---

NHS Deficits

The Department mentioned six areas in its executive summary in relation to the current deficits, and that is certainly one of them. My hon. Friend the Minister will be familiar with the cuts in education and training budgets. Given the overspend in certain areas, those seemed to be easy targets. Effectively, budgets are held by SHAs and are consequently easy to hold back in order to balance national budgets. The Government said, in paragraph 65 of their response:"““Although…funding will not be ring fenced—" for which we had asked, because of the raids, so to speak, in the current financial year—"““there will be a more robust service level agreement which will seek to ensure that SHA decisions on what training to fund and the level of commissions of training places requires are made on the basis of long term workforce need.””" The Health Committee will, I hope, agree a report on work force planning later this week, and no doubt the House will debate the matter again. I would be interested, however, to know exactly what the Government mean by the phrase, ““robust service level agreement””. Cuts to vulnerable services were also criticised. Numerous witnesses suggested that mental health and public health expenditure were the easier targets in health care. Several organisations wrote to us to make that point. The Government effectively denied that in their response. They said:"““However, improving financial management does not mean compromising services for patients. To ensure that these services are not compromised the Department of Health has asked SHAs to ensure that local changes to spending plans are equitable across the local health economy, and that NHS organisations providing mental health and learning disability services should not be asked to contribute more in savings or cost improvement plans than any other service””." I accept that entirely as it is written, but none of the three services that I have mentioned has national targets set. When services do have national targets, the NHS believes that those must be met. Under those circumstances, it is right and proper to say that matters should be equitable, but do we have equity when there are national targets and when some areas of the national health service have had such problems recently? On the delay in recognising deficits, the analytical body said in its report that the NHS’s inability to recognise the implications of changes in resource account budgeting and therefore what was likely to happen in the particular year was one of the major problems. The Government responded, and I am pleased that they did. We had said"““We are surprised that it took so long for the unsustainable financial commitments which trusts were undertaking to be recognised.””" The Government’s response was"““We have changed this financial focus, and, in the context of greater transparency, now encourage the NHS to plan towards achieving surpluses.””" That represents a big change in the culture of the national health service. I remember, many years ago when I was an Opposition health spokesman, reading Audit Commission reports showing that the priority of hospitals at this time of year was to spend their budgets immediately. If they did not do so, regardless of whether they needed the relevant equipment, the budget would be withheld from them in the following financial year. Has that changed? Rather than spending all its annual budget, can a part of the NHS—while not making a profit—keep some money that can be rolled over into the next financial year? That could help the NHS to plan for different departments.