Health and Social Care Bill

Baroness Thornton Excerpts

Tuesday 13th December 2011 Lords Chamber

Moved by

[Baroness Thornton]

260EA: Clause 58, page 87, line 9, at end insert—
“(c) is to continue as regulator of NHS Foundation Trusts as set out in Chapter 5 of Part 2 of the National Health Service Act 2006”

[Baroness Thornton]

My Lords, at last we move to Part 3. I hope the House will tolerate a longer speech from me than I normally make. I have made just a series of very short speeches so far on the Bill. There are many amendments in this part in my name and that of my noble friend Lord Beecham. I would like to take this opportunity to explain the rationale behind the suite of amendments that we have put before the Committee today. I thought the Committee might prefer one longish speech rather than 10 short ones, which will almost certainly save time.

Our amendments are largely in this group, which addresses the role and powers of Monitor, and the next two groups, which address Monitor as a licensing body and its accountability. Later today, in groups eight and nine, there are the issues of pricing and the failure regime.

On these Benches, we decided some time ago that this was the heart of the Bill. Over all the debates we have had in the last 11 days, it has become abundantly clear that the reason we have this mammoth Bill, bringing about the expensive and risky reorganisation of our NHS, is to create a regulated market in the NHS. On these Benches, we have always believed that fundamentally, this Bill was conceived and constructed, around Part 3. Even after the pause for reflection and the report from the Future Forum, that remains the case.

Version 1 of the Bill was at least honest in being the embodiment of what Andrew Lansley had promised to do to our NHS back in 2005. He is at one with his colleagues Oliver Letwin and George Osborne. Mr Lansley wants markets and is against a communally owned and publicly run public sector. Like his Conservative colleagues, he believes that competition solves every problem and is a cure-all. Indeed, Mr Lansley’s background in establishing regulated utilities in his five-year preparation as the shadow Health Secretary makes it clear that he wants to treat our healthcare just the same as gas, water and electricity. That was version 1.

That finally collapsed when people including the Liberal Democrats actually read and understood the White Paper and the Bill. I will not trouble your Lordships’ House by picking over the corpses of versions 2 and 3 of the Bill, but we now have version 4, and I suspect that we are still far from finished. This Bill is a mess. It is now a catalogue of compromises, except, it has to be said, the framework that we have on offer in Part 3, which would, over time, allow Mr Lansley’s vision to be fulfilled. He must be hanging on to that for dear life.

We believe that Monitor is being asked to fulfil too many functions and set too many priorities, and that some of these are potentially, if not actually, in conflict with each other. We hope the House will appreciate that, on these Benches, we have done the House a big favour. We have rewritten Part 3 to make it simpler and more coherent. We have taken out the nonsense parts, such as the voting system in Clauses 116 to 121, which as it were bring the X Factor system into the NHS. Why not have phone-in votes for CCG chairs, for example?

We have taken out the convoluted and bureaucratic ideas around levies and risk pooling. After all, that is part of what the NHS is for—to pool the risks. Our advice is to keep it simple. We believe that the attempt to define the rules-based system for the NHS was always doomed. The idea that, like a true regulated market, we can set out the rules in primary legislation and contracts and then let the courts decide everything is just plain daft—unless you are a lawyer, of course. They must be salivating at the business coming their way if this Bill becomes an Act in its current form. Does the presence of excessive legality and constant contracting sound familiar? It should, because essentially that is what happens in the United States healthcare system.

We have, like Monitor, suggested that instead, the principles and rules for co-operation and competition—PRCC—that we put in place when we were in government should be left as the basis for the system. We also suggest that the Co-operation and Competition Panel should retain its role of advising on complaints about any breaches of the rules, which was at one time the Government’s position, and it may still be. For us, a defining characteristic is that the pinnacle of such a system is that there is a Secretary of State who sets the framework through the PRCC.

I would like to dispel the myth that Labour is against reform. In 1997, we came in to rescue the NHS after many years of neglect. On everything worth measuring, the NHS of 2010 was far, far better than in 1997. It is only in 2011 that we have seen it start to go backwards again, as waiting times get longer and access is restricted. Our track record on reform is there. Clearly, we did not get everything right, but we learnt. The current Administration have launched the biggest reorganisation of the NHS in its history, despite the promises that they would not and despite all the evidence that reorganisations set the NHS back two to three years, and despite the costs and risks involved—except, of course, that we are not allowed to know exactly what those risks are.

Labour introduced independent regulation of quality to the NHS. We support the continued role for Monitor with regard to foundation trusts, which we put in place. We accept the idea of extending tough financial regulation over all providers in the NHS through the use of a licensing scheme. But we do not accept the handing over of economic regulation of the NHS to a quango. We wish Monitor to retain its powers to oversee foundation trusts, and, like Sir David Nicholson, we see the value in retaining the possibility of de-authorisation of a foundation trust into a safe haven to permit restructuring and reconfiguration. But more on FTs later.

We have never been against the idea of competition. Indeed, we set out the principles and rules basis on which it could operate. We have never been against using the private sector where this adds necessary capacity or provides expertise not available within the NHS. Our experience, good as well as bad, informs our response to the Bill.

There is a place for competition. It is not, and never should be, the main driving force for reform of the NHS. We are against the promotion of competition for its own sake, as this Bill originally intended. We believe the balance between co-operation and competition is a matter for the Secretary of State to determine, in the best interests of patients, not for a quango to determine in the interests of some ideological bias.

Further along in the consideration of our amendments, we set out the process by which major reconfigurations could be proposed, consulted on and determined. We set out for the first time the idea of a rules-based failure regime. We do not see failure as a desirable feature of a market system; we see it as a failure of planning and commissioning and as something to avoid, not welcome. But if all early intervention efforts are insufficient, then an orderly rules-based administration process is necessary, so we set one out.

In all these areas, we do not oppose development of the NHS or reform. We simply fundamentally disagree with the approach being used by this Administration, which is highly disruptive and expensive and takes focus away from the Nicholson challenge. Along with the Liberal Democrats of old, we oppose the change to a regulated market at the expense of democratic control. These are the wrong reforms at the wrong time and, we add, for the wrong reason. Healthcare is not another utility to be regulated and privatised. Our NHS has as its foundation the twin principles of universality and social solidarity. It is not a candidate for conversion into a fully fledged market. We introduced regulation to give the public some independent reassurance. We introduced external assessments of quality in the NHS. The role of the quality regulator, the CQC, is unchanged by the Bill. We support the CQC, but only if it is properly resourced. We set up NICE, which is acknowledged as a world leader in its field. We set up Monitor and we think it is too early to evaluate its success, as the move to an all-FT system has taken far longer than envisaged and proved more complicated than was assumed—a lesson not yet learnt by this Government.

The job is really only half done. What we do know is that there is no miracle transformation tool. The evidence is that foundation trusts do not progress any faster than non-foundation trusts. There is little, if any, evidence that foundation trusts are more innovative, more risk-taking or more competitive than their non-FT colleagues. It is a mix.

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[Earl Howe]

My Lords, I thank all noble Lords who have contributed to what has been a first-class debate. While I will not repeat what I said earlier, the value of this summing up will be in me responding to some of the specific questions and points that have been raised by noble Lords.

The debate has demonstrated broad agreement, if I am not putting words into noble Lords’ mouths—no doubt they will tell me if I am—that competition, when used appropriately, has an important role to play in realising what we all want to see in the NHS. It should be a means of improving the quality of care and productivity in the health service, and of improving patient choice, including choice of treatment. I would like to believe, from what noble Lords have said, that there is no disagreement about that as a general principle. It is consistent with the policies of the previous Government, reflected in published statements on behalf of all the main political parties over the years.

A further area of potential consensus appears to be on the merits of sector-specific regulation that is applicable to both commissioners and providers, with the starting point being the existing principles and rules for co-operation and competition in the NHS, as the noble Baroness, Lady Thornton, made clear.

Speeches from several noble Lords demonstrated the concern that competition law should never be applied to the NHS. The noble Lord, Lord Owen, in particular, expressed that view very forcibly. However, that is not in the gift of the Bill. The Bill provides for Monitor to consider cases of potential breaches of the Competition Act 1998, to undertake market studies and to determine where and when matters should be referred to the Competition Commission for investigation under the Enterprise Act 2002. Establishing concurrent powers for Monitor would not extend the scope of competition law or its applicability to the NHS.

[Baroness Thornton]

If that is the case, why do 20 clauses in this part of the Bill refer explicitly to the Competition Commission and the panoply of competition law? Should they not be there?

[Earl Howe]

They are there because this is the first time that any Government have attempted to bring together under one umbrella the disparate parts of our existing system for regulating and controlling competition. As I said earlier, we have that system in skeletal form, but there are lots of gaps and inconsistencies. By bringing them under one umbrella, as this Bill does—I am afraid that it inevitably occupies a goodly number of clauses—we will have a coherent system of regulation for the future.

Establishing concurrent powers for Monitor would not extend the scope of competition law or its applicability to the NHS; that is an important point for noble Lords to appreciate. Why have a sector-specific regulator? For me, the reason is that, instead of such matters being reserved for the Office of Fair Trading, Monitor will be able to lead on these issues in its capacity as a regulator with statutory duties to protect and promote patients’ interests and to enable integration, and as a body with much greater knowledge and expertise of healthcare compared with the Office of Fair Trading. That would include, for example, where arrangements such as clinical networks, which may restrict competition, deliver overriding benefits to patients. Just because there is no competition, that does not mean that the behaviour in question is anti-competitive.

That view was forcibly brought out by the NHS Future Forum. As I have said, competition is just one of the tools available to the commissioner in securing access and improving services, and it will be the commissioner, not Monitor, who will decide where and how to use it. That is not new. The use of competition—for example, through competitive tendering—is already well established in the NHS. A range of providers—NHS, voluntary, and independent—are contributing to improving services for patients.

Of course I understand the passion with which the noble Lord, Lord Owen, spoke; my concern is that his amendments would remove from the Bill a protection for patients in relation to the actions of commissioners. That is very important; if the noble Lord’s amendments were accepted we would have commissioners taking decisions that were not overseen or checked in any way, which would be very dangerous. It would also be a backwards step from the existing principles and rules that apply to primary care trusts and that were introduced by the previous Government. The noble Lord, Lord Owen, said very interestingly that according to his research the French railway system is not subject to EU competition law. I defer to his knowledge of French railway legislation but, as is made clear in the OFT’s recent guidance, the issue of whether competition law applies requires an analysis of the activity in question. To insert a clause into the Bill just to say that EU competition law shall not apply to the NHS would not achieve that aim. EU competition law is a fact, so we have to ensure that the system that we put in place protects patients against breaches of the law and that when breaches do occur they are remedied effectively.

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[Earl Howe]

My Lords, the noble Lord, not for the first time, is ahead of me. It is no accident that we have a group of amendments that deals with potential conflicts and how these are to be resolved. It might be better, if the noble Lord agrees, to wait an hour or two until we reach those amendments.

My noble friend Lord Newton indicated from his own personal experience that mergers, when they occur, are far too bureaucratic. I fully agree with him. The Department of Health, the Co-operation Competition Panel and, if it involves a foundation trust, Monitor, all currently play a role and may have conflicting views which lead to uncertainty and delay. Our proposals would create a simpler and much more streamlined process for the NHS.

My noble friend indicated his strong view that safety and quality—not competition—should be paramount. I am sure it will not have escaped his notice that improving quality is what these reforms are meant to be about. We have been clear that patients’ interests, especially their safety and the quality of the services they receive, have to be paramount. That is why Monitor’s overriding purpose is to protect and promote patients’ interests. It is why the board will have a duty to improve quality, why the CQC will underpin quality; and why competition will be used only as a means to improve quality. Where there are better ways to improve quality—and there may be—they will be used instead.

My noble friend Lord Clement-Jones, in his extremely interesting and—I do not mean to sound patronising—well-informed speech, took us through some of the intricacies of competition law. Although he did not say this, there has been a suggestion from a number of quarters that we are in a knowledge-free zone when we look at competition laws applied to the NHS. In one sense that is true because there is no case law that can guide us, but in another sense it is not true.

We can say many things with confidence. The point of competition law is to protect people from self-serving abuses like collusion or abuse of market power by restricting access to services. These self-serving abuses that harm patients are already prohibited in the NHS by the principles and rules for co-operation and competition, as introduced by the previous Government. This is not something new introduced by the Bill. Competition law applies to foundation trusts only in so far as they are acting as an undertaking, as my noble friend indicated—in other words, only where they are providing goods and services within a competitive market. Given the lack of directly applicable case law to NHS providers, there is some uncertainty about where that line is drawn.

A body can be an undertaking for some activities and not others. That is very clearly laid out in the OFT’s recent guidance, Public Bodies and Competition Law. For example, the foundation trust might be an undertaking for elective surgery, if it were provided in a competitive market, but it would be very unlikely to be an undertaking when providing NHS services in the absence of competition and while under a licensed obligation to maintain service continuity, which it could well be if Monitor chose to build that into its licence. In so far as foundation trusts may in the future be found to have abused their market power, what would then follow? It is important to understand what the consequences would be. In that situation, Monitor—

[Baroness Thornton]

Before the noble Earl moves on, I would like to be completely clear. Is the Minister saying that Monitor will decide which parts of the NHS are subject to competition law—and not the Secretary of State?

[Earl Howe]

My Lords, competition law potentially applies to the provision of services throughout the NHS. Monitor is there to protect patients from breaches of competition law, as it perceives them to be. The noble Baroness is right that it will not be the Secretary of State who makes those judgments. We are charging Monitor with that duty as a sector-specific regulator. I hope I have answered the noble Baroness’s question; if I have not, I am very happy to write to her on that.

In a situation where a foundation trust was found to have abused its market power, Monitor or the OFT would have the power to remedy the breach and impose proportionate sanctions, which might be a fine, or it might be to set aside a collusive agreement or to apply to the courts for a director disqualification. The effect would be to ensure that the anti-competitive conduct and the associated harm were addressed. That can be only a good thing. It is in the interests of patients, and it prevents the whole thing escalating further. The noble Lord, Lord Rea, indicated his doubts that there was any evidence that competition really did drive up quality. If he will allow me, rather than taking up time now, I will write to him, because there is quite a deal of evidence to indicate that it does drive up quality.

On reflecting upon the question that the noble Baroness, Lady Thornton, asked a moment ago, Monitor will not decide whether competition law applies; Monitor will apply the law as it exists. In the end, only the courts will decide the question that she put—certainly not the Secretary of State.

[Baroness Thornton]

In a way, that goes back to my original question: will the Secretary of State no longer decide, for example, that accident and emergency will be exempt from competition law? Will Monitor decide? Could the noble Earl please be patient with me and give me an example of what will be exempt and what will not be exempt, and who takes that decision? Is he saying that Monitor takes that decision and that if Monitor gets it wrong, the matter goes to the courts?

[Earl Howe]

Monitor would ask itself: is the arrangement we are looking at for, let us say, an A&E department that had no competition for miles around, anti-competitive? The answer might well be no, it is not. As I said earlier, the very fact that there is no competition to a service does not mean that it is anti-competitive. Monitor will make a judgment on whether the service is operating in the interests of patients. However, I think that we are getting into an area where it would be beneficial to have a letter from me setting out exactly how the law is applied and by whom.

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[Baroness Thornton]

My Lords, this has been an absolutely brilliant debate and very helpful to everybody in the Committee; I hope that that includes the Government. I start where the Minister left off about intentions—it is not the Government’s intention to introduce competition red in tooth and claw. However, the Minister must by now have realised that that is not what people understand by what is actually in the Bill and how it might be applied. That is the dilemma that faces the Committee and the Government. We on these Benches will certainly take up the offer that the noble Earl made in his opening statement, which was extremely useful, of discussing how to improve and change this part of the Bill. We would like to be part of that process. There is definitely work to be done on that.

I will briefly sum up our position on this debate. I have a series of questions for the Minister and I am very happy for him to write to me about them. We are not convinced as yet by the idea that having a quango as an economic regulator is the only way to bring a clear and comprehensive legal framework into the Bill. The purpose of Monitor in the Bill is to develop competition, which is why we have the Bill. We believe, and this debate shows us, that the contents of this part of the Bill in fact open the door and invite in the issues that were raised, for instance, by the noble Lord, Lord Clement-Jones. If competition is not at the heart of the Bill, why do we need all that detail? The noble Lord, Lord Clement-Jones, made a very helpful intervention and a useful analysis. I, for one, will be rereading his speech about EU competition law.

I ask that the noble Lord, Lord Clement-Jones, and his colleagues look at our Amendment 262A, which would add a third subsection to Clause 59(1). The proposed paragraph (c) says the provision of health services should be,

“based on the principles of universality and social solidarity”.

We were not making a particularly left-wing statement with that. We were actually lifting it out of European law, which our advice tells us is one of the ways in which you keep at bay the procurement processes of European law. I strongly ask the noble Lord, Lord Clement-Jones, to look at that; I would be interested to hear his comments.

One part of the debate that I have been disturbed about was that raised by the noble Lord, Lord Owen. He also has a freedom of information request in for information that would help to inform the discussions of this House. We know that we have had our debates about the lack of access to the risk register to help us in our deliberations. Indeed, my honourable friends in another place asked if they could also have access to the legal opinions that the department had got on this part of the Bill, and were refused access to that, too. We have all had to find our lawyers to advise us about competition law. We are now all a lot better informed than we were several months ago. The noble Lord, Lord Owen, was right when he said there is no consensus about this; indeed he was right when he said that parts of this Bill are feared and hated. The Minister needs to understand that there is a lot of fear out there, about this part of the Bill in particular. The noble Lord was expressing very grave concerns.

The noble Lord, Lord Newton, made a threat to the Government about patient safety and quality being the order of the day and said that he will be returning to this on Report. He will probably have more effect than the rest of us put together in his interjection on this matter. We will be behind him if he does so, which may not do his reputation any good at all.

The noble Baroness, Lady Meacher, made a very thoughtful speech, her most important point being that we already have the tools to make the system work. There is no need to put in an economic regulator and the competition regime that this Bill suggests, because the tools are already there. That is very important.

I say to my noble friend Lord Whitty that there is absolutely nothing wrong with a bit of slash and burn to make the point about this part of the Bill. In effect my noble friend was at one with the noble Lord, Lord Clement-Jones.

The message from the noble Baroness, Lady Cumberlege, is that the NHS needs to improve. Yes, we would all agree with that and every health system in the world needs to change and improve. I would, however, refer the noble Baroness to my speech, which embraced change, embraced development and even embraced the use of managed competition. Where we part company is that the way to improve the NHS is not to treat it as a utility or a supermarket; we do not think the evidence is there to prove that. In fact, there is a lot of evidence to suggest that we should be very wary of the introduction of market forces as a way to improve our health service.

My noble friend Lady Armstrong made the important point that we agree with the Minister that there is a case for the use of competition in its place. The challenge before us is how we ensure that this Bill delivers that without threatening the whole fabric of our health service.

[Baroness Cumberlege]

Is the noble Baroness aware of Gaynor et al and the work they have done? I quote again from Protecting and Promoting Patients’ Interests: the Role of Sector Regulation, a research study in 2010:

“We find that the effect of competition is to save lives without raising costs. Patients discharged from hospitals located in markets where competition was more feasible were less likely to die, had shorter length of stay and were treated at the same cost”.

[Baroness Thornton]

All I would say in answer to the noble Baroness is that there is no known health service in the world that shows competition improves health outcomes. I challenge the noble Baroness to send me the information that shows that is the case.

[Baroness Cumberlege]

The noble Baroness should look at this document and at the research which is stated in it.

[Baroness Thornton]

We are talking about the whole system, not a small part of it. We can share our intelligence outside the Chamber; the noble Baroness makes a good point but there is no evidence that says this is the way to improve our national health system.

[Lord Reid of Cardowan]

Perhaps I can be helpful. The noble Baroness referred to a study of the competition element, which was introduced into the British health system by the previous Government, as far as I am aware. That was carefully circumscribed competition. It did not amount to more than 10 per cent. It was based on the insistence that competition be fair in terms of quality, standards and price; it excluded emergency; and it applied only to elective operations. The difference here is not whether competition is beneficial where appropriate. The real question is: where is it appropriate? That is the distinction between the two comments.

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[Baroness Thornton]

My noble friend comes to my assistance in a very appropriate fashion and puts it much better than I did.

Finally, the question that we need to answer is: does the Bill increase the likely interference of competition law in the National Health Service? Does the Bill transfer power from the Secretary of State to Monitor, and is that a good thing? That is why I was pressing the Minister about who takes the decision about where competition law applies.

The Minister said at the outset that Part 3 is misunderstood. He is absolutely right. If the Government really want to put beyond doubt the issue of competition law and its place in the delivery of our National Health Service, we have to simplify, clarify and delete parts of Part 3 of the Bill. We have to take the NHS out of the danger zone of EU procurement law and competition law. That is the challenge that lies before the House when we return to consider this at a later stage in the Bill.

[Earl Howe]

My Lords, before the noble Baroness sits down, does she accept that European procurement law already applies? I do not think there is any dispute about that. I hope she will welcome my offer to write to cover issues relating to competition law, including giving my view on my noble friend’s suggestion of having an independent legal view. I have not taken a view about that at the moment, but I will gladly consider it.

[Baroness Thornton]

I accept both the invitation and comments that the Minister has made about procurement law. I refer him back to my comment about opening the door wide and inviting in the lawyers. I beg leave to withdraw the amendment.

Amendment 260EA withdrawn.

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Moved by

[Baroness Thornton]

260EB: Clause 58, page 87, line 9, at end insert—
“(d) is to take on the further duties as set out in this Act in relation to authorising through licensing any person who provides health care services for the purposes of the NHS as set out in Chapter 3 of this Act.”

[Baroness Thornton]

My Lords, I promise that this will be a very much shorter speech. We now turn to the second group, which concerns Monitor’s function as a licensing provider—a part of the suite of amendments that we have put down about reconfiguring Monitor.

The Bill extends the concept of financial regulation to non-financial trusts, and we can see the logic in this. For consistency, however, we argue that all providers of services to the NHS—not just foundation trusts—should have to meet requirements around their financial position and have this subject to oversight, as well as the obvious fit and proper test that they would have to go through.

We can see the argument for a robust evaluation, for example, of capital structures, which certainly would have been helpful in the case of Southern Cross. The regulator should be allowed to make authorisation subject to this kind of probity test—something like a fit and proper persons test. For us, the key aspects of the licensing regime should be determined by the Secretary of State, not by the regulator. The job of the regulator in our view is to operate the system, not to define it. I would invite the Minister to say whether he agrees with that analysis.

With foundation trusts we set out that Monitor shall use the licence to ensure that information flows to the regulator to enable it to have effective oversight and to intervene if necessary. The licence has to extend this to other sorts of providers which may be reluctant to supply information or submit to the idea of intervention. They may claim commercial confidentiality. The Bill resolves this problem, as far as we can see, by simply having no oversight—in other words, the “nothing to do with us, guv” approach to regulation. We believe that the public would not accept this. The Mid Staffs example, where Monitor came into much criticism, or the Southern Cross example might be instructive here.

[Baroness Murphy]

I am sorry to interrupt. The situation at Mid Staffs arose following the approval of the Department of Health and the Healthcare Commission. It was passed to Monitor as a fit and proper hospital. The scandal emerged only three weeks after it was approved by Monitor.

[Baroness Thornton]

The point I am making concerns what we need to do for the future. What happened in Mid Staffs has some bearing on that and I said “instructive”.

The tests that we are suggesting should be applied to any organisation wishing to supply clinical services to the NHS around probity and can be enforced through contracts and licensing. Meeting the conditions without trying to argue commercial confidentiality is now the price of doing business with the NHS, in our view.

Finally we have reservations about the interaction between the licensing regime and the use of standard contracts. Why have both as enforcements? What would be appropriate for each? What is the role of Monitor as regards the contracts? What happens to disputes between providers and commissioners? Do they all go to court? What is the role for Monitor in the resolution of disputes? We have accepted that if you have a licensing system then you have to build a bureaucracy to support it, moving from a top-down management bureaucracy to a regulatory bureaucracy. To keep this to a minimum while remaining effective is not simple, as the CQC is finding. But the system set up in the Bill is very complicated and our amendments seek to simplify it. The nature of the operation as to whether it should be a light-touch risk-based approach or continuous direct inspection is another issue which has plagued the CQC and will have to be resolved by the new Monitor. That is a question we need to put on the table.

I now turn to our amendments. In Amendment 260EB Monitor is to take on duties in relation to authorising through licensing any person who provides healthcare services for the purposes of the NHS. Amendment 279A is to remove any potential ambiguity and stress that providers of primary medical services for the purposes of the NHS must hold a licence. Clause 82 stand part is to facilitate a discussion about who can be exempt from the requirement for health service providers to be licensed and who makes those decisions. In Amendment 282A, since this a strong power granted to Monitor to revoke a licence, we add qualifications that in the case of a foundation trust Monitor must consult the Secretary of State, and the Secretary of State may veto any revocation if it is deemed not to be in patients’ or taxpayers’ interests. In Amendment 282B the Secretary of State, not Monitor, should determine the principles or framework behind the licensing conditions and Monitor must then have regard to these. Amendment 283 specifies that the standard conditions included in each licence must set out various minimum standards such as for governance arrangements, meeting in public, employment conditions, co-operation with local-authority overview and scrutiny functions. Amendment 283A contains the issue of there being no need to have different standard conditions for different descriptions of licences.

Amendments 286ZA, 287ZA and 287ZB set limits on Monitor’s functions to set and modify the licence conditions, simplifying its role. Amendment 287BA leaves out the roles of Monitor relating to licence conditions, price and charging. Amendment 287F requires licence holders to be fully subject to the overview and scrutiny functions of local authorities. In Amendment 288ZB Monitor has the power to modify the standard conditions applicable to all licences, and in doing so there should be no need for a vote among providers but consultation and consent from the Secretary of State is required. In Clauses 99 and 100 stand part we raise the issue of minimising the bureaucracy surrounding licensing. In Clause 101 stand part we argue that the requirements for fair eligibility and transparency in selection should be covered under the PRCC. This is a probing amendment designed to strengthen the clause instead of deleting it on Report. We think that that should be a matter for discussion. Amendment 288DZA regards Monitor’s power to impose discretionary requirements, including fines, on providers and licence holders if they fail to provide required documents or information, which can only occur with the consent of the Secretary of State. Any fine must be held by the local CCG for reinvestment in services in that area. Amendment 288DA states that if any provider is in breach of a licence Monitor may take action against them, including the imposition of fines, but only with the consent of the Secretary of State. I beg to move.

[Baroness Williams of Crosby]

I would like to address just one of the amendments in this group, which is in my name and that of my noble friend Lord Marks of Henley-on-Thames. Unfortunately my noble friend has been taken ill and is unable to be here. He extends his profound apologies to the Committee.

This amendment is significant in strengthening the general approach towards competition under Section 3 of the Bill, by making it quite plain that the requirements that have to be met, which we will come to in Part 4, must also apply to licence holders. I am in a slight difficulty, as my noble friend Lord Howe will appreciate, as the Government have tabled amendments on aspects of foundations trusts which will arise at a later stage in the Bill, particularly under Clause 161, which are related to the amendment to which I am now speaking. I will therefore do my best to navigate around Clause 161 in so far as I can. However, I may have to make limited reference to it in order to make clear what my own amendment is about. My own amendment is essentially one that would support, and indeed further improve, the proposals put forward in this particular amendment. They should therefore be read together with Clause 161 and Amendments 299ZA and 299AZA in the name of the Government.

We want to make two requirements as a fundamental part of the requirements that licence holders have to meet. We appreciate that, in many ways, the licence-holding requirements are fundamental to the way in which the Bill operates, because it must be the case that providers are brought within the general structure of the Bill itself. Our amendment makes two particular points about that. The first is that the revenue from private patients, as a percentage of the licence holder’s total revenue, must be kept below 50 per cent. Secondly, and at least as importantly, the number of private patients in a foundation trust hospital must also be kept below that proportion.

The main point of this amendment—I think that it is an important one—is again to establish that we are looking at foundation trusts that are part of the provision under the NHS and that a minority of both income and patient numbers would be required for any provision made. We hope, as I think the noble Baroness said, that this set of requirements continues well beyond 2016 as part of the structure of the relationship of foundations trusts to the health services, and that this is therefore not standing alone but a crucial part of the whole strategy.

If the noble Lord, Lord Owen, were in his place, I would say that if this is not the rail track of the French railways, it is at least the rolling stock, and we need both to have an effective railway service. However, I wanted to say one other thing. The first part of the amendment tabled this morning by the noble Earl, Lord Howe, goes a very long way. We will talk about this in more detail later so I shall only sketch it out now, given the time. I think that the first part of the amendment, with regard to income—and indeed the requirement that income must exceed the costs of providing that income, and that it must be used for the purposes of patients within the health services—is a very full and useful advance. It is very close to the phrasing of the 2006 Act, which is a point that I am sure will come across to the noble Baroness, Lady Thornton, and her colleagues, but with the additional wording that makes it, if anything, even stronger.

The noble Earl, Lord Howe, will know from discussions which I and my colleagues have had with him that we would want to see this supplemented, if possible, by a reference to the proportion of patients in foundation trust hospitals. Quite broadly, that is something the public can understand, whereas references to quite complicated percentages of income, although equally important—if not more so—are perhaps less transparent and less apparent.

I will not pursue further the new amendments beyond welcoming them, but I want to advance this particular, although limited, amendment as thoroughly as I can, as I think it would ensure that licence holders were held to the same kind of requirements that we are imposing upon Monitor, the national Commissioning Board and the CCGs. It must be the case that this should be a common approach across the front.