Health and Social Care Bill (HL Bill 92)

(2) If a declaration under this paragraph proves to be, or becomes,
inaccurate or incomplete, a further declaration must be made.

(3) Any declaration required by this paragraph must be made before the
corporation enters into the transaction or arrangement.

(4) 5This paragraph does not require a declaration of an interest of which
the director is not aware or where the director is not aware of the
transaction or arrangement in question.

(5) A director need not declare an interest—

(a) if it cannot reasonably be regarded as likely to give rise to a
10conflict of interest;

(b) if, or to the extent that, the directors are already aware of it;

(c) if, or to the extent that, it concerns terms of the director’s
appointment that have been or are to be considered—

(i) by a meeting of the board of directors, or

(ii) 15by a committee of the directors appointed for the
purpose under the constitution.”

(4) After paragraph 18C of that Schedule insert—

(1) Before holding a meeting, the board of directors must send a copy of
the agenda of the meeting to the council of governors.

(2) 20As soon as practicable after holding a meeting, the board of directors
must send a copy of the minutes of the meeting to the council of
governors.”

(5) After paragraph 18D of that Schedule insert—

(1) The constitution must provide for meetings of the board of directors
25to be open to members of the public.

(2) But the constitution may provide for members of the public to be
excluded from a meeting for special reasons.”

150 Members

(1) In section 61 of the National Health Service Act 2006 (representative
30membership), the existing text becomes subsection (1) and, in that subsection,
for “An authorisation may require an NHS foundation trust to” substitute “An
NHS foundation trust must”.

(2) After that subsection insert—

“(2) In deciding which areas are to be areas for public constituencies, or in
35deciding whether there is to be a patients’ constituency, an NHS
foundation trust must have regard to the need for those eligible for
such membership to be representative of those to whom the trust
provides services.”

151 Accounts: initial arrangements

(1) 40In paragraph 24 of Schedule 7 to the National Health Service Act 2006

(accounts: general), for sub-paragraph (1) substitute—

“(1) A public benefit corporation must keep proper accounts and proper
records in relation to the accounts.

(1A) The regulator may with the approval of the Secretary of State give
5directions to the corporation as to the content and form of its
accounts.”

(2) In paragraph 25 (annual accounts) of that Schedule, in sub-paragraph (1), for
“the Treasury” substitute “the Secretary of State”.

(3) After sub-paragraph (1) of that paragraph insert—

“(1A) 10The regulator may with the approval of the Secretary of State direct
a public benefit corporation—

(a) to prepare accounts in respect of such period or periods as
may be specified in the direction;

(b) that any accounts prepared by it by virtue of paragraph (a)
15are to be audited in accordance with such requirements as
may be specified in the direction.”

(4) In sub-paragraph (2) of that paragraph—

(a) after “annual accounts” insert “or in preparing any accounts by virtue
of sub-paragraph (1A)(a)”,

(b) 20for “the Treasury” substitute “the Secretary of State”, and

(c) for “information to be given in” substitute “content and form of”.

(5) In sub-paragraph (3) of that paragraph, after “annual accounts” insert “, or of
any accounts to be prepared by it by virtue of sub-paragraph (1A)(a),”.

(6) In sub-paragraph (4) of that paragraph, in paragraph (b)—

(a) 25omit “once it has done so,”, and

(b) at the end insert “within such period as the regulator may direct”.

(7) After that sub-paragraph insert—

“(4A) The corporation must send to the regulator within such period as the
regulator may direct—

(a) 30a copy of any accounts prepared by the corporation by virtue
of sub-paragraph (1A)(a), and

(b) a copy of any report of an auditor on them prepared by virtue
of sub-paragraph (1A)(b).”

152 Accounts: variations to initial arrangements

(1) 35In paragraph 24 of Schedule 7 to the National Health Service Act 2006
(accounts: general), in sub-paragraph (1A), for “The regulator may with the
approval of the Secretary of State” substitute “The Secretary of State may with
the approval of the Treasury”.

(2) In sub-paragraph (5) of that paragraph, for “the regulator” substitute “the
40Secretary of State”.

(3) In paragraph 25 (annual accounts), in sub-paragraph (1), for “the regulator
may with the approval of the Secretary of State” substitute “the Secretary of
State may with the approval of the Treasury”.

(4) In sub-paragraph (1A) of that paragraph, for “The regulator may with the
approval of the Secretary of State” substitute “The Secretary of State may with
the approval of the Treasury”.

(5) In sub-paragraph (2) of that paragraph, for “the regulator with the approval of
5the Secretary of State” substitute “the Secretary of State with the approval of
the Treasury”.

(6) In sub-paragraphs (3), (4) and (4A) of that paragraph, for “the regulator”, in
each place it appears, substitute “the Secretary of State”.

(7) This section applies to such financial year as is specified in the order under
10section 300 that brings the preceding provisions of this section into force (and
to the subsequent financial years); accordingly, this section does not affect the
application of paragraphs 24 and 25 of Schedule 7 to the National Health
Service Act 2006 (as amended by section 151) to the financial years preceding
the specified financial year.

(8) 15In subsection (7), “financial year” has the meaning given in section 275(1) of the
National Health Service Act 2006.

153 Annual report and forward plan

(1) In sub-paragraph (2) of paragraph 26 of Schedule 7 to the National Health
Service Act 2006 (information that must be included in annual report), after
20paragraph (aa) (inserted by section 148(8)) insert—

“(ab) information on the corporation’s policy on pay and on the
work of the committee established under paragraph 18(2)
and such other procedures as the corporation has on pay,

(ac) information on the remuneration of the directors and on the
25expenses of the governors and the directors,”.

(2) After that sub-paragraph insert—

“(2A) Before imposing a requirement under sub-paragraph (2)(b) that the
regulator considers is sufficiently significant to justify consultation,
the regulator must consult such persons as it considers appropriate.”

(3) 30The Secretary of State may by order—

(a) amend sub-paragraph (2) of paragraph 26 of that Schedule so as to
substitute for paragraph (b) the following—

“(b) such other information as may be prescribed.”, and

(b) repeal sub-paragraph (2A) of that paragraph.

(4) 35In paragraph 27(1) of that Schedule (duty to send forward plan to regulator),
for “the regulator” substitute “the Secretary of State”.

(5) Omit section 39(2)(e) of that Act (requirement for copy of forward plan to be on
register).

154 Meetings

(1) 40After paragraph 27 of Schedule 7 to the National Health Service Act 2006

insert—

“Annual meeting of members

(1) A public benefit corporation must hold an annual meeting of its
members.

(2) 5The meeting must be open to members of the public.

(3) At least one member of the board of directors of the corporation must
attend the meeting and present the following documents to the
members at the meeting—

(a) the annual accounts,

(b) 10any report of the auditor on them,

(c) the annual report.

(4) Where an amendment is made to the constitution in relation to the
powers or duties of the council of governors of a public benefit
corporation (or otherwise with respect to the role that the council has
15as part of the corporation)—

(a) at least one member of the council of governors must attend
the next meeting to be held under this paragraph and present
the amendment, and

(b) the corporation must give the members an opportunity to
20vote on whether they approve the amendment.

(5) If more than half of the members voting approve the amendment, the
amendment continues to have effect; otherwise, it ceases to have
effect and the corporation must take such steps as are necessary as a
result.”

(2) 25In paragraph 28 of that Schedule (meeting of council of governors to consider
annual accounts and reports), the existing text of which becomes sub-
paragraph (1), after that sub-paragraph insert—

“(2) Nothing in sub-paragraph (1) prevents the council of governors from
holding a general meeting more than once a year.”.

(3) 30After that paragraph insert—

“Combined meetings of members and governors

28A A public benefit corporation may hold a meeting which combines a
meeting under paragraph 27A with a meeting under paragraph 28.”

155 Voting

(1) 35After paragraph 29 of Schedule 7 to the National Health Service Act 2006
insert—

“Power to make provision about voting

(1) Regulations may amend this Chapter so as to add, vary or omit
provision relating to voting by members of the council of governors
40of a public benefit corporation that is an NHS foundation trust, by its
directors or by its members.

(2) The power under sub-paragraph (1) is exercisable only in relation to
provision in this Chapter that was inserted, or otherwise provided
for, by Part 4 of the Health and Social Care Act 2011.”

(2) In section 64(3) of that Act (regulations under Chapter 5 of Part 2 of that Act
5that are subject to affirmative procedure), after paragraph (a) (but before the
“or” following it) insert—

“(aa) regulations under paragraph 30(1) of Schedule 7,”.

Foundation trust status

156 Authorisation

(1) 10In section 30(1) of the National Health Service Act 2006 (definition of NHS
foundation trust), for “which is authorised under this Chapter to provide”
substitute “the function of which is to provide in accordance with this
Chapter”.

(2) Omit section 33(2)(a) of that Act (requirement for application for authorisation
15to describe goods and services to be provided).

(3) In section 35(2) of that Act (matters as to which the regulator must be satisfied
before giving authorisation), for paragraph (e) substitute—

“(e) the applicant will be able to provide goods and services for the
purposes of the health service in England,”.

(4) 20After section 35(3) of that Act (things the regulator must consider before
deciding whether it is satisfied as to the matters in section 35(2)) insert—

“(3A) The regulator must not give an authorisation unless it is notified by the
Care Quality Commission that it is satisfied that the applicant is
complying with (so far as applicable) the requirements mentioned in
25section 12(2) of the Health and Social Care Act 2008 in relation to the
regulated activity or activities the applicant carries on.

(3B) In subsection (3A), “regulated activity” has the same meaning as in
section 8 of the Health and Social Care Act 2008.”

(5) Omit section 35(4) and (7) of that Act (power to give authorisation on terms the
30regulator considers appropriate).

(6) Omit section 38 of that Act (variation of authorisation).

(7) Omit section 39(2)(b) of that Act (requirement for copy of authorisation to be
on register).

(8) Omit section 49 of that Act (authorisation to require trust to allow regulator to
35enter and inspect trust’s premises).

(9) Omit paragraph 22(1)(b) of Schedule 7 to that Act (requirement for copy of
authorisation to be available for public inspection).

157 Bodies which may apply for foundation trust status

(1) Omit section 34 of the National Health Service Act 2006 (application for
40authorisation by body other than NHS trust).

(2) In section 35(1) of that Act (bodies which may be given authorisation), omit
paragraph (b) (public benefit corporations) and the preceding “or”.

(3) Omit section 36(2) of that Act (public benefit corporation to become NHS
foundation trust on being given authorisation).

(4) 5Despite subsection (1)—

(a) section 34(1) to (4) of that Act continues to have effect in the case of an
application which, immediately before the commencement of that
subsection, is pending determination, and

(b) section 34(5) to (7) of that Act continues to have effect in the case of an
10existing public benefit corporation.

(5) Despite subsection (2), section 35(1)(b) of that Act continues to have effect in
the case of an existing public benefit corporation which, immediately before
the commencement of that subsection, has not been given an authorisation
under section 35.

(6) 15Despite subsection (3), section 36(2) of that Act continues to have effect in the
case of an existing public benefit corporation.

(7) In subsections (4) to (7), “existing public benefit corporation” means a public
benefit corporation—

(a) incorporated under section 34 of that Act and in existence immediately
20before the commencement of this section, or

(b) incorporated under that section by virtue of subsection (4).

158 Amendment of constitution

(1) In section 37 of the National Health Service Act 2006 (amendments of
constitution), the existing text of which becomes subsection (1), for “with the
25approval of the regulator” substitute “only if—

(a) more than half of the members of the council of governors of the
trust voting approve the amendments, and

(b) more than half of the members of the board of directors of the
trust voting approve the amendments.”

(2) 30After that subsection insert—

“(2) Amendments made under this section take effect as soon as the
conditions in subsection (1)(a) and (b) are satisfied.

(3) But an amendment is of no effect in so far as the constitution would, as
a result of the amendment, not accord with Schedule 7.

(4) 35The trust must inform the regulator of amendments made under this
section; but the regulator’s functions do not include a power or duty to
determine whether or not the constitution, as a result of the
amendments, accords with Schedule 7.”

(3) Subsections (1) and (2) do not apply in the case of amendments in respect of
40which, immediately before the commencement of this section, Monitor has yet
to decide whether or not to give approval under section 37 of the National
Health Service Act 2006.

159 Panel for advising governors

After section 39 of the National Health Service Act 2006 insert—

“39A Panel for advising governors

(1) The regulator may appoint a panel of persons to which a governor of
5an NHS foundation trust may refer a question as to whether the trust
has failed or is failing—

(a) to act in accordance with its constitution, or

(b) to act in accordance with provision made by or under this
Chapter.

(2) 10A governor may refer a question to the panel only if more than half of
the members of the council of governors voting approve the referral.

(3) The panel—

(a) may regulate its own procedure, and

(b) may establish such procedures, and make such other
15arrangements, as it considers appropriate for the purpose of
determining questions referred to it under this section.

(4) The panel may decide whether, or to what extent, to carry out an
investigation on a question referred to it under this section.

(5) The panel may for that purpose, or for the purpose of carrying out such
20an investigation, request information or advice.

(6) Where the panel has carried out such an investigation, it must publish
a report of its determination of the question referred to it.

(7) If a person refuses to comply with a request made under subsection (5),
the report under subsection (6) may refer to the refusal.

(8) 25On any proceedings before a court or tribunal relating to a question
referred to the panel under this section, the court may take the panel’s
report of its determination of the question into account.

(9) The regulator—

(a) must pay expenses properly incurred by the panel, and

(b) 30must make administrative support available to the panel.

(10) Regulations may make provision as to—

(a) eligibility for membership of the panel;

(b) the number of persons that may be appointed as members;

(c) the terms of appointment of members;

(d) 35circumstances in which a person ceases to be a member or may
be suspended.”

Finance

160 Financial powers etc.

(1) At the end of section 40 of the National Health Service Act 2006 (power of
40Secretary of State to give financial assistance to NHS foundation trusts),

insert—

“(5) As soon as is practicable after the end of each financial year, the
Secretary of State must prepare a report on the exercise of the power
under subsection (1).

(6) 5In relation to each exercise of the power under that subsection during
the year to which the report relates, the report must specify the amount
of the loan, issue of public dividend capital, grant or other payment
and—

(a) in the case of a loan, the amount (if any) outstanding at the end
10of the year and the other terms on which the loan was made,

(b) in the case of an issue of public dividend capital, the terms on
which it was issued (or, where a decision under section 42(3) is
made in relation to it during that year, the terms so decided as
those on which it is treated as having been issued), and

(c) 15in the case of a grant or other payment, the terms on which it
was made.

(7) In relation to each loan made under that subsection during a previous
financial year but not repaid by the beginning of the year to which the
report relates, the report must specify—

(a) 20the amount outstanding at the beginning of the year,

(b) the amount (if any) outstanding at the end of the year, and

(c) the other terms on which the loan was made.

(8) A report under subsection (5) must, in relation to each NHS foundation
trust, specify—

(a) 25the amount of the public dividend capital of that trust at the end
of the year to which the report relates, and

(b) the conditions on which it is held.

(9) The Secretary of State must publish a report under subsection (5).”

(2) Omit section 41 of that Act (prudential borrowing code).

(3) 30In section 42 of that Act (public dividend capital), omit subsection (4) (dividend
payable by NHS foundation trust to be same as that payable by NHS trust).

(4) Omit subsection (5) of that section (requirement for Secretary of State to consult
the regulator).

(5) At the end of that section insert—

“(7) 35The terms which may be decided under subsection (3) include terms to
which the exercise of any power of an NHS foundation trust to do any
of the following will be subject as a consequence—

(a) providing goods or services,

(b) borrowing or investing money,

(c) 40providing financial assistance,

(d) acquiring or disposing of property,

(e) entering into contracts, or making other arrangements, to do
anything referred to in paragraphs (a) to (d),

(f) applying for dissolution (whether or not when also applying for
45the establishment of one or more other trusts),

(g) applying to acquire another body.”

(6) After that section insert—

“42A Criteria for making loans etc.

(1) The Secretary of State must publish guidance on the powers conferred
by sections 40 and 42.

(2) 5The guidance on the power to make a loan under section 40(1) must in
particular—

(a) explain that, in exercising the power, the Secretary of State will
apply the principle that a loan should be made only where there
is a reasonable expectation that it will be repaid in accordance
10with the terms on which it is made;

(b) include other criteria that the Secretary of State will apply when
determining whether to exercise the power and, if so, the terms
on which to make the loan.

(3) The guidance on that power must also explain—

(a) 15the process for applying for a loan under section 40(1);

(b) the consequences of failing to comply with terms on which a
loan is made under that provision.

(4) The guidance on the power to decide terms under section 42(3) must in
particular include the criteria that the Secretary of State will apply
20when deciding the terms.

(5) The guidance on that power must also explain the consequences of
failing to comply with the terms decided.

(6) In preparing guidance under this section, the Secretary of State must
have regard (among other things) to any generally accepted principles
25used by financial institutions to determine whether to make loans to
bodies corporate and the terms on which to make loans to them.

(7) Before publishing the guidance, the Secretary of State must consult—

(a) the Treasury,

(b) the regulator, and

(c) 30such other persons as the Secretary of State considers
appropriate.”

(7) Omit section 45 of that Act (disposal of protected property).

(8) Omit section 46(2) and (3) of that Act (limitation on power of NHS foundation
trusts to borrow money).

(9) 35For section 50 of that Act (fees) substitute—

“50 Fees

An NHS foundation trust must pay to the regulator such fee as the
regulator may determine in respect of its exercise of functions under—

(a) section 39;

(b) 40section 39A.”

Functions

161 Goods and services

(1) In section 43 of the National Health Service Act 2006 (authorised services), for
subsections (1) and (2) substitute—

“(1) 5The principal purpose of an NHS foundation trust is the provision of
goods and services for the purposes of the health service in England.

(2) The NHS foundation trust may provide goods and services for any
purposes related to—

(a) the provision of services provided to individuals for or in
10connection with the prevention, diagnosis or treatment of
illness, and

(b) the promotion and protection of public health.”

(2) In subsection (3) of that section (power to carry on other activities in order to
generate additional income)—

(a) 15for “subsection (1)” substitute “subsection (2)”, and

(b) omit “, subject to any restrictions in the authorisation,”.

(3) Omit subsections (4) to (7) of that section (goods and services that may be
authorised, etc.).

(4) For the title to that section substitute “Provision of goods and services”.

(5) 20In paragraph 2 of Schedule 7 to that Act (constitution), the existing text of
which becomes sub-paragraph (1), after that sub-paragraph insert—

“(2) If the corporation is an NHS foundation trust, the constitution must
specify its principal purpose (as to which, see section 43(1)).”

162 Private health care

(1) 25In section 44 of the National Health Service Act 2006 (private health care),
omit—

(a) subsection (1) (restriction on provision of private health services),

(b) subsection (2) (cap on private income),

(c) subsection (2A) (special provision for mental health foundation trusts),
30and

(d) subsections (3) to (5) (interpretation etc.).

(2) For the title to that section substitute “Power to charge for accommodation
etc.”.

(3) In consequence of subsection (1)(b) and (c), omit section 33 of the Health Act
352009.

163 Information

For section 48 of the National Health Service Act 2006 (information)