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Address in Reply to Her Majesty’s Most Gracious Speech

My Lords, it is a pleasure to take part in a debate of such high quality. I join others in welcoming the noble Lord, Lord Adonis, to this House and to his portfolio. I do so very warmly and hope that he will find his new position to be agreeable and rewarding. I am sure that, as a freshly appointed Minister in a department that he knows well, he does not need anyone’s sympathy, least of all mine. However, I never envy anyone who is called on to make their maiden speech from the government Dispatch Box. That he did so with such surefootedness and charm is a marker, I am sure, of the future success that we all wish for him. As so often occurs after the gracious Speech, this has been a debate of considerable breadth as well as depth. If the Minister had any fears that the House might prove reticent in providing him with advice, I am sure that they have been comprehensively dispelled. I cannot be alone in discerning a happy fit between the eloquent emphasis of the noble Lord, Lord Dearing, on education as the route to good citizenship; what the right reverend Prelate had to say about mutual respect between children and teachers; the sensitive and wise remarks of the noble Lord, Lord Pendry, on encouraging sport in schools; the speech of the noble Baroness, Lady Walmsley, on parenting; and the theme taken up by the noble Earl, Lord Listowel, on how to promote the self-respect and achievement of looked-after children. I think too of what my noble friend Lady Morris said about families and the social benefits of young people’s clubs; the excellent speech of the noble Lord, Lord Rosser, about school   discipline; the noble Lord, Lord Mitchell, on Mossbourne Community Academy; and the noble Lord, Lord Smith, who used the example of Wigan to point out wider and thought-provoking messages on the general theme of education. Lying close to that was another theme—universal opportunity and social justice, whether it was my noble friend Lord Blackwell on choice in public services; the noble Baroness, Lady Hollis, on pensions for women; the noble Baroness, Lady Wilkins, on independent living for the disabled; the noble Lord, Lord Oakeshott, on incentivising private pension provision; or what the noble Baroness, Lady Greengross, said about the needs of the elderly. I think, too, of the persuasive and considered maiden speech of my noble friend Lord De Mauley, who spoke about flexibility in the age of retirement. Every contribution, including those that I have not had time to mention, did great credit to the opening debate of this Parliament. The noble Lord, Lord Warner, cannot have failed to notice that since we last faced each other across the Chamber something has not happened: he and I have not changed places. As we are all aware, the Government have been returned by the electors with a sizeable majority. Therefore, if the noble Lord feels inclined to indulge in a spot of sunbathing in the glow of electoral victory—metaphorically speaking—I am sure that we would concede that he has a reasonable excuse for doing so on this occasion. On behalf of these Benches, I congratulate the noble Lord on his appointment as Minister of State in the Department of Health and wish him well in that exciting but demanding post. I understand that one of the noble Lord’s departmental responsibilities is NHS delivery. The gracious Speech contained some undertakings that fall squarely into that category. Until we see the Bills, it is difficult to offer a sensible comment about any of them, but I want to make special mention of the long-promised mental health Bill. For me—and for many others, I suspect—the litmus test of the Bill will be the extent to which it promotes better patient care and the greater involvement of patients in their own care. It must be about reducing the stigma of mental illness. It must point the way to a lessening of social exclusion. Perhaps the most regrettable feature of the entire gracious Speech was the way in which the Bill was described:"““legislation to provide a new framework for the provision of compulsory treatment of those with mental disorders””." If that is how Ministers conceptualise the mental health Bill, heaven help us. A very small number of mentally ill individuals pose a risk to others. To allow considerations of risk to dominate our thinking in this area would be a great mistake. Compulsory treatment must have its place, but to over-emphasise it is likely to prove counter-productive. It will certainly do no good to the way in which the users of mental health services are perceived by the public. We shall look constructively at the measures designed to rationalise the number of arm’s length bodies. One proposal with which I disagree is the proposed merger of the Health Care Commission and CSCI. We supported the creation of those bodies as separate bodies, and we believe that both have started out well. It is a mistake to disrupt the work that they have begun for the sake of a banner headline—to put it at its crudest—about how many quangos have been abolished. If the Government felt able to rethink their decision on the issue, many would thank them for doing so. Over the crest of the hill, the health improvement and protection Bill is approaching to give us better hospital hygiene. I hope that it does so. Legislating for better hygiene after all the initiatives, campaigns and charters that have been launched over the past five years looks very much like the last chance saloon. We shall judge the Bill on its merits, but I wish that we were looking at something more imaginative instead of more sticks with which to beat the health service—much less of a culture of fear; more freedom; transparency of information for patients; and greater incentives to do well. The Royal College of Nursing has pointed the way with its list of minimum standards. There is no need to legislate to give those standards a central place in hospital management. The Bills laid before Parliament in the coming Session need to be viewed against the backdrop of what the gracious Speech referred to as,"““the introduction of more choice and diversity in healthcare””." We are entering some very interesting waters. Since 1997, the Government have made some useful inroads into the numbers on in-patient waiting lists, as well as into the mean waiting time experienced by patients on those lists. These improvements are, of course, very much to be welcomed. Part of the improvement since 2001 has been directly attributable to the greater use by the NHS of the private sector. I, for one, have no difficulty at all with that. Indeed, it is a policy that we urged the Government to adopt much sooner than they did. Equally, when the new Secretary of State, Patricia Hewitt, took office 10 days ago and announced that over the next five years another 1.7 million NHS operations are to take place in the private sector, I viewed that policy as being absolutely correct in principle. The principle is that where there is a specialist unit delivering treatments faster and more efficiently than an NHS provider, and to at least an equal standard of quality, it has to be good news for patients. We have seen the results of that approach most graphically in London where services to heart patients have been transformed and cardiac waiting lists have almost disappeared. But no initiative of this sort comes without risk. The Minister does not need me to tell him that the risks here are potentially quite significant. The increased use of the private sector is being rolled out in parallel with the financial reimbursement system known as payment by results. In ordinary language, that means that in order to pay for treatment the NHS money follows the patient wherever he goes. If one allows greater patient choice in healthcare, payment by results is a necessary accompaniment to that policy. The difficulty arises from how the policy is operated. The price charged for an episode of treatment is known as ““the tariff””. In many instances, the tariff is calculated on the basis of an average level of time needed to treat the patient and an average level of complexity. What many people fear is that independent treatment centres will take on most of the easier and more straightforward cases, leaving acute trusts to treat those patients who require greater time and who have greater co-morbidity. If the tariff system is not sufficiently sensitive to allow for case mix or for the difficulty of particular cases, acute trusts will find that the reimbursement they receive does not, on average, cover their costs. That is what some trusts report is now happening. In principle, there is everything to recommend a market-based approach that sorts out the successful providers of care from the less successful and which incentivises the health service to sharpen up its act. But the playing field needs to be level at the outset. We have to beware of unfairly handicapping the NHS while unreasonably favouring independent providers. An independent provider typically receives more money than an NHS trust for performing an identical procedure, in many cases up to 25 per cent more. On top of that, the tariff paid to the NHS does not reflect the cost of teaching and training or PFI payments. I am sure that the Government can produce all sort of arguments for these disparities, but when we read in this week’s press that the second wave of independent treatment centres is to be paid for a guaranteed volume of operations, regardless of whether patients are actually treated or not, it seems to me that we should question, if nothing else, the business case for that approach. It is to the Government’s credit that they are confronting head-on the possibility that some NHS hospitals may have to close if they cannot compete. That kind of contingency work needs to be done. But if a hospital were to close not so much through its own failings as because of a tariff system that is relatively crude and that featherbeds private providers, it would be deeply unfortunate. Some foundation trusts are centres of tertiary excellence. There is a real fear that, at the moment, tertiary procedures that are low-volume but high-cost are not adequately reimbursed. The implications of that for the provision of specialist services are serious. In economic terms, the margins of safety in healthcare are thin. Once you get a hospital which is losing money on its specialist services, and which also finds that its routine caseload is migrating across to a nearby independent provider, you rapidly start heading towards an operating deficit. A modern acute trust has a high base of fixed costs that cannot easily be ratcheted downwards to cope with a fall in volume. The NHS already has to contend with the financial shocks associated with Agenda for Change and the new consultants’ contract, not to mention the emerging competition from GPs under practice-based commission. To introduce payment by results across the board in the secondary and tertiary care sectors, without first being sure that the tariff system is sophisticated enough to cope with it, would be to risk destabilising the NHS in a way that would be as serious as it would be unnecessary. I do not criticise the direction of travel adopted by the Government; indeed, I firmly support it, which is why I hope the Minister will take it in good part if I say that his department would do well to examine the pitfalls experienced by other countries in the whole area of fee-for-service, as well as the difficulties currently being experienced by some of our new foundation trusts. The rolling-out of payment by results on a broader front needs to happen, but in a way that minimises the risks of unintended consequences. As we move into this new Parliament, the noble Lord will know that the opposition he encounters on these Benches will remain constructive. Of course, that does not preclude firm resistance to proposals that we consider may not have been properly thought through. The strength of this House, however, is its ability to look at issues dispassionately, to debate without unnecessary party rancour, and, at its best, to unite across party boundaries to achieve an outcome that is right and just. I have every confidence that we shall continue to see that strength come to the fore to the benefit of the legislation placed before us, and to the wider benefit of the men, women and children of this country.