Health and Social Care Bill

Baroness Murphy Excerpts

Tuesday 13th December 2011 Lords Chamber

Debate on Amendment 260EB resumed.

[Baroness Murphy]

My Lords—

[Baroness Anelay of St Johns]

My Lords, I appreciate that this procedure is not common, but it is not novel. The noble Baroness, Lady Murphy, is seeking to contribute to the continued debate. May I suggest that Peers who are attempting to leave should do so by the other door, and preferably not by that door—I say to the noble Lord, Lord Borrie—so that she can stand and be heard by the House?

[Baroness Murphy]

Thank you very much indeed. I just want to comment briefly on the amendments on licensing. Some of them are asking quite a lot of the licensing procedure, but there may be other mechanisms that achieve what they want to achieve. I am sympathetic to people’s desire to add these conditions, but I think that it is important to see the licensing arrangements as part of the system, in conjunction with registration with the CQC. It enables Monitor to approve the compliance arrangements to achieve good governance and the information requirements needed to monitor that the organisations are delivering the right standard of care.

The threat of licence revocation enables Monitor to pick up at an early stage the problems of quality and finance which other people have spoken about. Obviously the providers will be very concerned to hold on to their licence, which seems to be a very powerful and potent tying-in of organisations to the ethos and objectives of the NHS. We must be very careful not to regard the licensing process as something within which to impose too many conditions, but as a basic framework that ties the licensees into the system. That is particularly important when organisations start to go wrong. We will discuss later how they are rescued from those predicaments. However, it seems to me that this creates a basic level playing field, and that it would be a mistake to use that process to do much more than tie everyone into the basic system. It sort of replaces the old authorisation process on compliance and quality that was operated by old Monitor, but it is a way of going forward as new organisations come into the NHS as providers of NHS services. I just wanted to add those comments because I think that these amendments might be adding a bit too much to the responsibilities of the licensee.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, licence conditions will be the mechanism through which Monitor will be able to prevent potentially anti-competitive behaviour and enable service integration, where this is what commissioners want. Monitor would also use licence conditions to collect the information it would need to set prices, and to help identify at an early stage—at an early stage—if a provider was at risk of financial distress. If that was the case, it could work with the provider to address potential problems, as well as supporting commissioners to ensure continuity of services. I completely understand the concerns in that area.

First, I think that I need to make clear that all providers of NHS healthcare services will be subject to the requirement to hold a licence. This includes providers of primary medical services, which is the question posed in Amendment 279A. Furthermore, where a provider is providing services that carry a requirement to be registered with the Care Quality Commission, that registration will be a prerequisite to being granted a licence by Monitor. We all want to see close operational links between Monitor and the CQC. The Bill emphasises this by placing duties of co-operation on both organisations, not just in matters such as information sharing, but also in the development of the joint application mechanism for providers seeking registration from both bodies.

We are also clear that regulation must be proportionate, and impose the minimum of additional burdens on those being regulated, while still safeguarding the interests of patients and the public. To that end, the Bill makes provision for the Secretary of State to make regulations establishing an exemptions regime, so that licensing can be targeted towards those parts of the health service where there is the greatest need for regulation. While we are clear that there must be an exemptions regime, we also recognise the importance of making sure that we get the scope of it right. To that end, we are already committed to consulting fully next year on our proposals for the exemptions regulations. Noble Lords may also be aware that the Delegated Powers and Regulatory Reform Committee of your Lordships’ House has recommended that the first set of exemption regulations should be subject to the affirmative resolution procedure. We agree, and both Houses will have the opportunity to debate them before they come into force.

The Bill provides for Monitor to attach conditions to licences. While the Bill sets a framework for the scope of those conditions in Clauses 95 to 97, we are clear that it will be for Monitor itself to develop the detail as the sector regulator. The intention is that the conditions will support Monitor in exercising its functions and that Monitor will be best placed to know how they should be framed to achieve that. Therefore, including large numbers of mandatory conditions on the face of the Bill, as some noble Lords have suggested in certain amendments—for example, Amendments 283, 285ZA and 287A—would undermine the Monitor’s independence, which we do not think is desirable if it is to be a robust and vigorous sector regulator.

Nevertheless, I would like to reassure the Committee that there will be proper oversight of Monitor’s proposals for conditions. My right honourable friend the Secretary of State will have the power to veto the first set of licence conditions. We are clear that Monitor must be able to operate freely and autonomously within the legislative framework established by the Bill. We have built in reasonable checks and balances through requirements for key products, such as the licensing criteria and conditions, to be subject to approval by the Secretary of State. Although I understand entirely the reasoning behind amendments tabled by noble Lords which would increase the level of the Secretary of State’s involvement in provider regulation—for example, Amendments 281A, 282A and 282B—regrettably, I feel that these go a step too far in limiting Monitor’s independence.

The noble Baroness, Lady Thornton, asked me quite a number of questions to which I feel I should write in response. In particular, however, she asked whether Monitor will have the role of resolving disputes and whether all disputes would go to court. The answer to both of those questions is no. The NHS standard contract already provides for contractual disputes to be resolved through arbitration and this will not change. Licence holders have to agree special conditions or modifications to conditions. If the provider disagrees and Monitor then wants to proceed, it must refer the matter to the Competition Commission for consideration.

My noble friend Lord Clement-Jones spoke to Amendment 281A. I want just to comment briefly on that. The amendment would increase the minimum length of notice period during which representations could be made following publication of a notice of proposed exemptions. I am grateful to my noble friend for that. The Bill is clear that the notice period should be not less than 28 days. It could therefore be much more than that, and our expectation in most cases is that it will be. But there will be times when the Secretary of State needs to act quickly, so being locked into a notice period of not less than 90 days could be detrimental to a particular provider or group of providers.

My noble friend Lady Williams spoke to two amendments, Amendments 287EA and 287EB, where the purpose is to ensure that licence conditions on providers of NHS services restrict the income they can earn from private patients and the number of private patients they treat, as well as that funds provided for NHS care are not used to subsidise private treatment offered by foundation trusts, with various conditions attached. I understand my noble friend’s concern about this. However, the amendments would be impractical, and in particular for licence holders who are not NHS bodies they would be highly undesirable. Foundation trusts’ principal purpose—we will come to this in a later group of amendments, when we discuss the private patient income cap—is to provide goods and services for the NHS in England. It means that they must earn most of their income, over 50 per cent, from NHS services. We are tabling a government amendment to make it clear that the majority of every foundation trust’s income will continue to be from NHS service provision. Foundation trusts must comply with their principal purpose or they will be breaking the law. They could be at risk of successful legal challenge if they fail to meet their principal purpose. We are tabling a second government amendment to require foundation trusts to show in their annual reports how income earned from private activities has impacted on the provision of NHS services. Using NHS income to subsidise private patient work would lead to foundation trusts breaching the NHS constitution. The Government also gave a commitment that foundation trusts will have to produce separate accounts for their NHS and private-funded work.

Finally, I want to mention briefly the amendments that will fall to me to move in relation to licensing: Amendments 280A, 281B, 284A to 284C, 285A, 286B, 287C and 287D, and 288A to 288F. These are without exception minor tidying-up amendments to improve the drafting or clarify meaning, and I hope that the Committee will accept them when they are moved. I hope, too, that the Committee feels reassured by my explanation of how we envisage licensing to operate and that the noble Baroness will be able to withdraw her amendment.

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[Lord Warner]

My Lords, this amendment is in my name and that of the noble Lord, Lord Patel. I begin by briefly making clear my position on competition, which underpins this amendment. I am sorry that I had to miss the discussion on the first group of amendments. However, my position on competition is no different from what it was when I was the NHS reform Minister in the Blair Government, but it is somewhat different from that of the current Front Bench, as will become clear.

I start from a position of being opposed to monopolies, whether they are in the public or private sectors, and I consider that such research evidence as is available—such as that by Dr Zack Cooper at the LSE—supports the view that competition—

[Baroness Murphy]

I apologise. I think that the group we should be addressing begins with an amendment in my name. Unfortunately, I withdrew that amendment last week but it has continued to appear in the Marshalled List, for which I apologise. I believe that we should be moving on to the next amendment in that group.

[The Deputy Chairman of Committees (Viscount Ullswater)]

Perhaps I may clarify matters for the Committee. The group that we are now discussing begins with Amendment 265ZA, tabled by the noble Baroness, Lady Finlay, but which she did not move. However, the amendments in the group following that one were called in their place.

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[Baroness Murphy]

My Lords, I wanted to come in on this matter of anti-competitive practices and the role of Monitor in it. I apologise to the Committee if some of these matters have already been covered, but I was unable to be here this morning. However, this seems like an opportunity to speak, as we are discussing Monitor’s role in anti-competitive practice.

I am concerned that we have not yet talked about the quite serious anti-competitive practice that exists in the NHS today, and how damaging it is. As we know, the independent co-operation and competition panel has highlighted a range of tactics that are very common at the moment in the NHS and which go seriously against patients’ interests. We have not sufficiently considered these when we are looking at competition. We tend to think of competition in relation to the independent sector versus the NHS in approaching the provision of services, but in fact it is this anti-competitive practice within the NHS which is so damaging. An example of this is the protection of certain local services against providers for elective operations, and so on.

I can think of an example in my own backyard, at Barts and The London—and this is a very real case. For years and years Barts used the mainstream orthopaedic services to provide local podiatry services, at a very high cost and very anti-competitively against the local community services, which had very skilled podiatrists who were able to do foot operations very cheaply and simply with a much smaller waiting list. Those sorts of anti-competitive practices are rife throughout the NHS, and are against patients’ best interests. It is utterly crucial that this role to reduce as much anti-competitive practice as possible should be watched by Monitor, but we want it to be co-ordinated with its role on integration—there is absolutely no reason why the two things cannot go side by side.

I am sure that we will come on to mergers and acquisitions, but the recent protection of patients and the public—for example, against the merger of two mental health trusts, Norfolk and Waveney, and Suffolk—seems to me to be extremely good judgment about what is likely to be in patients’ best interests. We should remember these matters of anti-competitive practice that are, as I say, rife in the NHS, and we really need to do quite a lot to stamp them out. I hope that the role of Monitor in working on these practices in patients’ best interests will be strongly supported.

[Baroness Finlay of Llandaff]

My Lords, the noble Lord, Lord Warner, was most helpful in setting out the criteria with which one would want to look at competition, and emphasising the importance of competition. But there is another area of competition, which is the one that really drives up quality of care: the inherent competitiveness of different clinicians and different clinical services, their desire to have better clinical outcomes than others, and the pressure that they will put on themselves within their own team to achieve better clinical outcomes.

I apologise to the House if I contributed in any way to the confusion over the numbering of the amendments as they have arisen. I would like to address the ones that come after Amendment 266, which will be Amendments 268B and 267C. Amendment 267C was tabled because of the large number of patients with complex clinical conditions.

It is very easy, when we are thinking about tariffs and services, to look almost at discrete nuggets of care, diagnosis and so on. Indeed, Monitor has a requirement in the Bill to seek appropriate advice to effectively discharge its functions in,

“the prevention, diagnosis or treatment of illness, or … the protection or improvement of public health”.

The amendment related to the management of a wide range of complex conditions has been tabled because in complex conditions many situations overlap and cannot be discretely targeted together, nor can they necessarily be unpacked one from another because of their impact on each other. That requires integration of clinical services.

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[Lord Clement-Jones]

My Lords, I am sure that this was well worth waiting for, but it could be the mouse that roared. We are back to other aspects of Clause 59 on the general duties of Monitor. This amendment and Amendment 267ZB simply aim to ensure that to discharge its functions Monitor has input from HealthWatch England. That is all about patient and public involvement. It seems to me and to my noble friends that Monitor should definitely insert such input into its deliberations. I cannot find in the rest of the Bill any other such duty on HealthWatch England, which after all will have an extraordinarily important role. Many noble Lords have welcomed the new enhanced role for patient and public involvement. I remember the demise of community health councils and the hard-fought debate that took place in about 2004—I cannot remember exactly when—and I very much welcome the new enhanced role for HealthWatch England. However, Monitor will need to be informed by it and I very much hope that the Government will take this on board. I beg to move.

[Baroness Murphy]

I realise that I have another amendment in this group, and I would have saved the Committee a great deal of disquiet over the numbers if I had spoken to this one in the first place, so my apologies all round. This group of amendments is about how Monitor discharges its functions and what it takes into account. Mine is a probing amendment on whether we have the objectives for Monitor and their number right. Experience from other sectors suggests that if too many policy priorities are set, the regulator can become confused about its primary objectives, which can reduce its effectiveness. I wonder whether we have the clarity of Monitor’s objectives right.

Monitor will find itself in the position of other regulators in having to devise policies, particularly on the tariff, to meet a wide range of objectives over and above its primary duties. The experience of Ofgem, in particular, suggests that the risk might grow over time as the Government seek solutions for new problems as and when they arise. Setting too many policy priorities carries the risk of confusing the regulator about its primary objectives. That might be inevitable, given the complexity of healthcare policy-making, but it means that the accountability of the regulator in discharging those various functions is critical.

For other major economic regulators, the Government have committed themselves to updating the objectives only once in a Parliament and ensuring that objectives are outcome-focused. Monitor's objectives, unusually, will be set in primary legislation. I wonder whether they would be better in secondary guidance, together with a clear process for agreeing changes with the Department of Health, to protect the regulator from political whim. Nevertheless, it has a number of primary duties in Clause 59. In Clause 62 it has to have regard to a number of other matters. Monitor might find it difficult to demonstrate that they are all taken into account when decisions are made, possibly making it open to legal challenge. I wonder whether it is possible to reduce the number of duties.

I have included just one or two as exemplars simply because I think that they duplicate existing duties. In Clause 62(b),

“the desirability of securing continuous improvement in the quality of health care services for the purpose of the NHS”,

which is crucial, duplicates a primary duty in Clause 59(1)(b), so I think it could be removed. Clause 62(c), on,

“the desirability of securing continuous improvement in the efficiency with which health care services are provided for the purposes of the NHS”,

duplicates a duty under Clause 59(1)(a). Surely that could be removed. These are minor, tidying amendments, but if we can clarify for Monitor what its objectives should be, that would be a help to the regulator.

[Baroness Finlay of Llandaff]

My Lords, I half spoke previously to the need for Monitor to have regard to complex clinical conditions. I return to that and build on the comments that have just been made, particularly in relation to tariffs.

We are already beginning to see a degree of fragmentation through systems such as “choose and book”. We heard on a previous day in Committee about the problems for patients with various complex conditions, who have to be sent back to their general practitioner to be able to access a different discipline in secondary care and how their care then becomes fragmented. If you are going to provide good integrated care and improve clinical outcomes, you need all the different systems of the patient to be addressed simultaneously—the psychological and welfare areas as well as the different physiological systems that might be affected by a range of pathologies.

I remind the House that it is much easier when people are not terribly ill. When they do become terribly ill, more and more systems fail and become involved: cardiac complications, overwhelming infection, renal failure and potential dialysis might all be involved, and if there has also been trauma with orthopaedics there might be a lot of complex psychological conditions relating to whatever has happened to the person. They all need to come together around that patient. The patient cannot be parcelled off from one service to another or people be brought in sequentially like small aliquots of opinion.

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[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.