House of Commons - Health

Select Committee on Health Second Report

1. WILL THE PROPOSED CHANGES BRING ABOUT IMPROVEMENTS FOR PATIENTS WHO ARE TREATED BY FOUNDATION TRUSTS?

15. A chronology prepared by Kieran Walshe in an article recently published in the Journal of the Royal Society of Medicine shows that there has been some kind of organisational upheaval in some part of the NHS almost every year for the last twenty years:

1982	Reorganisation of health authority tier - abolition of area health authorities and restructuring of district health authorities
1983-85	Introduction of general management function throughout the NHS, with the appointment of general managers in all NHS health authorities and units, and establishment of a separate NHS board within the Department of Health
1989-93	Establishment of NHS trusts to manage health service provision, previously directly managed by health authorities but now accountable directly to the Department of Health while contracting with health authorities and GP fundholders as healthcare purchasers.
1989-95	Establishment of GP fundholding (and other models of GP commissioning), giving general practices direct control over an increasing proportion of healthcare services purchased from NHS trusts
1989-95	Creation of the NHS Executive (first called the NHS Management Executive) as a separate entity from the Department of Health, and the separation of responsibility for policy development and implementation/service delivery
1990	Abolition of Family Practitioner Committees (FPCs) accountable to health authorities and establishment of family health services authorities (FHSAs) as separate organisations from health authorities to manage primary care services
1991-97	Reconfiguration of district health authorities as health authorities, and then continuing reduction in numbers of health authorities (from around 200 to around 100) through mergers and consolidation
1991	Restructuring of the boards of NHS organisations to create executive and nonexecutive membership (replacing the distinction between members and officers)
1994	Reorganization of regional health authorities to reduce numbers from 14 to 8 regions
1994	Abolition of FHSAs and the incorporation of their responsibilities into those of health authorities
1995-2000	Reconfiguration of acute services involving extensive reorganisation of acute NHS trusts and succession of mergers and restructuring
1996	Abolition of regional health authorities and their incorporation into the NHS Executive as its regional offices
1997-2000	Abolition of GP fundholding and its replacement initially with primary care groups (PCGs) and subsequently, in some areas, by primary care trusts (PCTs)
2000	Abolition of the NHS Executive and the incorporation of its functions into the Department of Health
2002	Abolition of the NHS Executive regional offices, devolution of some functions to new strategic health authorities, and the creation of four new regional directorates of health and social care in the Department of Health.
2002	Reorganisation of health authorities into strategic health authorities, going from around 100 to about 28 StHAs in England, and the devolution of many responsibilities of health authorities to PCTs
2002	Creation of primary care trusts (PCTs) in all areas, replacing primary care groups (PCGs), including some mergers and restructuring, and transfer of responsibilities from health authorities
2003	Proposed creation of first wave of Foundation NHS trusts, based on existing NHS acute hospital trusts with proven good performance records

[Source: 'Foundation Hospitals - a new direction for NHS reform?' Kieran Walsh, Journal of the Royal Society of Medicine 2003; 96, 106-110]

16. As Kieran Walshe points out, perpetual reform is very costly, both in terms of the time and effort invested by managers and other NHS staff, and in terms of the financial costs of establishing the physical fabric of new organisations and of meeting the redundancy or retirement costs of displaced staff. It can create a significant diversion of time and effort from the focus on delivering improvements to patient care, and, crucially, may promote a cynical attitude to innovation and change in the NHS, and prompt NHS managers to take only a very short-term view. Kieran Walshe goes on to argue that perpetual reform is turning the NHS into an "organisational shantytown in which structures and systems are cobbled together or thrown up hastily in the knowledge that they will be torn down again in due course".[7]

17. The upheaval that can be brought about by continual cycles of reform within the NHS serves to reinforce the crucial importance of ensuring that new reforms, such as proposals for Foundation Trusts, are carefully scrutinised to see whether they have been properly designed to achieve their aims. So what are the overall aims of the proposals for Foundation Trusts? Government publications on Foundation Trusts present a complex model of organisational change, supplemented by various reforms to governance and regulation and supported by references to comparator models in other sectors and countries. While the theoretical and academic arguments behind the policy of Foundation Trusts are clearly interesting and relevant, for the lay commentator this may have the effect of detracting from the key purpose of Foundation Trusts, which was summed up very simply in Delivering the NHS Plan, the Government policy document published in April 2002:

Foundation Trusts will have greater freedoms than existing trusts, and will be able to use their freedoms to bring about benefits for patients.[8]

18. Benefits for patients of Foundation Trusts will potentially be brought about in three separate ways: increased management freedoms; increased access to nonringfenced resources; and a new form of social ownership designed to involve patients and the public in setting the strategic direction of the trust. Although these elements come as a closely entwined package, they are each new and very separate policies, and require careful consideration as to whether or not they are likely to translate into real benefits for patients.

How will management freedoms benefit the patients of Foundation Trusts?

19. The biggest concern expressed by our witnesses from the NHS was how real the promised management freedoms would in fact be. Foundation Trusts will be directly accountable to four separate bodies (PCTs, the proposed Commission for Healthcare Audit and Inspection (CHAI), the independent regulator, and the Board of Governors) as opposed to the three organisations currently (CHAI, PCTs and the Secretary of State, through Strategic Health Authorities). The key difference for Foundation Trusts is that instead of direct accountability to Government, the trust will be accountable to a Governmentappointed but independent regulator, and to a locally elected Board of Governors. As the King's Fund argued, what this may mean in practice is that "topdown 'vertical' control of Foundation Trusts by the centre will simply be replaced with 'horizontal' control by PCTs or regulatory bodies, potentially leaving little room for autonomy".[9] The King's Fund also pointed out that "the experience of the 1990s with NHS Trusts suggests that there were fewer freedoms than the NHS and policy community were initially led to believe", an argument which has been put forward in detail by several health policy academics over recent months.[10]

20. David Jackson, Chief Executive of Bradford Hospitals NHS Trust, told us of his understanding that there would be less "micromanagement", and gave as an example the central initiative to introduce 'Modern Matrons' into the NHS, to ensure strong and visible leadership on the wards.[11] For Mr Jackson, freedom from this type of central control was a key attraction of Foundation status, to the extent that "if that does not materialise, then many of us will say it is perhaps not an idea which is worth pursuing".[12] When questioned by the Committee, the Secretary of State agreed that his powers of direction over NHS Trusts were very seldom used, although he argued that its existence was still significant.[13]

21. Malcolm Stamp, Chief Executive of Addenbrookes Hospitals NHS Trust, expressed a hope that Foundation Trusts would be subject to fewer national targets, allowing them the freedom to develop more locally relevant targets and priorities: "I would like to see more locally driven targets ... if we are going to get buy in at a board of governors level it would be good to have relevant targets emanating from that engagement rather than just follow the national targets".[14] Although we asked for it, we did not receive any evidence about inspection, review or performance ratings from the Commission for Health Improvement, suggesting that thinking may not yet be well developed on this issue. However, speaking recently in the House, the Secretary of State was quite clear that "NHS Foundation Trusts will be subject to the star rating system, just as every other part of the national health service will be, whether it is a primary care trust or other NHS trust",[15] and the Bill introduced on 12 March makes provision for CHAI to carry out reviews and publish ratings of Foundation Trusts' performance on an annual basis.[16] For Joan Rogers, Chief Executive of North Tees NHS Trust, this represented a serious problem:

They are quite clear that we are stuck with all the targets as before and that quite bothers me. If you had a foundation community, you might go for a different target. Chris [Willis, Chief Executive of the local PCT] might want more money on children's health improvement through SureStart than sixmonth access time.[17]

The Government should make it clear whether there will be fewer targets for Foundation Trusts.

22. As well as performance information on the nine key targets and 28 performance indicators that feed into the star rating system, the Guide specifies that "an NHS Foundation Trust will also need to contribute to standard national NHS data flows which are required to support policy development and funding decisions for the NHS as a whole".[18] Further to this, the independent regulator will also carry out a review of each Foundation Trust's licence every two years. As Joan Rogers pointed out, there is also a danger of increased bureaucracy, including legal contracts, surrounding the new contracting process, as was the case when the internal market reforms were first introduced. Many of our witnesses were therefore acutely aware of the danger that, in applying to become Foundation Trusts, their organizations would be "jumping out of the frying pan into the fire".[19] We are deeply concerned that there will be a need for contracts between Foundation Trusts and PCTs to be legal contracts and thus involve extra costs. We would find it a poor use of NHS funds to employ lawyers by both sides to drag contractual problems through the courts. If the Government genuinely wants an NHS family of organisations and a lack of bureaucracy a way needs to be found for these contracts to stay within the current legal framework. Such matters should be addressed in the package of support and development of model template contracts the Department will be providing for PCTs commissioning services from Foundation Trusts.

23. Maria Goddard of the Centre for Health Economics based at the University of York questioned the need for "parallel but separate regulators for hospitals with identical health care delivery requirements".[20] While we believe that the abolition of the Secretary of State's powers of direction over NHS organisations is a gesture underpinned by a genuine intention to remove micromanagement, we are concerned that current plans for Foundation Trusts which include direct accountability to four separate types of organisation, in addition to the increased complexities of new contracting arrangements, may in fact leave Foundation Trusts encumbered by more bureaucracy than their predecessors. In line with the general move towards rationalising inspection and regulation in healthcare, we recommend that CHAI and the proposed independent regulator act in a complementary way, integrating their work.

Will the proposals increase resources for Foundation Trusts?

24. Painting a grim picture of the present situation, prospective Foundation Trusts such as Bradford Hospitals NHS Trust welcomed the idea of increased access to non-ringfenced resources both in terms of capital and resources:

Currently the imperative to expand capacity to meet access targets is frustrated by the physical limitations affecting our diagnostic and treatment facilities and the near impossibility of accessing capital. This process is excessively bureaucratic for relatively trivial levels of funding.[21]

25. However, some of our witnesses felt that the new freedoms may not, at least initially, lead to significant increases in resources. Peter Dixon, Chair of University College London Hospitals NHS Trust told us:

I do not believe that the capacity of trusts to borrow money is going to be that great initially. They do not have the cash flows, the revenue streams just are not there and a threeyear revenue stream or even a sevenyear revenue stream is not going to excite many bankers.[22]

26. The Government's proposals to limit the proportion of Foundation Trusts' private patient income to 200304 levels have attracted considerable media attention, and have been welcomed by the independent healthcare sector. While Malcolm Stamp made clear to us that he would not be seeking to increase the volume of private patients as an income generator, he told us that this element of the proposals felt "a bit like philosophical overdrive".[23] However, General Healthcare pointed out that despite these restrictions, it was far from clear that Foundation Trusts would not be able to reinvest NHS surpluses in developing other commercial enterprises, for example offering occupational health services to businesses.[24] We believe that the Government's proposals, as they stand, have the potential to get a greater proportion of the increasing NHS funds going to Foundation Trusts, and we believe that limitations on private work are appropriate and necessary to ensure that Foundation Trusts' primary function remains the delivery of healthcare to NHS patients.

Social ownership

27. The Government's Guide to Foundation Trusts states that NHS Foundation Trusts will be "independent public interest organisations, modelled on cooperative societies and mutual organisations".[25] Mutuo, a thinktank promoting social ownership models, was unequivocal about the success of mutualism and equally positive about the extension of social ownership models to the National Health Service: "Mutual structures work. They enable appropriate levels of involvement to be enjoyed by all stakeholders and allow managers to manage ... Community ownership could make a real and positive difference to delivering the aims of the National Health Service ... Mutual governance structures will provide a means for the local community to hold professional management to account and to play a partnership role in setting strategies to drive the organisation in serving the community".[26] The Co-operative Union was similarly supportive: "Management [of Foundation Trusts] by the identified membership will give accountability and this will drive efficiency and success. We believe that this harnesses public sector values and ethos and private sector flexibility".[27] We are also familiar, through the experiences of individual members of the Committee, of social ownership schemes that have brought significant benefits to the organisations that have adopted them, including football clubs and housing associations.

28. However, because of the nature of the NHS, the scope for similar activities may be limited. Other commentators have also questioned the applicability of the model of social enterprise that is being proposed for Foundation Trusts. Quite apart from the question of complexity identified by Mutuo are other considerations concerning scope and scale. Examples of mutuals or social enterprise schemes are typically small scale and labour intensive, and have tended to operate in areas requiring limited inputs of technology or specialist skill. It is questionable whether parallels can be drawn between such initiatives and organisations like hospitals that require substantial technical expertise and professional services, operating within large and defined budgets. Analysis of the development of mutuals has highlighted the extent to which they have emerged in communities marginalised from the economic mainstream; they have often required heroic efforts on the part of key individuals; have relied substantially on public funds, and success has often only come after years of struggle. Moreover, success is patchy and owes much to local circumstances and individual champions.

29. In their written evidence, Mutuo cited Greenwich Leisure, a communally owned sports and recreation facility, as a "fine example" of a mutual enterprise taking on some of the old functions of the state far more efficiently and cost effectively than the private sector ever could.[28] However, in oral evidence, the chief executive of Greenwich Leisure, Mark Sesnan, delivered a stark warning about the dangers of assuming the mutual model could be easily extrapolated to the NHS, arguing that it had not been tried in an organisation as complex as an NHS Trust, and should be piloted carefully in one or two hospitals.[29]

30. The presumption behind the proposed new model of local governance is that social ownership of local hospitals will lead to "local decisions being more responsive to community and individual patient needs".[30] However, it is a significant leap from this commendable aspiration to the devising and implementing of a system which both allows patients and the taxpaying public, as well as staff and representatives from local partner organisations, to have their interests fairly and transparently represented, and which also facilitates meaningful contribution to the strategic direction of a hospital in order to improve services. Much of the oral evidence we heard showed strong support for the principles behind plans for Foundation Trusts to secure local ownership and involvement, but also elements of scepticism and genuine bewilderment at the array of different problems, both philosophical and practical, facing those charged with implementing them. We agree with the Secretary of State that "either this is for real or it is not" and feel that it absolutely crucial that these proposals are able to deliver the genuine improvements in patient involvement that they promise, rather than raising expectations they are not able to meet. There might have been even wider support for the concept of social ownership if the Government had first introduced the model in smaller scale community-based parts of the NHS.

Membership of a Foundation Trust

31. The Guide specifies that "Local people, patients and staff who become members will elect representatives on to a Board of Governors. The Board of Governors will have defined responsibilities for advising and overseeing the activities of the Management Board who will be responsible for the day to day operation of the NHS Foundation Trust".[31] The Guide sets out the following framework for the membership of a Foundation Trust:

1. Membership will be by registration rather than by automatic right

2. Membership will be open to:

People living in the local community.
People living outside the local community who have been patients at the hospital in the past 3 years.
Employees of the Trust.
Representatives of 'partner organisations'.

Registration as a member will bring with it the right to participate in the election of representatives to the Board of Governors, to receive information about the NHS Foundation Trust (for example its annual report) and to be consulted.[32]

32. Beyond these broad guidelines, each Foundation Trust will have considerable freedom as to how it implements arrangements for social ownership. It will be able to set out the boundaries for its own membership constituency, determine how elections are run, and decide on the scope and method of its consultation with the local community it serves. All these elements will need to be set out by trusts as part of their application for Foundation status. Trusts who wish to apply for first wave status will have six months to consult local stakeholders and prepare plans for their constitution before they are assessed, during September 2003, by a sofar unnamed "panel of experts drawn from inside and outside the Department of Health" in advance of announcements of successful candidates in SeptemberOctober 2003.[33]

Who will the members be?

33. The most immediate difficulty surrounding these plans concerns entitlement to 'membership' of a Foundation Trust. While all prospective Foundation Trusts will be obliged to have a membership community based on geographical boundaries, and to offer membership to current patients and those treated in the past three years, geographical boundaries of constituencies will be drawn by trusts themselves, and trusts will also be free to extend their membership to other groups if they choose. This is significantly different from other democratic organisations in this country, whose constituency boundaries are determined by the Boundaries Commission, an independent nondepartmental public body.

34. The Guide states that "the policy is about inclusion rather than exclusion".[34] However, as in order to keep the system manageable limits will have to be set, this is likely to result in a policy which could be construed as exclusive rather than inclusive. For example, the Guide is not clear whether people will be able to be members of more than one Foundation Trust, and this raises a number of questions: what if someone living in central London is equidistant between two Foundation Trusts, and, under the patient choice initiative, has chosen to have treatment at both? Is it reasonable to reserve membership for those who have actually used a service, thus excluding potential users (for example someone waiting for an appointment, or someone who was turned away from a GUM clinic because there were insufficient services available) who may in fact have a far greater interest in contributing to service improvements than those who have just been discharged? Will oneoff users of A&E services be offered membership or will this be restricted to patients being treated for an ongoing problem? A significant number of prospective Foundation Trusts provide undergraduate teaching, but should medical and nursing students be considered part of the membership community?

35. NHS organisations serve diverse and complicated constituencies, particularly those which function as regional or even national referral centres. Of the 32 Trusts that have expressed an interest in Foundation status, at least half fall into this category. The Secretary of State told us that approximately 50 PCTs commission specialist services from Moorfields Eye Hospital in London, with no single PCT responsible for more than two per cent of Moorfields' income.[35] As he put it, "clearly it would be pretty difficult if they get to Foundation Trust status to have 50 PCTs on the board and then the patients and the staff, that is going to be one hell of a board and it is going to be unmanageable".[36] Alternative forms of representation will obviously have to be found in situations like this, but again arrangements will be at the discretion of Foundation Trusts.

36. Another key issue is what proportion of local people will need to be members to achieve a reasonable representation of the local community. While the Secretary of State told us that for his local NHS Trust, serving a population of between 300,000 and 500,000 people, a membership of only 50 people would cause him concern, he did not want to commit himself to saying what a minimum proportion might be, arguing that "at this stage nobody knows because we have not tested the concept".[37] Bradford Hospitals NHS Trust told us they would be aiming towards a membership of 10% of their local population.[38] To put this in the context of existing systems of democracy, according to the Electoral Commission the approximate proportion of the population registered to vote in general elections is between 97-98%.[39]

37. We believe that the time is long overdue to address the democratic deficit in the NHS. However, the proposed system has no minimum standards for involvement and no coherent guidelines for how constituencies will be drawn up to ensure that patients and the public throughout the country have an equal opportunity for involvement. Instead, the Government has left the determination of what is a radical alteration to democratic accountability in the NHS to the unelected leaders of individual NHS organisations, which could lead to a system of patient and public involvement that is fragmented, confusing and inequitable. Although different constructions will clearly need to apply to different types of organisation, it is imperative that the Government safeguards democracy throughout the NHS by providing a national set of guidelines specifying the rules for defining membership constituencies and the process for managing elections so that NHS patients, and the public at large, can have full confidence in transparent and consistent standards of involvement.

38. The BMA argued that although trusts will be "expected to demonstrate innovative approaches to ensuring genuine community membership", there is no guarantee that these approaches will be successful - it is entirely possible that less organised and less vocal groups in the community, including ethnic minorities who may have specific health needs, will be under-represented.[40] The NHS Confederation made the point that most people tend to use hospitals episodically and rarely rather than regularly, and that those with most interest in their local hospital may be the least able to exercise membership rights.[41]

39. Speaking in the House, the Secretary of State defended the policy of limiting membership of Foundation Trusts to eligible individuals who complete a registration process, arguing that "if people are passionately committed to an organisation, they tend to want to join it. That is the tradition of mutualism and cooperation that underpins NHS Foundation Trusts, and it is a perfectly good principle".[42] He also said he would not rule out considering the electoral roll as a basis for membership. Peter Dixon told us that he did not feel, in London at least, that there was a "pent up demand for electoral participation in the NHS".[43] However, experiences of social ownership schemes in other sectors, including sport and leisure, suggest that such schemes have often generated considerably more interest than expected. But there are undoubtedly many groups within society who may be less able to develop or demonstrate a "passionate commitment" to their local hospital, either through lack of time, knowledge, confidence or ability. And these are likely to be precisely the groups who suffer from the most illhealth and therefore have the largest stake in the NHS, those from ethnic minorities, lower socioeconomic groups, refugees, those for whom English is not a first language or who have literacy problems, the elderly, and those with learning disabilities or mental health problems. Mark Sesnan also pointed out that it could be difficult to secure proactive involvement in something so new and unknown: "the patients, the users or whatever - do not know what they are going to vote and stand for, so they are not going to go out and fill this form in, are they, because it does not mean anything to them".[44]

40. The Guide recognises the problems attached to opening membership up beyond the 'usual suspects' who already engage with the NHS through patient support groups and the League of Friends, and suggests that "applicants may want to take a more proactive approach particularly where there are communities where public participation is particularly low. This might be necessary, for example, in some inner cities to engage minority groups who would not normally expect to be able to take part in the running of a public service".[45] Although it specifies that "Foundation Trusts will be expected to demonstrate innovative approaches to ensuring genuine community membership" as part of their applications, the standards against which this "genuine community membership" will be assessed are unknown.

41. The decision on whether or not to grant a trust Foundation status will also be made before these plans have been tested, and will not necessarily draw on their track record in community and patient engagement so far. Within the 32 3-star Trusts that have applied for Foundation status, there is very variable performance on the six indicators designed to measure patient satisfaction. Ten trusts scored below average on at least one aspect, and four received the lowest score on at least one aspect. Seven of the 32 applicants were average or below average on all six of the patient related performance indicators and only two of the 32 3star acute hospitals applying achieved the highest score on any aspect.[46] This suggests that in some prospective Foundation Trusts, patient involvement may currently leave something to be desired. Fiona Campbell, of the Democratic Health Network, told us she felt that some of our oral evidence demonstrated this point:

[Trusts] have no idea of what is involved in real community engagement ... I think it was pretty clear, from some of the answers you received earlier ... from the group of people, that they do not actually even know what the existing structures of public involvement are, because they referred to PALS [Patient Advice and Liaison Services] as if they were patients' forums and things like that. So I really do not think that by and large the trusts have a sense of what would be involved and the kind of real engagement that their colleagues are talking about.[47]

Whether this reflection is true or not there is a pressing need to clarify the nature and role of community engagement.

42. In order to maximise the breadth and range of membership, we believe that Foundation Trusts must proactively attempt to extend registration so as to achieve real and representative community engagement. This, including the involvement of disadvantaged groups, should be an issue both in assessing applications for Foundation Trusts and an on-going responsibility for the attention of the Commission for Patient and Public Involvement in Health, or, failing that, the independent regulator.

What will membership really mean?

43. Peter Hunt, the Director of Mutuo, argued that currently democratic input into the NHS remains "somewhat remote if our only ability to have any influence is via a general election".[48] Mr Hunt went on to suggest that "by giving ownership of the institution to individuals they then have a right to participate constitutionally, they cannot then be excluded from particular decisions and they cannot then be excluded from the whole round of decisionmaking processes".[49] However, we are not convinced that the current system allows members to be as directly involved in the running of Foundation Trusts as Mr Hunt suggests.

44. When questioned by the Committee on whether members of a Foundation Trust could overturn the decision of a trust to reconfigure services, the Secretary of State replied that "the simple answer to that is probably yes".[50] But under the present proposals, members' inclusion in decisionmaking appears to be limited to the election of Board members, who will then seek to influence the strategic direction of the Trust through an annual public meeting. Further to this, members will have a right to be 'consulted', which is again rather sketchily drawn. The Guide gives as an example "matters relating to how provision of NHS clinical services by the NHS Foundation Trust could be improved", but does not specify that members would need to be consulted about major service reconfigurations.[51] It is also important to note that consultation does not of itself equate to support of a policy, and the Guide does not specify what impact public consultation would be expected to have. If it is the case that members of a Foundation Trust will have the right to veto trust proposals through a referendum, then this will invest patients and the public with significant power over the way their local services are run. However, nothing we have seen in the Guide or in our other evidence suggests that this is the case, and we would welcome clarification on this point from the Department.

How will the Board of Governors work?

45. The Guide specifies that a Foundation Trust's Board of Governors "will represent the interests of the members and of partner organisations in the local health economy in the governance of the NHS Foundation Trust".[52] As with membership, Foundation Trusts will be free to determine the size and makeup of their own Boards of Governors, subject to the following guidelines:

The majority of governors must be representatives elected from the patient and public membership
There must also be:
- Representatives elected by the employee membership
- Representatives nominated from the main commissioning Primary Care Trusts
- Representatives from universities with responsibility for undergraduate training and research in the Foundation Trusts.[53]

46. The main function of the Board of Governors will be to work with the Management Board to ensure that the NHS Foundation Trust acts in a way that is consistent with its objects and with the conditions under which it is licensed to operate, and to help set the strategic direction. The Board of Governors will not be involved in matters of day to day management - such as setting budgets, staff pay and other operational matters, which will be decided by the management board.

47. The Board of Governors will elect a Chair, and will also elect nonexecutive directors to the Management Board. Non-executive Directors must account for at least a third of the places on the Management Board. The Board of Governors must hold at least three meetings per year, one of which must be in public.

What if the Board of Governors is divided?

48. Bob Hudson, Principal Research Fellow at the Nuffield Institute for Health, argued in his written evidence to us that "democracy and cosy consensus rarely go together hand in hand".[54] Many of our witnesses raised the potential difficulty of reconciling competing viewpoints on a board of governors. Mark Sesnan, Chief Executive of the mutuallyrun Greenwich Leisure, told us that the challenge of empowering consultants, frontline staff, managers and patients should not be underestimated.[55] We also heard that difficulties could be particularly pointed in relation to the differing interests within a twinsite trust where each individual hospital is intensely parochial, or in a trust which provides both specialist and more general services, which, as we have seen, make up a substantial proportion of applicant trusts.[56] Peter Dixon argued that for trusts such as his, the already difficult "balancing act" between specialist and general services was likely to be made more problematic by the new arrangements for Foundation Trusts which, he argued, would be likely to "cause some problems rather than some solutions".[57]

49. The Department has not answered the important question of how disputes will be resolved when a Board of Governors refuses to approve strategic plans related to meeting national priorities. This question was flagged by several chief executives as being crucial to how successful this policy could be. In response to a question about whether Boards of Governors would be able to veto decisions taken by the Management Board, the Department was limited to saying that if the Board of Governors wanted to do this they would need to sack the Chair or non-executive directors subject to approval by a 75% majority of the Board of Governors. This does not necessarily mean the decision will be vetoed. We call on the Department to clarify this situation and to indicate how it expects decisions to be overturned.

Local interests versus wider priorities?

50. Equally, if not more, problematic will be situations where the Board of Governors is in disagreement with local or national needs identified by the PCT. According to Dr Rutter:

Not all demands are the same as the needs of the population. We have a very high incidence of ischaemic heart disease and it would clearly be quite wrong in Bradford not to address that as a key public health issue despite what local residents may feel. There is a silent majority which is clearly dying out there and we need to address those issues.[58]

51. Chris Willis, Chief Executive of North Tees PCT, argued that it would be incredibly difficult to manage a situation "where you have succeeded in having meaningful local democracy and [the Board of Governors] vehemently disagree with national targets. I am not sure what we do at that point. That is when it is either going to stand or fall".[59]

52. Joan Rogers assumed that Government priorities would inevitably prevail over local ones: "I do believe we are still going to have these awful football matches sometimes; sometimes people will not like the change we are making in order to bring in the Government's agenda".[60] This very difficult issue has not been directly addressed by the Government, perhaps giving rise to some of the concerns we have heard voiced that boards of governors may in fact just turn into 'talking shops'. Birmingham NHS Concern felt particularly strongly on this point:

Although the publicly elected governors will be in a majority on the Board, they could lack expertise and simply defer to the minority that represent professional bodies or to the views of hospital managers and doctors. Some hospital managers already believe they can manipulate the Boards into becoming nothing more than talking shops.[61]

53. This also raises a crucial point about how effectively the Board of Governors will be able to scrutinise the Management Board's activities. The line between the responsibility of the Board of Governors and the Management Board is difficult to draw. On the one hand, as the Secretary of State argued, "you cannot have the Board of Governors interfering in the day to day decisions of the hospital otherwise the thing will never run".[62] On the other hand, the Board of Governors is ultimately accountable to the membership for the stewardship of the Trust and must be able to make an objective and meaningful contribution to the way in which it is run. Currently, nonexecutive directors of NHS trusts undergo a tailored training programme. However, no detail has been given as to what training Foundation Trusts would be expected to provide for their governors. Michael Tremblay, director of an independent health policy consultancy, argued that the Board of Governors should involve a wider level of representation beyond that of the more obvious social stakeholders, to ensure that the Board has sufficient access to operational expertise, including, at the least, financial, organisational, technology (information and clinical) and human resource expertise. He also suggested that the chief executive, medical director, and other senior executive staff should hold exofficio, nonvoting or advisory seats on the Board.[63]

54. We believe that the Government must put in place a national training system to ensure that Governors of Foundation Trusts have the necessary skills and information to hold the management boards of Foundation Trusts fully to account. This programme should be led by the Commission for Patient and Public Involvement in Health.

55. The Government must also give very careful consideration to the difficult questions which are already emerging about how disputes will be managed where the interests of representative constituencies including patients, staff and academics differ, and even more problematically, where the will of the Board of Governors steers a trust away from national priorities, or from a PCT's assessment of the needs of the local health economy as a whole. Not enough is known yet about formal voting and vetoing rights, and nascent Foundation Trusts cannot be expected to wrestle successfully with these enormously difficult issues on their own. Instead, these principles must be firmly established on a national basis if Boards of Governors are to wield genuine power in the NHS, rather than simply functioning as a focus groups, advisory panels or talking shops.

The costs and benefits of democracy?

56. As Ken Jarrold pointed out to us, "democracy has to be paid for".[64] He told us that he would welcome additional money being spent on greater democracy in the NHS. However, given the fact that the NHS operates within a fixed budget and continues to have to make very difficult decisions on prioritisation of spending on medical care on a day to day basis, introducing considerable expenditure without known benefits needs to be carefully justified. Peter Dixon admitted serious doubt about the relative costs and benefits of the proposals under consideration, arguing that despite extremely hard work, previous attempts at securing patient involvement had been nothing more than a "charade":

I am worried about the bureaucracy which may be associated with the democratic accountability, because you can put an awful lot of effort into that, for fairly limited returns. There are other ways of making sure that we are accessible and accountable to our localities without trying to run an electorate in excess of 1 million for us. If we are going to take it that seriously, it is going to require an enormous bureaucracy. It either becomes "going through the motions" or it becomes very complicated.[65]

57. The King's Fund seconded this view: "We are not convinced that, for the effort involved, the Stakeholder Council will have much effect in improving services for local people."[66] One way of minimising the bureaucracy and allowing another model for trusts to choose from would be to allow elections to take place based on the electoral roll (not necessarily on existing council boundaries). The Government should consider this as an alternative model which some trusts might want to adopt.

Lack of Patient and Public Involvement Forums

58. Many groups have also taken issue with the fact that, although they will be subject to PCT patient forums, Foundation Trusts will not be subject to the same arrangements for patient and public involvement as other trusts. Peter Dixon, Chair of University College Hospitals London NHS Trust told us:

We certainly need to engage better, but will we? At the moment we are saying that Foundation Trusts do not have to have a patients' forum. That seems to me a rather strange thing to say. I would welcome a patients' forum, but if I am going to be a Foundation, I do not have to have one. All right, I can have one, but it seems to me an odd way of structuring this.[67]

59. Under proposals currently being implemented, in each NHS trust there will be a Patient Advice and Liaison Service (PALS) providing on the spot help and information about health services and an independent complaints advocacy service (ICAS) where people will be able to get help to pursue formal complaints. Patient and Public Involvement Forums will be set up in every NHS trust and PCT to feed in to the day to day management of health services by the Trust, and will monitor the effectiveness of the PALS and ICAS in their area. Patient and Public Involvement Forums will have rights of entry to trust buildings, and will have the right to appoint a member as a non-executive director on the trust board. An independent nondepartmental public body established this year to ensure better patient and public involvement in the NHS, the Commission for Patient and Public Involvement in Health (CPPIH), will establish, support and facilitate the coordination of Patient and Public Involvement Forums.[68] Foundation Trusts will not have to establish Patient and Public Involvement Forums, but will still be subject to scrutiny by the Patients Forums of local PCTs.[69]

60. The CPPIH were vehement in their condemnation of this exemption:

It is the unanimous view of the Board that the proposal to exempt Foundation Trust Hospitals from the requirement to have Patient and Public Involvement Forums represents a serious threat to the integrity of the new system for involving the public which the Commission is charged with establishing.[70]

61. According to the CPPIH, not having Patient and Public Involvement Forums will mean that Foundation Trusts become a 'blind spot' for PCT Patient and Public Involvement Forums , and ultimately in the bigger picture being built up by CPPIH. CPPIH is charged with providing a national and strategic approach to patient and public involvement in the NHS, but they expressed concern that without Patient and Public Involvement Forums, Foundation Trusts may effectively become 'no go' areas for CPPIH. Although the Secretary of State was clear that "two replicated forms of patient involvement" within Foundation Trusts would be unnecessary, CPPIH argued that it would in fact be more logical to scrap the inclusion of nonexecutive directors on the Management Board, as it was here that the duplication lay.[71]

62. The Secretary of State told us that Foundation Trusts did not need Patient and Public Involvement Forums, as they already had a substantial element of patient involvement built into their structures:

With Foundation Trust status we go way beyond Patient Forums in at least two regards. First of all, it is the local community who will elect the hospital governors, the patients and the public will have a democratic mandate, which is not the case with Patient Forums at all, so it is a much purer form of democracy. If you want to put the patients at the heart of it the best way is to let the patients decide that.[72]

63. We received evidence cautioning against confusing ownership, democracy and engagement. Securing democracy in the NHS essentially involves putting in place a mechanism whereby elected representatives have an input into service delivery. Ownership is a subtly different concept, stemming, as we have seen, from the cooperative movement, whereby people voluntarily 'opt in' to a mutual or collective organisation. As well as being committed to the purpose and values of an organisation, members have a financial stake in it, and are liable in the case of insolvency. Both democracy and ownership imply a degree of indirect engagement, but this is not necessarily a separate objective of either of these two processes.

64. Another point that is easily overlooked is that the proposed shifts in governance for Foundation Trusts are replacing a distant, but established form of democracy (the Secretary of State) with a new and untried one. If this policy is adopted, Boards of Governors will ultimately represent the only form of democracy overseeing the NHS, because, as pointed out in our evidence, local people will have not have the power to remove the independent regulator if they think it is acting against their interests, as they can do with elected politicians. As well as striving to improve democracy at a local level, as these proposals do, we feel it is important that democratic accountability is maintained at a national level. The appointment of an independent regulator must not be allowed to reduce the ability of members of the public to obtain information that they otherwise would have sought from Ministers through their Member of Parliament.

65. Efforts to secure direct patient engagement and involvement are different from democracy, which constitutes at best only an indirect voice in the governance of services. Direct patient engagement often involves methods such as consultation, patient surveys, or the provision of other opportunities for patients to give direct feedback about the organisation, including the resolution of complaints. This is precisely the type of engagement that, according to the CPPIH, Patient and Public Involvement Forums are likely to have the expertise in providing.[73]

66. Patient and Public Involvement Forums function independently of the Trust Board, reporting upwards to the central, independent body, the CPPIH. Although the Board of Governors will be separate from the Management Board, as we have seen it may be easy for it to appear to be hijacked by the agenda of the Trust Management Board. Secondly, Patient and Public Involvement Forums will be run by staff with proven expertise in patient involvement and will have direct and regular links with a central body established to ensure best practice in this still very new discipline. Without Patient and Public Involvement Forums it is difficult to see how Foundation Trusts will tap into this expertise.

67. In oral evidence to us, the Secretary of State indicated that Patient and Public Involvement Forums (PPIFs) in NHS trusts would be temporary measures, which would ultimately be replaced by the new system of a partly elected Board of Governors. One of the key functions of PPIFs is their right to appoint a non-executive Director to the Trust Board, something the Commission for Patient and Public Involvement in Health (CPPIH) argued might allow patients and the public more direct involvement in a Trust's governance than only being able to elect representatives to a Board of Governors. However we feel that this function of PPIFs will be covered by the provision for Foundation Trusts' Boards of Governors to elect non-executive directors (NEDs) to their Management Boards.

68. Nevertheless, major concerns remain about the differences between arrangements for patient and public involvement in Foundation Trusts and in other NHS trusts. For example, PPIFs are entirely independent of the trust whose population they serve, and account directly to the Commission for Patient and Public Involvement. On the other hand NEDs on a Foundation Trust Management Board would be accountable to the Trust's Board of Governors and the CPPIH would be excluded. We recommend that, in the absence of its own Patient and Public Involvement Forum, a Foundation Trust's patient non-executive directors should have access to support and training from the CPPIH. Such NEDs should be a part of the CPPIH in the same way as NEDs appointed to Foundation Trust Management Boards as representatives from commissioning PCT Patients Forums.

69. Also there are no explicit provisions either in the Guide to Foundation Trusts or in the Health and Social Care (Community Health and Standards) Bill to ensure that Foundation Trusts have Patient Advocacy and Liaison Services (PALS) to support patients in negotiating hospitals systems, or that they will have access to an Independent Complaints Advocacy Service. Neither is it clear that they will be subject to the same complaints procedure as the rest of the NHS. The proposal of entirely new arrangements for patient and public involvement for Foundation Trusts does not appear to be well integrated with systems currently being implemented in the rest of the NHS. We feel it is very important that Foundation Trusts are able to benefit from the developing expertise of the CPPIH, and to contribute to the work that the CPPIH is undertaking to improve patient and public involvement in the NHS at a national, strategic level.

A marriage of convenience?

70. Questions have been raised about how naturally and logically the three elements of increased financial freedoms, increased management freedoms, and new local governance arrangements, sit together. It would clearly be possible to have one element without the others; as the Secretary of State has pointed out to us, some NHS trusts have already established wider advisory groups drawn from representatives from the community, with the aim of working alongside the trust board on issues that are of concern to the local community.[74]

71. Evidence we took from chief executives of NHS 3-star trusts suggested that although they had been pushing strongly for less central control, the idea of Foundation Trusts as independent entities governed by local stakeholders was not something that had occurred to them.[75] While some of the trusts we received evidence from thought that they might still consider applying for Foundation status if increased local accountability through an elected board of governors was the only change on offer, one witness stated that the increased access to capital was by far the strongest incentive for his trust, and several others felt that the proposals would not be worthwhile if the promise of less central control did not materialise.[76]

72. Plans for Foundation Trusts involve far-reaching reforms in three areas. At a central level, they propose the introduction of a new regulatory regime and the establishment of a new regulatory body which will eventually replace the Secretary of State's direct control over NHS organisations. The new regulatory regime will also require Foundation Trusts to develop new skills in order to interact with it successfully. Also at a local level, Foundation Trusts will face the challenge of designing and administering large community and staff elections, and, once elections are finished, ensuring that new Boards of Governors are able to contribute effectively to the governance of the trust, whilst protecting the smooth running of the trust during the transition period. At the same time as this Foundation Trusts will also be learning how best to use their new financial freedoms. The problems we have identified with the proposals as they stand attest to the difficulty of formulating three such complex reforms simultaneously, and we therefore feel it is very important that if these reforms are implemented Foundation Trusts are given dedicated support in introducing each element, and that each element is individually addressed.

7 'Foundation Hospitals - a new direction for NHS reform?' Kieran Walsh, Journal of the Royal Society of Medicine 2003; 96, 106-110 Back

8 Delivering the NHS Plan, Department of Health, April 2002, p 30 Back

9 Ev 123 Back

10 Ev 123 Back

11 Q5; Q6 Back

12 Q8 Back

13 Q430; The little information available on exactly what the Secretary of State's direction powers are at the moment reinforces this case. As we write this report the Government still has not replied to the written question by Julia Drown MP tabled on 30th January which asked when the Secretary of State last made direction to a) an NHS Trust and b) all NHS Trusts and what that direction was. We do know that there were no instances in the three months up until 29 January 2003 where the Secretary of State used his power of intervention to give direction to a particular trust. Back

14 Q252 Back

15 HC Deb, 3 December 2002, col. 751 Back

16 Health and Social Care (Community Health and Standards) Bill Back

17 Q140 Back

18 A Guide to NHS Foundation Trusts, Department of Health, December 2002, p 28 Back