National Health Service Trust Development Authority (Directions and Miscellaneous Amendments etc.) 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 National Health Service Trust Development Authority (Directions and Miscellaneous Amendments etc.) Regulations 2016 (2016/214).

[Lord Hunt of Kings Heath (Lab)]

My Lords, in moving this Motion, I should make it clear that, in raising issues around the governance of NHS Improvement, I make no criticism of the relatively newly appointed chairman and chief executive of that body, both of whom have outstanding records and have, I know, much to contribute to the National Health Service. I want to raise two sets of issues: the governance arrangements for NHS Improvement; and, linked to that, the future of NHS foundation trusts.

The Motion and the order relate to the National Health Service Trust Development Authority, which was established, as a result of a special health authority order in 2012, to manage the performance of English NHS trusts with the objective of assisting them to become foundation trusts. In contrast, NHS foundation trusts are regulated by Monitor under a number of pieces of legislation, including the Health and Social Care Act 2012. Therefore, both the NHS Trust Development Authority and Monitor are responsible for overseeing and, where necessary, helping to improve the performance of their respective cohorts of providers —NHS trusts and NHS foundation trusts.

The Government have argued that, in recent years, both the NHS TDA and Monitor have been working more closely together and are increasingly utilising similar interventions with their respective cohorts. Last summer, the Government announced that NHS TDA and Monitor would come together under a single leadership and operating model. As part of these arrangements, they would share a single leadership team—comprising the chief exec, chair and a joint board—with the organisations to be known as NHS Improvement. In addition, safety and quality would be key components of the new arrangements, with the national safety function previously exercised by NHS England being transferred essentially to NHS Improvement but formally exercised by the NHS Trust Development Authority.

This seems to be a complex governance arrangement, and no one should underestimate the challenge for NHS Improvement, which has to manage a complex range of functions and accountabilities. Monitor’s duties, as economic sector regulator and its role in ensuring the regulation of foundation trusts, remain risk based and proportionate, in line with the “earned freedoms and autonomy” accorded to the foundation trust model. Alongside that, the function of the NHS TDA in supporting and offering oversight for NHS trusts is equally important in the current, challenging financial climate. Then there are NHS Improvement’s new duties to improve trusts and integrate the safety function formerly hosted by NHS England.

The governance structure is therefore complex. NHS TDA and Monitor remain separate institutions—one a special health authority and the other an organisation established in statute and subject to extensive provision in primary legislation. Indeed, the Health and Social Care Act 2012 contains no less than 85 clauses relating directly to Monitor and about 85 days were spent in your Lordships’ House debating them. There is no clause relating to the NHS Trust Development Authority because it is a special health authority, yet it seems to be the principal vehicle by which functions are to be transferred to NHS Improvement.

NHS Improvement is itself subject to no legislation, but a board using its name as a banner will oversee both the NHS TDA and Monitor with the same executive team and operating procedures. My understanding from what has been said is that, in statute, Monitor and the TDA will continue to have their own boards but these will have identical membership and meet as one NHS Improvement board. They will also continue to publish separate annual reports alongside an aggregate report from NHS Improvement. To all intents and purposes, NHS Improvement will operate as one board, with one set of staff and operating procedures, but the legislative provisions under which it operates will be quite separate for NHS foundation trusts and NHS trusts.

I ask the Minister how realistic it is to expect staff to work under a single operating procedure, given the hugely different legislative provisions relating to foundation and non-foundation trusts, unless the market and competition provisions in the 2012 Act are effectively ignored. The King’s Fund, in its analysis of the planning guidance for 2016-17, has said that it effectively spells the end of the emphasis on competition and the principle of autonomy.

Linked to this is the question of the future of NHS foundation trusts. In effect, if FTs and non-FTs are treated in the same way, overseen by the same board, the same members of staff and the same operating procedures, what on earth is the point of being a foundation trust? What will happen to non-FTs that were in the pipeline to gain FT status—what is the point of them applying? I raise this question as an unashamed supporter of the concept of NHS foundation trusts. I think they were the right approach and I am convinced that their governance model, whereby the board is accountable through the governing body to local members, has many advantages.

The noble Lord, Lord Prior, was a distinguished chairman of a very successful foundation trust, and I had a similar experience. While, having been the chairman of a board, I can say that meetings of the governing body were not always comfortable, I thought it was a strength that the board had to account to local people for its performance. Of course, that is not the situation for non-foundation trusts but, if I were now the chairman of a non-foundation trust, I could not see what advantage there would be to me in becoming a foundation trust, because essentially the economic regulator would manage my trust in the same way as it would a foundation trust. At least, that seems to be the implication of the regulations and the changes made to NHS Improvement.

I have seen an intimation that, following these regulations, there will be no further pieces of legislation in relation to operating procedures. I ask the noble Lord, Lord Prior, why that is and whether he can assure me that, with the same group of staff and the same board, the autonomy and independence of foundation trusts, as opposed to NHS trusts, will be respected. I also ask him how this then relates to the development of the strategic transformation plans at local level, which on any reading also signals to me that we are moving back to a planning model of the health service. Again, it would be very interesting to get the Minister’s comments on that. Above all else, I hope that he can reassure me that the Government are still committed to the model of foundation trusts, particularly regarding the strength that it brings to local autonomy and governance. I beg to move.

[Baroness Walmsley (LD)]

My Lords, I have no intention of detaining the Committee, as I agree with everything that the noble Lord, Lord Hunt, has said. I look forward to hearing the Minister’s reply. I am particularly concerned that a very complex system of governance will not produce transparency and accountability, and I look forward to reassurance on that score.

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Speaking more generally, we see NHS Improvement more as being essentially an improvement agency holding trusts to account and giving them help and support to achieve high levels of performance rather than being purely a regulator, which is I think how Monitor was originally established. Clearly, the role of the foundation trust that the noble Lord mentioned in his speech is going to change over time, but I can assure him that the benefits of foundation trusts, through the clearer accountability and earned autonomy, will still be very much a part of the future.

[Lord Hunt of Kings Heath]

I thank the noble Lord, Lord Prior, for his response. I certainly understand the need for speed and the erosion over time of the distinction between foundation trusts and non-foundation trusts. I also agree with the Minister on the issue of competition. The past years have shown that while it can play a role, that role should be limited, and I have no objection to that, nor, indeed, to the extended remit of improvement. That is something which has been missing from the regulatory apparatus and it is to be welcomed.

I would like to make a couple of points. First, the Minister said that we are moving locally to system-level leadership and development. I am sure that that is right, but I hope that local accountability will be borne in mind. I have just had responses to a number of Questions for Written Answer that I tabled about accountability in the sustainability and transformation plans. As the Minister knows, they have to be in by 30 June. We know that they will all say that the acute care footprint will be reduced by so many hundreds of beds—to be honest, this has all been done before—and they will then say that there is going to be heroic demand management and, somehow or other, there will be miraculous developments in the community. But they will not have ownership locally because, essentially, they are being top-down led. At some point, they will have to go through formal consultation procedures and I believe that, unless there are some powerful forms of local accountability, they will run into trouble.

[Lord Prior of Brampton]

I think that the noble Lord has put his finger on it. If the STP process is just another top-down-led system redesign, it will not have any teeth to it. But what has happened in Manchester, for example, is that there is clear local leadership and accountability, which mean that some of the really difficult decisions that have not been taken for generations are now being addressed. There must be effective local accountability and governance around the STPs.

[Lord Hunt of Kings Heath]

The other area, which I have raised with the Minister before, is in relation to clinical commissioning groups. First, the creation of federations of GPs makes the model unsustainable in the long term, because in some parts of the country the electoral body for the GP members of CCGs will be almost coterminous with the federations. Clearly, there is a conflict of interest in that. Secondly, there is still an issue about the accountability of CCGs. If ever one needed a governance structure that made them somehow locally accountable, the foundation trust model would provide some answers which I hope that the Government will look at.

My final point is on what legislation will be in the Queen’s Speech. Clearly, from all that the Minister has said, much of the 2012 Act is defunct in practice. We are moving to a planning model, and the Act is very different from that. The longer that this goes on, the more need there will be at some point for some legislative change, because at the moment people in the health service are at risk. They are essentially being asked to develop a system-led planning model, but that is challengeable because the Act is very different from that. I believe that at some point it will be challenged. The Government may not want to have core health legislation debated, but at some point that will have to be done. I also remind him that we still have a draft Law Commission Bill and I am hoping that, at the very least, we will see a short form of that announced in the Queen’s Speech.

This has been an excellent debate and I am very grateful to the noble Baroness, Lady Walmsley, and the noble Lord, Lord Prior.

Motion agreed.