Health and Social Care Bill

Lord Patel Excerpts

Tuesday 22nd November 2011 Lords Chamber

[Lord Hunt of Kings Heath]

My Lords, this is one of the most important groups of amendments that we are going to discuss, because, in a sense, it sets the whole relationship between the Secretary of State and the NHS Commissioning Board.

I have considerable sympathy with my noble friend Lord Warner’s Amendment 96, which seeks to avoid the Secretary of State essentially putting in a huge shopping list of demands by limiting the mandate to a maximum of five obligatory and five desirable functions.

I come back to the recent interventions by the Government in the affairs of the National Health Service. The most recent have been around waiting times, both in terms of what happens to patients who have passed the 18-week target and of the activities of some primary care trusts, which, in order to contain their expenditure, have set arbitrary waits for patients even though they are ultimately treated within the 18-week limit. I have said to the Minister that I have no complaint about the intervention of Secretary of State, which I thought was quite proper, but it is very difficult to see how this will happen under the new system. We have yet to receive a satisfactory answer to it. What in the new system will suddenly obviate the need for the Secretary of State to make such interventions?

The question then comes to the mandate. Is it, as my noble friend Lord Warner hopes, a high-level document which will focus on a very limited number of objectives, or will it be a shopping list? The noble Baroness, Lady Murphy, expressed it very well as in a sense legitimising “recent ministerial enthusiasms”. We were rather given the lie to this when we debated this matter last week, because the Minister suggested that if there was an issue such as primary care trusts lengthening waiting in order to meet the budget, the mandate could be used to prevent it. Indeed, that is the risk—that the Secretary of State will, quite properly, come under pressure to intervene in the health service. The Bill weakens the legal powers of the Secretary of State to do so. The risk is clearly that the mandate will be used instead, and it would be used retrospectively if it does not satisfy the intervention power. I believe that there is great reservation among noble Lords as to whether the intervention power is sufficient, because there has basically to be a failure by the NHS Commissioning Board to carry out the objective. If it is not sufficient for an intervention to take place during the year, my goodness me the shopping list will grow when the new mandate is written. So, there are some very important issues on which we have yet to receive any answer from the Minister.

There are, however, a number of other important amendments in this group. Perhaps I may ask the Minister to clarify three points. The first point is how long the mandate will last. My assumption, from what Ministers have said and what is in the Bill, is that it will last for a year. The Minister will be aware that the chairman of the NHS Commissioning Board expressed a wish to the Health Select Committee, which was vetting his appointment, that the mandate should last for three years. I wonder if the Minister could clear up that matter for your Lordships.

Will the Minister also clarify the intention behind the provision in proposed new Section 223D(7)(b), on page 27, which allows changes to total capital and revenue resource use after parliamentary general election takes place? I take it that this is simply to allow for a change of Government but I would be grateful if he could spell that out.

However, my substantive amendment, Amendment 100A, is concerned with parliamentary scrutiny. In Clause 20, proposed new Section 13A states:

“Before the start of each financial year, the Secretary of State must publish and lay before Parliament a document to be known as ‘the mandate’”.

Surely Parliament is entitled to a little more involvement than merely receiving the mandate as a fait accompli. My noble friend Lord Warner has already pushed the Government in their amendment to give Parliament information about any reservations the board may have expressed about meeting the mandate. I would certainly support that in the interests of transparency. There is also, in Amendment 100, reference to the requirement on the Secretary of State to consult the board, HealthWatch England and other persons, with the results of any consultation on the mandate to be published. That too seems reasonable.

However, I wonder if we ought not to go further in terms of parliamentary scrutiny. If we take Ministers at face value—and the Secretary of State has expressed a wish to step back from day-to-day involvement in the National Health Service—it is clear that the mandate assumes special importance. Why is Parliament not being given a proper opportunity to scrutinise the mandate before the Secretary of State finally sets it for the NHS Commissioning Board? If the Secretary of State is really going to tell Members of Parliament in particular that he is not going to intervene in a particular question because he considers that now to be the responsibility of the NHS Commissioning Board, in accordance with the mandate that the Secretary of State has set, then I think that Parliament should be entitled to some involvement in scrutiny of that mandate. My Amendment 100A suggests how that might be done. It is built on the system of scrutiny for national policy statements.

The House will be aware that the Planning Act 2008 introduced a new planning system for applications to build nationally significant infrastructure projects. They cover applications for major energy generation, railways, ports, roads, airports, water and hazardous waste infrastructure. Under this system, national policy on national infrastructure is set out in a series of national policy statements. Under Section 92 of the Planning Act 2008, each proposal for a national policy statement must be laid before Parliament. In so doing, the Secretary of State specifies a relevant period for parliamentary scrutiny.

If during that scrutiny period either House passes a resolution with regard to the proposal, or if a committee of either House makes recommendations regarding the proposal, the Secretary of State must lay before Parliament a Statement setting out his response to the resolution or recommendations. Following completion of parliamentary scrutiny, the Secretary of State may formally designate the proposal as a national policy statement. The final national policy statement is also laid before Parliament.

In the House of Lords, national policy statements are normally debated in Grand Committee, but that does not restrict the freedom of committees of the House or individual Members to make use of the statutory procedures. In the event of a Motion for resolution being tabled, the usual channels have undertaken to provide time for a debate in the Chamber within the scrutiny period.

When I was energy Minister, I had to bring through four energy policy statements. We had three four-hour debates in Grand Committee. They were very thorough. The Government took note of what took place in those debates. In the end, it is up to the Government to make the statement because it is a matter for the Executive. I do not challenge that the mandate, which I regard as important as a national policy statement, is ultimately for Ministers to make. It is rightfully an Executive responsibility. However, the process that I am suggesting in my Amendment 100A would allow Parliament to have much more involvement in the scrutiny. It would allow Ministers to take account of that and then make their minds up in relation to the mandate.

If the Government are determined to hand over such responsibility to a quango—and I remind the House that in this Bill the National Health Service Commissioning Board is given concurrent powers with the Secretary of State in relation to the crucial responsibility in Clause 1—there has to be a great parliamentary scrutiny of that mandate.

[Lord Patel]

My Lords, I added my name to the amendments tabled by the noble Lord, Lord Warner. They were prompted by the lack of clarity in the nature of the mandate that the Secretary of State will issue to the Commissioning Board. There is also a lack of clarity in how he will consult the public, although the provision does say that the Secretary of State will consult HealthWatch England prior to issuing a mandate. Who else will be able to scrutinise the mandate?

On the basis that the Secretary of State will use the mandate to performance-manage the Commissioning Board, what will be the nature of the mandate that will allow him to do that? Will it have measurable outcomes against which the Secretary of State can performance-manage the Commissioning Board? What happens if the Commissioning Board does not agree with the mandate? How is that dispute settled? Will the financial aspects be a major part of it or will it be better outcomes for patients?

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Moved by

[Lord Patel]

99: Clause 20, page 16, leave out lines 27 and 28 and insert—
“(b) Healthwatch England, and”

[Lord Patel]

My Lords, I apologise to the Minister and to the noble Baroness, Lady Northover. Yesterday afternoon I told them that I was degrouping these amendments to be taken at a later stage of the Committee. That was, however, before I got beaten up later in the day and lost my normal aggression. I had to retable them and I apologise for that. I hope that it is possible to take them today.

I will concentrate mainly on HealthWatch England. The purpose of this amendment is simple—to make both HealthWatch England and local healthwatch organisations independent bodies and, in doing so, to give patients and public a truly independent voice. It does not change the broad thrust of the policy in any way, nor does it have any more resource implications.

In the Government’s list of intentions for HealthWatch England, the Minister recognised the need for it to maintain independence; to set its own work programme; to publish its own annual report to Parliament; and to have independent membership. He also said that regulation would be brought forward by the Secretary of State in relation to this. It would also provide advice directly to the Secretary of State, the NHS Commissioning Board, Monitor and local authorities. At the same time, the list also suggests that HealthWatch England will be able to advise the Care Quality Commission on the views of people who use the service; that it will be a committee of the CQC; and that the CQC will respond in writing to HealthWatch England’s advice.

HealthWatch England’s operating plan, which was discussed by the CQC board, suggests that its main focus will be local; it will be small and strategic; its accounting officer will be the CEO of the CQC; its staff will be employed by the CQC; and service-level agreement on its functions will be put in place. The plan also suggests that HealthWatch England’s committee will be appointed by the CQC; that its chair will be subject to CQC board governance; and that conflicts of interest will be decided by the board. HealthWatch England will publish reports on a “no surprise” basis. This is quite contrary to the suggestion that HealthWatch England should be independent of the CQC. The CQC clearly sees itself having a close relationship with HealthWatch England, with the latter relying on it for significant analytical intelligence and other analytics and data. Joint data collection will not be appropriate for the diverse functions of the two organisations. The relationship between the two has not had a good start either, with LINks and others feeling that they have not been fully consulted by the CQC in developing the plan.

The proposed duties of HealthWatch England are intended to provide local healthwatch organisations with advice and assistance in relation to promoting and supporting the involvement of people in the commissioning, provision and scrutiny of local care services. Under the duties, people will be able to monitor local health and social care services; their views will be obtained on the standard of local services; and information will be gathered on local need for and experiences of care services. Recommendations will be made to commissioners and providers of services about how local care services could or should be improved.

The relationship between HealthWatch England and local healthwatch organisations is important. The Bill establishes HealthWatch England as a statutory committee. Ministers say that the relationship between HealthWatch England and local healthwatch organisations must be an open dialogue so that critical knowledge of the views and experiences of patients and local service users will have a real influence on the delivery of health and social care. The aspiration is that local healthwatch organisations and HealthWatch England will collaborate with local authorities and clinical commissioning groups. However, the Bill does not give local healthwatch organisations any specific role in relation to clinical commissioning groups. They have no direct role in influencing the commissioning arrangements of CCGs in relation to the needs of local people, nor do they have any say in it.

In my view, therefore, HealthWatch England should be established as an independent body outside the CQC; be the guarantor of an independent local community voice; have clear accountability to local healthwatch organisations; and have adequate resourcing—there are concerns that the CQC will not adequately fund HealthWatch England. It should provide an expert team that has the knowledge and experience to build HealthWatch; and support the transition of LINks into healthwatch organisations and the development of local healthwatch’s ability to carry out its five statutory functions. It should provide local healthwatch organisations with support, training, advice, resources and expertise on health and social care policy, legal processes and myriad other issues if local healthwatch is to take off quickly. On the basis of current and previous experiences, I feel that the CQC’s belief that local healthwatch can be built and become operational quickly is misplaced—that is the experience of LINks, too.

HealthWatch England should have a capacity to carry out research that is needed by local healthwatch organisations to support their work. HealthWatch England should support the development of local expertise to gather information and data from all sources—public, patients, complaints and serious incident investigations—so that it has a well developed and informed view of the state of local health and social care services. It should support the development of regional healthwatch organisations so that a powerful regional voice on services and commissioning can be developed. It should provide the capacity to elevate local and regional demands for better health and social care to the NHS Commissioning Board, the Secretary of State, Monitor and the CQC. It should support the co-ordination of major demands for changes to health and social care policy and commissioning, integrating local healthwatch.

It was pointed out to the CQC that a research capability was essential for HealthWatch to function. If a potential service problem is suspected, it is necessary to check how widespread it is. Beyond this, the organisation must be able to carry out original research on consumer needs in order to improve services. No research capability had been placed in the plan that the CQC develops. It appeared in meetings with LINks that the CQC might commission research, but we know from examples that research at a local level is important—staff being the classic example.

Diverse and inclusive healthwatch organisations could substantially increase the power and influence of local people to monitor services more effectively, improve safety, influence commissioning and provide a voice that will be heard in the local, regional and national development of health and care policies. To be effective, HealthWatch, nationally and locally, must be fully independent and democratic. Others with experience have informed me that the dependent relationship that HealthWatch is intended to have in relation to local authorities is deeply flawed. They believe the proposed system will be expensive and difficult to establish. The decision not to ring-fence funding will make these bodies weak and vulnerable.

The way forward is for HealthWatch England to be an independent body helping the local healthwatch organisations, which should also be independent of the local authority. If the Government are serious about what they say—that the Bill is about putting patients and the public at the centre and the slogan, “no decision about me without me”,is what they wish to follow—then the way to create public confidence is to have HealthWatch England as an independent body. I beg to move.

[Baroness Wheeler]

My Lords, I start by saying that I was not one of the ones who beat up the noble Lord, Lord Patel, over grouping issues, although it was extremely frustrating to have them appear and disappear all the time. Anyway, we now have our list and I am speaking to that.

I am pleased to support the amendments in the group, which have two important aims: first, to ensure that HealthWatch England and local healthwatch organisations are truly involved and consulted where decisions are made about the development and planning of commissioning services and on reconfiguration or changes to services; secondly, to ensure that it is an independent statutory body and not a subcommittee of the Care Quality Commission.

The Government’s far-reaching proposed changes to the NHS, with the emphasis on competition and regulation, make the need for HealthWatch England to be given robust and independent scrutiny powers even more important. Amendment 305 from my noble friend Lord Harris and myself is a probing amendment with the intention of ensuring that HealthWatch England and local healthwatch organisations have the strengthened power and functions they need. It establishes HealthWatch England as an independent body responsible for providing the Secretary of State, the NHS Commissioning Board, the Care Quality Commission, Monitor and local authorities with information and advice on the views, needs and experiences of users of health and social services, and the views of local healthwatch organisations on care standards and how they can be improved.

Under Amendment 305, HealthWatch England is responsible for providing local healthwatch organisations with resources, advice and assistance. The amendments of my noble friend Lord Whitty, Amendments 318C and 318D, set out similar and additional powers and functions for HealthWatch England to those proposed in Amendment 305. We fully support these, which include powers of investigation into complaints and powers to seek disclosure of information from health and social care providers, the NHS Commissioning Board, CQC and others. Important functions also include information, research and representation functions.

The independence of HealthWatch England from the Care Quality Commission is vital if it is to be the national service users watchdog and champion. It must be able to hold regulators in the whole of the health and social care system to account and be the independent guarantor of the rights, duties and independence of local healthwatch organisations. Given the uncertainties still surrounding how Monitor and the CQC will work together, and the current trials and tribulations facing the CQC, how realistic is it to expect the CQC to undertake this role or for HealthWatch England to function properly as a CQC committee?

Does the Minister acknowledge these problems? Will he—or she—consider working with NLAM and other interested stakeholders to produce an alternative model for HealthWatch England that will secure the Government’s stated policy for a powerful and independent system of public involvement in health and social care? To be effective, local healthwatch must be able to scrutinise how consortia and health and well-being boards undertake public engagement and transparency and are ensuing that the public voice is embedded in the care pathway design. They should also be given the right to comment on tenders and commissioning contracts before release.

LINks organisations currently have significant powers to enter and view the premises of all health and social care providers regulated by the CQC—another potential conflict of interest if the CQC relationship is not changed. These powers are often little used by local LINks organisations and we hope that their retention in the Bill and robust guidance to local healthwatch organisations on how they can be applied to the benefit of improved patient care and treatment will lead to these important powers being more frequently used. I would welcome the Minister's endorsement of that.

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[Lord Harris of Haringey]

I am sorry to intervene again on the noble Baroness, Lady Cumberlege. It is probably because we know each other too well that I feel able to interrupt at regular intervals. The examples she has just cited are examples of bodies that are there specifically to advise the organisation concerned. The consumer panels that NICE set up are about advising NICE about particular issues in terms of clinical effectiveness and what patients in that area are concerned about. They are not representing patients more generally and they are certainly not representing patients in terms of the statutory obligations of NICE and where there might be a disagreement about what NICE is doing. They are there to inform. That is the distinction.

[Lord Patel]

In response to the amount of funding, as I understand it—I am sure the noble Baroness, Lady Northover, will correct me if I am wrong—the Bill suggests that the funding for HealthWatch England will be a grant in aid provided by the department to the CQC.

[Baroness Jolly]

My Lords, they say that too many cooks spoil the broth, but I think this is an occasion where that probably has not happened. Many hands might make light work. I ask the Minister to take these amendments away because there is an awful lot of good to be found in each of them, but not in each together, as it were.

Amendment 318C, tabled by the noble Lord, Lord Whitty, inserts a new clause and subsection (2)(a) of the new clause is about complaints. It is a nice idea that complaints could be taken to HealthWatch England. Complaints are a big issue to which we will be returning on Amendment 108.

The noble Baroness, Lady Cumberlege, raised the relationship between local and national healthwatches. It is critical. We would support the election of local healthwatch representatives to the national body.

Finally, on independence and finance, I believe very strongly that it is very difficult to criticise and challenge an organisation if you sit within it. I understand the point about the benefits, but if you are local, and you sit within your local health authority or nationally you sit within the CQC, generally the feeling that you are monitoring the organisation that is your host is never a good place to start. Similarly, I, too, have had letters from people who were CHIPs and then LINks about budgets being not just cut a little bit but absolutely hacked away. I would be really uncomfortable if, for example, locally the healthwatch was going to be located within the principal local authority that held the budget. We have had it already today. Intentions will be good and then somebody will come along and say, “We really need a bit more just for this”. It will happen in a meeting where they are not present and, all of a sudden, there will be another slice taken. We have seen it before with lots of other things. You could look at it from a negative point of view and say these are like curate’s eggs and bad in parts or good in parts, but I think too many cooks will not spoil this broth. Many hands will make light work. I ask my noble friend to take this away and have a look at it.

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The noble Lord also suggested that HealthWatch England should have regional arms. I cannot agree with him that this would be a good course of action. We want to see resources, wherever possible, channelled to the front line. One of the criticisms of the short-lived Commission for Patient and Public Involvement, which I have referred to before, was that this was too bureaucratic and its regional arms soaked up too many resources. We feel that having both a local and a national tier is sufficient. The noble Lord, Lord Patel, also asked about research. Local healthwatch will gather and present the views and experiences of local people to make reports and recommendations, and as part of this it may need to carry out studies. However, we have to remember that it is not primarily a research organisation. We have to emphasise that it is a champion of patients at local level.

[Lord Patel]

I did not have in mind the scientific meaning of “research”. This is research of what is going on in individual hospitals. I use the example of Mid Staffordshire, where it was the research following initial incidents that made everybody aware of the extent to which bad practices were going on. That is the kind of research that local healthwatch should be involved in.

[Baroness Northover]

I take on board what the noble Lord says, and indeed he is absolutely right. There are various ways in which such problems should be picked up, but it is exceedingly important that that happens, and we certainly hope that local healthwatch will be part of that.

The noble Baroness, Lady Wheeler, talked about engagement with stakeholders. I can assure her that there is ongoing engagement with stakeholders through a HealthWatch advisory group. The National Association of LINks Members and others are members of this group, and there are others. The noble Baroness also asked about the funding for transition. The Government continue to make funding available to LINks— £27 million during the transition—and as part of the HealthWatch development programme we will make £3.2 million available for start-up costs for local healthwatch organisations.

The noble Lord, Lord Harris, asked about conflicts between the CQC and HealthWatch England. We disagree that the Bill does not already provide sufficient safeguards to ensure the independence of HealthWatch England within the CQC. Obviously, in extreme cases, the Secretary of State has the ability to intervene if HealthWatch England is significantly failing. However, both the CQC and HealthWatch England have responsibilities that they must deliver.

The noble Lord also spoke about the relationship between LINks and local authorities, and expressed some concern about that. LINks have been funded by the local authorities and it is right that so too will the local healthwatch. The relationship of local health authorities and LINks overall has been a successful one—although I take the point that he makes—that has encouraged collaborative working between LINk and the local authority. The Government believe that if local healthwatch organisations are to play a full part in their local communities, it is appropriate for them to be accountable to directly elected local bodies that are better able to assess the needs of the local population. It would not be appropriate for them to be funded nationally, but I hear what the noble Lord said.

My noble friend Lady Cumberlege spoke strongly in support of many of these developments from her knowledge of the history of the past few years. She showed how we are trying to build on the experience of previous Governments to take this forward. However, she will not be surprised to know that I have some concerns about some of her amendments. Her Amendments 307A and 308A would prescribe certain aspects of the membership of the HealthWatch England committee. For example, Amendment 307A proposes that:

“The majority of the members of the Healthwatch England committee shall not be members of the Commission”.

The debate that we have just had illustrates why this is important. Certainly, we have sympathy with that point of view. However, we do not think that it should be in the Bill. It is best to put these in regulations, which would enable flexibility. Clearly, rules about the membership and procedure need to be consulted on and that will be taken forward when we engage over those regulations.

I told myself that we would write to the noble Lord, Lord Walton, about his organisation. However, it turns out that I am aware of a number of other organisations that use the name HealthWatch. The Government’s proposals mean that the HealthWatch we envisage will be unique as the champion of the patient and the public voice. I am not sure whether that totally answers the concern of the noble Lord, Lord Walton. Perhaps I had better write to him after all.

My noble friend Lady Jolly flagged up concerns about complaints. Perhaps I may reiterate that HealthWatch England’s role is that of a national champion of the consumer voice. Its purpose will be to bring that voice to the attention of regulators and others. Giving HealthWatch England powers of investigation of complaints could compromise its primary role in that regard. One of the developments introduced by the previous Government was to bring in a statutory framework for an investigation of NHS and adult social care complaints. It remains the Government’s view that complaints are best dealt with in the existing framework and initially at the local level. This provides a better opportunity for local organisations to learn from their mistakes and to improve services as a result. Where resolution is not possible locally a complainant is able to complain further to the Health Service Commissioner, the ombudsman or the local government ombudsman, as appropriate. The ombudsman’s functions of investigation are statutory. Therefore, we see no reason to duplicate. The structure set in place by the previous Government will stay in place and acts in that way.

As ever in this House there is a wide range of experience, particularly perhaps in this instance on what has not worked in the past. It is a great challenge to enlist patients and the public in making sure that standards are driven up. We believe that devolving to the local level with clinicians and patients more in the driving seat should help. I welcome the support of noble Lords who feel that these changes are a move forward, but I hear them when they say that there are areas that still need to be addressed. For that reason, we would certainly like to continue discussions with those who wish to feed in on this issue in order to make it as good as we can: namely, a system that more effectively brings to bear the voice of patients and the public, which has so far proved to be a difficult challenge not only to the previous Government but to Governments before that.

[Lord Patel]

My Lords, I was hoping that at the end the noble Baroness would be able to say more strongly how the Government intend to take forward today’s debate, but I am afraid that she did not do that, which is a pity. There was strong support for HealthWatch England and local healthwatch to have more independence. Her argument about a synergy between the CQC and HealthWatch England is not absolutely correct. Yes, there is a degree of synergy, but not in all areas, including: commissioning, as mentioned by the Minister; community care, where the CQC is not involved; advice to the Secretary of State on the mandate; and social care as it develops to more home-based care where the CQC will not be involved. HealthWatch England has a much wider remit than the CQC.

I have a rule in life never to oppose anything that the noble Baroness, Lady Cumberlege, says or does and I will not break that rule now. She is always well researched and communicates her research well, but I have to say that her well researched argument supports the Government more and I am surprised that the noble Baroness, Lady Northover, did not feel able to accept some of her amendments. None the less, it is a halfway house that would give more independence to HealthWatch England within the CQC. If we are serious about giving HealthWatch England independence, it should be truly independent. It should have its own powerful voice for the public and patients. It should not be answerable to another body that will control it, fund it and employ its members. That is the great weakness.

The outside voice of the people involved in this work is strong. They would like to test their work in an independent way. Previously, they have failed because they have not been given that independence. Let us be serious about giving a strong voice to the public and patients. Let us give them independence and see whether they can stand up to the challenge.

There was a lot of support today but I am willing to continue talking, particularly with the outside organisations, if that commitment can be made by the Government. We will always have an opportunity to come back. I beg leave to withdraw the amendment.

Amendment 99 withdrawn.

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[Lord Warner]

My Lords, I apologise as I seem to have a series of amendments to this part of the Bill with my name on them. Amendment 103 is the first amendment in this group in my name and that of the noble Lord, Lord Patel, and the noble Baroness, Lady Murphy. It brings us to the first of what I suspect will be a number of debates on the complex and difficult issue of a national tariff and the need to use that tariff to ensure the most appropriate forms of care and care pathways for patients.

This is a time for confessions. The current tariff system, which I am afraid I was deeply involved in implementing to scale seven years ago, was designed for a different era when there was considerable financial growth and we were trying to drive acute hospitals to increase capacity to dramatically reduce waiting times for treatment. Those long waiting times, which had been a feature of the NHS for a long period, were the part of the NHS that led to the most complaints being made. They were the issue to which any Government needed to pay attention. The tariff was one of the ways of helping to progress that. The other was, of course, the much maligned targets, which we need not go into at this point.

In some ways, the current tariff has been too successful. It has helped to create overcapacity in in-patient hospital provision and has propped up poor and unsustainable hospital provision in some parts of the country. The current tariff does not promote well co-ordinated, integrated care for people with long-term conditions, which is the bulk of the NHS’s workload, given our demographic profile and some of our lifestyle choices. A significant proportion of services, particularly mental health and community services, are simply not covered by the national tariff and are often still dealt with on the basis of block grants. In 2012-13, the plan is to focus mainly on developing currencies rather than mandatory tariffs. This means that the majority of non-acute services will remain outside the national tariff. What is more worrying is the fact that the continuation of an acute hospital-dominated tariff based on episodes of care without any counterbalance risks these hospital trusts sucking in a disproportionately large amount of our NHS budget, which is shrinking in real terms. This is not a jibe at the Government except to say that they should stop pretending that the NHS can continue with real-terms growth and deliver the Nicholson challenge, as should any political party, including my own.

Tariff-setting is a technically complex business. There are plans to expand it into fields such as mental health where there is no international track record of success in doing that. There are no quick fixes, particularly if there are insufficient people working on a new tariff system. Tariff-setting relies totally on a good understanding of costs, an area where the NHS does not have great strengths, as I think we have just discussed. The current reference cost system has considerable shortcomings and excludes independent sector providers. Most of the rhetoric on price competition is just that—rhetoric—because reliable data to make price competition work effectively within the NHS are usually absent, so we are having a row about something that we probably could not deliver anyway.

The best that this Bill can do is to try to set a direction for future tariff design. The elements of that design should be fourfold. First, it should enable integrated care, not just within the NHS but across the health/social care boundary. This almost certainly means moving away from the tariff based on episodes of care to a year-of-care approach for long-term conditions, or a bundling of the services across care pathways. Secondly, a future tariff system should not be based on average cost, as now, but on best practice for particular conditions. Thirdly, the currencies in a new national tariff should cover the full range of services, not just acute care, which needs to diminish its dominance of the tariff. Fourthly, it should cover unavoidable costs and avoid windfall profits to providers. Unless we start designing a tariff system around those ideas, we will not progress towards a new NHS.

It will take at least three or four years at best to complete a national tariff covering a full range of services. However, I believe that we should set a clear direction of travel for the national Commissioning Board in the Bill. Given the responsibility of commissioners for demand management, it is right that if we are to have a national Commissioning Board it should set the currencies for a new tariff system. That is why Amendment 103 seeks to place the duty on the board to progress this work and to create some momentum by securing annual increments of progress. We can discuss later whether the board should also price the currencies rather than Monitor, but that is a subject for a debate on another day.

In the mean time, I wish to speak in support of Amendment 290 in my name and others in this group of amendments. This amendment would enable whoever is setting the prices in the tariff—currently Monitor in the Bill—to pay incentives to providers to integrate the delivery of health and social care services to individuals. It seems to me that we use the word “integration” without realising that it probably requires someone to do a bit more work than they are doing now to integrate the services, and that has a cost. This should be recognised in setting the tariff for the future so that service providers can be encouraged to take on the difficult job of integration without losing money in doing so. I hope that the Minister will see merit in these amendments and, indeed, others in the group, which move in a similar direction to mine. We need to set the agenda for the board in taking this difficult area of tariff work forward. I beg to move.

[Lord Patel]

My Lords, my name is added to Amendment 103 and other amendments in the group. Amendment 197E, which is a new amendment relating to commissioning, also stands in my name. Some of the points that I will make are similar to those made by the noble Lord, Lord Warner, but I have a slightly different way of looking at tariffs. I see them more from a clinical or patient care pathway point of view than that of integrating services. It is true that tackling the financial physiology of the NHS is critical to enabling the more influential and focused commissioning of integrated care. The payment by results tariff was designed by the previous Government to support the introduction of choice and competition, and specifically to create incentives for providers to increase elective activity to bring down waiting times for treatment and reward them for work undertaken. As the noble Lord, Lord Warner, has just said, that has been a bonanza for some of the acute trusts.

The tariff has played its part in that process with the consequence that access to planned care has improved significantly. Progress in elective care has enabled—or should enable—attention to turn to other priorities, such as providing high-quality care for people with long-term conditions where continuity and co-ordination are key objectives alongside access. This includes shifting unplanned care from secondary to primary care settings, where this will help deliver improvements in efficiency.

As currently designed and operated, payment by results does not appear to be well suited to support the implementation of these priorities, and there is a need to develop incentives that will facilitate integrated care for people with long-term conditions and for other services where this approach is likely to bring benefits. Experience in the United States offers valuable learning in this regard, but it is not the only place, particularly in the development of new forms of payment that go beyond fee for service and case-based reimbursement.

The idea behind episode-based payments—something that my noble friend Lord Warner also referred to—is to remove incentives to deliver increasing volumes of care by bundling together payments for a range of services relating to a particular episode of treatment. One example from the United States is the ProvenCare programme of the Geisinger health system under which a global fee covers the entire cost of cardiac care from pre-admission and surgery to follow-up for up to 90 days after surgery. Episode-based payments are designed in part to improve the quality of care by placing the responsibility on providers for avoiding and correcting errors. You do not get paid if you make a mistake and it takes the patient longer to recover. This encourages care to be done right the first time, and hence offers a more co-ordinated and positive experience for patients.

Capitation payments on the other hand go much further than episode-based payments in potentially covering all the costs of care for a defined population over a certain time period—a year, for example. Integrated healthcare systems such as Kaiser Permanente in California have pioneered the use of capitation funding—or pre-paid group practice as it was originally known—as a way of creating incentives to support prevention and primary care and to avoid the inappropriate use of specialist care. Kaiser Permanente sees acute care as a cost centre, but it sees community care and primary care, particularly for long-term conditions, as where the costs should be maintained and the quality driven. It monitors the performance of the providers of that care more intensively on a one-to-one basis than it does for acute care.

Although capitation funding has a long history, there has been renewed interest in it. In the NHS, various options could be pursued. These include combining payments to cover an episode of care or a care pathway, taking forward the idea of the year of care that has been tested in three national pilots for diabetes—I say this to the noble Baroness, Lady Young—and exploring how it might support integrated care; contracting with local clinical networks of primary and secondary care clinicians or foundation trusts to deliver integrated care for a specific population—some of the foundation trusts are experimenting with this and are quite innovative; and, lastly, accelerating work on personal health budgets to enable patients to commission care packages for themselves, with support from carers and families.

In practice, it is likely that all these options, and others, will have to play a part, and a period of active experimentation and evaluation is now needed to work through the consequences. All healthcare systems use a mix of payment systems related to the service that is provided, such as episodic or long-term, and where care is provided, such as primary or secondary care. The NHS is no exception and attention is needed for the way in which financial incentives can be developed to support integrated care where it will bring benefits to patients. The prospect of four years in which the NHS budget will only increase in line with inflation underlines the urgency associated with this work and the need to focus on improving the quality of care and not simply incentivising extra activity at a time when resources are not available to do this. As my noble friend Lord Warner said, it will require tariff flexibility, even tariff bonuses for providing care quicker and of a higher quality. What is needed is system leadership and innovation, which we expect the NHS Commission to deliver boldly, in tariffs for integrated care, with the explicit promotion of systems of integrated care.