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

Debate between Lord Owen and Lord Warner

Wednesday 24th April 2013 Lords Chamber

[Lord Warner]

If the noble Baroness was listening, I think I declared my registered interests at the beginning of my utterances. She is very welcome to look at the register, which will show those particular interests, but they do not shape my view. I would like to finish the argument. If noble Lords want to go on interrupting me that is fine, but I would like to finish the arguments which substantially substantiate the case for accepting these regulations.

As I was saying before I was interrupted, these rules are very similar to the rules produced under the previous Labour Government but with the addition of some sensible provisions on integration. Let me remind colleagues that these regulations are totally compatible with the policy of using the independent sector in the NHS set out in the 2005 election manifesto of the Labour Party. Some may recall that Labour won a third election on the trot with that manifesto. I also remember, as a Minister, implementing the NHS parts of that manifesto with a policy of “any willing provider”. Many of the interests opposing these regulations look remarkably familiar to me from those days.

Even in the swashbuckling new Labour days of modest NHS competition, most PCTs’ contracts were rolled forward each year under that regime without any tendering process, competitive or otherwise. My guess would be that there were probably somewhere of the order of 50,000 of those contracts each year. It would have been totally impracticable and unnecessary to put many of those out to competitive tender each year, or even every three years. It will be the same with the 211 clinical commissioning groups. They will not be able to put out to tender on any great scale a large number of contracts, and they will be operating with a smaller number of staff than the PCTs.

The clinical commissioning groups will have to concentrate their change efforts on those services where there is continuing failure or underperformance, or where it is clear that there is a bigger prize of patient benefits from a major overhaul and out-tendering of services. I suggest that it is almost a paranoid fantasy to suggest that David Bennett and Co. at Monitor, with about 40 staff working on competition issues, will be able to act as a kind of Stasi outfit, rounding up clinical commissioning groups which have not recorded enough competitive tendering processes.

I am afraid that I have to disagree fundamentally with many of my colleagues. My sympathies are with the Minister over these regulations. He has done his best, in his customary patient way, to clarify them. In my view, they are perfectly acceptable in their present form and can always be amended in the light of experience. To my colleagues on these Benches, I would say that we ought to remember what was satisfying to the British public when we were winning elections. This approach of injecting, on an agreed basis, some measure of competition and change where NHS public providers are consistently failing is in the best interests of patients.

[Lord Owen]

My Lords, the noble Lord and I served together in the Department of Health many years ago, and he will remember that his then boss, Barbara Castle, warned in the 1975 referendum about the impact of the European Economic Community, as it was then called. I thought she was greatly exaggerating the challenge, but it was interesting in that campaign that the allegation that the European Economic Community contained within it the capacity to interfere in the National Health Service was specifically denied.

As I understand the last two speakers, a great deal of justification for this regulation comes from an obligation under EU legislation to go in the direction that we are presented with—competitive tendering, potentially in all aspects of NHS care. Why is this not being done in Scotland, Wales and Northern Ireland, all of which are in the European Union and all of which ought, if this is so compelling, to be under this obligation? Why is it not being done in Finland, Denmark and other countries? Why was specific provision made in the European Union for people to exempt publicly provided services? Why did successive Governments argue that the National Health Service was not going to be covered by EU legislation?

The last speaker’s intervention was painful for many of his colleagues on the Labour Benches, and it is probably right that we should be discussing, as has been already suggested, the 2010 regulations as they affected PCTs. Were they driven by EU legislation? The Minister knows that I tried to get from him through a freedom of information request the advice on which the Government’s legislation was founded, because I felt that we were not being told the truth behind our relationship with the European Union. It was very difficult to hold this debate without knowing the actual legal advice. I hope we will get that. I do not want go too far into all these issues in this debate, but underneath it there is a fundamental question. The National Health Service, as it was conceived, had a substantial element of public provision within it. There then came the provisions of the internal market, which I thoroughly supported and have always believed was necessary. Doctors had to be more conscious of costs. The whole health service had to be aware that it was making considerable economic decisions, often involving budgets of millions of pounds. There had to be a mechanism for cost comparison as a simple measure of good management.

In this regulation we are presented with the full impact of the 2012 Act. It has been hitherto denied, but within this Act is the potential—and I agree somewhat with the remarks that it will take some years for it to evolve—to have a fully marketised National Health Service. If that is the choice, the people of this country should be told about it. They should know that this is the direction in which we are going.

I will now deal with the regulations. We have had the fiasco in which our own scrutiny committee on statutory instruments has been highly critical not just of the statutory instrument that has been withdrawn but of the present one. The committee has also felt that the regulations have not been understood and have had sufficient consultation. We do not even have the consultative document, which we are told is so important, in front of us today. Maybe that is a good thing because it focuses our mind on the legislation. What is the law? That is why subsection (5) is so difficult for many people.

Let me say here what Help the Hospices and Marie Curie Cancer Care think about this. They say:

“The Regulations as they are currently worded will mean that competitive tendering could become mandatory in all but the most exceptional circumstances”.

I stress the word “could”. We cannot leave this as an open question. They say:

“Given the burden of having to put each individual service out for tender”—

which has been mentioned—

“CCGs will tend to bundle services together to put out for contract, as currently happens in local government”.

Quite apart from the fact that the comparison between local government and the NHS does not stand up for one moment, they are right—this, again, has been said—that bundling will take place. The problem for charities and for small funded organisations is that if contracts are bundled, this could put them out of the reach of the voluntary sector providers, which by their very nature are providers of specialised care—unless they are going to be embraced by the bundled commercial companies, and many people think that that is the direction in which we are going.

The charities say:

“If voluntary sector providers are forced out of the market then this could have a negative impact on patients and the communities they live in”.

Most of us have heard of the hospice movement in our localities, which has brought about a massive change in attitudes in the health service that has been very beneficial. Most of us have also had experience of the effect and the value of the Marie Curie foundation. Are we seriously just to ignore these charities when they come forward with these views? Are these changes politically motivated? Are they driven by some ideological persuasion? Are they committed to what was being experimented with in 2010, 2012 and now 2013? We are warned by many professional people, particularly public health doctors, of the effect of these changes.

We have looked at the NHS over many years and pride ourselves on it. It is not perfect, it never was, but it still provides a hugely cost-effective rationed health service and is popular. Why is rationing popular under the NHS? One reason is that it is democratic. People feel that in the general sense it is fair. However, we are now being asked to put all these decisions to an unelected quango. We are now accompanied by a letter that tells us when we can expect to get answers from Ministers and when we will have to have answers from quangos. Is this a change in the NHS? You bet it is. Is this the health service that Aneurin Bevan conceived of? Is this the idea that I thought the Labour Party was wholly, absolutely and totally committed to?

The charities go on to say:

“The problem hinges around the use of the word ‘capable’ in Section 5 of the Regulations”.

They are right to say that. They fear that,

“‘capable’ will be interpreted narrowly to mean only that a provider is able to provide the service within the budget set out by the commissioner. This means that … There will be few if any services where there is only one capable provider … Providers will feel confident to regularly challenge CCGs’ commissioning decisions … Without legal cover to award contracts without advertising, CCGs will simply put all services out to competitive tender to avoid challenge”.

Lawyers in this area tell me that of course they should be opposing this legislation, but in terms of their own financial development—the income that they are going to get—they are of course wholly in favour of it. Consultancies in healthcare are straining at the leash in the United States to come over here and make profits that they cannot make even under some of the HMO arrangements in the US. For 18 years I was on the board of a massive healthcare company in Chicago, and it used to watch the NHS. My wife is American, and she still thinks the NHS is the best thing that she found in coming to this country.

I warn this House: do not think that this is a minor step. If this goes through, the NHS as we have seen it, believed in it and persuaded the electorate that we support it, will be massively changed. It will take five, 10, 15 or maybe 20 years, but unless we pull back from this whole attitude there will be no National Health Service that any of us can recognise, and tonight I feel one feeling only: overwhelming sadness.

Health and Social Care Bill

Debate between Lord Owen and Lord Warner

Monday 19th December 2011 Lords Chamber

[Lord Warner]

My Lords, Amendment 344 in this group, in my name and that of the noble Lord, Lord Patel, and the noble Baroness, Lady Thornton, has been prompted by the Government’s apparent wish to remove NICE from technology appraisals of new drugs to assess their cost-effectiveness.

I join my noble friend Lord Hunt in paying tribute to the work that NICE has done. These technology appraisals were the original purpose of NICE when it was set up, against the wishes of the pharmaceutical industry. It has done sterling work in this area which has provided it with an international reputation. One of the strange ironies of this is that the pharmaceutical industry has come almost to love NICE, because the commercial value and standing given to some of its new products when companies receive a positive appraisal by NICE has been considerable. When I went to America to make my peace with some in the pharmaceutical industry after cutting their prices, and after they sometimes broke down in tears over the drop in their profits, they would say that if the mean NHS was willing to pay for those drugs, they must be good things in themselves.

Value-based pricing still looks to be some way off and it seems premature to many to remove NICE from the sphere of technology appraisals—here, I should declare my interest, because I have been a Minister with responsibilities for NICE. I want to press the Minister to tell us more about the arguments for removing NICE from this work, particularly given the financial challenges faced by the NHS, and whether the Government will think again about technology appraisals and NICE’s responsibilities there. That is the purpose of the amendment; I look forward to hearing the Government’s views.

[Lord Owen]

My Lords, I wish to extol the merits of NICE after watching it from the other side, which is the pharmaceutical industry. It is certainly true that the United States pharmaceutical industry was appalled initially by the appointment of NICE and there are still a lot of people who dislike it intensely. Nevertheless, it has established a scientific credibility which is rare in regulatory activities and which it would be absurd to forgo.

I am worried about a lot of the language used about NICE in this legislation. I know that “direct” will be discussed in another context, but there is an overall intent effectively to bring the body into the Government and make it answerable to them. The important quality of NICE, which was established particularly when it first arose, is its measure of independence. If that measure of independence is lost, NICE’s authority and credibility will go with it. I see a lot of merit in ensuring that the appointment of the chair carries not just the imprimatur of the Secretary of State but the imprimatur of Parliament. The Select Committee on Health, which has shown itself over many years to take an informed and knowledgeable view of the National Health Service, is a credible check on NICE becoming not just another annexe to the Department of Health.

I am also concerned about the additional responsibilities being given to NICE. NICE’s quality came from the fact that it was highly focused. That focus was on the pharmaceutical industry but it was also on science and scientific appraisal. It is a great help to the department to have this authoritative, independent view. We all know how easy it is for so-called wonder drugs to get sponsored by newspapers, individuals or trends. What NICE did was to give an authoritative viewpoint, as far as possible objectively, and to take its time sometimes when there was great pressure for an early pronouncement. It was able to withstand that pressure and say, “Until we get more evidence, we will not be able to form a judgment”. We all know that it is very difficult for the department, for Ministers and for people who are in the front line to have that measure of detachment, but scientific evaluation requires it, as well authority that has been built up over a substantial period.

I hope that the Government will not only listen to the proposers of the amendments but take this issue away and ask themselves whether they are not scoring an own-goal. NICE is an organisation that has worked; not many of our organisations in this field work quite so successfully and build such a substantial reputation within the profession which was sceptical about it. I agree with the noble Lord, Lord Warner, that even the pharmaceutical industry has come to see its value. A lot of other countries are looking at NICE and want something similar to be established. A lot of the language in this part of the Bill goes against that trend. I will listen carefully to the Minister’s reply, but I hope that the Government will have a fresh look at this matter.

Health and Social Care Bill

Debate between Lord Owen and Lord Warner

Tuesday 22nd November 2011 Lords Chamber

[Lord Warner]

My Lords, I am seeking to set up something that would function in the early years of the national Commissioning Board. It would be independent in the sense that I did not want it to be dominated by NHS finance people. I want it to be a broader group of people than just those who have worked in the NHS. There is a tendency on the part of the NHS to think of itself as unique, special and different from other businesses, whereas it is a business which needs some business systems in it.

I am not someone who wants to keep bodies going in perpetuity. I am certainly open to negotiation on how long this one exists. I feel more strongly about the National Audit Office keeping an eye on this area. The national Commissioning Board needs some outside help to get this started, particularly in asset management, which is a long neglected area in the NHS, as I think the noble Baroness knows.

Some of the problems with PFI which she mentioned arise from the fact that the NHS has not had a track record of looking after its assets. It does not see them in the terms that a more commercial organisation would do. Many of the things that have gone wrong with PFI are not to do with there being anything inherently wrong with it, because it delivered a lot more hospitals more quickly and effectively than previous public procurement systems. What went wrong was the hubris in the NHS in many parts of the country about its ability to build a Taj Mahal district general hospital with some very dodgy income/revenue flows spread over time, most of the contracts being for 30 years. If one looks at the quality of some of the financial management in the NHS, it is not surprising that it could not do a very good job, even with some outside help, of getting a realistic idea of the revenue that it was likely to generate over 25 to 30 years to fund those projects.

[Lord Owen]

My Lords, I had not expected to intervene in this debate, but some of the things that I want to say may fit more naturally under this issue. The idea of having a standardised method of comparison right across the National Health Service is a very good one and it has merit if it comes initially from an independent group.

The Government have a special responsibility here, because, very soon after taking office, they encouraged the noble Lord, Lord Green, to look at all these areas, of which land and asset management was a very important part. We all know that this has not been coherently done in the past and that there are substantial land assets throughout the NHS.

As we go to smaller and more fragmented units, it is even more important that there is some structure which looks at land management across the board; otherwise it will be seen in a very narrow context. There may be a sale of some land asset which might quite appropriately have been offered to a neighbouring organisation, whether it is a commissioning group or a foundation hospital. The proposed body would cover all aspects, not just commissioning groups but foundation hospitals as well, and so I am very attracted to it.

The report of the noble Lord, Lord Green, said that not only did government not utilise the efficiencies of having an overall look at land management but also that it had no coherent way of achieving its procurement gains. Any large organisation looks across these areas and maximises the advantages that are available. Procurement has not been done very well in the National Health Service, so there is room for improvement whatever structure is implemented. In the past, regional health authorities had procurement functions and were able to negotiate substantially improved contracts because of the size of the procurement agency. I do not quite know what is going to happen in the procurement field. I therefore put the matter to the Minister so that he can perhaps indicate where he thinks it would be appropriate to raise the issue of procurement in future. Again, I say that the work needs to be done by independent people. That was the advantage of the Green report: he got his people from many different fields and focused on government as a whole. He did not look very closely at the NHS, but there is merit on both these questions of land and procurement in seeing whether we can achieve some economies of scale and in taking a fresh and independent look, which we have not had for some time.

Health and Social Care Bill

Debate between Lord Owen and Lord Warner

Tuesday 25th October 2011 Lords Chamber

[Lord Owen]

My Lords, this has been a fascinating debate and it has certainly taken the arguments further. I do not think that anybody expects that we will vote tonight, and I think that we will come back to this at Report.

There are merits in both of the cases put forward. In some respects—we can argue about the word “ultimate”—the idea of responsibility to Parliament has merit. It also tallies with the expression used by the noble Lord, Lord Newton. When people realise what the chairman of this largest quango thinks he will do, there will be uproar. Unfortunately, we have not yet been able to read those things—we know about them through reports, but we have not yet read them. It is very clear that the chairman-designate takes the view that he is given the money, he is given the mandate—a three-year mandate which is of course subject to change—and he then decides. It is pretty clear that some people think that that is a very good idea. I think that the noble Lord, Lord Warner, is pretty close to that position.

[Lord Warner]

I cannot resist responding to that. I do not accept that position. I was trying to say that what the putative chairman is saying seems to be in conflict with what is provided for in the legislation, which requires the Secretary of State to produce a mandate before the start of each financial year. That is a very clear marching orders provision in the hands of the Secretary of State.