Wendy Morton (Aldridge-Brownhills) (Con)
I beg to move, That the Bill be now read a Second time.
Let me begin by thanking all the Members who are present for giving up a Friday in their constituencies to take part in what I believe will be a very important debate, and all the Members on both sides of the House who have sponsored my Bill. It was a tremendous honour, and also a surprise, for me, a new Member of Parliament, to be drawn in the ballot for private Members’ Bills the day after making my maiden speech. I am not normally drawn in a raffle, so this was something of a coup.
As many colleagues had warned me would happen, a raft of suggestions for Bills came flooding my way, on to the internet, into my inbox, and as text messages. All of a sudden I was the No. 1 favourite MP, and enjoyed a few minutes of fame. After some consideration, however, one Bill caught my eye, the one that I should like to be referred to as “the Peter Pan Bill”.
The Minister for Community and Social Care (Alistair Burt)
Peter Pan and Wendy!
Wendy Morton
Indeed. I had often wondered why my mum and dad named me Wendy, and that was obviously the reason.
Like many other people, I knew of the tremendous work of Great Ormond Street hospital. Each year, children from all over the United Kingdom, many of whom suffer from rare, complex and life-threatening conditions that cannot be treated elsewhere, go to that specialist hospital to benefit from its specialist care. Sadly, for many children Great Ormond Street is the last hope, and, although it is one of the world’s leading children’s research hospitals, for some of those conditions there are no known cures.
I was also aware of the very special link with J.M. Barrie, whose generous bequest to the hospital consisted of the royalties for commercial publications and public performances of his play “Peter Pan”. What I did not know, however, was that legislation was needed to enable the right to those royalties to be given to the new, independent Great Ormond Street Hospital Children’s Charity to which the current NHS charity is in the course of being converted. The right to the royalties is currently conferred on the special trustees for Great Ormond Street hospital who are appointed by the Secretary of State. Baroness Blackstone first raised the need to amend legislation to enable Great Ormond Street hospital to continue to benefit from the Barrie bequest during the passage, in the other place, of the Bill that became the Deregulation Act 2015, and the Government agreed to introduce legislation at the earliest opportunity. My Bill will do that by amending the Copyright, Designs and Patents Act 1988.
I have to say that my warm and comforting thoughts of Great Ormond Street vanished temporarily when I read more of the briefing that had been prepared for the Bill, and discovered a proposal to remove powers from the Secretary of State for Health. I was a little concerned. Could I have been handed a Trojan rocking horse? Well, I can assure Members that if I had been, I would not be presenting the Bill today, because it also paves the way for sensible housekeeping on the part of NHS charities, the Secretary of State and his Department. As a new, eager and enthusiastic Member of Parliament, and one who wishes to see less bureaucracy, less duplication and less Government interference, I think it fair to say that the opportunity to remove some of the Secretary of State’s powers had a certain attraction.
Before I deal with the details of the Bill, let me assure you, Mr Speaker—and I hope you will not be too disappointed—that this Wendy will not be flying through the sky, or indeed the Chamber, on an adventure with a mischievous little boy called Peter Pan and a fairy named Tinker Bell, although I shall remain firmly on my guard for Captain Hook and ticking crocodiles.
Let me start with the background to the Bill, which, although it might seem technical in parts, is necessary and important. NHS charities are regulated under charity law but are also linked to NHS bodies and bound by NHS legislation. They are charitable trusts established under NHS legislation and have as their trustee an NHS body such as a foundation trust or trustees appointed by the Secretary of State for an NHS body. NHS charities are distinct from independent charities, which are established solely under charity law. As we would expect, funds donated to the NHS must be held separately from Exchequer funding provided by the taxpayer. These charities exist to support the beneficiaries and there is a special relationship between the charities and the trusts with which they are associated.
The first part of the Bill makes provision to remove the Secretary of State for Health’s powers to appoint trustees for NHS bodies in England and to appoint special trustees in England for specific hospitals. It also amends primary legislation in this regard. It fulfils a Government commitment made in 2014 following a 2012 Department of Health review and consultation on the governance of NHS charities. The outcome of the consultation was that NHS charities should be allowed to convert to independence should they so choose and the Secretary of State for Health’s powers to appoint trustees to NHS bodies under the National Health Service Act 2006 should be removed at the earliest legislative opportunity.
You may well ask why, Mr Speaker, and I can understand that question, but please let me try to explain. A number of the larger NHS charities called for reform because they were concerned that the NHS legislative framework limited their freedom to grow and develop their charitable activity to best support their beneficiaries and to demonstrate to potential donors visible independence from Government.
Wendy Morton
Let us hope so. Many artists and authors around the country have preferred charities to which they donate and give their royalties, but by highlighting the work of J. M. Barrie and Great Ormond Street Children’s Hospital Charity the measure may, fingers crossed, lead to more of them doing so.
The Minister for Community and Social Care (Alistair Burt)
Before we leave the Scottish dimension, may I say that my granny was born in Angus, fairly close to where J. M. Barrie comes from?
Mr Speaker
Order. We are learning quite a lot about Members’ family circumstances, and it is very illuminating.
Kevin Foster
I could not have put it better myself. My hon. Friend is right that although the Secretary of State might appoint someone independent with skills and abilities such that they become a trustee by another route, the fact that they are appointed by the Secretary of State makes it appear that they are the Government’s person, even if they are diametrically politically opposed to the Government of the day. I am sure that the Minister will be able to think of examples of Government appointments who are not the most supportive of the current Administration.
Kevin Foster
Indeed. This is a bit like the reforms to school governors, where we have reduced the number of local authority appointments. Although some were very independent minded and focused solely on the school and its interests, in other areas it was almost a tradition to have a certain number from Labour, a certain number from the Conservatives and a certain number from the Lib Dems.
The Minister for Community and Social Care (Alistair Burt)
I congratulate my hon. Friend the Member for Aldridge-Brownhills (Wendy Morton) on securing her place in the ballot and on her speech. This is the NHS (Charitable Trusts Etc) Bill, but it will forever be known as the “Peter Pan and Wendy Bill”, and we shall all do our best to refer to it in that way as we proceed.
I thank colleagues for what they have said during the course of the debate. I welcome the hon. Member for Ellesmere Port and Neston (Justin Madders) to his place and thank him for his brief support for the Bill, which is appreciated.
Those of us who have known my hon. Friend the Member for Aldridge-Brownhills for some years—I think we first knew each other when we were working in Rwanda together—will appreciate that there is a lot of her personality in this Bill: a determination to support the right causes, a fierce and deep commitment to the charitable objectives represented by the NHS, and her usual diligence in introducing the Bill and working very hard to secure support for it and to discuss the issues involved. I thank her very much for the way in which she has done this.
A number of J. M. Barrie quotes are appropriate, and we may hear them during the debates in Committee, if the House wishes to progress the Bill. The one that caught my eye was,
“one girl is worth more than twenty boys.”
I am not sure whether it is currently acceptable to make such a comment from the Dispatch Box, but I use it in its historical context as a sentence from the book, “Peter Pan”. I think that my hon. Friend has well demonstrated her worth in relation to what she has brought forward today.
The hon. and learned Member for Holborn and St Pancras (Keir Starmer), in whose constituency lies Great Ormond Street hospital, made a very decent and correct response to the Bill in which he proudly supported his hospital, as of course he, and we, would wish to do.
Kevin Foster
The Minister says “his hospital”. He is obviously right that it is based in the constituency of the hon. and learned Member for Holborn and St Pancras (Keir Starmer), who sadly is not in his place, but it is actually the whole UK’s hospital given the services it provides.
Alistair Burt
My hon. Friend makes a point that I would have gone on to make and was emphasised by him and several others. Of course, Great Ormond Street hospital covers not only the areas of London but the rest of the country and, indeed, the world. That is one of the reasons we are so proud to support what my hon. Friend the Member for Aldridge-Brownhills proposes.
My hon. Friend the Member for Newton Abbot (Anne Marie Morris), in supporting the Bill, commented on the history of Barrie, not least making the link with the childhood tragedy of the death of his brother leading to the chain of thought about a young boy living forever, which was certainly in his mother’s mind. My hon. Friend brought us that little bit of tragedy to remind us of the origin of the story.
My hon. Friend the Member for Cheadle (Mary Robinson) concentrated on the technical aspects of the Bill, to which I will turn later in my remarks.
My hon. Friend the Member for Telford (Lucy Allan) raised some of the work done by the local charitable trusts in her area. She spoke of the Friends of the Princess Royal Hospital, Telford and the substantial sums that that charity has contributed to the work of the hospital.
My hon. Friend the Member for Erewash (Maggie Throup) spoke of the League of Friends of Ilkeston Community Hospital and Treetops Hospice Care. She reiterated the point that although we have an almost uniquely taxation-based system of support for the health service in this country, that does not completely absolve people from the desire to make their own contribution to hospitals in a charitable manner, as they do in extraordinary ways.
Maggie Throup
Does my right hon. Friend agree that we are richer as a nation because of the unique combination of our free-at-the-point-of-care NHS and all the charities that support it, which all come together to make us bigger and better?
Alistair Burt
Yes. I do not think I am trespassing on any party political ground in saying that we should recognise that people’s desire to give is built on more than just paying their taxes; it is built on an innate desire to help their communities and their neighbours. That is an instinct that cannot and should not be stopped, and it will always find its way into other areas where there are services funded by the state, but it adds a dimension that is very special. Each is valuable in its own way, and my hon. Friend is right to draw attention to that.
My hon. Friend the Member for Yeovil (Marcus Fysh) spoke of his young days visiting hospitals as the son of a paediatrician. My dad, who might be watching this debate, is a retired general practitioner and I also remember visiting hospitals with him. Perhaps, like me, the sight of needles and machines that go “ping” were sufficient to put my hon. Friend off going into medicine, which means he has ended up in the same place as me. Those days, however, were valuable and we are grateful to all those who work in the health service and have made a contribution. As a senior paediatrician, my hon. Friend’s father will have certainly done a lot of good throughout his career.
My hon. Friend the Member for North Dorset (Simon Hoare) also supported the change in the law and invited us to comprehend the risks involved in various trustees supporting Lucky Lad at Uttoxeter. Unfortunately, my brief does not extend to whether that is common practice among trustees or whether it was a major inspiration for the Bill, but my hon. Friend made his point well and it is covered by what we will go on to do.
My hon. Friend the Member for Torbay (Kevin Foster) spoke of the importance—he has also just mentioned this in his intervention—of recognising that Great Ormond Street hospital serves so many of us. He also spoke of the Torbay Hospital League of Friends and its “This is critical” campaign, which is a perfect example, as my hon. Friend the Member for Erewash has said, of a combination of people who recognise that funds are available through the national health service, but who want to make an extra contribution on top of that. We wish that and similar campaigns well.
Anne Marie Morris
We have heard today about a great number of institutions that undertake such voluntary work. This is a timely debate, because we are approaching Christmas, a time when more and more of this sort of work, volunteering and giving takes place. Does the Minister agree that it is absolutely on point for us to be debating the Bill at this time of year?
Alistair Burt
My hon. Friend makes her point well. This is traditionally a time when people look very hard at what they plan to give, both for the Christmas season and for next year. A number of appeals will be run and local hospitals recognise that this is an important time for them. I imagine that many charities will benefit from the sentiment described by my hon. Friend.
Kevin Foster
The Minister is making an excellent speech, as predicted during my own speech. Does he agree that the core issue is that charitable funds are not just giving extra to patients in the NHS, but going beyond what would be funded by the NHS? This is not about replacing taxpayers’ money; it is about giving that extra boost and extra bonus.
Alistair Burt
It is about exactly that. In a world of never-ending resources, there would be no need to look for charitable funding. As I have said, charitable funding covers not just finance but the instinct to give and support. Even if it was not about finance, plenty of people are able to support their local communities and local hospitals, not because they contribute financially, but because they give their time. Leagues of friends and others are perfect examples of that instinct.
My hon. Friend the Member for Stafford (Jeremy Lefroy) spoke characteristically succinctly about charities making a real difference in his hospital and health community. My hon. Friend the Member for North East Somerset (Mr Rees-Mogg) made a vigorous defence of the private Member’s Bill as an example of Conservative principles and values. I am not sure whether he wanted to convey that a vigorous defence of fundamental Conservative principles is best and appropriately summed up in a Bill about Peter Pan and Neverland. Perhaps he recognised that those principles are reflected in the fact that the most successful example of the genre is everlastingly popular. I am sure that is exactly what my hon. Friend meant to convey.
Members can imagine my shock at my hon. Friend’s suggestion that an anonymised, bureaucratic element in the NHS might be pursuing a seemingly puzzling and unnecessary course of action to add to bureaucratic difficulties. Although I do not necessarily recognise the exact unit of which he speaks, I will look into his concerns, just in case it can be identified.
My hon. Friend the Member for Eddisbury (Antoinette Sandbach) spoke of the contribution of Alder Hey hospital, which was also welcomed and supported by the right hon. Member for Knowsley (Mr Howarth). My hon. Friend spoke of the new hospital and the charity work being done there. I am sure that most Members present would wish to recognise her contribution to a debate earlier this week in very different circumstances. She was immensely brave and her remarks will no doubt lead to much good. In today’s debate, she pointed out that charities can make a contribution to the running of even the best known hospitals.
Finally, my hon. Friend the Member for Bury St Edmunds (Jo Churchill), who had a personal reason for her particular interest in the Bill, referred to this country’s extraordinary pioneering work in medicine. That was exemplified by the news just this morning of genetic editing and the happy outcome for one little girl in particular. That reminds us of this country’s extraordinary reputation in medicine and medical research, and of the work of medical academics and all other health professionals. Every day we are appreciative of everything they have done for and contributed to this country’s reputation.
Wendy Morton
My Bill focuses on the 16 charities that are either moving to independence or reverting to corporate trustee status. The number fluctuates a little, but there are at least 260 NHS charities. During this debate, we have heard fantastic examples of the work being done right across the country. Although we are focusing on the 16, the model of independence is available to other corporate NHS charities. Highlighting the work they all do is a great way for us as parliamentarians to learn from the wealth of experience out there.
Alistair Burt
My hon. Friend neatly sums up her Bill, which I will now address, and reminds us of the work of so many different trusts.
Before I finish my tributes, may I briefly mention the work of the Bedford Hospitals Charity and Brian Woodrow in my constituency? They have made an immense contribution to my constituents and those around Bedfordshire, not least through the Primrose appeal and the magnificent Macmillan cancer treatment centre that resulted from it.
Although I intend to go into the technical details of the Bill, because that is important, I also want to speak in the following debate. I do not want to take an unreasonable amount of time, but I hope the House will appreciate that there are things I must cover.
I am delighted we have the opportunity to debate and discuss NHS charities, which provide support to our health system that is crucial to the delivery of better care for patients. Thanks to the generosity of the people of this country, NHS charities have been able to deliver valuable enhancements to the wellbeing and experience of patients and staff for many decades. I hope that today’s debate has helped to publicise the valuable work the charities do, and that it will encourage more people to give them their support.
This Government have listened to NHS charities and delivered the opportunity for those that wish to have greater independence in order to evolve and grow to meet the needs of their beneficiaries. A number of charities have seized the opportunity to become independent, with others planning to do so in the near future.
The Bill puts the last pieces of the jigsaw in place to deliver the vision the Government set out in 2014. When the previous Government came to office in 2010, a number of NHS charities and their representative bodies and interest groups were calling for reform. They were concerned about the NHS framework and inflexibility. The Government were also committed to deregulation, promoting localism and the big society, and freeing the NHS from central Government controls.
Following a review in 2011, the Government consulted in 2012 on options for changes to the regulation and governance of NHS charities. The fundamental aim of the proposals was to review the legislative powers relating to the governance of NHS charities, to preserve and extend their independence from central Government.
In their 2014 response to the consultation, the Government noted that the majority of respondents supported the principle of the proposals for the transition of NHS charities to independent charity status. They concluded that it would be appropriate to allow those NHS charities that wish to do so to convert to become an independent charity.
Anne Marie Morris
One of the questions we have not touched on is how that transition will be made. Will the Minister add a few words about how, in practical terms, we will move from having two sets of trustees and pots of money to one set? We clearly want that to be as unbureaucratic as possible.
Alistair Burt
It will be. The procedure is very simple. Some of it is laid out in the Bill and some of it will be discussed in Committee. The intention is to make it very simple for trustees, and some charities are already moving that way. It is certainly not the intention to let any bureaucracy get in the way of the process, and there is no reason why it should do so.
The Government concluded that where trustees have been appointed by the Secretary of State, the provisions for the appointments will be repealed as soon as possible. I am pleased that the Bill will remove those powers. The Bill will confer the rights to the play “Peter Pan” on the new independent charity for Great Ormond Street. That will enable the charity to complete its conversion by removing the statutory obstacle preventing Great Ormond Street Hospital Children’s Charity from becoming fully independent.
An informative debate has taken place and, as I have said, I thank all hon. Members for their speeches. I thank my hon. Friend the Member for Aldridge-Brownhills for all the hard work and endeavour she has put into presenting the Bill today. We salute her for the way in which she has applied herself, her diligent research and her time spent engaging with NHS charities. I also want to pay tribute to Baroness Blackstone for her foresight and determination in securing Great Ormond Street Hospital Children’s Charity’s rights to the royalties from the play “Peter Pan” so that current and future generations can benefit from J. M. Barrie’s generosity.
As several Members have mentioned, the work of NHS charities often goes unheralded. The charities play a crucial role in supporting the NHS in a wide range of initiatives and projects, including research, new buildings and equipment, and helping to provide services over and above those provided by the NHS. Some have large sums at their disposal, many have much less, but they all make a big contribution to improving the lives of patients and staff.
Thanks to the generosity of the public and the hard work of its fundraisers, Birmingham Children’s Hospital Charities reached its £2 million target for its children’s heart appeal. It will make Birmingham the only children’s hospital in Britain with its own hybrid theatre, which will enable two procedures to be done at the same time so that children do not have to go back in for a second operation at a later date. Fundraising helped to build the hybrid theatre and a new catheterisation laboratory, where keyhole cardiac surgery can be carried out, and it will increase the number of intensive care beds from 20 to 31. The trust invested some of its own funds in the project, and its supporters raised the final £2 million in a variety of imaginative ways, from sponsored abseils and a freezing Snowdon swim to major corporate donations and half marathons. The new theatre is now in use and has treated 126 patients so far, many with hugely complex heart problems. It will treat an extra 300 patients a year, and there are plans for more in the future. That is a perfect example of how the work of a hospital and a charity can coincide, and of how work done in one area can benefit other areas throughout the region.
The Sheffield Hospitals Charity has provided funding for a revolutionary bionic exoskeleton suit in the spinal cord injury centre. This revolutionary suit enables paralysed patients to experience standing and walking, sometimes for the first time, with the suit’s assistance. The University College London Hospital Charity supported the construction of the Cotton Rooms, the first four-star, purpose-built boutique hotel for NHS patients. Opened in 2012 at a cost of £4.5 million, it has 35 rooms for patients and their partners. Over 1,000 patients a year typically stay at the hotel, spending between one and 25 nights.
Some charities support vital research work. The Chelsea and Westminster Health Charity is supporting the Borne programme, which has two ambitions: first, to prevent death and disability in pregnancy and childbirth, and secondly, to create lifelong health for mothers and babies. In the UK alone, one in 10 babies is born too soon; that is nearly 80,000 babies a year. Premature birth is responsible for 70% of disability and death in new-born babies. The charity has raised £3 million, which has enabled it to identify treatments that could reduce the risk of pre-term labour in high-risk pregnancies from 35% to 10% or less. It has also supported a study highlighting the link between maternal diet and a baby’s brain development.
NHS charities are supporting and enhancing mental health services. Poor mental health is one of the major challenges facing society today. Never in my political life have I noticed a time when mental health has been given so much attention in so many quarters of the House and by Members from all the different parties. I think that the cross-party contribution to the development of advancements in mental health treatment will be one of the signature features of this Parliament. I welcome the interest that has been shown by those, including Front Benchers, on both sides of the House.
Anne Marie Morris
I am delighted that the Minister has raised the issue of mental health, because what we achieve in Parliament is not just done through legislation and regulation or by debate in the House. Does he agree that communities have taken this issue on board? I have been involved in dementia-friendly projects in two of my towns, whereby everybody in the street is made well aware of what they can do to help the confused or those with mental health problems.
Alistair Burt
My hon. Friend makes a very important point about the community’s engagement and the way in which it can work with existing health services. The renewed attention paid to mental health will provide many further such opportunities.
Kevin Foster
The Minister is being exceptionally generous in giving way to colleagues. Given the rapidly ageing population, which means that there are likely to be more demands on services because of age-related illnesses, does he agree that the Bill is very timely? That is particularly true in a ward in my constituency where 9% of the entire population is aged over 85.
Alistair Burt
My hon. Friend makes a significant point about the use of the health service and the relationship of charities to its work. I am sure that many of us have similar contributions in mind. I appreciate how the Bill brings those two things very closely together.
I think it would help the House if I made some progress on the technicalities of the Bill. As I have mentioned, the Bill delivers commitments announced by the Government in response to the consultation on the “Review of the regulation and governance of NHS charities”, published in March 2014. Charities were given the opportunity to seek greater independence under the sole regulation of the Charity Commission, so removing themselves from dual regulation under NHS legislation and charity law. Six NHS charities have converted to become independent and others are progressing towards independence.
The Government response to the consultation made it clear that, given the new freedom for NHS charities to become independent, the Secretary of State’s powers to appoint trustees were no longer necessary and that they would be revoked as soon as possible once a legislative vehicle became available. This Bill is that legislative vehicle. It completes the reform of the regulation and governance of NHS charities, and it delivers the Government’s commitment to repeal the Secretary of State’s powers to appoint trustees to NHS bodies that hold charitable property.
The Department of Health has stated that it will not appoint trustees to any further bodies that are not already named in existing trustee appointment orders. It will, however, continue to enable the replacement of trustees for NHS bodies that currently have Secretary of State-appointed trustees until the appointment powers are repealed. The Department has said that the provisions removing the Secretary of State’s powers, if the Bill passes into law, would be brought into force in April 2018. That will allow charities with trustees appointed by the Secretary of State a generous period of grace in which to decide whether to become independent or to revert to corporate trustee status with the board of the NHS trust or NHS foundation trust as the trustee.
The Bill confers powers on the Secretary of State to make regulations to transfer charitable property from the trustees of an NHS trust or NHS foundation trust to the trust itself. This power will enable the Secretary of State to ensure that, prior to the repeal of his powers to appoint trustees, any trust property held by trustees can be transferred back to the trust to which the trustees were appointed. It is hoped that all charities with trustees will have resolved their future status, either by becoming independent or by reverting to corporate trustee status, before the Secretary of State’s powers are revoked so that the powers will not be needed.
The Bill amends the provisions of the Copyright, Designs and Patents Act 1988, which conferred in perpetuity the rights to royalties, and other remuneration as agreed, from the play “Peter Pan” on the special trustees appointed by the Secretary of State for Great Ormond Street hospital. J. M. Barrie’s gift of the rights to “Peter Pan” has provided a significant source of income for the charity. I do not want to linger for too long on “Peter Pan” because we have said quite a bit about it, but in deference to my granddaughter, who may be watching this debate, I wanted to mention that I am proud to be able to take this Bill through its initial stages and, hopefully, beyond.
The quality of the gift provided by J. M. Barrie has been mentioned by others. It was an almost unique charitable gift. I hope that through our talking about it, others will be encouraged to do the same. There are many generous benefactors from show business and the business and economic community, but to provide an endowment to a hospital in the manner that J. M. Barrie did was remarkable. He was a remarkable individual. I think that colleagues in the House know a little more about him now than they did before the debate. One of the quotations that is worth leaving with colleagues is:
“When a new baby laughs for the first time a new fairy is born”.
I suspect many of us have had the pleasure of saying that to our own children and grandchildren. This is an appropriate opportunity to discuss such issues.
Great Ormond Street Hospital Children’s Charity was eager to take the opportunity to become independent. It became partially independent on 1 April 2015. It is, however, unable to complete its conversion to an independent charity because the original NHS charity has to be kept in existence until the Copyright, Designs and Patents Act 1988 is amended, so as to avoid its statutory rights to the “Peter Pan” royalties being lost. The Bill will confer those rights on the new independent charity for Great Ormond Street hospital.
Retaining the original NHS charity causes a number of complications for Great Ormond Street Hospital Children’s Charity. Most significantly, running the two charities side by side creates a risk that legacies to the charities may fail. It also duplicates the governance arrangements, requires the production of separate accounts and may require the submission of duplicate returns to the Charity Commission.
Transferring the rights to “Peter Pan” also clears the way for removing the Secretary of State’s powers to appoint trustees to NHS charities. The Government will not remove those powers until such time as Great Ormond Street Hospital Children’s Charity no longer needs its Secretary of State-appointed trustees to receive royalties from “Peter Pan”.
In considering this Bill, the House needs to reflect briefly on the evolution of NHS charity legislation. Charities played a key role in the provision of healthcare before the NHS was created. In the years before 1948, people relied on a mixture of charitable provision and some limited national and voluntary insurance schemes. Prior to the NHS, many hospitals and other healthcare services were organised on a charitable basis, with their property and assets held in charitable trusts.
On the appointed day, 5 July 1948, the NHS took control of 480,000 hospital beds in England and Wales. The National Health Service Act 1946 transferred virtually all existing voluntary hospitals to the Minister of Health. The effect was that property previously held in clear charitable trusts for a hospital ceased to be charitable property. The 1946 Act also gave hospital boards the power to accept on trust further charitable property, such as donations. It gave the Minister of Health the power to appoint a hospital board as the trustee to hold charitable property for charitable purposes. The structure of the NHS has changed many times since the 1946 Act, but NHS legislation has always ensured that NHS bodies have the power to receive, hold and deal with charitable property.
NHS charities are characterised by the fact that they are bound both by charity law and their statutory objectives set out in NHS legislation, as well as by the fact that the Secretary of State has the power to appoint and remove trustees. NHS charities are linked directly to NHS bodies. In addition to raising funds, they have a special role as the charities that automatically receive money donated by members of the public to the NHS or to their linked NHS bodies. The NHS bodies that can hold charitable property are NHS trusts, special health authorities, foundation trusts, clinical commissioning groups and NHS England.
The statutory objectives of NHS bodies are derived from NHS legislation. They can hold property on trust both for the purposes of their linked NHS body or for any purposes relating to the health service. In reality, the vast majority of funds are held by charities linked to an NHS trust or foundation trust. They therefore hold property both for the purpose of their linked trust and for the purposes of the health service more generally.
As my hon. Friend the Member for Aldridge-Brownhills said, as at March 2015, there were about 260 NHS charities with a combined income of about £320 million and assets with a value of £2 billion. There is considerable disparity in size across the sector, with income heavily skewed towards charities linked to large, high-profile hospital trusts. At the time of the consultation in 2012, the top five NHS charities accounted for a third of the total income and the top 30 for over two thirds. That is why a concentration on smaller charities, such as those that have been mentioned by colleagues today, is so important.
The default position for an NHS charity is the corporate trustee model, whereby property held on trust is held by the NHS body itself, acting as a corporate trustee. The directors of the NHS body act collectively as a trustee for charitable property. The members of the board of the NHS body are not, individually, the trustees of the charity. NHS bodies acting as a corporate trustee are required, under charity law, to act exactly as an independent trustee would—that is, solely in the interests of the charity and its beneficiaries. The vast majority of NHS charities use the corporate trustee model. As at March 2015, of around 260 NHS charities, more than 90% had corporate trustees.
NHS legislation makes provision for the Secretary of State to appoint trustees for NHS bodies, and those appointed trustees carry out the trustee function in respect of that body’s charitable property. Trustees appointed by the Secretary of State have powers to hold trust property on the same terms as NHS bodies. Once in post, the trustees are answerable to the Charity Commission and not their linked NHS body.
The right hon. Member for Knowsley raised a potential issue in respect of the independence of charities and asked whether this provision would in any way deflect them from their other responsibilities. I assure him that that is not the case. Charitable law will still apply. They will still be regulated, but solely under charity law by the Charity Commission. That reduces the administrative burden and cost, and the calls on the time of the charity’s staff, but it does not weaken the essential controls. I hope that I have reassured him.
NHS legislation does not stipulate the circumstances in which such trustees should be appointed. The Department’s policy has been to establish bodies of trustees only where the charity holds such significant assets that it justifies the engagement of people with relevant expertise. The most recent Department of Health guidance, which was issued in 2011, said that assets of more than £10 million and an annual income or expenditure of £l million would provide a clear case for the appointment of separate trustees.
As hon. Members have mentioned, issues of charitable control are very much in the minds of the House at the moment and, I suspect, will continue to be so as we look into the background of Kids Company. It is important that when trustees are appointed, the importance of their role and the duties they have to perform is recognised. There should be extreme caution about appointing people to boards just for the sake of it, now more than ever.
Kevin Foster
There has been a National Audit Office report on Kids Company and I believe that the Public Administration and Constitutional Affairs Committee is looking into it. This Bill is about ensuring that the charities affected have the freedoms and benefits that all other charities have. There is a wider discussion to be had, perhaps at another time, about how charities should be structured to ensure that they operate appropriately and have good corporate governance.
Alistair Burt
That is absolutely right. The House will be pleased to know that I do not intend to go further down that road. In the context of recent discussions, it is important to ensure that the misuse of charitable funds is the exception to the rule. It is important that people retain confidence and faith in what charities do. That is why it is important to have a rigorous examination whenever allegations are made about things being wrong. In the NHS, such confidence is vital.
In practice, the Secretary of State has delegated his responsibility for making trustee appointments to NHS bodies to the Trust Development Authority, which is a special health authority. In addition to having powers to appoint trustees to an NHS body, the Secretary of State retains powers under NHS legislation to appoint special trustees for certain university hospitals or teaching hospitals. Those special trustees have narrower objectives than other NHS trustees. The special trustees’ objectives are limited to holding property on trust mainly or wholly for the hospital for which they are appointed, or for any other part of the NHS associated with hospitals. In contrast, all other NHS trustees may hold property for any purposes relating to the health service, as well as for the purposes of their linked NHS body.
As the House has heard, following the Government’s response to the consultation, there is now a process for NHS charities to convert to independent status. NHS charity trustees need to assess how they see the NHS charity’s future in order to decide whether or not to convert. There are a number of advantages to conversion. An independent charity’s liability can be limited. One main issue with the current position is that trustees appointed by the Secretary of State risk unlimited personal liability, and that can impact negatively on moves to attract new trustees with the relevant experience and expertise. Moving to independence allows trustees to form structures, such as limited liability companies that provide them with limited liability, thereby enabling them to tackle more significant and innovative projects.
Furthermore, in the eyes of a potential donor, an NHS charity can be seen as too close to Government. Experience has shown that donors—especially major donors—can be reluctant to give if they think the charity is simply seeking money that could or should be provided by the Exchequer. Some grant-giving charitable foundations will not entertain applications from NHS charities simply because of their connection to Government. An independent charity is able to adopt wider charitable purposes in respect of funds raised after it has become independent, and enter into more innovative fundraising initiatives, collaborations and mergers.
Independence removes the need for the charity to comply with NHS legislation, and enables it to be regulated solely under charity law by the Charity Commission. That reduces the administrative burden, costs and calls on charity staff time. It also removes the need to be tied to the “Agenda for Change” pay structure. “Agenda for Change” was not designed for charities and for some it hampers their recruitment of suitable staff at an appropriate salary.
There are, however, some drawbacks to converting to independence and some costs to conversion. There may be additional costs to being an independent entity, some minor VAT disadvantages, and the NHS body may fear a loss of influence over its charity. Each set of trustees has to decide what is best—whether to convert to independence or have corporate trustee model arrangements. Conversion involves the creation of an independent charity outside the NHS. As my hon. Friend said, conversion to independent status involves the creation of a new charity, usually in corporate form, either as a company limited by guarantee or a charitable incorporated organisation in relation to which Secretary of State has no powers. Alternatively it could involve the transfer to the new charity of all the charitable property of the NHS charity, or the winding up of the NHS charity.
The relationship between the NHS body and the independent charity is important. The conversion process requires a formal agreement, or memorandum of understanding, to be in place. The content of that is to be decided between the parties, but there must be a binding obligation on the NHS body to transfer all charitable donations it receives to the independent charity. The Department is also of the view that the NHS body should have some involvement in the new charity’s governance arrangements, for example by having a specific place on the board. That is because of the commitment for all future donations to be transferred to the independent charity, and because the independent charity’s objectives will continue to relate to the NHS.
The independent charity’s governing instrument—such as articles of association or its constitution—must ensure that the existing objects of the independent NHS charity are the same as those applying to the funds transferred from the former NHS charity. It will, however, be possible for the independent charity to have wider objects for new funds raised after independence. Prior to completion of the conversion, the Department must be satisfied with the final memorandum of understanding, and see evidence that the NHS body’s board has considered and approved the conversion.
As the House has already heard, five NHS charities with appointed trustees have converted to independent status: Barts Charity, Alder Hey Children’s Charity, Guy’s and St Thomas’ Charity, Birmingham Children’s Hospital Charity and Great Ormond Street Hospital Children’s Charity. Of the 16 remaining charities with appointed trustees, six have formally notified the Department that they are converting to become independent, one has formally decided to revert to corporate trustee status, and the other nine are at various stages of deciding the best way forward. One NHS charity with corporate trustee arrangements, Royal Brompton & Harefield Hospitals Charity, has already converted to independence, and Yeovil District Hospital NHS Foundation Trust charitable fund has notified the Department that it has decided to convert to independence—my hon. Friend the Member for Yeovil will know it well. The Department is aware of other charities with corporate trustees that are actively considering conversion to independence.
In summary, the Government have listened to the NHS charities and given them what they asked for. NHS charities can, if they so choose, do away with dual regulation, and gain greater independence under the sole regulation of the Charity Commission. Alternatively, they can have corporate trustee arrangements that provide a tried and tested means of managing charitable funds. This Bill makes good on the Government’s decision to repeal the Secretary of State’s powers to appoint trustees to NHS bodies. They are no longer needed. It also provides powers for the Secretary of State to transfer, by regulations, property from the appointed trustees to their linked trust, if any Secretary of State-appointed trustees are still in place when those powers are repealed.
The Department of Health has told the NHS that the powers to appoint trustees would not be revoked before April 2018, to provide a period of grace for trustees appointed by the Secretary of State to decide the most appropriate legal form for their charity in future. As we have extensively discussed, the Bill amends the Copyright, Designs and Patents Act 1988 to provide for the right in perpetuity for royalties from the play “Peter Pan” to be conferred on Great Ormond Street Hospital Children’s Charity. This Bill will enable the charity to complete its conversion to full independence.
I appreciate the points that have been made today and the way that the House has handled the Bill, and many colleagues have contributed. The Government are supportive of the Bill’s intentions, not because it delivers what we want, but because it helps to deliver the model and freedom that charities themselves have asked for.
I will conclude with one final quote from J. M. Barrie—[Interruption.] It is a final quote:
“Those who bring sunshine into the lives of others cannot keep it from themselves”.
Those of us who know my hon. Friend the Member for Aldridge-Brownhills, will know that that is certainly true about her, and I commend her Bill to the House.