Health and Social Care Bill (HL Bill 132)

(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
5the 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
10by sections 40 and 42.

(2) The 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
15is a reasonable expectation that it will be repaid in accordance
with 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) 20The guidance on that power must also explain—

(a) the 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
25particular, include the criteria that the Secretary of State will apply
when 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
30have regard (among other things) to any generally accepted principles
used 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) 35the regulator, and

(c) such 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
40trusts to borrow money).

(9) For 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) section 39A.”

Functions

164 Goods and services

(1) 5In section 43 of the National Health Service Act 2006 (authorised services), for
subsections (1) and (2) substitute—

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

(2) An NHS foundation trust may provide goods and services for any
10purposes related to—

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

(b) the promotion and protection of public health.

(2A) 15An NHS foundation trust does not fulfil its principal purpose unless, in
each financial year, its total income from the provision of goods and
services for the purposes of the health service in England is greater than
its total income from the provision of goods and services for any other
purposes.”

(2) 20In subsection (3) of that section (power to carry on other activities in order to
generate additional income)—

(a) for “The” substitute “An”,

(b) for “subsection (1)” substitute “subsection (2)”, and

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

(3) 25After that subsection insert—

“(3A) Each annual report prepared by an NHS foundation trust must give
information on the impact that income received by the trust otherwise
than from the provision of goods and services for the purposes of the
health service in England has had on the provision by the trust of goods
30and services for those purposes.

(3B) Each document prepared by an NHS foundation trust under paragraph
27 of Schedule 7 (forward plan) must include information about—

(a) the activities other than the provision of goods and services for
the purposes of the health service in England that the trust
35proposes to carry on, and

(b) the income it expects to receive from doing so.

(3C) Where a document which is being prepared under paragraph 27 of
Schedule 7 contains a proposal that an NHS foundation trust carry on
an activity of a kind mentioned in subsection (3B)(a), the council of
40governors of the trust must—

(a) determine whether it is satisfied that the carrying on of the
activity will not to any significant extent interfere with the
fulfilment by the trust of its principal purpose or the
performance of its other functions, and

(b) notify the directors of the trust of its determination.

(3D) An NHS foundation trust which proposes to increase by 5% or more the
proportion of its total income in any financial year attributable to
activities other than the provision of goods and services for the
5purposes of the health service in England may implement the proposal
only if more than half of the members of the council of governors of the
trust voting approve its implementation.”

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

(5) 10For the title to that section substitute “Provision of goods and services”.

(6) In 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)).”

165 15Private health care

(1) In 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) 20subsection (2A) (special provision for mental health foundation trusts),
and

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

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

(3) 25In consequence of subsection (1)(b) and (c), omit section 33 of the Health Act
2009.

166 Information

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

“48 30Information

(1) The Secretary of State may require an NHS foundation trust to provide
the Secretary of State with such information as the Secretary of State
considers it necessary to have for the purposes of the functions of the
Secretary of State in relation to the health service.

(2) 35The information must be provided in such form, and at such time or
within such period, as the Secretary of State may require.”

167 Significant transactions

51A Significant transactions

(1) An NHS foundation trust may enter into a significant transaction only
5if more than half of the members of the council of governors of the trust
voting approve entering into the transaction.

(2) “Significant transaction” means a transaction or arrangement of such
description as may be specified in the trust’s constitution.

(3) If an NHS foundation trust does not wish to specify any descriptions of
10transaction or arrangement for the purposes of subsection (2), the
constitution of the trust must specify that it contains no such
descriptions.”

Mergers, acquisitions, separations and dissolution

168 Mergers

(1) 15In section 56 of the National Health Service Act 2006 (mergers), in subsection
(1)—

(a) in paragraph (b), after “NHS trust” insert “established under section
25”, and

(b) for the words from “authorisation” to the end substitute “the
20dissolution of the trusts and the establishment of a new NHS
foundation trust.”

(2) After that subsection insert—

“(1A) An application under this section may be made only with the approval
of more than half of the members of the council of governors of each
25applicant (that is an NHS foundation trust).”

(3) In subsection (2) of that section, omit—

(a) paragraph (c) (but not the “and” following it), and

(b) the words from “and must give” to the end.

(4) Omit subsection (3) of that section.

(5) 30For subsection (4) of that section substitute—

“(4) The regulator must grant the application if it is satisfied that such steps
as are necessary to prepare for the dissolution of the trusts and the
establishment of the proposed new trust have been taken.”

(6) Omit subsections (5) to (10) of that section.

(7) 35In subsection (11) of that section, for “On an authorisation being given under
this section” substitute “On the grant of the application”.

169 Acquisitions

After section 56 of the National Health Service Act 2006 insert—

“56A Acquisitions

(1) An application may be made jointly by—

(a) 5an NHS foundation trust (A), and

(b) another NHS foundation trust or an NHS trust established
under section 25 (B),

to the regulator for the acquisition by A of B.

(2) An application under this section may be made only with the approval
10of more than half of the members of the council of governors of each
applicant (that is an NHS foundation trust).

(3) The application must—

(a) be supported by the Secretary of State if B is an NHS trust, and

(b) be accompanied by a copy of the proposed constitution of A,
15amended on the assumption that A acquires B.

(4) The regulator must grant the application if it is satisfied that such steps
as are necessary to prepare for the acquisition have been taken.

(5) On the grant of the application, the proposed constitution has effect,
but where a person who is specified as a director of A in the
20constitution has yet to be appointed as such, the directors of A may
exercise that person’s functions under the constitution.”

170 Separations

After section 56A of the National Health Service Act 2006 insert—

“56B Separations

(1) 25An application may be made to the regulator by an NHS foundation
trust for the dissolution of the trust and the establishment of two or
more new NHS foundation trusts.

(2) An application under this section may be made only with the approval
of more than half of the members of the council of governors of the
30applicant.

(3) The application must, by reference to each of the proposed new trusts—

(a) specify the property and liabilities proposed to be transferred
to it;

(b) be accompanied by a copy of its proposed constitution.

(4) 35The regulator must grant the application if it is satisfied that such steps
as are necessary to prepare for the dissolution of the trust and the
establishment of each of the proposed new trusts have been taken.

(5) On the grant of the application, the proposed constitution of each of the
new trusts has effect but, in the case of each of the new trusts, the
40proposed directors may exercise the functions of the trust on its behalf
until a board of directors is appointed in accordance with the
constitution.”

171 Dissolution

After section 57 of the National Health Service Act 2006 insert—

“57A Dissolution

(1) An application may be made by an NHS foundation trust to the
5regulator for dissolution.

(2) An application under this section may be made only with the approval
of more than half of the members of the council of governors of the
applicant.

(3) The regulator must grant the application if it is satisfied that—

(a) 10the trust has no liabilities, and

(b) such steps as are necessary to prepare for the dissolution have
been taken.

(4) Where an application under this section is granted, the regulator must
make an order—

(a) 15dissolving the trust in question, and

(b) transferring, or providing for the transfer of, the property of the
trust (if any) to the Secretary of State.”

172 Supplementary

(1) In section 57 of the National Health Service Act 2006 (mergers:
20supplementary), in subsection (1)—

(a) for “an authorisation is given under section 56” substitute “an
application is granted under section 56 or 56B”, and

(b) at the end insert “or trusts”.

(2) In subsection (2) of that section—

(a) 25for “such an authorisation is given, the Secretary of State” substitute
“such an application is granted, the regulator”, and

(b) in paragraph (a), after “dissolving the” insert “trust or”, and

(c) in paragraph (b), at the end insert “or trusts”.

(3) After that subsection insert—

“(2A) 30An order under section 56 or 56B is conclusive evidence of
incorporation and conclusive evidence that the corporation is an NHS
foundation trust.”

(4) In subsection (3)(a) of that section, for “section 54(3)” substitute “section 54(4)”.

(5) In subsection (4) of that section—

(a) 35for “section 56(1) and (2)” substitute “sections 56(2) and 56B(3)”, and

(b) for “section 54(4)(a) to (c)” substitute “section 54(4)(a) or (c)”.

(6) In subsection (5) of that section, after “section 56” insert “or 56A”.

(7) Omit subsection (6) of that section.

(8) For the title to that section substitute “Sections 56 to 56B: supplementary”.

(9) 40For the cross-heading preceding section 56 of that Act substitute “Mergers,
acquisitions and separations”.

(10) In section 64 of that Act (orders and regulations under Chapter 5 of Part 2 of
that Act), in subsection (4)—

(a) omit the “or” following paragraph (b), and

(b) after paragraph (c), insert “, or

(d) 5section 57A.”

(11) After that subsection insert—

“(4A) The Statutory Instruments Act 1946 applies in relation to the power of
the regulator to make an order under section 57 or 57A as if the
regulator were a Minister of the Crown.”

(12) 10In section 271(3)(b) of that Act (territorial limit of exercise of functions under
Chapter 5), for “Part 1” substitute “Part 2”.

Failure

173 Repeal of de-authorisation provisions

(1) Omit section 52C of the National Health Service Act 2006 (guidance etc. on de-
15authorisation notices).

(2) Omit sections 53 to 55 of, and Schedule 9 to, that Act (voluntary arrangements
and dissolution); and in consequence of that—

(a) in section 57 of that Act (as amended by section 172 of this Act)—

(i) in subsection (3)(a), for “the persons mentioned in section 54(4)”
20substitute “another NHS foundation trust, an NHS trust
established under section 25 or the Secretary of State”,

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

(iii) in subsection (4), for “any of the bodies mentioned in section
54(4)(a) or (c)” substitute “another NHS foundation trust or an
25NHS trust established under section 25”,

(b) in section 64(4) of that Act (as amended by section 172 of this Act), omit
paragraph (b), and

(c) omit section 18(2) to (6) and (11) of the Health Act 2009.

(3) Omit section 65E of the National Health Service Act 2006 (NHS foundation
30trusts: de-authorisation and appointment of administrator).

(4) Omit Schedule 8A to that Act (de-authorised NHS trusts and NHS foundation
trusts).

(5) Omit section 15 of the Health Act 2009 (which inserts sections 52A to 52E and
Schedule 8A in the National Health Service Act 2006).

(6) 35In section 272 of the National Health Service Act 2006 (orders, regulations,
rules and directions)—

(a) in subsection (5), omit paragraph (aa), and

(b) in subsection (6A), omit “52D(1), 52E(6),”.

(7) In section 275(1) of that Act (interpretation), in the definition of “NHS trust”—

(a) 40omit “, subject to Schedule 8A,”, and

(b) omit “52D(1) or”.

(8) In section 206(1) of the National Health Service (Wales) Act 2006, in the
definition of “NHS trust”, omit “52D(1) or”.

174 Trust special administrators

(1) In section 65A of the National Health Service Act 2006 (bodies to which trust
special administration regime applies)—

(a) in subsection (1), for paragraphs (b) and (c) substitute—

“(b) 5any NHS foundation trust.”, and

(b) omit subsection (2).

(2) For the title to section 65B of that Act substitute “NHS trusts: appointment of
trust special administrator”.

(3) In section 65D of that Act (NHS foundation trusts: regulator’s notice), for
10subsections (1) to (3) substitute—

“(1) This section applies if the regulator is satisfied that an NHS foundation
trust is, or is likely to become, unable to pay its debts.

(2) The regulator may make an order authorising the appointment of a
trust special administrator to exercise the functions of the governors,
15chairman and directors of the trust.

(3) As soon as reasonably practicable after the making of an order under
subsection (2), the Care Quality Commission must provide to the
regulator a report on the safety and quality of the services that the trust
provides under this Act.”

(4) 20In subsection (4) of that section—

(a) for “giving a notice” substitute “making an order”,

(b) after paragraph (a) insert—

“(aa) the Board,”,

(c) omit paragraph (b),

(d) 25in paragraph (c), omit “goods or”, and

(e) after paragraph (c) insert “, and

(d) the Care Quality Commission.”

(5) After that subsection insert—

“(5) An order under subsection (2) must specify the date when the
30appointment is to take effect, which must be within the period of 5
working days beginning with the day on which the order is made.

(6) The regulator must lay before Parliament (with the statutory
instrument containing the order) a report stating the reasons for
making the order.

(7) 35If the regulator makes an order under subsection (2), it must—

(a) appoint a person as the trust special administrator with effect
from the day specified in the order, and

(b) publish the name of the person appointed.

(8) A person appointed as a trust special administrator under this section
40holds and vacates office in accordance with the terms of the
appointment.

(9) A person appointed as a trust special administrator under this section
must manage the trust’s affairs, business and property, and exercise the
trust special administrator’s functions, so as to achieve the objective set

out in section 65DA as quickly and as efficiently as is reasonably
practicable.

(10) When the appointment of a trust special administrator under this
section takes effect, the trust’s governors, chairman and executive and
5non-executive directors are suspended from office; and Chapter 5 of
this Part, in its application to the trust, is to be read accordingly.

(11) But subsection (10) does not affect the employment of the executive
directors or their membership of any committee or sub-committee of
the trust.

(12) 10The regulator may indemnify a trust special administrator appointed
under this section in respect of such matters as the regulator may
determine.”

(6) For the title to that section substitute “NHS foundation trusts: appointment of
trust special administrator”.

(7) 15Omit the cross-heading preceding that section.

175 Objective of trust special administration

(1) After section 65D of the National Health Service Act 2006 insert—

“65DA Objective of trust special administration

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

(a) 20the continued provision of such of the services provided for the
purposes of the NHS by the NHS foundation trust that is subject
to an order under section 65D(2), at such level, as the
commissioners of those services determine, and

(b) that it becomes unnecessary for the order to remain in force for
25that purpose.

(2) The commissioners may determine that the objective set out in
subsection (1) is to apply to a service only if they are satisfied that the
criterion in subsection (3) is met.

(3) The criterion is that ceasing to provide the service under this Act
30would, in the absence of alternative arrangements for its provision
under this Act, be likely to—

(a) have a significant adverse impact on the health of persons in
need of the service or significantly increase health inequalities,
or

(b) 35cause a failure to prevent or ameliorate either a significant
adverse impact on the health of such persons or a significant
increase in health inequalities.

(4) In determining whether that criterion is met, the commissioners must
(in so far as they would not otherwise be required to do so) have regard
40to—

(a) the current and future need for the provision of the service
under this Act,

(b) whether ceasing to provide the service under this Act would
significantly reduce equality between those for whom the
45commissioner arranges for the provision of services under this

Act with respect to their ability to access services so provided,
and

(c) such other matters as may be specified in relation to NHS
foundation trusts in guidance published by the regulator.

(5) 5The regulator may revise guidance under subsection (4)(c) and, if it
does so, must publish the guidance as revised.

(6) Before publishing guidance under subsection (4)(c) or (5), the regulator
must obtain the approval of—

(a) the Secretary of State;

(b) 10the Board.

(7) The Board must make arrangements for facilitating agreement between
commissioners in determining the services provided by the trust under
this Act to which the objective set out in subsection (1) is to apply.

(8) Where commissioners fail to reach agreement in pursuance of
15arrangements under subsection (7), the Board may make the
determination (and the duty imposed by subsection (1)(a), so far as
applying to the commissioners concerned, is to be regarded as
discharged).

(9) In this section—

• 20“commissioners” means the persons to which the trust provides
  services under this Act, and

• “health inequalities” means the inequalities between persons with
  respect to the outcomes achieved for them by the provision of
  services that are provided as part of the health service.”

(2) 25If, at any time before section 9 comes into force, Monitor obtains the approval
of the NHS Commissioning Board Authority to publish guidance under
section 65DA(4)(c) or (5) of the National Health Service Act 2006, that approval
is to be treated for the purposes of subsection (6)(b) of that section as approval
obtained from the National Health Service Commissioning Board.

176 30Procedure etc.

(1) In section 65F of the National Health Service Act 2006 (administrator’s draft
report), in subsection (2)—

(a) before paragraph (a) insert—

“(za) the Board,”, and

(b) 35omit paragraph (a) (but not the following “and”).

(2) At the end of that section insert—

“(4) For the purposes of this section in its application to the case of an NHS
foundation trust, the references to the Secretary of State are to be read
as references to the regulator.

(5) 40In the case of an NHS foundation trust, the administrator may not
provide the draft report to the regulator under subsection (1)—

(a) without having obtained from each commissioner a statement
that the commissioner considers that the recommendation in
the draft report would achieve the objective set out in section
4565DA, or