---

NHS: Finance

rose to ask Her Majesty’s Government what proportion of NHS finances are currently spent on the private sector; and what is their estimate of the likely rise or fall of this proportion in the future. The noble Lord said: My Lords, I would like to start by thanking the noble Baronesses, the noble Earl and the noble Lord who put their names down to join this mini-debate on a Friday. I particularly apologise to Front Benchers who, perforce, have had to stay on a Friday. Unfortunately, it was the only slot available to me. The increasing role of the private sector in the National Health Service is causing widespread concern, including to all the professional organisations in the NHS. That was expressed strongly at the TUC and Labour Party conferences this year, as well as at Wednesday’s lobby of Parliament. I declare an interest as a medical practitioner who spent most of his professional lifetime working for the NHS. I expect that my noble friend will express the view of the Secretary of State that the use of the private sector by the NHS is not the same as privatisation of the NHS and that, as long as it is free at the point of contact and financed through central taxation, ithas not been privatised. However, increasing therole of private profit-making organisations—often transatlantic—in delivering services and in the management of the NHS is expensive. The private sector may be useful in shortage areas, though costly, but it is frequently unnecessary and may eventually undermine the integrity and comprehensive nature of the NHS. Like the Secretary of State, my noble friend may think that supping with Mammon is safe if a sufficiently long spoon is used. I wonder. Because of time constraints I will concentrate on only two areas—the private finance initiative and independent sector treatment centres. However, I would like briefly to list some other current examples of this increasing trend, such as outsourcing the commissioning function of PCTs, privatising the management of GP services, the unbundling of primary care services, the sale of NHS logistics—to a very doubtful new owner—and privatising oxygen supplies in the community, pathology services and non-emergency ambulance services. Then there is the fiasco of outsourcing the NHS IT system, but I think that that might defeat anybody. In the mid 1990s, public sector funding for capital projects became very scarce, and that continued in the first austere years of the present Government. By the time of Labour's success in 1997, the private finance initiative was up and ready to go—and there has been a virtual bonanza of PFI-financed hospital building, which has often been welcomed by patients and clinicians alike. The high cost of the projects has, however, led to the downsizing of the number of beds provided and it has increased the pressure on staff to reduce throughput times, often to a stressful level. PFI costs over the whole of a contract will almost certainly be considerably greater than the public service comparator would be. PFI consortia charge a rate of interest well above bank rate on the capital that they raise. This interest represents a significant proportion of NHS finances, paid for by the trust concerned. It should be considered as money diverted to the private sector. Andrew Lansley MP obtained Department of Health data giving a sum of £53 billion to be paid by NHS trusts over the next 30 to 40 years for completed PFI projects with a capital value of £8 billion. I would be grateful if the Minister could disaggregate this unitary sum of £53 billion into its component parts. What proportion represents the ““availability charge””, covering rent, interest on capital, and maintenance? What proportion represents non-clinical service provision of the PFI consortium? I expect that profit is made in all these areas, but this will be difficult to dissect out due to commercial confidentiality. I realise that I am venturing into complex territory, but I also suspect that there is a deliberate tendency to present PFI statistics in an obscure way. The Minister may need to write to me about these details. I have a further question: how often does ownership of the assets revert to the trust at the end of a contract, and how often do the assets remain the property of the PFI operators? PFI may have seemed an efficient way to get buildings up and moving quickly, with risk shouldered by the PFI consortium. However, this has been at considerable cost to the financial health of many trusts with large PFI schemes—as the Audit Commission notes in its report Learning the Lessons from Financial Failure in the NHS—and it has been a stone around the neck of the NHS as a whole. I suspect, like the eminent economists whom I have consulted, that the use of PFI has actually been the reverse of prudent. The repayments continue for half a lifetime and will therefore partly fall on the next generation—and, of course, the next few Chancellors. The Health Select Committee of another place reported on independent sector treatment centres in July and the Government have recently responded. It is clear that some waiting lists were already falling rapidly before the ISTC scheme got off the ground, largely because of the decision to separate the treatment of elective cases from acute and emergency services. This was achieved within the National Health Service partly through the 46 NHS treatment centres. In the case of cataract surgery, for example, NHS operations increased from 62,000 a year to 210,000 a year in the five years to 2005, and the average waiting time fell from 200 days to 70. During the same period, ISTCs carried out less than 2 per cent of this number of operations on cataracts, so their impact on the waiting list reduction was minimal. It is interesting to note how much the number of operations rose. That was because, once waiting list times had gone down, many people who had previously been allowed to sit at home with their disability persisting were referred by their GPs. During this same period up to 2005, the more complex procedures also reduced their waiting times a little, but much less dramatically. They were mostly falling before the ISTCs made a significant impact. ISTCs are popular with patients, but there is no difference in the standard of clinical care given, according to a recent Healthcare Commission report. On that point, is my noble friend satisfied that inspections of ISTCs by the Healthcare Commission are as rigorous as those in NHS facilities? That has been questioned. ISTCs can have adverse effects on the National Health Service. It is now a requirement that patients on referral must have a choice of at least one independent hospital. That has resulted in some NHS facilities being underused and the trust concerned losing money because of the payment-by-results scheme. The ““take or pay”” arrangement means that NHS trusts are virtually forced to refer patients to ISTCs and other private facilities. In its evidence to the House of Commons Select Committee, the Royal College of Surgeons said that there was ““cherry-picking”” of the more straightforward cases by ISTCs, leaving the high-risk patients with the NHS, which thus has a slower turnaround and loses payments. The removal of straightforward cases to ISTCs has also had a deleterious effect on the training of junior doctors and nurses. The Government say that training will be increased in ISTCs, but training costs money. Will new money be made available for that, rather than requiring payment from the already stretched budgets of postgraduate and undergraduate deans? I have more or less come to the end of my time, but I have just scratched the surface of the topic. I have tried to show that there are alternative ways of achieving the results claimed for the private sector. It is held that introducing competition and market discipline will increase efficiency to more than cover any profit taken. I want robust evidence of that. At no point has there been serious evaluation of any private sector scheme before it has been introduced into the NHS on a fairly wide scale. Innovative NHS alternatives, such as NHS treatment centres, have not been given the chance to demonstrate their full effectiveness. I very much hope that the Government will pause for thought before going further down a road that risks fragmenting and destabilising a much valued institution.