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The Minister of State, Department of Health (Mr. John Hutton): I should like to begin by speaking to the amendment moved by my hon. Friend the Member for Wakefield (Mr. Hinchliffe) and to set out one or two observations about other amendments.

Dr. Fox: On a point of order, Mr. Deputy Speaker. As a large number of hon. Members intend to speak, may I ask whether it is normal for the Minister to speak before hon. Members have had a chance to make their voices heard?

Mr. Deputy Speaker: The Minister will be speaking in support of amendments to a Government Bill and it is usual for the occupant of the Chair to call the Minister to speak at this stage if he seeks to rise. Under the Standing Orders, that will not preclude his making a short winding-up speech at the end of the debate.

2.15 pm

Mr. Hutton: Thank you, Mr. Deputy Speaker. I genuinely want to be helpful to the House, which is why I thought that it would be useful for me to speak now. If it is more helpful to hon. Members on both sides of the House, I shall confine my remarks to amendment No. 164 and the Government amendments. In the short winding-up speech that I might look forward, if that is the right phrase, to making if I catch your eye, I shall confine my comments to the other amendments.

I respect the sincerity of my hon. Friend the Member for Wakefield and the strongly held views that he and many other hon. Friends have expressed about NHS foundation trusts, but I believe profoundly that he is wrong in his analysis of the Government's policy and his description of the impact that the reforms will have on our national health service. I shall explain in a moment

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why I believe that he is wrong, but one thing needs to be made clear at the outset: the Government have listened to the concerns that have been expressed about that part of the Bill, and we have acted on those concerns. We tabled amendments in Committee, for example, to strengthen the accountability to this House of the new independent regulator of NHS foundation trusts. We are seeking to amend and improve the Government's arrangements in schedule 1 to make them fairer and more effective. The hon. Member for Woodspring (Dr. Fox) referred to his concerns, which I shall deal with in a moment. We have ensured that the new national health service pay arrangements will apply to NHS foundation trusts.

Judy Mallaber (Amber Valley): I thank my right hon. Friend for giving way. He will know that the anxiety about the issue that he raises is that foundation hospitals could poach NHS staff from other hospitals by offering better pay and conditions. To avoid such an outcome, will he ensure that the newly negotiated "Agenda for Change" applies on the same timetable and basis for foundation hospitals as for non-foundation hospitals and consider further ways of locking in an assurance that hospitals will continue to abide by "Agenda for Change" and national pay rates in future?

Mr. Hutton: I am grateful to my hon. Friend for her remarks. I shall make a few more comments about "Agenda for Change" in a moment, but I understand the point that she makes and have every sympathy with it. That is why I believe that it is important that all NHS foundation trust applicants agree to sign up to "Agenda for Change" as part of the approval process. My right hon. Friend the Secretary of State will not approve for submission to the independent regulator any application from an NHS trust that does not contain that clear and express provision.

We have made it very clear that the timetable that we envisage for implementation of "Agenda for Change" should be broadly coterminous with the arrangements in the other early implementer sites. I have also made that clear to the trade unions. We recently told trade unions that the NHS foundation trusts will start to apply the new "Agenda for Change" arrangements from this April, should they be set up at that time, but it will be done on the basis of a rolling programme between now and October, so that we can learn the lessons from what is happening in the early implementer sites. If any modifications are needed, they can be made in the NHS foundation trusts as well as other early implementer sites. I hope that my hon. Friend the Member for Amber Valley (Judy Mallaber) will take it from that that my answer to her question is broadly yes, which is what we have said to the trade unions.

We have also strengthened the audit rules to ensure greater financial transparency. The rules have been the subject of extensive comment both in Standing Committee and elsewhere. We have introduced a cap on the income that NHS foundation trusts can earn from private patients, so that NHS patients will always come first. We have also moved to ensure that the NHS in England will not become a two-tier service, as all trusts will have an opportunity to become NHS foundation trusts in the next few years.

Dr. Evan Harris: The Minister says that he insisted on a cap, but did he not table in Committee amendments

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that weakened the regulator's role in enforcing the cap by transforming it from a duty into a power? The changes also made it clear that the regulator need not enforce the cap in some cases. As far as any concessions were made in Committee, they were made in reverse on the important issue of pay beds and private income.

Mr. Hutton: No, that is completely not the case. In case any hon. Member is confused, let me just deal with that point, because my hon. Friend the Member for Wakefield and others have expressed concern to me about it. The amendments that we tabled in Committee were purely and simply designed to ensure that the ability of NHS foundation trusts to treat patients from Scotland, Wales and Northern Ireland was not compromised by the Bill. That is the sole extent of the changes. Let me make it clear that under clause 15(2) the regulator must impose such a restriction on the amount of private business that an NHS foundation trust can undertake. There is no question at all about that: he must exercise that provision.

Mr. George Stevenson (Stoke-on-Trent, South): As my right hon. Friend suggests, this is an extremely important matter. Clause 15(1) says that an authorisation "may" restrict. As I understand it, that "may" was inserted in place of "must". How does that strengthen regulation?

Mr. Hutton: As I have tried to explain, we changed the word from "must" to "may" to deal with the issue of whether the trust is treating patients from Scotland, Wales or Northern Ireland; it may not be. I give my hon. Friend this absolute assurance—

Mr. Deputy Speaker: Order. I am sorry to interrupt the Minister, but it would be helpful if he addressed his remarks to the Chair, not behind him.

Mr. Hutton: I am sorry, Mr. Deputy Speaker. It is always nice to look into the eyes of my hon. Friends when trying to be reassuring and tell them how it is. My only other choice is to look at that lot over there. [Interruption.] Well, one or two of them are not too bad, but some of them really do suck.

The point that I am trying to make to my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) is that he, like others, has confused the amendments that were made to clause 15(1) with the requirement in clause 15(2) that the regulator shall exercise his powers to impose such a cap. I recognise that it looks on first reading as though there has been a change, but I give my hon. Friend an absolute assurance that the regulator must impose a cap on the volume of private patient activity that an NHS foundation trust is to undertake.

Mrs. Patsy Calton (Cheadle): Will the Minister give way?

Mr. Hutton: With the greatest of respect, I am conscious that many other hon. Members want to speak, and I am trying to get through my points as quickly as I can.

These are all significant movements. We have tried to reach a sensible set of positions. The Tories say—we have heard it again from the hon. Member for

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Woodspring—that we have not gone far enough, and some of my hon. Friends say that we have gone too far. That probably means that we have got it about right.

In putting forward his arguments against part 1 of the Bill, my hon. Friend the Member for Wakefield made a number of claims. Let me deal with those. First, the claim that NHS foundation trusts will reintroduce the old internal market is not true. That system was based on two-tier commissioning and price competition. Primary care trusts will do all the commissioning in the NHS and, as my hon. Friend well knows, there will be a new national tariff for all hospital services as part of our reforms to NHS finances. NHS organisations will all be paid the same for the same procedures, whether they are NHS foundation trusts or not. Those reforms to NHS finances are all about ensuring that NHS assets are used to maximum effectiveness for the benefit of NHS patients. They are not designed to, nor will they have the effect of, reintroducing the damaging effects of the old internal market.

In the old internal market, there were no national standards and no independent inspection and audit arrangements. That has all changed. In the old internal market, there was no statutory duty of co-operation between NHS bodies. That has changed, too. The very same statutory duty of co-operation that is contained in the Health Act 1999, and which my right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) rightly said would bring the internal market to an end when he introduced the debate on that legislation on Second Reading, is now being extended to NHS foundation trusts. I profoundly believe that it is a myth that these proposals reintroduce the internal market: they do not.

Secondly, it is wrong to suggest that NHS foundation trusts can gain only at the expense of everyone else. As I have said, there will not be one set of rules on revenue for NHS foundation trusts and another set of rules for NHS trusts; there will be one set of rules for everyone. On capital, we have made several things repeatedly clear. First, there will be proper limits on how much NHS foundation trusts can borrow, which will be determined according to the terms of a prudential borrowing code and their ability to service debt.

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