Health Care Services (Provider Selection Regime) Regulations 2023

Debate between Lord Allan of Hallam and Lord Hunt of Kings Heath

Monday 27th November 2023 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, like the noble Lord, Lord Stevens, I very much welcome these regulations. As he put it—in a very kind way—in essence they withdraw the wretched health Act 2012, which enforced competitive tendering on clinical services and, as the noble Lord said, was not only bureaucratic and costly but got in the way of integration and collaboration. Of course, the Explanatory Notes that go with this SI are very explicit in saying so. I noticed, though, that the Minister failed to mention the 2012 Act. In fact, the Explanatory Memorandum was just the thing my noble friend Lady Thornton used at the Dispatch Box as we sought to scrutinise the wretched 2012 Bill, which cost so much money and staff time and achieved so little.

I want to pick up one or two points that the noble Lord, Lord Stevens, raised. The first is to acknowledge that there is a huge challenge for the procurement profession. I remind the House that I am patron of the Health Care Supply Association. I understand that the provider selection regime regulations come into effect in January, but these are ahead of the procurement regulations which come into effect in October next year. It is important that the Minister mentioned the guidance and I am very glad he mentioned the work that will be done by NHS England in supporting the service implement these regulations. However, I say to him that if you are trying to work out the relationship between the 2022 health Act, the 2023 Procurement Act, these regulations and the forthcoming procurement regulations, to a procurement manager sitting in an NHS trust this can be rather complex. The more help and guidance that can be given to those professionals, the better.

The Minister may well be aware that at the same time as procurement teams have been asked to implement this big change, they are having to generate short-term savings to meet the financial pressures in-year at the moment and actually cut their department operating costs. It is a short-term saving that may have long-term consequences, particularly as investing in procurement for the long-term value we wish to see enhanced in the health service makes economic sense. I point out to the Minister the recent announcement by NHS England that it is investing £600,000 in new commercial roles to unlock £1.5 billion of savings. That is very welcome, but we should be investing similarly in local and regional procurement teams as well. It is also important that the analysis behind the £1.5 billion savings is made available in order to guide the procurement function in the areas they need to be focusing on.

What is being done to support the skills, training and development of the NHS procurement and supply chain people? Will we invest in learning and development through organisations such as the HCSA and the NHS Skills Development Network to support upskilling and developing their functions? I commend the strategic framework for NHS Commercial, published only in September, and support the establishment of academies of commercial excellence—these are good initiatives—but you also need to support the people on the ground to do the job most effectively.

The noble Lord, Lord Stevens, said that there is a good balance in the regulations, because, while we want to get rid of the bureaucracy of automatic competitive tendering, as there is clearly no point doing it, we do not want to lose the opportunity of inviting innovative companies to play a part in the health service in the future. There is an issue around conflict of interest in the new structures. He will be aware that, around the table at integrated care boards, the chief executives of the local trust will often be in membership. In these regulations, and more generally, there are rules about how you mitigate that in a competitive process, but the decisions that ICBs make will sometimes be not to go down a competitive process at all—decisions, as I understand it, that those trust CEOs can be part of. I have had a briefing from Specsavers, which says that there surely needs to be some kind of requirement for ICBs, particularly for community services, to consider proposals from non-commercial providers who can demonstrate that they can improve value, quality of care and clinical outcomes. It is there that the conflict of interest issue arises.

How will value-based procurement be driven forward? In the draft PSR statutory guidance, “value” and “social value” are two of the national criteria for procuring health services. As I understand it, value-based procurement is about looking at which product is not only cheapest per item but best for patient outcomes, quality of life and avoiding relapses or unintended side-effects. I have been championing value-based procurement because in the long term it provides better value for money and better quality of what is being procured. The Minister has kindly agreed to meet me—I am grateful for that—but a statement from the Government on the importance of value-based procurement would be helpful.

Finally, I will ask the Minister about health technology. How far does he think these regulations support our vital health technology sector? I have been in discussions with ABHI about the potential that health tech offers the UK—it is fast—but there are worries that, in the new world, there are issues limiting the ability of many of these companies to be competitive, some of which are clearly to do with regulatory uncertainty. He will know of the issues with the MHRA’s performance. I pay tribute to the MHRA, but there is no doubt that it has resource issues—both money and staff—when getting things approved where they need to be approved. Coming back to Brexit, surely one of the advantages of having an independent regulator is that we can be seen as a place that, for medicines or medical devices technology, has a first-rate regulator that takes these processes through as quickly as possible. The problem, as he will know, is that there has been a blockage inhibiting innovative companies, so we really need to do something about it.

Overall, I warmly welcome the regulations. I thought that the Minister could have acknowledged a little more the failings of the 2012 Act, but we will pass on that. I certainly very much support the general thrust, but the procurement function in the health service needs every support it can get in understanding the new architecture and implementing it fully.

[Lord Allan of Hallam (LD)]

My Lords, this is an altogether weightier statutory instrument than the previous one we discussed, running to many pages and with lots of interesting new acronyms. The noble Lords, Lord Stevens and Lord Hunt, have set out effectively the case for why the changes are necessary, in a kind of Birmingham pincer movement as I stand here in the middle. I also have ringing in my ears the comments of the noble Baroness, Lady Merron, on the previous statutory instrument, when she talked about a particular instance where procurement went wrong. We need to have that in mind.

It is worth putting a marker down now on the potential impact. We are talking about many billions of pounds of expenditure; how many billions is an interesting question that we will come to in a minute. The potential benefits are hundreds of millions of pounds of savings, as the noble Lord, Lord Stevens, pointed out, but we must acknowledge that there is a potential downside risk, which could be millions in fraud and legal fees. It is worth spending a moment as we debate the instrument to make sure that everything is being done to ensure that we get the upside but minimise the downside.

My first question is around the integrated care board members and conflicts of interest—something that was raised by the noble Lord, Lord Hunt—particularly where they are not in a competitive tender situation, where we are talking about direct awards and most suitable providers. Once that decision has been made, there are some valid questions around what that means. Candidly, we do not want to create 42 ICB VIP fast lanes where people can talk to the ICB and somehow get themselves out of the normal procurement process when they should not be out of it. Therefore, there are risks at that level; we must be conscious of that. Given the roles that ICB board members have, and since these are local entities, it is likely that an ICB board member will have relationships with people in the local community who deliver services that will be subject to the tender.

My next question is about the variability and the number. It is flagged in paragraph 4 of the impact assessment that the expenditure over a period was

“estimated to be between £75bn-£380bn”.

I am not great at maths but that is quite a significant variability. It talks about how the £75 billion concerned procurement processes that went through the EU process and were notified, while the long tail of the other £300-odd billion concerned other procurements that were not notified. However, we should be able to get better information than that. One of my requests for the Minister comes with a suggestion: there should be a machine-readable database somewhere where all health and care procurement can be analysed and studied. I know that the department intends to do that but, actually, the best way for us to understand that we are getting good value for money is this: if anyone, whether a researcher at one of our excellent universities such as the University of Birmingham or another interested party, wants to be able to look at NHS purchasing data and can analyse it, they should be able to do so.

This seems to me to be a reasonable request to make of government: that information about procurement—including the status and how the contract was awarded, whether it was competitive or elsewhere—is publicly available and analysed by any third party who chooses to do so. The Government would benefit from that, as would individual NHS procurers, as people will analyse those patterns of purchasing and perhaps suggest something that they had not thought of themselves where they may be able to make more savings.

The final area that I want to cover is one that the noble Lord, Lord Hunt, touched on: skills in procurement. I suspect that all of us who follow healthcare have seen the Health Service Journal article in October that talked about integrated care boards in the south-west of England paying £1.7 million in compensation for a procurement failure. Obviously, that is happening under the existing regime, but it is a strong warning sign that we need to heed what happens when we get this wrong. Again, the impact assessment helpfully talks about the litigation process and the different costs that may be assigned to each area. I think that we tend to underestimate these things. If anything, once you get into a litigation process, the pressure to settle and resolve it means that money is often thrown at the problem. This could mean a significant cost to the NHS if we get it wrong. The fact that we have a new process means that new risk is being introduced. What is being done around training? That comes in two aspects. The first is general awareness raising, which applies to everyone. Certainly, I have had experience in business of working for an American company where you are subject to the Foreign Corrupt Practices Act, meaning that you go to prison if you try to bribe a member of a foreign legislature.