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Health and Social Care Bill
|©Parliamentary copyright||Prepared 18th March 2011|
Publications on the internet
Health and Social Care Bill
Health and Social Care Bill
The Committee consisted of the following Members:
Chris Stanton, Mark Etherton, Committee Clerks
† attended the Committee
Jeremy Lefroy (Stafford) (Con): Thank you, Mr Hancock. I should like to make a few comments on clause 55 and in particular on the continuing function of Monitor in the approval of foundation trusts. I will refer to evidence given at the Francis inquiry on Monday this week during the questioning of Mr Gill, who was working for or on secondment to the Department of Health and the strategic health authority for some of the period with which the Mid Staffordshire NHS Foundation Trust independent inquiry is concerned. I am referring to page 49 of the evidence. The QC put it to Mr Gill that
“there appears to have been…a drive to get SHAs to put trusts forward for foundation trust status. Here, Warren Brown…is saying ‘SHAs may be putting trusts in waves that have no business being there’.”
“I think a number of SHAs gave the FT pipeline, as it was called, a different priority. So some really embraced it, wanted to work with the Department and get their organisations through to FT status. Other SHAs, perhaps, saw that as a dilution or diminution in power”.
There is much more in the evidence, and I urge members of the Committee to look at it on the inquiry website. The point that I want to make and the question that I want to raise with the Minister is this. Clearly, how Monitor views the ongoing process of approval for foundation trust status is extremely important. I want an assurance from the Minister that that process will be rigorous and thorough and that those involved will consider carefully the mistakes made in the past and learn the lessons.
The Minister of State, Department of Health (Mr Simon Burns): My hon. Friend makes an important point. I am happy to give him that assurance. I would also like to tell him, because I think that it will encourage him, that there is no question of NHS trusts being allowed to sacrifice quality while developing their application to become an FT. To achieve FT status, a trust must be able to demonstrate that it is delivering high-quality care and is well managed and financially strong. The FT process has improved considerably during the last two years to address some of the very failings that my hon. Friend highlighted with regard to the Mid Staffordshire NHS Foundation Trust. That trust achieved FT status despite very poor standards of care. The changes to the assessment process have ensured that quality is the key focus for trusts working towards FT status. I hope that that explanation provides some of the assurances that my hon. Friend seeks.
My final point is that I am absolutely convinced that there should be no timetable for approval for foundation trust status, although there might be an indicative timetable saying, “We would like to get to this point by this date.” I am glad to hear the Minister’s reassurance on that. It is critical that no timetable should take precedence over the concern for quality and for rigour in the approval process.
Liz Kendall (Leicester West) (Lab): Thank you, Mr Hancock, for giving me some time to gather myself. My comments follow directly on from the, as always, wise words of the hon. Member for Stafford. I absolutely want to learn from the problems experienced at the Mid Staffordshire trust, as I am sure my hon. Friends do, so I am grateful to the hon. Gentleman for raising the issue.
The Minister responded to my opening comments in the clause stand part debate, but he did not respond to some of my specific questions about the work load that Monitor will have in getting all hospitals to foundation trust status or about the difficulties and the time scale involved, and we need to be clear about those issues.
In the past six years, 134 trusts have got foundation trust status. Monitor estimates that about another 120 NHS trusts will need to be authorised to get every trust to foundation trust status. Let us be clear, however, that Monitor is also looking at about 30 major transactions that foundation trusts are involved in, and it will look at any future transactions between trusts that are currently NHS trusts, but which will take on foundation trust status. Monitor has said that that means it will probably have to make 150 or so assessments of one sort or another over the next three years, compared with the 134 that it has looked at over the past six years. At the recent Westminster health forum, David Bennett said:
“Having said that, the real challenge is not for us, it’s for the Department of Health, because it is for the Department of Health to get all of these NHS Trusts to a position where they can become Foundation Trusts, and that, undoubtedly in some cases at least, will be very challenging.”
How will the Government get twice the number of NHS trusts ready for foundation trust status, when those trusts involved are likely to be the ones with the biggest challenges, because they are not the ones that moved quickly to foundation trust status?
How will Monitor make sure—I asked this earlier—that the governors in every trust across the country have the skills and expertise necessary? As I have said, making sure that every hospital in the land has governors with sufficient experience and of sufficient quality to manage budgets of millions of pounds is a very real challenge. Monitor is supposed to help to train governors to do that, but it is a huge challenge. What steps is the Department taking to deal with that? The Minister said that a separate authority is being set up to do these things.
Mr Burns: In an effort to help the hon. Lady, let me tell her that we recognise that some NHS trusts have significant problems or face significant challenges. That is why we are setting up a temporary special health authority, on a time-limited basis, that will provide dedicated support, including senior clinical expertise, to help those trusts to move forward and to deal with some of the situations that they face.
Liz Kendall: The Minister says that he is setting up a “time-limited” special authority. It would be very useful to learn from him whether any plans, outlines or proposals for that special authority have been set out. I am sure that many MPs, not just those in this Committee, would like to know what this authority is. Who will it be run by? What is its budget? How can MPs relate to this special authority if they have a trust in their own area that is struggling to gain foundation trust status?
The Chair: Order. We have to direct our minds to clause 55 and we must consider where we are going, given the present tone of the debate. I am not altogether sure that I understand where you are taking us on this one, Ms Kendall.
Liz Kendall: Mr Hancock, as is often the case, you remind us that we must remain on the clause under debate. the clause sets out how Monitor will attempt to resolve conflicts of interest between its different roles: its current role of regulating foundation trusts, which it is going to lose, and its new role as an economic regulator; and what it will do in the transition period. I am focusing my comments on the transition period, which is one of the subjects of the clause. Having said that, Mr Hancock, I will of course abide by your ruling. If you prefer that I return to this subject when we debate the clauses on foundation trust clauses, I will be more than happy to do so.
Grahame M. Morris (Easington) (Lab): The clause requires Monitor to review regulatory burdens as part of its functions as the regulatory body for the new health market. It must ensure that it does not either impose or maintain unnecessary burdens. According to the Bill, not only must Monitor impose only regulation that it deems necessary and proportionate but it must determine whether its own regulation is necessary and proportionate. I suggest that there is a tension between those two roles.
David Bennett, the chief executive of Monitor who has often been quoted in this Committee, said in his recent interview with The Time s that Monitor’s aim will be to create a genuine market for fair competition between providers. However, that would require a fair plying field between competing providers, and as things stand, there cannot be a fair playing field, due to the differential costs that apply to different types of organisation. The Opposition are genuinely concerned that Monitor will decide to act against those differential costs, which it will justifiably view as regulatory burdens. The Bill certainly gives it the powers to do so, and David Bennett’s comments fit in with that scenario.
I have previously referred to the Government’s impact assessment of the Bill. On closer examination, it is most revealing in relation to what clause 56 could mean and
“The regulator will also be tasked with publishing advice…on barriers to competition/fair playing field…and implement recommended solutions…Once the net distortion facing different provider types is better understood, the tariff methodology could be developed in such a way as to move towards a fairer playing field by setting”—
“The impact assessment for the Health and Social Care Bill…includes a partial assessment of factors affecting the costs incurred by national health service bodies and private providers, respectively, in delivering health services for NHS patients. The key conclusion is that some of these factors appear to increase costs for NHS bodies relative to private providers, whilst other factors appear to increase costs for private providers relative to NHS bodies. However, based on the information held centrally, it has not been possible to determine, on balance, whether NHS bodies or private providers of NHS services are systematically advantaged or disadvantaged relative to the other.”—[Official Report, 4 February 2011; Vol. 522, c. 1007W.]
In layman’s terms, NHS providers are able to provide services at a cheaper cost base than private providers. The impact assessment also has an intriguing section on the cost of capital. In it, the Government admit that public investment is far more efficient than private borrowing. I do not want to deviate from the clause, but there is a credibility gap between the Government’s rhetoric on the private finance initiative and what is actually happening on the ground. There are issues around deeds of safeguard that need to be tackled elsewhere. Alarmingly, the point about the cost of capital is viewed as a problem rather than an argument for the publicly funded investment that we all want.
The impact assessment goes on to outline how to remove the distortion when creating private markets. Whether the Minister or the impact assessment is correct is irrelevant because we have to deal with the provisions in the Bill. It will be the duty of Monitor, not the Minister, to take action and resolve these problems. The impact assessment uses KPMG research into fair playing fields, which calculated additional costs for private providers at 14%. By and large, according to KPMG, NHS providers are 14% cheaper.
In the view of Opposition Members and some informed commentators, the spectre of European competition regulations and rules on state aid are quite important. Monitor will be under pressure to give either tax breaks or subsidies to private providers, or to put additional costs on to NHS providers. Unless the Minister is willing to reduce the scope of powers given to Monitor by this Bill, it will not be able to offer any guarantees on decisions that will be out of its hands.
My hon. Friend the Member for Leicester West has set out in a most comprehensive manner the key differences between utilities and health services. The public would find such a comparison objectionable.
Monitor’s power within the health service will dominate the provision of future services. The Bill suggests that it will take a prime position over the bodies responsible for quality, notably the Care Quality Commission. The clause gives Monitor unnecessary control over the market by giving it the power to fix costs and act against the naturally cheaper and better option, the NHS provider. I would argue that if the Government are sincere about rejecting price competition, Government Members should take this opportunity to vote against clause 56.
Mr Burns: I hope the Committee will be satisfied if I deal with this clause relatively briefly, rather than having a long drawn out debate, because we have a considerable amount of work to get through this afternoon.
Clause 56, as we know from clause 52, ensures that Monitor’s main duties are to protect and promote the interests of people who use health care services by promoting competition where appropriate and by regulating where necessary to enhance quality. Clause 56, therefore, requires Monitor to keep those regulatory practices under review so it does not increase or retain unnecessary regulatory burdens, and, through that, it will ensure best regulatory practice.
Over time, as the health care markets change and competition becomes more embedded and efficient, Monitor will adapt the way it regulates those services, particularly where regulatory activity is no longer necessary. It will also be possible for it to reduce certain regulatory activities for certain types of providers, which would ensure that regulation is applied proportionately and only where necessary. That would ensure sufficient regulation while keeping burdens and costs to a reasonable minimum. Monitor, under this clause, will publish statements reporting its actions for every 12-month period and its plans for future regulatory changes.
Grahame M. Morris: Will the Minister confirm that Monitor could invoke those powers when a private provider complains under competition law that a GP commissioner is favouring the incumbent provider, such as an NHS foundation trust?
May I pick up another point raised by the hon. Gentleman, which was about Monitor giving higher prices to private providers? As the hon. Gentleman should be aware, we have tabled Government amendments to make our position on pricing completely clear. We will reach the relevant clause, which addresses pricing, in due course. I will tread very carefully so as not to go down a cul-de-sac and stray out of order, Mr Hancock. Amendment 192 to clause 104 will ensure that Monitor cannot vary prices according to whether a provider is public or private. We will debate that later, and I am sure the hon. Gentleman will have a considerable amount to say about it, although I hope he studies the amendment carefully so he fully understands it.
Liz Kendall: The clause deals with Monitor’s duty to carry out impact assessments. As we know, there are various duties on Government to produce different impact assessments on various Departments, and the clause sets out Monitor’s duties in that regard.
Amendment 482 would delete subsection (2), which states that any of Monitor’s duties to carry out impact assessments do not apply to those duties for which clauses 60 and 61 provide. Those clauses give Monitor similar powers to those of the Office of Fair Trading under the Competition Act 1998 and the Enterprise Act 2002. In other words, no impact assessment is required for anything that Monitor does in exercising its competition duties. It seems astonishing that Monitor does not have to produce an impact assessment when using such fundamental powers, which are the same as those of the OFT. What is the point of having a duty to produce impact assessments, if they do not relate to any of Monitor’s competition functions? I am stuttering, because I find it so astonishing.
Liz Kendall: I will, Mr Hancock, because amendment 489, I am reminded by my notes, relates to clause 62. It would delete subsection (2) of that clause, which states that Monitor’s general duties, as set out in clause 52, and matters to which it must have regard, which discussed under clause 54,
clauses 60 and 61. In other words, when Monitor is carrying out the same functions that the OFT has under the 1998 and 2002 Acts, it does not have to pay regard to its general duties or to other matters to which it must have regard. The kindest way of looking at this is that it is badly drafted and completely unclear. I apologise to any civil servants sitting here who might have been involved. What is the point of setting out duties and matters to which Monitor must pay regard, then saying that when it is exercising pretty much its main functions it does not have to bother with them? What is the point of having a duty to conduct impact assessments when they do not have to be done? That is entirely wrong.
Clause 62 enables Monitor to act in a manner similar to the OFT for its concurrent functions as competition authority, which are granted under the Competition Act 1998 and the Enterprise Act 2002. There is significant overlap between the matters to which the OFT must have regard in protecting consumer interests, and Monitor’s duties in protecting patients’ interests.
In deciding whether to take a case under the 1998 Act, Monitor could consider how doing so fitted into the performance of its overall duties. That is to say that it must make the best use of its resources and it is legally permitted to apply administrative priorities when deciding whether to take cases; its administrative priorities would reflect its duties. We must avoid inconsistency in the legal framework, however, for concurrent competition authorities such as Monitor and the OFT. To do otherwise would undermine the UK’s competition regime and put Monitor at risk of legal challenge. Amendment 489 would create such an inconsistency.
Monitor must be subject to the established duties that apply to the OFT to allow it to perform its competition authority function effectively and in the best interests of patients and taxpayers. It is worth remembering that the OFT could currently take action under the 1998 Act against undertakings providing health care services. In so doing, it would have regard to the usual matters that a competition authority could take into account, such as the market share of the undertakings concerned and the impact on consumers.
The drafting in the Bill, therefore, maintains the legal powers as they already are but with the added benefit of establishing a sector-specific regulator for health and concurrent powers. The advantage of a sector-specific regulator is the potential for enhanced knowledge and understanding of the health care market. The amendment would, therefore, be extremely inappropriate.
I turn to impact assessments. When Monitor applies the 1998 Act, it needs to use reasoning that is in line with the law. A decision that is reached based on an
It is worth bearing in mind, however, that the 1998 Act involves consideration of factors other than the effects on competition. For example, agreements are permitted that contribute to the improvement of the production or distribution of goods or the promotion of technical or economic progress, while allowing consumers a fair share of the resulting benefit, provided that they do not impose unnecessary restrictions and they do not allow undertakings to eliminate competition entirely. We will undertake an impact assessment of the regulations that are permitted under clause 63 on GP consortia and the NHS commissioning board. That will ensure that all the impacts resulting from the requirements that are placed on commissioners are taken into consideration.
Finally, I would like my hon. Friends also to consider Government amendments 377 and 378, which clarify clause 57 and remove unnecessary duplication. Clause 57(2)(a) refers to clauses 60 and 61, and we propose to remove that paragraph. It is not necessary, because paragraph (c) refers to the entirety of chapter 2, which includes clauses 60 and 61. The addition of “by virtue of” clarifies that the duty to carry out impact assessments does not apply in relation to any of Monitor’s functions under chapter 2, irrespective of whether they are specified in primary legislation or, for example, in regulations made under that chapter.
Liz Kendall: I do not think that the Minister has adequately explained what Government amendment 377 does. Clause 57(1)(a) says that Monitor has to carry out an impact assessment when it proposes to do something it considers would
So Government amendment 377 says that Monitor does not have to do an impact assessment if it affects staff. I respectfully request that the Minister be clearer about the amendments that he tables, because this amendment says that when Monitor exercises its functions under competition law, it does not have to look at the impact on staff. That is how I read it, and I would appreciate more clarity on that. It is wrong; any impact assessment should look at the impact not only on the users of services, but on the staff, who the Government often say they very much want to involve in decisions.
To my mind, the Government either want Monitor to pay regard to patient safety, improving quality, fair access, better use of resources and promoting investment, research, and high standards in education and training, or they do not. If they do, they should not say in their legislation that these are not issues that Monitor must pay regard to when exercising its functions under the 1998 and 2002 Acts.
The Government either want to ensure that there are impact assessments that set out the impact of Monitor’s decisions on people who provide and use services, and the general public, or they do not—in which case, the Government should not say that Monitor does not have to do an impact assessment when exercising its competition functions. The Minister has not explained that. As I said earlier, the nicest interpretation is that it is a legal mess—clauses are being added here and there—because the different parts of legislation do not fit. Alternatively, the real reason for the subsections in clauses 57 and 62 is that the Government do not intend Monitor to deliver these laudable goals, but instead want it to promote competition in all parts of the NHS with no regard to the impact on the people or the providers of those services.
John Pugh (Southport) (LD): I want to make a few remarks to clear things up—in my own mind, if no one else’s. Some concerns have been raised that I have not previously had a chance to ask the Minister about.
It strikes me that the fundamental thrust of the legislation is to create a regulator who will stamp out anti-competitive practice and bring the benefits that people perceive competition to have. The Minister has explained that we are not talking about crude competition, that a series of other issues must be taken into account—we might call them mitigating factors—and that impact assessments are to be made. We have just argued about what they mean in effect, and we seem to be creating an entity that is slightly more than a simple regulator—almost a strategic body capable of making decisions that have major consequences. It will be an unaccountable body and, as I said this morning, it will not have to deal directly with the consequences of its decisions.
I shall give an analogy that helps me, although it might not help anyone else. We are perfectly happy for referees to decide matters such as the offside rule and to implement a set of bloodless rules, but if they must make judgments about how the game is going, and whether it is being played well or badly enough, we are less happy, and think, “What right does he have to decide such matters?” If we have a hard and fast set of rules, and we know clearly what they are and how they should be applied, we are comfortable. In other situations, we are less than happy.
The burden of my remarks is not only that Monitor could create a problem that it does not have to manage, but how it will meld—the hon. Member for Halton made this point—with the fact that it will sometimes overrule decisions on matters that consortia want. Sometimes, it will overrule decisions on matters that are welcome to the public, or decisions that the commissioners and the public want, but Monitor deems to be anti-competitive.
I gave an example this morning of an issue in my constituency. I am still not clear about it. I could ask Assura Medical to provide a Southport walk-in centre for children, and accept the risk because I know that the background is that the GPs do not want it, but that the public do—and I know that the Secretary of State does because there are photographs of him campaigning for some sort of children’s facility in Southport. The argument against that, which was put to me by the existing PCT—presumably, it will also be made by the GP consortia as they take over from the PCT—is that it will imperil not the A and E service, which I understand there to be no competition about, but the paediatric unit in another town.
That is not a stand-alone independent paediatric unit; it has no surgery and it is partly dependent on Alder Hey, but that was the rationale given to me for the non-provision of this facility. At some point, I would genuinely like to refer a case to Monitor and ask, “Is this anti-competitive or not?” Monitor, presumably, will make a judgment call. Whether that call is for or against, it will be highly controversial, and my constituents will not be any happier being frustrated by Monitor’s decision than they are being frustrated by persistent decisions from the PCT.
I do not see, therefore, where accountability comes into this. We have no health and well-being board to test
This morning, however, the Secretary of State said something that alarmed me even more. He gave helpful examples of things that would count as anti-competitive practice, which I appreciate. He mentioned such issues as producer collusion, or decisions not to deliver certain services. To talk again about my local hospital in my own patch, a decision is being made to concentrate pathology services there, which affects the whole Mersey region. Why? Because it is part of a QIPP—quality, innovation, productivity and prevention—saving, and that pattern is repeated right across the piece.
All the hospitals, apart from some foundation trusts that do not want to play, are getting together to consider how they can meet the Nicholson challenge, how they can reduce over-costs, and how they need not provide a full range of services because they can decide among themselves which hospitals provide which services, using NHS manpower and resources more efficiently than they would otherwise. That strikes me, however, as something that would be snarled up by Monitor. It is a classic example of producer collusion, which the Minister mentioned this morning. Yet that strategy is being followed in the Merseyside area to get the budget under control and make the appreciable savings that are necessary.
I see all those problems generated by the creation of Monitor. I cannot help thinking that we are creating a bureaucratic monster, with a whole series of different ancillary roles that are not necessarily mutually consistent. It will cost a lot of money, and I do not understand why we are doing it. If the thrust is to have a system of competitive regulation for clinical services, analogous to the system we have for the procurement of other kinds of hospital services—the bedpans, the beds and so on—it must be observed that there is no regulator for such an activity. It does not exist.
Grahame M. Morris: That is an excellent point, well made, and I want to amplify it, particularly in relation to the hon. Gentleman’s example of pathology services and the risk of charges of anti-competitive behaviour. It strikes me, as someone who worked in the pathology service for 12 years, that the service would be ripe for a private laboratory to come in and issue a claim to Monitor that it was not being allowed to compete, because the commissioners were using the preferred provider based at the local hospital. Even the threat of legal redress being resorted to, with the 10% fine for GP commissioners, may be enough to shift the existing NHS provision to a private provider.
John Pugh: It is not an academic point. In the north-west and Merseyside, we are trying to maintain access and facilities as best we can—and this is not something that this Government have done, because the £20 billion is a consequence of the Budget in which the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), said we would have to find that saving.
The way to maintain access and facilities is to ensure that the hospitals are colluding as to the activities they are engaging in. That is the least painful way of doing it. The other way is to beat one another to death and have facilities go down in different areas and to have access diminish. I do not see how we can run with the remit of Monitor and simultaneously make a quick saving. I would be grateful if the Minister explained how this would happen. I am making a serious point; I am not trying to get one over on the Government or whatever. I am making the point because I am worried. I am really worried.
My final point is that we are creating something that we have decided is going to grow in cost. It is going to be a big bureaucracy. We are giving it a lot of roles and a lot of different considerations. Not all of them seem to dovetail together, which is going to be more difficult and more legally complex. Why are we doing it? Local authorities manage to go through processes of using a variety of providers and they have guidelines. They have best value. The hospitals currently procure in an open way, subject to European rules. We can discuss them later on. We do not have a central provider. What is the point of the central provider when we get all the benefits and none of the problems without having it?
Jeremy Lefroy: I shall follow on from what my hon. Friend the Member for Southport has said and raise one further question with the Minister. It is a genuine question about how this legislation would impact on a specific case. When I say “a specific case”, I do not mean specific to my constituency, but a specific general case across the country.
Many general practices have community pharmacies within them. Many of those practices reinvest the profits from the pharmacies into other services that they provide to the community—they do not take them out for partners; they put them back in. I can think of one particular practice in my constituency that does precisely that.
The question I raise with the Minister is about whether such a practice would be considered, or be at risk of being considered, anti-competitive. For instance, would another provider of, for instance, the home visits to cancer patients, which the practice provides out of the profits from its pharmacy, be considered anti-competitive by another provider that potentially wanted to offer that service to the local consortium?
Liz Kendall: I am inspired by the hon. Member for Southport and I have been thinking about this for some time. It seems as if the Bill is developing two parallel universes in the NHS. One is from the NHS commissioning board driving GP commissioning consortia with—question mark—a degree of accountability, with some health and well-being boards and local authorities joining up. There is that world. Then there is the world of the economic regulator and competition law driving changes in the system. My question is about how on earth the two relate to one another.
Mr Burns: The clause requires Monitor to carry out impact assessments for particularly significant proposals, or to publish statements explaining why it is not necessary to do so. Significant proposals would include proposals that would have a significant impact on health care providers for the purposes of the NHS, NHS patients and the general public, or proposals that involved major change to Monitor’s activities or made changes to the standard licence conditions.
However, Monitor will not need to carry out impact assessments in relation to the exercise of its competition functions, or when the matter is too urgent for delay or intervention, as that would involve taking account of considerations not relevant to the enforcement of competition law. We want to ensure that Monitor considers only what is appropriate for a competition authority to consider, which includes the effect on patients.
The clause sets out how the impact assessment should be carried out. That includes why intervention by Monitor should be necessary rather than its using its powers under the competition function, and how the intervention fitted in with Monitor’s overarching duties. Monitor must consult on its impact assessments for at least 28 days, and give details on those that it has conducted in its annual report. The clause is needed to ensure that Monitor’s activities are appropriately justified and that it does not carry out activities outside its stated duties and functions.
Owen Smith (Pontypridd) (Lab): I was going to make this point earlier but as the Minister has repeated his remarks, I shall make it now. The Minister says that Monitor does not have to apply an impact assessment in areas where it exercises its principal function in respect of competition law, lest it effectively set a precedent for other regulators in respect of competition law. Does that not point out the deep inappropriateness of competition law being binding and biting on the NHS?
Mr Burns: The answer is no. It is quite straightforward. There is not much that I can do about it; the hon. Gentleman is not going to be convinced by me, and I am not going to change the Bill to fit in with him.
The hon. Member for Southport asked a number of questions, and I shall deal with them briefly. He spoke about competition law preventing collaboration in general. I believe that competition law would not preclude collaboration—for example, shared pathology services would improve services and be in the interests of patients and taxpayers.
The hon. Gentleman also spoke about Monitor and QIPP. I believe that Monitor will help drive greater efficiency and productivity for the benefit of patients and taxpayers. There is growing evidence that well designed competition can improve efficiency as well as drive up clinical quality. Health and well-being boards cannot hold Monitor to account for decisions on anti-competitive behaviour. Although Monitor does not sit on a health and well-being board, commissioners do, and the board can challenge the commissioners directly about their commissioning decisions.
Mr Burns: The clause provides powers for the Secretary of State to direct Monitor when he considers that it is failing or has failed to perform a function. The Secretary of State may direct it to carry out the functions within a
Monitor will be the economic regulator of health care services. We do not intend to compromise Monitor’s independence or undermine the benefits of economic regulation by allowing for political interference in its decision making. However, we need to strike a balance. Monitor will continue to be a non-departmental body, and, as such, we need to ensure its political accountability. The Secretary of State will be able to direct Monitor only in respect of significant failings in the performance of its functions, and will not be able to intervene in individual cases. Where the Secretary of State does intervene, he or she will be required to publish a statement on his or her reasons for doing so.
The amendments are needed to make the accountabilities clear and to ensure that Monitor is, as far as possible, independent and protected from political interference. At the same time, they will ensure that steps can be taken should there be significant failings by Monitor in the performance of its functions as an economic regulator. The amendments will also bring Monitor into line with the Government’s proposed overarching principles for economic regulation, which the Department for Business, Innovation and Skills published in January.
Paul Burstow: The clause updates the Secretary of State’s powers of direction during an emergency to reflect the new framework for the health service provided by the Bill. That is done by amending section 253 of the National Health Service Act 2006. The Secretary of State will be able to use such powers of direction only when he considers it appropriate by reason of emergency.
The purpose of amendments 222, 223 and 224, which are minor, is to ensure that the references to the bodies in new sections 253(2) and 253(2A) of the 2006 Act are correct. That is necessary, because, as a result of new section 253(1A) of the 2006 Act, a necessary consequential amendment should also have been made to new section 253(2), which is inserted by subsection (4) of the clause.
The cross-references to new section 253(1A), which are in new section 253(2A), as inserted by subsection (4) of the clause, should also have been updated. I am sure that that will be clear to hon. Members when they study their copy of Hansard in detail over the weekend. [Hon. Members: “Very clear.”]
The powers of direction will affect how NHS bodies, or other bodies to whom directions are issued, exercise their functions, and such powers will not only relate to an NHS body’s activities, but bolster co-ordination between bodies at times of emergency. The Bill maximises the autonomy of organisations at the local level. The Secretary of State will, however, retain a few specific and limited powers. Those will include sufficient powers of direction to ensure a command and control framework in an emergency. I am sure that the Committee will agree with me that, in an emergency, that is an appropriate and necessary step to take.
The Secretary of State would be able to direct an NHS body or a provider of NHS services on how they should act in the event of an emergency. He would be able to delegate his power of direction to the board, which would allow it to exercise a national command and control role where it considers that it is appropriate to do so in an emergency.
Derek Twigg (Halton) (Lab): This is quite an interesting clause, which we want to explore. The Minister has made some consequential amendments, but he understands that we are opposed in principle to the changes that the Bill will bring about and to the comments that have been made in earlier discussions.
Paul Burstow: The hon. Gentleman says that he is “opposed in principle”. I want to be clear. The motion that he tabled and had his name added to yesterday listed a whole host of the principles on which the Bill is based. Is he sure that he is against the principle?
Derek Twigg: Perhaps the Minister has misunderstood me. I said that we are opposed to the proposals in the Bill to change the Secretary of State’s powers. We can go back to the duties to promote health services and so on, and I will come to that in my speech.
We read the clause with great interest following the first debate that we had about the changes to the role of the Secretary of State on the first day of scrutiny. The Minister may recall that we particularly opposed the passing of some powers to unelected quangos relating to the NHS commissioning board, GP consortia and Monitor. We made some strong points, but the Minister did not take those on board, and we were disappointed with that.
for the purpose of the health service. So the Secretary of State is currently directly responsible for providing or securing the provision of health services, and I hope the Minister understands that that is my point.
Section 253 of the 2006 Act confers on the Secretary of State the power to give directions to any body or person exercising functions under the Act, other than the NHS foundation trusts, when he considers that
Subsection (2) amends section 253 so that the Secretary of State can give a direction under the section where he considers it is appropriate, not just necessary, to do so by reason of an emergency. In addition, the effect of the amendment is that the power is not limited to giving directions to ensure that a service is provided. Subsection (3) provides that the Secretary of State’s power to direct applies to all NHS bodies except Local Health Boards (which are Welsh NHS bodies)”.
Clauses 158 to 163, which address the failure of foundation trusts and the transfer of powers to Monitor, are relevant. Clause 114, which details the health special administration orders, as outlined by explanatory note 745, is also relevant. As we read it—this is important—Monitor’s role in relation to foundation trusts is changing because, of course, there is no early intervention, as there is under our current procedure. I will come back to that in a minute.
Paul Burstow: I want to make sure I understand the flow of the argument being developed by the hon. Gentleman. This clause deals with the Secretary of State’s emergency powers. Is the hon. Gentleman suggesting that the Secretary of State should not have an emergency power to direct foundation trusts?
Derek Twigg: I am making a point about the change in the Secretary of State’s powers compared with his powers under the previous regime. When the Minister answers my questions, perhaps he might be able to explore that a bit further. Under what circumstances might the Secretary of State’s powers be used in relation to the foundation trusts?
Jeremy Lefroy: I rise to underline the hon. Gentleman’s point. One of the real problems that my constituents faced during that time was that they did not know who to go to in the case of an emergency, as it then was. That needs clarification.
Derek Twigg: I am grateful for that intervention, which is why I raised the point. It is important to remind the Minister that my right hon. and hon. Friends and I have raised serious concerns about the proposed changes to accountability, particularly to the accountability of the Secretary of State’s Department. A point was made about the ability of Ministers to intervene in matters raised by MPs and whether MPs would be told to go to speak to the NHS board or consortia. It would
In his responses, the right hon. Member for Chelmsford, whom I congratulate on his elevation to the Privy Council, has kept telling us that the Bill is about freeing up the NHS from bureaucracy, reducing political interference and liberating providers. In the clause, however, we see that the Secretary of State’s powers, which have been described by some as draconian, have been extended. Will the Minister give us more information about the extent of the Secretary of State’s powers under the clause and what has changed from the previous situation?
Paul Burstow: I would probably be straying beyond the bounds of the clause if I were to describe the architecture in respect of accountability for the day-to-day running of the NHS. The clause relates to the exceptional circumstances of an emergency. That is the context in which the hon. Gentleman wants further information, and I will be more than happy to try to supply some of that.
Let me go through a few issues that will illuminate the position. There is concern about the circumstances in which the Secretary of State might use the powers. The Secretary of State would declare an emergency only where it was appropriate to do so—for example, to ensure that a service under the Act continued to be provided. In the event of a major flood affecting—
Paul Burstow: Let me develop the thread of my speech a little further and then I will be more than happy to take an intervention. In the event of a major flood affecting an area, as happened in Cumbria, a hospital trust in a neighbouring area may be directed to treat patients transferred from hospitals in the affected area. The ongoing Exercise Watermark, which relates to flooding, would be a case in point.
I shall give another example to develop the point and then give way. A transient power failure in a hospital would initiate a local emergency plan on a site, but that would not require the emergency declaration by the Secretary of State. However, a longer-term cessation of power that rendered the local NHS unable to maintain essential NHS services for patients might require a direction from the Secretary of State for mutual assistance from other areas. Those are a few examples.
Derek Twigg: I apologise for trying to jump in too early, because the Minister was developing his point. In the event of the failure of an NHS trust—we can go back to the Mid Staffordshire case—how would failure be determined under the Secretary of State’s powers? I apologise if the Minister was coming to that point, but it is important because failure might be subjective in some instances.
Paul Burstow: If I may say so, that is not what the clause is about. It is not about describing or dealing with the failure of providers in the sense that we might in other contexts. It is about circumstances in which an emergency requires the marshalling of NHS resources
Derek Twigg: I think that I was asking the Minister to explain that in more detail because we are not clear about it. Let me put it this way. Let us think of the clinical care of patients and take the example of an NHS trust where people may have died in greater numbers than one or two and nothing has been done by the board or by Monitor. What would the Secretary of State’s position be?
Paul Burstow: Let me try to deal with that by describing what would constitute a relevant emergency for the purposes of the clause. A relevant emergency, to which these duties apply, includes any emergency that might affect a body to which the duty to be properly prepared applies, whether by increasing the need for services that it commissions or provides or in any other way. The emergency preparedness provisions therefore apply in relation to an emergency in which the body in question may be asked to assist other NHS bodies or other public authorities responding to that emergency, as well as one that directly affects its local services.
Grahame M. Morris: In relation to that list of examples, in the event of the failure of a foundation trust, would the Secretary of State exercise emergency powers, for example to instruct the neighbouring trust to take on those responsibilities?
Paul Burstow: Let me be absolutely clear—that is not the purpose of the clause. There are other clauses in the Bill in which the issues around the failure regime and so on will be dealt with, but they are not dealt with in this clause. This clause is about dealing with civil emergencies of one sort or another, where there is a need to have clear command and control to ensure that public resources are directed appropriately through the NHS to address a civil emergency. I hope that that answers the question—I am answering it as clearly as I possibly can.
I am not sure that I have addressed the questions put by the hon. Member for Halton. If I have not done so, he should intervene again, because I am anxious to ensure that this clause, which is about ensuring that we have a robust set of arrangements in the event of an emergency—
Paul Burstow: The reason that I did so, Mr Hancock, is that I want to ensure that, before we finish our debate on this clause, hon. Members are clear about the intention behind it. Through this clause, some hon. Members are trying to explore—quite understandably—what the failure regime might look like, how it would work and the role of the Secretary of State. What I am trying to say to them, as clearly as I can, is that this clause is not about the failure regime.
The hon. Gentleman was talking about the Mid Staffordshire trust. What happens in a case such as Mid Staffordshire is that the CQC is responsible for safeguarding essential levels of quality and safety. In the existing system today, that responsibility sits with the CQC and not with the Secretary of State. That is what the hon. Gentleman’s question was about—“What happens now?” And that responsibility would not sit with the Secretary of State in the future. However, this clause is not about those matters.
Derek Twigg: I will intervene on the Minister one last time, just to get some clarity. So the Bill does not change the situation. We can go through all the various bodies that will have responsibility—Monitor, the CQC, whatever. The same is true of the bodies that are in place currently. However, if those bodies all miss a problem and do not deal with it, the Secretary of State still cannot come in and make a direction in a situation such as the one in the Mid Staffordshire trust. Is that right?
Paul Burstow: That question does not apply to this clause. It is an important question and it is one of the reasons why, at earlier stages in the consideration of the Bill, I indicated the Government’s desire and intention to listen to and act on the recommendations of the Francis inquiry. It is also why I have made it very clear on the record today that we already have provisions, through the arrangements for the CQC, to safeguard essential standards of safety and quality. Those provisions were legislated for in the last Parliament by an Administration of which the hon. Gentleman was a member and they provide those safeguards to deal with situations such as the one in Mid Staffordshire. We are willing to consider other changes in the light of Mid Staffordshire, but this clause is not about that issue.
I ask the Committee’s indulgence. When we come to vote on these Government amendments, members should decide whether we take the last group of amendments as a collective group or as individual amendments.
Paul Burstow: The amendments are all minor and technical changes to the National Health Service Act 2006, as a result of changes made elsewhere in the Bill. The vast majority are consequent on the abolition of primary care trusts and strategic health authorities, which is provided for in clauses 28 and 29 of part 1 of the Bill, which we have already considered.
As such, most of these amendments are concerned with removing references to and definitions containing “primary care trust”. For example, amendment 252 removes “primary care trust” from the definition of health service hospital. In addition, a number of these amendments remove references to strategic health authorities. For example, amendment 226 removes strategic health authorities from the list of bodies in section 78 that the Secretary of State is allowed to direct in the event of a failure. References to these bodies will no longer be needed once they are abolished by the Bill.
Some of these amendments insert references to the new bodies established by the Bill, including the NHS commissioning board and consortia where appropriate. For example, amendment 234 to section 123 transfers some ophthalmic functions previously held by PCTs to the NHS commissioning board, in line with changes in primary care elsewhere in the Bill.
Amendments 236 to 241 ensure that the amendments to the National Health Service Act 2006 currently in the Bill extend powers to request documents—for investigative purposes—from contractors providing services for the Secretary of State’s public health functions, as well as those of local authorities. They remove references to local authorities in the definition of the Secretary of State’s security management functions. The existing version of the Bill incorrectly suggests that those functions would be extended to local authorities.
Amendment 238 also ensures that amendments to the 2006 Act that are currently in the Bill are extended to require the production of documents for contractors providing services for the purpose of the Secretary of State’s health functions. While the amendments to this schedule and the next are numerous, they are of a minor and inconsequential nature, and I hope that hon. Members are reassured that they are essential to the functioning of the Bill and all related legislation. For those reasons, I ask the Committee to accept these amendments to schedule 4.
Derek Twigg: I have a very simple question. The reference in amendment 236 is to “NHS services”. Will the Minister explain what is meant by “NHS services”? If he cannot answer now I am happy for him to write to me, but I would like an explanation. To make it clear, when I come to speak on the amendments to the next
Paul Burstow: Before we deal with the amendments to be made formally, may I very quickly answer the question that was asked? Any service funded by the NHS would be covered by the definition “NHS services”.
Nicky Morgan (Loughborough) (Con): I want to talk briefly about part 6 to schedule 4, which relates to ophthalmic services. I have two points, but first I should say that I am vice-chair of the all-party group on eye health and visual impairment. Perhaps I am being a pedantic lawyer, but in my copy of the Bill, part 6, “Ophthalmic services”, is listed as part 7 in the contents. We may want to correct that before it becomes law.
It is welcome that primary ophthalmic services, notably sight-testing services, are within the remit of the NHS commissioning board. That is strongly supported by the Optical Confederation, to which I am grateful for its help in pulling together my thoughts. It represents optometrists, opticians and optical businesses. It makes sense to utilise optometric practices to deliver primary eye care, as they are the logical partners of hospital-based ophthalmology. That has been demonstrated with great success in Wales and Scotland, where people with eye problems see their optometrist first, rather than going to their GPs or to hospital. In my constituency, GPs work closely with opticians and optometrists to secure decent treatment.
Enhanced eye care services, such as shared care arrangements with hospitals and GPs, for pre and post-operation cataract assessments and stable glaucoma management, are currently commissioned locally. My right hon. Friend the Minister has made it clear that the NHS commissioning board will devolve enhanced optometric services to GP commissioners, and, in the main, that also makes sense.
However, optometrists are concerned about glaucoma referrals under the NICE guidelines and community-based acute services. Managing red eye and minor eye problems are two small services that are national in character and, many believe, should be commissioned nationally on the same basis as the NHS sight test. That would ensure national coverage and appropriate protocols and accreditation within an agreed patient pathway, and would save money and transaction costs throughout the system.
Suspect glaucoma referrals became a significant capacity issue for hospitals when NICE laid down a very low threshold for referral into secondary care. In Stockport, a local scheme enables optometrists to carry out further tests to reduce unnecessary referrals to the hospital eye service by appropriately retaining patients within primary care. That scheme is deflecting 77% of low-risk patients with suspect high inter-ocular pressures who would otherwise be seen in a hospital setting.
Negotiating that simple yet effective scheme PCT by PCT has proved to be complex, and it has not been established in many areas despite NICE advice to do so. From a patient point of view, to reduce hospital capacity problems and make the service cost effective, the NHS commissioning board may be best placed to ensure provision across England. I hope that the Minister can comment on that.
Paul Burstow: I shall briefly respond now, and I undertake to write to my hon. Friend, and therefore the rest of the Committee. She has helpfully illustrated one of the great strengths and opportunities that the NHS commissioning board presents—the ability to have greater consistency in how commissioning of certain services is taken forward, to ensure that some past concerns about
I will write to my hon. Friend and members of the Committee on the specific details. It will be a useful example to work through on how the new arrangements will strengthen commissioning, so I undertake to do that.
Paul Burstow: The amendments and the new clause add to the consequential amendments made to other enactments in schedule 5. The amendments are all consequential on the provisions of part 1, which we have discussed, and ensure that existing powers and duties in other legislation refer to the correct bodies in the new architecture.
Although the list of amendments is long, in the majority of cases they simply remove references to primary care trusts or strategic health authorities and insert references either to commissioning consortia and the commissioning board or to the Secretary of State or local authorities performing public health functions. In a few cases, we have removed references to PCTs and SHAs and not inserted any reference to the new bodies created by the Bill. That is usually because the new bodies will no longer be responsible for the activity. For example, unlike primary care trusts, the NHS commissioning board and commissioning consortia will be not providers of services but commissioners of services. That provides a split that has increasingly been established over the years.
Although I do not intend to speak in detail about each amendment, I would like to draw the Committee’s intention to amendment 260. I know that my hon. Friend the Member for Southport also wanted to speak to this amendment. He raised his concern about access under the access to public bodies provisions. Let me remind the Committee that during the discussions on the commissioning board, we promised that we would ensure that it was subject to the Public Bodies (Admissions to Meetings) Act 1960 and that is what this amendment does. I hope that we have reassured the Committee and that the amendments will be accepted.
Derek Twigg: This matter goes back to the question that I asked about the previous schedules. Perhaps it was an oversight, but the Minister did not cover it in his speech. He will probably understand that we have a great suspicion that the Government want to take the word “national” out of the national health service. [Interruption.] If the Minister will listen, he may be able to reassure me.
Amendment 312 refers to a person who is receiving NHS treatment. That seems fair enough. However, under amendment 332, the phrase “NHS services” is substituted with “health services”. Amendment 333 changes NHS functions to “health service functions” and amendment 335 substitutes an NHS function with a “health service function”. Amendment 337 states:
Mr Kevin Barron (Rother Valley) (Lab): Does my hon. Friend think that the fact that 87 amendments have been tabled to this schedule is the sign of joined-up work in the Department prior to the publication of the Bill?
Derek Twigg: My right hon. Friend makes a very important point. He might remember my point of order when most of these amendments were submitted. We had to change the programme motion to include a debate on these amendments, for which we are grateful.
Many provisions make changes to various other Acts of Parliament, and that is important. It underlines the rush that there is to get this legislation through Parliament, which means that this is not good legislation. I could speak to a number of other amendments, but I am conscious that the Whips want to move on with business. Will the Minister tell us why those changes have been made and why the reference to the NHS is different in an earlier clause?
The Local Government Group has expressed concern about new clause 2. It said that the Coroners and Justice Act 2009 requires primary care trusts in England to appoint medical examiners to introduce a unified system of death certification for all deaths that does not require coroners, post mortems or inquests. Part 1 of schedule 5 and clauses 77 and 78 of the Bill have the effect of transferring the PCTs’ duties in regard to medical examiners to single and upper-tier local authorities, in line with the planned abolition of PCTs in 2013.
The Local Government Group has concerns about the uncosted change to the 2009 Act, which, it feels, has not been adequately consulted on or had a thorough impact assessment. The question is about how this additional requirement on councils squares with the commitment for no new burdens. This will be a wholly new requirement for local authorities and, given that the system will not be up and running before the abolition of PCTs, councils will be faced with the introduction of a largely untested process.
The Department of Health has anticipated the need for around 1,000 medical examiners, appointed by local authorities on a part-time basis. The new service is expected to impact on the NHS through the requirement
So what are the financial implications for councils? The initial impact assessment did not consider the cost implications for local authorities, other than for publicly held funerals, as the original intention was for the requirement of PCTs. They believe strongly that there should be a new impact assessment that considers the detailed implications for local authorities. The original impact assessment considered that the cost of introducing the medical examiners would be met in full from the fees paid by the public for death certificates.
In the proposed system, a flat fee would be payable irrespective of whether the body was buried or cremated, instead of the current situation in which those who choose to bury their relatives pay nothing and those who choose to cremate—some 70% of people—pay £160.50. It has been estimated that the cost of the new system will be less than the current one, so the total amount paid by the public should be less than at present. The flat fee should be less than the current fee for cremation. Currently, the total annual expenditure on cremation is estimated to be around £45 million.
The Local Government Group has consulted with several other member authorities who are sceptical about whether the introduction of the new role will really be cost-neutral, funded by fees from the public. Their concern is about funding and the additional cost burden, both in the short and long terms, and a potential unintended consequence may result from the fact that the public is asked to pay a much lower fee for deaths investigated by the coroners service and there may be increased pressure for coroners to investigate deaths. It is proposed that the fee for death certification will be set nationally. They are concerned that the national fee will not adequately reflect the differing costs of implementation at local level.
Local costs will be affected by issues such as rurality, demography and, for example, communities whose religious practice requires burial to take place as soon as possible after death. The concern is that in the current financial climate any new charge will be seen as a death tax imposed by councils.
Although local government does not oppose the idea in principle, as authorities already manage coroners and registrars, both of whom have had to work closely with medical examiners, it could make sense for them to be commissioned by local authorities and co-ordinated with the coroners and the registration service. They feel this issue needs to be addressed in a broader context, abrogating the totality of the new burdens associated with the health reforms. Furthermore, they seek agreement on planned consultation which will identify all the costs and implications for local authorities.
Paul Burstow: I thank the hon. Gentleman for his questions and I will try to address them in the order that he raised them. I will start with amendments 332 to 336 to provide the context in which the use of “health services” is appropriate. They amend provisions in schedule 5 that amend the Health Act 2009 and they relate to the NHS constitution. The amendments ensure that local authorities are added to the list of bodies who must have regard to the constitution.
The duty to have regard to the constitution covers the entire health service to reflect the fact that in the Bill we are transferring public health duties to local authorities, and it is because we want to ensure that those aspects of health that are discharged by local authorities are covered, that we are using the definition that we are. We are changing the reference to “health services” so we can ensure that we cover the comprehensive health service, which includes the NHS and public health. Both parts constitute the comprehensive health service, and we want to ensure that that is clear in terms of discharging duties under the NHS constitution. That is why the language is as it is.
The danger of retaining “NHS services” is that it would give the impression that health services provided and commissioned under the public health responsibility of local authorities were not part of that duty. I should have thought that hon. Members would want to ensure that the NHS constitution’s values, principles, and so on were being considered by local authorities when discharging their public health duties. That is the intent, and there is no sinister purpose behind it. It is about ensuring that we fulfil the ongoing obligation, which we believe we have, to a universal health service.
Amendments 337 to 339 amend provisions of the Health Act 2009 relating to quality. They ensure that quality accounts apply only to the provision of NHS services, not to public health services, and that Monitor, rather than strategic health authorities, will require providers to correct errors or omissions in their accounts.
Finally, the hon. Member for Halton raised a number of concerns about the examining service, on behalf of the Local Government Group. We have already embarked on a consultation about the public health responsibilities of local authorities and the resourcing of those, but to fulfil the hon. Gentleman’s request, I will write to him to ensure that we give him the best possible answer. I also want to make sure that we are properly consulting our colleagues in local government, so that we deal with any concerns that they have about a new burden that is not properly resourced. I can assure the hon. Gentleman that officials and Ministers in the Department for Communities and Local Government would be among the first to warn us of such a consequence, if it were there. I will, however, write to him on those points and with that, I hope the clauses can be amended in the way we recommend.
These minor technical changes are necessary to clarify two points that are not made explicitly in the Bill. The first would ensure that the Secretary of State retains his powers of delegation in relation to primary care trusts, until their abolition. The second change would ensure that directions made to special health authorities under existing legislation can continue to be in force once clause 17, which relates to functions of special health authorities, commences. The provisions are important to ensure that the period of transition is as smooth as possible, and that everything continues to function as it should. I recommend, therefore, that the amendment stands part of the Bill.
Paul Burstow: Clause 46 abolishes the Health Protection Agency and repeals the Health Protection Agency Act 2004. Amendment 343 and new schedule 1 are technical provisions that remove references to the Health Protection Agency from current enactments.
The abolition of the Health Protection Agency is an important step in the Government’s plan for unifying national health protection activity and creating a more transparent, responsive and accountable service under the Secretary of State. The Health Protection Agency is mentioned in primary legislation ranging from the Health and Safety Act Work etc. Act 1974 to the Employment Rights Act 1996, and in many cases the Secretary of State is already named in the relevant legislation and the reference to the Health Protection Agency simply needs to be omitted.
As discussed, clause 7 imposes on the Secretary of State a new general duty to protect the health of the people of England. The duty underpins a major component
Emily Thornberry: Clause 46 abolishes the Health Protection Agency as a statutory organisation and make the Secretary of State responsible for its functions, and we need to pause and think about the sense of that. I know that a number of organisations are anxious about it. There is concern that the Health Protection Agency will lose its independence and its impartiality, not only in fact but in the perception of the Health Protection Agency’s alternative structures. As the Minister has said, the agency has done an outstanding job and has an international reputation. If it is not broken, why is any attempt being made to fix it? On one hand, the Minister has argued for the importance of changing it to ensure greater transparency and accountability in the new structures. On the other hand—I know that the Government have this at the forefront of their mind in a lot of this legislation—it is important to avoid political involvement and to free the NHS from political interference.
There is obviously the potential, as there has been in the past, for a breakdown in public trust; we know about the BSE crisis and we know about the MMR vaccine crisis. The Royal College of Nursing in particular has asked me to point out that the Health Protection Agency is very different from the Department of Health. The Health Protection Agency is public and customer facing—it provides advice and information to the general public, to health professionals such as doctors and nurses and to national and local government—but the Department of Health is not naturally a public-facing body. That is causing some concern, which is why I am raising it today. Has the Minister given consideration to that, and to how the Department will carry out these new responsibilities?
The Health Protection Agency has a number of UK-wide functions. Will the Minister explain how those will be transferred to the devolved Administrations? I would also be grateful if the Minister explained the motivation behind that change and, in particular, why the Health Protection Agency will not be made a special health authority, which would have given it greater independence?
Paul Burstow: On the notion that the Department of Health is not a public-facing body, I must say, as a Minister in that Department, that it does not feel like that, both in terms of the amount of correspondence that the public quite rightly send in and the responses that Ministers give and that the hard-working team of correspondence officials discharge on our behalf.
Emily Thornberry: I understand the hon. Gentleman’s perspective, but, from the perspective of the public and patients, it is a different body. It is not one that is seen as warm and welcoming to the public and to patients in the way that I am sure that the hon. Gentleman would want it to.
Paul Burstow: This is not necessarily an encouragement, but the Department of Health is the place that people write to when they have a concern about their experience in the health service. In some cases, that means that we will signpost it, but, in other cases, we will deal with it appropriately. In the case of reforms in public health, that further strengthens us.
The hon. Lady asked about the agency’s reputation for independence and how that might be affected. There is no reason why it should be. Public Health England will have all the functions of the Health Protection Agency along with its experts and scientists, many of whom, I am sure we all agree, are world class. There will continue to be expert advisory committees drawn from the scientific community through open recruitment, and the chief medical officer will continue to provide impartial and objective advice to Ministers and others.
The hon. Lady went on to ask about Health Protection Agency functions and how accountability will be improved. At a national level, there is a clear rationale for accountability for health protection resting with the Secretary of State and, through him, Parliament. That is the intention of the changes that the Bill makes. The nature of various threats to health range from infectious diseases to terrorist attacks, and they are not always amenable to individual or local action. They require a clear line of sight from the centre of Government down to local services, and we need a system that is more integrated and less dispersed than the present one. Abolishing the agency and conferring its responsibilities directly on to the Secretary of State will be a major step forward.
The Health Protection Agency does a good job, and its efforts will continue to the same high standards through Public Health England. Its scientific expertise and ability will continue to be available to provide independent expert advice. There will be a clear line of sight from the Secretary of State on vital health protection and emergency preparedness.
In essence, we want to the see the Secretary of State and the Department of Health having a much sharper and clearer focus on public health than has historically been the case. That is an important, and up until this point oft-overlooked, area of responsibility in a comprehensive health service. By having clear outcomes and frameworks for the NHS, for public health and, indeed, social care, too, and also having that responsibility close to the Secretary of State, will allow us to be in a much better place to drive a public health agenda, of the sort that is necessary to address so many of the public health challenges that the country faces, right across Government. It is for those reasons that we are proceeding in this way. While concerns have been raised around implementation and transition in the consultations that we have undertaken; there have been no concerns about the principle of the direction of travel. For those reasons, I hope that the hon. Lady is reassured and that the amendments are accepted.
Mr Barron: I hope that I will not detain the Committee for too long, but I have been trying to get to the bottom of what “competition” means in relation to the Bill. We have been told on numerous occasions that the Bill is an extension of the legislation introduced in the past 10 years in which the previous Government introduced the independent sector to the national health service. That prompts the question—I see one or two Government Members nodding their head—why do we have to have all these clauses to introduce competition law if the Bill is just an extension of what has been happening over the past 10 years?
Earlier in our proceedings, I asked the Minister what he meant when he said on BBC television earlier this year, “It is going to be a genuine market. It is going to be a genuine competition.” His answer was that there is going to be competition in terms of quality. When we set off on this Bill, we looked at NICE’s role in quality standards, which I support. The spreading of best practice has been very poor inside the national health service, so, in that respect, I see where quality comes through from NICE’s laying down standards for patient pathways and having both commissioners and providers accept them. That seems to me to be a simple concept to accept.
Competition law is a little different. On Tuesday I asked a number of questions of the Minister on the Government’s intention for competition and the introduction of competition law. We see here that it is an introduction of competition law; it is not using the current framework, otherwise we would not have to have it in the Bill. I asked several questions. Our greatest problem, in a sense, is with the powers of Monitor. Those powers are described in the explanatory notes on clause 52, which say very little about how the shape of competition will work. The explanatory notes simply say that it will work
On Tuesday we debated competition law and some of its different aspects. I asked a number of questions of the Minister, some of which he answered, but he was not taking interventions at the time because he wanted to get through answering questions that other Members and I had asked. The questions I asked of him related not to what is in the explanatory notes, but to what is in the White Paper that was published last July and explains the scope and powers of Monitor. I want very briefly to describe those questions. One question was on the powers Monitor will have to protect
“Secondly, the powers to grant access by third parties to a monopoly provider’s facilities would be used only in limited circumstances, when it was in patients’ interests, which could in the form of extended hours, more flexible access or more innovative services; the provider giving access would receive payment for doing so.”
There is a whole debate, not only in this Committee or in this House—it was debated in the Chamber yesterday, but I did not participate in that debate—but in political parties and in the different organisations that represent different aspects, both clinical and non-clinical, of the national health service. What exactly does this mean? What does bringing competition law into the NHS mean? With all due respect, “in limited circumstances” means absolutely nothing. It means very little to me that the new power the Bill will allow Monitor to exercise will be used “in limited circumstances”.
“For example, where a provider refused to co-operate with GPs to provide integration of primary care within A and E”.––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 770.]
I have visited that type of establishment. We have had them for a number of years, and while it is true that they have, on occasion, been reluctant for GPs to endorse them because it would be a change away from the normal shape of general practice service in this country, why would we need these powers to bring in competition law if those are the examples? We are saying that they are an example of the potential abuse of a monopoly position.
Over many years we have been able to reshape the NHS at local level without ever having to bring competition law, or anything like it, into the equation. We are the Committee that should be looking in detail at the implications of this legislation for our constituents and the country. Going away from here on the basis of “in limited circumstances” does not satisfy me that, as a legislator, I can say to my constituents—or anybody else—that this legislation will not disrupt the NHS in the way that it has the potential to do.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): Is there not an added complication in this part of the Bill? If European competition law is a part of Monitor’s remit, would a monopoly provider, such as the one my right hon. Friend mentioned on Tuesday evening, potentially be subject to state aid rules if we were applying competition law to its full extent?
Mr Barron: Let me answer that very relevant question by explaining to the Committee. On Tuesday I said that we were all sent a brief on competition law by the NHS Confederation. An element I did not bring up then but will now is that
“Under the NHS reforms, Monitor will have the same powers as the OFT, in relation to competition in the provision of health services in England. Competition law regulates anti-competitive conduct, mergers and state aid. In relation to anti-competitive conduct, there are two main areas: [one is] (collusion) [and the other is] (monopoly)”.
I am not convinced that monopoly will only be threatened “in limited circumstances”. We had no examples as far as the law is concerned—I am not a lawyer, but bringing competition law into the health service could open up every provision.
As I said on Tuesday, I accept entirely the existing issues around procurement. Competition law should be used there because it is a major way of protecting the public purse. There are good examples of where NHS procurement has not been as efficient for the taxpayer as it should have. There are many, many examples of that over many years. However, clinical services are entirely different. I am unsure about the implications around the issue of state aid and competition law—perhaps the Minister could tell us whether there are any implications concerning state aid, given that our health service is pretty unique in how it is funded?
As I said earlier, I do not want to detain the Committee, but I must go back to the question I posed to the Minister, which was not answered on Tuesday. It related to the White Paper published in July, which said:
“Monitor’s powers to regulate prices and license providers will only cover publicly-funded health services. However, its powers to apply competition law will extend to both publicly and privately funded healthcare, and to social care.”
Again, I pose the question to the Minister: what are the implications of that? What does it tell the Committee about whether competition law will be involved in every aspect of health and social care in this country? I entirely accept the issue about procurement, but this is about monopoly providers, which in general terms are hospitals, and about having access to them. I do not pose the question to scare anybody, but this is relevant. Even if all we get back is limited in terms of how this arrangement can work, I pose it to the Committee.
There has been a great debate for 60 years about whether hospitals should have private wings. My local hospital does not have a private wing, but I have been into some that do. Some people who work in the NHS and many of our constituents would take strong exception to a current NHS hospital being told that it had to open a private wing because Monitor believed that that was a way to use the powers given to it by the Bill. I know that we are on competition law and not the powers of Monitor, but this is about the powers of Monitor. It has the power to look into the market and direct things if it feels that the market is being held up in any way. Competition law, quite frankly, does not reassure me about the decisions that will be taken.
As the hon. Member for Southport said in an earlier debate, much of our health care system is integrated, and has to be integrated at a regional or sub-regional level on occasion. That is how our NHS works. This is
Grahame M. Morris: My view echoes that of my right hon. Friend. This is another cornerstone of the Bill. The provisions clause 60 and some subsequent clauses on functions under the 1998 Act are causing considerable concern, not only to my party and the public, but to many Members of the governing parties, and certainly to the medical profession.
Clause 60 gives Monitor powers under competition law that it can use concurrently with the Office of Fair Trading, as my right hon. Friend said. My understanding is that Monitor will identify market distortions or anti-competitive practices, and the Competition Commission will take appropriate corrective action. The application of competition law to health care is a major departure in terms of the clinical provisions and is of considerable concern. If the full weight of EU competition law applied to the NHS, as if it were a standard service industry, the process of privatisation, which Opposition members are concerned about and the Government have indicated that they are opposed to, could not only be accelerated but might become entirely irreversible.
My right hon. Friend said that a quarter of the Bill is dedicated to clauses dealing with competition. This seems to be a difficult concept to explain, but my principle concern is that in changing the structure and architecture of the NHS we are exposing the clinical areas to EU competition law. It is not so much about the drivers in the Bill, but the structural changes, and that is the issue of concern to Opposition Members and those further afield. It is important to read the clauses in conjunction with the impact assessment, and to note that the competition powers can be invoked where a private provider complains that a commissioner, such as a GP commissioner, is favouring an incumbent provider, such as a local NHS hospital. We touched on this when the hon. Member for Southport gave particular examples in his area, so I do not want to rehearse those.
The implication is that, on receipt of such a complaint, Monitor would be able to investigate local GPs with the threat of full enforcement powers, and the possibility of levying a penalty of up to 10% of their turnover where it determines that there has been anti-competitive practice. I accept that Monitor would do the investigation and would make the recommendations and that the Competition Commission would want to carry out the sanction. However, in cases like this—and even in extreme cases—it is conceivable that, under European competition law, there could be criminal offences. I am not suggesting that that is going to happen; it would be an extreme situation. However, even if that scenario is unlikely, just the prospect of it may be a useful weapon for the private providers who are seeking to gain entry to the market by exerting influence over local GPs to commission their services instead of the preferred NHS providers. Indeed, such threats would counteract any political pressure from the local community to save local services and local NHS hospitals.
Liz Kendall: My hon. Friends the Members for Rother Valley and for Easington both raised important issues about this clause. I would like to say some more about what the clause seeks to do and why I think that that is a huge problem, as do my hon. Friends. For the record, clause 60 gives Monitor concurrent functions with the Office of Fair Trading under part 1 of the Competition Act 1998. There has been much debate about this, both within this Committee and on the Floor of the House. The Act is applied and enforced by the OFT in a number of regulatory functions. I have found another one in the explanatory note with the Bill: it is not just telecoms, gas, electricity, water and railways but sewerage. So that is added to the mix.
Part 1 of the Act has two chapters. The first prohibits what are called undertakings from reaching certain agreements which prevent, restrict or distort competition, which include reaching agreements not only to fix prices but also to “share markets”.
Chapter 2 of part 1 of the Act prohibits undertakings from abusing a dominant position in the market, which include limiting production. Undertakings, as hon. Members will know, are defined in EU law as entities engaged in economic activity. I say EU law, because chapters 1 and 2 of part 1 of the Competition Act are modelled, as detailed in the explanatory notes, on articles 101 and 102 of the treaty on the functioning of the European Union. It is clear that these provisions are being generally applied to the NHS in primary legislation.
Monitor would have the same powers as the Office of Fair Trading to conduct investigations where it has reasonable grounds for suspecting that either of the prohibited areas that I have outlined have taken place in relation to health services in England. It would also have powers to impose remedies or penalties for those breaches. If I may clarify what some of my hon. Friends have said, the OFT’s powers include a power to fine businesses who are found to have broken the law up to 10% of their turnover. Third parties, including injured competitors, customers and consumer groups, can bring damages and claims against them. Individuals found to be involved in cartels can be fined and imprisoned for up to five years and directors of companies that breach prohibitions can be disqualified for up to 15 years. That is why it is important for us seriously to consider the implications for the NHS.
I want to get to the heart of the issue which Mr. Hancock rightly said should wait to be discussed until this clause. Members on this side of the Committee have not argued that this Bill extends the scope of competition law; we have argued that it extends the applicability of the law by extending it to the NHS. I say to the Minister that the national health service has explicitly become a market in which competition law has been added to primary legislation for the first time. The Minister is guaranteeing that it will be treated as a market and bodies will be treated as undertakings because that is enshrined in primary legislation for the first time. By introducing an economic regulator, the Government have made it clear that the NHS is being treated more as a market.
I would go further, however. As the private patient price cap is entirely removed from foundation trusts and they can make money from the private sector, they would be more likely to be considered undertakings. As there are no more primary care trusts or strategic health authorities as a management level of Government to
“UK and EU competition laws will increasingly become applicable. …in a future where the majority of providers are likely to be classed as undertakings for the purposes of EU competition law, that law…will apply.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 718.]
Liz Kendall: the other place—said that they would indeed be counted as undertakings. So this is not just about what happens to NHS trusts, it is about how social enterprises in the voluntary sector will be treated, too.
I would like to put this list of hypothetical concerns into some context. It is worth bearing it in mind that we are talking about £100 billion of taxpayers’ money. That will above all else be spent equally to provide high-quality health care with free access for all. Is it not right that this should not be under a monopoly and that we should not be frightened by the prospect of what the hon. Lady is saying? Even though I do not agree with everything she is saying, there has to be some value judgment.
Liz Kendall: I sought to achieve in whatever role I had in life before I came here the very best value for taxpayers’ money. I believe that within the national health service that should be a matter of policy decision based on evidence rather than one of competition law, Monitor or the courts. I will come on to that point in a moment to explain that in more detail.
The Minister has already said that providers will become undertakings and subject to competition law, including EU competition law. The key issue as well about which there is real concern is whether commissioners will become undertakings. My right hon. Friend the Member for Rother Valley has already pointed to a briefing, which I have mentioned before, that was issued last month by the NHS Confederation and Mills and Reeve—a top 50 UK law firm, according to its website—which is called “An introduction to procurement and competition for GP commissioners.” As I have said before, the briefing was published because people were concerned about what the changes would mean for their future. The briefing states clearly that under current legislation
“Whether or not competition law actually applies to GP commissioning consortia in the future will, however, depend on their exact form and functions and the precise legislative framework under which they act. Also, competition law is a highly complex area which is constantly developing, with new cases being decided and new guidance being issued all the time. This leads to uncertainty as to its application.”
Tom Blenkinsop: Irrespective of the interpretation of that legislation on each side of the Committee, the point is that if interpretation is shifting all the time it results in constant litigation. The funding for that comes from the NHS budget.
Liz Kendall: My hon. Friend raises an important point about the costs that are associated with all this. The uncertainty means that—as the NHS Confederation is doing—people will be employing lawyers to interpret the legislation and what it would mean for their members. Those costs are likely to increase.
Mr Steve Brine (Winchester) (Con): I realise that the Opposition want to present all this as radical revolution, but is it not the case now that when primary care trusts are making commissioning decisions they have to adhere to procurement rules? My primary care trust said to me only this morning that it does exactly that. I realise that yesterday’s Opposition day debate fell rather flat, but it is not greatly helpful to repeat these messages.
Liz Kendall: The hon. Gentleman will know the situation. At the moment, PCTs are not counted in their commissioning function as undertakings. Of course, there has always been debate about the degree to which different laws apply, but I am arguing that the changes in the Bill will make it explicit and will expose commissioning consortia to these challenges and issues. The proposed changes could explicitly clarify that they are subject to the full force of competition law, about which, as the hon. Gentleman knows, there is at the very least a lot of uncertainty at the moment.
Tom Blenkinsop: I want to reinforce that point. PCTs were exempt, under the designation of part B services, because they performed social functions. Under clause 52, which specifies the general duties of Monitor, it is an economic body that promotes competition. It is as clear as day.
Liz Kendall: There are lawyers present. Although I am not a lawyer, I have been attempting—as we all have—to look through the legislation, and there is uncertainty. I am not making it up out of nowhere; I am raising these questions for the same reason that the NHS Confederation and other organisations are raising them, and I ask the Minister just to stop and look at those concerns. He may disagree with them, but he is not a lawyer. Neither am I; I am a member of Her Majesty’s Opposition rightly questioning what this legislation means.
We have had a lot of debate on the reorganisation of hospital services, such as stroke care or trauma care, and the planning of a system across a regional area.
Returning to a point that I made earlier, I have asked the Minister to publish the legal advice, so that we at least have a better understanding of these different issues. I conclude by urging him to do so, because the most telling part of the briefing from the NHS Confederation is the statement that once the competition regime is in place by 2012—I say this respectfully to the hon. Member for Winchester—it will be very different from the previous regime. The King’s Fund says the same. If it was not different from before, arguably there would be no point in the legislation. The NHS Confederation says that competition will be enforced by Monitor through legislation, rather than by NHS policy. Ultimately, where competition should be applied should be based on evidence and decided on by policy, not by lawyers or Monitor and certainly not in the courts—whether in this land or another.
Karl Turner (Kingston upon Hull East) (Lab): I think I am right in saying that a third of the Bill applies competition law—no less than 85 clauses. Clause 60 outlines the Government’s intention to give Monitor concurrent powers to the Office of Fair Trading, under part 1 of the Competition Act 1998. This is the linchpin of the Government’s plan to privatise our NHS.
Karl Turner: Not at the moment. Let me make a little progress. The 1998 Act prohibits undertakings from reaching certain agreements, decisions or concerted practices that prevent, restrict or distort competition. Giving Monitor concurrent powers to the OFT opens the gateway to wholesale privatisation. The Government must realise that it will be difficult, at best, to close that door once they have opened it.
The provisions contained in the clause will open the NHS up to legal challenges under UK and EU competition laws. That represents a significant marketisation of the NHS. Once the precedent of competition law has been set, it may be impossible to reverse it. The Bill is forcing the Tory ideological commitment to competition and full-scale free marketisation of the NHS. To be clear, we support competition in the NHS where it benefits patients, but we oppose the ideological drive to introduce markets when it will harm services. The Bill is harmful. Its provisions mean that any GP consortium fondly imagining that it can keep using its well-trusted local hospital will be bitterly disappointed when it finds itself tangled in wasteful and time-consuming legal challenges.
“Clause 60 would give Monitor concurrent powers with the Office of Fair Trading (OFT) to apply the Competition Act 1998 in relation the provision of healthcare in England (Chapter I of Part I of this Act prohibits undertakings from reaching agreements that prevent, restrict or distort competition…)”.
That means that, on the face of it, the interplay between the CQC, the Secretary of State and Monitor looks good, because there is a system of checks and balances, but, with the application of the competition legislation, Monitor absolutely dominates and applies competition law forthwith.
Karl Turner: My hon. Friend is absolutely right, and my hon. Friend the Member for Leicester West was also right about this. It is not so much about the scope as about the application. It brings in competition law. Why is it necessary to have this massive document if this is simply an evolution of what already exists?
Mr Burns: This has been an interesting debate. We have heard most of it before in previous debates. I suppose it goes to the heart of matters, but I am saddened by this philosophy that if someone repeats something that is not factually correct often enough, it might become a fact.
We heard from the hon. Members for Kingston upon Hull East and for Easington—the hon. Member for Easington is a bit of a neanderthal Labour Member—that the clause is all about privatising the health service. Heaven forbid. I suspect that part of the argument put by the hon. Member for Easington is based on the fact that there is going to be competition within the NHS. There was open competition in the health service before 11 May—
Competition did not start on 11 May 2010. Before that there was open competition between hospitals in the NHS and in the private and voluntary sectors for all elective operations such as hip replacements, cataracts and other medical procedures. Some 200,000 patients a year choose to have their NHS-funded operations in independent hospitals. [ Interruption. ]
The Chair: Order. Please bear with the rest of us, Mr Turner. We would like to hear what the Minister has to say. You might not, but we do. Could we just give him some time to say it? Save it for after the Committee.
There always was, and is, competition within the health service under the previous Government and this Government. I gave examples of elective treatment in hospitals and the number of patients who opt under NHS rules to have NHS-funded treatment in private hospitals. There have been major procurements to improve primary care services that involved open competition and brought in new providers.
Mr Burns: Let me just explain something. If competition is so dreadful, do Labour Members still agree—I know that there has been a regime change—with the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown),
That competing is competition. If it is all right for the right hon. Member for Kirkcaldy and Cowdenbeath, I am surprised it is not all right for the Labour Members here, particularly the hon. Member for Easington, who I imagine is more of that wing of the Labour party than the hon. Member for Leicester West. I do not know about the hon. Member for Sedgefield, he must be a bit torn between the competing former Prime Ministers and their philosophies.
I want to keep this rather brief, because, as I have said, we have been around the houses on this issue in the past month or so. I want to say—so that Opposition Members fully understand—that the clause gives Monitor concurrent powers with the OFT—[ Interruption. ] Hon. Members say that they know that. Having listened to them for the last hour, I have to say I am surprised that they know anything, given some of the things they have come out with.
Clause 60 gives Monitor concurrent powers with the OFT in relation to the provision of health care services, under part 1 of the Competition Act 1998. Most sectoral regulators have these concurrent powers with the OFT. The Bill does not introduce the Competition Act to the provision of health care services for the first time. Competition law has always applied where providers are performing an economic function.
Mr Burns: The hon. Member for Middlesbrough and somewhere—[ Laughter. ] The hon. Member for Middlesbrough South and East Cleveland nods his head in disagreement, but I have to tell him that facts are facts, and nodding his head in disagreement will not alter that.
Concurrent powers would enable Monitor to investigate where it had reasonable grounds to suspect that health service providers had colluded in a way that prevented, restricted or distorted competition, against the interests of patients. I cannot see what is wrong with that, and if
Monitor would have concurrent powers to issue directions and fines as remedies for breaches of the prohibition. For example, a direction could be a requirement to bring the infringement to an end and remedy its effects. Any sane person would assume that that was beneficial and commonsensical. These powers currently sit with the OFT; giving them to Monitor in relation to health care services, alongside its powers to set licence conditions to promote competition, would effectively result in a single regulator for competition in health care services. This would ensure clarity of roles and provide a single centre of expertise. That is what clause 60 is about, and to my mind it is very sensible.
Let us look at some of the issues raised. The right hon. Member for Rother Valley asked whether state aid law would apply. Monitor will not be able to enforce state aid law—only the European Commission can do that. As with the rest of competition law, it is only if a provider is an undertaking that state aid rules apply. To help the Committee, a body is an undertaking if it is carrying out economic activity.
Another point raised by the right hon. Gentleman was why Monitor should be able to fine providers. That ability would act as a deterrent, and take away unlawful gains that might be made by providers engaged in that sort of activity. It is entirely consistent with normal regulatory practice in other sectors. Fines are rarely used, but they deter anti-competitive behaviour that is against the interests of patients and taxpayers.
The right hon. Gentleman also asked what the implications of Monitor’s competition powers applying to private and primary funded health care were. As set out in the White Paper, Monitor will become the sector-specific economic regulator for health. Its competition powers will extend across health care, both NHS and privately funded. These powers already exist and are held by the OFT; we are simply creating a dedicated regulator with expertise in health. Monitor’s other powers on price-setting and on service continuity are relevant only to NHS-funded care and do not apply to privately funded health care.
The right hon. Gentleman also asked whether an NHS hospital would be forced to open a private wing. No, is the straightforward answer to that. This is about ensuring that NHS patients have access to the best services where they are not provided or provided well by a monopoly trust. Patient interest would be key in determining the limited occasions when Monitor uses such a power, so Monitor could never force an NHS hospital to open a private wing.
“Secondly, the powers to grant access by third parties to a monopoly provider’s facilities would be used only in limited circumstances”.––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 770.]
Mr Burns: Partly by experience in other fields of competition law, and through studying and considering the implications of the policy. We do not anticipate the degree of problems that the right hon. Gentleman speculates might arise. We do not believe that it will be at that level.
I do not want to go round in circles. Right hon. and hon. Members have to accept that, if they reflect in the cold light of day, neither this clause nor the clauses that follow in this part of the Bill have anything whatever to do with privatising the health service.
“May I just explain this first? As NHS providers develop and begin to compete actively with other NHS providers and with private and voluntary providers, UK and EU competition laws will increasingly become applicable.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 718.]
Mr Burns: We dealt with this at the beginning of the Committee this morning, Mr Hancock, and you might like to tell the hon. Gentleman, for whom I have considerable respect, that he asks the questions in his way and I will answer them in mine. I do not need him to sit there telling me how I am going to answer the question. I did not tell him how to pose the question. We dealt with this issue this morning, so once again we are going round in circles, but I will answer the question.
The Secretary of State and I are in agreement. Both our comments are compatible and correct. I said then and I say now that the Bill itself does not introduce any new competition law or extend the applicability of current UK or EU competition legislation. At present, the OFT enforces competition law in most sectors. Under the Bill, Monitor will have the OFT’s existing powers to enforce, where appropriate, competition law in health services. It will do only what the OFT can currently do. Would the hon. Gentleman like me to continue or will he take that as read? [ Interruption. ] Well, I take it as read because that is the answer to the question. With that, I urge that the clause stand part of the Bill.
The Chair: The intention is to take the business to about clause 68, which could take some time. Would a 10-minute break be agreeable? Are we in agreement? Does that suit your purposes, Mr Burns? I suspend the Committee. We will resume at 10 past 4.
Liz Kendall: I shall attempt to keep my comments brief. As hon. Members know, clause 61 gives Monitor functions that the Office of Fair Trading has under part 4 of the Enterprise Act 2002 in respect of health services in England. Essentially, it will allow Monitor to make market references to the Competition Commission if it has reasonable grounds to suspect that any features of a market would prevent, restrict or distort competition. I have two points to make on that.
First, what is a market in that regard? Does such a market cover a local geographical area? I hope that the Minister will be able to explain what that would cover. Could Monitor say that it requires a whole local area as a market that it does not think there is enough competition in? Would Monitor be able to refer what might be called a national market for services? We know that the NHS commissioning board will be commissioning national services. I think that the Minister very helpfully clarified that when we had the debate on it. That was probably only a few weeks ago, but it feels like many more. A whole list of services is currently commissioned nationally, under the specialised commissioning list. It includes such things as specialist renal services, kidney treatment, treatment for people who have pancreas problems and special cancer services. Would that be considered as a market to which Monitor could refer, or might Monitor—as David Bennett mentioned in one of his recent articles for either The Times or the Financial Times—take diabetes care and say that there was not enough competition in that system, and so on? What is the market and will it be able to cover those different areas?
My second point relates to a more practical question. Hon. Members will be aware that, although the Bill gives Monitor powers that the OFT has, including the ability to refer to the Competition Commission, the Government announced in October last year that the OFT and the Competition Commission would merge. One new competition body will investigate mergers, dominance and cartels. Another body will then take on
Mr Burns: Like the hon. Lady, I shall be relatively brief. The clause gives Monitor powers to make market references to the Competition Commission if it has reasonable grounds to suspect that features of the market restrict, prevent or distort competition. That could happen, for example, if a number of providers introduced systems that made it difficult for patients to choose provider or move between them, or for potential new providers to offer services to patients. In such cases, the Competition Commission would investigate, and if it found an adverse effect on competition, it would determine remedies to address that. Monitor would undertake that function concurrently with the OFT, and the Bill requires those bodies to consult each other when first exercising that function, and not to make the reference if the other body has already done so.
Like clause 60, clause 61 does not create powers that do not already exist. It simply provides for powers currently resting with the OFT to be exercised by Monitor instead. We want to create a single regulator for the health care sector, to provide clarity and a single focus of expertise.
The hon. Lady also asked about what “a market” would cover. That would cover a national market for specialised services—for example, a regional market for elective hospital care, or a more local market for long-term conditions. It would be up to Monitor to define those conditions. I hope that the hon. Lady finds that helpful.
Liz Kendall: Will the Minister respond to my questions about the merger of the OFT and the Competition Commission? When will that merger take place and are the Government considering new powers for those bodies? I assume that Monitor will take that on. It is an important point.
I do not know whether the amendment is probing or not. Subsection (4), which the amendment seeks to delete, gives Monitor the power to disqualify directors for competition infringements, if they are in breach of the Competition Act 1998. I am sure that the Minister will tell us that those are the exact powers that the OFT has. I want to ask him some questions, so that the matter can be clear and on the record for Members, if they have the joy and pleasure of reading the Hansard account of our proceedings.
Who will be considered responsible directors for the new GP consortia? Will it be the accountable officer? Will it be the individual GP members of the consortia or practice managers? Who will be considered responsible directors for commissioning consortia? Similarly, for foundation trusts, will that be the executive directors of the board, the non-executive directors or the governors? Will the Minister please clarify?
What would the implications be for directors if Monitor can have them disqualified for competition infringements? Does the subsection imply that there is any personal liability attached to the directors of any health bodies now considered as undertakings? Are there financial implications? If the Government propose that Monitor should have the same powers as the OFT when it comes to disqualifying directors, we need to know who they are and what that will mean for them. People involved in running GP commissioning consortia and health service providers would like to know what their personal, financial and other responsibilities are.
The enforcement powers set out in the Bill are the same set available to the Office of Fair Trading and other sectoral regulators. Indeed, the OFT could currently apply to the courts for the disqualification of a director of a provider of health care services, if it had breached competition law. The Bill does not change the sanctions that can apply to providers, so the hon. Lady was right to anticipate what I would say on that point.
The hon. Lady asked to whom the provision applies. It applies to directors of companies and those in equivalent positions, such as senior staff in NHS providers who perform a director-like role. She also asked from where the power to disqualify directors comes. It does not come from Monitor; it cannot disqualify. Only a court can disqualify a person, and the relevant powers relate to breaches of the Competition Act 1998, which will not apply to consortia when commissioning NHS services.
Liz Kendall: Can I clarify that? The provision will not apply to GP commissioning consortia. I have already raised the fact that there is some confusion about whether they will become undertakings. Will the Minister please clarify?
Liz Kendall: For clarification, I did not ask where the powers come from; I am clear on that. I specifically asked who would be considered directors. The final question I asked, to which I hope the Minister will now reply, is: what would the implications be? Are there any personal financial implications, and any personal levels of responsibility? Could the provision apply to a whole board? I know that the Minister said that the OFT has never used the power—
Mr Burns: I can answer both points. The answer is no, the people to whom she referred cannot be fined; there would be a disqualification from the position. Unless I misheard her, the hon. Lady also asked for the definition of directors within the providers. The definition is a member of senior staff in an NHS provider who is performing a director-like role.
The Bill states that Monitor’s overriding duty will be to protect and promote patients’ interests. The purpose of the regulations mentioned in clause 63 is to ensure that commissioning processes enable services to be delivered by the best providers; that any conflicts of interest between commissioner and provider functions are appropriately managed; and that choice for patients is promoted on the principle “no decision about me without me.”
The Government are clear that the use of competition in the NHS should be a means of driving up the quality, responsiveness and efficiency of services for the benefit of patients. In future, patients will have more control over their care and will be able to choose from any
Competition is not an end in itself. Amendments 498 and 499 clarify our intentions and reduce any potential for misunderstanding by narrowing the scope of regulation-making powers to remove the scope for regulations to include requirements on commissioners to promote competition. We are replacing that with strong and clear provision for regulations to include prohibitions on anti-competitive conduct.
The amendments remove any doubt about whether commissioners could be asked to promote competition for competition’s sake. The sort of anti-competitive conduct that we want to prohibit would include behaviours such as: commissioners and providers agreeing to prevent the entry of a new provider with a potentially higher-quality service; collusion to fix prices; and agreements between commissioners and providers to exclude existing providers from being offered to patients under patient choice.
Having clarified that the scope of Monitor’s powers will be limited to addressing potential abuses, I come to Government amendments 500 and 501. It is important that Monitor has the appropriate investigative powers. To that end, I propose that the Bill be amended to give Monitor powers to carry out an investigation on its own initiative where it has reasonable grounds to suspect that commissioners have failed to comply with the prohibitions on anti-competitive conduct. For example, Monitor could become aware of a pattern of service provision that suggested that patients might be being directed to certain providers, or that choice was not being offered. If it followed that up and found further indications that that was the case, for example through discussions with the local healthwatch, it could then have grounds to suspect that commissioners were not complying with the regulations.
The ability to initiate investigations concerning anti-competitive behaviour is important, as certain types of behaviour, such as the ones I have described, are difficult for other providers or individual patients to observe, and it is therefore difficult to make a complaint about it. Moreover, the amendments will strengthen Monitor’s power to seek out and address anti-competitive behaviour resulting from conflicts of interest. Monitor will be able to require information from commissioners to help it with its investigations. However, it may be helpful if I clarify that we are not proposing that Monitor has the power to access a commissioner’s premises and seize documents or other materials.
Jeremy Lefroy: I want to raise the question that I raised a couple of days ago. Does the Minister not agree that if a provider in the private sector feels that it is being obstructed by a more traditional provider of the same service in ways that might not be discernible, it would be easier for the provider to ask Monitor to have a look at the matter under the new provisions?
Opposition amendment 492 would remove the express provision that regulations under clause 63 could include requirements relating to competitive tendering. Our intention is that effective regulation should provide a mechanism for ensuring good procurement practice by commissioners, including in their use of tendering. That is important because the use of procurement in tendering has already been well established in the NHS, including under the previous Government. Rules on tendering are already set out in guidance to primary care trusts on procurement that was introduced by the previous Administration.
The regulations would ensure that requirements on commissioners to adhere to good procurement practices, including in the use of tendering, are clear and enforceable. However, it would be for the commissioners to determine how best to make use of procurement to drive improvements for patients. Our aim is simply to ensure that contracts for NHS services are awarded to the best provider, or providers, and that patients have greater choice and control of their area. It is in the best interests of patients and the taxpayer for the scope of the procurement regulations under clause 63 to include requirements relating to tendering. For that reason, I urge my hon. Friends not to support amendment 492 if the Opposition decide to put it to a Division.
Liz Kendall: Let us be clear about what amendment 492 tries to do: it deletes subsection (3). Under the clause, regulations can be introduced that would allow the Secretary of State to require both the national commissioning board and local commissioning consortia to do certain things, one of which, under subsection 3(a), which we are trying to delete, is to require them to put services out to competitive tender. In other words, the provision allows the Secretary of State to say to the NHS commissioning board and local commissioning consortia, “This is what you must put out to tender.” If Government Members think that is about decentralising power and control, I find that quite astonishing. The provision allows the Secretary of State to direct the national board and local commissioning consortia to put services out to tender. I do not think that that is the right approach, which is why I am pressing the amendment to a Division.
Mr Burns: The clause permits the Secretary of State to regulate the procurement practices of the NHS commissioning board and commissioning consortia, to ensure that they adhere to good practice in procurement, protect and promote patient choice, and that they do not act in a manner that would—or would be likely to—prevent, restrict or distort competition in the provision of health care services for those purposes. Such regulations may include requirements to manage the commissioners’ conflicts of interest between their interests in commissioning services and their interests in providing them. For example, some GPs might be in a position to provide the services that they commission through their commissioning consortium. While they might be the best provider for a particular patient, we want to ensure that patients are given the choice of provider, and that alternative providers are given a fair chance to provide the service.
Clause 63 also states that regulations may include requirements relating to competitive tendering of clinical services. Where competitive tendering takes place, we want to ensure that bad procurement practice, such as excluding bidders unfairly, could be prevented. Our aim is to create a presumption that all patients will have choice and control over their care and treatment, and choice of any willing provider, wherever appropriate. However, competitive tendering will continue to be required for certain services, such as when patients have complex and enduring needs that require a range of skills and resources. The clause therefore ensures that commissioners use best procurement practice, protect and promote patient choice, and promote competition in the interests of patients. That will be key to driving up standards, and the clause provides a mechanism for ensuring that it happens.
I also propose to introduce, via new clause 7 and new schedule 2, a power to allow Monitor to accept undertakings—that is, commitments—from commissioners if they have breached regulations under clause 63. Monitor could accept those undertakings in lieu of issuing a direction or of declaring an arrangement ineffective. The 2006 report by Richard Macrory, “Regulatory Justice: Making Sanctions Effective”, stated that such undertakings represent a powerful alternative to traditional coercive, regulatory enforcement action, and have the potential to impose fit-for-purpose sanctions that are more satisfying for both the offender and the victims of non-compliance. The Bill already allows for Monitor to accept undertakings from providers to remedy non-compliance with licence conditions. The amendment provides for a similar power in respect of commissioners and non-compliance with regulations made under clause 63.
Finally, new clause 8 would place Monitor under a duty to set out how it would apply regulations made under clause 63 to commissioners, by publishing guidance. It would require Monitor to consult the NHS commissioning board in doing that, and to seek approval for the guidance from the Secretary of State. The duty would ensure that commissioners are clear on the rules and the behaviour expected of them. I urge the Committee to accept clause 63 and to accept, in due course, the new clauses and new schedule.
Liz Kendall: I want to try to put this in layman’s terms. The provisions mean that not only can the new commissioning consortia—there will be four in my area—be referred by Monitor for behaving anti-competitively or for not putting services out to tender, but that they can now be referred by the NHS commissioning board as well. Is that not Government and policy by quangos, ordering around the different consortia?
Liz Kendall: This is an important matter, but I will be brief. Clause 64 gives various powers to Monitor, or it allows for “regulations”—in other words, the Secretary of State—to confer powers on Monitor. Let us be clear that there will be no more proper discussion in Parliament. Clause 64(3) says:
Essentially, clause 64(3) allows Monitor to say that a service provided for the NHS is “ineffective”. There are so many questions that one could ask about that, from very simple and immediate questions—for example, how will Monitor determine what is “ineffective”?—to the more fundamental question, “Why on earth should it be up to Monitor to decide to declare an NHS service ineffective?” For that reason, we have tabled the amendment and we are seeking to delete the remainder of the clause, because it should not be up to Monitor to decide that.
The Government’s intention in seeking delegated power to make regulations under clause 63 is to establish clear requirements on commissioners that would be binding and enforceable. To remove the ability for those requirements to be enforced would be irresponsible. Monitor needs credible sanctions to deter the types of behaviour that would be bad for patients and taxpayers. I recognise that the majority of GP commissioning consortia and the NHS commissioning board will always seek to do their best for patients. Others may find themselves on the wrong side of the rules, but will respond to a soft approach by Monitor and these powers do not preclude Monitor from adopting a soft approach. However, we need to ensure that there are powers in the system to prevent the most damaging behaviour, such as referring patients inappropriately to services that the commissioner has a direct vested interest in. That type of action would result in poor outcomes for patients and poor value for money. We cannot allow the regulations to be ignored and we cannot allow that sort of behaviour to continue unchallenged.
Earlier in our discussions, the Government tabled an amendment that required Monitor to publish guidance, with approval from the Secretary of State, that sets out how it would apply its enforcement powers to breaches by commissioning consortia and the NHS commissioning board. Without enforcement powers, Monitor would be in the same toothless position as the Co-operation and Competition Panel, which the previous Administration established. That body can make investigations and produce reports, but any actions that it recommends are subject to decisions by the Secretary of State. To my mind, that situation is completely inconsistent with having a transparent and independent economic regulator. Therefore I strongly resist amendment 493.
Mr Burns: I might be able to help the hon. Gentleman by putting on the record exactly what “ineffective” means. It means that the arrangement, in other words the contract, is void. It does not mean that the service is “ineffective”. I hope that that helps the hon. Gentleman.
With the extension of patient choice, however, the need for tendering would diminish in any event. Moreover, the remaining powers for Monitor to set aside a contract where there has been a serious breach of the regulations and to direct the commissioner to put in place measures to prevent or mitigate further breaches should provide sufficient of a deterrent effect. Powers for Monitor to go further and direct the commissioner to put services out to tender would be unnecessary. It is for these reasons that I urge the Committee to accept Government amendments 502 and 503, and to oppose amendment 493.
Liz Kendall: I will make my last comment of the day. I do not like hyperbole, but I think that we are developing a Kafkaesque nightmare of regulation and bureaucracy that is completely unnecessary. The Government may want to see more competition and more diversity, but they do not have to set up all these powers. It is extremely confusing and extremely bureaucratic.
The Chair: A rather confusing situation has arisen. We have to vote again on Government amendments 500 and 501, which were earlier voted for unopposed, because I was a bit presumptuous. I should have waited until after the debate on amendment 493, for reasons that I obviously do not understand.
The Chair: I know, but the Clerk has told me that Government amendments 500 and 501 were grouped with Government amendment 498 to clause 63, but they are amendments to this clause. They should have been called formally after clause 63 stand part. If we call them formally now, we can then call amendment 493. We can take the amendments together if that is the will of the Committee—
“This clause provides that the merger control regime in Part 3 of the Enterprise Act 2002 would apply to foundation trusts which are not enterprises for the purposes of that regime in relation to mergers between foundation trusts or between NHS foundation trusts and other organisations.”
From the beginning, our debate has been about localism and the fact that commissioners and others can shape local services for patients. Will the Minister explain what the Office of Fair Trading and the Competition Commission have to do with the merging of NHS facilities?
Mr Burns: I have to say to the right hon. Gentleman that that is a very interesting question. I am grateful to him for asking it, and I will not beat about the bush. I will write to him very soon with a full and comprehensive answer.
Mr Burns: I have been very kindly directed along the way—the details were in front of me. I shall now give a full explanation, and I shall do so quickly. The clause enables the merger control regime for enterprises in the UK to be applied to mergers of foundation trusts and mergers between foundation trusts and other businesses. As I continue my explanation, the answer to the right hon. Gentleman’s question will be unveiled.
Under the clause, the OFT could make a reference to the Competition Commission to review foundation trust mergers to test whether they gave rise to a substantial lessening of competition. We want to ensure that mergers of foundation trusts and mergers between foundation trusts and others would go ahead if they did not cause a substantial lessening of competition or if their impact on competition was offset by the benefits that they would create.
We want to prevent or address any adverse effects of mergers that do not create benefits for patients and taxpayers, and which are detrimental to competition and therefore to choice and long-term efficiency.
Mr Barron: Does that mean that, on that basis, the OFT and the Competition Commission could not have the power to override what has been agreed locally? Or does it mean that they do have the power to override what has been agreed locally?
Mr Burns: It will be for the convenience of the Committee if I speak first. Clause 66 requires the Competition Commission to review how competition in the provision of quality health care services is developing and how Monitor is fulfilling its duties in relation to competition. Reviews would be every seven years, with the first one starting no later than the end of 2019. Other sectors do not have such a review requirement, but we think it is particularly important for health care services. It will enable the Competition Commission to ensure that providers, commissioners, Monitor and the regulations that apply to these bodies are working in a way that ensures that competition is improving quality and working for patients and taxpayers. The commission is required to publish reports on its reviews within 12 months, and make recommendations where it finds issues detrimental to the public interest. The Secretary of State, Monitor and the commissioning board are required to respond to those recommendations within six months.
It would be sensible to periodically review how competition in the sector is developing. The commission’s review will help show how the market is developing in the interests of patients and taxpayers and how Monitor is exercising its functions. The Competition Commission will be able to make informed, independent judgments, including making recommendations on any matters it had considered and concluded might have effects adverse to the public interest.
The purpose of new clause 9 is to give the Competition Commission powers to collect information to inform its reviews of the development of competition in the provision of NHS services and the exercise by Monitor of its
Liz Kendall: I beg hon. Members’ forgiveness. I said that I was not going to say anything else, but not for the first time or probably the last, I have been inspired to add to the debate. Let us be clear; the provision says that the Competition Commission will carry out a review on whether Monitor is promoting competition enough in the NHS. The Minister has said that it will make informed decisions about that. How will it do so? What health care knowledge does the Competition Commission have?
Liz Kendall: The Competition Commission is going to look at, as the Minister has said, whether Monitor is promoting markets and competition enough in the NHS. What knowledge does the Competition Commission have about health and health care? We have enough problems with Monitor and how democratically accountable it is to people for the decisions it takes that will affect health care. Now we have the Competition Commission reviewing and judging Monitor. We seem to have layer upon layer of decisions that are made by undemocratic, unaccountable bodies that do not know anything about health and health care. It is not about devolving that power and responsibility. Government Members—even the hon. Member for Broxtowe, who is not really allowed to speak because she is a Parliamentary Private Secretary—must question what this is all for. We seem to be imposing layers and layers of bureaucracy. What knowledge or expertise does the Competition Commission have about health?
Jeremy Lefroy: I have a question about the review of competition. I understand why the provision is there, but under clause 52 Monitor has a duty to promote competition “where appropriate.” Will that definition of “where appropriate” be taken into account when the Competition Commission conducts its review? Clearly, the Competition Commission could conduct a review of competition throughout the NHS and decide that in certain areas it does not exist, but that could be because Monitor has decided that competition in those areas is inappropriate.
Jeremy Lefroy: Let us take a basic case, such as the provision of acute services in a district general hospital. It is unlikely that there will be much in the way of competition, because it would be a waste of national resources to have two district general hospitals next to each other under different providers.
Mr Burns: If it would be helpful to the Committee and my hon. Friend, I will answer his question. Monitor’s duty, under clause 52, which he rightly refers to, is to promote competition where appropriate. The Competition Commission would look at how that is being interpreted, but there would be no bias for competition. It would only be where it was appropriate.
Jeremy Lefroy: I am most grateful to the Minister for that clarification. There is no point in us having a massive review of competition in the NHS, and having the Competition Commission decide that it has a remit to look right across the NHS, including areas where it would be inappropriate.
I can be very brief on this minor amendment, which is primarily about drafting. The amendment is required to ensure that the provision in clause 67 is clear in scope and consistent with other provisions in part 3. Its purpose is to ensure that, when publishing a report under clause 66, the Competition Commission must consider excluding information that would, as well as might, significantly harm the legitimate business interests of a person to whom it relates. In a case where it was clear cut that publication would harm legitimate business interests, the commission would have to consider excluding
The Chair: Before I take the motion from the Whip, I should like to say how appreciative I was of Mr Burns’s ability to take his signal from his Whip. It must be the old habits of being a Whip that meant that you were able to do that so effectively.
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