Health Bill (Ninth sitting)

Gregory Stafford Excerpts

Committee stage
Tuesday 30th June 2026 Public Bill Committees

[Dr Caroline Johnson (Sleaford and North Hykeham) (Con)]

Clause 31 introduces schedule 4, which essentially makes series of amendments to other Acts. It amends the Public Finance and Accountability (Scotland) Act 2000 to remove a cross-reference to other categories, and it amends the Audit and Accountability (Northern Ireland) Order 2003 and the Public Audit (Wales) Act 2004 for similar purposes. It also amends the National Health Service Act 2006 by deleting section 62 and schedule 10, relating to the audit of accounts of NHS foundation trusts, to end the old audit scheme.

Schedule 4 amends section 3 of the Local Audit and Accountability Act 2014 so that foundation trusts are now included in the list of bodies that must keep accounts in the standard way, it amends section 4 to specify which documents count as accounts of foundation trusts for the purpose of auditing, and it amends sections 8 and 10 so that the auditor appointment procedure and the auditor panel’s role now cover foundation trusts.

In addition, schedule 4 rewrites section 13 of the 2014 Act so that if a trust fails to appoint a local auditor, it is the Secretary of State’s job to step in. Previously, that was NHS England’s job; clearly, that needs to change, because NHS England is being abolished. The schedule also amends section 21 so that the auditors’ general duties now apply to foundation trusts too, and it amends section 30, relating to unlawful expenditure and activity, and section 32B, relating to the independence requirement, to remove a now-redundant item from the list.

Schedule 4 also amends schedule 2 to the 2014 Act to formally add foundation trusts to the official list of audited bodies; schedule 5 so that the rules on who can be a local auditor now cover foundation trusts too; schedule 6 to remove an outdated segment from the audit practice code rules; schedule 7 to tidy the reporting rules and extend them to foundation trusts; schedule 9 to realign data matching rules that apply to foundation trusts in the new system; and schedule 11, relating to the disclosure of information, to remove a reference to NHS England, which is no longer necessary because NHS England is being abolished. In general, clause 31 aligns the audit process for accounts of foundation trusts with those of standard trusts and integrated care boards.

Clause 32 removes the need for NHS England to maintain a register of foundation trusts and the fees associated with maintaining it. Section 39 of the NHS Act 2006 requires NHS England to maintain a current register of NHS foundation trusts and specifies what must be in that register. Section 50 states that an NHS foundation trust must pay NHS England a fee that NHS England may determine in respect of exercising its functions under section 39, which relates to keeping the register, and section 39A, relating to a panel for advising governors. Clause 32 deletes sections 39 and 50. The explanatory notes say that the requirement to maintain a register does not need to be transferred to the Secretary of State when NHS England is abolished because, the Government argue, the information will already be available centrally, and there is no need for a fee to keep that in place. That seems sensible to me.

Clause 33 enables the Secretary of State to impose limits on a foundation trust’s annual capital or revenue expenditure. Section 42B of the 2006 Act allows NHS England to make an order imposing a limit on the capital expenditure of a foundation trust in a single year. Section 42C sets out that NHS England must publish guidance about the exercise of its power under section 42B, including about the circumstances in which it is likely to make an order and the method it will use to determine the capital expenditure limit. Clause 33 entirely replaces sections 42B and 42C with rewritten sections, with some notable changes. The wording is changed from “capital expenditure” to “expenditure”. The power is therefore widened from capital expenditure limits to limits on any expenditure—capital and revenue. The Secretary of State replaces NHS England as the entity with the power to impose limits, which makes sense, and the subsection requiring an order to specify the trust, the financial year and so on has been removed in full.

The change gives the Government financial control to stop overspending by NHS foundation trusts. I note that in financial year 2023-24, NHS trusts overspent by £1.2 billion, so presumably this is the Secretary of State getting a tighter grip on spending. In some respects that is sensible, but overspending is often due to staffing costs and day-to-day pressures, not capital expenditure, so there is an argument that the capital limits themselves are not sufficient to deal with the problem. Under the new governance model, the Secretary of State has oversight and responsibility for the health service, and financial control aligns with those changes. The new power could prevent one organisation’s failures from undermining the health service’s wider financial position or impacting other providers.

However, the purpose of foundation trusts is supposed to be that they have greater independence over spending, and the Government have stated that their aim is to create a more devolved and autonomous health system. How does broadening the Secretary of State’s ability to interfere in expenditure devolve power or make foundation trusts more independent? Imposing expenditure limits may control overspending on paper, but it does not address the reasons why it is happening, so limits could lead to a deterioration in the health services delivered by some trusts. What plans does the Minister have to deal with that?

Because the power moves from an arm’s length body to the Secretary of State, interventions could be politically motivated, rather than in the best interests of the NHS. How does the Minister consider that that will be managed?

The power for the Secretary of State to impose expenditure limits at any time during or before the financial year could create uncertainty among trust leadership and undermine long-term planning. If a trust is given a budget for the year, it knows what it has to work with, but if somebody says halfway through the year, “Actually, you are going to have to work with less money than that,” it is very difficult for the board to plan its expenditure, because it is always looking the other way. Why does the Secretary of State need that power? Can the Minister clarify that, if there is a change in the expenditure limit during the year, it will always be revised upwards, and never downwards?

[Gregory Stafford (Farnham and Bordon) (Con)]

My hon. Friend is making a prescient point. Has she thought about the word “limits”? To me, it is not clear from the clause as drafted—perhaps it is clearer to her—whether that is an overall limit on capital and revenue expenditure, or whether the clause is saying that the Secretary of State could impose limits on individual line items or departments. The word “limits”—plural—suggests that he or she may be able to do that.

[Dr Johnson]

I do not think the Bill is very clear on that. It says that the Secretary of State

“may by order impose limits on the expenditure that may be incurred by an NHS foundation trust in respect of a single financial year.”

However, it does not say whether that is an overall limit, whether it is for capital or revenue or whether it is a limit on a specific item, so the degree to which the Secretary of State has control is not clear. I presume it is an overall limit and that it is for dealing with budgets, but perhaps the Minister can provide some clarity for my hon. Friend.

Clause 34 requires foundation trusts that have been newly authorised, or that have recently acquired another trust or another foundation trust, to prepare the final accounts for their predecessor trust or foundation trust. It does that by modifying section 36 of the NHS Act 2006 to add new provisions that require foundation trusts to prepare accounts for the final period for which they were an NHS trust, establish that part of schedule 7 and part of the Local Audit and Accountability Act 2014 apply in relation to those accounts, and define the final accounting period. It does the same for section 56AA of the 2006 Act.

--- Later in debate ---

[Gregory Stafford]

I want to touch briefly on clause 39, Government new clause 20, and new clause 26, tabled by the hon. Member for Oxford West and Abingdon in her role as Chair of the Health and Social Care Committee.

I recognise the intention behind clause 39. Greater collaboration between the NHS, local authorities and other public bodies has the potential to improve the co-ordination of services and deliver a more integrated approach to population health, which I think we all welcome. However, it sits slightly uncomfortably with other clauses we have debated that appear to draw local authorities and the NHS further apart. In this case, it looks like they may be brought together.

As the clause expands delegation and joint working powers, I would be interested to understand from the Minister where the oversight and safeguards for accountability for spending the joint budgets would sit. Would it be with the NHS, local authorities or somewhere else? We hope that everything goes well, but if services fail or financial problems emerge, the public deserve to know who precisely is accountable for those budgets. As I have said in debates on numerous other clauses, I continue to be concerned by the broad powers that the Bill gives to the Secretary of State. I have the same concerns about this clause.

On Government new clause 20, bringing health services and wider local government functions together is really important, particularly where combined authorities have responsibilities that affect the wider determinants of health. However, once again, I am concerned about the fact that the new clause further complicates an already crowded accountability landscape. As more functions are delivered through pooled budgets and joint arrangements, it becomes harder to identify who is responsible for outcomes, spending decisions and—hopefully not, but potentially—service failures. I welcome the flexibility, which I think has value, but it must be balanced with transparency and democratic accountability. I am not convinced that the new clause gets that right.

On new clause 26, as I have said before concerning amendments and new clauses that have come from the Health and Social Care Committee, it is often difficult to get entire agreement on these things because of the cross-party nature of the Committee. Therefore, new clauses and amendments that come out of the Committee are in some ways aspirational, rather than ones that hit the nail on the head.

The new clause suggests that the Secretary of State carry out a review of how effective section 75 arrangements are—the hon. Member for Winchester outlined evidence that in some cases, the use of section 75 arrangements has not always been effective—consult NHS bodies, local authorities and anyone else considered appropriate; consider whether existing powers should be used to improve those arrangements; publish a report and lay it before Parliament; explain whether the Government intend to use their powers to change regulations or guidance and why; and complete all that within 12 months of the Bill passing, which I think is a reasonable timeframe.

Section 75 arrangements already play an important role in bringing together health and social care. It is reasonable to ask, as the hon. Member for Winchester did, whether they are delivering the benefits in the most effective way possible. I would potentially say that this proposal does not go far enough. The new clause would require a review, a consultation and a report, but would not require any action to follow that. The Secretary of State need only “consider” whether existing powers should be exercised and explain the reasons for any decision. If the review identified significant weaknesses, there is no obligation in the new clause, as far as I understand it, to implement those changes.

I agree that the new clause is well-meaning. It has some good recommendations, and I hope the Minister takes on board its sentiment, but it probably does not have the teeth and the power to make it an effective part of the Bill.

[Karin Smyth]

I got a little confused at the end, but I think the Opposition generally accept the power in this clause. The hon. Member for Farnham and Bordon contended that this Bill and previous amendments to it will drive local authorities and the NHS further apart; just to have it on the record, I do not accept that that is true at all. Section 75 of the National Health Service Act 2006 and the work that we are doing on this further highlights the effect of some of the things that we are trying to do.

The hon. Member for Winchester raised new clause 26. I have sympathy for the intention behind the new clause. We all want health and care services to work closer together, as I have said repeatedly, and we agree that the partnership framework under section 75 of the National Health Service Act 2006 is a useful tool for doing so. While I understand the new clause, it is not necessary. The Department can review the section 75 framework without needing legislation, and indeed it has already done so. The Department carried out a review of section 75 in 2023, as has been said. Since then, we have continued to consider how these partnership arrangements can best support health and care integration.

The new clause would risk duplicating ongoing work. Furthermore, that work is not a one-off exercise but an ongoing process of learning and improvement across the country, and we want something that is responsive and flexible enough to respond to changes in health and care services and to the changing needs of people who use them. For that reason, I do not consider requiring a single statutory review to be the most effective approach.

Hon. Members raised important issues about clarity of accountability and responsibility. To reiterate, the legislation is clear: the legal responsibility or liability for a function being carried out properly rests with the receiving party; however, the delegating party is accountable for that function being carried out, and they must know how it is being carried out and make sure that any issues are addressed. The hon. Member for Sleaford and North Hykeham rightly alluded to one of the examples that we are exploring around section 75, which is how it might support key priorities in delivering neighbourhood health, to make absolutely clear and sure that we bring services closer together.

Both spokespeople outlined a quote from Melanie Williams of ADASS. Although I do not know the whole context of the quote, I understand the frustration of colleagues in social services and this whole area as it is one that I worked in myself. I understand the issue, but it is slightly different because it concerns the what, rather than the how, of what is being discussed. Section 75 is part of the how. We want to make this easier for people who are trying to do the right thing, and these provisions, which I commend to the Committee, do just that.

Question put and agreed to.

Clause 39 accordingly ordered to stand part of the Bill.

Clause 40

Consolidated accounts

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Edward Argar]

I will be relatively brief, turning just to clause 40. I hope the Minister may be able to clarify something for me. I take the opportunity to thank the Minister for the letter that I received this morning, which was a very prompt response to her promise to write to me last week.

In respect of clause 40 and subsequent clauses, I can see the logic of updating the legislation to reflect the abolition of NHS England and the changes that come with that. I can also see the logic of a consolidated set of accounts so that one can see the national, or overall, picture. In the interests of transparency, I would be grateful if the Minister could confirm that that will be in addition to, and in no way replace, every individual trust having to produce granular public accounts that anyone can inspect, so that we can see not only the overall operation and financial health of the system but that of each of its individual component parts sitting beneath.

[Gregory Stafford]

I wish to carry on the point that my right hon. Friend the Member for Melton and Syston has just raised. He rightly says that there is a transparency element to this, so that the public and any other interested party can look at the individual accounts of an ICB or a trust. Going further than that on the technical elements, my understanding is that NHS England’s own guidance notes suggest that consolidation does not just bring accounting under one set of accounts, one umbrella or one document. Within that accounting, however, adjustments and eliminations of transactions between NHS bodies can happen. Therefore, the aggregated figures do not necessarily reflect the financial reality of individual organisations.

I understand why that might be entirely appropriate from an accounting point of view, but it can make it harder for external observers to understand exactly where the pressures are coming from, where they are concentrated and, in a world where we want accountability, who should be held responsible for addressing them. That is all I need to say on that point.

[Karin Smyth]

I am pleased that, in an outbreak of cross-party agreement at 3.20 pm on a Tuesday, I completely agree with the comments made by the hon. Member for Farnham and Bordon and the right hon. Member for Melton and Syston. It is a point that I made myself: the ability of Members of Parliament and the public to understand the granularity relating to their local providers and ICBs is very important for transparency and accountability. I hope Committee members recognise that I have tried to drive much more transparency in that system. They are absolutely right that that is separate from this clause, and we will continue to expect providers and ICBs to do that; I hope that addresses that point.

To add further clarity on the wider point the clause deals with, the consolidated accounts we prepare include some analysis by different types of body. That will mean separate information about NHS providers being included in the document, such as a summary of income and expenditure. Separately, providers and ICBs will continue to publish accounts so that people can look at those. The Government will listen to any feedback from users to adapt the nature of this content in future years after the initial publication, recognising that this is a new development following the abolition of NHS England. We are also mindful that too many separate publications add to administrative costs and risk losing focus. The intention is to have transparency at the local level, building that up to do something more sensible and cost-effective that is also transparent at national level. I commend the clauses to the Committee.

Question put and agreed to.

Clause 40 accordingly ordered to stand part of the Bill.

Clauses 41 and 42 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Emma Foody.)