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Public Accounts Committee

The Public Accounts Committee's session on sustainability and transformation in the NHS with evidence from the Department of Health and Simon Stevens of NHS England.


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Welcome to the Public Accounts

Committee on Monday the 5th of March

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2018. We are here today to look at

the sustainability and

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transformation in the NHS on the

back of a National Audit Office

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report on the subject. This is a

subject we return to perennially as

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a committee sadly and last year we

were very critical of the short-term

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measures used to balance the NHS

budget. And last year, that was when

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the trust sector reported a deficit

of nearly 800 million and

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forecasting a deficit of over 900

million this year so the system

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still has a long way to go before it

is sustainable. As the Olivia

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highlights and we have Cedric

before, the NHS is focused still on

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survival with growing demand but

it's not the case with that and the

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transformation funding schemes

cropping up the system rather than

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doing the transformation it was

intended for, and in that system,

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there are clear winners and losers

as the waiter but it is formulated.

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We have spent time talking to

finance directors or working with

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colleagues around the House to do

that and two concerns from the

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trusts was the issue around

stuffing. And the concern that they

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are getting mixed messages from the

top. So we will probe some of that

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today. I want to introduce our

witnesses. From my left-to-right,

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David Williams, Director-General of

finance at the Department of Health

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and Social Care Act. The permanent

Secretary at the Department of

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Health and social care. Simon

Stevens, Chief Executive of NHS

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England, not yet of social care. I'm

sure that will come! And Ian Dalton,

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the new Chief Executive of NHS

improvement replacing Jim Mackie,

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who retired last Christmas. It is

your first hearing since Christmas?

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Welcome. Before we get into the main

session, and wanted to ask both the

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permanent Secretary and Simon

Stevens about the NHS winter crisis

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funding provided to trusts who bid

for it and met certain criteria last

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year. And our reckoning, in about

November, it will arrive, and have

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you any indication of how that is

being spent? I want to know how that

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is being spent and where it has been

spent and how you are monitoring

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that from a central level?

David

Williams first. I can set out how

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the funding was allocated and

planned to be spent. And then you

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may want to hear from NHS colleagues

how in practice it is being deployed

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into the system. So the Chancellor

announced 337 million pounds of

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additional funding at the budget in

Artur Mas chair. £150 million that

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has flowed straight through to

providers to cover costs and

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pressures which they had already

incurred or been forecasting. 137

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million was put into the system to

buy additional capacity. Some of

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that around additional beds in the

acute trust. Some for increased

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access, particularly over the

Christmas holiday period to GPs, as

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well as resources for mental health

services, ambulance trusts and NHS

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111 services. We retained

essentially £50 million of that

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additional money against the point

where winter was over. Which is a

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point we have not yet reached! And

we are currently in discussion about

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how best to release that.

So that

money is for this financial years,

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so winter has to be over by the 31st

of March?

We hoped there might be

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some opportunity for investment

towards the end of February and

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March into elective care but in

practice, the continuing high levels

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of flu and the bad weather that we

have been having means that we

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focused more heavily on A&E

performance.

Sorry, so the money,

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the 50 million you have held back

century, it has to be spent by the

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31st of March? As you are the

finance Director, you might not want

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it spent.

It has been voted the

department through supplementary

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Estimates and we have put it into

the mandate. So there is no question

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about whether there is anything

sensible we can do with it over the

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next four weeks. Or whether it is

simply a relief to the bottom line.

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Simon Stevens, from your

perspective, has been money been

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spent well and have you kept track

of it?

It has been allocated in the

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way David described. Short notice.

To trusts and a small amount to

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macro 3 and for the first time in

terms of winter funding, mental

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health trusts also reserve that

received funding -- and a small

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amount to GPs. To help the winter

crisis and A&E departments. That has

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collectively helped the NHS perform

under demanding circumstances over

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the December and January period. The

key fact to have in your mind is

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that we looked after at one people

within the four-hour A&E target in

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December and January this year than

we did December and January the year

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before.

Given the money arrived

quite late into the trust covers and

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there is still money not yet spent

with four weeks to go, is there not

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a risk it gets spent on short-term

expense of options by Kylie paid

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locums if you can find them,

although the evidence from finance

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is hard to find stuff even if you

have the money, is it not better to

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look at this in a more long term

sustainable way?

Yes, ideally, you

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allocate money very early for the

reasons you say. In this case, as I

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think I may have said to the

committee before, what we were

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investing in was the NHS existing

plan for winter. A lot of what David

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has described were plans that were

already there in the system that we

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were back funding through money that

people had already spent.

Let me be

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clear, plans, but without the

funding attached, so you still had

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to find stuff. David Williams talked

about adding capacity including

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beds, it sounds easy to open up a

bed, but that is the staff cost you

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are paying for, so you have to find

the nurses and ancillary

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professionals to support that at

short notice. So even with the plans

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in place, you need the stuff. Yes,

that's true. Have you monitored

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whether they have overpaid for the

staff?

I don't think we have seen

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any evidence of overpaying.

Yes,

trusts had been planning ahead of

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the budget money becoming available

having additional services online

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over the holiday period, what the

budget money has done is provide a

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funding source for that. Over and

above that, I would say that there

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are a range of nonhospital related

services that were put in place for

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this winter that were not available

last winter such as the fact that

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everybody, every major A&E had

clinical GP streaming available this

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year such as the fact that we had a

much higher proportion of calls to

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11 on being dealt with by a nurse, a

paramedic or GP. They are additional

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services put in place for this

winter and the budget money has

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helped fund some of those costs.

So

just to be clear, if they were put

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in place before the money was

available, where their staff trusts

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were saying, we hope we can pay them

and we hope the department will pay

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more money, or was this money, the

plans were there, but the people

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will not and they had to find the

people to fill those?

Trusts had

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been asked to and they were planning

for expanded services over this

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holiday period, head of the budget

money becoming available.

So had

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they recruited the stuff already?

To

give a concrete example, before I

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came here, I was privileged to be

the Chief Executive of one of our

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largest trusts, Imperial health

care. We had plans to increase our

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capacity at risk by a significant

amount going into winter. It is a

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legitimate call on the resource to

meet in part costs that trusts knew

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that they were going to incur.

How

would Imperial have fun to do that?

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Without the money, we would have had

to make additional savings or see

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the budget go out as a result.

You

had staff and doctors and nurses in

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positions, salaried staff to fill

this capacity?

Inevitably, when you

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plan this, you work on an assumptive

you can feel your chefs and we know

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there is a significant with

vacancies across the service. --

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chefs. That is the basis on which

you plan, in advance, to build the

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capacity. Give the point with

mentioning, management information

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tells us that if one compares the

bed state in January with November

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30, we had moved up from 96,000 298

( 299,116 (. So there is no question

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that the NHS steps is capacity up.

As a result, some of the really

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impressive work that clinicians

across the NHS have done to see

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patients within four hours, despite

the pressure, relied on that. So it

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is an important contribution,

notwithstanding all the other debate

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we have just had.

Mr Dalton, you

Chief Executive of a large trust.

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With that hat on, is not more

sustainable tap that money built

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into your budget, giving you are

planning for this? And you are now

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sitting next to the Department, what

would you say to them about how

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sustainable this approach to funding

is and what they should be doing in

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future years?

I would say two

things. First is that the money was

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really welcome for the reasons

talked about. And secondly, this is

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something we have signalled, NHS

England and ourselves in the

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planning guidance, that it is

absolutely right that people should

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be planning for this on the basis of

their projections for the year

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rather than receiving the money late

in the year although it was welcome.

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I think that is a signal we have

sent the NHS for next year partly to

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address this issue.

In terms of how

the winter money is spent, so Chris,

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you said you are not sure whether

that means we have been overpaying.

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I said we have not seen any evidence

we have been overpaying. We monitor

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agency spend extremely closely

indeed and have a series of controls

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around agency spend and NHS

improvement and we were looking at

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the numbers earlier today and we

have not seen any evidence in those

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numbers that there was a loss of

control on agency spend over that

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period.

So where is the extra

capacity coming from, who is filling

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these additional hours that can be

created through the funding?

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Normally, Ian will comment further,

it will normally be existing members

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of staff doing extra shifts either

as part of overtime or as part of

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bank arrangements. What we have seen

as agency spend has declined is a

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big expansion in trust run bank

arrangements. That being the way in

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which temporary cover is funded,

which is of course more efficient,

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but also, it fits better with the

staffing model of the hospitals.

Do

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you want to add anything? Later in

the discussion, we may talk in the

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reduction of agency spend, which has

been really quite extraordinary, 20%

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projected reduction issue, that is a

dramatic reduction. But

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specifically, normally, the best way

of staffing a surgeon capacity, and

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bear in mind hospitals have to

maximise their capacity to cope with

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the emergency patients coming

through the door on a daily basis as

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well as just across winter, is

absolutely to offer your own staff

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who know the hospital and the

patients and the protocols and the

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wards, work through the bank and you

will have seen I think a very

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successful move from agency to bank

as part of the overall staffing plan

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for the NHS. That was the case again

this winter.

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I appreciate NHS staff may welcome

that opportunity to earn extra money

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and do additional hours but is that

sustainable in the long run given

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that it must be a highly pressurised

environment for those staff over the

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winter period although they clearly

do this of their own free will? Are

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we not better to look at longer term

solutions around creating those

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positions in earlier in the year

even if it comes at a cost, but is

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more sustainable for managing some

of those winter pressures?

I think

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the key message we give the NHS and

we have given clearly in the

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planning guidance for next year is

that absolutely the NHS needs to

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plan for the capacity it expects to

see, particularly the emergency

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demand which we have seen as this

committee has commented on recently

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moving ahead significantly over the

last two years to give one

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particular number which is on my

mind during December, the NHS

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admitted 400,000 people through as

medical emergencies into hospitals

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which is a 5.9% increase in the same

period in the previous year so there

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is a significant rise in demand and

it's absolutely right that hospitals

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plan for that, winter is, we have

had a particularly demanding winter

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and I think NHS staff of done a

phenomenal job. Nonetheless... At

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THEY TALK OVER EACH OTHER They might

plan for this but if they don't have

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the funding they cannot recruit the

people?

The bottom line is yes,

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would it be desirable to have the

extra money earlier in the year if

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it was there, sure, we are nothing

other than grateful for the extra

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money, and our message to the NHS

for 2018-19 is we have to plan on

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the assumption we don't have it

again and thus build plans for the

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year with the emergency capacity

built up for December and January.

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Are we saying, last year you

planned, you used the phrase "At

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risk". He did not have the budget

capacity, you took the risk that

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either you would get the funding or

you'd be allowed to have a

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deficit...

Not quite.

So let me

carry on a second. Then, this year

0:16:310:16:42

if I understand rightly, the plan is

that you will plan earlier for the

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peak you will have during the

winter? You will have more staff on

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board, does that mean you will have

the money already allocated to you,

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what does it mean exactly about

funding?

When you get a winter

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pressure, the bit of the NHS which

sufferers is the discretionary bit,

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the elective bit, not the emergency

bit. You would always expect a trust

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to meet and resource itself to meet

its emergency demand. In the absence

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of extra money to pay for that, what

it would need to do is cut its

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collective activity and its other

discretionary activity. So every

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trust will plan for the emergency

part, so what we did essentially

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wars we funded what would otherwise

have been reductions in service

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elsewhere in the hospital. That is

why it's perfectly possible to have

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a planned....

THEY TALK OVER EACH

OTHER The NHS is being fought to rob

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Peter to pay Paul.

Which is why we

wanted to invest the extra money. As

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Simon says, would it be even better

to have that money right at the

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beginning, of course it would, but

we didn't. And clearly it is better

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to remove from trusts they need to

make those reductions in other

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services by funding the existing

winter plans, than it is not to. But

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we're not denying, is it better to

have all the money at the beginning

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of the financial year to spend

properly, that is: the optimum, the

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second of done is to get it through

the year.

Another point, there was

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quite a lot of speculation about the

amount of non-urgent surgery

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operations in January which would

have to be deferred, we will have

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the definitive figures later this

week but the early indications are

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that partly because of the extra

funding that was available the

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number of operations deferred was

substantially, substantially lower

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than speculated in the press at the

time. We will have those figures

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definitively on Thursday.

So a lower

than very bad figure is a good

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result? You see optimism in every

bad figure.

I wanted to come back to

0:19:190:19:26

the question about bank staff and

flexibility, this is all about

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balance. For something the size of

the NHS or indeed a trust it's

0:19:300:19:34

perfectly sensible to have a bank of

flexible staff to allow you to

0:19:340:19:38

manage peaks and troughs, you don't

want to staff for the maximum for

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the entire year. It is also true we

have more vacancies in the NHS that

0:19:420:19:47

we would like. If your vacancy

position was perfect you would still

0:19:470:19:55

want a bank of flexible staff so we

are definitely not saying we want

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that out of the system. We want much

less agency and more bank to meet

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those flexibility needs.

Wore the

reliance on those bank staff create

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broader pressures which mean it more

difficult, part of the reason there

0:20:110:20:14

is the struggle to fill vacancies is

that staff find the pressure of

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working in understaffed and

overstretched environment is too

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much. Are we not just continuing the

cycle?

Well-run banks help you with

0:20:220:20:28

the problem rather than hinder.

There are members of staff who

0:20:280:20:34

rather like bank work, you choose

when you work and it's very flexible

0:20:340:20:38

and you can do it at points in the

year where you want to earn more so

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there is positive advantages to

flexibility of bank work. But you

0:20:460:20:49

also as you say need a properly

staffed kora which is one of the

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reasons we are consulting on future

workforce strategy at the moment.

0:20:530:21:06

One of the key points at the

beginning was the inability to

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recruit vacancies, the danger we are

talking up the bank as if it is a

0:21:120:21:16

solution but...

It is why I made the

point, it's all about balance, a

0:21:160:21:22

well-run bank has a part to play but

it does not take you away from some

0:21:220:21:25

of those underlying issues.

Does not

fill gaps in the workforce.

0:21:250:21:32

INAUDIBLE

The winter money still left held

0:21:320:21:40

centrally, how many trusts asks for

more money than they were allocated

0:21:400:21:45

as part of the winter pressure

funding and as an example my

0:21:450:21:49

hospital trust was given around £2

million but it calculated the actual

0:21:490:21:53

additional cost was around £10

million so there is an £8 million

0:21:530:21:58

bill to pick up and you are sitting

on 50 million, so how many trusts

0:21:580:22:02

would have liked that money earlier

in the year rather than new thinking

0:22:020:22:07

about how to spend it now?

I don't

have that information, the way in

0:22:070:22:12

which the money was allocated was

through a series of engagements by

0:22:120:22:18

the national lead Pauline Phillips

with regional directors and trusts

0:22:180:22:27

to come up with the allocations

which we have been talking about. In

0:22:270:22:34

practice I think the 50 million will

help offset some of those additional

0:22:340:22:37

pressures that trusts have faced in

managing winter. It's just at the

0:22:370:22:44

moment those pressures are being

offset with the money on the

0:22:440:22:48

commissioner side of the equation

rather than individual providers and

0:22:480:22:53

that is one of the things we need to

work through over the next few

0:22:530:22:57

weeks.

Would you be able to send to

that information as though specifics

0:22:570:23:04

if someone came back and asked for

more at a particular time? It would

0:23:040:23:08

be interesting to know what trusts

were seeing the reserves is where

0:23:080:23:12

they needed at the time as opposed

to what the Department was offering.

0:23:120:23:16

Has anyone done any work to say what

the total cost of the winter

0:23:160:23:20

pressures was to the NHS and how

much money was allocated Allah that

0:23:200:23:25

was as a percentage because to pick

up the point, we have winter next

0:23:250:23:29

year and it's likely we will have

winter pressure points again and if

0:23:290:23:34

we know what the cost of winter is

going to be we should be looking now

0:23:340:23:39

to create the circumstances while

the trusts are thinking about how

0:23:390:23:42

they can make small surpluses

throughout the year to meet those

0:23:420:23:45

costs or in the cases of those

trusts which will not get into

0:23:450:23:49

surplus they can start talking to

commissioners about how they can get

0:23:490:23:53

the demand without relying on

one-off payments.

We do a review of

0:23:530:23:59

how winter has gone at the end of

winter every year and Bill back into

0:23:590:24:03

the planning. Do we look

specifically at that?

We do. What I

0:24:030:24:10

will say, I think as was said

earlier, the going assumption has

0:24:100:24:15

got to be that the funding made

available with realistic planning

0:24:150:24:18

assumptions around emergency growth

with the right seasonal has to be

0:24:180:24:22

built into capacity plans at the

start of the year. I think that is

0:24:220:24:26

kind of pretty much a statement of

the obvious. There was a significant

0:24:260:24:32

positive this year and a significant

negative when it came to pressure,

0:24:320:24:36

the significant positive was we have

generally turned a corner on the

0:24:360:24:41

delayed transfers of care problem

which has been brewing over many

0:24:410:24:45

years and we were able to free up

almost 2000 delayed transfer of care

0:24:450:24:52

beds come this January which means

it's the best we had into a half

0:24:520:24:59

years and that was in the zone of

the 2000-2000 we had plans to free

0:24:590:25:04

up. That is good news. The bad news

is the Bobsleigh had the worst flu

0:25:040:25:10

season in seven years. The

0:25:100:25:16

even today we've got around 5000

hospital beds occupied by people

0:25:170:25:23

with flu or no rotavirus is the

equivalent of having ten acute

0:25:230:25:31

hospitals solely looking after those

patients which would not normally be

0:25:310:25:36

the case, on 100,000 bed base its

unusual incremental pressure compare

0:25:360:25:44

with the last six or seven years.

Great progress or not the whole

0:25:440:25:49

system working as evidenced by the

reduction, set against this pressure

0:25:490:25:55

from flu and norovirus which we have

experienced this year at a far

0:25:550:26:01

higher rate than recent memory.

Surely the ideal situation is that

0:26:010:26:09

no elective surgery is cancelled and

trusts and commissions planning for

0:26:090:26:14

winter pressure but at the same time

planning to carry on their normal

0:26:140:26:22

elective work, should that not be

the ideal?

Yes and his extent that

0:26:220:26:28

is what the national emergencies

pressures panel reminding people of

0:26:280:26:31

when they said at the beginning of

January don't engage in last-minute

0:26:310:26:36

cancellations the night before, the

morning of when people are coming in

0:26:360:26:39

for surgery. The assumption should

be given the extra flu pressures,

0:26:390:26:44

norovirus I have thought about you

have two free up. Hospitals and

0:26:440:26:51

surgeons rightly want to try to use

of a last available bed which can be

0:26:510:26:58

deployed for patients on waiting

lists who have got non-urgent needs

0:26:580:27:00

for surgery. There is always that

balancing act. But as I see the good

0:27:000:27:05

news is that actually the number of

elective deferrals for routine

0:27:050:27:11

operations in January is going to

come in substantially more low than

0:27:110:27:16

was feared at the beginning of

January.

Whilst it is the government

0:27:160:27:19

's ambition to recruit more nurses

and doctors it's having great

0:27:190:27:24

difficulty doing so, doesn't it

therefore make it even more urgent

0:27:240:27:29

with these constant winter pressures

that the government puts greater

0:27:290:27:33

attention into recruiting and

training more nurses and doctors?

On

0:27:330:27:39

both fronts that is right. On

doctors in the hospital and

0:27:390:27:44

community health services it's worth

remembering the number of full-time

0:27:440:27:49

equivalent consultants is up by

almost 1500 over the course of the

0:27:490:27:54

last year. That compares with GPs

with a number is down. In the case

0:27:540:27:59

of doctors in training, there is a

increase of more than 1200 over the

0:27:590:28:05

last 12 months so that's important

thing to in mind. In curse of the

0:28:050:28:13

nursing and health visiting

workforce there are genuine

0:28:130:28:16

pressures that a combination of

nurse training, place expansion, new

0:28:160:28:23

routes into nursing, better

retention and indeed the action the

0:28:230:28:26

government is poised to take on

dealing with nurses pay three the

0:28:260:28:30

new agenda for change reform, all of

those have to come together to deal

0:28:300:28:36

with the obvious pressures we are

facing in nursing. I am not decrying

0:28:360:28:40

the pressures on the other parts of

the workforce but I think the

0:28:400:28:44

nursing pressure is very front of

mind.

0:28:440:28:49

It is all very well increasing the

number of consultants, but unless

0:28:490:28:54

you have the back-up staff, they are

not as effective in productivity

0:28:540:29:01

terms as they might be. Surely the

entire picture has got to come

0:29:010:29:04

together?

Yes.

Yes, that is white we

all led by Education England,

0:29:040:29:13

drawing the NHS, that is why we are

doing the consultation about future

0:29:130:29:17

workforce strategy. We do have a

number of pressures that Simon has

0:29:170:29:22

mentioned and we will need some new

approaches.

So you will be looking

0:29:220:29:25

at the nursing bursary?

We are not

looking at changing the funding, but

0:29:250:29:32

we will certainly be looking at the

routes into nursing. Including nurse

0:29:320:29:38

apprenticeships and other mechanisms

so that we maximise...

Can I just be

0:29:380:29:47

clear, a nurse apprentice will be

paid to learn on the job rather than

0:29:470:29:51

having the nursing bursary which

paid people to train traditional

0:29:510:29:54

route?

Yes, if you are a nurse

apprentice, it works like any other

0:29:540:30:00

sort of apprenticeship.

You are

looking at expanding as

0:30:000:30:03

apprenticeships, where you pay

someone to train, having got rid of

0:30:030:30:07

the bursary where you paid someone

to train?

No, it is a completely

0:30:070:30:11

different model.

Well, it is maybe a

different model, but you have the

0:30:110:30:16

beginning somebody who is not a

nurse and at the end, somebody who

0:30:160:30:19

is trying to be a nurse.

What we are

looking to get to is a variety of

0:30:190:30:25

different routes into nursing that

suit different types of people. So

0:30:250:30:31

we will have people who continue to

want to do the classic undergraduate

0:30:310:30:35

route, we will also have people who

wish to go through nurse

0:30:350:30:37

apprenticeships.

Just to be

absolutely clear, for fear of

0:30:370:30:44

misunderstanding, if I wanted to

train to be a nurse today, I could

0:30:440:30:49

train and a nurse apprenticeship and

the NHS would fund that and I am a

0:30:490:30:53

fully qualified staff nurse, yes?

And if I wanted to train to be a

0:30:530:30:58

nurse but go through university, I

would have to get a loan and pay

0:30:580:31:02

£9,000 a year fees and come out as a

fully qualified staff nurse? So the

0:31:020:31:07

NHS is funding nursing still, even

though it has got rid of the

0:31:070:31:11

bursary, it is funding it through

apprenticeships.

The apprenticeship

0:31:110:31:14

is funded through the apprenticeship

levy as I am sure you know. So

0:31:140:31:19

saving money. Would you like is to

set up these various proposals?

Yes,

0:31:190:31:25

to see how many people you are

getting through and the variations.

0:31:250:31:29

These are exactly the things we

calls that consulting on. For the

0:31:290:31:36

reason that Simon set out.

Depends

ship levy is still tax payers money,

0:31:360:31:43

I should say. Bridget Phillips is

asking about recruitment of GPs.

0:31:430:31:48

I am concerned about the decline we

have seen in Sunderland and across

0:31:480:31:54

the North East, in 9% fall in the

number of GPs in the last two years

0:31:540:31:59

alone and this continues a declining

trend. In an area which has real

0:31:590:32:05

health problems, often chronic

problems associated with industry.

0:32:050:32:08

What can we do to address some of

the regional imbalances that exist

0:32:080:32:12

within the workforce?

You are right about Sunderland, not

0:32:120:32:20

just the North East, other parts of

the country as well. But we have to

0:32:200:32:25

decompose it if I can put it that

way. The first thing we have to do,

0:32:250:32:29

we had to make sure that for newly

qualifying doctors, general practice

0:32:290:32:34

is seen as an attractive career

option. Which for several years

0:32:340:32:40

prior, frankly, it has not been. We

have had significant shortages of

0:32:400:32:45

people going on to the GP training

scheme. What we have done is

0:32:450:32:50

increase the GP training recruitment

onto the training scheme. We have

0:32:500:32:58

3157 places felt blessed year which

was the highest intake of GP

0:32:580:33:01

trainees ever. -- build last year.

And we have offered salary

0:33:010:33:07

supplements to GP trainees who agree

to train in parts of the country

0:33:070:33:12

where, as you described, we have had

problems in filling those training

0:33:120:33:16

spots. And we have filled 133 such

places last year and because of the

0:33:160:33:25

success of the scheme last year, we

are expanding that to 250 places

0:33:250:33:28

this year. In addition, we know that

we have got to make it easier to

0:33:280:33:34

come back to GP work, if you have

taken time out for a family break,

0:33:340:33:40

so we have a GB returned back to

scheme aiming to support at least

0:33:400:33:47

500 GPs in induction refresher

programmes. 600 GPs have applied to

0:33:470:33:53

join that programme. We are also

trying to develop a more flexible

0:33:530:33:56

model for being the GP so if you do

not want to sign on as a partner or

0:33:560:34:02

as a majority of your week salary

employee of practice, we have got

0:34:020:34:07

something called GP career plus

where you agree to work with

0:34:070:34:10

multiple practices in the area where

you live, but with a more sustained

0:34:100:34:14

commitment and an exchange, you get

a series of supports from the NHS.

0:34:140:34:19

But we also have a problem which we

do not as yet have an answer to,

0:34:190:34:24

which is the premature retirement

rate for people in their late 50s

0:34:240:34:28

and 60s. And I think the Department,

the evidence to review body has

0:34:280:34:35

pointed out one of the contributory

factors is the broad change to the

0:34:350:34:39

pension system and so I am not going

to pretend that is not a problem, we

0:34:390:34:45

have more work to do on that.

When

you look at the numbers coming

0:34:450:34:49

through to training places in 2017,

the problem is also again we see a

0:34:490:34:54

regional imbalance. In London, the

fill rate was 106% and in the North

0:34:540:35:00

East, Dunst and 77%. So at the point

of recruiting people into practice,

0:35:000:35:06

there are significant regional

variations in our ability to fill

0:35:060:35:09

those places. It is welcome that we

see more people coming in, but it is

0:35:090:35:13

not just enough to have a raw

number, we want to make sure those

0:35:130:35:16

people are in the book -- right

places.

Exactly, that is why we have

0:35:160:35:20

the salary supplement scheme and we

are not just creating lots of extra

0:35:200:35:24

training places in London which you

probably could fill because the

0:35:240:35:27

worry is that might draw people from

other parts of the country in those

0:35:270:35:31

training schemes. What I also did

not mention was the work we are now

0:35:310:35:37

doing and GP international

recruitment with a particular

0:35:370:35:40

intention of placing those

internationally recruited GPs in

0:35:400:35:42

parts of the country where it is

hard to recruit and retain. So the

0:35:420:35:47

North East falls into that category,

but also places like Lincolnshire

0:35:470:35:51

where our first international

recruits had been recruited to and

0:35:510:35:56

they are installed. We are aiming to

see we can resource may be 2,000

0:35:560:36:02

plus international GPs over the next

three or four years.

I agree on the

0:36:020:36:06

issue of medical school training

places and Sunderland University has

0:36:060:36:11

bits to open a new school to provide

additional places because also, do

0:36:110:36:14

we not need to look at making sure

we have access to medicine more

0:36:140:36:18

broadly, not just supplementing

existing provision, but looking at

0:36:180:36:23

creating new and different ways of

getting people into medicine?

We

0:36:230:36:27

certainly do. It has to be said that

is probably not a town or city in

0:36:270:36:32

the land that has not bid for a new

medical school but Jo advocacy for

0:36:320:36:37

Sunderland is warmly welcomed and

noted?

There is quite clear evidence

0:36:370:36:40

that people do tend to stay where

they are trained or placed which is

0:36:400:36:46

why we have taken measures as Simon

is setting out.

We have spent a lot

0:36:460:36:56

of time on the preamble, you have

been in the Department aid year now?

0:36:560:37:04

Nearly two. Forgive me, time flies!

How would you rank the financial

0:37:040:37:12

2017-18 in terms of success in

balancing the NHS budget?

The

0:37:120:37:16

National Audit Office set it out

very clearly. We clearly made a lot

0:37:160:37:19

of progress from 2015 to 2016, in

terms of the overall deficit and the

0:37:190:37:27

levels of financial rigour we saw in

the system following the financial

0:37:270:37:33

reset we did in July 2016. But we

did not achieve everything that we

0:37:330:37:42

were trying to achieve, as the

National Audit Office sets out, and

0:37:420:37:45

we still have a lot of challenges

going forward.

I think challenges in

0:37:450:37:53

the word, you are still papering

over the cracks with capital budgets

0:37:530:37:59

funding revenue, still one of

savings. And from the Finance

0:37:590:38:03

Directors that send information to

us, a lot are concerned just as one

0:38:030:38:08

example, East Lancashire hospitals

NHS trust, the last two years, the

0:38:080:38:15

trust has become increasingly

dependent on non-recurrent measures

0:38:150:38:17

to balance our box and while there

remains an opportunity for waste, I

0:38:170:38:22

guess they say that to people, but

they might be telling you what they

0:38:220:38:25

are saying, but it is increasingly

difficult to release this

0:38:250:38:28

opportunity. The mild way of saying

that they cannot keep doing it. So

0:38:280:38:35

you are still doing it?

Figure ten

on page 27 of the National Audit

0:38:350:38:41

Office report set this out extremely

clearly. The level of recurrent

0:38:410:38:49

savings that trusts have achieved

remains by a long way the biggest

0:38:490:38:56

portion of the savings made. We do

still have one of measures and that

0:38:560:39:02

one of measures in every set of

accounts in every sector, we wish to

0:39:020:39:08

see our reliance on that falling

over time and as we have discussed

0:39:080:39:12

up the Crow how long will it take?

We want to eliminate capital revenue

0:39:120:39:22

switches by the end of this

Parliament. What have we said, David

0:39:220:39:29

on the one-off measures?

We have not

set a timescale.

Very cleverly, Mr

0:39:290:39:37

Williams! Can you set a timescale

now and how long is it acceptable to

0:39:370:39:40

oversee the budget as you do is

Finance Director at the Department

0:39:400:39:44

of Health that allows hospitals to

carry on Reading capital budgets?

I

0:39:440:39:52

prefer not to set a precise

timetable now, not least because I

0:39:520:39:55

think as you see within the report,

and as comes out in data that the

0:39:550:40:05

NHS publishes, they're both a

general set of issues which NHS

0:40:050:40:11

providers need to deal with, but

also, a of specific challenges for a

0:40:110:40:17

relatively small number of trusts

with especially difficult financial

0:40:170:40:25

situations and large deficits. And

so thinking about a reduction in

0:40:250:40:32

reliance...

Those hospitals,

highlighted they are one of the

0:40:320:40:40

biggest challenges in the NHS budget

and some trusts, they have large

0:40:400:40:44

deficits and if they do not get

support, they will continually be a

0:40:440:40:48

drain on the overall budget. Is it

possible for those trusts with those

0:40:480:40:55

big problems to overcome them in

over a year or two years, do they

0:40:550:41:00

not need help to get to a place

where they no longer have this large

0:41:000:41:05

and growing deficit?

Yes, they do.

It is white in the July reset I

0:41:050:41:11

mentioned, we introduce the

financial specialists -- special

0:41:110:41:14

measures regimes which is one of the

things that has worked for those

0:41:140:41:20

people going into the financial

special measures regime, we have

0:41:200:41:23

seen either stabilisation or

improvement in everybody's finances,

0:41:230:41:28

which is partly about pressure and

also about the support putting.

Can

0:41:280:41:35

I just respond those points?

Firstly, on the recurrent and on the

0:41:350:41:41

challenged trusts because both are

important. I think on the recurrent

0:41:410:41:45

and non-recurrent income it is

important to have a sense of context

0:41:450:41:50

which says that the NHS provider

sector for 232 organisations is

0:41:500:41:55

continuing to deliver every year

more cost improvements and they have

0:41:550:41:58

in the past so overall, we have seen

that rise from 2.9 billion to 3.1

0:41:580:42:06

billion in 2016-17 and a forecast

based on 3.3 billion 417-18. So that

0:42:060:42:14

is the good news. It is true to say

and it concerns me as much as my

0:42:140:42:19

colleagues that while there is a

legitimate degree of non-recurrence

0:42:190:42:24

in that, the amount of non-recurrent

still small compared to the overall

0:42:240:42:28

savings and it is rising. And that

is an issue. There is no question

0:42:280:42:33

that the sector is continuing to

deliver cost improvements and it

0:42:330:42:36

needs to continue to do that, but we

cannot rely on the same amount of

0:42:360:42:41

non-recurrent on an ongoing basis.

And they are reducing cost

0:42:410:42:47

reductions, but we know demand is

rising. The costs are going up. At a

0:42:470:42:52

rate faster than even if we are

optimistic, and we talking about

0:42:520:42:58

efficiencies, would you not agree?

No, I would disagree with that. I

0:42:580:43:04

think the issue of fiscal studies

has shown that our funding and our

0:43:040:43:09

all costs have been growing fast

lower than the rate at which the NHS

0:43:090:43:13

has been doing extra patient care.

So just to put numbers around this,

0:43:130:43:17

if you look at the period from

2009-10 to 2016-17, the IFS data

0:43:170:43:24

shows the English Department of

Health, the funding has gone up by

0:43:240:43:29

2.3%. The services we provide for

emergency patients have gone up by

0:43:290:43:34

6.7%. And the plan surgery would

provide has gone up by 15.7%. So the

0:43:340:43:40

NHS has got a superb record on

productivity growth, which is why

0:43:400:43:44

evidence that has been prepared for

this committee by the health

0:43:440:43:48

foundation points out NHS

productivity growth has been faster

0:43:480:43:50

than that of the Cape economy

overall. So these are genuine

0:43:500:43:54

savings.

That was interesting

evidence. I think it showed what the

0:43:540:44:02

NHS can do at some of its best. But

demand is increasing and that does

0:44:020:44:07

not create. You have said it often

enough, I'm giving you an open goal

0:44:070:44:13

here, next to the permanent

Secretary, that there is a challenge

0:44:130:44:17

with the sustainability and the

funding mechanism we have heard.

0:44:170:44:21

Winter crisis planned for without

the full money available, trusts

0:44:210:44:24

know they do not have the staff and

yet they have accepted a funding

0:44:240:44:27

model that does not allow them to

effectively recruit the stuff even

0:44:270:44:31

if they were available, and you have

that consistent game. 4.9 billion

0:44:310:44:37

last year was given financial

support to keep the NHS trusts

0:44:370:44:39

afloat.

0:44:390:44:42

THEY TALK OVER EACH OTHER

I think

both things can be true once, the

0:44:420:44:51

NHS has become even more efficient

over the course of the last several

0:44:510:44:54

years, all the data shows that and

at the same time there is a wedge

0:44:540:44:58

opening up between the NHS and the

funding available, those things at

0:44:580:45:04

the same time and just to put

another point which illustrates the

0:45:040:45:09

point very graphically, in the

report from the NAO, the referenced

0:45:090:45:18

that the funding has been going up

in real terms but the difference

0:45:180:45:23

between what the NHS has

successfully managed with over the

0:45:230:45:27

last five years and 3.7% is an £8.8

billion funding difference in

0:45:270:45:36

2018-19. Cumulatively that's 27

billion of funding that the NHS has

0:45:360:45:43

contributed to economic turnaround

for the UK economy over that period

0:45:430:45:47

compared with our trend rate of

funding growth.

If you take it over

0:45:470:45:53

a long period of time the

suggestion... The 48. If you look at

0:45:530:46:00

what has happened since 2010, we

have seen, your predecessor

0:46:000:46:05

acknowledged the efficiency savings

target was increasingly challenging

0:46:050:46:08

to deliver. What is your view on the

4% efficiency savings?

Could I

0:46:080:46:17

answer the point on the trust first?

I do agree the productivity point is

0:46:170:46:26

not insignificant. We anticipate a

1.8% like-for-like efficiency

0:46:260:46:30

forecast for this year which does

considerably outstrip the rest of

0:46:300:46:34

the economy. On the most challenged

trusts I think it's fair to say a

0:46:340:46:42

small minority of our trusts have

particular financial issues they

0:46:420:46:47

need to resolve. It is also true

that returning was trusts to

0:46:470:46:52

financial surplus is of course not

going to be a one or two-year job,

0:46:520:46:59

it's a process of improvement

against an underlying deficit

0:46:590:47:01

problem which needs to be there for

improved over a million of years, I

0:47:010:47:06

think one of the reasons my

predecessor introduced the financial

0:47:060:47:12

special measures regime back in 2016

is to allow more support for NHS

0:47:120:47:19

improvement to go into the most

financially challenged trusts. I

0:47:190:47:23

think the record in the initial

year, the first eight trusts

0:47:230:47:28

according to the NAO report improved

their year end position by just £96

0:47:280:47:33

million as a result of being in the

programme. For the next category of

0:47:330:47:38

trusts those which were in what we

call the financial improvement

0:47:380:47:43

programme, 22 trusts, improved their

position by 107 million. So there is

0:47:430:47:51

a general need to create continued

efficiency across the sector as a

0:47:510:47:54

whole and we will talk about some of

the elements of that as this

0:47:540:47:57

committee goes on. But there are

also individual organisations that

0:47:570:48:02

are further away from really need to

be financially and I think we have

0:48:020:48:06

to be realistic about the pace of

improvement they can make which will

0:48:060:48:09

not be a single year 's improvement.

Does this not cause challenges we

0:48:090:48:14

have got effectively rewards, there

is a potential for more funding to

0:48:140:48:19

come from the centre, if you're one

of these challenged trusts and you

0:48:190:48:23

don't accept because you know you

cannot manage to deliver that, you

0:48:230:48:29

get less additional money, so the

additional funding is supporting

0:48:290:48:35

trusts which do already reasonably

well. There is a serious problem

0:48:350:48:41

with the trust and additional

funding is not so readily available,

0:48:410:48:45

is that not a topsy-turvy way of

dealing with it, what tools you have

0:48:450:48:52

for dealing with challenged trusts

with deficits which take several

0:48:520:48:57

years to resolve to make sure they

do that without being further

0:48:570:49:00

penalised because of decisions out

with the control of the current

0:49:000:49:05

management or patients, large trusts

which had been brought her in

0:49:050:49:07

interesting ways are what I am

thinking of.

There are several

0:49:070:49:11

different elements so I will pixel

Villa Park because it's quite a

0:49:110:49:14

complex question so I hope I don't

forget but I'm sure you'll come back

0:49:140:49:22

if I do, the most challenged trusts

do need support across a period of

0:49:220:49:26

time which is why on occasions and I

vow to do it in my tenure, I started

0:49:260:49:30

on this role on the 4th of December,

we had to move into financial

0:49:300:49:35

special measures regime. As

regarding the sustainability and

0:49:350:49:38

transformation fund, and the

underlying position of trust I think

0:49:380:49:44

they can be different things. The

control totals have proven their

0:49:440:49:51

worth as part of the financial reset

my predecessor was part of

0:49:510:49:56

overseeing and I am convinced where

they contribute to the NHS improving

0:49:560:50:02

the NHS provider sector in proving

its financial sector during 16-17 to

0:50:020:50:08

the extent commented on by the

committee. I think it is fair to say

0:50:080:50:13

that because of the sustainability

and transformation fund which needs

0:50:130:50:19

to be acquired there are different

from the underlying position of our

0:50:190:50:24

most challenged trusts and the

imbalance between the income and

0:50:240:50:26

expenditure. Those things are

different. The remedy is necessarily

0:50:260:50:31

there which needs to be different

and it's fair to say there are more

0:50:310:50:37

challenged trusts which will need

support over a longer period of time

0:50:370:50:40

than the quarter by quarter approach

the sustainability and

0:50:400:50:43

transformation fund, on the point of

control totals they were set on a

0:50:430:50:50

consistent basis across the NHS in

2016-17 and were meant to create an

0:50:500:50:57

incentive for incremental

improvement. A number of trusts have

0:50:570:51:00

control totals which are deficits

and that reflects the fact that you

0:51:000:51:05

rightly highlighted a minute ago

that trusts with the biggest

0:51:050:51:08

problems will take a number of years

to bring finances back. It would be

0:51:080:51:13

unrealistic to set a success

criterion of moving into surplus in

0:51:130:51:17

any of time so they reflect

intermittent improvement which takes

0:51:170:51:22

me to the third part of your

question which is whether the

0:51:220:51:27

financially challenged trusts

remains of them all in all its parts

0:51:270:51:32

and while I am convinced genuinely

convinced that in 16-17, 17-18 and

0:51:320:51:40

looking into 18-19 the resume of

control totals, the sustainability

0:51:400:51:44

and support funds and the package of

measures that we help trusts with is

0:51:440:51:51

right, I think in some areas and I

would perhaps highlight the rate of

0:51:510:51:55

interest paid on loans for cash

support to our most challenged

0:51:550:52:01

organisations which is currently

running at 6% as opposed to the 1.5%

0:52:010:52:06

which is levied on other

organisations that are in the

0:52:060:52:10

capability of accepting their

control totals, I do think going

0:52:100:52:14

forward we should have a look at

that as part of a financial review.

0:52:140:52:17

I think there's a general support,

speaking on behalf of my colleagues,

0:52:170:52:21

that looking ahead the review that.

We agree you should reward financial

0:52:210:52:27

mismanagement but 6% seems a high

penalty.

I agree with everything

0:52:270:52:35

which has been said, just to be

clear, getting into financial

0:52:350:52:39

special measures is not how big is

your deficits, it is about

0:52:390:52:44

management and the trusts we are

most concerned about are the ones

0:52:440:52:48

where you see rapidly rising

projected deficits because that

0:52:480:52:54

cannot be about underlying

structural questions, if you have an

0:52:540:52:56

underlying structural question you

should know what it is and be able

0:52:560:52:59

to cost it. It's those ones where

you see the deficit projection

0:52:590:53:03

changing month-to-month that we have

concerns about. We agree with Ian

0:53:030:53:09

that the regime which was put in has

achieved a lot and we also agree

0:53:090:53:15

that going forward there were

elements including the interest rate

0:53:150:53:18

question that we will want to review

as to whether that is the right

0:53:180:53:25

mechanism going forward. As the

report sets out we are committed to

0:53:250:53:33

the STF is a funding mechanism for

the next financial year and we will

0:53:330:53:36

have a choice about whether we

continue with that regime or whether

0:53:360:53:40

we use that money in a different way

and now is right time to reviewing

0:53:400:53:44

that.

It's bit like the current

trends with kids for slime, it moves

0:53:440:53:52

would have it is needed any good the

way. It doesn't stick. THEY TALK

0:53:520:54:02

OVER EACH OTHER This is supposed to

transform services which were used

0:54:020:54:11

to stop, to fill gaps.

Explicitly we

used the resources to tackle the big

0:54:110:54:20

challenge we had in 15-16 around

where the provider deficit had got

0:54:200:54:26

too and it was a mechanism that was

designed to incentivise exactly what

0:54:260:54:30

happened which was for those

deficits to come down. The question

0:54:300:54:34

as I say is whether that regime

which achieved an enormous amount

0:54:340:54:41

across the last financial year and

in this financial year is exactly

0:54:410:54:44

the right regime going forward is a

question

INAUDIBLE

0:54:440:54:48

.

The report itself from NAO and I

caught the sharp decline in

0:54:480:54:56

financial position is halted.

Incentivise the most trusts to

0:54:560:55:03

improve financial discipline. We

agree.

But whether it transformed it

0:55:030:55:08

is another matter.

As NAO also see

effective transformation takes time.

0:55:080:55:15

That is the point. I will bring in

Bridget Philipson.

On that point, in

0:55:150:55:23

terms of how the funding is being

used, the fact that 40% of that

0:55:230:55:28

funding is being used to create or

increase surplus in trusts, is that

0:55:280:55:32

effective use what happens at the

end of the

0:55:320:55:42

net off deficits against surpluses.

In terms of system level stability

0:55:440:55:49

in makes no difference at all.

That

is not what the patient will be

0:55:490:55:55

concerned about.

The question which

is one of the things we will want to

0:55:550:56:02

look at is what behaviours you are

creating at trust level. To be

0:56:020:56:08

exactly in line with the NAO report

and court, we do think the way we

0:56:080:56:19

use STF did incentivise greater

financial rigour both across people

0:56:190:56:21

who were in deficit and across

people who were in surplus but could

0:56:210:56:25

have been in greater surplus. We

think the evidence does support

0:56:250:56:29

that. I think this is the question

Ian was raising, whether that

0:56:290:56:34

remains the mechanism to incentivise

the right behaviours at trust level

0:56:340:56:39

is something.

I think NAO as is so

often the case but not always the

0:56:390:56:46

case got the recommendation is

absolutely right on this point. They

0:56:460:56:49

talk about the need for more...

I

don't think they will be swayed by

0:56:490:56:54

this flattery!

LAUGHTER

They talk about system incentives

0:56:540:57:03

and working, and the opportunity to

think about the deployment of the

0:57:030:57:10

STF funding in 2019-20 represents

such an opportunity which we will

0:57:100:57:15

take. But to 2018-19 we got a very

clear set of rules and allocations

0:57:150:57:23

set out for the sector as a whole

and that which we are putting out

0:57:230:57:28

emphasis on from the year ahead.

A

couple of things, you're not going

0:57:280:57:35

to make your savings target in this

year are you? I think that is right.

0:57:350:57:42

The forecast outturn is for 3.3

billion against, I'll try remember

0:57:420:57:47

if it was 3.8, 3.8 billion. There is

an underachievement this year.

0:57:470:57:56

Another thing, I'm not saying that's

necessarily bad but you need to be

0:57:560:58:04

realistic about what balance of

recovering and non-recovering will

0:58:040:58:10

likely turn out to be the case,

which you don't know at the moment I

0:58:100:58:14

think I am right in saying. And if I

might finish, I also think it's

0:58:140:58:20

worthwhile asking a question as we

come to the end of this programme

0:58:200:58:26

about how much damage they have

done. In other words particularly

0:58:260:58:31

the use of capital funding on the

recurrent case, admittedly those

0:58:310:58:36

capital findings may have been

slightly more than were strictly

0:58:360:58:40

required in the first place but

still there must have been quite

0:58:400:58:45

long periods of deferment of capital

spend. Are you going to take stock

0:58:450:58:52

of that? It might have been

necessary to do it but are you going

0:58:520:58:57

to take stock of that and understand

where that leaves you and what you

0:58:570:59:00

may need to do as a result?

0:59:000:59:02

Just on that last point about

capital, the report refers to the

0:59:070:59:17

review of underemployment is that is

a Robert Naylor led, which set out

0:59:170:59:25

an ambition for around 10 billion of

capital investment in the NHS over a

0:59:250:59:31

period of time. And that 10 billion

split roughly into 50-50 four

0:59:310:59:39

transformation of services and

picking up a backlog maintenance in

0:59:390:59:49

the system. The Chancellor set out

in the autumn budget the third share

0:59:490:59:55

as it were to come from direct

investment by government and we're

0:59:551:00:02

working through with individual

organisations how we can increase

1:00:021:00:08

that in particular. We are

undertaking a review of capital

1:00:081:00:17

flows and the Chancellor set out

briefly in his budget announcement

1:00:171:00:23

in particular to understand how at a

local level the decisions around

1:00:231:00:29

whether to maintain or use money

elsewhere to support day-to-day

1:00:291:00:39

operations, how they'll is just how

those decisions are taken and how we

1:00:391:00:46

look at the wave funding flows the

system and the incentives to guard

1:00:461:00:50

against that in the future. Work

just starting now.

Interesting it is

1:00:501:00:58

starting now when you have had a

couple of years Reading capital fund

1:00:581:01:03

revenues so we will be following

that as you will be not surprised to

1:01:031:01:06

hear.

Just returning to the

sustainability and transformation

1:01:061:01:12

funding, as was, would it be better

for trusts to have a greater degree

1:01:121:01:16

of security and certainty in the

system, rather than coming to quite

1:01:161:01:20

a late stage of the year and getting

to just, getting decisions as to

1:01:201:01:24

whether they are going to have an

ability to sort things out in the

1:01:241:01:30

long-term?

The way the regime works

is that those are set out

1:01:301:01:36

prospectively at the start of the

year and then it depends on how well

1:01:361:01:40

the trust us as to what we earn. I

don't think it is quite as you

1:01:401:01:44

describe it.

They could plan better

for the longer term if they had the

1:01:441:01:49

greater degree of certainty about

money they were to receive. You

1:01:491:01:54

would agree a controlled total, you

meet it and you get money for

1:01:541:01:57

meeting it and a bonus potentially

on top of that, is that an effective

1:01:571:02:01

means of funding services in the

medium to long-term?

In the medium

1:02:011:02:06

to long-term, we are looking to move

more of the funding of the health

1:02:061:02:09

service a population basis where

different organisations within an

1:02:091:02:13

area then able to plan together for

the kind of why don't more profound

1:02:131:02:18

changes that they think are needed

to join up parts of their primary

1:02:181:02:24

community and hospital services. And

that is what is happening in the

1:02:241:02:29

first of the integrated care systems

across the country covering around

1:02:291:02:32

10 million people across England and

they are taking shared

1:02:321:02:35

responsibility for their STF and a

system controlled total, that is the

1:02:351:02:41

plan. And so that is incrementally

the direction we absolutely do want

1:02:411:02:46

to move on.

Will that include a

review of tariffs, in terms of

1:02:461:02:51

looking at procedures and how they

are funded? So where trusts would be

1:02:511:02:55

receiving less than the cost of the

procedure?

We have a two-year tariff

1:02:551:02:59

place and we will have decisions to

make about the tariff in 2019-20.

1:02:591:03:10

But at the same time, we are also

being pushed by many across the NHS

1:03:101:03:15

to make it easier to move money

around between different services

1:03:151:03:17

rather than the click of the

turnstile payment system which was

1:03:171:03:22

more orientated towards the problems

we were dealing with and having to

1:03:221:03:28

expand elective surgery to cut long

waits for care. I do think there are

1:03:281:03:32

a set of things going on in terms of

the urgent emergency care pathway

1:03:321:03:36

that have to be looked at. There is

a case for saying that some of the

1:03:361:03:39

funding implied in the

sustainability and transformation

1:03:391:03:46

funding, the STF, is probably

reflecting the underlying cost of

1:03:461:03:50

emergency care, that is the basis on

which it is allocated we need to

1:03:501:03:53

factor in. Equally, there have been

big shifts in the clinical pathways

1:03:531:03:57

for emergency care and at the

moment, the tariff system does not

1:03:571:04:01

adequately reflect those.

Specifically, as Ian said, the

1:04:011:04:06

headline increases we see in

emergency admissions, non-elective

1:04:061:04:09

admissions, if you look over the

last, over this year, to date, the

1:04:091:04:16

number of emergency admissions that

require a stay in hospital have been

1:04:161:04:21

going up by just over 1%, the number

of so-called emergency admissions

1:04:211:04:25

dealt with on the same day, half of

those in less than four hours have

1:04:251:04:31

gone up between 6-7%. Call them and

add emergency admission, they are a

1:04:311:04:39

new type of care and we have to make

sure the system funds efficient care

1:04:391:04:45

delivery for those kinds of

pathways.

So you are planning to

1:04:451:04:49

change the tariff system, and when

will trusts know the new tariff

1:04:491:04:54

system?

During the course of this

year, 18-19, we will set out

1:04:541:04:58

proposals together and we will

consult on them.

More specific than

1:04:581:05:05

that.

In the autumn.

We need to give

the NHS certainty.

Absolutely. So it

1:05:051:05:13

is the autumn?

In particular, it...

I'm just going to remind witnesses

1:05:131:05:21

about the time. If you are quick

answer in our quick questions, we

1:05:211:05:27

might be out of here by six o'clock.

The future of £109 billion of NHS

1:05:271:05:33

funding is not a quick question.

No,

absolutely, but if you can set the

1:05:331:05:38

questions, we can ask the questions

quickly and we have a chant of at

1:05:381:05:41

least scratching the surface.

At the

risk of delaying hearing, this is a

1:05:411:05:46

hugely complex area. The law

requires quite a lot and we comply

1:05:461:05:55

with that. And that builds a level

of uncertainty into trust finances

1:05:551:05:59

by the nature of it. We do

understand that. There are things we

1:05:591:06:04

can do which Simon and Ian described

which create more certainty, but it

1:06:041:06:08

does not answer the entire original

question. We will for the

1:06:081:06:15

foreseeable future be running a

Commission provide a system which

1:06:151:06:18

has some of those uncertainties in

it.

There are certainly changes

1:06:181:06:24

afoot under the radar.

Is the

current funding system of opaque and

1:06:241:06:31

often unfathomable even for people

who love Witney NHS for a long time

1:06:311:06:35

and who currently work in the NHS? A

lack of certainty and you miss your

1:06:351:06:45

controlled total, what happens?

In

terms of the refresh on the guidance

1:06:451:06:50

we have set out, Ian and I for next

year, we have been very clear and

1:06:501:06:56

transparent about what we are asking

of the NHS.

I don't think trusts

1:06:561:07:02

would accept there is transparency.

You have picked up uncertainty about

1:07:021:07:10

the 2018-19 arrangements.

I am

talking about what has gone on

1:07:101:07:13

previously, you agree you are

uncertain as to what you will

1:07:131:07:20

receive, if you get a bonus on top

of that. That seems a rather

1:07:201:07:24

perverse way.

We could have just run

that STF to the normal commissioning

1:07:241:07:29

system. The judgment we took was to

give NHS improvement weavers over

1:07:291:07:35

that 1.8 billion so as to give them

the ability to have those trust

1:07:351:07:40

specific conversations and that has

been sent via improved financial

1:07:401:07:49

discipline. As Ian and I have also

said, we don't think that is the

1:07:491:07:53

mechanism in perpetuity that we

would want to continue.

As the

1:07:531:07:58

report sets out, the combined income

for trusts in 2016-2017 is just over

1:07:581:08:06

£8 billion. Of the 1.8 billion of

STF, one quickly was paid out

1:08:061:08:11

essentially as planned and the

uncertainty element was around half

1:08:111:08:15

a billion -- one quarter. So half a

billion is a degree of risk which

1:08:151:08:25

should not be too difficult to

manage.

1:08:251:08:28

Why has the fund fails to improve

performance of acute services?

1:08:281:08:33

Why did everybody not only 30%... Is

that what you mean?

It is

1:08:331:08:40

sustaining, but not really

transforming.

Yes, I agree with

1:08:401:08:44

that.

You talked earlier about the

NHS...

As I said before, we took a

1:08:441:09:01

very explicit decision in July 2016

that the level of deficits and

1:09:011:09:08

financial control that we had seen

in 2015-2016 was a big problem. And

1:09:081:09:15

that we would focus our efforts on

that. And we did it very explicitly.

1:09:151:09:21

So did we emphasise reintroducing

financial rigour and stabilising

1:09:211:09:30

trust finances? Yes, we did. Does

that have a consequence for some of

1:09:301:09:35

the transformation things? Quite

clearly, whenever we do these

1:09:351:09:39

things, we have that consequence.

And we did that...

Did you

1:09:391:09:44

overpromise on the transformation?

I

might leave others to comment. But

1:09:441:09:51

as the report notes, quite a lot of

progress has been made through SDP

1:09:511:09:57

is, variable.

That does not mean

transformation. That is what we were

1:09:571:10:03

there to do. And Simon will add in

some of our leading areas, there are

1:10:031:10:13

some genuinely original approaches.

We do not see that across the

1:10:131:10:16

country as a whole which is where we

need to get to. But well we took

1:10:161:10:22

some very explicit decisions to

prioritise stabilisation, there was

1:10:221:10:29

also quite a lot going on on the

transformation.

1:10:291:10:36

We will move on to that.

You talked

about the contribution the NHS have

1:10:361:10:42

made towards the UK targets by way

of spending reduction, but that

1:10:421:10:47

comes to the point that all of this

comes at a cost, not simply a

1:10:471:10:52

financial cost, but the impact on

patient care, the impact on the A&E

1:10:521:10:58

waiting, the length of time people

will be on waiting lists, the

1:10:581:11:03

ambulance backlogs, the time it

takes to see your GP. The NHS has

1:11:031:11:08

had to make the contributions, but

that has not just been at a

1:11:081:11:11

financial cost service, it has been

at a direct cost to patients and

1:11:111:11:15

those who need the NHS.

Well, we discuss this last January.

1:11:151:11:21

I think those comments, we aired

that issue and I have been very

1:11:211:11:29

upfront about that point since then.

I think Sir Angus in his comment on

1:11:291:11:37

this report, his press release, made

a wise statement when he said, the

1:11:371:11:43

public purse may be better served by

a long-term funding settlement that

1:11:431:11:47

provides a stable platform for

sustained improvement. I think that

1:11:471:11:50

is why the Health Secretary also has

been arguing for a funding

1:11:501:11:55

settlement.

On the quality side, certainly what

1:11:551:12:10

the CTC has found is not a drop in

the quality of service provided by

1:12:101:12:13

the NHS. And ratings have been going

in the other direction. And the

1:12:131:12:22

impression on of us would want to

leave if anyone is that the basic

1:12:221:12:25

quality of care has in any way been

sacrificed, there is a huge quantity

1:12:251:12:31

of effort into that and the NHS has

responded extremely well. I would

1:12:311:12:36

not deny of course there have been

consequences around some of the

1:12:361:12:40

targets, but in terms of quality of

care...

The access targets are

1:12:401:12:49

clearly under pressure and

important, but when it comes to the

1:12:491:12:52

quality of cancer care, 7,000 more

people are surviving cancer now than

1:12:521:12:57

would have been the case three years

ago. When it comes to mental health

1:12:571:13:01

services, we have got a lot of work

ahead of us, but access and the

1:13:011:13:05

range of services are clearly

improving in many important areas.

1:13:051:13:09

When it comes to major trauma, the

fact is you are 25% more likely to

1:13:091:13:13

survive if you are knocked from your

motorbike and taken to a A&E

1:13:131:13:20

department now than would have been

the case five years ago and we see

1:13:201:13:24

many other examples of that.

Clinical quality of care has been

1:13:241:13:27

and it is improving.

And as we have

repeatedly seen for different

1:13:271:13:31

service areas, there is also a

growing demand in all those areas

1:13:311:13:34

and that is one of the challenges.

Before we move on, I just wanted to

1:13:341:13:40

asked about this issue of the loans,

the high interest rate for the

1:13:401:13:46

struggling trusts, is that any real

prospect of those paying back the

1:13:461:13:51

loan, have you a secret plan to

convert it to a

1:13:511:13:57

So, the 6% rate which we have

touched on already, as part of the

1:13:581:14:01

finance reset moment in 2016.

The

yes, yes...

Way in which it works,

1:14:011:14:10

trusts in special financial

measures...

The question was, you

1:14:101:14:13

think those that... Will they

realistically be able to pay back,

1:14:131:14:17

the struggling ones, will they

realistically be able to pay back?

1:14:171:14:21

Two trusts have exited financial

special measures, refinancing at a

1:14:211:14:26

lower rate as part of the incentive

to sign up to a recovery plan, and

1:14:261:14:30

then deliver it. Of the 12 trusts

currently in financial special

1:14:301:14:34

measures, eight who have shown at

least three months worth of

1:14:341:14:39

improvement against the plan are now

being financed at a lower rate, and

1:14:391:14:43

only four still attracting the 6%

rate for new borrowing.

Meat back as

1:14:431:14:53

as we have said, it is something we

will review.

Is it working?

If we

1:14:531:15:05

look at the amount of distressed

loans given to some of our largest

1:15:051:15:08

trusts, in the hundreds of millions

of pounds, at that level, as part of

1:15:081:15:14

a look at this that we have

committed to, it would be absolutely

1:15:141:15:17

right to consider the rate of

interest and the nature of the

1:15:171:15:20

financing. When trusts effectively

need the financing so that they can

1:15:201:15:24

pay staff and pay their bills.

Yes.

I think it is a legitimate question

1:15:241:15:31

about the ability to repay the

principal as well as the interest

1:15:311:15:33

rate, I don't think people enter

into those loans without cause, and

1:15:331:15:38

I think we need to have that

conversation that we all committed

1:15:381:15:40

to doing.

This only affects at trust

level and system level, the amount

1:15:401:15:49

we raise in interest... It is

robbing Peter to pay Paul.

It was

1:15:491:15:58

introduced as part of that package,

to try to create the right incentive

1:15:581:16:04

for individual trusts.

It seems to

be working, except those...

1:16:041:16:08

On the same point of robbing Peter

to table, will you have trusts --

1:16:101:16:17

where you have trusts not meeting

their transfer targets, they are

1:16:171:16:22

fined by the clinical commissioning

groups, in the case of my trust,

1:16:221:16:25

which is in financial special

measures, that will add almost 10

1:16:251:16:29

million on to the 60 million

deficit. Given that, how do you see

1:16:291:16:34

finding those sort of hospitals as

being either transformative or

1:16:341:16:37

sustainable?

That is why we are not

doing that.

You are.

We have said

1:16:371:16:45

that, the bulk of fines were waved,

this year, for trusts who are in

1:16:451:16:54

receipt of the exceptional control

total, and next year from the 1st of

1:16:541:16:57

April, are essentially all, except

for a very small number of items

1:16:571:17:03

which don't include the ones you

mentioned, they will be waived for

1:17:031:17:07

trusts in receipt, who signed up for

control totals, so that is the fact

1:17:071:17:12

of the matter.

How has that been

communicated to the clinical

1:17:121:17:18

committee group? North Staffordshire

have budgeted in their budget for

1:17:181:17:23

next year, to receive those fines,

as part of... For the missed

1:17:231:17:30

Accident and Emergency...

Well

then... Well then, they need to

1:17:301:17:35

study the 18/19 refreshed planning

guidance and indeed, the draft

1:17:351:17:41

consultation on the amendments to

the NHS standard contract, both of

1:17:411:17:45

which make the point that I have

just set out clear.

Excellent, thank

1:17:451:17:49

you.

1:17:491:17:50

It seems to me that key to both

sustainability and transformation of

1:17:551:18:00

the NHS is the success of the

integrated care model, now this

1:18:001:18:04

involves a whole load of people

working together, GPs, pharmacies,

1:18:041:18:10

community beds, acute services,

social care services. When we tried

1:18:101:18:15

this in West Sussex, western Sussex

Hospital trust, only one of those

1:18:151:18:17

parties signed up to move to an

integrated care model. So the change

1:18:171:18:24

management of these organisations

working together is massive. And

1:18:241:18:30

these are organisations that are not

known for dealing with change

1:18:301:18:33

management challenges in the best

way, so what mechanisms do you have

1:18:331:18:37

to make sure that that key to the

success is one that you can use.

1:18:371:18:42

I think it is absolutely right that

we need to integrate services, that

1:18:481:18:52

is something that is increasingly

recognised right across the NHS. We

1:18:521:18:56

have our role to play in helping

that happen, so I think it is

1:18:561:19:02

absolutely right that working with

colleagues in NHS England, we have a

1:19:021:19:05

system control totals with the ten

integrated care systems that are

1:19:051:19:10

likely looking to go live on the 1st

of April, and that will give them an

1:19:101:19:16

opportunity to respond to new models

of patient care, with new financial

1:19:161:19:23

incentives, incentive to collaborate

and work together, rather than to

1:19:231:19:26

compete and protect different

budgets. I think that will be

1:19:261:19:31

incredibly helpful. It is

interesting that in addition to

1:19:311:19:34

those ten, there is enthusiasm from

across the country about joining in

1:19:341:19:40

and participating in integrated care

systems going forward. With

1:19:401:19:46

colleagues again in NHS England, we

have invited patches of hospitals,

1:19:461:19:52

community services, mental health

providers and commissioners that

1:19:521:19:54

want to go on this important

integration journey to apply to us,

1:19:541:19:59

and then we will do what we can to

support them in that. I think it is

1:19:591:20:02

also fair to say that we are looking

at the support that NHS England and

1:20:021:20:09

NHS improvement give because it is

really important that as the

1:20:091:20:14

regulators of our respective sectors

that we are working together to

1:20:141:20:17

support integrated care.

We will

come onto this later, something we

1:20:171:20:21

want to talk about is the role of

the regulators and how you integrate

1:20:211:20:26

nationally, that is certainly an

issue. Going back to Bridget

1:20:261:20:29

Phillips, and then some of these

issues. More broadly, how do we

1:20:291:20:33

shift the NHS from the short-term

survival we are talking about,

1:20:331:20:38

getting through financially, to some

of the longer term transformation

1:20:381:20:40

that we need to see? How do we move

away from the short-term is, to some

1:20:401:20:48

long-term challenges that we face?

-- short termism.

We need to do both

1:20:481:20:56

at once, the short-term needs

attending to as much as future

1:20:561:21:00

proofing and to be here and now

about it, the amount of effort that

1:21:001:21:03

has been brilliantly going on across

the NHS even over the course of the

1:21:031:21:09

last week with the appalling weather

in different parts of the country,

1:21:091:21:12

we have seen that, I publicly

praised staff in Sunderland on

1:21:121:21:17

Friday, for having come in and

stayed overnight in the hospital to

1:21:171:21:20

be there for the next day shifts,

and we have had issues with getting

1:21:201:21:24

staff into work, volunteers helping,

the army, the health services. The

1:21:241:21:30

health service has performed very

well indeed under these trying

1:21:301:21:33

circumstances, that does not happen

by accident, that is the consequence

1:21:331:21:36

of a lot of focus by ward nurse

managers, clinical directors,

1:21:361:21:41

hospital Chief Executives, and...

We

acknowledge that.

I don't want to

1:21:411:21:48

decry the operational realities.

How

can these longer-term challenges be

1:21:481:21:54

used to address the short-term

challenges, we talk about moving

1:21:541:21:58

care out of hospital into the

community, achieving it is far more

1:21:581:22:02

difficult, will it deliver savings,

what are the savings that can be

1:22:021:22:06

delivered, are they sufficient?

There are some tensions and

1:22:061:22:14

trade-offs, of course there are, but

in those parts of the country that

1:22:141:22:17

have gone furthest on the service

redesign and integration agenda, we

1:22:171:22:22

see early signs that it is helping

moderate pressure on hospitals, I

1:22:221:22:27

think we will have a discussion

facilitated by the NA oh, with

1:22:271:22:32

yourself, on this topic, in the not

too distant future, on emergency

1:22:321:22:36

admissions pressure, and that has

shown some of the data for the early

1:22:361:22:44

Vanguard programme. -- NAO. In no

sense is this mission accomplished.

1:22:441:22:48

Part of the country are showing what

it looks like but big changes will

1:22:481:22:53

happen everywhere, one of the things

is while supporting individual GP

1:22:531:22:57

practices we must have much more

networking between practices on a 30

1:22:571:23:03

to 50,000 population basis, more

support into care homes and

1:23:031:23:07

Sunderland and the north-east have

done a good job in showing what that

1:23:071:23:09

looks like, we will be expanding the

funding for clinical pharmacist in

1:23:091:23:15

care homes, to help reduce the

emergency hospitalisation rate for

1:23:151:23:18

people there. We have a big

programme underway to join up what

1:23:181:23:23

is happening in community mental

health services and community

1:23:231:23:26

physical health services. At a

national level, we know what the

1:23:261:23:30

shape of this looks like but in

practice, it is going to be

1:23:301:23:36

different in West Suffolk than it is

in Sunderland, but that is what the

1:23:361:23:41

IACS, integrated care system, are

all about, driving the change with

1:23:411:23:45

hearts and minds of local people and

clinicians in each part of the

1:23:451:23:49

country. -- ICS.

Where do managers

grow more quickly than funding will

1:23:491:23:54

allow, what action can be taken to

manage some of the demand?

For next

1:23:541:23:58

year, we said that certain things

cannot be used as a balancing item,

1:23:581:24:04

NHS England board publicly in

November and then again in February

1:24:041:24:10

said that looking for Rafael would

do next year, we are ranked, a

1:24:101:24:20

series of reality is that the NHS

had to get right. First, acknowledge

1:24:201:24:25

that services are being delivered

which are in a sense and funded, and

1:24:251:24:30

that is why the extra money for next

year, we have allocated just over £1

1:24:301:24:35

billion to both the trust provider

sustainability fund and the

1:24:351:24:39

equivalent fund deficit CCG 's.

Second, we said that funding

1:24:391:24:47

realistic levels of activity growth

next year is going to be important,

1:24:471:24:51

and we will kick the tires more

vigorously between NHS England and

1:24:511:24:57

NHS improvement on what those

capacity plans look like in every

1:24:571:25:01

part of the country. Thirdly, we

said, we did not see where there

1:25:011:25:06

were financial pressures they should

be balanced on a bag of mental

1:25:061:25:09

health all cancer care of primary

care services, and went further and

1:25:091:25:12

said that we were making it a

requirement that every CCG next year

1:25:121:25:16

increases mental health spending

faster than its overall funding

1:25:161:25:21

growth, and that will be subject to

independent external audit.

1:25:211:25:26

Fourthly, we are looking to expand

the amount of routine surgery that

1:25:261:25:32

is being funded in the NHS next

year, and lastly, we said that the

1:25:321:25:37

much deserved pay rises for NHS

staff would have to be funded

1:25:371:25:42

separately, the government has

accepted that, rather than being the

1:25:421:25:44

first call going in next year. All

of that is the context within which

1:25:441:25:51

people are committed making those

judgments.

Funding routine

1:25:511:25:54

surgeries, you are making a

statement that... Some of... Clean

1:25:541:25:59

operation, hip replacements, private

hospitals provide that because it is

1:25:591:26:03

an easy thing for them to provide,

funded by the NHS, are you saying

1:26:031:26:07

those will go back into provide bulk

income for some NHS hospitals?

What

1:26:071:26:12

we're saying is, as a result of

where we ended up in discussions

1:26:121:26:18

with the Department of Health and

other branches of government, we are

1:26:181:26:25

able to have funding expectation

that we will have a bigger increase

1:26:251:26:30

in operations next year, than we had

this year, as it happens, we expect

1:26:301:26:35

that it is likely that the majority

of those will be delivered by NHS

1:26:351:26:39

hospitals... But we are not changing

the policy. The point is, the amount

1:26:391:26:45

of, the funding increase for

elective care should be greater next

1:26:451:26:49

year than this year.

More operations

taking place?

At a faster rate of

1:26:491:26:54

growth.

What impact do you think the

changes may have on NHS finances,

1:26:541:27:02

have you got any up-to-date

assessment on that?

The fifth

1:27:021:27:06

principle I set out, which I think

the Chancellor had accepted in his

1:27:061:27:10

budget at the end of November,

November 22, was that in exchange

1:27:101:27:19

for reforms around the agenda for

change group, government rather than

1:27:191:27:23

the NHS would pick up the tab for

the cost. That is what the

1:27:231:27:29

government has said.

Finally, in

terms of the great role that you

1:27:291:27:37

anticipate for primary and community

care, and so on. How likely is it

1:27:371:27:43

that the savings you want to make

can be achieved without additional

1:27:431:27:47

resource in, they talk a lot in the

report that change and

1:27:471:27:51

transformation to deliver some of

those savings in the short-term can

1:27:511:27:54

cost money. We all want these

savings to happen, both in terms of

1:27:541:28:01

more effective care but also more

money wasted, but how do we get it

1:28:011:28:05

right so that we deliver the savings

which we want to say?

I think there

1:28:051:28:10

is a genuine pressure here, and it

is right to say it, and we have

1:28:101:28:15

talked about it before, the fact is

that under, given the aggregate

1:28:151:28:19

funding available to us, the

pragmatic response is that we have

1:28:191:28:27

two support the services that are

needed in the here and now. -- we

1:28:271:28:30

have to support. That means less

available than might have been

1:28:301:28:37

desired for extending some of these

wider changes, and just to give you

1:28:371:28:42

a figure for that, the men that had

been spent on the vanguards, the

1:28:421:28:48

place is doing the care redesign,

each year of their existence, would

1:28:481:28:53

have been less than one tenth of 1%

of the NHS budget. It has not been a

1:28:531:28:57

big investment.

1:28:571:28:59

Should they be planning for reduced

or growing admissions? We want to

1:29:061:29:11

reduce admissions in some cases but

we are seeing increasing levels of

1:29:111:29:15

admission. Well that takers?

Our

central planning assumption for

1:29:151:29:20

England for next year is that the

default all the conversation starter

1:29:201:29:25

in the local plan is entered into

its growth of non-elective

1:29:251:29:31

admissions of 2.3%. That comes with

the caveat we have got this gap

1:29:311:29:39

opening up between the emergencies

versus the overnight emergency

1:29:391:29:46

admissions growing that five, six,

7%. So we have to understand the

1:29:461:29:52

dynamics of that in each part of the

country. But realistically, with the

1:29:521:29:56

growing in ageing population, with

pressures we know about in social

1:29:561:30:02

care, with GP numbers down and not

up, we should be planning on the

1:30:021:30:07

basis that going to continue to be

pressures in the hospital part of

1:30:071:30:11

the system that needs to be

resourced.

Which then continues the

1:30:111:30:17

cycle of A&E problems, needing to

put money at the front end because

1:30:171:30:22

these problems seem to kind of

continue on a cycle.

Yes, except

1:30:221:30:27

that compared with France or

Germany, we do a superb job of

1:30:271:30:33

looking after people at home.

Emergency hospitalisation rates for

1:30:331:30:40

many common conditions is lower than

that of other comparable countries.

1:30:401:30:45

Your chance of being admitted to

hospital as an emergency patient is

1:30:451:30:50

against being looked after at home

by your GP, your chance has gone

1:30:501:30:55

down by 12% over the last five

years. So there is a lot that is

1:30:551:31:00

working well, notwithstanding those

underlying long-term pressures you

1:31:001:31:03

rightly point to.

We are on a journey and I am not

1:31:031:31:12

quite sure where we are going. We

started out the concept of STPs.

1:31:121:31:17

Perhaps we should stay in -- we

should say that is a sustainable

1:31:171:31:27

transport -- transport plan.

That

morphed into something which is not

1:31:271:31:31

a fixed hard plan but a staging

post. Now we have got these very

1:31:311:31:37

different accountable care systems

and the totally devolved systems.

1:31:371:31:41

You say a number of these, ten, they

will go live in April this year. So

1:31:411:31:46

I am totally confused, what is the

difference? I understood we have

1:31:461:31:50

STPs. And we have a number of

different bodies going in different

1:31:501:31:57

directions, what is the endgame,

what are they going to look like in

1:31:571:32:01

April 2018?

If you go back three or

four years, the landscape locally

1:32:011:32:08

across the NHS was of individual

hospital trusts, individual

1:32:081:32:12

community trust and mental health

trusts and GP practices ploughing

1:32:121:32:16

their own 40 and the expectation was

the combined effect of all that

1:32:161:32:22

ploughing was a beautiful field.

What we have now done is to say, can

1:32:221:32:27

we gather round and discuss the

crops we need to grow for the people

1:32:271:32:33

in this area? I'm going to stop now!

We all know this is about

1:32:331:32:44

integration. What is it going to

look like?

What has changed is, we

1:32:441:32:50

have won a big argument about the

clinical logic, the patient budget,

1:32:501:32:54

the economic logic for taking a

holistic population view of health

1:32:541:32:59

in a given geography,

countercultural to over two decades

1:32:591:33:04

worth of how the health service has

worked. What STPs were, they were

1:33:041:33:09

the Marc Warren version of getting

people round a table to have the

1:33:091:33:12

conversation. -- they were the

marketable version. And the new

1:33:121:33:20

partnership arrangements across

health and social governments are

1:33:201:33:23

laying the foundations for more

strategic systemwide planning and

1:33:231:33:27

delivery. That is what has happened

everywhere, the 44. For ten parts of

1:33:271:33:33

the country covering 10 million

people, they are more intensively

1:33:331:33:36

saying, we are going to show the

system financial incentives, we are

1:33:361:33:42

going to get on with the process of

care integration, the health

1:33:421:33:48

committee...

What they actually

doing?

I invite this committee to do

1:33:481:33:54

what the Health Select Committee did

within the last fortnight, to spend

1:33:541:33:58

a day in South Yorkshire talking to

patients and local authorities,

1:33:581:34:04

talking to GPs and hospital doctors

and finding out what it means in

1:34:041:34:08

Doncaster, what it means in

Sheffield. And that would make it

1:34:081:34:11

very practical for you.

Absolutely

right, but it is very difficult to

1:34:111:34:16

find the time to invest in all of

that. So I am asking you as you

1:34:161:34:20

clearly have the time because that

is your job to look at this, my

1:34:201:34:26

concern is that the concept of the

sustainable transformation

1:34:261:34:29

partnerships has become just a

bureaucracy. Instead of trying to

1:34:291:34:32

simplify it, you have effectively

got a number of bits and you are

1:34:321:34:35

trying to force them together, but

you will not have one budget and one

1:34:351:34:40

set of accountability is because

they still have that accountability

1:34:401:34:43

to your organisation.

And with

regards to local authorities. It

1:34:431:34:48

does not change the law, they still

have individual accountability is as

1:34:481:34:52

you describe. Over and above that,

they have a shared and common

1:34:521:34:57

interest in charting a course for

health improvement in their area and

1:34:571:35:00

I don't think there is a

contradiction.

We are talking about

1:35:001:35:06

goodwill, isn't it?

Relationships.

And relationships take time, don't

1:35:061:35:10

they? Yes. So what is it about those

ten that is different to the

1:35:101:35:19

remaining eight -44?

Some of them

have been on that journey together

1:35:191:35:25

for longer. That is your point about

time. Some of them have got a few

1:35:251:35:33

different organisations in the area

and the report has a chart showing

1:35:331:35:37

some of the STPs have got a very

large number of entities within

1:35:371:35:41

them. At one end of the spectrum,

you have got East, North and West

1:35:411:35:48

Cumbria which is something like five

statutory bodies, that was the bar

1:35:481:35:53

chart which shows the fewest. And at

the other, the chart has got... What

1:35:531:36:02

I think is... Cheshire and

Merseyside. 42. 42 statutory bodies.

1:36:021:36:14

So Cheshire, within Cheshire and

Merseyside, that is a much more

1:36:141:36:17

complex task.

But the two that going

to be the devolved systems of

1:36:171:36:25

Greater Manchester and sorry

Harpers, is that right?

And a number

1:36:251:36:28

of others, South Yorkshire, the

Thames.

So all ten, not eight and

1:36:281:36:37

two, they are heading in the same

direction?

They are beginning to act

1:36:371:36:42

together taking system shared

responsibility, yes.

But what is

1:36:421:36:46

going to be the difference from the

patient's perspective and what are

1:36:461:36:51

we learning from those ten that

should be shared with the remainder?

1:36:511:36:56

The difference is not going to

affect every patient, it is going to

1:36:561:37:00

affect a group of patients,

principally the people who are, who

1:37:001:37:04

have the greatest needs for NHS use,

and they are going to find more

1:37:041:37:09

teamwork, less being passed from

pillar to post and having to repeat

1:37:091:37:13

your information when you are

sitting down in front of a nurse, or

1:37:131:37:17

a doctor. A lower likelihood of

ending up in hospital for a

1:37:171:37:21

preventable condition. And the data

shows from the places that have done

1:37:211:37:24

this first, those are the results

they are getting.

What is the data

1:37:241:37:29

you're going to be collecting to

demonstrate from a patient

1:37:291:37:34

perspective, not just a finance

perspective, you are delivering what

1:37:341:37:37

you set out to deliver.

In all 44

areas of the country, we will be

1:37:371:37:45

publishing for the second year

running the overview of how well

1:37:451:37:50

they are doing on that early cancer

diagnosis, on access to new mental

1:37:501:37:56

health services. How easy it is to

get a GP appointment. How easy it is

1:37:561:38:00

to be looked after evenings and

weekends. How well, how quickly you

1:38:001:38:05

get a routine operation. What the

access experience is if you need to

1:38:051:38:12

go to A&E. All of those measures I

think the public would readily see

1:38:121:38:18

as being very important to the NHS

will be published for all 44 STPs.

1:38:181:38:24

One of the answers you gave to Mr

Philipson, he said, we talked about

1:38:241:38:33

transformation, but it is now about

sustainability.

That was just for

1:38:331:38:37

the 1.8 billion funding going to the

trust sector specifically. Not about

1:38:371:38:42

the NHS budget in total, that 1.8

billion.

These are also about

1:38:421:38:48

transformation is, is the plan not

transformation rather than just...

1:38:481:38:54

Not just for the 2.4 billion going

into the provider sustainability

1:38:541:38:59

fund, that is what it says on the

tin. Provide a sustainability.

When

1:38:591:39:03

we set out the STPs, the point was

to transform care and not just

1:39:031:39:11

sustain care. The measures you have

set out to measure success, they are

1:39:111:39:16

very much about how much of what we

already offer people are getting and

1:39:161:39:20

how fast they are getting it. The

bit missing is a vanguard work.

1:39:201:39:24

There has been a lot of vanguard

work that does not seem to be doing

1:39:241:39:29

best being shared. You approach

would was very much, it is there if

1:39:291:39:35

they cared to find it, to which, I

said, have you not got to push?

1:39:351:39:41

These are busy people and unless you

do push, they will never make the

1:39:411:39:44

changes.

I think the level of

pressure we have in the system,

1:39:441:39:51

people are very eager to find out

what it is other parts of the

1:39:511:39:54

country have done that moderating

the emergency pressures on

1:39:541:39:57

hospitals. Improving the care people

with. Improving your chance of

1:39:571:40:05

having your cancer picked up at an

early stage when it is possible to

1:40:051:40:08

give you treatments such that you

will do well. So all of those that

1:40:081:40:12

are part of these programmes I think

are now being laid across the

1:40:121:40:16

country. And some of the programmes

referred to in the report

1:40:161:40:22

specifically about holding up a

mirror to each part of the country

1:40:221:40:24

and saying, how do you compare and

where'd you learn? And this is where

1:40:241:40:29

you find the practice.

With respect,

I am still not convinced the

1:40:291:40:35

vanguard has been dissected. And

really being used by some of these

1:40:351:40:40

new organisations. What you're

talking about, I fear, is still very

1:40:401:40:45

much, how'd you improve the care for

challenges we already have, for

1:40:451:40:53

illnesses we are already aware of?

It does not seem you are talking

1:40:531:40:58

about the challenges in the rural

community. You have many more people

1:40:581:41:03

living over 85. Generally, they come

into the population at 65 and they

1:41:031:41:07

can move to rural areas to retire.

You need a very different form of

1:41:071:41:11

care. You have challenges about foot

fault into the different types of

1:41:111:41:17

care entities, to make sure

professionals keep up their

1:41:171:41:20

training. I am not hearing about how

you might adjust and develop the

1:41:201:41:24

fundamental model so it is fit for

purpose whether you up urban oral.

1:41:241:41:30

So if we talk about Dorset and

Somerset, in the case of Dorset,

1:41:301:41:38

they are doing a fine job for a

population outside of Bournemouth

1:41:381:41:42

which has got very rural elements to

the county. I can send you people

1:41:421:41:50

from Dorset to meet with you because

hearing from them first hand about

1:41:501:41:54

what they are doing and how they are

doing it and the results are getting

1:41:541:41:58

would really definitively answer

your questions.

That would be

1:41:581:42:01

helpful, that is just one, we have

44, what is your plan to help all

1:42:011:42:05

44?

You were talking specifically

about rural areas.

There must be

1:42:051:42:11

other learning from other STPs,

these new system organisations,

1:42:111:42:18

which could and should be shared

because of the particular similarity

1:42:181:42:22

between the different classes across

the 44.

Is that happening? Yes, to

1:42:221:42:27

some extent, but I am not going to

say... Go back to Bridget's

1:42:271:42:33

question, a lot of people are doing

with the here and now and they are

1:42:331:42:37

also busy people and not touring the

country on a fact-finding mission so

1:42:371:42:41

people are doing both at the same

time.

1:42:411:42:45

Anyone who has had experience of the

NHS can see there are issues and

1:42:451:42:49

challenges in the system.

You have

staff and it does not always hang

1:42:491:42:54

together as well as it could, but

for a lot of people, it is heads

1:42:541:42:59

down hearing another initiative,

again and you have regulators and

1:42:591:43:04

NHS improvement, you'll got you and

the Department issuing edicts about

1:43:041:43:07

money and other things. You have all

that not interacting very well on

1:43:071:43:13

the ground. At the senior level, you

have hospital managers and health

1:43:131:43:17

managers trying to balance the

different demands of different

1:43:171:43:19

regulators. Different funders. And

as well as than at the junior level,

1:43:191:43:24

that comes down to a more junior

level many more initiatives they

1:43:241:43:29

have to learn about and take on

board which cuts into what Miss

1:43:291:43:32

Morris is saying. You have the grand

plan but on the ground, how'd you

1:43:321:43:38

deliver? So can you answer how you

called innate your work to make sure

1:43:381:43:42

you are not making competing demands

for people lower down the system?

1:43:421:43:55

Shore, and Ian and Chris may come in

on this, there is a danger of a

1:43:551:43:59

slight contradiction here, on the

one hand, you need to be more direct

1:43:591:44:06

nationally about banging heads

together to make sure they learn. --

1:44:061:44:08

sure.

No, no, no, let me be

specific, no, my question... My

1:44:081:44:16

question is, sometimes guidance that

comes down requires one set of

1:44:161:44:21

activity by one part of the system

and... For example, the billing

1:44:211:44:28

arrangements, billing CCGs or not

and how you do that, you have one

1:44:281:44:34

thing asking for one thing and

another saying you will do it

1:44:341:44:37

differently, and a complete clash,

in one individual, in a trust, you

1:44:371:44:42

have to balance different advice, or

guidance, from different parts of

1:44:421:44:45

the system, how do you make sure you

are working to make sure what Ms

1:44:451:44:50

Morris says will not happen.

In one

case, France and is -- for instance,

1:44:501:44:57

they are devolving to a situation

where they take shared

1:44:571:45:00

responsibility for the NHS funding

available in Dorset, and are able to

1:45:001:45:05

redesign care themselves. That will

take out a lot of the transactional

1:45:051:45:08

hassle between different parts of

the system but in order to be able

1:45:081:45:12

to take on that responsibility, you

need to be working in a coherent

1:45:121:45:17

fashion between the various

organisations involved, which is why

1:45:171:45:21

this is an evolutionary journey

which cannot proceed at the same

1:45:211:45:23

pace in every part of the country

but it is a developmental journey,

1:45:231:45:29

to support that, NHS improvement and

NHS England have got to work

1:45:291:45:33

together in a different way and I

think that we are on course to do

1:45:331:45:39

that and the discussions that Ian

and I with our teams are having at

1:45:391:45:45

the end of March and public board

meetings, will be setting it out,

1:45:451:45:49

will show that in the confines of

the statute and the distinctive

1:45:491:45:53

responsibilities that Parliament was

assigned to monitor and the one hand

1:45:531:45:58

with NHS England and the other,

within that you will see much more

1:45:581:46:00

join up between work regionally and

nationally.

In the winter, it was

1:46:001:46:12

almost entirely joint, but it is

very difficult to have a completely

1:46:121:46:24

clear and single message all of the

time and in the case of some of the

1:46:241:46:28

regulators, we set them up

specifically not to do that.

1:46:281:46:31

Seek you see is there to give an

independent assessment of quality,

1:46:311:46:38

including giving the government and

the NHS tough messages when it needs

1:46:381:46:43

it. -- CQC. And we guard their

independence extremely jealously. We

1:46:431:46:50

work together very closely with

regulators about seeking to ensure

1:46:501:46:56

that improvement work led by NHS I

fits and lands with the system of

1:46:561:47:06

CTC but we keep them separate for a

very important reason, it is we

1:47:061:47:11

value them. -- CQC. There are some

tensions but here, as we do in

1:47:111:47:17

schools and prisons and lots of

other public services, having an

1:47:171:47:21

independent regulator which can say

what it likes, regardless of what

1:47:211:47:25

the three of us think, is a good

thing or a bad thing.

Can I ask, if

1:47:251:47:34

I was to be really cynical, this

move towards integration without

1:47:341:47:38

changing job descriptions, job

titles or budgets, could be seen as

1:47:381:47:40

a way of getting a change in the

health system through the back door,

1:47:401:47:48

as anybody had a go at any of you

individual organisations,

1:47:481:47:53

particularly the STPs, a judicial

review, anything, to say, and on a

1:47:531:47:56

minute, is what you are doing really

really within the law?

Yes, I'm not

1:47:561:48:05

going to comment in detail, given

these matters are a matter for the

1:48:051:48:10

courts, but there are judicial

review is currently pending, and

1:48:101:48:17

that will bring clarity based on

what the courts decide. -- judicial

1:48:171:48:22

reviews.

It could derail the whole

thing?

The claim that is being made

1:48:221:48:27

is that 2012 acts prevents joined up

working and integration as expressed

1:48:271:48:39

through a particular approach to

varying the NHS standard contract

1:48:391:48:46

for something called ACOs and that

is the records to be clear with us.

1:48:461:48:52

If the courts say the approach taken

is consistent with legislation, then

1:48:521:48:59

I hope everyone will accept that.

Then the ball will be in

1:48:591:49:03

Parliament's court. If that is the

direction in which the NHS should be

1:49:031:49:08

headed.

If that happened, would you

be recommending that he should be

1:49:081:49:13

recommending to the Minister that

instead of trying to go through a

1:49:131:49:17

reformation in the back door, you

should be doing it publicly, and the

1:49:171:49:21

great Richard Garbett want it and

needed.

We are doing it publicly, we

1:49:211:49:27

have been explicit about the

benefits of joining up services and

1:49:271:49:31

by the way we are not the only

country for whom that is true, when

1:49:311:49:35

the NHS was formed in 1948, it was

formed on the basis of brief

1:49:351:49:42

encounters. Between patients and

their doctors. Now, we need a steady

1:49:421:49:47

relationships based on the fact that

we have people with long-term

1:49:471:49:51

conditions...

LAUGHTER

Mr Stevens, that is a lovely story,

1:49:511:49:56

and you are absolutely right in

where we want to go but by the sound

1:49:561:49:59

of it, we are all in agreement that

there are many barriers and at some

1:49:591:50:05

point we will have to remove them,

because it takes time...

Less

1:50:051:50:12

tinder, more stable relationships.

I

don't know what the concept is that

1:50:121:50:15

you are referring to.

What I would

add is, the history of the NHS has

1:50:151:50:22

not been short of reorganisations(!)

and the key thing about this and the

1:50:221:50:29

integrated care systems that Simon

is describing, one of the important

1:50:291:50:34

things is we are not trying to

change the statutory basis with

1:50:341:50:40

organisations or accountabilities,

those will remain exactly as they

1:50:401:50:43

are, the focus is on how do all

those people work together, as

1:50:431:50:49

opposed to can we redraw the map of

the NHS so that it in some way works

1:50:491:50:55

better.

I totally understand that,

entirely the answer I would expect

1:50:551:51:00

from you, and I am not in the least

bit surprised but it does not help

1:51:001:51:04

us move forward. Does not help us in

terms of the overall agenda, which

1:51:041:51:12

is about transformation, not just

simply staying within the law,

1:51:121:51:16

important or as crucial as that may

be.

To be clear, obviously we have

1:51:161:51:22

to stay within the law, what we are

saying is, rather than spending

1:51:221:51:29

another several years, redrawing the

map of the NHS, can we get on with

1:51:291:51:33

the very important clinically led

discussions about how professionals

1:51:331:51:38

relate to each other, as opposed to

redrawing the map of the NHS,

1:51:381:51:43

because most of the things we are

describing as transformation come

1:51:431:51:48

down to how clinicians and others

relate to each other, not the

1:51:481:51:53

organisations that they sit within,

you mention the vanguards, that is

1:51:531:51:56

exactly what they found, so much

that is your own question, back to

1:51:561:52:02

your own question, it is all about

can we get the right types of

1:52:021:52:06

behaviour and good practice in the

system as opposed to worrying about

1:52:061:52:09

who sits in which organisation when

it comes up.

That is about culture

1:52:091:52:16

change, which has always been

something difficult to change but

1:52:161:52:19

can I take you away from the ten,

you seem to have achieved much of

1:52:191:52:26

this, to the remainder, they seem to

be penalised for not having achieved

1:52:261:52:31

the best plan which meets financial

criteria, for many of them, it seems

1:52:311:52:36

to me, the challenge is, they are

trying to do the impossible with

1:52:361:52:39

insufficient funds, to say, you have

got to save even more, will not help

1:52:391:52:44

deliver anything.

As Ian said

earlier, we are inviting the next

1:52:441:52:52

group around the country to come and

join the liberated zone.

How will

1:52:521:53:01

you help them do that, is it clear

there is any commonality between

1:53:011:53:05

those who have succeeded being in

the top ten and those who have not,

1:53:051:53:09

from what you said, maybe it is the

time they have been working

1:53:091:53:12

together, in which case, not much

that can be done about it but if

1:53:121:53:16

there is something like historic

underfunding, if I can for one

1:53:161:53:19

minute alludes to the standard fun

formula, and this is true not just

1:53:191:53:24

for health but for education and

many other sectors, those generally

1:53:241:53:28

agreed to be underfunding if you

compare urban with law, and more of

1:53:281:53:35

the rural STPs if I can pull them

that seemed to be at the bottom of

1:53:351:53:39

the list. -- if I can call them

that. As opposed to the urban ones.

1:53:391:53:47

-- compare urban withdrawal. What

can you tell us about them, when you

1:53:471:53:50

set objectives and targets, you have

taken into account historic mismatch

1:53:501:53:54

and underfunding, if we look into

the future, surely we should take

1:53:541:54:00

this opportunity to level the

playing field and give people

1:54:001:54:04

reasonable targets?

We must not

conflate a question about the

1:54:041:54:10

aggregate funding available for the

health service with questions about

1:54:101:54:14

its zero-sum distribution between

parts of the health service

1:54:141:54:18

geography in the health service, on

the second question, I am afraid, I

1:54:181:54:23

have two... The way in which money

is allocated to different parts of

1:54:231:54:33

the country is now the fairest it

has ever been in the history of the

1:54:331:54:36

National Health Service and

certainly fairer than at any year

1:54:361:54:41

since 1976, when our predecessors

first went down this route. Through

1:54:411:54:45

the resource allocations working

party. Reason I feel confident in

1:54:451:54:49

saying that, we have an independent

committee, which looks at needs

1:54:491:54:54

allocations and have specifically

looked at incremental cost of

1:54:541:54:58

sparsity and relative. With a high

population chairman, and the costs

1:54:581:55:06

that go with that. Over and above

that, we have now not just applied

1:55:061:55:13

that fair funding formula to

hospital and community health

1:55:131:55:17

services, we have done so to primary

care services and also to

1:55:171:55:22

specialised hospital services and as

a result, no CCG is more than 5%

1:55:221:55:29

below its fair funding formula, not

just for the hospital and community

1:55:291:55:33

health services but for primary care

and for spending in the round. I

1:55:331:55:37

don't think that, to use one of the

favourite labels, this is a question

1:55:371:55:43

of going robbing Peter, in this

case, chair, you, in order to

1:55:431:55:52

benefit you, which is the arguing

you are making. This would be a

1:55:521:55:55

question of the aggregate funding

available for the health service in

1:55:551:55:58

the round.

This is maybe the subject

for a wider discussion. Perhaps we

1:55:581:56:05

can move along.

It will boil down

to, your area versus that area, and

1:56:051:56:14

as far as I can tell, we are being

as objective as we can be about the

1:56:141:56:18

allocation. There is a related

question that we are going to start

1:56:181:56:23

lifting the stones and having a look

at, which is for those parts of the

1:56:231:56:27

country who are getting extra

funding, the extra health and

1:56:271:56:33

qualities adjustments we make, how

are those resources being made. --

1:56:331:56:36

used. There is disturbing data

emerging around life expectancy

1:56:361:56:43

trendss. So, we really want to

understand whether those extra funds

1:56:431:56:48

in parts of the country such as the

north-east are being used for things

1:56:481:56:53

that would be likely to improve

health and reduce inequalitys or

1:56:531:57:02

just being used for the gnarly

utilisation of services rather than

1:57:021:57:06

going upstream. -- vanilla.

This is

a much bigger topic, and it will

1:57:061:57:17

come as no surprise to you that I do

not necessarily agree that some of

1:57:171:57:20

those materials being used are fit

for purpose, so let's go back to the

1:57:201:57:27

integration, which is what we are

also keen between us to achieve, one

1:57:271:57:31

of the concerns I hear, is that the

voluntary sector feel excluded, that

1:57:311:57:36

the local authorities engage don't

engage in a very great degree of

1:57:361:57:40

variety across the country. So,

given where we want to get to and

1:57:401:57:46

the challenge of breaking down

cultures, what are you and your

1:57:461:57:50

colleagues and the rest of the

department doing to actually insure

1:57:501:57:54

that it is not just, if you like,

talking the talk but walking the

1:57:541:57:58

walk and not just across health and

social care, and community care, but

1:57:581:58:04

also, the other key players, in the

voluntary sector, playing a huge

1:58:041:58:07

role. How are you getting back

ordination?

I agree completely,

1:58:071:58:14

there are things we can do

nationally, there are things we have

1:58:141:58:17

got to try to stimulate local action

on, the things we can do nationally

1:58:171:58:20

are ensure that the national level

voluntary and community

1:58:201:58:27

organisations are involved with us

in the big improvement programmes we

1:58:271:58:29

have across the National Health

Service, that is why I have invited

1:58:291:58:36

the Chief Executive of Diabetes UK

to oversee the assessment process

1:58:361:58:40

for how well different part of the

country, CCGs, are doing on the

1:58:401:58:45

diabetes element of the annual

assessment framework, it is why

1:58:451:58:48

Cancer Research UK, I had the chair

of the task force improvement

1:58:481:58:55

programme with me, it is why I have

invited the chief executive of Mind

1:58:551:59:01

to leave their way on mental health

improvement, at a national level we

1:59:011:59:04

are setting the example.

1:59:041:59:06

But I think we also recognise that

luckily, there are different levels

1:59:101:59:16

of community assets, engagement,

funding pressures, some of this is

1:59:161:59:19

about the different expectations

that the statutory sector and the

1:59:191:59:23

voluntary sector have, so within the

last several years, for example, we

1:59:231:59:26

have taken a lot of bureaucracy out

of being able to get funding from

1:59:261:59:30

the NHS. Instead of having to do the

sort of telephone directory worth of

1:59:301:59:35

NHS standard contract, there is a

shorter version there that can be

1:59:351:59:39

used for funding with the voluntary

sector. But this has been a time of

1:59:391:59:43

pull-back of grants for many Fonte

organisations, there's a whole local

1:59:431:59:49

ecosystem, if you like, with some of

the larger national organisations

1:59:491:59:54

having dug representatives. -- for

many voluntary organisations. Some

1:59:542:00:02

smaller organisations... This takes

considerable sensitivity and local

2:00:022:00:05

sensitivity to get right.

You're

right, but do you not think yorked

2:00:052:00:09

to be having a target which are then

measure that further don't, not

2:00:092:00:15

where you guys are sitting in

London, to say, how demonstrates to

2:00:152:00:22

me that you have actually engage

with at least ten of your local

2:00:222:00:26

charities that provide community

transport, befriended, etc? It isn't

2:00:262:00:29

just the paid bit of the voluntary

sector, it is the unpaid bit.

You

2:00:292:00:35

make an important part and that is

something we have been discussing as

2:00:352:00:38

early as this morning, and we should

try and build some of that into the

2:00:382:00:43

processes we used to sort of assess

and check how well STP 's are

2:00:432:00:49

actually working.

We have seen local

government playing a bigger and

2:00:492:00:59

bigger role in STP is. It is a

voluntary role for them, we don't

2:00:592:01:05

have powers to compel them. The big

lever we have as committee has

2:01:052:01:13

discussed before, the better care

fund, which has upside and downside,

2:01:132:01:16

one of the things it is undoubtedly

do it is create a conversation which

2:01:162:01:23

wasn't there before between local

government and the NHS. And we've

2:01:232:01:28

mentioned earlier in this hearing,

when we were doing the delayed

2:01:282:01:34

transport of care programme, which

spans local government and the NHS,

2:01:342:01:40

and I think most sides would say

there was a quality of conversation

2:01:402:01:44

around that that we have not seen

before. There is clearly further to

2:01:442:01:51

go, again, when we were discussing

and last week, around how the health

2:01:512:01:54

service and social care and the

wider local government system work

2:01:542:01:58

together, but we do think we've seen

signs of progress.

That's very

2:01:582:02:05

encouraging, but can I then put this

to you, that common working is

2:02:052:02:11

extremely good but I'm beginning to

look at this and say, going forward,

2:02:112:02:16

there are scenes to be almost a

blurring between commissioning

2:02:162:02:21

providers and with the overall

Government moved towards, if you

2:02:212:02:28

like, decentralising and putting

power in the hands of local

2:02:282:02:34

divisions, are we going to get a

point where, for example, there is a

2:02:342:02:39

proposal in my area in the West

Country, for two counties, three

2:02:392:02:50

LEPs and ten local authorities to

come together to provide health and

2:02:502:02:53

social care. If that happens, it

seems that we're totally blurred the

2:02:532:02:57

distinction between commissioning

and provision, which had its

2:02:572:03:01

benefits, we introduced it to ensure

that there was some check and

2:03:012:03:04

balance. So from what we are saying,

I'm a little bit confused as to what

2:03:042:03:10

ultimately is going to happen with

all this integration. Is there going

2:03:102:03:14

to be a breakdown between

commissioning and provision? And

2:03:142:03:17

what is this integration going to

look like in the end, how far will

2:03:172:03:21

it spread?

Obviously, we are not

changing the law, and the health

2:03:212:03:27

system and the social care system

revived very different types of

2:03:272:03:32

statue which does limit things in

the way that you describe. When we

2:03:322:03:38

see good examples of where health

and care work together, it's very

2:03:382:03:47

often, in fact almost exclusively,

add the nuts and bolts level rather

2:03:472:03:51

than the grand conceptual level. The

areas that do this well share data

2:03:512:03:55

well, they have a common

decision-making process, they do all

2:03:552:04:00

these sort of mechanics things and

actually tends not to worry about

2:04:002:04:09

how big the statutory divide is

between services. So what we're

2:04:092:04:16

encouraging is building how we do

the better care programmes, can we

2:04:162:04:23

tackle the issues that get in the

way of good joint working? That

2:04:232:04:29

doesn't deal with the bigger

question you race but that is for

2:04:292:04:32

another day.

The simple question is

who is accountable in these

2:04:322:04:38

integrated care arrangements? If I

have a complaint under consent to

2:04:382:04:40

race, where do I go? -- and a

concern to raise.

The law is the

2:04:402:04:49

law...

But if you're patient in a

court in the middle of all this, if

2:04:492:04:56

you're getting all the different

bits of the organisation and you

2:04:562:04:59

have a problem, you're not thinking

along those lines, the bureaucratic

2:04:592:05:03

lines that you and we probably think

about. You're trying to make a

2:05:032:05:07

point, you might go and raise the

concern somewhere but will that have

2:05:072:05:10

an impact? Does that bit of the

joining up work?

You will have the

2:05:102:05:15

same ability to raise complaints and

concerns as you have now, because

2:05:152:05:20

the formal accountabilities have not

changed, but hopefully, we will have

2:05:202:05:24

less reason for doing so because the

quality patient experience will have

2:05:242:05:28

improved.

Ever the optimist. But who

is ultimately accountable? The law

2:05:282:05:33

has not changed, everyone has own

accountabilities... Will people pass

2:05:332:05:36

the buck and blame each other?

By

definition... I believe that we can

2:05:362:05:42

dance on pinheads, but if you spent

a bit of time with some parts of the

2:05:422:05:46

country... You will just hear it

from...

We are not that bad we are

2:05:462:05:52

just asking questions.

It's a more

practical conversation that we are

2:05:522:05:57

having.

We are just asking if you

got plans in place to make sure, for

2:05:572:06:01

instance, where accountability has

not been sorted out... You paint a

2:06:012:06:06

perfect...

That has been lawful

since 2006 under sections to five of

2:06:062:06:12

the 2006 act, so that question, to

be clear, there will be no change to

2:06:122:06:18

the principle that NHS care has to

remain free on the basis of need not

2:06:182:06:22

ability to pay. -- under section 75

of the 2006 act. But all that said,

2:06:222:06:30

this year, local authorities and CCG

's have voluntarily chosen to budget

2:06:302:06:37

£2000 more than they were a party as

part of the better care fund.

I

2:06:372:06:40

don't doubt that at a local level

where people want to do it they can

2:06:402:06:43

find a way, but what I want to know,

for example, if you have an issue to

2:06:432:06:48

raise in the NHS, you go to the

patient advice and liaison service,

2:06:482:06:53

but with integrated care, you will

have several PALs, if you raise it

2:06:532:07:02

in one place, with the integrated

care system, would you envision it

2:07:022:07:07

that that would be dealt with across

all the organisations involved?

I

2:07:072:07:11

would hope so but your statutory

rights are... That's obviously not

2:07:112:07:17

the status quo, but...

I know, but

is that...?

There are separate

2:07:172:07:24

appeal rights in hospitals...

But my

point is, is your vision that...?

2:07:242:07:27

Chun that is where we would like to

get to but that will not affect your

2:07:272:07:34

ability

to complain about different

services...

Guising a complaint, it

2:07:342:07:37

could be a comment, it may not all

was the complaint. Sam Maguire NHS

2:07:372:07:45

trusts setting up subsidiary

companies?

-- why are NHS trusts

2:07:452:07:52

setting up subsidiary companies?

Since 2006, I believe, NHS

2:07:522:08:02

foundation trusts have been able to

establish subsidiary companies where

2:08:022:08:08

they further the purpose of the NHS.

So this is not a new thing. There

2:08:082:08:17

have been subsidiary companies set

up across the country, most notably

2:08:172:08:22

to generate additional income to

support the clinical work of the

2:08:222:08:27

hospitals. So I guess there is quite

a long-standing thing.

I understand

2:08:272:08:34

in Barnsley, for example, the trust

has set up a wholly-owned subsidiary

2:08:342:08:38

company, Gloucestershire is looking

into this as well. From what I

2:08:382:08:43

understand, having had a catch up

with my Chief Executive at the trust

2:08:432:08:50

on Friday, the idea for these

wholly-owned subsidiary companies is

2:08:502:08:57

one, to look at how it can reduce

tax liabilities, and two, to

2:08:572:09:05

transfer staff, nonclinical staff,

into these organisations, where in

2:09:052:09:10

whilst they will be tuped across,

any new starters, there is a

2:09:102:09:19

potential savings on salaries and

savings for those new starters. Is

2:09:192:09:25

that the purpose of those subsidiary

companies as Mac

I have seen --

2:09:252:09:32

haven't seen the individual

companies to which you refer but the

2:09:322:09:35

general point I would respond to is

that where there are genuine

2:09:352:09:39

commercial reasons for creating a

subsidiary company, a foundation

2:09:392:09:42

trust in law has the power to do

that. And so I guess that is an

2:09:422:09:48

existing legal power that has been

on the statute book for many years.

2:09:482:09:54

But I try to understand here, there

seems to be, before this gets the

2:09:542:09:59

head of steam, there are only a few

of these at the moment, but I

2:09:592:10:02

understand there is discussion going

on within trusts, in my own trust

2:10:022:10:05

has been discussion about it. They

have landed on the view that they

2:10:052:10:09

want to go down this path but before

this becomes something that is

2:10:092:10:13

widespread, don't you think it's

important for us and the public to

2:10:132:10:18

understand why now and why this

model and understand what it is

2:10:182:10:24

trying to do it? Because this whole

discussion this afternoon has been

2:10:242:10:27

about saving money, is this the

vehicle we are going to go down in

2:10:272:10:31

the future, where anybody who cleans

in hospital or provides admin in a

2:10:312:10:36

hospital, provides finance services

in a hospital, everything else that

2:10:362:10:39

is nonclinical, will end up in a

different organisation to that of

2:10:392:10:42

the NHS?

I think we should go away,

I haven't heard that specific

2:10:422:10:52

suggestions yet made, so we ought to

go away and look at that. Of course,

2:10:522:10:55

number of the that staff, a lot of

those services are contracted out. I

2:10:552:11:05

haven't come across the model you're

describing for those...

I do find it

2:11:052:11:12

rather surprising, to be honest. And

Mr Dalton, you're in charge of NHS

2:11:122:11:16

improvement, which presumably helps

to advise trusts on what they can

2:11:162:11:22

do, discussions around money. I am a

little surprised that I'm getting

2:11:222:11:25

less than I hoped in terms of an

understanding about why this model

2:11:252:11:30

is being developed. And is being

actively discussed by trust. I

2:11:302:11:36

understand, circus, that the

Department of Health sensed NHS

2:11:362:11:42

finance territories in September

last year an article around tax

2:11:422:11:47

avoidance issues in the NHS. --

finance directors. I wonder what

2:11:472:11:53

could have prompted that. I'll be at

you say the power was there before,

2:11:532:11:59

the fact it is being activated now

and is being actively discussed for

2:11:592:12:03

the reasons I have outlined, don't

you think we should know more, order

2:12:032:12:05

and you think we should be more open

and curious about why this is

2:12:052:12:09

happening? -- or don't you think we

should be?

We will have a look again

2:12:092:12:17

at regulatory oversight in this

area, so we absolutely are prepared

2:12:172:12:22

to do that. But at the same time, I

think we need to go back to the fact

2:12:222:12:27

that this is not a novel power, it

is not a new power. And our line

2:12:272:12:34

remains that with a genuine -- word

there are genuine commercial reasons

2:12:342:12:37

for doing this and that is the law,

trusts should not be put the

2:12:372:12:41

different doing that. In a role as

regulator, is to ask questions, and

2:12:412:12:49

locate the previous regular to

resume which has previously attract

2:12:492:12:52

those, whether we should do so.

,

just press this, you seem to be, Mr

2:12:522:13:01

Dalton, rather less concerned than

I'd hoped you'd be, about waiters

2:13:012:13:07

that this power has been around for

a substantial amount of time, what

2:13:072:13:09

may be driving people to utilise it

now? I would suggest that that is

2:13:092:13:13

perhaps to do with trusts having to

find savings and having to manage

2:13:132:13:19

budgets for all be difficult,

complicated reasons we understand

2:13:192:13:24

and something that has been

addressed in this session. But the

2:13:242:13:28

question is that if they are doing

it in terms of, example, tax

2:13:282:13:33

flexibility is, why isn't that

something they should be able to

2:13:332:13:35

locate and have an open discussion

about in their current trust

2:13:352:13:40

arrangements with yourselves, with

H, C, but more worryingly, if it is

2:13:402:13:46

to try and separate out more members

of staff of the NHS into another

2:13:462:13:52

organisation that further splits up

the NHS family, surely that is going

2:13:522:13:56

to be worrying for recruitment and

retention down the road as well? So

2:13:562:14:01

I'll leave it there, because of

user, I'm getting pretty blank faces

2:14:012:14:07

on this, but I would urge you to

very much consider what is going on

2:14:072:14:10

here, because I think there's a

concern that outside of this room

2:14:102:14:14

today that this could be a back door

route to privatisation but also, it

2:14:142:14:19

may not be the model that delivers

the financial savings that some of

2:14:192:14:23

the people involved in this think it

will achieve.

2:14:232:14:28

I will write to you. As you know,

there was a proposal to set up these

2:14:282:14:36

social and to size companies in

Gloucestershire. I am surprised you

2:14:362:14:41

do not know more about it because in

a submission to the trust from the

2:14:412:14:47

Royal College of Nursing they say

the Department of Health wrote to

2:14:472:14:52

all NHS Trust financial directors in

2017 with a letter entitled tax

2:14:522:14:57

avoidance issues in the NHS,

discouraging all trusts from the tax

2:14:572:15:03

avoidance schemes and reminding them

that fees reject a leakage out of

2:15:032:15:09

eight health system. That is quite a

serious letter. I am surprised you

2:15:092:15:15

do not know more about it.

We do

discourage those things. The bit I

2:15:152:15:23

haven't looked at or been briefed on

is the specific arrangements that

2:15:232:15:31

have been raised. We do look at tax

in a variety of areas and we do

2:15:312:15:39

exactly what we have just said,

people should be paying taxes fairly

2:15:392:15:45

as set out by HMRC. I think from

memory the things we were concerned

2:15:452:15:53

about when we wrote that letter, I

think the individual taxation

2:15:532:15:57

questions around agency staff,...

It

was a combination of that and a set

2:15:572:16:04

of procurement arrangements, which

potentially had an impact on

2:16:042:16:10

suppliers. I do not think it was a

letter that had been prompted by

2:16:102:16:15

either of the arrangements that had

been raised, is as Sir Chris says,

2:16:152:16:21

we should take that away.

The same

principles as you say it would be

2:16:212:16:25

exactly the same in any situation

and people should pay tax fairly.

2:16:252:16:31

So, the unions say we believe that

VAT savings remain one of the major

2:16:312:16:38

incentives for this proposal but

that this aspect is being downplayed

2:16:382:16:42

in order to reduce the risks of

being denied VAT exempt status by

2:16:422:16:49

HMRC. Surely, either is a VAT

seething author is not. Surely it is

2:16:492:16:55

a matter that the department should

be dealing with HMRC to resolve,

2:16:552:17:00

rather than trust having to go to

this expensive procedure to get

2:17:002:17:04

around to VAT problems?

I am not an

expert on VAT but I do not think the

2:17:042:17:10

holy on company had -- wholly owned

company had this. This is not

2:17:102:17:18

something that I personally have

looked at...

When I asked about this

2:17:182:17:24

with my local trust, they said it

was about VAT flexibilities.

We

2:17:242:17:29

would appreciate... If we could have

a better...

As the new reference you

2:17:292:17:40

read outside, all these questions

are things that we take a serious

2:17:402:17:44

view on. If issues that have been

raised are correct, we will look

2:17:442:17:48

into them.

Perhaps if the NHS were

to write us as well, the key point

2:17:482:17:56

as well is the point about whether

anyone is watching the ecosystem of

2:17:562:18:02

the NHS would have many types of

different provider and the

2:18:022:18:06

sustainability issues first

staffing, in and out of pension

2:18:062:18:10

schemes and so on, is potentially a

very big issue. If it is not

2:18:102:18:14

identified and acted on now, that

could be a long-term problem. We

2:18:142:18:18

will leave it there for now but

towards the end of the hearing now.

2:18:182:18:23

There are two issues I want to

raise. One is mentioned in the

2:18:232:18:29

report, the business of recouping

fees from foreign visitors into the

2:18:292:18:33

NHS. And how you intend to meet your

target of £500 million, when I

2:18:332:18:41

gather there is significant backlash

from doctors, accident and emergency

2:18:412:18:46

departments and GPs in trying to

recover these fees.

We had a whole

2:18:462:18:49

hearing on this subject and we set

out our plans for improving in that

2:18:492:18:57

area. We have been running a number

of pilots at trust level on how we

2:18:572:19:02

can improve recruitment -- recouping

funds, and we are looking at the

2:19:022:19:12

results of. We have also been

looking at the surcharge we place on

2:19:122:19:18

visas, our other area of income.

Actually, the biggest area we need

2:19:182:19:28

to improve on is not the individual

charging, it is getting people to

2:19:282:19:31

claim under the scheme where other

governments pay. That is the bit

2:19:312:19:40

where we are furthest away from

hitting our target, but the plan is

2:19:402:19:45

exactly as we set out the previous

hearing.

Can I ask on the European

2:19:452:19:53

health insurance scheme, when we

leave and when Brexit happens, there

2:19:532:19:59

will be a lot of tourists arranging

on the arrangements but will not

2:19:592:20:05

have the cards either. Have you had

any thoughts on the impact on the

2:20:052:20:12

budget for that?

What the future of

our mutual health insurance

2:20:122:20:19

arrangements are with the European

Union is one of the areas that is

2:20:192:20:23

part of the discussion. There has

already been, with the proviso that

2:20:232:20:30

nothing is agreed until everything

is agreed, as you know, we already

2:20:302:20:34

have an agreement around people who

are already in receipt of the

2:20:342:20:43

payments who live here, but the

issue you raise is one of the ones

2:20:432:20:48

we shall cover.

Is that one of your

work streams?

Yes. It is an

2:20:482:20:56

extremely important. It would be

good if you could tell us what the

2:20:562:21:01

other work streams was?

It is

workforce, mutual health insurance,

2:21:012:21:07

medicine regulation. These are very

big ones. We have a range of public

2:21:072:21:16

health questions around public

health monitoring, and of course

2:21:162:21:22

there is a world dimension to the

NHS supply chain. We are looking at

2:21:222:21:26

this in detail and those are our

biggest. I said to the committee

2:21:262:21:35

before, we are not as affected as

some departments who come before

2:21:352:21:43

you. Most health issues are common

to everybody whether it you the

2:21:432:21:51

European Union or not. We have a

quite small number of quite

2:21:512:21:56

significant issues. We have research

is the other big other when we are

2:21:562:22:00

looking at, very important in their

own right. It doesn't dominate our

2:22:002:22:05

thinking in the way that some

people...

It is helpful to have that

2:22:052:22:10

because we are collecting...

On your

original question, if somebody is

2:22:102:22:19

here and has not got a Visa

exemption and is not entitled to NHS

2:22:192:22:25

care, we have to charge them.

It is

going to be more complicated.

We

2:22:252:22:29

already do that.

We are glad it is

on your radar.

The time is getting

2:22:292:22:36

late. Can I has the one question on

efficiency statements within the

2:22:362:22:41

NHS? Paragraph 2.15 makes it clear

from the report you commissioned...

2:22:412:22:49

2.1 five. And the table on figure 13

makes it clear that you have a £22

2:22:492:22:59

billion gap in trying to obtain

efficiency savings and figure 13,

2:22:592:23:04

over three pages, details a number

of ways in which you try to fill

2:23:042:23:08

that gap. Even at those very

detailed efficiency savings come to

2:23:082:23:13

12.5 billion. There is still a big

gap you need to make in terms of

2:23:132:23:17

efficiency savings and I wonder what

your aspirations where in terms of

2:23:172:23:23

filling that gap?

I will go first.

My NHS colleagues may want to join

2:23:232:23:31

in. The 22 billion reflects the

original view from the five-year

2:23:312:23:40

review about the level of efficiency

that would be needed to help manage

2:23:402:23:49

a 30 billion, with a billion of

additional investment in the NHS, by

2:23:492:23:55

2021. As we have set out I think

previously, this is both a

2:23:552:24:00

combination of central measures,

taken forward by the Department,

2:24:002:24:09

nationally facilitating run

programmes led by the NHS and a

2:24:092:24:12

series of bottom-up measures in

which individual NHS groups and

2:24:122:24:20

providers. Along with the reasons

around constraining soft two cost

2:24:202:24:26

growth, rather than taking cost out,

whether that is on the demand side

2:24:262:24:32

through the grounds like right care,

which NHS England leads are on the

2:24:322:24:41

productivity sides with providers

who run the efficiency programme. I

2:24:412:24:45

think as we have progressed through

Parliament, with additional

2:24:452:24:56

investment in the NHS, the size

composition of the 22 billion is

2:24:562:25:05

necessarily something that is quite

fluid. The single largest component

2:25:052:25:11

of the 22 billion to be delivered

essentially was based on an

2:25:112:25:16

assumption around the continuation

of a pay restraint. We will see

2:25:162:25:19

where we come out in the discussions

and negotiations with trade unions

2:25:192:25:24

on that point, as we have touched on

in the hearing already. So, it is a

2:25:242:25:32

long winded way of saying the 22

billion is a moving target. What

2:25:322:25:37

report sets out is progress against

the range of those savings. What NHS

2:25:372:25:43

colleagues set out earlier in the

year is a more focused approach to

2:25:432:25:50

delivery of the level of efficiency

and productivity needed through the

2:25:502:25:54

ten point efficiency plan, which is

also set out in the report at figure

2:25:542:26:04

nine. That is really now primarily

the way through which the monitoring

2:26:042:26:10

and tracking performance. As I think

we heard from witnesses today, the

2:26:102:26:15

NHS has a very good track record of

delivering such efficiency and

2:26:152:26:19

productivity improvements. The

questionnaires, short term at least,

2:26:192:26:25

is whether they are hitting the

level of plan that we have assumed.

2:26:252:26:28

Well, given that those are detailed

proposals on a jointly agreed report

2:26:282:26:35

and figure 13, does seem somewhat

alarming that there is this 22

2:26:352:26:40

billion gap, and yet the detailed

proposals only amount to 12.5

2:26:402:26:45

billion. That is a significant, very

significant, admits match of

2:26:452:26:51

figures, it seems to me.

-- Mitch

match. We will set out to the

2:26:512:26:58

committee just how the 22 billion

was made up. That is the

2:26:582:27:06

breakdown...

I am more concerned

about how you are going to meet it

2:27:062:27:10

rather than how it was set up. We

know it is from a report you

2:27:102:27:14

commissioned. What we really need to

know and I wonder whether we could

2:27:142:27:19

have a note on this, how you attempt

to meet that large figure in

2:27:192:27:24

efficiency savings.

It underlines

the questioning earlier,

2:27:242:27:29

sustainability. Can you outline and

sent us a letter?

Yes, we will send

2:27:292:27:34

you a joint letter with colleagues.

Thank you. This is not a

2:27:342:27:39

comprehensive list for the reasons

that David set out. There are

2:27:392:27:45

various national efficiency

programmes on this list. This is NHS

2:27:452:27:49

facing list. There are matters

around PA, matter is around drug

2:27:492:27:53

prices are negotiated nationally

through the programmes that do not

2:27:532:27:58

fall to the local health service to

set out.

Does that fill the gap?

2:27:582:28:04

Again, as David said, the 22 billion

was a construct in October 2014.

2:28:042:28:12

Obviously, as we advance, we can see

what we are dealing with in reality.

2:28:122:28:18

We have been able to adjust as we go

and deliver on these kinds of items,

2:28:182:28:25

together with the National

programmes that aren't here, is what

2:28:252:28:27

we think we need to do. None of that

detracts from the fact that we have

2:28:272:28:33

significant funding pressures in the

system in the way that the report

2:28:332:28:39

suggests. We both can take more

action on efficiency that is not

2:28:392:28:43

going to avoid the need about a

conversation about what a properly

2:28:432:28:48

resourced health service looks like.

Thank you very much. The transcript

2:28:482:28:52

will be on the website and we hope

we will get this report out before

2:28:522:28:55

Easter. We will keep you updated on

that.

2:28:552:29:05

The Public Accounts Committee's session on sustainability and transformation in the NHS with evidence from the Department of Health and Simon Stevens, chief executive of NHS England, from Monday 5 March.