Health and Social Care Bill

House of Commons

Session 2010 - 11
Internet Publications
Other Bills before Parliament

Health and Social Care Bill

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 6 — Insolvency and health special administration
105

116
Health special administration regulations
(1)
Regulations (referred to in this Chapter as “health special administration
regulations”) must make further provision about health special administration
orders.
(2)
Health special administration regulations may apply (with or without
5
modifications)—
(a)
any provision of Part 2 of the Insolvency Act 1986 (administration) or
any related provision of that Act, and
(b)
any other enactment which relates to insolvency or administration or
makes provision by reference to anything that is or may be done under
10
that Act.
(3)
Health special administration regulations may in particular provide that the
court may make a health special administration order in relation to a relevant
provider if it is satisfied, on a petition by the Secretary of State under section
124A of the Insolvency Act 1986 (petition for winding up on grounds of public
15
interest), that it would be just and equitable (disregarding the objective of the
health special administration) to wind up the provider in the public interest.
(4)
Health special administration regulations may make provision about—
(a)
the application of procedures under the Insolvency Act 1986 in relation
to relevant providers, and
20
(b)
the enforcement of security over property of relevant providers.
(5)
Health special administration regulations may modify this Chapter or any
enactment mentioned in subsection (6) in relation to any provision made by
virtue of this Chapter.
(6)
The enactments are—
25
(a)
the Insolvency Act 1986,
(b)
any other enactment which relates to insolvency or administration or
makes provision by reference to anything that is or may be done under
that Act, and
(c)
section 242 of the National Health Service Act 2006 (NHS foundation
30
trusts etc: public involvement and consultation duties).
(7)
The power to make rules under section 411 of the Insolvency Act 1986
(company insolvency rules) applies for the purpose of giving effect to
provision made by virtue of this Chapter as it applies for the purpose of giving
effect to Parts 1 to 7 of that Act.
35
(8)
For that purpose—
(a)
the power to make rules in relation to England and Wales is exercisable
by the Lord Chancellor with the concurrence of the Secretary of State
and, in the case of rules that affect court procedure, with the
concurrence of the Lord Chief Justice;
40
(b)
references in section 411 of that Act to those Parts are to be read as
including a reference to this Chapter.
(9)
Before making health special administration regulations the Secretary of State
must consult—
(a)
Monitor, and
45
(b)
such other persons as the Secretary of State considers appropriate.

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 6 — Insolvency and health special administration
106

117
Transfer schemes
(1)
Health special administration regulations may make provision about transfer
schemes to achieve the objective of a health special administration (see
section 115).
(2)
Health special administration regulations may in particular include
5
provision—
(a)
for the making of a transfer scheme to be subject to the consent of
Monitor and the licence holder to whom the transfer is being made, and
(b)
for Monitor to have power to modify a transfer scheme with the consent
of parties to the transfers effected by the scheme.
10
(3)
Health special administration regulations may in particular provide that a
transfer scheme may include provision—
(a)
for the transfer of property, rights and liabilities from an NHS
foundation trust or company subject to a health special administration
order to another licence holder (including property, rights and
15
liabilities which would not otherwise be capable of being transferred or
assigned),
(b)
for the transfer of property acquired, and rights and liabilities arising,
after the making of the scheme,
(c)
for the creation of interests or rights, or the imposition of liabilities, and
20
(d)
for the transfer, or concurrent exercise of, functions under enactments.
118
Indemnities
Health special administration regulations may make provision about the
giving by Monitor of indemnities in respect of—
(a)
liabilities incurred in connection with the discharge by health special
25
administrators of their functions, and
(b)
loss or damage sustained in that connection.
119
Modification of this Chapter under Enterprise Act 2002
(1)
The power to modify or apply enactments conferred on the Secretary of State
by each of the sections of the Enterprise Act 2002 mentioned in subsection (2)
30
includes power to make such consequential modifications of provision made
by virtue of this Chapter as the Secretary of State considers appropriate in
connection with any other provision made under that section.
(2)
Those sections are—
(a)
sections 248 and 277 (amendments consequential on that Act), and
35
(b)
section 254 (power to apply insolvency law to foreign companies).

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 7 — Financial assistance in health special administration cases
107

Chapter 7
Financial assistance in health special administration cases
Establishment of mechanisms
120
Duty to establish mechanisms for providing financial assistance
(1)
Monitor must establish, and secure the effective operation of, one or more
5
mechanisms for providing financial assistance in cases where a provider is
subject to a health special administration order (within the meaning of
Chapter 6).
(2)
Mechanisms that Monitor may establish under this section include, in
particular—
10
(a)
mechanisms for raising money to make grants or loans or to make
payments in consequence of indemnities given by Monitor by virtue of
section 118;
(b)
mechanisms for securing that providers arrange, or are provided with,
insurance facilities.
15
(3)
Monitor may secure that a mechanism established under this section operates
so as to enable it to recover the costs it incurs in establishing and operating the
mechanism.
(4)
Monitor may establish different mechanisms for different providers or
providers of different descriptions.
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(5)
Monitor does not require permission under any provision of the Financial
Services and Markets Act 2000 as respects activities carried out under this
Chapter.
(6)
In this Chapter—
“commissioner” means a person who arranges for the provision of
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designated services;
“provider” means a person who provides designated services.
(7)
An order under section 279 providing for the commencement of this Chapter
may require Monitor to comply with the duty to establish under subsection (1)
before such date as the order specifies.
30
121
Power to establish fund
(1)
Monitor may, for the purposes of section 120, establish and maintain a fund.
(2)
In order to raise money for investment in a fund it establishes under this section,
Monitor may impose requirements on providers or commissioners.
(3)
Monitor must appoint at least two managers for a fund it establishes under this
35
section.
(4)
A manager of a fund may be an individual, a firm or a body corporate.
(5)
Monitor must not appoint an individual as manager of a fund unless it is
satisfied that the individual has the appropriate knowledge and experience for
managing investments.
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Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 7 — Financial assistance in health special administration cases
108

(6)
Monitor must not appoint a firm or body corporate as manager of a fund unless
it is satisfied that arrangements are in place to secure that any individual who
will exercise functions of the firm or body corporate as manager will, at the
time of doing so, have the appropriate knowledge and experience for
managing investments.
5
(7)
Monitor must not appoint an individual, firm or body corporate as manager of
a fund unless the individual, firm or body is an authorised or exempt person
within the meaning of the Financial Services and Markets Act 2000.
(8)
Monitor must secure the prudent management of any fund it establishes under
this section.
10
Applications for financial assistance
122
Applications
(1)
Monitor may, on an application by a health special administrator, provide
financial assistance to the health special administrator by using a mechanism
established under section 120.
15
(2)
An application under this section must be in such form, and must be supported
by such evidence or other information, as Monitor may require (and a
requirement under this subsection may be imposed after the receipt, but before
the determination, of the application).
(3)
If Monitor grants an application under this section, it must notify the applicant
20
of—
(a)
the purpose for which the financial assistance is being provided, and
(b)
the other conditions to which its provision is subject.
(4)
The health special administrator must secure that the financial assistance is
used only—
25
(a)
for the purpose notified under subsection (3)(a), and
(b)
in accordance with the conditions notified under subsection (3)(b).
(5)
Financial assistance under this section may be provided only in the period
during which the provider in question is in health special administration.
(6)
If Monitor refuses an application under this section, it must notify the applicant
30
of the reasons for the refusal.
(7)
Monitor must, on a request by an applicant whose application under this
section has been refused, reconsider the application; but no individual
involved in the decision to refuse the application may be involved in the
decision on the reconsideration of the application.
35
(8)
For the purposes of reconsidering an application, Monitor may request
information from the applicant.
(9)
Monitor must notify the applicant of its decision on reconsidering the
application; and—
(a)
if Monitor grants the application, it must notify the applicant of the
40
matters specified in subsection (3), and
(b)
if Monitor refuses the application, it must notify the applicant of the
reasons for the refusal.

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 7 — Financial assistance in health special administration cases
109

(10)
In this Chapter, “health special administrator” has the meaning given in
Chapter 6 (see section 114(3)).
123
Grants and loans
(1)
Monitor may not provide financial assistance under section 122 in the form of
a grant or loan unless it is satisfied that—
5
(a)
it is necessary for the provider—
(i)
to be able to continue to provide designated services, or
(ii)
to be able to secure a viable business in the long term, and
(b)
no other source of funding which would enable it do so and on which
it would be reasonable for it to rely is likely to become available to it.
10
(2)
The terms of a grant or loan must include a term that the whole or a specified
part of the grant or loan becomes repayable in the event of a breach by the
provider or health special administrator of the terms of the grant or loan.
(3)
Subject to that, where Monitor makes a grant or loan under section 122, it may
do so in such manner and on such terms as it may determine.
15
(4)
Monitor may take such steps as it considers appropriate (including steps to
adjust the amount of future payments towards the mechanism established
under section 120 to raise funds for grants or loans under section 122) to
recover overpayments in the provision of a grant or loan under that section.
(5)
The power to recover an overpayment under subsection (4) includes a power
20
to recover interest, at such rate as Monitor may determine, on the amount of
the overpayment for the period beginning with the making of the overpayment
and ending with its recovery.
Charges on commissioners
124
Power to impose charges on commissioners
25
(1)
The Secretary of State may by regulations confer power on Monitor to require
commissioners to pay charges relating to such of Monitor’s functions that relate to
securing the continued provision of designated services.
(2)
The regulations must provide that the amount of a charge imposed by virtue
of this section is to be such amount—
30
(a)
as may be prescribed, or
(b)
as is determined by reference to such criteria, and by using such
method, as may be prescribed.
(3)
The regulations must—
(a)
prescribe to whom the charge is to be paid;
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(b)
prescribe when the charge becomes payable;
(c)
where the amount of the charge is to be determined in accordance with
subsection (2)(b), require Monitor to carry out consultation in
accordance with the regulations before imposing the charge;
(d)
provide for any amount that is not paid by the time prescribed for the
40
purposes of paragraph (b) to carry interest at the rate for the time being
specified in section 18 of the Judgments Act 1838;

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 7 — Financial assistance in health special administration cases
110

(e)
provide for any unpaid balance and accrued interest to be recoverable
summarily as a civil debt.
(4)
Where the person that the regulations prescribe for the purposes of subsection
(3)(a) is a provider, the regulations may confer power on Monitor to require the
provider to pay Monitor the amount of the charge in question in accordance
5
with the regulations.
(5)
Before making regulations under this section, the Secretary of State must
consult—
(a)
Monitor, and
(b)
the National Health Service Commissioning Board.
10
(6)
Regulations under this section may apply with modifications provision made
by sections 127 to 129 in relation to charges imposed by virtue of this section.
Levy on providers
125
Imposition of levy
(1)
The power under section 121(2) includes, in particular, power to impose a levy on
15
providers for each financial year.
(2)
Before deciding whether to impose a levy under this section for the coming
financial year, Monitor must estimate—
(a)
the amount that will be required for the purpose of providing financial
assistance in accordance with this Chapter,
20
(b)
the amount that will be collected from commissioners by way of
charges imposed by virtue of section 124 during that year, and
(c)
the amount that will be standing to the credit of the fund at the end of
the current financial year.
(3)
Before the start of a financial year in which Monitor proposes to impose a levy
25
under this section, it must determine—
(a)
the factors by reference to which the rate of the levy is to be assessed,
(b)
the time or times by reference to which those factors are to be assessed,
and
(c)
the time or times during the year when the levy, or an instalment of it,
30
becomes payable.
(4)
Where the determinations under subsection (3) reflect changes made to the
factors by reference to which the levy is to be assessed, the notice under section
129(1)(b) must include an explanation of those changes.
(5)
A levy under this section may be imposed at different rates for different
35
providers.
126
Power of Secretary of State to set limit on levy and charges
(1)
Before the beginning of each financial year, the Secretary of State may, with the
approval of the Treasury, specify by order—
(a)
the maximum amount that Monitor may raise from levies it imposes
40
under section 125 for that year, and
(b)
the maximum amount that it may raise from charges it imposes by
virtue of section 124 for that year.

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 7 — Financial assistance in health special administration cases
111

(2)
Where the Secretary of State makes an order under this section, Monitor must
secure that the levies and charges for that year are at a level that Monitor
estimates will, in each case, raise an amount not exceeding the amount
specified for that case in the order.
127
Consultation
5
(1)
This section applies where Monitor is proposing to impose a levy under section
125 for the coming financial year and—
(a)
has not imposed a levy under that section for that or any previous year,
(b)
has been imposing the levy for the current financial year but proposes
to make relevant changes to it for the coming financial year, or
10
(c)
has been imposing the levy for the current financial year and the
financial year preceding it, but has not been required to serve a notice
under this section in respect of the levy for either of those years.
(2)
A change to a levy is relevant for the purposes of subsection (1)(b) if it is a
change to the factors by reference to which the levy is to be assessed.
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(3)
Before making the determinations under section 125(3) in respect of the levy,
Monitor must send a notice to—
(a)
the Secretary of State,
(b)
the National Health Service Commissioning Board,
(c)
each commissioning consortium,
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(d)
each provider, and
(e)
such other persons as it considers appropriate.
(4)
Monitor must publish a notice that it sends under subsection (3).
(5)
In a case within subsection (1)(a) or (c), the notice must state—
(a)
the factors by reference to which Monitor proposes to assess the rate of
25
the levy,
(b)
the time or times by reference to which it proposes to assess the rate of
levy, and
(c)
the time or times during the coming financial year when it proposes
that the levy, or an instalment of it, will become payable.
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(6)
In a case within subsection (1)(b), the notice must specify the relevant changes
Monitor proposes to make.
(7)
A notice under this section must specify when the consultation period in
relation to the proposals ends; and for that purpose, the consultation period is
the period of 28 days beginning with the day on which the notice is published
35
under subsection (4).
128
Responses to consultation
(1)
If Monitor receives objections from one or more providers to its proposals, it
may not give notice under section 129(1)(b) unless—
(a)
the conditions in subsection (2) are met, or
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(b)
where those conditions are not met, Monitor has made a reference to
the Competition Commission.
(2)
The conditions referred to in subsection (1)(a) are that—