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This speech was given in the House of Commons on 7 July 2003

Mr. Richard Bacon (South Norfolk): I, too, am interested in money. The Chancellor spent most of his speech boasting about it, as did the hon. Member for Leeds, East (Mr. Mudie). In the health service, much money is wasted: approximately 1 billion to 3 billion on fraud and theft; approximately 2 billion through bed blocking and late cancelled operations; approximately 2 billion through staff sicknesses and absences; approximately 1 billion through infections that are caught while in hospital; between 300 million and 600 million on over-prescribing drugs; approximately 400 million through clinical negligence, and approximately 230 million on treating patients who become malnourished while they are in hospital.

That is a total of some 9 billion, which means that between 16 per cent. and 20 per cent. of the NHS budget is wasted. Those are Department of Health figures.

Mr. Eric Martlew (Carlisle): Will the hon. Gentleman give way?

Mr. Bacon: No, I do not have time. Before examining and boasting about extra expenditure, we should discuss serious, proper financial management of it. The Government are good at playing fast and loose with taxpayers' money. I recently came across an example of a farmer who succeeded in claiming two different subsidies under the arable area payments scheme and the fibre flax scheme for the same piece of land. He also claimed for territories which, on closer inspection, when people could be bothered to examine the grid references that he had supplied, turned out to be in the North sea between Scotland and Denmark and on the mainland of Greenland and Iceland. Basic management, not targets, is what is needed to deal with that.  The reason why 4 billion-worth of Apache helicopters are sitting in a shed on Salisbury plain is not targets but sheer mismanagement and forgetting to train the pilots in time.

We have a chief executive in the health service who was sacked and paid 149,000 in compensation. Most of the payment was found to be ultra vires and it should have been possible to reclaim it, but the six-year time limit had elapsed and it could not be claimed back. The individual was subsequently hired elsewhere in the NHS and later summoned to an industrial tribunal to answer allegations of sexual harassment. He did not turn up and was therefore sacked. However, as any lawyer would tell us, it is unlawful to sack someone for not turning up to an industrial tribunal, so the individual received a further 195,000 in compensation. We do not need targets, but basic management.

A classic example of poor application of targets and its consequences is education. Let us consider the halcyon days of 2001-02, when the Department for Education and Skills underspent its budget by 1.7 billion and 6 billion was underspent throughout the public sector. It is a shame that the Economic Secretary is not present because he was the Minister with responsibility for adult skills at the time of individual learning accounts, which were a model of how not to do something and showed why targets by themselves do not work. The cost was 300 million. Much, possibly even most - the Department cannot say - was wasted. Seventy civil servants are spending two years trying to sort out the mess, which was caused by targets.

In a unanimous report, the Select Committee on Education and Skills stated:

"It should have been possible to design a scheme to encourage new providers that was not wide open to abuse by unscrupulous people posing as learning providers, but the lack of quality assurance made it almost inevitable that it would be abused."

Subsequently, the Public Accounts Committee examined the individual learning accounts scheme. Its report stated:

"In the absence of quality assurance, the decision to give a positive incentive to providers to recruit learners was fundamentally flawed."

In other words, the fraudsters envisaged easy pickings and came steaming in. The PAC report continued:

"Because of ineffective monitoring, the Department was not aware of unusual patterns of activity, including very large payments to individual providers".

The permanent secretary to the Department, Mr. David Normington, said that the large amount of activity on the individual learning accounts scheme was taken as a sign of success. The Department budgeted 199 million for two years, but it was spending three times that rate: 25 million a month, which is a total of 600 million over two years. It did not realise that it in spending that money it was being diddled and defrauded. It believed that it was a sign of success. There was no control of cash. In evidence to the Education and Skills Committee, the Economic Secretary, who was formerly responsible for adult skills, said:

"At the moment because of the uncertain number of individual learning account discount payments we are going to have to pay we simply cannot give you a sense, even a ballpark I regret to say, of what the possible overspends are going to be."

There was a complete lack of financial control, yet the Chancellor had the gall to boast about spending extra money.

How did the Government get into such a mess? They were genuinely interested not in quality but in quantity - never mind the quality, feel the width. The Government had a manifesto target to include 1 million people in their programme. As the Education and Skills Committee said of the individual learning accounts scheme:

"Presented with a manifesto commitment, and a single target of one million users, insufficient attention was given both to the reasons for the previous rejection of an ILA scheme and to ensuring that quantity was balanced by quality."

That is a perfect example of too much emphasis on targets and not enough on information for users of public services.

In the health service, we need to enable people to understand what goes on in hospitals and what happens to waiting lists and mortality rates, and let them make the decisions. In schools, we need to enable people to understand what is happening with class sizes, exam results and university entrance performance and let them choose. Dare I say it, parents should be given the money to enable them to make the decisions. What we need to do is to diminish the emphasis on targets and increase the emphasis on choice.
 


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