Care Quality Commission (Fees) (Reviews and Performance Assessments) Regulations 2016

Lord Hunt of Kings Heath Excerpts

Tuesday 10th May 2016 Grand Committee

Moved by

[Lord Hunt of Kings Heath]

That the Grand Committee takes note of the Care Quality Commission (Fees) (Reviews and Performance Assessments) Regulations 2016 (2016/249).

Relevant document: 30th Report from the Secondary Legislation Scrutiny Committee

[Lord Hunt of Kings Heath (Lab)]

My Lords, this is rather like the previous debate in the sense that it is important that this matter is at least discussed and given some form of parliamentary scrutiny, given that the CQC is going to impose very large increases on NHS and private care providers at a time of great financial challenge. I am someone who is impressed with the way that the CQC has developed, and I pay tribute to the work of the noble Lord, Lord Prior, who was the chair of the CQC. It clearly performs a vital role.

At the same time as Ministers have increased the responsibilities of the CQC, they have squeezed its budget and my understanding is that, over the next four years, its overall budget will be reduced by £32 million. The proportion of its budget as grant in aid from the department will reduce and the proportion charged to providers will increase. I understand that its budget next year will be £236 million, which is a sharp reduction of £13 million from that of 2015-16. Like all public bodies with fee-setting powers, CQC expects to follow government policy by levying fees that will, over time, fully cover the cost of its chargeable activities. Previously, CQC was able to charge for some but not all of its activities, so these regulations are a prerequisite to enable it to meet the Government-set target of full cost recovery through a dramatic increase in fees.

Given the budgetary pressure it faces, the CQC undertook a consultation—I will come back to this consultation process—that recommended to the Secretary of State that the CQC should move to full cost recovery in just two years. I understand that there was a good deal of toing and froing between the CQC and the Government on this and that the CQC reluctantly asked for a two-year full cost recovery. The Government have really refused to help out or to give greater flexibility in relation to the number of years that it should take to meet full cost recovery.

I want to raise three issues. First, there is no doubt that this will have a financial impact of some significance on struggling providers by diverting resources away from front-line patient care. Secondly, there is the timing, given that the CQC is about to implement a new strategy in which it will evolve its approach to regulation considerably. Thirdly, there is the illogical series of consultations which took place with regard to these regulations, resulting in a lack of meaningful engagement by the Department of Health with the front line.

If the Government proceed, CQC fees will increase by a massive amount for individual secondary care providers. The estimate from NHS providers is the equivalent to every NHS provider losing two senior nurses. As the Minister knows, providers of NHS ambulance, acute, mental health and community services are already facing unprecedented financial challenges. I would have thought that the last thing the Government would want to do is put extra pressure on those providers at this time.

It is noticeable that, in the care sector, the care providers are facing huge financial acute pressure. Work in the past two weeks shows that up to a quarter of care homes fear financial catastrophe over the next 12 months. Again, I question the Government’s approach to regulation and the sustainability of these homes following such a large increase in fees.

The Government talk about a light-touch regulatory approach, and I suspect that in our next debate we might discuss that in detail. However, providers of health and care services had only two days’ notice of the fee increases before they came into effect. As no provision for this extra expense has been made through the national tariff, providers have to pay for it from money that would otherwise fund patient care.

We could debate the CQC as a whole, but I do not want to do that. I actually think that the CQC has been going in the right direction and I am keen to see its new strategic five-year plan, which is due for publication in the next week or so. David Behan, the chief inspector, commands a great deal of confidence in his mature, sensible approach. Certainly, my experience of large CQC inspections is that they can offer many insights and are getting better in quality as greater experience is gained. Therefore, this is not a criticism of CQC; it is about the impact on the NHS of a sudden increase in fees which, in relation to large NHS trusts, can amount to thousands and thousands of pounds.

On the consultation process, the decision to raise fees over two years has been made amidst a convoluted array of consultations, all of which have a bearing on the issues to be debated today. First, the CQC consulted on the timescale for moving on to full cost recovery. The Department of Health then consulted on a proposal that was a prerequisite for enabling the CQC to adopt full cost recovery for its current inspection model, amending legislation through the regulations debated today to allow full cost recovery of its comprehensive inspection regime through fees. Previously, the CQC had the power to charge health and care providers only for activities related to its core remit of ensuring minimum quality standards. So respondents to the CQC’s consultation were therefore obliged to opt for a trajectory to full year cost recovery of either two or four years before being invited to express views on whether such a move to full cost recovery was appropriate.

Further, the CQC was required to consult on the pace to full cost recovery before the final discussions regarding the spending review and the CQC’s budget for 2016-17 and before it consulted on its new strategy for the next five years. This did not allow for appropriate engagement on the proposals. Clearly, in the logical order of things, the CQC would have been allowed to finalise its strategy before making decisions about future fees. That was wholly unsatisfactory.

The consultation produced an almost unanimous conclusion that full cost recovery should be undertaken over four years rather than two. We need to remember that what this is doing is transferring money back from the Department of Health to the Treasury—we are talking about public money and it is about the way it goes through the system. But at a time of critical financial challenge in health and social care, the Government have bizarrely chosen to take money out of front-line services in order to give the Treasury more money. That essentially is what is happening at the core of this discussion.

At some point in the future, we are going to debate the NHS mandate—I think that it will finally reach us in the new Session—but, at the same time as this financial squeeze is being made, we have the extra CQC fees while another arm of government, in the form of NHS PropCo, is now charging market rates for accommodation rented by the NHS. That is another transfer of money, a paper transfer, presumably to the DH’s central budget. However, it is coming from front-line services. We know that there are other examples, such as in relation to pension costs, which again is essentially a Treasury decision to take money out of front-line services, so it is not as if the CQC decision is isolated. A number of peculiar decisions are being made to take money out of funds going to the NHS.

Those of us who have picked up on the evidence given yesterday by the Secretary of State to the Health Select Committee can see that he made that abundantly clear. Let us go back to the £30 billion for five years estimated by NHS England. The Government claim that they have given £10 billion—which of course is £8 billion because they added an extra year in order to get up to £10 billion—but the Secretary of State made it clear yesterday that about half of that money has been taken away from central department resources. So the reality is that in fact very little extra money is being put into the NHS.

I know that we are not going to debate the overall finances of the health service today, but it is important that decisions about the CQC are seen in the context of a very stretched service. I hope that, at the very least, the Government will reconsider this because it is a bit much to say to health services and care providers that they are facing a huge financial challenge that is going to be made worse by insisting that they pay full cost recovery over two years. I beg to move.

--- Later in debate ---

[Lord Prior of Brampton]

I believe that it has gone into the baseline funding of the GP contract, but if I am wrong about that I shall write to the noble Baroness.

More generally, the CQC’s scope and the way that it does its inspections is just much broader than it used to be. They are done in more depth and detail. This statutory instrument was introduced to Parliament so that it would reflect what the CQC is now doing and recognise its enlarged scope. The regulations do not extend the remit of the CQC’s activity or the scope of reviews or performance assessments to additional providers or services; neither does it change the fees actually charged.

The CQC, like every other aspect of the NHS, is going to have to save a considerable amount of money over the next five years, which the noble Lord, Lord Hunt, referred to in his speech. This means that the kind of inspections which we have seen in some NHS trusts, where a large number of very expensive people descend upon a trust, will have to be scaled back to some extent. As the noble Baroness intimated, I think that we will see a more risk-based inspection model—a bit more like the Ofsted model. I suspect that we will see more unannounced inspections as well, because a large part of the cost of the CQC is not just its direct cost but the indirect costs on the trusts preparing for the inspections. Sometimes the degree of preparation undermines the validity and insightfulness of the actual inspection.

I take on board entirely the strictures of the noble Lord, Lord Hunt. This is another expense when times are extremely hard, but it reflects the fact that the scope of the CQC is now broader than it was three years ago, and the need to have full cost recovery over a fairly limited time.

[Lord Hunt of Kings Heath]

My Lords, again, I am grateful to all noble Lords who have spoken in this debate and to the Minister. I have no problems whatever with the wider scope of the CQC’s responsibility, which inevitably has an impact on its cost base. Nor do I object to full cost recovery as a principle, because that has obviously been accepted by Governments over many years.

My complaint is that it is hugely insensitive for the Government to insist, which is essentially what has happened, that the NHS and parts of the care sector had to move to two-year full cost recovery. I note the alleviation given to GPs and domiciliary care, but I am puzzled that residential care was not given the same amelioration, given that, as we know, the care sector is in such a parlous state at the moment. We obviously look forward to the CQC strategy; I am sure it is right that it should be more risk based.

I very much welcomed the intervention of the noble Earl, Lord Lindsay. The United Kingdom Accreditation Service does its role very well. I also recently met RDB Star Rating, which is based in Sussex although it covers a number of institutions nationwide. It also made the point to me that, if you have a strong accreditation system, not only is there greater ownership by the bodies being accredited—because they have volunteered for it—but it ought to tie into the CQC process. The Minister has encouraged the noble Earl to meet the CQC; I hope that he might encourage the CQC to meet the noble Earl to see whether further progress can be made, because we clearly ought to take up the offer in relation to accreditation, if at all possible.

This has been a good debate. It is not at all a criticism of the CQC but of the Government and their approach, and it has been useful to raise those issues.

Motion agreed.