NHS: Private Companies

Earl Howe Excerpts

Monday 11th February 2013 Lords Chamber

[Lord Winston]

To ask Her Majesty’s Government whether they have plans to exempt private companies providing services to the NHS from corporation tax.

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

My Lords, the Government will not be exempting private sector providers of NHS services from corporation tax. The purpose of Monitor’s fair playing-field review is to ensure that any providers, be they NHS, for-profit, community or voluntary sector organisations, that are able to improve the services offered to patients are given a fair opportunity to do so.

[Lord Winston]

I am grateful to the noble Earl for that reply and deeply reassured that corporation tax will not be in the equation. Given that the NHS is not good at costing out its treatments, how can he be sure that the private sector will not charge what it thinks the market will bear rather than the actual cost of the treatment it is delivering?

[Earl Howe]

My Lords, the Government’s policy is that competition should never be deployed for competition’s sake but only in the interests of patients. Furthermore, competition should be on the basis of quality and not price. The answer to the noble Lord’s question is that we need to arrive progressively at a system of tariffs that fairly reflect the value and cost of the work that providers do, and that all providers should compete equally on that basis.

[Baroness Jolly]

My Lords, Parts 3 and 4 of the Health and Social Care Act were rigorously debated. Will my noble friend confirm that the regulations covering this will be laid down soon, as 1 April is less than two months away?

[Earl Howe]

I can tell my noble friend that the Government intend to lay these regulations shortly.

[Lord Harris of Haringey]

My Lords, it is gratifying that the private sector will be expected to pay corporation tax. However, can the Minister tell us how the private sector will make an appropriate and proper contribution to meet the needs of a full and broad range of training within the NHS, given that in some instances it will not be providing a full range of services?

--- Later in debate ---

[Earl Howe]

The noble Lord raises an important point. A great deal of work is currently being done on the way in which the education and training of NHS clinical staff is funded. Changes are being made this year in order to make funding fairer and more transparent generally, and the Government will consider any further recommendations that Monitor may choose to make in this area if they would bring about further benefits to patients.

[Lord Swinfen]

My Lords, how will the quality of the work be evaluated?

[Earl Howe]

My Lords, the system will operate in a way that ensures that non-NHS providers who provide services to the National Health Service pass a quality test with the Care Quality Commission. They will be obliged after that, should they receive the benefit of contracts from the NHS, to demonstrate that they have abided by the terms of the contract.

[Lord Brooke of Alverthorpe]

My Lords, as the Government are contemplating introducing a new factor into contracts in which government work is let out to international companies to ensure that they are paying their tax properly, what will they do about the NHS? Have they any plans to apply that kind of system to letting contracts for NHS services?

[Earl Howe]

My Lords, the answer to that question will need to wait until Monitor has reported to the Secretary of State, which it has not yet done. I know that it is considering a number of aspects of the fair playing field generally, and that may well be one of them. When I am in a position to answer that question, I will be happy to do so.

[Lord Flight]

My Lords, what will the Government’s policy be towards the term of contracts? One of the big problems with PFI has been that the contracts were too long, but it is quite difficult to combine getting both commitment to service and investment and prices updated.

[Earl Howe]

My noble friend is absolutely right. Various contracts have been criticised for being too long: PFI is perhaps a good example. Other types of contract have been criticised for being too short because they do not enable providers to invest on a sufficient timescale in order to be able confidently to bid for work. I have little doubt, once again, that this is an area that Monitor will look at and make recommendations upon.

[Lord Foulkes of Cumnock]

My Lords, will the Government consider requiring companies providing services in the NHS to pay their employees at the very least the national minimum wage and preferably a living wage?

[Earl Howe]

My Lords, the national minimum wage applies across all sectors and therefore all employers need to pay heed to that, including those in the healthcare sector.

[Lord Naseby]

My noble friend mentioned tariffs. Will it be a tariff across the whole of England or will it reflect the differing costs, particularly in overheads, of, say, an operation in London and an operation further north?

[Earl Howe]

My Lords, there are tariffs that are nationally set and others that may be locally set, but there is scope to vary even the national tariffs if there is a good reason to do so on the grounds of local variation in costs. There is some flexibility in the system, but the main basis of the policy, as I stressed earlier, is that, where competition occurs, it should be on the basis of quality and not price.

[Baroness Meacher]

The CQC has an incredibly important job to do, but we know that it is very overstretched. What systems do the Government have in place to ensure that the CQC’s scope is adequate to monitor all private and NHS facilities and ensure that they are providing a sufficiently good service?

[Earl Howe]

I am aware that the board of the CQC is looking at that very question at the moment in the light of the Mid Staffordshire review. The noble Baroness is absolutely right. I think the essence of the answer to her question is that a risk-based approach must be adopted so that areas that are deserving of more attention from the CQC receive it and areas that are of lesser concern are allowed to act accordingly without interference.

[Baroness Royall of Blaisdon]

My Lords, the Minister spoke of the possibility of local tariffs. How does that translate into regional pay? Is the Minister in favour of regional pay for people working in health service?

[Earl Howe]

My Lords, regional pay is already allowed for under Agenda for Change, and has been for a number of years. The Government do not intend to change that.

[Lord Campbell-Savours]

What about the living wage?

[Earl Howe]

I am not sure what the noble Lord’s question about the living wage implies. I answered a question about the minimum wage, which is what the law entails. It is of course up to employers to ensure that they pay their employees in a way that is not derisory and that reflects the value of the work that they do.