Health and Social Care (Re-committed) Bill

Owen Smith Excerpts

Tuesday 6th September 2011 Commons Chamber

[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.

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[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.

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[Paul Burstow]

These Government amendments will make important changes to extend Monitor’s intervention powers over all foundation trusts until 2016. This would give additional time for foundation trusts’ governors to build the capability that they need to be able to hold their boards to account.

As my right hon. Friend the Secretary of State has described, through part 3 of the Bill, Monitor as the sector regulator would have permanent intervention powers over all providers, including foundation trusts. These will allow it to fulfil its duty to protect and promote the patient’s interest and its functions include supporting commissioners in securing continuity of services. That is why we believe that Opposition amendment 17 is not only ineffective, based as it is on non-existent terms of authorisation, but also redundant.

My right hon. Friend the Secretary of State has already confirmed that we agree that it is essential that Monitor, as health sector regulator, can take action to secure patients’ continued access to NHS services, and our plans ensure this. Monitor would have powers under its licensing regime to require a provider to take specific actions if it gets into difficulties. These will be effective safeguards to protect patients’ and taxpayers’ interests, and will support commissioners in securing continued access to services that patients depend on for their care. I hope, therefore, that the hon. Members who tabled the amendment will not press it.

However, the NHS Future Forum raised concerns about the current readiness of foundation trust governors to take on the strengthened role that the Bill provides for them in holding foundation trusts to account as autonomous NHS providers. In response, the Government have agreed that Monitor’s intervention powers should apply to all foundation trusts until 2016, to allow time for their governance arrangements to become fully effective. The amendments provide for the transitional powers to continue until 2016. They also make corresponding amendments to clause 117 on licence conditions supporting use of the powers, and remove clause 116, about identifying which foundation trusts would be subject to the powers.

The amendments do not change the nature of the transitional intervention powers set out in clause 117. Monitor will continue to have the power to remove or suspend members of the board of directors or members of the council of governors. Monitor would also be able to direct a foundation trust to do or not to do specific things within a specified timetable. These powers are similar to those currently available to Monitor in its role as foundation trust regulator, and would allow Monitor to continue to protect the taxpayers’ interest in foundation trusts.

The powers go beyond those that Monitor would have over all providers, under part 3, as sector regulator. They will help to ensure a smooth transition from the current arrangements for NHS foundation trusts. The amendments would allow the Secretary of State to seek further parliamentary agreement to extend the powers beyond 2016 for all or some foundation trusts for up to two years at a time. That power could be used, for example, if there was a significant remaining concern about the governance of some foundation trusts.

If it were decided to extend the powers for some, but not all, foundation trusts, Monitor would be required to go through a process similar to that originally envisaged in clause 116. It would have to publish the criteria that it would use to decide which foundation trusts would remain subject to its intervention powers. Those criteria would be subject to consultation and would require approval from the Secretary of State. The amendments will ensure that the transitional regime proposed in the Bill provides a more secure safety net while foundation trust governors develop the skills and capabilities necessary to hold their boards to account.

The amendments would enable Monitor to rectify avoidable difficulties at a foundation trust while foundation trust governance arrangements developed, ahead of normal regulatory intervention through the licensing regime. They also provide for the extension of the powers, should that prove necessary. I commend them to the House.

[Owen Smith]

I do not intend to take long, because we must get on to the important next group of new clauses and amendments, which is on the private patient cap; there will be huge interest in that outside this place, and there is far too little time to discuss it. I shall say right at the outset that we will not press amendment 17, because we accept that, as the Minister said, it is effectively made redundant by other amendments that have been tabled.

In some respects, the amendments in the group before us tell the story of the Bill in microcosm. Throughout the progress of the Bill, the Government have responded in two ways. One has been to bolt endless obfuscation and compromise on to the Bill to obscure its true intentions. There was clarity at the outset, in the Bill’s first iteration; it clearly aimed to break up a publicly owned, collaborative NHS and replace it with a competitive, market-driven NHS. The Government have sought to obscure that throughout the Bill’s progress, and have done so relatively effectively. Certainly, more gullible Government Members, perhaps even including the Deputy Prime Minister, have bought into the double-speak about this now being a question of preventing anti-competition, as opposed to promoting competition, but we Labour Members still do not buy that.

Nor do we buy the idea that the other amendments that we have considered today add clarity. In truth, they add to the confusion—the chaos, indeed—that will follow the implementation of the Bill. As the Minister has outlined, the clauses that we are considering effectively extend Monitor’s existing compliance and regulatory roles over foundation trusts to all FTs through to 2016. That is what the Future Forum recommended to Ministers, but they did not do that last time, although they did get rid of the arbitrary 2014 deadline that they had introduced. They are now going a step further and extending Monitor’s compliance functions. That might not be such a bad thing, and perhaps many people will agree with the idea; certainly the Future Forum will. The trouble with it, of course, is that it extends the critical conflict of interest that is at the heart of Monitor’s role.

There is a conflict between what is clearly Monitor’s principal function—as an economic regulator, designed to prevent anti-competitive behaviour and facilitate the exit of providers, such as hospitals, from the marketplace—and its compliance role, which is ostensibly about allowing FTs to flourish, and making sure that they do not fail. How will the Government deal with that apparent contradiction? To use their own words as set out in the original explanatory notes, how will they

“mitigate and manage potential conflicts of interest”

between the transitional functions and Monitor’s new functions? Well, rest easy, because the Government have made a very simple suggestion as to how Monitor should square that circle, which I am sure all Members will find satisfactory, as I do. Clause 62(3), subtly amended by Government amendment 89, explains that Monitor must simply

“ignore the functions it has under section…117 when exercising…its functions”

relating to competition, price-setting, or the licensing of NHS services.

So there we go: in Monitor there are to be Chinese walls, as Ministers colourfully put it in Committee. Monitor retains its role in trying to keep FTs from failing, but it also takes on a role in exiting them from the market and helping other providers—Bupa, perhaps, or Helios, which we know are sniffing around the Department of Health right now—to step into the breach. Chinese walls, competition and confusion: those are the key words for this botched Bill.

Question put and agreed to.

New clause 3 accordingly read a Second time, and added to the Bill.

New Clause 4

Orders under section [Duration of transitional period] that apply to only some trusts

‘(1) Where the Secretary of State proposes to make an order under section [Duration of transitional period] in reliance on subsection (2)(b) of that section (“a section [Duration of transitional period](2)(b) order”), the Secretary of State must notify Monitor.

(2) Monitor, having received a notification under subsection (1), must set the criteria that are to be applied for the purpose of determining to which NHS foundation trusts the order should apply.

(3) Before setting criteria under subsection (2), Monitor must—

(a) consult the Care Quality Commission and such other persons as Monitor considers appropriate, and

(b) obtain the approval of the Secretary of State.

(4) If the Secretary of State approves the proposed criteria, Monitor must—

(a) publish the criteria,

(b) determine, by applying the criteria, to which trusts the order should apply,

(c) notify the Secretary of State of its determination, and

(d) publish a list of the trusts concerned.

(5) If the Secretary of State does not approve the proposed criteria, Monitor must propose revised criteria; and subsections (3)(b) and (4) apply in relation to the proposed revised criteria as they apply in relation to the criteria previously proposed.

(6) If, having received a notification under subsection (1), Monitor proposes to set criteria the same as those it set on the last occasion it received a notification under that subsection, it need not comply with subsection (3)(a).

(7) A section [Duration of transitional period](2)(b) order—

(a) must apply to all the trusts that are determined under subsection (4)(b) as being the trusts to which the order should apply (and to no others);

(b) may specify the trusts to which it applies by reference to their inclusion in the list published under subsection (4)(d).

(8) Subsection (9) applies where —

(a) a section [Duration of transitional period](2)(b) order is in force at a time when there is in existence an NHS foundation trust authorised after 1 April 2014, and

(b) the initial two-year period in relation to that trust has yet to come to an end.

(9) Monitor must—

(a) determine, by applying the criteria it applied under subsection (4)(b), whether section 117 should continue to have effect in relation to the trust after the end of the initial two-year period,

(b) notify the Secretary of State of its determination, and

(c) publish its determination.

(10) If Monitor determines under subsection (9)(a) that section117 should so continue to have effect, the trust is to be treated as if it had been authorised on or before 1 April 2014 and as if the order referred to in subsection (7)(a) applied to it; and section [Duration of transitional period] (5) is accordingly to apply in relation to the trust.

(11) If Monitor determines under subsection (9)(a) that section 117 should not so continue to have effect, section 117 ceases to have effect in relation to the trust immediately after the end of the initial two-year period.’.—(Paul Burstow.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 5

Repeal of sections [Duration of transitional period] and [Orders under section [Duration of transitional period] that apply to only some trusts]

‘(1) Sections [Duration of transitional period] and [Orders under section [Duration of transitional period] that apply to only some trusts] are repealed immediately after section 117 is repealed; and in consequence of that—

(a) in section 62(2)(a), omit “or under sections 117 and [Orders under section [Duration of transitional period] that apply to only some trusts] of this Act (imposition of licence conditions on NHS foundation trusts during transitional period)”,

(b) omit section62(3),

(c) in section 94(4), after paragraph (a) insert “and”,

(d) in section 94(4), omit paragraph (c) and the preceding “and”, and

(e) omit section 302(5)(e) and (8A).

(2) This section is repealed immediately after sections [Duration of transitional period] and [Orders under section [Duration of transitional period] that apply to only some trusts] are repealed.’.—(Paul Burstow.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 19

NHS Foundations Trusts: phasing out of provision of private health care

‘The Secretary of State must make regulations which provide for NHS Foundation Trusts to be prevented from providing services other than those of the health service in England within three years of Royal Assent of this Act.’.—(Andrew George.)

Brought up, and read the First time.

[Andrew George]

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