Health and Social Care (Re-committed) Bill

Lord Lansley Excerpts

Tuesday 6th September 2011 Commons Chamber

[The Secretary of State for Health (Mr Andrew Lansley)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

Government new clause 6—Objective of trust special administration.

Amendment 10, page 83, line 5, leave out part 3.

Amendment 1225, in clause 57, page 83, line 13, leave out ‘monitor’ and insert ‘Integrated Health Service Regulator (elsewhere referred to in this Bill as “Monitor”)’.

Amendment 1226, in clause 58, page 83, line 20, at end insert ‘and

(c) is sufficiently integrated so as to reduce any risk to patient care and to provide continuity of service.’.

Amendment 1207, page 83, line 23, after ‘preventing’, insert ‘competitive or, as the case may be,’.

Amendment 1227, in clause 59, page 84, line 42, at end insert ‘bearing in mind that it should be balanced with ensuring the protection of health service integration.’.

Amendment 1228, page 85, line 2, at end insert—

‘(3A) “Integration”, in relation to health services, means the provision or commissioning of health services in a manner to ensure the viability of the full range of health and social care facilities which a community might reasonably expect from the NHS, including the provision of complex and commercially less attractive and difficult to provide emergency and other acute services which require to be provided on a site or in a manner which benefits from its collaboration with other acute health specialities or services.’.

Government amendment 87.

Amendment 1205, in clause 61, page 86, line 14, at end insert—

‘(n) the need to avoid existing NHS services, including but not restricted to, emergency care, intensive care, chronic and complex care, teaching, training and research, becoming unviable or unstable due to an unplanned reduction in income or case-load.’.

Government amendment 90.

Amendment 1208, in clause 70, page 92, line 7, after ‘in’, insert ‘competitive or, as the case may be,’.

Amendment 1209, page 92, line 8, at end insert—

‘(d) protect and promote the integration of health services and health and social care services,

(e) improve the equality of access to NHS services and healthcare outcome,

(f) do not undermine the stability of existing NHS services, including but not restricted to, emergency care, intensive care, chronic and complex care, teaching, training and research.’.

Amendment 1229, page 92, line 8, at end insert—

‘(d) do not act in a manner which risks undermining the viability of maintaining essential or designated core health services or the essential integration between health services.’.

Amendment 1219, in clause 74, page 94, line 22, leave out subsections (1) to (3) and insert—

‘(1) Part 3 of the Enterprise Act 2002 (mergers) applies (in so far as it would not otherwise) where two or more enterprises have ceased to be distinct enterprises and specifically the activities of one or more NHS foundation trusts and the activities of one or more businesses have ceased to be distinct activities.’.

Amendment 1220, page 94, line 29, leave out ‘subsections (2) and (3)’ and insert ‘subsection (1)’.

Government amendments 91 to 107.

Amendment 28, page 117, line 22, leave out clause 110.

Government amendments 113 to 115.

Amendment 44, in clause 119, page 123, line 30, at end insert—

‘(10A) A description for the purposes of subsection (9)(b) may be framed by reference to—

(a) the level of workforce training undertaken by the provider, and

(b) the extent to which the provision of its service leads to consequential costs for other providers.’.

Government amendments 116 to 136.

Amendment 29, in clause 130, page 132, line 34, at end insert—

‘(5AA) Regulations under this section must ensure that where transfers of property or liabilities occur, they can only be transferred to another NHS body.’.

Government amendments 137 to 164.

Amendment 30, in clause 134, page 136, line 26, leave out ‘licence holder’ and insert ‘NHS body’.

Government amendments 165 to 180.

Amendment 19, page 156, line 38, leave out clause 166.

Government amendments 181 to 184.

Amendment 1166, page 159, line 2, leave out clause 167.

Government amendments 185 to 187.

Amendment 20, page 163, line 14, leave out clause 176.

Government amendments 188 to 217.

Amendment 8, page 168, line 6, leave out clause 182.

Government amendment 218.

Amendment 9, page 168, line 39, leave out clause 183.

Government amendments 219, 220 and 366 to 372.

[Mr Lansley]

Our plans for modernising the NHS are focused not only on improving the quality of care of patients today, but on ensuring that the NHS is fit to face the challenges of tomorrow—to ensure that the NHS is always there, always improving and always based on the needs of patients, not their ability to pay. Parts 3 and 4 of the Bill are an integral part of achieving that aim. They take forward our commitment to protecting patients’ interests, by establishing a comprehensive system of regulation in part 3, and to promoting high quality services, by supporting all NHS trusts to become foundation trusts in part 4.

The regulatory framework that we inherited from the previous Government simply did not do enough to protect patients. It lacked a way to protect patients’ interests in relation to all types of provider. The previous Government set up two regulators—Monitor for foundation trusts and the Care Quality Commission—but forgot, or neglected, to create an explicit link between the two. They also left independent providers outside much of that regulatory oversight. We have proposed the development of Monitor as a health sector-specific regulator, establishing equivalent safeguards to protect patients’ interests in relation to all types of provider.

By contrast, let us look at Labour’s proposed amendment—amendment 10, in this group—which would delete all of part 3. That would leave the NHS in a position in which inconsistent regulation as between NHS trusts and foundation trusts undermined accountability and performance, in which independent providers were not regulated effectively, in which the Labour Government’s preferential treatment of independent sector providers could carry on, and in which politicians would continue to second-guess regulatory decisions, creating a double jeopardy for providers. On the Government side of the House, however, we recognise the needs of the NHS. We recognise the fact that patients’ interests must be protected, irrespective of the type of organisation providing their NHS services, in a clear, consistent, transparent framework.

These parts of the Bill have been scrutinised in the Bill’s two Committee stages and by the NHS Future Forum. I should like once again to thank Professor Steve Field and the members of the NHS Future Forum for their work in making recommendations on how to improve our plans. We then took those recommendations forward in the recommittal stage. As a result of the listening exercise, we made changes to introduce stronger safeguards, to ensure that fears of a market free-for-all could not happen. Monitor’s core duty has been changed to make it clear that it is there to protect and promote patients’ interests, and that it will not be required to promote competition as if that were an end in itself.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Do not the right hon. Gentleman’s changes to the Bill still emphasise far too much the supposed read-across with competition law, treating health provision as though it were simply another utility? With regard to mergers and changes, for example, the Office of Fair Trading will be the arbiter on competition duties. Why has he chosen the OFT as arbiter in such cases?

[Mr Lansley]

I am not sure that the hon. Gentleman has followed this closely enough. We do not do any of those things. We are very clear that, through the Bill, we are creating, in Monitor, a health sector-specific regulator that will be able to exercise competition powers in a way that is entirely sensitive to the duties that it has for sustaining high-quality NHS services. As I will explain later, there will be a role for the OFT. Indeed, it has a role now. Labour Members should know that the application of competition law inside the NHS at the moment is exactly the same as it will be after the Bill. However, instead of it being done through the OFT as principal competition authority, it will—with the exception of mergers, which I will talk about later—be done through the concurrent powers of Monitor. The NHS Future Forum helpfully discussed these matters at length with people throughout the country, and concluded that it would be in the interests of the NHS for the legislation to create concurrent competition jurisdiction for Monitor, thereby ensuring that the application of competition rules—which is not changed in its extent by this legislation—is achieved in a health-specific context.

[Nick Smith (Blaenau Gwent) (Lab)]

Why will Monitor have no duty to promote collaboration, as recommended by the Future Forum?

[Mr Lansley]

I am sure that the hon. Gentleman will want to look at clause 20, which is very clear about Monitor’s responsibilities. I am sorry—it is not clause 20; I will find it later. Monitor’s duties are very clear, and they include support for the integration of services and for the continuous improvement of quality of services. Across the NHS there is existing legislation making it clear that there is a responsibility for collaboration. As we have made clear in response to the NHS Future Forum’s report on the listening exercise, we are taking an evolutionary approach. The competition and co-operation panel was established under the Labour Government in January 2009. At that time, the panel made it absolutely clear that there should be a health basis for the implementation of competition and procurement rules in the NHS. That panel is now to be incorporated as part of Monitor. As its name implies, it examines both competition and collaboration. Monitor, like other bodies, has a duty to promote the integration of services.

Now, as I said, we have introduced safeguards against privatisation. This Bill, for the first time, stops the Secretary of State—and, indeed, Monitor or the NHS commissioning board—from trying deliberately to increase the market share of a particular type of provider. If the previous Labour Government had put such a requirement in law when they were office, hundreds of millions of pounds would not have been paid to independent sector treatment centres to carry out operations that were not required and never took place. If the Opposition had their way this afternoon, the safeguards that we intend to put in place would not be available.

--- Later in debate ---

[Toby Perkins (Chesterfield) (Lab)]

I am grateful to the Secretary of State for giving way. Does he think that the British Medical Association, too, is misrepresenting the position when it says that even after Report stage there will still be too much emphasis on using market forces to shape health services? Is the BMA misrepresenting the truth as well, or is it just the Labour party?

[Mr Lansley]

I was interested to read this morning a letter whose lead signatory was Hamish Meldrum, the chairman of the BMA council, whom I know well. It was curious because his objection to the Bill, which he wants to be amended, was about the introduction and extension of the role of “any qualified provider”. However, that extension is not in the Bill. It is not occasioned by the Bill; it is a consequence of the way in which commissioners—[Interruption.] No, it does not. If there were no Bill, it would be open to strategic health authorities and primary care trusts to extend “any qualified provider” and patient choice in the NHS to whatever extent they wished. The Bill does not make that happen.

The point is that under the legislation there is a stronger safeguarding process, because the commissioners—

[Toby Perkins]

rose—

[Mr Lansley]

I will finish answering the hon. Gentleman before letting him intervene again.

The safeguard structure will be stronger, because commissioners must ensure, for example, that they meet their duty of continuous improvement of quality, their duty of safety and their duty of integration of services and other duties, including a duty to promote patient choice—but of course they have to balance those duties. Whether they extend “any qualified provider” is a matter of judgment. If they took the view that the extension of patient choice would be inimical to the integration of services and the improvement of quality, they would not go ahead with it. The hon. Gentleman and his colleagues should recall that they have put in an NHS constitutional right for patients to exercise choice, so if the commissioners think it is possible to promote choice and improve quality by extending the any qualified provider remit, they can do it, but the Bill is not what enables it. It is therefore curious that the Bill should be attacked on that basis.

[Toby Perkins]

I am grateful to the right hon. Gentleman for giving way a second time. That was a very long answer to a short question, but I understand the Secretary of State to be saying that the BMA is wrong and the Labour party is wrong. Everyone I meet in the health service tells me that it is the Secretary of State who has got it wrong. He has come back here once again, confirming that he is not listening to what people are saying to him. He thinks the BMA is misleading people, but is it possible that he is the one who has got it wrong?

[Mr Lansley]

I will give the hon. Gentleman a shorter answer this time: he does not talk to enough people in the NHS.

Let me return to the important point that I was about to make. I was saying that criticism of the Bill has typically developed to the point of literally misrepresenting the facts in order to attack the Bill, as was the case with 38 Degrees. I am indebted to my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) for sharing with me a letter that he prepared for the better information of his constituents. He looked at the legal opinion obtained by 38 Degrees and concluded that it did not support the views that those behind the 38 Degrees website evidently wished it did.

For example, 38 Degrees claims that the Bill removes the Secretary of State’s duty to provide a comprehensive health service. However, its own legal advice makes it clear that the Secretary of State has never had a duty to provide a comprehensive health service—only a duty to “promote” a comprehensive health service, which is exactly reproduced in clause 1.

Clause 1 also makes it clear that the Secretary of State must secure the provision of that service. The “duty to provide” certain services to which 38 Degrees refers is a duty that I, as Secretary of State, currently delegate to primary care trusts. In future, the Bill will—in exactly the same way—pass that duty of the Secretary of State to the NHS commissioning board and to clinical commissioning groups. In other words, the situation will be legally unchanged. The Secretary of State has a duty, and discharges it through organisations to which he or she delegates that power. Strictly speaking, they have more direct statutory duties, but the duty to provide will not change.

38 Degrees also claims that the Bill opens up the NHS to competition law, but its own legal advice—which it obviously did not like—made it clear that there would be no change between the present competition regime and that which would operate if and when the Bill became law.

I am very grateful to my hon. and learned Friend, whose forensic analysis accords with our own view. The provision, under the Bill, of a comprehensive NHS is watertight, and it is equally clear that the Bill does not change the extent of the application of competition law and EU procurement rules. The 38 Degrees campaign should be seen for the distorting and misleading political propaganda that it is.

[Andrew George (St Ives) (LD)]

I entirely endorse the Secretary of State’s point about the biased way in which the last Government advanced the private sector, but may I make a point about the changes that have resulted from the listening exercise? The Secretary of State has sought to reassure the House about Monitor’s role of integration and promoting collaboration. Would he be prepared to respond to, and perhaps even accept, amendments that I have tabled—for example, amendment 1226—which propose, I think reasonably and in a balanced way, that promoting the importance and the role of integration should be among the principal duties?

[Mr Lansley]

As we said in our response to the recommendations of the NHS Future Forum, we recognise the importance of integrating health and social care services—while concentrating on the needs of patients and their families—to the achievement of our aims. However, I do not believe that we would further those aims by changing Monitor’s name, as amendment 1225 suggests. Although I agree with the aims of my hon. Friend the Member for St Ives (Andrew George), we have an alternative approach.

Rather than making it explicit that the Secretary of State could impose requirements on commissioners in key areas through regulations, as my hon. Friend suggests in amendment 1209, the Bill proposes that commissioners should have clear statutory duties to reduce inequalities between patients, in relation to both access and outcomes. That is covered in clauses 20 and 23. Commissioners would also have to promote integration of services in carrying out those duties. That is covered in clause 20, which inserts new section 13M of the National Health Service Act 2006, and in clause 23, which inserts new section 14Y. Those clauses refer respectively to the NHS commissioning board and to clinical commissioning groups.

The Bill would also establish clear duties for Monitor to allow the integration of health care services and the integration of health care with other relevant services, including social care. We have already amended the Bill to make it clear that Monitor should not promote competition for competition’s sake: this is all about quality. However, integration can only ever be a means to that end, not an end in itself. Integration, like competition, is designed to secure continuous improvement in the quality of services and a reduction in inequalities, as clauses 20 and 23 make clear.

Although I understand the point that my hon. Friend is making, I ask him to not to press amendments 1225 to 1228 when we reach the appropriate moment.

[Frank Dobson (Holborn and St Pancras) (Lab)]

The Secretary of State has pleaded the legal view of one of his Back Benchers in rebutting the case made by others about the impact of the changes in his duties. Will he tell us what advice he received from the Department’s lawyers or the Law Officers of the Crown?

--- Later in debate ---

[Mr Lansley]

It is not the practice of Ministers to publish their internal legal advice, but what I will say to the right hon. Gentleman is very straightforward, because I have said it time and again: our legal advice clearly sets out the duty of the Secretary of State to promote a comprehensive health service and to secure the provision of a comprehensive health service, and that is also clearly set out in the Bill and our amendments to it. We are clear, too, that the Bill does not change the extent of the application of competition law and EU public procurement rules. I have taken the liberty of referring to the comments of my hon. and learned Friend the Member for Sleaford and North Hykeham on the basis that they entirely agree with the legal advice on which we have based our view.

[Several hon. Members]

rose—

[Mr Lansley]

I had better give way to the hon. Member for Pontypridd (Owen Smith) first, as no Opposition Front-Bench has previously intervened.

[Owen Smith (Pontypridd) (Lab)]

Is it not disingenuous of the Secretary of State to keep repeating that the application of competition law is not expanded or changed by the Bill? We know that the change in the architecture of the NHS—the use of competition law, the writing of competition law into the architecture of the NHS, and the entry of lots of other providers into a genuine marketplace—will lead to competition law increasingly being used by people who wish to provide NHS services, breaking up the NHS. Labour Members have repeatedly stated that, and it has been confirmed by independent legal advice. That is our point. It is straightforwardly the case, and I suggest that it is disingenuous to say competition law does not apply.

[Mr Lansley]

I did not say that competition law does not apply; if the hon. Gentleman is going to attack me, he might at least get what I said right. I said that the Bill does not change the extent of the application of competition law. The House should know that the debate about the extent to which competition law, and in particular EU competition law, is applicable within the NHS is a matter of debate among lawyers. That is because it has not been tested in courts, but it was always going to be tested in courts and it is much more likely to be tested in them if we do not pass this measure, which not only gives Monitor a responsibility to be the concurrent competition jurisdiction, but, through its licensing powers, allows it to take ex-ante steps. The hon. Gentleman therefore misses the point; the point is that by introducing the private sector into the NHS before the last election, his party’s Government inevitably extended the application of EU competition law in respect of NHS providers—not NHS commissioners, I might add. To that extent, he has therefore missed the point. EU procurement rules have applied, and continue to apply. We cannot change that.

[Several hon. Members]

rose—

[Mr Lansley]

I will not give way again, or Mr Deputy Speaker will chide me for not addressing the substance of the amendments.

During the listening exercise, we heard concerns about how we would secure continued access to NHS services in the event that a provider fails clinically or financially. We promised then to strengthen our proposals and bring back changes at the next possible parliamentary stage, and we have done that.

What should happen in the NHS when things go wrong has long been the subject of debate in this House, often without satisfactory resolution. Those of us who were in the House when my predecessor stood at this Dispatch Box and said that what happened at Maidstone and Tunbridge Wells was the responsibility of local managers, and that what happened at Mid Staffs was all a local issue, will recall how difficult it was then, and over the recent past, to know what the Secretary of State’s accountability for the NHS actually meant.

In 2003 the Labour Government said that they would put in place a legislative framework for dealing with the failures of foundation trusts. They then failed to do that. The Health Act 2009 regime was contradictory in respect of interventions, but in response to failure it simply enabled foundation trusts to be de-authorised, thereby undermining the integrity of foundation trust status and demonstrating a lack of confidence in foundation trust regulation. Evidence does not support that lack of confidence, however. Monitor has generally handled financial stability more effectively in foundation trusts than strategic health authorities have done in NHS trusts. Putting these measures clearly into legislation is necessary not because providers are more likely to fail—on the contrary, we are putting in place measures that make it less likely that they will fail—but because, as when writing a contract, in writing legislation one must be clear about what happens when things go wrong.

--- Later in debate ---

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

Did not the Minister of State, Department of Health, the right hon. Member for Chelmsford (Mr Burns) say in Committee that under the relevant clause,

“the OFT could make a reference to the Competition Commission to review foundation trust mergers to test whether they gave rise to a substantial lessening of competition”––[Official Report, Health and Social Care Public Bill Committee, 17 March 2011; c.885.]?

Does that not undermine the democratic element that the Secretary of State has just tried to explain?

[Mr Lansley]

I said that I would come on to the continuing role of the OFT in relation to mergers, and I will.

Returning to this substantial group of Government new clauses and amendments, the purpose of which is to set out the regime for the continuity of services, our new proposals focus on five particular changes. Together, the proposed changes significantly improve upon the existing situation. First, the Bill puts clinically led commissioning at the heart of securing high-quality services for local populations. It is therefore right that commissioners should have a leading role when continuing access to services is threatened. Our amendments therefore strengthen the role of commissioners. For the first time, commissioners will have an explicit role in working with Monitor to agree plans to secure continuity of services.

There will also be an oversight role for the NHS commissioning board. Where issues involve more than one clinical commissioning group, it will be the board’s role to co-ordinate agreement so that a joint plan is agreed. Secondly, commissioners will need to be supported in acting with providers to ensure that they have access to the scope, quality and choice of services they need. It is about promoting high-quality, effective and integrated services, as set out in clause 58. This will be the task of Monitor.

If need be, when continued access to services is threatened because of failure occurring in a particular provider, Monitor will have a range of actions it can take. For example, it could take action to secure sustainability of essential services by adjusting prices. This would be necessary where a provider is otherwise unable to cover the costs of essential services—for example, because of lower patient volumes in more remote areas of the country. That was included in the Bill from the outset, and our amendments strengthen the provisions by ensuring that Monitor must agree the methodology with the NHS commissioning board.

[Rosie Cooper (West Lancashire) (Lab)]

Will the Secretary of State be clear on this issue? Can the enhanced tariff that I think he is suggesting Monitor can use to save a provider apply to private companies as well as the NHS?

[Mr Lansley]

It would apply in any circumstances where it was necessary in order to secure continued access to essential services for patients, so a methodology would be in place. As I have described, the intention is to have a regime through which, although specific mechanisms will be applied to foundation trusts and to other providers—of course, the overwhelming majority of activity is in the hands of foundation trusts—the principles of intervention will be the same between the two sets of providers. We want to arrive, wherever possible, at a consistent application of failure rules. Why? Our concern is to make sure that we deal with this, which has not been the case in the past. Under Labour’s regime, if a private sector or independent sector provider failed financially, there was no appropriate mechanism for intervention and continuity of services.

[Mark Simmonds (Boston and Skegness) (Con)]

Will my right hon. Friend confirm that the additional funding he is describing will not be used to bail out, in the traditional way, inefficient and ineffective health providers, but will be used to ensure that services continue to be provided, particularly in rural areas, where the cost base may, necessarily, be more than it is in the metropolitan cities?

[Mr Lansley]

Yes, I understand that and I think that my hon. Friend makes entirely the right point. This is not about a bail-out; the commissioning board and Monitor will need to agree the methodology, because neither side will wish to undermine the integrity of the regulatory structure and the price structure that Monitor is responsible for, nor will the NHS commissioning board and commissioners want to pay any more for services than is necessary to secure continued access. None the less, continuing access to quality services for patients is the essential principle, and so there will be circumstances, particularly where it has become evident that in the absence of this there would be an unacceptable deterioration in or failure of services, in which it is necessary for the methodology to add to the tariff price.

[Fiona Mactaggart (Slough) (Lab)]

The right hon. Gentleman will recall that very shortly after Monitor had approved the granting of foundation trust status to my local district general hospital, Wexham Park hospital, it ended up in very serious financial difficulty, and I was grateful to him when he arrived with a loan to ensure the continuation of service. What I am not clear about in the regime that he proposes is who will be able to provide those kinds of resources when something as important as the district general hospital’s future is at risk.

[Mr Lansley]

I am grateful to the hon. Lady for that. I will deal with that matter in a moment, because subsequent amendments in this group continue the capacity of the Department of Health, for example, to make a loan in those circumstances—that would not change.

Of the five principal changes that I was talking about—

[Grahame M. Morris (Easington) (Lab)]

rose—

[Mr Lansley]

I have reached the third of them, so I will carry on for a moment, if I may.

Thirdly, if a provider gets into significant difficulties, we have provided Monitor with powers to be able to try to turn around the provider. The aim would always be to support the recovery of the provider, wherever this was possible. Specifically, the amendments require Monitor to maintain an ongoing assessment of risk to the continued supply of NHS services. Monitor must then intervene proactively to help a provider to address problems and, where necessary, agree contingency plans with commissioners. New clause 2 and amendments 100 to 104 achieve this.

Fourthly, we have put in place provisions to deal with the rare event of a provider no longer being sustainable in its current form. In that instance, the priority must be to secure continued access to the services patients need. This protection is particularly important in relation to foundation trusts, which of course are the principal providers of acute, emergency and specialist hospital services.

So we have put forward amendments that would build and improve on the previous Government’s regime established under the Health Act 2009. The improvements would ensure that foundation trusts do not revert to being NHS trusts and that commissioners take the lead in securing continued access to NHS services, and they would increase democratic legitimacy by allowing the Secretary of State to intervene in individual cases to protect patients’ interests. At the same time, we are retaining Bill provisions to allow Monitor proactively to regulate to secure continued access of NHS services delivered by companies and social enterprises, through provisions on the health special administration regime, should these providers become unsustainable. New clause 6 and amendments 107, 188 to 193, 195 to 204, 217, 218 and 371 to 372 achieve this.

Fifthly, it is essential that political accountability runs through what hon. Members will all know is central to our responsibilities to our constituents. Our plans therefore strengthen political accountability at both the local and national level. At a local level, the amendments enhance democratic legitimacy by extending local authority scrutiny to all NHS services. That is in contrast to previous proposals, where only designated services would have been subject to such scrutiny. At a national level, we will establish a process for the Secretary of State to veto proposals, in individual cases relating to unsustainable foundation trusts, if he decides that they do not secure continued access to NHS services and, as a last resort, to intervene where he believes that the NHS commissioning board or Monitor has failed to discharge its functions. This veto will ensure that the Secretary of State retains all the powers needed to retain his role—

[Grahame M. Morris]

Will the Secretary of State give way?

[Mr Lansley]

In a moment. I want to complete the five points; otherwise people might not see them in their entirety.

The veto will ensure that the Secretary of State retains the powers needed to fulfil his role in promoting a comprehensive health service. Amendments 205 to 207 and 208 to 216 achieve this.

[Grahame M. Morris]

Will the right hon. Gentleman clarify an issue to do with the Secretary of State’s powers to intervene in the event of failure? I am thinking in particular of the reports about freedom of information requests that appeared in The Guardian earlier in the week, which said that Department of Health officials had been in discussions with Helios about a potential transfer of between 10 and 20 NHS hospitals to the private sector. Is that a scenario in which the Secretary of State would use his powers?

[Mr Lansley]

I do not recognise such a scenario and in any case there will be no transfer of NHS-owned organisations and the estate and property of such to the private sector. We are not engaging in privatisation, so to that extent the question does not arise.

I must also make it clear that the implication of the proposals I have just described—

[Clive Efford (Eltham) (Lab)]

Will the Secretary of State give way?

[Mr Lansley]

No.

The implication of these proposals is that we are not continuing with our previous proposals to have a system of prior designation. We are also withdrawing our proposals to apply insolvency law, including the health special administration procedure, to foundation trusts, so I hope that Opposition Members will not press amendments 29 and 30.

I hope that that explanation of the purpose of the substantive group of Government amendments will help the House. In a moment, I shall turn to some of the additional amendments that have been presented by other colleagues.

[Owen Smith]

Let me clarify a remark that the Secretary of State just made to my hon. Friend the Member for Easington (Grahame M. Morris). The Secretary of State said that there would be no instances where NHS properties might be transferred to private companies, but he will know that under schedule 23 there is provision for precisely that. Such companies are described there as a “qualifying company”. A licence holder could be a private company to which NHS material—even staff—and other liabilities might be transferred. Is that not right?

[Mr Lansley]

The point I am making is that we are not transferring foundation trusts or NHS trusts into the private sector. We are not planning to do that. The particular case to which the hon. Member for Easington (Grahame M. Morris) referred was misrepresented as a proposal to transfer the ownership of NHS organisations. There is no such proposal; we are not planning to do that.

As I have described, the Bill would establish a comprehensive system of regulation focused on protecting and promoting patients’ interests and applicable to all providers of NHS services. The purpose of part 3 is to protect our health services from the unrestrained operation of market forces—otherwise, why would we want this structure of regulation? That is why it is there. The provisions will ensure that services are not destabilised or undermined and will protect the public and patients’ interests.

Let us consider the implications of the Labour party’s amendment 10, which would remove part 3 of the Bill. The impact of removing part 3 would be to expose the NHS to the full force of competition law, as I described earlier, without the safeguard of a health sector regulator and without any sensitivity to the needs of patients, health services and our NHS. It should not be beyond the wit of Opposition Members to recall the impact on the health service and, in particular, on pharmacy services, when the Office of Fair Trading undertook an inquiry into the provision of pharmacy services from a competition perspective without any reference to the health perspective.

[Grahame M. Morris]

Will the Secretary of State give way?

[Mr Lansley]

No.

That is what happened in the past and it is important that it does not happen in the future. We must have a health sector-specific regulator to see the health-related aspects of such matters.

Labour’s amendment 10 would potentially expose the NHS to practices that we do not wish to see. That would include paying over the odds for private sector services, as the previous Government did when they paid £250 million extra to the independent sector for operations that were never carried out; the cherry-picking of easier operations by the private sector, which is an issue in the NHS because the previous Labour Government let it happen; unreformed payment by results, losing the focus on outcomes and integration; and the retention of a system of payment based on price. We are not introducing payment by results; we are reforming it. Payment by results, as implemented by the Labour party, was simply payment for price and volume, not for quality.

Amendment 10 would leave independent sector providers of NHS-funded services, which serve hundreds of thousands of patients a year, unregulated by Monitor and unprotected if the service in which they are being treated gets into financial difficulty. So Opposition Members will wish to consider whether all of those things are what they want to be voting for when they walk through the Lobby later on.

[Margot James (Stourbridge) (Con)]

Does my right hon. Friend think that the previous Government set up the system for private companies so that they could fail without any redress on the part of the Government precisely because the companies had such a favourable financial regime bestowed on them that they could not possibly fail?

[Mr Lansley]

My hon. Friend is right in relation to the independent treatment centre contracts. They were constructed in a way that effectively removed most of the financial risk from the operators. For other private sector operators in the NHS that is not necessarily true. For example, most of us would recognise that private sector providers are instrumental to continued access to many NHS diagnostic services. There are providers who could fail and at the moment no regulatory structure is in place for that.

Let us continue down the path of the implications of the removal of part 3, which the Labour party proposes. Part 3 includes clause 60. I am sure that Opposition Members are familiar with clause 60, their having served in Committee for so long. It is the means by which, if the hon. Member for Islington South and Finsbury (Emily Thornberry) recalls, we can consider the application of Monitor’s functions to adult social care. So precisely when we are legislating to be able to consider whether the implications of an issue such as that at Southern Cross are such that there should be an additional prudential regulatory regime, the Labour party would take away that opportunity.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

Does the Secretary of State agree that it is unfortunate that the Government have not had an opportunity to table detailed amendments on how they would deal with situations such as Southern Cross? To table an amendment that simply says, “At some stage in the future, the Government may be able to do something about a failing organisation such as Southern Cross”, is not necessarily adequate. Although there will be a White Paper on social care next spring, we understand that there are unlikely to be any further details until that point.

[Mr Lansley]

I am confused. I understood that the hon. Lady was a member of the Bill Committees. [Hon. Members: “She was.”] She does not seem to have learned what is going on in the Bill. Clause 60 was not an amendment; it was in the Bill from the outset. It was not introduced as a result of what happened at Southern Cross. We had anticipated the need to address the extent to which Monitor’s functions in relation to the health sector—

[Emily Thornberry]

Will the Secretary of State give way?

[Mr Lansley]

No. I will answer her question. The functions that it exercises in relation to health care include assessing viability and taking action if access to services or the interests of patients or care users are threatened. The Government can consider that by virtue of clause 60. It was not an amendment. So the idea that the measure could not be scrutinised is absurd. It has been in the Bill through all the 100 hours in Committee. If the hon. Lady never said anything about it, that is her own fault and as the shadow care services Minister she should have been more on the ball.

[Emily Thornberry]

Will the Secretary of State give way?

[Mr Lansley]

No. She can sit down.

Let me come to the other Opposition amendments. Amendment 10 would delete all of part 3, which would be absurd. Some of the other Opposition amendments are equally absurd. Amendment 28 envisages that part 3 would remain in place, but that Monitor would license providers of NHS services. However, it then takes away any means of enforcement. Perhaps the Labour party has forgotten that in government if you create obligations it is rather helpful to create a means by which they can be enforced.

Opposition amendment 44 would take the Bill down a slippery slope by trying to prescribe the range of factors that Monitor should reflect in setting prices for NHS services. Such a list could never be exhaustive and would inevitably suggest that some factors were more important than others. It would undermine our ability to hold Monitor to account for setting prices that promote patients’ interests. We must focus Monitor on its duties to promote the quality, efficiency and effectiveness of NHS services, not on trying to prescribe in legislation how it goes about it.

Labour Members have tabled amendments to part 4 that indicate that they either do not understand the Bill, or have abandoned their previous, repeated commitment to supporting all NHS trusts in becoming foundation trusts. They gave that commitment back in 2003, when they passed the necessary legislation, and repeated it in about 2006, when they said that trusts should all be foundation trusts by 2008. The Labour party manifesto from last year—2010—said:

“All hospitals will become Foundation Trusts, with successful FTs given the support and incentives to take over those that are under performing”.

Compare our programme for such hospitals as those in Trafford and Carlisle. The manifesto continued:

“Failing hospitals will have their management replaced. Foundation Trusts will be given the freedom”—

additional freedoms—

“to expand their provision into primary and community care, and to increase their private services”.

We will debate that later today, but I should complete the quote, or I might be accused of being selective:

“where these are consistent with NHS values, and provided they generate surpluses that are invested directly into the NHS.”

That is exactly what we are proposing.

The Labour party appears utterly confused. Does it support foundation trusts or not? The NHS Future Forum said that all NHS trusts should continue to work towards achieving FT status by 2014. It was right: achieving FT status is about demonstrating clinical and financial stability, and we think that all NHS providers should be expected to do that, in the interests of NHS patients and staff. If we maintained the NHS trust legislative model in statute, we would risk losing the change in mindset and the momentum that is being demonstrated by prospective foundation trusts.

Our consequential amendments 219, 220 and 367 to 370 will simply remove references to NHS trusts when they no longer exist—and not, of course, until then. For the hon. Member for Pontypridd, I add that our amendments 185 to 188 make it clear that—sadly for those in Wales—a foundation trust cannot merge with or acquire a Welsh NHS trust.

The Opposition want to take the retrograde step of de-authorising foundation trusts, retaining NHS trusts under the Secretary of State’s direct control, and having them dependent on the layers of bureaucracy that go with that. There would be all the regulatory requirements for foundation trusts and independent providers, and all the bureaucracy that has accompanied NHS trusts and strategic health authorities. That would undermine the FT regulatory regime and the objective of all NHS trusts becoming FTs. Opposition Members who voted in favour of the original legislation establishing foundation trusts in 2003 can have no credibility in supporting Labour now, because the very purpose of that legislation was to give hospitals greater autonomy.

Other Opposition amendments would simply result in duplication and reduced coherence in the Bill. For example, amendments 1166 and 19 seek to retain controls on goods and services, and borrowing and property, but that would duplicate Monitor’s powers through the licensing regime. Deleting clause 166, as the Opposition propose would undermine our intention of increasing transparency in the public financing of foundation trusts. I am looking for the hon. Member for Slough (Fiona Mactaggart); this would have been her moment. Through our amendments, we can show how we can maintain support for FTs, if necessary, in a transparent fashion, including through a requirement, which the Labour party apparently wants to delete, on the Secretary of State to publish an annual report showing what form of financial support has been given to foundation trusts.

I turn to the amendments tabled by my Liberal Democrat friends below the Gangway, who expressed their intention of improving NHS services and ensuring sustainable access for patients. We all share those aims, but I believe that we have in place alternative approaches to meeting those aims. The hon. Member for St Ives tabled a series of amendments emphasising the need to secure sustainability in the provision of NHS services. Securing sustainable access to meet patients’ needs is fundamental to good commissioning. We would expect the board to ensure that there was sufficient competency over issues when it authorised clinical commissioning groups to take on their new responsibilities, and when holding them to account for doing that job.

As the Government have said many times, our focus is on outcomes, including ensuring that patients have access to the services that they need when they need them. That the outcomes must be sustainable is obviously implied, but that is not necessarily the same as saying that commissioners must ensure the sustainability of particular providers or particular services, as amendments 1205 and 1209 suggest when referring to the sustainability of “existing NHS services”. In some cases it will not be in the interests of patients to maintain the status quo—for example, where those services may be unable to improve in line with new standards of clinical best practice, or where there is clear evidence that centralising specialist services on fewer sites would improve health outcomes, as we have seen in examples relating to cardiac, stroke and trauma services. So although I agree with the intention behind these amendments regarding the role of commissioners, I must urge the hon. Member for St Ives not to press them.

I addressed earlier the hon. Gentleman’s amendments about integration and collaboration. On integration, we agree with the conclusion of the NHS Future Forum that integrating services around the needs of patients and giving patients greater choice over who provides those services are not mutually exclusive. As the NHS Future Forum made clear, this is a false dichotomy. As the NHS Future Forum’s report stated:

“If commissioners want to commission integrated care they will only succeed in doing this by creating a new market in integrated care services and stopping the current commissioning of episodic services from different NHS organisations.”

As the hon. Member for St Ives will recognise, his amendments 1207 and 1208 are based upon that dichotomy, so I ask him to withdraw them.

[Andrew George]

Will the Secretary of State give way?

[Mr Lansley]

No. I do not want to intrude on the time of other Members.

Amendments 1219 and 1220 tabled by my hon. Friend the Member for Southport (John Pugh) would apply the Enterprise Act 2002 to mergers of the activities of foundation trusts with businesses, but would exclude from these arrangements mergers between foundation trusts. I have given careful thought to this proposal, but I am not convinced that it would address two of the problems of the existing regime.

There is currently legal uncertainty as to when and where the 2002 Act would apply to mergers of foundation trusts. As a result, under the current arrangements for the review of mergers involving foundation trusts by the Co-operation and Competition Panel, there is always a potential risk of duplication—or worse still, double jeopardy. The risk arising from a separate regime for foundation trusts would be increased where a trust’s activities extended beyond Monitor’s remit—for example, where a foundation trust provided social care or supplied goods. Consolidating oversight of foundation trust mergers under the Enterprise Act, as proposed by the Bill, would avoid the risk of double jeopardy and eliminate the uncertainty of the current approach.

Mergers are a specialist area. Hence, we think it is right to maintain existing responsibilities and expertise within the Office of Fair Trading and the Competition Commission, rather than resource a further body to consider potential mergers in health care. It may reassure my hon. Friend if I say that the OFT and the Competition Commission would consult Monitor to ensure that they had a full understanding of the health care issues involved.

[Tom Blenkinsop]

Will the Secretary of State give way?

[Mr Lansley]

No.

The OFT and the Competition Commission would obtain Monitor’s view on how a proposed merger would affect competition in the sector and whether it would bring benefits for patients. These views would then be considered, along with other evidence. However, the OFT would have discretion not to refer, where patient benefits outweighed any adverse impacts on competition—further illustration of the fact that competition law is not about promoting competition as an end in itself.

In conclusion—

[Fiona O'Donnell (East Lothian) (Lab)]

Will the Secretary of State give way?

[Mr Lansley]

No.

I return to the choice offered in this group of amendments between the Government and Opposition Members. The Government are putting forward a range of amendments to protect patients’ interests and to safeguard them when providers run into difficulties and access to services is threatened. The amendments show that the Government have listened and improved the Bill. These amendments are on top of the changes made at earlier stages to strengthen the safeguards and protections offered by Monitor as a new provider regulator.

The Opposition simply want to delete the whole of that part—delete the safeguards to stop price competition, delete the means to stop cherry-picking, delete the means to enable NHS providers to work on a level playing field. The Government’s new clauses and amendments move us forward with the right safeguards in place. Labour would take us back. I urge the House to support the Government new clauses and amendments in this group—specifically, new clauses 2 and 6 and amendments 90 to 107, 113 to 220, and 366 to 372.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

The Secretary of State has insisted that the amended Health and Social Care Bill shows that the Government are listening, but despite their reassurances there are many reasons why the Bill remains a threat to the future of the NHS. Central to the reforms is the proposal to increase competition across the NHS by opening it up to providers, particularly those from the private sector. The Government claim that increasing competition drives down costs and improves quality, but overwhelming international evidence suggests that this simply is not the case in health care.

--- Later in debate ---

[Madam Deputy Speaker]

Order. I just remind the hon. Gentleman that the timetable for the debate was not set by me. I am merely assisting the House to meet its deadlines.

[Mr Lansley]

I am grateful to my hon. Friend the Member for St Ives (Andrew George) for the additional time, and I appreciate what he said in his speech. On securing continuing access to essential services, we are in exactly the same place. If a service is essential, it will be the responsibility—and, indeed, the objective—of the commissioners of that service to make it clear that they expect the regulator, or the administrator on the regulator’s behalf, to secure access to those services.

That was one of the three points that the hon. Member for Leicester West (Liz Kendall) mentioned. I thought that she made rather a good speech, but its basic premises were flawed. She also said that Monitor would be responsible for making decisions on what happened to services in the event of a failing or failed provider, but that is simply not true. The whole point of this group of amendments, including new clause 6 and amendments 198 and 199, is to make it clear that commissioners will lead in those circumstances. The proposed structure in the event of failure, through the administrator and the regulator, must be led and approved by the commissioners, who will be clinically led. The fact that the hon. Lady can look at the consultation with, for example, clinical advisors and clinical senates, does not preclude the fact that it will be local clinicians leading the process. Nor does it preclude the fact that local authorities will have an opportunity to intervene, through the scrutiny powers that the amendments will bring in. Indeed, even the Secretary of State will have the opportunity to intervene. It will not simply be a matter of Monitor doing this; the process will be led by commissioners and clinicians, and local people will have the opportunity to intervene.

The hon. Lady also mentioned competition. The Labour party seems somehow to have turned against competition, in a complete shift from where it was in 2006. My hon. Friend the Member for Southport (John Pugh) said that we were bringing in Blairite health reforms-plus, but I think that we are doing something altogether more coherent, purposeful and positive. I would far rather that the comparison involved the focus on quality that the noble Lord Darzi brought in when he was a Health Minister. In so far as Mr Blair pursued these objectives when he was Prime Minister, I think that we are doing it much better.

The amendments, and the Bill, will not allow discrimination in favour of the private sector in the way that the last Labour Government did. We are going to stop that. We are going to stop cherry-picking, because variation in price could not be by virtue of the specific characteristics of the provider. Clause 58(10) makes it clear that Monitor cannot discriminate in favour of the private sector. When the hon. Lady’s predecessor as Member for Leicester West, a previous Secretary of State, set a target for the private sector’s proportion of activity in the NHS, she was wrong. We are not going to do that. The only objective is to secure providers that deliver the best quality for patients. That is what we are all about.

I am grateful to other colleagues for their contributions to the debate, to which I cannot do justice. My hon. Friend the Member for Boston and Skegness (Mark Simmonds) asked whether commissioners would lead improvements in quality. The commissioning board will sort out disagreements, monitoring the commissioners, and together they must draw up plans to deal with providers that have failed.

My hon. Friend the Member for Southport asked whether Monitor or the Office of Fair Trading would deal with mergers. If we were to decide that it should be Monitor, the OFT would still have jurisdiction through its merger regime, so we would be duplicating that regime. I can assure my hon. Friend that, when the OFT is involved in any FT mergers, it will seek sectoral advice from Monitor, and that patient’s interests will always be central to the considerations during the merger.

The hon. Member for Easington (Grahame M. Morris) and other Labour Members were going on about the takeover of failing hospitals by foreign companies. Let me make it clear to them that the last Government, in the National Health Service Act 2006, enabled the franchising of an NHS trust to a private company. That is the legislation under which the last Government initiated the franchising of management at Hinchingbrooke hospital. The last Labour Government then passed legislation in the form of the Health Act 2009, which would have enabled exactly the same thing to be done for foundation trusts, following de-authorisation. Our proposals would specifically prevent that, because we prevent de-authorisation in that way and we are withdrawing the 2006 legal framework for NHS trusts, which, in the long run, of course, will cease to exist.

This group of amendments is part of ensuring that the NHS is and always will be there when we need it. Through this Bill, we will strengthen our confidence in continued access to the services patients need. By contrast, the Opposition would leave the NHS stranded; they would take it back; they are by turns reactionary and opportunist. I invite the Opposition to withdraw their amendments and, if not, I invite the House to reject them. I understand the positive intentions of my hon. Friends who have tabled amendments, but I also ask them to withdraw them. Strengthened by our continuing commitment to listen and to respond, I invite the House to agree to the Government new clauses and amendments.

Question put, That the clause be read a Second time.

The House proceeded to a Division.

[Madam Deputy Speaker (Dawn Primarolo)]

I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.