Health Committee,

Meeting date: Tuesday, May 4, 2004

Official Report 294KB pdf

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Budget Process 2005-06

Item 3 on the agenda is the budget process. I welcome our adviser, Andrew Walker, who will assist us during this evidence-taking session. I refer members to the letter from the minister that has been circulated, which updates the committee on progress on implementation of its earlier recommendations. I welcome the minister to the meeting, together with Peter Collings, the director of performance management and finance in the Scottish Executive Health Department, and Julie Wilson from analytical services in the same department—hello again.

I thank you for your prompt responses to all my recent letters. It is useful to have them for the next meeting. I appreciate the fact that you have come for a session of nearly two hours this morning. I ask you to brace yourselves, although there will be a break after questions on the budget.

Last time I was here for two and a half hours without a break, so this will be an improvement.

If we have you for two and a half hours, we will keep you for two and a half hours. For the convenience of members and the minister, there will be a break between items.

We move straight to questions.

The annual evaluation report states that 12 of the 14 health targets are on course to be met. There is good evidence to support that claim for the targets to reduce premature mortality, but the evidence is much less compelling for the other targets. What is the basis for the claim that targets are on course?

It would be good for us to be challenged on the targets that are not on course. As the member points out, the health improvement targets are very much on course. At the weekend, there was considerable coverage of issues relating to coronary heart disease and stroke, but there is no doubt that the trend is that we are making significant reductions in mortality in people under 75. That is a legitimate issue to target. Obviously, we want fewer people overall to die from the big killer diseases, but the older people are, the more likely that is to happen. The particular tragedy of health in Scotland is that so many people have died prematurely from those illnesses.

Some of the waiting targets are on a longer time frame, but we believe that we are on track to meet the target for in-patient treatment. The fact that we met the target for a nine-month maximum wait by the end of December was an important signpost on the way. On cancer, the latest information is that 84 per cent of people are getting treatment within two months of urgent referral, so we think that we are on track to meet that target. We know that there have been particular problems with out-patient waiting in Scotland, but we are dealing with those in a radical way through the centre for change and innovation's out-patient programmes. We think that we are on course to meet that target, too.

In many cases, we are exceeding the target for access to health professionals. Recently I spoke to the Scottish primary care collaborative, which aims to offer people an appointment on the same day. Many practices in Scotland are already achieving that. It would be helpful if the member could flag up the targets that she thinks are particularly problematic.

I will assist Helen Eadie by passing her a copy of the AER.

I refer the minister to the following target:

"All hospitals to have made significant progress towards the Clinical Standards Board for Scotland standards on infection control and clean hospitals by April 2003 and to make further progress each year thereafter."

The report states:

"The first part of this target has been met. The Clinical Standards Board for Scotland/NHS Quality Improvement Scotland (QIS) and Audit Scotland reports on NHS boards' performance against infection control and cleaning services standards were published in January 2003. These showed that performance had improved but that some boards were still falling short in some areas. Local improvement plans have been agreed between Audit Scotland and each board in terms of cleaning services, and boards are being supported to further improve their infection control performance through the work of the Healthcare Associated Infection (HAI) Taskforce set up in January 2003."

The question is whether NHS Quality Improvement Scotland will be able to deliver on all those targets to ensure that all the necessary progress is being made.

We certainly think that we are on track. Problems were flagged up in the Audit Scotland report of January 2003, which showed that more than 20 per cent of hospitals had a clear need for improvement. In each case, the hospitals have agreed action plans with external auditors and the latest indications are that progress is being made. I am not in any way complacent about the situation, but all the indications are that improvement is being made in that area.

I did not understand the answer. How do you measure that? Many people are very concerned about hospital-acquired infections. You say that progress is being made, but how do you know where you are starting from or where you ought to be to show that progress has been made? How do you measure progress?

We are highly dependent on NHS QIS, which is the body that is incorporating the Clinical Standards Board for Scotland. It goes round hospitals and makes reports. In relation to clean hospitals, Audit Scotland has a role as well. We set the target against the reports of those bodies. We are not making the judgment; the external bodies that produce the reports and carry out the assessments do that.

They are doing the reports and the assessments, but you are the minister, so you have to set some kind of target. Am I correct? You need to say, "That is not good enough; the target has to be such-and-such." I am trying to establish how you measure progress. How do you know that it is being made?

If one is making steady progress towards a final standard that has been set by those external bodies, that is an acceptable way in which to proceed. The idea of having continuous improvement is good, as long as one measures it and can demonstrate progress. In this case, the ultimate yardstick is the standards that have been set by those external bodies. We are measuring progress towards those standards.

Has a time limit been set for meeting those standards?

We are talking about significant progress. We have not set a timescale for the achievement of absolute perfection; we are saying that we want there to be steady progress towards meeting those standards.

You started off by talking about the comment in the media at the weekend about coronary heart disease. I want to ask you a general question about that. It was highlighted that there has been a rise in the number of men who suffer from coronary heart disease and a rise in the number of women who are dying of strokes. Target 1 in the AER is on coronary heart disease and target 3 is on stroke. If those trends continue for the next year or two, where does that leave your key targets—targets 1 and 3?

The first thing to say is that, genuinely, we must consider trends rather than figures for one year. The figures to which you refer were not to do with under-75s, although that is not to say that we should not consider them carefully. The reality is that, although the increase that you have flagged up related to the incidence of CHD among all men in one year, the trend is still very much downwards. I think that there has been a 23 per cent reduction in the incidence of CHD over 10 years and a 30 per cent reduction in mortality. The position is similar for stroke—the trends are still downwards, notwithstanding the upwards move in one year.

The trends are what matter, but that does not mean that I am in any way complacent about the situation. More detailed analysis is required. Some people are saying that stroke mortality among women is very much to do with the aging population and so on. I will not give a final view on that, as further analysis is required. Even those trends are strongly downwards but, among under-75s, the trend is even stronger. That is where we have had significant reductions over the past few years. We are definitely on track to meet the target on that. Even the latest figures show a continued reduction. The two figures that Shona Robison mentioned do not affect the trend or the target for under-75s.

The British Medical Association gave us some written evidence that casts doubt on one or two of the minister's targets. There are three examples that I would like to run past him, and he hinted at one of them earlier on. The BMA says that, under the general medical services contract for general practice, offering 48-hour access is optional for general practitioners. It asks why the Executive has a national target and why it is committed to meeting it when the scheme is voluntary.

The BMA has been making that point about that target for a long time, but I have met a large number of GPs—most recently, two weeks ago at the primary care collaborative—who are seriously engaged not only in meeting the target but in surpassing it. The evidence that I am getting, not just from GPs but from the whole primary health care team, is that that is not only good for patients but is incredibly good and motivating for the staff who work in general practice. By changing the booking systems and taking a team-based approach to care, they are finding that the stress and difficulty of their job are considerably lessened. Doctors and other primary health care professionals on the ground are enthusiastic about that. I know that the BMA is still officially against the target, but I merely make the distinction.

David Davidson went on to make a further point. We have incentivised the target through the quality and outcomes framework of the new GMS contracts, so there is an incentive for practices to meet the target. Perhaps he is suggesting that there should be a stick rather than a carrot. Let us see how it works out in practice. As I indicated at question time last week, we are making enormous progress in reducing waiting times, and not just for seeing a GP, because the target is for seeing the appropriate primary health care professional. In practices involved in the primary care collaborative, we are getting beyond the 48-hour target and the target is to offer same-day appointments.

Massive strides have been made. Let us acknowledge the work that has been done in primary care. If problems are shown to exist that we had not anticipated, we can always look at other ways of doing things, but incentivising the target and acknowledging the fact that doctors and others in primary care realise the benefits for themselves will enable them to deliver.

My point is that many of them are trying to deliver anyway, regardless of whether the Executive has a target. If you put an incentive in place, it is for them to take it up or not to take it up. That is what an incentive is; it is not a stick. Perhaps what they are worried about is that a target may be seen more as a stick than as anything else.

I would like to take you up on another point. There is a target for cancer patients to be treated within two months, but I have a constituent who could not even get her breasts screened within two months. The big claim is that that is what will happen, but how can you be sure that it will be delivered? There has been a problem in England with that very target. Is there the capacity in the health service system to guarantee that it will be delivered? That seems to be where the Executive is going, but the BMA takes issue with that point.

The target is for 2005, but I suppose that one of the functions of targets is to focus people's efforts and priorities. In the case of cancer treatment, the target is very much directed at ourselves. As you know, there is a massive programme on cancer, involving the cancer strategy and building up staff and equipment capacity for diagnosis and treatment. We are in the middle of a big cancer strategy implementation, so we believe that we can meet the target. As I indicated, we are making significant progress towards it.

Of course the BMA can flag up specific concerns, because there will still be areas of cancer treatment and care where there are problems, and it is perfectly legitimate that they should be flagged up. I am merely saying that I think that we can do it, but it will obviously require a big effort.

You mentioned 2005. Is that a hope or is it a prediction of when the target will be delivered?

That is what we are aiming for and we believe that we can achieve it.

My final question is on smoking cessation. The BMA says that the target of a 2 per cent reduction is really not on. Why is the target not something like 10 per cent? Are you likely to stiffen your resolve and set a higher target?

At the moment, we are doing better than that. I am open to your suggestion that we could set a stricter target, as I hope that we will achieve better than that. The target was set some time ago, and I accept that we want to do better than it. Current indications are that we are doing a bit better than that.

Are you likely to consider changing your targets at the end of the Executive's consultation on smoking cessation, which will take place over the summer? Are you waiting to get that through?

There is on-going consideration of that target, as there is of other targets.

I have a tiny follow up to that. How do you measure smoking reduction?

I cannot answer that question in detail because I do not know.

I have a small supplementary question, seeking clarification. The target that David Davidson mentioned was to wait for no longer than two months from urgent referral to treatment, so the referral would have to be urgent. Can you define that?

That would be down to clinical judgment.

So some people might wait considerably longer.

Yes.

Waiting times will always involve on-going discussions with health boards, as you said last week. Has the time not come to confirm patients' rights to minimum waiting-time guarantees?

We have progressed significantly on the issue by giving guarantees beyond what applies in the rest of the United Kingdom, although I believe that similar guarantees apply in England for patients with heart disease. We have extended that to all in-patient treatment and to heart surgery and other heart procedures such as angioplasty and angiograms. That significant progress has taken place only this year. It is the correct way forward and it appears to be bearing fruit.

I know that you have lodged an amendment to the National Health Service Reform (Scotland) Bill to place the issue in primary legislation. I am against that and obviously there will be a fuller debate about that during the stage 3 debate on Thursday. If we give boards the legal duty to deliver treatment within a certain waiting time, we will be giving preference, in law, to elective surgery over emergency care and that is fundamentally wrong. At the end of the day, it would mean that, in an extreme situation, a health board or a clinician would be duty-bound to treat somebody who was waiting for elective surgery before an emergency, and that would be quite wrong. It would be wrong to give that status in law to elective treatment when it does not exist for emergency care.

In its evidence, the Royal College of Nursing suggested that the target of 12,000 more nurses by 2007 will not be sufficient. One of its key arguments is that the target does not take account of those leaving the profession. If you believe that you are on course to meet the present target, is there not an argument for making it more ambitious, for example by taking into account those nurses who are leaving the profession, so that the 12,000 nurses are additional?

No one is saying that we could get 12,000 additional nurses within that time. However, there is an unprecedented increase in the number of additional nurses entering the NHS. For example, last year a net increase of 1,000 extra trained nurses entered the NHS. We have figures on that and it is unprecedented in the Scottish NHS no matter how far back we look.

Recently, we had a constructive meeting with the RCN to discuss the issue. It is true that the 12,000 target is a recruitment target. Just because the other side of it is not embodied in the target does not mean that the work, which focuses on retaining the existing nursing work force, will not be done. It is crucial to ensure that as many as possible of the 12,000 extra nurses represent a net increase. We will also focus on student attrition. We have agreed to do further work with the RCN on that and I chaired the facing the future group on nurse recruitment and retention. The next meeting will focus on the retention of older nurses. I accept that the recruitment target does not tell the whole story; however, the fact of the matter is that it is still an important target.

If the target was phrased in terms of a net increase, how many thousand additional nurses would be recruited by 2007?

As I say, it is confusing when we are talking about nursing. Sometimes we talk about qualified nurses; sometimes we talk about the whole nursing work force, including health care assistants. If we focus on qualified nurses, 1,000 extra nurses was the highest number of extra nurses ever achieved in the history of the NHS in Scotland. Obviously, we want to improve on that, year on year, but, because 1,000 is the most extra qualified nurses that we have ever had, I think that a 12,000 net increase is unrealistic. We want to build on the position. I would not pluck a figure out of the air at this meeting, but we are continuing discussions with the RCN to try to establish agreement about the net increase that would be required.

It is important that we keep nurses within the NHS. Our new nurses are learning and do not have the experience, so it is extremely important that we keep the ones who have knowledge within the system.

I am disturbed by the number of people in my constituency who have approached me because they are having great difficulty in getting grievances in the NHS sorted out. I can think of three extremely experienced nurses whose grievances have not been settled although they have gone on for two or three years. If such information on health boards is held centrally—it may not be—do you have figures for the number of nurses who are suspended or not in work because of stress-related illnesses arising from the fact that their problems are not being resolved?

Some very experienced nurses are leaving the service never to come back to it. It distresses me that there seems to be no system within the management set-up to deal with such things quickly so that they do not smoulder for two to three years, by which time the NHS will have lost those nurses. I would have thought that that is as important as getting new nurses into the system, because new nurses need experienced nurses to help them out.

I agree that that is an important part of retention. I do not have figures for that in my head, but I can find out whether such figures exist. If they do, I will communicate them to you. Grievances are one area to address; health issues are another. Someone who attended one of my surgeries recently told me that, because of things that had happened to her, she needed occupational health support to go back to work. We need to consider all the issues relating to the retention of nurses—that is the correct way in which to proceed anyway if we are to value nurses. If we have the figures for which you have asked, I will certainly communicate them to you.

That would be useful for the committee, as we are about to embark on an inquiry into recruitment and retention in the NHS. Any information that we do not have to dig for will be gratefully received.

First, on the question of retention, you must have been disturbed by the reports over the weekend and the effect that they will be having on the morale of nurses and staff in the NHS. It has been suggested that the hard-working staff in the health service are about to lose substantial earnings. What is your comment on that?

Secondly, what moneys are available for work-force development and what barriers do you see in that area? We have a shortage of paediatricians, for example. I meet nurses who work in paediatrics who are not being allowed to develop as they should and could. How much money is available for work-force development and are we tackling it seriously to address the shortages that exist? What barriers are we coming up against in terms of interest groups that would prefer their control to continue and whose interest is served by the shortages?

I hope that there is nobody in the latter category.

We will consider that in our work-force planning review, in which we will bring some vested interests into play.

On your first point, I was slightly puzzled by the story in the Sunday newspaper. There are two main unions involved, but the reality is that the Royal College of Nursing has voted to support agenda for change by a 9:1 margin. The simple reason for that is that the vast majority of nurses stand to gain from agenda for change.

The issue that the newspaper article flagged up was that some staff will lose under agenda for change. However, at the end of the article, there was a reference to the fact that I had made it absolutely clear that nobody in Scotland would take a pay cut as a result of agenda for change—nobody will earn less cash next year than they did this year. Some people will gain more from agenda for change than others will and some people will be losers, but I have made it clear that there is an element of protection. I accept that ballots are still to be held by two of the main unions, so we will have to wait and see how that goes.

Your second question was about money for work-force development. There is a big budget line in the annual evaluation report for NHS Education for Scotland and most of that money is for the training of a variety of health care staff. There is also a specific budget line for nurse education and training. I remember that we had some discussion about those lines the last time that I was here, although that might have been for a previous year.

A lot of money is going into the area. In general, more money, focus and activity are going into work-force planning and development. All that takes time to bear fruit but, in the main staff groups, the numbers of staff are increasing—you will be aware of the partnership agreement targets for consultants, nurses and allied health professionals. We have a commitment to train more staff in each case, but there are also work-force development programmes for continuing professional development. Agenda for change recognises the professional developments that staff undertake in the rewards that they receive. Although there is a big agenda for work-force planning and development, that does not mean that more cannot be done or that problems will not remain. Such development takes a long time, particularly the training of doctors.

We appreciate that, minister.

You said that money is available. When was the budget set? Given the drive and acceleration of the acute services review and the centralisation programme, does the budget reflect what we need to do now? Many of our communities will increasingly depend on specialist and consultant nurses to deliver local services, which are very much in demand. Do we need to review the budget? Do we need to accelerate the process if we are to meet—even halfway—the demands of the communities that we represent for delivery of local health services?

We certainly need to keep reviewing and accelerating those programmes. I met the new chief executive of NHS Education for Scotland within the first week of his taking up his post in April. I thought that it was important to do that because NHS Education for Scotland is a key organisation. I spoke to him about specialist registrars, which is the level below consultants, to make sure that the expansion in that important area would take place during this year.

You mentioned specialist nurses. The expansion in the number of nurse consultants is a partnership agreement commitment and we are making progress on it. That is an important development not only for the delivery of care, but for the career opportunities that it provides for nurses. We are also expanding the numbers of allied health professionals and the opportunities that are available for them. We have programmes of work for each of the key staffing groups.

Money is obviously one factor in those programmes, but we also need to assess how many people it is possible to bring in within a given period. Shona Robison said that it would be nice to have a 12,000 net increase in the number of nurses over the next three years, but I suspect that, no matter how much money I threw at the problem, it would be difficult to find that number of nurses within that timescale without going in for mass recruitment from overseas. There is an issue about supply as well as money. We are making progress, but I am sure that the committee will ask us to do things differently once it has completed its inquiry.

Can you provide more detail about the moneys that are being allocated and whether there are any plans to accelerate the provision of those moneys? What discussions are taking place with the various organisations to bring about that change in numbers and to effect a change in the duties that people can perform within the health service? How quickly will those changes take place?

In addition to that, minister, do you have information—I appreciate that it may not be available or may not be able to be retrieved—on how many nurses leave the NHS to go into private commercial operations? Do you know how many NHS nurses become agency nurses? I would quite like to have that figure to see whether, instead of leaving the NHS entirely, people are coming back into the service at more costly rates.

That is certainly a big issue and we will provide the committee with the figures that we have on it.

Last week, the facing the future group, which I chair, published an important report on nursing work load. One of the report's key recommendations was that we need to exert downward pressure on the numbers of agency nurses and to ensure that local health systems convert agency nurses to staff on more permanent contracts. That is an important part of the way forward.

One way of attracting people into the health care professions is to provide access to continuing professional development. Does the minister sympathise with the RCN's desire to have three days of CPD each working year? Is there money in the budget to cover that?

We have not made a specific commitment on three days' CPD. At the moment, we have said that everyone is entitled to CPD. For nurses, in whom the RCN has an interest, we have dedicated annual funding to boost CPD by providing an extra £1.7 million a year over and above the existing CPD budget. Over the past couple of years in which that money has been provided, there has been a large expansion in CPD opportunities for nurses. However, we have not made the particular commitment that you mentioned.

I understand that specific moneys have been provided, but the nurses are seeking to be paid for those three days of CPD. In other words, the CPD should be done during working time. The health boards will require resources if they are to be able to provide that. Is there any money for that within the system?

The extra money that has been provided allows people to be released from their work to attend CPD, so that should not be an issue in the nursing initiatives that we have supported.

Can we have a breakdown of those figures?

If you want detailed information on how the £1.7 million has been spent, I can send it to the committee.

That would be helpful.

For the record, it is important to clarify that the concern about the target was raised by the RCN, which had been led to believe that the target was to recruit an additional 12,000 nurses.

Minister, you mentioned the target for nurse consultants. Will you remind us where we are with that? What is the target and how far away are we from meeting it? How does our target compare to the levels of nurse consultants in England?

I am perfectly willing to acknowledge that England is ahead of us in certain areas. I have been up front about that in relation to nurse consultants. It was a great frustration to me that so little progress on nurse consultants was made before the election. That is why I told the RCN conference a year ago that we would triple the numbers of nurse consultants from 18 to 54. I think that 27 are on the ground now, but I do not have the figure in front of me. More important is that a lot of other posts are being planned. Obviously, it takes some time to work up the details of the posts. We have made reasonable progress in the year since the election and we are on track to meet our objective.

The RCN is worried that filling the nurse consultant posts would lead to a shortage of other nurses. We cannot keep replacing doctors with nurses, because that would lead to a deficit of nurses to do the rest of the work that nurses used to do. The RCN flagged up that point in some of the documents that I read and I understand why it has concerns.

There are still not enough nurses on duty, especially at night. I understand that sometimes there are not enough nurses covering the job and that health boards are reluctant to pay for staff. I hear about such problems in intensive care and coronary care units, in which people cannot have operations because there are not enough nurses to do a lot of the background work that should be done. Such problems put stresses and strains on the nurse's professionalism. She may reach the point at which she must figure out whether she can continue to do the job to the standard to which she has been trained and, at that point, she may decide to leave.

The minister has already undertaken to try to provide the committee with statistics on the number of nurses who leave due to stress.

That is an issue, too, but the problem is also about employing enough nurses. I have spoken to nurses who have said that extra nurses are not allowed to be hired because of financial constraints on health boards.

There are financial issues. I agree substantially with what Jean Turner has said. Nursing issues have been important to me throughout my time as Minister for Health and Community Care. We are making progress, but the RCN and others say that we need to make more progress. We had a constructive meeting with the RCN, which is—along with Unison—fully involved in the facing the future group. We are addressing the issue in partnership.

I flag up the report on work load that came out last week. It is an important piece of work that will help to address some of the issues that Jean Turner raises. One of the problems is establishing the number of nurses that there should be in a ward or in a hospital—that can vary across Scotland, as people might not use the same methods to calculate how many nurses there should be on a ward.

The steering group's work on the project and the report that has been produced have carried that agenda forward significantly, so the number of nurses on a ward is now likely to be calculated more objectively and with greater consistency throughout Scotland. I recognise that there are serious problems with work load in some wards in Scotland; that is one of the major issues that nurses have raised with me over the past two years. The project has carried the work on that issue forward.

Jean Turner is right to mention funding, because there are funding issues. I am clear that there has to be an expansion of the nursing work force. We should remember—the matter is part of the work-force planning agenda—that the skills mix is changing across the board. Just because nurses are doing things that they did not do in the past—a major piece of work is on-going on nurse role development—that does not mean that they are also doing all the things that they did in the past; health care assistants or other health care professionals might be doing some of the things that nurses used to do. That is why work-force planning must be done on a multidisciplinary basis to work out some of those skills-mix issues.

This may be a very stupid question—it probably is and I probably should not ask it because it will make me look stupid—but is there any guidance on the number of patients per nurse? I understand that there are other intricacies. There may be guidance on the number of patients that a general practitioner can have, but is there guidance about that for nurses?

That is precisely the kind of territory that the work-load report went into. Sometimes, different hospitals use different systems and the work-load group has tried to introduce more standardisation and greater consistency. However, it would not be possible to give an overall ratio of nurses to patients. Intensive care is an obvious example of the fact that different kinds of wards require different numbers of nurses.

Is that being looked into?

If we have not sent you a copy of the work-load report, we should send you one. That report is, if I may say so, relevant to your more general work on the work force.

We do not have a copy, but one would be very useful.

Minister, we have heard what various organisations think of the national targets. Is this a good time to review those targets? Is there scope to change the emphasis? Last year, you suggested to the committee that two of your priorities would be service redesign and public involvement. I accept, as I think others do, that those issues affect existing targets. Do you agree that targets have to be realistic and flexible and that they have to be constantly assessed so that new priorities can be introduced? Targets that have been reached can be dropped. What kind of work is your department doing to evaluate targets and to change them?

The targets are for this spending review period—which is three years officially, but tends to be two or three years. Obviously, we are now considering the next spending review period. You make some fair points; we are certainly considering how we can achieve what the committee, in its recommendations, correctly calls "SMART" targets for public involvement and patient focus. The agenda is not just about the wider public; it is specifically about patients and their involvement. Achieving specific, measurable, achievable, relevant and time-limited targets for that is challenging, but I accept in principle that we should have such targets. We will certainly try to have them for the next spending review. I am not saying that the present targets are the final targets, because the situation is evolving. I do not disagree with the principle of what you say.

For the next spending review, will you be giving the committee information on how you intend to involve the public and the committee before targets are set or will we just hear about the targets when they have been set?

That is an interesting process issue to do with the spending review, but it is not really one for me to answer. As you know, an announcement will be made in the autumn. The arrangements will be the same across the Executive. Peter Collings will know about that.

Minister, did you say that the targets are not for you—

No—the targets are for me. However, Duncan McNeil's question was on the process of how spending reviews are developed and how committees are involved.

I thought that he was asking about input from the committee and the public in respect of those targets, rather than about processes. He was asking about substantial input.

Convener, I was picking up the minister on his point that there could be a role for the public and the committee in engaging in discussions on the targets that are to be set. The minister has certain priorities, but other priorities have been set by society in general, I suppose. How can we influence the process?

I was just making a point about the process of the spending review, which we are obviously already well into. I do not know what the involvement of committees in that process will be. I have no doubt that I should know, but I do not know what the Minister for Finance and Public Services has said about the matter. Peter Collings may be able to help.

Thus far, the engagement has been between the Minister for Finance and Public Services and the Finance Committee, rather than between him and committees more generally. We expect an announcement in September. If committees have views, it would clearly be extremely helpful to hear them before the summer recess.

Our budget adviser has been working to obtain financial plans from health boards for the current financial year. It is unfortunate that, although we are more than a month into the current financial year, we have been able to obtain only three such plans. That seems to be a recurring problem—at the beginning of previous financial years we have been unable to see the financial plans for all health boards. What are your views on that? Do you have any mechanisms in place to ensure that the situation does nor recur year on year?

We discussed that issue the last time I was before the committee, when we talked about the fact that things are out of synch. We are looking at the budget for 2005-06 and the plans that you have or have not received are presumably for 2004-05. However, no doubt you are saying that you would have liked to have had more plans from health boards for this year. I know that there has been at least one meeting with some committee members, if not all committee members, and Andrew Walker on getting more information from health boards. Peter Collings and Julie Wilson may wish to comment on those issues.

The meeting was with the deputy convener and me.

The reason why the committee has not received more plans is that a number of boards are still working on their budgets for this year. They do a first cut of the figures early on, but they are still evaluating how much pressure there will be, what developments they can afford and what savings they need to look for—there is a moving target.

We have said that we will provide the committee with a summary of the local health plans once they are all in. Some of them are finalised, but most are in draft and awaiting approval by boards. We will also provide some summary financial information on the forward plans of boards once we have a complete set. Julie Wilson can expand on that point.

Following the meeting at the beginning of March, we provided Dr Walker with all the information that we currently hold on the breakdown of the money into care programmes. It would be beneficial for the committee to examine what is spent on that basis. Once we have all the financial plans, we can link them together, to give the committee the past trend and the projection. On finances, the local health plans have a tie-up element at a very aggregate level.

We also supplied Dr Walker with information that he wanted to examine on high and low-value treatments. We should agree on a basket of that information before we get fully under way, but I thought that it would be helpful to look out the four or five items that he flagged up in the first instance. It might be useful if we have a follow-up session, because the type of information that the committee wants to build on for the next budget discussion may need quite a bit of work and we should not lose too much of this year if we want to be in a position where the committee has everything that it wants for next spring.

I welcome that helpful offer. Dr Collings, when will you be able to give us the information that you mentioned?

I hope to have it in June, but where boards are in the process varies. We are pressing them to provide us with the information but, as you will be aware from reports of health board meetings and the papers, some of them are still reshaping the budgets for this year. It is hard to judge, but I hope that we will have the information in June.

We have seen only three financial plans, but they predict financial shortfalls that will be covered by non-recurring money or cost-recovery programmes that will affect front-line services. People are concerned that front-line services may be affected by recovery plans to address deficits that have built up over a period of time. Does that give you cause for concern? How do you plan to address that issue when you see the recovery plans of the boards that are in deficit? Indeed, some boards face a substantial deficit.

Peter Collings can provide more detail, but I think that three boards are in deficit.

Obviously, boards face particular challenges this year, because all the new contracts will kick in simultaneously: agenda for change, which was mentioned in passing; the consultants contract; and the GMS contract, although the funding for that will not flow through the mainstream allocation to NHS boards, but will be provided separately through ring-fenced money. The fact that those contracts will come on stream together will present difficulties, but we will do all that we can to help boards in that difficult situation. I managed to distribute an extra £30 million just before the end of the financial year—boards obviously welcomed that money, but it will not address all their difficulties. I will see what else I can do during the year through any further distribution of money—for example, if we save money from central budgets, as we did last year with the £30 million.

The reality is that the new contracts will bear fruit, although it might take time for some of them to bear their full fruits. The new contracts present great opportunities to employ the work force differently by providing more team-based care and direct clinical care and by offering more flexible working. I certainly think that the contracts are worth while—they are very much about money for change in terms of service development and improvement—although they will present challenges in the year in which they start to operate.

It appears that some of the larger boards are hoping to recover moneys from the smaller, neighbouring boards to which they provide services. The recouping of such money appears to be part of the larger boards' recovery plans, but it places more financial pressure on smaller boards. Will you comment on that?

I presume that you are talking about money for cross-border flows of patients. There have been issues about that and I think that we are making progress, but perhaps we need to make more progress. Peter Collings will talk about that in more detail.

There is a range of issues in relation to that matter, one of which is whether the major teaching boards are adequately compensated for the complexity of the cases that they deal with when they take patients from other board areas. A lot of work has been done on that in the east of Scotland, where arrangements are fairly stable. In the west of Scotland, there remains a debate about whether compensation is adequate.

The minister mentioned pressures such as the consultants contract. Boards that provide services to other boards will expect that increase in their costs to be reflected in the payments that they receive from those other boards. The discussion about what would be a fair adjustment to payments to reflect the increasing costs must take place between the boards concerned.

Minister, you appoint health board chairmen and you meet them regularly—I think that you meet them monthly. What guidance or instructions did you give chairmen in advance of their preparation of financial plans for this year?

Again, Peter Collings can respond to that, because a lot of that work happens at chief executive level, as well as at chair level. Obviously, all boards must live within the resources that they are given; that is a key issue in health management and a primary duty of the chief executives—who are the accountable officers—even more than it is of the chairs. Within that context, boards have to take account of the priorities and targets that need to be met, which must be uppermost in their minds when they plan for forthcoming years. Obviously, we give them as much information and intelligence as we can about the various pressures that build up in the system.

The other point that we made, with which the boards completely agree, is that it is important to try to find savings on non-clinical costs. For example, there are savings on overhead costs from the move to single-system working and we are working with boards to see whether we can achieve substantial cost reductions in NHS Scotland by aggregating procurement. We have said that those areas are the first places in which they should look for savings.

So that guidance has been given by Dr Collings's department to—

Those points were made at meetings with the chief executives. As well as meetings with chairs, the department has monthly meetings with the chief executives, which are chaired by Trevor Jones as chief executive of NHS Scotland.

Does the minister's response mean that, in the main, he leaves it to the civil servants to deal with the mechanics, or has he given any specific details on the outcomes that he is looking for next year?

Obviously, the priorities and targets are set by ministers, so at that level there is full involvement. I take a great deal of interest in the state of the finances because, at the end of the day, money is required for all that we want to deliver. I am conscious of the issues and we talk about them at the meetings with chairs. A greater level of detail is gone into at the meetings with chief executives, but that is consistent both with what is said at the meetings with chairs and with the ministerial priorities and targets.

You said that three health boards are in some financial difficulties, but there could be more; Peter Collings said in his evidence that there are seven others that could go either way. You said that you do all that you can to help boards, but surely the matter comes down to one of two things. If you are fully funding the new responsibilities and boards are unable to manage with the money that you give them, there must be gross financial mismanagement at the local level. If that is not the case, the opposite must be true, namely that you are not fully funding the new responsibilities and boards therefore have to make cuts elsewhere—those cuts form the basis of the recovery plans—to meet the responsibilities. It has to be one or the other and, from the evidence of the health boards, I think that many elements of the new responsibilities are not fully funded. That must surely have an impact on the targets that you set, in that the health boards' ability to deliver on the national targets is compromised because they have to cut back on some of the service developments that would help them to meet those targets.

I think that Peter Collings will want to comment further on the seven health boards. The general point that you make relates to the way in which money is distributed to boards. We do not add up all the responsibilities of a board, aggregate the figures then give out the funding—money is not distributed to boards in that way. In the Scottish Parliament, there is three-year budgeting and, in historical terms, generous health budgets have been set. There are a lot of pressures in the system, but that is the way in which budgets are set. Within that, people have to make local decisions about priorities.

I would not make the distinction that you make between the new costs and other targets, because many of the new costs are for staffing, and how else are we going to deliver most of what we want to achieve? I do not accept that investment in staff pay, additional staff and new ways of working contradicts the aims of shorter waiting times and higher-quality care. I have acknowledged that, because of the introduction of the new contracts, more of the new money may be going into staffing this year than has been the case in the past, but I do not regard that as a bad investment for local health systems.

On the numbers that the seven health boards have sent us so far, I cannot say at the moment whether those boards will end up a little bit over or a little bit under budget, because they are sufficiently close to spending exactly to budget. As at the end of last year, they are not at risk of the numbers suddenly changing so that they are badly in deficit.

I would like to check one more thing. Is it your assertion, minister, that the new responsibilities that are now on health boards vis-à-vis the contracts and so forth are fully funded by the Health Department?

As I say, money is not distributed in the way that you suppose is the case. It goes out as a block to boards, from which they have to meet their various responsibilities. The money is not worked out by adding up all the different responsibilities of the health boards. As you know, we have three-year budgeting in health and the decision on funding was made at the time of the spending review, just as in September we will make an announcement about health funding over the next few years. That is the basis of health funding.

If there are particular pressures from the new contracts, as there are in this case, I will obviously try to help boards by redistributing money within the overall health budget. Indeed, I did so in March with the £30 million that I distributed and I will try to do a bit more of that this year. I do not accept that the situation that you describe is the way in which health resources are distributed.

If I may, I will give an example of something that has been brought to my attention. In Glasgow, for example, the £77 million of new money has been used for pay and price inflation, including for the new contracts. There is nothing left for anything else—nothing for your targets. The money has simply been put into staffing—there is a direct correlation. If it is possible to say how much is going to cover pay increases, inflation and the required staffing levels in Glasgow, it must be possible to do that in other health boards.

I am not quite sure how many other pressures are included in that figure. It is reasonable for the committee, in seeking information from boards, to ask exactly how much of the new money has been spent in a particular way. I do not know whether we have that information from all boards at the moment.

My adviser tells me that we have that information from three health boards. What we are trying to get at is the simple question whether boards are getting into greater deficit because they did not get enough money to cover inflation, staffing and everything else that arose as a consequence of the new contracts. The examples from Glasgow and two other health boards show that there is a direct link.

In the case of Greater Glasgow NHS Board, one of the issues is its decision last year to fund some costs out of non-recurring money. To that extent, the situation in Glasgow is not the same as that of the other health boards.

We might return to the issue as soon as my adviser stops frowning and comes back with a supplementary.

The other thing that I noticed about Glasgow is that although it had a lot of publicity for the things that it was not able to do, it was some of the service development that it wanted to build into its plans that resulted in the consequential reductions in other areas.

That is right. That is the point that is being made. After it had dealt with inflation and staffing costs and so forth, Glasgow did not have the money for anything else.

That is not quite the point that I made.

We will leave it at that. We can look at the Official Report and see what was said. No doubt I will be given further advice on the subject.

I have to say that I am not very happy with the answers that the minister has given, particularly to the last set of questions about the additional pressures on NHS boards. As the issue is one that I have raised with the minister before, I suspect that he will not be surprised that I am doing so again.

I think that your answer is a bit glib and does not acknowledge how serious the additional pressures are. Anybody listening to you would get the impression that, although there is a little bit of extra difficulty and things are a bit challenging, it is all going to work out and the situation is actually good. In fact, the consultant contracts involve more than £50 million of additional resources that health boards have to find. The consultants will be getting higher wages and better training and will be able to perform better, but that does not mean that there will be any more of them. In terms of meeting targets, there will be the same number of consultants but they will cost a lot more. Obviously, something will have to give if health boards are to pay for that. I do not think that the additional pressures have been properly taken on board. Further, I do not think that we know the full effect of other changes. For example, we do not know whether the new GP contracts will put additional pressure on boards.

I do not think that any of us or any business or organisation would like to operate our finances on the basis of hoping that a benevolent minister will rearrange elements of his budget and find a few extra million pounds. That is not a good way in which to ask health boards to operate. Do you accept how serious the difficulties are for health boards?

Is the £30 million that you said that you have already distributed to try to help out a one-off payment or will it be included in the health boards' baseline budgets for next year? If it is included next year, will it be counted as being additional money? Members of the public might think that health boards get tremendous amounts of additional money every year but, in fact, there is such a great amount of committed expenditure and money that has already been accounted for in another way that the amount of extra money that health boards have to spend on new developments is quite minimal.

Do you accept that health boards are facing significant and unusual pressures this year? Is that £30 million going to be counted as part of health boards' base budgets in years to come?

I am sorry that I have given the impression that you describe. I did not intend to and I think that I have said on several occasions this afternoon that there are particular pressures this year because of the introduction of the new contracts and that I will do everything that I can to deal with those pressures within the budgets for which I am responsible.

I assure you not only that the investment of £30 million will be repeated but that I am confident that, before too long, I will be able to find more than £30 million to distribute to help boards to deal with the additional pressures. I am not being glib in any way. I acknowledge that there are particular pressures on boards this year and I am determined to do everything that I can to support boards. I am not fundamentally disagreeing with you.

We are asking for financial plans from health boards, but they do not know what their finances are going to look like. They do not know whether they are going to be given extra money to meet the additional pressures. Do you think that that is an acceptable way to have to run major organisations that are trying to deliver key policies of the Government?

That is precisely why I hope to find some extra money for them in the near future. I want the boards to be able to take that into account throughout the year. Equally, however, they have to examine their budgets seriously. Obviously, we do not want patient care to be affected in any way as we want to improve and develop it but, as Peter Collings said, boards need to examine seriously the money that they are spending on services in other, non-clinical areas. We have a big agenda in the Health Department involving shared services and saving money through the way in which we deliver non-clinical services.

At both national and board level we must continue to seek ways of saving money in non-clinical areas. Boards should do that, but they know that we will distribute some extra money. That is not something that I am announcing out of the blue today—boards have been told that some more money will come. However, they know that the situation will still be challenging. I acknowledge that that is the nature of this year. I am doing everything that I can to make the changes as deliverable as possible by boards. I assure the committee that I will pull out all the stops to do that.

How was the £30 million distributed? Who got it for what?

The Arbuthnott formula was used.

Can you provide the committee with an estimate of what the new contracts will cost each board? As we have said, the boards are just meeting policy requirements. I ask Kate Maclean to develop that point. I would like the minister to clarify the situation.

That is interesting. Obviously, money has to be distributed using a certain formula, but in other Executive policy areas distribution of money has not been equal in all local authorities, despite the fact that a formula was used. I refer to the McCrone settlement for teachers and the concessionary travel arrangements. Does the same apply to this money, which has been distributed specifically to fund consultants' new contracts? Would it not be better to distribute the money based on how many consultants there are in each health board area, rather than on the Arbuthnott formula? I know that there have been complaints in the past.

The money has not been distributed specifically to fund the consultant contract. You make an interesting suggestion. Given that the consultant contract is subject to individual job plans with every consultant in Scotland, the issue is not just the number of consultants but how many sessions they negotiate with boards. Distributing the money on the basis that you suggest would be a very complex procedure. I know that you have questions about the Arbuthnott formula, which you may ask later, but I still think that it is the fairest means of distributing the money.

It would be interesting for us to know how many consultant sessions will be provided per health board, rather than how many consultants each board employs, and how much of the additional £30 million each board has received. We could then see which boards have benefited more than others.

Because we have to produce our report next week, we will draft a letter and circulate it to members later today or tomorrow, so that they can have input to the minister and, hopefully, get a response before the report is finalised.

I am sorry to labour the issue of the consultant contract, but I want to pursue the point made by Janis Hughes. We welcome the additional money, which will relieve pressure on boards. Over recent months, boards have lobbied us concertedly about the shortfall and the disagreement about what should be paid. More important, what is in this for the patient? Although we welcome the money, it will have little impact on the patient. Today you said that the contract was worth while. When he was asked about the patient benefits last week, Peter Collings said that we must pay the going rate to retain people and that if we do not, we will not fill vacancies. He also said:

"The other changes are, I agree, longer term. They are about discussions that are going on now about job planning for consultants and whether changing how they are doing the job—how they use their time—could benefit patients. We will have to see how that goes and whether there are benefits for patients out of that. We are monitoring those benefits to see how long they take to emerge."—[Official Report, Health Committee, 27 April 2004; c 740.]

How much have the contracts cost us up till now? When will patients see the benefits from that? Who is pulling out all the stops to get the contracts in place as soon as possible so that we start to get value for the money that we have invested?

The contracts will be in place soon, but job planning is not a one-off process. The job plans will be continually revised and developed. That is why some of the advantages will take longer to come on stream. Redesigning how care is provided cannot be done in the short period of time that is required for the initial job plan.

In that sense, the contract provides opportunities that must be grasped by the managers on the ground. We have put a lot of effort into communicating to the service the need to take the opportunities that are provided by the new contract. Although the contract is a good pay award, it is primarily about getting more guaranteed clinical care from every consultant in Scotland. Consultants will have to provide seven and a half sessions as a minimum. We know that a large number of consultants have been doing that anyway, but some have not. The contract provides us with guaranteed minimal delivery of clinical care.

The contract provides wider opportunities for managers to have more control over how the consultant's working week is organised so that the consultant can fit into the whole health care team rather than operate as an autonomous individual, as has traditionally been the case. The contract presents a big change for consultants, but Peter Collings is right that it will not suddenly show up in a one-off change in a few weeks' time when all the initial job plans have been agreed. However, we will have made a start that we can build on and develop.

The GMS contract, which has been thoroughly discussed in the Parliament, presents similar opportunities for the delivery of higher-quality primary care for patients. The third contract is agenda for change. As I have already highlighted, agenda for change rewards people for the skills that they use and the roles that they perform by providing a greater connection between pay and the job that a person does. All the contracts will help to improve the quality of care, but it will take some time for those benefits to show up.

We do not expect a big bang, but we want some confidence that we will see additional service sessions. When can we expect to see those? 2005? 2006? 2007?

We will see some benefits right away, in the sense that all consultants will be required to do seven and a half sessions of clinical care. That will start very soon, once the initial job plans have been signed up to. However, some of the other redesigning of services and roles will take a bit longer.

Why do you not just say that you do not know?

That is not the correct answer, so why should I say it? I cannot say what things will look like in 2008 and it would be completely wrong of me to do so. David Davidson and others would jump on me if I sat here and said exactly what every consultant in Scotland would be doing in 2007, 2008 or 2009. That will be subject to the job planning between local managers and local consultants. My job is to ensure that they do that job properly and that they seize the opportunities that are provided by the consultant contract. My job is not to fill out the job plan details for every consultant in Scotland.

The consultants are catching up with the junior hospital doctors, so they will certainly be paid better for what they do. Do you expect the bill for the waiting times initiatives to go down as a result? Will consultants do that additional work within NHS time or will they still get paid £500 a session to reduce waiting lists?

Waiting times initiatives will still exist, but they will be standardised across Scotland. Up till now, the way in which the rate that is paid could be inflated has been a problem in certain parts of Scotland, so there will be more standardisation on that. However, given the job planning and the new contracts, we expect that there will be less need for specific waiting times initiatives in the traditional sense.

A lot of money has gone into such initiatives, but we were surprised that the figure for Greater Glasgow NHS Board was—I think—only £2 million.

I am almost feeling sorry for health boards, because at one point I thought that you said that you had ring fenced the money for consultants' salaries—

I said that the money for the GMS contract is separate from health boards' money.

If Greater Glasgow NHS Board, which is nearly £60 million in debt, has to claw back about £37 million in the first year and the rest in the second year by cutting a lot of services, patients will suffer greatly as a result of the new contract.

I would not like to manage a health board if I could not plan ahead because I did not know how much money I would receive to pay for all the salaries that I had to meet. If the Executive is saying, "We have decided that everyone will have a new contract and be paid more and it will cost this much money", that money should come out of the central coffers, so that health boards can continue doing what they do without cutting any services. Efficiencies in relation to waiting times should not come out of the extra money; that is divisive in the work force and makes people angry because they think that money is unnecessarily being spent to meet waiting times targets.

I feel sorry for health boards. The money should come from central Government and boards should not have to meet those bills.

The money is coming from central Government—I do not think that I can add to what I said about that earlier. I recognise the pressures on health boards, but boards have known for a long time how much money they will receive. In March we supplemented that to some extent and we will seek to do so again in the near future.

I note that you said that the money for the GMS contract is ring fenced, but we must consider what boards will be expected to pay out in future. Three boards are currently in deficit and seven are hovering around break-even. What do you anticipate that the situation will be this time next year and what will you do if the budget down south does not bring the routine increases to Scotland?

We are not looking "down south", as you put it, in that timescale, because such matters are considered in terms of spending review periods, as I said, so in that sense there is no annual allocation. We know how much money we will have in 2005-06 and obviously we are trying to get the best intelligence from boards about the pressures that their systems are under. Obviously, we also have our own information and we want to take early action. It is precisely because we recognise the pressures in the system that we seek to find more money centrally to send to boards in the near future.

I am repeating myself when I say that boards face particular pressures this year. We are taking a series of actions to deal with those. At the Audit Committee last week, Peter Collings was asked about capital-to-revenue transfers. We hope to help boards by resolving some of the issues around such transfers and I think that we can make progress on that, which is good news for boards. That is one way in which we can help and, as I said, a second way would be to find extra money to distribute in the near future.

It might save time if you could send the committee a note to inform us how you set criteria for recovery plans and how you judge such plans. You said that everything goes out on the Arbuthnott formula, whether or not there is a problem, but different boards will have distinctly different problems.

I am sure that Peter Collings can provide that information. He could speak at great length on the subject, too, but you have not asked him to do that.

I think that you were making the point that some people might say, "If one board has a big deficit, why don't you just give all the money to that board?" Perhaps that is not what you were saying. We think that, on the whole, Arbuthnott is fair, because we do not want to appear to reward a particular board. Other boards might say, "We have been managing our finances for a long time and now we are being punished, in effect." It is a difficult argument, but in general we think that it is best to distribute money on the basis of Arbuthnott, because that is the fairest way to do so, although it is not perfect.

It is nice to hear you admit that. I was not giving a view; I just wanted to find out what your view was.

Last week, the Scottish medicines consortium ran a seminar for MSPs, which was very informative. One point that came out of the seminar was that when new medicines are cleared for use many health boards do not have the money to take the medicines on board, because many of the medicines are quite expensive, although they might improve health. How does the Health Department ensure that the recommendations of the SMC are carried out on the ground?

You raise a series of issues. We have a new system and we have made significant progress in expanding the role of the SMC so that new drugs can be considered well in advance. Chief executives and others are involved in the SMC, so boards have quite a long lead-in time if a new unique drug is recommended for use throughout Scotland. Planning has improved in the past year and we have tried to address postcode prescribing, which has been a big issue for the Health Committee and the Health and Community Care Committee over the years. We think that we have made significant progress.

You asked how we ensure that boards implement the recommendations. We certainly want to establish that they do. If anyone had evidence that a board was not implementing the recommendations, I think that that would quickly be drawn to our attention. I do not think that the SMC's recommendations would be ignored on the sly; it would be perfectly obvious if a drug that had been recommended was not being prescribed in a particular board and we would take appropriate action if that were to happen.

Are you saying that clinicians have the right to prescribe in the best interests of their patients, as long as a drug has been approved, so boards must live with that?

That is absolutely the case, yes.

Thank you. We will have a short break.

Is that the end of questions on the budget?

Yes. The next item will be consideration of your letter of April 2004 on the appointment of an expert group to develop a national framework for service change in the NHS and the final item will be hepatitis C.

Meeting suspended.

On resuming—