Budget Process 2003-04
I apologise to the minister for keeping him waiting, but our evidence-taking session on the School Meals (Scotland) Bill overran.
We have already taken evidence on the budget for 2003-04 from officials. The committee decided this year that it would examine the budget by talking to two health boards—Lothian NHS Board and Highland NHS Board. We questioned them about what happens within their structures and how they allocate the funding that they receive from the Executive. We also examined how the health boards prioritise services and how links are made between national and local priorities.
As the minister will know, we are not a finance committee but a health committee, so our questions will tend to concern generic health matters rather than the nuts and bolts of the figures. However, we may throw him a googly. Does the minister want to make any comments or is he happy for us to go straight to questions?
As we are running late, I will not make a big opening statement. We have made efforts to take on board some of the concerns that have been expressed in previous years, so the health section of the budget contains more information than previously. However, I will not say that it is the last word.
We realise that there are difficulties inherent in the fact that most of the budget is distributed to unified boards. In that sense, the committee obviously made a sensible decision to talk to the boards so that it could find out how they spend the money. We are open to making further progress, but I am sure that the committee will understand that the reason for the inherent difficulty is that, as so much of the money is spent by boards, the Executive cannot decide exactly how much will go into each specific area. Boards make their own local decisions.
It will be of no surprise to the minister that I want to start off by asking about the new framework for the accountability process that is being put in place this year. At a previous meeting, we highlighted our concerns about the openness and transparency of that process to John Aldridge, who is present this morning. He has been kind enough to provide us with further information, but I remain concerned that the process is not open and transparent. I am also concerned that some time may elapse before the outcome of the accountability review process is made public knowledge, which could give the NHS boards the opportunity to water things down in their reports to their local communities. Do you have plans to remove some of the curtains surrounding the performance assessment framework?
It is not intended that there should be curtains around the framework. The performance assessment framework is an important development, but this is its first year of operation. As with the layout of the budget document, no one is saying that this is the last word on the matter.
At the moment we are concentrating on the content of the performance assessment framework. I was not aware that there was widespread criticism of the framework. The aim is to capture a wide range of important areas. There will be an emphasis on quality, patient focus, access, health improvement and health inequalities. We welcome the way in which the framework has been constructed, but it can evolve and we can try to make it better.
The framework includes both quantitative and qualitative indicators. The former are easier to deal with. There are concerns about whether all the information will be made public and about the time scale for that happening. Transparency is fundamentally important. We cannot have the culture of improvement in the health service that we want and support without having a culture of transparency. The information that we gather through the performance assessment framework will not be hidden; it will be made available.
My only caveat is that parts of the framework are evolving. Some of the qualitative indicators will not be as developed this year as they will be next year. I am not saying that this year all the information will be available in perfect form. However, whatever information we have will be made available. There should not be a big time lag. It is reasonable that some information should be shared with boards first, but that will result in a time lag of days rather than months. After information has been shared with boards, it will be published. A letter will be sent to boards and to the committee.
We are somewhat sceptical about what will happen. During the first budget process, when you were a member of the committee, we discussed performance management and the fact that there was sometimes a 10-month delay between assessments and the extraction of letters from reluctant boards. We are trying to ensure that the information is available upfront the minute that it is issued.
I would like to raise another concern. Who performance manages John Aldridge and his colleagues in the health department?
The same question could be asked about all civil servants, rather than just those working in the health department. There is a chain of command within the Scottish Executive. Civil servants have people above them. John Aldridge will agree that Trevor Jones, as head of the health department, performance manages him. Trevor Jones is performance managed by the permanent secretary to the Scottish Executive, Muir Russell.
Some of those working in the health department may be pure civil servants. However, the department also includes a plethora of individuals who, having worked in the NHS, are seconded to the Scottish Executive and eventually become permanent members of staff. Those people do not seem to be subject to performance assessment. In fact, their jobs are not even advertised. How can that process be transparent? How can we be assured that such appointments constitute best use of the health department's budget?
The health department is different from other departments of the Scottish Executive, in that it includes many staff who are drawn from the health service rather than from the mainstream civil service. For example, the head of the health department used to be the chief executive of the then Lothian Health Board.
That job was advertised and he applied for it. I am talking about those who fall heir to certain projects.
Margaret Jamieson raises a valid point, but the answer that I gave to a previous question applies. Ultimately I have overall responsibility for policy, but appointments to the department are not a ministerial responsibility, so the answer that I gave about Trevor Jones and the permanent secretary applies.
You understand my point about the lack of transparency.
I can imagine the issue to which you refer. There have been secondments to the health department, but I have just described the way in which they are managed.
The annual expenditure report notes that the impact of inflation and demographic change will vary from health board to health board. Is it possible to indicate the real rate of growth in planned spending for each board?
There is a general issue about the gross domestic product deflator, for which 2.5 per cent is used. We all acknowledge that for decades health service inflation has been running a bit ahead of that. The committee interviewed the officials, so we know that we have six years security, because the budget money does not kick in until next April. We know that we will have steady and sustained growth over that period. We have never been in such a position.
Janis Hughes asked about local variations within that. I do not think that such variations are of great significance when it comes to inflation. Labour market issues in Edinburgh are different from those in other areas. Some people draw controversial conclusions from that. We do not support such conclusions and I am not sure whether that is the direction in which you are trying to steer me. The significant issue is the overall rate of health inflation and the real growth in the health budget. Local variations are relatively insignificant.
We are all anxious to know how the new money might be spent and how the public can have input locally, because of the great variations among boards in providing services. When the committee was in Inverness last week we discovered that there is nothing in the Highlands worth mentioning for patients with epilepsy. The witnesses admitted that there was nothing in the community for chronic pain patients. How do you cope with that? Do you respond to public demand, as in the case of the chronic pain patients who contacted the Parliament?
I am sure that everybody would want to pay tribute to the work that you have done on chronic pain, which is an issue on which you are campaigning. We have recently written to health boards about their waiting times for chronic pain clinics. I will send you the note that I have in front of me. Highland is the only area that states specifically that no formal service is available. Waiting times are clearly an issue in the Highlands and are variable throughout the country. However, I am pleased that most health boards have some service and I was pleased to visit the service at the Astley Ainslie hospital in Edinburgh recently.
I have read the evidence that Epilepsy Action Scotland gave to the committee recently. We are keen to develop managed clinical networks for epilepsy, so we have made it clear to Epilepsy Action Scotland and to neurologists that funds are available to help with the development of such networks. We await bids from them.
We flagged up in the health plan the fact that we want patient groups to be involved in the development of services. The patient agenda, patient focus and public involvement are central parts of our reform agenda. On Friday, I was at a well attended and inspiring conference in Glasgow on that subject. We are keen to involve patients and the public more. We have issued new draft guidance on public involvement in acute services reviews. We launched that at the conference and I hope that it is winging its way to the committee. If it is not, I am sure that it will hereafter. There is a lot of activity in that area.
Of course we want to involve people in discussions about the new money. However, I want to emphasise two points that I have already made. The announcement in the budget was a very good one, but we must remember that the extra money from the budget kicks in in the next financial year. That is relevant to our discussions today, but it would be wrong to think that there will be a sudden increase this year, although we already have substantial increases this year. When we discuss the new money, we are talking about the five-year period that starts next April.
The Executive will consider how to spend that money during the spending review process, which will take place this summer. We are getting input from lots of people about what they want to spend the money on. It is important that the public should have a say as well. The committee will understand that, although the amount is unprecedented in terms of the sustained level of increase, it will not solve all the problems of the health budget, so choices will still have to be made.
Thank you very much. I am delighted to hear that you are moving on chronic pain and that you will listen to the public about the new money.
I was so excited about Dorothy-Grace Elder's great success that I almost forgot my question.
To what extent do NHS boards have genuine scope to make spending decisions? There seems to be a difficulty about the spending intentions of the Executive and the spending intentions and priorities of boards and the outcomes that they achieve. The committee has found out that much expenditure results from past decisions and that other expenditure is a consequence of national decisions, over which individual health boards have little influence. Can Malcolm Chisholm outline the balance between the autonomy of local health boards and the Executive's autonomy?
Looking back over the budget process in the past few years, that is the key issue that we come back to over and over again. It is not just the key issue in health; striking the balance between national priorities and local autonomy is a key issue in many of the areas with which the Scottish Executive deals. Without being party political, it is a statement of fact that the Executive now has more democratic legitimacy than the Government of Scotland had in the old days, so we have a certain entitlement to insist on certain priorities, which are the democratically agreed priorities of the Scottish Parliament. That is important, but equally I do not think that anyone wants NHS boards in Scotland to be micromanaged by either me or the Health and Community Care Committee. A balance must be struck; I hope that we are striking the right balance.
We have talked about the performance assessment framework. That very much homes in on the strategic priorities. We are ensuring in a firm and unprecedented way that boards deliver those priorities, but there must be an element of local decision making in order to meet local needs. It is a matter of balance.
One of the themes that often emerges from the Health and Community Care Committee is that it wants more direction from the centre. I am comfortable with that in terms of ensuring that priorities are implemented on the ground, but it is important to me that we trust front-line staff to lead many of the changes. Although there must be direction from the centre, we must empower front-line staff to use their skills and capacity for innovation in order to change things.
We must be careful. We want to centralise in the correct way. We must be clear about the role of Government and Parliament, the role of patients and the role of front-line staff. It is a collaborative venture. We must be clear about what we can insist on without micromanaging the service or telling front-line staff exactly how to go about their business. They know much better than we do how to redesign services and so on. We must be clear about the respective roles of the different partners.
We can all agree about trusting front-line staff to use their skills and to innovate. They are obviously more aware of needs in their areas.
In the second page of his letter, which we received yesterday, John Aldridge talks about "unacceptable performance". He also mentions that action was taken to "strengthen … management" in order to tackle the problems at the Beatson clinic and refers to a task force's being sent into Tayside 18 months ago to address the problem of performance that was "below acceptable levels". However, in both cases, action was taken only after consultants walked out and there was a huge public outcry expressing serious general concern about cancer care in Glasgow, and about Tayside's ability—particularly at Ninewells hospital—to offer health care to people. Because neither you nor the health department took decisive action before that outcry, what you did could be interpreted as more of a response to media publicity than as good financial management by the department. Is performance unacceptable to the Executive only when it is unacceptable to the media?
We want a culture of continuous improvement in the service. Equally, we set that standard for ourselves. No doubt lessons can be learned from previous events and improvements made.
However, Mary Scanlon slightly overstates her case. Although I intervened in the problems at the Beatson clinic in my first week as Minister for Health and Community Care, Susan Deacon had already been very active in the situation and had drawn up an action plan to deal with the matter. Indeed, the progress that has been made at the Beatson clinic stems as much from the action plan as from the changes that I introduced.
Through the new performance assessment framework, we are now far more able to pick up problems at an early stage. We have improved our approach to such matters, which is why we have adopted a doctrine of escalating intervention. Obviously, the final step that we took at the Beatson clinic would not happen frequently; there are many stages before such intervention would occur. The committee can be confident that, from now on, we will pick things up early and act on them.
Obviously we want the best outcomes from health service and additional moneys. Apart from the well-publicised cases of the Beatson clinic and Tayside, can you give the committee an example of what you regard as "unacceptable performance"?
The reality is that we are developing our approach to the matter. I do not think that John Aldridge would disagree that, in the past, we focused more on financial matters, although such matters are important. We can prevent the development of many of the problems that we hear about—such as boards' having financial difficulties and deficits—if we spot them early. We are quite open about the fact that we have broadened our approach. The significant point about the performance assessment framework is that we now believe that performance management is not just about finance. As far as financial matters are concerned, if we look at the past, it is probably difficult to find many examples of unacceptable performance of the kind that Mary Scanlon asked for. However, as I said, we have broadened our approach and will intervene on non-financial matters, as we do on financial matters.
Is there greater emphasis on performance assessment or on financial management?
As I said in my previous remarks, we have broadened our focus. Historically, the department has focused very much on financial management, which is important. No one is saying that we should forget about financial management and focus only on outcomes; we must focus on both. We cannot deliver outcomes if we have not properly looked after the money. Keeping our financial focus while broadening our approach to include outcomes for patients is the key point behind the performance assessment framework that we are adopting.
I agree that we should not put boards in a straitjacket and that we should empower front-line staff.
Mary Scanlon may have overstated her case. She was right to an extent that your examples of intervention tended to take place in crisis situations in which you intervened at a late stage. I am more interested in your talking us through other examples. For instance, when you announce or reannounce in Parliament money to be spent on specific matters, how does the Executive ensure that health boards spend the money on the matters for which it is earmarked and that the money has the desired effect? Some of that can be measured only in the long term.
The minister's intervention may be needed not only when things go badly wrong, but from day to day and from week to week, to ensure that what you want to happen occurs, or at least that progress is made. I am more interested in such intervention and accountability. I would like to have a wee bit more detail on and understanding of that.
We have talked about the performance assessment framework, which is part of that, but that is not the whole picture. Nicola Sturgeon asked about money that is announced in Parliament. In the committee's discussions, you have made the distinction between ring-fenced money and performance-managed money. It is not only we who performance manage that money. Everybody welcomes the work of the Clinical Standards Board for Scotland, which is another approach to the same issue. Everybody welcomes the board's reports. We welcome them, because although they highlight problems, which attracts criticism, the board's reports are an engine for change. That, too, is an important part of performance management.
It is difficult to generalise about the money to which Nicola Sturgeon referred. We take different approaches to different priorities. The money that we announced for cancer—I was pleased to increase that amount by 50 per cent earlier this year—is, in effect, ring-fenced money. People have commented on that. At the big cancer conference in Edinburgh that some committee members attended, several people said that that money was ring fenced in Scotland, whereas in England, the money is leaking into other matters, because it is not ring fenced. Much progress must be made, but that money goes into regional cancer groups, which produce investment priorities. I hope that we will soon be able to announce the investment decisions on the second tranche of that money.
We are tracking the money for delayed discharge in a new way. Last week, I spoke to all the NHS board chairs and local authority leaders to make it clear that we mean business and that there is no option to not deliver or not spend the money appropriately. We are examining board's joint action plans and will give the money only when we are satisfied that they have delivery mechanisms and policies in place.
The third big tranche of extra money this year is for waiting times. Routine performance management applies to that, but the waiting times unit is also involved. People in that unit are going round all the board areas to discuss boards' waiting time problems. Apart from the overarching waiting targets, boards have local targets that they must focus on doing something about in the next year or so.
Those three tranches of money are being performance managed differently, over and above the mainstream performance assessment framework and the work of the Clinical Standards Board for Scotland and the Scottish Health Advisory Service.
I will explore that a wee bit more in the context of mental health, which is supposed to be a key clinical priority. The Clinical Standards Board has just published a report on schizophrenia that suggests that there are many areas for improvement, yet Tayside has reduced its spend on mental health because of budgetary pressures and demands on other parts of the service. How do you reconcile the improvements that are required in mental health with the fact that, locally, money is going in a different direction? How directive will you be about that?
Part of the performance assessment framework homes in on mental health, so if the general picture in Tayside is as Shona Robison has described, the problems will be picked up. Page 118 of the budget report shows that, in general, the mental health lines are moving strongly in the right direction. I accept that we start from an inadequate situation for many of those figures, but I merely point out that there is movement and that expenditure on mental health is increasing.
Obviously, there will be considerable local variations within those figures. I am certainly aware that there are issues in Tayside, which has had to make decisions to get its budget sorted out. I am sure that we welcome the fact that, in general, Tayside's budget looks a lot healthier than it did a couple of years ago. However, if there are problems in Tayside, they will be picked up by the performance assessment framework and will have to be addressed.
Nobody is being complacent about mental health. The report on schizophrenia standards that was published by the Clinical Standards Board for Scotland highlighted certain difficulties in Tayside, so nobody is saying that everything is fine. I merely observe that, in general, the spend is moving in the right direction. The performance of particular boards will be looked at as part of the performance assessment framework.
Will the minister outline for the committee the role that is given to the views of consumers, patients, family members and taxpayers in the budget decision-making process? How are those views identified and acted upon?
As I said, we have a broad agenda on patient focus and public involvement. The Executive also has a general commitment to openness in budget decision making. That is partly why we publish for the Scottish Parliament a document such as the annual expenditure report, which we never used to have at Westminster.
As well as the general opportunities for people to feed into the budget process, there are specific local initiatives, which are referred to in the performance assessment framework. Those initiatives aim to involve the public more in decisions about their own health care and in decisions about health services generally.
The work on involving the public is evolving. In December, we published the framework for patient focus and public involvement. The conference on Friday was a staging post in which we reported progress on patient information, on public involvement in service reconfiguration and on how we are making more effort to get patients' views and feedback on the quality of service. We have a broad agenda on involving the public, but you are right that we need to get more views from the public on what the priorities for the health service should be.
I suppose that some people have a despairing attitude toward public involvement because they think that the public cannot or will not engage, but I am very optimistic. I believe that involving the public in decisions about service reorganisation and helping them to have a view on priority setting will result in the public's realising the complexity of the issues and being able to make a positive contribution. That is why I think that we must go forward with that agenda. Some people hesitate because they think that we cannot possibly get anything positive or sensible at the end of the process, but I am absolutely committed to expanding the amount of public involvement in local decisions.
I also want from the public more input on general spending priorities. We have an opportunity to do that with an increasing health budget. Everybody in the world can say that the health budget should be even bigger but nobody can say that we are not committed to improving and expanding the health service. Given that baseline, I believe that the public can really engage in our decisions about what our priorities in the budget should be.
There are particular difficulties in setting priorities in the health budget. The committee is right to home in on the priorities but, in the health budget, one cannot stop doing the other things because one wants to emphasise the priorities. That is a particular feature of health. It does not necessarily apply to every area of the Executive's responsibility. Everybody who is ill is important. They need a service and they need a better service. We cannot therefore stop doing some things in the health service so that we can address priorities. That is the nature of health decision making. It is more difficult than decision making in some other areas. That comes across all the time.
The Parliament has been a great opportunity for every illness to be given a better profile. Asthma will be given such a profile today. Dorothy-Grace Elder has been raising the profile of chronic pain and epilepsy. The committee has considered a petition about epilepsy service provision. All those areas are being flagged up in the Parliament. We have to respond and develop services for them, but we still have our clinical priorities of cancer, coronary heart disease and stroke. Health decision making is inherently difficult, even when we have big spending increases, because we have a lot of services that we must develop.
The committee agrees that health decision making is among the most difficult of tasks. We quite often hear that it is difficult to measure outcomes and even inputs. If we ask what the input is, for tackling coronary heart disease or cancer for example, we are told that some but not all of the money that goes in can be identified. Identifying outcomes is also difficult.
Other than the performance assessment framework, what work is the department doing to move towards a more outcome-based approach to what we will see in the AER in future? This year's AER lacks work on health outcomes, but I presume that the performance assessment framework will, over time, lead to a greater reliance on outcomes.
This morning, we heard an example of the type of question with which I presume you wrestle as a minister: if you have £170 million to spend on children's health, is it better to spend it with other ministers on free school meals or on something for which it is easier to identify the outcome? What are the health department's thought processes on outcomes?
I do not want to keep talking about the performance assessment framework, but in it we have tried to capture outcomes to some degree. There are some quantitative outcomes. The one on which most people focus—and they do so correctly—is waiting times. Most people have now agreed that that focus is right. That is a quantitative, objective indicator.
The performance assessment framework contains a lot of qualitative indicators. I have a page of indicators in front of me on which every one of the indicators begins with the word "quality". They relate to, for example, children's services, maternity services and services for older people. Quality is more difficult to capture. Some of the information that will come from the performance assessment framework will be based on qualitative indicators and so will have an element of subjectivity. That is why patients' views and feedback on outcomes are important.
I am not trying to avoid the question, but it is difficult to get hard-and-fast outcomes all the time, because some indicators are qualitative. The Clinical Standards Board for Scotland is also important to that, because it, too, examines outcomes. The Clinical Standards Board has a series of indicators on which it reported in its first year. We will follow up those indicators annually.
We have a lot more outcome indicators than we have ever had. We must pay tribute to the work that was done on developing general clinical outcome indicators in Scotland, which was way ahead of England. We are trying to focus on outputs and new targets. We still have work to do in certain areas, which I know the committee discussed earlier, such as health improvement. We have targets on that, but we need to develop outcome indicators. That work is continuing. Health inequality is a key area in which we have more work to do on developing indicators.
I do not know whether that answers your question, but it demonstrates that a lot of work is going on to try to develop more outcome indicators. You say that you want more of those to be captured in the AER.
Presumably, that is the direction in which we are going.
The outcome indicators are reported on each year in many ways and in other places. The report of the chief medical officer for Scotland will provide the health outcome figures for the whole population in the year concerned, and information will come across in the reporting of the performance assessment framework. There is an issue about the extent to which that feeds into the following year's budget report.
The responses that we received in evidence from Highland NHS Board and Lothian NHS Board were broadly positive in the context of those unified boards having just been set up and of the performance assessment framework. Highland NHS Board was particularly positive about the framework offering the way forward. Is that characteristic of the responses that you have received from NHS boards across Scotland? Do you view the accountability review as a tool that almost goes beyond the performance assessment framework and relates to a different way of working and a different culture?
I think that that is one of the first points that I made. The accountability review is an important part of the culture of improvement. It involves assessing what is done, recording information and so on, and we want to capture information in a variety of ways. It is true that most people concerned have welcomed our general approach in the performance assessment framework.
I repeat that the process is evolving. We expect to learn from the first year of the performance assessment framework. A group will be set up not only to monitor its progress, but to help to make changes and improvements to the framework. We are as committed to a culture of continuous improvement as we hope the health service is.
I apologise for my absence during the earlier part of your contribution. You mentioned the importance of transparency in the budget. Some areas of the budget are anything but transparent, particularly as far as the private finance initiative is concerned. Shona Robison mentioned the cuts made by Tayside Primary Care NHS Trust in mental health expenditure. That, of course, is nothing to do with the funding crisis in Dundee Teaching Hospitals NHS Trust, which was a completely separate matter. Some of us think that the situation was connected to the opening of the PFI acute psychiatric unit at the Carseview Centre. Tayside Primary Care NHS Trust had to pay a significant amount to the private contractors who run the unit.
We recently heard that Lothian NHS Board must find £10 million in cuts to pay for the new royal infirmary of Edinburgh. How can we investigate why there have to be cuts in the wider budget following the awarding of PFI contracts to private partners?
There are a lot of pretty complex issues there. People have different views about PFI and public-private partnerships. That is one thing. However, the finance is pretty transparent.
Recently, Lothian NHS Board gave evidence to the committee and said how much it was paying every year to the private contractor that is responsible for the royal infirmary of Edinburgh. That information was in the business case. This year, the amount concerned was about £31 million and I think that the board said that that was £10 million more than it pays for capital charges and equivalent services at present. It also pointed out that there was an extra capital charge of, I think, £4.8 million for the Anne Ferguson building at the Western general hospital, also in Edinburgh, which was funded through traditional capital arrangements.
My point is that if NHS boards develop their buildings and estates by traditional arrangements, they still end up paying more. We can argue about whether PFI involves paying more than the traditional route involves, but the reality is that, if new buildings are developed, there is a cost, either in traditional capital charges or in payments to the PFI contractor. That general point forms part of the whole debate about priorities in the health budget.
Next week, I think, I will meet MSPs and campaigners from south Glasgow, where there is a complicated situation and a desire for more hospitals. One of the questions that we must tackle is how much of the health budget we want to spend on new buildings—which we have to pay for, whether through traditional spending or PFI—relative to spending on more nurses, doctors or other staff. Decisions about new buildings are just part of the picture of decisions on priorities.
I accept that, but in the light of your answer, why cannot the contracts rather than just the full business cases be placed in the Parliament library? If there is nothing in the contracts that you are trying to hide, why cannot you be completely transparent and put a copy of the contract in the library for members of the Scottish Parliament to access?
I will ask John Aldridge to comment on that. As far as I understand it, the full business case gives all the information that is required.
So would the contract, so why cannot we see it?
John Aldridge (Scottish Executive Finance and Central Services Department):
I would need to investigate the reasons. I suspect that there is an issue of commercial confidentiality.
So there is something in the contract that we should not know about.
Not that I am aware of.
What can be confidential if there is nothing in the contract that we should not know about?
Do you want to come back to us on that in writing?
Yes, I would have to come back on that.
If John McAllion thinks of any other questions that he wants to ask before you come back to us in writing, I am sure that he will submit them to the clerks.
As a representative of the Finance Committee, I am possibly a bit more mechanical about the budget than are members of the Health and Community Care Committee.
The minister talked about the balance between ministerial direction of resource and health boards' freedom to spend their allocation. We are talking about a period of growth in the resources available to health. What are you doing about setting up mechanisms whereby the health boards, having identified the fact that the people for whom they care are not able to access services evenly, can make a case?
Are you moving to a phase of challenge funding to supplement poor services? I am not just referring to Dorothy-Grace Elder's example of chronic pain. Highland and Grampian health boards are getting together to tackle eating disorders, but the problem is that they do not have the flexibility to add to their service. What is the new mechanism? If the national priorities that you dictate—funding for which might be ring fenced—are to be balanced, will a performance assessment mechanism spin out of the current system so that health boards that do not have enough dentists or a dental hospital have to put forward a business case?
At the moment, many health boards that have given evidence to the Audit Committee and the Finance Committee are unsure about how they can introduce services that are missing or develop new services for which there is a public demand. You have talked a bit about public demand this morning.
You will correct me if I have not picked up the gist of your question. It sounds like you are proposing a completely different method of funding the health service—a certain amount of money is distributed and the rest is held in the middle. You used the words "challenge funding" and I do not know whether that is your general thinking. The reality is that we have a new method of distributing money—this committee knows more than any other committee about the Arbuthnott formula. That is the starting point. Nobody is saying that the system is perfect, but it is fairer than what we had.
Are you suggesting that if a board lacks a service, it will have to bid for more money? That would lead to every board bidding for more money for something, because every board is deficient in some way. I am not sure how such a funding system would stack up. It is an interesting idea, but I am not sure how it would work.
I am trying to pick up from where you started. You direct one set of moneys and moneys are passed to boards, which have the freedom within the performance system to deliver the services that are appropriate to their area. You said that variation between the boards was insignificant, but that is not what we are hearing. A health board might want to start to deliver a service that is delivered elsewhere, but might not have the resource through Arbuthnott to do so. Will there be a mechanism in the performance assessment framework whereby boards, having proved the need for the service and their ability to deliver it and measure it effectively, will be able to apply for good services?
First, I did not say that there was no variation. It is self-evident that there will be variation in some services. I said that I did not think that there was significant variation in inflation rates, which were the subject of the question. Variations in service levels must be addressed. The reality is that most money is not ring fenced. As you know, the bulk of the money is distributed to boards and performance managed—we have described those new methods.
Some money is central money for which people bid—personal medical services are a good example of that. That allows individual GPs or groups of GP practices to bid for money. Examples of that exist, but the reality is that the system is grounded in boards receiving their fair allocation based on the Arbuthnott formula, after which decisions are made.
Not only boards are involved. We had a positive debate on primary care, because many members agreed that more funds should go down to develop primary care services, although members disagreed about whether they should be used to commission secondary care. Some decisions are made not by boards, but at a more grass-roots level—I was going to say at a lower level, but that could have been misinterpreted. That is an exciting part of the developments in primary care, such as money for local health care co-operatives and for PMS. That is where many exciting changes in the health service are taking place.
I suppose that David Davidson suggests the option of holding back more money in the centre and not distributing it to boards. We have done that to some extent with the cancer money and the delayed discharge money to which I referred. People can argue for holding back more, and I suppose that what he suggests is a challenge funding element. That is not uppermost in our minds at present. Challenge funding creates its own controversies.
Many different funds exist. Such an arrangement applies to the primary care premises fund, which will have £48 million over three years. Margaret Jamieson and I talked about Dalmellington in Ayrshire during the primary care services debate two weeks ago, so we have seen the fruits of that fund in many places. That was a kind of challenge fund, so we do not oppose such funds in principle. You could ask why we do not adopt that model more extensively. All that I am saying is that we are not minded to do that at the moment. However, that can feed into the debate.
Arbuthnott funding set out to address poverty, inequality and deprivation. Given the problems with assessing and measuring health gains, are you satisfied with the way in which additional Arbuthnott funding has been spent in the health boards that benefited—particularly Greater Glasgow and Highland?
I read the evidence from Highland NHS Board and noted that that issue came up. Roger Gibbins referred to a detail about car ownership that I did not think was relevant to the Arbuthnott formula. That was a slight inaccuracy in his evidence—he will not mind my saying that, as he was a good colleague when he was a member of the care development group.
Mary Scanlon's more general point, which is—rightly—made repeatedly in the committee, concerns how we ensure that the health inequality priority is followed through at board level as well as at national level. That relates to the Arbuthnott deprivation money. Although the rural factor was the other new element, health inequality is probably the matter that most concerns people. If Glasgow has extra money, how do we know that it will spend the money on dealing with that problem? I know many people who are involved in the health system in Glasgow and I am sure that that is a top priority for them. For example, Greater Glasgow NHS Board's director of public health, Harry Burns, is a leading thinker in Scotland on health inequalities.
The point is that we have a performance management system that examines health inequalities and how money is spent at local level to tackle that priority. I know that the issue that Mary Scanlon raised is a concern, but we will use that mechanism to monitor the issue and follow it through.
I think that the point that Highland NHS Board made was that car ownership is used to indicate wealth, but in the Highlands the car is a necessity rather than a luxury. In fact, car ownership can cause poverty because of high fuel prices. The concern was that a high rate of car ownership could mask poverty.
What I really want to know is whether you are satisfied with the way in which the extra money from the Arbuthnott redistribution is being spent. Is the redistribution addressing inequalities, poverty and deprivation, as it was intended to do?
First, let me repeat that car ownership is used in the Carstairs index of deprivation but not in the Arbuthnott formula. Roger Gibbins got that detail wrong. The deprivation element of Arbuthnott is based on unemployment rates, the proportion of elderly people on income support, mortality rates among people under 65 and the proportion of households with two or more indicators of deprivation.
Secondly, as this is the first year of the performance assessment framework, I cannot say with any confidence that all boards have suddenly adopted health inequalities as a priority in the way that they should. However, I certainly talk to many board members—chairs and others—and my impression is that the boards are focusing on health inequalities in a new way. Obviously, until we have seen how the performance assessment framework works out this year and until we can see the trends, we will not be absolutely sure how the health inequalities agenda is playing through. However, I certainly have no reason to think that people are ignoring the issue.
Given the scale of the health inequalities that exist, there is no doubt that what boards do to address those inequalities will never be adequate. I suppose that health inequality is one of the most challenging of the many health problems that we face.
Sorry, but the question that I asked was whether you have the ability to measure poverty, deprivation and inequality. Will you be able to come back to the committee in two or three years and say, "Yes, Highland NHS Board and Greater Glasgow NHS Board have used the money to focus on those three issues"? Do you have the ability to assess and measure the health gain in relation to poverty, deprivation and inequality?
As I indicated, we need to develop better health inequality indicators, but we will have objective information. For any board area, we will know what proportion of people died before the age of 65 in the current year compared with in the previous year. As part of the performance assessment framework, we will need to consider how spend is addressing health inequalities. I am not saying that we have all the answers and all the indicators, but we are focusing on the issue. I have reason to believe that most boards are focusing on the issue as well.
Finally, I will ask a quick parochial question on a point that Lothian NHS Board raised. Lothian and other tertiary teaching centres that provide services to other boards say that, although they get fair treatment from the health department in terms of payments for national services, they experience a shortfall in funding for services that are provided to patients from other board areas. The issue affects similar boards such as Glasgow, Tayside and Grampian. Lothian said that the health department was considering the issue, so will you quickly tell us what action your department has taken?
There are three issues that involve extra costs. First, as you pointed out, extra money is provided for the services that are carried out for the national services division. I understand that Lothian did not complain about that.
Secondly, there are the additional costs of teaching. John McAllion has commented on those on previous occasions. I am surprised that he has not done so today, but perhaps he decided that PFI would come first. A group led by Sir John Arbuthnott is examining the costs to see whether they are adequately covered. It stands to reason that Tayside, Edinburgh, Glasgow and Grampian, which have to train a lot of medical students in hospitals, will incur additional costs from teaching. Perhaps John McAllion will take comfort from the fact that the dean of the medical faculty of the University of Dundee is on the group.
Thirdly, there are tertiary services, which is the area that you mentioned. Tertiary services are regional services—a good example is cancer care—which are provided from the kind of centres that I have mentioned. We have put in place new arrangements whereby boards come together to agree the funding that is required for regional services. The respective contributions from the different boards will then be redistributed at national level.
We have issued new guidance to the service on the issue. We certainly hope—and I think that Lothian is reasonably optimistic—that the guidance will help to address problems that have arisen in the past, when individual boards may have refused to pay or may have said that they would not pay the right amount. There are new arrangements in place. If you have not already received the new guidance on the funding of regional services, it will be winging its way to you.
I thank the minister and his colleagues for their evidence. That brings to an end the public part of this morning's meeting. Our final agenda item on epilepsy services will be taken in private.
Meeting continued in private until 12:34.