Lord James was addressing The Scottish Conference on Mental Health in Glasgow.
He said: 'We are currently looking at policy proposals for the delivery of health and social care to mentally disordered offenders;
'We are also concerned that there should be good child and adolescent psychiatric services. A review of the situation in Scotland will be published shortly, and further work will inevitably be needed to address the issues the review will identify.
'We have moved more slowly than south of the border in closing long-stay institutions. I have explained to you why the pace of progress must be measured. We must plan our route carefully if we are to arrive at our destination of the development of appropriate levels of high quality community accommodation and services which will reduce our reliance on outdated institutional care.
'Local authorities and health agencies, in collaboration with voluntary and private providers, must continue to plan and work together to develop and purchase these services in line with the assessed needs of people living in their area.
'I have no doubt that our approach has been entirely right because it has enabled us to ensure that the right provision is available in the community before a patient moves out to live in the community.
'One last point. Managing change on this scale is an enormous challenge to all our staff. I would like to pay tribute to them for their dedication.
'I see our aim as being to achieve by the end of the decade a mental health service which should have four main characteristics:
First it should be patient centred; second it should be of high quality; third it should be effective and efficient in the use of resources; and finally, to a greater extent than at present, it should provide that high quality care in the community rather than in long-stay institutions.
'What then, are we doing to achieve these objectives?
'I believe we have begun to overcome the bias towards institutionally based services and to see the development of services, which are genuinely community based.
'As the NHS in Scotland continues on developing local mental health strategies, let us consider what this means for the traditional home of mental health care - the hospital.
'Here our policy is quite clear.
- to have available sufficient acute mental health beds to meet current needs - though they may not be in the right place at present
- there should be a planned reduction in long-stay beds - albeit we have deliberately set no target for what that reduction should be
'This is because we believe that the number of beds for both these groups should be driven by the outcome of individual assessments and local decisions on how best to provide care for people with mental health problems.
'Against that background, it is interesting to consider the change in the number of hospital beds in the long-stay sector over the past decade as new models of care have developed thus reducing our dependence on institutional provision.
'This is the key to the whole process and an answer to criticism about the pace of change.'