. If they want to go to an independent sector provider they should have the opportunity to do so. Care is free at the point of use, it is funded through general taxation; there are no losers in that sense. You can caricature this in the way that you have done. Fine, it is easy to do, but this is not about engendering fear in anyone. This is giving to patients the power to decide where and when and how they are going to be treated. What is wrong with that?

Q453 Mr Hopkins: I only wish Nye Bevan was here for me to put that question to him, but I think I have had more than my fair share of -----

Mr Hutton: Nye Bevan was in favour of patient choice; he was not against it.

Q454 Mr Prentice: If there are all these benefits of private sector involvement why has the Secretary of State seemingly capped that involvement at 15 per cent?

Mr Hutton: For very sensible reasons. Many people - and maybe Kelvin is one of them - who would like to run around saying that the whole NHS is going to be privatised. That is one way of dealing with that argument, is it not?

Q455 Mr Prentice: So it is to do with the idealogues?

Mr Hutton: It is partly to do with that but it is also partly to set the right context for planners and policy makers in the NHS to understand what the future is going to be. The NHS is going to be the predominant provider of NHS health care for the foreseeable future; I do not think there is any question about that, because it is where 95 per cent of all the capacity is. That is the reality. The Secretary of State was simply trying to show people exactly what the terms of this debate and the terms of this engagement will be between the public sector and the independent sector.

Q456 Mr Prentice: The only thing that concerns me is this. I talked about the GPs and their views, the NHS professionals and the articles in the Health Service journal, the BMA, which is quite critical of the government's choice agenda, and I was reminded of the Joni Mitchell song, Big Yellow Taxi. It goes, "You don't know what you've got till it's gone". In experimenting on this scale is there not a problem that you may fragment and completely destabilise such an important national institution as the NHS?

Mr Hutton: Joni Mitchell was before my time, so I am not going to get into that.

Q457 Mr Prentice: Oh no, she was not!

Mr Hutton: Actually, I went to see her. She was very good. We are not going to destabilise the National Health Service. It is a cherished public service; it is going to stay in that position. I know there are some people who want to make the argument that that is what we are trying to do. It is nonsense. The Chairman asked me a minute ago about the delayed introduction of some of these financial reforms. We are doing it in order to avoid precisely that danger. We are clear about how we are trying to manage this process of reform and we are determined to go down that route. In relation to this issue about the independent sector, about for-profit, because Kelvin raised it earlier, in the context of this debate it is very important that we realise the nature of the NHS as it currently is. Virtually all of our primary care in the NHS is provided by small businessmen who make a profit. They are the GPs. I do not hear anyone saying what a disgrace that is. The GPs remain the most supported part of the NHS in the service they provide, but they are small business people, rightly so. I have no problem whatsoever with people providing a quality public service and making a reasonable profit. I think it is a good discipline to improve the quality of care and we see the evidence for that in primary care where we have operated a for-profit principle ever since Nye Bevan established the NHS in 1948. No-one on the Labour side of the argument has said we must nationalise all the GPs. I have not heard it. It would be quite the wrong argument to make.

Q458 Mr Prentice: I know you do not have ministerial responsibility for NHS dentistry, but let me just ask you one or two questions about that -----

Mr Hutton: That is one of the joys of this job.

Q459 Mr Prentice: ----- because we are exploring the philosophy of all this. What would you do if a person's NHS dentist decided to go private and the only NHS dentist with an open list - and this is not fanciful, as you know - was 25 miles away and that person was forced to take out private dental insurance, Denplan? Should the state be responsible for the cost of that insurance in any way, perhaps by allowing it to be offset against tax because the private dentist is a little business, just like the GP? Is there a read-across, that is what I am saying, between the general practitioner and what is happening in another bit of the NHS, NHS dentistry?

Mr Hutton: I do not think there is and we are certainly not saying that people will be charged to go and see their GP or will need to take out insurance to see their GP. I think the responsibility of government, when there are problems around accessing NHS dentistry, is to invest more in NHS dentistry, and that is precisely what we are doing. Rosie Winterton, as you know, is overseeing these reforms and is working very hard to ensure, for example, that if that were to happen that the primary care trust would be able, as it now is with the new powers that it has to commission primary care dental services, to employ salaried dentists to come in and run a service. We are doing that increasingly across the country. We are looking to employ hundreds more dentists who will work either as salaried dentists or in personal dental pilot schemes. In my own constituency (I do not know about yours) I have got a dental access centre funded by the NHS that provides emergency dental care, and very necessary too, on a drop-in basis for people who cannot see an NHS dentist.

Q460 Mr Prentice: Maybe it was unfair of me and I do not want to crank it up. I realise that in some parts of the country NHS dentistry is in a state of crisis and I am putting to you as a minister that there is a practical non-ideological answer here, which is to allow people whose NHS dentist has gone private and there is no NHS alternative to have the cost of taking out private dental insurance offset against tax.

Mr Hutton: That is, I am glad to say, well above my peg rate, so I think I will duck that one.

Q461 Chairman: A manifesto point, as we call it.

Mr Hutton: Possibly.

Q462 Chairman: Can I just wrap up that previous exchange? I think we still have not got to the bottom of it. If I can push you on this, John, and I know it is always dangerous to say what someone's real self is, but listening to you talk with the passion that you do about the choice agenda, I think you would really like to tell us that if in a generation's time the balance between public and private provision is fundamentally different in this country, you would have no worries about that at all because that would be the logic of the choice agenda if that is what people were choosing, if the NHS was being reconfigured around people's choices, that would be okay, but you feel you probably cannot say that and so we have this artificial 15 per cent figure introduced, that we now know is the Kelvin Hopkins figure, to provide ideological reassurance. Would it not be better to say, "Who knows what it will be like in a generation's time? If that is what choice produces that is the logic of what we are doing"?

Mr Hutton: It is always a very brave politician who wants to try and predict how things will look 20-25 years from now and I do not, to be honest, really want to get into that. I think essentially what will ultimately determine the pattern of provision in the new NHS will be what patients decide to do. If Kelvin is right, that everyone wants to go to an NHS provider, then it will be NHS providers who continue to provide the bulk of care. If he is wrong it will be independent sector providers working within the value space of the wider NHS system, free at the point of use, funded through taxation. It will be those independent sector providers who are in the majority.

Q463 Chairman: In which case artificial percentage restrictions will fall away, will they not?

Mr Hutton: As I said when Gordon asked me that question, we have tried to give a straight answer to the question that we have been repeatedly put: what do we think the likely share over the medium term future of the independent sector will be in the NHS?

Q464 Chairman: But over a longer term it is bound to fall away, is it not?

Mr Hutton: As I said, that will only be the case if that is what patients decide to do.

Q465 Chairman: Can I just pick up one point out of Kelvin's questioning, which was the payment point? You were very careful to say no payment for care. If people want to choose to pay for services why should they not do so? We allow them to do it to an extent now. If I wanted to pay, for example, as I desperately did when I was in hospital recently, for a room of my own (I would have paid anything and I did not want to be a non-NHS patient but I wanted a private room; I was able to pay to have a television set and again I would have paid not to have a television set), payment for services surely is something that we can be relaxed about, is it not?

Mr Hutton: In relation to core health services, if that is what you are talking about, getting your knee replaced or whatever, of course people can pay if they want to now. We are not stopping people going to private health providers if they want to. That is their choice, they can do that. However, we are not going to say to patients, "We are going to charge you a new set of payments if you want to use the NHS to get those core services", absolutely not. But, of course, it has always been the case in the NHS that if you want additional services inside the hospital, the so-called hotel services, they can be provided at a price by the NHS. It has always provided those extra services, those top-up services, whether it is e-mail or IT or Sky or cable, whatever. I think the public understand that because those are more personal comfort things than fundamental health care. As long as we have got the balance in the right place I think we can avoid the obvious pitfall that we start to have a negative impact on health equalities. We should not do that. We should not impose a set of charges for health care that deter people from accessing health care when they need it. We are never going to do that. In relation to this wider argument about what should and what should not be paid for, I say very strongly that the government has made its position very clear on that. If people want to misinterpret our pursuit of diversity in terms of providers as a sort of backdoor privatisation paving the way for charges, I cannot stop them doing that. All I can do is point to what is actually happening. No-one is being charged and no-one is going to be charged, for NHS care. We do want greater efficiency and we certainly want more choice because I think they are all good things to have in the public service, not bad things. I would just say in a political sense that on the centre left it is bonkers for people to say choice is a Tory word, being Douglas for the moment. If we do that we just box ourselves into a corner.

Q466 Chairman: I am just asking you whether people are rats about paying for extra services.

Mr Hutton: They are able to now, Tony, if they want those extra services and that is fine.

Q467 Mr Heyes: The committee's inquiry is entitled Choice and Voice in Public Services. We have left the voice bit till the end and I am going to mop it up. In my view the committee has not focused strongly enough on patient voice but I think that is reflected in the Health Service equally in relation to the reports that we have heard about the levels of dissatisfaction, for example, with the complaints procedure. The complaints procedure is the one component (a very important component) of a patient's ability to express a voice. This committee has the Health Service Ombudsman reporting to it and there is no end to the very critical comments that have been made by the Ombudsman fairly recently about the way that reforms to the complaints system are often not debated properly and contain significant flaws in her view. The question is, how are you going to rescue the system from this crisis?

Mr Hutton: Certainly the Healthcare Commission is dealing with more second-stage inquiries and referrals than it thought and we thought it would be doing and I am sure they will give this figure to the committee if they have not done so already. I think they are dealing with about 7,000 of these referrals every year; they may be running at twice the level we thought we would be dealing with. There is now a backlog of about 3,000 of these cases waiting to be progressed. The Healthcare Commission is trying to tackle this in three ways. It is recruiting more of its own staff. It is taking on about 70 more staff to try and deal with the backlog and that is a significant investment on its part. It is also, as a temporary measure, going to invite extra resource to be put in by outside facilitators, people who can get the second stage process under way. It is going to ask people to come in and support the work of the Commission in that as well as a temporary boost. It is also in a process of making some efficient reforms inside its organisation to try and get on top of this. It is obviously very important that this backlog is cleared as soon as possible. The Healthcare Commission is working very hard to do that.

Q468 Mr Heyes: The Ombudsman has told us of her anxiety about the Healthcare Commission being overwhelmed. I hear what you say about the ways you are going about addressing that. That is at the higher level, the second level of complaint. The survey work, the assessment of patient confidence in the complaint system, is really at the first level, the local level, and that is where levels of dissatisfaction are high. Only one third of people who issue a complaint are satisfied with the system. We all know as constituency MPs the frequency with which we are asked to advocate for a constituent who is dissatisfied with the complaint system or needs help to find their way through it because of its complexity and lack of responsiveness. What is being done about that? How important is it to you?

Mr Hutton: It is very important for the NHS to deal with complaints in a timely, efficient and courteous manner. It is our responsibility as a public service organisation to deal with the public's concerns in that way. We do not always achieve all of those objectives. Again, it is not my area of direct ministerial responsibility, the complaints procedure, but I understand that ministers are looking, in the light of Janet Smith's report on Harold Shipman, at taking another look at the whole complaints procedure that we operate in the NHS to make sure we have got a system that is robust and can deal properly with patient concerns.

Mr Bacon: Of course, we are also at local level developing the new powers role. You may well say that they are internal to the hospital but they are nonetheless beginning to be effective in helping people to understand how they go through the process. We are in the early days of the independent Complaints Advisory Service where that also is beginning to offer very good independent advice to patients as to the way in which they can manoeuvre their way through the complaints service. These are new initiatives, as is the transfer of responsibility for stage two to the Healthcare Commission. Apart from the work that we are doing around Shipman we need to encourage these new organisations and these new processes to improve and to develop. These are early days.

Mr Hutton: There is a very strong connection, obviously, between choice and voice here, but the most powerful voice we can give patients is to give them choice. I agree it is very important that we have the complaints procedure right, the patients' forums working well, PALS and all of this stuff, but I think we will make a big mistake if we think voice is just about structures and committees and organisations. It is not. It is an important part of the NHS, I believe that absolutely, because the NHS is a public organisation. It is owned by the public. They should have a proper democratic input to it. We are trying to make sure that happens. I think the most powerful voice we can give patients is to give them new choices about what happens to them, where and when and by whom. That is the voice that they have not had in the NHS and as a result they have not always had the care and services they should have had.

Q469 Mr Heyes: Is that consistent with David Miliband's view that "choice and voice are strengthened by the presence of the other"? He obviously agrees with you on that.

Mr Hutton: I have found something to agree with another Minister on. That is fantastic.

Q470 Mr Heyes: It is "the ability to make your voice heard [that] provides a tool to the consumer who does not want to change shops, or political parties, every time they are unhappy"?

Mr Hutton: I agree very strongly with what David has said. I can only repeat what I said a minute ago. Fundamentally, as a health consumer, if you are not happy with the service that you are getting and you have made all the complaints, you have only got that one service to use at the moment, have you not? You cannot go anywhere else because your care is not going to be funded by any other part of the NHS. That is an utterly hopeless position to be in. That is why ultimately we must get the complaints procedure right, we must deal with the second stage processes efficiently as well. We need to do more on that. Ultimately, if we really want to be on the patient's side we have to be on the side of choices.

Q471 Mr Heyes: Those are very worthy statements of intent that none of us could fail to agree with. It is what is happening to bring about that change that I remain unconvinced about. This argument about it being early days for the new system has been running for quite a long time now. I do not see, and I am sure colleagues do not see, any change in our daily experience of people coming to us to complain about the complaints system. There is no more level of satisfaction or confidence than there has ever been.

Mr Hutton: It is a complicated picture. I am not going to re-run the lifeline that it is early days yet, although it is true with the new arrangements that it is literally days. The new PALS, the new patients' forums, are less than two years old. It is complicated because it is tied up with another issue here, which is sometimes our inability to say sorry to patients when things go wrong for fear of litigation and medical negligence lawsuits and so on. Ultimately there is a bigger jigsaw that we have to get right. We have got to get right the complaints procedure as far as we can but we have also got to look very carefully, as the Chief Medical Officer is doing and we have published proposals for this, at how we can move to a "no fault" compensation system in the NHS as well, which might well facilitate the one thing that patients often want to hear and do not hear early on: "sorry".

Q472 Mr Heyes: Has the Ombudsman got it wrong then when she says that the complaint forms contain significant flaws and that the draft regulations covering the reforms are focused on process and timescales rather than outcome, leadership and staff competence? That is her view and as far as I know she holds that view today.

Mr Hutton: I do not know.

Mr Bacon: Without going into the exact detail, I think you have to look at the totality of what we are doing around these issues, particularly around, for instance, the staff competence issue where we have set up very sophisticated processes of clinical audit, we have got the Patient Safety Agency which is world-class and is developing. You could argue that making it easier for patients to complain has in itself provoked more complaints. That may not be a bad thing in a system in which we want people to be able to express their views and let us know when we have not provided a good service. If you look at the totality of what we are trying to do to improve patient experience and safety of treatment to patients, we can say that -----

Q473 Mr Heyes: I think the Ombudsman would say if she were here that that is because you had included time targets which were not achievable and it was inevitable that further disappointment and dissatisfaction with the system was the result of that. To pick up a point you made earlier, she also says that you are failing to address the issue of redress for justified complaints. I agree with you entirely: mostly, when people come to us with complaints about the complaints system they say, "It is not money we want; it is an apology. It is an understanding that the system has learned from my bad experience". Sometimes financial redress is part of that but on the whole issue of redress, the Ombudsman would say if she were here that you are completely failing to address that.

Mr Hutton: Maybe, Chairman, this is something that the department can submit some supplementary evidence on.

Q474 Chairman: That would be very good. We are almost done. Can I just ask you a couple of quick questions and then we are completely done? We have kept you longer than we thought we would, which shows that we have had an interesting discussion. On this voice thing, I think what has happened - and it is not a critical observation - is that the voice agenda has gone down and the choice agenda has gone up and the government's memorandum to us says, "Voice mechanisms are often difficult to mobilise, underused and ineffective", and it seems to have lost interest in the voice agenda and has developed a lot of interest in the choice agenda. That leads to the question: does this not make it a bit odd then to have done what we did when we were engaged with the voice agenda, which was to seek to set up foundation trusts with a user involvement at board level, because if we are creating a Health Service which in a sense is open to everybody, where there are going to be all these different providers floating around, where consumers can choose all over the place, it looks a bit prehistoric, does it not, to worry about who actually sits on the boards of provider units and whether we involve patients in that or not? That is inconsistent with this new world that you were describing to us.

Mr Hutton: I think this is something that the Healthcare Commission itself will probably be looking at when it reviews the operation of the first wave of NHS foundation trusts. It will be difficult for me, Tony, really at this point to say anything which might look like I am pre-empting that Healthcare Commission review. It probably would be true to say that we made that concession as the Bill progressed in Parliament because that is essentially what many of our colleagues asked us to do. They wanted to have that as part of the Bill. There was a history to that argument which I will not go into but I can understand why some people would make that observation. That is all I can say.

Q475 Chairman: That is very good. Finally, just to go to back to where we started with what the NAO was telling us about the patient choice model, when I read the NAO report it was not so much the 63 figure against the 200,000. You could see that that was going to be the headline. It was what it said about the primary care trusts which was most worrying, the fact that two-thirds of them have not yet done the necessary commissioning to get the providers in place, and even beyond that, they go and talk about how if this system is to work in the long term we need managers of choice. The PCT are to be the managers of choice. They talk about how a dynamic system, with providers coming in, providers going out, has got to be dynamically managed and they raise questions about, frankly, whether many PCTs are up to this. Is that not a very worrying point, if the people we are going to depend upon to manage themselves are not able to do it?

Mr Hutton: I agree it is a serious issue and the department has to address it seriously as well. It is absolutely our responsibility at the centre to make sure that local NHS organisations support this agenda of choice. If that is not happening then we take the necessary measures to put things right and get thing back on track and we will do that. In relation to the first point, what you said about only 32 per cent of PCTs have currently made steps in commissioning four or five providers, that work was done last September. The requirement to have a choice, a menu, if you like, of four or five providers is not till the end of this year, so I personally would not read too much into the fact that only a third of trusts have started that process yet. They will all be providing that by the end of the year. That again is our performance management job in the department to oversee; actually, it is John's job to oversee that and I can assure you that he will be doing that.

Q476 Chairman: Thank you for that. As I said at the beginning, we are not the Health Select Committee.

Mr Hutton: Oh, it felt like it!

Q477 Chairman: We sometimes get at the edges of it. We have been trying to explore what these ideas mean for particular services and I think we have had a good go at that today in relation to the health field and we are very grateful to you and Mr Bacon for coming along and helping us with that.

Q478 Mr Hutton: My pleasure.

Chairman: Thank you very much indeed.