Health and Social Care Bill

Baroness Thornton Excerpts

Tuesday 13th December 2011 Lords Chamber

Moved by

[Baroness Thornton]

282ZA: Clause 85, page 104, line 11, at end insert—
“( ) Such criteria must include the requirement, at regular intervals, for all licensees to supply Monitor with financial information, in the interests of meeting standards of financial stability and probity.”

[Baroness Thornton]

My Lords, I start by congratulating noble Lords on making it through this day of debate. We are ending the day with this large group on failure, and the smaller group on pre-failure, tabled by my noble friend, in a moment or so.

In the NHS of 20 years ago, the trusts that got into problems were helped, although the help may have been brutal, with chief executives removed or moved on and nasty phone calls to trust chairs. The system gave powers of intervention from the Secretary of State through local strategic bodies, as they became. Financial help was grudgingly provided, usually for a recovery plan, sometimes delivered and sometimes not. The relationships were not defined by legal contract, and NHS contracts could not be enforced in the courts, so there was a system of arbitration within the NHS.

Those days have gone, and we now have an NHS as a network of many sub-organisations, some with linkages through real contracts. With FTs came the idea of a real contract, although in reality, of course, disputes are still sorted out long before reaching a court. We know that services, and even whole organisations, can fail as the impact of demographic, technological and behavioural changes shape our NHS. In reality, we have to deal with trusts that get into severe difficulties and may be technically insolvent, at which point a real organisation may not be allowed to trade. Then we have to accept that a whole trust might need to be shut down. Indeed, how should that be done? How should the continuity of services be maintained, how should the staff be dealt with, and how should the assets, most of which are owned by the state, be dealt with?

We know that this is the tail end of a bigger and important issue of reconfiguration. So how do we ensure that we can adapt services that show poor quality or that need to be delivered in different ways in different settings? Maybe, as with an increasing array of subspecialities, we have to accept regionalisation. Maybe we need network solutions. Is the market the way to do this? In other markets, innovations lead to changes in demand, and the organisations that cannot adapt close down. Is that what we want for our NHS?

Those who might be so inclined might like to wander through the delicate prose of Simon Burns MP in Committee in the Commons. He loves failure. The idea that you have competition is inextricably linked to having failure. It facilitates the market, brings in the innovators and drives out the inefficient. He believes that failure is a measure of market success, not failure.

It is true that in government we introduced a failure regime as we came to realise that, even after all the support and changes of management team, there may be organisations that are simply not viable. However, it is not so much that they were not viable; it is what that means, that continuing to support them is not giving value for the NHS, however much we adjust that value to include non-financial aspects. Indeed, we also wanted to bring out into the light the murky transactions used within the NHS to support organisations, through means such as brokerage loans. The tendency was for bad performers to be bailed out by the good—the opposite of a reforming system. The way NHS accounts were done also had to be changed to make this kind of smoke-and-mirrors accounting more open.

Issues around failure are more likely to operate at service level than at a whole-organisation level. To take a recent example, a well known and respected financial trust is having issues around its 18-week performance. Its general quality is good but it has signalled that it needs help, and it is indeed getting it from a Department of Health team. The question that we need to ask is: would this kind of support be available in the new world? Presumably, it would not; and even if it were, might that help be deemed anticompetitive? Would that good trust be allowed to fail? The link here to reconfiguration is inescapable.

We know and even admit in our rational moments that reconfiguration on a grand scale is what the Nicholson challenge is really about. The need to move services into community settings and to reduce dependency on the district general hospital model is widely recognised. However, we also know that reconfiguration is beset with political problems. In the run-up to the election, about one-third of constituencies had some kind of campaign to keep open a hospital, a surgery or whatever. One felt sometimes that even if there was no threat, one was invented. We had Andrew Lansley and David Cameron claiming that they would prevent any closures. I think that the Government are learning the hard way that promises made in opposition, especially during election campaigns, may turn out to be millstones when the real burden of decision-making passes to them. The examples of broken promises will continue as reconfigurations gather apace.

This is the issue to which our suspicions should be addressed. Is it part of the rationale to put the blame for nasty politically damaging decisions on others? This abdication of responsibility is characterised by the way that Ministers are trying to give away the key roles of the Secretary of State. This is in part a failure of process but is also a failure of leadership. The leadership should be accountable for delivering answers and necessary changes within a reasonable timescale. If we get reconfiguration right, the failure regime would look less necessary. This is far better for patients than the trauma of seeing their local facilities under constant threat or even being closed down. There are examples of where this has been done, and done well—and we need more of them.

In Committee in the Commons, the Conservatives in particular appeared to believe that these unpopular local changes would be less likely under the Bill—if changes in organisations are branded as failures, then those MPs would be well clear of any responsibility. In fact, we have years of evidence because every reconfiguration has to go through a clinical and management review at an early stage—so we know what works and what does not. We could use that evidence, rely on a robust process and stop opportunist politics. However, we know that the market will not bring about these changes any time soon.

In our NHS, the best interests of patients are served by good information that allows early intervention to improve failing services. CQC inspections are also of value in raising the prospect that poor services will be detected early. If you rely on competition, how long does it take for the public to react to the information that a service is bad and for them to choose to go elsewhere, or for that to impact on the finances to the extent that the service is closed down? In our view, using choice and competition to detect and close poor services takes too long and the cost for patients is indeed too high. That is what this suite of amendments aims to tackle.

The amendment sets licensing criteria to ensure that private providers meet standards around financial stability and probity. We need to supply regular financial information for the good providers. This is, in other words, a sort of Southern Cross test. Amendment 249MBA brings into effect the remaining inactivated arrangements for trust special administration from the 2009 Act, as amendments to the 2006 Act. I remember those well. Amendment 353ZZA is a commencement provision for that. Amendment 295 states that health special administrators must exercise their functions to “protect the interests of patients”. As to the Questions that Clauses 125 to 130 stand part of the Bill, this would create a regime for private companies that provide services to the NHS to have special procedures that augment the normal company provisions under the Insolvency Act. It arguably implies that we need stronger protection from the risk of private provider failure. It should be for the commissioners to factor in the risk of using private providers and contract to ensure that arrangements are in place for contingencies. The licensing regime needs to be tough enough to prevent Southern Cross-type failure through active monitoring.

Risk pooling is what the NHS does. We do not need new risk pools, with the costs that they involve. That is why we think that the clauses should be deleted. Clauses 131 to 143 inclusive allow Monitor to set up the regime to provide special administration for both private and public providers to levy charges on providers and commissioners and to manage the finances of a risk pool.

We argue that none of that is required; it just adds extra complexity and cost. Clause 170 is about FTs and failure. The clause removes the ability to deauthorise a foundation trust. We argue that that power should be retained, along with the recognition that some NHS provider trusts may need to be directly managed under the powers of the Secretary of State.

The new clause in Amendment 303ZA makes clear that the initial effort, in the context of failure, should be remedial action rather than going straight for a failure regime. My noble friend has a similar idea behind his amendment. On Amendment 303ZB, the new clause is intended to reinforce and strengthen how reconfiguration is carried out. Under Amendment 303A to Section 65A of the 2006 Act, bodies to which trusts’ special administration regimes apply should remain, so that the special administration regime applies to FTs and NHS trusts.

Again, we are shortening the Bill and making it simpler and probably taking out quite a lot of cost. I beg to move.

[Baroness Finlay of Llandaff]

My Lords, I have several amendments in this group. I shall start with Amendment 294N, which is a probing amendment. As far as I have understood it, social enterprise bodies which are NHS bodies in all but name are coming into existence. They have evolved from PCTs under the transforming community services programme. They will be subject to special health administration arrangements. I ask the Government to confirm whether the social enterprises that come under the health special administration arrangements are coming under arrangements based on insolvency law and that, as such, that allows assets to be transferred outside the NHS and the redundancy payments are not guaranteed.

Amendment 295CA is intended to ensure that clinical commissioning groups are consulted before the Secretary of State makes regulations that allow Monitor to impose charges on commissioners. The charge imposed can include a levy to fund Monitor’s functions that have to be invoked in the event of failures. Amendment 295CB is intended to ensure that when setting such a levy, Monitor takes into account the impact of the levy on the financial stability of the organisation, especially a financial trust that is already in distress or failing. Amendment 304A requires that the commissioners are considered when the services of a failed financial trust are considered by Monitor and should be involved in the decision as to which should be continued, and that such services must include some continuation of education and training, because in planning for the future workforce, if a whole lot of posts were suddenly lost, it would destabilise the workforce planning. That is in addition to considerations such as the service provision and issues of equity and access. That becomes particularly important because if you do not have the staff with the appropriate training, you cannot, in the long term, provide the service anyway.

Amendment 304B is intended to ensure that commissioners are involved in the board's role in agreeing arrangements to secure continued access to NHS services will be achieved. Will that include the board’s selecting which commissioner would become lead commissioner for the process during a failure?

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As regards Amendment 304A, I have already committed to considering education and training, and we will return on Report to clarify this issue.

[Baroness Thornton]

Perhaps I may ask for clarification. The noble Earl refers to providers all the way through. Can we be completely clear that this means all providers —that is, private sector providers, NHS providers, social enterprises and charity providers of health services? Do all these levies and fines apply to them?

[Earl Howe]

My Lords, when I refer to providers of NHS services, I am referring to NHS providers and non-NHS providers. It is to be determined who will contribute to the levy. That is being worked through and I am sure that the noble Baroness will have noticed from the document that we published the other day that this work is ongoing. We will make further announcements about that in due course.

On Amendment 304B, I say that the board should consult the relevant commissioners but it must make the decision itself, which is what the Bill provides for. The noble Baroness, Lady Finlay, asked whether social enterprises will be within the scope of the health special administration regime. Social enterprises are companies so they will be within the scope of health special administration. It is right that they are not treated as NHS bodies as when assets are transferred from PCTs robust rules apply, as I have set out in detail in previous debates. She asked whether the NHS Commissioning Board would nominate a lead commissioner if a provider becomes unsustainable. The answer is yes.

I hope that noble Lords will find that series of explanations helpful and I ask the noble Baroness, Lady Thornton, to withdraw the amendment.

[Earl Howe]

I am grateful to the noble Baroness and will take that point away.

[Baroness Thornton]

I thank noble Lords. I will take only a moment, but we will need to return to this. First, this was not looked at properly in the Commons and I can see that that is the case. Secondly, I recall that the chief executive David Nicholson disagrees. He said that he advocates de-authorisation. I believe that the pooling and the levy are bureaucratic and expensive and that the noble Earl does not understand that reconfigurations will not be led locally. I do not think that the Bill adequately approaches how we will manage reconfigurations. To be kind one has to say that the work is ongoing; I am not quite saying that the department and the Bill team are making this up as they go along, but it is definitely an area to which we will need to return on Report. I beg leave to withdraw the amendment.

Amendment 282ZA withdrawn.

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[Earl Howe]

My Lords, may I say to the noble Lord, Lord Warner, that I am very pleased that—

[Baroness Thornton]

I have a very small piece of advice to give the Minister. I always think that it is best to give in and agree with my noble friend Lord Warner. I have almost always found that this is the best course of action. The noble Earl might recall that, when I was a Minister, on one of the occasions where I did not give in I certainly came a cropper. I urge the Minister to think very carefully and seriously about what my noble friend has had to say. It merits great attention and it merits being in the Bill.

[Earl Howe]

My Lords, before that intervention I was about to say that I was very pleased that the noble Lord, Lord Warner, had returned us to this issue, which I, like he, regard as extremely important. It is a thoughtful amendment and will certainly prompt further thought on my part after this debate.

I do not think that there is any difference between the noble Lord and myself in this respect. I am certainly all in favour of ensuring that wherever possible there is early intervention and proactive monitoring of organisations well in advance of failure so that failure can be averted. The main difference between us, if there is one, is that we believe that this process should be locally led and not led from the centre, which is how I read his amendment. I probably read it wrongly. When the noble Lord spoke to it, he indicated that nothing in it was intended to run counter to that locally led process. I take that on board.

Why are we so keen on a locally led process? The overall aims that we set out are to put patients, carers and local communities at the heart of the NHS, shifting decision-making as close as possible to individual patients and devolving power to professionals and providers, liberating them from top-down control. This amendment would appear to do the opposite and could lead to an increasing level of decisions being centralised and moved away from local communities and their democratic representatives. The more that one does that, the less likely one is to get local buy-in. In a patient-led NHS, if it is to be worthy of the name, any changes to services have to begin and end with what patients and local communities need.

[Baroness Thornton]

Does not the experience of the last few years—we can name the hospitals concerned—show exactly the opposite of what the noble Earl is now saying to us, that this has to be locally led? We have to find some mechanism which allows decisions to be taken that does not dismiss or ignore local feelings. Of course people have to be involved in those decisions but, at the end of the day, we know about Chase Farm and several hospitals I could name. In north London, we know that we have too many hospitals. They have not been closed down because it is politically too difficult to do so. If the decision remains at local level, in north London we will still have too many hospitals. I have lots of MP friends who have campaigned to keep those hospitals in place, particularly before the last general election. It seems that what the noble Earl is outlining now will not work.

[Earl Howe]

Contrary to popular opinion, there have been cases of very successful and rapid reconfigurations of services. Of course, the ones that come to our attention are those that have taken a long time, such as Chase Farm. There is no better or worse example than that.

In reading this amendment, we should be cautious about any process that would significantly weaken both local commissioner autonomy and public engagement. We do not want to conflict with the statutory requirement for NHS bodies to ensure appropriate and proportionate involvement of patients and the public in service changes or reduce the ability for local authority scrutiny to bring effective democratic challenge to reconfiguration plans. I certainly do not think there is a case to reduce democratic accountability in this way.

I agree with the noble Lord that, where it is not possible to reach local agreement on a service change proposal, there should be mechanisms for independent review. We are retaining powers in the Bill for local authority scrutiny functions to be able to refer reconfiguration schemes. As part of the transition, we are also exploring how the NHS Commissioning Board and Monitor can work together to support commissioners and providers. As I have said, the key to successful service change is ensuring engagement with the local community and stakeholders so as to secure as broad support as possible in what can be very difficult decisions.