112 Further provision about enforcement powers

Schedule 11 (Part 1 of which makes further provision about discretionary
requirements and Part 2 of which makes further provision about enforcement
undertakings) has effect.

113 5Guidance as to use of enforcement powers

(1) Monitor must publish guidance about how it intends to exercise its functions
under sections 110 and 111 and Schedule 11.

(2) Monitor may revise the guidance and, if it does so, must publish the guidance
as revised.

(3) 10Monitor must consult such persons as it considers appropriate before
publishing or revising the guidance.

(4) Guidance relating to Monitor’s functions under section 110 must include
information about—

(a) the circumstances in which Monitor is likely to impose a discretionary
15requirement,

(b) the circumstances in which Monitor may not impose a discretionary
requirement,

(c) the matters likely to be taken into account by Monitor in determining
the amount of any variable monetary penalty to be imposed (including,
20where relevant, any discounts for voluntary reporting of breaches in
respect of which a penalty may be imposed), and

(d) rights to make representations and rights of appeal.

(5) Monitor must have regard to the guidance or (as the case may be) revised
guidance in exercising its functions under sections 110 and 111 and Schedule
2511.

114 Publication of enforcement action

(1) Monitor must include information about the following in its annual report—

(a) the cases in which a discretionary requirement has been imposed
during the financial year to which the report relates, and

(b) 30the cases in which an enforcement undertaking has been accepted
during that financial year.

(2) But Monitor must not include commercial information which it is satisfied
would or might significantly harm the legitimate business interests of the
person to whom it relates.

(3) 35The reference in subsection (1)(a) to cases in which a discretionary requirement
has been imposed does not include a reference to a case where a discretionary
requirement has been imposed but overturned on appeal.

115 Notification of enforcement action

(1) As soon as reasonably practicable after imposing a discretionary requirement
40or accepting an enforcement undertaking Monitor must notify the following of
that fact—

(a) the National Health Service Commissioning Board,

(b) such commissioning consortia as are likely to be affected by the
imposition of the requirement or the acceptance of the undertaking,
and

(c) any person exercising regulatory functions in relation to the person on
5whom the discretionary requirement was imposed or from whom the
enforcement undertaking was accepted.

(2) In subsection (1) “regulatory functions” has the same meaning as in the
Legislative and Regulatory Reform Act 2006 (see section 32 of that Act).

Transitional provision

116 10Designation of NHS foundation trusts during transitional period

(1) Monitor may designate an NHS foundation trust for the purposes of this
section and section 117 if it is satisfied that the trust meets such criteria as are
set and published by Monitor.

(2) Before publishing criteria under subsection (1), Monitor must consult—

(a) 15the Secretary of State,

(b) the Care Quality Commission, and

(c) such other persons as Monitor considers are likely to be affected by a
designation under this section.

(3) A designation under this section of a trust authorised before the day on which
20this Chapter comes into force (“the licensing commencement day”) does not
have effect unless—

(a) Monitor gives notice of the designation to the Secretary of State, and

(b) before the end of the period of 28 days beginning with the day after that
on which the Secretary of State receives the notice, the Secretary of State
25approves the designation.

(4) A trust authorised before the licensing commencement day may not be
designated under this section after that day; but approval under subsection
(3)(b) may be given after that day.

(5) A designation under this section of a trust authorised before the licensing
30commencement day expires at the end of the period of two years beginning
with that day.

(6) A designation under this section of a trust authorised on or after the licensing
commencement day takes effect when the designation is given.

(7) A trust authorised on or after the licensing commencement day may not be
35designated under this section other than at the time when the trust is
authorised.

(8) A designation under this section of a trust authorised on or after the licensing
commencement day expires at the end of the period of two years beginning
with the day on which the designation is given.

(9) 40Where Monitor is satisfied that a trust in respect of which a designation under
this section has effect does not meet the criteria under subsection (1), it may
remove the designation from the trust.

(10) The Secretary of State may by order provide that subsections (5) and (8) are to
have effect with the substitution of a longer period for the period specified
there (whether originally or by virtue of a previous order).

(11) In this section, a reference to being authorised is a reference to being given an
5authorisation under section 35 of the National Health Service Act 2006.

117 Imposition of licence conditions on designated NHS foundation trusts

(1) This section applies in relation to an NHS foundation trust in respect of which
a designation under section 116 has effect.

(2) Where Monitor is satisfied that there is a significant risk that the trust will fail
10to fulfil its principal purpose (as to which, see section 43(1) of the National
Health Service Act 2006), Monitor may include in the trust’s licence such
conditions as it considers appropriate for the purpose of reducing that risk.

(3) A condition included under subsection (2) has effect until the designation
expires.

(4) 15Monitor may modify a condition included under subsection (2).

(5) Where Monitor is satisfied that the trust has breached or is breaching a
condition included under subsection (2), Monitor may by notice—

(a) require the trust, the directors or the council of governors to do, or not
to do, specified things or things of a specified description (or to do, or
20not to do, any such things in a specified manner) within such period as
may be specified;

(b) remove one or more of the directors or members of the council of
governors and appoint interim directors or members of the council;

(c) suspend one or more of the directors or members of the council from
25office as a director or member for a specified period;

(d) disqualify one or more of the directors or members of the council from
holding office as a director or member for a specified period.

(6) Where Monitor is satisfied that a person has breached or is breaching a
requirement imposed under subsection (5)(a), or has otherwise failed or is
30otherwise failing to comply with a notice under that subsection, Monitor may
by notice exercise one or more of the powers specified in paragraphs (a) to (d)
of subsection (5).

(7) A power under subsection (5) (including as it applies by virtue of subsection
(6)) may be exercised only while the designation has effect.

(8) 35Subsection (5) does not prevent Monitor from exercising the powers conferred
by sections 110 and 111 (discretionary requirements and enforcement
undertakings) in relation to conditions included under subsection (2).

(9) Where Monitor includes a condition under subsection (2), it may also make
such incidental or consequential modifications as it considers necessary or
40expedient of any other condition of the licence concerned which is affected.

(10) Where Monitor includes a condition under subsection (2) by modifying a
standard condition of the licence concerned, the modification does not prevent
any other part of the condition from continuing to be regarded as a standard
condition for the purposes of this Chapter.

(11) A reference in this section to failing to discharge functions includes a reference
to failing to discharge those functions properly.

(12) Omit section 52 of the National Health Service Act 2006 (failing NHS
foundation trusts); and in consequence of that, omit—

(a) 5section 39(2)(f) of that Act (copy of notice under section 52 of that Act
to be on register), and

(b) paragraph 22(1)(f) of Schedule 7 to that Act (copy of that notice to be
available for public inspection).

CHAPTER 5 Pricing

118 10Price payable by commissioners for NHS services

(1) If a health care service is specified in the national tariff (as to which, see section
119), the price payable for the provision of that service for the purposes of the
NHS is (subject to sections 127 and 128) such price as is determined in
accordance with the national tariff on the basis of the price (referred to in this
15Chapter as “the national price”) specified in the national tariff for that service.

(2) If a health care service is not specified in the national tariff, the price payable
for the provision of that service for the purposes of the NHS is such price as is
determined in accordance with the rules provided for in the national tariff for
that purpose.

119 20The national tariff

(1) Monitor must publish a document, to be known as “the national tariff”, which
specifies—

(a) certain health care services which are or may be provided for the
purposes of the NHS,

(b) 25the method used for determining the national prices of those services,
and

(c) the national price of each of those services.

(2) The national tariff may provide for rules under which the commissioner of a
health care service specified in the national tariff and the providers of that
30service may agree to vary—

(a) the specification of the service under subsection (1)(a), or

(b) the national price of the service.

(3) Where a variation is agreed in accordance with rules provided for under
subsection (2), the commissioner of the service in question must maintain and
35publish a written statement of—

(a) the variation, and

(b) such other variations as have already been agreed in accordance with
rules provided for under that subsection in the case of that service.

(4) The national tariff may also—

(a) 40specify variations to the national price for a service by reference to
circumstances in which the service is provided or other factors relevant
to the provision of the service,

(b) provide for rules for determining the price payable for the provision for
the purposes of the NHS of health care services which are not specified
under subsection (1)(a), and

(c) provide for rules relating to the making of payments to the provider of
5a health care service for the provision of that service.

(5) Rules provided for under subsection (4)(b) may specify health care services
which are not specified under subsection (1)(a).

(6) The national tariff may also provide for rules for determining, where a health
care service is specified in more than one way under subsection (1)(a) or in
10more than one way in rules provided for under subsection (4)(b), which
specification of the service is to apply in any particular case or cases of any
particular description.

(7) The national tariff may include guidance as to—

(a) the application of rules provided for under subsection (2), (4)(b) or (6),

(b) 15the discharge of the duty imposed by subsection (3), or

(c) the application of variations specified under subsection (4)(a),

and a commissioner of a health care service for the purposes of the NHS must
have regard to guidance under this subsection.

(8) Different methods may be specified under subsection (1)(b) for different
20descriptions of health care service.

(9) The national tariff may, in the case of a specified health care service or health
care services of a specified description, specify different national prices or
different variations under subsection (4)(a)—

(a) according to whether the service has been designated under section 79;

(b) 25in relation to different descriptions of provider.

(10) A description for the purposes of subsection (9)(b) may not be framed by
reference to—

(a) whether the provider is in the public or (as the case may be) private
sector, or

(b) 30some other aspect of the status of the provider.

(11) The national tariff may not specify a national price for a health care service
provided pursuant to the public health functions of the Secretary of State, or of
a local authority, under the National Health Service Act 2006.

(12) The national tariff has effect for such period as is specified in the national tariff
35(or, where a new edition of the national tariff takes effect before the end of that
period, until that new edition takes effect).

(13) In exercising its functions under this Chapter, Monitor must (in addition to the
matters specified in section 61) have regard to the objectives and requirements
for the time being specified in the mandate published under section 13A of the
40National Health Service Act 2006.

120 The national tariff: further provision

(1) The ways in which a health care service may be specified in the national tariff
under section 119(1)(a), or in rules provided for in the national tariff under
section 119(4)(b), include in particular—

(a) 45specifying it by reference to its components,

(b) specifying it as a service (a “bundle”) that comprises two or more health
care services which together constitute a form of treatment,

(c) specifying it as a service in a group of standardised services.

(2) In the case of a service specified in the national tariff under section 119(1)(a),
5the national tariff must—

(a) if the service is specified in accordance with subsection (1)(a), specify a
national price for each component of the service;

(b) if it is specified in accordance with subsection (1)(b), specify a national
price for the bundle;

(c) 10if it is specified in accordance with subsection (1)(c), specify a single
price as the national price for each service in the group.

(3) In the case of a service specified in rules provided for in the national tariff
under section 119(4)(b), the rules may—

(a) if the service is specified in accordance with subsection (1)(a), make
15provision for determining the price payable for each component of the
service;

(b) if it is specified in accordance with subsection (1)(b), make provision for
determining the price payable for the bundle;

(c) if it is specified in accordance with subsection (1)(c), make provision for
20determining the price payable for each service in the group.

(4) Neither a component specified in accordance with subsection (1)(a) nor a
service comprised in a bundle specified in accordance with subsection (1)(b) is
to be treated for the purposes of this Part as a service capable of being provided
separately for the purposes of the NHS except—

(a) 25where the component, or the service comprised in the bundle, is
specified separately under subsection (1)(a) of section 119 or (as the
case may be) in rules provided for under subsection (4)(b) of that
section, or

(b) in accordance with rules under subsection (2) of that section.

(5) 30Where the commissioner of a health care service for the purposes of the NHS
agrees to pay a price for the provision of the service other than the price that is
payable by virtue of this Chapter, Monitor may direct the commissioner to take
such steps within such period as Monitor may specify to secure that the
position is, so far as practicable, restored to what it would have been if the
35commissioner had agreed to pay the price payable by virtue of this Chapter.

(6) Where the commissioner of a health care service fails to comply with rules
provided for under section 119(2), (4) or (6), Monitor may direct the
commissioner to take such steps within such period as Monitor may specify—

(a) to secure that the failure does not continue or recur;

(b) 40to secure that the position is, so far as practicable, restored to what it
would have been if the failure was not occurring or had not occurred.

121 Consultation on proposals for the national tariff

(1) Before publishing the national tariff, Monitor must send a notice to—

(a) each commissioning consortium,

(b) 45each licence holder, and

(c) such other persons as it considers appropriate.

(2) Monitor must also publish the notice.

(3) The notice must specify—

(a) the health care services which Monitor proposes to specify in the
national tariff,

(b) the method or methods it proposes to use for determining the national
5prices of those services, and

(c) the prices, determined in each case by using the applicable method
specified under paragraph (b), that Monitor proposes as the national
prices of those services.

(4) The notice may specify such rules as Monitor proposes to provide for in the
10national tariff under which the commissioner of a health care service and a
provider of the service would be entitled to vary—

(a) the specification of the service in the national tariff, or

(b) the national price of the service.

(5) The notice may also specify—

(a) 15such variations (by reference to circumstances in which a service is
provided or other factors relevant to its provision) as Monitor proposes
to specify to the prices that it proposes as the national prices,

(b) such rules as Monitor proposes to provide for in the national tariff for
determining the price payable for the provision for the purposes of the
20NHS of health care services not specified for the purposes of subsection
(3)(a), and

(c) such rules as Monitor proposes to provide for in the national tariff for
determining, where a health care service is specified in more than one
way for the purposes of subsection (3)(a) or in more than one way in
25rules specified for the purposes of paragraph (b), which specification of
the service is to apply in any particular case or cases of any particular
description.

(6) The notice may include guidance as to—

(a) the application of rules specified for the purposes of subsection (4) or
30(5)(b) or (c), or

(b) the application of variations specified for the purposes of subsection
(5)(a).

(7) The health care services specified for the purposes of subsection (3)(a) are only
such services as the National Health Service Commissioning Board considers
35should be so specified and—

(a) as the Board and Monitor agree will be so specified, or

(b) in default of agreement, as are determined by arbitration as being
services that will be so specified.

(8) A method specified for the purposes of subsection (3)(b) is only such method
40as Monitor considers should be so specified and—

(a) as Monitor and the Board agree will be so specified, or

(b) in default of agreement, as is determined by arbitration as being the
method that will be so specified.

(9) The prices specified for the purposes of subsection (3)(c) are only such prices
45as Monitor considers should be so specified and—

(a) as Monitor and the Board agree will be so specified, or

(b) in default of agreement, as are determined by arbitration as being the
prices that will be so specified.

(10) Such variations as are specified for the purposes of subsection (5)(a), and such
guidance on the application of those variations as is included for the purposes
of subsection (6), are only such variations and such guidance as Monitor
considers should be so specified and included and—

(a) 5as Monitor and the Board agree will be so specified and included, or

(b) in default of agreement, as are determined by arbitration as being the
variations that will be so specified and the guidance that will be so
included.

(11) Such rules as are specified for the purposes of subsection (4) or (5)(c), and such
10guidance on those rules as is included for the purposes of subsection (6), are
only such rules and such guidance as the National Health Service
Commissioning Board considers should be so specified and included and—

(a) as the Board and Monitor agree will be so specified and included, or

(b) in default of agreement, as are determined by arbitration as being the
15rules that will be so specified and the guidance that will be so included.

(12) Such rules as are specified for the purposes of subsection (5)(b), and such
guidance on those rules as is included for the purposes of subsection (6), are
only such rules and such guidance as Monitor considers should be so specified
and included and—

(a) 20as Monitor and the Board agree will be so specified and included, or

(b) in default of agreement, as are determined by arbitration as being the
rules that will be so specified and the guidance that will be so included.

(13) A notice under this section must specify when the consultation period in
relation to the proposals ends; and for that purpose, the consultation period is
25the period of 28 days beginning with the day after that on which the notice is
published under subsection (2).

(14) For the purposes of subsection (1) in its application to the first performance of
the duty under that subsection, the reference to licence holders is to be read as
a reference to such persons as are at that time providing health care services for
30the purposes of the NHS.

122 Consultation: further provision

(1) For the purpose of securing that the prices payable for the provision of health
care services for the purposes of the NHS are such as to result in a fair level of
pay for providers of the services, the National Health Service Commissioning
35Board and Monitor must, in exercising functions under section 121, have
regard to—

(a) differences in the costs incurred in providing health care services for
the purposes of the NHS to persons of different descriptions, and

(b) differences between providers with respect to the range of health care
40services that they provide for those purposes.

(2) In exercising functions under section 121(7), the Board and Monitor must act
with a view to securing the standardisation throughout England of the
specification of health care services in the national tariff under section
119(1)(a).

(3) 45In exercising functions under section 121(12), Monitor and the Board must act
with a view to securing the standardisation throughout England of the
specification of health care services in rules provided for in the national tariff
under section 119(4)(b).

(4) In carrying out the duty under subsection (2) or (3), the Board and Monitor
must have regard to whether, or to what extent, standardisation is likely to
have a significant adverse impact on the provision of health care services for
the purposes of the NHS.

123 5Responses to consultation

(1) If Monitor receives objections from one or more commissioning consortia or
licence holders to a method it proposes under section 121(3)(b), Monitor may
not publish the national tariff unless—

(a) the conditions in subsection (2) are met, or

(b) 10where those conditions are not met, Monitor has made a reference to
the Competition Commission.

(2) The conditions referred to in subsection (1)(a) are that—

(a) the objection percentage for commissioning consortia is less than the
prescribed percentage,

(b) 15the objection percentage for licence holders is less than the prescribed
percentage, and

(c) the share of supply percentage is less than such percentage as may be
prescribed.

(3) In subsection (2)—

(a) 20the “objection percentage” is the proportion (expressed as a percentage)
of commissioning consortia or (as the case may be) licence holders who
objected to the proposed method, and

(b) the “share of supply percentage” is the proportion (expressed as a
percentage) of licence holders who objected to the proposed method,
25weighted according to their share of the supply in England of such
services as may be prescribed.

(4) A reference under subsection (1)(b) must require the Competition Commission
to determine whether the method proposed under section 121(3)(b) is
appropriate.

(5) 30The functions of the Competition Commission with respect to a reference
under this section are not to be regarded as general functions of its for the
purposes of Part 2 of Schedule 7 to the Competition Act 1998; instead, Schedule
12 to this Act (procedure on a reference under this section) has effect.

(6) Regulations prescribing a percentage for the purposes of subsection (2)(c) may
35include provision prescribing the method used for determining a licence
holder’s share of the supply in England of the services concerned.

(7) Where subsection (14) of section 121 applies, references in this section to licence
holders are to be construed in accordance with that subsection.

124 Determination on reference under section 123

(1) 40In carrying out a determination on a reference under section 123, the
Competition Commission must have regard, to the same extent as is required
of Monitor, to the matters to which Monitor must have regard in carrying out
the functions of its to which the determination relates.

(2) In carrying out the determination, the Competition Commission must also
45have regard to such representations as are made to it by licence holders who

made objections to Monitor in accordance with paragraph 2 of Schedule 12
about the method proposed under section 121(3)(b).

(3) In carrying out the determination, the Competition Commission—

(a) may also have regard to matters to which Monitor was not able to have
5regard in the case to which the determination relates, but

(b) must not, in the exercise of the power under paragraph (a), have regard
to a matter to which Monitor would not have been entitled to have
regard in that case had it had the opportunity to do so.

(4) The Commission may determine that the method proposed under section
10121(3)(b) is not appropriate only if it is satisfied that Monitor’s decision to
propose the method was wrong on one or more of the following grounds—

(a) that Monitor failed to have regard to the matters referred to in
subsection (1),

(b) that the decision was based, wholly or partly, on an error of fact,

(c) 15that the decision was wrong in law.

(5) Where the Commission determines that the method proposed under section
121(3)(b) is appropriate, Monitor may use that method for the purposes of the
national tariff accordingly.

(6) Where the Commission determines that the method proposed under section
20121(3)(b) is not appropriate, it must remit the matter to Monitor for
reconsideration and decision in accordance with such directions as the
Commission may give.

(7) A direction under subsection (6) may, in particular, require Monitor to make
such changes to the method in question as are specified in the direction.

(8) 25A determination on a reference under section 123—

(a) must be contained in an order made by the Commission,

(b) must set out the reasons for the determination, and

(c) takes effect at the time specified in the order or determined in
accordance with provision made in the order.

(9) 30The Commission must give notice of a determination on a reference under
section 123 to—

(a) Monitor,

(b) the National Health Service Commissioning Board, and

(c) such licence holders as made representations in accordance with
35paragraph 2 of Schedule 12.

(10) The Commission must also publish the determination; but it must exclude
from what it publishes information which it is satisfied is—

(a) commercial information the disclosure of which would, or might,
significantly harm the legitimate business interests of an undertaking
40to which it relates;

(b) information relating to the private affairs of an individual the
disclosure of which would, or might, significantly harm that person’s
interests.