National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013

Lord Clement-Jones Excerpts

Wednesday 24th April 2013 Lords Chamber

So the panoply of arrangements that we now have means that despite clinical evidence, a competitive market is being forced upon the NHS. I am oblivious of any assurances given by Ministers to Parliament. People in the system believe that a market is required. That is why CCGs will operate defensively, because of a fear of being brought before the courts if they do not put out services to competitive tendering. I believe that we face the prospect of NHS services being placed in the middle of a costly bidding war with private companies, with discrete services cherry picked for profit, while the NHS is left to run the more complex and expensive services with less money. How can that possibly be in the best interest of patients? It cannot, and we should reject these regulations. I beg to move.

[Lord Clement-Jones]

My Lords, I was prepared to disagree with a substantial proportion of the speech by the noble Lord, Lord Hunt of Kings Heath, but I was certainly not prepared to find myself disagreeing with 100% of it, which is the position I find myself in. It is of course regrettable that the original regulations were published late and have had to be revised. As the Secondary Legislation Scrutiny Committee has pointed out, the draft guidance is not yet available and I am sure that this would have allayed many of the fears expressed about the impact of the new regulations. However, it is clearly important that it is subject to extensive consultation and, in the circumstances, it is entirely understandable that it is not yet available.

Especially as I was heavily involved in seeking assurances from my noble friend Lord Howe on the competition aspects of the Health and Social Care Act this time last year, I want to explain some of the background to the revised regulations and why we on these Benches firmly support them. Some weeks ago, I read the original form of these regulations, and we took the clear view that they would need to be changed. In perfectly good faith, they had been too restrictively drafted and did not appear to fulfil the commitment given to noble Lords during the passage of the Health and Social Care Act last March that local GP commissioners would not be forced to put services out to tender.

As a result of our concerns, my noble friends Lady Jolly, Lady Williams of Crosby and I met Health Ministers on the first day that the House returned after the February half-term Recess to discuss the issue. It became clear that some of the problems with the regulations were due to the difficulties of ensuring that the UK abides by European law on competition and tendering; but that the language used in the regulations was, in some cases, inaccurate and in others did not properly reflect the provisions of Section 75 of the Act. Health Ministers agreed with our view that the regulations’ wording at the time could lead CCGs and others to the incorrect belief that they were required to tender for all services. They therefore agreed to work with some of us to redraft the regulations. The new regulations that have been published are a result of those discussions.

The most important change to the regulations clarifies the role of Monitor in regulating and policing contracts entered into by CCGs. The new Regulation 15(2) states very clearly that:

“Monitor may not direct a relevant body”—

that is, a CCG of the NHS commissioning body—

“to hold a competitive tender for the provision of health care services for the purposes of the NHS”.

That makes it absolutely clear that CCGs cannot be forced by Monitor to go out to competitive tender. A number of other changes have been made to clarify how CCGs should decide whether to go out to tender. In particular, there are changes to Regulation 2. This sets the overriding objectives of the CCGs when commissioning. The first and foremost objective states:

“securing the needs of the people who use the services”.

As a result of the changes agreed, Regulation 2 now makes it absolutely clear that CCGs should consider the benefits that providing services in an integrated way can have on their quality and efficiency. Bundling of services is clearly envisaged, indeed encouraged, and the BMA should be entirely reassured on this point. These objectives in Regulation 2 determine how CCGs exercise their powers, including those under the much disputed Regulation 5, which sets out the circumstances in which a contract can be awarded without a competition. Under Regulation 5, it is expressly provided that there may be only one provider capable of delivering the kind of integrated service that the CCG wants to secure for its patients, in which case commissioners would not be forced to put services out to tender.

Many people have expressed their concern that this part of the regulations would make commissioners tender more services than they do now, and this is due to the reference to commissioners having to tender services unless they feel they can be provided by only “one capable provider”. However, there are many proper and valid reasons why commissioners might feel services can be provided by only “one capable provider”. They are, for example, if the commissioner is satisfied that the local hospital needs to maintain a certain number and mix of patients to provide a safe and effective service; if only one provider is able to meet the clinical quality and safety standards required; where only one provider is capable of giving access 24 hours a day, seven days a week; where highly specialised care is involved; and, crucially, where a range of integrated services needs to be delivered. Similarly, nothing under the regulations could force commissioners to fragment services against the interests of their patients.

Moreover, the rules in the regulations simply and accurately reflect the rules that are already imposed by EU law on the NHS. These rules were put in place long before the coalition came to power in May 2010. Procurement guidance for PCTs issued in March 2010 under the previous Labour Government—here is the cover of that PCT procurement guidance—had to conform with it and as result stated, inter alia, in paragraph 2.24 that:

“PCT boards must act transparently and without discrimination and be able to demonstrate rationale for decisions on whether or not to competitively tender. In particular”—

and these are the salient words—

“where the commissioner decides to procure through single tender the rationale must demonstrate that there is only one capable provider to deliver the services and, therefore, that could provide better value for money”.

Incidentally that wording was repeated word for word in subsequent guidance in July 2010. I urge your Lordships to compare that wording with the current Regulation 5. The fact is that the criticism and concern directed at Regulation 5 could equally well have been directed towards the Labour Government's guidance, which, I must emphasise, was the guidance on the procedure and law applicable to PCTs when tendering. In fact the changes to the original regulations ensure that the new rules allow as much discretion as possible within existing EU law. Indeed, CCGs are now in a stronger position than PCTs were under the 2010 Labour Government guidance. The chief executive of the Association of Chief Executives of Voluntary Organisations, Sir Stephen Bubb, has said:

“These regulations will enable charities to do more in partnership with the NHS, not less, and the result will be better services for NHS patients. The regulations should be passed, without falling victim to another political slanging match, so that NHS commissioners and charities can get on with the job of improving the health services made available to the public”.

I also urge your Lordships to read Department of Health legal opinion, which makes the position absolutely clear.