Health and Social Care Bill

Earl Howe Excerpts

Tuesday 22nd November 2011 Lords Chamber

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

My Lords, I hope that I can demonstrate to the Committee that the portrayal of what the Government intend through these provisions is a false one. We wish to create a transparent and accountable system in which every organisation understands its duties and responsibilities. Clause 20 sets out further provisions for the NHS Commissioning Board. It requires the Secretary of State to publish a mandate to the board setting out objectives and requirements as well as the board’s resource limits. The mandate is one of the key levers that Ministers will have in order to set a national health policy and influence the way in which taxpayers' money is spent on delivering NHS services. It lies at the heart of the Secretary of State’s continuing accountability for the health service.

In a moment, I shall cover the provisions concerning transparency prior to the publication of the mandate, but once the mandate has been published, the Bill requires the board to publish its business plan, setting out how it will deliver it. The Bill also requires it to report on what it has previously achieved in its annual report laid before Parliament. The Secretary of State must then publish an assessment of the board's performance. Taken together, that will provide what we believe is an unprecedented degree of transparency about what the NHS is asked to achieve and what is delivered.

The noble Lord, Lord Warner, suggested that, having issued the mandate, the Secretary of State would detach himself from the health service from that point on. That has never been our vision and it will not happen. I say to the noble Lord, Lord Hunt, in regard to his example of waiting times, that he will know that the board and all the commissioners will have to have regard to the NHS constitution, and within the NHS constitution is a standard which says that patients can expect to wait no longer than 18 weeks. That duty is in the Bill and we do not intend to change it. It is also open to the Secretary of State to stipulate conditions to be included in the NHS standard contract. Again, the noble Lord will know that within the NHS standard contract there is a stipulation about waiting times.

The Bill requires the Secretary of State to keep the board's performance against the mandate under review throughout the year, over and above his general duty to review the performance of all national bodies. I refer the noble Lord, Lord Owen, to Clause 49 of the Bill which sets out that duty.

Amendments 96 and 153A, tabled respectively by the noble Lords, Lord Warner and Lord Hunt, would limit the number of objectives in the mandate and remove the ability to amend it in-year following an election. I do not yet know how many objectives the mandate will contain. That will emerge from the process of engagement and public consultation that we will undertake, but I am confident that, given that the NHS Commissioning Board will receive around £80 billion of funding, there will be many more than 10. Setting an arbitrary limit, as the amendment seeks to do, would undermine Ministers’ legitimate ability to set strategic policy for the NHS.

As a result, although I support the broad intention of the noble Lords, I think a better way of achieving the desired outcome is not to put crude limits on Ministers’ powers, but to ensure that they are used proportionately. That is what the autonomy duty in Clause 4 does. I hope that helps to explain to the noble Lords why we think that duty is so important.

The noble Lord asked whether the mandate would contain desirable as well as obligatory objectives for the Commissioning Board. That is not our intention. The Bill will require the board to seek to achieve all the objectives in the mandate and the board will then be legally required to comply with all the requirements set out in the mandate.

The noble Lord, Lord Hunt, asked me about the period—

[Lord Warner]

I would like to pursue the last point the Minister made. Is he saying that, after a lot of consultation, the Secretary of State may say, “I have 35 objectives for you, laid out in the mandate, and I claim that the justification for that is the consultation process that we have had. You, the national Commissioning Board, better get on with it, and we will look at what you have done at the end of 12 months to see whether you have delivered those 35 objectives”? Can the Minister give us some idea what failure would look like? Would it mean failure on 10 objectives, or five, or 15? Where does the point come when the chairman and the chief executive get fired because they have not delivered the objectives in the mandate?

[Earl Howe]

The noble Lord is taking us into a hypothetical realm. I understand why he is asking those questions, and I think the answer would depend on the degree and scale of the failure. I have just said that the Bill requires the board to seek to achieve all the objectives in the mandate. It would be up to the Secretary of State to judge whether it had used its best endeavours to do that. The performance of the board will be a matter of public record; it will be up to Parliament to take a view on that, as well.

[Lord Davies of Stamford]

I am most grateful to the Minister for giving way. Could, or would, the mandate include any way to prioritise between the potentially 35 different tasks that are being imposed on the board?

[Earl Howe]

It could do. However, that is to be determined. I would welcome the views of the noble Lord on that, if he has particular examples in mind.

This brings us to the question the noble Lord, Lord Hunt, asked about the period which the mandate will cover. It will be a multi-year document, updated annually, which is intended to provide a stable policy context for the board. There may be circumstances which call for the mandate to be updated in-year, including after a general election, to ensure that an incoming Government could start to implement their manifesto commitments for the NHS in-year. Any revisions to the mandate will be open and transparent. If the mandate is revised, it must be published and laid before Parliament with an explanation of the changes.

I will now comment on Amendments 98 and 100, tabled by the noble Lord, Lord Warner, and Amendment 100A, tabled by the noble Lord, Lord Hunt. These rightly highlight the importance of transparency and parliamentary scrutiny of the mandate. I completely sign up to transparency as a principle. In the first place, there will be a public consultation. Alongside that, we will engage with stakeholders, including the board, to ensure that we set ambitious but achievable objectives. It is essential that the Government hold the board to account for objectives that are achievable. It is not in anybody’s interests to set the board up to fail. At the same time, where there is scope for improvement in the health service within the resources available, the mandate should and will ask the board to drive such improvements.

Ministers have a legitimate right to be ambitious on behalf of citizens and taxpayers, but we know that getting the balance right and setting objectives that are affordable and ambitious will not be straightforward. Much of the answer lies in transparency. There will be open public consultation on the Government’s objectives for the NHS. I can assure noble Lords that the process of developing the mandate will be open and consultative, including a formal 12-week public consultation. We intend to publish a consultation response as well as a summary of the responses we receive.

I point out that the Bill places a duty on the Secretary of State to consult the board and HealthWatch England before specifying the objectives and requirements in the mandate. We should be clear about how that changes the current arrangements. At present, decisions about the Secretary of State’s priorities for the NHS can be decided without reference to, or consultation with, anyone, as we saw under previous Governments. Top-down targets can be set without consultation. The priorities for the NHS are issued around this time every year through an operating framework without any need for consultation. Under the Bill, for the first time parliamentarians and the public will have the opportunity to consider and challenge the Government's objectives for the NHS every year. No previous Government have ever allowed this. It will highlight and reinforce, year by year, Ministers’ overarching responsibility for a comprehensive National Health Service free at the point of need.

The consultation will provide a period in which Parliament will be able to scrutinise the Government's proposals—as will the Health Select Committee if it chooses. It is appropriate that this consultation should take place before the mandate is published. We must provide clarity of purpose for the NHS. A period of additional parliamentary scrutiny after the mandate is published, which is what the amendment proposes, would be disproportionate and very disruptive. It would reduce the time the NHS has for planning and would create uncertainty in the service.

There will of course be formal parliamentary control over any legal requirements set for the NHS through the standing rules and any other regulations. The Bill not only gives Parliament an unprecedented role in setting out the roles and responsibilities in the NHS but increases parliamentary scrutiny by requiring detailed parameters and requirements to be set in regulations rather than in ministerial directions that have no scrutiny at all. I hope that noble Lords will give the Government credit for that package of proposals.

In addition, we have accepted the recommendation of the Delegated Powers and Regulatory Reform Committee that the requirements in the mandate should have the force of legislation and should be in an instrument subject to the negative procedure.

[Lord Owen]

It sounds very reasonable, but effectively the pre-consultation period will involve the board, HealthWatch England and such other persons as the Secretary of State allows. Parliament will not always be fobbed off with the answer that the Minister is still considering the issue. That is perfectly reasonable; we all know that a normal consultation period is required by all ministries, and certainly the Department of Health has observed this over many decades. It is when the Minister makes up his mind that Parliament will know what the policy is—and if it is in legislation it will be at that stage that there will be an intervention from Parliament with the right to challenge it. Therefore, it is perfectly reasonable to ask Parliament to come in after the consultation period because then it will know what the Secretary of State is proposing.

[Earl Howe]

Of course, Parliament is the sovereign body and can do whatever it chooses. Nothing will prevent it commenting on the mandate once it has been published. No doubt the Health Select Committee will wish to do this. My point is that to expect the process to feed into a regurgitation or reformulation of the mandate would be unfair on the NHS. The opportunity for Parliament to have its say should surely be during the normal consultation period. Parliament will be able to see the extent to which the Secretary of State has responded to whatever comments it has made.

[Lord Hunt of Kings Heath]

I take up the point that any debate in Parliament should be after consultation has taken place so that Parliament will know what the Secretary of State has decided. The Minister said that this would be debated by a sovereign Parliament. However, he will know that translating that into real time for debates in which noble Lords can question Ministers is problematic. The beauty of the Planning Act 2008 was that it laid down a requirement that was then turned into procedure. Perhaps the Minister will reflect on this. As he rightly said, this mandate is a very important indication to the health service of the Secretary of State’s wishes. If the department gave some further thought to this matter, it might come to the conclusion that it would be right to allow parliamentarians to have a go at the mandate—to question Ministers—before it is finally signed off.

[Earl Howe]

My Lords, I was just about to comment on the recommendation of the Delegated Powers and Regulatory Reform Committee that the requirements in the mandate should have the force of legislation, in an instrument subject to the negative procedure. The board will have to comply with the requirements in order to support delivery of the objectives in the mandate that it must seek to achieve. Parliament will therefore be able to scrutinise the requirements after the mandate is published. We will bring forward a government amendment at Report stage to achieve that recommendation of your Lordships’ committee.

That is not the same as opening up the actual objectives in the mandate—that is to say, the direction and the strategy that the Government of the day want to set for the NHS—and rightly so. If that were to happen, it would lead to unwelcome delay and uncertainty for the health service. The Delegated Powers Committee, which has great expertise in this area, did not suggest that any further parliamentary scrutiny of the mandate was necessary. I can reassure the Committee that if Parliament were to make a recommendation concerning the mandate after it is laid before Parliament, the Secretary of State would undoubtedly have to respond, just as Ministers do now as a matter of course.

[Lord Warner]

I have been cogitating what the Minister has been saying, in his normal, plausible way, about the consultation with everybody before the mandate is agreed by the Secretary of State. The trouble that I have with that, worthy though it is, is that it does not really deal with the point in my Amendment 98, and in some ways it makes the situation worse. My amendment is all about how the national Commissioning Board answers back and tells Parliament if it thinks that the final mandate is undeliverable. That is the purpose. If you have extensive public consultation, the point that my noble friend Lord Harris made earlier comes into play. I am sorry to have got a bit fixated about the figure of 35, but you end up with 35 propositions in the mandate, and the money available to the Secretary of State at that point is still the same as when he went out to public consultation. We run an even greater risk of having a very overloaded mandate, with lots of items in it which come out of the public consultation. The money has not changed. The board is expected to deliver a larger number of things with the same amount of money. That is why my Amendment 98 becomes even more important if the Minister is going down the path that he says that the Government are going down.

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[Earl Howe]

As I said, there will be full public consultation on the mandate. It would of course be possible for the Health Select Committee or indeed other parliamentarians to scrutinise and challenge the mandate at that point. If changes to the mandate were made in-year as a result of that process—that is not inconceivable—then a revised mandate would be published. It would be laid before Parliament with an explanation. After the mandate comes into force in April 2013, Parliament will have all the usual opportunities to ask questions about the performance of the board against the mandate. The board in addition will include in its annual report an assessment of performance against the mandate, and that will be published and laid before Parliament.

The noble Lord, Lord Hunt, asked me how we will know what the board said when it is consulted about the mandate. As I am sure he knows, the Government have a code of practice on consultation that we would follow. That code sets out the expectation for the Government to respond to the consultation and in doing so to provide a summary of the views expressed to each question as well as of what decisions have been taken in the light of them.

The noble Lord, Lord Patel, asked a question that the noble Lord, Lord Warner, also asked me about what would happen if the board disagrees with the mandate. The mandate sets out the objectives that the Secretary of State considers the board should seek to achieve. Those objectives will be developed in close co-operation with the board. It will not be a detached process. Indeed, the Bill requires the Secretary of State to consult the board before setting the mandate. Nevertheless, decisions about the content of the mandate will ultimately rest with the Secretary of State, and I contend that that is entirely appropriate. It is the Secretary of State taking responsibility on behalf of the Government for what he is requiring the board to achieve.

I hope that I have shown that the level of transparency and of public accountability over the mandate will be very great indeed. I do not share noble Lords’ apprehensions that somehow Parliament will have no opportunity to comment on the mandate. Quite the reverse is the case. We will ensure that it does, and it is right that it does. This is an entirely new situation for the NHS. I hope that that is welcome to noble Lords and that I have said enough to persuade the noble Lord, Lord Warner, to withdraw his amendment.

[Baroness Jay of Paddington]

I wonder whether the Minister can help me with a point he made in response to the noble Lord, Lord Owen. He was raising some important points of principle about the Secretary of State’s role and the way in which it, as it were, percolates through so many of the provisions in the Bill, and the Minister referred to Clause 49 as being something that should ease those concerns. I realise that we are not discussing Clause 49 at the moment, but the Minister and the Committee will remember that the Select Committee on the Constitution was concerned that Clause 49 was not an adequate answer to some of these points of principle that were raised by, among others, the noble Lord, Lord Owen. Can the Minister help me this afternoon on that?

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[Earl Howe]

The noble Baroness knows that I have undertaken to engage in discussions outside this Chamber about Clauses 1 and 4 and their relationship with Clauses 10 and 20, and that is what I intend to do. There is a broader question here. My point to the noble Lord, Lord Owen, and the noble Lord, Lord Warner, who suggested in his opening speech that somehow the Secretary of State would detach himself and say, “Not me, guv” about anything that happened in the health service, is that they are mistaken because Clause 49 requires the Secretary of State to keep health service functions under review—in other words, not just the functions, but the effectiveness of the exercise by the bodies of those functions in relation to the health service. That is a very powerful duty. It is not a signal that the Secretary of State can just detach himself from what is going on in the health service. If he is holding the board to account, it involves him doing what Clause 49 requires, and I do not think that anything in the Bill negates that.

[Lord Owen]

The procedure in another place is deliberately very limited in terms of getting to a legislative change. This mandate has many of the qualities of legislation. It lasts for a year. It is going be a fixed statement. Is the Minister really telling us that the Secretary of State will not be saying that, because the mandate has been given, this is a question for the commission or the board—one which he would normally accept on the Floor of the House? Past experience is that he will pass that responsibility on the Floor of the House to, in this case, the commission. This is what concerns many people: there will be a change in procedure in how questions are answered in the House of Commons. The Minister has still not answered the question. This amendment allows a substantive change in the mandate that would stay for a year to be instituted by Parliament after it knows what is in the Minister’s mind, and he appears to be rejecting that. Is he rejecting that?

[Earl Howe]

I am surprised that the noble Lord, Lord Owen, thinks that the health service should be run in that way; that is, Parliament in effect mandating requirements to the health service whenever it chooses. I do not think that is a helpful idea. I think it is helpful for the Secretary of State, as now, to take responsibility for the health service but in the future to take direct responsibility for what lies in the mandate. Should events during a given year raise questions about the performance of the board, the Secretary of State would be answerable to Parliament for whatever the event was, and he would indeed have to take the necessary advice from the board. What he would not be saying is, “This is not my concern, guv”. He is answerable to Parliament in the ways that I have indicated. There is obviously a need for the board to take responsibility for the day-to-day management of the health service. However, we are seeking to achieve a balance between the Secretary of State taking responsibility in Parliament for what is in the mandate and the outcomes that he has set for the health service.

This is a shift of responsibility, it is not an abdication of responsibility—that is the distinction. Power is a zero sum game. If you shift power from the Secretary of State down to the health service, you cannot at the same time expect the Secretary of State to retain the same degree of power. We are transferring power in two directions; from the Secretary of State downwards, and from the Secretary of State upwards to Parliament. That is the picture that I hope noble Lords will keep in their minds.

[Lord Hunt of Kings Heath]

My Lords, I am grateful to the noble Earl, but there are some extra points here. What we have seen from the Secretary of State recently is no desire to desist from day-to-day involvement in the National Health Service. We have seen a number of interventions—which, as the noble Earl knows, I welcome; I believe that is the duty of the Secretary of State. I am still completely mystified as to how the Secretary of State will do this in the future. I can see that you have the NHS constitution; I can see that in the objectives set in the mandate the Secretary of State will say to the NHS Commissioning Board, “You will do the right thing on waiting times”. However, what happens if, because of resource constraints, clinical commissioning groups put in artificial devices to extend waiting while still meeting the 18-week targets? They will be okay under the constitution, but that action is found to be unacceptable in PCTs now. Where does the intervention come? The Secretary of State will be required by Parliament to intervene. There will be no getting away from that.

The second point is about accountability upwards. I say again to the noble Earl that I do not know why he will not take this point away. We have the Planning Act 2008; we have had a highly successful process of examining national policy statements, which must be of the same degree of importance as the mandate. It has been clearly set out how Parliament will scrutinise those: it allows in your Lordships’ House a process in Grand Committee and then in your Lordships’ Chamber if a Motion is moved. However, at the end of the day the Secretary of State can ignore what Parliament says because it is the Secretary of State’s responsibility to set the national policy statement as he would the mandate. If the Government are claiming that this is an appreciable shift of power, I am puzzled as to why on earth Parliament is not allowed more involvement in scrutinising the mandate.

[Earl Howe]

Because it would get Parliament into the territory of micromanaging the health service, if it so chose. That is not the territory we would want to be in, any more than we wish the Secretary of State to micromanage the health service. That is the problem. The Secretary of State has to take responsibility for the objectives set for the health service. I think there is a general acceptance among those in the health service and indeed the public at large that the health service has to be judged on a different set of measures than it has been in the past—namely, on its outcomes and the cost effectiveness with which it approaches the use of the budget given to it.

We believe that undue political influence is undesirable. Parliament is capable of exercising that kind of interference every bit as much as a Secretary of State. We are saying, however, that Parliament has every right to scrutinise the Secretary of State’s proposals, to feed into those proposals, to be listened to and to be responded to. However, in our contention, it is undesirable for us to go beyond that because in the end, the health service has to know where it stands. If this is an endless process of Parliament second guessing the mandate and coming forward all the time with suggested changes, we will not have a workable system.

[Lord Warner]

My Lords, we have had a very interesting debate on Amendment 96. I cannot say that I have been convinced by the noble Earl’s argument that he will not have a large amount of clutter in this mandate as a result of this public consultation. The poor old NHS will have to make the best of it. I suspect that at some stage we will come back to this issue of placing some limit on the objectives and requirements. In the mean time, I beg leave to withdraw Amendment 96.

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[Lord Hunt of Kings Heath]

My Lords, I am grateful to my noble friend for moving the amendment. I should like to start with the question about the scale of the financial challenge. As my noble friend suggested, the amount of money that has got to be taken out of the NHS through efficiency in the next four years is considerable. The indications are that while in the current financial year there will be some parts of the NHS that really struggle, by and large the service is going to get through. However, years two, three and four are going to be much more fundamental challenges. The need for the NHS to use its assets as effectively as possible, to get on with reconfiguration of services, and for all groups involved in the NHS to buy into that kind of change, is going to be essential. The more comparative information that can be provided the better, which is where I hope the Minister will be responsive to my noble friend.

The noble Lord Lord, Lord Owen, mentioned procurement. I should wear a hat as president of the Health Care Supply Association, and say that he is right to identify procurement as a potential area of much greater efficiency in the future. However, the Minister will know that two recent reports from the Public Accounts Committee have raised concerns about procurement and really are inviting the Minister in particular and the department specifically to take on a much greater leadership role in ensuring—it is rather like the Green report suggested—that the NHS makes the most of its potential buying power. I ask the Minister how, in the devolved structure that the Government are enunciating, we can ensure that on issues such as the use of our assets and procurement we still act as one national service making the most of our buying power? Unless we do that, there are going to be continuous PAC reports looking at the problem of national direction.

Finally, I endorse the comments made by the noble Baroness, Lady Williams. What about clinical commissioning groups? The Bill is silent on how CCGs are to be accountable. One way would be the publication of comparative performance of how they use their resources—the more comparative performance, the better. I should also like to ask the Minister about primary medical services. As we know, this has always been a difficult area. We have had various efforts through the GP contract to have much more of a performance culture. I cannot say that has been uniformly successful. However, in these days of stringency, I do not think we can get away with that any longer. It would be good to hear how we can extend the whole concept of efficiency performance measurement into an area of the health service, such as GPs themselves, where I am sure there is much more efficiency to be gained.

[Earl Howe]

My Lords, this has been a useful debate. I should probably say straight away to the noble Lord, Lord Warner, that I am not convinced by the amendment. That is not because I do not believe that the issues that he has raised are important—I certainly do. Good governance is absolutely dependent on having good data and on the financial control that that data enable the board of directors to exercise. It is very much about ensuring throughout the health service that the QIPP agenda is pursued effectively. The QIPP agenda is all about ensuring the more efficient and effective use of money. This could not be a more salient topic at the moment.

However, Amendment 102, which the noble Lord has proposed, would in my view introduce a new layer of bureaucracy. I hope to show that it is not required. My main reason for saying that is that accounting and disclosure requirements for the Department of Health and all NHS bodies are ultimately set by the Treasury. These are already based on independent advice.

I am conscious that that is rather a condensed answer, so, if I may, I should like to go into a little detail as to how this will work. Paragraph 15 of the new Schedule A1 to the NHS Act, inserted by Schedule 1 to the Bill, enables the Secretary of State, with the agreement of the Treasury, to specify the form and content of the board’s accounts and the methods and principles to be applied in their preparation. The Bill places an obligation on the board to produce annual accounts, as well as in-year accounts covering shorter periods if necessary.

In addition, the Bill provides powers for the Secretary of State to require such other information as is considered necessary for the purpose of exercising his functions in relation to the health service. This is what one might term management information—data required by those controlling funding or setting policy alongside the financial returns in order to provide an accurate picture of issues such as staffing levels.

For clinical commissioning groups, it is the NHS Commissioning Board that sets the accounting and reporting requirements. It will do so in a way that is consistent with requirements set by the Secretary of State, and approved by the Treasury for the purposes of consolidation.

My noble friend Lady Williams expressed the fear that CCGs may not be well equipped to handle that kind of reporting. The board will set the accounting and reporting requirements for CCGs, as I indicated. Paragraph 16 of Schedule 1A to the NHS Act 2006, inserted by Schedule 2 to the Bill, allows the board, with the approval of the Secretary of State, to give directions to CCGs as to the methods and principles of accounting which they must use and the form and content of their accounts. That will provide a means whereby much greater control can be had over the form, content and consistency of those accounts.

These provisions are mirrored in relation to NHS foundation trusts, with Monitor or the Secretary of State specifying the form and content of the trusts' accounts, again with Treasury agreement.

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[Earl Howe]

Practices will be accountable for the money that they receive to commission services, as will CCGs. But it is another matter to say that independent private individuals should lay open what are effectively their tax returns to the general public. That is the sensitivity there.

[Baroness Finlay of Llandaff]

This is not about GPs’ private incomes and tax returns. This is about the finances of the business, which is their practice partnership, and within that the way in which that money is being spent on business, just as other business accounts have to be open and filed.

[Earl Howe]

I understand the noble Baroness’s point. Clearly, we want to see maximum accountability for public money. Does the noble Lord wish to intervene?

[Lord Warner]

I do not particularly want to intervene about GPs. I can understand to some extent what the noble Earl is saying about them. I am more concerned that the noble Earl has given us a lot of information about powers in the Bill for people to do things. I recognise only too well official defence in depth of the current status quo. I have had many a brief along those lines in my time, so I can see that.

What I am really interested in is how the Government are going to use those powers that they have taken in this Bill to deliver the kind of ideas that are actually in my amendment. I want to know what work is going on to produce the kind of comparative data that this amendment seeks to deliver to an unsuspecting world, from this variety of providers; not least because it is not just about accounting standards in financial terms, it is about the relationship of that expenditure to what is being delivered. That is why I have deliberately used the term “management accounts”, not just financial accounts. The public, and many of us, want to see the NHS showing how it has spent the money and what it has produced for that, and to see that on a standardised basis. I remain very sceptical whether the QUIP accounts deliver that. That is the issue that the NHS has to face up to. Unless we tackle that and can use the powers that the noble Earl has referred to in the Bill—and I am happy to come back on Report with a new amendment that relates to those powers—to deliver the comparative management account data, I do not think we are progressing matters very far from where we are now. I would very much welcome a more detailed discussion on this issue with the noble Earl, and with any other noble Lords, before the next part of this Bill, so that we can get to the bottom of this and help the Government use the powers that they are taking in a more constructive way.

[Earl Howe]

My Lords, I would be delighted to have that conversation. I did not in the least mean to suggest that the ideas the noble Lord has put forward are in any way irrelevant. Indeed, quite the opposite, I am aware that there is a lot of work going on at the moment in the very areas that he has highlighted. I would be happy to write to him about that, if that would help as a precursor to a meeting.

I will just cover a couple of the questions that have been asked. The noble Baroness, Lady Morgan, asked to what extent the Office for Budget Responsibility would be involved. The OBR has a very specific role in terms of producing economic information. We would not see a role for the OBR itself in analysing the impact of NHS spending, but this is an area that is always under close scrutiny across the Government, in the Department of Health and beyond. I am leaving the possibility slightly open, if I may.

The noble Lord, Lord Walton, asked whether Sir David Nicholson would have sufficient financial expertise alongside him on the board. Sir David Nicholson has said in Developing the NHS Commissioning Board, published earlier this year, that the board will have a finance director as part of its leadership team. That is all I can tell him at the moment. However, it is clear that the board will have a major task in ensuring that sufficient financial control is maintained over the health service as a whole. If it fails to do so—as the noble Lord, Lord Warner, rightly reminded us—we are all in trouble.

The noble Lord, Lord Hunt, asked how we can achieve comparable performance measurement of CCGs. The board will be required to publish an assessment of CCG performance annually, including their financial functions. It must also publish a summary report of the performance of all CCGs.

The amendment is well intended; I have no difficulty with that. However, in practice, as framed, it would be onerous and cut across established government responsibilities. I know the noble Lord, Lord Warner, thinks I am just defending the status quo, but I am trying to say that I am not sure his formula would add much value, particularly as the underlying purpose of the amendment is already achieved under existing arrangements. For those reasons, I hope he will feel comfortable—for the time being—in withdrawing it.

[Lord Hunt of Kings Heath]

My Lords, I am grateful for the Minister’s response on clinical commissioning groups, but I come back to the question of GPs. Along with the noble Baroness, Lady Finlay, I do not think I was seeking to look at their business arrangements, but I am seeking to find out how their performance as primary medical providers is going to be measured in the future. When the Secretary of State announced his reforms, shortly after coming into government, he emphasised that he wanted to put responsibility for budgets alongside responsibility for expenditure, on the basis that GPs, either through referral or through prescribing, were responsible for most expenditure in the NHS. I assume the intention was, essentially, to encourage GPs to be much more effective in what they did in primary medicine, as it would impact on their budgetary situation; but, given that, how do we get to a situation where we can start to measure the performance of GPs? I do not pretend that it is easy—as I said earlier, I think our own experience with the GP contract shows some of the challenges. However, I would have thought that for the future, some comparative information about GP performance, in addition to the prescribing information that is now available, would help. For instance, one issue would be how good they are at demand management. How good are they at preventing their patients from inappropriately going to hospital? I would have thought this was a rich gold seam.

[Earl Howe]

I could not agree more with the noble Lord. We want to get closer to the question of what represents value for money in primary care. There are perhaps two principal ingredients of that equation. The first is the money we put into primary care, which we will know through the resource allocation formula, with which the noble Lord is familiar; the second is through highlighting the results achieved through primary care. Primary care clinicians will be accountable as never before by reference to the outcomes that they achieve for their patients. The other ingredient, overarching all that, is transparency. The more measures of performance that we can devise and place into the public domain the better in my view, and in the next few weeks, we will be announcing measures that I hope will be welcome in that regard. However, we are starting from a low base—not much information is currently published. We want to change that, and ensure not only that clinical commissioning groups and the NHS board are aware of all this but that patients and the public are aware of how well or badly a practice is performing. All these things such as prescribing rates and referral rates are key measures of performance, which we have to get closer to. If we can ensure that practices themselves are more able to compare their own performance with those of their peers, that too will be an advance. I am sure that this is a rich seam, as the noble Lord put it, and we very much hope to advance on that front over the coming months.

[Baroness Young of Old Scone]

Can I just press the noble Earl on that point? We have a situation at the moment that I think is not in patients’ interests. If you want to find out about the quality of diabetes care by provider, hospital or trust in this country, you can find out about it perfectly well; if you want to find out about the quality of diabetes care commissioned by a PCT, you can find out about it perfectly well. The quality of care being delivered to people with diabetes by general practitioners is available and can be seen by general practitioners—who can compare their performance with each other—but it is not available for people with diabetes. Quite frankly, I think that is outrageous and I would urge the Minister to do something about that now.

[Earl Howe]

The noble Baroness, with her passion for this important area of care, makes an extremely important point. I will take that point away and see what more I can tell her about the work that is going on in that area.

[Lord Warner]

My Lords, this has been a very interesting debate. It was never my intention to assume that the way in which this amendment was framed was the last word on the subject. It is helpful to know that there are provisions in the Bill that can be used or adapted for the purposes that I was seeking to produce. I still remain concerned that we need to use the powers that the Government are taking in a very speedy and effective way to link finance with performance data on a standardised basis. We need to get on with that. It needs to be in place by the time the SHAs disappear. The SHAs have been holding some of this stuff together. Once they go, we will need better systems than we have now to monitor performance and money. As the noble Baroness, Lady Young, has said, we need that matter to be in the public arena as well; it is not just for the closed world of the NHS. I hope that we can have some useful dialogue on this before Report to see whether we can secure amendments to the existing arrangements that will improve things.

--- Later in debate ---

[Earl Howe]

My Lords, the subject of the tariff may, to an outsider, seem rather dry but I will begin by saying to the noble Lord, Lord Warner, that I agree with him that it is fundamental to having an effective and efficient health service and better care for patients. Indeed, as noble Lords have articulated so well, this group of amendments takes us to the heart of one of our running themes in Committee; namely, the integration of NHS services, both within the NHS and more widely with social care services. I agree that this is a subject of profound importance. The NHS Future Forum highlighted this while also identifying that some people had real concerns that competition in the provision of NHS services could act against the development of integrated provision.

First, what do we mean by integration? A number of noble Lords have asked that question. The duties to promote integration would cover both integration between service types—for example, between health and social care—and integration between different types of health services. Whatever the combination and however they are integrated, the practical effect should be that services are co-ordinated around the needs of the individual. This duty would apply right the way through the system. It would certainly apply to the board when exercising its functions, not just its commissioning functions.

I agree with the noble Baroness, Lady Wheeler, who made a very important point about vulnerable people in particular. For example, CCGs could comply with their duty of integration by choosing to commission services jointly with local authorities. We have always envisaged that happening. The joining-up of services could, as I say, be between different organisations or between workers within an organisation or even with advice that is given to patients about self-care and the treatment that is delivered by providing organisations. What matters is that the service is based around those patients, not the other way round.

It might be helpful if I said something about the Government’s approach to competition in the NHS. We are clear that in some circumstances competition is a force for good. Competition can create incentives for providers to innovate and improve effectiveness, as well as enabling greater choice for patients. My noble friend Lady Williams made that point very well. However, there is no single model of competition that will be right in all circumstances. Indeed, in some circumstances, competition will not be appropriate at all. Who should decide questions of this kind? Our view is that it should be for commissioners to decide whether—and if so, how—to use competition to further patients’ interests. In doing so, commissioners must act transparently and would need to consider the type of service and the needs and preferences of patients who would receive it, and be able to demonstrate the rationale for their decisions.

The noble Lord, Lord Warner, made a helpful intervention on this issue. The NHS Future Forum report stated:

“We have also heard many people saying that competition and integration are opposing forces. We believe this is a false dichotomy. Integrated care is vital, and competition can and should be used by commissioners as a powerful tool to drive this for patients”.

The Government agree. That is why the Bill set out duties for both the board and CCGs on promoting integration when commissioning services. The board, CCGs and health and well-being boards, as well as the regulators, Monitor and the CQC, will have duties to encourage integration and work across health and social care.

These changes should make it easier to deliver higher quality service pathways of patient-centred care. To help support commissioners, health and well-being boards will provide a forum to bring together people from across the health and social care sectors. Furthermore, the Bill gives the boards a specific duty to encourage health and care commissioners to work together to advance the health and well-being of the people in their areas. I might just mention that we have also asked the NHS Future Forum to consider in more detail how we can ensure that our reforms lead to better integrated services, and its conclusions on that topic will be with us shortly.

It is perfectly possible to have responsive, joined-up services working in patients’ interests and competing for their choice. For example, commissioners could decide to run a tender for a whole pathway of integrated services to be delivered by a single provider. This could encourage providers to bring forward innovative, integrated care solutions that deliver greater patient benefits and greater efficiency. Only a few weeks ago, I visited in Oldham an example of exactly that: musculoskeletal services delivered in the community, specialists from a variety of disciplines situated in one building and accessible to patients directly, and with short lines of communication. It is very popular with the clinicians and patients involved, and is achieving great results.

Of course, as the noble Baroness, Lady Hollins, pointed out, the extent to which particular services will benefit from both integration and choice will vary. Diabetes networks provide high-quality services with a high degree of integration but limited choice for patients between providers. I am sorry not to have a contribution from the noble Baroness, Lady Young, on this point, but I am sure she would agree. Certain mental health services may be another example of this. For other services, more choice may deliver better outcomes. This is why the provision in the Bill enables services specified in a particular way in the national tariff to be unbundled and paid for separately. That should happen, however, only where this is demonstrably in patients’ best interests. The comments made by the noble Baroness, Lady Hollins, in support of her Amendment 203A were very helpful in that context.

Monitor would have duties to support commissioners by enabling integration through the exercise of its functions. This reflects the fact that, as I have indicated, the driver for integration within the reformed healthcare system must come from clinical commissioners rather than from the regulator. Having said that, we are clear that, consistent with its duty to enable integration, Monitor will have an important role here. For example, the Commissioning Board would specify services for the purpose of tariff-setting, which may include bundling services together or specifying care pathways. Monitor’s role would be to devise methodologies for pricing those services.

I would not want to go further than that and make it a statutory requirement that the tariff could specify services by reference to clinical pathways, as some amendments in this group imply. That would be overly prescriptive and unnecessary. While tariffs for whole pathways of care may be appropriate in some circumstances—and I have mentioned an example or two of this—that may not always be so. For example, it might be appropriate to give patients choice about which provider provided a particular element of their care along a pathway. If the tariff enabled only a single payment for a whole pathway of care, it could deny patients that choice. Hence, we need to retain flexibility within the tariff and remain focused on outcomes.

My noble friend Lord Clement-Jones spoke with great authority about specialised services. Sir David Nicholson, as chief executive designate of the Commissioning Board, published Developing the NHS Commissioning Board in July, which set out proposals for how the board will operate and how it will be organised. It is envisaged that the initial sub-national structure will reflect the arrangements that have been made for PCTs and SHA clusters. It is envisaged that the field force, as he describes it, will be responsible for commissioning specialised services, providing the flexibility for this to be organised at different levels according to what is most appropriate for that condition. My noble friend was absolutely right to draw attention to the need for integrated pathways of care in specialised services. We believe that we are setting up the structures to deliver just that.

The noble Lord, Lord Warner, helpfully indicated that the tariff should be based on four main principles: integrated care rather than episodes of care; best practice, not average costs; a full range of services; and particularly the need to avoid costs that did not need to be built in and windfall gains. Those factors form the basis for the new tariff structure provided for by the Bill. Provisions will allow currencies based on integrated services and pathways of care by specifying bundles.

Monitor will set the costs based on a fair level of pay for providers. The board will be required to work towards the standardisation of currencies, which will enable the extension of the tariff to a wider range of services. What the noble Baroness, Lady Finlay, said about tariffs reflecting clinical complexity was absolutely right. We tabled amendments in another place to prevent providers from benefiting from cherry-picking services, including providing for a fair level of pay and a requirement for transparency in patient eligibility and selection criteria.

My noble friend Lady Tyler spoke compellingly about addressing inequalities. The Bill does not lose sight of that. The board’s duty under new Section 13M, to be inserted into the NHS Act under Clause 20, and that of clinical commissioning groups under new Section 14Y to promote integration—

[Baroness Thornton]

I am thinking about Monitor, what it is doing and its role as an economic regulator. Why is it the best body to decide on the price, cost and value of things?

[Earl Howe]

It needs to be a body that is separate from the NHS Commissioning Board. Determining what represents an appropriate price in the system is a very specialised discipline. We think that it will be helpful to have a sector-specific regulator doing that work. I would be happy to write to the noble Baroness setting out our rationale on this, but I make no pretence that this is a complex job. We do not think that it can be done very readily at the local level, although it would not be impossible. We think that local commissioners will need to be supported in this task.

[Baroness Thornton]

Perhaps when the Minister writes to me, he could explain why it is better that economists and regulators dictate those decisions rather than clinicians.

[Earl Howe]

Yes, I will. To address the point that I began just now, the board’s duty to promote integration specifically requires it to exercise its functions to ensure that services are provided in an integrated way where it considers that this would reduce inequality in outcomes. Those words are very important. That is mirrored by Monitor’s duty to enable integration.

I completely understand the intentions behind the amendments in this group. We have had a very helpful debate. We believe that the duties in the Bill, coupled with the wider levers in the system to promote integration, address the points that have been made. In the light of what I have said, I hope that the noble Lord will withdraw his amendment, although I am sure that this is a theme to which we shall return.

[Lord Warner]

My Lords, this has been a very helpful debate. I do not wish to keep noble Lords from their supper. I just want to log with the noble Lord the thought that, ultimately, if we look at history, changing the tariff has been a long, arduous job. I ask him to think some more about whether we should give a little more of a push to the work of the board in setting currencies than we have so far. Monitor cannot get on with pricing until those currencies are settled. That is the potential blockage in the system. On that basis, I beg leave to withdraw my amendment.