The health select committee meets to hear evidence from Health Secretary Andrew Lansley (AL), NHS chief executive Sir David Nicholson (DN) and DH director of finance Richard Douglas (RD).

(There are going to be a lot of typos in this) - and the corrected transcript is here.

Chair Stephen Dorrell (SD) wants brief questions and answers.

Begin by analysing decisions on spending as regards social care, due to cost-shunting in healthcare. Dorrell refers to Kings Fund paper on spending round implications on personal social services LAs, suggesting end of review period will be £2.6 bn funding gap as result of spending pressures in social care and level of resource insufficient to meet rising demand for social care. Does DH agree, if not, why not?

AL: thanks for inviting me, brought DN and RD. Short answer no I don't agree, firstly as it has treated historic increases in pay and price in social care as replicated. I don't agree as the decision was already taken relating to pay for those on under £21K; and secondly, in a way I don't understand, the Kings Fund briefing only assumed 3% efficiency saving in year one - and it's 3% in each year, and witnesses from social services and local govt believe it's achievable. That largely resolves the funding gap asserted in KF paper.

But it's not just about cash numbers, I also want it to be very clear about the way in which money is deployed collectively between LAs and the NHS to drive improved quality and outcomes and efficiencies, and if we look at the social care-NHS interface, that's the place most susceptible to improvement.

SD: Is the NHS £1 bn for social care conditional on improved interface?

AL: That's not the language I would use, but it's going to be jointly planned, and we will ensure forward transfer; £1 bn is front-end loaded. £650 million is also going from PCTs to local authorities (LAs) on agreed projects.

SD: What about the extent to which planning in the NHS should be brought together aith social care to improve inter-system working and avoid cost-shunting. It seems to me an opportunity to insist that the new money is conditional on this.

AL: There's been years and years of cost-shunting, and we're creating pooled budget to support, as well as new NHS financial support, LA funding. LAs and their elected members are very conscious of pressures and need to sustain suport for social care.

Yes there is reduction in the national formula grant, but DH has made available social care grants and learning disability trasfer grants. LAs themselves, in context of council tax, have another source of revenue. Thebriefing document's more extreme scenarios are not likely to eventuate. Likely to be middle or low range.

Sarah Woolaston: Some people in Torbay, in my constituency, say that with the with White Paper (WP)'s end of PCTs, they feel the loss of co-terminosity over make-or-buy decisions impeding.

AL: Financial resources flow through PCTs for two more years, so your example of Torbay will not affected for 2 years. Subsequently, we will be clear about transfer to support LA social care activity, and spend for health to support social care

SW: But they think health and social care integration will be worse, due to losing co-terminosity.

AL: You are making assumption about how consortia will work with LAs

SW: Torbay feel that this reorganisation wlll impede what they do in relation to impeding of provider activity in community services.

AL: The transfer of provider arms out of PCT was started by the last government, and it doesn't mean people can't integrate servcies, or commission their former provider: it just means they can't do it without trasnparency and opportunity for challenge.

Rosie Cooper: position of PCTs and tragets for future. You said consortia will be overseen by PCTs in the interim. What is the timetable for PCTs now-2013? Won't London PCTs soon be gone?

AL: WP set out clear, legislating for PCTs to stop existing 1 April 2013, and in the NHS Operating Framework (OF) 2011-12, we will set out howthe transition to consortia should work, including delegated powers. For London, there were always relatively many PCTs related to the rest of England, and so they are saying that as London's commissioning consortia establish themselves, they will cut PCT spending by putting PCTs into clusters.

Q: How will cash-releasing efficiency savings (CRES) release real money? In DH evidence, it points out ADSS published report estimating 2009-10 achieved 2.5% efficiency gains, but it emphasises that this figure should be treated with caution and was more probably 1%. You suggets 3% year-on-year (YOY), but evidence we've heard not only suggests this will be seriously challenging, the ADSS say that to do 3% efficiency, local authorities would have to raise charges and in some cases eligibility criteria. What's your view on the nature and character of these savings?

AL: It's not my view that raising eligibility thresholds will be necessary, our view is that this settlement should keep eligibility thresholds as they are, but we do need unprecedented gains in quality and productivity. The relationship is different: preventative things like telehealth, equipment adaptations can all make big difference. We've tended too much in the past to treat social care budgets as 'how much are we going to spend' - now we're asking 'what makes the biggest difference?'

As our vision for social care published last week said,we're looking for preventative care and personalisation to make enormous differences to the quality and efficiency and shape of services, to match what's offered by the best healthcare. We're looking by 2013 to give everybody access to a personal budget, and I think that will have a major impact on the social care budget. Personalisation is the route to achieving that.

Q: Are you confident that the demographic tide of need will be held back by efficiency?

AL: I can do nothing to change underlying demography, but wew're looking to change the relationship between NHS and social care, emphasising the importance of public health interventions. LAs will have bigger public health and preventative roles. It's important that one signal of success in relation to public health will be reduction of dependency, relying on age.

We're most concerned now that the increase in life expectancy should as far as possible mean disability-free life expectancy. Look at social care, rising dementia is unexplained. Can't cure dementia today, but we are doing more on research, but there are proven ways to help people remain more indpendent and offset these rising levels - mermory clinics etc to help people be active and independent.

Graham Allen: efficiency vs. cuts. Local government is losing 28% of the national revenue support grants, you said council tax will not be cut, but central support is the massive majority of LAs' money. There is emerging evidence of residential care home closures, and day care centre closures. If the money is not ringfenced, won't it inevitably raise pressure on health service?

AL: You said bulk of social care funded out of central grant, but that's not true for many authorities. Headline overall real-terms reduction over 4 years does not necessarily translate into fall in resource for social care -far from it.

We de-ring-fenced grants to give LAs flexibility to work most efficiently, but learning difficulties formula will relate directly to need for services. Where NHS provides health support to social care, including transfer of resources, not with formula grant, and there will be a line of accountability to ensure spent on health and social services.

Nadine Dorries: Looking at the Kings Fund briefing report, in what sense is the £1 bn extra from the NHS going to be new spending?

AL: Point I made about the Kings Fund memorandum is that it assumed same level of pay raise in future - paper took account of NHS increase in support

SD: Table 5, column 1

AL: my point was not that wasn't taken into account, but Table 2 assumes 3% CRES assumed to be only once in the first year. Taking those differences into account, combined resources directed at health and social care will have additional impact, sufficient to sustain eligibility.

This is on a bcakground of sustained rise in demand for social care; hence our independent Andrew Dilnot funding committee. Dilnot took very strong view that this is a big step towards enabling a context for his proposals to be implemented - need to be bridged.

ND: could you elebaorate on where extra £1 bn will be spent, and in light of no LA ring-fence, what you'd identify as social care gouing forwards, and what will be extra services?

AL: The sort of things I expect to see - to clarify, money via NHS for social care not simply in addition to LA

ND: So no ring-fencing?

AL: They have to spend NHS money for this specific purpose

Richard Douglas: The NHS money is ring-fenced.

AL: For a range of things that are health-provided, we have removed ring-fence. Money provided through NHS to support health and social care is ring-fenced, and it comes from PCTs. What does it buy? Depends on local circumstances. Things like more telehealth, or a good example - group in my constituency or Torbay excellent work assessing people at risk of falls, and putting in exercise classes to offset risk. For dementia, memory clinics, local groups, befriending services.

ND: This is re-ablement?

AL: No, that is a new £150 million next year to enable people to go home from hospital, physio, adaptation - secondary prevention. The £650 million is primary prevention.

RD: we will send you a note on the detail

Valerie Vaz: Regarding the YOY 3% CRES saving efficiency gain in Table 2,it would be helpful to have a writen commentary so we can go back to Kings Fund and compare notes. Back to unprecedened social care efficiency saving, and I understand management tools; the issue is what impact on social care on eligibility, access and range of servcies available?

Eligibility is often under pressure, and services, with healthcare assistants, under great time-and-motion efficiency pressure. Where do you think, in services on the ground, the inefficiencies are that will be driven out?

AL: not just for me; it's for LAs as well to identify this. Firstly, driving out inefficiencies doesn't sum up what we are trying to do - it's to be more efficient in giving the care people want in the3 way they want. It's very often about persoanlisation.

It's mainly about driving out ineffciiencies about variation in cost, and these are major in terms of extent of per-hour cost of social services support

VV: Can you give us examples?

AL: I'll have to send you note about that. A lot was covered in a memorandum from DH in this and previous years.

SD: provided LAs deliver compounded efficiency gain, and with the relief of pay pressures for 2 years, are you sure those two things will be sufficient (with £1 bn from health services and £1 bn for PSS gran) to come together to reconcile pressures of supply and demand?

AL: Yes, but 'sufficient' to sustain current eligibility. Not sufficient to do everything. Still difficult decisions to eligibility decisions.

SD: It's striking in Kings Fund memo that resource pressures get greater as the period goes on, front-end loading eases short-term pressures, but in year 3 and 4 there will be more. Do you recognise that?

AL: It's inevitable pressures rise as time goes on. If you just do cash tables, money spent in 2012 to enable home support will have positive impact on subsequent support. Kings Fund says 3% CRES at top of table, but it's not supported in gap between 2012 and 2014-15 numbers. Gap in order of £400 million. It's arithmetic

SD: On front-end loading, is the implication that more resources may come for social care later in period?

AL: I'm not in a position to say anything until we see Dilnot's recommendation and timescale: the design of solution and timings.

Rosie Cooper: They pay freeze won;t make much difference: most staff n social care don't earn over £21 K.

AL: That's true, but pay freeze in public services doesn't mean increase in pay comparable to pay increases in percentage terms in recent years. Pay pressures moderated in relation to recent past.

RC: On pay, my point is that in social care, the difference from this is minimal.

GAP HERE

AL: With additional telehealth and support adaptations, will have beneficial effect on health servcies.

RC: Is the £1 bn from health going into LAs' budgets or being retained by health? Your examples are all great things to enable people to be healthier longer, but there are still huge pressures on LAs to deliver basic social care. I'm unsure LAs see this money going to them. This will help, but not deliver the same level of care in LAs.

AL: The spending review was very clear about the transfer of de-ring-fenced grants to local govt, in addition, through the NHS we have found £1 bn to support delivery of health and social care - very often, people's needs span both. We need better integration and co-ordination (WP very clear) resources designed to meet requirements. Seems very straightforward to me. Clear what will be spent and transferred.

RC: You're not worried about terrible stories of LAs cutting services next year and year after?

AL: Resources for social care are sufficient, in my view, to maintain eligibility

Q: What about the NAO reports - will we get consistency of review of local delivery in social care?

AL: The NAO's not going anywhere; that's the Audit Commission

Q: But Local Area Agreements are going

GAP HERE

AL: Our view as a government is that previous govternments have done to death efforts at specifying to LAs how best to spend money. We de-ring-fenced £2.7 billiion of grants as we think LAs are competent organisations, and we want more power in hands of individuals.

Q: Any power to reduce eligibility criteria and start charging?

LONGISH GAP HERE

AL: I am trying to spend less of my time trying to tell clinicians how to do their job.

David Tredinnick: cost savings linked to regulation - potential problems if people start using complex OTC herbal remedies, want to highlight Ayurvedic and traditional Chinese medicine, some commission is open to considering simplified registration procedure if MPs and govt approached them to make such a study.

Editor's note - I'm not writing about alternative medicine. resuming when this bit is over.

Graham Allen: impact of cuts - the 'Nicholson Challenge' of £15-20 bn and 33% management cost savings. Now we have 10 SHAs, which play imprtant performance management roles; but they're to be ablolished. If there's no DH regional outpost, how will we be able to measure efficiencies and productivity improvement? What management muscle will drive special registers?

AL: Our outcomes focus and framework. We've already made this the subject of consultation, published in July, and these things will inform the design of the future system. We will seek to sepcify outcomes from centre.

GA: What'd the difference between otucome and targets?

AL: If you go to A&E, and you're not treated properly, but you're out the door in 3 hrs 59 mins, that hits the target. We need to focus on outcomes like avoiding more premature mortality and improving the quality and safety of healthcare in measurable ways. Outcomes can be measured. There is a clear distinction.

Performance has to be managed in the service, so we at the centre will be clear what we want and let local organisations decide how to deliver that performance. Some of it will be performance-managed by local provider FT boards, and some of it by the national commissioning board. The NCB will performance-manage everybody commissioning in the system. GPs and hpspitals, will be increasing accvountable through more, better-quality information in the public domain, which will allow a more meaningful basis for being held to account and people can choose on that basis.

SD: key issue is that that sounds like a wonderful world, one to which we all look forward; but how do you manage the process this next year and in the years after? The Nicholson Challenge calls for 4% compound efficiency during that time, how will that be delivered 2011-12?

AL: From my point of view, it's straightforward: we're moving to establish pathfinder GP consortia, who will have a learning network, demonstrating how can react positively. One purpose they genuinely engage with us to make it happen, early engagement in service redesign, and in 2011-12, will do with delegated responsibility and 2012-13 all but legal responsibility, from April 2013, they will be legally responsible. and providers will be more autonomous

SD: harking back to your reply to my initial question, what about achieving service reconfiguration and more emphasis on community and primary provision?

AL: patients must be managed in the right location, not just automatically in the community. we have to get much clearer on service design: where is right place and what is right time.

SD: it's always easier to provide a new service than close down the old one

AL: it’s undeniably true that in the past, emphasis has been shut existing to provide new, but care closer to home pilots initiative, clearly design services more accessible to community and give clinicians confidence in quality, GPs and secondary clinicians design together, and this is why I am so keen hospital trusts see themselves as healthcare trusts.

DN: 2013 sees legal budgets for consortia, and 2014 all provider organisations are to be FTs. we’ll have to centralise more power in the very short term to deliver benefits. 2011-12, expect people to work with and monitoring to make changes reality.

Will the NHS feel universally like a free-er system in the next 12 months? No it won’t: we have to take a very tight rein on management of finance, for which we'll be setting out the process in the next few months.

To reassure you, challenge in May 2009, planning in each year, this year efficiency gain for providers up from 3% to 3.5% and next year 4%. 2% of allocation to be spent on things not have recurring basis to give PCTs tools

All that said, it’s really important we start to grow the new system out of the old one. It’s not just about Stalinist controls: we need to grow the new. Three examples will help: pathfinder consortia. Some say go slower, others go faster - we want to use their experience, enthusiasm and knowledge. They should focus not so much on creating perfect governance, but on major issues like management of long-term conditions (LTCs), and also on the run-through to secondary care, engaging them in all that much better measure of whether consortia are ready for statutory budget management. Improvement of LTCs management in a locality will be really important, more so than governance. Those really important.

The second is development of the provider side, especially in becoming FTs. Need to mount significant quality clinical and financial services, showing that they’re sustainable in new world

Third, integrated and community services and new organisational and vertical integration. how we get real benefits for patients out of those?

So we’ll hold tight to some levers of management, but also start to grow the new system within it.

Q: pathfinders will no doubt be great, but some PCTs are in meltdown with managers leaving.

DN: Do I think we can sustain 152 PCTs between now and April 2013? No. It will be a case not of statutory abolition, but sustaining them with the management capacity we have. We will see PCTs clustering with a single management team, but holding onto accountability chain

Q: this is happening in an uncontrolled manner.

DN: I hope it’ll all be much clearer mid-December when we publish the 2011-12 OF and HR document. You’re right, it is uncontrolled. This is unlike any other reorganisation ever before, I've managed previous ones (StBoP and CAPLNHS), which were top-down; we organised the number of SHAs and appointed, and then did the same with PCTs.

This is very different, and in transitional terms, very bottom-up (or inverted pyramid, in politically-correct terms). Of the consortia emerging, some want to lead, some want to be in clusters. It’s very fluid but I do think we need more stakes in ground.

Q: bottom-up or belly-up?

SD: Are you confident those clusters of PCTs will be redundant in the end of this period?

DN: That’s a matter for the national commissioning board. which will commission dentistry and primary care, and will need a more local presence. I think there is a synergy there, that we could make work quite well.

Nadine Dorries: In 2011, pathfinder consortia and PCTs. Many taking redundancy or sabbatical, come back in 2 years. Why not value people in PCTs? Letting them walk back into plum jobs ... cancel that and keep god staff

AL: PCTs are not in meltdown, they're delivering across the country, but we'd expect to retain stronger scrutiny because we're in a very constrained financial situation

ND: based on what information do you say that?

AL: we know need to get to point consortia identify who. People in PCTs will want to focus on job of transfer but not join consortia. At same time, public health transfer to LAs, also will be developing new forms commissioning support - shared back office, LAs offering more pooled budget management support, independent sector, PCTs come together in social enterprise 0 create new opportunities for clinical management support Get more economies of scale on support functions on fin control risk , r risk stratification

ND: any idea how m any PCT staff left on MARS or 2 year return?

DN: MARS is closed now, gave PCT and SHA staff opportunity August to now.

ND: gave them window to jump ship.

DN: and it’s closed, were some people wanting to go, and we have to help them go. Over 2,000 did, at cost of £40 million, and next year will save us £70 million and again every subsequent year.

ND: Why save £70 million?

DN: won’t replace them; won’t have to pay them

AL: if no White Paper, we would have to do same as need to save 1/3 on management numbers.

ND: still in 2011 pathfinder consortia, reduced management capacity in PCTs, stand back to watch pathfinder consortia, so will be hiatus 2011-12 with weakened capacity in PCT. Hiatus in any means.

AL: that is to look at it in static terms. Should look at capacity needed in PCTs on larger and cluster basis; job can be done effectively, but also allow space for consortia to establish selves, may come from PCTs, independent sector, local authorities.

ND: so you anticipate 2,000 who left will return in 2 years in 2012-13? why not say, they can't come back ever?

DN: against the law. it’s not 2 years, it’s 6 months; and if they return in that period, the have to pay the MARS money back,

Q: you need unprecedented efficiency savings in health and social care, defying gravity in terms of NHS inflation. This challenge, while at same time, very significant reorganisation, while effectively there’s a nuclear device going off at commissioning level. You ask us to totally suspend disbelief that this can all be achieved? What can you say to reassure us this is all genuinely realistic? Nothing wrong with ambition, but without realism .. add all the efficiency needed together, year-on-year ...

AL: is unprecedented efficiency and quality improvement, but NHS has had unprecedented resources and declining productivity, relatively high resource level, so it logically follows that there’s a greater realistic prospect of delivering efficiencies in years ahead.

secondly, this isn’t revolution, it’s evolution, there’s no nuclear device. Most efficiency gains will come from redesigning clinical services in acute and community – like the productive ward scheme. The White Paper changes none of that: it just gives acute trusts greater autonomy.

Tariff will be driving best practice and efficiency. I didn’t invent tariff, or start PBC. The last government did: they should have given PBC real responsibility. Much of this is evolution.

For GP practices, this is about empowering them. GPs say PCTs making job harder. Frankly, need to keep the best of processes in place - tariff, autonomy for providers in FTs. I didn't invent that either.

I am, and make no apology for, wanting this done consistently, not piecemeal. If only acute providers have autonomy, the system will get a lot of acute supplier-induced demand

ND: what evidence is there that what you’re doing is going to work?

AL: there’s great evidence that clinician-led commissioning drives efficiency. Tax-funded basis of NHS covers all population, and we have no plans to change. And GPs insist that they can do this

ND: but they say they don’t want to do this, quite a few of them do.

Q: in unprecedented efficiency gains, it would be helpful to have more narrative on the difference between efficiency savings and cuts. Is it dependent on who’s explaining it to whom? If many decisions by GP commissioning services result in new community services but also in the pathology services being removes as at present from the acute trust (which is happening in my constituency), is that budget-driven? or do we have other language needed?

AL: a cut is depriving patients of service. This is about increased quality and efficiency through innovation and prevention. Productivity is doing same thing with less inputs Quality is changing the design of what we do, so that fewer people are admitted to acute care – improving productivity is getting more people into and out of hospital more quickly.

Q: what are you doing to discourage GP referrals to hospital?

AL: we say to commissioners, here is budget to keep within and here is responsibility for your outcomes.

Rosie Cooper: You said NHS has had unprecedented resources - do you think it's "never had it so good"? And would you like to comment on the House of Commons library research showing that real-terms change in NHS expenditure will be reduced from 7.9% in 09-10 and will go down to nothing in 2014-14?

AL: I’d prefer not to have words put in my mouth. we start with a level of resources far in excess of what was usual in the past – an average of real terms 4% growth. In this financial year, NHS has more resources than ever seen in past. Resources will rise in each year, in cash and in real terms to £114.4 billion by 2014-15.

RC: real terms rise will be down to nothing in 2014-15.

AL: it rises 1.3% in real terms using the GDP defaltor over the period to 2014-15.

RC: In 2014-15 - it's flat.

AL: gets 1.3% over the period.

Q: prevention - look at issue of diet, quality and quantity of food people eat. interesting China study show if cut back on fats, arteries de-fur. much to do managing healthcare through diet. great opportunity here

AL: people should have information and support about good diet. ultimately, they must take responsibility for their diet, but we can help them more. 2008 Foresight report talked about our obesogenic environment; also relatively inexpensive energy-dense food.

We collectively have to ensure that we do more collectively, nationally across government and private and independent sectors, to ensure people can access food with the taste and enjoyment they want while containing less fat, sugar and salt. Cannot solve problem without people becoming more aware of what is in their food. Calorie labelling. Label restaurant menus. More in public health white paper

Q: efficiency savings, tweaking system, how will we got coherence - how will savings be monitored over the initial period? Will we see them in each year, or will all get dumped into fifth year.

RD: efficiencies can’t be pushed back to end of period, essential spread relatively evenly.

DN: monitoring and reporting system, set out expectation centrally, then plans are drawn up locally in every organisation by end of March - staffing, quality, money. all in public domain. delivering savings, in our view demand is not going to be lumpy: it’s relatively constant, that’s how it works in practice.

Q: how far are we now into £15-20 billion?

DN: we don’t start counting till next year, but had to do 3.,5% this year and we’re on course. Much of this £15-20 billion is under central control, wages, central budgets, and management costs – that’s 40% of the £20 billion. another 20% comes from service change - secondary-primary shift and LTCs. the remaining 40% will be driven though tariff. we will set out metrics and milestones in the OF in December and then report each quarter in The Quarter.

Q: 20% primary care - QIPP programme delayed by a year in primary care - full efficiency savings now out 2013-14 to 2014-15

DN: QIPP was originally 3-year timescale 2011-12, assuming flat cash, not flat real, have or redo numbers based on CSR. Fundamental changes asking people to do anyway

Q: how flat cash impacted?

AL: if had been flat cash, relationship between services and demand would have been more extreme. This was before the pay freeze, and thus the pace of implementation would have been more urgent. Financial incentives are now in a stronger place to respond and deliver

Q: so CSR has made efficiency savings less severe?

AL: can’t speak for previous government, what we are asking for is about as challenging as is thought do-able

RD: difference in number of years, this CSR cycle is 4 years not three.

Q: that extra year will allow you to deliver the Nicholson Challenge?

DN: our flat cash assumption was not in reference to government plans; we just assessed what was happening in world, decided it was a good place to start. the last time NHS got into financial difficulties, it was because we only delivered 70% of planned savings, so it’s worth overshooting at first (also that was short-term). we were determined to plan our way into this. flat real and over 4 years make it more manageable

Q: are you more confident?

AL: since 20 October, there’s been a greater sense of financial certainty across NHS. Everybody charged with doing this now knows savings can be reinvested to meet demand - every part of QIPP savings can now be reinvested – it’s an extremely positive situation for clinicians, and relative to rest of the public sector. asking 4% efficiency a year, in circumstances every penny can be reinvested within the NHS 'protected bubble' to improve services and outcomes.

RC: reinvesting into NHS. FTs have £2.5-3 billion surpluses, Peter Carter of RCN asked for this to be distributed to struggling parts of services. Justified to retain? And changing the end-of-year flexibility surrendering extant £3.5 billion EOY surplus, as happened with previous years’ surpluses – is that a disincentive?

AL: FTs have legal autonomy, and can reinvest surpluses for future. If we do not allow that, they couldn't reinvest to improve. Monitor have responsibility to set criteria for level of surpluses – and it would anyway be of the order of £1.5 billion for safety. FTs will say they’ve often generated surpluses in the expectation of using them to improve and protect services.

As to the EOY disincentive - in recent years, DH management of departmental expenditure limit (DEL) allowed retention and reinvestment of surpluses. Treasury's approach is reiterating that basically, they thought it had always applied.

SD: So there's no change to the DH end-of-year flexibility arrangement?

AL: we work on basis that surpluses can be carried forward because of our management of DEL

SD: and that include PCTs as well, any NHS org?

AL: the surplus would have to be an established fact!

SD: No change, then?

AL: No

Q: 2 patients requiring hip replacement operations. One waits 10 weeks, the other 20. how will they know difference on waits? and how measure satisfaction?

AL: committee has seen patient satisfaction on outcomes domain. How will we measure that? Patients should know when choosing where might have operation, information enabling to make choice. Choices will bear on how long have to wait, and should see performance, and also who is their named consultant team? Might want same consultant as previously. These are choices patients should be able to make

Q: will you publish average wait times?

AL: I'm clear we want to use information to inform choice: this should be published, and should be basis on which patients choose, and will drive improvement. providers will measure RTT waiting times - I hope aggregate.

Q: Kieran Walshe evidence on costs of reorganisation between £2bn and £3 bn. Minister Simon Burns said 2% service transformation would be sufficient to cover any transformational costs. Is that accurate?

AL: Simon Burns said in this financial year. We are going to have to reduce administration and management costs whatever happens, approaching £900 million in total. White Paper involves transferring of PCT staff. Redundancy or not, we do not yet know the conclusions of emerging commissioning consortia and local authorities.

Q: so plans now are based on original estimate between your guess and worst outcome?

AL: no - we know how to reduce management costs

Q: what about monitoring reduced management costs? Pathfinder consortia, get idea on consequential costs of reorganisation - monitor them and share that info?

AL: we will know, but this is proceeding at pace - this is 4 months post-White Paper, and we’re soon publishing our response to the fabulous 7,000 WP responses. Our forthcoming HR and Operating Frameworks will also give the service a great deal of definition about transfer of responsibilities, pathfinder consortia coming forward. People in most parts of country will see nature of responsibility and transfer of staff.

Q: do you anticipate whether number of consortia will be greater than 152?

AL: Of pathfinder consortia? I think it's better for me not to speculate or venture any number. Northamptonshire want their consortia to cover the whole county area; Runcorn want to cover just Runcorn. There will be very considerable variation – it would be misleading and directly unhelpful for consortia me to comment.

Q: what is your view on the optimum population level for consortia?

AL: they can work that out for themselves. Size will not necessarily preclude realising economies of scale because of nature of commissioning support arrangements - LAs, bodies, private ...

Sarah Woolaston: commissioning groups, saving with co-terminosity and reducing PCTs down to 152.

AL: it’s open to consortia to decide their boundaries. If they conclude they don’t want the boundaries of the old PCT, that doesn’t prevent them commissioning in concert for Devon-wide services (like OOH DevonDocs - can commission services for co-terminosity). We are just inviting pathfinders to establish – so I think the question is premature - they should say, 'how can we collectively work together to best serve the needs of our patients - locally or wide area?' Those are the sorts of issues they should consider, not which practice comes with inherited debt in 2.5 years’ time

SW: What will you do on inherited debt?

AL: That’ll be in the operating framework

Q: the NHS reduced £250 million spend in cutting to 152 PCTs from 300-odd. Now, you’re setting admin cost limit for system. Most saving last time were governance reduction (boards, support structures).

Q about Nicholson's £270,000 salary - Lansley - I think he's worth it. Laughter. Dorrell rules question not suitable.

AL: we’ve already reduced management cost by 7-8%. the number of managers has doubled over the past decade; we're going to bring them down. focus on clinical staff. quality of managers critical, but in past too often went to quantity. Quality managers have a future. some natural wastage, some want to leave, some we'll want to retain. we’re not in a position to arbitrarily impose pay restraints on people.