Many of England’s maternity services run at a deficit and have to be subsidised by other departments, the Foundation Trust Network (FTN) told MPs.
The Public Accounts Committee demanded explanations from senior health officials after a National Audit Office (NAO) report highlighted a shortage of midwives and consultants on labour wards and found that a fifth of funding was spent on insurance against malpractice.
The committee’s Labour chairwoman Margaret Hodge said the FTN’s information was “very worrying”.
She said the FTN claimed in an email to her that “most maternity services have run at a deficit or break even at best and are cross-subsidised from other services”.
Mrs Hodge told Department of Health (DH) permanent secretary Una O’ Brien: “It’s very worrying to be told by the FTN that there’s not enough money.”
She added: “The moment you hear that you think ‘no wonder there are not enough midwives or enough consultants if that’s true”.
Ms O’Brien said it was not the responsibility of the permanent secretary - the DH’s top civil servant - to be in charge of the “carve up of money to individual commissioners”.
She said the FTN claims were “not something that I am aware of” and setting the tariffs used in the system was a “very complicated matter”.
NHS England chief executive Sir David Nicholson said: “The tariff is set on the basis of reference costs, it’s actually set on actual costs two years ago. So when we set the tariff for maternity services based on what they actually cost during that period … So there is the possibility of a lag, that we are not moving it quick enough.
“But about five years ago we concluded that we weren’t actually spending enough money on maternity at that stage, we thought that it needed about another £300m and so we changed the tariff in order to do that.”
Asked if he knew about services being run at a deficit, he said the NAO report had highlighted a “massive variation” in the cost of maternity services across the country.
He said: “It is not necessarily that people may be running at a loss because they are not getting enough money, it may be that their costs are in the wrong kind of place.
“The tariff is set on the average across the whole of the country.”
Some £482m was spent on clinical negligence cover last year, the equivalent of £700 per birth.
The most common reasons for maternity claims are mistakes in the management of labour or Caesarean sections and errors resulting in cerebral palsy, the NAO report said.
Ms O’ Brien said she was “shocked” by the amount of money tied up in legal costs, partly due to no-win, no-fee cases.
Mrs Hodge said there had been an 80% increase in maternity case claims in the last five years - although the MPs heard that across the NHS there had been an 88% rise in claims.
She said: “It’s not rocket science … it’s because there aren’t enough midwives and there aren’t enough consultants.”
It was a “vicious circle” that resulted in funds going on legal costs and insurance cover so “trusts haven’t got the money to employ the midwives or the consultants at the right time”.
“Somebody has got to take responsibility, I don’t care who, for sorting it out not just passing the buck,” she said.
Ms O’ Brien said: “We recognise that more can and should be done to bring down the actual harm that happens in very rare circumstances.”She said cutting down on the number of negligence cases was “not necessarily a direct relationship to the proportion of staff”.
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