My Lords, as always in these debates, we have had some pertinent and useful contributions. I shall take some of the points raised in reverse order. On the very important point raised by the noble Lord, Lord Kakkar, a profound change is happening in how we will deliver care over the next five years, which will be very much more based around a system rather than the institution. I think that the noble Lord, Lord Hunt, would agree with that; we will move from a payment-by-results system that has been
very much based around individual pieces of care delivered in acute hospitals, to other payments systems, such as a capitation system or a whole pathway system. That is going to happen.
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I am always struck by a quotation from, I think, Warren Buffett—that you get what you incentivise for. Over the past 20 years, we have incentivised almost everything going into acute care, and that has got to be changed at a time when acute care facilities are very busy. It will be very difficult to make that change. Increasing the threshold from 51% to 66% will aid that journey because it will prevent NHS providers, which are currently taking most of the tariff income, being a possible brake on that change.
The noble Lord, Lord Turnberg, prefaced his remarks by saying that this was designed to save money. It is not designed to save money, but to reallocate money. We have a fixed pool of money. The noble Lord will be familiar with the concept of the tragedy of the commons. The problem with the tragedy of the commons is that when you have a fixed resource, be it fish, money or common land—where it is used in law the most—no individual user of that resource has an incentive to husband it. This is not about saving money. The specialised commissioning budget got out of control two or three years ago. It was running much higher than had been budgeted for. The appointment of Jonathan Fielden, who was a very distinguished medical director at UCL, to head the specialised commissioning role in NHS England is important because getting control of that budget will be vital.
The noble Lord also mentioned the unintended consequences of the tariff, which go beyond the debate today about the thresholds. I am very happy to speak to him further about that. The issue he raised related to gastroenterology, I think, and getting double payments. I have picked that up, and I think that issue has been resolved, but if there are other problems with the tariff, I will be very happy to address them with the noble Lord outside.
The noble Lord, Lord Warner, made some very important points. We are committed to the principle of a multiyear tariff that will remove a lot of the angst over these annual negotiations, which often happen at the end of the year, and make a big difference. The noble Lord made the point, which is true, that we have been very provider-centric and teaching hospital-provider-centric. I am guilty of that. Having been chairman of a provider for many years, I was very provider-centric. The commissioner, along with Monitor, must ultimately have the final say on the allocation of resources within the system. I will come back to the point that the noble Lord, Lord Hunt, made about the imperative need for proper engagement and transparency, but ultimately, as NHS providers recognised in their briefing note to noble Lords, NHS England and NHS Improvement must have the ultimate say on the allocation of resources within the system.
The noble Lord, Lord Patel, made a particular point about specialised providers. Monitor is currently devising HRG4+—that sounds rather technical—which is designed to get more money into more specialist
procedures. For example, only last week Monitor briefed more than 100 providers on the specialised tariff proposals for 2016-17 as an example of its recognition that there must be a greater degree of consultation with providers. The noble Lord made a powerful speech, and of course I recognise the strength of a number of his arguments. It is critical that providers again have confidence in the process, as it is true that a number had to some extent lost confidence in it.
I should mention here the importance of the changes at NHS Improvement. I hope we are going to see an organisation that is culturally and strategically very different from Monitor. I know that Jim Mackey, the new chief executive of NHS Improvement, has already set up a group of chief executives from foundation trusts and NHS trusts from whom he will be taking regular advice.
We recognise the degree of consultation, engagement, openness and trust that was not there last year, and we are committed to rebuilding that. We note the comments made by NHS Providers and have taken them on board. I can tell the noble Lord that Simon Stevens, Jim Mackey, the Secretary of State and I are absolutely committed to rebuilding that confidence and to having a much higher degree of engagement and consultation in the tariff-setting process.