Health and Social Care Bill Debate
Full Debate: Read Full DebateEarl Howe
Main Page: Earl Howe (Conservative - Excepted Hereditary)Department Debates - View all Earl Howe's debates with the Department of Health and Social Care
(12 years, 5 months ago)
Lords ChamberMy Lords, I do not know whether the Bill is adequate for its intention. I did not think for one minute that the noble Lord, Lord Warner, was trying to insert a Bill into a Bill; he is trying merely to highlight the need for some commitment to social care in a Bill that has “health and social care” in its Title but not much about social care in it. Successive Governments have talked about integrated health and social care but have failed to achieve it. For the first time, we have a Bill with the Title “Health and Social Care”, but with no mention at all of social care. To indicate some commitment to its delivery, if not now then at a later stage, would have been adequate. Delivering integrated health and social care should have the same commitment to it as delivering improved waiting times for acute care.
We tried to get commissioning as a way of integrating health and social care. It would have been a better way forward, but unfortunately that amendment was narrowly defeated. This amendment asks only that the Government commit to making continuous efforts to reduce barriers to integrated health and social care. I do not think that it is inadequate or that it inserts a new Bill into the Bill.
My Lords, this has been a thoughtful debate. At the outset, it is appropriate for me to pay tribute to the noble Lord, Lord Warner, for his strong advocacy of the need to improve the quality and funding of social care services. The noble Lord played a critical role as part of the Dilnot commission and has made strong speeches both today and in Committee on this subject.
I am in complete agreement that high-quality social care services are crucial for the health and well-being of the population. As the Government and many others have said, major reform in adult social care is long overdue. We recognise the need for lasting reform to respond to the challenges facing social care. The recent engagement exercise, Caring for our Future: Shared Ambitions for Care and Support, conducted from September to December last year, highlighted again the scale of the challenges. We know that the quality of care is variable and can sometimes be poor, as recent high-profile failures have demonstrated. The current social care system does not support people to plan for their future care needs or maintain their well-being and independence. People often have a poor understanding of what social care is and of how to navigate the system and access the services they need.
All this is compounded by the well documented twin issues of an ageing society and financial constraint. This critical context explains why the Government have set the reform of adult social care as one their key priorities, but it also explains why social care reform merits it own focus and cannot be dealt with around the edges of discussions on another important topic. The Government are convinced that the time has come for social care reform. Given that, the question before us is not whether action should be taken to improve the quality of social care services but rather how we go about doing so.
I have given Amendment 163AA a good deal of consideration, and I am afraid that I have to say to the noble Lord, Lord Warner, that I do not feel it is the appropriate mechanism to achieve what he seeks. This is because, as well as reform being needed for social care quality and funding, there is broad consensus that social care law too needs extensive reform. The noble Baroness, Lady Murphy, helpfully mentioned the Law Commission report on law reform, which put forward this argument last year. I wish to quote a short passage of the report, which states that,
“adult social care law has been the subject of countless piecemeal reforms … It is of little surprise that not only does the law perplex service users and social workers, but also the judiciary”.
This is the problem with the noble Lord’s amendment; to accept it would be to perpetuate exactly the same confusing and piecemeal approach against which the Law Commission argues. The legal framework for care and support needs fundamental reform, not further additions to an already opaque statute.
I wish to set out briefly what I see as the appropriate course of action on social care reform. We will publish a White Paper on care and support in spring this year. I repeat that undertaking, particularly to the noble Baroness, Lady Pitkeathley. We will follow this by bringing forward legislation at the earliest opportunity. The White Paper will draw on multiple sources, including the excellent work of the Law Commission and the Commission on Funding of Care and Support, for which I again express my gratitude to the noble Lord, Lord Warner. The White Paper will respond formally to the reports of both those commissions and, of course, to the Health Select Committee report on social care.
The noble Lord has proposed that a duty be placed on the Secretary of State to secure continuous improvement in the quality of social care. The Government’s proposals for embedding and safeguarding quality throughout social care will be a central theme for the White Paper. We sought views on this as part of the engagement; it highlighted that progress on quality has already been made with the publication of Transparency in Outcomes last year, which set out the Government’s approach on quality, transparency and outcomes in social care. Our approach to quality improvement is aimed at responding to poor quality, enabling improvement and rewarding best-quality services to support choice.
The ideal for social care is a sector filled with great people doing great jobs who deliver high-quality care to people using social care services. As I said, we are committed to publishing the White Paper this spring and preparations are on course. The Government are taking the broadest possible approach to achieving consensus on the most crucial long-term issues. Therefore, in that context, I do not believe that the time is right for an amendment of this sort. It would pre-empt the White Paper and could leave stakeholders unclear on the broader picture of social care reform.
Moreover—I see this as the central point—we do not want to make further changes to the existing statute when more lasting legal reform is already planned in the near future. Social care is a vital public service and deserves its own focus in its own statute. Too often, debates on social care have taken place on the margins of those on another issue.
I apologise for intervening but I wonder whether it might be relevant to change the Title of the Bill to the Health Bill, bearing in mind the noble Earl’s very valid comments that there will be a White Paper and a totally separate Bill. The Bill’s Title is a misnomer.
The noble Baroness may not have been following all our debates as closely as some, given that we have extensively debated integrating health and social care and how the Bill will improve the prospects of that. I therefore do not agree that social care is such a poor relation in the Bill. She is quite right; of course its prime focus is health, but we have not completely neglected the subject that is so close to her heart.
Specific legislation on social care will be the most appropriate vehicle for debating these critical matters and achieving lasting reform. Of course I understand the desire of the noble Lord, Lord Warner, to keep social care at the top of the political agenda. That is greatly to his credit. I can assure him that the Government have not lost sight of this. We share the same aims for a high-quality service, but it would be wrong to legislate now in such a selective way. The noble Lord may suppose that this is just another instance of a Minister following the standard line that says “resist”, but I hope he will accept that that is not so. There are genuine reasons why the amendment is a bad idea, and I hope that he will feel able to withdraw it.
Having said that, I look forward to debating these issues with him further in due course, and to benefiting from the insight that he and others bring to this topic.
My Lords, this is an interesting debate. Let me say to the noble Baroness, Lady Murphy, that I am not having the House on. I am deadly serious about this because when the Dilnot commission was set up we were asked to do a job extremely rapidly, and we did so well within the 12 months we were set. We were asked to do that so that the Government could crack on with change, which is absolutely vital. This service—adult social care—is in a parlous state that will also do enormous damage to the NHS. Unless you do something quickly about adult social care, you will cause the most terrible financial crisis in the NHS. That is what the demography tells us. That is the reality for urgent admissions to acute hospitals and people staying there much longer than they need to.
If you are interested in improving and safeguarding the NHS, you should be interested in rapidly moving on with the reform of adult social care. The Government are already behind time on this reform. I do not blame the noble Earl, but we were expecting faster action, as was the Dilnot commission. Spring could come quite late this year in terms of the White Paper appearing, and we have no guarantee that there will be legislation in the next Session. The noble Earl has stuck to the normal line, for which I do not criticise him, that one can give no assurances about the next Session’s legislation, but one has to be an extreme optimist to believe that a collective Government will want to have another go at this territory in the next parliamentary Session. I do not doubt his good will—I am grateful for the kind words he said about me—nor his real confidence that the Government will press on with that, but there are a lot of people out there, not just in front of Parliament today, who think that the Government need to go faster on this issue.
I have listened very carefully. The amendment does not prevent the Government from bringing forward new legislation in the next Session. If they want to do that, I shall be deeply delighted and they will have my support. I see nothing in the amendment that prevents the Government from making a start on making changes and protects them to go further if they want to include such provision in the next legislative programme.
I think we should make sure that adult social care is properly represented and recognised in the Bill. Therefore, I wish to test the opinion of the House.
My Lords, competition in the health service is a complex topic and very often, in my experience, misunderstood. It is important that we start with a misconception which several noble Lords have raised with me outside the Chamber and, indeed, in Committee. We need to be clear that competition already exists in the NHS and that the Bill does not herald its introduction. The last Government fully recognised that and encouraged it. The last operating framework which they put in place for the NHS stated:
“We shall enable this by … re-affirming our commitment to the ‘any willing provider’ approach for free choice of elective care, reducing the barriers to the entry of new providers”.
The previous Prime Minister, Gordon Brown, giving evidence to the Liaison Committee in December 2007, said that,
“the private sector … is expanding, will continue to expand and will be a lot bigger in the next few years than it is now”.
The Labour Party manifesto of 2010 said:
“Patients requiring elective care will have the right, in law, to choose from any provider who meets NHS standards of quality at NHS costs”.
The previous Government’s policy of increasing the use of competition is already benefiting patients. The recent report from the Office of Health Economics Commission on Competition in the NHS concluded that,
“evidence both from the UK and internationally suggests that quality based competition with prices fixed by a regulator can be beneficial, producing higher quality care at the same cost on average and, importantly, not leading to increased inequity in access to health care”.
I thank the noble Earl for allowing me briefly to intervene. He has given some useful and selective quotes. Do not those quotes go on to warn very seriously about cherry picking?
I think that the noble Baroness and I agree that cherry picking is highly undesirable, which is why this Bill outlaws it.
I do not see, as some do, competition and integration as polar opposites, nor are they mutually exclusive. I agreed entirely with the Future Forum when it said in its report last year:
“We have also heard many people saying that competition and integration are opposing forces. We believe this is a false dichotomy. Integrated care is vital, and competition can and should be used by commissioners as a powerful tool to drive this for patients”.
That is worth keeping in our minds.
In response to my noble friend Lord Clement-Jones, let me turn to competition law. I understand that some noble Lords want to prevent competition law ever applying to NHS services. That is to wish for the impossible. The question is not whether competition law should apply to the health service but how. That is why I agree with my noble friend that we must make sure that the NHS is insulated from the inappropriate application of competition law. In particular, we must ensure that clinicians are free to commission NHS services in the way that best serves patients’ interests and that there are no impediments to beneficial co-operation to increase integration, improve quality or reduce inequalities. Under our proposals, a series of protections will provide the sort of insulation against inappropriate application of competition law that my noble friend and others require. I hope that the House will allow me to set this out in a little detail.
Co-operation for the benefit of patients should not breach competition law. Article 101(3) of the Treaty on the Functioning of the European Union and Section 9 of the Competition Act lay down exemptions which apply if the wider benefits of an agreement outweigh its anti-competitive effects. On an individual basis, we would expect collaborative arrangements whose overall effect was beneficial to patients to meet the criteria in Article 101(3) and Section 9.
Competition law would be unlikely to apply to a wide range of NHS services. Some obvious examples are accident and emergency, trauma, critical care, maternity, specialist surgery and many others, particularly in remote or rural areas.
Monitor would support the NHS to understand where competition law does and does not apply. A key benefit of establishing Monitor as a sector regulator, with concurrent responsibilities under the Competition Act, is that it will be able to provide authoritative guidance to the NHS on where that law would and would not apply. The Government’s firm expectation is that Monitor would produce sector-specific guidance and address this question in terms of relevant examples, including models of integrated care and clinical networks, which would be updated in line with developments in healthcare practice. This guidance would help reduce unnecessary fear of legal challenge and uncertainty for both commissioners and providers.
Monitor could also provide informal advice in individual cases, building on what the Co-operation and Competition Panel does now. For example, that might include commenting on what types of collaborative arrangements and specific provisions within such arrangements are and are not likely to comply with the competition rules. Any such advice would be without prejudice to any future decision that Monitor might have to take to enforce the provisions of the Competition Act. However, like the guidance, such advice would provide reassurance to providers and could help them to avoid unnecessary legal costs.
If and when it became appropriate, Monitor could make the case for block exemptions. That would mean that the Competition Act would not apply to specified arrangements for the provision of NHS services. At this stage, it is not clear whether or where block exemptions might be appropriate, but an example of the sort of arrangement that could potentially be covered is clinical networks. In any event, this protection would remain available and there is no doubt in my mind that Monitor would be better placed than the OFT to determine when and where it might be needed.
In these and other areas, competition is unlikely to be effective in providing services on the scale or in the way that best promotes patient's interests. The NHS often acts to promote social objectives to ensure that patients receive the level of service that they could not afford or which private companies might not find it profitable to provide. Applying competition law in such contexts makes little sense and such activities are likely to fall outside its scope.
Next, commissioners would not have to create markets against the interests of patients. Clinicians will be free to commission services in the way they consider best. We intend to make it clear that commissioners will have a full range of options and that they will be under no legal obligation to create new markets, particularly where competition would not be effective in driving high standards and value for patients. As I have already explained, this will be made absolutely clear through secondary legislation and supporting guidance as a result of the Bill.
The Bill already creates duties on commissioners to secure continuous improvement in the quality of services, reduce inequalities and promote integrated services. The Government intend to complement these by making it explicit through regulations under Clause 73 of the Bill that commissioning decisions must be in the best interests of patients, those decisions must be transparent and commissioners will be accountable for them. We would expect the NHS Commissioning Board to maintain guidance to support commissioners in these decisions, based on the available evidence and drawing on academic research.
It is worth reflecting that without Part 3, the main legal provision on commissioning NHS services would continue to be the general procurement regulations for public bodies introduced by the previous Administration in 2006. The application of that law to the NHS is unclear. Without the provision that we intend to include in regulations under Clause 73, commissioners would continue to face risk of legal challenge when they decided not to open services up to competition, even where the decision was in the best interests of patients. That uncertainty is unacceptable.
Finally, the Bill would prevent private companies taking over NHS trusts or foundation trusts. There has been a lot of misconception about that. I assure the House today, unequivocally, that that could not happen.
I now turn to the opposition amendments. Amendment 163D raises the application of competition law to the provision of NHS services. Its intention is to ensure that competition law does not apply to the provision of NHS services. However, as I have said, there is a basic point to make here: it is not within the gift of this Bill to secure that. It is like saying that if you pass a law saying that black is white, that is what will happen. However, what I agree on absolutely is that we need to protect the NHS from inappropriate application of competition law and its undesirable effects. Equally, as I said earlier, we do not want to leave patients unprotected from potential abuses by providers. That would be the effect of the amendment and I hope that the noble Baroness will reconsider her wish to move it.
I also referred to the fact that this Bill would provide for clinical commissioners to decide how to secure NHS services to best serve the interests of their patients. Hence, I do not agree with Amendment 178A.
The NHS has always been a comprehensive service, free to patients, with treatment and care based on clinical need and delivered through a wide range of diverse providers. That includes GPs, dentists, independent sector providers, NHS trusts, foundation trusts and a range of charities and social enterprises. Taken together, these providers operate across the various sectors of healthcare, including the community and mental health. They provide a range of services, including vital specialist services to people in lower socioeconomic and minority groups, and people with rare medical conditions.
Amendment 178A does not acknowledge that reality at all. Instead, it seeks to create an arbitrary and unnecessary presumption in favour of NHS and foundation trusts which would likely act against patients’ best interests. For example, the amendment would make it more difficult for a clinical commissioner seeking to manage long-term conditions such as diabetes or COPD in primary care and in the community—involving GP practices or social enterprises—instead of sending those patients to hospital. That could prevent choice for patients in a very crucial area. It could also prevent choice in end-of-life care by restricting the extent to which organisations such as Macmillan and Marie Curie were able to extend the services that they delivered for the NHS. It could prevent charities such as Turning Point transforming—
My Lords, has the noble Earl actually read the amendment? Paragraph 6(c) says,
“the need to commission health services in a way that promotes the integration of health and social care services”.
Will the noble Earl accept that he just said that it does not say that? It says that; it is there.
My Lords, we are talking about Amendment 178A. I disagree with the noble Baroness’s reading of it. It is quite clear what it says. It is geared towards making the NHS the preferred provider. The noble Baroness shakes her head. If I have misunderstood and that is not her intention, I will obviously retract that.
Yet the amendment would increase the risk of commissioners facing legal challenge under procurement law. As the noble Baroness pointed out in 2010,
“procurement must be transparent and non-discriminatory”.—[Official Report, 9/3/10; col. 137.]
Amendment 178A would be a retrograde step. I ask the noble Baroness to withdraw it, as well as the other amendment in this group.
My Lords, is the Minister aware that many of us will welcome the statement he made? It was very comprehensive—indeed, more comprehensive than would be possible in many respects under an amendment to the Bill. He has covered so many different areas, both in terms of the provision-commissioning duties of Monitor and also the duties of co-operation.
My Lords, clearly I have the Floor. I thought that I had it after the noble Baroness, Lady Thornton, as I was guided. I am very pleased to have the Floor before her.
What my noble friend Lord Howe said was extremely constructive, not only about the state of competition within the health service and some of the patching that had to be done to make up for deficiencies of the 2006 Act, but also to do with competition, the block exemptions available, co-operation and the general duties of Monitor. A law court would probably find it much more useful to have my noble friend’s fuller statement than simply some rather narrow amendment to the Bill. I recognise the deficiencies in my own Amendments 177 and 178. I much prefer the Pepper v Hart solution that has been found and proposed in these circumstances. The dangers of putting matters in the Bill are entirely illustrated by Amendment 178A. The Minister’s criticism of that amendment, which was made to me by expert competition lawyers, of trying to put commissioning in a straitjacket as is proposed—it may give the wrong impression, but it is ineffective in terms of EU procurement law—shows exactly the dangers of trying to put too much into the Bill. The Minister, entirely appropriately, has picked up many of the points made during the course of the Committee and in debate today and put forward a statement that will be used by those looking at provision and commissioning in the NHS in future. On that basis, I wholly welcome it. I may not be able to withdraw my amendment to the amendment, but I shall certainly not be moving my Amendments 177 and 178. I beg leave to withdraw the amendment.
My Lords, this is a disparate group of amendments. I support the principles that underline Amendments 164, 165 and 166. The Bill has been amended since the Committee stage and may address some issues, and that is one of the difficulties when we discuss competition, collaboration, integration and co-operation. We will have yet another amendment later today or on Thursday from the Government on the duty of co-operation that will further strengthen the role of Monitor in regard to these issues. That, I think, will meet some of the arguments.
My feelings are consonant with those of the noble Baroness, Lady Williams. I am furious at some of the debates in the press about whether we are marketeers or pro-NHS. In fact, the vast majority of people in this House steer a course in order to do what is in the best interests of patients in terms of competition, collaboration and integration. I acknowledge that many of us must feel the same as the noble Baroness in her frustration about that.
The intervention of my noble friend Lord Adebowale was helpful in that it reminded us of how competition has worked in mental health services and substance misuse services. For many years collaboration between organisations to deliver services in both acute care and for long-term conditions has been helpful. I have no difficulty thinking of dozens of situations where commissioners have decided to commission services in areas where there has been collaboration between a group of service providers. They may involve social care services, residential care homes being run independently and so on. Commissioners might seek to put together an improved ortho-geriatric service especially for people with multiple disabilities in later life. There are examples of successful collaborative services which have been competitively tendered for. However, I do not want to take up the time of the House at this stage by mentioning too many examples.
I have a question to ask of the Opposition in relation to Amendment 163BA. This is the first amendment in the group, and perhaps the noble Baroness, Lady Thornton, could help me in one respect. I am not quite clear whether this amendment would return Monitor to the position it is in now—where we would continue with the two-tier system of foundation trusts and other trusts with a simple economic regulator for foundation trusts—and would rule out the rest of the new economic regulation functions. If it has that effect, it would seriously wreck the main purpose of the Bill. However, I may well be reading it incorrectly, so before I decide which way to go, I wonder whether the noble Baroness, Lady Thornton, could reassure me that that is not the purpose of the amendment.
My Lords, there is a clear purpose to Part 3. It is to strengthen sector regulation of healthcare in England by building and improving on Monitor’s existing role as the regulator of foundation trusts. It does that in three main ways. First, it makes clear that Monitor’s overriding duty would be to protect and promote patients’ interests. Secondly, it makes sector regulation more comprehensive by extending Monitor’s remit to all providers of NHS services. Thirdly, it makes sector regulation more effective in realising benefits for patients; for example, by monitoring the NHS Commissioning Board setting fairer prices for NHS services. Fair pricing is important for a whole host of reasons: to strengthen incentives for improvement, to enable better integration and to reduce the risk of cherry picking.
I shall deal with a simple point. Monitor will continue as the regulator of NHS foundation trusts. The Bill makes that crystal clear in Chapter 1. However, I am most grateful to my noble friend Lord Clement-Jones for highlighting the need for greater clarity on what intervention powers Monitor would have over foundation trusts on an enduring basis as against what would be transitional. I shall say more about that when we come to debate his amendments in a later group.
Before going on, let me address Amendment 167 from the noble Lord, Lord Hunt, on the specific issue of patients’ rights to refuse consent for treatment in the NHS. I can absolutely assure the noble Lord that these rights must be protected and nothing in the Bill would change that.
Returning to Part 3 and the role of Monitor, its overarching duty will be to promote economy, efficiency and effectiveness in the provision of healthcare while maintaining or improving quality for the benefit of patients. I underline those last words. This is the single overarching purpose for which Monitor would carry out all its functions, including its continuing functions under the NHS Act 2006 as the regulator of foundation trusts. Monitor’s overarching duty is clear, unequivocal and focused on improving outcomes for patients. I stress that point since as this is its guiding principle for resolving potential conflicts, there is no need to separate Monitor into two organisations, as the noble Baroness, Lady Thornton, proposes in her amendment. I suggest that she has raised an issue that in reality is not a substantive one.
Let me briefly address Monitor’s role in ensuring that where there is competition in the provision of healthcare it operates in the interests of patients. We will have an opportunity to consider this issue in more detail later. Decisions on whether and when to use competition will be a matter for clinical commissioners. As I have already said, there have always been private and voluntary providers in the NHS. Anyone who reads Part 3 will see that it does not create markets for NHS services, despite what some others have said. This is not the same Bill as that which was debated in the Committee of the House of Commons in March 2011. It has changed significantly as a result of amendments tabled by the coalition in response to the NHS Future Forum.
Lower prices may be determined for simpler procedures, but this matter is far more complicated than that. If a lot of the simpler procedures are creamed off, the public sector institution may not be viable, which the research again shows. It is not straightforward. People concerned with long-term and complex conditions fear that over time such a differential organisational and pricing structure could lead to a two-tier system.
My Lords, it is a concern that I understand. The destabilisation of the NHS will naturally be a concern to all commissioners, which is why they can protect that situation through the contract. They could insist through the contract that a provider provided the full range of services rather than a select few. I simply say to the noble Baroness that we are alive to that concern and I have no doubt that commissioners will be as time goes on.
On the amendment tabled by the noble Lord, Lord Warner, he will be disappointed to hear that I am not drawn to going any further than the Bill does, much as I understand that his idea is well-intentioned. I say that because of Monitor’s overarching duty to protect patients’ interests and prevent anti-competitive behaviour that would harm those interests. This amended duty reflects what the Future Forum recommended and it is right that we stick with that. I can, however, offer the noble Lord, Lord Warner, some reassurance. First, in carrying out its duty to address anti-competitive behaviour, Monitor will necessarily have to identify it. Secondly, Monitor would have the power under Chapter 2 of Part 3 to conduct market studies and to refer potential barriers to new entrants for further investigation by the competition authorities where necessary. I hope that that is of some comfort also to the noble Lord, Lord Adebowale.
We had a most constructive debate in Committee about the Secretary of State’s accountability for securing a comprehensive health service in England and his role in holding Monitor to account for its duties. I thank my noble friend Lady Williams for proposing an amendment which adds much to the Bill in this area. Clause 61 already requires Monitor to carry out its functions in a manner consistent with the Secretary of State’s performance of his duty to promote a comprehensive health service. My noble friend’s amendment would strengthen these provisions and thereby improve the Bill on a key issue. This would help to ensure that the Secretary of State can discharge effectively his responsibility for the health service in England and that Monitor carries out its functions to that end. I support my noble friend’s amendment.
Clause 64 specifies the range of matters that Monitor would be obliged to have regard to in carrying out its duties. In Committee, the noble Baroness, Lady Murphy, and my noble friend Lady Williams raised some concerns about that list. I agreed to reflect on these concerns and have tabled Amendments 168 to 171, which would rationalise the list and make it clear that maintaining patient safety would be the paramount consideration. I hope that the noble Baroness and my noble friend will be content with that rationalisation.
On the amendment tabled by noble friend Lady Cumberlege, the Bill ensures that patient and public involvement is embedded at every level of the healthcare system. However, unlike the NHS Commissioning Board and clinical commissioning groups, Monitor would not be responsible for securing NHS services to meet patients’ needs. It is a regulator, with economic and more technical functions. Clause 61 reflects this and gives Monitor the responsibility for determining arrangements for patient and public involvement as appropriate to its functions. So I am afraid that I do not regard my noble friend’s amendment as appropriate. She asked what could be done if Monitor did not involve patients in the right way. Well, the Secretary of State would hold Monitor to account as to how it discharged its functions. Monitor would have to report to the Secretary of State on how it was discharging its duty on patient and public involvement as part of its annual report. The Secretary of State could also request a specific report on how Monitor discharged this function and intervene where there had been a significant failure in meeting this duty. The Bill provides for HealthWatch to send advice to Monitor as it seems appropriate. Monitor would then be required to respond to this advice in writing. I hope that my noble friend will take comfort from those points.
I stress once again that the purpose of Part 3 is to strengthen sector regulation in healthcare to protect and promote patients’ interests. The current system is inadequate, fragmented and duplicative. It fails to protect the interests of all patients. Part 3 recognises that the NHS is not and never has been a single institution. The reality of the NHS is a comprehensive health service that has always been delivered by a diverse range of providers.
Part 3 would address gaps in the current system by extending equivalent safeguards to protect patients’ interests irrespective of who provides their NHS services. It would also make sector regulation in the NHS more effective in driving improvements and enabling integration during an absolutely crucial period of economic challenge.
I am very happy to support the amendments of my noble friend Lady Williams, which would improve the Bill, but I urge, following the reassurances and explanation that I have been able to give, other noble Lords not to press their amendments.
Before the Minister sits down, will he answer a straightforward question in relation to my amendment? Given that the Bill at page 88 states,
“functions with a view to preventing anti-competitive behaviour”,
and my amendment, which is not being accepted, states,
“functions with a view to preventing anti-collaborative behaviour”,
will the Minister confirm that that means that competition is trumping collaboration?
What instances are there of when collaboration has not resulted in improved patient outcomes? I have not been able to find any.
Nor have I, which is why I listed earlier some prime examples of collaboration. Clinical networks are a prime example of collaborative behaviour which is clearly in the interests of patients. The noble Baroness is asking me to think of examples in my head of collaborative behaviour in the NHS that does not advantage patients. I cannot think of any, which is why it would be hard for Monitor to find fault with collaboration where it has clearly been designed to improve patient care.
In response to that last remark, it depends on whether Monitor decides it is collusion or collaboration. That is the key point. We suggested that that was a problem right at the very beginning of the Bill—how you distinguish between collaboration and collusion and what you do about that. I do not think we are any closer to finding the answer.
I turn to remarks that were made during the course of this very useful if diverse debate. I want to take one moment to say something to the noble Baroness, Lady Williams, and her colleagues and to the noble Baroness, Lady Murphy, about the fact that they feel misrepresented in social and other media. Indeed, as politicians it goes with the territory that you may be misrepresented from time to time. I have the greatest respect and admiration for the noble Baroness, Lady Williams, and she knows herself that that is where you are when you are in politics.
However, the noble Baroness herself wrote in an article in the Guardian on 13 February about dropping the chapter on competition, and in a letter that the noble Baroness and her leader wrote to their own MPs and Peers, they set a high bar for how Part 3 of the Bill might be made safe. It is just and proper that everybody will be looking at the noble Baroness and her friends to see and test whether they have succeeded and met their own aspirations. At the moment, I think that that is open to question. I do not think that it has been achieved. I know that that might be painful, but that is the case.
We have had some thoughtful amendments and contributions. As usual, the noble Baroness, Lady Finlay, in her amendment and questions put her finger on a very important issue that the Bill needs to address even at this late stage. I had a great deal of sympathy with the amendment of the noble Baroness, Lady Cumberlege. I rather hoped that she would get a more positive response than she did and I am sorry about that.
In summing up after the previous debate, the Minister spoke about the service currently being fragmented and duplicative, and I would agree that it is. I am glad that the Government’s intention is to have a service where healthcare providers collaborate more than they do at the moment. I accept that there will be a range of providers, and I support having a wide range of providers to provide a spectrum of services. However, I do not understand—and have not understood from the answers—why anti-collaborative behaviour should not be up there as a general duty for Monitor with anti-competitive behaviour. Because of that, and because of all the discussion that we have had over integration and collaboration, I feel that it is a duty that I have to those who wish to collaborate in the NHS to test the opinion of the House, so that there is equal status between anti-competitive and anti-collaborative behaviour in the event of there being a conflict between the two.
I hoped that I had already made it clear to the noble Baroness that collaborative behaviour when it is in the interests of the patients—and I distinguish that from collusive behaviour, which is almost certainly not in the interests of patients—will be regarded by Monitor as trumping the need for competition to be deployed in services. I am not sure that I understand what the noble Baroness’s problem is in this area; she should be reassured by that.
I am grateful to the Minister for trying to clarify these matters, but my concern relates to anti-competitive and anti-collaborative being of at least equal status. I would prefer anti-collaborative to be on the face of the Bill. Is the Minister prepared to have a discussion with me after this debate to see whether we could insert some other wording to prevent both anti-collaborative and anti-competitive behaviour? In that way, even when a provider states that it intends to collaborate and that is put down clearly, if it is demonstrated as time goes on that the provider is not fulfilling that, Monitor will have the leverage to say that it was in open competition but the provider has not fulfilled the requirement to collaborate.
I am of course willing to hold discussions with the noble Baroness, but I remind her that we have explicitly provided for Monitor to use its licensing powers to support integration and co-operation when that is in the interests of patients. We were fully aware of that issue when drafting the Bill. Later amendments, which we will debate today, will strengthen the ability of Monitor even further.
I recognise that they will strengthen Monitor further and that they will come later, but my disappointment is that they are not in the core general duties that will override the way in which Monitor functions. They will come later on and in detail, and I can see that in the amendments that the Government have tabled. But my concern persists, and I wish to test the opinion of the House.
My Lords, I speak also to Amendments 182 and 183. There is one simple point to Clause 77: it is there to remove the current legal uncertainty and risk of double jeopardy for foundation trusts under the UK’s existing general merger controls. The OFT already has jurisdiction to review foundation trust mergers under the Enterprise Act, but there is legal uncertainty as to when that applies in individual cases. That creates the risk of double jeopardy for foundation trusts under current arrangements, as their mergers are also reviewed by the Co-operation and Competition Panel. Amendments 181 to 183 are minor and technical amendments which make it clear that Clause 77 applies to both completed and anticipated mergers. I will reserve my remarks on the other amendments in the group until I have heard the contributions of the noble Lords who are proposing them. Meanwhile, I beg to move.
My Lords, I shall speak to Amendment 184. In Committee, we debated the role of the OFT in merger policy and looking into mergers between foundation trusts. I tabled an amendment because it seemed to me at the time that the Enterprise Act was a relatively blunt instrument for the OFT to use to look at those mergers, compared to the usual way that it would look at the competitive effect or impact on competition of such a merger. The response of the noble Earl, Lord Howe, was extremely helpful in guiding us through the relevant provisions of the Enterprise Act—in particular, pointing out that the OFT has a duty under the Enterprise Act to look at relevant customer benefits.
The issue is that “customer” is not normally how we describe patients in the NHS and the way that the NHS operates is rather different from considering whether Dixons taking over Comet, for instance, will impact on the customer or the consumer. There is a difference. It seemed to me that the best way to handle the matter would be specifically to provide for Monitor to be inserted into the process so that it would give specific advice to the OFT on those matters. Although the definition is “relevant customer benefits”, its perspective would be on the impact on patients.
I appreciate the earlier amendments which the noble Earl has tabled, but this would add the extra dimension to Clause 77 which will enable the OFT and Monitor to have a really powerful role in the way that they oversee foundation trust mergers and, I think, settle some of the concerns which surround Clause 77 as drafted.
My Lords, the amendments are a good example of the thickets and undergrowth of the elaborate structures to deal with competition generally in the economy into which the health service is being drawn. I have no doubt that the noble Earl is right in describing the amendments as technical; the amendment of the noble Lord, Lord Clement-Jones, is also technical. It is not the worse for that, but this whole area ought to be removed from the Bill. Our Amendment 184A would remove Clause 77 altogether. Our view is that that elaborate machinery and the use of the Office of Fair Trading is not appropriate for mergers of foundation trusts. Having said that, we do not intend to divide the House; we simply deplore the fact that this machinery, somewhat refined by the amendments, is being cranked up to apply unnecessarily.
My Lords, as I said earlier, retaining Clause 77 would have several substantial benefits. The OFT already has jurisdiction to review foundation trust mergers under the Enterprise Act. The problem, as I said, is that there is legal uncertainty as to when that applies in individual cases. That creates the risk of double jeopardy for foundation trusts, as their mergers are also reviewed by the Co-operation and Competition Panel. There is also a problem of unnecessary duplication of specialist skills between the Co-operation and Competition Panel and the OFT which, incidentally, brings with it a cost to the UK taxpayer.
Retaining Clause 77 would avoid that duplication and eliminate the current legal uncertainty and risk of double jeopardy for foundation trusts. That would encompass mergers between two or more foundation trusts and acquisitions by a foundation trust of another foundation trust or a private business, such as UCLH’s acquisition of the London Heart Hospital under the previous Administration.
However, it is important for me to make it clear that the Bill would prevent any takeover of a foundation trust by a private company, contrary to what some commentators outside this House have suggested. Secondly, the OFT has a proven track record for light-touch, proportionate regulation of mergers and ensuring good value for public money. By contrast, under the system we inherited from the previous Government, the Co-operation and Competition Panel has reviewed several mergers of community services at considerable cost and delay to the NHS that would have been permitted automatically under the OFT’s materiality thresholds.
Finally, the approach provides better value for public money by avoiding duplication of specialist resources between the OFT and Monitor. Mergers are a specialist area. Given the variable frequency of mergers in the NHS, it would be a far better use of resources to consolidate the responsibility and expertise within the OFT, where they could also be put to good work for the benefit of the wider economy, rather than resourcing another public body at the taxpayer’s expense.
My Lords, perhaps I may begin by clarifying the role of the Competition Commission as set out in the Bill because I think that there have been a few misconceptions about this. The commission would not enforce the Competition Act in relation to healthcare services, nor would the commission’s role affect the applicability of competition law to the NHS, and the Bill would not give the Competition Commission direct powers over providers of NHS services.
Instead, the Bill would give the Competition Commission two narrow, specific roles in relation to NHS services. First, the commission would be the independent adjudicator where sufficient providers or, in some cases, commissioners objected to Monitor’s proposals for licence modifications or its methodologies to be used to calculate prices or levies for providers to ensure the continuity of essential services.
Secondly, the Bill currently provides that the commission would undertake reviews of the development of competition in the provision of NHS services and the way that Monitor was fulfilling its functions relating to the provision of such services. Where it concluded that something was or could be averse to the public interest, it could make non-binding recommendations to the Secretary of State, Monitor or the NHS Commissioning Board.
I am aware of a concern that this wording could imply that the review should focus the development of competition as an end in itself. That is absolutely not our intention. That is why commissioners will decide when competition and choice will be used, and indeed whether it will be used, as a means of improving services and enabling patients to have control of their care. To make that clear, we have tabled Amendment 185, which provides that the reviews relate to the effectiveness of competition in realising benefits for NHS patients, rather than the development of competition per se. I hope that noble Lords will agree that this wording provides clarity about the purpose of the reviews and is consistent with the principle that competition should not be pursued as an end in itself. I therefore beg to move Amendment 185.
My Lords, it would seem convenient, although it alters the groupings, to talk to my Amendments 186, 187 and 188 at this point.
In Committee—and I am very grateful to the noble Lords, Lord Turnberg and Lord Patel, for supporting these amendments—we flagged our general concern about the risks of EU competition law being applied across the board in the health service. One risk that we considered to be high was the involvement to such a great extent in the Bill of the Competition Commission and, in particular, its role in Clauses 78, 79 and 80, as well as its role in reviewing competition within the health service and the development of competition by Monitor.
On these Benches, we, along with Future Forum and following legal advice, believe that it is necessary and consistent to delete Clause 78, which provides for a review of the exercise of Monitor’s functions and, as I said, the development of competition in the NHS. Government Amendment 185 would of course change this to a review of the effectiveness of competition in the NHS in promoting the interests of those who use the NHS. Nevertheless, we have considerable concerns about the involvement of the Competition Commission. The commission occasionally has to apply non-commission principles in its investigations. It may need to consider, for example, whether media plurality would be undermined by a media merger. However, the commission members and staff are steeped in competition law principles and it is difficult to get them to attribute equal weight to non-competition objectives. The experience of those involved with the commission is that it tends to focus far more on the competition analysis and is often reluctant to accept that it might be required to endorse an outcome that may be suboptimal from a competition perspective in order better to promote other objectives.
Judgments about whether competition or co-operation best promote certain objectives, including health sector objectives, are not clear-cut. Which side of the line people come down on will depend on their standpoints and assumptions about the extent to which competition is helpful in general, as well as on their experience. Regular commission members tend to have a strong bias in favour of the benefits of competition, and that strengthens our view on the inappropriateness of the reviews by the Competition Commission. It is not necessary for there to be a review of this kind either of the NHS or of the operation of Monitor. Indeed, I would argue that its very presence in reviewing both the NHS and Monitor increases the risk of competition law applying more widely.
Following the Future Forum’s report, the purpose of Monitor is no longer primarily to promote competition. Clearly there is now explicit recognition of the overriding importance of the benefits to patients. This is the key determinant of which instrument—competition or integration—is appropriate in the operation of the health service.
I have not put down amendments to the more technical areas where there is Competition Commission involvement. It seems that in many cases that may well be relevant in terms of the tariff and so on. However, we on these Benches believe that Clauses 78, 79 and 80 are a throwback to pre-Future Forum days, and we therefore propose leaving them all out.
My Lords, I would like to comment on the three amendments in the name of the noble Lord, Lord Clement-Jones, and then speak to the two amendments that we have in this group. They say that imitation is the sincerest form of flattery, so I am very happy that the noble Lord saw fit to take three of the amendments that we tabled in Committee and to make them his own. Those are Amendments 186, 187 and 188. That is fine by us. I understand that the Minister will be very sympathetic to these amendments and might accept them, which is probably just as well, as I would hate to embarrass the Liberal Democrat Benches any further by having votes on amendments that they have tabled and speak to but then do not support.
These three amendments would stop a review from happening. I know that the noble Lord, Lord Clement-Jones, and his colleagues need to tell us that they have won a great victory by getting the Government to concede on these amendments. Far be it from me to intrude on the coalition parties’ love-in, so to speak. When we tabled these amendments in Committee they were part of an overall, comprehensive change to Part 3 of the Bill. In many ways these amendments were part of the tidying up of our suite of amendments to effect radical change to and improvement of Part 3. We certainly support these amendments.
I turn to Amendments 196A and 196B, which stand in my name and that of my noble friend. We do not understand why the noble Lord, Lord Clement-Jones, did not also table those amendments as he is going to be very successful in having his amendments agreed to. In fact we think that there is no need to have any mention of the Competition Commission in the Bill. For the sake of completeness, we would have preferred those amendments to be included. Perhaps I may implore the Minister to accept them as well.
My Lords, Amendments 196A and 196B, tabled by the noble Baroness, Lady Thornton, would remove the provision for adjudication if a significant proportion of those affected object to proposals by Monitor for methodologies to be used to calculate prices of levies to ensure the continuity of the central services or proposed licence modifications.
I am clear that we must have a process for adjudicating on Monitor’s proposals if a sufficient number of those who will be affected by them object; otherwise, in these circumstances, either Monitor would have no way of proceeding with disputed proposals or those affected would have no other way of disputing proposals other than by judicial review. Either way that would be unacceptable and could result in significant harm to patients, for example if a licence condition that Monitor proposed related to securing essential NHS services. For pricing methodologies, for example, the amendments would mean that Monitor could go ahead with its proposals even if sufficient numbers of those affected objected. The only way that providers, in the case of pricing commissioners, would be able to ensure that their concerns were taken into account would again be through judicial review. We need to ensure a fair and transparent system of pricing, securing competition on quality and not price, and removing incentives for providers to cherry-pick the services that they deliver or the patients whom they treat.
I am therefore clear that we should have a process for adjudication. I am also clear that the Competition Commission should undertake that role. It has other adjudication roles. The commission has experience of working across a range of sectors, on the basis that it does not necessarily have the knowledge which it needs about those sectors in-house. It would be free from political intervention in making these judgments. It is well respected by other regulators across the economy, for which it performs a similar role. In our earlier debates, some noble Lords expressed concern that there should be appropriate checks and balances on Monitor’s powers. The provision for adjudication by the Competition Commission creates one such check and balance. These amendments would remove it. For those reasons, I oppose Amendments 196A and 196B, and I hope that on reflection the noble Baroness, Lady Thornton, will withdraw them.
I turn to the Competition Commission’s role in reviewing how competition is benefiting patients in the NHS. After briefing myself, I came to the conclusion that the reviews will bring considerable benefit to the NHS because they will help us understand further what effect competition has on NHS services for patients. They will also increase Monitor’s accountability because they will consider how Monitor is discharging its functions. The commission will be well placed to conduct them because it is an independent body with a long history of performing such reviews across the economy. It is the body where the expert technical knowledge needed to perform this function already resides, and it understands and reviews how markets and regulation work in the best interests of people. That was why the provision was put in the Bill.
However, I listened to the points made this evening by my noble friends Lord Clement-Jones and Lord Newton. On earlier occasions my noble friend Lord Clement-Jones was quite vocal in expressing his views to me on this subject. I have some sympathy with the argument that prescribing reviews every seven years, as the Bill stipulates, may place too great an emphasis on competition. Greater flexibility about the timing and specification of reviews may be helpful. Therefore, I am clear that such reviews of competition in the NHS, when they happen, should focus on benefits to patients. On the basis that prescribed seven-year reviews may place too great an emphasis on competition in the NHS, and given the role of the Competition Commission, if it is the view of the House that Clauses 78, 79 and 80 should be removed from the Bill, I will not oppose Amendments 186, 187 and 188.
I turn briefly to the issues raised by the noble Baroness, Lady Hollins, on procurement in Surrey. The issue was raised earlier by the noble Lord, Lord Adebowale. I agree with her and with the noble Lord that social enterprises can and do play an important role in providing innovative, high-quality services, often to very vulnerable people. Turning Point is an excellent example. The key aim of our reforms is that patients should be treated by the best providers; that bureaucratic procurement practices should not frustrate this; and that it should be quality that counts. We will take all this into account when framing the commissioner procurement regulations.
On the example quoted by the noble Baroness, I understand that the requirement for the £10 million performance bond to which she referred was subsequently withdrawn and therefore played no role in the decision to appoint a preferred bidder. However, I will write to her with further details on this.
My Lords, I beg to move Amendment 190 and speak to Amendments 193, 194, 195, 299 and 300. We have tabled Amendments 190, 299 and 300 to comply with the Delegated Powers and Regulatory Reform Committee’s recommendations. These sought to ensure that key elements of the licensing arrangements are subject to appropriate levels of parliamentary scrutiny.
In line with that, Amendments 190 and 300 provide that the Secretary of State’s approval of Monitor’s licensing criteria will always be made by order, and the first such order must be subject to the affirmative procedure. Subsequent orders, in the event of Monitor wishing to revise the criteria, would be subject to the negative procedure. Similarly, Amendment 299 provides for the first set of exemption regulations made by the Secretary of State under Clause 84 to be subject to the affirmative procedure.
I turn now to Amendments 193, 194 and 195, which deal with the hugely important issue of integration of services. There is a clear consensus around the importance of having further integration and more services joined up around patients’ needs. The Bill seeks to encourage and enable the delivery of integrated services.
All NHS bodies and private and third-sector providers supplying NHS services are required by the Health Act 2009 to take account of the NHS constitution in their decisions and actions. This includes the principle that the NHS works across organisational boundaries and in partnership with other organisations in the interests of patients, local communities and the wider population. The Bill takes this further by making it clear that in exercising any of their functions, commissioners must act with a view to securing continuous improvement in outcomes, including effectiveness, safety and quality of patient experience. Commissioners must also exercise their functions with a view to securing that health services are provided in an integrated way, where this would improve the quality of those services, including outcomes, and/or reduce inequalities in relation to access to services and outcomes. The intention is, therefore, that it would be for commissioners to drive integration and co-operation between providers in the light of local circumstances and needs, and to enforce this through legally binding contracts.
Monitor would have an important role to play in supporting commissioners by enabling integration of services. That is why Clause 61 expressly requires Monitor to exercise its functions with a view to enabling integration. Nevertheless, in Committee the House raised further concerns around the extent of Monitor’s role in enabling integration and co-operation. We listened carefully to those concerns, and ultimately agreed that there was more that we could do.
We have tabled Amendments 193, 194 and 195 in order to establish express power for Monitor to set and enforce licence conditions for the purposes of enabling integration, and enabling co-operation between healthcare providers where it would improve the quality or efficiency of NHS healthcare services, or reduce inequalities. Licence conditions could therefore be used to support commissioners in promoting integration and co-operation. This would also allow for licence conditions to fully cover the relevant principles and rules of the current Principles and Rules for Competition and Co-operation.
My Lords, I thank my noble friend Lord Howe for putting forward these amendments, particularly Amendment 193, to which I have added my name. In Committee, we were concerned that the powers of Monitor did not reflect the general spirit of the way in which the Future Forum report talked about the mixture of competition and integration. Although the objectives of Monitor at the beginning of Part 3 were changed to reflect the Future Forum report, some of the back end of Part 3 was not changed to reflect that. These significant amendments, particularly Amendment 193, rebalance the Bill and makes sure that it genuinely reflects the intentions of Future Forum. I am very grateful to my noble friend for putting down these amendments.
My Lords, this has been an interesting debate and I thank in particular the noble Lords, Lord Patel and Lord Warner, and my noble friend Lady Cumberlege for tabling Amendment 191 and for giving me the opportunity to explain the Government’s thinking on the important issue of patient and public involvement in Monitor’s work. We are very clear that patients must lie at the centre of the reformed NHS and that the Bill establishes mechanisms to ensure that that is the case. Health and well-being boards are part of those arrangements and HealthWatch will have a vital role in giving patients and the public a real voice throughout the NHS. I can therefore understand the intent of Amendment 191—and I wish that I could accept it. However, I am sorry to say that in practical terms it is not workable and I will explain why.
The list in Clause 95(8) relates to consultation but this is expected to take place before bodies such as HealthWatch and health and well-being boards are formally established. In other words, Amendment 191 would impose a statutory requirement with which Monitor could not possibly comply. The list at subsection (8) deliberately includes only those bodies that will be in existence at the expected time of the consultation.
I can nevertheless offer the noble Lord and the House firm reassurances on this issue. First, Clause 95(8)(e) gives Monitor powers to include in the consultation “such other persons” as it “considers appropriate”. Clause 61(7) places a general duty on Monitor to secure the involvement of patients and the public in decisions on the exercise of its functions, and we would firmly expect Monitor to use those powers to involve patients and the public fully in the consultation. Secondly, Clause 95(11) would require Monitor to consult with HealthWatch England, with the NHS Commissioning Board and with every clinical commissioning group in the event that the consultation takes place later than currently expected and after these bodies have been established. I hope that I have been able to reassure the House that Amendment 191 is not only unnecessary, but would actually put Monitor in an extremely difficult position, and that the noble Lord, Lord Patel, will feel able to withdraw the amendment.
I turn now to Amendment 196, tabled by the noble Baroness, Lady Finlay. The amendment raises an important issue, that of making sure that patients receive the compensation to which they are entitled in the unfortunate event that they are harmed as a result of clinical negligence. The Government agree that there must be equivalent safeguards in place for patients irrespective of who provides their NHS services. Currently the NHS contract which providers must hold to deliver services requires adequate and sufficient indemnity arrangements to be in place. In addition, to ensure equivalent protection for the future, the Government’s preference is to enable all providers of NHS services access to the clinical negligence scheme for trusts. That would mean that all providers of NHS services would have access to the same level of protection for patients, whether those providers were private, voluntary or public sector. The department has asked the NHS Litigation Authority for advice on the options for modifying the scheme and expects that new arrangements would be in place for the next round of NHS contracts in April 2013.
I hope, therefore, that the noble Baroness will appreciate that I strongly agree with the spirit of her amendment. Nevertheless, I must set out my concerns around its potential effect, if she is thinking of pressing it. First, the amendment could be implemented by employing organisations requiring indemnity from their own staff. Employees would then have to obtain their own personal indemnity. However, I do not believe it would be right to transfer this burden to staff or that employees would support it. Further, I do not believe it would be cost-effective. My second concern is about potential unintended consequences. Currently the Limitation Act 1990 limits the time available that personal injury claimants have to bring their claim. The overwhelming majority of claimants have three years to make their claim under the terms of that Act. Requiring all providers to hold indemnity for the lifetime of all patients, potentially much longer than a patient’s legal entitlement to make a claim, would be disproportionate and incur significant costs. Overall, the effect of such a wide-reaching clause would be to divert resource unnecessarily away from patient care. I am sure that that is not what the noble Baroness would ever seek to do and I do not believe that it is in the interests of patients or the NHS. I hope that on reflection and in the light of my assurances about what we are planning, the noble Baroness will feel able not to press her amendment.
The noble Baroness also referred to her Amendment 192, which I think we debated in a previous group. The Government have listened to concerns on education and training raised by her and other noble Lords and we have brought forward amendments to require the board and CCGs to have regard to the need to promote education and training when exercising their functions. Further, the Bill requires Monitor in Clause 64(j) to have regard to,
“the need for high standards in the education and training of health care professionals”,
when exercising its functions. I suggest to the noble Baroness that Amendment 192 is not required.
At this juncture, it might be worth quickly reminding the House that all providers of NHS services will be licensed by Monitor. The Royal College of Physicians has sought reassurances on how patient choice of any qualified provider would work. Even though the choice of any qualified provider is not in the Bill, I am happy to confirm that providers would always be required to comply with national quality standards. Under our reforms, providers above a minimum size would be expected to take part in the provision of education and training, and to work within agreed local care pathways to ensure safe and joined-up care. I hope that that is a reassurance not only to the Royal College of Physicians but to other noble Lords.
I am grateful to the Minister for his reply on indemnity. Would the risk pool apply to the provider rather than be linked to the individual patient? If there is an acute problem, some hospices will accept referrals directly from patients and their families rather than waiting for a GP necessarily to refer them. Those patients are all being treated in the voluntary sector; they are not paying; they are all being treated the same; and they have been under NHS providers for other parts of their treatment. The Minister may not be able to answer my question now, but I flag up such a situation as a potential that will need to be covered off in providing. However, I am sure that what he has said tonight will be warmly welcomed by the voluntary sector, which provides an important and, in many places, essential clinical service—which, I venture to suggest, hospices do par excellence. Their ability to meet patient and family need at great speed has allowed them to be recognised as being so important.
My Lords, I understand the noble Baroness’s question. It might be best if I wrote to her because the circumstances that she posits are such as to make it important that I do not get it wrong if I give her an answer now. As she knows, the broad answer to her question is that our aim is for all NHS-funded care to be covered. She has raised a particular set of circumstances on which I shall have to take advice, if she will allow.
As I hope will be clear, the Government’s proposals are for a fair, transparent and comprehensive framework that protects patients and taxpayers’ interests by securing continued access to services through early intervention to prevent failure wherever possible and effective arrangements to secure continuity of NHS services should a provider become unsustainable.
The Bill builds on and improves existing arrangements by putting commissioners in the lead for shaping services for patients and providing a clear role for Monitor in supporting commissioners. It will ensure that change happens when the status quo is unsustainable, and there will be sufficient funding to support this. The Bill goes further and addresses the gaps in existing legislation, such the lack of protections for patients whose NHS core is delivered by social enterprises and other independent providers. The Bill gives Monitor a comprehensive range of powers to intervene proactively to support reorganisation and prevent failure to maintain service continuity.
I turn to Amendments 196ZA and 214G. I am grateful to the noble Lord, Lord Warner, for his patience in working with the Government on this issue. I see that the noble Lord, albeit with a tiny bit of help, has really got to the core of our proposals for ensuring the continuity of services for patients by clarifying a role for Monitor, which is to support commissioners and provide them with information that they need to take the right decisions about services in the best interests of patients. The key aspect of the noble Lord’s amendments is that they reinforce the fact that commissioners remain in the lead for responding to risks to services and, in partnership with providers and other local stakeholders, for engaging on service change to reduce those risks. That is why I am pleased to accept these amendments, which also reflect the King’s Fund recommendation on how the Bill could be improved to support vital service reconfiguration.
However, it is not always possible or desirable to prevent provider failure at all costs. As a last resort, when a provider becomes unsustainable—and I emphasise that that will be only when all other interventions have been exhausted or may not be in patients’ best interests—a continuity of services administrator may be appointed to protect patients’ interests and secure NHS services in line with requirements determined by commissioners. For the first time, there will be similar protection for patients who rely on essential NHS services regardless of who the provider might be. The existing legal framework has no such protection for patients who rely on NHS services provided by independent providers, including the social enterprises established by the previous Government when the noble Baroness, Lady Thornton, was Health Minister. I am sure noble Lords would agree that if a social enterprise delivering essential community palliative care became unsustainable, then surely its patients should receive protections that would secure the continuity of that service, as do patients of the foundation trust.
The reality of the NHS is that it is a comprehensive health service delivered by a diverse range of providers. Part 3 recognises that reality and will protect patients’ access to that comprehensive service. I cannot agree with the noble Lord, Lord Beecham, as his amendments would remove this type of protection for patients. Fundamental to our aim of protecting patients’ access to a comprehensive health service is the need to ensure that sufficient funding is set aside for when things go wrong. The King’s Fund and others have said that they support the establishment of a transparent funding mechanism for securing essential services when providers go into administration. When the noble Baroness was a Health Minister, her Government presided over a period of sustained growth in the economy, but sadly that is no longer the case. Despite economic challenges, the coalition has continued to increase NHS funding above the rate of inflation, but we need to be prudent to be able to guarantee that funding will be available to protect patients when any provider of essential services gets into difficulty. The problem with the noble Lord’s amendment is that it would put that at risk.
That funding is essential because we simply cannot be sure otherwise that sufficient funding would be available centrally, particularly when the Treasury will face competing demands on any surplus funds held centrally by Whitehall departments. A further benefit of our approach is that the funding will be built up from commissioners and providers, including private providers, based on a transparent methodology and in proportion to risk. That will strengthen financial incentives for providers and commissioners to manage risks effectively and help to end the culture of back-room bailouts.
I hope that the arguments that I have put forward demonstrate how Part 3 will strengthen the protection of patients’ interests. Once again, I thank the noble Lord, Lord Warner, for his amendments, which will improve the Bill and undoubtedly benefit patients. I hope that noble Lords will join me in my support for them, and I ask the noble Lord, Lord Beecham, to withdraw his amendment, as he has indicated he will.
My Lords, I shall speak also to government Amendments 197A, 197B, 197C, 198A, 198B, 199A, 199B, 200A, 300ZA and 300ZB.
Monitor will continue as the regulator of NHS foundation trusts, as I have said. We had always intended this to be the case and I welcome the opportunity to clarify our position. Monitor will regulate foundation trusts through a new licensing regime, which it will administer jointly with the Care Quality Commission. This will help to strengthen collaboration between the two regulators. It will license foundation trusts to provide NHS services, as it would license anyone else who wished to do so, to ensure that NHS services are protected as financially sustainable and of high clinical quality.
Part 3 anticipates that Monitor will set differential licence conditions for foundation trusts to reflect their unique status and governance structures. Monitor would have power to intervene and direct foundation trusts to take action to ensure compliance with licence conditions. This would include the power to enforce requirements on foundation trusts to maintain continuity of NHS services and protect essential NHS assets, consistent with its principal purpose, as defined in statute. Those powers are set out in Clause 105. I emphasise that these enforcement powers would not be transitional.
However, I recognise that this was not as clear in the Bill as it could have been. I am grateful to noble Lords, particularly my noble friends Lord Clement-Jones, Lord Marks, Lady Barker and Lady Tyler, for their work in highlighting this issue. I have tabled four amendments to Clause 111—Amendments 196C, 197A, 197B and 197C—which clarify the position. These enduring powers would enable Monitor to require a foundation trust to remove directors or governors in exceptional circumstances as a form of remedial action, where it considered this necessary. This would be appropriate only in the case of a very serious breach of licence conditions.
In addition, for a transitional period until at least 2016, Monitor would retain express powers to fire or suspend foundation trust directors and governors directly. As now, this power could be used only where a foundation trust had failed to comply with a notice from Monitor to remove or suspend individuals itself. These powers are for use when a foundation trust is at risk of breaching its licence conditions to provide NHS services because of a failure of governance. This is more likely in the early years of a trust’s existence, when its governors are all new to the role and are building up their capability to hold its directors to account. That is why the powers consist of those to fire or suspend directors and governors.
I understand the concerns of noble Lords to ensure that this additional power remains available for as long as Parliament considers necessary, while we work with Monitor, the Foundation Trust Network and others to support governors to develop their capability in holding their boards to account. Therefore, I have tabled five amendments—Amendments 198A, 198B, 199A, 199B and 200A—which provide for Monitor to retain this power unless and until the Secretary of State makes an order to withdraw it, either for all foundation trusts or individual trusts. I beg to move.
My Lords, I want to speak to my amendments, to express my thanks to the Minister for the amendments that he has tabled, and to give a little rationale for why we were concerned but are now satisfied by the Minister’s amendments. On these Benches we were very concerned about the deregulation of foundation trusts in 2016. We believed that putting foundation trusts on the same footing as all other provider licensees was not only dangerous because of the risk of wider application of competition principles, but undesirable since district general hospitals—essentially foundation trusts—are the core of public provision in the health service. They are public assets, funded either conventionally by the Government or by PFI. Sadly, many of us argued at the time that PFI would be an expensive and inflexible method of financing healthcare infrastructure. Nevertheless, district general hospitals are an essential part of the NHS.
Therefore, we proposed amendments that removed Clauses 111 to 114 and retained Monitor’s special powers over foundation trusts unless terminated by the Secretary of State with the authority of an affirmative resolution of both Houses of Parliament. We were not saying “never” but the Secretary of State, after some years of the new structure, clearly needs to satisfy Parliament as to why particular foundation trusts no longer need to be subject to regulation by Monitor in this way. It may be possible to make the case for the deregulation of foundation trusts in the future, but currently the assumption should be that foundation trusts will be treated differently from other providers in regulation—not just in the transition period but in the medium term—so that Monitor will have the right to appoint and dismiss directors and governors in that period.
To that end, we very much welcome the amendments tabled by the Minister to meet our concerns. Our amendments talk of an order passed by the affirmative process and the Government’s by the negative process but I do not want that to stand between us. The Minister has gone a very long way to meet our concerns, for which I am extremely grateful, as are all my colleagues on these Benches.
My Lords, I have added my name to four of the amendments in this group and I am wholly content that the Government have addressed them satisfactorily.
My Lords, the noble Lord, Lord Warner, has said more or less what I was going to say. It seems to me that if you remove price setting from the regulator of healthcare, you do not have an economic regulator. From my experience of watching prices and types of funding formula go up and down over the past 20 or 30 years, it is crucial and admirable to remove it into a system that can be independent and transparent.
As the noble Lord, Lord Warner, says, after the Future Forum amendments, we have a system now whereby the shape of the tariff and the bundling systems, if you like, which will enable the sort of integration and co-ordinated care to be effective, will be firmly with the national Commissioning Board, and Monitor will respond to those design structures. I think that working together will be very healthy indeed. I do not underestimate the difficulties of getting it right; it is an ongoing developmental programme. Nevertheless, I think it is a good way forward. I do not like the idea of removing the price setting from Monitor.
I will briefly say that I am quite attracted to the amendment of the noble Lord, Lord Davies. One cannot not be if one wants value for money. I remember seeing the noble Lord’s face when he first realised that there was going to be no competition on price, and having a good deal of sympathy for where he was coming from. However, the matter is one of transition, and of when the public will feel confident that the way that the Bill intends to introduce competition on the basis of competitive tender will improve quality.
I worry about the response that the media could make to a significant change of this kind, even though I agree with the noble Lord that some services—as the noble Lord, Lord Warner, said—are overpriced and that there are opportunities for driving down these prices. That may come through the way that the national Commissioning Board and the regulator together set prices. After all, the price of a tariff will be a moving thing; it will be negotiated; it will change over time; and we will be able to address areas where there is obvious overpricing. I am attracted to the amendment of the noble Lord, Lord Davies, and it may be that eventually we will need to introduce something of the sort. However, I would be nervous of doing it at the moment in this form, even though it seems quite sensible.
My Lords, the case for regulating prices for NHS services is strong. Many academics agree that competition should be on quality and not price and that this will increase the standard and quality of healthcare services and protect patients’ and taxpayers’ interests. This requires prices to be fixed. Therefore, it is vital that there is an effective system of price regulation that can deliver these improvements and help sustain a universal and comprehensive NHS, free at the point of use. However, a number of problems with the current system have been identified, including by the previous Administration, which mean that it is not as effective as it could be.
In particular, I will mention two things. First, prices are subject to potential political interference. This means that providers are more risk averse. That inhibits investment and innovation in the sector. As the noble Lord, Lord Warner, said, the methodology for setting prices is not transparent. This makes the system unpredictable—again, inhibiting investment and innovation. Secondly, prices can be inaccurate and may not always reflect best practice models of clinical service delivery. This may result in cherry picking and may hinder providers from expanding and improving quality. Therefore, the case for change is clear and compelling. The Government’s vision is for an independent, fair and transparent system of NHS price regulation that reflects best practice and extends the scope of the tariff when it is in the interests of patients; that ensures that competition is based on quality and choice, and not on price; and that addresses the problems of cherry picking. To deliver this vision, prices will continue to be regulated through a national tariff. This will build on and improve the system of payment by results—which the previous Government said that they would improve but failed to do so.
Perhaps it would be helpful for me to explain in a bit more detail how the Bill will support this vision. In other healthcare systems around the world—for example, in the Netherlands—Governments have delegated price setting to independent organisations. The noble Lord, Lord Warner, cited another example: that of Germany. Such bodies create a transparent and stable environment for pricing.
Before we get on to the important matter raised by my noble friend of who is going to fix the tariff, if there is a tariff, and the issues raised by my amendment, will the Minister agree to meet privately me and, I hope, my noble friend Lord Warner—there has been no collusion between us but I hope he will come to that meeting—to discuss in greater detail the technical but important matter of the circumstances in which it is right to accept a lower price bid in the National Health Service?
I will be happy to meet the noble Lord to talk about that.
I was talking about the example of the Netherlands and Germany and was about to make the point that bodies of that kind can create a transparent and stable environment for pricing outside the influence of politics so that providers have confidence to invest and regulators can develop strong technical skills in setting prices at efficient levels. The Bill proposes that independent statutory bodies—Monitor and the NHS Commissioning Board—would collaborate to regulate prices. This will give commissioners a key role in price setting, whereas the opposition amendments would prevent this and would return control to Whitehall.
Monitor would publish national tariff prices based on a methodology subject to consultation where providers and commissioners could trigger an independent adjudication to ensure transparency and fairness. I am clear that we must have, as I said earlier, a process for adjudicating on Monitor’s methodology. Otherwise Monitor could just go ahead with its proposals, even if there were a whole lot of people affected by the proposals who objected and the only way that they could see those objections through to a conclusion would be through judicial review. The government amendments in this group ensure that the appropriate providers could trigger independent adjudication.
I am also clear that the Competition Commission should undertake this role. As I said earlier, it would be free from political intervention in making these judgments and is well respected as an organisation across the economy for the role it performs. The opposition amendments would prevent any of these benefits being realised. A key priority for improving the system is to expand its coverage so that more and more services are brought within scope. The previous Government failed to do this in line with their own published timetables, for example, regarding mental health services. The Bill would place duties on Monitor and the NHS Commissioning Board to secure the standardisation of service specifications to support the foundation of a comprehensive tariff system. This will make reconfiguration of services and integration across administrative boundaries easier.
To put matters beyond doubt, the national tariff would be a fixed price, with any competition based on quality and choice, not price. We listened to representations made to us about this, and we amended the Bill to make clear that the tariff would not be based on a maximum price. Of course I understand the points made very ably, if I may say so, by the noble Lord, Lord Davies, and the noble Baroness, Lady Murphy. We all want to see best value for money for taxpayers in the way that services are provided, but our judgment was that, for reasons that I will elaborate on, that is not the right way to go. Where services were not covered under the national tariff, there would be rules to govern those prices locally. Prices and rules within the national tariff would be legally binding and independently enforceable by Monitor to eradicate any abuses. Tariff prices could not be varied for different providers according to their ownership status. That would prevent future Governments paying inflated high prices to private providers.
I shall elaborate a little on what I said in answer to the noble Lord, Lord Davies. The purpose of the tariff is to ensure that providers are reimbursed fairly for the services they provide and to allow competition to be based on quality and not price, as I mentioned. When a maximum price was suggested, the fear was that there would be a drive to the bottom on prices, thus jeopardising the quality of care. The evidence from the UK and internationally suggests that quality-based competition with fixed prices can be very beneficial in producing higher quality care—that evidence is reported by the Office of Health Economics—whereas evidence from the USA sounds a note of caution that the wrong kind of competition based on price can lead to a race to the bottom on quality. Our judgment was that we should stick with our position that the tariff will not be a maximum price.
Finally, the Bill addresses the problem of cherry picking, which I am afraid was a problem that the previous Government did not grip. It places a duty on Monitor and the NHS Commissioning Board when setting prices to consider the range of services provided by different providers and the differing needs of the patients treated. As the Royal College of Psychiatrists noted:
“We are particularly glad to note the Government’s moves to prevent the cherry-picking of services and hope that the safeguards are a success”.
The Opposition’s amendments would actually delete these important provisions from the Bill, thus not addressing the concerns expressed by clinicians up and down the country.
To conclude, the status quo is not an option. The Bill strengthens the current system and meets the concerns raised by clinicians and others. I ask noble Lords not to press their amendments which would fail to address the current fundamental problems and would deny patients and taxpayers the benefits of an independent, fair and transparent system. Finally, I hope the House will accept the minor and technical amendments in my name in this group when I come to move them.
My Lords, the Minister has explained this very clearly. We part company about the transparency, clarity and accountability. I resist the temptation at this time of night to start asking questions of the Minister about this matter, but I fear that it is going to take a very long time to sort this one out. One of the reasons why my own Government had not completed this task is that it is fiendishly difficult and fiendishly complex. I fear that this Bill is not going to make it any less fiendishly difficult and fiendishly complex, but it also might make the whole process a lot less accountable.
This was in fact the final group of amendments that we had put down in our suite of amendments to reform the whole of Part 3 in Committee. The noble Baroness, Lady Murphy, is quite right. If you give the responsibility and accountability for the tariff to the Secretary of State, you undermine the role of the economic regulator. Yes, that was the point of this amendment in the very first place. She got it in one—well done.
At this time of night, it is probably best if we do not delay proceedings. I beg leave to withdraw the amendment.