Written evidence from Monitor (CFI 08)
1.1 Monitor welcomes the Health and Social Care
Bill. We strongly support the Government's plans to modernise
the NHS and make Monitor the economic regulator for health and
adult social care. We believe it is right to have an economic
regulator which is independent of political influence, can build
specialist skills and is transparent in the way it sets prices,
promotes competition where appropriate and deals with failure,
both of markets and of institutions.
2.0 MONITOR AND
NHS FOUNDATION TRUSTS
2.1 Monitor's current role is as the Independent
Regulator for NHS foundation trusts. Our mission is to provide
a regulatory framework which ensures that NHS foundation trusts
are well led and financially robust so that they are able to deliver
excellent care and value for money.
2.2 NHS foundation trusts are a key component
of the purchaser/provider split that was established following
the Health and Social Care Act 2003. When an organisation achieves
NHS foundation trust status it is no longer accountable to Strategic
Health Authorities and the Department of Health (who have ongoing
responsibilities for commissioners). Instead NHS foundation trusts
are accountable to their local communities (through their members
and governors), to their commissioners (through contracts), to
Monitor and to Parliament.
2.3 Monitor considers that the purchaser/provider
split aims to ensure that the funding that is provided to the
NHS achieves the best possible value for money, and that the NHS
allocates the resources that it receives efficiently to meet the
expectations of the public.
3.1 Monitor believes effective commissioning
is integral to the success of proposals in the Health and Social
Care Bill. GP consortia will be responsible for 80% of the NHS
budgetaround £88 billion for 2010-11. They will be
expected to use this resource to improve the quality of care for
their patients by bringing greater clinical expertise to commissioning
3.2 The Health and Social Bill continues and
enhances the policy of patient choice in the NHS so that there
is greater competition among providers. For some services patient
choice will not be appropriate, but there will be an expectation
on commissioners to look to contract for services via competitive
tenders (competition for the market), rather than issuing contracts
non-competitively to incumbent providers.
3.3 Monitor is aware that interested parties
have raised questions on the impact of the Health and Social Care
Bill on commissioners' activities. It is therefore important to
clarify the current status of proposals with regard to procurement.
3.4 Monitor agrees with the Department of Health
that there is potential for commissioners to act in ways that
might not promote competition, or to act anti-competitively, particularly
if they are able to provide services and self-supply. For example,
a consortium might decide to continue to roll over contracts for
services delivered by their practices, rather than allowing other
providers to bid for them through competitively tendering.
3.5 The Department of Health currently requires
commissioners to follow the Principles and Rules for Cooperation
and Competition (PRCC) when procuring health services. The PRCC
contains 10 principles which help to ensure co-operation, while
protecting competition, in NHS services. This includes the prevention
of anti-competitive behaviours by commissioners. The Cooperation
and Competition Panel (CCP) can investigate complaints where there
has been a failure to comply with the PRCC, and it can make recommendations.
However, it has no power to require that the recommendations are
Health and Social Care Bill sets out that commissioners
may be subject to procurement and competition regulations - developed
by the Department of Health but enforced by Monitor. These would
require the NHS
Commissioning Board and commissioning consortia to:
- adhere to good procurement practice;
- protect and promote patient choice; and
- promote competition.
4.2 According to clause 64 of the Bill, Monitor
may be given new powers to take action against, amongst other
things, anti-competitive behaviour by commissioners. These powers
will be set out in regulations and would enable Monitor to:
- investigate a complaint against the NHS Commissioning
Board and/or commissioning consortia for failing to observe these
- require information from the NHS Commissioning
Board and/or a commissioning consortia; and
- require explanations from the NHS Commissioning
Board or a Commissioning Consortium.
4.3 Monitor would only be able to use these powers
under specific circumstances as outlined in the Bill. For example,
if the NHS Commissioning Board or a commissioning consortium were
to fail to comply with the regulations (under clause 63). However,
the failure would have to be serious and Monitor would have to
consider that the person making the complaint has "sufficient
interest" in the arrangement.
4.4 The Bill does not specify whether this applies
to individual health service users. Nor does it define serious
failure or sufficient interest.
4.5 Also according to clause 63 of the Bill,
Monitor may be given powers to require, if the investigation were
to be upheld, the NHS Commissioning Board or commissioning consortium
- remedy the failure;
- put in place measures to prevent failures to
comply with the requirements or to mitigate against the effects
- vary or withdraw an on-going tender process;
- render an arrangement ineffective.
4.6 The Bill does not give Monitor the right
to award damages to a claimant or compensation if a contract is
4.7 Monitor considers that it is important that
the new framework under which we will operate should go further
than the protection against anti-competitive behaviour that is
provided in the PRCC. We therefore support the proposal in the
Bill that Monitor should have oversight relating to procurement
of health and social care services, co-operation and agreements
between providers and commissioners, the conduct of commissioners
(from a competition perspective), and mergers and vertical integration
between providers and commissioners.
4.8 When exercising these functions, Monitor
would have to have regard to factors such as patient safety.
4.9 The Department
of Health will consult on the regulations before they are made.
The regulations would also need to be interpreted alongside existing
EU and UK procurement law.
4.10 However, the extent of Monitor's remit in
this area will only be clear once we have further detail from
the Department of Health about the regulations to be brought forward.
This includes details such as the criteria Monitor will have to
apply in deciding whether to render a contract ineffective, the
rights of appeal available to the NHS Commissioning Board and
commissioning consortia, and the time limit for bringing a claim.
Monitor is unable to provide clarity on how it will exercise these
functions until the Department of Health has set out this detail.
4.11 Once Monitor has this information, we will
carry out a full analysis of the situation. Before any decisions
are taken, there will be full consultation and involvement of
interested parties. This is paramount. We will only make the final
decisions after careful consultation and analysis.