Health and Social Care Bill

Lord Clement-Jones Excerpts

Tuesday 6th March 2012 Lords Chamber

Moved by

[Lord Clement-Jones]

163BZZB:Line 6, after “functions” insert “in accordance with the provisions of Article 106 of the Treaty of the Functioning of the European Union as set out in section (Service of general economic interest),”

[Lord Clement-Jones]

My Lords, I beg to move Amendment 163BZZB. I am delighted at the response of the noble Baroness, Lady Thornton. Clearly she recognises good drafting when she sees it. I hope she accepts the arguments, in substance, as I put them forward in my speech.

In common with many other Members of this House on all Benches, I expressed a number of concerns about the risk of market competition becoming greatly more prevalent within the health service as a result of the current provisions of the Bill, despite some concessions offered and partly because the Bill failed to fully reflect the intentions of the Future Forum. Our fear was that the Bill contained a number of measures that could increase competition within the NHS at the expense of collaboration and integration.

We were explicit that we are not against competition in the NHS but it must be applied where it is appropriate to do so in the interests of patients. It is not appropriate in all circumstances. Patient and public benefit can often be secured in other ways; for example, integration of services and co-operation between providers, or a mixture of these with competition, are often preferable alternatives.

EU and UK competition law has had some application within the health service for some years now, largely as a result of Labour’s reforms in the 2006 Act, and we should remember that. However, we do not want to see competition law applied universally across the health service so that our health service commissioners and providers are required to operate an entirely market-based NHS without being able to choose where the market and competition should apply and where they should not.

The objective of the Bill and Ministers during its passage must be to put beyond doubt the protection of the NHS from competition as an end in itself where this does not serve the interests of patients. The tests summarised from OFT guidance for whether EU competition law applies to the provision of healthcare for the purposes of the NHS falls into three stages. First, is the provider an “undertaking”? This depends on whether it carries out an “economic activity”. This status may fluctuate over time and apply to some activities and not others of the same provider. Offering or supplying goods or services in a given market is the characteristic feature of an economic activity.

Even if economic, is the activity wholly social in nature rather than commercial? Compulsory healthcare and insurance schemes have been held to be wholly social. The OFT emphasises that this depends on the facts of each case. Even if the provider is an undertaking and the economic activity is not wholly social, is this in relation to services of general economic interest? This is where both Amendment 177, which I am currently speaking to as well as Amendment 178, come in, in addition to Amendment 163BZZA.

SGEIs are protected from some aspects of competition law. Member states are free to designate services as SGEIs and the Commission will challenge such decisions only if it thinks that the member state is in error. In the view of these Benches, the risk of a number of elements of the Bill being taken together increases the likelihood of NHS services being found by English and EU courts to fall within the scope of UK and EU competition law. These include the fact that the Competition Commission is deployed in reviewing the development of competition in the NHS in the provision of healthcare, and the exercise by Monitor of its functions in relation to the provision of healthcare services.

Secondly, the potential deregulation of foundation trusts from 1 April 2016 under Clauses 111 to 114 means that Monitor will no longer from that date have the power to appoint and dismiss foundation trust directors unless the Secretary of State decides otherwise. On oversight of foundation trust mergers by the OFT, we were concerned that ordinary competition rules as a result of the application of Part 3 of the Enterprise Act by virtue of Clause 77 would be applied. Originally, the PPI cap for foundation hospitals was lifted under Clauses 163 and 164, opening the way for the majority of income for some foundation trusts to derive from private patients, which could have led to a loss of status as an organisation promoting social solidarity. This has now been restricted to a maximum of half the revenue of an FT, which helps to mitigate that risk. There are still issues surrounding transparency and authorisation by a foundation trust’s council of governors or Monitor which remain to be resolved with later amendments.

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[Earl Howe]

My Lords, we are talking about Amendment 178A. I disagree with the noble Baroness’s reading of it. It is quite clear what it says. It is geared towards making the NHS the preferred provider. The noble Baroness shakes her head. If I have misunderstood and that is not her intention, I will obviously retract that.

Yet the amendment would increase the risk of commissioners facing legal challenge under procurement law. As the noble Baroness pointed out in 2010,

“procurement must be transparent and non-discriminatory”.—[Official Report, 9/3/10; col. 137.]

Amendment 178A would be a retrograde step. I ask the noble Baroness to withdraw it, as well as the other amendment in this group.

[Lord Clement-Jones]

My Lords, is the Minister aware that many of us will welcome the statement he made? It was very comprehensive—indeed, more comprehensive than would be possible in many respects under an amendment to the Bill. He has covered so many different areas, both in terms of the provision-commissioning duties of Monitor and also the duties of co-operation.

[Earl Howe]

I am grateful to my noble friend. He very well encapsulated in his speech the issues that we are looking at. I hope that what I said will in turn serve to reassure him on those crucial points.

[Lord Clement-Jones]

My Lords, clearly I have the Floor. I thought that I had it after the noble Baroness, Lady Thornton, as I was guided. I am very pleased to have the Floor before her.

What my noble friend Lord Howe said was extremely constructive, not only about the state of competition within the health service and some of the patching that had to be done to make up for deficiencies of the 2006 Act, but also to do with competition, the block exemptions available, co-operation and the general duties of Monitor. A law court would probably find it much more useful to have my noble friend’s fuller statement than simply some rather narrow amendment to the Bill. I recognise the deficiencies in my own Amendments 177 and 178. I much prefer the Pepper v Hart solution that has been found and proposed in these circumstances. The dangers of putting matters in the Bill are entirely illustrated by Amendment 178A. The Minister’s criticism of that amendment, which was made to me by expert competition lawyers, of trying to put commissioning in a straitjacket as is proposed—it may give the wrong impression, but it is ineffective in terms of EU procurement law—shows exactly the dangers of trying to put too much into the Bill. The Minister, entirely appropriately, has picked up many of the points made during the course of the Committee and in debate today and put forward a statement that will be used by those looking at provision and commissioning in the NHS in future. On that basis, I wholly welcome it. I may not be able to withdraw my amendment to the amendment, but I shall certainly not be moving my Amendments 177 and 178. I beg leave to withdraw the amendment.

Some Lords objected to the request for leave to withdraw the amendment, so it was not granted.

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[Lord Clement-Jones]

My Lords, perhaps I may intervene. Has the noble Baroness received legal advice on the benefits of a Pepper and Hart-type statement versus the kind of amendment that her party has tabled, its effectiveness and the width of the statement made by the Minister?

[Baroness Thornton]

The noble Lord, Lord Clement-Jones, has a very legalistic manner of addressing the House. Of course I understand exactly what was happening there, and I understand exactly what the deal was between his Benches and the Minister, which was that the noble Lord would get a strong statement in response to his amendment. Is he satisfied with it? If so, he is wrong. That strong statement means that the protection comes when legal action starts to take place. I would prefer the protection to be in the Bill. That is what these amendments are about—protecting the NHS. We disagree about that and the noble Lord knows it. If I may address the Liberal Democrat Benches, it seems likely that the noble Lord’s spring conference will agree more with me than with him. However, that is his party’s problem for this weekend—not ours, for now, on the Bill.

I should like to make two further remarks on the substantive amendment and what the noble Earl said. He suggested that we were making the procurement rules more complex. We were not; we were making them simpler. The NHS deserves protection in the Bill. The Liberal Democrats have made a deal that sells the NHS short, as happened on the issue debated last week on conflict of interest. That is a great shame.

[Lord Clement-Jones]

I apologise for interrupting the noble Baroness, but does she realise that the more she attacks us, the more chances we have of a very positive outcome at our Gateshead conference?

[Baroness Thornton]

I was not actually attacking the noble Lord; I was just speculating about what might happen. I feel for Liberal Democrat Peers when they go to their conference this weekend, because they may be in for an uncomfortable time. However, that is absolutely not my business. I will just witness it with interest. It is time that we moved on and I beg leave to withdraw the amendment.

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[Earl Howe]

My Lords, I speak also to Amendments 182 and 183. There is one simple point to Clause 77: it is there to remove the current legal uncertainty and risk of double jeopardy for foundation trusts under the UK’s existing general merger controls. The OFT already has jurisdiction to review foundation trust mergers under the Enterprise Act, but there is legal uncertainty as to when that applies in individual cases. That creates the risk of double jeopardy for foundation trusts under current arrangements, as their mergers are also reviewed by the Co-operation and Competition Panel. Amendments 181 to 183 are minor and technical amendments which make it clear that Clause 77 applies to both completed and anticipated mergers. I will reserve my remarks on the other amendments in the group until I have heard the contributions of the noble Lords who are proposing them. Meanwhile, I beg to move.

[Lord Clement-Jones]

My Lords, I shall speak to Amendment 184. In Committee, we debated the role of the OFT in merger policy and looking into mergers between foundation trusts. I tabled an amendment because it seemed to me at the time that the Enterprise Act was a relatively blunt instrument for the OFT to use to look at those mergers, compared to the usual way that it would look at the competitive effect or impact on competition of such a merger. The response of the noble Earl, Lord Howe, was extremely helpful in guiding us through the relevant provisions of the Enterprise Act—in particular, pointing out that the OFT has a duty under the Enterprise Act to look at relevant customer benefits.

The issue is that “customer” is not normally how we describe patients in the NHS and the way that the NHS operates is rather different from considering whether Dixons taking over Comet, for instance, will impact on the customer or the consumer. There is a difference. It seemed to me that the best way to handle the matter would be specifically to provide for Monitor to be inserted into the process so that it would give specific advice to the OFT on those matters. Although the definition is “relevant customer benefits”, its perspective would be on the impact on patients.

I appreciate the earlier amendments which the noble Earl has tabled, but this would add the extra dimension to Clause 77 which will enable the OFT and Monitor to have a really powerful role in the way that they oversee foundation trust mergers and, I think, settle some of the concerns which surround Clause 77 as drafted.

[Lord Beecham]

My Lords, the amendments are a good example of the thickets and undergrowth of the elaborate structures to deal with competition generally in the economy into which the health service is being drawn. I have no doubt that the noble Earl is right in describing the amendments as technical; the amendment of the noble Lord, Lord Clement-Jones, is also technical. It is not the worse for that, but this whole area ought to be removed from the Bill. Our Amendment 184A would remove Clause 77 altogether. Our view is that that elaborate machinery and the use of the Office of Fair Trading is not appropriate for mergers of foundation trusts. Having said that, we do not intend to divide the House; we simply deplore the fact that this machinery, somewhat refined by the amendments, is being cranked up to apply unnecessarily.

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Moved by

[Lord Clement-Jones]

184: Clause 77, page 98, line 40, at end insert—
“(3A) Where the Office of Fair Trading decides to carry out an investigation under Part 3 of the Enterprise Act 2002 of a matter involving an NHS foundation trust, it must as soon as reasonably practicable notify Monitor.
(3B) As soon as reasonably practicable after receiving a notification under subsection (3A), Monitor must provide the Office of Fair Trading with advice on—
(a) the effect of the matter under investigation on benefits (in the form of those within section 30(1)(a) of the Enterprise Act 2002 (relevant customer benefits)) for people who use health care services provided for the purpose of the NHS, and(b) such other matters relating to the matter under investigation as Monitor considers appropriate.”

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[Earl Howe]

My Lords, perhaps I may begin by clarifying the role of the Competition Commission as set out in the Bill because I think that there have been a few misconceptions about this. The commission would not enforce the Competition Act in relation to healthcare services, nor would the commission’s role affect the applicability of competition law to the NHS, and the Bill would not give the Competition Commission direct powers over providers of NHS services.

Instead, the Bill would give the Competition Commission two narrow, specific roles in relation to NHS services. First, the commission would be the independent adjudicator where sufficient providers or, in some cases, commissioners objected to Monitor’s proposals for licence modifications or its methodologies to be used to calculate prices or levies for providers to ensure the continuity of essential services.

Secondly, the Bill currently provides that the commission would undertake reviews of the development of competition in the provision of NHS services and the way that Monitor was fulfilling its functions relating to the provision of such services. Where it concluded that something was or could be averse to the public interest, it could make non-binding recommendations to the Secretary of State, Monitor or the NHS Commissioning Board.

I am aware of a concern that this wording could imply that the review should focus the development of competition as an end in itself. That is absolutely not our intention. That is why commissioners will decide when competition and choice will be used, and indeed whether it will be used, as a means of improving services and enabling patients to have control of their care. To make that clear, we have tabled Amendment 185, which provides that the reviews relate to the effectiveness of competition in realising benefits for NHS patients, rather than the development of competition per se. I hope that noble Lords will agree that this wording provides clarity about the purpose of the reviews and is consistent with the principle that competition should not be pursued as an end in itself. I therefore beg to move Amendment 185.

[Lord Clement-Jones]

My Lords, it would seem convenient, although it alters the groupings, to talk to my Amendments 186, 187 and 188 at this point.

In Committee—and I am very grateful to the noble Lords, Lord Turnberg and Lord Patel, for supporting these amendments—we flagged our general concern about the risks of EU competition law being applied across the board in the health service. One risk that we considered to be high was the involvement to such a great extent in the Bill of the Competition Commission and, in particular, its role in Clauses 78, 79 and 80, as well as its role in reviewing competition within the health service and the development of competition by Monitor.

On these Benches, we, along with Future Forum and following legal advice, believe that it is necessary and consistent to delete Clause 78, which provides for a review of the exercise of Monitor’s functions and, as I said, the development of competition in the NHS. Government Amendment 185 would of course change this to a review of the effectiveness of competition in the NHS in promoting the interests of those who use the NHS. Nevertheless, we have considerable concerns about the involvement of the Competition Commission. The commission occasionally has to apply non-commission principles in its investigations. It may need to consider, for example, whether media plurality would be undermined by a media merger. However, the commission members and staff are steeped in competition law principles and it is difficult to get them to attribute equal weight to non-competition objectives. The experience of those involved with the commission is that it tends to focus far more on the competition analysis and is often reluctant to accept that it might be required to endorse an outcome that may be suboptimal from a competition perspective in order better to promote other objectives.

Judgments about whether competition or co-operation best promote certain objectives, including health sector objectives, are not clear-cut. Which side of the line people come down on will depend on their standpoints and assumptions about the extent to which competition is helpful in general, as well as on their experience. Regular commission members tend to have a strong bias in favour of the benefits of competition, and that strengthens our view on the inappropriateness of the reviews by the Competition Commission. It is not necessary for there to be a review of this kind either of the NHS or of the operation of Monitor. Indeed, I would argue that its very presence in reviewing both the NHS and Monitor increases the risk of competition law applying more widely.

Following the Future Forum’s report, the purpose of Monitor is no longer primarily to promote competition. Clearly there is now explicit recognition of the overriding importance of the benefits to patients. This is the key determinant of which instrument—competition or integration—is appropriate in the operation of the health service.

I have not put down amendments to the more technical areas where there is Competition Commission involvement. It seems that in many cases that may well be relevant in terms of the tariff and so on. However, we on these Benches believe that Clauses 78, 79 and 80 are a throwback to pre-Future Forum days, and we therefore propose leaving them all out.

[Lord Newton of Braintree]

My Lords, perhaps I may intervene briefly, if only to avoid withdrawal symptoms from not having spoken on any day this week. I want to support my noble friend Lord Clement-Jones on the general proposition without wishing in any way to threaten mayhem if we do not get a satisfactory reply. The House is well aware, as I have referred to it on a number of occasions, that last year I went through what turned out to be the trauma of trying to engage in what was technically a takeover, although we presented it as a merger, with the neighbouring health trust. That involved Suffolk Mental Health and Norfolk Mental Health. We finally achieved it on New Year's Day, so I am, so to speak, out of work.

There was a real problem. One got the feeling that the people on the competition and collaboration panel, or whatever it was called, which overlaps quite heavily with the Competition Commission, saw us in much the same category—how can I put this without upsetting anyone?—as two rival sellers of washing detergents. They did not recognise that health is not like that. There were health issues, patient safety issues and quality of service issues that needed to trump the competition issues. I know that we have been told that that will happen, but it is very important to make sure that the machinery will ensure that it happens and that the health issues trump those narrower competition issues. All I seek from the Minister is an assurance that, one way or another, that will be the case.

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Moved by

[Lord Clement-Jones]

186: Clause 78, leave out Clause 78

[Lord Clement-Jones]

My Lords, I thank the Minister for what he said. I recognise that it is not easy to take away a piece of architecture that the Government had thought was necessary. I believe that the piece of architecture effectively fell away with the Future Forum report. I do not at all recognise his description of me as “vocal” in any circumstances.

As to the Opposition and the noble Baroness, Lady Thornton, I recognise that it is a bit difficult to acknowledge on the Floor of the House that the Government today made many concessions in collaboration with these Benches. I will promise to be gracious—if the noble Baroness is listening—about the role that she played in tabling these amendments in Committee if she will cease to be ungracious on Twitter about the achievements of, and amendments to, the Bill. I beg to move.

Amendment 186 agreed.

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Moved by

[Lord Clement-Jones]

187: Clause 79, leave out Clause 79

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Moved by

[Lord Clement-Jones]

188: Clause 80, leave out Clause 80

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[Baroness Finlay of Llandaff]

My Lords, the government amendments are indeed welcome because they reflect concerns that have been expressed. I am sure that all those who expressed those concerns are grateful.

The amendments in my name in this group relate to education and training. I know that we have somewhat threaded education and training through the Bill at all stages. Amendment 192 relates to considering education and training when setting licence conditions, and I put “education and training” because in addition to education, staff training at every level is essential.

I hope that the Government will support the view that no organisation should be fit to provide services if it does not ensure that its staff are being kept up to date and if it is not providing an environment from which people can learn. This does not mean that they all have to be recognised educational providers.

Amendment 196 in this group relates to indemnity. This amendment has been tabled again because, despite the response that we were given in Committee, concerns continue over indemnity for patients. Should a patient develop a problem subsequent to a provider going out of business, they should be covered by indemnity. It is interesting that we have the Legal Aid, Sentencing and Punishment of Offenders Bill in parallel with this Bill. We have concerns over legal aid for medical negligence. I have attached my name to amendments to that Bill concerning legal aid for the victims of clinical negligence.

I hope that the Government will see that there is a need to have indemnity within services, whoever the licensed provider is. There should be a read across to the protection of patients in the event of something going wrong or being done wrong that has harmed them, particularly if they have been harmed in such a way as to incur ongoing costs for healthcare and social care as a result of the problem that arose with the provider, whether it be a voluntary sector provider or a private provider.

[Lord Clement-Jones]

My Lords, I thank my noble friend Lord Howe for putting forward these amendments, particularly Amendment 193, to which I have added my name. In Committee, we were concerned that the powers of Monitor did not reflect the general spirit of the way in which the Future Forum report talked about the mixture of competition and integration. Although the objectives of Monitor at the beginning of Part 3 were changed to reflect the Future Forum report, some of the back end of Part 3 was not changed to reflect that. These significant amendments, particularly Amendment 193, rebalance the Bill and makes sure that it genuinely reflects the intentions of Future Forum. I am very grateful to my noble friend for putting down these amendments.

[Earl Howe]

My Lords, this has been an interesting debate and I thank in particular the noble Lords, Lord Patel and Lord Warner, and my noble friend Lady Cumberlege for tabling Amendment 191 and for giving me the opportunity to explain the Government’s thinking on the important issue of patient and public involvement in Monitor’s work. We are very clear that patients must lie at the centre of the reformed NHS and that the Bill establishes mechanisms to ensure that that is the case. Health and well-being boards are part of those arrangements and HealthWatch will have a vital role in giving patients and the public a real voice throughout the NHS. I can therefore understand the intent of Amendment 191—and I wish that I could accept it. However, I am sorry to say that in practical terms it is not workable and I will explain why.

The list in Clause 95(8) relates to consultation but this is expected to take place before bodies such as HealthWatch and health and well-being boards are formally established. In other words, Amendment 191 would impose a statutory requirement with which Monitor could not possibly comply. The list at subsection (8) deliberately includes only those bodies that will be in existence at the expected time of the consultation.

I can nevertheless offer the noble Lord and the House firm reassurances on this issue. First, Clause 95(8)(e) gives Monitor powers to include in the consultation “such other persons” as it “considers appropriate”. Clause 61(7) places a general duty on Monitor to secure the involvement of patients and the public in decisions on the exercise of its functions, and we would firmly expect Monitor to use those powers to involve patients and the public fully in the consultation. Secondly, Clause 95(11) would require Monitor to consult with HealthWatch England, with the NHS Commissioning Board and with every clinical commissioning group in the event that the consultation takes place later than currently expected and after these bodies have been established. I hope that I have been able to reassure the House that Amendment 191 is not only unnecessary, but would actually put Monitor in an extremely difficult position, and that the noble Lord, Lord Patel, will feel able to withdraw the amendment.

I turn now to Amendment 196, tabled by the noble Baroness, Lady Finlay. The amendment raises an important issue, that of making sure that patients receive the compensation to which they are entitled in the unfortunate event that they are harmed as a result of clinical negligence. The Government agree that there must be equivalent safeguards in place for patients irrespective of who provides their NHS services. Currently the NHS contract which providers must hold to deliver services requires adequate and sufficient indemnity arrangements to be in place. In addition, to ensure equivalent protection for the future, the Government’s preference is to enable all providers of NHS services access to the clinical negligence scheme for trusts. That would mean that all providers of NHS services would have access to the same level of protection for patients, whether those providers were private, voluntary or public sector. The department has asked the NHS Litigation Authority for advice on the options for modifying the scheme and expects that new arrangements would be in place for the next round of NHS contracts in April 2013.

I hope, therefore, that the noble Baroness will appreciate that I strongly agree with the spirit of her amendment. Nevertheless, I must set out my concerns around its potential effect, if she is thinking of pressing it. First, the amendment could be implemented by employing organisations requiring indemnity from their own staff. Employees would then have to obtain their own personal indemnity. However, I do not believe it would be right to transfer this burden to staff or that employees would support it. Further, I do not believe it would be cost-effective. My second concern is about potential unintended consequences. Currently the Limitation Act 1990 limits the time available that personal injury claimants have to bring their claim. The overwhelming majority of claimants have three years to make their claim under the terms of that Act. Requiring all providers to hold indemnity for the lifetime of all patients, potentially much longer than a patient’s legal entitlement to make a claim, would be disproportionate and incur significant costs. Overall, the effect of such a wide-reaching clause would be to divert resource unnecessarily away from patient care. I am sure that that is not what the noble Baroness would ever seek to do and I do not believe that it is in the interests of patients or the NHS. I hope that on reflection and in the light of my assurances about what we are planning, the noble Baroness will feel able not to press her amendment.

The noble Baroness also referred to her Amendment 192, which I think we debated in a previous group. The Government have listened to concerns on education and training raised by her and other noble Lords and we have brought forward amendments to require the board and CCGs to have regard to the need to promote education and training when exercising their functions. Further, the Bill requires Monitor in Clause 64(j) to have regard to,

“the need for high standards in the education and training of health care professionals”,

when exercising its functions. I suggest to the noble Baroness that Amendment 192 is not required.

At this juncture, it might be worth quickly reminding the House that all providers of NHS services will be licensed by Monitor. The Royal College of Physicians has sought reassurances on how patient choice of any qualified provider would work. Even though the choice of any qualified provider is not in the Bill, I am happy to confirm that providers would always be required to comply with national quality standards. Under our reforms, providers above a minimum size would be expected to take part in the provision of education and training, and to work within agreed local care pathways to ensure safe and joined-up care. I hope that that is a reassurance not only to the Royal College of Physicians but to other noble Lords.

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[Earl Howe]

My Lords, I shall speak also to government Amendments 197A, 197B, 197C, 198A, 198B, 199A, 199B, 200A, 300ZA and 300ZB.

Monitor will continue as the regulator of NHS foundation trusts, as I have said. We had always intended this to be the case and I welcome the opportunity to clarify our position. Monitor will regulate foundation trusts through a new licensing regime, which it will administer jointly with the Care Quality Commission. This will help to strengthen collaboration between the two regulators. It will license foundation trusts to provide NHS services, as it would license anyone else who wished to do so, to ensure that NHS services are protected as financially sustainable and of high clinical quality.

Part 3 anticipates that Monitor will set differential licence conditions for foundation trusts to reflect their unique status and governance structures. Monitor would have power to intervene and direct foundation trusts to take action to ensure compliance with licence conditions. This would include the power to enforce requirements on foundation trusts to maintain continuity of NHS services and protect essential NHS assets, consistent with its principal purpose, as defined in statute. Those powers are set out in Clause 105. I emphasise that these enforcement powers would not be transitional.

However, I recognise that this was not as clear in the Bill as it could have been. I am grateful to noble Lords, particularly my noble friends Lord Clement-Jones, Lord Marks, Lady Barker and Lady Tyler, for their work in highlighting this issue. I have tabled four amendments to Clause 111—Amendments 196C, 197A, 197B and 197C—which clarify the position. These enduring powers would enable Monitor to require a foundation trust to remove directors or governors in exceptional circumstances as a form of remedial action, where it considered this necessary. This would be appropriate only in the case of a very serious breach of licence conditions.

In addition, for a transitional period until at least 2016, Monitor would retain express powers to fire or suspend foundation trust directors and governors directly. As now, this power could be used only where a foundation trust had failed to comply with a notice from Monitor to remove or suspend individuals itself. These powers are for use when a foundation trust is at risk of breaching its licence conditions to provide NHS services because of a failure of governance. This is more likely in the early years of a trust’s existence, when its governors are all new to the role and are building up their capability to hold its directors to account. That is why the powers consist of those to fire or suspend directors and governors.

I understand the concerns of noble Lords to ensure that this additional power remains available for as long as Parliament considers necessary, while we work with Monitor, the Foundation Trust Network and others to support governors to develop their capability in holding their boards to account. Therefore, I have tabled five amendments—Amendments 198A, 198B, 199A, 199B and 200A—which provide for Monitor to retain this power unless and until the Secretary of State makes an order to withdraw it, either for all foundation trusts or individual trusts. I beg to move.

[Lord Clement-Jones]

My Lords, I want to speak to my amendments, to express my thanks to the Minister for the amendments that he has tabled, and to give a little rationale for why we were concerned but are now satisfied by the Minister’s amendments. On these Benches we were very concerned about the deregulation of foundation trusts in 2016. We believed that putting foundation trusts on the same footing as all other provider licensees was not only dangerous because of the risk of wider application of competition principles, but undesirable since district general hospitals—essentially foundation trusts—are the core of public provision in the health service. They are public assets, funded either conventionally by the Government or by PFI. Sadly, many of us argued at the time that PFI would be an expensive and inflexible method of financing healthcare infrastructure. Nevertheless, district general hospitals are an essential part of the NHS.

Therefore, we proposed amendments that removed Clauses 111 to 114 and retained Monitor’s special powers over foundation trusts unless terminated by the Secretary of State with the authority of an affirmative resolution of both Houses of Parliament. We were not saying “never” but the Secretary of State, after some years of the new structure, clearly needs to satisfy Parliament as to why particular foundation trusts no longer need to be subject to regulation by Monitor in this way. It may be possible to make the case for the deregulation of foundation trusts in the future, but currently the assumption should be that foundation trusts will be treated differently from other providers in regulation—not just in the transition period but in the medium term—so that Monitor will have the right to appoint and dismiss directors and governors in that period.

To that end, we very much welcome the amendments tabled by the Minister to meet our concerns. Our amendments talk of an order passed by the affirmative process and the Government’s by the negative process but I do not want that to stand between us. The Minister has gone a very long way to meet our concerns, for which I am extremely grateful, as are all my colleagues on these Benches.

[Baroness Murphy]

My Lords, I have added my name to four of the amendments in this group and I am wholly content that the Government have addressed them satisfactorily.