---

Address in Reply to Her Majesty’s Most Gracious Speech

My Lords, in addition to welcoming the Minister, the noble Lord, Lord Adonis, I join my noble friend Lady Buscombe in giving a guarded welcome to the objectives set out in the gracious Speech as they relate to education and health. In particular, I welcome the direction of reform that the proposals represent, which is a clear shift in direction from the more centralist approach taken by the Government in their first term towards one that represents more emphasis on delegation and decentralisation. But it is a guarded welcome because we all know that it is results that count—and my concern is that the Government will not in the end go far or fast enough. Nevertheless, given the policies of competition and choice that I have advocated in previous debates in this   House, I cannot but welcome moves to extend delegation and decentralisation to schools, doctors and hospitals. We have spoken about consensus on pensions, and I believe that this is evidence of a growing cross-party understanding of the need for a new settlement in public services, and I encourage the Government to be bolder in pursuing that. The nature of the new settlement is a common recognition that health and education, while primarily funded by the state as a service available to all, do not need to be run by the state. What is important is the quality of services received by the individual user, not who is involved in providing them or who they are employed by. As the Labour Party manifesto stated:"““Expansion in NHS capacity will come both from within the NHS . . .  as well as from the independent and voluntary sector””." The manifesto continued:"““Whenever NHS patients need new capacity for their healthcare we will ensure that it is provided from whatever source””." Similarly, on education, the Labour Party manifesto said:"““Britain has a positive tradition of independent providers within the state system . . .  where new educational providers can help boost standards and opportunities in a locality we will welcome them into the state system, subject to parental demand, fair funding and fair admission””." If we take the next logical step from those principles and if, as a nation, we recognise that providers of health and education do not need to be owned and controlled by the state, we may also be quite close to recognising that in general there may be advantages if they are not owned and controlled by the state. The truth is, as we have learned from nationalised industries, that public industries run by the state tend not to put the public or customer first but instead get bound up in their own inward-looking systems and targets. Management spends too much of its time looking upwards towards Whitehall, with too little time and freedom to pursue local entrepreneurial initiatives to satisfy real customer needs. We transformed telecommunications in this country by taking it out of state ownership, and I encourage the Government to have the courage of their own convictions by accepting that, ultimately, the same would be true of much of health and education provision within the right regulatory and funding framework. Rather than bureaucratic state control, we should move towards open contention between independent providers to deliver the best quality of service to patients and parents within a state-funded system. Patient and parent choice becomes the source of pressure for standards and efficiency, rather than Whitehall targets. I confess that I could not put it better than the Labour Party manifesto, which said on health:"““The key principle is putting patients centre stage—and extending patient power and choice is crucial to achieving this””." The manifesto went on to say:"““We shall continue to encourage innovation and reform through the use of the independent sector to add capacity to and drive contestability within the NHS””." The manifesto set out a target: that by,"““the end of 2008, patients whose GPs refer them for an operation will be able to choose from any hospital””—" any hospital—"““that can provide that operation to NHS medical and financial standards””." Let me add two more manifesto quotes while I am at it. The first says:"““We will give patients and local GPs the right to choose the hospital or care provider that is right for them””." The second says:"““Schools will be liberated to set their own priorities and budgets, and money will follow the pupil””." Those last two quotes are, as it happens, from the Conservative Party manifesto. So there we have a vision to which perhaps we can all subscribe—of a publicly funded health service and education system, open and free to all, served by innovative and independent hospitals, GP practices and schools, which compete openly to drive up standards and to attract patients and parents by the quality that they offer. Since, like the noble Lord, Lord Adonis, and others in this House, I believe passionately that education is, and should be, the ladder of opportunity for everyone in society who wants to strive and rise, I believe strongly in creating that kind of education system where the opportunity to choose quality is open to all and not only to those who can afford to pay, just as the choice of quality healthcare should be open to all and not only to the wealthy. That is why the kind of reforms towards more competition and independent provision in health and education that I and others have been advocating is so important. If we are agreed on the end point, the real question is how far the Government’s proposals in this gracious Speech will go towards achieving that level of reform. How far and how fast will they move towards that vision? While I recognise that we will have to be patient before we know the detail and that White Papers may precede primary legislation, perhaps I may set out a few of the issues that it will be important to address, whether in the Minister’s winding-up speech today or in the further proposals from the Government when they are published. It is in the context of these issues that the proposals should then be judged. I turn first to health. Will the Government’s further steps to free up foundation hospitals mean that local professionals really will have the opportunity to deliver innovative local treatment without the current constraints and overly burdensome central targets? When the Government talk about more choice and diversity in healthcare provision, will they establish conditions where, increasingly, independent foundation hospitals, alongside other new independent healthcare providers, can truly compete for patients and funding on a level playing field? Will the decision on what hospital facilities are provided in an area, including the use of cottage hospitals, be in the hands of local medical staff and local communities? What process will there be in that environment to deal with hospitals that fail to sustain patient demand? How will the Government take forward freedoms and funding for the primary care sector to offer real choice to patients while driving efficiency across the whole treatment chain? Will they, for example, seek to develop PCTs into an HMO-style healthcare provider or revert to a model that is closer to GP fund-holding? Many important issues around a proper structure for primary healthcare in particular still need to be resolved. And similar issues need to be addressed in education. Will the development of foundation schools really enable the state sector to transform itself into independent, state-funded schools, where head teachers and governors can offer parents a choice of education without excessive interference? Will this lead to the removal of local authority control over schools, with funding for pupils passing straight to schools based on pupil roles so that they can be truly independent? Will there be real support for the development of new independent state-funded schools? Will the new education providers, which the Government have promoted, be free to enter the system without the regulatory barriers and delays that make that freedom seem like lip service only? Will both foundation and new independent schools be allowed to expand in response to demand or to take over other schools where they have the support of parents? These are difficult issues, but they will determine whether the proposals that have been put forward to increase choice, competition and independence in both health and education transform the system in the way that the Government set out in their manifesto. If the Government bring forward proposals that move us towards the common vision that I have described, they will deserve support, but I and others will want to hold them to the bold ambitions that they have set out. I look forward to seeing the detailed proposals when they bring them forward so that we can debate them against that test.