House of Commons Hansard Debates for 13 Mar 1990

New clause 4

Consultation on National Health Service Trusts

(1) Before making an Order under section 5 of this Act the Secretary of State shall lay before Parliament a report.

(2) A report under subsection (1) above shall state :

(a) The results of a ballot of staff at the hospital or service applying for Trust status.

(b) In any case where a majority of the patients of the hospital or service reside in a single borough or district council, the result of a ballot of electors registered in that local authority area. (

(d) The views of any relevant Community Health Council. (3) The Secretary of State shall not approve application for a National Health Trust until a report under this section is approved by both Houses.'.-- [Mr. Robin Cook.]

Brought up, and read the First time.

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Mr. Robin Cook : I beg to move, That the clause be read a Second time.

We now come to the heart of the Bill and of the Government's proposals. The new clause relates to the proposal that the Government were good enough to refer to as one of their key propositions--the creation of self-governing trusts. That matter has given rise to strong views both for and against, and I am therefore happy to assure the House that this is not an occasion on which it is necessary for me to strike a non-partisan note. I have strong views on this matter. I believe that self-governing trusts will result in the fragmentation of the Health Service, that the competition on which they are based will introduce a commercial ethos into the Health Service, and that they are patently designed to pave the way for the privatisation of the Health Service.

I am aware that Conservative Members take a different view. Some take the view that this will be an excellent change for the Health Service. The Secretary of State's predecessor proposed that the changes would be the greatest breakthrough in medicine since the discovery of penicillin, but I doubt whether many hon. Members would wish to go that far.

Whichever view hon. Members take on whether self-governing trusts are desirable, there can be agreement on both sides that that step is a major decision for the local Health Service. The contention of new clause 4 is that that decision should be taken by local people. I am happy to say that the Secretary of State seems to agree with that proposition. At an early stage during the debate on the White Paper, he made a speech on self- governing hospitals which was videoed and included on the staff communications video. These are the words of the right hon. and learned Gentleman in that message which was so expensively prepared for the staff of hospitals contemplating self-governing status :

"I believe the best decisions on local services are the ones made by doctors, nurses and managers who have first-hand knowledge of the needs of local people."

That is a sensible basis on which to proceed.

However, I am sorry to report that, ever since we took the Secretary of State at his word, he has been desperately inventing arguments about why this local decision could not be left to local people. The Bill makes it perfectly clear who is intended to take that "local" decision. Clause 5 opens with the deathless line : "The Secretary of State may by order establish bodies, to be known as National Health Service trusts".

It also states that the Secretary of State shall also appoint the board of directors of the trust, and

"The functions specified in an order shall include such functions as the Secretary of State considersappropriate

The Secretary of State may by regulations make general provision with respect to--

(a) the qualifications for and the tenure of office of the chairman and directors of an NHS trust

(b) the persons by whom the directors and any of the officers are to be appointed and the manner of their appointment

(d) the proceedings of the trust ; and

(e) the appointment, constitution and exercise of functions by committees and sub-committees of the trust".

All those things will be established in regulations that are to be decided by the Secretary of State. It is perfectly clear that it will not be left to the local people to decide

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whether they shall have an NHS trust, nor even what that NHS trust shall do. There is nothing in the Bill to oblige the Secretary of State, when deciding whether to create an NHS trust, to produce a single scrap of evidence that it is supported by the people who work in that hospital or those who use it.

That is why I have tabled a new clause 4, which would oblige the Secretary of State to report to the House before approving an order for an NHS trust on the views of three seperate groups that are most closely affected--all of them local people. The first of the three groups comprises the patients of the hospital. They come from the population of the catchment area of the hospital or unit concerned. I am conscious that the formula that I have proposed in the new clause will not fit every case on the list that is proposed for self-governing status. However, it will fit the majority--a point which I shall develop later.

Why should patients worry about the creation of National Health Service trusts? Why should they seek the right to ballot on the creation of a trust? The first reason is that trusts will be obliged to trade on their own account. Working paper No. 1 on self-governing hospitals is refreshingly candid on that point. On page 8 we find in paragraph 2.2 the following candid statement on how various hospitals or units are expected to balance their books :

"The main source of revenue will be from contracts with health authorities to provide their residents with specified NHS services to a given level and quality of service. Other contracts may come from general practitioner practices or private patients"

--a point to which I shall return. The moment that a hospital or unit finds that it is dependent for income on trading on contracts, it has entered into a commercial environment in which the directors who run the hospital will be obliged and have a duty to secure its financial viability before medical needs can be fulfilled. 5 am

Mr. Kenneth Clarke : I am following the hon. Gentleman with great care. The passage that he quoted would apply to every hospital in the NHS, whether self-governing or directly managed. I am not sure why the quote from working paper No. 1 gives a key reason why self-governing status should be the subject of the ballot that he proposes.

Mr. Cook : I welcome that intervention, which I anticipated. The Secretary of State has just confirmed that not only self-governing trust hospitals will enter into a commercial ethos, but every hospital in th Health Service will find itself in a competitive and commercial environment.

The reason why I believe that patients in a catchment area where there is a proposal to create a trust should be anxious is that the moment that the hospital becomes self-governing it will be outwith the scope of the district health authority. It will no longer be directly managed by the district health authority. In the case of several district health authorities, to which I shall refer later, hospitals will have acquired self-governing status in defiance of the wishes of the district health authority. Hospitals may find that the district health authority does not have the loyalty and commitment to making it a success that it has to those which it directly manages. If hon. Members have any doubts about how swiftly and dramatically the new environment would encourage a

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commercial ethos within the hospital sector, they need only glimpse the documents currently being prepared by hospitals contemplating forming an NHS trust. I have found it depressing how quickly the language of public service has been replaced by the patter of the salesman. The most remarkable is the document produced by Yorkshire region. It advises management on what it will need to do once the hospital is a self-governing trust. It contains the immortal advice that managers should keep changing the product lines. I presume by that they mean the specialties of the hospital.

The dilemma of such hospitals has been well expressed by the director of one of the private hospitals in London, the Lister hospital. He was invited to write an article outlining what he saw as the challenges to the management of a self-governing trust. He said :

"The opted out hospitals will need to make firm decisions as to which services to promote and which are uncompetitive. Some specialities may have to go. The problem of unsuccessful specialities will be a real one. For how long could one carry a loss-making speciality?"

I invite my hon. Friends to notice what happened between the second last and last sentences of that paragraph. There was a reference to "unsuccessful specialities". How is an unsuccessful speciality redefined? Not as a speciality which failed to cure the patients, nor as one which was not needed by the patients, but as a loss-making specialty. The population of the catchment area of the hospital and its patients may seek the right to cast their vote on the question : what if they are the loss-making patient?

Mr. Kenneth Clarke : What does that mean?

Mr. Cook : It is not difficult for them to work out what specialties are at risk of being loss-making. We can identify them easily by running our finger down the list of specialties not provided by the present private sector. They are chronic care and long-term care with no immediate prospect of cure and involving heavy expense, for example, geriatric care, renal dialysis and chemotherapy. All are lacking from the private sector and are likely to be under pressure once the Secretary of State has created commercial pressures within the public service and the NHS.

Mr. Kenneth Clarke : The hon. Gentleman is being most courteous in giving way. I am waiting for him to come up with one coherent argument for his proposed ballots. Perhaps because of the time of morning, he has so far not produced one. The manager of the Lister hospital has nothing to do with our proposals. All hospitals will depend on these contracts for finance. There is no distinction between NHS trusts and the rest. That means that they will be financed to the extent that they attract NHS patients. When they attract patients, whether for advanced surgery or basic community care, they will recover the full costs of treatment. They will not make a profit or a loss. If they are unsuccessful it will be because they are not attracting the patients of the GPs who would otherwise refer to that unit. We spent a long time on this in Committee, in which the hon. Gentleman appeared from time to time and took some part, so he knows that that is the position. I do not see the slightest relevance of his remarks to that position.

Mr. Cook : The Secretary of State has made an interesting observation which, if he means it, will require him to go back and redraft many of the notes of guidance and circulars which have been going around the district

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and regional health authorities for the past six months. He has just said that hospitals will recover the full cost of treatment of patients. That is not what his Department is saying to health authorities. It is saying that they must price a contract for a number of treatments with other district health authorities, their district health authorities or GPs, and deliver the required number of treatments within the price on the contract. That is the meaning of the whole contract system. The hospitals are not guaranteed the cost. If they get it wrong they will have difficulty in making ends meet. If that is not the case, it is utterly impossible to conceive what the function of creating the new system is, because at present we offer the hospitals their costs. It is that historic basis of pricing and paying the Health Service that we understand the Secretary of State is putting behind him.

If the Secretary of State is going to tell us that the director of the Lister hospital, as a director of a private hospital, has no insights to offer us about the future of the NHS, let me share with him the comments of the management of Trent region. It is within the NHS, although it seems to have every possible intention to get out as fast as possible. It produced an extremely interesting document marked "Strictly confidential" which provides advice to the personnel managers of hospitals seeking self- governing trust status. I shall return to the document later.

Mr. Rowe : I think that the hon. Gentleman has said something that, on reflection, he would not have meant to say. He stated that the people of the Trent region are working as hard as they can to get out of the National Health Service. The whole point about the hospitals--or units--is that they will remain part of the service.

Mr. Cook : That is an opinion which the hon. Gentleman is perfectly entitled to hold, but it is strongly disputed by many Opposition Members, and I shall develop that argument during my speech. If it is argued that those self-governing trusts will remain within the National Health Service, the hon. Gentleman has so redefined the meaning of that service as to put it beyond the recognition of anything that people would have previously contemplated.

I anticipate that the Secretary of State will not say that the management of the Trent region are irrelevant to our debate. Their document opens with some assumptions about self-governing trusts : "a. in the short term there will be an initial period of stability and no immediate crisis"--

that is refreshing and reassuring, I am sure--and

"b. in the medium term, there will be rationalisation and contraction of services".

That is the assumption of the management of Trent region. That brings us back to the anxieties of patients in the catchment area, to whom I referred earlier. There is now a risk that specialties may be squeezed on commercial and financial grounds, but those patients require them.

Once upon a time, we were promised safeguards against contraction and rationalisation. Working paper No. 1 on page 3 promised those safeguards. The opening paragraph of the working paper on self-governing hospitals said :

"There will be safeguards to ensure that essential local services continue to be provided locally."

Those safeguards were going to be the core services.

One question that patients would want to ask themselves when considering voting in a ballot on the issue is what happened to core services. It was a pretty short list,

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which did not at any stage include paediatrics or maternity services. The Nottingham Post had an entertaining quotation from a spokesperson for the Department of Health, who, when asked why maternity was not in the list of core services, replied that it was because Ministers forgot to put it in. However, it does not really matter whether paediatrics, maternity or anything else was omitted from the list, because there is not a word anywhere in the 60 clauses of the Bill about core services.

In Committee the Under-Secretary, who I suspect must be on the afternoon shift of these proceedings, advised us that he regretted that Ministers had got the name wrong. They should not have called them core services, because the use of those words encouraged us to have the wrong expectations. As it turns out, core services are no more than matters for negotiation between the district health authority and any hospital in the district that is contemplating forming a self-governing trust. There is nothing to prevent those trusts from deciding, during the negotiations, that they need a rate of return on renal dialysis or geriatrics that prices it beyond the reach of the district health authority, and nothing to stop the district health authority from deciding, during the negotiations, that the price offered is too expensive. Bang--between them, in the process of negotiation, it is gone ; it is priced out.

I suggest that that is one of the key reasons why patients need a voice in whether their local hospital leaves the management of the local district health authority. They will lose the choice if a specialty goes and they may even lose the choice if the hospital retains the specialty that they need, because, as the Secretary of State fairly said in his intervention, patients will get into hospital only if there is a contract with the hospital for someone to pay for them to have speciality treatment--whether it is the district health authority or their GP.

That brings me to the last reason why patients in that catchment area should be anxious about their hospital becoming a self-governing hospital.

Mr. Nigel Spearing (Newham, South) : How can we be certain that patient needs will be defined? The scheme has been likened to going to a garage for a particular type of car repair. Is it not the experience of us all that we require treatment in hospital for a variety of reasons that involve different techniques? How will that practical problem be addressed?

5.15 am

Mr. Cook : I intend to deal later with that point. However, I believe that it is a travesty to describe the White Paper and Bill as proposals for the National Health Service. They regard people's experience of the NHS, particularly of hospitals, as episodic and completely unrelated to the continuity of care that they receive. The Government's proposals therefore threaten a break in the continuity of care that is represented by the present integrated service. I was about to remind hon. Members of the contents of paragraph 2.2 of working paper No. 1. It refers to contracts with private patients or their insurance companies, with private hospitals and employers generally. We have only reached paragraph 2.2, but already we are into private provision. Let us suppose that

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a self-governing trust discovers that the mark-up for private patients is higher than the mark-up for district health authority patients. Let us also suppose that the private insurance companies with which it is supposed to negotiate says, "You will get our patients only if our patients get preference and shorter working times than NHS patients." That would be the perfectly normal reaction of private insurance companies. Would NHS patients then find that they had been disadvantaged?

The prospectuses that have been published by hospitals that are contemplating self-governing status are full of commitments to expand private practice. The nearest hospital to this Chamber that is contemplating self-governing status is St. Thomas's hospital. It has published a lengthy document which contains the following statement :

"There will be an expansion of private patient services, including a range of choice of accommodation."

Where is the expansion to come from? Where is the new range of choice of accommodation to come from? During the last two years that hospital has become notorious for removing NHS beds. Its expansion and new accommodation will not be a fresh site. The expansion in the number of private patient beds and new accommodation for private patients will be at the expense of the present NHS provision and of present NHS patients, who therefore are entitled to express their views in a ballot before such a step is taken.

Mr. Tim Yeo (Suffolk, South) : Would it be the policy of the Labour party, should it ever come to power, to refuse to allow any National Health Service hospital under any circumstances to take private sector patients? Does the hon. Gentleman know how much income would therefore be denied to the NHS?

Mr. Cook : It is easy to answer the hon. Gentleman's second point : at present National Health Service hospitals are not permitted to take in private patients at a profit. It is only as a result of the Government's Health and Medicines Act 1988 that it is possible for them to seek to make a profit out of private practice. It is no part of the function of a free public service that is committed to meeting need, rather than to responding to market demand, to seek to make a profit out of the sale of medical services.

Mr. Yeo : Will the hon. Gentleman give way?

Mr. Cook : The hon. Gentleman has taken me wide of the new clause. I am anxious to confine my remarks to the scope of the new clause. I want to return to the new clause.

Mr. Yeo : Yes or no?

Mr. Cook : I am terribly sorry to disappoint the hon. Gentleman, but I have to say that I responded to his point. [ An Hon. Member :-- "What about the charity out of which he has had a good living for years?"] That is a very fair point.

As I do not want the hon. Gentleman to be disadvantaged in any way, I shall try again to answer his point. He may intervene again if he wishes to do so.

Mr. Yeo : Will it be Labour policy, should that party ever come to power, to allow National Health Service hospitals to take any patients from the private sector? Will the hon. Gentleman please answer yes or no?

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Mr. Cook : Our policy on that matter has been set out fully on a number of occasions. The answer to the hon. Gentleman's question is that we have no intention of legislating to prevent hospitals from taking private patients. None of our policy statements contains anything to suggest that we so propose. It is our policy, however, that no patient should be brought in on a trading basis--for profit. Secondly--and much more important--the function of National Health Service hospitals is to treat NHS patients and to meet the needs of the people in their catchment areas. If the National Health Service were successful in meeting that objective, the private sector's market would vanish. If the hon. Gentleman ever looks at BUPA's recruitment leaflets, he will see that the organisation's one selling point is the waiting lists for NHS hospital treatment.

All of this indicates precisely why we worry about a Government so patently committed to the expansion of private provision. One does not stimulate the private sector, one does not push the demand for private medicine, by subsidising it. Tax relief for the elderly patient is at the margin. If the hon. Gentleman asks, the private sector will tell him that such relief is peripheral. The way to increase the demand for private provision is to run down the public sector to such an extent that it cannot make proper provision. That is why one is suspicious of an Administration committed to expansion of private practice. Such an Administration cannot be committed to excellence within the NHS.

I was tempted wide of my remarks just as I was about to turn to the second group who, under new clause 4, would be provided with a right of consultation--the staff of the hospitals or groups proposed for self- governing status. The main anxiety about the proposals for self-governing status is the anxiety about what they will mean for patients. Staff do have legitimate concerns. Indeed, those concerns came up during exchanges in Committee on this point. The only protection for staff is provided in clause 6. It provides protection, but only at the point of transfer to the self-governing trust. At that point, staff will transfer with the pay and conditions to which they were entitled on the previous day. Thereafter, they will be on their own. They will have no right to be included in national negotiations. A self-governing trust hires and fires its staff ; it sets its own wage rates ; it chooses whether or not to follow a national award. Here we are considering not just Whitley council staff. What about those people who fall within the pay review body network? A self-governing trust will not be obliged to follow a pay review body award.

What about the thousands--tens of thousands--of nurses who are still awaiting a decision following the clinical grading review? What will happen if their hospital decides to form a self-governing trust? What will be done about appeals? To whom, for that matter, would they appeal?

Not only do the staff find themselves outwith national negotiating systems, but they find that they have no absolute right to collective bargaining. A self-governing trust has no obligation to recognise even the existing health unions. [Interruption.] I am grateful for that confirmation. A self-governing trust need not confer the right to organise in a union, although the staff transferred to it will be members of a union. There is no obligation, even on a self-governing trust, to recognise any system of

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collective bargaining, whether through trade unions or for any other purpose. Both those points--the exclusion from national negotiations and the loss of the right to collective bargaining through recognised existing Health Service unions--are surely sufficient to warrant the staff being asked whether they wish the hospital or unit for which they work to make such a dramatic change. There is an even more pressing reason why the staff should be given the option of voting on this question. They are not even to be asked whether they are willing to transfer. Clause 6 does not give the staff the option not to transfer with the self-governing trust. They are not to be allowed to say, "I am sorry, I do not want to transfer to a self-governing trust. I want to stick with my present employer and hold my present employer to my present contract of employment." Clause 6 makes it clear that that option does not exist. Subsection (5) states that the preceding subsections

"are without prejudice"--

that is rather nice--

"to any right of an employee to terminate his contract of employment"--

it is unfortunate that we are obliged to use the legal fiction that everyone is male, especially in the context of the Health Service, where most of the employees are women

"if a substantial change is made to his detriment in his working conditions".

That does not confer any additional right on an employee, because he or she has that right whether or not it is stated in the clause. I invite my hon. Friends to mark well what comes next :

"but no such right shall arise by reason only of the change in employer effected by this section."

In other words, that employee has no right to terminate his or her employment because of the transfer from the district health authority to a self-governing trust. As my hon. Friends know, were employees so determined to terminate their employment, and were they to turn up at the unemployment benefit office, they would be told that they became voluntarily unemployed and did not qualify for benefit for six months.

In Committee, Conservative Members rejected Labour amendments to give staff the right to say, "No, we wish to stick with the district health authority." All right, if it has to be a compulsory transfer and staff are not to be given the individual right to say no, surely they must be given the collective right to ballot on whether their hospital should form a self -governing trust. Conservative Members have strongly insisted over the past decade on ballots of union members for every conceivable purpose. I concede that over that period unions have got in a lot of practice in balloting. I admit that some have become quite attached to the idea of ballots, but the Government will leave those members of health unions in a strange position. They have a statutory right to elect their general secretary but they will have no ballot on a change in employment that could result in that general secretary not being able to protect them or negotiate for them with the employer to which they had been transferred.

Lest any hon. Member thinks that these anxieties are fanciful, I shall deal at some length with the document produced by Trent region called "Patients before Profits". It was essentially about the personnel function of the new hospitals that are to form the self-governing trusts. Let me share with the House some passages. This is a passage from page 6 of the document :

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"Suppose people in key positions manifest a lack of commitment to organisational goals, ideals and values? What about renegades, subversives and opposers of what is being attempted? There will be a nettle to be grasped in terms of recruiting, keeping and getting rid of people in key positions right through the self-governing trust." I note that my hon. Friend the Member for Halifax (Mrs. Mahon) is here. I suspect that if my hon. Friend had been an employee on such an occasion--and she was an employee of the Health Service--she would quickly be indentified as a renegade subversive and opposer. I suspect that my hon. Friend would be rather insulted is she were not swiftly so identified.

5.30 am

Page 9 of the document contains the following statement on trade unions.

"A self-governing trust will need to take decisions at an early stage as to whether it wishes to recognise any staff-side organisation for collective bargaining. It may be an appropriate tactic from the first day not to confer recognition on any organisation in order that the self-governing trust can pick the perfect time and opportunity to begin to enter into discussions for recognition of collective bargaining."

We should note the passage :

"to begin to enter into discussions for recognition of collective bargaining."

On page 10 there is the suggestion that even collective bargaining may not be conceded :

"A self-governing trust will have a choice. It may choose not to enter into collective bargaining arrangements. It may choose to continue to adopt the Whitley pay strategy or, alternatively, it may seek to impose pay deals. The trust will also need to have a clear view of its pay strategy and whether it chooses to move totally to individual remuneration packages."

I finally want to share with the House a passage from page 13. It says in the discussion on pay :

"Where the issue is one of lack of competitiveness, buying out a staff group may not be a viable option as this would merely increase costs when the defined problem was that the costs"--

I remind my hon. Friends that "costs" means pay--

"were already too high. The options here appear to be either to red circle existing work posts and offer different rates to new starters or to move into competitive tendering."

In that passage, the problem identified is that NHS staff are paid too much.

What emerges from the document is a picture of a management already manoeuvring to clear out those of independent mind and to remove the right to belong to a union that is recognised by the management. It is a management prepared to contemplate not even honouring existing pay agreements to new staff.

Mr. Max Madden (Bradford, West) : Will my hon. Friend also accept that the Bradford Health Service trust has already said that staff who do not like the terms and conditions on offer will be subject to instant dismissal without any right of redress and that all night sisters in Bradford have been told that the night sister posts are to be abolished under the trust? They have been told that they may be redeployed, but they fear that it would be to lower nursing grades. They are also fearful that in cases where such vacancies are not available, they will be made redundant.

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