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Clause 2 and Schedule 1: Primary Care Trusts47. Clause 2 provides that the Secretary of State may establish new NHS bodies to be known as Primary Care Trusts. Primary Care Trusts will take on the function of arranging the provision of (or "commissioning") health services, currently exercised by Health Authorities and GP fund-holders. In addition, they may also become providers of services under Part I of the 1977 Act, a function currently performed by NHS trusts. Furthermore, they will be able to exercise some functions in relation to general medical services, for example deploying cash-limited funds to improve general practice infrastructure and support practice staff costs. They will also be able to provide personal medical and dental services under the Primary Care Act 1997. It is envisaged that, at least initially, provider Primary Care Trusts will provide only community health services, or personal medical and dental services. However, clause 10 provides the potential to broaden the range of Part I services that they may provide in future.
48. Primary Care Trusts will be established as corporate bodies with their own budget for local health care. The population coverage of a Primary Care Trust is likely to vary from place to place but typically a Trust is likely to serve a population of at least 100,000 and have a budget of around £60 million or more. They will be accountable to the local Health Authority and subject, like other NHS bodies, to directions given by the Secretary of State (see clause 10). Their membership will include local health professionals and managers, with the Chairman and lay members appointed by the Secretary of State.
49. Clause 2(1) inserts two new sections into the NHS Act 1977: sections 16A and 16B.
50. The new section 16A gives the Secretary of State the power to establish Primary Care Trusts. Subsection (1) provides that Primary Care Trusts will be established with a view, in particular, to their undertaking the following activities:
51. Primary Care Trusts will be established by orders, which will specify the area for which the Trust will be established and certain limitations on the functions it may exercise. The PCT order will also set out the name of the Trust and the date it will become operational (paragraph 1 of the new Schedule 5A to the 1977 Act, as inserted by Schedule 1 to the Bill).
52. It is envisaged that proposals to establish a Primary Care Trust will be generated locally. The views of Primary Care Groups, NHS trusts and local communities will be taken into account in considering such proposals. The Secretary of State will direct Health Authorities under the new sections 16D and 17 of the 1977 Act (see clause 10) to make preliminary selections on his behalf of those proposals which will go forward to consultation and those which will not. It is the Government's intention that the directions will provide that Health Authorities must select a proposal if it has been made or endorsed by either a Primary Care Group or an NHS trust providing community services locally, and if it meets certain requirements as to the form and content of the proposals. In addition Health Authorities will also be able to initiate their own proposals.
53. Subsection (2), as amended by the House of Lords against the wishes of the Government, provides that the Secretary of State may only make an order in respect of proposals that command the support of the Primary Care Group concerned (i.e. the Primary Care Group covering the area for which the Primary Care Trust would be established) following a majority vote by its members after consultation with all health care professionals that would be covered by the Primary Care Trust.
54. Once a proposal to establish a Primary Care Trust has been selected or initiated by a Health Authority, it will be the subject of a consultation conducted in accordance with the regulations made under subsection (5). These regulations will provide that the consultation must be conducted by the Health Authority and that the result must be reported to the Secretary of State. It is envisaged that they will also make provision for matters such as who must be consulted, the information that must be provided for consultation, the period in which consultation must be conducted and for reporting to the Secretary of State the results of consultation, including the form such a report must take.
55. Regulations will place a further duty on the Health Authority to consult before the Secretary of State can dissolve a Primary Care Trust, or amend an order to establish a Primary Care Trust, except where the change to the order is a minor change. The requirement to consult will not however apply where it appears to the Secretary of State necessary to dissolve the Primary Care Trust as a matter of urgency. A similar power exists in connection with NHS trusts (paragraph 29(3) of Schedule 2 to the 1990 Act). It is designed as a safeguard of last resort if, for example, patient safety is at risk.
56. It is intended that there will be a clear distinction between Primary Care Trusts that are able to commission services, and those which may also provide services directly to patients. Progression from a "commissioning-only" Primary Care Trust to a "commissioning-and-providing" Primary Care Trust will be subject to consultation and the approval of the Secretary of State, in the same way as when a Primary Care Trust is first established. The new section 16A, inserted by clause 2, sets the framework for this in two ways. First, subsection (3) allows the Secretary of State to specify in the PCT order whether the Primary Care Trust is prohibited from providing services directly. A Primary Care Trust that is subject to such a prohibition will therefore not be allowed to provide services directly until its order is amended. Second, the Secretary of State will be able to amend a PCT order only after any consultation requirements, set out in regulations made under subsection (5), have been met. (See commentary on clause 10 for further discussion of Primary Care Trust functions.)
57. The provisions for delegation and joint exercise of functions in the new section 16B will be similar to those made for Health Authorities in section 16 of the NHS Act 1977. They will enable Primary Care Trusts to choose how they arrange for the performance of their functions. For example, it will be possible for Primary Care Trusts to pool administrative support services such as IT, estate and payroll management with other NHS bodies. It will also be possible for committees and staff members of a Primary Care Trust to perform functions on behalf of the Trust and for Primary Care Trusts to enter joint commissioning arrangements with Health Authorities and other Primary Care Trusts.
58. Subsection (2) of clause 2 gives effect to Schedule 1 to the Bill, which inserts a new Schedule 5A in the 1977 Act. The new Schedule makes additional, detailed provisions in respect of Primary Care Trusts. In particular it includes provisions in respect of PCT orders, constitution, membership, staff and property.
New Schedule 5A59. Paragraph 1 provides for the matters which must be specified in the order, and should be read with the new section 16A.
60. Paragraph 2 allows for a preparatory period between the date of establishment of a Primary Care Trust and its operational date. During this period the Primary Care Trust will have limited powers to carry out activities in preparation for becoming fully operational. It is envisaged that the preparatory activities will include:
Health Authorities will be able to provide funding for Primary Care Trusts for such purposes, or settle bills incurred by them.
61. Paragraphs 4 to 7 provide for the membership of a Primary Care Trust. Each Primary Care Trust will have a chairman appointed by the Secretary of State and a number of members. Some of those members will be employees of the Trust, for example the Chief Executive. The members of the Primary Care Trust will be responsible for running the Trust and, in effect, will constitute its governing board. The detailed provisions for the membership and procedure of Primary Care Trusts will be set out in regulations made under the provisions in these paragraphs.
62. Paragraph 9 confers a power of direction on the Secretary of State which enables him to require Primary Care Trusts to loan their staff to other Primary Care Trusts, or to employ former employees of other Primary Care Trusts. It mirrors the provision for Health Authority staff under paragraph 10(3) of Schedule 5 to the 1977 NHS Act. The power could be used in the event of a problem in a Primary Care Trust, where there is a short-term need for staff with particular expertise. The exercise of this power is subject to consultation by the Secretary of State with the member of staff involved or his representative body. These provisions will not detract from an employer's duty to consult staff under other mechanisms (e.g. TUPE Regulations or General Whitley Council Regulations).
63. In particular circumstances, such as in cases of temporary emergency or where consultation has previously been fully carried out with the individual concerned, the Secretary of State may require a Primary Care Trust to make the services of its staff available to another Primary Care Trust without consulting with the member of staff concerned or his representative. Again this mirrors the provisions for Health Authorities in paragraph 11 of Schedule 5 to the 1977 Act. One example where it might be used would be if a Primary Care Trust employed an individual with specialist skills (e.g. public health skills in the case of an epidemic) which were needed in an emergency by a Primary Care Trust elsewhere in the country.
64. Paragraph 10 brings the staff of Primary Care Trusts within the scope of current powers in paragraph 10(2) of Schedule 5 to the 1977 Act. Under paragraph 10(2) the Secretary of State may make regulations in respect of the transfer of staff from one Health Authority to another and the arrangements under which Health Authority staff are made available to other Health Authorities or local authorities. Paragraph 10 of Schedule 5A therefore enables regulations to be made which provide for permanent staff transfers between Primary Care Trusts, for example where functions transfer from one Primary Care Trust to another. This paragraph also enables the Secretary of State to regulate any temporary arrangements under which Primary Care Trust staff are put at the disposal of other Primary Care Trusts (by direction under paragraph 9 of the Schedule) or local authorities. Primary Care Trusts would make their staff available to local authorities under the provisions of section 26(1)(b) and (3)(b) and (c) of the 1977 Act. Paragraph 8 of Schedule 4 to the Bill extends these provisions so as to cover PCT staff. The intention is to have as much freedom for movement of Primary Care Trust staff as is currently available for Health Authority staff and to facilitate partnership arrangements made under clause 28 between Primary Care Trusts and local authorities. Before making regulations under paragraph 10(2), the Secretary of State has a duty to consult any individuals or their representative bodies who are, in his opinion, likely to be affected.
65. Paragraph 12 confers a general power on Primary Care Trusts to do things ancillary to their main functions. This includes a power to acquire land (which will enable them to obtain their own premises), to enter into contracts, and to accept gifts of money, land and other property. The latter power enables the Primary Care Trust to accept and administer charitable property, e.g. gifts of medical equipment donated by voluntary and charitable organisations, bequests of shares or gifts of vehicles.
66. Paragraph 13 concerns legal proceedings and the enforcement of rights and liabilities. It provides that a Primary Care Trust will take legal proceedings in its own name, and will be sued in its own name, even though it is exercising functions delegated to it by a Health Authority. For example if a Primary Care Trust is providing services in the exercise of a function delegated to it by a Health Authority, a patient who is injured while receiving those services will bring legal proceedings against the Primary Care Trust rather than the Health Authority.
67. Paragraph 14 enables Primary Care Trusts to carry out and fund research activity, and make their staff and facilities available for that purpose. Funded from the NHS research and development budget (raised by levy on Health Authorities), the Primary Care Trust will be able to host clinical trials of a new drug or the evaluation of different treatments for e.g. chronic back conditions. NHS trusts have similar powers under paragraph 11 of Schedule 2 to the 1990 Act.
68. Paragraph 15 enables the Primary Care Trust to make staff available to assist the provision of education and training of NHS employees or prospective NHS employees, or persons employed (or to be employed) by local authorities to provide social care (section 63 of the Health Services and Public Health Act 1968 concerns the provision of education and training to such persons). NHS trusts have similar powers under paragraph 12 of Schedule 2 to the 1990 Act.
69. Paragraphs 16 and 17 confer specific reporting duties on Primary Care Trusts. These paragraphs place duties on a Primary Care Trust to prepare and provide reports and information on its activities to the Health Authority to whom it is accountable, and to the Secretary of State. This will enable Health Authorities to monitor the performance of Primary Care Trusts in their area.
70. Paragraph 17 provides for regulations imposing requirements on Primary Care Trusts to publicise their accounts, annual report, any auditor's report pursuant to section 8 of the Audit Commission Act 1998 and any other documents as may be specified in the regulations. Those regulations will have to make provision requiring Primary Care Trusts to publicise their accounts etc. The regulations will set out the manner in which and the times at which they must publicise such documents. Under this power the Secretary of State will be able to require any Primary Care Trust to hold a public meeting at which such documents shall be presented. This puts Primary Care Trusts on a similar footing to other NHS bodies.
71. Paragraph 19 provides for the exercise by Primary Care Trusts of powers of compulsory purchase and mirrors the provisions for other NHS bodies (e.g. NHS trusts: paragraph 26 of Schedule 2 to the 1990 Act). The exercise of these powers will be subject to the provisions of the Acquisition of Land Act 1981. The Act makes provision for the procedures which apply to the compulsory purchase of land by Government departments, local authorities and certain other public bodies, for example, requirements for a compulsory purchase order, the publication of notices and the holding of inquiries.
72. Paragraph 20 provides for the transfer of property, rights and liabilities on the dissolution of a Primary Care Trust. Whenever a Primary Care Trust is dissolved, section 1 of the National Health Service (Residual Liabilities) Act 1996 (as amended by paragraph 82 of Schedule 4 to the Bill) will require the Secretary of State to exercise his powers so as to secure that all of the Primary Care Trust's liabilities are dealt with.
73. Paragraphs 21 and 22 make provision for the transfer of property to Primary Care Trusts, similar to that in section 8 of the 1990 Act in respect of NHS trusts. The property which Primary Care Trusts will require in connection with the exercise of their functions will often already be under the ownership or management of the Secretary of State, Health Authorities or NHS trusts. Paragraph 18 gives the Secretary of State the power to make an order to transfer or provide for the transfer of such property, and the attached rights and liabilities, to Primary Care Trusts.
74. Paragraph 21(1)(b) is intended to cater, for example, for circumstances where property transfers from an NHS trust to a Primary Care Trust but the NHS trust wishes to continue using the property for the services it retains. In such a case, the Secretary of State might wish to create a right for the NHS trust to continue using the property transferred to the Primary Care Trust.
75. Property, rights and liabilities may need to be apportioned between the different parties, for example where a Primary Care Trust is to provide services previously provided by an NHS trust at premises held by the trust. Any such apportionment will be provided for in the transfer order. The order might provide, for example, that the Primary Care Trust and the NHS trust divide the rights and liabilities under a lease on premises which they both will use.
76. Where the transfer order provides for the transfer of land or assets held on lease from a third person, the transfer will be binding on that person, even though it would otherwise have required his consent. So if, for example, the property to be transferred to the Primary Care Trust were a health clinic, leased by the NHS trust from a private company, the lease would automatically transfer to the Primary Care Trust without requiring the consent of the private company concerned. However, under such circumstances the Secretary of State must make appropriate provisions to safeguard the interests of third parties, including, where appropriate, the payment of compensation.
77. Paragraphs 23 to 26 provide for the transfer of staff to a Primary Care Trust. This will frequently occur when a Primary Care Trust is established.
78. Paragraph 23 confers on the Secretary of State a power to transfer by order staff from a Health Authority, NHS trust or another Primary Care Trust. The exercise of this power is subject to consultation by the Secretary of State with the staff involved.
79. Paragraph 24 provides for safeguarding the terms and conditions of service of staff transferring by order to a Primary Care Trust. This will ensure that such a member of staff retains his existing terms and conditions of employment, that the contract of employment with the Primary Care Trust is regarded as a continuation of the employee's original contract and that he maintains any rights, powers, duties and liabilities he has under that original contract. Where a member of staff declines to transfer to the Primary Care Trust he will not be treated as having been dismissed. Where there is a change in his terms or conditions of employment that is both significant and to his disadvantage, nothing in these provisions will remove any right he has to terminate his contract.
80. Where staff who are to be transferred are to remain working for part of their time at the original Health Authority, NHS trust or original Primary Care Trust, in addition to working at the Primary Care Trust to which they are to be transferred, paragraph 25 enables an order under paragraph 23 to provide that the person's contract is be divided into two separate contracts (one with the original employee, the second with the new Primary Care Trust). This will safeguard the employee's terms and conditions of service.
81. Paragraph 26 gives the Secretary of State the power to transfer staff from a dissolved Primary Care Trust, but only after consulting the staff involved or their representatives. These consultation requirements will be set out in regulations under paragraph 20(2). In these circumstances the terms and conditions of employment will be similarly protected.
Clause 3: Primary Care Trusts: finance82. Clause 3 inserts two new sections into the 1977 Act (sections 97C and 97D) which provide for the funding and financial duties of Primary Care Trusts. The sections are similar to sections 97 and 97A of the 1977 Act which provide for the funding and financial duties of Health Authorities.
83. Health Authorities receive both cash-limited funding (under section 97(3)) and non-cash-limited funding (under section 97(1)) as follows:
84. The allotted sum covers the provision of hospital and community health services, the payment of certain expenses incurred by Part II practitioners (in particular the costs of GP practice staff, premises improvements and information technology), and the costs of the drugs and appliances prescribed by GPs (and by some community nurses), although clause 4 refines the definition of the drug costs chargeable to a particular Health Authority. In the absence of directions under section 97(6)(a) (see below), the various elements of the allotted sum are not ring-fenced.
85. Section 97C provides for the funding of Primary Care Trusts by Health Authorities to mirror as closely as possible the provisions for funding Health Authorities. It provides for the funding of a Primary Care Trust's main (i.e. cash-limited) expenditure and of any non cash-limited general Part II expenditure it incurs. The Health Authority will pay sums to Primary Care Trusts in their area up to a limit set by the Health Authority for the financial year (the "allotted sum"). This limit can however be altered during the year (subsection (3)).
86. The Secretary of State sometimes gives Health Authorities allocations earmarked for particular purposes, under section 97(6)(a) of the 1977 Act. In future these sums will often be passed to Primary Care Trusts. The new section 97C(5) obliges the Health Authority to earmark such sums in the same way, when allocating them to Primary Care Trusts. This will enable the Secretary of State to direct Primary Care Trusts to apply some of their allocation for a particular purpose. The power may be applied to all Health Authorities and Primary Care Trusts or to individual bodies.
87. In the past this power has been used to protect, for example, funding for HIV and AIDS treatment and care. The current power of direction is used only sparingly and exceptionally (for example, to ring-fence the Out of Hours Development Fund for GPs) and when extended to Primary Care Trusts the Government intends to continue to use it in such a way.
88. Subsection (4) of section 97C regulates the payment of capital charges on Primary Care Trust assets. It is modelled on the existing provision for Health Authorities (section 97(6)(b) of the 1977 Act) and enables Primary Care Trusts to be brought within the capital charging system, placing them in the same position as other NHS bodies. The system ensures that capital costs are included as an overhead when a Primary Care Trust is calculating the cost of any services it provides.
89. Section 97D places a financial duty on Primary Care Trusts not to spend more than the sum of the amount allotted to them by their Health Authority (the cash limit) and any other receipts. It also enables the Secretary of State to give directions to Primary Care Trusts to ensure they comply with their financial duty. These provisions mirror those in respect of Health Authorities in section 97A.
90. The rest of the new section 97D is concerned with what is or is not to be covered by the provisions of this section, and with defining expenditure or receipts (mirroring the provisions in section 97A(6) to (9)). In particular subsection (4) ensures that funds held by Primary Care Trusts as charitable trustees or obtained by their fund raising activities are outside the scope of the financial duty. Subsections (7) and (8) enable the Secretary of State to give directions defining the categories of expenditure and receipts which are to be counted when considering whether or not a PCT has met its financial duty.
Clause 4: Expenditure of Health Authorities and Primary Care Trusts91. Clause 4 inserts a new Schedule 12A in the 1977 Act, which revises the definitions of Health Authorities' "main expenditure" (which is cash-limited) and "general Part II expenditure" (which is not cash-limited) and introduces comparable definitions for Primary Care Trusts. The main purpose of the changes is to allow the drugs costs of prescriptions written by GPs or nurses to be treated as part of the "main expenditure" of the Health Authority or Primary Care Trust where the prescription is written rather than of the Health Authority where the prescription is dispensed.
92. Responsibility for paying remuneration to pharmacists and GPs in respect of drugs dispensed to NHS patients belongs to the Health Authority in whose area the dispensing service is provided. Section 97(3A)(b) of the 1977 Act allows the costs of reimbursing the expenses incurred in supplying the dispensed drugs to be designated as part of the cash-limited "main expenditure" of the Health Authority making the payment.
93. The main change arising from the new Schedule 12A for Health Authorities (paragraphs 1 to 3) is that their cash-limited "main expenditure" will include those payments to pharmacists and GPs in respect of drugs for which they are deemed to be accountable. A Health Authority will be deemed to be accountable for drugs costs arising from prescriptions written by GPs or nurses in their area (whether the payments are made by them or, where the drugs are dispensed outside that Health Authority's area, by another Health Authority). Health Authorities will, by such means as clinical governance procedures, be able to influence decisions of GPs and nurses in their area as to whether and, if so, what to prescribe. In several Health Authorities in England, a significant proportion of the costs of dispensed drugs (up to 25% in some cases) is attributable to prescriptions written by GPs in other areas over which the Health Authority has no influence.
94. Dispensing fees will remain part of "general Part II expenditure".
95. The payments for which Health Authorities will be accountable will comprise the share apportioned to them by the Secretary of State of the total payments to pharmacists and GPs for drugs in a given financial year (paragraphs 3(1) and (2)). This apportionment will primarily reflect the principle of the cost of prescriptions falling to the Health Authority in whose area they are written (see paragraph 3(4)(a)).
96. The power to apportion payments for drugs among Health Authorities, other than on the basis of where the drugs are dispensed, will also enable those elements of the payments that are extraneous to the prescribing decision (e.g. the assumed level of discount obtained by the pharmacist or GP) to be averaged out amongst Health Authorities (see paragraph 3(4)(b)).
97. Responsibility for making payments to pharmacists and GPs will remain with the Health Authority in whose area the dispensing service is provided. Where some element of these payments is to be apportioned to a different Health Authority, the other Health Authority will have to be treated for these purposes as if they had themselves made the payment (paragraph 3(3)). The Health Authority actually making the payments will, however, still need to be reimbursed in some way for the costs involved (paragraph 3(5)). The system that will operate in England is that the Prescription Pricing Authority (for pharmacists) and Health Authorities (for GPs) will draw down from a central account the funds needed to make all payments for drugs, whichever Health Authority is to be accountable for the payments. The Department of Health will then re-charge these payments to Health Authorities' cash-limited budgets according to the apportionment made under paragraph 3(1).
98. In the case of drugs ordered by hospital practitioners but dispensed by community pharmacies, NHS Trusts (as now) and Primary Care Trusts may be required to reimburse Health Authorities for the full amount of the remuneration paid to the pharmacist, i.e. both in relation to the drugs dispensed and the associated professional fees. Paragraph 7(3) enables both these elements of remuneration to be taken into account in re-charging costs to Health Authorities. Clause 4(3) amends section 103(3) of the 1977 Act in such a way that the Secretary of State will be able to arrange for a NHS Trust or Primary Care Trust to re-pay such costs to the same Health Authority in each case (rather than necessarily the Health Authority which made the corresponding payment to the pharmacist). The Health Authority to which these payments are apportioned will be the Health Authority to which the repayment is due.
99. The definitions of Primary Care Trusts' "general Part II expenditure" and "main expenditure" (paragraphs 4 and 5 of new Schedule 12A) mirror as closely as possible the definitions for Health Authorities.
100. Paragraph 6 allows Health Authorities to apportion the drugs payments for which they are accountable (under paragraph 3) among their Primary Care Trusts, such that these apportioned payments are treated as part of the Primary Care Trust's "main expenditure". This will enable Health Authorities to charge to Primary Care Trusts' cash-limited budgets the costs of prescriptions written by GPs and community nurses for which that Primary Care Trust is responsible.
101. Health Authorities will be accountable for payments on the revised basis from 1999/2000 (paragraph 7).
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| © Parliamentary copyright 1999 | Prepared: 31 March 1999 |