Health and Community Care Committee, 25 Oct 2000

Meeting date: Wednesday, October 25, 2000

Official Report 229KB pdf

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Arbuthnott Report

Good morning, minister. It is good to see so many of your team here, although we wondered whether you had left anybody back at the office. We are appreciative of your time and input this morning.

We should all appreciate that we have a constrained time scale today. We have only two hours in which to get through four important issues that this committee and your team have done a lot of work on. We hope to keep things moving as quickly as possible while getting all the questions answered.

The first issue that we will discuss this morning is the Arbuthnott report. Minister, if you want to make a brief statement at the beginning of any of the agenda items, I ask you to keep it tight.

I am grateful for the opportunity to be here to address matters of interest to the committee.

I have brought with me some people from the health department. I stress that most of them are here to listen to the views of the committee on the range of issues that will be raised. It is important for the health department to hear at first hand the views of the committee. I will introduce two members whom members might like to ask to comment. John Aldridge, the director of finance, has attended the committee before. Gerry Marr is the director of performance and planning. He has recently taken up that post—previously he was the director of human resources.

I am aware that the Arbuthnott report has been subject to extensive debate in the committee and in the chamber. On 21 September, I made a full statement in Parliament setting out the Executive's proposals for implementation of the new formula. This year, we provided £12 million of additional money as a first step in implementation. The allocations for 2001-02 for each health board, based on the Arbuthnott report, were part of that announcement.

The report that was published on 7 September has been widely circulated and discussed. It has been generally welcomed as an important step towards replacing the outdated Scottish health allocation revenue equalisation, or SHARE, formula that has been in place for more than 20 years. As the committee knows, the report was the product of considerable discussion and consultation. I take the opportunity to thank the committee for its contribution to that process.

I am aware that committee members and others have continued to raise questions about this issue. I am sure that that discussion will continue—and rightly—but, as I said when I announced our plans for implementation, it is our intention to act on the proposal of Sir John Arbuthnott and his committee that there be a standing review mechanism for the formula. We will proceed with that and I hope that we can strike a balance between being willing to learn and review while ensuring stability in the funding allocation arrangements for the national health service in Scotland.

I am happy to take any specific questions that committee members may have.

I will use my convener's privilege and kick off. Time and time again, you tell this committee and the Parliament that tackling health inequalities is one of the main priorities of the Executive's health policy. Do you believe that implementing the Arbuthnott formula will have a significant impact on the level and distribution of good health in Scotland, given that the total amount of cash that is being redistributed will remain pretty small—around 2 per cent of the overall budget?

The figure of 2.2 per cent, which is the total of what is being redistributed, is sometimes slightly misleading, as we are talking about 2.2 per cent of an overall total of some £4.5 billion, which is not an insignificant sum. When the Arbuthnott formula is applied, it will translate into significant changes in certain areas.

Your question concerned inequalities. One of the significant elements of the formula is that it seeks to assess and quantify, for the first time, deprivation in different parts of the country. Thereafter, it allocates NHS resources accordingly. The formula goes a considerable way towards ensuring that global NHS resources are linked more effectively to need, specifically addressing the needs of deprived and remote areas.

The next stage, to which we should turn our attention, is to ensure that those resources are used effectively locally, to address health inequalities. That forms a central part of our much wider range of health policies.

Chapter 15 of the Arbuthnott report talks about inequality and deprivation. Over the past few weeks, we have heard a significant restatement of the Executive's commitment to social justice. When can we expect those key issues to be addressed?

Deprivation and the wider agenda of social justice have been addressed since the Executive came into office last year. We have worked hard to put tackling health inequalities at the heart of our policy agenda. I shall give a couple of examples of that. We have targeted the allocation of the tobacco tax money in Scotland towards health improvement, specifically to address the needs of deprived communities. We have also put health inequalities centre stage in the policy framework for local health boards.

However, much more needs to be done. A major area of work that is being done at the moment is the development of the Scottish health plan—which has been discussed in the Parliament and previously in this committee—as part of our wider NHS modernisation agenda. I know that the committee will have a meeting on that next week. That plan will be published at the end of November and will set out a new performance framework for the NHS in Scotland. I expect that the need for NHS bodies throughout Scotland to tackle health inequalities effectively, innovatively and creatively will be at the heart of that performance framework. We must narrow the gap between the health of the rich and the health of the poor. It is a complex agenda, but we are serious about it.

You said that you expect bodies across Scotland to tackle health inequality. You have set out aspirations and talk about targets. Arbuthnott recognises the link between inequality, deprivation and poor health. How can you be sure that the money that you distribute will be allocated locally in a way that addresses inequalities? What criteria will you use that will indicate what level of finance there is at local level to tackle inequality?

Those are precisely the sorts of issues that are being addressed in the context of the development of the Scottish health plan, which will provide the strategic framework within which the NHS in Scotland will be required to operate from April next year and which will set out clearly a new performance framework for the service. At present, health inequalities are given significant emphasis in the priorities and planning guidance to which the service works in Scotland, but we believe that we can do much more to be clear about the outputs and outcomes that we require in this area.

Hugh Henry asked about ensuring that money is spent to address health inequalities. That is just one side of the coin. I also want to ensure that the money is spent well. To do that, the NHS must work very closely with community health organisations, the voluntary sector, local authorities and social inclusion partnerships. I am pleased that significant steps in that direction have been taken in many parts of the country. We must continue to drive the NHS in Scotland in that direction in the months and years ahead.

I have a supplementary question on that. My area has received a very welcome £1 million for the first healthy living centre. The Stirling group, which involves health bodies, the local authority and the other groups that you mentioned, has been very active on it.

Following Arbuthnott, will you issue any guidance on the provision of support for the approach that healthy living centres represent? It is intended that they will ultimately cover 20 per cent of the population and that they will be in deprived areas. How do you link those two elements?

Richard Simpson identifies that healthy living centres have been developed in different parts of the country with funding support from the new opportunities fund. We regard them as an integral and important part of work in this area. The development of healthy living centres will be addressed in the context of the Scottish health plan and put in the wider context of the work of the NHS. In this area, as in others, we want to strike a balance between guiding, directing and setting the overall direction of travel for local NHS bodies, and leaving scope for local needs to be met effectively.

It is striking that the various bids that have been developed across the country for healthy living centres are very different from one another. Some are based on the development of a bricks-and-mortar centre, with a particular emphasis on health-related services. Others involve a much more virtual concept, such as linking up a range of community and voluntary organisations. It is important that there should be scope for local variation and innovation if the centres are to be effective on the ground.

I am concerned about the Highlands and Islands in particular. I refer you to sections 4.15 to 4.19 of "Fair Shares for All: Final Report", and in particular to what is said about Argyll and Clyde Health Board. The report talks about the particular difficulties that are faced by islands and health boards that serve island communities, which require substantial adjustment. Given that the committee raised the case of Argyll and Clyde, which has 26 inhabited islands, you will understand that it is quite a shock to read in the final report that Argyll and Clyde has received nothing extra.

In the first report, Orkney was to receive a 20 per cent increase, but that has been reduced to 7 per cent. Shetland's increase has been reduced from 10 per cent to 1.4 per cent. In fact, your second report has seriously disadvantaged the islands and there is serious concern in Argyll and Clyde about the health board's ability to maintain and provide a health service for the 26 inhabited islands. In your report, you speak about roads and kilometres. Is it possible that this complex formula has not taken account of ferry and sea crossings?

Let me correct a point that Mary Scanlon makes. It is important to point out that the Arbuthnott report is not my report. The report was produced by the Arbuthnott committee and an independent review group, following widespread consultation, and the Executive has chosen to accept and implement its recommendations.

It is important to distinguish between the share of resources and the overall amount that is allocated to each health board. Mary Scanlon is correct in saying that there were changes in the relative shares between the first and second Arbuthnott reports, as I would have expected. There was widespread consultation on the first report and further adjustments were made to the methodology and the report overall as a result.

On the amounts that were allocated, it is important to stress that the Executive gave a firm commitment, from day one—which we have now translated into practical effect, through the allocations that I have announced for next year—that every health board would receive a real-terms increase alongside the new formula that was being introduced. For example, Argyll and Clyde Health Board will receive a 5.5 per cent increase on next year's allocation against this year's allocation. Highland Health Board will get a 9.8 per cent increase, reflecting the fact that, under the Arbuthnott formula, it has been assessed as requiring an even greater share. Every health board has received a real-terms increase, and some have had a greater increase than others according to the Arbuthnott formula.

We recognise that, in every health board area, to a degree, there will be real diversity between the needs of the different parts of the area—more so in an area such as Argyll and Clyde than in others. Most of the population of Argyll and Clyde live in densely populated urban areas but, as Mary Scanlon says, a significant section of the population live in island communities and more remotely. We believe that the Arbuthnott formula assesses fairly and transparently the overall needs of that health board area, but we stress that it is up to Argyll and Clyde Health Board to ensure that the needs of different parts of that area are met effectively.

You spoke about outputs in tackling health inequalities. I presume that one output you would look for in areas such as Argyll and Clyde would be a local authority's meeting of the diversity of health needs.

Absolutely.

Do you have a question, Duncan?

May I finish my question, please?

The unique nature of Argyll and Clyde Health Board, with its 26 inhabited islands, was raised by this committee—vocally and responsibly—as an anomaly in the first report. You have chosen to accept and implement a final report that has not given any cognisance to the unique needs of Argyll and Clyde. You have also chosen to accept a report that reduces the amount that is allocated to Orkney, Shetland and the Western Isles. Orkney's general medical services resource has been reduced by 28.6 per cent, the Western Isles' GMS has been reduced by 22.7 per cent, and Shetland's GMS has been reduced by 19.8 per cent. Our island communities seem to have been seriously disadvantaged in the final report. Although Highland Health Board's allocation has increased by 9.8 per cent, its GMS has been reduced. I am seriously concerned about why the island communities in particular appear to have lost out in the final Arbuthnott report.

I repeat my earlier point: I am bound to say that Mary Scanlon's points are inaccurate, in the sense that—

That information is at page 55 of the report.

With the greatest respect, I point to the distinction that I made in response to the previous question between shifts, relative shares and the amount of resource allocated. When the Arbuthnott review group compiled the formula, it considered the different components of each health board's allocation. The Executive allocates resources to the health boards as a unified budget and it is up to each health board to take the decisions on that budget.

My point is that the formula takes account of roads, but not sea crossings. At least, that appears to be the case, given that the island communities have seriously missed out.

Convener, Mary Scanlon raised a number of detailed points. Would it be helpful if the director of finance commented on them?

May I make a couple of points, convener?

I will stop you there for a moment, John. Duncan Hamilton had a supplementary question and I will let him ask it so that you can respond to both questions.

I remind members that they should go through the chair when they ask questions.

I fully understand the point that there is a real-terms increase for each health board but, as the minister has correctly identified, the issue is the relative share of resources that is apportioned to each health board. In the context of a report of which one part was designed specifically to target remote and rural communities, it seems odd that those areas will not do as well in terms of relative share as this committee or, I am sure, the minister would like. Committee members are concerned about how robust the formula is.

Given that there was consultation and that, as a result, changes were made, it seems odd that the relative share that will go to remote and rural areas appears to have been reduced. It was interesting that the minister talked about the diversity of Argyll and Clyde, because that is the point of the exercise. The report was meant to highlight deprivation, particularly in urban areas, and remoteness and the problems of service delivery in rural communities. Surely it is obvious to the Executive that the Argyll and Clyde area, which has a preponderance of deprivation and remoteness, should have received a relative gain. We understand the point about relative shift, but we also need to understand why the formula is not achieving the specific objectives that it set out to achieve.

I will make a brief comment before John Aldridge comes in with the details.

I take this opportunity to reiterate the offer that was extended to the committee of a full briefing on the detail of the final report from officials and/or members of the Arbuthnott group. I know that that facility was taken up when the first report was published, but I am conscious that a number of the concerns that have been raised today would probably be alleviated by the detail that could be covered through such a briefing. The final report fully addresses many of the issues.

I stress that we sought to deliver a formula that is as transparent and fair as possible; we believe that the Arbuthnott review group has delivered such a formula. We are more than happy to take time, as we are doing with individual health boards, to explain further to the committee the details of those calculations. I am happy for John Aldridge to provide further details.

That was the first point that I was going to make. The Arbuthnott review group, which reconsidered the recommendations of the first report in the light of the consultation exercise, sought to address each issue raised in the consultation, including the specific issues that relate to Argyll and Clyde and the islands. In doing so, the group found that the best match between the need for expenditure on health care and the available information was given by the road kilometres per 1,000 population figure, which was used as the proxy for defining deprivation. The review group could, in a briefing, provide more details about the various options that it considered before concluding that that was the best fit.

Mrs Scanlon mentioned ferries. I can assure the committee that that issue was considered. If ferry kilometrage, as well as road kilometrage, had been included in the formula, that would have resulted in a worse outcome for island communities.

Why?

Because, as the minister has explained, the formula determines relative shares, not absolute shares. An increased kilometrage would not necessarily benefit the islands. It would merely adjust the shares that the islands get.

Does that not suggest to you that the formula may be wrong?

Exactly.

It depends. The members of the group would be in a better position to provide details on this issue, but as I understand it the health care costs that arise in island communities do not relate primarily to travelling from place to place by ferry. Services are provided either in the community, where the costs are similar to those in other communities, or in the local hospital, where the distances are determined primarily by the road mileage or kilometrage. There are separate, additional allocations to the island health boards and to the inner isles for patient travel—when, for example, patients have to go to Aberdeen for health care. Those allocations are added in on top of the Arbuthnott formula. Those are some of the reasons why ferry kilometrage does not necessarily provide a good match.

I would like to pick up a related point that was made in evidence from Shetland Health Board. Are you convinced that the new shares will not be detrimental to island and smaller boards and that those boards will not experience proportionately greater change than larger organisations? Are you convinced that, given the shares that have been allocated to them by Arbuthnott II—if we can call it that—all the island and smaller health boards in Scotland will still be able to proceed with their health improvement and other plans?

I confirm again that the island health boards, like other health boards, are receiving substantial real-terms increases in spend. That enables me to give you the assurance that you seek. I am, of course, aware of the specific needs not only of island health board areas but of each individual part of Scotland. Within days of the publication of the Arbuthnott report, I met the chair of Shetland Health Board and we discussed in detail how, in the light of the allocations that I had announced, Shetland would move forward with the development of services.

To move on from the SHARE formula, we had at some stage to be willing to grasp the nettle of devising an alternative formula for Scotland. Both the process by which the formula has been developed and the outcome of that process are very robust. I am sure that there is scope for refinement and development in the future. We have recognised that overtly and said that there will be a mechanism for it. However, I am not aware of any substantial or significant body of opinion that believes that the report is not the way forward. The welcome for the report and the new formula has been widespread. I am more than happy to put in place mechanisms for us to continue to discuss points of detail. However, I do not agree with the assertion that there is something inherently wrong with the approach that we have taken.

Given the evidence that you have provided to the committee today, would you agree that there has to be something seriously wrong with the formula when taking ferry distances into account would disadvantage people living on remote and rural islands? Will you now make a commitment to talk to the island health boards, including Argyll and Clyde Health Board, to recompense them for the drastic loss in their income?

As I have indicated, I do not think that there is anything seriously wrong with the formula and I am not aware that anyone else, including those who were in the chamber when I made the announcement, has said that there is anything seriously wrong with it. I reiterate my commitment to ensure that we continue to refine and improve what is a radical and important step forward.

I want to move on to another area. The Arbuthnott report was meant to be transparent. The methodology and how it would be put into practice were meant to be easily understood. Indeed, as you have just said, minister, the report should be as transparent and fair as possible. The final Arbuthnott report is certainly more transparent than the original report. What specific steps are being taken to disclose all the data and methods used to calculate the financial allocations within the report? Will those be subject to formal peer review?

Transparency is crucial. I know that the committee commented on that point in some detail and I am pleased that the Arbuthnott review group took on board the committee's comments. The net result is a final report and a summary report that are more accessible to a range of audiences, including the general public.

I recall that we discussed transparency in relation to other areas of policy when I last attended the Health and Community Care Committee. There is always a balance to be struck between the level of detail that is put into the short summary and the detail that underpins any policy document. On the availability of information, a far greater degree of detail is included in the final report. In addition, a series of presentations is taking place with health boards around the country to set out the details of the data and how they apply. I repeat the offer that I extended earlier, and in correspondence, that we are more than happy to do the same with the committee.

All the information is available. We are happy for it to be publicly available. I am also pleased that an attempt has been made to hone formula down to key salient points,and refine the major issues relating to the formula which the public and others can access.

What is the timetable for making the full information—the methodology—openly available? Which sections of the final report are being rewritten for publication in peer review journals?

I doubt whether many, if any, Government policies have been as closely reviewed as the Arbuthnott proposals. As the committee knows from the range of evidence and witnesses that it heard, the input was extensive. I therefore believe that the report has already been subject to considerable review. In addition, the two technical sub-groups appointed by the steering group provided expert advice on the further work that was done, which was fully taken on board following the consultation. I believe that the review process that is in place is robust. I am sure that there will continue to be much discussion and dialogue in a range of journals and other publications, as I would expect with such a radical change.

On the availability of information, I must point out again that the full final report contains a great deal of the information to which I think you are referring when you talk about the methodology. If the committee wants specific information to be included in the final report, I am more than happy to pursue that. An attempt has been made to include all the information in the report, precisely so that there is no need to look further for it.

As the minister says, the report has been heavily scrutinised by many people. However, the committee is interested in whether, given that this is a fairly novel approach, the methodology could be published so that there could be an international discussion—our problem is not unique. That might be part of the review system that the minister has announced; it would help us to move forward through critical analysis by other groups. That is more likely to happen if people are funded to publish the methodology as part of a research exercise, so that it can be subject to close academic scrutiny.

I note Richard Simpson's point. However, I must point out again that the report contains significant methodology and detail. I stress that we want to ensure that the issue is addressed and I hope that we can develop effective mechanisms in order to achieve that. The matter is under consideration and I will bear in mind the points that Richard Simpson has made.

Perhaps members of the committee might be sponsored to find the time to take this to the next step and to an academic journal.

We want to ensure that effective review mechanisms are in place. Our entire approach must be as open, transparent and robust as possible. I would be happy to come back to the committee as we develop the means of doing that.

I have a more general question. During the lifetime of the Health and Community Care Committee, it has become apparent that there are barriers to joint and effective service delivery. Is the minister satisfied that Arbuthnott facilitates joint finance and service delivery across traditional health and social service boundaries?

The fact that the Arbuthnott report results in each board receiving an allocation that more appropriately reflects its needs means that, in each part of the country, the NHS is resourced according to need, rather than simply population base. It is important that we encourage the NHS to work more closely with other bodies. The fact that remote and deprived areas have greater funding as a consequence of Arbuthnott will help to facilitate joint working.

In itself, Arbuthnott will not bring about the necessary improvements in joint working. In some parts of the country, there are good examples of different parts of the NHS working in partnership with other agencies, but good practice is by no means universal. I am determined to ensure that the steps that we are taking—to be published in the Scottish health plan—will help to make joint working a reality in every part of the country. The announcement that I made in Parliament just before the recess on services for older people set out some of the specific measures that we are implementing to ensure that effective joint planning and budgeting mechanisms are put in place at a local level across the country. We want to ensure that all the resources are used to best effect. I take on board Irene Oldfather's point.

I would like to bring this section of the meeting to a close with a few comments. All members welcome the fact that there has been some movement on many of the issues that we raised with the Executive and with Sir John Arbuthnott. There was a significant change—the second report was far more transparent than the first report. Many of the points that were raised were taken on board, although some were not addressed to the satisfaction of all members.

The committee will consider Arbuthnott at a future date. At that point—when we have a somewhat different report to consider—we may decide to take up the minister's invitation to give us a further briefing before we finally sign off the Arbuthnott report for the time being.

No one should be in any doubt about the fact that the whole committee is committed to tackling health inequalities. We realise, in particular, that effort needs to be focused not only on areas of urban deprivation but on areas of rural deprivation and that certain parts of the country have peculiarities in terms of their locality and so on.