Health and Social Care Bill (HC Bill 221)

125 Changes following determination on reference under section 123

(1) Where the Competition Commission remits a matter to Monitor under
subsection (6) of section 124, Monitor must make such changes to the method
to which the matter relates as it considers necessary, having regard to the
5reasons specified for the purposes of subsection (8)(b) of that section.

(2) Monitor must give the Competition Commission and the National Health
Service Commissioning Board a notice specifying—

(a) the changes it proposes to make, and

(b) its reasons for proposing to make them.

(3) 10Monitor must make the changes specified in the notice unless it is given a
direction under section 126 before the end of the period of 28 days beginning
with the day after that on which it gave the notice.

(4) If Monitor is given a direction under that section before the end of that period,
it must make such of the changes as are not specified in the direction.

126 15Power to veto changes proposed under section 125

(1) The Competition Commission may, within the period of 28 days beginning
with the day after that on which it is given a notice under section 125, direct
Monitor—

(a) not to make the changes specified in the notice, or

(b) 20not to make such of those changes as may be specified in the direction.

(2) Monitor must comply with a direction under this section.

(3) The Secretary of State may, within that period and on the application of the
Commission, direct that the period for giving a direction under this section
(and, accordingly, the period referred to in section 125(3)) is to be extended by
2514 days.

(4) The Competition Commission may give a direction under this section only in
respect of such of the changes specified in the notice under section 125 as it
considers are necessary in consequence of its determination on the reference.

(5) If the Commission gives a direction under this section, it—

(a) 30must give notice specifying the changes proposed by Monitor, the
terms of the direction and the reasons for giving it, and

(b) must itself make such changes to the method to which the reference
relates as it considers necessary in consequence of its determination on
the reference.

(6) 35In exercising its function under subsection (5)(b), the Commission must have
regard to the matters to which Monitor must have regard when determining
the method to which the reference relates.

(7) Before making changes under subsection (5)(b), the Commission must give
notice to Monitor and the National Health Service Commissioning Board
40specifying—

(a) the changes it proposes to make,

(b) its reasons for proposing to make them, and

(c) the period within which representations on the proposed changes may
be made.

(8) The period specified for the purposes of subsection (7)(c) must not be less than
28 days beginning with the day on which the notice is given.

127 Local modifications of prices of designated services: agreements

(1) In the case of a designated service, the commissioner and the provider may
5agree that the price payable to the provider for the provision of the service in
such circumstances or areas as may be determined in accordance with the
agreement is the price determined in accordance with the national tariff for
that service as modified in accordance with the agreement.

(2) An agreement under this section must specify the date on which the
10modification is to take effect; and a date specified for that purpose may be
earlier than the date of the agreement (but not earlier than the date on which
the national tariff took effect).

(3) An agreement under this section has effect only if it is approved by Monitor.

(4) An agreement submitted for approval under subsection (3) must be supported
15by such evidence as Monitor may require.

(5) Monitor may approve an agreement under this section only if it is satisfied
that, without a modification to the price determined in accordance with the
national tariff for that service, it would be uneconomic for the provider to
provide the service for the purposes of the NHS.

(6) 20Where an agreement is approved under subsection (3), Monitor must send a
notice to such commissioning consortia, providers and other persons as it
considers appropriate.

(7) Monitor must also publish the notice.

(8) The notice must specify—

(a) 25the modification, and

(b) the date on which it takes effect.

(9) Monitor may publish guidance on the modification of prices under this section.

(10) In making an agreement under this section, the commissioner and provider of
a designated service must have regard to guidance under subsection (9).

(11) 30In deciding whether to approve an agreement under this section, Monitor must
have regard to guidance under subsection (9).

128 Local modifications of prices of designated services: applications

(1) Monitor may, on an application by a provider of a designated service who has
failed to reach an agreement under section 127 with the commissioner, decide
35that the price payable to the provider for the provision of the service in such
circumstances or areas as Monitor may determine is to be the the price
determined in accordance with the national tariff for that service as modified
in such way as Monitor may determine.

(2) An application under this section must be supported by such evidence as
40Monitor may require.

(3) Monitor may grant an application under this section only if it is satisfied that,
without a modification to the price determined in accordance with the national

tariff for that service, it would be uneconomic for the provider to provide the
service for the purposes of the NHS.

(4) Subsections (5) to (9) apply where Monitor grants an application under this
section.

(5) 5The decision by Monitor on the application takes effect on such date as Monitor
may determine; and a date determined for that purpose may be earlier than the
date of the decision (but not earlier than the date on which the national tariff
took effect).

(6) Monitor must send a notice of the decision to such commissioning consortia,
10providers and other persons as it considers appropriate.

(7) Monitor must also publish the notice.

(8) The notice must specify—

(a) the modification, and

(b) the date on which it takes effect.

(9) 15The power to make an application under section 82(3) for the removal of the
designation in question is (as well as being exercisable by the commissioner of
the service in question) exercisable by the National Health Service
Commissioning Board where it is not the commissioner of the service.

(10) Monitor may publish guidance on the modification of prices under this section.

(11) 20In making an application under this section, a provider of a designated service
must have regard to guidance under subsection (10).

(12) In deciding whether to grant an application under this section, Monitor must
have regard to guidance under subsection (10).

129 Correction of mistakes

(1) 25This section applies where the national tariff contains information that does
not accord with—

(a) what Monitor and the National Health Service Commissioning Board
agreed on the matter concerned, or

(b) where the matter was determined by arbitration, what was determined.

(2) 30Monitor must send a notice to—

(a) each commissioning consortium,

(b) each licence holder, and

(c) such other persons as Monitor considers appropriate.

(3) Monitor must also publish the notice.

(4) 35The notice must specify—

(a) the information that does not accord with what was agreed or
determined,

(b) the correction required to make the information so accord, and

(c) the date on which the correction is to take effect.

(5) 40A date specified for the purposes of subsection (4)(c) may be earlier than the
date of the notice.

CHAPTER 6 Insolvency and health special administration

130 Application of insolvency law to NHS foundation trusts

(1) Omit sections 53 to 55 of, and Schedule 9 to, the National Health Service Act
2006 (voluntary arrangements and dissolution).

(2) 5Before section 56 of that Act and the preceding cross-heading (accordingly,
under the cross-heading “Failure”) insert—

“55A Application of insolvency law etc.

(1) Regulations must provide for provisions of the Insolvency Act 1986
mentioned in subsection (2), and related provisions of that Act or of
10rules under section 411 of that Act, to apply (with or without
modifications) to NHS foundation trusts.

(2) The provisions of the Insolvency Act 1986 referred to in subsection (1)
are—

(a) Part 1 (company voluntary arrangements),

(b) 15Part 2 (administration),

(c) Part 4 (winding-up of companies), and

(d) Part 6 (miscellaneous provision about company insolvency).

(3) The power to make rules under section 411 of that Act applies for the
purpose of giving effect to provision made by virtue of this section as it
20applies for the purpose of giving effect to Parts 1, 2, 4, 6 and 7 of that
Act.

(4) For that purpose—

(a) the power to make rules is exercisable by the Lord Chancellor
with the concurrence of the Secretary of State and, in the case of
25rules that affect court procedure, with the concurrence of the
Lord Chief Justice;

(b) references in section 411 of that Act to those Parts are to be read
as including a reference to such of those Parts as are applied by
virtue of this section.

(5) 30Regulations under this section must also provide for provisions of Part
26 of the Companies Act 2006 (arrangements and reconstructions), or
any related provision of that Act, to apply (with or without
modifications) to NHS foundation trusts.

(6) Before making regulations under this section, the Secretary of State
35must consult—

(a) Monitor, and

(b) such other persons as the Secretary of State considers
appropriate.”

(3) In section 57 of that Act (mergers etc: supplementary) (as amended by section
40175 of this Act)—

(a) in subsection (3)(a), for “the persons mentioned in section 54(4)”
substitute “another NHS foundation trust, an NHS trust or the
Secretary of State”,

(b) omit subsection (3)(b), and

(c) in subsection (4), for “any of the bodies mentioned in section 54(4)(a) or
(c)” substitute “another NHS foundation trust or an NHS trust”.

(4) In section 64 of that Act (procedure for orders and regulations under Chapter
55 of Part 2 of that Act) (as amended by section 175 of this Act), in subsection (4),
omit paragraph (b).

(5) In section 272 of that Act (orders, regulations, rules etc.), in subsection (6), after
paragraph (zc) insert—

“(zd) regulations under section 55A,”.

(6) 10In consequence of the repeals made by subsections (1) and (4), omit section
18(2) to (6) and (11) of the Health Act 2009.

131 Health special administration orders

(1) In this Chapter “health special administration order” means an order which—

(a) is made by the court in relation to a relevant provider, and

(b) 15directs that the affairs, business and property of the provider are to be
managed by one or more persons appointed by the court.

(2) An application to the court for a health special administration order may be
made only by Monitor.

(3) A person appointed as mentioned in subsection (1)(b) is referred to in this
20Chapter as a “health special administrator”.

(4) A health special administrator of a relevant provider must manage its affairs,
business and property, and exercise the health special administrator’s
functions, so as to—

(a) achieve the objective set out in section 132 as quickly and as efficiently
25as is reasonably practicable,

(b) in seeking to achieve that objective, ensure that any regulated activity
carried on in providing the services provided by the provider is carried
on in accordance with any requirements or conditions imposed in
respect of that activity by virtue of Chapter 2 of Part 1 of the Health and
30Social Care Act 2008,

(c) so far as is consistent with the objective set out in section 132, protect
the interests of the creditors of the provider as a whole, and

(d) in the case of a provider which is a company, so far as is consistent with
that objective and subject to those interests, protect the interests of the
35members of the company as a whole.

(5) In relation to a health special administration order applying to a non-GB
company, references in this Chapter to the affairs, business and property of the
company are references only to its affairs and business so far as carried on in
Great Britain and to its property in Great Britain.

(6) 40In this section “regulated activity” has the same meaning as in Part 1 of the
Health and Social Care Act 2008 (see section 8 of that Act).

(7) In this Chapter—

• “business” and “property” each have the same meaning as in the
  Insolvency Act 1986 (see section 436 of that Act);

Health and Social Care BillPage 135

• “company” includes a company not registered under the Companies Act
  2006;

• “court”—

  (a)

  in relation to an NHS foundation trust, means the High Court;

  (b)

  5in relation to a company, means the court—

  (i)

  having jurisdiction to wind up the company, or

  (ii)

  that would have such jurisdiction apart from section
  221(2) or 441(2) of the Insolvency Act 1986 (exclusion of
  winding up jurisdiction in case of companies
  10incorporated in, or having principal place of business in,
  Northern Ireland);

• “member”, in relation to a company, is to be read in accordance with
  section 250 of the Insolvency Act 1986;

• “non-GB company” means a company incorporated outside Great Britain;

• 15“relevant provider” means an NHS foundation trust, or a company, which
  is providing designated services;

• “wholly-owned subsidiary” has the meaning given by section 1159 of the
  Companies Act 2006.

132 Objective of a health special administration

(1) 20The objective of a health special administration is to secure—

(a) the continued provision of the designated services provided by the
NHS foundation trust or company subject to the health special
administration order, and

(b) that it becomes unnecessary, by one or both of the means set out in
25subsection (2), for the health special administration order to remain in
force for that purpose.

(2) Those means are—

(a) the rescue as a going concern of the NHS foundation trust or company
subject to the health special administration order, and

(b) 30one or more transfers falling within subsection (3).

(3) A transfer falls within this subsection if it is a transfer as a going concern—

(a) to another licence holder, or

(b) as respects different parts of the undertaking of the NHS foundation
trust or company subject to the health special administration order, to
35two or more other licence holders,

of so much of that undertaking as it is appropriate to transfer for the purpose
of achieving the objective of the health special administration.

(4) The means by which a transfer falling within subsection (3) may be effected in
the case of a company include in particular—

(a) 40a transfer of the undertaking of the company subject to the health
special administration order, or of part of its undertaking, to a wholly-
owned subsidiary of that company, and

(b) a transfer to a company of securities of a wholly-owned subsidiary to
which there has been a transfer falling within paragraph (a).

(5) 45The objective of a health special administration may be achieved by transfers
to the extent only that—

(a) the rescue as a going concern of the NHS foundation trust or company
subject to the health special administration order is not reasonably
practicable or is not reasonably practicable without such transfers,

(b) the rescue of the trust or company as a going concern will not achieve
5that objective or will not do so without such transfers,

(c) such transfers would produce a result for the trust’s or company’s
creditors as a whole that is better than the result that would be
produced without them, or

(d) in the case of a company, such transfers would, without prejudicing the
10interests of its creditors as a whole, produce a result for its members as
a whole that is better than the result that would be produced without
them.

133 Health special administration regulations

(1) Regulations (referred to in this Chapter as “health special administration
15regulations”) must make further provision about health special administration
orders.

(2) Health special administration regulations may apply (with or without
modifications)—

(a) any provision of Part 2 of the Insolvency Act 1986 (administration) or
20any related provision of that Act, and

(b) any other enactment which relates to insolvency or administration or
makes provision by reference to anything that is or may be done under
that Act.

(3) Health special administration regulations may in particular provide that the
25court may make a health special administration order in relation to a relevant
provider if it is satisfied, on a petition by the Secretary of State under section
124A of the Insolvency Act 1986 (petition for winding up on grounds of public
interest), that it would be just and equitable (disregarding the objective of the
health special administration) to wind up the provider in the public interest.

(4) 30Health special administration regulations may make provision about—

(a) the application of procedures under the Insolvency Act 1986 in relation
to relevant providers, and

(b) the enforcement of security over property of relevant providers.

(5) Health special administration regulations may modify this Chapter or any
35enactment mentioned in subsection (6) in relation to any provision made by
virtue of this Chapter.

(6) The enactments are—

(a) the Insolvency Act 1986,

(b) any other enactment which relates to insolvency or administration or
40makes provision by reference to anything that is or may be done under
that Act, and

(c) section 242 of the National Health Service Act 2006 (NHS foundation
trusts etc: public involvement and consultation duties).

(7) The power to make rules under section 411 of the Insolvency Act 1986
45(company insolvency rules) applies for the purpose of giving effect to
provision made by virtue of this Chapter as it applies for the purpose of giving
effect to Parts 1 to 7 of that Act.

(8) For that purpose—

(a) the power to make rules in relation to England and Wales is exercisable
by the Lord Chancellor with the concurrence of the Secretary of State
and, in the case of rules that affect court procedure, with the
5concurrence of the Lord Chief Justice;

(b) references in section 411 of that Act to those Parts are to be read as
including a reference to this Chapter.

(9) Before making health special administration regulations the Secretary of State
must consult—

(a) 10Monitor, and

(b) such other persons as the Secretary of State considers appropriate.

134 Transfer schemes

(1) Health special administration regulations may make provision about transfer
schemes to achieve the objective of a health special administration (see
15section 132).

(2) Health special administration regulations may in particular include
provision—

(a) for the making of a transfer scheme to be subject to the consent of
Monitor and the licence holder to whom the transfer is being made, and

(b) 20for Monitor to have power to modify a transfer scheme with the consent
of parties to the transfers effected by the scheme.

(3) Health special administration regulations may in particular provide that a
transfer scheme may include provision—

(a) for the transfer of property, rights and liabilities from an NHS
25foundation trust or company subject to a health special administration
order to another licence holder (including property, rights and
liabilities which would not otherwise be capable of being transferred or
assigned),

(b) for the transfer of property acquired, and rights and liabilities arising,
30after the making of the scheme,

(c) for the creation of interests or rights, or the imposition of liabilities, and

(d) for the transfer, or concurrent exercise, of functions under enactments.

135 Indemnities

Health special administration regulations may make provision about the
35giving by Monitor of indemnities in respect of—

(a) liabilities incurred in connection with the discharge by health special
administrators of their functions, and

(b) loss or damage sustained in that connection.

136 Modification of this Chapter under Enterprise Act 2002

(1) 40The power to modify or apply enactments conferred on the Secretary of State
by each of the sections of the Enterprise Act 2002 mentioned in subsection (2)
includes power to make such consequential modifications of provision made
by virtue of this Chapter as the Secretary of State considers appropriate in
connection with any other provision made under that section.

(2) Those sections are—

(a) sections 248 and 277 (amendments consequential on that Act), and

(b) section 254 (power to apply insolvency law to foreign companies).

CHAPTER 7 Financial assistance in health special administration cases

5Establishment of mechanisms

137 Duty to establish mechanisms for providing financial assistance

(1) Monitor must establish, and secure the effective operation of, one or more
mechanisms for providing financial assistance in cases where a provider is
subject to a health special administration order (within the meaning of
10Chapter 6).

(2) Mechanisms that Monitor may establish under this section include, in
particular—

(a) mechanisms for raising money to make grants or loans or to make
payments in consequence of indemnities given by Monitor by virtue of
15section 135;

(b) mechanisms for securing that providers arrange, or are provided with,
insurance facilities.

(3) Monitor may secure that a mechanism established under this section operates
so as to enable it to recover the costs it incurs in establishing and operating the
20mechanism.

(4) Monitor may establish different mechanisms for different providers or
providers of different descriptions.

(5) Monitor does not require permission under any provision of the Financial
Services and Markets Act 2000 as respects activities carried out under this
25Chapter.

(6) In this Chapter—

• “commissioner” means a person who arranges for the provision of
  designated services;

• “provider” means a person who provides designated services.

(7) 30An order under section 304 providing for the commencement of this Chapter
may require Monitor to comply with the duty to establish under subsection (1)
before such date as the order specifies.

138 Power to establish fund

(1) Monitor may, for the purposes of section 137, establish and maintain a fund.

(2) 35In order to raise money for investment in a fund it establishes under this
section, Monitor may impose requirements on providers or commissioners.

(3) Monitor must appoint at least two managers for a fund it establishes under this
section.

(4) A manager of a fund may be an individual, a firm or a body corporate.

(5) Monitor must not appoint an individual as manager of a fund unless it is
satisfied that the individual has the appropriate knowledge and experience for
managing investments.

(6) Monitor must not appoint a firm or body corporate as manager of a fund unless
5it is satisfied that arrangements are in place to secure that any individual who
will exercise functions of the firm or body corporate as manager will, at the
time of doing so, have the appropriate knowledge and experience for
managing investments.

(7) Monitor must not appoint an individual, firm or body corporate as manager of
10a fund unless the individual, firm or body is an authorised or exempt person
within the meaning of the Financial Services and Markets Act 2000.

(8) Monitor must secure the prudent management of any fund it establishes under
this section.

Applications for financial assistance

139 15Applications

(1) Monitor may, on an application by a health special administrator, provide
financial assistance to the health special administrator by using a mechanism
established under section 137.

(2) An application under this section must be in such form, and must be supported
20by such evidence or other information, as Monitor may require (and a
requirement under this subsection may be imposed after the receipt, but before
the determination, of the application).

(3) If Monitor grants an application under this section, it must notify the applicant
of—

(a) 25the purpose for which the financial assistance is being provided, and

(b) the other conditions to which its provision is subject.

(4) The health special administrator must secure that the financial assistance is
used only—

(a) for the purpose notified under subsection (3)(a), and

(b) 30in accordance with the conditions notified under subsection (3)(b).

(5) Financial assistance under this section may be provided only in the period
during which the provider in question is in health special administration.

(6) If Monitor refuses an application under this section, it must notify the applicant
of the reasons for the refusal.

(7) 35Monitor must, on a request by an applicant whose application under this
section has been refused, reconsider the application; but no individual
involved in the decision to refuse the application may be involved in the
decision on the reconsideration of the application.

(8) For the purposes of reconsidering an application, Monitor may request
40information from the applicant.

(9) Monitor must notify the applicant of its decision on reconsidering the
application; and—