National Health Service Trust Development Authority (Establishment and Constitution) Order 2012

Earl Howe Excerpts

Monday 28th May 2012 Grand Committee

[Baroness Thornton]

My Lords, much of what I would like to say has been said by my two noble friends, but I would like to add my tuppenceworth because this is the beginning of some of the very important statutory instruments we are going to consider that will bring the Act into being. I have a few questions for the Minister. The first one has been alluded to by my noble friend Lord Warner: I refer to the creation of a new arm’s-length body, which I thought the Government did not really want to do. I wonder why it was felt necessary to create another arm’s-length body when many of the useful arm’s-length bodies, which some of us thought should not have been abolished, have been abolished, particularly the NHS Appointments Commission, which I will come back to in a moment.

Under point 7.1 in the Explanatory Notes, liabilities and assets are referred to. There is the recurring notion that this new body will take responsibility for those. My noble friend Lord Warner questioned the liabilities, but I am interested in the assets. For example, if an NHS trust is not viable as a foundation trust but a private sector organisation offers to purchase it, merge with it or whatever, what happens to the ownership of its assets—the land, the buildings and the kit? Where do they go? Who do they reside with? Is it the new provider body, whatever that is? I would like some explanation.

Appointments are important. Once the NHS Appointments Commission has been abolished, I cannot see from the Explanatory Notes that there is a guarantee of independence and transparency in appointments to the new bodies or when people in NHS trusts retire and have to be replaced. I am not clear what happens in those circumstances and who makes those appointments. If it is the new authority, which is my understanding, what guarantees do we have of independence, accountability and transparency in those appointments? The reason why I think that is important was alluded to and described much more adequately than I can by my noble friend Lord Warner and is in point 8 of the evidence base, which states:

“To date, 50 per cent of NHS trusts whose applications for FT status are rejected by Monitor fail because they do not have sufficiently robust governance. It is proposed that SHAs will be abolished in 2013, so new support arrangements will be required to support the FT pipeline”.

Do the Government think that, because NHS trusts fail because of their lack of robust governance, by taking control of this issue they will be able to appoint more robust trustees or do whatever it is to ensure that they meet the foundation trust requirement? I have exactly the same question as my noble friend: what is the magic that will increase the success rate from 50% to 100% with the new authority? We need to be concerned on several counts: the accountability, viability and credibility of the new body proposed in these statutory instruments. I am not convinced that what is being proposed meets those requirements.

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

My Lords, I am grateful to the noble Lord, Lord Hunt, and the two other noble Lords who have spoken because their questions give me an opportunity to clarify what these statutory instruments are designed to do and to say why we believe that they are appropriate.

The NHS Trust Development Authority will play a vital part in laying the foundations for the new health and social care system. From April 2013 it will provide essential governance and oversight of NHS trusts that are not yet foundation trusts to support them in delivering the vision of an NHS consisting entirely of fully autonomous healthcare providers.

Foundation trusts are sustainable, autonomous providers with far greater freedom to innovate, design and deliver services to local communities, and there I believe that the noble Lord, Lord Hunt, and I are in full agreement. Helping every NHS trust to attain foundation trust status is key to creating an environment in which adaptable, sustainable organisations deliver high-quality care and collaborate with NHS and other partners to provide integrated care designed around the needs of individual patients.

The Government’s vision of care delivered in an all-FT landscape means that NHS trusts must either become authorised as foundation trusts in their own right, merge with an existing FT, or move forward in another organisational form. There is a strong expectation that the majority of NHS trusts will achieve FT status by 2014 and that only by exceptional agreement, made after close scrutiny of financial and clinical feasibility, will they be allowed to continue in their present form beyond this date. Supporting the progress of NHS Trusts through the process of applying for FT status is often referred to as “managing the FT pipeline”.

Of course, FT status is not an end in itself but a crucial step in the process by which we can drive up the quality of care and make sure that the services we offer patients are robust, sustainable and of the highest quality. The benefits that achieving FT status can bring patients and communities cannot be underestimated. In doing so, NHS trusts examine their leadership, financial sustainability, quality of service and plans for continuous improvement. It is a mechanism designed to bring all provider services in all parts of the country up to a level of excellence.

An important part of this transition is the establishment of a new special health authority, the NTDA. The orders before noble Lords now provide the legal underpinning. The NTDA will be a short-lived, enabling organisation in the reform programme. The authority is important because once the current system of strategic health authorities comes to an end in 2013, the infrastructure to support NHS trusts on their way to becoming foundation trusts, or indeed to support them if they become unsustainable and can no longer function as a foundation trust, will no longer be in place.

The legislative framework set out in the Health and Social Care Act 2012 introduces a new and comprehensive regulatory system, including measures for dealing with providers at risk of becoming unsustainable. The new system will concentrate on protecting essential local services for NHS patients, not on maintaining failed organisations at great and unnecessary cost to the taxpayer. The NTDA will work closely with the whole of the new NHS to ensure innovation and that the very best of clinical practice is brought to bear on the most complex problems. It will work with local communities and their representatives to make the case for change when service reconfiguration is needed to deliver sustainable services.

The NTDA, on behalf of the Secretary of State, will also appoint chairs and non-executive directors to NHS trusts while they continue to exist, and appoint certain trustees such as special trustees and trustees to hold trust property for some NHS bodies. The organisations that the NTDA will take responsibility for cover a wide spectrum of services, including acute hospitals, ambulance services, mental health services and community services. Some are on the cusp of achieving foundation trust status while others face some of the most significant challenges in the NHS, with long-standing financial and operational difficulties to contend with.

It will not be an easy task. That is why the Secretary of State has appointed David Flory, currently deputy chief executive of the NHS and director of finance, performance and operations, as its chief executive-designate, and Sir Peter Carr, former chair of NHS North East SHA and vice-chair of the NHS north cluster of SHAs, as its chair. We are establishing the authority now to give it time to design its operating model, recruit staff and engage in the planning round for NHS trusts for the financial year 2013-14 before it takes up its full operational functions in April 2013.

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[Earl Howe]

I apologise. The rules surrounding public appointments will of course still apply, particularly those relating to open competition. The continued existence of those rules and their implementation should give the public confidence that this system will be open and unbiased.

[Lord Hunt of Kings Heath]

My Lords, like other noble Lords, I thank the noble Earl, Lord Howe, for his response. I prayed against this statutory instrument in a genuine spirit of seeking information. I agree with the Minister about the importance of foundation trust status. I have no problem at all with the Government wishing to see NHS trusts becoming foundation trusts as soon as possible; that is absolutely right. Equally, I have no problem about the establishment of the new authority, and I commend the Government on the appointment of David Flory as the chief executive and Sir Peter Carr as chairman. Sir Peter has been a long-standing chairman in various guises in the health service going back more than 20 years. I suspect that he may well be chairman of this authority for a little longer than the department thinks at this moment.

There is genuine puzzlement about how these trusts—more than 100 of them—are to become foundation trusts by 2014. The fact is that many of them are facing great problems, mainly financial. They may have a PFI scheme that is expensive and which the local system is unable to afford without consequences on the rest of the system or, as my noble friend Lord Warner said, it may be tied up with very difficult reconfiguration issues.