NHS: Hinchingbrooke Hospital

Baroness Thornton Excerpts

Thursday 10th November 2011 Lords Chamber

Asked by

[Baroness Thornton]

To ask Her Majesty’s Government what profit margin the contract between the Department of Health and Circle Health Ltd specifies for the running of Hinchingbrooke Hospital announced today.

[Baroness Thornton]

My Lords, I beg leave to ask a Question of which I have given private notice.

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

My Lords, we do not know Circle's profit margin. I can, however, explain the basis on which Circle will be paid. Circle will effectively receive a success fee for bringing the trust into surplus and keeping it there. If Circle does not make the trust operate at a surplus, it will not receive any fee and it will lose money on the transaction. Circle will receive all surpluses up to the first £2 million of any year's surplus, and then a share of surpluses of more than £2 million to keep it incentivised to generate the further surpluses that the trust will retain.

[Baroness Thornton]

I thank the noble Earl for that comprehensive explanation of taxpayers’ money. The issues I want to address are ones of transparency in process and criteria. Will the Minister provide details—I do not expect them this morning—of the meetings and minutes of meetings between Ministers, civil servants and Circle Health Ltd, and meetings with Mark Simmonds, MP, who is a paid adviser to Circle and a former member of the Conservative Front Bench? How will the Department of Health know whether this is a good deal? I can see how we will know whether Circle has made a profit or not. What is the objective here? Will a clinical as well as a financial audit be built in, and will those results be made public? In other words, how will the taxpayer know whether this is a good deal?

[Earl Howe]

I will, of course, write to the noble Baroness with detailed answers to the first part of her question, which would take too long for me to answer now. I can say that this is a transfer of risk to the private sector. That is why it is a good deal. It is also a good deal in another sense, because patients will still have a hospital in Hinchingbrooke. This is a hospital that in common parlance could be described as a financial and clinical basket case. No NHS bidders were willing to take it on. When the previous Administration left office, only independent sector operators were in the frame to do so. We therefore knew at the last election that there would be an independent sector solution. I think that it is a win-win situation all round. It is good news for Hinchingbrooke patients, and I understand that under normal Freedom of Information Act rules the contract involved will be made available, subject to commercially confidential details being redacted.