Health Authorities (Membership and Procedure) Amendment Regulations 2011

Earl Howe Excerpts

Monday 31st October 2011 Grand Committee

[Baroness Thornton]

My Lords, I beg to move that the Grand Committee should consider these regulations, SI 2011/2200. I thought that it would be worth while to have a discussion about these regulations—which I think have now technically come into force—because they will be used, as far as I can see, to establish at least two of the bodies which we know about arising out of the Government’s legislative programme. Indeed, my first questions are: how many more, which and when?

The first instrument concerns the establishment of the NHS Commissioning Board as a special health authority as a result of the legislation that is before the House right now and which we will be discussing in the Chamber tomorrow. The second instrument concerns the establishment of a research organisation as a result of the Public Bodies Bill and the proposed abolition of the Health Protection Agency and the Human Fertilisation and Embryology Authority. I think that the order will also be discussed in due course.

My first question to the Minister has to be this: do the Government have further proposals to use this legislation in order to set up more and new special health authorities, and if so, which ones, where and when? Will we see orders, for example, to establish special health authorities for the new sub-national bodies that David Nicholson keeps referring to? Will those bodies have formal status in legislation and will that be done by order?

I turn now to the substance of the regulations, and while I am not going to take very long, I have some questions to ask. One of the key issues is the removal of the restriction that prevents chairs, non-officers and officer members of strategic health authorities from being appointed to more than one strategic health authority at a time, a rule which I think is entirely reasonable. What has changed so much that a chair could or might want to serve, or indeed where it might be desirable for them to serve, on a special health authority as well as a strategic health authority? Do the Government propose to establish so many special health authorities that that could become a problem? For example, would it be possible for someone to be the chair of a strategic health authority that exists now, a member of another strategic health authority and a member of a special health authority as those bodies emerge? Apart from anything else, I would like to know whether those individuals would be paid for doing all those different jobs, and how much that is likely to cost. Is that envisaged as the purpose of this order?

Moving forward, what happens to the strategic health authorities in this process? Where are all the authorities going to be? Are they going to be sucked up into the sub-national bodies, and are they therefore going to be special health authorities? Is that going to be done slowly or will it all happen in one go in 2013? How will the new chairs and members of special health authorities be appointed, and by whom? Will there be an independent element in what happens in the appointments procedure—will it be open to public scrutiny or will it just be done by the Secretary of State? Will that be on the public record? How much will they be paid, for how many days and what will their jobs involve? Does the Minister expect or envisage that there may be a clash of interests as this policy develops?

As we head towards 2013, special health authorities—these sub-national bodies or whatever they are to be called—may bring forward and carry out the work of the national Commissioning Board. What will happen in those areas where you have members on the sub-national bodies and on the strategic health authorities? There may be discussions between the two about where the policy goes and there may be clashes of interest. I am thinking about things like the developing role of commissioning and the clinical commissioning groups, and the role and powers that strategic health authorities have had in the past to drive forward, for example, stroke strategies or support for cancer networks. Where does the Minister see those? What happens if somebody who had responsibility for them in a strategic health authority now serves on one of the other bodies and there is a clash of interest over where the resources are going and how they will be supported? How could that be resolved? I am thinking in particular about things like failure regime, reconfigurations, training and workforce planning. As the Minister knows, that is an important role of strategic health authorities. Who will be the arbiter if there are those sorts of clashes of interest about the new structures as they move forward? Would it be the Secretary of State or the NHS Commissioning Board?

There are a variety of questions, some of which it may not be possible to answer now, but which will have to be looked at as we move forward and if the proposals to establish more of these special health authorities are carried through with the different roles. I beg to move.

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

I am grateful to the noble Baroness for tabling this debate on the Health Authorities (Membership and Procedure) Amendment Regulations, and I welcome the opportunity to respond. As she pointed out, we will gather in Committee several more times this week to review the impact of a number of pieces of legislation introduced by the Government and challenged by the noble Baroness.

I believe that the combination of these statutory instruments provides security to hard-working NHS staff to maintain the continuity and quality of services that patients need at a time of considerable pressure. We cannot forget that the NHS has been challenged to make up to £20 billion in savings over the next three and a half years, which will be reinvested back into front-line patient care. Alongside this, we are seeking to move to a more autonomous and locally accountable patient-centred NHS, focused on improving outcomes for patients. That is the background although—in reply to the points made by the noble Baroness at the beginning of her speech—I make it clear that this order has nothing directly to do with the establishment of the two special health authorities, the NHS Commissioning Board Authority and the Health Research Authority, as special health authorities. We will debate both tomorrow.

The effect of the Health Authorities (Membership and Procedure) Amendment Regulations 2011 is to allow the clustering of strategic health authorities and to provide greater flexibility among the non-executive and executive community to take up other board level posts in the health sector during the transition period. The 10 strategic health authorities have been clustered into four: NHS North of England, comprising North East, Yorkshire and the Humber and North West; NHS Midlands and East, East Midlands, East of England and West Midlands; NHS South of England, South West, South Central and South East Coast; and NHS London, which will simply encompass the existing strategic health authority.

That does not change the current structure of the NHS. There are still 10 strategic health authorities with the same boundaries which exist as legal statutory bodies. We have just simplified the governance of the strategic health authorities in order to sustain structural stability and reduce management costs. To do that, the Government are using powers that exist in legislation previously scrutinised by your Lordships' House. The correct procedures were followed in making appointments to the new clusters which complied with both the Commissioner for Public Appointments’ code of practice and employment law, as appropriate. The posts are time-limited and will be disestablished when strategic health authorities are abolished—if the Bill goes through the House and becomes law—on 31 March 2013.

Each cluster board now comprises a chair, up to eight non-executive directors, four executive directors with voting rights and up to five other non-voting executive directors who lead and scrutinise the decisions of each of the constituent SHAs within the cluster. Clustering SHAs, as we have already done with PCTs, supports the delivery of the £20 billion NHS efficiency savings through significantly reducing the cost of NHS administration—a commitment of both this and the previous Government. The creation of SHA clusters is a step towards that. PCT and SHA management costs increased by more than £1 billion since 2002-03, a rise of more than 120 per cent. It would not be possible to make savings on the scale required while retaining the administrative superstructure of PCTs and SHAs.

In addition to the pressing needs that I have outlined, the Government have a responsibility to ensure that the transition to the new system of working in the NHS—subject to the passage of the Bill—supports the integrity of the health service, as well as continuity of accountability and minimised disruption to those working hard to deliver and maintain high-quality services on the front line.

In the current system, SHAs have a key role to play in ensuring the quality and safety of services, in driving performance and delivery, including safeguarding the cash limit and in responding to the QIPP challenge. SHA managers have done a commendable job in delivering that agenda. That is in part why the Government's response to the Future Forum report extends the life of SHAs to the end of March 2013. Until then, SHAs will retain their statutory responsibilities and remain accountable for delivery and transition. Given the context of major change, with new leadership starting to take up roles in the system, it is critical that strong SHA leadership teams continue in place to provide the right focus on delivery and ensure effective accountability.

Clustering provides resilience and alignment for the future. Already, a number of senior posts in SHAs are either not filled or are being covered through interim arrangements. That is not sustainable for a 17-month period, and the position is likely to deteriorate further over time. The risk posed by SHA atrophy is therefore too great, and clustering for greater collective resilience over the next 17 months is an essential response.

Sir David Nicholson has announced that the initial sub-national arrangements of the NHS Commissioning Board will mirror the geographical footprint of the SHA clusters. To give the board a greater sense of having a stake in the future, there is a strong argument for moving early to future geographical footprints. The Government are moving swiftly with those arrangements, drawing on the lessons learnt from PCT clustering, which show that once a decision to cluster is made, it is better to implement the changes quickly. It is also important to embed these arrangements before winter to reduce the impact of the extra operational pressure that the health service is put under at this time.

--- Later in debate ---

[Baroness Jolly]

My Lords, I will add to the points raised hitherto. I welcome the emphasis on continuity, but I wonder whether there is an opportunity to think whether we are closing the door completely on appointing new non-executive directors. We are moving into a new world with a new mindset and culture. If we are going to retain non-executive directors currently in situ in SHAs, will that opportunity be lost? I should like that to be clarified.

We must not lose sight of the fact that these are enormous organisations geographically. From one end of Cornwall to the other end of Kent is further, distance-wise, than from London to Edinburgh. There are issues about representation on boards. There must be complete understanding of the different issues in metropolitan, rural and urban settings. That will be critical for any board.

Also, does the noble Earl have any figure for what the savings in management costs might be? I seem to remember that when this was done for PCTs and they were all enlarged to become coterminous with local authorities, management savings were promised but not delivered. What is the size of the savings that we hope for? Have the Government factored in the risk with all of this?

[Earl Howe]

My Lords, I am grateful to noble Lords for their questions, which I will try to deal with in order. The noble Lord, Lord Beecham, asked about the extent to which the new bodies will be subject to local authority scrutiny. There is no change to the existing arrangements for scrutinising SHAs. All 10 SHAs still exist. They must meet their duties as set out in legislation.

The noble Lord also made a good point about geographical representation, geographical balance and the spread of local knowledge. What we tried to achieve with the ring-fenced competition, to which I referred, across the geographical boundaries of each cluster was to arrive at a point where we had as much geographical representation as was practicable. The chairs of individual SHAs who were not appointed as cluster chairs were invited to become vice-chairs so that corporate knowledge could be preserved.