National Health Service Trust Development Authority (Establishment and Constitution) Order 2012

Lord Warner Excerpts

Monday 28th May 2012 Grand Committee

The authority’s decisions could have a big impact on the local provision of NHS services, and I would have thought it would be a great pity if the authority were not under an obligation, before it took action in relation to a non-foundation trust, to consult local NHS organisations, clinical commissioning groups, local authorities and health and well-being boards. It would be quite wrong for a national quango simply to intervene in local matters without that being transparent and subject to rigorous public consultation. This is an important body and I do not object at all to its establishment, but we need to know much more about the context in which it is going to work in future. I beg to move.

[Lord Warner]

My Lords, I speak on this Motion and the regulations as a former Health Minister with responsibility for the foundation trust pipeline when FTs were started. I took the foundation trust legislation through this House back in the heady days of 2003, when we sat until about five o’clock in the morning dealing with this legislation, so I have some background in this. After I ceased to be a Minister, I was chairman of a provider development agency in London for a couple of years. We grappled with the issue of trying to get people through the pipeline to FT status without lowering the regulatory bar for the standards that they had to achieve to do that. I make it clear that I am not auditioning for a position on the Trust Development Authority.

I saw the decision to set up the new authority with considerable puzzlement verging on disbelief. We know, as my noble friend has said—I am grateful to him for putting down this Motion and giving us the chance to debate it—that 50% of FT applications fail to satisfy Monitor that they should be accorded FT status. It is worth bearing in mind that to have got to Monitor, they must have been through the department as well and the SHAs. They would not have got to Monitor without going through some vetting process beforehand. So even after that process, 50% of them are failing when they get to Monitor. That is a pretty high failure rate, given that we already have a vetting system.

We need to think a bit about what causes them to fail. The Explanatory Memorandum was rather kind about some of these reasons. The main reasons why they fail, wrapped up in terms like “governance”, is that they do not have a credible business plan in the circumstances that the new foundation trusts will face to be an organisation that is viable and sustainable clinically and financially. Their business plans are often simply not credible. That has been a longstanding problem for many of those that have failed at the stage of going to Monitor. At the root of that problem is the fact that they have tried to put in place a set of service configurations that are not economically or financially sustainable and, in some cases, are not clinically sustainable either.

In those circumstances, what is the magic dust that the new authority will bring to this set of circumstances that will resolve these problems—and not just over the long term? I will come to the timetable in a minute, which my noble friend eloquently outlined. What is the new ingredient that this authority will bring to the party which is lacking in the present arrangements, which have a 50% failure rate when the trusts reach Monitor? Why and how is a new body going to do things differently? I would like to hear from the Minister what the new ingredients are that we will get from this body that will produce a real improvement in the number of FTs going through the foundation trust application process.

In particular, will it have the authority to push local people on reshaping and reconfiguring services? Many trusts in the 108 that have not made it through the Monitor hoops will fail because they are not going concerns in commercial terms, either clinically or financially. Will the body actually provide the leadership to shift and change the configuration of services at local level to produce more viable applications? Or will it just be a body that pushes for mergers and hopes for the best? The track record on mergers in the NHS is not a good one on reshaping services. They tend to be expensive, difficult to do and time consuming. We need more explanation from the Minister than is in the Explanatory Memorandum about what the new approaches will be from this body that justify setting it up and that will produce change.

I want to say a few words about London in particular. Among the 100 or so trusts that have not made it to FT status are some powerful players with international reputations, such as Imperial College, Barts and the Royal London. These are international bodies that have still not made it through the foundation trust application process. Will the new development trust have the authority to look around in London and answer some questions about why these powerful trusts have not been able to get through the process and satisfy Monitor that they can become foundation trusts?

Turning to a slightly different part of these regulations, I notice that the Government are now required to set up a replacement, in effect, for the NHS Appointments Commission. It is extraordinary that we should have spent time in this House getting rid of the Appointments Commission and then find that we have to set up another health authority to do its job. Why have the Government changed their mind on this? I understood the argument to be that the Health Secretary wanted to ensure that the right and appropriate people were appointed. What has caused the change of heart since the Public Bodies Bill and the department’s own arm’s-length body review to cause them to require these old functions on appointments to be put into this new body, which is a considerably different set of functions from strengthening the FT pipeline?

A couple of areas in the Explanatory Memorandum are very difficult to understand. This issue impinges on the timescales that my noble friend outlined. Paragraph 31 quotes the recent NAO report, which identified 139 foundation trusts established since the 2003 enabling legislation was passed and 108 trusts that have not made it yet. But if we compare that with paragraph 19 of the impact assessment, we find that,

“only by exceptional agreement made after close scrutiny of financial and clinical feasibility will they be allowed to continue in existence past this date”.

That date is April 2014. If we discount the 20 or so trusts that have been accepted by the Government as non-viable as foundation trusts, we are left with 88 trusts that are somehow going either to become foundation trusts by April 2014 or, in the wording of paragraph 19, they will not be allowed to continue in their current existence.