RT HON PATRICIA HEWITT MP, MR DAVID NICHOLSON AND MR HUGH TAYLOR

29 NOVEMBER 2006

  Q180  Mike Penning: Or wasting tax-payers' money.

  Ms Hewitt: No. The department is working very closely with trusts that are in deficit, including North Staffordshire that Charlotte Atkins referred to, both to ensure that they have got a recovery plan in place and are on track to deliver that and get back into balance and to look at the PFI. If I take that hospital in particular, it is operating from two sites, they are old, they are unsuitable for modern care, they are bad for patients, they are bad for staff. There is no doubt all that they need a new hospital and they need new community facilities as well. That has to be affordable, it has got to be right for future medicine, which is why, quite rightly, they are reducing the number of beds they are planning, but it will not be finally signed off until we are also satisfied that the trust is well on the road to recovery and able to afford it.

  Q181  Mike Penning: The PFI project business plans are very, very expensive to put together, a huge amount of expertise is going on, so in areas where the deficits are a real problem and closures are taking place, et cetera, et cetera, surely the priority must be to look at the clinical care first rather than going down the avenue of the PFI projects, because in many cases they are not going to go ahead. As you know in my own area, they have been cancelled. There has been no reason. Obviously the reason is that there is a financial deficit sitting out there.

  Ms Hewitt: There are some cases where, when the project is reviewed, the local NHS decides actually they cannot afford the proposal. I believe that that is the case in your own area, in Hertfordshire, and there is at least one other that was fairly recent reviewed in Essex that was cancelled as a result, but the priority always is to get the best care for patients, and in some cases the buildings which the NHS is operating in, many of which still are 19th century buildings, desperately need replacement.

  Q182  Mike Penning: It is the interventions that I am looking for. I am looking for advice early on that they are not likely to get the PFI so the money is not wasted. In fact it is being wasted in many, many cases. There is a PFI project in my part of the world. It has been going on for five years and the amount of money that has been wasted on that could have been used in frontline services, which I am sure you and I would agree is the best place for it.

  Ms Hewitt: I am sure that is true, and, as you and I have discussed on many occasions, there have been financial problems in Hertfordshire that have built up over a very long time. We are now getting a grip on them and that is what matters. When we were elected in 1997, I think I am right in saying that over half the NHS buildings had been built before the NHS was founded. By 2010 we will have around 100 new Acute Hospitals as well as all the community provision, but new Acute Hospitals open or close to completion.

  Mike Penning: That is not the case in my constituency.

  Q183  Dr Taylor: Going back to these 19 hospitals that have PFIs that are in deficit, is there any correlation? Have you had a chance to see if those were early PFIs, because we have had quite a bit of evidence that some of the contracts worked out for the early PFIs were not as good as the later ones?

  Ms Hewitt: It is perfectly true that we have learnt lessons right across government in PFI contracts which, obviously, later contracts have been able to benefit from, but I have not seen any evidence to suggest a correlation between early PFIs and deficits. There are certainly one or two early PFIs I am aware of where the hospital trust is in deficit; there are several where the hospital trust is not in deficit, and, although the early contracts were less flexible and cannot be refinanced as easily in the same way as the later ones, building costs were much lower and so they benefited from lower building costs as well as having the benefit of wonderful new facilities earlier than other places.

  Q184  Dr Taylor: Last week we picked up the increases in PFIs from the outline business case to the final figure and the figures from the tables were that of 54 major PFIs costing over 25 million the total capital cost had gone up on average by 31.4% after the outline business case. Since last week we have had a chance to look at Table 10, which was referring to the 38 publicly funded capital projects over the value of 10 million, and there the increase from the original estimated cost to the current estimated cost was only 3.8%, so there is a huge difference.

  Mr Nicholson: I hope I can help. I think it is apples and oranges, or whatever. The one in relation to the public sector capital is the increase in cost between the contract being let and the building being built. It is the changes in cost during building. The other one is the difference between the outline business case and the final business case. It is a completely different set of issues. There is the building increase in costs once the thing has started, once the contract is let, on the one hand, and the total costs between outline business case and full business case. As we said, that was predominantly around changing the brief or people getting together understanding better what kind of hospital they need, planning it in more detail and identifying what is required; so they are two quite different things.

  Q185  Dr Taylor: That is a huge disappointment to me because I thought we had a marvellous argument for going for more publicly funded projects, but you have given us the truth, so thank you.

  Ms Hewitt: But because we have seen that very big increase in some PFIs between outlined and final business case, in the reviews that we are doing we are actually reducing, in most cases, the total capital value in order to ensure both best value and affordability and we are making sure for future ones that that increase in specification is dealt with at an earlier stage so that you do not end up planning something that you then have to scale back because it turns out to be unaffordable. It is much better to decide what you can afford in the first place and plan accordingly.

  Q186  Dr Taylor: So you are going to stop the gung-ho clinicians who think they can get everything just because they do not have to pay for it now; so you are going to really make an effort to hold outline business case near to the final cost?

  Ms Hewitt: There will always be developments just as people go through the process of working out exactly what they want. I am not sure to whether it is gung-ho clinicians, but you are a clinician so I will defer to you on that point.

  Q187  Anne Milton: Before we move on to service reconfiguration, what money has been spent on community-based facilities as against Acute Hospitals in terms of building programmes? What is the difference?

  Ms Hewitt: I am not sure that I have got the figures to hand. We have just announced a £750 million capital fund for community hospitals, new or modernisation. That can be used for a purely publicly financed scheme, but it can also be used to leverage in private money, so we do not yet know how much private capital will come in as a result of that. I have not got to hand the figures on LIFT.

  Q188  Anne Milton: Maybe, Mr Nicholson, you could let us have a comparison of money being spent on built space in the acute sector and in the community sector.

  Mr Nicholson: Yes.[1]

  Q189 Anne Milton: Service reconfiguration. I feel that I must say (and this is for anybody listening or reading the transcript) that we can only focus on the financial side of this because, as I am sure you are aware, this is attracting a great deal public concern at the moment, not least in my area, Surrey. What evidence do you have that reconfiguration of services is actually going to save money?

  Ms Hewitt: Reconfiguration of services is largely, and in some cases entirely, driven by clinical improvements. Calderdale and Huddersfield recently on maternity services were driven by clinical safety and the desire to improve services, not by finances. There is no doubt at all that the two issues have become thoroughly muddled up. In many places the NHS locally has responded to the financial problem by embarking on reconfiguration proposals. As you know, we are looking at those at the moment to see which ones should go ahead to formal consultations and which ones should not, but all the time the constraint, if you like, is to get the best care, taking into account changes in medicine, within the available resources, which are bigger than they ever have been and will go on increasing but, nonetheless, are finite.

  Q190  Anne Milton: To come back on that, certainly in my own area the SHA produced a document called NHS Fit for the Future and in the first paragraph is the fact that they have to save £100 million; so they made it quite clear that this is driven by the deficits and that they need to achieve financial balance. In fact, I think it was some of the evidence we had from the Worcestershire trusts, one of the gentleman here talked about the fact that he has never worked in a climate where financial imperatives so overrode everything else and I think the trouble is that the public feels slightly differently about it. They believe, because they are being told, as I have been told and we have had evidence, that actually financial concern is leading the process. However, it is about whether it will save any money.

  Ms Hewitt: What is happening is that in places with real financial problems where they need to make changes and get back into balance they are, in a sense, being forced to look at how their services are organised and how they can do better. They are looking, for instance, at some of the issues that Dr Taylor raised that emerge from the quality and value metrics. Although it might have been better if they had done some of these things earlier when they did not have financial problems or did not have visible financial problems, in some cases they have been led to look at those because of financial problems that have emerged. If a proposal is being made, at least in part, on the grounds that it will save money and give people better value for the available resources, then that proposition has to be very carefully tested. In Stroud, for instance, a proposal was made some months ago to close a maternity unit, allegedly to save money; it was going to save, if anything, a very small amount of money indeed; it was going to damage the care of mothers and their babies—certainly was not going to meet their needs—and that proposal, after some initial consultation, was withdrawn. So the whole issue about getting the best value for money out of a reconfiguration has to be tested in relation to each proposal.

  Q191  Anne Milton: Yes, but my concern is what evidence there is out there that looking after people in their own homes is actually cheaper than looking after them in hospital. It is common sense, to some extent. If you think of people being rehabilitated after a stroke or hip replacement, one physiotherapist can take three hours to see six patients on a ward but it will take two days if they are in their own homes. The cost of "servicing" people (for want of a better word) in their own homes is high.

  Ms Hewitt: It depends. You might find it very interesting to talk to the NHS Institute for Improvement and Innovation, who are responsible for the quality and value metrics, because what they confirm is the growing evidence from around the world, not just from the NHS, that better care costs less. One example is in Dudley, where they use community nurses to care for people with serious long-term illnesses in their own home and thus avoid emergency admissions. In Dudley that enabled them to reduce the number of acute beds from over 900 to just over 600, which itself represented a significant saving, to transform the quality of life for the patients who are now being looked after at home, and the PCT in the first year saved on what they had budgeted for in the hospital, so they had more money for other care. So we have a lot of evidence about that. We also have a great deal of evidence that for patients going in for emergency operations—hip fracture, for instance—the hospitals that keep patients in, on average, for 10 or 11 days have better outcomes for those patients than hospitals that keep them in for 30 or 40 days. The ones who keep their patients in for longer, those patients are more likely to get pneumonia, they are more likely to get some nasty infection, they are less likely to be able to return home at the end of it and more likely to need expensive, difficult long-term nursing residential care. So you get better outcomes with better care and better value for money simultaneously. Michael Porter's recent book on the American health care service marshals that evidence from the United States at great length, but it has a very useful summary.

  Q192  Anne Milton: Would you accept the fact that there is an element of cost shifting, too? There are many local authorities who have responsibility for social care that are getting very sweaty at the moment, certainly in my area; they feel their budget is already stretched. Of course, if you look after people in their own homes some of the NHS costs are shifted to local authorities.

  Ms Hewitt: I would accept that. There are some local authorities who are saying, really, the NHS is asking them to pick up the bill for the care of very vulnerable people. There are some local NHS areas who say that it is happening the other way round; social services are restricting their services only to the absolute top priority of cases and the result is the NHS is getting more emergency admissions. We have some evidence that for a pound cut in social services the NHS spends at least an extra 30p in emergency admissions, and the answer to this, as we keep reinforcing, is for the Primary Care Trust and the local social services authority to work very closely together, preferably with joint commissioning of these services and, sometimes, pooled budgets, so that wherever the money is coming from you get the best care for the patient, and as far as possible you enable them to stay in their own homes.

  Q193  Anne Milton: There is real concern, and I think there is real concern that people will just suffer in silence. Take somebody who has had a stroke: they go home and this huge care package is meant to turn up and it does not; instead of having physio every day they only get it once a week and they are put to bed at 4 o'clock in the afternoon because the carers are so stretched they cannot put back to bed 100 patients all at the same time, at 10 o'clock at night. There is real concern that there will be suffering that will not get headlines because it is not terribly sexy stuff.

  Ms Hewitt: I share the concern, and with an ageing population and with more young people living with very profound disabilities this is an issue of growing importance to all of us, as well as just the NHS and the social services. However, direct payments and individual budgets for users of social care, which are still only going to a small number of people at the moment, have enabled a number of service users to get much better care. For instance, dealing with this issue of the carer coming at 4 o'clock to put an elderly person into their nightclothes, that is wholly unacceptable. Switch that to an individual budget or direct payment and the family can help that person get the care they need at the time they need it.

  Q194  Anne Milton: A lot of the families will tell you they have fought every step of the way, and it is a battle. That is the trouble.

  Ms Hewitt: It sometimes is—

  Q195  Anne Milton: It often is.

  Ms Hewitt: It sometimes is and it should not be. I have met a number of families, though, who have seen their lives transformed by the use of direct payments, and it is why we are so determined to increase the availability of direct payments and individual budgets because it is a better way for people to get the social care they need in a way that is absolutely personal to their needs.

  Q196  Chairman: Can I ask a supplementary to David Nicholson. You wrote to all Members of Parliament representing English seats on 8 November about the issue of reconfiguration, explaining they are not easy or simple decisions to face up to. You also said: "I appreciate that changes to much of local services often provoke strong emotions and opinions". Have you had any replies yet?

  Mr Nicholson: No, I do not think I have, because in the letter I also put: "If you have anything to say ring your local Health or Strategic Health Authority". They have had lots of replies.

  Chairman: It would be interesting to find out what emotion it is provoking in Members of Parliament, if we could know that at some stage.

  Anne Milton: Would you like a little display? We can display our emotions freely!

  Chairman: I just wondered what emotions the letter provoked.

  Mike Penning: They are not repeatable.

  Q197  Dr Stoate: How much do you think the future affordability of the NHS is dependent on shifting care out of hospitals and into the community?

  Ms Hewitt: I think it is an important element of future affordability, but future affordability is going to depend upon the NHS becoming even more effective in the way it uses its resources. That includes all the issues we have been talking about: reducing emergency admissions with much better care of patients with long-term conditions and reducing emergency admissions in future with much better prevention and support for self-care by patients themselves. It involves the kind of changes I was discussing with Dr Taylor—much more day-case surgery, much shorter average lengths of stay—the kind of changes that the best hospitals have been making for sometime because they are absolutely determined to get the best clinical outcomes and, as I say, they can see that they will do that with better value for money as well. If we look at the cost pressures on the service in the next decade, say, from an ageing population, more people surviving with disabilities, new medical technology, the costs of new drugs, and people's rising expectations, those are the cost pressures on the one hand. On the other hand, the quality and value metrics and other examples are where you can give patients better care with much better value for money, and we have got to release those savings much faster than we have been doing to keep up with the new needs and the new costs.

  Q198  Dr Stoate: I entirely agree with that; that is the direction of travel and that is how things have got to go. However, what worries me is the answer to PEQ 75, which says: "direct collection of data pertaining to shifts in activity from secondary to primary care is not possible". In other words, the theory is right but we do not actually have any way yet, by your own admission, of actually measuring any of this stuff.

  Ms Hewitt: My understanding is that we had for years and years pretty accurate data collection from the acute hospitals. We have not had the same level of collection of data from primary and community care settings, and that causes some real problems because, depending on whether a service has been moved into the community very recently or has been there for years and years, it may be counted in different ways. We are working with the NHS on that to improve data collection so that we can actually track what is happening to PCT budgets, their commissioning budgets; how much is being spent in the acute hospitals and how much is being spent in the community. David, do you want to come in?

  Mr Nicholson: I covered a little bit of this earlier in response to Dr Taylor's question. There is a group of people with the Royal Colleges now working on all of this to get a better fix on it, but there are some proxies that we can use. The information that we are going to get through the budgeting system will enable us to look at how much is being spent in the community and how much is being spent in the acute sector. Also, as part of the local delivery planning process this year, we will be looking at asking organisations to set out how much they are shifting in terms of total amount from secondary to primary care. So we will be able to get that information out of the plans and monitor people against them during the year.

  Q199  Dr Stoate: Yet in Our Health, Our Care, Our Say there is a very specific figure of a 5% shift in resources. Was that realistic, given that currently you actually have no idea what the situation is?

  Ms Hewitt: We expect to get it from PCT local delivery plans and then the reports they give us as they show how they are spending their commissioning budgets.