Resignation of Lord Kerslake

12th December 2017

Philip Dunne responds to an Urgent Question on the resignation of Lord Kerslake as chair of the King’s College Hospital NHS Foundation Trust.

I would like to begin by paying tribute to Lord Kerslake, whom I have met in his role as chair of King’s, which he has served with great commitment for two years during a period of significant challenge. While we may differ on some matters of policy, this should not blind us to the service that he has given to the NHS.

The context of Lord Kerslake’s departure from King’s is the very real financial challenges faced by the trust and the way in which these have or have not been addressed. A number of other trusts have similar challenges, but none has deteriorated as far or as fast as King’s, especially in the past few months. This is why it was placed into financial special measures by NHS Improvement yesterday.

There has been a consistent pattern of financial projections by the trust that have not been met during Lord Kerslake’s tenure as chairman. In 2016-17, a planned deficit of £1.6 million deteriorated over the year to an actual deficit of £59.6 million. For the current year, a budget deficit of £38.8 million was agreed in May. At month 5, the chairman confirmed to NHS Improvement that the trust was on track to meet this deficit, but by October there had been significant deterioration in the trust’s position, with a projected deficit of £70.6 million at October—£32.l million worse than planned. NHS Improvement was informed last week that this had deteriorated further to a mid-case projection of a deficit of £92.2 million, which would be £53.4 million worse than the original planned deficit. Indeed, Lord Kerslake indicated that the final position could be even worse.

King’s is receiving substantial financial support from the Department of Health. During this financial year, the trust is receiving £135 million of support to maintain frontline services. That is the second highest level of support across England. Both the level of deficit and the speed of deterioration are unacceptable, as I am sure all hon. Members will agree. Although no trust or hospital is an island, it is right that those charged with leading it should take responsibility for such results. The chief financial officer and chief operating officer both resigned last month, and, as we know, Lord Kerslake left on Sunday.

The trust will now receive even more support with the appointment of a financial improvement director. The organisation will be required to implement a plan to improve its finances, which will be closely monitored by NHS Improvement. On top of special measures and subject to due process, NHS Improvement intends to appoint Ian Smith as a new and experienced interim chair for King’s to take control of the organisation’s position.

Does the Minister not realise that the problem at King’s is not the leadership, any more than it is the growing number of patients or the dedicated staff? The problem at King’s is that there is not enough money. He shows no recognition of the fact that over the past two years, King’s has already cut £80 million—double the rate that other hospitals have had to cut—and taken on an ailing trust to help out the wider NHS. King’s is now being told that it has to make even further cuts. How can it keep its A&E waiting times down, prevent waiting lists from growing and continue to meet cancer targets if it goes on to make further cuts?

Will the Minister face up to the fact that problems caused by lack of money are simply not going to be solved by blaming the leadership? King’s is an amazing hospital and a specialist world centre of research, which is also there for local people. It was there after the Grenfell Tower fire and the terrorist incidents we have had in London. Is it too much to ask the Government to recognise the reality of the situation and pull back from imposing further cuts, which will make patients suffer? No amount of changing the faces at the top will make that difference. It is the Minister’s responsibility.

The right hon. and learned Lady said on the radio yesterday,

“just because they’re the regulator, when these judgments have to be made, doesn’t mean that they are actually right”.

I have to ask her about that, in the light of the comments made by NHSI, the regulator. I will give her a couple of quotes. Jim Mackey, who was until recently the chief executive of NHSI, has said:

“Honestly, I don’t think they have in my time hit a single set of their re-forecasted numbers”.

The current chief executive, Ian Dalton, has said that no other trust in the country

“has shown the sheer scale and pace of the deterioration at King’s”.

This is not just about the numbers; it is about the way in which the trust is managed.

Have you been there?

I have visited the trust, and I have met the chairman and finance director. The brutal reality is that they were not addressing the problems as they should have done, and as is being done across the NHS.

The right hon. and learned Lady has just asked questions concerning funding. Will the Minister confirm that NHS spending is at a record level, and that the Budget on 22 November provided a further £6 billion to support our NHS?

I am grateful to my hon. Friend, because I can confirm that the NHS is receiving record levels of funding, in advance of the plan that was agreed with the NHS chief executive for the five year forward view. That was front-loaded for the five years, so the NHS has received increases of funding for the first three of those five years over and above what was requested.

Lord Kerslake has said that the Government are

“simply not facing up to the enormous challenge the NHS is currently facing”.

We agree. The Nuffield Trust has today called King’s

“the canary down the coalmine”

for NHS finances. Hospitals across London and beyond have been forced to cut costs by 4% a year since 2011, yet the report that Ministers commissioned from Lord Carter advised that trusts should find savings of 2% a year.

Does the Minister agree with NHS Providers, which warns that the saving hospitals have been ordered to find

“risks the quality of patient care”?

He will know that, by September this year, 83% of acute hospital trusts were in deficit to the tune of £1.5 billion. Does he agree that these deficits, across London and beyond, are a consequence of Government underfunding, cuts to tariffs and the failure to get a grip of delayed transfers of care because of the £6 billion of cuts to social care? Does he expect delayed transfers of care to increase in the coming weeks, and will trusts again be ordered to cancel elective operations this winter?

Before the Budget, the NHS argued publicly for an extra £4 billion in revenue a year. Why did the Chancellor refuse to give the NHS the extra funding that Simon Stevens asked for? Lord Kerslake has said that our NHS faces the

“tightest spending figures in recent times”.

Does that not mean that, as at King’s, there will be continued hospital deficits, growing waiting lists, greater rationing of care, the dropping of the 18-week target, more privatisation and an NHS pushed to the brink because of this Government’ persistent underfunding? Do patients not deserve better?

I think the hon. Gentleman’s critique would have a shade more credibility if he acknowledged that, before the 2015 election, the then shadow Health Secretary indicated that he wanted £5.5 billion less for the NHS than my party was offering. If we had followed that prescription, the financial position of the NHS would be far worse.

The hon. Gentleman asked about delayed transfers of care. In March, the Chancellor gave an additional £2 billion to the adult social care system, precisely targeted on reducing DTOC, and significant progress is being made in freeing up beds across the system. He also asked about NHS funding in the most recent Budget. The Chancellor awarded an additional £2.8 billion in revenue support for this year, next year and the following year, and a further £3.5 billion of capital to support programmes.

As a London MP, I know that other hospitals that have faced challenging situations have put in place improvement plans and met the targets set by NHSI. If the regulator had not acted yesterday, would it not have been letting down other London hospitals and my constituents?

My hon. Friend is quite right. There has to be a sense of responsibility and accountability for delivering on budget deficits—if they are deficits—that have been agreed between the regulator and the trust. That is happening up and down the country, and it would be unfair on other trusts and other areas of the country if one trust was allowed to get away with its performance unchecked.

The key to this question has to be ensuring sustainable delivery of the NHS. The Minister may wish to look at the model in Scotland, where we have boosted investment and listened to the needs of our healthcare workers. By stark contrast, the UK Government seem intent on burning their bridges with NHS staff with their cost cutting and special financial measures. When will the UK Government wake up and realise that their ideologically driven austerity threatens the very future of our NHS?

I am afraid that the hon. Gentleman was not referring to the urgent question. We are talking about what has happened at King’s over the past few days, rather than what is happening in Scotland.

My local hospital trust, based on Northwick Park Hospital, has had to make some very difficult decisions to make itself more efficient and to reduce its deficit, and it has done so under excellent leadership. Does my hon. Friend know whether decisions were taken at King’s to keep to the deficit target? Were efficiencies made, and how effective were they?

What is particularly disappointing about King’s is that it does have a cost improvement programme, but regrettably, it has not been able to keep to it. It is particularly surprising that, as recently as October, the senior leadership team indicated that they were on track to meet their deficit, which palpably, as we now realise, was not the case.

King’s College Hospital is in my constituency, and I can tell the Minister that the roots of this current financial crisis go back to 2013, with the collapse of the South London Healthcare NHS Trust and the decision to incorporate two additional hospitals, which were failing in their services, into the King’s trust without adequate funding to support that decision. This has been followed by year-on-year, real-terms revenue cuts and next-to-zero capital funding, while demand and need in our community is going up all the time. Instead of scapegoating a well-respected public servant, will the Minister listen to his wake-up call and look again at holding a full review of the finances for King’s College Hospital, and will he give the trust the resources it needs, so that the exceptional doctors and nurses who work for it can deliver the care and treatment that patients need and deserve?

I share the hon. Lady’s support for the clinicians and professionals working in her trust, who are doing the best job they can in admittedly challenging circumstances. I do not accept her characterisation of a lack of capital provided to King’s. I have been there myself and seen some of the building work going on. I am happy to look at the circumstances surrounding what happened in 2013, but they are not as relevant to today’s situation as the way the trust’s financial management has deteriorated in recent months.

What has NHS Improvement said about this, and what has it recommended that King’s should do?

As I have indicated, the chief executive of NHS Improvement said yesterday that no other trust

“has shown the sheer scale and pace of the deterioration at King’s. It is not acceptable for individual organisations to run up such significant deficits when the majority of the sector is working extremely hard to hit their financial plans, and in many cases have made real progress.”

That is from the regulator responsible for putting the trust into special measures for now.

The “brutal reality”—to use the Minister’s words—is that the staff at King’s, which also serves my constituency, are doing all they can in impossible circumstances. If we are honest about this, we on both sides of the House have perpetuated the fiction for too long—over decades—that we can have Scandinavian levels of public services on American levels of taxation. That is why I ask him to heed the call of the hon. Member for Totnes (Dr Wollaston), and many others across the House, and set up a proper convention to look at what is a sustainable model, not just for King’s but for the whole NHS, so that our constituents can continue to get the services they deserve.

I share the hon. Gentleman’s support for the staff, and I have already paid tribute to the hard work and commitment that they are showing to their local population. His question regarding a royal commission is rather beyond the scope of this urgent question and rather above my paygrade.

We do have a problem with NHS managers; not only are there too many of them, but many lack clinical skills, which is probably why they make so many bizarre decisions. On Lord Kerslake’s watch, £715,000 was spent off payroll last year on an interim director, and £30,000 a month was spent on temporary managers. There is a problem with this scandalous waste of taxpayers’ money.

My hon. Friend takes a close interest in what is happening in London’s hospitals, where she regularly works shifts. From time to time, there is a need for some interim managers to fill vacancies and gaps, but she is absolutely right that we have taken significant action to limit the excessive amounts that some have been paid. The amounts have now been capped and are being driven out of the service, and the interim mangers are being encouraged to take up substantive positions.

I pay tribute to the staff at King’s, who have looked after so many of my constituents so well. Does the Minister agree that one thing we have to learn from this is that when a trust takes over a failing hospital, the challenges and difficulties can be much more than people have said, and the money given has not always been spent as it should have been? Does he also agree that just appointing a former head of the civil service to chair a trust does not necessary mean that they will have the attributes to do the job and that sometimes they are so busy doing other jobs that they might just take their eye off the ball?

In relation to the hon. Lady’s first point, I think that the experience has been variable; some outstanding trusts have taken on failing hospitals and managed successfully to turn them around, and others have found it more of a challenge. I accept that it is specific to the circumstances, and we are looking to learn from the various experiences to ensure that we encourage the right trusts to buddy up with those that are in trouble. In relation to her second point, I gently point out that Lord Kerslake has been providing advice to the NHS, and he has been spending a considerable part of his time providing advice to the Leader of the Opposition on a whole range of non-NHS-related topics.

Following on from the hon. Lady’s question, King’s College Hospital NHS Foundation Trust is indeed a significant organisation and it requires very firm leadership. I understand the chairman who has resigned from his position also held seven remunerated roles other than that chairmanship and four non-financial positions. Will the Minister assure the House that any future chairman will be looked at very closely to ensure they have the capacity to lead an organisation of this size successfully?

My right hon. Friend makes a very valid point. We need to ensure that chairmen who go into trusts that have challenges have the capacity to do that job. I will be looking to ensure that NHS Improvement challenges Ian Smith, if he is appointed, to check that he has sufficient capacity to undertake the role. My understanding is that he does.

Will the Minister ask NHS Improvement to produce a report on what has happened at King’s, so that Parliament can look at the report to learn the lessons and to find out who was right?

NHS Improvement regularly reviews trusts in financial special measures. It does so through the usual channels to the ministerial team responsible for it. It will do so in this case, as it does in all other cases where financial special measures have been entered into.

Is it not the case that what we have here is one of Labour’s top advisers jumping in a blaze of politically motivated publicity before being pushed out for woeful financial mismanagement?

My hon. Friend may say that; I am not going to comment.

The Minister quoted selectively from the chief executive of NHS Improvement, who also made it absolutely clear he did not think the NHS has enough money overall. In the real world, as opposed to the fantasy world inhabited by Conservative Ministers, Simon Stevens, the head of the NHS, has repeatedly told the Health Committee that the NHS cannot do what the Government are asking it to do with the current money. Is it not clear that there will be no £350 million a week extra for the NHS? There will be less, because of the impact of Brexit and the economic incompetence of this Conservative Government.

I was actually quoting the chief executive of NHS Improvement.

What was he paid and where is he going next?

I understand that Lord Kerslake was paid in the range of £60,000 to £65,000 for his role as chairman of King’s. My right hon. Friend would have to ask him where he is going next.

The Minister has to accept that when the Government stepped in with South London Healthcare NHS Trust in 2013, they imposed their own interim director, just as they are now doing at King’s, and imposed the restructuring of south-east London health but never, ever funded it. That has led to the crisis at King’s today. The buck stops with the Tories. You just cannot trust the Tories with the NHS.

I am afraid the hon. Gentleman was clearly not listening to my response to the question. The trust agreed a budget deficit in May this year of £38.8 million. That figure is currently £92 million from activity happening this year, not in the past.

Is not the reality that any politically motivated resignation such as this leaves the NHS, the hardworking staff and the patients all worse off?

All those who assist the NHS in a non-executive capacity do so with the best motivations. I would not question Lord Kerslake’s motivation for wanting to undertake this role. As to the suitability of all the individuals appointed to these positions, that will be variable because there are so many organisations across the NHS. I would not like to make any comment about political motivation in relation to this departure.
Imperial College Healthcare NHS Trust is also running a large deficit—it is not just King’s. The Government’s solution is to demolish Charing Cross hospital, when admissions have gone up 11% in the past two years. We are on our fourth chief executive in five years. The last one left to run NHS Improvement before he could even meet local MPs. When are the Government going to get a grip and fund the NHS properly, rather than blame everybody else for the problem?

I share the hon. Gentleman’s concern about trusts that have a revolving door of senior leadership. One thing we are looking to do is to encourage a larger cadre of leadership people in the NHS and more clinicians to become leaders, so we have more consistency of skills and better trained leaders across the NHS. I do not think the departure of Ian Dalton from Imperial has anything to do with the subject of King’s College, or indeed with the funding of the NHS.

Is it not the case that in any senior public service appointment within the civil service, a basic requirement is political neutrality and non-partisanship? Is there a question for the Committee on Standards in Public Life with regard to this particular appointment?

The NHS is the largest organisation in the country and everybody who works in it will have their own political views and persuasions. Very few of them are brought to the board table. It is the case that when in government parties on both sides appoint individuals with political representation from the other side, so I think we have to be balanced about this. I would gently point out that Lord Kerslake sits as a Cross Bencher, although he may provide advice to one party more than another.

Does the Minister believe that the duty of candour extends to NHS leaders?

The duty of candour applies right across the NHS.

Does my hon. Friend agree that one upshot from the noble Lord’s resignation is that he will have more time on his hands to use his proven financial prowess to prepare implementation manuals for the Leader of the Opposition?

My hon. Friend is very ingenious with his question. Clearly, there will be more time available for Lord Kerslake to take on his other responsibilities. The Leader of the Opposition might like to look very closely and keenly at the financial performance of the organisation over which Lord Kerslake has taken responsibility before he adopts any of his other advice.

It is abundantly clear that the Government are accelerating the privatisation of our national health service by reducing supply in the NHS to create demand for private health insurance. We do not want a US-style health insurance here. Will the Minister please give the NHS the money it needs?

I cannot understand how the hon. Lady can make such an interpretation from any discussions that have been held, either in this urgent question or further afield. The Government have just given an additional £2.8 billion over and above that asked for by the chief executive of NHS England when he set out the “Five Year Forward View” and up to £10 billion of capital. This is nothing whatever to do with privatisation.

Will the Minister confirm that the trust has been in discussions with NHS Improvement with regards to reducing its deficit for some time and that the forecast of double the deficit is an unacceptably poor standard of financial leadership at a time when other trusts have made great successes in improving patient care and finding successors?

My hon. Friend is quite right. There are financial pressures across the NHS in England. We have been very clear and very open about that. Some trusts are managing within those financial challenges and other trusts are not. That is in large part down to the rigour and leadership given to those trusts. Unfortunately, in this trust there has not been sufficient of either.

Given the financial incapacity problems currently affecting the NHS, is it right or fair that individual acute trust leaders should be removed from their post when surely their perceived failures are part of wider systems issues and funding pressures?

The hon. Lady is right to identify pressures across the system, but it is also the case that when leaders change their position in a very short period of time and oversee a period of significant deterioration, the regulator has to take a view on whether those individuals are the right people to continue to lead that organisation. I think that that is what has happened in this case.

Does the Minister think it would have been possible for the trust to have improved, notwithstanding its financial position? I ask in the knowledge that Cambridge University Hospitals went from special measures to outstanding in care and good overall.

My hon. and learned Friend highlights the special measures regime. We have introduced a financial special measures regime and, during 2016-17, the trusts that went through that regime—King’s went in only yesterday—improved their financial performance by £100 million overall over the year. The short answer is yes. It is possible to manage improvement through this regime, and that is what NHS Improvement is there to do—to help trusts that get into financial difficulties to manage their way out of them.

Given the noble Lord Kerslake’s much publicised association with the current Labour leadership, should it come as any surprise that the trust he was chairing would run out of taxpayers’ money? Is not the truth that he jumped and squeaked before he was pushed?

My hon. Friend is right to highlight the sources of advice that the Leader of the Opposition seeks to take. He will need to reflect on that, as will the shadow Chancellor. In connection with this particular situation, it is the case that NHS Improvement spoke to Lord Kerslake last week to ask him to consider his position.

| Hansard

Twitter

Advice Surgeries

All are welcome at my advice surgeries, but an appointment is recommended.

To make an appointment please telephone the constituency office on 01584 872187.
 
2018
 
Friday 12th January
Community Hall, Low Town, Bridgnorth
3.30pm-5.00pm
 
Friday 26th January
Market Hall, Cleobury Mortimer
4.30pm-6.00pm