National Health Service Bill [HL]

House of Commons

Session 2005 - 06
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National Health Service Bill [HL]

National Health Service Bill [HL]
Schedule 7 — Constitution of public benefit corporations
216

(a)
a person who has been adjudged bankrupt or whose estate has been
sequestrated and (in either case) has not been discharged,
(b)
a person who has made a composition or arrangement with, or
granted a trust deed for, his creditors and has not been discharged in
respect of it,
5
(c)
a person who within the preceding five years has been convicted in
the British Islands of any offence if a sentence of imprisonment
(whether suspended or not) for a period of not less than three
months (without the option of a fine) was imposed on him.
      (2)
The constitution may make further provision as to the circumstances in
10
which a person may not become or continue as a member of the board.
9     (1)
More than half of the members of the board of governors must be elected by
members of the corporation other than those who come within paragraph
3(1)(b).
      (2)
At least three members of the board must be elected by the staff constituency
15
or, where there are classes within it, at least one member of the board must
be elected by each class and at least three members must be elected
altogether.
      (3)
At least one member of the board must be appointed by a Primary Care
Trust for which the corporation provides goods or services.
20
      (4)
At least one member of the board must be appointed by one or more
qualifying local authorities.
      (5)
A qualifying local authority is a local authority for an area which includes
the whole or part of an area specified in the constitution as the area for a
public constituency.
25
      (6)
If any of the corporation’s hospitals includes a medical or dental school
provided by a university, at least one member of the board must be
appointed by that university.
      (7)
An organisation specified in the constitution as a partnership organisation
may appoint a member of the board.
30
10    (1)
An elected member of the board of governors may hold office for a period of
three years.
      (2)
Such a member is eligible for re-election at the end of that period.
      (3)
But such a member ceases to hold office if he ceases to be a member of the
corporation.
35
11
The corporation may pay travelling and other expenses to members of the
board of governors at rates decided by the corporation.
12
The constitution must provide for the chairman of the corporation or (in his
absence) another person to preside at meetings of the board of governors.
13    (1)
The constitution must provide for meetings of the board of governors to be
40
open to members of the public.
      (2)
But the constitution may provide for members of the public to be excluded
from a meeting for special reasons.
14    (1)
The constitution must make provision as to—

National Health Service Bill [HL]
Schedule 7 — Constitution of public benefit corporations
217

(a)
the conduct of elections for membership of the board,
(b)
the appointment of persons to membership,
(c)
the practice and procedure of the board,
(d)
the removal of a member from office.
      (2)
The constitution may make further provision about the board.
5
Directors
15    (1)
A public benefit corporation has a board of directors.
      (2)
The constitution must provide for all the powers of the corporation to be
exercisable by the board of directors on its behalf.
      (3)
But the constitution may provide for any of those powers to be delegated to
10
a committee of directors or to an executive director.
16    (1)
The board consists of—
(a)
executive directors, one of whom is the chief executive (and
accounting officer) and another the finance director,
(b)
non-executive directors, one of whom is the chairman.
15
      (2)
One of the executive directors must be a registered medical practitioner or a
registered dentist (within the meaning of the Dentists Act 1984 (c 24)); and
another must be a registered nurse or a registered midwife.
      (3)
A person may not be appointed as an executive director if he is within
paragraph 8(1).
20
      (4)
A person may be appointed as a non-executive director only if—
(a)
he is a member of a public constituency or the patients’ constituency,
or
(b)
where any of the corporation’s hospitals includes a medical or dental
school provided by a university, he exercises functions for the
25
purposes of that university,

and he is not within paragraph 8(1).
17    (1)
It is for the board of governors at a general meeting to appoint or remove the
chairman and the other non-executive directors.
      (2)
Removal of a non-executive director under sub-paragraph (1) requires the
30
approval of three-quarters of the members of the board.
      (3)
It is for the non-executive directors to appoint or remove the chief executive.
      (4)
It is for a committee consisting of the chairman, the chief executive and the
other non-executive directors to appoint or remove the executive directors.
      (5)
The appointment of a chief executive requires the approval of the board of
35
governors.
18    (1)
It is for the board of governors at a general meeting to decide the
remuneration and allowances, and the other terms and conditions of office,
of the non-executive directors.
      (2)
The corporation must establish a committee of non-executive directors to
40
decide the remuneration and allowances, and the other terms and
conditions of office, of the executive directors; but the constitution may

National Health Service Bill [HL]
Schedule 7 — Constitution of public benefit corporations
218

make provision for those matters to be decided pending the establishment
of such a committee.
Initial directors of former NHS trusts
19    (1)
This paragraph applies, where the application for authorisation is made
under section 33, to the exercise of the powers mentioned in paragraph 17 to
5
appoint the initial non-executive directors and the initial chief executive.
      (2)
The power to appoint the initial chairman of the corporation must be
exercised by appointing the chairman of the NHS trust, if he wishes to be
appointed.
      (3)
The power to appoint the other initial non-executive directors of the
10
corporation must be exercised, so far as possible, by appointing any of the
non-executive directors of the NHS trust (other than the chairman) who
wish to be appointed.
      (4)
A person appointed in accordance with sub-paragraph (2) or (3) must be
appointed for the unexpired period of his term of office as chairman or non-
15
executive director of the NHS trust; but if, on any such appointment, that
period is less than 12 months, he must be appointed for 12 months.
      (5)
The power to appoint the initial chief executive of the corporation must be
exercised by appointing the chief officer of the NHS trust, if he wishes to be
appointed.
20
      (6)
Sub-paragraphs (a) and (b) of paragraph 16(4) do not apply to the
appointment of any initial non-executive director in pursuance of this
paragraph; and paragraph 17(5) does not apply to the appointment of the
initial chief executive of the corporation in pursuance of sub-paragraph (5).
Register of members etc
25
20    (1)
A public benefit corporation must have—
(a)
a register of members showing, in respect of each member, the
constituency to which he belongs and, where there are classes within
it, the class to which he belongs,
(b)
a register of members of the board of governors,
30
(c)
a register of interests of the members of the board of governors,
(d)
a register of directors,
(e)
a register of interests of the directors.
      (2)
The constitution may make further provision about the registers including,
in particular, admission to, and removal from, the registers.
35
21
The constitution must make provision for dealing with conflicts of interest
of members of the board of governors and of the directors.
22    (1)
A public benefit corporation must make the following documents available
for inspection by members of the public free of charge at all reasonable
times—
40
(a)
a copy of the current constitution,
(b)
a copy of the current authorisation,
(c)
a copy of the latest annual accounts and of any report of the auditor
on them,

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Schedule 7 — Constitution of public benefit corporations
219

(d)
a copy of the latest annual report,
(e)
a copy of the latest information as to its forward planning,
(f)
a copy of any notice given under section 52.
      (2)
Any person who requests it must be provided with a copy of or extract from
any of the above documents.
5
      (3)
The corporation is also to make the registers mentioned in paragraph 20
available for inspection by members of the public, except in circumstances
prescribed; and, so far as the registers are required to be available—
(a)
they must be available free of charge at all reasonable times,
(b)
a person who requests it must be provided with a copy of or extract
10
from them.
      (4)
If the person requesting a copy or extract under this paragraph is not a
member of the corporation, the corporation may impose a reasonable charge
for doing so.
Auditor
15
23    (1)
A public benefit corporation must have an auditor.
      (2)
It is for the board of governors to appoint or remove the auditor at a general
meeting of the board.
      (3)
An officer of the Audit Commission may be the auditor if he is appointed by
the board with the agreement of the Commission.
20
      (4)
But a person may not be appointed as auditor unless he (or, in the case of a
firm, each of its members) is a member of one or more of the following
bodies—
(a)
the bodies mentioned in section 3(7)(a) to (e) of the Audit
Commission Act 1998 (c. 18),
25
(b)
any other body of accountants established in the United Kingdom
and approved by the regulator for the purposes of this paragraph.
      (5)
Where an officer of the Audit Commission is appointed as auditor, the
Commission must charge the public benefit corporation such fees for his
services as will cover the full cost of providing them.
30
      (6)
The corporation must establish a committee of non-executive directors as an
audit committee to perform such monitoring, reviewing and other functions
as are appropriate.
      (7)
In this paragraph “the Audit Commission” means the Audit Commission for
Local Authorities and the National Health Service in England and Wales.
35
Accounts
24    (1)
A public benefit corporation must keep accounts in such form as the
regulator may with the approval of the Treasury direct.
      (2)
The accounts must be audited by the corporation’s auditor.
      (3)
But the Comptroller and Auditor General may examine—
40
(a)
the accounts,
(b)
any records relating to them, and

National Health Service Bill [HL]
Schedule 7 — Constitution of public benefit corporations
220

(c)
any report of the auditor on them.
      (4)
If trustees are appointed under section 51, the Comptroller and Auditor
General may also examine—
(a)
the accounts kept by the trustees,
(b)
any records relating to them, and
5
(c)
any report of an auditor on them.
      (5)
In auditing the accounts the auditor must comply with any directions given
by the regulator as to the standards, procedures and techniques to be
adopted.
25    (1)
A public benefit corporation must prepare in respect of each financial year
10
annual accounts in such form as the regulator may with the approval of the
Treasury direct.
      (2)
In preparing its annual accounts, the corporation must comply with any
directions given by the regulator with the approval of the Treasury as to—
(a)
the methods and principles according to which the accounts must be
15
prepared,
(b)
the information to be given in the accounts.
      (3)
In determining the form and content of the annual accounts the regulator
must aim to ensure that the accounts present a true and fair view.
      (4)
The corporation must—
20
(a)
lay a copy of the annual accounts, and any report of the auditor on
them, before Parliament, and
(b)
once it has done so, send copies of those documents to the regulator.
      (5)
The constitution must provide for the functions of the corporation under this
paragraph to be delegated to the accounting officer.
25
      (6)
In this paragraph and paragraph 27 “financial year” means—
(a)
the period beginning with the date on which the corporation is
authorised under section 35 and ending with the next 31st March,
and
(b)
each successive period of twelve months beginning with 1st April.
30
Annual reports and forward plans
26    (1)
A public benefit corporation must prepare annual reports and send them to
the regulator.
      (2)
The reports must give—
(a)
information on any steps taken by the corporation to secure that
35
(taken as a whole) the actual membership of any public constituency
and (if there is one) of the patients’ constituency is representative of
those eligible for such membership,
(b)
any other information the regulator requires.
      (3)
It is for the regulator to decide—
40
(a)
the form of the reports,
(b)
when the reports must be sent to it,
(c)
the periods to which the reports are to relate.

National Health Service Bill [HL]
Schedule 8 — Independent Regulator of NHS foundation Trusts
221

27    (1)
A public benefit corporation must give information to the regulator as to its
forward planning in respect of each financial year.
      (2)
The document containing the information must be prepared by the
directors.
      (3)
In preparing the document the directors must have regard to the views of
5
the board of governors.
Meeting of board of governors to consider annual accounts and reports
28
The following documents must be presented to the board of governors of a
public benefit corporation at a general meeting—
(a)
the annual accounts,
10
(b)
any report of the auditor on them,
(c)
the annual report.
Instruments etc
29    (1)
The constitution must make provision for the authentication of the fixing of
the corporation’s seal.
15
      (2)
A document purporting to be duly executed under the corporation’s seal or
to be signed on its behalf must be received in evidence and, unless the
contrary is proved, taken to be so executed or signed.
Schedule 8
Section 31

Independent Regulator of NHS foundation Trusts
20
Membership
1     (1)
The regulator consists of a number of members (but not more than 5)
appointed by the Secretary of State.
      (2)
One of the members must be appointed as chairman and another as deputy
chairman.
25
      (3)
The deputy chairman need not be appointed before the end of the period of
six months beginning with the establishment of the regulator.
Tenure of office
2     (1)
A person holds and vacates office as a member in accordance with the terms
of his appointment.
30
      (2)
But—
(a)
he may at any time resign his office by giving notice to the Secretary
of State,
(b)
the Secretary of State may at any time remove him from office on the
ground of incapacity or misbehaviour.
35
      (3)
A person must not be appointed as a member for a period of more than four
years.

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      (4)
A person who ceases to be a member is eligible for re-appointment.
Remuneration and pensions
3     (1)
The regulator must pay to the chairman—
(a)
such remuneration, and
(b)
such travelling and other allowances,
5

as the Secretary of State may determine.
      (2)
The regulator must pay to the members (other than the chairman) such
travelling and other allowances as the Secretary of State may determine.
      (3)
In the case of any such person who holds or has held office as chairman as
the Secretary of State may determine, the regulator must pay—
10
(a)
such pension, allowance or gratuity to or in respect of him, or
(b)
such contributions or payments towards provision for such a
pension, allowance or gratuity,

as the Secretary of State may determine.
Staff
15
4
The regulator may, after consulting the Minister for the Civil Service as to
numbers and terms and conditions of service, employ such staff as the
regulator may determine.
Superannuation
5     (1)
Sub-paragraph (2) applies where—
20
(a)
a person is an active or deferred member of a scheme under section
1 of the Superannuation Act 1972 (c. 11), and
(b)
he is appointed as chairman.
      (2)
The Minister for the Civil Service may determine that the person’s term of
office as chairman must be treated for the purposes of the scheme as service
25
in the employment by reference to which he is a member (whether or not any
benefits are payable by virtue of paragraph 3(3)).
      (3)
The regulator must pay to the Minister for the Civil Service, at such times as
the Minister may direct, such sums as he may determine in respect of any
increase attributable to sub-paragraph (2) or (3) in the sums payable out of
30
money provided by Parliament under the Superannuation Act 1972 (c 11).
Procedure
6     (1)
The regulator may regulate its own procedure and make any arrangements
it considers appropriate for the discharge of its functions.
      (2)
The validity of any act of the regulator is not affected by any vacancy among
35
the members or by any defect in the appointment of any member.
Delegation of functions
7
Anything which the regulator is authorised or required to do may be done
by—
(a)
the chairman or deputy chairman or any committee,
40