“Overview of the National Health Service in Scotland 2002/03”
The next item on the agenda is the third evidence session in our examination of the Auditor General's report, "Overview of the National Health Service in Scotland 2002/03". In previous weeks, we have taken evidence from representatives of NHS Lothian, NHS Ayrshire and Arran and NHS Borders on the financial and other pressures that are facing the NHS throughout Scotland. Today it is the turn of representatives of the Scottish Executive Health Department to give their perspective. We shall ask questions on three main areas: financial and service planning; the benefits of trust integration; and performance management and accountability in the new NHS organisational structure. I welcome the witnesses to the Audit Committee and ask them to introduce themselves and outline their areas of responsibility.
Mr Trevor Jones (Scottish Executive Health Department and NHS Scotland):
I am head of the Health Department and the chief executive of NHS Scotland.
Mr Mike Palmer (Scottish Executive Health Department):
I am head of the work force and policy division in the human resources directorate of the SEHD.
Dr Peter Collings (Scottish Executive Health Department):
I am the director of performance management and finance in the Health Department.
Mrs Sarah Melling (Scottish Executive Health Department):
I am head of the financial performance and accounting division within the finance directorate.
Mr Jones, do you have an opening statement?
Yes—a brief one.
I am pleased that the Auditor General has again recognised that, overall, financial management in the NHS continues to be of a good standard and that there were no qualifications to the true and fair opinions that were provided by auditors in any of the 54 NHS organisations in 2002-03. The auditors found that the key financial systems are of a good standard and that most organisations' budgeting and planning operated satisfactorily and soundly.
Good progress is being made in developing corporate governance. As part of that, most boards found that the performance assessment framework provides a useful tool to develop performance. That was positive from our perspective.
I was pleased to note that 12 of the 15 NHS boards were in surplus at the end of 2002-03, and that NHS organisations overall had a net surplus of £14 million. However, we are not complacent about the NHS's financial position. We recognise the pressures that the NHS faces from a number of factors. Changing demography means that there will be more older people in the community, which increases pressure on the NHS. New treatments continue to be available to the NHS, which increases pressure on the finances. We are driving up the standards of care that are provided nationally, which adds to the service delivery agenda. At the same time, the labour market in Scotland is shrinking, so we need to ensure that NHS Scotland is able to recruit the best staff to deliver care, which adds cost pressures.
From that, it is clear that the status quo is not an option when it comes to health care delivery. We need to see fundamental change in how health services are delivered, which will put pressure on health budgets. It is our task in the Health Department, and my task as chief executive of the NHS in Scotland, to work with the service to ensure that we manage those pressures co-operatively across the whole system.
Thank you. As a matter of courtesy, perhaps I should have explained why I, rather than my colleague Brian Monteith, am convening the meeting. We are awaiting his arrival because his train is late. My colleagues and I are making our best endeavours to keep matters going while the convener is still in transit.
We have heard about the financial difficulties that some boards face. What assistance do you provide to boards that are managing financial challenges? Under what circumstances do you request boards to prepare financial recovery plans? How do you monitor the boards that have the greatest financial difficulties?
I will begin the answer, but it might be useful if Sarah Melling, who manages the performance of NHS organisations, takes us through the process that we call escalating intervention. That will provide detail on how the monitoring process works.
The planning system starts with the allocations that the department makes to NHS boards. We give boards an indication of their likely income over the spending review period, so they have an indication of future resources. The boards get firm allocations for the year into which they are going, which are based on an assessment of health care need. We do not fund specific issues; we give a general allocation, which takes into account the age and sex make-up of the population, rurality and deprivation.
The allocations that are going to health boards—I speak as a former chief executive in the service—are probably much higher than any of us would have expected five or six years ago. Significant investment is going into the NHS based on the health needs formula. It is for NHS boards to assess the likely financial pressures that they will face locally, and to use their general allocation to best effect. They need to use that allocation first to meet financial pressures, such as inflationary pressures and the cost of pay awards, and then to think about how to develop services. We do not expect the boards, in doing that, to concentrate simply on the increasing resources that they get every year. We expect them to examine their total budget and think about how they can improve services, and to make non-clinical services more efficient to release cash for reinvestment in clinical services. Financial planning should be about the whole budget, not simply the marginal increase that a board receives every year.
The Health Department has a detailed performance management function, which examines everything that an NHS board does, not just its financial targets. In the days of the internal market, performance management tended to focus on financial performance. We now examine the whole performance of a health board. If there are financial issues—which is what you want us to concentrate on—and if we have concerns about financial management, we have a process of escalating intervention, which means that the more significant the potential financial problem, the more intervention there will be from the centre. Sarah Melling will take us through the steps of the escalating intervention process.
As Trevor Jones has said, all boards produce a financial plan at the beginning of the financial year, usually covering a five-year period. We monitor on a monthly basis all boards and their performance against the plan. However, there is a process of interventions if boards start to deviate from their plan or show significant financial difficulties.
We meet boards on a regular basis, but if a board starts to show variance from its target of greater than 10 per cent and no meeting has been arranged, we will initiate a meeting to discuss with the board the reasons for the problem and how the board intends to address it. We will then await the next month's monitoring to see whether the situation has improved. If it has not, the next meeting may involve not just me, but Dr Peter Collings. Again, the board will be asked how it is addressing the problem and how its plans have been adjusted to do that. We will also involve performance management colleagues. Although the pressure is manifesting itself as a financial issue, there may also be operational issues that need to be addressed.
If, after a period of three to four months, the problem has not been solved, we will ask the board to produce a financial recovery plan and give it time to do that. We will then assess the recovery plan. If we do not believe that it is appropriate, we will send in an independent team to help the board to address its problems. The board will then be given an opportunity to show that the recovery plan is working. We will monitor that and meet the board regularly.
We have taken evidence and both general and specific matters have been raised. What do you assess the total cost to be of the new consultant contract, the new GMS contract, agenda for change and the new deal for junior doctors, and how do you propose to fund it? Borders NHS Board indicated that it was having particular difficulty in providing out-of-hours GP services. How will you address that problem? How will you address and factor in the difficulties that Borders NHS Board and, presumably, other boards are facing because of the late agreement of various national deals?
I reiterate what I said—we do not fund specific issues. We do not retain all the development funds for the NHS at the centre and issue them as pay agreements are settled nationally or as inflationary pressures hit the service. I have had discussions with all the boards about how we should manage finances in the NHS. There is a strong view across the NHS that it is better for cash to be allocated to the system earlier and for boards to be allowed to manage pressures locally than for the Health Department to retain large central reserves and to dish out money as bids are received at the centre. That would be a very bureaucratic process that would not allow creativity locally and would not encourage boards to manage problems at local level.
We will not issue cash specifically to cover the total cost of the consultant contract, the GMS contract and so on. My colleagues will be able to give members figures for the cost of those contracts.
The main concern about the consultant contract has been about its impact on budgets for 2003-04. That is not yet firm, because the cost depends on the outcome of discussions between individual consultants and their line managers and job plans for each of the consultants in NHS Scotland. At present, we estimate that it will amount to 21 per cent of the pay bill for consultants—£55 million.
The GMS contract was part of an overall three-year package that is not funded out of the general allocation to boards but is subject to ring-fenced funding. At present, it appears that the whole cost can be met from within the moneys that are allocated to primary care. With one exception—the out-of-hours service—there will not be pressure on general allocations. When GPs opt out of providing an out-of-hours service, an alternative service must be provided, which looks as if it will be a significant cost pressure on boards. However, that will hit mainly in the next financial year, rather than this one, as the new service will start towards the end of 2004, at different dates for different boards. It will have an effect for only part of this year but will be a significant factor next year.
Mike Palmer is the expert on progress with agenda for change. Pilots are being conducted and much work is still being undertaken on what the deal will be.
Under agenda for change, we are evaluating pilot sites. Four pilot sites in Scotland are dry running elements of agenda for change. In England, several early implementation sites are piloting comprehensively the whole agenda for change package. We are beginning to receive feedback through management data from the early implementation and pilot sites, which will be fed into a review that we will have with the trade unions. That is kicking off and will continue into the summer. It is a bit early to say what the package will look like, because it will be subject to that review. After that, Unison and Amicus will hold further ballots of their members. The deal is still a little way down the track.
How do you expect late deals to be factored in? Such things happen. In the course of events, matters arise late. When boards are cheek by jowl with preparing their finances, what action will they be expected to take if they are suddenly faced with significant changes? Should such matters be factored in? If so, on what basis should boards do that?
Boards should be aware of the major financial pressures. We work with boards and share intelligence about financial pressures that might be in the system. We expect boards to put all those pressures in their financial plans. As with any plan, all that can be guaranteed is that a financial plan will be wrong. The outcome of any negotiation or the inflation rate over the coming year cannot be forecast precisely, so variations will always occur. We expect boards to make provision.
A problem arose with the consultant contract, which involves a UK-wide pay deal. Early in the negotiation, a UK-wide survey was conducted of what the impact of the contract might be. The survey suggested that, after account had been taken of changing working practices and service changes, the result of the consultant contract would be that the average consultant would receive one additional sessional payment—a session is equivalent to half a day. It was expected that consultants would work five and a half days a week; the old contract was based on a fixed amount for five days a week.
While the detailed work on implementing the contract is being done—as Peter Collings said, that work continues, because it involves a discussion between every consultant and their clinical manager to agree the consultant's work plan—the additional figure is turning out to be about 1.4 sessions. The average addition to a consultant's working week that is being built into the contract is higher than the figure from the survey and that extra sessional payment is producing most of the additional cost.
As I said, the survey was based on assumptions about how working practices might change. At present, implementation of the consultant contract is being based on existing working patterns. An extra cost is involved. Early in the negotiation, the additional cost was estimated at 8 per cent and that was the information that boards had when they thought about their financial planning and the contract's cost in their areas. The additional cost has increased to about 20 per cent, as Peter Collings said, which has created an additional pressure that boards could not reasonably have forecast 12 months ago.
We have heard evidence that GP out-of-hours contracts, which are being dealt with locally, will be a problem in some areas. How are you factoring that in? Are you leaving that to boards?
The cost of the GP out-of-hours service is for the local boards to meet from their allocations. We are aware of the costs of that service throughout Scotland and we are having discussions with the boards. There is a national reference group for Scotland and the lead for the GMS contract in each board comes together with our pay modernisation director. They are considering the implementation of the out-of-hours contract to ensure that there is national consistency in the way in which it is implemented. At the moment, there is quite a variation in the costs that are being forecast by different boards.
I am keen to pursue the wider contractual issues that have been mentioned. There are three major pillars under pay modernisation—GMS contracts, consultant contracts and the agenda for change—all of which are being implemented on a UK basis.
I would like to pursue the Scottish dimensions of pay modernisation, if they exist. First, how effectively were the distinctive needs and conditions of the NHS in Scotland addressed during the negotiation process and in the final outcome? Secondly, what differential impact might the various changes have in different parts of the UK? For example, there is generally a higher number of staff in the NHS in Scotland, so how might the NHS in Scotland be differentially affected by the pay awards and other changes that are coming through? Thirdly, given the degree of rurality in the NHS in Scotland, what differential impact, if any, do you consider that the changes in the GMS contract might have, particularly in relation to out-of-hours services?
Finally, in relation to the consultant contract, will you comment on the relationship with the private sector, given that traditionally there has been a considerably lower level of private sector involvement in health care and provision in Scotland? How satisfied are you with the outcome of the contract negotiations, given that, as I understand it, a considerable element of the contract is about retaining the commitment of consultants to the NHS in Scotland, but that that might not be the issue in Scotland that it has been in other parts of the UK?
It might be useful if Mike Palmer talks about the Scottish elements of the contracts, but I will talk generally about the negotiation process. All four health departments were actively involved in that process, as were the different branches of the British Medical Association, so there was a Scottish dimension to the negotiations. However, realistically, because we are a 10th of the size of England, which is the key driver, our influence over the outcome will not be as great as that of the English.
At the start of the negotiations, there was a clear view that one of the key drivers for the consultant contract was the relationship with the private sector. I used to work in north-east London, where consultant work in the private sector was a significant issue. All the consultants in the hospital for which I had responsibility had significant private sector commitments and that needed to be clarified. At the start of the consultant contract negotiation process, the intention was to reduce the commitment to the private sector and increase the commitment to the NHS. At the end of the negotiation process, the emphasis on that element of the contract had been significantly reduced. Again, Mike Palmer was actively involved in those negotiations, so he can describe that.
The issue of the differential impacts of the contracts on Scotland is interesting. You are quite right: we have more doctors and nurses in Scotland per head of population, so the pay award is significant to us. If we think of the English-Scottish dimension, rather than of Wales and Northern Ireland, one of the key differentials results from the impact of the Barnett formula. For a number of years, the level of growth that has come into the NHS in Scotland has been less than the level of growth that has gone into the NHS in England. The Westminster Government made a clear commitment to bring up the funding of the English NHS to the European average. Scotland is there already.
More growth funds are going into England in relative terms than is the case in Scotland. Obviously, that makes it easier for the NHS in England to bear the cost of any of the pay awards or of other cost pressures. That is one of the things that feels very real in Scotland. We are playing with a smaller development fund when we handle UK-wide pressures, and we have to be acutely aware of that in terms of the management of the Scottish health budget. Mike Palmer might want to say something about the Scottish element.
I will pick up on the point about higher staffing levels. To a certain extent, the question is one of timing. It is clear that England is on a significant growth track in terms of raising the number of staff. In a way, we are a bit ahead of the game in that we have a higher staff baseline. Although extra financial pressures will be felt in Scotland because England will be catching up proportionately, so to speak, for a time, in a way we are in the position that England is aiming to reach.
Susan Deacon mentioned the private practice element of the consultant contract in the context of the differentials between the different deals. As Trevor Jones said, for a long time the emphasis in the negotiations was on retaining consultants for the first seven years of their contractual term in the NHS and not allowing them to do any private practice during that time. As Susan Deacon rightly said, that was the result of a clear steer from England, which was motivated by concerns about the encroachment of private practice. The emphasis on retaining consultants for the first seven years of their contractual term in the NHS fell away towards the end. In return, we managed to gain an extra half session for direct clinical care from all consultants. That is of clear benefit in terms of the pressures that we face and our objectives in Scotland.
The issues around rurality and the extent to which the different deals are sensitive to remote and rural problems were raised. It is absolutely right to flag up some of the difficulties that exist in rural and remote areas around out-of-hours services. I think, however, that those challenges can have a silver lining in so far as they offer enormous opportunities for boards in rural areas to take a much more co-ordinated, holistic and coherent approach to out-of-hours services. The issue is neither as doctor-centric nor such a burden on individual GPs as has been the case in the past. Some innovative ideas are being introduced by boards such as NHS Highland.
One of the big messages that came through consistently from the profession was the difficulty with recruitment and retention of GPs in rural and remote areas. That was simply because the GPs could no longer stomach the out-of-hours responsibilities and the way in which they were being asked to sustain the service. In quite a significant way, the new contract is a direct response to the plea that the profession made for the removal of that responsibility.
I am grateful for all that information. I want to return to the comparison between Scotland and other parts of the UK. Trevor Jones made the point, which is important for the committee, that the impact of Barnett has meant that the lines for levels of growth north and south of the border look very different. Mike Palmer made a point about the differential impact and increased costs of the pay modernisation changes. He said that the issue was one of timing—which I understand—and that Scotland's higher staff levels are making a disproportionate impact in the short term. He also said that England is working quickly to catch up with our level of staff capacity.
You might like to quantify what you mean by the short term—are we talking about one, two, three, four or five years? What will the impact of all that be? What will be the impact of having, in your words, a smaller development fund in Scotland? What has to give?
That is a critical point. The NHS in Scotland spends significantly more per head than the NHS in England. In terms of spend per head of population, a levelling-up process is going on—that is the starting point. The reality is that the extra cash in Scotland is being spent on services; we have more doctors and nurses. A simple example is beds for older people. In the NHS in England, it is hard to find traditional beds for care of the elderly because beds in the old geriatric wards no longer exist and functions have transferred to local authorities. However, in Scotland we still provide those services.
The matter is not just about pay; I described in my introduction the overall pressures that face the NHS. The status quo cannot continue, and we have to reform the way in which we provide NHS services. We have to think about providing a different model of care, and that requires fundamental reform and change, the key foundation for which is pay modernisation. We need a work force that can work more flexibly and it needs to move out of the silos in which the NHS has tended to work. We need to reward staff for the skills that they bring, and we need to develop staff to do jobs differently. We need pay systems that support that, and those systems need to recognise changing working practices and the importance of work-life balance. To take GPs as an example, we cannot expect people to be on call 24 hours per day, seven days per week, 365 days per year—that is no longer acceptable and people will not apply for such jobs. We have to reform the pay system and use it and the new contracts to drive the reform agenda. In time, that will lead to a different NHS in Scotland.
We need to think about why there are differences in service provision between England and Scotland and decide what is right for the Scottish population. We do not necessarily want to mirror the service in England. We have to think carefully about the differences and about the direction in which we want to take the NHS in Scotland, taking into account the differences in the Scottish demography.
If smaller levels of growth money are available in Scotland, which I do not dispute, and if smaller development funds are available in Scotland in the short term, which I understand to mean at least several years, what developments are not taking place in Scotland that are taking place elsewhere? I would be grateful if you could return to that point. Much of what you said, the philosophy of which I would not disagree with, applies equally to other parts of the UK. That includes your remarks on using the contracts as levers for reform, so those remarks do not in themselves answer my question. What developments and modernisation processes are not moving forward in Scotland, or not having the same investment put in as elsewhere, because of the differential that you identified?
A major modernisation process is taking place both north and south of the border. One of the things that England has been trying to do is to increase the number of acute beds. We have more acute beds than England, and some of the extra development funds in England are being used to enable it to mirror the service provision that we have in Scotland. We are not doing that work because we are already there; England is trying to move towards the number of acute beds that we have in Scotland. The extra development funds in England are being used partly to move its output level to that of Scotland.
Another good example is waiting times; in England there is huge investment of additional funds to reduce waiting times. Traditionally, Scotland has had better waiting times than England, so England is trying to catch up. We are concerned that in some areas England has overtaken us—for example, England has exceeded us on out-patient waiting times because of the huge investment that it has put in.
We identify the key priorities for the NHS in Scotland and we use the funds that are available—that is, the £7 billion, not just the development funds—to improve the service. It is fair to say that it is easier to drive change with new money from development funds than it is to drive change from within the system. The Scottish agenda is about driving change within the system, using the £7 billion, which is a higher level of funding than in England. The challenge is bigger for us.
I have a question about best value. How will you ensure that the changes to GPs' contracts will not negatively affect services to patients?
Mike Palmer will take you through the improvements for patients under the GMS contract, after which I will mention some general best-value issues.
The GMS contract is underpinned by the patient services guarantee, which is written into the legislation and which guarantees that the range of services that patients have enjoyed until now will at least be maintained. The focus on quality services for patients runs right through the contract. Perhaps the most revolutionary and significant element of the contract is the quality and outcomes framework. This is the first time that a country the size of Britain has developed and delivered a framework that is based on quality outcomes, and which links reward to clinicians and their teams to those outcomes. That pioneering work is focused absolutely on how improvements can be made for patients.
Under the quality and outcomes framework, there are three domains: various clinical indicators, to which all practices are asked to aspire; organisational indictors; and the theme of improving the experience of patients in general medical services. The quality and outcomes framework will be fully audited. We will assess GP practices' aspirations to provide the various improvements in services for patients that are flagged up in the indicators, and the degree to which the aspirations have been achieved. Visits will be paid to every GP practice to assess and manage performance in that aspect of the contract.
The audit is a major step forward in giving the contractual arrangements for GP practices a quality outcomes focus. Checks will be made within the assessment of the framework. For example, if it is found that a GP practice has an unreasonable degree of referral to secondary care in a way that unfairly ratchets up its quality outcomes points, that will be picked up in the audit and will not be sustainable. We must think about an integrated approach across primary and secondary care to ensure that we do not simply create knock-on problems for secondary care. Those are the key aspects through which improvements to patient services will be monitored.
I should mention out-of-hours provision, about which there has been much concern. Under the new contract, out-of-hours services will have to meet independent standards for the first time. NHS Quality Improvement Scotland recently issued a consultation document on the standards. The contract will ensure that every out-of-hours service provider meets the standards, which should bring greater benefits for patients. The consultation on the standards will last until the end of May. The process is inclusive—we have ensured that patient groups have input.
I will pick up on best value in the NHS in Scotland. We discussed earlier with Susan Deacon the need to use existing funding better. Best value is a key tool in that.
A range of initiatives are under way, which I think will produce significant savings and release cash to invest in the service or to address some of the pressures that we have been describing and which I will run through quickly. The policy of the NHS in Scotland is to develop the concept of the national service. The entity is NHS Scotland and 15 boards will work together nationally and regionally to deliver a national service to common standards. We are first working to ensure that we provide non-clinical services in the most cost-effective way so that we get best value for money.
An initiative on improved procurement systems is under way, which we think will by 2006 release about £50 million through the whole service using its purchasing power and the latest technology to get better deals from suppliers; the same goods will be coming in, but they will be significantly cheaper. We are considering whether we could improve nationally, rather than at board level, the non-clinical transactional services—such as paying invoices—and parts of the human resources function, such as paying staff. We are working with the staff organisations in NHS Scotland on a project that could release about £17 million by improving those processes using the latest technology. A business case is being presented for a new logistics process in Scotland, which addresses whether we can manage better than we do now the process by which goods are delivered from suppliers to ward. The first draft of the business case shows that that could release about £11 million. About £70 million to £80 million could be released from our improving back-office functions, which is important.
In addition, we are about to commission a major benchmarking exercise on the NHS in Scotland, which will examine the relative cost of provision of the service throughout Scotland. We will benchmark the service from an efficiency perspective. Why should the same service cost more in Lothian than it does in Fife? Why should the same event cost more in one part of Scotland than it does in another? We will also consider access. Why should more service be provided in one board area than is provided in another?
We will benchmark the service in terms of the quantity of service that is being provided and the cost of the individual service that is being provided. The exercise will allow us to identify areas where we can do better, which could release resources to address some of the financial pressures that we face. It will also provide us with international comparisons. We do not want to look just at Scotland; we want to compare ourselves to the rest of the world in terms of how we deliver health care, and to see what we can learn from that. That is a much bigger exercise, in which there is probably 12 months' work before we start to see results. We can do a lot of work around best value, which will allow us to use differently the cash that we have.
Will you be benchmarking against what is happening in England?
We will benchmark against the four United Kingdom countries, against Europe and against the rest of the world, if we can get comparators. We do not want to focus only on England; we need to look at health care systems generally. We can probably learn a lot from some European systems of service delivery.
Planned expenditure in the NHS is expected to increase from £6.7 billion in 2002-03 to £8.5 billion in 2005-06. In our evidence-taking sessions we have heard about increases in individual boards. Ayrshire and Arran NHS Board indicated that its uplift was £30 million, but that only 10 per cent of it would be available for service developments. Given that service developments are linked to health gains, do you expect that the additional funding will improve the health of the people of Scotland? How can that be measured in relation to the constituency profiles that were published recently, which are a poor starting point? How will you ensure that NHS boards use funds that are earmarked for new service developments for that?
I will pick up the inequalities issue first. The formula that allocates the percentage increase to boards takes into account deprivation, so the more deprived a community is, the greater will be the increase it will receive. There is a step in the formula that addresses the inequalities agenda.
I understand what Ayrshire and Arran NHS Board said and I have read the Official Report of that meeting, but the matter can be oversimplified. It would be wrong to assume—we would be missing a trick if we were to do so—that investment in the new pay modernisation system does not provide an opportunity to improve services. If the new contracts are simply pay awards for staff, we are making huge investments for very little return. They are not about that: the pay modernisation agenda is about changing services.
Part of the problem with the consultants' contract is in the working group's assessment of how much it might cost. The group made assumptions about improvements in service provision, and we need to encourage all boards to use discussions with individual consultants on their work programmes to improve the service for patients. The boards are all aware of that. As Mike Palmer said, part of the agreement is an assumption that the amount of time with patients will increase in the consultants' work plans. Part of the agreement was to increase that clinical interface, which is good. It is therefore wrong to say that the £20 million that you quoted for inflation and pay awards does not produce patient benefit. It does—Mike Palmer has described some of that benefit.
I am not the one who said that; it was your officials at board level.
I understand that. I am saying that investment in staff should not be regarded simply as an increase in pay for which the service gets no benefit. The service must get a benefit; we are investing huge amounts in the new contracts, and we must see an improvement in services to patients from that. If we do not, we will have lost a huge amount. That is the distinction that I draw.
I understand that board officials were saying, "If you take the costs of pay modernisation away, this is the amount we're left with." That is right, but they do not only have the increase in their allocation; they need to consider their whole allocation and think about how they can do things differently. I have just said that, through back-office functions, £80 million can be released for Scotland to develop patient services if boards work together to improve how they do things.
Your answer is fine, but there have obviously been discussions with health boards, and if you are saying that the explanation that you have provided us with—that the amount of money that they will allocate for pay modernisation will provide service benefits—has also been given to boards, why did that not come through when we took evidence? We are still in a silo culture, and, to a certain extent, you have demonstrated that you are in that mould. Best value is not always about saving money; it is about how a service is provided and how the public are consulted and involved in shaping that service. Some boards are good at doing that—others are poor.
At the end of the day, the figures that we go on are the amount of money that comes through to the NHS in Scotland and which, through the Arbuthnott formula, arrives eventually at local NHS boards. In spite of those figures, we get profiles that are absolutely shameful. When will we see tangible improvements in health?
You can see the health of Scots improving now; health is improving throughout the world. There is an issue about the rate of that improvement; I do not think that any of us believe that it is fast enough in Scotland. That is because of our starting point, and that is why we are putting significant emphasis on the health improvement strategy and why we are allocating additional funding not only to the NHS, but to the public sector in Scotland, to improve the health of the people of Scotland.
Significant investment is being made on the health improvement agenda and we are starting to see signs of improvement but—as you know well—we do not get a quick return from investment in health improvement. It is a long-term investment, but it is the right thing to do. Probably the most important thing that we are trying to do is to address the wider health improvement agenda. We must drive that forward.
There was one question that I did not approach, which was about how we manage the funding through boards and ensure that we get outcomes from it. Perhaps Peter Collings would like to talk about performance management.
I will make two points. Most of our funding to boards is a general allocation. Within that general allocation, it is for boards to decide how they will use the money in a way that reflects local priorities. That said, we get boards' plans for how they will use the money and we use the performance assessment framework and other tools to assess their performance. We have a system for ensuring that money is spent well. In addition, for some sorts of expenditure—for example, that which relates to coronary heart disease, stroke and cancer—there is ring-fenced money that boards can use only for particular development purposes.
I appreciate the substance of Trevor Jones's answer to Margaret Jamieson's question about what is happening with regard to health improvement and the timescale that is involved, and I acknowledge that what will deliver results is action across Government and not just within the Health Department. However, previous witnesses have commented on the national health improvement fund, which is one of the mechanisms that the Health Department is using to bring about change. One witness said:
"We have found some difficulty in establishing exactly how the money is to be channelled through the different agencies. Although the money was taken from the health boards, it is to be channelled through various funding mechanisms … Obviously, because the money is going to various places, it is hard for us to get our arms round all of it."—[Official Report, Audit Committee, 30 March 2004; c 454-55.]
In the first few years of the fund, Scotland's share of the tobacco tax was ring fenced. It was earmarked for health improvement and allocated to health boards to be put into local projects in conjunction with partner agencies. However, as I understand what that witness told us, the channel for the resources is to change. Can you clarify what is happening in relation to channelling those funds? Also, is the fund to be retained? To what extent is the practice of ring fencing that share of the tobacco tax to be continued? If the funds are to be channelled through various agencies, how will the level and impact of the investment be monitored? The evidence that we heard suggested that at least one board was struggling to understand how that could be done with the clarity of previous years.
Dr Collings can talk about the detail of the funding streams; I will talk about the principle of the fund. The health improvement fund was a useful tool for raising the profile of the health improvement agenda and the need to refocus on health improvement. In practice, that cash was used right across Scotland for relatively small projects, as you said. That was fine, but I believe strongly that we cannot make a fundamental shift in the health of the people of Scotland simply by having a lot of small projects. We have to make health improvement a part of the core business of every public sector body, although the private sector is important as well. It is not about using a small fund; it is about using the existing spend. How can we change fundamentally the approach to health improvement? That is what we are moving towards.
Through last year's spending review process, significant additional funds were allocated for health improvement, but they were allocated for major issues relating to a range of Scottish Executive departments. The money was not coming through the Health Department. Cash was going through the Education Department to local authorities for schemes in schools that were designed to improve the health of children in Scotland. In that way, we would fund initiatives that would improve health through the normal funding streams of various bodies.
It is interesting if people in the national health service are concerned that they cannot trace the cash and see what is being done with it.
A key driver for health improvement is the community planning process. It is not the responsibility of NHS boards to control that; we would expect NHS boards to be the drivers and facilitators for health improvement, but we would expect the local authorities to be driving that as well—and they are. The Convention of Scottish Local Authorities is extremely interested in the health improvement agenda. In fact, in the past 12 months, we have set up a joint ministerial group involving the local government ministers, health ministers, COSLA and the NHS to drive the health improvement agenda across the wider public sector.
The fund was very useful at the start of that, as it put the issue on the agenda. We have now moved it up four or five gears, and we are seeing a significant investment in the core budgets of the public sector bodies that are responsible for making changes. We need the change to happen, and we expect the community planning process to be the vehicle through which all the public sector bodies feel that they have ownership of the funding and can see change happen. We are trying to step the process up and drive it much harder. The projects were useful in their time, but we need to move away from that. The matter has to be about using core funding to make fundamental change. That is the only way we will catch up with the rest of the world.
To avoid doubt, is there to be no such fund in the future?
Peter Collings will talk about the funding streams.
As Trevor Jones said, there is not a single fund: money goes out through the health and education budgets. What will happen in the future is all part of this year's spending review process. There will in the autumn be announcements of ministers' decisions in the spending review, which will cover all our expenditure including, I expect, health improvement.
I am interested to hear that. I accept that there have to be partners in improving public health across government areas. How is investment in improvement tracked across those different government areas? We have just had a session with the Accounts Commission. How are you working with other bodies to ensure that that investment is making a difference?
Looking backwards at previous decisions on spending, we have a range of funding initiatives through last year's spending review process. We will have to see that the outcomes that were promised as part of those spending decisions were delivered. They will be monitored by the appropriate Executive spending departments—the Executive Education Department will monitor local authorities on its health improvement areas and we will monitor the NHS on its health improvement areas. That monitoring will take place as part of the existing performance management systems for the different parts of the public sector.
We are engaged in an interesting discussion with NHS boards and local authorities about whether we should bring together the performance management systems. It has been suggested that the NHS accountability review process should have the local authorities round the table. At the moment, they attend as NHS board members, but the question is whether local authorities and NHS boards should work with us through that process. That is something that we want to discuss with COSLA.
We have had a great deal of comment on benchmarking. If Robin Harper does not want to ask anything specific on finance, trusts and planning, I propose that we move on to trust integration.
I have one question.
Have you identified any further efficiency savings that could still be achieved in the NHS under benchmarking?
No. The back office functions are described and are well advanced. We are having detailed discussions with the service and the trade unions about how we might take those forward. The benchmarking initiative is very new and we are still putting together a team to manage that project. I suspect that it will take six months for us to see some early results and it will probably be 12 months before we get into the meat of what might come out of the initiative.
I have two other questions on issues that have been covered, but I will defer them until the end of the session, if there is time.
Okay. We will move on to the benefits of trust integration.
The trusts have been wound up and integrated with NHS boards. I have a series of questions. First, what does the department see as being the key benefits that will arise from integration? Has the department set economy and efficiency targets for trust integration? From the lessons that were learned by the first NHS boards to undergo trust integration, to what extent has the department provided guidance or disseminated good practice to other NHS boards? Finally, how is the department monitoring NHS boards' progress in establishing the integrated structures?
On the question of benefits from integration, we must take a step back and think about the philosophy behind the creation of trusts, which was about creating relatively small organisations that would compete with each other to drive up standards in the service. It was about bringing in the internal market, which had benefits in its early days. There were significant improvements in UK-wide service delivery.
In Scotland, however, we quickly recognised that it was difficult to create an internal market. For example, there is little competition between a hospital in Inverness and one in Aberdeen, so it was difficult to get a market concept working in such an environment. Furthermore, we quickly questioned the divide between acute care and primary care. The organisations that were set up through the internal market process were based on the institutions that provided care; they were not based on the experience of the individual patient.
Since 2000, we have had a clear policy direction. We surveyed the public in 2000 and the clear message that came back was that they wanted a national health service. They were not impressed with the idea of 54 organisations—with different letterheads that no one understood—working against each other. The public wanted a national service with national standards.
In 2000, we created the unified boards by bringing together around a single board table typically three independent organisations: the acute trust, the primary care trust and the old NHS board. The unified boards were created in September 2001, but in the parts of Scotland in which the system was felt to be working best it quickly became obvious that the separate statutory organisations had no added value. They were operating as single bodies and the fact that there were three chairmen, three finance directors and three human resource directors was getting in the way. We wanted a single organisation that focused on the patient experience. That was not about focusing on institutional care and care in the community, but on the experience of the individual cancer patient or the individual patient with mental health problems.
We have taken away independent status, so that a single system operates throughout Scotland in which NHS boards can organise themselves to suit local problems. We have not prescribed an organisational model. Each NHS board has stood back, considered the issues that it faces and devised a management structure to address local health issues.
Since 1 April, some boards have stuck in the first instance with the acute and primary care divide, some have gone for having a single operational unit and one board has organised itself geographically. It is still early days, but all the feedback that we have had is extremely positive. I met the NHS board chairs with the Minister for Health and Community Care and the Deputy Minister for Health and Community Care yesterday, and we had a good discussion about how we will assess the effectiveness of the new organisations. We agreed that we will stand back in September to evaluate how the transition has worked and how effectively the new organisations have improved services.
To dissolve trusts requires public consultation, but there was no lobby in NHS boards throughout Scotland to retain the trusts. It was probably the quietest and easiest consultation that I have ever seen in the NHS. We have had one or two difficult ones recently.
That must have been a blessing.
The important message is that the people of Scotland did not believe that the old model was the right one.
We issued detailed guidance to the boards on how they should approach trust integration. The thrust of the guidance was simple: we needed the least change possible and evolution, not revolution. A lesson that we learned from taking a big-bang approach to reducing the number of trusts in 1997-98 was that everyone got focused on organisational change and we lost control of the finances and waiting lists and times. People's concentration was too focused on applying for jobs for them to do the day job. As a result, the guidance told boards to stick to the knitting, to concentrate on clinical services, to bring the change in as quickly and quietly as possible and to get on with the real business. I want to congratulate everyone in the NHS on making the whole thing work remarkably well. It is good that patients have not noticed the change, which has just happened quietly.
We have set no efficiency targets for the change, as it was not about saving money; it was about getting the right organisational model. If, as the experience of NHS Dumfries and Galloway and NHS Borders suggests, boards can reduce their costs and save money through the change, it is up to boards to decide to use that money for local issues. Dumfries and Galloway and Borders have suggested that they saved about £500,000 in the senior structure of the organisation. As I said, we are not setting any financial targets; boards need to find the right structure and to drive the change forward.
We move on to questions about performance management accountability and the new NHS organisational structure.
I want to return to my hobby-horse of the performance assessment framework. Obviously, as the framework has been in place for some time, there is some scope to refine it. Do you have any plans to review the scope of health activities within the performance assessment framework? Given our earlier discussions about best value in local government and how that approach might extend into other areas such as the health service, how do you think the accountability review process will develop? Will you consider giving the public a role in reviewing the current PAF?
Where does one start with the performance assessment framework? I suppose that the first thing to say is that it is simply a tool that helps us with the performance management process. It is not the performance management process itself. The PAF allows us to work up jointly with an NHS board a helicopter view of the board's performance. We examine the seven fields of activity for which the board is responsible, which means that we are not concentrating only on money—indicators for each of those fields give us a feel for whether certain aspects are improving or getting worse.
We provide that PAF information to the NHS boards and ask them to prepare a self-assessment and give us a view on their own performance. Although we use the data and the self-assessment to construct the agenda of the accountability review meeting, we also have detailed discussions with clinical staff and staff members more generally in the area partnership forums to allow them to express their views about how an organisation is working. We then meet representatives of the NHS board, which would usually include a local authority representative. In fact, I think that last year every meeting was attended by such a representative.
That approach has dramatically changed NHS Scotland's accountability review process. The process used to be hated and feared by the service, because it was more a discussion about negatives than a general assessment of how things are working. Instead of having a debate about the system's operation and thinking about how to share good practice and improve poor practice, boards and staff simply received instructions. We now have an open dialogue with boards.
You asked what we are thinking of doing with the PAF. In that respect, we commissioned the University of Aberdeen health economics research unit to review the framework. The unit's draft document, which we will publish in June, is called "Experiences and perception of the NHS"—we are happy to share it with the committee.
The view that is coming back from those who took part in the survey—I do not know who they are—by the health economics research unit is positive. The service is saying that the PAF is useful and that we should not change it; the message is that we should stick with what we have. The people who took part in the survey are saying that, although we should let the system evolve a wee bit, we should not change it every year, because we need to identify trends. Those people speak positively about the accountability review process. One of the key messages concerns the fact that the review process takes place in the board area. People from the department go to the board area to see and discuss the service; staff are not summoned to Edinburgh. There is a clear message in the report that that simple point is seen as positive.
We need to keep on evolving. When we designed the PAF, we assumed that we would work in seven fields of activity. Currently, only five of those fields are operating effectively. There is still work to do on staff governance, which we have not quite got right, and public involvement, on which we do not have indicators that will allow us to test how a board is performing. The work is evolving—it is new, but a good start has been made.
On performance management in the NHS in general, we are starting a review of the health statistics. We believe that the categories of statistics that we collect are a result of history and we will undertake a fundamental review to see whether they give us useful information that allows us to manage the performance of the new agenda. That review is under way and it will help.
We are also undertaking a best-value review of the performance management function in the Health Department to see how we can improve performance management in its widest sense. In addition to being subject to that process, health boards have performance management functions hitting them from other bits of the department. We want the best-value review to ensure that we are aware of everything that is going on in performance management—we want to streamline that work and make it more helpful.
A good start has been made. We recognise that there is more to be done, but in general the reaction from the service has been positive. Every year, after the accountability review, we survey the boards to seek their views on how the accountability review process works and how we might improve it. I am happy to share the results of the previous survey with the committee, if members would like to see them. From my perspective, the results are positive, but I guess that I always see the glass as half full.
I would expect that to be the case, given that the boards would not want to upset the individual who is responsible for their budgets for the following year.
You talk about best value, but your concept of best value appears to be totally different from the concept that is emerging from the Accounts Commission, from which we heard this morning. That body, together with the Auditor General for Scotland, considers best value in terms of taking the concept into other areas. You are inventing your own wheel; you want to put things in place and roll them out for the health service so that you are ahead of the game, so to speak.
I do not think that I would ever want to wait for another organisation to come in before I improved anything in the Health Department. If we see scope to improve, we will do that.
I am not saying that.
I thought that you were saying that we should wait for the Auditor General—
The Auditor General's concept of best value is totally different from the concept that you outlined this morning.
I do not think that it is. We contributed significantly to the guidance on best value that has been issued by the Scottish Executive. The Health Department has been a major player in that. The best-value review of performance management is absolutely around those definitions. Earlier, when we had a discussion about how to use the NHS resource differently, the committee might have heard me emphasise the fact that best value in the back-office functions is about making the service as effective and efficient as possible, to release cash for clinical services. Our approach to best value is exactly the same as the approach of the rest of the public sector.
Do you accept that best value is not always a cost-saving exercise?
Absolutely. It is about making the service as good as possible within the resource that we have.
Yet your previous emphasis was always on saving.
It was. I was trying to demonstrate a point.
That clarification is fine.
Some people think that, under the new single-tier NHS system, there is a risk that financial performance and the reasons for underlying deficits in particular services or directorates will become less transparent. What guidance or instruction has the Health Department given to NHS boards to ensure that the accountability for the financial performance of operating divisions will be maintained and the results reported? Do you expect the financial performance and activities of operating divisions to remain visible outside NHS boards?
The key point about deficits is that the overall finances of the NHS organisation in an area are managed properly so that the organisation balances its books. One feature of having several organisations in an area is that numbers get bandied about—one bit of a service can be in deficit, while another is in surplus. To an extent, that does not matter; what matters is that the board in an area manages funds properly and that, overall, it is coping. In some instances, a deficit existed simply because a board had not yet released extra funds to a trust, although it intended to do so. The money existed, but there were headlines about the trust being in deficit, even though that was not the real situation. To that extent, the new organisation will better illustrate the real situation.
I have two points about transparency. One is that NHS board papers are in general made public—that situation will continue. Boards produce detailed reports on their finances and the finances of their individual components. In future, that will vary, because boards will have differing divisional structures, as Trevor Jones said. However, the information will still be in the public domain. Secondly, at national level, we produce the costs book on the "Scotland's health on the web" website, which sets out in exhausting detail what it has cost to provide services. Much of that information is provided not on an organisational basis, but by hospital. That information will continue to be provided.
The new management structure is more robust and will prevent some of the game playing that has taken place—sometimes in the media, unfortunately—between NHS organisations. The public will continue to be able to find out about the finances of organisations.
Are you saying that people will be able to distinguish between the operating divisions in boards' published accounts?
Depending on the structure that boards adopt, their published accounts will give varying breakdowns. However, at the national level, we will continue to publish financial information that is broken down into more detail than that, which is the sort of information that you are after.
One way or another, the breakdown will be available. Why are you not issuing direct guidance to the boards to print the information in that more detailed form?
We issue guidance to the boards on the format of their accounts, but the format will inevitably follow the structure, which means that, if a board has stuck to an acute/primary care structure, the accounts will be split in that way. If a board has gone for a geographical structure, it may use that to monitor finances and some of the information in the accounts is more likely to be structured in that way. We will continue nationally to collect and publish detailed cost information.
I question the value of making divisional information available, because it is not comparable across NHS boards. What purpose would it serve? How would it help the people of Scotland to understand the quality of the NHS system? Performance management information is much more valuable and the performance assessment framework is on the web. It is much more important to look at health outcomes and inputs in a way that enables us to compare performance across Scotland. If we simply say that the division that manages hospitals and community services in the Borders has one cost and the division that manages part of the acute service in Lothian has another cost, the response might well be, "So what?" We cannot compare the two.
I want to continue the theme of performance monitoring and review. An enormous amount of development and change has taken place in this area, most of which is generally acknowledged to have been for the better. I return to something that Trevor Jones said in an earlier answer to Margaret Jamieson. The comment was made several times that the reaction from the service has been positive. One of the key reasons for the improvements, however—indeed, I do not even need to say this—was the need to ensure that the public had a better insight into and appreciation of the way in which their money is being used in the health service. I am concerned to know where in the myriad bits of information the public can get an accessible, almost light-touch, indication of how their board is performing relative to other health boards.
Indeed, I raised the issue when Lothian NHS Board gave evidence to the committee. I confess that it had been a wee while since I had looked at accountability review letters. On looking at the last letter that was sent to Lothian NHS Board, I was quite struck by the fact that it erred terribly on the side of the positive; it made no reference to some of the hard-edged difficulties that exist in Lothian.
I want to be crystal clear on the issue. I for one do not want to advocate pointing the finger, laying the blame or concentrating on shortcomings. Far from it; I think that it is good, helpful and healthy that achievements in the service are highlighted wherever possible. Equally, however, on looking at the letter, I felt that its contents were not balanced. I raised the matter with James Barbour at the time. I said that particular, profound problems, including those of long waiting times relative to other parts of the country in key specialties, were not referred to. I also raised the fact that there was no reference to the extent of delayed discharge in the Lothians; the only reference was to the input and effort that were being made to address the problem.
Ultimately, I cannot help but feel that all that energy and effort will be effective only if the public can achieve a good sense of how the health service in its area is performing. At the moment, it seems that people have to spend two or three hours on the internet if they want to gain access to such information.
I agree. At the moment, we are looking forward: we are developing a report on performance for the NHS, although members will appreciate that the matter is still subject to ministerial approval. We intend to issue the report probably in the late autumn—possibly around October or November—if ministers think that that is the right thing to do.
The report would try to give a national overview of the performance of the NHS, and the performance assessment framework data are part of the background to the report. Current thinking is for those data to be issued as an annex to the report, which would mean that we would have a short, sharp report on the performance of the NHS that was accompanied by a technical appendix within which the hard evidence to support the report's findings could be found. In my view, we should probably do that annually. The report would allow the people of Scotland to form a view about how the NHS is performing.
If Susan Deacon were to read 15 of the accountability review letters, she would get a different view of how each health board feels. If we are reviewing a board that is performing well—and Lothian is one such board—one would expect it to receive a very positive letter. Health systems are huge and the letter cannot be expected to cover everything. Before the review begins, we agree jointly what the key issues are. I guess that the letter records my view of how the board is performing.
Even in a case of a board that is having problems, when I write expressing a view about its performance it is important for me to strike a balance between the things that are going badly and the 95 per cent of the organisation's work that is going well. The board with the biggest problem in the year before last was probably Argyll and Clyde NHS Board, and the accountability review letter for that year included some very hard messages. In that letter, members would see not only those hard messages about the performance of the board, but an absolute recognition of the contribution of the people who provide the services in Argyll and Clyde. The accountability review has to strike a balance. At the end of the review meeting, I do not think that anybody is under any misapprehension about what we are concerned about and what we are not concerned about.
I want to clarify a point in layperson's terms. Are you considering producing information that would allow a cancer patient who was considering moving house to make an assessment about what the quality of their care would be in one area of Scotland compared to that in another?
No. We could not go into that level of detail in the document that I am describing. We are talking about a high-level overview of the performance of the NHS. If we had to go into that level of detail for every procedure or every clinical service the document would be pretty thick. I was talking about the performance of the service. You would have to dig down to test the data that you are talking about.
How do people find that information at the moment?
They get it from a range of services. There is a waiting times database—the waiting time of every clinical department in Scotland is on the web. When general practitioners decide whether a patient needs a referral for surgery, they and the patient could consider not only their local hospital, which tends to be everybody's first choice, but, if they wanted earlier treatment, they could find the next available slot to see a consultant anywhere in Scotland. A lot of information is available around clinical reports on quality of service, but someone would have to dig for those, because there is not a single directory of them.
So currently it is not easy to get information for outcomes for cancer treatment and care.
We would have to assess the practicality of what you are suggesting. I can see the value of it, but my knee-jerk reaction is that it sounds like a huge exercise; it would be complex to put together a document containing information that would enable someone to decide which cancer surgeon they wanted to see. The suggestion seems difficult, but we could think about it.
It just struck me that patients with major illnesses such as cancer, which cause a significant number of deaths, would find such information helpful. If someone is moving house, they need to be able to access information about the quality of care that they can expect in an area to which they might move.
That is right. The other side of that coin is that that patient's family could need a range of NHS services and, in practice, there would be a range of performance in those services in any given area.
There could well be.
If someone was basing a decision on where to move simply on health considerations, they would have to be able to forecast what conditions they might face in the next five or six years and decide which is most important. People face a multiplicity of conditions.
But you would accept that, in an ideal world, patients should have access to as much information as possible to allow them to make informed decisions.
Yes, absolutely.
I want to return to the issue of health promotion. I have heard ideas about doctors being able to prescribe home insulation on the basis that it would save the health service a considerable amount of money, given the number of repeat illnesses that older people get as a result of living in damp houses. I have also heard about doctors being able to prescribe health clubs and homeopathy—that already happens in some cases. How much are GPs involved in health promotion? Might we get to the stage at which GP practices' performance in health promotion is monitored and audited?
Health promotion tends to be a rather narrow term in the NHS. The wider health improvement agenda encompasses everything that we have to do to improve Scots' health. We see the new community health partnerships, which are being created now, as a key plank in the development and implementation of the health improvement strategy and GPs are obviously among the major clinical players in those partnerships. It is critical that we drive the agenda at community level. Indeed, we have to drive health improvement at a range of levels—for example, at a local community level in Craigmillar, then across Edinburgh and then nationally. There must be different approaches at different levels of society.
My final question concerns the issue of capital-to-revenue transfers, which has been raised. Given that last year £50 million was transferred from capital to revenue, can you give us an indication of the point that we have reached in discussions with the Treasury regarding its quest to tighten up the rules on capital-to-revenue transfers?
It is important first to provide some background. Capital-to-revenue transfers are an issue because at the UK level the golden rule states that we should borrow only to fund capital expenditure. At both the UK and the Scottish levels, there is a concern that sufficient capital expenditure should go into public services and that we should enhance capital assets in the public services, rather than let them degrade. If money is moved across simply to prop up the short-term financial position of a public body, we will not get reinvestment.
However, capital-to-revenue transfers will still be possible for NHS Scotland. We will manage how we do that within the Scottish Executive budget. In the next few days, I will write to NHS boards to ask them to submit proposals. I will accept some and reject others, depending on their merits and, in particular, on whether they seem to be related to other sorts of investment, as opposed to simply propping up revenue positions.
I am interested in some of the innovative ways in which boards are working with local authority partners, the police service and so on that involve transfers of capital to another organisation. It would be of great concern if under your new guidance that were not allowed.
The projects to which Margaret Jamieson refers account for a small proportion of total transfers, but they are one of the issues in which we will be interested. Some projects are genuinely capital investments but are classified as current expenditure because the NHS will not end up owning the asset. We will deal with those as a particular category.
Perhaps NHS Ayrshire and Arran has jumped the gun a bit.
I thank Trevor Jones and his colleagues for their forbearance and for their attendance.
We move to item 6 on the agenda. I am aware that we were running ahead of schedule but are now somewhat behind. I suggest that we crack on and deal with item 6 before I demit the chair and hand it back to the convener, who has arrived after an epic journey. We are still in public session, and I will give Trevor Jones and his colleagues time to depart.
Our discussion relates to the evidence that we took from NHS Lothian on 16 March and from NHS Borders and NHS Ayrshire and Arran on 30 March, as well as the evidence that we have just taken. I seek comments from members.
I apologise for my late arrival. Fortunately, I will have nothing to do with the award of railway franchises.
I will take the unusual opportunity to comment at the outset. Members will be aware that, in the papers that we have received today, we also have a briefing on evidence that we have taken. It is not a complete summary of what we have heard, but it points out some of the relevant areas. If we were to compile a report, I would like it to be based on that paper; however, it would require the addition of some of the details that we have received from NHS Lothian and from some of the other health boards about the difficulties that health boards are facing because the uplift in funding is essentially being used for changes in contracts and increases in salaries and the cost of drugs. The difference between the perception of what might be available to improve health service delivery or introduce new systems of delivery and the reality is something that the committee has brought to light and which should be included in our report.
The paper mentions the agenda for change, which was an issue of concern because it looks as if that, too, will have a significant impact on spending patterns in the NHS. A question was asked seeking further evidence on the new Treasury rules. That is an issue that we have stirred up and we must see what we can say about it in our report. I have not had the benefit of hearing all the evidence this morning, but the evidence that we heard from NHS Lothian, NHS Borders and NHS Ayrshire and Arran is sufficient for us to put into the public domain the concerns that I expect the committee to have about how tough it is for the boards to deliver improved services when so many different new contractual arrangements are coming together at the same time. That is something that the public has to be aware of.
Do any other members have comments?
Is the aim at this stage just to get an indication of key themes that we might want to develop further?
Yes.
That was just my insurance policy. Often, after we have had these sessions, we need time to reflect. I sense that, from what we have heard, we clearly need to reflect on what we are going to say about the pay modernisation issues.
Although I would not want to push the committee down the road of the questions that I pursued with the minister, I think that a big question remains about what the cost of pay modernisation will be—that is a simple question that has been made explicit—and what its impact will be. I raised the issue of comparisons with other parts of the UK. I would not always go down the road of making comparisons with the situation elsewhere, but this is an area in which such comparisons are germane, given the fact that the contracts are UK-wide. There are issues not only of direct costs but of opportunity costs, and some of the specifically Scottish dimensions to the changes need to be considered. I am not sure that I would want to go further than that at this stage. I just note that.
The only other point that I would make is that, in line with what we have explored not only in relation to the overview report, but in relation to a number of service-specific or area-specific Audit Scotland reports on health service issues, there are still profound questions about the scale and pace of change and development in Scotland, some of which are linked to the question of what investment is available to catalyse and support the change and some of which are about how to incentivise change within the system in Scotland. There are a range of different reasons as to how and why that might happen, and there are issues that need to be explored.
Although I said that that was the last thing that I was going to say, I would like to add a third point. On the issue of making the process more transparent and accessible to the public, we should not simply be putting more and more information in the public domain—often, that can have an adverse impact—but should be making information available in a language and form that the public can genuinely understand and access. Although a lot of the material and mechanisms that have been discussed today in relation to performance monitoring and accountability are terribly laudable and give us more of an evidence base for performance in the health service, it is difficult enough for us to get a handle on them, so heaven help Joe Public. I would like us to think not only about what the performance-monitoring process is but about how it can be improved.
Might it be possible for the clerk to give us an indication of how long it will take her to prepare a draft report for us? That would allow us to consider how we might reflect on the evidence that we have heard today. Once the Official Report of this meeting is published, it would be useful if we were able to compare the evidence that was gathered at previous meetings with what was said today. To some extent, that will slow down the production of the draft and the process of producing a report. I am conscious that we have four committee meetings left before the summer recess. Given the other work that the clerks have, what progress will have been made on the report at various stages before the recess?
Shelagh McKinlay (Clerk):
To a certain extent, that depends on the progress that the committee makes on reaching decisions about what to put in the report. Had I been sent off today to write a report, I would have hoped to have been able to bring a first draft to the meeting on 25 May. Clearly, the committee has decided that it does not want me to do that. Realistically, the first time that the committee will see a comprehensive draft report will be the first meeting in June, which I think is on 8 June. It might be possible for us to produce some kind of key issues paper in time for the next meeting or the meeting after that. That would help us with our further discussions about the key messages.
I suggest that we ask the clerk to produce a key issues paper. It could highlight the issues that we have taken evidence on and give us a chance to focus on those. Would that be a way forward?
That would seem to be helpful.
I ask the Auditor General to give us his views on what we heard in today's evidence-taking session and before the session.
My first thought is a statement of the obvious. I do not think that any of us can be in any doubt about the significance of the change that is taking place in the health service at the moment. We will have to maintain a continuing interest in the health service in order that we can demonstrate to the satisfaction of the committee and the Scottish Parliament whether the benefits that are being promised are delivered.
A lot of evidence has been given regarding the costs of the various contracts and pay uplifts. The general response from the NHS witnesses is that they are optimistic that the changes will produce different and much more effective models of care. That must be encouraging. Again, we will have to monitor that. I expect that, for example, in relation to something as significant as the GMS contract, I will want to ask Audit Scotland to consider seriously undertaking an examination of whether the benefits are being delivered. However, that will be some way down the road. Clearly, we will also have to work closely with other agencies, not least bodies such as NHS Quality Improvement Scotland.
It might be worth offering a thought or two on the best-value agenda. Most of Trevor Jones's answers on best value related to the economy reviews of support services, in relation to which a great deal of activity is undoubtedly going on. In due course, we will report on whether the anticipated benefits have been delivered, but that will be some time. There are differences in the best-value regime for performance and quality between the NHS and local government, which reflect the different accountability regimes that operate. Ultimately, the chief executives of health boards are accountable principally to the chief executive of the NHS in Scotland and onward from that to ministers, whereas local authorities are independent democratic institutions. Therefore, it is inevitable that the best-value regimes will be different.
However, many of the underlying principles are similar. Public bodies—whether they are local authorities acting on behalf of their community or NHS boards—should be clear about their priorities and where they wish to put resources; they should be rigorous in evaluating performance; and they should report the results of performance reviews in public, clearly and unambiguously. Trevor Jones, with whom I have regular conversations, is equally committed to that model. That is a parallel between local government and the NHS. Another parallel is that there is a role for audit in providing independent assurance on whether the performance that is being reported is appropriate and fit for purpose and whether the right issues are being highlighted.
One issue that is related to best value is the transparency of reporting. NHS managers are clearly positive about the new single-system regime, under which individual health boards will co-ordinate the delivery of services in acute and primary care. We will have to monitor carefully how performance is reported. It is important that reports consider how the whole system operates. Increasingly, the work of Audit Scotland will be driven by a need to consider whole systems; indeed, earlier this morning, in conversation with the Accounts Commission, the committee heard how we work jointly on issues such as community planning, community indicators, joint future and so on. That will be a growing part of our work.
My personal view is that, in addition to considering whole systems, we must be able to see transparent information about how parts of systems operate. If we lose that variety and detail, we will find it difficult to explain differences in performance and cost at board level. Therefore, while I accept entirely the value of operating the NHS in whole-system terms, I remain of the view—which I expressed in the overview report—that it is vital that we consider the big cost drivers such as hospitals, drugs budgets and community and residential care. We need to analyse those drivers because it is only at that level and below that we really get explanations for variations in performance. I encourage the committee to think seriously about supporting the view that we need performance and financial information about parts of systems as well as about whole systems.
On the issue of public reporting on the NHS as a whole that is understandable to and informative for the public, I am sure that the committee was encouraged that Trevor Jones mentioned that ministers are thinking seriously about publishing a performance report on the health service in the autumn. I confirm, however, that before the summer, I will lay before the Parliament an NHS overview that considers performance. In that study, we have taken all the available sources of information and attempted to draw them together to present some kind of overview of what the people of Scotland get for the £7 billion plus that is spent on the service. I would like to think that that report will be taken in the manner in which it is given. It is not the last word on NHS performance but an attempt to encourage a debate and to indicate how we can take complex NHS information and present it at a high level in a way that is helpful and can be readily understood by people who are not NHS managers.
We will commission an issues paper that will be considered either at the next meeting or the one after that, which will give members the opportunity to consider the Official Report of this meeting and the Auditor General's points.
Meeting continued in private until 12:40.