National Health Service (NHS Payment Scheme—Consultation) (No. 2) Regulations 2022

Baroness Merron Excerpts

Monday 9th January 2023 Grand Committee

[Lord Allan of Hallam (LD)]

My Lords, I am pleased to be able to take the reins from my noble friend Lady Brinton, starting with this short but important statutory instrument. I echo the happy new year wishes and thank the Minister for his welcome. I understand that a key function that we perform in this House is to ensure that legislation is implemented in the way that Parliament intended as we put flesh on the bones of primary legislation through statutory instruments such as the one we are considering today.

Today’s statutory instrument is a small element of an important part of our modern health service infrastructure: the mechanism for pricing services within the NHS’s internal market. It was a prompt for me to read more pages of tariffs and rules than I ever intended or wished to do, which is mind-boggling and fascinating in equal measure. The subject of our debate today is not the substance of the payment scheme but rather the trigger for when the scheme might be reviewed if there are objections.

As the Minister pointed out, the Government’s intention is to maintain a 66% objection rate for triggering a further consultation period, which is unexceptional as it maintains the previous level. However, like the noble Lord, Lord Patel, I am curious as to why 66% was picked, particularly as I understand that it will not trigger a referral to the Competition and Markets Authority, which would have been a major step, but simply a further consultation period. There may be an argument for why a 51% or 60% threshold would not be appropriate, given that the threshold triggers something less significant than the previous regime.

I am also curious about the experience that we have had over the last decade or so while the other tariff scheme has been in place. Does the Minister have data on the levels of objections received in previous consultations? I suspect that they were much lower than the level we are talking about here but, as we review the scheme, it would be interesting for us to understand whether we were previously getting 10% objection levels, or 50%. I assume that there must be some experience of that within the National Health Service.

Like the noble Lord, Lord Patel, I would like more words about why 66% remains the effective level, and some information about objection levels we have experienced previously. That would be helpful to put our minds at rest, but I think we are all broadly supportive of the instrument as it stands.

[Baroness Merron (Lab)]

I thank the Minister for introducing this statutory instrument. It is a great pleasure to follow the noble Lord, Lord Allan, for the first time in his new role. I am sure there will be many more times, and we all wish him well. Of course, from these Benches, I echo the happy new year greetings. The new year gift to the Minister is that on no side are we opposing these regulations today. I am sure that will make him absolutely delighted as he starts 2023.

The consultation that we are talking about here is important because, as noble Lords have said, the NHS payments scheme governs how billions of pounds of taxpayers’ money is spent. Of course, quality of care and value for money have always to be at the core of our health service and its decision-making, and we need financial management within the health service to be able to deliver both quality of care and value for money in parallel—they are not an either/or. We saw during the pandemic what happens when the NHS strays from these principles, and we do not want to allow such events to happen again.

The former tariff system which these regulations form part of replacing sought to deliver a more competitive environment to drive up quality and to improve outcomes for patients yet, regrettably, it was often something of a rather rigid system that did not allow for the flexibility that individual commissioners actually needed. Therefore, giving local decision-makers the tools that they need to improve services in their areas is absolutely vital to ensuring that the NHS meets the needs of patients where they are, not where the system thinks they should be. The noble Lord, Lord Patel, raised an important point about meeting the needs of patients where there is variability across the country, and it would be helpful if the Minister could offer us some comment on that. With that in mind, a rigorous and effective consultation on changes is absolutely vital, because we know that, when done properly, payment schemes can deliver a meaningful impact on patient outcomes.

The payment by results incentives that were used by the last Labour Government made a significant impact on the elective waiting lists. We know that this may not be the appropriate way forward in every case and that options have to be carefully considered, but we are now in a situation where elective waiting lists are at record levels. So, given the reports that Ministers are considering bringing back payment by results incentives in some form or another, perhaps the Minister could give some comment on what plans are in place to do that.

I will ask a further question to get a sense on this. As we are talking about billions of pounds of public money—of course I believe that this SI and other discussions that we have treat this point with the gravity that it warrants—it would be helpful to hear from the Minister whether he considers that there is enough input through the Secretary of State into this process. I am of course not suggesting that Ministers should be setting payment levels for various treatments, but it would be helpful to have a sense about whether there is enough political input into how we might ensure that the extraordinary purchasing power of the NHS might incentivise innovation, prevention or, for example, buying British.

Furthermore, in previous consultations on the national tariff, such as in 2014, the objection percentage was met, but how have the NHS and the department worked since then and engaged with stakeholders to prevent that from happening again, as far as possible? I was also pleased to read that the department will be monitoring and reviewing the implementation of this legislation. Can the Minister give us some more detail on what form this will take and whether the analysis could be made public? That follows on from the point made by the noble Lord, Lord Allan.

It is important that we get right these changes that we are considering today, and effective consultation is absolutely key. It is in the interests of everyone, because it will ensure better outcomes for patients. I therefore look forward to hearing from the Minister how this will be delivered.