National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013
Lord Davies of Stamford Excerpts(11 years, 7 months ago)
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Baroness Williams of Crosby
In this particular set of regulations we are giving statutory underpinning to Monitor in a way that will mean, as it did previously, a much greater opportunity to deal with most objections on the spot and not have them carry on into the courts at great expense to the taxpayer and to patients. If we turn it down tonight it will leave us without that structure altogether and we will go back to where we were.
In conclusion, while I have very strong sympathy with the view of the noble Lord, Lord Owen, that the National Health Service of the 1980s was a more true state service than anything today, I am afraid we cannot go back; we are where we are. The best thing we can possibly do is to make patients’ interests the very centre of what the NHS is all about and to recognise that this new route is the way we are going. It could, however, be very exciting and it would lead to a very much more accountable NHS than we have had in recent years.
Lord Davies of Stamford
We have had a very thorough and memorable debate on this important subject, and that is not a bad thing. It is striking that the House should be so full on this occasion, because the NHS is very close to all our hearts and to the hearts of the whole of this country. We had a very powerful speech by the noble Lord, Lord Owen, and against that we have had attempts by a spokesman on behalf of the coalition, and by the noble Lord, Lord Walton, to whom we always listen with great respect on these occasions, trying to reassure us that things are not quite as alarming as they appear to be—not quite as alarming as the BMA, which the noble Lord, Lord Walton, once presided over in a very distinguished fashion, appears to think.
Before we accept those blandishments and reassurances, we need at least four very specific assurances from the Government tonight. One is on the matter very well raised by my noble friend Lord Hunt. Clause 5 is extremely weak in providing any protection against the absoluteness of the requirement for CCGs to go out to tender. It simply says that they do not have to do so if in fact there is no other party able to provide the relevant service. As the noble Lord, Lord Hunt, very clearly said—and he is absolutely right—in a large urban area such as London or the West Midlands, there will always, or almost always, be somebody else who is technically capable of delivering the service, so that is extremely weak protection. I am not very reassured by what the noble Lord, Lord Walton, said on that subject. It is no use saying “We’ve got guidance”. We are now passing the law, and guidance cannot override the law. What is more, when we have changed the law you can be absolutely certain that an awful lot of lawyers and some very aggressive companies will be waiting to use this law to try to force open a business opportunity.
Lord Mackay of Clashfern
Can the noble Lord say what sort of clause he proposes instead of Clause 5 that would be consistent with the European legislation and the regulations made here under the previous Government in implementing it?
Lord Davies of Stamford
I am in favour of scrapping all these regulations completely and simply voting them down tonight. That is my simple answer. I put the onus on to the noble Lord—if he can come up with a suggestion which reassures me, so much the better.
My second concern is over the future of networks. I was lobbied over the weekend by one or two doctors in Lincolnshire and I undertook to speak about this matter. One of them served as a junior doctor in Newcastle under the noble Lord, Lord Walton, and was full of affectionate and very admiring memories of the way in which he ran his department. Nevertheless, those doctors are deeply concerned—as are so many across the country—about the impact on networks. We have all read the handouts and papers from the BMA on this subject. I notice from the way in which the regulations are drafted that the protections regarding networks and integration in Regulations 2 and 3(4) in no way override the requirement in Regulation 5 to go for tendering. That is not a sufficient protection. They simply say that there is one criterion, and that is not good enough. If the Government want us to take these regulations seriously, I expect them to provide some specific reassurances on that.
My third concern is this. We all know that the ratio of fixed to variable costs in healthcare is extremely high. To use a technical term, the operational gearing of healthcare, particularly in the secondary sector, is very high. That means that if you take out any particular activity from a general hospital, the existing overheads will then fall on a reduced range of activities and therefore a reduced range of revenues. So you will make unviable—or are likely to make both financially and possibly technically unviable—other services which are being delivered in that particular hospital.
Under these new regulations, will it be possible for a CCG to take the view that it does not want to tender either service, which, if it took it away from the existing provider, would make that provider unviable not merely for that service but for the whole range of services currently being provided? In other words, will it be possible for a CCG to take the view that it is not in the interests of the patient in that particular area to run down or destroy a local hospital or a local unit? Will the regulations provide any protection for a CCG which, in the public interest, decides not to tender out for that particular purpose?
My final concern is one on which, again, I should like a specific reassurance from the Government—it can be in a yes or no form. We live in an international digital age. We know that medical services, even remote surgery, can be provided not merely here but anywhere around the world. If electromagnetic waves travel at speed c, that merely means that you have something like a 20th of a second delay if you are operating from India. A 20th of a second may not be crucial to that operation in terms of security.
Therefore, we may well face the possibility of tendering out services all around the world. It may be that a CCG will quite legitimately decide that the Massachusetts General Hospital is the best place to go for a particular type of surgery. That is fine but, again, if a CCG decides—or, more likely, if the national Commissioning Board decides—that it is in the interests of this country to keep a capability here, will it be protected in taking that decision against Monitor or against the competition laws which will then operate?
An even better example, perhaps, than remote surgery is imaging. Whether it is computerised thermography, ultrasound or magnetic resonance, these things can be read anywhere around the world in real time 24 hours a day, seven days a week. It may well be that very good offers will come in from India to provide this particular service. In those circumstances, if we went for those offers in a particular region—perhaps in the whole country—we would not have any radiologists left at all. They would all have gone somewhere else in the world. Will the national Commissioning Board and the CCGs be protected if, in the interests of keeping what they regard as an essential capability in this country, they decide that it is not appropriate to tender out a service or to accept a tender, however financially and technically attractive that tender might be?
Baroness Hollins
My Lords, I begin my comments by reminding the House that I am the current president of the BMA and a psychiatrist. The matter we are discussing this evening has been one of the most controversial aspects of implementation of the Health and Social Care Act. We are in a rather unusual situation, debating regulations that have already been subject to revision, following widespread concern about their intent and the strength or otherwise of ministerial assurances. This is remarkable. However, the opportunity has been afforded to us tonight to rehearse the issues once again and to ascertain why there is continued unease about these regulations. It is worrying that these concerns have not abated, despite repeated assurances from the Government during the passage of a Bill that we spent so many hours debating and further assurances received since the regulations were laid earlier this year.
The regulations are intended to ensure good procurement practice, as required by the 2006 EU directive and subsequent case law. They are substantially the same as those that were in place prior to the 2012 Act, which had the status of declaratory guidance and should have been enforceable in the courts. Will the Minister tell us how many legal challenges have been made since 2006 and how many organisations have deferred court action pending Monitor’s new powers? Will he also confirm that in future Monitor will provide regular reports on the scale of legal challenges and on their outcomes? The new regulations have the effect of binding the new clinical commissioning groups into the existing legal framework. This reminds us that the NHS of 2006 was a rather different organisation from today’s NHS, which is evolving rapidly after the radical changes of the Health and Social Care Act 2012.
Health and Social Care Bill
Lord Davies of Stamford Excerpts(12 years, 8 months ago)
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Baroness Thornton
My Lords, we now move on to pricing. We believe that setting the national tariff is a matter of policy and that it should be set by a Secretary of State, not Monitor. That is the main thrust of these amendments. Amendment 201A is about setting the national tariff as a matter of policy. Amendment 201B proposes that regulations to the national tariff must state how the prices and methods were determined, that any proposed change to the national tariff will be subject to proper evaluation and testing, and that there must be evidence of consultation between the Secretary of State and Monitor. Amendment 201C states that the national tariff should not be allowed to vary in relation to different descriptions of provider. Amendment 201D states that where a commissioner of a health service receives an offer from a service provider who is licensed by Monitor at a price below the national tariff—I am sorry; that is my noble friend’s amendment. I beg his pardon. Then there are a whole set of amendments which seek to delete clauses—Amendments 211A, 214A, 214B and 214C—because if the Secretary of State is setting the national tariff, these clauses are unnecessary.
At present, the national tariff is set by the Department of Health, often in ways that are mysterious, probably less than optimal and without sufficient consideration of unintended consequences, and often without enough testing. Nevertheless, we remain firmly of the view that price setting is such a fundamental part of the system that it has to remain the responsibility of the Secretary of State and the Department of Health. We do not have an answer as to why you would give such a potentially potent policy lever to the regulator. I should be grateful if the noble Earl could explain that. Why keep price control with Monitor? I should be interested to hear what he has to say. I am sure that we would all agree that the key point is that we get tariffs right. We therefore seek to insert the need for proper consultation and transparency in the tariff-setting process. I beg to move.
Lord Davies of Stamford
My Lords, I shall speak to Amendment 201D in my name. I tentatively proposed this in Committee as a probing amendment. I bring it forward now much more seriously because I have been reinforced in my belief that this is a necessary amendment by everything that has been said. My belief has also been reinforced by the support of a number of colleagues, including explicitly by my noble friend Lord Warner, to whom I am grateful.
It has been clear from our debates that the Government’s intention is that there should be two price regimes in the NHS—one for services for which there is no national tariff and one constituted by the national tariff itself. Services that are outside the national tariff will be contracted for on the basis of a tender offer and good value for the taxpayer or customer. I have no quarrel with that, and the Government have clearly stated that they intend to achieve contracts on the basis of the right reconciliation of quality and price. I argued in Committee—and I am sure that I was right —that that constitutes price competition. The Government do not like the phrase “price competition”, but I am not interested in semantics or the party-political reasons that may lie behind their semantic choices; I am interested in the reality, which is that commissioning services on that basis is entirely rational, and I have no quarrel with it.
The problem arises in relation to the national tariff. The Minister set out the position clearly in his response to me on 13 December. He said,
“we want a system of fixed prices”,
and then stated that,
“the tariff would not be a maximum price”.—[Official Report, 13/12/11; col. 1229.]
In other words, the tariff could not be varied either upwards or downwards; it would be an immutable price. I regard this as extraordinarily irrational and perverse, and I hope that I can persuade the Government to think again. It has at least four problems.
First, if there is an immutable price, you may not be able to pay for certain services that are required and are of the quality necessary for patient outcomes. The Government have recognised that point at least. Indeed, Clauses 124 and 125 appear to address that because they make it clear that there is scope for an agreement between a commissioner and a provider to be approved by Monitor at a price above the tariff. The wording in Clause 124(5) and Clause 125(3) is identical, except for the words “approve an agreement” and “may grant an application”, and states:
“Monitor may approve an agreement”—
or “grant an application”—
“only if, having applied the method under section 116(1)(d), it is satisfied that, without a modification to the price determined in accordance with the national tariff for that service, it would be uneconomic for the provider to provide the service for the purposes of the NHS”.
That makes it clear that it is possible for the commissioner to pay more than the tariff in those exceptional circumstances, with the consent of Monitor, and of course I approve of that, but it is not possible for the commissioner to approve less. That is an extraordinary state of affairs.
I can quite understand why the Government do not want to write into the Bill that it will not be possible for a commissioner to accept a lower price. That would not make the slightest sense. It would be all over the tabloids in headlines. Instead, it is disguised in the language of parliamentary drafting as being a power that would exist only if it was uneconomic for the provider to provide the service for the purposes of the NHS. You can never argue that it is uneconomic to provide a service at a higher price. The amendments provide only for the circumstance in which the commissioner finds it necessary to pay a higher price than the tariff to secure the patient services which the commissioner is procuring.
That is the only one of the four problems raised by that approach to a national tariff which the Government appear to have addressed. The second is that in many cases, it may be possible to provide the same quality of service at a lower price, but the Government are excluding, a priori, from the beginning, outright, in principle, any possibility of that happening. That makes no sense. We and the Government surely agree that the NHS budget will always be under great pressure, that there must be financial discipline in the NHS, and that when there are opportunities to secure the same quality at a lower price it should be the obligation of commissioners to achieve that. My amendment does not go so far as to create an obligation—I was more hesitant than that—but at least there must be the possibility for commissioners, if they see an opportunity, to procure that service at a lower price and save money for the benefit of patients and the National Health Service as a whole.
The third and fourth problems created by government policy in this area are perhaps a little more subtle. The third, which I mentioned in debate in Committee, is that if you deny the possibility of bids coming in at a lower price for any given service, you deny the possibility of ever investigating or having insight into the process of price formation in that sector of activity. You simply do not know to what extent the prices you are working on—the prices you are accepting—contain an unnecessary level of cost and overheads, or the extent to which you are not getting a good bargain. In my view, you should not be sleeping at night if you are a commissioner and you do not know how prices are formed, whether you could be getting a better price and, if so, what that better price would be.
The fourth problem created by the Government's approach to this up until now— I live in hope that they may change it in the light of this debate—is that it dampens or may even be fatal to innovation in this area of the National Health Service. I think we are all agreed in principle that we should encourage innovation, but there is no point in any prospective provider spending time and money on developing a better approach to solving a problem or a new technique for diagnostics, therapy or what have you, which has the same quality and outcomes, or even better, which could be delivered at a lower price, because the price is fixed. You can only come up with the same price because you are not allowed to be given a contract if you tender at a lower price. That makes no sense, so I must press the amendment again.
I emphasise, as I did in Committee, that the amendment is in no sense prescriptive. It does not force commissioners to take the lowest price. There might be an argument for forcing commissioners to take the lowest price where quality remains the same, but I have come up with a much weaker amendment. It is purely permissive. It provides for commissioners, where they wish to and where Monitor approves—so there is a double check, a double brake on the mechanism—to accept a lower price. It is extraordinary that they are not allowed to do something which all of us in every other field of economic activity would feel to be the rational thing to do.
My noble friends on the Front Bench have made the point several times that there are many situations in which it would not be sensible to take the lowest price in an NHS context. One of them I described in some detail in Committee, so I do not need to go over it too much tonight. There is no doubt that in any field of economic activity where overheads or fixed costs are a high proportion of the total costs there is a temptation or opportunity for predatory pricing. If the fixed costs are a very high proportion of the total costs, then anyone who has the capacity to make a one-off offer can come in with an offer which may be at a substantial premium to variable costs and therefore very attractive to him if he has spare capacity. It would be much lower than the full cost and therefore very tempting but it might be very dangerous for the customer—the commissioner in this case—to accept because it might undercut and perhaps destroy the capacity on which he relies on a long-term basis. Clearly, no one is going to provide services at below full cost on a long-term basis. Therefore, there is always a danger of predatory pricing in healthcare and we must be alert to it. There is no question about that.
Earl Howe
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.
Lord Davies of Stamford
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?
“(5A) Where the Commissioner of a health service receives an offer from a service provider licensed under section 80 at a price below the price that is payable by virtue of this Chapter, the commissioner shall seek the agreement of Monitor before placing any order for this service.
(5B) Before acceding to a request from a commissioner in accordance with subsection (5A), Monitor shall satisfy itself that—
(a) the quality of the service to be provided will not be inferior to the same service provided by another supplier at the price payable by virtue of this Chapter, and(b) there will be no consequent unacceptable impact on the structure or capabilities of the NHS.(5C) Subject to the considerations under subsection (5B), Monitor shall not unreasonably withhold its consent.”
Baroness Anelay of St Johns
My Lords, I think the noble Lord on the Woolsack is trying to assist the noble Lord, Lord Davies of Stamford, to realise that the rules as they pertain in this House are that if the noble Lord, Lord Davies, wishes now to speak further to his amendment, he must go through the process of moving it, speaking to it—and I am sure the Minister would hope he might then withdraw it. Having spoken to it already, it is not up to him simply to make an extempore statement; he has to go through a procedure to achieve that.
Lord Davies of Stamford
My Lords, I am very grateful for that guidance. In accordance with it, I have moved my amendment. I think that the Minister and I are still some distance apart. Once again, I put it to the noble Earl that a price that is not based on competition is not an economic price. A price that is negotiated with one vendor and based on the costs of that vendor, even if they are very transparent, is not an economic price. You cannot rest content that you have done an honest job if you accept that price. A fixed price that may be even remotely correct one day will not be correct in six months’ time or 12 months’ time. You need to continue to put that price to some sort of competition discipline. These points are fundamental. The noble Baroness, Lady Murphy, came nearer to the mark when she suggested that the reasons for the Government’s position had more to do with PR, politics or the media than with the economics of the health service. I was grateful to the noble Earl for the offer to discuss this matter in greater detail. Given that offer, I shall not detain the House further on this matter and will not put my amendment to a vote.
Health and Social Care Bill
Lord Davies of Stamford Excerpts(12 years, 11 months ago)
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Lord Davies of Stamford
Can I take the Minister back to the all-important matter of Monitor? I think he said this morning that he recognised that there were potential conflicts of interest in Monitor’s role. Monitor will continue to have its role of oversight over foundation trusts until 2016. The Minister has said today that that can be continued beyond 2016. Monitor will now be given responsibility for competition policy: in other words, for all the supply side, whether private sector, independent, or foundation trust. Is there not a conflict with Monitor having this responsibility for foundation trusts and then being responsible for the oversight of the rules of competition and the supply side? Monitor will also be responsible for oversight on the other side: the commissioning and customer side. Is this not an intensely problematic situation, and will the Minister say how he intends to resolve these issues?
Earl Howe
My Lords, the noble Lord, not for the first time, is ahead of me. It is no accident that we have a group of amendments that deals with potential conflicts and how these are to be resolved. It might be better, if the noble Lord agrees, to wait an hour or two until we reach those amendments.
My noble friend Lord Newton indicated from his own personal experience that mergers, when they occur, are far too bureaucratic. I fully agree with him. The Department of Health, the Co-operation Competition Panel and, if it involves a foundation trust, Monitor, all currently play a role and may have conflicting views which lead to uncertainty and delay. Our proposals would create a simpler and much more streamlined process for the NHS.
My noble friend indicated his strong view that safety and quality—not competition—should be paramount. I am sure it will not have escaped his notice that improving quality is what these reforms are meant to be about. We have been clear that patients’ interests, especially their safety and the quality of the services they receive, have to be paramount. That is why Monitor’s overriding purpose is to protect and promote patients’ interests. It is why the board will have a duty to improve quality, why the CQC will underpin quality; and why competition will be used only as a means to improve quality. Where there are better ways to improve quality—and there may be—they will be used instead.
My noble friend Lord Clement-Jones, in his extremely interesting and—I do not mean to sound patronising—well-informed speech, took us through some of the intricacies of competition law. Although he did not say this, there has been a suggestion from a number of quarters that we are in a knowledge-free zone when we look at competition laws applied to the NHS. In one sense that is true because there is no case law that can guide us, but in another sense it is not true.
We can say many things with confidence. The point of competition law is to protect people from self-serving abuses like collusion or abuse of market power by restricting access to services. These self-serving abuses that harm patients are already prohibited in the NHS by the principles and rules for co-operation and competition, as introduced by the previous Government. This is not something new introduced by the Bill. Competition law applies to foundation trusts only in so far as they are acting as an undertaking, as my noble friend indicated—in other words, only where they are providing goods and services within a competitive market. Given the lack of directly applicable case law to NHS providers, there is some uncertainty about where that line is drawn.
A body can be an undertaking for some activities and not others. That is very clearly laid out in the OFT’s recent guidance, Public Bodies and Competition Law. For example, the foundation trust might be an undertaking for elective surgery, if it were provided in a competitive market, but it would be very unlikely to be an undertaking when providing NHS services in the absence of competition and while under a licensed obligation to maintain service continuity, which it could well be if Monitor chose to build that into its licence. In so far as foundation trusts may in the future be found to have abused their market power, what would then follow? It is important to understand what the consequences would be. In that situation, Monitor—
Health and Social Care Bill
Lord Davies of Stamford Excerpts(12 years, 11 months ago)
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Baroness Finlay of Llandaff
My Lords, I have an amendment in this group which really builds on the amendment already spoken to comprehensively and efficiently by the noble Lord, Lord Clement-Jones—that is, to not impose a burden on providers in the process.
One of the difficulties in any type of regulation or inspection is that it is very easy for those who are doing the inspection to require more and more data from a provider to support whatever they view as their outcome and their inspection processes. There is a real danger in here that sometimes the regulatory processes can develop a life of their own, and, quite inadvertently, become a burden on providers. We have already seen that occur with some of the current inspection processes in place, which seem to have collected an inordinate amount of data sometimes, but have missed out on real deficits in care.
It is a paramount duty towards the safety of people who use healthcare services, and built into that of course will be good clinical outcomes, because bad clinical outcomes will be unsafe in the process. However, it is also a suggestion—and this is therefore a probing amendment—that the regulatory burden on the providers must not be excessive. They must be able to deliver patient care without diverting resources away from it in order to meet requirements from a regulator.
Lord Davies of Stamford
My Lords, I find it not entirely surprising that a number of us this afternoon have found it difficult to know at exactly what point we should be making the contribution that we wanted to make, because of course there is an immense overlap between the themes that all the clauses we have been reviewing today have brought forward.
All those clauses, and most of the amendments to them, necessarily derive from a single decision by the Government. This was the decision that they wanted to distance the Secretary of State from the operations of the health service and superimpose a set of bureaucracies and regulators that would in future take on the responsibility that the Secretary of State has had until now. That was a decision that has had, and will have, a lot of consequences.
Three consequences in particular are very unfortunate. The first is that there will inevitably be a lack of transparency. You may impose on Monitor the obligation to produce the annual report and occasional statements on the decisions it takes, and impose on clinical commissioning boards, foundation trusts and other bodies within the NHS an obligation to try to relate to the local public and have meetings and report to them and so on. However, you will never get the degree of close oversight that you can get in Parliament when the important decisions are taken by the Secretary of State in Parliament, where they are subject to a weekly or, when necessary, daily scrutiny. That does not apply to the functional decisions, which I will come to in a moment. That is the first inevitable cost of this proposal by the Government.
The second consequence is the cost to democracy. People will no longer feel that the health service is being delivered by their democracy, or is part of their democracy. It will increasingly be delivered by relatively remote and autonomous bureaucracies which will no doubt be staffed by the most high-minded people—a sort of platonic mandarinate who will certainly deliver the best they can for the human beings in their care. However, that is a very different concept from the democratically driven concept of the National Health Service on which a lot of us were brought up and which was, of course, the vision of Beveridge and Bevan.
The third consequence, to which I turn in specific detail, relates directly to the clause and amendments before us. Many contradictions and conflicts of interest will be created in the organisations and bureaucracy that take over the Secretary of State’s role. Until now the Secretary of State has been responsible for taking those decisions that are properly political decisions in the true sense of the word. They involve priorities, value judgments, trade-offs and strategic decisions for the future, which have properly been decisions of the Secretary of State up to now. Many of them will now be taken by someone else, particularly Monitor, which will take over from the Secretary of State the job of making sure that the whole system works. I have no doubt that the Government hope that that will work out well, but I repeat that I think that the effort, the initiative, is misconceived.
Two types of conflict will inevitably be structurally hardwired into Monitor. There will be the functional conflicts to which I have already referred. Monitor has specific, specialised responsibility for licensing and overseeing foundation trusts and making sure that problems are ironed out. That is one particular sector on the provider side of the equation. It now has a whole lot of responsibility for everyone else on the provider side and for the supplier side. There are some inherent conflicts.
There are also philosophical conflicts. Monitor is being given very many criteria. Clause 59 sets out what probably most of us would write if we were asked to write the most important targets of the health service on the back of an envelope. However, there is no attempt to establish a hierarchy and there will be conflicts between them the whole time. In the short term at least there could be serious conflicts between increases in efficiency, for example in access and improvement in care, and in all the other virtuous objectives set out in that clause.
The noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Finlay, have brought forward their own solution. They say, “Well, let us take one criteria, make that the overriding criteria and then Monitor won’t have a conflict any more”. That is how I understand the logic of what they propose. Perhaps I may disagree for a moment with the noble Baroness, Lady Finlay. It is not right to say that she builds on the suggestion made by the noble Lord, Lord Clement-Jones, because her proposal comes under different criteria. The noble Lord thinks that the safety of the patient is the most important thing, and the noble Baroness thinks that it is not to place too great a burden on providers. Both are admirable considerations, but by definition they cannot both be the overriding determining consideration where there is otherwise a conflict between desirable objectives. That will occur the whole time. These two amendments highlight the problem created by the way that the Government have decided to approach the future of healthcare in this country.
I turn now to the Government’s answer to the problem that I have set out. It is quite extraordinary. Clause 63(2) states:
“Monitor must act so as to secure that there is not, and could not reasonably be regarded as being, a conflict between”,
its responsibilities, which in this case are foundation trusts, and the rest. How can Monitor possibly act as if there is not conflict if there is a conflict? You cannot just pretend that there is not conflict and think that that means that the conflict has disappeared. That does not work at all. The same thing applies to subsection (3), which states:
“Monitor must ignore the functions it has under sections 109 and 111 when exercising … its functions under Chapter 2 … and Chapter 4”.
What exactly does that mean? It cannot be ignored. Of course, Clause 109 is about when a foundation trust runs into difficulty. When that happens the Government cannot wish away the fact that the foundation trust has a difficulty; they have a responsibility to resolve it. Perhaps they mean that there will be a department looking after the foundation trust’s problems but that it will not be allowed to speak to the departments with the general responsibility that Monitor exercises across the rest of the health service.
If that is what the Government are saying, perhaps they should say it explicitly. But if they are going to set up two separate departments which will not be allowed to talk to each other—there is a kind of negative synergy in an organisation having two functions of that sort—why not have two separate organisations? What is the logic for having Monitor at all if it will have to operate in this extraordinary way? I have intervened because the Government need to tell us clearly, before we agree Clause 63 and accept this Bill into the legislation of this country, exactly how they propose to grapple with the serious problems that their decision has created. I do not think that we will accept in this House that their decisions can simply be wished or thought away.
Baroness Williams of Crosby
My Lords, I can address my Amendment 274ZB very quickly. I have to admit that it arises from a fog of misunderstanding. Frankly, I do not know what this subsection means. Under Clause 63(3), there can be a Monitor intervention in a situation where Sections 109 and 111, which address themselves to various aspects of foundation trusts, can be completely waived without any regard to the fact that they are looking at competition and pricing as regards profoundly sensitive subjects. I wish that I could say that I know what it means but I do not. Instead I have put down an amendment which simply proposes leaving out that subsection. If the Minister can enlighten me, perhaps I will put it back in again. At the moment, I simply do not know what I would be putting in or out. I apologise to the House for such absurd and detailed ignorance, to which I confess with great humility. But I hope that the Minister will be able to enlighten me because so far no one else has been able to do so.
Earl Howe
My Lords, I think we will rely on Monitor to make its own arrangements and, as the Committee will appreciate, there are limits to how far it is sensible to prescribe in legislation what the arrangements should be. Nevertheless, picking up the noble Lord’s prompt, I am sympathetic to the concerns that have been raised in this general area and I undertake to discuss the matter further with Monitor.
To create legal certainty, Clause 63(3) clarifies Monitor’s arrangements to resolve conflicts further, so when preventing anti-competitive behaviour and setting and regulating prices, Monitor must ignore its transitional regulatory functions relating to foundation trusts. I hope that addresses Amendment 274ZB, tabled in the name of my noble friend Lady Williams. The meaning of this provision—
Lord Davies of Stamford
My Lords, the noble Earl keeps on referring to Monitor’s responsibilities towards foundation trusts as being transitional, but I recall that earlier today he accepted that in fact they would possibly continue beyond 2016, which is five years away. It hardly seems possible that he should be saying that at one moment and then at the next using the argument that since these responsibilities are only transitional, the conflict of interest will rapidly resolve itself.
Earl Howe
I refer the noble Lord to the remarks I made earlier. The provisions are partly transitional and partly not. It depends on which functions we are looking at.
I come back to the point I was making on the amendment tabled in the name of my noble friend. This provision says that in preventing anti-competitive behaviour that is against patients’ interests or in setting prices, Monitor must ignore the transitional functions it has as the regulator of foundation trusts. If the subsection were left out as the amendment proposes—although I know that it is only a probing amendment—when undertaking its anti-competitive behaviour or pricing functions, Monitor could also consider its transitional intervention powers. That could result in Monitor treating struggling foundation trusts preferentially by, for example, not subjecting them to its anti-competitive powers. I hope that that is helpful to my noble friend.
My noble friend Lord Clement-Jones spoke about the designation of specialist centres and expressed his view that that should not conflict with the prohibitions on anti-competitive behaviour and that, in essence, patients’ interests have to be paramount. I am with him on this and I would like to reassure him that patients’ interests would be the paramount consideration for Monitor in resolving conflicts that arise in the exercise of its functions in this way. Monitor need not take issue with decisions to designate specialist centres where this would improve quality and protect patient safety, even if it reduced competition.
I hope that those remarks are helpful and that my noble friend will feel content to withdraw his amendment.
Lord Davies of Stamford
My Lords, I shall speak to—I had better read this out; I cannot possibly remember it—Amendment 294AZB in my name. This is a probing amendment, intended to smoke out the Government’s real feelings about price competition in the health service market. There have been some conflicting signals on this, as we all know, with the general expectation that the Government intended to introduce a greater measure of price competition, and then a spectacular U-turn earlier this year, which the Government said was not a U-turn because they never intended to introduce price competition anyway. A whole lot of clauses were introduced into the Bill that had the effect of banning price competition in the NHS.
I was assured by the Minister only yesterday that the Government’s true thinking on this is best set out in the document Protecting and Promoting Patients’ Interests, and I am grateful to his officials for giving me a copy. I shall quote what it says on this subject in paragraph 35 under the heading “No price competition”, which sounds very decisive:
“We have strengthened the Bill to ensure that where a national or local tariff is in place, providers and commissioners cannot undercut this”.
That seems to be straightforward, coherent and, as I shall argue, completely wrong. Paragraph 36 says:
“Where competitive tendering is undertaken for services not covered by the tariff, bids would be evaluated in terms of best value (i.e. awarding contracts to those bidders who provide the best balance of quality and cost”.
That seems to be incoherent and complete rubbish. Once you introduce the idea of a balance of quality and cost, you are into price competition. Every time you buy a car, you compare the quality and price of the cars on the market and come to a balance between quality and cost. Every time you go for a coffee and you choose between Costa and—what is the other one?—Starbucks, you are striking a balance between quality and cost. That is clearly incoherent and the result of very sloppy thinking.
Let us assume that that is just bad exposition or bad thinking on the part of the Government, and their real conviction is represented by the first quotation—they do not believe in price competition at all. Why is that a mistake? For two reasons: first, it involves a considerable potential loss of money from public funds. Surely if you can save money with no detriment to the purposes of the health service or the interests of patients, it should be the obligation of the Government to do that.
The second reason is a little more complicated: if you deny price competition a role in the system at all, you are denying the use of the mechanism for price determination. Competition is the only way in which you can really make sure that you understand how prices are put together. If you have a tariff that does not involve any price competition, you are basically into a form of cost-plus price determination, and anyone who knows anything about this—I know a little, having been Minister for Defence Procurement; sometimes we have to use cost-based pricing because there is no competition in the product that we need to acquire—knows that if you produce prices on that basis, you find that you can never exert any downward pressure on the prices that your suppliers are quoting to you. They will put in whatever they think is necessary for that activity and whatever costs they think they ought to put in. They will use the technique that they traditionally prefer to use for producing the goods or services that you are buying. You will never be able to second-guess that or look beyond it. It is an extraordinarily wasteful system of procurement and it is completely wrong.
We should have a commonsensical agreement that we should use price competition wherever we can where it does not do damage to other desirable objectives, particularly the objective of patient outcomes. I have endeavoured to produce an amendment—it is a purely probing amendment; I am sure that it is technically deficient, and I do not intend to take it any further in its present form—that establishes one way of doing that. It says that when commissioners wish to use price competition and they find that they get an offer of a price that is more favourable than the tariff price, they should be allowed to take it, subject to checking with Monitor to ensure that there is no damage to other purposes of the health service, to the interests of patients or to the structure and capacity of the health service. In health, there are often good reasons why you might not want to take the nearest offer, and I shall come to a couple of those in a moment, but, where there are no such reasons, surely the onus should be that you should take that offer and save the public money.
There are reasons why in health it may not always be sensible or in the interests of the health service or of patients to take the lowest offer, and I entirely accept that that may often arise. One is in the case where you are making a strategic investment in a new capability. We have had examples that have struck me in the course of these debates—for example, the new stroke systems in London and cardiac systems that cover London. I do not come from London but I believe that they have been a great success. That has consisted of ensuring that a quasi-monopoly has been given to perhaps half a dozen units that contain the best expertise and the best equipment that can be brought together for these purposes. That has been found to be the best solution for maximising patient outcomes or, to put it rather more straightforwardly, actually saving people’s lives, which is clearly the priority. I totally accept that there may be decisions of that kind that need to be taken irrespective of cost. Indeed, I welcome that they should be taken irrespective of cost and I have provided in this amendment a mechanism for making clear that when that happens and there are arguments of that kind they can prevail and it can be quite clear and quite transparent why the decision has been taken.
The second reason is also rather specific to healthcare, although not exclusively so. One of the features of the economics of healthcare is that it has a very high operational gearing; in other words, a very high ratio of fixed costs to total costs. In any sector of the market where that prevails there is obviously a great temptation for people to bid opportunistically when they have spare capacity at a price that represents a return over their variable costs and some contribution to fixed costs though not necessarily a very great one. You may get some very cheap offers coming in from people who happen to have spare capacity at a particular moment. It may be dangerous to take those offers rather than ones from other suppliers, such as traditional NHS suppliers which are more expensive, because if you do that you will put those NHS suppliers out of business. By definition, if people are bidding at a price below their full costs but over their variable costs then they will not always be providing it on that basis. They will certainly not be investing in new capability or sustaining capability on that basis. One has to be very careful about predatory pricing in the health service. I totally recognise that, and it would be a very good reason for saying, “We do not want to take this particular offer because if we do we shall put out of business capacity we need over the long term that can only be sustained long term at a higher price”.
I am very open and sensitive to the reasons for not taking the lowest price in many individual cases, but it seems to me that the Government have got this thing completely the wrong way round. The default option should be to take the cheapest price. We should be saving money. We should be exerting downward pressure on cost. We should be encouraging people to come up with new, cheaper and more efficient ways of doing things consistent with the quality that we require. It goes without saying that quality should be absolute and should be determined for every diagnostic related group, every service and health service procedure. For each of these we should have a clearly defined specification of quality and we should not go below that for reasons of price. Where we can get that quality cheaper and we do not do structural damage to the service it seems to me completely crazy not to go in that direction. I am sorry that the Government carried out the U-turn in February and I hope they may now turn back again.
Lord Warner
My Lords, I have some sympathy with some of the remarks made by my noble friend Lord Davies of Stamford in the sense that a blanket ban on price competition seems rather misguided in the situation the NHS faces. To give one example, under the last Government the price we paid for spot purchasing from the private sector when there were peaks of demand in the NHS was often much cheaper than had previously been the case and could, on occasion, be below a tariff price for some of the services. That was in the interests of the NHS and patients. A blanket ban does not seem to me to be the most sensible way forward.
I want to speak to Amendment 291C which should have been in this group. Assiduous readers of the groupings list will see that there are two commas after Amendment 291B. Between those two commas should have been Amendment 291C and the Whips’ Office has confirmed to me that was indeed the intention, so I wish to speak to the missing amendment and I also wish to speak to Amendments 294AA and 294BA which were included in the list.
Amendment 291C adds to Clause 141 some principles that should be applied to the construction of the national tariff. We have already had one debate about the tariff and how the national Commissioning Board might be encouraged to move the tariff away from its dependence on pricing episodes of care, which tend to favour acute hospitals, to a greater emphasis on periods of care that are more appropriate to the high volume of NHS patients with long-term conditions. I withdrew my earlier amendments on this issue but discussed the issue much further with outside interests and experts to see whether there was anything we could usefully do to further this particular cause. I think the Minister was not unsympathetic to some of the ideas in the earlier amendment.
These discussions have persuaded me that there is widespread support for trying to move the tariff currencies and pricing in the direction of periods of care but also a belief that this will take quite a long time and it involves a good deal of new data collection and analysis. In the mean time, people seemed to be saying that there was some merit in being clear about what should be the underpinning key principles for developing the national tariff in the future. I have had a shot at encapsulating these key principles—drawing very much on work by the NHS Confederation and I am extremely grateful for the help and advice it gave me—so that principles of this kind could be placed in the Bill to guide those who will be taking forward the difficult but important work of shaping the national tariff. I hope the Minister will be able to agree that we should try to have some guiding principles on the tariff in the Bill even if he does not like my particular wording because this is an important issue. We need to use this legislation to try to shape an important piece of work that will stretch over quite a few years to develop a new national tariff.
Amendments 294AA and 294BAA are technical amendments that reflect concerns expressed to my noble friend Lord Darzi and me by representatives of specialist medical interests about the current wording in Clause 116 on consultation on proposals for the national tariff and Clause 128 on the responses to those consultations. Amendment 294AA is intended to ensure that the relevant specialist groups are consulted on proposals for the tariff. It does not seek to specify the particular groups—that would be left to Monitor in the light of what the particular proposals were, affecting particular specialties. The amendment simply seeks to require that specialist clinical groups are consulted when tariff proposals are made so that they are involved and can bring to bear their expertise on the tariff-setting processes that can be involved with particular quite highly specialised sets of services. Amendment 294BAA merely seeks to ensure that when there are objections to a tariff proposal, assessing the weight of opinion for or against should be restricted to specialist licence holders undertaking work of comparable complexity. This is really to ensure that any objections are raised by the people undertaking work of a similar complexity defined in the original proposals for tariffs. I know that specialist opinion will be much reassured if the Minister could look favourably on these two amendments.
Baroness Murphy
My Lords, I would like to make a few remarks about tariff and price setting and echo the words of the noble Lord, Lord Warner, who reminded us that there are two equally important mechanisms: tariff development, which is the responsibility of the national Commissioning Board; and price setting, which is the responsibility of Monitor. It is critical that Monitor retains the responsibility to set prices. That enables it to uphold its responsibilities for sustainability and balance the interests of commissioners and providers in the patients’ best interest. Independence in price setting is utterly critical. We have seen previously that not having independence from the executive arm in the NHS has been a disadvantage in getting the right prices which reflect the complexity of the issue concerned. I take the point made by the noble Baroness, Lady Thornton, that the development of tariffs is a very complex matter. It is work in progress but the work never stops. That has been the case in all countries that have developed tariffs and will be for the foreseeable future. We need flexibility when designing tariffs.
I say to the noble Lord, Lord Davies, that we have seen how catastrophic simple price competition has been internationally in driving down quality of service. Indeed, we have seen that in this country, too. Price competition was not helpful. In order to drive down prices and get better value, you need to start designing the tariff around best practice. This was mentioned by the noble Lord, Lord Warner. You need to design a pathway of care based on what should ideally happen to a patient, deliver the clinical pathway, cost that out and get the best practice in place. If that amounts to less than the set price, which it often does, that is the way that you can start to drive down costs while improving quality. A tremendous amount of superb work has been done in a group of mental health trusts looking at best practice tariffs for episodes of care. If we can get that work ongoing in a group of people who are dedicated to designing better tariffs, we will be able to improve price competition by designing the tariff correctly while not striving to be competitive on price alone.
Lord Davies of Stamford
I am very grateful to the noble Baroness for giving way. I made clear in my remarks that I believe one should start by specifying quality—that would include her point about best practice—and then allow the market to bid against that. Where potential suppliers, whether NHS or otherwise, can come in below the existing price—call it the tariff price or what you will—that will be a spur to everybody else to consider whether they can deliver that quality—I stress “that quality”—better, more effectively and more cheaply. That mechanism will be totally absent in the National Health Service if the Bill is not changed in the way that I have suggested or something equivalent.
Baroness Murphy
I take the noble Lord’s point. I think it is possible to introduce the mechanisms that he would like to see through the existing mechanisms in the Bill on tariff design. Those mechanisms would also address the points made by the noble Lord, Lord Butler, about the need to develop an additional payment for certain kinds of innovation tariff. The possibilities for designing tariffs are wide. We do not need to be rigid about this. I do not know how much needs to be written on the face of the Bill. It seems to me that we need to get that separate in our minds from the actual price setting which is more the role of the independent regulator, having got the design of the tariff correct. Therefore, I would like to see Monitor retain its role as a price setting regulator but I wholeheartedly agree that a lot of creative work needs to be done on the tariff to get it right for integrated care packages and proper best practice design.
Health and Social Care Bill
Lord Davies of Stamford Excerpts(12 years, 11 months ago)
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“(5A) Where the commissioner of a health service receives an offer from a service provider licenced under section 80 at a price below the price that is payable by virtue of this Chapter, the commissioner shall seek the agreement of Monitor before placing any order for this service.
(5B) Before acceding to a request from a commissioner in accordance with subsection (5A), Monitor shall satisfy itself that—
(a) the quality of the service to be provided will not be inferior to the same service provided by another supplier at the price payable by virtue of this Chapter, and(b) there will be no consequent unacceptable impact on the structure or capabilities of the NHS.(5C) Subject to the considerations under subsection (5B), Monitor shall not unreasonably withhold its consent.”
Lord Davies of Stamford
My Lords, I had intended to move this, and to take the opportunity to respond to one or two points that the Minister made on my proposal on competitive pricing, but in view of the lateness of the hour I will find another opportunity to pursue the argument with him.
Baroness Murphy
My Lords, I have added my name to this amendment because it fills in the hole in this Bill that I am still worried about. Clauses 95 and 96 contain good ways of intervening early in individual failures on quality and the financial governance of providers that will enable Monitor to get in and do the business it needs to do with individuals, but what we have not got are the mechanisms that will allow Monitor to address at an early stage failures that can be seen coming up in a local health economy.
I have already experienced in the current regime how difficult it is for a regulator to get discussions going locally between trusts and local commissioners on how to address a local service failure. I well remember the whole of the Monitor board going down to the south-west—the trust will remain nameless—to address a failure of the local economy, to discuss it with the strategic health authority and to attempt to come to a conclusion and come up with a plan about how the local economy would solve the problem. The Minister has already mentioned bailouts. The solution was that the strategic health authority would give a bung, which it duly did and which sent the problem away. But in fact the problem did not go away because the local economy was still failing.
It is this early failure—where you can see that things are mounting up, that it is not going to work and that the sums are not going to add up—for which we need some mechanism. This is a clever scheme, but it may be too interventionist. It may be put into blocks which are too chunky to be inserted into the Bill as it is. But we need to address the problem of failure before it gets to the point of administration. As the noble Lord, Lord Warner, says, Monitor will not want to implement the failure regime and the administration regime until things have gone desperately awry. It should not implement the failure regime when the problem is an economy problem and not a trust problem. We need to have some reassurance that there will be some support for local people who are trying to tackle this in a meaningful way.
Lord Davies of Stamford
My Lords, I do not want to hold up the House for too long, but I feel that someone should respond to my noble friend Lord Warner’s amendment on behalf of what he rather dismissively described as the elected political class. I am proud to say that I was a member of that elected political class for 23 years, representing Grantham and Stamford. In the course of those 23 years I had to take action to save both Grantham hospital and Stamford Hospital, separately and at different times, when they were threatened with closure. I used all the methods which my noble friend is no doubt familiar with: meetings with Ministers, lining up local government support, petitions, threatening judicial reviews—even potentially funding a judicial review—and heading major marches. I remember leading over 9,000 people through the streets of Grantham and 5,000 through the streets of Stamford. We won in both cases. Grantham is still a very successful local district hospital and Stamford is a smaller hospital—what you might call a cottage hospital.
The point I wanted to make is this: I would have welcomed the sort of report from Monitor which my noble friend is suggesting. If one wants to save one’s local hospital, and one wants to make sure that the right decisions are made about the health of one’s constituents, one wants a warning as early as possible about the financial or clinical problems—or both—that may be arising. There are often all sorts of alternatives that one can find to closure. It is important for democratic confidence in the NHS that all the possibilities are thoroughly explored and everybody is content that the decision has not simply been taken behind closed doors and then announced to the public when there could have been some initiative that might have saved the day. On behalf of the—slightly dismissed—elected political class, I thoroughly support the amendment of my noble friend.
Health and Social Care Bill
Lord Davies of Stamford Excerpts(12 years, 11 months ago)
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Lord Davies of Stamford
This is a very difficult situation and I am very much in sympathy with the noble Lord’s amendment, but I wonder whether he would address the one reservation and concern on which I imagine I may not be alone: if we cease to charge for HIV treatment and diagnosis, as the noble Lord suggests, that could constitute an incentive for people to come to this country to exploit that possibility, given what he has already said about the expense and difficulty of receiving that treatment. Indeed, it could be an incentive for people to deliberately overstay their visa or become illegal immigrants to this country.
Lord Fowler
I will obviously deal with that issue, because it is crucial. If the noble Lord would be as patient as I have been in waiting for the opportunity of this debate, then all will be revealed to him.
It is probably the black African population who are most affected by the current policy, yet it is here that the Government’s policy of prevention has been most concentrated. We need to remember that late diagnosis of HIV, leading to the late start of treatment, is one of the major causes of serious ill health and early death. Yet, here we are, pursuing a policy that deters treatment and testing, from which the only logical result can be that late diagnosis. If you want a monetary argument, you have to add the additional costs of treatment for that individual plus the cost of those who may be further infected. On the face of it, it is not a prudent financial policy.
Why do we therefore pursue such an apparently reactionary and foolish policy? Here I come to the noble Lord’s point. Only one argument has ever been put forward. It is that if the rule were to be lifted there would be a danger of “health tourism”. This is an argument based entirely on assertion. As far as I can see, there is no evidence whatever for it. My Select Committee looked at this point, as the noble Lord will know because he has read the committee’s report on this matter. The same rule is not applied in Scotland, Wales or Northern Ireland—either as policy or in practice. Has there been an influx of those suffering with HIV to Edinburgh, Cardiff or Belfast? Of course not. My Select Committee could find absolutely no evidence in this respect. If there is such evidence, I invite the Minister to give it or any other evidence that she may have on health tourism, because, so far, it has never been put.
The crucial point against the law in England is that it is not enforced in any event. It is incapable of being enforced. The patients are usually destitute. A hospital gives the treatment. Then it pursues the charges. Then it finds out that the patient cannot pay and it writes off the whole amount. As one of our witnesses said, it is a constant circle of nonsense. That is the position that is being defended at present.
I have not yet heard any sensible defence of the present position. As a matter of principle, Parliament should not pass laws which cannot be enforced; and as a matter of practice, Parliament should not pass laws which add to the problems of public health and do not reduce them. If the Government are serious about their intent to put prevention first, this law should be repealed. I beg to move.
Health and Social Care Bill
Lord Davies of Stamford Excerpts(13 years ago)
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Lord Davies of Stamford
I am most grateful to the Minister for giving way. Could, or would, the mandate include any way to prioritise between the potentially 35 different tasks that are being imposed on the board?
Earl Howe
It could do. However, that is to be determined. I would welcome the views of the noble Lord on that, if he has particular examples in mind.
This brings us to the question the noble Lord, Lord Hunt, asked about the period which the mandate will cover. It will be a multi-year document, updated annually, which is intended to provide a stable policy context for the board. There may be circumstances which call for the mandate to be updated in-year, including after a general election, to ensure that an incoming Government could start to implement their manifesto commitments for the NHS in-year. Any revisions to the mandate will be open and transparent. If the mandate is revised, it must be published and laid before Parliament with an explanation of the changes.
I will now comment on Amendments 98 and 100, tabled by the noble Lord, Lord Warner, and Amendment 100A, tabled by the noble Lord, Lord Hunt. These rightly highlight the importance of transparency and parliamentary scrutiny of the mandate. I completely sign up to transparency as a principle. In the first place, there will be a public consultation. Alongside that, we will engage with stakeholders, including the board, to ensure that we set ambitious but achievable objectives. It is essential that the Government hold the board to account for objectives that are achievable. It is not in anybody’s interests to set the board up to fail. At the same time, where there is scope for improvement in the health service within the resources available, the mandate should and will ask the board to drive such improvements.
Ministers have a legitimate right to be ambitious on behalf of citizens and taxpayers, but we know that getting the balance right and setting objectives that are affordable and ambitious will not be straightforward. Much of the answer lies in transparency. There will be open public consultation on the Government’s objectives for the NHS. I can assure noble Lords that the process of developing the mandate will be open and consultative, including a formal 12-week public consultation. We intend to publish a consultation response as well as a summary of the responses we receive.
I point out that the Bill places a duty on the Secretary of State to consult the board and HealthWatch England before specifying the objectives and requirements in the mandate. We should be clear about how that changes the current arrangements. At present, decisions about the Secretary of State’s priorities for the NHS can be decided without reference to, or consultation with, anyone, as we saw under previous Governments. Top-down targets can be set without consultation. The priorities for the NHS are issued around this time every year through an operating framework without any need for consultation. Under the Bill, for the first time parliamentarians and the public will have the opportunity to consider and challenge the Government's objectives for the NHS every year. No previous Government have ever allowed this. It will highlight and reinforce, year by year, Ministers’ overarching responsibility for a comprehensive National Health Service free at the point of need.
The consultation will provide a period in which Parliament will be able to scrutinise the Government's proposals—as will the Health Select Committee if it chooses. It is appropriate that this consultation should take place before the mandate is published. We must provide clarity of purpose for the NHS. A period of additional parliamentary scrutiny after the mandate is published, which is what the amendment proposes, would be disproportionate and very disruptive. It would reduce the time the NHS has for planning and would create uncertainty in the service.
There will of course be formal parliamentary control over any legal requirements set for the NHS through the standing rules and any other regulations. The Bill not only gives Parliament an unprecedented role in setting out the roles and responsibilities in the NHS but increases parliamentary scrutiny by requiring detailed parameters and requirements to be set in regulations rather than in ministerial directions that have no scrutiny at all. I hope that noble Lords will give the Government credit for that package of proposals.
In addition, we have accepted the recommendation of the Delegated Powers and Regulatory Reform Committee that the requirements in the mandate should have the force of legislation and should be in an instrument subject to the negative procedure.
Health and Social Care Bill
Lord Davies of Stamford Excerpts(13 years ago)
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Baroness Armstrong of Hill Top
Briefly, this is a very important set of amendments, which we do not have time to deal with effectively in the next 10 minutes. I understand that the Government do not want to spend more money. Indeed, the Minister said earlier that the whole idea was to cut down the amount of money spent on CCGs, relative to what was previously spent on PCTs. The problem is that there will be more CCGs than there are PCTs and there is deep anxiety over the lack of clear governance. The Government have a problem here. So far we have had clues that there is to be accountability upwards. These amendments make it clear that there must be accountability downwards, too.
As the noble Baroness, Lady Finlay, said, GP groups are different from other groups in the National Health Service. They are not used to this level of accountability or this level of governance—even at the level that the Government have already put into the Bill. Nobody outside, particularly in other aspects of the NHS, thinks that the governance in the Bill is adequate. I share the concerns that other people have expressed tonight; I share the concerns about coterminosity.
I have mentioned previously to the Minister that Durham is now a unitary county. We used to have seven PCTs in Durham and Darlington; we now have one. We will have three CCGs. I do not believe that that will be cheaper and I am not yet convinced that it will be more effective for commissioning. The Government have a lot to do to reassure people that this will be more effective and that it will be accountable. There are many GPs who are now anxious the other way around. They are anxious that if they go into CCGs, the level of accountability, governance and bureaucracy will be so great that they are saying, “We’re not sure we want to have anything to do with it”.
This is an area where I suspect the Government will say that, in all truth, this is not where they want to be. However, this is where we are and the responses that we have heard so far simply do not meet the level of anxiety and the need for accountability that everyone thinks is there.
Lord Davies of Stamford
My Lords, what I want to say might have been a little long as an intervention in the Minister’s speech but it will be very short as a speech. I simply want to ask the noble Earl, when he replies to this debate, to address in a considered way how the Government intend to deal with an enormously significant and worrying conflict of professional interest that could arise in this context. Anyone who is a member of a clinical commissioning group, whether he or she is a GP or not, must presumably be committed and signed up to the priorities, policies and plans of that clinical commissioning group. However, where that individual is also a GP who has his or her own patients, some of those patients may have conditions that do not get a very high priority in those plans and policies. Surely there is an immediate conflict of interest. In the present circumstances, the GP can say to his or her patient: “I am doing my best to battle with the PCT to get the treatment that I really think you need”. However, in the situation that arises as a result of the structure in this Bill, that GP would be on both sides of the table. He would be arguing with himself and making representations to himself. Surely the noble Earl would agree that it is a thoroughly unsatisfactory situation. Can he assure the Committee that it will not arise and, if it does, that the Government have a clear set of rules or procedures for dealing with it?
Earl Howe
My Lords, we have had another well informed and stimulating debate. I will start by going back to the beginning. On paper, clinical commissioning groups can seem like a dry concept, but I would encourage your Lordships to look beyond the words and duties on the page and consider what CCGs will be able to achieve in practice. GPs and other front-line professionals already make the clinical decisions that determine how most NHS resources are used. Putting them in charge of shaping services will enable NHS funding to be spent effectively to provide high-quality care.
I have seen at first hand the work of primary care clinicians—GPs, nurses, allied health professionals and others—in leading the commissioning of services. I have been struck on numerous occasions by their dynamism, innovation and their absolute dedication to ensuring that their patients receive high quality care. It is in that context that we should consider our debates on this topic, including this one, which have focused primarily on ensuring that CCGs have effective governance arrangements, but have also touched upon CCG boundaries.
I do not agree with the noble Baroness, Lady Armstrong, that the arrangements are weak. We have already responded to the Future Forum’s recommendation to strengthen the Government’s arrangements for CCGs and made it a requirement for every CCG to have a governing body. We recognise that good governance will be critical to the design and operation of CCGs, in order that they act transparently, manage conflicts of interest and have the proper checks and balances in place to provide assurance that decisions are taken in ways that protect patients' best interests, promote continual improvements in quality and provide assurance that public money is well spent.
That is why I believe that the Bill already achieves the intent of Amendment 60, which would place the Secretary of State under a duty to publish a code of conduct for CCGs, incorporating the Nolan principles on public life. I am fully in support of CCGs adhering to the principles established by the Committee on Standards in Public Life. However, new Section 14L already states that the main function of a governing body of a CCG includes ensuring that the group complies—and these were the words quoted by the noble Lord, Lord Warner—
“with such generally accepted principles of good governance as are relevant to it”.
The Nolan principles, or any successor principles which the Committee on Standards in Public Life or another body was to issue, would be foremost among these. However, the provision in the Bill will also encompass any other relevant, generally accepted principles of good governance issued by appropriate bodies, such as the Institute of Good Governance, and therefore has the potential to be of wider effect. That is why I feel that Amendment 171 is also unnecessary, as it appreciably narrows the field of vision of the governing body.
In addition, the Bill already sets out other provisions which relate to a CCG’s conduct. For example, with respect to the constitution of a CCG, the constitution must include arrangements for ensuring absolute transparency. It must specify the arrangements for discharging the CCG’s functions, its decision-making process, how it will secure transparency about the decisions of the group, and how it will deal with conflicts of interest of members and employees of the CCG or members of the governing body.
Health and Social Care Bill
Lord Davies of Stamford Excerpts(13 years ago)
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Lord Davies of Stamford
My Lords, the first thing I want to say in the light of the Minister’s comments a moment ago is that of course I read his letter dated 7 November to my noble friend Lady Thornton, which was copied to a number of us. I think the Minister deserves considerable credit for it. I have no doubt at all that the letter was written in total good faith and was totally sincere. The Minister is trying to see if a compromise is possible: whether there is something that would be an improvement both to the existing text of the Bill and to the various amendments that have been put down. It is a creditable initiative on his part. I have tried in the past as a Minister myself to do things in that direction and I do not think the Minister should be penalised for that in any way.
Equally, as he said himself, the Minister does not want to inhibit the freedom of debate in any way this afternoon. It is very important that we express our views, because they can be taken into account when those informal consultations subsequently take place. If in fact his aim can be achieved and we can get something that we can all agree to, everybody should be happy. That is because we will be content that the Bill will be improved and the Government will find that they have a much easier ride on Report and Third Reading. If there is an agreed solution to this and other problems, I trust that the whole thing will go through Report and Third Reading like a dose of salts. Everybody could be satisfied with that outcome.
This group of amendments includes a clause stand part debate, and this clause raises two very important issues. First, I do not think that micromanagement is ever a good idea. You cannot run a business on that basis; when running a business you must appoint the best people you can find and let them get on with the job. It is exactly the same thing in respect of the armed services. Micromanagement is always a mistake in running or managing any human institution. That pretty much goes without saying.
The problem is that good management sometimes needs the ability to intervene very rapidly in a crisis, when things are going wrong. You cannot allow yourself—if you are going to have a well managed organisation—to be inhibited by bureaucratic procedures or rules from taking the necessary action to make sure that things are set right on the front line. That is probably more important for the NHS than any other human institution I can think of, because, literally, the activities of the NHS are a matter of life and death. Of course, that happens to be true of the armed services as well, but there are not many institutions of which that is true. The general principle is there.
My first point is that many of us are worried that, if the Bill is passed, there will be insufficient ability by the Secretary of State to take that necessary action, perhaps very dramatically, in a crisis. That is a matter of deep concern. There is of course—and I hope I do not offend either the noble Earl or others on the other side of the House by saying this; they know this perfectly well—a real concern out there in the public that the reason why the Bill has been drafted this way and why the Secretary of State’s powers have appeared to have been, or some people feel they are being, emasculated, and the reason why autonomy is being emphasised, is that the Government think there is going to be a crisis in the NHS. The Government are not going to be funding the NHS at the same rate as the last Government did.
I accept that a lot of the money that we spent was not spent with enormously good value and probably too much was spent on paying more for inputs—perhaps excessive pay rises—rather than buying new outputs. A lot was spent on bureaucracy. Nevertheless, the bulk of it was spent immensely usefully. It was an incredible achievement to get maximum waiting times down from 18 months to 18 weeks. There is a general feeling out there that that progress is not going to be sustained and that this Government are not going to be committed to funding the NHS in the same way. They are trying to make savings of £15 billion to £20 billion, we hear. There is going to be a crisis and some nasty news coming through; hospitals are going to be closed and so forth. At that point, the Secretary of State is going to be able to turn round, because of the effect of this Bill if it becomes an Act, and say, “Don’t talk to me—it’s not my responsibility. Go and talk to the national Commissioning Board or your local clinical commissioning group. Go and talk to anybody. Don’t talk to me”.
We have that already. I am a total supporter of the independence of the Bank of England. I refused to vote with my then party, the Tory party, when it opposed that independence. However, an inevitable consequence of making the Bank of England independent is that when we have questions here on monetary matters, the Minister who is responding—quite normally and naturally—says, “Don’t talk to me about it, go and talk to the governor or the Monetary Policy Committee. Don’t talk to me”. We do not want that situation to arise in relation to the NHS. That is the issue raised by this particular clause.
Secondly, I do not think that micromanagement or political management is actually the real problem in the NHS. I am sure there has been unfortunate political intervention and interference over the history of the NHS, and there is no doubt that is the case, but that is not the real problem. The actual, fatal tendency of the NHS—the besetting sin, if I can use a theological concept—is something quite different. Its fatal tendency is bureaucratic or producer capture: the tendency of any organisation that is in a monopolistic position to be run for the convenience and in the interests of those who are providing the service, whether doctors, nurses, managers or whatever. That is the problem we should really be addressing.
However, I am awfully afraid that the way this clause is drafted at present, far from acting as a barrier or corrective to that unfortunate tendency, may actually reinforce it. The text we have before us says that any person,
“exercising functions in relation to the health service”—
must be,
“free to exercise those functions or provide those services in the manner that it considers most appropriate”.
That seems almost an invitation to bureaucratic or producer capture.
I am not actually sure, with great respect to my noble friend Lord Warner—whose knowledge in this area I greatly admire—that his amendment fully addresses that. The amendment says,
“leave out ‘manner that it considers most appropriate’ and insert ‘interests of the health service’”.
That is a little ambiguous—the interests of the health service could indeed be what I define as the producer interest of the health service. I would much rather that it said “in the interests of the patient”, or “according to the principles of the NHS”. That would be clearer and would address the point that I am making.
Something needs to be done to redress the balance against this fatal tendency for the NHS to be run in the interests of producers, where the patient simply sits in line and then is grateful for what he or she receives. That is a culture we want to oppose and against which we must introduce long-term, structural, corrective mechanisms. That is a vital task for anybody framing a Bill to manage the future of the NHS.
Health and Social Care Bill
Lord Davies of Stamford Excerpts(13 years ago)
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The Archbishop of York
My Lords, I also support the amendment. Like the previous noble Lords who have spoken, I think that this amendment should be put into this part of the Bill. As the noble Lord has just said, the Secretary of State’s duty is to improve the quality of services. The greatest need in our nation is to ensure that the quality of services is improved. How is that to be done? The amendment is a helpful pointer to integrating the clinical delivery of health and social care. The Secretary of State should have a duty to make sure that the delivery of those is integrated. I also know that if that is not done, the duty—already provided for in the first two subsections—will not be carried out. Integrating the delivery of services will be important.
I already have my copy showing how the new NHS structure will work, and if the noble Earl wants a copy, he is more than welcome to have one. The proposed structure of the reformed NHS under the Bill is complex. Some of the relationships are not clearly defined. I happen to believe that integrating the delivery of health and social care will go some way to addressing this complex structure. People will know that the two areas are being integrated in their delivery. The NHS Commissioning Board is of course key, and will become even more so in the case of the failure of a clinical commissioning group. I should have thought that the Commissioning Board needs to know that it is working to make sure that both services are integrated.
It is also clear in the Bill that the role of Monitor will need to be defined and watched carefully if it is not going be the route for introducing harmful levels of competition. If you are going to integrate the delivery of health and social care, Monitor and whoever is delivering will have to be sure that this is being done in an integrated way. Part of the solution, it seems to me, is to ensure the clinical integration of the delivery of health and social care. The amendment is intended to ensure that there is another, further duty on the Secretary of State to ensure the delivery is integrated.
Lord Davies of Stamford
My Lords, it is clear from all the contributions this evening what an important element in all medical care integration is. Of course, all of us have intuitively known that all along. If any of us have a medical problem, we all hope that we will get a diagnosis which will integrate the perspectives of the different specialists who may be relevant and the results of different diagnostic tests and that we have a package of care prescribed for us that is coherent and will be delivered in a predictable way with a clear structure of responsibility for delivering it. No one would deny that.
Amendment 12 is about the integration of social care, secondary care, and hospital care, NHS care. This is the first opportunity to discuss the issue. Things are not working well at all in this area, and I do not think that they ever have. I know from my experience in Lincolnshire—and it will be hard to persuade me that Lincolnshire is very different from any other part of the country in this matter—that there is a whole mass of perverse incentives and behaviours at the expense of the patient. If any social worker under pressure of a budget is confronted with a crisis—some old person who can no longer cope in some way—his or her first reaction, naturally, is to try to secure an admission to an acute hospital, especially if the patient under means-testing would be a drain on their budget, to get the patient on to the National Health Service.
Equally, any social worker is extremely reluctant to accept patients from acute hospitals on discharge. All kinds of ruses are adopted to try to keep the patient a bit longer on the NHS budget rather than on their budget. At present, there are financial penalties, at least in theory, for social care organisations and social services departments of local authorities which decline to accept patients who need social care as a condition of their discharge from an acute hospital, but there are all kinds of ways of avoiding that and delaying the evil moment when the patient suddenly falls on to the budget of the social services department. That system is not working well at all. That causes enormous anxiety, literally every day of the week—it is not an exceptional situation—to patients, their families and carers, who are the victims of it.
The perverse incentives can work in exactly the other way. I remember all too clearly how, at the time of the previous Conservative Government, they closed down most of the geriatric and other chronic wards and facilities in general hospitals, pushing patients out on to the means-tested social care sector. That was very cynical. There may sometimes have been clinical excuses for doing that, but they were just excuses. I knew at the time that the motivation was to try to massage the growing deficit of the NHS, which would have been even worse if it had been accounted for on the basis of constant business. I remember talking about it to the Secretary of State at the time, but she asked me not to say anything about it in public. It was a scandal. That is another example of the perversities that can exist in this area.
Sadly—I deeply regret this—the Government have not taken the opportunity to adopt the obvious solution, which would have been the radical reform, which is to integrate social services with the NHS and the provision of medical care. That worked extremely well in Northern Ireland, where I had the privilege of being shadow Secretary of State for several years. I saw how that system worked, where there is integration. Two distinguished noble Lords from Northern Ireland are here, the noble Lord, Lord Alderdice—the noble Lord, Lord Empey, has just left the Chamber. I think that they will bear me out in saying that it works extremely well in Northern Ireland.
I am quite sure that the Government considered the theoretical possibility of adopting the Northern Ireland model in England. Why did they not do it? In what respect is Northern Ireland different from England such that a system that works well in Northern Ireland could not work well here?
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, all the amendments in this group have the entirely laudable aim of improving the integration of services across health and social care and improving access to services. I agreed strongly with many of the messages which the noble Lord, Lord Warner, delivered in his excellent speech, and with so many of the powerful contributions from other noble Lords. The only person with whom I felt seriously out of sympathy was the noble Lord, Lord Davies of Stamford. I would simply say to him that the Bill contains a number of provisions to encourage and enable the NHS, local government and other sectors to improve patient outcomes through far more co-ordinated working.
For example, the reformed system that this Bill will give form to—the provision of high-quality, efficient and fair services—represents the fundamental goals of the health and care service. This clause puts on to a statutory footing the three domains of quality identified by the noble Lord, Lord Darzi, in his next stage review: effectiveness, safety and experience. Every aspect of healthcare quality fits into the Darzi domains, and that is a tribute to the noble Lord’s work in co-producing the quality framework with patients and the professions, and it is also why the domains still provide the framework for quality.
In answer to my noble friend Lady Jolly, or at least to give her a partial answer, we seek to measure success in meeting these fundamental goals through the transparent accountability mechanisms of the outcomes frameworks for the NHS, public health and social care. Integration and access, though laudable objectives that I share with all those noble Lords who have spoken about them, are a means to this end. If integration and access help the NHS to meet the quality and fairness duties—and by fairness I mean reducing inequalities—then integration and access will need to be factored in to commissioners’ plans. Commissioning guidance will set out how best to achieve this based on the accredited evidence of what works best that NICE is developing in its quality standards and other guidance.
The point is often made that high-quality care must surely be integrated care. Integration is not an outcome, it is a possible feature of the process. Where it will improve outcomes and reduce inequalities, integration should most certainly happen, and this Bill provides for that. But we must not sacrifice outcomes for process. I thought the noble Baroness, Lady Armstrong, injected a welcome dose of reality on that theme borne out of her considerable experience, and although I did not fully agree with everything that the noble Baroness, Lady Wheeler, said, she also made some very sensible comments on that point. Indeed, the NHS Future Forum’s Phase 1 report highlights well the practical rather than legislative challenge of bringing about more integrated services for patients. I shall quote from its summary report, which states that,
“legislating or dictating for collaboration and integration can only take us so far. Formal structures are all too often presented as an excuse for fragmented care. The reality is that the provision of integrated services around the needs of patients occurs when the right values and behaviours are allowed to prevail and there is the will to do something different”.
Lord Davies of Stamford
My Lords, I am most grateful to the noble Earl for giving way. Of course we all agree about the importance of the right values and behaviours. I know he did not like my questions, but perhaps he would answer at least two of them. First, what concrete, specific measure in this Bill, if any, addresses the perversities currently existing in the integration of social care and NHS care? Secondly, what about Northern Ireland? Why is the system that exists in Northern Ireland, where the provision of the two is entirely integrated, not suitable for England?
Earl Howe
My Lords, if the noble Lord will be patient, I will proceed and answer his questions at the end, as I normally do.
It was in recognition of these practical challenges that the Government asked both the NHS Future Forum and the King’s Fund, jointly with the Nuffield Trust, to provide further advice on the practicalities of achieving more integrated services around the needs of patients. We look forward to receiving their advice later this year. So we share entirely the intentions of noble Lords, and that is why Clauses 20 and 23 contain proposed new Sections 13M and 14Y to create duties for national and local commissioners to promote integration across health and social care—that is the first part of my answer to the noble Lord, Lord Davies.
New Section 13M creates an NHS Commissioning Board duty to promote integration. Rather than simply requiring the board to encourage clinical commissioning groups to work closely with local authorities, as under this amended duty, the board is required to promote integration by taking specific action to secure that services are provided in an integrated way where it considers that that would be beneficial to the people receiving those services. The duty requires the board to exercise its functions with a view to securing that health services, health and social care services and health and other health-related services are provided in an integrated way where it considers that this would either improve the quality of health services and the outcomes they achieve, or reduce inequalities in access to and outcomes from health services. By other health-related services, I mean services such as housing, which may have an effect on the health of individuals but are not health services or social care services.
This requirement would cover both integration between service types—for example, between health and social care—and integration between different types of health services. Whatever the combination and however they are integrated, the practical effect should be that services are co-ordinated around the needs of the individual. This would apply to all the board’s functions not just when exercising its commissioning functions, including when it exercises public health functions under arrangements with Public Health England.
The duty also requires the board to encourage clinical commissioning groups to enter into partnership arrangements with local authorities under Section 75 of the NHS Act 2006 where this would secure the provision of services in an integrated way, or that the provision of health services is integrated with the provision of health-related services or social care services. Proposed new Section 14Y creates a similar duty for local clinical commissioning groups.
The changes to the regulatory framework give Monitor a role in Clause 59 in relation to improvement in quality and fairness as well as efficiency.
The question then is: what actual risk exists of fragmentation at the national level? There is no such risk. Our outcomes frameworks span public health, the NHS and social care; the Secretary of State will aim to improve outcomes in all three components of the care system; NICE will provide quality standards across the whole patient pathway that will push for integrated care; and the care system, nationally as well as locally, will have to pay attention. The Secretary of State’s duties and his actions are, in other words, an embodiment of integration.
Our reforms are firmly focused on improving quality and outcomes for patients. We are not in the business of dictating the processes by which this improvement might be achieved, or trying to measure success in terms of whether a particular process has been put in place regardless of whether it actually delivers a good outcome for patients. I make no apology for that. We are of course committed to enabling and facilitating integration, but integration is neither a necessary nor a sufficient condition of a good outcome.
Perhaps more importantly, our reforms aim to encourage measurement and reporting throughout the system that will tell us whether it is achieving what we have said it should achieve. Accountability should finally have arrived at all levels in the system. Improvement should result and will be understood through the outcomes frameworks in terms of the actual outcomes achieved and those that matter most to patients, service users, their families and carers and the wider public.