National Health Service Bill [HL]

House of Commons

Session 2005 - 06
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Other Bills before Parliament

National Health Service Bill [HL]

National Health Service Bill [HL]
Part 2 — Health service bodies
Chapter 5 — NHS foundation trusts
19

Financial matters
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Power of Secretary of State to give financial assistance
(1)
The Secretary of State may give financial assistance to any NHS foundation
trust.
(2)
The financial assistance may be given by way of loan, public dividend capital,
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grant or other payment.
(3)
The Secretary of State may guarantee the payment of any amount payable by
an NHS foundation trust under an externally financed development
agreement.
(4)
“Externally financed development agreement” has the same meaning as in
10
paragraph 23 of Schedule 4, reading references in sub-paragraphs (3) and (5) of
that paragraph to the NHS trust as references to the NHS foundation trust.
41
Prudential borrowing code
(1)
The regulator may revise the code made under section 12(1) of the Health and
Social Care (Community Health and Standards) Act 2003 (c. 43) for
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determining the limit on the total amount of the borrowing of any NHS
foundation trust.
(2)
In revising the code the regulator must have regard (among other things) to
any generally accepted principles used by financial institutions to determine
the amounts of loans to non profit making bodies.
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(3)
A body is non profit making if it does not carry on activities for the purpose of
making profits for distribution to its members or others.
(4)
Before revising the code, the regulator must consult—
(a)
the Secretary of State,
(b)
each NHS foundation trust,
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(c)
each NHS trust intending to make an application to become an NHS
foundation trust,
(d)
such other persons as the regulator considers appropriate.
(5)
The regulator must lay a copy of the revised code before Parliament.
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Public dividend capital
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(1)
Where an NHS trust becomes an NHS foundation trust, the amount which was
the public dividend capital of the NHS trust immediately before the giving of
the authorisation continues as public dividend capital of the NHS foundation
trust held on the same conditions (“initial public dividend capital”), but subject
to this section.
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(2)
Any amount issued to an NHS foundation trust as public dividend capital
under section 40 is (like initial public dividend capital) an asset of the
Consolidated Fund.
(3)
The Secretary of State may, with the consent of the Treasury, decide the terms
on which any public dividend capital of an NHS foundation trust must be
40
treated as having been issued.

National Health Service Bill [HL]
Part 2 — Health service bodies
Chapter 5 — NHS foundation trusts
20

(4)
But the dividend to be paid by the trust must be the same as that payable by
NHS trusts in England under paragraph 1(6) of Schedule 5.
(5)
Before exercising the power in subsection (3), the Secretary of State must
consult the regulator.
(6)
Any amount paid to the Secretary of State by an NHS foundation trust by way
5
of repayment of public dividend capital must be paid into the Consolidated
Fund.
Functions
43
Authorised services
(1)
An authorisation must authorise the NHS foundation trust to provide goods
10
and services for purposes related to the provision of health care.
(2)
But the authorisation must secure that the principal purpose of the NHS
foundation trust is the provision of goods and services for the purposes of the
health service in England.
(3)
The NHS foundation trust may also carry on activities other than those
15
mentioned in subsection (1), subject to any restrictions in the authorisation, for
the purpose of making additional income available in order better to carry on
its principal purpose.
(4)
The authorisation may require the provision, wholly or partly for the purposes
of the health service in England, of goods and services by the NHS foundation
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trust.
(5)
The authorisation must authorise and may require the NHS foundation trust—
(a)
to carry out research in connection with the provision of health care,
(b)
to make facilities and staff available for the purposes of education,
training or research carried on by others,
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and, in deciding how to exercise its functions under this subsection in a case
where any of the corporation’s hospitals includes a medical or dental school
provided by a university, the regulator must have regard to the need to
establish and maintain appropriate arrangements within the university.
(6)
In deciding whether or not to require the NHS foundation trust to provide,
30
wholly or partly for the purposes of the health service in England, any goods
or services the regulator must have regard (among other things) to—
(a)
the need for the provision of goods or services in the area in question,
(b)
any provision of goods or services by other health service bodies in the
area in question,
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(c)
any other provision by the NHS foundation trust with which the
provision of the goods or services is connected,
(d)
any agreement or arrangement to which the body corporate which is
the NHS foundation trust is or was a party.
(7)
Such a requirement as is mentioned in subsection (4) may be framed by
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reference (among other things) to—
(a)
goods or services in general or of a particular description,
(b)
goods or services required to meet the needs of health service bodies in
general or those of a particular description,

National Health Service Bill [HL]
Part 2 — Health service bodies
Chapter 5 — NHS foundation trusts
21

(c)
goods or services required to meet the needs of other persons of a
particular description,
(d)
the volume of goods or services provided,
(e)
the place where goods or services are provided,
(f)
the period within which goods or services are provided.
5
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Private health care
(1)
An authorisation may restrict the provision, for purposes other than those of
the health service in England, of goods and services by an NHS foundation
trust.
(2)
The power must be exercised, in particular, with a view to securing that the
10
proportion of the total income of an NHS foundation trust which was an NHS
trust in any financial year derived from private charges is not greater than the
proportion of the total income of the NHS trust derived from such charges in
the base financial year.
(3)
“Base financial year” means the first financial year throughout which the body
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corporate was an NHS trust or, if it was an NHS trust throughout the financial
year ending with 31st March 2003, that year.
(4)
“Private charges” means charges imposed in respect of goods and services
provided to patients other than patients being provided with goods and
services for the purposes of the health service.
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(5)
Section 43(7) applies for the purposes of this section.
(6)
According to the nature of its functions, an NHS foundation trust may, in the
case of patients being provided with goods and services for the purposes of the
health service, make accommodation or further services available for patients
who give undertakings (or for whom undertakings are given) to pay any
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charges imposed by the NHS foundation trust in respect of the accommodation
or services.
(7)
An NHS foundation trust may exercise the power conferred by subsection (6)
only to the extent that its exercise does not to any significant extent interfere
with the performance by the NHS foundation trust of its functions.
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Protection of property
(1)
An NHS foundation trust may not dispose of any protected property without
the approval of the regulator.
(2)
Disposing of property includes disposing of part of it or granting an interest in
it.
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(3)
Protected property is property of the trust designated as protected in its
authorisation.
(4)
The regulator may designate property as protected if it considers it is needed—
(a)
for the purposes of any goods or services which the authorisation
requires the trust to provide wholly or partly for the purposes of the
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health service in England, or
(b)
for the purpose of doing anything which the trust is required to do
under section 43(5).

National Health Service Bill [HL]
Part 2 — Health service bodies
Chapter 5 — NHS foundation trusts
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(5)
The regulator may give approval under subsection (1) on any terms it
considers appropriate.
(6)
An NHS foundation trust may not create a floating charge on its property.
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Financial powers
(1)
An NHS foundation trust may borrow money for the purposes of or in
5
connection with its functions.
(2)
But the total amount of the NHS foundation trust’s borrowing is subject to the
limit imposed by its authorisation.
(3)
The limit must be reviewed annually by the regulator.
(4)
An NHS foundation trust may invest money (other than money held by it as
10
trustee) for the purposes of or in connection with its functions.
(5)
The investment may include investment by—
(a)
forming, or participating in forming, bodies corporate,
(b)
otherwise acquiring membership of bodies corporate.
(6)
An NHS foundation trust may give financial assistance (whether by way of
15
loan, guarantee or otherwise) to any person for the purposes of or in
connection with its functions.
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General powers
(1)
An NHS foundation trust may do anything which appears to it to be necessary
or expedient for the purpose of or in connection with its functions.
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(2)
In particular it may—
(a)
acquire and dispose of property,
(b)
enter into contracts,
(c)
accept gifts of property (including property to be held on trust for the
purposes of the NHS foundation trust or for any purposes relating to
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the health service),
(d)
employ staff.
(3)
Any power of the NHS foundation trust to pay remuneration and allowances
to any person includes power to make arrangements for providing, or securing
the provision of, pensions or gratuities (including those payable by way of
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compensation for loss of employment or loss or reduction of pay).
(4)
“The purposes of the NHS foundation trust” means the general or any specific
purposes of the trust (including the purposes of any specific hospital at or from
which services are provided by the trust).
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Information
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(1)
An authorisation—
(a)
must require an NHS foundation trust to disclose such information to
the regulator as the Secretary of State specifies,
(b)
may require an NHS foundation trust to disclose other information to
the regulator.
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National Health Service Bill [HL]
Part 2 — Health service bodies
Chapter 5 — NHS foundation trusts
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(2)
The regulator may require any other health service body to disclose any
information which the regulator requires for the purposes of its functions.
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Entry and inspection of premises
An authorisation may require an NHS foundation trust to allow the regulator
to enter and inspect premises owned or controlled by the trust.
5
50
Fees
An authorisation may require an NHS foundation trust to pay a reasonable
annual fee to the regulator.
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Trust funds and trustees
(1)
The Secretary of State may by order provide for the appointment of trustees for
10
an NHS foundation trust to hold property on trust—
(a)
for the purposes of the NHS foundation trust, or
(b)
for any purposes relating to the health service.
(2)
The order may—
(a)
make provision as to the persons by whom trustees must be appointed
15
and generally as to the method of their appointment,
(b)
make any appointment subject to such conditions as may be specified
in the order (including conditions requiring the consent of the Secretary
of State),
(c)
make provision as to the number of trustees to be appointed, including
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provision under which that number may from time to time be
determined by the Secretary of State after consultation with such
persons as he considers appropriate,
(d)
make provision with respect to the term of office of any trustee and his
removal from office.
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(3)
Where trustees have been appointed for an NHS foundation trust under this
section, the Secretary of State may by order provide for the transfer of any trust
property from the NHS foundation trust to the trustees.
(4)
Where an NHS trust for which trustees have been appointed under paragraph
10 of Schedule 4 is given an authorisation, the order appointing the trustees has
30
effect as an order under this section.
(5)
“The purposes of the NHS foundation trust” means the general or any specific
purposes of the trust (including the purposes of any specific hospital at or from
which services are provided by the trust).
Failure
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52
Failing NHS foundation trusts
(1)
If the regulator is satisfied—
(a)
that an NHS foundation trust is contravening, or failing to comply
with, any term of its authorisation or any requirement imposed on it
under any enactment and that the contravention or failure is
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significant, or

National Health Service Bill [HL]
Part 2 — Health service bodies
Chapter 5 — NHS foundation trusts
24

(b)
that an NHS foundation trust has contravened, or failed to comply
with, any such term or requirement and is likely to do so again and that
the contravention or failure was significant,

the regulator may by a notice to the trust exercise one or more of the powers in
subsections (3) and (4).
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(2)
The regulator may also by a notice to the trust exercise one or more of those
powers if the regulator is satisfied that the trust has contravened or failed to
comply with a previous notice.
(3)
The regulator may require the trust, the directors or the board of governors to
do, or not to do, specified things or things of a specified description within a
10
specified period.
(4)
The regulator may remove any or all of the directors or members of the board
of governors and appoint interim directors or members of the board.
(5)
The regulator’s power to remove a director, or member of the board of
governors, of the trust includes power to suspend him from office, or to
15
disqualify him from holding office, as a director or member of the board of
governors of the trust for a specified period.
53
Voluntary arrangements
(1)
If the regulator is satisfied that it is necessary or expedient to do so, it may by
a notice to an NHS foundation trust require the directors—
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(a)
to take steps to obtain a moratorium, or
(b)
to make a proposal for a voluntary arrangement.
(2)
An order may provide for Part 1 of the Insolvency Act 1986 (c. 45) (company
voluntary arrangements), including any related provision of that Act, to apply
with modifications in relation to NHS foundation trusts.
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(3)
References in this Chapter to a moratorium are to a moratorium under section
1A of that Act as modified by the order.
(4)
References in this Chapter to a voluntary arrangement are to a voluntary
arrangement under Part 1 of that Act as modified by the order.
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Dissolution etc
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(1)
The powers conferred by this section are exercisable where—
(a)
an NHS foundation trust contravenes or fails to comply with a notice
under section 52 or 53 or the trust’s compliance with a notice under
section 53 does not result in the implementation of a voluntary
arrangement, and
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(b)
the regulator considers that further exercise of any of the powers
conferred by those sections would not be likely to secure the provision
of the goods and services which the authorisation requires the trust to
provide.
(2)
Before the powers conferred by this section are exercised, the regulator must
40
consult specified persons about specified matters.
(3)
“Specified” means specified in an order.

National Health Service Bill [HL]
Part 2 — Health service bodies
Chapter 5 — NHS foundation trusts
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(4)
An order may transfer, or provide for the transfer of, any property or liabilities
of the trust to—
(a)
another NHS foundation trust,
(b)
a Primary Care Trust,
(c)
an NHS trust,
5
(d)
the Secretary of State.
(5)
The liabilities which may be transferred by virtue of subsection (4) to any of the
bodies mentioned in paragraphs (a) to (c) of that subsection include criminal
liabilities.
(6)
Schedule 9 makes provision for the transfer of employees.
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(7)
An order may provide for the dissolution of the trust.
(8)
An order may apply any provision of Part 4 of the Insolvency Act 1986 (c. 45)
(winding up of companies), including any related provision of that Act, with
modifications.
(9)
Where the regulator refuses to give an authorisation to a public benefit
15
corporation—
(a)
the powers conferred by this section are also exercisable, and
(b)
references in this section and Schedule 9 to an NHS foundation trust are
references to the corporation.
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Sections 53 and 54: supplementary
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(1)
In sections 53 and 54, an order means an order made by the Secretary of State.
(2)
The modifications of the Insolvency Act 1986 that may be made by an order
include—
(a)
provision for securing that the goods and services which the trust is
required by the authorisation to provide continue to be provided
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(whether by the trust or another),
(b)
provision for securing the protection of property needed for the
purposes of those goods and services.
(3)
The power conferred by section 54(3) must be exercised with a view to securing
the provision of the goods and services which the authorisation requires the
30
trust to provide.
(4)
That power must also be exercised (together, if required, with the power
conferred by section 40(2)) with a view to securing that any transfer of property
in pursuance of the exercise of the power does not result in a net loss of value
to the trust; and the question whether a transfer would result in a net loss of
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value must be determined in accordance with regulations.
(5)
The Insolvency Act 1986 may not be modified under section 54(8) so as to alter
the priority of debts or the ranking of debts between themselves.
Mergers
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Mergers
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(1)
An application may be made jointly by—
(a)
an NHS foundation trust, and