A new covenant for the NHS

21 September 2016

Rt Hon Lord Lansley CBE


Check against delivery

It is four years since I was secretary of state for health. More, since the passage of the Health and Social Care Act. A great deal has happened to the NHS, within it and out with it in that time. Frankly, too much to be able to assert with any certainty what the Act's consequences are today, as distinct from the actions and policy decisions taken over the last four years. 

But the Act was only one part of a more comprehensive reform plan, as best represented in the White Paper Equity and excellence from July 2010.

So I intend this evening to focus principally on the extent to which those reforms are being implemented, or not; and their continuing relevance to tackling the problems facing the NHS today. And I want to offer, with the proper reservation that I am no longer continuously and daily engaged with the NHS in the way that I was for a decade previously, my personal view on the way forward.

My starting point today is the same as it was a decade ago. That anyone who spends time with the NHS, as I did, cannot fail to be impressed by the skill, commitment and care given to so many people and the sheer scale of the clinical knowledge brought to bear in seeing and treating nearly a million people a day. That many of these were capable of becoming leaders of the service if only we gave them the chance and the powers to do so.

The NHS should stop being a political football and should become more independent

At the same time, one saw many in the service who realised that despite being among the most cost-effective healthcare systems in the world, many of the systems and structures of the service were not keeping up with the best systems for customer relationship management and responsiveness, procurement, electronic data management and human resource planning. This despite big cash increases in the previous decade. However, productivity was falling while bureaucracy increased. Change was needed.

So the reforms were constructed on the basis of several key propositions and a number of complementary structural changes.

The propositions were, in brief, that:

The structural changes required for these included the NHS Commissioning Board, now the self-styled NHS England, clinical commissioning croups, Monitor and TDA, health and wellbeing boards, HealthWatch, Public Health England, Health Education England, the Dilnot Review and the Care Act as well as the Health and Social Care Act.

Complementary to legislation was the creation of the NHS Outcomes Framework (and those for public health and social care), the shift from 'any willing provider' to 'any qualified provider' and the extension of clinical audit and introduction of clinical standards through NICE.

I knew legislation was going to be the most painful process. I had seen how Alan Milburn's plans were cut back and almost abandoned, even with a big majority. But you simply cannot make the NHS more independent without legislation. You can't give powers to local government without it; and you can't entrench the devolved powers for a generation without it.

Quote mark The political opposition to the Bill largely consisted of attacks on what wasn't in it, not what was

I know nobody now wants new NHS legislation. Some want simply to ignore the structure and do what they like. But that misses the point. It is the 2012 Act that gives us those powers. No NHS England, no Five year forward view. There is no way political parties would have signed up to a political DH-led document. And I don’t hear now that health and wellbeing boards, and the integration they facilitate, should be abolished.

Autonomous CCGs are free to combine, to integrate (indeed, the statute gives them a duty to do so) and to delegate authority to new devolved authorities.

A stronger critique has been to say it was too much at once. Bite-sized pieces are better.  But I knew the politics were against that. The only realistic moment for legislation is early in a new government with a majority.

And, in reality, the political opposition to the Bill largely consisted of attacks on what wasn't in it, not what was. You’ll be delighted to know I’m not going to rehash the arguments of four years ago - but let me just say, it didn't extend competition, and it didn't promote privatisation, as I hope you know.

It forbade discrimination in favour of private providers; it didn't promote competition against integration, it expressly required the development of integrated services. Any qualified provider wasn't even mentioned in the Bill. And I should note that the principles I set out earlier were in the 2010 Manifesto, which did not say “no top-down reorganisation”.

Subsequent accusations of the cost and disruptive effects don't hold water. Last year, final figures showed the cost of the reforms was £1.4bn, but the savings in the last parliament were £6.9bn. The NAO described the completion of the transition on time and on budget as a great achievement, the "Nicholson Challenge" on savings was delivered; by 2013 NHS waiting times were the lowest ever and high to 2013-14 the NHS delivered a surplus overall in each year.

But the rather dispiriting conclusion I have reached from the process is that for a Conservative secretary of state and prime minister there are only two options with the NHS: do what they think is right or necessary and be prepared for the accusations of cuts and privatisation to fly, or do nothing.

I hope that by doing what I feel is right and necessary – and at least getting the substance of the White Paper nailed down in legislation - will mean future ministers don't have to go through that process again.

I should say, however, that in recent months the question most often put to me is “I bet you're glad you're not secretary of state now?" They mean by that being subjected to the toxic attacks like those on Jeremy for pushing forward with plans for a seven-day service. I deplore the personal character of those attacks, frankly worse than anything I had to put up with, when I know that Jeremy sees it as an essential part of his objective to focus on how patients can be safer in the NHS."

It could be said that the junior doctors' dispute is nothing to do with the reforms, but I would just say three things: first, that it is in my view unethical potentially to inflict harm to patients in pursuit of what is a self-interested campaign; secondly, that the BMA's actions are nakedly political (as they were in 2011) and are in stark contrast to my experience of negotiating with real trade unionists like Dave Prentis, (on NHS pensions) who see it as their job to get the best available deal for their members and, when they judge they have it, to do the deal; thirdly, that Jeremy Hunt has a right and responsibility to speak out on behalf of the public, but that responsibility need not have extended to being directly party to the negotiations. The reforms imply independent action by the NHS. Bruce Keogh was pursuing the seven-day service on a clinical basis. NHS England and NHS Employers should have been the parties to the negotiations with the junior doctors committee. Don't give the chance to the BMA to make the NHS their political football any more than the politicians.

So, I can say what the reforms were intended to do and not to do. More difficult now to say how far they have achieved what I hoped they would. It would be easy to take the 'Zhou Enlai' [1789/1968/1972] defence, that it is too early to say, but there are compelling reasons for uncertainty. Firstly, because as Tony Blair observed of his public services reforms, structural change is a necessary but not a sufficient, condition for reform. But he was told to change culture, not structures and concluded that he was wrong. One must do both, but recognising that culture eats strategy and it can certainly eat structures. In this case, to a large degree, it has. Even as the past and present government has been following up with a push for a cultural shift in prioritising patient safety, elements of the NHS have been busy reverting to type on management and priorities.

When I hear ministers say that they have gone beyond competition and choice, I know that means that they have by-passed it

What this has meant is that many of the reforms have simply not been pushed forward. When I hear ministers say that they have gone beyond competition and choice, I know that means that they have by-passed it. When I see reversion from tariff to block contracts, I know that it is going back towards a system which manages demand by constraining supply. And I have to say that if block contracts have for years been a block on commissioning equitably for mental health services, why should anyone in provider acute trusts think it will work any better for them?

And, most obviously, some of the plans for sustainability and transformation plans are a clear attempt to shift back in time and apply the same solutions now as were applied or sought to be applied when the NHS went into deficit in 2006. Top-slicing commissioning budgets. Shifting around deficits.

Shutting beds and closing units on the basis that making services less accessible reduces demand. And so it might, just as opening walk-in centres didn't divert demand from GPs and A&Es. But it isn't the right way to improve outcomes, unless as in the 'Improving Cancer Outcomes' programme, there is an evidenced case for the concentration of services in fewer, better-resourced centres.

The STPs will differ in character and intent. Where they are designed to enable the whole health and care system redesign services to reflect patient need and innovative approaches, to enable resources better to match need, they are to be supported.

Where they are a device to manipulate deficits and drive the commissioning process from the perspective of the providers, they will lead to conflict and disintegration, not integration.

We should not allow the tendency to monopoly to take over in the NHS any more than in other sectors. The result is always the same: short-term gain but long-term loss to consumers through lack of innovation, contestability and responsiveness.

So, if STPs are to be a feature of the NHS landscape they have to be commissioner led. They have to reflect the results of population health management. They should prioritise prevention. They have to be owned equally by local authorities and NHS. They should redesign services around patient pathways with contracts and payments which correspond. The key performance indicators should reflect the NHS Mandate and be both financially sustainable and seek to improve outcomes.

Of course, the driving force behind STPs is the emergence in the last two financial years of substantial deficits. Those, and the reasons for them, further muddy the waters of what the discrete impact of the reform process has been.

The Francis Report, necessary as it was to expose the full awful reality of failings at Mid-Staffs (and to be the basis of a drive for quality and safety in our hospitals), did not need to trigger a shift from measuring outcomes to inputs. If given nursing ratios deliver better outcomes, then why not measure the outcomes and allow the hospitals and clinicians to determine the staffing mix, technology substitutes and be free to innovate without a tick-box stopping them?

Rising agency costs and staffing shortages are one aspect of the deficit. When I hear talk of the benefit of SHAs I remember how in 2011 they put in place the plans to cut nurse training places. I stopped the cut in midwifery training, but I wish I'd gone further. But at the time we did not expect the increase in nursing numbers prompted by Francis. Where medical staffing is concerned, we presently are still dependent on pre-2010 decisions on training numbers.

Quote mark If given nursing ratios deliver better outcomes, then why not measure the outcomes and allow the hospitals and clinicians to determine the staffing mix, technology substitutes and be free to innovate without a tick-box stopping them?

The deficits are, however, the product of other factors. The NHS England assumption of responsibility for specialised commissioning has inevitably led to a levelling-up more than down, with cost implications; and the failure to implement value-based pricing from 2014 led directly to the consequent Cancer Drugs Fund budget overrun.

But each of these issues and others should not obscure the simple fact that in 2010 we knew we had to implement a tight budget squeeze for five years, but we never thought it would last for ten. I am proud that I secured a real terms increase for the NHS, not just the commissioning budget, but including Health Education and public health within the ring-fence. And we were in surplus up to and including 2013-14.

We know what has followed, but I will give you the numbers in any case. In 2012-13, income growth of 3.8%, expenditure growth of 3.7%. In 2013-14, income growth of 3.2%, expenditure up 4.2%. In 2014-15, income up by 3%, expenditure up by 4%. And in 2015-16, income up by 1.9%, expenditure up by 4%.

These figures do not speak of a loss of control of costs, but a combination of persistent increases in demand and cost, with a sharp reduction in income coming through to Trusts.

At the heart of this, is the steep decline in social care provision. When Nuffield and The King's Fund said there had been a decline in social care provision of a quarter, that understated the pressure on the NHS.  As expressed proportionately to the growing number of older people, local authority-funded social care has gone down by over 40per cent. Many more frail elderly are tipping over into NHS emergency or urgent care than previously and, given the NHS approach to seeking to resolve their multiple morbidities, the costs have escalated. And so we have record numbers of delayed discharges and deficits, while residential home beds lie empty.

I referred earlier to the Dilnot report. It was intended to be introduced this year. It is now in the "not now, maybe not ever" tray.

This is completely wrong. Local government were frightened of Dilnot because of the cost of looking after the minority in long-stay residential care exceeding the threshold. Because the threshold was set higher, they rightly judged that few older people would buy insurance, they would continue to self-pay and fall into means-tested care early, yielding no short term gain.

My original plan was to help fund Dilnot through ending the exemption on ones' own property in the domiciliary care means test. This would increase contributions by some £1.3bn a year, delayed somewhat by the universal deferred payment scheme.

The Treasury's unwillingness to grasp this nettle four years ago has not in the event relieved them of a financial burden. They increased the grant, then allowed extra precept funding to councils and then took even more from the NHS via the Better Care Fund.

Frankly, for two years in 2011 and 2012, I and my colleagues had been willing to fund any local authority spending on equipment, adaptations and technology or reablement scheme which would directly help the NHS. We weren't willing to use the NHS budget as a covert route to funding local government's statutory social care responsibilities. Nor should it now. The government should centrally fund the £2.5bn currently top-sliced from CCG allocations and handed to health and wellbeing boards, and also remove the domiciliary care exemption, so as to bring forward Dilnot, to promote affordable options for insurance against the cost of long-term care.

Tackling the costs of social care in this way will make a significant difference to NHS finances. The front-end loading of the spending review increase will enable deficits to be tackled this year. Retaining BCF funding within CCG budgets will avoid what would otherwise have been a further severe financial gap in each of the following two years.

The government should centrally fund the £2.5bn currently top-sliced from CCG allocations and handed to health and wellbeing boards, and also remove the domiciliary care exemption, so as to bring forward Dilnot, to promote affordable options for insurance against the cost of long-term care.

Longer term, it is essential to be realistic about NHS finances. It was never realistic to assume that the rate of efficiency savings in this Parliament would be so much greater than in the last. The combination of cost pressures and demand pressures, even if offset by efficiency gains system-wide at 2 per cent, would mean further substantial deficits which, given provider deficits carried forward, is unsustainable.

It is commonly said that the cost of the NHS is unsustainable long-term. Frankly, I think that is nonsense. Since 2010, the health budget has a proportion of GDP has fallen and is set to fall further. As a straightforward measure of affordability, we can certainly afford the NHS. As the Commonwealth Fund attested, we have among the best systems, most cost effective and certainly the most equitable. But we want it to be excellent too and however cost-effective it may be, if we want that, we will have to pay for it.

At each of the last two general elections, the Conservative Party has committed to increase the NHS budget, in each case by more than Labour promised. At the referendum, on the one hand the public were told that staying in would mean a strong economy and more money for the NHS; on the other hand, redirected EU budget contributions and, yes, more money for the NHS.

So the public have a right to expect a Brexit bonus to the NHS. It clearly should be no later than 2019-20 fiscal year; and it should not be less than £5bn a year.

I see no reason for extra NHS-hypothecated taxes. That simply presents a risk in the future and a constraint on the budget now, and - frankly - it is impossible to find a single tax that isn’t somehow cyclical and wouldn’t have to be topped up with funds from elsewhere at some point. If the government is committed to funding something, it finds the money.

And we have now two examples of commitment to funding as a proportion of GDP, international aid and defence. Why should the NHS be any less a long-term commitment? And, given the need in my view to entrench NHS independence, I believe a floor on UK-wide NHS spending set at 7% of GDP (or 7.3% as it may be with 2019-20 increase) would provide a basis for a fiscal and services covenant between Parliament, public and the NHS.

What should such a covenant include? In the first instance, a commitment to the NHS constitution and the maintenance of a comprehensive healthcare service. Secondly, a commitment to be accountable for the maintenance, improvement or remedial action on outcomes in the NHS outcomes framework. Thirdly, delivering in practice on the statutory duty in the 2012 Act for parity of treatment between physical and mental health. And, fourth, to deliver on the statutory duty to integrate services, around the needs, wishes and choices of service users.

I would also want to see the NHS commit itself to continuing reform. A less kind observer of the NHS might say that it is always in one of two conditions: either flush with cash increases, in which case it sees no need to change or with tight budgets , in which case it says it cannot afford to change.

Quote mark So the public have a right to expect a Brexit bonus to the NHS. It clearly should be no later than 2019-20 fiscal year; and it should not be less than £5bn a year.

A financial commitment must come with reform. Clinical leadership, which the King's Fund report on CCGs suggests is there if the GPs feel they aren't scapegoats for cuts.

Innovation, which Innovation, Health and Wealth in 2011 set out and the adoption of innovation is as yet not systematic as it should be. To strengthen Academic Health Service Networks and procurement collaborations. To use the Accelerated Access Review to push early adoption of new breakthrough technologies. Adopting disruptive but exciting technologies like regenerative treatments, genomics and 3D printing.

Commitment to giving patients access to the treatment right for them and then negotiate the cost with the Pharma industry.

Reviving the drive to embed patient choice of GP services and embrace AI technologies to modernise GP management of patients.

Service redesign, as for example in making '111' the comprehensive gateway to NHS services with high-quality algorithms and clinical back-up which was intended. 

And a focus on commissioning, using population health management expertise from wherever in the world can do it best, and developing a contract and payment system which pays for quality and outcomes, using capitated payments, bundled payments and outcome -relayed payments as well as quality incentives in activity-based payments. Tariff reform is clearly essential; is unfinished business; has been a key a key failure in recent years and must be used to drive reform.

So, I have hoped this evening to set out why the Act should be seen in context;

what the reforms were intended to achieve;

that I believe that some criticisms are demonstrably false or unjustified;

that significant elements of reform have not been implemented;

that the NHS is in any case more autonomous and is free to adopt approaches of its' own choosing;

that the deficits and their causes must be tackled now;

if we do, the autonomy and accountability of the NHS can and should be enhanced;

and that, with commitment to future support, the NHS should embrace change and reform once more.

Thank you, again, for the opportunity to speak to so many of those charged with delivering vital care. I have always appreciated and supported what you do. I hope today I have shown my continuing interest and support. I wish you well in your endeavours.

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