Health and Social Care Bill

Lord Clement-Jones Excerpts

Thursday 15th December 2011 Lords Chamber

[Lord Clement-Jones]

It seems rather extreme and extraordinary to be plunged into the possibility of a vote on a matter such as this without further consideration of what the Minister has had to say, particularly with a fairly thin House at the moment, although I have some sympathy with the noble Baroness. But it is obviously up to her to make her own dispositions.

[Baroness Thornton]

My Lords, the problem with transparency and accountability is that the issues of confidentiality and expense are always used as excuses. I do not deny that my own Government almost certainly used them as reasons for not proceeding with issues of confidentiality and accountability. I am struggling with the idea that we should withdraw this amendment, because I feel that this is a really rather important matter. It may be a very small and minor matter, but it is actually rather important and I would like to test the opinion of the House.

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[Lord Newton of Braintree]

My Lords, I will come in very briefly. I declare a past interest as former chairman of the Royal Brompton and Harefield NHS Foundation Trust, which probably has as large a private patient income as any in the country. Frankly, that income considerably benefits the two hospitals and their NHS patients.

I welcome the amendments of my noble friend, and hope that the Minister will give them careful consideration. All of us in this House, not least those of us who are former Ministers of health, have been united in our wish to see a successful and flourishing NHS, and in being really dedicated to it. It would be an oddity if a hospital designated as an NHS trust—whether foundation or otherwise—were treating a majority of patients who were not NHS patients. That is quite a simple proposition, and it is the one advocated by my noble friend Baroness Williams.

The amendments already tabled by my noble friend on the cap on income are extremely welcome and sensible. However, I hope that he might think of—dare I say it—embracing the thoughts of my noble friend Lady Williams as well in some further modification of those amendments so that they refer both to income and to numbers. The numbers thing will be more readily understood by many members of the public. Clearly we do not want NHS trust hospitals to gain most of their income from doing non-NHS work or from treating non-NHS patients. That just does not make sense. It would helpful if we could make that clear.

[Lord Clement-Jones]

My Lords, my noble friend Lady Williams very clearly set out the approach of these Benches to a number of amendments in this group. I simply want to return to EU competition law for a moment. The noble Earl’s amendment regarding limits on the cap goes quite some way to mitigating one of the elements of risk associated with the greater application of EU competition law. As I outlined on Tuesday, there are some really significant issues in the Bill which will introduce EU competition law to a much greater extent if we are not careful. One of those, clearly, is the uncapping of private patient income of foundation trusts. I am very pleased that the noble Earl has gone some way to dealing with some of those concerns. However, I of course very much share the view of my noble friend Lady Williams that we are not quite there yet, and that it would be belt and braces to have the additional safeguard of a limit on the numbers as well as on the revenue.

Generally, four key issues arise from the changes to Sections 43 and 44 of the 2006 Act, quite apart from that of EU competition law. First, there is the question of limits on the cap—what kind of limit is appropriate? Secondly, there is the question of being absolutely certain that any income from private patients is exclusively devoted to the National Health Service. Thirdly, there is the question of prospective transparency—of being well aware of what the plans of foundation trusts will be. Fourthly, there is the question of transparency after the event, in terms of reporting in an annual report.

As far as the limits on the cap are concerned, as I have mentioned, the noble Earl’s Amendment 299ZA is welcome, but it would be useful if he could consider whether any further qualification of that cap was appropriate. There is also the question of being absolutely certain that we are talking about this income going exclusively to the NHS, which is what my Amendment 299A goes towards—that is why I seek to add the word “exclusive” to the changes to Section 43 of the Act.

On the question of prospective transparency, I very much welcome the Minister’s Amendment 299AZA, but that simply provides for reporting after the fact. It is important to share prospectively with the general public and people in the locality the governors’ process for determining the right balance between private income and the NHS activities in a trust. That is what my amendment seeks to achieve by requiring the situation to be set out in an annual plan.

There are four elements. We are some way down the track towards achieving a number of them. At that point, I think that on at least one of the limbs that I and many others are concerned about—the further introduction of competition law to the NHS—we will be satisfied. We will at least have knocked over one of the green bottles, so to speak, with several more to come.

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[Earl Howe]

My Lords, if the noble Baroness is calling for evidence beyond the testimony of numerous NHS trusts, I am not sure what more I can offer her. I can write to her on this but there is very considerable evidence—almost a priori evidence—that if you restrict a trust’s ability to earn income which would otherwise go to improve facilities for NHS patients, you are damaging the interests of those NHS patients. That is an argument that we have consistently put forward ever since the 2003 legislation. However, it is also an argument that I recall Ministers in the previous Administration making when we last debated this subject at any length.

I was going to point out too that NHS trusts as distinct from foundation trusts do not have a private income cap. A number of them earn private incomes well in excess of many foundation trusts. There is absolutely no evidence that these providers are ignoring NHS patients as their prime responsibility—no evidence at all. A number of noble Lords, not least my noble friend Lady Williams, have tabled amendments in this area to ensure that foundation trusts must protect the interests of NHS patients above all and that public money should not subsidise private care. I wholeheartedly agree with that. I would like reassure noble Lords of the safeguards that the Bill already contains to this end. Some of these safeguards are prospective in nature and some are retrospective.

First, foundation trusts will continue to be bound by their principal legal purpose, which is to provide goods and services for the NHS in England. I am going to move Amendment 299ZA today to state explicitly that “principal purpose” means that the majority of every foundation trust’s income must come from NHS service provision. That amendment will make it certain that the trusts are NHS providers first and foremost. I admit to my noble friend Lady Noakes that this is something of a belt and braces amendment, but I believe that it directly addresses the main concerns voiced by my noble friend Lady Williams.

The second safeguard is that the Bill would make foundation trusts more accountable and transparent to their public and NHS staff. My second amendment in this group, Amendment 299AZA, would support that by requiring every foundation trust to explain in its annual report how its non-NHS income had benefited NHS services. The Bill gives governors, who represent the public and NHS staff, greater powers to hold directors to account and this amendment would help them do so. My noble friend Lord Clement-Jones sought to place additional duties on directors. The Bill would also place an explicit duty on them to promote the success of their foundation trust with a view to maximising benefits for its members and the public. If, for example, directors were to pursue private patient activity against the interests of members and the public, the governors would be able to, and they should, use their new powers to challenge directors or they could use their existing power to remove the chair and non-executive directors.

[Lord Clement-Jones]

I understand the safeguard aspect there, but what will the members of the trust or the general public know about how a foundation trust plans to use its assets in terms of private patient income?

[Earl Howe]

My Lords, it will be open to governors to seek information from the boards of directors on the plans that they have for the trust. They will have access to key papers. There should be no difficulty about knowing what the board has in mind for the trust in that strategic sense.

Thirdly, the NHS Commissioning Board and NHS commissioners would be responsible for securing timely care for NHS patients. They would be under a duty to exercise their functions with a view to securing continuous improvements in the quality of NHS services. That is an important provision too.

Finally, to achieve a fairer playing field, Monitor’s licensing regime would allow it to step in to prevent NHS money cross-subsidising private care. Foundation trusts would also be required separately to report to Monitor their NHS and private-funded income. My noble friend Lady Williams said that in her view it would be useful to have in the Bill that the majority of foundation trust patients have to be NHS patients. While I agree with the intent behind that thought, I cannot agree with her two arguments that support the need for an amendment. First, we do not agree that legislation should be used symbolically in this way. Foundation trusts’ principal purpose already covers the point that she raised. Secondly, even if we had such an amendment, it would not make any difference to how the courts interpret and apply EU competition law. It is the nature of the activities that they are undertaking that matter, not how many patients they treat or how much income they earn.

Perhaps I may make a specific point about my noble friend’s Amendments 297 and 299. They would duplicate unnecessarily the legal description of the NHS, which since 1946 has been described as “health service”. Use of the word “national” would be inconsistent with references to the NHS throughout existing legislation.

Just to elaborate on EU competition law, the Bill, as we discussed the other day, does not change the position on EU competition law or the applicability of the law. It remains the case that there is uncertainty on the status of NHS providers as undertakings for the purposes of competition law because no direct case law exists. In so far as foundation trusts already provide private healthcare services, they may be engaged in economic activity. Therefore competition law, both the prohibitions on anti-competitive behaviour and the prohibitions on state aid, may apply to their activities in these markets. Although the Bill would offer more flexibility to participate in these markets if the cap were lifted, it does not mean that foundation trusts are more or less likely to be considered undertakings in their provision of NHS services.

It was suggested by my noble friend Lady Williams that there might be a sort of case-by-case approach to lifting the cap. I recall that that approach was strongly rejected by the previous Government, and for very good reasons. We agree with those reasons. The disadvantages of that approach would be that it would be very difficult to set up a clear system and it would be likely to be difficult to administer and to increase bureaucracy. It would potentially lead to greater variation between foundation trusts and to claims of unfairness between different trusts, which could possibly be a source of litigation. It would maintain the problematic definitional issues around the cap itself. We are not drawn to that approach.

The noble Baroness, Lady Finlay, asked whether we could consider including in guidance to foundation trusts the need to avoid double-paying staff. I think she makes a very interesting point and I can confirm that we will give that some active consideration.

While the principles of some of the amendments tabled by noble Lords are ones that we could all agree with, we believe that the amendments are unnecessary and could be damaging. For example, a requirement for non-NHS income to support only NHS services could mean that foundation trusts would find it impossible to invest in their non-NHS activities and therefore make greater profits to support core NHS work. We want to avoid safeguards, no matter how well intentioned they may be, having a perverse legal consequence on foundation trusts’ ability to innovate.

I hope I have said enough to persuade the noble Baroness to withdraw the amendment because I am completely convinced that the necessary safeguards are there and that what we are proposing are the right things to do.

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[Lord Clement-Jones]

My Lords, I shall intervene briefly before my noble friend Lady Williams sums up on her amendment. What the Minister just said about this relationship between governors and directors and the advancement of the principal purpose of a foundation trust added another dimension. It is not so much the question of the majority of income or of patients coming from the private or the public sector that is important. That is simply a test for competition law purposes. The issue is whether the principal purpose of the foundation trust remains within a social purpose. The element of solidarity established by FENIN is there and it is therefore at less risk of falling totally within EU competition law as an undertaking.

The Minister’s comments bear considerable study, but what he has said does not completely take us out of the risk area. I know he does not use the word “risk” in relation to EU law applying further, but that is certainly the mindset of a number of us looking at these provisions, particularly in relation to the cap. It is the question of social purpose and solidarity that is crucial in law, and the question of whether what my noble friend has done to date is sufficient. I will obviously read his comments carefully but I do not think we are quite there yet.

[Baroness Williams of Crosby]

I am happy to withdraw the amendment, but I would like the Minister to consider very carefully the words of my noble friend Lord Clement-Jones because my impression is rather the same as his, although on a much weaker basis of expertise. On the one or two occasions when I visited the Commission to discuss this matter, I had a strong sense that social purpose is one of the main criteria that they look at in deciding whether something counts in the area that captures competition law in the EU. I cannot speak about the Competition Commission in England because I do not have enough expertise to do so, but I hope that the Minister will consider what my noble friend has said because I believe that it is a crucial factor for the EU Competition Commissioner.

[Earl Howe]

My Lords, I am very happy to consider all these issues in the context of the discussion that my noble friend Lord Clement-Jones and I are going to have on EU competition issues generally.

[Lord Clement-Jones]

I want to add one further point about “prospectivity”, if there is such a word, and governors and/or directors looking at the activities of the trust. It is important that one considers that point from the social purpose point of view. One can then look at the pattern of activity of the trust and see what investments are going to be devoted to private and NHS patients. That is an important part of looking at the risk factors associated with a purpose not being a social purpose.

[Baroness Thornton]

I am glad that the two parties of government are in discussion with each other about these matters. However, there are Members on the Cross Benches and on these Benches who also have opinions on these issues. If it is appropriate, we would like to be involved in those discussions.