National Health Service (Licensing and Pricing) (Amendment) Regulations 2015

Lord Hunt of Kings Heath Excerpts

Tuesday 1st December 2015 Lords Chamber

This has been a long speech because it is an important issue and one which is somewhat arcane for some noble Lords. I beg to move.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to the noble Lord for his detailed and careful explanation of the reason for this statutory instrument. I still regard it as a flawed set of regulations and I am not surprised that your Lordships’ Secondary Legislation Scrutiny Committee has reported it for the specific attention of the House on the grounds that the regulations may imperfectly achieve their policy objective. It is my contention that the regulations undermine a core part of the Health and Social Care Act 2012. They certainly run against the spirit, if not the letter, of what the noble Earl, Lord Howe, told the House during the passage of the Bill. Although the noble Lord has been very careful to differentiate between acute and non-acute trusts, the actual impact of what is being proposed is that NHS trusts and foundation trusts, which provide 96% of the tariff work for the NHS, are effectively disabled from using the tariff objection mechanism because it is mathematically impossible for them to trigger it alone. They would need some of the very small-scale, private providers to join in. The effective silencing of the voice of the NHS front line in the tariff-setting process displays a shocking degree of arrogance on the part of NHS England. It seems to be bent on punishing these providers for having the temerity to object, as they did in the last financial year.

The noble Lord has carefully described the national tariff. I suspect that noble Lords know more about it than they ever thought they wished to. As he says, it is very important in terms of the income going to most NHS providers. The 2012 Act provides for a statutory duty to consult on the proposals that NHS England and Monitor make. There is also a parallel right to object to the tariff proposal if they have insignificant numbers. The current threshold is 51% of commissioners or providers, either individually or based on the proportion of services they provide. This is called the share of supply. I do not think that 51% could be said to be not setting a pretty high threshold. I understand entirely that this mechanism is not meant to be used regularly, but current experience shows that it actually works. It was not used in the first year of its operation, but it was used in the 2014-15 financial year, with 75% of providers by share of supply making an objection. The reason they objected was that the tariff changes made, particularly for specialist services, would have an enormously negative impact on the providers of those services and, by definition, on the specialist services themselves.

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We recognise the degree of consultation, engagement, openness and trust that was not there last year, and we are committed to rebuilding that. We note the comments made by NHS Providers and have taken them on board. I can tell the noble Lord that Simon Stevens, Jim Mackey, the Secretary of State and I are absolutely committed to rebuilding that confidence and to having a much higher degree of engagement and consultation in the tariff-setting process.

[Lord Hunt of Kings Heath]

My Lords, I am very grateful to all noble Lords who have taken part in this interesting debate. We perhaps went rather wider than the terms of the regulations. I agree with the Minister that payment by results was brought in essentially to drive through reductions in waiting times by providing the right incentives. By and large that has been very successful, but we are moving, and this is a very good thing, into thinking about systems and how they work. There is a clear need to develop a funding mechanism to ensure that there are proper incentives for system-wide working, and I absolutely agree with that.

However, I also agree with the noble Lord, Lord Warner, my fellow former Minister. Looking at the Five Year Forward View, it seems to me that essentially we are moving again to a planning model but we are still stuck with the 2012 Act, and the two do not seem to mesh together. The Minister is struggling with these regulations because they are trying to operate a system that is still based on payment by results, when in essence we are trying to incentivise people to work together to produce a much more effective system and that is very difficult. If he were to tell me that the NHS amendment Act was to be brought forward, I think he would find a warm welcome in your Lordships’ House, but perhaps I dream too far.

I say to the noble Lord, Lord Patel, that I do not disagree at all with his idea of an independent commission; the funding challenges facing health and social care warrant that kind of independent consideration. I say to him, though, that all the work done by the King’s Fund and the Nuffield Trust suggests that if you could maintain real-terms growth at 4% a year, which is the historic annual real-terms growth of the NHS, we would get a pretty good system without some of the pressures that we are facing at the moment. It is not a question of having to increase money to the NHS and social care hugely, but it needs some increase or we will be faced with the kind of problems that we have at the moment. The Barker commission, which was sponsored by the King’s Fund, shows some of the thinking that one might ask a royal commission to go into.

My noble friend Lord Turnberg mentioned the particular challenges of highly specialist providers, which of course are very much tied into the area that he knows so well: our whole R&D effort in this country and the link with the life sciences. While I understand the language of domination by specialist providers, we need to recognise that the link that these very same providers have with R&D and the life sciences is crucial to this country and to the lead that we often have in these areas. We have to be very careful not to undermine their financial viability because of the general financial challenge.

I am delighted that the noble Lord, Lord Warner, is working on, chairing or leading this work on specialised services, and I am sure he is right that we need to have much more effective commissioning. I certainly accept that that is likely to lead to a rationalisation of specialised services, which will not be universally popular. However, if we can show that by doing so we get more bang for our buck, getting better specialist services, and that they are a better investment, clearly, that has to be followed through. I hope that we will see the outcome of that work within the next few months.

I have no problem at all with putting more resources into mental health and community services—I entirely understand that. However, the regulations are a pretty poor show, and in effect disfranchising the providers, who get 96% of the tariff income, is not the way to go forward. However, I am very grateful to the noble Lord, Lord Prior, for what he said. I take his commitment to rebuilding the confidence, as he described it, of providers in the system, as a very strong one. He did not quite go as far as I would have wished with regard to endorsing the open book approach. Does that mean that that is still being considered, or has it been rejected? Can I take anything from that?

[Lord Prior of Brampton]

I will have to defer to Jim Mackey, the chief executive of NHS Improvement. It would not be fair for me to answer that question.

[Lord Hunt of Kings Heath]

I am sure of that, my Lords. I will just say to the Minister that I hope the spirit of this debate will be conveyed to him and NHS Improvement. I certainly have been very impressed by the chief executive’s words since his appointment, and of course the chairman, Ed Smith, commands great respect and authority, not least for the work he has done on behalf of Birmingham University, for which those of us in the city are very grateful.

With that, I thank all noble Lords who have spoken. The point has been made, we look forward to a better approach in the future, and I hope that the spirit of the proposal regarding early consultation and an open book process will be acceded to. I beg leave to withdraw my amendment to the Motion.

Amendment to the Motion withdrawn.