Health Care Services (Provider Selection Regime) Regulations 2023

Lord Markham Excerpts

Monday 27th November 2023 Lords Chamber

Moved by

[Lord Markham]

That the draft Regulations laid before the House on 19 October be approved.

Relevant documents: 1st Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)]

My Lords, the Government are committed to giving patients better, more joined-up healthcare services. To do so, we need to ensure that we have the right procurement regime so that the NHS can best allocate resources which meet the needs of patients. These regulations do that. They would establish the provider selection regime on 1 January 2024.

This House knows that the challenges we face as a country are changing, and the NHS is changing to address them—an ageing population, an increase in people with multiple health conditions, and persistent inequalities in health outcomes. We must respond to these challenges. To meet them, we need to provide an enabling and empowering framework that allows the NHS to combine the value of competition with the benefits of collaboration in the interests of patients.

In March last year, the Health and Care Act 2022 was passed. It sought to bring together NHS organisations and partners to tackle issues in our health and care system. This instrument builds on that progress. In 2019, engagement across the NHS identified that the use of the current rules on procurement presented a bureaucratic barrier to bringing NHS organisations and partners together. NHS colleagues wanted a framework that allowed them to use the right approach for different scenarios; a framework that included competition without defaulting to it and which supported the increased need for the alignment of services, including those provided by non-statutory organisations in the voluntary sector, to join up care for patients. The Government developed the legislative framework in the light of these requests. Furthermore, in June 2019, the Health and Social Care Committee also agreed that this was the right approach to

“ease the burden procurement rules have placed on the NHS, ensuring commissioners have discretion over when to conduct a procurement process”.

As our colleagues in the NHS and across the health system have emphasised, we must seek to balance a system-driven approach to planning services while recognising the importance of provider diversity for service innovation and value. That is also why my officials have worked closely with a broad range of colleagues and organisations across the system, including both commissioners and providers of healthcare services, to prepare the instrument before you today. This work has included extensive consultation. In 2021, NHS England published a consultation on the detail of the policy behind this instrument. Of 420 responses received from NHS representative bodies and individuals, 70% of respondents agreed or strongly agreed with the detailed proposals set out in that consultation. In 2022, the department published a further consultation to help inform the detail of our regulations.

Finally, we have not neglected to do the analysis of impacts associated with this regime change. Our voluntary impact assessment shows that, in the most likely scenarios, introducing this instrument will deliver savings to the NHS by reducing bureaucracy. Although it is difficult to provide a precise figure ahead of monitoring this regime, those noble Lords who have read the assessment will be aware that our central estimate suggests that savings of up to £230 million are possible. While I am on this subject, I was very glad to see that the Secondary Legislation Scrutiny Committee welcomed our consultation and voluntary impact assessment in its report on this instrument.

To summarise, the instrument reflects engagement and careful balancing to present commissioners with the right options for procurement so that they can find the most collaborative, value-add solutions that will work for patients. Engagement with providers has told us that both more collaborative approaches to healthcare—where those with services to offer can get around the table, help break down barriers and promote provider diversity—and putting a contract out to tender are valuable and need to be in the commissioner’s toolkit. That is why this instrument reaffirms the role of competition in arranging services by providing explicitly for those processes, while also providing some flexibility to commissioners to adopt a more direct approach.

As many noble Lords will know, getting the balance of a framework right to promote the best culture and behaviour on the ground is tricky. I am glad, therefore, that we have worked so closely with providers and commissioners to find and test that balance. One result of that engagement was to agree to establish an independently chaired panel which will act as a non-statutory advisory body for contested decisions made under this regime. We intend that this will help commissioners think carefully about the approach that they take to procurement, and its justifications.

Furthermore, we must ensure that the system understands these rules so that it can have the best chance of promoting the right behaviour on the ground. That is why NHS England is leading an extensive programme of familiarisation with those draft regulations and the draft statutory guidance, which is available online. Of course, legislation and guidance are only part of the story of how the new legislation will influence outcomes. That is why the department is committed to monitoring and evaluating this new regime from its implementation.

For these reasons, I am content to move these draft regulations, which, subject to the approval of the House, would bring the provider selection regime into force. I beg to move.

[Lord Stevens of Birmingham (CB)]

My Lords, I welcome these regulations. They get the NHS off the hook from inappropriate compulsory competitive tendering of clinical services but also avoid throwing the baby out with the bathwater. Open procurement will remain an option where it is in patients’ and taxpayers’ interests.

In my previous experience, there have been several problems with the way in which the accretion of UK procurement rules and the EU procurement regime have tied the hands of the NHS. We have often had to go through the motions of competitive clinical procurements for services that would quite obviously be provided only in one place and by one part of the NHS—for example, billions of pounds-worth of specialised cardiac and cancer services for which it was blindingly obvious that the Germans and Italians would not turn up and try to replace Leeds General Infirmary or St Thomas’ Hospital. These regulations make these processes honest, in that when we embark on procurements, it will be for a good reason.

A related problem is that the legacy procurement rules have tended to lead to too much service fragmentation. We have seen examples where community nursing services have had to be tendered out but core general practice services have not, so getting the community nurses and GP practices working together has been much harder. One of the fragmenting consequences of the 2012 Act was that a lot of what had previously been NHS services became local authority-procured, and so sexual health services and health visitors were operating on a different procurement process through local authorities rather than through the local NHS. The Health and Care Act 2022 and these regulations overcome that problem. The NHS will still be subject to transparent and fair procurement, but it will now be much more flexible and proportionate.

The regulations are quite complex. Those noble Lords who have read through the materials may agree that it is fair to say that they will not command the attention of the pubs and clubs of Barnsley or Barnstaple, but they will make a huge difference to the way in which care is delivered right across the country.

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[Baroness Merron (Lab)]

My Lords, I bring more cheer to the Minister by adding our support for these regulations—I thank him for bringing them before your Lordships’ House today—because the provision of this statutory instrument is to define and give relevant authorities greater flexibility to procure healthcare services. This will, I hope—I know that other noble Lords also hope this—benefit patients and service efficiency by better integrating services. Like the Minister, I am pleased to note that the policy behind these regulations has been informed by both a voluntary impact assessment and an extensive consultation that received 70% support from 420 respondents; this is welcome news.

It is the view of the Opposition that the NHS should be the preferred provider of commissioned healthcare services, not least because it embodies not just a public service ethos but efficiency, resilience and democratic accountability. It is also the case, particularly in the short term, that, in order to treat NHS patients and bring waiting lists down, the independent sector has an important role to play where a service cannot be provided by a public body because the capability or capacity just is not there.

Your Lordships’ House may recall that, when the Health and Social Care Act2012, which my noble friend Lord Hunt described as “wretched” on several occasions, went through its various stages in Parliament, these Benches argued that relevant authorities should have the appropriate flexibility to award contracts, which was something for which the Act did not provide. As my noble friend identified, the competitive tendering requirements of that Act did not serve the NHS, patients or the public at all well. Therefore, where we are today with the provider selection regime, which does allow for this, is as long overdue as it is welcome, as is seeing that good sense, flexibility and efficiency will now apply.

During the passage of the Health and Care Act 2022, these Benches also argued for the legislative provision to be made as outlined in these regulations. Although the Government did not take that on at that time, I am glad that the benefit of hindsight has prevailed and that the Opposition’s view, which was set out during the course of that debate, has now been set out in these regulations.

As the noble Lord, Lord Stevens, illustrated so well, these regulations recognise that it would not be an efficient use of resources in certain circumstances for relevant authorities to use competitive tendering, but that there continues and needs to be a procurement process that relevant authorities can and should use. As the Minister will be aware, concerns have continually been raised about the impact of the current procurement framework, which often places additional burdens on community and mental health providers in particular, where services have been much more likely to be subject to expensive and disruptive competitive tendering processes. I therefore welcome the alignment of the PSR’s aim with the spirit of collaboration within health and care systems, as well as the offer to commissioners and providers of a clear and transparent process by which procurement decisions can be made.

The PSR will offer a consistent model for both NHS and local government bodies to follow with regard to health services, and I hope that this will support local relationships and decision-making, as well as integrated care. However, it is important that national bodies engage with all organisations that will be subject to the new regime in an effort to smooth the transition to a new procurement framework.

I ask the Minister for more detail on how NHS England and the department will review the application of the PSR over the course of the next year to ensure that real-time feedback on the operation of the regime can be collected, as well as evaluated and, importantly, acted on as swiftly as possible. I make this point as it will be crucial to capture feedback on whether any difficulties arise for commissioning bodies in selecting which procurement process is the most appropriate across various different scenarios and circumstances, and whether any challenges arise for providers in the application of their approach.

My noble friend Lord Hunt emphasised the need for support, training and guidance—something that other noble Lords also emphasised. This is a point that the Minister would be well advised, as I am sure he is, to pay absolute attention to, so that we support those who work in NHS procurement and the NHS supply chain, not least because the combination of these regulations, other regulations and other Acts is something of a complex field. We should support and guide those who make the interpretation and the application, and, if necessary, adjust in real time any of that training, support and guidance. More information from the Minister about how this will be done will be extremely welcome.

I am aware that NHS Providers has worked with membership bodies for providers in the independent and voluntary sectors, the department and NHS England to make the case for the new regime to include a challenge function for decisions made by commissioning bodies to be reviewed and scrutinised if appropriate. Although the PSR panel does not have legally binding powers, does the Minister consider it appropriate to give providers some opportunity to challenge the application of the regime and raise legitimate concerns where appropriate?

As I said at the outset, I am glad to provide our support to these regulations. I hope that we can look forward to great improvements because of them in the years ahead.

[Lord Markham (Con)]

I thank noble Lords and welcome the support offered. I appreciate their understanding on my lack of comments on 2012 and all that. I also appreciate having the vast experience of the noble Lord, Lord Stevens, and wonder whether he could be here so that I can phone a friend on some of the questions we have, because I fear he may be far better qualified to answer a lot of them. I will take home the “Think like a patient, act like a taxpayer” mantra.

I think we all agree that, although this is welcome, it is complex. We are trying to set out an approach, knowing that really we want sensible people to act sensibly around the table and to co-operate with each other. We all know that it is very hard to put a rules-based system around that. As all noble Lords have mentioned, the training of staff in that is vital. I have some personal experience, as I know the noble Lord, Lord Hunt, does, of many of the people in this space, and I have to say that they are very good people. My experience is obviously much more on the national level, but clearly it needs to be taken down to the local level as well.

I believe we are publishing the strategic framework for NHS commercial tomorrow. That tries to set out the importance of commercial capability, and the investment and critical skills required. It will be accompanied by a programme that sets out what upskilling needs to be done and a programme, with support from the Crown Commercial Service, that I hope we can effectively use to upskill in the way that we all believe is necessary.

To answer the point by the noble Baroness, Lady Merron, whenever you are trying to put in place a value-based system, for want of a better word, in terms of culture, you have to have those guard-rails around making sure that there are appeals processes and lessons learned. My understanding of this independent panel is that companies or providers that feel they have been wrongly excluded will have the opportunity to appeal directly. I have challenged them quite strongly on that, given my experience in this space, and asked how much a company will really want to be awkward. Often you know that if you are being awkward and challenging, that might make life more difficult for you in future, so there are some difficulties involved there. A lot of companies often ask whether that challenge is really worth it. Getting that right, with the panel, is vital, so that it is welcoming and open and that, as the noble Baroness, Lady Merron, says, there is that “lessons learned” kind of constant review. At probably the year stage, we will look to understand how it has gone so far and what we can learn from it.

Having been involved in quite a few start-ups, I am also very aware of the point the noble Lord, Lord Hunt, made. Time really is money in these things; a regulatory process that is opaque or cumbersome is not very helpful. I acknowledge some of the issues the MHRA has had. That is what the £10 million investment behind it is trying to address. I know it is very much looking to act on this.

A very good example of that is what the MHRA is doing in the point-of-care space. One Brexit advantage that I have seen is the ability very quickly to set rules around point-of-care medicines, particularly around when you take a biopsy and then provide an individual patient with treatment according to that for a certain cancer. Clearly, if you follow the strict rules, you would have to be regulating that every single time, and that just would not work. The MHRA has introduced a sensible framework that tries to adopt an umbrella-type approach. I know that the MHRA understands the possibilities in this space and really wants to use this as an opportunity to show that we can be fleet of foot and leaders in that space from it all.

On the point raised about trusts sometimes having a conflict and the example provided by Specsavers, that is what the panels are supposed to be there for. It is important—I will check this out—that, in the rules, we are guiding the 42 ICBs on how they should manage some of those conflict situations and when they should put people aside. We have all managed it in our corporate and public lives, and there are rules about it. Just as we put the emphasis on noble Lords to declare interests and so on, clearly we must make sure that there are similar rules for the trust CEOs, but it is a point well made that we need to pick up. I look forward to going into some of these issues much more when we have the value-based procurement meeting shortly.

On how we can make the analysis available, I have seen a tool that the NHS has recently introduced which is very good in terms of being able to drill down straightaway and provide that analysis. That is a good base point. I will find out some more about how that needs to be tweaked, but there is a basic premise about making that information available—that is a sensible move. On the point made by the noble Baroness, Lady Merron, it should be used to arm providers with the ability to challenge the panels.

I welcome the input. Such is the knowledge base around this, I am happy to suggest that, in nine months or one year’s time, we have that round table where I will appreciate some of the skills here. We can ask how it has gone down so far. We can do that through a debate, but it is probably better done through a round table, so I would like to propose that so we can learn the lessons.

In summary, I welcome the points made and that noble Lords believe that this is the right direction, although it needs work along the way to make sure it stays going in the right direction and does what we hope it does. With that, I commend the draft regulations to the House.

Motion agreed.