Health and Social Care Bill

Lord Newton of Braintree Excerpts

Thursday 15th December 2011 Lords Chamber

[Lord Mawhinney]

I have been thinking about something that my noble friend the Minister said a moment ago. The amendment would require the Secretary of State’s approval, in addition to that of more than half of the members of the council of governors, for an application made under this section. He did not welcome the amendment of the noble Baroness, Lady Williams, on the grounds that the approval of the Secretary of State amounted to an added layer of bureaucracy. It would be helpful to the Committee if we were to know whether the Secretary of State is always considered to be an added layer of bureaucracy and, if not, can he give us a couple of examples of when the Secretary of State is a net plus?

[Lord Newton of Braintree]

My Lords, since my question to the Minister, before he rises, is in similar territory, I might as well leave him sitting down for the moment and get my question in. As I indicated the other day, I have been involved in what is legalistically an acquisition, although we have always talked of it as a merger, of a foundation trust by its neighbour, due to come to fruition at the turn of the year. The last hurdle that we had to overcome, though it was not much of hurdle, was the need for the Secretary of State to sign off dissolution orders for the existing trust, and at least one other order, to allow this to happen. Is my noble friend saying that, under this Bill, such things could proceed untouched by the Secretary of State? I do not have a strong view one way or the other, but it is quite an important change if that kind of reconfiguration can occur without the Secretary of State even having to agree.

[Earl Howe]

My Lords, I would not dream of putting my right honourable friend the Secretary of State’s nose out of joint by calling him “an added layer of bureaucracy” in all circumstances. If I did so, I retract it immediately before it catches up with me. The answer to my noble friend is that the Secretary of State is not that of course; he has a major role in the structure of accountability and decision-making in the architecture of the Bill.

The issue to which my noble friends Lord Mawhinney and Lord Newton have referred is, however, complicated. I have asked for briefing on the way in which the merger process will work. It is quite extensive. To cut to the chase, an application from an NHS trust to merge with a foundation trust must be supported by the Secretary of State. That reflects current rules. However, the Bill removes the requirement for a foundation trust to consult the local authority on a merger. Section 244 of the Act, as amended by the Bill, would provide powers for regulations to make provision as to matters on which NHS bodies, including foundation trusts, must consult local authorities. We intend that foundation trusts will continue to be required to consult local authorities on particular matters set out in regulations and we will consult on those. That is the local authority bit of it. There will also be a duty of public involvement on foundation trusts in relation to such matters as the planning of service provision, proposals for changes in the way in which services are provided and decisions affecting the operation of services. I would be happy to write to both my noble friends—it would probably be better if I did so—to set out exactly what we envisage in the circumstances that they have raised.

I do not want to delay the Committee unduly, but perhaps I could refer to the PAC report to which the noble Baroness, Lady Thornton, referred. We welcome the report, which says that the NHS is in need of major overhaul. What is interesting about the report is what it shows about the state of the provider sector when the Government took office last year. It had problems such as hidden bail-outs, inadequate leadership and toxic PFI deals. These matters had not been addressed and we have made the firm decision that we cannot continue on that basis. That is why we are proposing independent assessments of trust boards as part of the foundation trust authorisation process.

As regards that process, trust boards will be independently assessed. The point of that is to ensure that they are up to scratch and able to lead their hospitals to foundation status. The underlying issue here is that we want all trusts to be clinically and financially sustainable in the future. The Public Accounts Committee has, very properly, drawn to our attention various issues around the capacity and capability of leadership, among other things, and my noble friend Lord Mawhinney mentioned PFI as another issue. All NHS trust boards will have to identify their strengths and weaknesses before being independently assessed. That is a robust discipline.

As my right honourable friend made clear in October, if, even after receiving support, management teams fail to improve their performance, then action will be taken. This could include their possible removal as a last resort. The Government will provide help to a small number of challenged hospitals to turn themselves around where necessary, but only after they have met the four tough tests that we have laid down. The problems they face must be exceptional and beyond those faced by other organisations; they must be historic; they must have a plan to deal with them in the future; they must demonstrate that they are improving their productivity; and they must deliver high-quality, sustainable services.

Before I conclude, I should like to speak to a number of minor and technical government amendments—for that is indeed what they are—in this group. These make consequential amendments in line with the revised provisions of the Bill; they correct drafting errors to correct references and numbering, or they remove redundant references to repealed legislation. Their purpose is to make the Bill work properly and to ensure that the legislation is up to date.

--- Later in debate ---

[Baroness Williams of Crosby]

My Lords, I shall speak also to Amendments 299A and 299AA.

Before I do so, let me say just a word or two about two other amendments in this group, that is, Amendments 299ZA and 299AZA. I warmly thank the Minister, my noble friend Lord Howe, for having listened with such care to those of us who spoke to him about the issue of foundation trusts, in particular the issue of the private income paid into foundation trusts and the question of how that private income should be used ultimately for the benefit of the health service. He has been very patient, very willing to listen and extremely helpful. On behalf of these Benches and my own party I would like to thank him, and I am sure that others in the House will share that gratitude for the way in which he has responded.

I do not want to go into detail, because the amendments are very clear and have been laid, beyond saying that the first of those amendments, Amendment 299ZA, clearly states the situation with regard to income that comes into a foundation hospital—that is, that that income must be ultimately devoted to the health service. It sets beyond question or ambiguity the Government’s position on this critical issue. I am therefore extremely grateful to the Minister for that.

I also strongly support the proposals about the annual report. I take to heart the Minister’s distinction between the way in which the annual report deals with the funding of National Health Service patients in foundation trusts and with the separate funding of private patients in foundation trusts. On both those issues, it is extremely helpful that the annual report should be clear and open, so that we can all discuss not only the very serious issues that have been raised by the noble Lord, Lord Warner, but also, as pointed out by the noble Baroness, Lady Thornton, the very disturbing report from the Public Accounts Committee, which reiterates over and over again the need for leadership and for a clear statement of where the trusts stand, and the real concerns it has about the difficulties that some of them now confront. It is a dramatic report, and we should commend it to this House as far as we possibly can. Perhaps a separate debate on that issue in the Public Accounts Committee report would be appropriate on some future occasion.

Having said that, I will add only one other thing with regard to the first two amendments I mentioned, which are familiar enough to the noble Earl. In my view, it would be very helpful if there were “belt and braces”, by which I mean a government amendment which would indicate that, in the case of foundation trusts, the majority of patients should be NHS patients. That is, there should be an unquestionable commitment to having a majority of NHS patients. There are two reasons for that. One is simply that, good as the amendment unquestionably is, it is difficult for the general public—I certainly include myself in this—to understand the precise thrust of Amendment 299ZA, which I have quoted. It is helpful in this complicated Bill to have some islands of clarity that those who are not experts in the field—again, I include myself—can understand. People could understand the simple concept that a majority of patients should be from the NHS, not the private sector.

The other reason why I beg him to look at this carefully is that it is also important from the point of view of the complex debate that we have already had in this Committee on the issue of competition policy and EU competition policy. If there is a clear statement that the majority of patients must come from the NHS, that should be immensely helpful in ensuring that we are not then subjected to the rigours of the extreme competition policies defended at present in the EU and, indeed, by our own Competition Commission. My noble friend Lord Clement-Jones, who knows a great deal about the legalisms of competition policy, may have something to add on this point.

I turn briefly—well, fairly briefly; I am now conscious of the disapproval of the noble Lord, Lord Mawhinney, so I shall be a little more detailed—to the three more minor amendments in the group that my name is associated with. The first of those is Amendment 297, where we would like to add the words,

“for the purposes of the National Health Service”.

In order to persuade noble Lords of the importance of this, I will read out the text that the Bill currently inserts:

“The general duty of the board of directors, and of each director individually, is to act with a view to promoting the success of the corporation so as to maximise the benefits for the members of the corporation as a whole and for the public”.

In that wording, the public trail far behind the interests of the members of the corporate body. That is unfortunate and unwise. We are therefore proposing the simple amendment that the words “for the purposes of the NHS”, which, as noble Lords will appreciate, recur in other parts of the Bill on many occasions, should be added to this section about the directors of foundation trusts. It is important to reiterate that foundation trusts work for the interests of the NHS, which is why we have suggested this simple amendment.

On Amendment 299AA, on which my noble friend Lord Clement-Jones will speak in slightly more detail, the point here is quite straightforward. Clause 162(1)(a), which we are suggesting should be left out, removes the existing subsection in the National Health Service Act 2006 that limits the provision of private services. In particular, the 2006 Act permits not the abolition but the restriction of private health services within foundation trusts. Section 44(1) of the 2006 Act provides that,

“An authorisation may restrict the provision, for purposes other than those of the health service in England, of goods and services by an NHS foundation trust”.

In other words, that subsection again sustains the argument that there is a role for the private sector but that there must be restrictions on it if the NHS trusts and foundation trusts are to sustain their fundamental legal obligation to the NHS. It is important that these restrictions should be upheld. Indeed, the authorisations that I have referred to are critical to the concept of maintaining the foundation trusts within the health service system and therefore making it less vulnerable to competition legislation.

The final amendment that I want to refer to is Amendment 299A, where we are simply bearing out what I have already said. I therefore hope the House will now hear additional arguments from my noble friend to show why this group of amendments is very important in order to retain the current status of foundation trusts, which is very welcome, and which will assist in meeting some of the trenchant criticisms of the Public Accounts Committee about this whole sector of the health service. I beg to move.

[Lord Newton of Braintree]

My Lords, I will come in very briefly. I declare a past interest as former chairman of the Royal Brompton and Harefield NHS Foundation Trust, which probably has as large a private patient income as any in the country. Frankly, that income considerably benefits the two hospitals and their NHS patients.

I welcome the amendments of my noble friend, and hope that the Minister will give them careful consideration. All of us in this House, not least those of us who are former Ministers of health, have been united in our wish to see a successful and flourishing NHS, and in being really dedicated to it. It would be an oddity if a hospital designated as an NHS trust—whether foundation or otherwise—were treating a majority of patients who were not NHS patients. That is quite a simple proposition, and it is the one advocated by my noble friend Baroness Williams.

The amendments already tabled by my noble friend on the cap on income are extremely welcome and sensible. However, I hope that he might think of—dare I say it—embracing the thoughts of my noble friend Lady Williams as well in some further modification of those amendments so that they refer both to income and to numbers. The numbers thing will be more readily understood by many members of the public. Clearly we do not want NHS trust hospitals to gain most of their income from doing non-NHS work or from treating non-NHS patients. That just does not make sense. It would helpful if we could make that clear.

[Lord Clement-Jones]

My Lords, my noble friend Lady Williams very clearly set out the approach of these Benches to a number of amendments in this group. I simply want to return to EU competition law for a moment. The noble Earl’s amendment regarding limits on the cap goes quite some way to mitigating one of the elements of risk associated with the greater application of EU competition law. As I outlined on Tuesday, there are some really significant issues in the Bill which will introduce EU competition law to a much greater extent if we are not careful. One of those, clearly, is the uncapping of private patient income of foundation trusts. I am very pleased that the noble Earl has gone some way to dealing with some of those concerns. However, I of course very much share the view of my noble friend Lady Williams that we are not quite there yet, and that it would be belt and braces to have the additional safeguard of a limit on the numbers as well as on the revenue.

Generally, four key issues arise from the changes to Sections 43 and 44 of the 2006 Act, quite apart from that of EU competition law. First, there is the question of limits on the cap—what kind of limit is appropriate? Secondly, there is the question of being absolutely certain that any income from private patients is exclusively devoted to the National Health Service. Thirdly, there is the question of prospective transparency—of being well aware of what the plans of foundation trusts will be. Fourthly, there is the question of transparency after the event, in terms of reporting in an annual report.

As far as the limits on the cap are concerned, as I have mentioned, the noble Earl’s Amendment 299ZA is welcome, but it would be useful if he could consider whether any further qualification of that cap was appropriate. There is also the question of being absolutely certain that we are talking about this income going exclusively to the NHS, which is what my Amendment 299A goes towards—that is why I seek to add the word “exclusive” to the changes to Section 43 of the Act.

On the question of prospective transparency, I very much welcome the Minister’s Amendment 299AZA, but that simply provides for reporting after the fact. It is important to share prospectively with the general public and people in the locality the governors’ process for determining the right balance between private income and the NHS activities in a trust. That is what my amendment seeks to achieve by requiring the situation to be set out in an annual plan.

There are four elements. We are some way down the track towards achieving a number of them. At that point, I think that on at least one of the limbs that I and many others are concerned about—the further introduction of competition law to the NHS—we will be satisfied. We will at least have knocked over one of the green bottles, so to speak, with several more to come.