To be published as HC 1248-ii

House of COMMONS



Health Committee


Tuesday 5 JuLY 2011


Evidence heard in Public Questions 131 - 260



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Oral Evidence

Taken before the Health Committee

on Tuesday 5 July 2011

Members present:

Mr Stephen Dorrell (Chair)

Rosie Cooper

Yvonne Fovargue

Andrew George

Grahame M. Morris

Mr Virendra Sharma

Chris Skidmore

David Tredinnick

Valerie Vaz

Dr Sarah Wollaston


Examination of Witnesses

Witnesses: Rt Hon Andrew Lansley CBE MP, Secretary of State for Health, Sir David Nicholson KCB CBE, Chief Executive, National Health Service, and Richard Douglas CB, Director General, Policy, Strategy and Finance, Department of Health, gave evidence.

Q131 Chair: Gentlemen, thank you very much for joining us this morning. As we have a lot of ground we would like to cover, I have been asked by the Committee to appeal to you for brief and focused responses to our questions as we go on this morning in the interests of preserving all our lunch commitments.

Mr Lansley: I would hate to interfere with lunch commitments.

Chair: We would be grateful if that was a shared objective on all sides.

Mr Lansley: We don’t have lunch commitments, do we, gentlemen?

Sir David Nicholson: No.

Richard Douglas: No.

Q132 Chair: The Committee does have lunch commitments and would like to be able to meet them.

Thank you for coming. We would like to move on to cover a lot of ground on the changing proposals in the Health and Social Care Bill, the result of the listening exercise and so forth. However, we would like to start this morning by looking at the background against which those proposals are being worked out, in particular what the Committee tends to refer to as "the Nicholson challenge" and the requirement to deliver unprecedented efficiency gains if we are going to continue to meet demand for health care out of more constrained resources during the lifetime of this Parliament. The Committee would be interested to hear, to begin with, how you feel that process is developing. How confident are you that the proposals for service change, implicit in that commitment, are being prepared and are going to be delivered in a timescale that ensures we can achieve the objective of efficiency gain on the scale required?

Mr Lansley: Thank you very much. Can I say, for the record, that I am accompanied by Sir David Nicholson, Chief Executive of the NHS and Chief Executive-designate of the NHS Commissioning Board, and Richard Douglas, who is the Director General of Policy, Strategy and Finance at the Department of Health? Happily, we meet on the 63rd birthday of the National Health Service-5 July.

Last week, David Flory, who is the Deputy Chief Executive of the NHS Commissioning Board, in his fourth quarter report on the performance of the NHS completing the 201011 financial year, set out a strong financial performance. On a range of 21 measures of performance-for reasons of brevity, I will not detail them-by which the NHS has customarily been measured, if memory serves me right, something like 14 or 15 have seen an improvement, several have been maintained and only one has deteriorated. In that case, there were two young people below the age of 16 who were admitted to adult inpatient psychiatric beds, contrary to the standard that we try to maintain. That was a very strong performance.

During the course of that financial year and now moving into 201112, especially in 201112, as you know and as we have discussed previously, we are looking for significant savings-what you describe as the Nicholson challenge. I will not go into the history of all that, as you know it well. This is the first year of doing that. While we will report on a quarterly basis on the financial performance of the NHS in achieving this, the things which contribute to that quality, innovation, prevention and productivity challenge are all making good progress. First, it is because we are clearly-as David and his colleagues across the Service have set out to do-maintaining or improving performance while undertaking transition. Secondly, we are taking steps-David or Richard might like to say a bit more about this-to cut the costs of administration and to focus resources on the front line. If anything, we are making faster progress on that than we had originally expected, including significant progress in 201011. We are benefiting-and the staff of the NHS are themselves substantially contributing to this-through the pay freeze; we are seeing improving productivity within the NHS already; we are seeing, through the tariff processes, a constraint upon growth of costs in the NHS; and we are seeing the commencement of a substantial redesign of services through the work already beginning to take place through clinical commissioning groups locally working with PCTs and local authorities. All of those are contributing to this.

Q133 Chair: That is the key, isn’t it? In order to deliver productivity gains sustained in the medium term, yes, you can reduce costs through wage restraint and reducing unnecessary bureaucracy, but the key is service redesign in order to deliver care that is more up to date and meets higher standards of both quality and efficiency following redesign.

Mr Lansley: Yes. We were always clear in QIPP that this year would be a year where the greater part of the financial contributions to the efficiency savings would be generated through control of central costs, central budgets, the tariff changes, which are substantial, and the commencement of the redesign of services. However, that redesign of services in itself is more important as one proceeds through the subsequent years of the QIPP process than it is in the first year. What is encouraging is the extent to which the clinical commissioning groups, even though they have not, in most cases, taken any formal responsibilities-some have delegated responsibilities during the course of this year, but the majority have not-are, none the less, engaging directly in that process of redesign. If I might, I would ask David to add a bit about how that QIPP challenge is being responded to.

Sir David Nicholson: The point you make is absolutely right. If you look at the QIPP challenge across the whole of the four years, about 40% comes from the central things we discussed, about 40% comes from the tariff changes and about 20% from service redesign. The real danger for us, and the risk we face if we don’t do that redesign, is that you end up making the savings through operational efficiency, and that is where you get into problems with quality. That is absolutely the case. We need to focus our attention on that. We always knew-I think I have said it here before-we had front-loaded the savings profile in the first year around the first two rather than the service redesign. There are two big elements to it. One is the service redesign which results in a flattening and then reduction of nonelective activity-it is service redesign around longterm conditions and all of that-and then there is the bit around the concentration and specialisation of sites. Those two things are relevant.

There is a lot of work going on around the country in planning both those things. I do not think we are going to see many results soon in relation to that. You will see the results of the service redesign coming onstream towards the end of this year and beginning of next year, but our response is not uniform nationally. For example, there are parts of the country where they are making greater progress in relation to managing nonelective activity-the east of England is one, south central is another-and places where they are having real difficulty with that-and London would probably be identified as being in that category. Similarly, in terms of the centralisation and concentration of services in areas, you will know that we are currently at consultation on paediatric cardiac surgery as a very important part of that process. There are a number of consultations either beginning or about to begin around the country on service redesign of that nature. During this year you will see more of that as people plan and organise themselves to make the changes in years two and three.

Q134 Chair: I have one final followup and then I will ask Sarah to come in. Is it correct to identify 20% as attributable to service redesign and 40% parked as being the result of tariff change? Surely tariff change is merely a mechanism for forcing service redesign, isn’t it?

Sir David Nicholson: It is, but the focus of the 40% on tariff redesign is predominantly around those things that we have known for a long time-better care, better value-

Chair: The fact that we have moved on-

Sir David Nicholson: -about operational efficiency. You have to deliver operational efficiency. It is not only about service redesign. The other argument that people make is, "You can’t do it unless you service redesign." You can make a lot of savings just by improving productivity.

Mr Lansley: In effect, that is the process. There is now quite a substantial process of tariff development with which we are trying to make much faster progress. A lot of that is about best practice. Much of what David is describing in this 40% is driving out unnecessary variation and moving the service progressively towards achieving best practice. The tariff is intended to drive that, but the tariff development itself is going to be pretty important. Of course, in the response to the Future Forum, one of the issues we have been very clear about is the desirability of ensuring that we extend the tariff into new areas-that we make sure the tariff extends into the community services as well as hospital services-because that fosters redesign. Otherwise the tariff structure in itself would be an impediment. The same will be true in mental health services. As we shift the tariff towards a focus on paying for outcomes rather than paying for processes and activities, that, too, will help in the design. That all forms part of the productive care element of QIPP but, as we do it, it not only drives that productivity but also opens the door to a more constructive service redesign.

Q135 Dr Wollaston: For the record, Sir David, as to the challenge that has been set out as being "the Nicholson challenge", could you clarify for the Committee when you first set that out and informed the NHS that that would need to happen?

Sir David Nicholson: Thank you for giving me that. I appreciate it. It was in May 2009 when we did an analysis of the forward look for the NHS-what we thought was going to happen and what we thought of the financial circumstances the country found itself in-and we thought we needed to do it early. It did not come on until 18 months later because we needed to do the planning and engagement to get people to understand the nature of that. It was May 2009.

Dr Wollaston: Thank you very much for clarifying that date.

Q136 Chris Skidmore: Sir David, in 2009, when you had the original QIPP challenge, it was to be achieved over three rather than four years, I believe.

Sir David Nicholson: Yes.

Q137 Chris Skidmore: My concern is this. Now we have seen the delay in the Health and Social Care Bill, to what extent, in the terms you were talking about-the service redesign being part of the QIPP challenge later on in the Parliament-will this delay affect achieving the financial savings that need to be made?

Sir David Nicholson: I do not think so. All the way through we have tried to keep momentum, particularly in relation to the two aspects of the change which are especially important, on clinical redesign. We have been talking to the pathfinder clinical commissioning groups-at least I have got it right this time-

Q138 Chris Skidmore: They were the consortia.

Sir David Nicholson: Please don’t say it. The clinical commissioning groups have been working hard on all of this. There is lots of activity and we don’t believe that has been slowed down by it.

The other issue is the foundation trust pipeline. In order to get people through the hoop of becoming clinically and financially viable organisations, you have to tackle a load of things, and we certainly have not rolled back on the foundation trust pipeline. We have kept the momentum going and we do not believe that the delay in the Bill will materially affect it.

Q139 Grahame M. Morris: I would like to ask the Secretary of State about competition policy, particularly, since the Bill was first published on 19 January, we have had this pause-this listening exercise-and the Future Forum report which indicated that competition should not be an end in itself. On the day when we are celebrating the 63rd birthday of the NHS, there are real concerns and issues with the modified Bill around, "Are the emperor’s clothes full of holes?" Staff and service users are very concerned about clarity.

Can I remind the Secretary of State that in his statement to the House of Commons on 14 June-this is the statement on the Future Forum report-he said the principles and rules for cooperation and competition would be placed on a statutory footing? At the moment, the Government have not tabled any amendments to do this. The Secretary of State went on to say: "We will keep the existing competition rules introduced by the last Government"-that is, the March 2010 rules, which included "preferred provider". Is this a contradiction in relation to the recommendations on Any Qualified Provider and would the Secretary of State like to take this opportunity to set the record straight and give some clarity as to the Government’s intention?

Mr Lansley: I believe what I said before was entirely accurate. The premise of your question was that the principles and rules of the Cooperation and Competition Panel included the NHS as preferred provider, and they do not. As far as I am concerned-as indeed was said by the then Government at the point at which they established the Panel and set out those principles and rules-they were reflective of the situation in competition law and, in effect, simply translated into operational terms within the NHS the potential application of competition law in the NHS in any case.

What we are doing, through the legislation-and we have in fact put amendments forward to the Bill-is ensuring that those things are on a statutory footing in the sense that Monitor, as a sectorspecific regulator, will be responsible for their application but will do so in an evolutionary way by maintaining the distinct identity of the Cooperation and Competition Panel and maintaining their rules in the form in which they had previously applied. As I said before-to this Committee and elsewhere-the legislation does not, of itself, change the extent or application of competition law to the NHS.

Q140 Grahame M. Morris: Can I remind the Secretary of State that we had David Bennett, the Chief Executive of Monitor, giving evidence to the Bill Committee? In that evidence he said it is an unknown. He indicated that the exposure of the new structures to challenges using EU competition law was for the courts to determine, but he did not know whether that was going to be the case. Can I also ask, in relation to this point about competition: we are differentiating between good and bad competition but, from the regulator’s point of view, how easy is it to make this distinction between good and bad competition?

Mr Lansley: I have two points. First, I entirely agree with David Bennett. The point I was making was that the Health and Social Care Bill as such does not change the extent or application of competition law in relation to the NHS. Of course, if you are trying to establish with certainty the boundary of that application of competition law, he is absolutely right. It is a matter essentially of debate and will be something that would, other things being equal, only be determined over time as cases were brought before the courts. In fact, the view which the Future Forum set out, having considered it during these last few months, was that the NHS would benefit significantly from the involvement of a sectorspecific regulator in the health sector in applying such competition rules inside the NHS.

On your second point-good and bad competition-the whole point of the response to the Future Forum and the changes we have made, and indeed the legislation itself, is to use competition as a means to an end. To that extent, it is an issue for commissioners to say, "Where do we believe competition helps us to secure the quality that we are looking for?" In other circumstances, there may not be a competitive environment. Looking at the ends of a spectrum, if, for example, you are looking for accident and emergency services you are very unlikely to be doing anything other than commissioning directly from a single provider. At the other end, you might be, as we have been for some years, looking at access to planned care for elective operations and you may well be doing so in an environment of patient choice. To that extent, competition will apply. From our point of view, it is very clear that we are looking to create a structure which is focused on competition on quality because of the extension of tariff. In response to the Future Forum we made it very clear that we are going to pursue the extension of tariffbased competition, but then commissioners will be looking, through the extension of patient choice, to see where competition best applies to deliver that quality.

Q141 Mr Sharma: Are you satisfied that the Secretary of State will in future not only be accountable to Parliament and the public for the NHS, but will have sufficient powers to correct problems when action is needed?

Mr Lansley: Yes.

Q142 Mr Sharma: You are satisfied.

Mr Lansley: I am satisfied that the Bill will achieve exactly that. We have tabled amendments to the Bill that the Secretary of State will not only have a duty to promote a comprehensive health service, but a duty to secure the provision of that. The Secretary of State will also have continuing duties to report to Parliament, through an annual report, on the performance of NHS bodies, will have power to oversee and assess all of the national NHS bodies and will be clearly accountable for the performance of the NHS to Parliament.

Q143 Dr Wollaston: How are you going to balance the need to retain responsibility without interfering in the daytoday decision making? It strikes me that you have all the responsibility but without powers. Are you satisfied that you will be able to get that balance right?

Mr Lansley: You are absolutely right. It is very important to get that balance right. We have always set out and continue to maintain the principle that, on behalf of taxpayers and Parliament, the job of the Secretary of State is to be clear about the mandate for the NHS. What people were concerned about the Future Forum quite properly reported and we have responded to. People want to know that that process of setting a mandate does not distance the Secretary of State from a duty to provide a comprehensive health care service and that it does not separate the Secretary of State from accountability to Parliament for how well the service has performed. They also want to know that, if there are significant failures in the system, the Secretary of State has, if necessary, the power to intervene.

The Secretary of State’s relationship with the NHS should be one that is essentially determined through the mandate, which is set annually but is a multiyear mandate, and the purpose of which is to be clear to the service about what, on behalf of taxpayers and the public, Parliament and the Secretary of State are setting out for them to achieve, but then leaves the NHS free to determine how they can best achieve those results.

Q144 Valerie Vaz: What does that mandate look like? Presumably you are going to say that to Sir David Nicholson, or whoever is going to be in charge of the NHS Commissioning Board-whatever it is called. What is that phrase? Are you going to say to them, "Here is a mandate"?

Mr Lansley: The mandate will be a document that sets out for the NHS Commissioning Board, and through them to clinical commissioning groups, the relationship between the resources they receive, the nature of the comprehensive service they are expected to provide and how the Secretary of State is looking to them to secure the continuous improvement in outcomes reflected in the NHS Outcomes Framework.

Q145 Valerie Vaz: It is going to be a big document, is it?

Mr Lansley: It will be a document.

Sir David Nicholson: It is worth saying that in the Bill it is a document that is consulted on. In terms of the Bill, it sets out a timetable for public consultation on what is in it.

Q146 Valerie Vaz: There is a slight change, and I am looking at your response to the Future Forum. You said at paragraph 2.10, page 12-this is a kind of Jeremy PaxmanMichael Howard scenario, isn’t it?-"Ministers are responsible, not for direct operational management, but for overseeing and holding to account the national bodies." There is a change, isn’t there? It is a different NHS.

Mr Lansley: Do you mean a change from now?

Q147 Valerie Vaz: From now.

Mr Lansley: Yes, it is a change, in that-

Q148 Valerie Vaz: There is a different reorganisation.

Mr Lansley: We have always been clear-and this remains true-that we are looking for the NHS to enjoy greater autonomy in how it delivers the results it is intended to achieve. We have always been clear that we think it right for there not to be day-to-day political interference in the NHS. We think there should be a clear strategic framework for the NHS and a mandate for the improvement in outcomes that we are looking for, but we do not think that daytoday political interference in the NHS is helpful.

Q149 Valerie Vaz: That is the royal "we," isn’t it? It is a "we". It is not the Prime Minister’s "we" because he was saying before the election that this is no topdown reorganisation. This is a huge change from before. You are giving all your powers to the NHS Commissioning Board. Isn’t that correct? That is what you are basically saying here.

Mr Lansley: I don’t think I am saying that because clearly the Secretary of State-

Q150 Valerie Vaz: I read it as that.

Mr Lansley: -continues to maintain considerable powers. Indeed, the strategic oversight and accountability through the mandate and other duties and powers are maintained. There is a transfer of daytoday responsibility at the moment-which technically is vested, in the legislation, in the Secretary of State-into the NHS Commissioning Board. Of course, that is true.

Q151 Chair: It is more in the nature, is it not, of a selfdenying ordinance on the part of the Secretary of State? He has the power to do it but is choosing, in the context of the mandate, not to use it because the NHS would be better run if it is run without daytoday political interference. Is that a fair characterisation?

Mr Lansley: It would be contrary to the structure of the legislation in future for the Secretary of State to say, "I have the power to do it," and, in effect, take back powers from the NHS Commissioning Board. Except in the event of a significant failure on the part of the NHS Commissioning Board, the legislative structure would be that the Secretary of State would set the mandate and the NHS Commissioning Board would then have the power to commission and to provide those services.

Q152 Chris Skidmore: If there ever needs to be any future reorganisation, can the NHS Commissioning Board as a statutory body achieve that without going to the Secretary of State, or would there need to be further legislation?

Mr Lansley: One never knows with these things, but I am hopeful that the structure of the legislation should be enduring. We are trying to deal with as many issues as possible. That is one of the reasons I thought the role of the NHS Future Forum was very helpful. It enabled us to address many of the questions-some of which had clearly arisen over recent months, since the publication of the White Paper and the Bill itself-so that they are dealt with in the legislation rather than left to be dealt with again in future legislation. It is much better to deal with the legislation properly now and get it right. Part of that is I do not think there would be an expectation that the NHS Commissioning Board would have to seek further legislation.

The legislation is clear about the structures. It is very clear, and continues to be clear, about the twin pillars, as it were, in terms of commissioning. We are talking about a National Health Service, nationally funded, to which people have rights of access under the NHS constitution. The NHS Commissioning Board discharges that responsibility in setting a national framework for resource allocation and national standards and undertakes national commissioning in terms of primary medical services and other family health services, plus national and regional specialised commissioning. Thus there is a big structure for the NHS Commissioning Board. The other pillar is locallyled, clinicallyled commissioning. Between these two, we are creating space for flexible structures not requiring legislative prescription.

What the Future Forum did, of course, was to say, "We want to know, in between the national and the local, how these work together." What is being done practically, in terms of clustering primary care trusts and strategic health authorities, is giving people clarity about the evolution of organisation in the NHS to support clinical commissioning groups. The Future Forum’s recommendations, which we have endorsed fully, about the development of clinical senates and clinical networks-and the development of those, hosted by the NHS Commissioning Board-is giving people a very clear shape, both administratively and clinically, of how we mesh national standards with local clinical leadership.

Q153 Andrew George: I wonder if I could bring you back to the broad brush rather than the specifics. What has changed as a result of the pause? In reality, has anything changed?

Mr Lansley: There are quite a lot of things that have changed. We have been clear, in the way that I just described, about the specific duties and accountabilities of the Secretary of State. We have further entrenched our determination that bodies across the NHS should respond to the NHS Constitution. We have extended further the requirements in terms of transparency, both of the clinical commissioning groups in future and indeed of foundation trusts. We have set out a framework for multiprofessional involvement in commissioning, both at a local level and through the NHS Commissioning Board. We have set out a more flexible framework for transition while retaining the determination that we should do so, as the Forum said, making as much pace and progress as we can.

We have been clear about additional powers for Health and Wellbeing Boards in relation to commissioning, so that the Joint Strategic Needs Assessment and the strategies derived from that drive commissioning plans more explicitly than was the case. I have set out, in response to the Future Forum, my expectation that Public Health England will be established as an executive agency, balancing independent expert and scientific advice with the integration of policy and operational response to health threats. We have set out very clearly in the legislation how competition should be a means to an end, not an end in itself.

Q154 Andrew George: Was it ever an end in itself?

Mr Lansley: It was not intended to be, in our view, but there has been this change in the structure of legal duties. You will know very well that when you set up any form of regulation under statute, it is very important how you express the duties of such a body and the ranking of those duties. The ranking of those duties is very clear about the importance of Monitor as a sectorspecific regulator focusing on what is in the best interests of patients and seeking to secure the integration of services around the needs of patients. We have done some very specific additional things in the legislation: changes which ensure that Monitor, as a sectorspecific regulator, could not fall into the trap of the past of seeking to advantage one set of providers by reference to their ownership compared to others, supporting integration and ensuring safeguards against cherrypicking, including the extension of tariff. We have also said we are intending to be very clear about the transparency and robustness of a failure regime while ensuring that patients continue to have access to the services they require but not doing so, as we had previously intended, by an ex ante designation of services. So a few changes, then.

Q155 Andrew George: Yes, a few changes, but most of them, as you were describing yourselves, are matters seeking clarification, wanting to reemphasise points and, also, reassuring. The narrative has been that you felt you had been misunderstood and you wanted to clarify issues. The changes you have described represent changes of emphasis, wanting to bolster issues and to reassure the public, and there are some welcome changes with regard to accountability and transparency which can certainly be seen as progress. However, as far as the broad direction of Government policy in this area is concerned, PCTs are still being abolished rather than simply remoulded, competition is still as relevant to these reforms as was previously the case and choice is as much emphasised as before-it is no less emphasised than it was before-and, while you have changed the responsibility for driving competition from Monitor to the NHS Commissioning Board, those broad themes are still there, are they not?

Mr Lansley: I would not characterise it quite like that. I entirely understand the point you are making but legislation, by its nature, is precisely about ensuring one captures the intentions, sets out the safeguards and is clear about the accountabilities. I agree it was not recommended to us by the NHS Future Forum that we should depart from the fundamental principles of the Bill. In fact, they said there was widespread support for the principles of the Bill. I would not necessarily describe the principles in the way that you did. In the principles they were describing, it was not choice for patients but giving patients a real share in decision making and greater influence. That is as much about information as it is about choice. They were very clear about support for an outcomes focus, and there is a great deal we are doing on that. They were very clear about support for clinical leadership and devolved leadership. There was support for democratic accountability. Those are the principles of the Bill and they did not disagree with them. Indeed, I am not even sure that, politically speaking, political parties disagreed with them. Even the shadow Health Secretary is on the record as agreeing with the principles.

The point is to make sure, where people had concerns, that we addressed those concerns in the legislation. Through the Future Forum we had a very thorough means by which we assessed those concerns. You are right to say that some of them were misplaced concerns. That does not mean it is not important to try to respond to them and, in some cases-and this is certainly true where, for example, the duties of the Secretary of State are concerned-make changes to the legislation that demonstrate, I hope without fear of ambiguity, that the structure we are putting in place does not reflect those concerns that the Secretary of State no longer had this duty in relation to a comprehensive health service.

That is a good example. It is about language and changes in the legislation. Some are indeed to try and continue to reflect the principles more accurately. Others are genuine changes in the sense that we were going to pursue it in a particular way-for example, in relation to the failure regime-and we are not going to pursue designation in that way in future. So we are changing and there is a process of redrafting the legislation to make that happen.

Q156 Andrew George: Earlier, you said-and I think you used the expression-you were addressing the ranking of competition versus integration, addressing the inequalities and also patient choice. In what way have those four themes been reranked-which has gone up and which has fallen?

Mr Lansley:: From memory-and I do not have the drafts of the amendments in front of me for this purpose-essentially, in the original structure, the legislation said that Monitor would have what is, in effect, a primary duty to pursue the best interests of patients and the public through the promotion of competition where appropriate, and regulation where necessary. If I recall the structure of the ranking of duties, it is to focus, first, on pursuing the best interests of patients and the public through the integration of services and the duty to improve quality. Subsequently, there is a range of further responsibilities and duties to which Monitor should have regard.

I come back to the point-which I have known over many years, and I am sure many Members will be very well aware of-that, where you establish under statute a body with a set of duties, it is important to be clear about what the relative ranking of those duties are. To that extent, people raised a concern with us that, other things being equal, they felt the structure of the legislation might have encouraged Monitor to step in in circumstances where commissioners had created an integrated structural provision in order to try and break it up and expose it to competition. Indeed, in the legislation there was a potential that Monitor could use competition powers in order, for example, to require NHS bodies to give competitors access to their facilities. What we are doing, through amendments to the legislation, is to make it absolutely clear that integration around the needs of patients trumps other issues, including the application of competition rules.

Q157 Andrew George: That is a change. Integration has now trumped competition whereas, in the previous legislation as drafted, competition was either at a similar rank or was trumping integration. Is that a fair characterisation?

Mr Lansley: It is a characterisation. I am sure one can quibble, so I will not quibble. Essentially, there was a risk. There was a risk that we had-

Q158 Andrew George: What I mean is it was a big defeat, wasn’t it?

Mr Lansley: No. There was a risk that we had commissioners who we knew-and we were positively encouraging commissioners-would look to the integration of services around the needs of patients, which is why we were pursuing things like networks and clinical redesign. At the same time, we had a sectorspecific regulator, the application of whose competition powers might impact adversely on that. People were concerned about that. We recognised that concern and I think we have made it absolutely clear that if one is acting in the best interests of patients, integrating services around the needs of patients and continuing to give patients access to information and choice-and, where appropriate, choice of Any Qualified Provider-then the way in which Monitor applies its sectorspecific competition rules should not get in the way of that happening.

Q159 Andrew George: I want to try and square this one. I do not want to focus on Monitor as a whole. I want to look at the impact of the Bill. I am trying to get my head around whether there has been a fundamental alteration in the ranking of competition overall, in other words, in the net effect of the legislation itself. Has the ranking of competition in relation to, for example, integration in addressing inequalities retained its previous status or has it now been trumped by other issues and competition is less significant-overall?

Mr Lansley: The amendments that we are proposing to the Bill quite clearly change the relative structure of duties for Monitor so as to make it absolutely clear-

Andrew George: I do not just mean Monitor, because the NHS Commissioning Board now has a more significant role.

Q160 Chair: It has a new duty, hasn’t it, to promote integration?

Mr Lansley: Yes, it does have a new duty. Indeed, across NHS bodies, the Bill will make it clear that there is a set of duties about promoting integration, as there is a set of duties-and always was-to promote the continuous improvement of quality. Specifically, of course, since the NHS Commissioning Board did not have a duty to promote competition as such-and the powers in relation to competition with Monitor-what has been important is that the amendments properly reflect, as they do, like other key parts of the NHS structure, the fact that there is an inherent duty to promote the best interests of patients and to do so, in the first instance, by securing the integration of services around the needs of patients.

Q161 David Tredinnick: May I move from competition to choice? The Government response to the Future Forum report says: "Nearly everyone who contributed to the listening exercise felt patients should be given more choice and control over their care."

Last week, there was another report about worries about the use of combinations of allopathic drugs, in this case in elderly people. One of the reasons, I would suggest to you, that more people turn to what we used to call complementary medicines, perhaps herbal medicine, acupuncture-some of it now NICE approved-or homoeopathic medicine, is that they are worried about sideeffects, or just the effects, of drugs. Under the new arrangements, if a patient goes to his doctor and says, "Doctor, I would like to be treated by a doctor who is qualified in homoeopathy"-a doctor who is regulated under the Faculty of Homoeopathy Act 1950 is properly trained and is a doctor-how would a patient’s request be handled?

Mr Lansley: I am not sure there is a change in the new system as compared to the current system, in that patients have a right to seek out a general practitioner of their choice. In so far as there is a distinction between general practitioners, as long as one is, to that extent, accessible to them, I am not sure there is any constraint upon them treating that as one of their criteria. David, I don’t know if I have missed something on that.

Sir David Nicholson: No.

Q162 David Tredinnick: Broadly, there would be no objection if a patient goes along with a specific request and says, "My choice is to be treated by a physician with particular training." That would be possible. We do not have homoeopathic doctors right across the country, so one of the issues you might want to address is further training of those doctors-a further increase in the provision of that particular service. I also think we are going to have to see a greater interest by the Department in herbal medicine, acupuncture and ayurvedic medicine because there is going to be an increased demand if patients are genuinely given more choice over their treatments.

Mr Lansley: Would it be helpful, David, to say a word about the process by which we are looking to develop choice for patients?

Sir David Nicholson: Yes. We have had extensive discussions with patients’ organisations about these kinds of issues-in a sense, about where next to go with choice. We will not go from no choice to choice of everything. We will have to introduce it over time, get evidence, knowledge and understanding, and work it all the way through. The patients’ organisations have come up with a set of things that they think-and these are the national patient voices and organisations-would be suitable for choice for patients in terms of the next stage. These relate to things like wheelchair services for children, some services around longterm conditions, aids to daily living, talking therapies and those kinds of things. People are thinking they are the next phase of choice.

We would like to think then about what nationally we would say about that range of choice but also how we would stimulate the provision of that choice using Any Qualified Provider. That kind of approach, of talking to patient groups, drawing up lists, testing them in consultation, putting them into a national framework, inviting Any Qualified Provider and designing tariffs, seems to be a way of rolling this out over time rather than going from one place to another.

David Tredinnick: Thank you very much.

Q163 Chris Skidmore: One of the best bits about the Bill for me was the element of Any Qualified Provider, which could offer constituents certain services that they simply cannot get with the sort of silo mentality that exists at the moment. There was a document that came out just before the pause, aimed at providers, explaining what "Any Qualified Provider" would mean. That document talked at the end about establishing-I think we have just said-a national framework, specifically around registration, so that if providers came up to commissioning groups they would not have to endlessly register in different local areas. In terms of your response to the Future Forum, you have mentioned that "commissioners will decide...to which services choice of ‘Any Qualified Provider’ would apply and, where it applies, commissioners would determine pathways, referral thresholds and relevant local quality standards." That sounds slightly more fragmented than having a national framework. I was wondering if you might you be able to explain, for those who want to join Any Qualified Provider, whether they will have to go through each individual local commissioning group. Surely that would create a situation where you are going to have a variation in services.

Sir David Nicholson: We are due to publish something-I am not quite sure whether it is in the summer or the autumn-on all of this to explain it in the way that you have described. You are absolutely right. What we want is a system whereby people can register to be an Any Qualified Provider but that would be applicable across the range of the NHS, not only in local circumstances. We need to consult on what mechanism that is because we want something that gives us reassurance but is not a huge bureaucratic process that stops people wanting to do it. A precondition for Any Qualified Provider is, of course, a tariff. That, in a sense, is why you need a national framework because you will need a national tariff to do that. Those sorts of things I have described will be the next phase of drawing together a national tariff. If you are an organisation who looks at that range of things and says, "Yes, I think I can provide them at the quality standards I provide," we will set out a national process for them to identify what they have to do in order to get on to the list of qualified providers. Then they can start providing them. That is the mechanism for doing it.

Q164 Valerie Vaz: Secretary of State, I think you are being slightly disingenuous, with the greatest respect. I do not mean to be rude, but I need to pull you up on some of your remarks. Before the Health Select Committee, when the White Paper was out, we had 6,000 responses from professionals who were concerned about what was happening with the Bill. Professor Steve Field was on record as saying that he supported the Bill beforehand, as you have said. He has said to us in evidence that he did not take his own separate legal advice on competition; he was reassured by the Department of Health. Therefore, we need to question his independence. Also, you can’t have it both ways. You cannot have an evolutionary approach and then also have legislation. If it was an evolutionary approach, you would not need legislation. Many professionals have said that you could carry out some of this in a pilot exercise and you would not engage the NHS in this massive reorganisation with great cost to people’s morale and their jobs-and we have not even touched on how much this is all costing. However, I want to move on to the National Commissioning Board now, if I could, Sir David. I am thoroughly confused. Yes, okay, you can patronise me later. But I am not sure-

Sir David Nicholson: I-

Valerie Vaz: Not you-

Mr Lansley: Apparently, I am doing the patronising. I had not thought that I had said anything.

Q165 Valerie Vaz: He always makes faces at me.

I am thoroughly confused because I have a number of questions about your role and where you see your role and the Secretary of State’s. As I understand it, he is going to be sitting in a big armchair and getting the National Commissioning Board to do all the work and have all the power. I notice from this little diagram in "Designing the NHS Commissioning Board" that there does not seem to be an accountability link between patients and the public and the Department of Health, the Treasury and Parliament. There is between you and the Secretary of State, but nothing between the public and the Secretary of State. Also, what are the local commissioning groups now? How do they fit in with the senate and what is the "14 to 17 health systems"? Could you expand on all that?

Sir David Nicholson: There are quite a lot of questions in all of this and I do not want to go on for ever.

Q166 Valerie Vaz: Yes, but I am flagging up the headings.

Sir David Nicholson: Okay. First of all, you have a document there which I sort of recognise. We plan to publish, later on this week, an introductory document about designing the NHS Commissioning Board. I understand that there is a copy on some website of an early draft, so my assumption is that you have a leaked copy of that document.

Chair: I think it is on the Department’s website right now.

Q167 Valerie Vaz: And you are going to be in charge of the NHS. Oh, dear.

Sir David Nicholson: It’s an outrage.

Q168 Valerie Vaz: And it wasn’t you.

Sir David Nicholson: I have only been away for 10 minutes and they’ve done that.

Q169 Valerie Vaz: And it wasn’t you.

Sir David Nicholson: Given that I have not signed it off, and indeed I have a discussion this afternoon with a whole set of general practitioners about it, it is extraordinary. Nevertheless, the final document on all this has not been published yet. They may have put an early draft on the Department of Health website, and good luck to them for doing that. However, the importance of that is to try and set out to people who work in the Service in particular, and the clinical commissioning groups, what the totality of the system will look like. People have been dealing with little bits of the system independently, so all the debate is around Monitor, but the real issue is the relationship between Monitor, the commissioners and the Government and the rest of it. It is trying to explain how all of that works together. That is the first thing in relation to all of that.

What was your next question about?

Q170 Valerie Vaz: It is the local commissioning groups and then you also have senates. Are we talking about the same people, additional people or is there another layer? Also, what are these 14 to 17? You are on record as saying 14 to 17 health systems.

Sir David Nicholson: By "local commissioning groups", I assume you mean the clinical commissioning groups.

Valerie Vaz: Yes.

Sir David Nicholson: The clinical commissioning groups are obviously responsible for a population base in the area for commissioning those services. We have set out now what the broad shape of the governance arrangements are for the governing body of those and we have identified that it certainly needs to have a registered nurse and someone with experience and expertise in specialist services as part of that as well as at least two lay members. We have set out all of that, but that is not the only issue in relation to the way those individual clinical commissioning groups interact with clinicians and patients and all the rest of it.

The first thing that came up in the discussion was the importance of clinical networks. As you know, some people thought that, by setting up clinical commissioning groups, we were abolishing clinical networks because somehow they wouldn’t work, but they are a very important part of the way we do business in the NHS. The cancer networks, the coronary heart disease networks and so on cover big geographies-they don’t just cover small areas but big geographies-that set out how the different bits of the system for a particular specialty work together. They will continue.

Q171 Valerie Vaz: Will that be locally or nationally?

Sir David Nicholson: The networks will be hosted by the Commissioning Board. That means someone needs to make sure they happen. Clinical networks do not just happen. You need to organise them. You need to get people together. You need to put an infrastructure in place to enable people to work together. At the moment, they are often done by strategic health authorities. Some of them are done by PCTs. Some are done by individual trusts, depending on the local arrangements. We think that is great. All we need to do is make sure they happen. The commissioning boards will have a responsibility to make sure they do happen. That is at an individual specialty level.

There is the issue, though, about the total pattern of service in an area. What does the whole service look like from primary to secondary to tertiary? There was a concern that clinicians engaged in those various activities did not have a say or an input into the way that the commissioning groups were going to operate or the way that the strategies were being developed, so this idea of a senate came out. Senates are operating in the east midlands- London has a clinical senate as well-where a whole range of clinicians get together across a whole pattern of service to think about how it all fits together.

Q172 Valerie Vaz: This is the SHA, basically.

Sir David Nicholson: The two that I have described do relate to an SHA area. The question is: how many of these senates should you have? We have to do quite a lot of work with the Royal Colleges and clinicians on the ground to work all this out, but where they seem to work really well is when they connect primary, secondary and tertiary care together. What you are looking at then is total patient flows and how the flows work. If you look across the country as a whole-and we have done a huge amount of analysis to see where patients actually flow-what you can see is there are between 15 and 20 total health economies in the country where they have the complete picture of all those services around them. All I was saying on the record there-I was asked the question about how many senates there would be-was if you applied that rule to the senate you would have that sort of number. Some people were worried that we would have 300 senates, that in every locality you would have a small senate. That was not the reason at all. We were looking at bigger footprints. That is where the 15 to 20 comes from.

Q173 Valerie Vaz: Where does the money flow then? You have the budget, so you can tell.

Sir David Nicholson: That is nothing to do with it. The money does not flow through them.

Q174 Valerie Vaz: No, but I am asking that.

Sir David Nicholson: Okay. The Government set out the mandate and then they set out the amount of resource attached to that mandate. The NHS Commissioning Board gets that and then allocates it. The vast majority of that will go to the clinical commissioning groups. Some of that will go to specialised commissioning and some to the local representatives of the NHS Commissioning Board who will be commissioning primary medical services. That is where the money goes.

Q175 Valerie Vaz: Are the people on the senate slightly different from the people who are on the local clinical commissioning boards?

Sir David Nicholson: Yes. There will be a whole range of clinicians who are-

Q176 Valerie Vaz: There is a whole new set of people.

Sir David Nicholson: Yes, there is a new set of people. This is not a statutory body. This is a group of people getting together. As I say, we have experience of how this works. They are really helpful because individual Health and Wellbeing Boards can ask questions and ask them for advice when they are dealing with issues in their locality, the clinical commissioning groups can ask them for advice, help and support in dealing with particular issues and the Commissioning Board itself can ask them for help and advice. Indeed, what we have said is we will ask them for help and advice in identifying how we are going to authorise clinical commissioning groups. It is a mechanism by which you can get more clinical involvement and engagement in the important decisions that we need to make.

Q177 Valerie Vaz: Turning to your Board, who is on your Board at the minute?

Sir David Nicholson: It does not exist.

Q178 Valerie Vaz: It does not exist. It is just you at the minute.

Sir David Nicholson: Not even me. I do exist, obviously.

Valerie Vaz: For now.

Sir David Nicholson: Thank you for that. I will now pull a funny face at you.

The plan is that we will set up a special health authority as soon as we possibly can in order to start the work of the NHS Commissioning Board, because there is quite a lot of preparatory work we need to do, not least to identify some more people to work for it. One of the things we have is a whole load of people who don’t know where their employment arrangements are going to be. We are going to set that up as soon as we can. Before we can do that, we will have to appoint a chair and a nonexecutive director. That will probably be advertised after the summer break-presumably September time. There will be a national advertisement for a chair of the NHS Commissioning Board and a nonexecutive director. That appointment is finally an appointment for the Secretary of State, and I guess they will come here to talk to you as part of that.

Q179 Valerie Vaz: What is the current state of the people who are working in the PCTs and the SHAs? Are you aware of what is going on at ground level? Are these people likely to be part of the senate?

Sir David Nicholson: The senate will be a clinicallybased organisation. It will be clinicians who currently-

Q180 Valerie Vaz: What about the local commissioning groups? Will they have PCT people?

Sir David Nicholson: What is happening at the moment is we have clustered the PCTs together. Are you Walsall?

Valerie Vaz: Yes.

Sir David Nicholson: There is a Black Country cluster and they, essentially, have three jobs to do. The first is to make sure we deliver over the next two years while all the changes are going on, focusing on daytoday delivery to make sure we continue to deliver the QIPP challenge and all the rest of it. The second one is to develop the clinical commissioning groups within their locality, so they have a job to help them do that. As part of that, we would like them to assign staff currently working in the PCT to individual clinical commissioning groups to get them up and running and working and moving. I know in your part of the world they have done quite a lot of that. The third bit is to develop commissioning support-the kind of support the clinical commissioning groups will need to do their job. That will be to start to develop informatics, logistics and issues around contracting, all those sorts of things, so that the clinical commissioning groups can operate from 1 April 2013.

Those are the three things we have asked them to do. As part of that, some of those people will go to the clinical commissioning groups, some will go and work in commissioning support and some will work in the Commissioning Board for oversight when the clinical commissioning groups are up and running.

Valerie Vaz: Thank you.

Q181 Chair: I should apologise. I misled you. This document is not on the Department’s website. It is on the Health Service Journal website. I apologise for that.

Sir David Nicholson: There is a difference.

Chair: There is a difference.

Sir David Nicholson: I will not be seeking revenge and retribution when I get back.

Chair: No revenge necessary.

Q182 Rosie Cooper: If I could come back to the clinical senates, do you believe that doctors will be doing this in their own time or will this be part of their paid employment? I say that because in my area we are setting up an integrated care organisation and the GPs who are independent contractors and see themselves as small businessmen resent the fact that perhaps consultants and others may attend in their duty time whereas the GPs do not. Therefore, we currently have a standoff where GPs are not going to attend these senates unless they are paid. If this is going to be broad-based and you are going to need the engagement of doctors, do you intend to pay them to attend?

Sir David Nicholson: We have not worked out the detail of all this at all. It is something we will need to talk to the Royal Colleges and the trades unions about and all the rest of it. This kind of work-and it will not be just doctors, by the way-is part of being a doctor or a clinician, to be engaged in the planning and organisation of the services that you provide. It seems to me it is a critical part of their job.

Q183 Rosie Cooper: I would agree with you, but if you are a small businessman and it is costing you money to go, you are not going to engage as well as if you were paid or you had your costs covered in order for you to attend. It is a basic flaw if that is not addressed early.

Sir David Nicholson: We will obviously have to address that then.

Q184 Rosie Cooper: I have absolutely no idea where we are generally, but we have talked in very great detail-at the macrolevel-and the Secretary of State before referred to "no daytoday political interference". I wonder whether he could explain to us how political representation on behalf of constituents will take place in this new world.

Mr Lansley: If, for example, you mean that a constituent comes to you who has a difficulty with access to services, let us say, or some services have not met their needs, the first thing is, as a Member of Parliament, you will have exactly the same right in future to raise the interests of your constituent with the relevant body. It may be a clinical commissioning group who have responsibility for that patient or it may be that, in this particular instance, it will be a foundation trust or a health care provider you should raise the issue with. I am not sure I see any reason why that should be any different from the current situation.

If you were to raise an individual case with me, as Secretary of State, I would not expect-and my predecessors did not expect-to tell an individual primary care trust how they should behave in relation to a particular patient. However, Secretaries of State in the past and in the future have an expectation, if they are asked by Members of Parliament, to be able themselves to ask the relevant NHS body, whoever that may be, to respond, perhaps through the Secretary of State or directly, to an MP.

Q185 Rosie Cooper: But in this case, those people will be making those decisions. For example, there will undoubtedly be hospital closures and rationing. Everybody acknowledges that.

Mr Lansley: I am sorry, which hospitals are you expecting to close?

Q186 Rosie Cooper: No doubt, you will be very seriously telling us very soon.

Mr Lansley: I don’t know of any.

Q187 Rosie Cooper: Let’s see. I will put my Mystic Meg hat on and say that that will be a result of these processes.

Mr Lansley: You assert this with great confidence as though everybody knows this. I don’t know it.

Q188 Rosie Cooper: My PCT has a number of operations which it will only agree to being done, if at all, under certain criteria, for example, varicose vein operations. I have a constituent whose GP, clinician and NHS consultant say she needs the operation. The remaining vestiges of the PCT say it does not meet their criteria and she is not eligible to have that done. In the brave new world-and we substitute clinical commissioning groups for the PCT-when the patient does not get any better response, what avenues are open, beyond just readdressing the clinical commissioning group, to the taxpayers to pursue their legitimate and supported clinical requests? I will say it on record: this is a question which will exercise, I would suggest, coalition MPs as the constituents whose services are reduced or are removed are seeking answers as we march towards the general election.

Mr Lansley: Don’t you think your question rather well illustrates the benefits of the changes that we are seeking to bring forward? At a local level, from your point of view, in relation to your constituent, you are experiencing in practical terms a divide between what is felt to be appropriate from a clinical perspective and what is being applied as a policy from a managerial perspective. What we are setting out to do in clinical commissioning groups is to make absolutely clear that that is not an appropriate divide and that there should be-

Q189 Rosie Cooper: Secretary of State-

Mr Lansley: -clinical leadership around the interests of patients.

Rosie Cooper: -you are not listening to the second part of my question. I said when that the PCT is substituted by a clinical commissioning group and they make that decision which my constituent disagrees with, what were the avenues open then? That was the real question. I was illustrating it with what is happening today.

Mr Lansley: I will come to the second question, but the first point is that your constituent is unhappy because he or she thinks that their doctor, nurse and consultant believe something is in his or her best interests and that is being frustrated by the primary care trust. If, in future, you have clinical leadership in the clinical commissioning groups, while there may be disagreement at an individual level between clinicians about what is the appropriate treatment, at least the policy of the clinical commissioning group will have been established by those self-same clinicians. There will be clinical leadership that drives decisions about resources. We cannot take away the overall issue that resources have to be managed most effectively for the best interests of patients.

You will know that, across the country, there are certainly clinicians who will make judgments about where they regard certain treatments as being of very poor effectiveness or value for money. They may well engage in that kind of prioritisation. What they will not do, however, is be required to deny patients treatment that they think is effective and is value for money.

In a sense, I come back to the answer to your first point. If, at the end of the day, the clinical commissioning group takes the decision that your constituent does not agree with, and your constituent comes to you, there will be exactly, in that sense, the same kind of relationship between the clinical commissioning group and Parliament. There is room for complaint and there is room for representation in exactly the same way as the current primary care trust.

Q190 Grahame M. Morris: Can I ask a supplementary on that? In that case, Secretary of State, why did you withdraw the proposal for designation where a commissioner could designate a particular service, irrespective of whether there was provider failure, and it would continue to be protected? What was the rationale for that?

Mr Lansley: We did not think it would be helpful, not least to the NHS, to be distracted into a theoretical discussion about whether services should be designated or otherwise. If it becomes a practical question, it should be addressed as a practical question.

Rosie Cooper: I think the taxpayers will make their own decisions on that.

Q191 Dr Wollaston: There is an issue about service reconfiguration, and you touched on the reconfiguration of the paediatric cardiology services where we know that-not only financially, but also, more importantly, for clinical reasons-you need to concentrate services. Therefore, some hospitals or services would have to close and, of course, there has never been a time in the NHS when there has not been some rationing, as far as I can remember in my involvement with it.

Something that was touched on by one of the King’s Fund reports was that service reconfiguration needed to happen at a regional level because it is very difficult for local politicians, let alone local councillors, to agree to decisions that close local units, even where it is perhaps clinically or financially necessary. Are you satisfied that that service reconfiguration will be able to take place under the new arrangements and we will not see Health and Wellbeing Boards and local decision making getting in the way of necessary service reconfigurations? Is that a clear question?

Mr Lansley: Yes, I think it is. It is a clear question to which I would say, first, if we are all, in all parts of the service, clear about the four tests that we apply, it is pretty important that we constantly look at the question of, "How does this respond to patients’ needs, expectations and patient choice? Would a reconfiguration unacceptably restrict that choice or not respond to patients’ wishes?" Secondly, we have to look at the public view. There is a legitimate democratic accountability, which is expressed through the Health and Well-being Boards, which needs to be part of the decisionmaking process. Thirdly, there is a need for the commissioners, the clinical commissioning groups or the NHS Commissioning Board, depending on the nature of the service one is talking about, to be clear that this is something the commissioners themselves see as desirable if a change is required. Fourthly, there has to be clarity about clinical evidence and clinical safety.

The starting point, before you get into the "Who takes what decision under what circumstances?", is for everybody in the process to be clear about the rationale against those four tests for any specific reconfiguration. Compared to the current situation, we are likely, under the changed structures of decision making in the NHS, to see reconfigurations dealt with better than in the past. Why? At the moment it is very often done by primary care trusts and strategic health authorities whom the public, in any given location, think are not accountable directly to them. That will change to circumstances where, in the great majority of cases, reconfiguration of services is proposed and led by the two sets of people whom the public would expect to be directly involved: the clinicians-the doctors and nurses in whom they put their trust and whom they expect to have the clearest view about what services they do need in their area-and the people whom they elect, their local council, who together, through the health and wellbeing strategy, should be clear about the implications of any service reconfiguration on the overall structure of services in that area. Thus, from the public’s point of view, to the extent those two sides are directly involved, we are more likely to have a proactive agreement about whether service reconfiguration should happen.

Q192 Dr Wollaston: Except that, even in an area, say, in London, where it is accepted that there is perhaps overprovision of acute hospital services relative to other parts of the country, if you try to close a hospital or a service, there is likely to be a very vociferous local campaign to keep it open.

Mr Lansley: Of course, absolutely.

Q193 Dr Wollaston: Even where you have involvement, if that local involvement says, "No, we don’t want our local service to close," how will that be pushed?

Mr Lansley: I say this on the back of years of experience of these things, as indeed David and Richard will have. Very often it is precisely in circumstances where you have the public as patients that you will have a local authority, GPs and even hospital and other clinicians all objecting to what is being proposed. Is it any wonder that there is considerable public antipathy to some of these reconfiguration proposals?

If you then move to a place where, from the public’s point of view, people they know and trust, particularly their general practitioners, have been in a position of helping to make these decisions in the first place and the clinicians and the local authority are proactively looking at what is in the best interests of their area-and sometimes there are difficult, challenging decisions to be made about the structure of service configuration-a shift of services into the community is clearly going to happen, it is going to lead to changes in service structures and provision inside the acute sector. People will have to go through these issues. However, if they can see that it is happening as something that is clinicallyled, locally-led, they are more likely to accept it. We have seen it happen even since the election. We have seen circumstances where reconfiguration proposals-which before the election were very much objected to because they were effectively being dictated by what was regarded as a less accountable bureaucratic process-have become clearly owned, not least by the GPs as commissioners coming together owning the decision. From the public’s point of view, that makes a big difference.

Q194 Dr Wollaston: In circumstances where that was not the case, where local people still felt very strongly that they did not want their particular local service to close, if the commissioners still took a decision that it was in the wider interests for that to happen, that could still take place.

Mr Lansley: There will be-and we are clear in the legislation that there will continue to be-a mechanism by which, through the local authority, that can be referred to the Secretary of State. There is still the same scope for that kind of referral leading to the Independent Reconfiguration Panel’s scrutiny. There is still an independent process, if necessary.

Q195 Rosie Cooper: Secretary of State, are you really saying that you see a group of independent contractors, acting as a local commissioning group, as the democratic accountability of this system? Health and Wellbeing Boards and councillors with no power other than to speak and try to influence do not add up to one jot of democratic accountability.

Mr Lansley: I don’t think I did say that at all. In this context, they are not independent contractors. They will be members of a statutory body. They are not independent in-

Q196 Rosie Cooper: But you are asking people to trust them based on-

Mr Lansley: Democratic accountability does not come through the clinical commissioning groups. It comes through the role of the Health and Wellbeing Board as an executive function of the local authority.

Q197 Rosie Cooper: Forgive me, Secretary of State, but it is like sitting in a parallel universe. Health and Wellbeing Boards do not have any power and currently-

Mr Lansley: They will do under the legislation.

Q198 Rosie Cooper: Health and Well-being Boards do not have a veto on what is commissioned and the commissioning groups, as they are now called, do not have to listen to them. It is not mandatory that they listen to them. How can that be direct accountability?

Mr Lansley: There was always intended to be a strong relationship between the Health and Wellbeing Boards and the clinical commissioning groups fashioned through the Joint Strategic Needs Assessment and the strategy, and we intend to strengthen that further through amendments to the legislation. Richard, I don’t know if you want to talk us through that a little bit.

Richard Douglas: We will be setting out in the statutory guidance how commissioning groups have to take into account the views of Health and Wellbeing Boards and there will be the option for Health and Wellbeing Boards to make referrals back to the NHS commissioning boards. There will not be an overall right of veto-you are absolutely right-but there will be the opportunity to make referrals to other organisations.

Q199 Rosie Cooper: People will be sitting there completely stunned at the fact that we are giving over the Health Service to groups of commissioners. Let me take this document, "Designing the NHS Commissioning Board," which is not on the Department’s website but on the NHS website: "I envisage a significant role for clinical commissioning groups themselves in overseeing primary medical care contracts and improving the quality of primary care, supported by the Board." Everybody is looking in at themselves. There is, surely to goodness, a huge amount of conflict here.

Sir David Nicholson: The point you particularly raise is a really important one because we know from experience that the best way of driving up the quality of care in the primary sector is the activity of your peers. That is what makes the difference. It is a response, in a sense, but the real levers are going to be held by the Board, which they are, because the Board has the statutory responsibility to commission primary care. The issue is: how can we bring the Board and the local GPs together to get the best of both worlds, to get the transparency of accountability so that it is clear who is commissioning for what but, on the other hand, get the power of peer review to drive up the quality of primary care, which is what we want to do?

Q200 Rosie Cooper: Absolutely. I understand that, and you can use peer group pressure to deal with outliers. As to having doctors look at other doctors in their area, you are not saying that is not going to be open to abuse of some sort.

Sir David Nicholson: That is why it needs to be transparent and why the accountability remains with the Commissioning Board. We want doctors to look at each other. We want general practitioners to benchmark themselves against each other to see how they are making improvements. That is exactly what we want.

Mr Lansley: I have been very encouraged by the discussions I have had with lots of GP groups across the country who have seen it as one of their principal objectives to deal with poor performance in primary care and in general practices. To be frank, they have often felt that primary care trusts have not been able to do that because it is almost a case that the only way the primary care trusts can do it is by taking what are rather extreme measures in relation to their contract. This kind of clinical governance at a local level is absolutely essential.

Q201 Grahame M. Morris: We are dealing with commissioning which seems quite abstract, looking at some of the concepts, but giving a practical example brings it to life. I would like to raise an issue that the Secretary of State referred to in his opening remarks, at least very briefly, in relation to mental health services. The Department’s own figures show that the investment in statutory mental health services in the north-east is less than in other regions and we are aware that GPs are concerned they do not have the right skills to treat mental illness, let alone to commission services. There are all sorts of issues building up in the north-east that are impacting on the ability to deliver the service because we rely quite heavily on the third sector. In particular, I should mention the Northern Rock Foundation, as £3 million from the Northern Rock Foundation has been lost. The likelihood is, when the bank is reprivatised, that everything invested in the region will be lost, and most of that goes into mental health and emotional wellbeing services. £800,000 is being lost when the North East Mental Health Development Unit closes this October and I am sure you are aware of the pressures that the Public Health Observatories are under. Ours in the North East specialises in mental health issues and develops the profiles.

My question is: how will these new arrangements ensure that, in this case, the voluntary sector receives the necessary financial support to remain viable and will have the capacity to support increasing amounts of vulnerable people? Clearly, mental illness is a function of the economic recession and pressures arising out of that.

Richard Douglas: I can let David go into some of the detail of this, but if you are looking at how this new system would work, the very simple way we are trying to present it is that the Commissioning Board’s role will be to turn the £80 billion-or whatever it is we end up allocating to them-into the best possible outcomes for patients. They will do that within the framework of the mandate and the outcomes that we set, but the job of the Commissioning Board is to turn that money into improved outcomes. I don’t know if David wants to say anything particularly about the mental health area.

Sir David Nicholson: We believe that this is best commissioned locally, with local understanding, local knowledge and all the rest of it. One of the criticisms we have had in the past around commissioning mental health services is that it has not been professionalised, that every PCT has one person who does mental health and they do not have the expertise-the knowledge-to do it. That is the reason why we are looking at commissioning support. In the north-east I know that the clusters involved there are working out, "How can we concentrate all of our expertise in mental health services to support the individual clinical commissioners to take that action?" That is well established and will improve the quality of clinical commissioning of mental health services.

On the other side, of course, you have what everybody in the country should have access to, which is good-quality mental health services. How do you do that? The NHS Commissioning Board is commissioning NICE to set out a whole series of standards, including for mental health, which will be applicable to each of the local commissioning groups. We will set out a series of standards and some measures that we expect everyone to deliver. That is how we will do it, both at a national level and at a local level.

Q202 Grahame M. Morris: Essentially, in relation to mental health services, we will be relying on the clinical commissioning groups at local level to recognise the value of this service and commission it.

Sir David Nicholson: Yes, but one of the things about previous reorganisations which is different from this one is that, when a PCT was set up on 1 April, whenever it was, it automatically took on all of its responsibilities on day one. It was assumed that it could do everything. The difference with the clinical commissioning groups is we are not saying that. They have to go through an authorisation process over the next two years to get them to a place where they can. We would have to be absolutely assured that they have access to the clinical advice, the knowledge, understanding and techniques in order to authorise them to commission mental health services.

Q203 Grahame M. Morris: I understand that, but my immediate concern, as someone who is involved in this area and has had contact with some of the people who are delivering the services, is that there will be a hiatus until the commissioning groups are ready. In the meantime, we are losing this very valuable and wellestablished service. Some of it, incidentally, is funded by the charitable sector and some through local government-areabased grants and so on-which have also gone.

Sir David Nicholson: I absolutely accept this issue about planning blight and all the worries that you have around the move from one system to another. In a sense, it is the job of the PCT clusters to ensure that does not happen. That is their job.

Mr Lansley: I might add that in the report of the Deputy Chief Executive last week, one of the performance measures is a series of proxies for the quality of child and adolescent mental health services. Overall performance in meeting those proxy measures-that is ageappropriate services, learning disability services, 24hour mental health cover and early intervention support services-improved to the point where 104 primary care trusts over England were fully meeting access to all those four services. That is improved performance. Thus, what David is describing is that there is a focus in the service on maintaining and improving performance at the same time as we are building capacity.

It is often true to say-David said it a moment ago-that many of those who work in mental health services say that their existing commissioners do not sufficiently understand the service they are commissioning. They would often say they are not sure that general practitioners understand the service they are commissioning, but that is not a reason to say that clinical commissioning groups should not take over responsibility in relation to this because, broadly, one in four patients who go into their GP surgery present with a mental health problem. Many GP practices actively want, through their commissioning processes, to create a more integrated service locally. I couldn’t tell you how often GP groups have told me they want, for example, to have community psychiatric nursing based in their own local surgeries on the basis, alongside services, of being able to understand and integrate the service better around the needs of their patients. The business of shifting from where GPs very often are referring into a mental health partnership trust, but not really having any handle on what happens thereafter, to a situation where, through the commissioning process, they do understand the nature of the service they are commissioning and are more fully engaged with it from the primary care angle is a significant positive benefit.

Q204 Yvonne Fovargue: I am concerned about the volume of the clinical commissioning groups-the actual numbers. There are 328. In Wigan alone, which has a population of 300,000, I have five pathfinders. Do you expect that number to reduce and how many are going to be authorised and go through the process by 2013?

Mr Lansley: I understood we had 220 pathfinders who have come forward at the moment. On average, that represents something like 87% of the population. That is an average population of about 200,000 patients. The purpose of the pathfinder process, and the purpose of the learning network that we have established between them, is for them to understand how they can best combine the obvious benefits of locality commissioning with the obvious pressures for scale. What we are doing, rather than trying to determine some size or number of patients that meets all these circumstances, is to say that they should respond to their own local circumstances in terms of the overall shape of the groups that they bring together but, through the commissioning support organisations that are being developed with them, we should enable them to access economies and benefits of scale in terms of the commissioning activity they undertake.

Q205 Yvonne Fovargue: The other concern I have is that in my locality a lot of them cross boundaries because they are not based on logic. They are based on who they work with as friends. Therefore, there is a lot of local authority boundary crossing and the patients are dispersed.

Mr Lansley: Of the 220 who have come forward as pathfinders, 16 cross unitary and uppertier local authority boundaries.

Q206 Yvonne Fovargue: It’s a pity they are in Wigan.

Sir David Nicholson: Because you don’t get on with people-you are not mates-is not a criterion for allowing people to cross those boundaries.

Q207 Yvonne Fovargue: My local consortia are not based on any sort of patient links in terms of being next to each other. They are actually based on who they are working with at the moment, which you can see in one way is sensible, but it is not doing much for the patients. One person has one doctor who works over there, and another has another doctor who is working over there and is commissioning totally differently. Do you expect that to be a significant problem?

Sir David Nicholson: We want to try and get all of those 16 practices that cross uppertier boundaries to look at it again and think about what the relative benefits of crossing that boundary are as against the integration with local authority services, although I have to say that, just because people are coterminous, does not mean that their services are integrated. Then the Commissioning Board at some stage will take a view about what it will and will not allow. All I was saying was that a criterion will not be, "I want those people in my consortia because they are my mates." That will not be part of the criteria.

Mr Lansley: In truth, on most of 16 where they do cross these boundaries, they have done so on the basis of their approach being in relation to the catchment of a particular major provider-a provider trust.

Sir David Nicholson: Yes. The ones at Sandwell and the Black Country are an example of that sort of thing, where they relate to catchment areas of hospitals rather than local authorities. That is the predominant reason people do it.

Q208 Yvonne Fovargue: Where that does not happen, they will have to look at it again.

Sir David Nicholson: Yes.

Q209 Andrew George: I want to briefly turn back to the issue of Monitor and competition, which was mentioned earlier. Amendment 149 does what the Government said it would do, which is to remove the duty to "promote competition", and "requires Monitor to exercise its functions"-and I am reading from the briefing notes prepared by your Department, page 17, paragraph 67-"with a view to preventing anticompetitive behaviour which acts against the interests of people who use NHS services." Could you explain what the difference is between "promoting competition" and "preventing anticompetitive behaviour"?

Mr Lansley: Richard, you might want to add a little to this. From my point of view, it is the difference between seeking to impose any particular structure of competition, which would be effectively ex ante-trying to decide in advance what a competitive structure would look like-and what is effectively an ex post approach, which is to say commissioners and providers should behave in ways that they think are in the best interests of patients, and perhaps in their own best interests as an organisation. But it is only if one can actually see that they are engaging in abuse which impacts negatively on patients in practice that you act upon it. It is the difference between the theoretical and the practical.

An example of the nature of such abuse is as follows. Quite often, in the NHS you have joint appointments, or consultants and clinical staff who have a contract with one person here and another provider there. If one of those providers were to say "We are going to try and exercise a power over you through our contracts to stop you doing your work for this other provider because they compete with us," that is an abuse. It is an abuse of dominance.

Q210 Andrew George: Does the OFT not monitor that?

Mr Lansley: Your point is absolutely fair. If we are dealing with those kinds of abuses-abuse of a dominant position, price fixing, cartelisation, things of that kind-where they would damage patients’ interests, the same would be true in the application of the OFT’s rules and they would be perfectly capable of stepping in. Of course, the structure of the legislation is that Monitor, as the sectorspecific regulator, should exercise the same powers and would hopefully do so in a way that is more aware of the overall nature of the provision of services in the NHS and can interpret them more effectively.

Richard Douglas: I have nothing I would add to that.

Q211 Andrew George: In paragraph 5.9 of your response to the Future Forum, you say: "Therefore, we will outlaw any policy to increase or maintain the market share of any particular sector of provider." That is, in effect, saying that the share of the NHS will go down. Is that right?

Mr Lansley: No. It means we do not think it is right for the Government to pursue a policy that says the private sector should enjoy a bigger market share in the NHS. Equally, we do not think it was right that the Government should have exercised a policy that said the NHS is preferred provider and the NHS can let patients down before they are able to go somewhere else. We should operate on the basis of consistent equal application of the rules regardless of the ownership of providers.

Andrew George: That is very helpful.

Q212 Valerie Vaz: That would be open to a challenge under state aid, so you could do that anyway. You are not doing anything different or new. That is what the law is.

Mr Lansley: I do not think that is strictly true.

Q213 Valerie Vaz: It is-state aid.

Richard Douglas: We have set objectives in the past around the growth of private sector elements in the NHS and when we set the ISTC programme there was-

Mr Lansley: When you say "we," you mean a previous Government.

Richard Douglas: I am sorry. The Department of Health-

Mr Lansley: A previous Secretary of State in Lady Thatcher’s time set out specific objectives for the increase in the extent of private sector provision in the NHS and we are not proposing to do that.

Q214 Andrew George: That is very helpful. It does help to calm some people’s interpretation of that word "maintain" in relation to the NHS. Given the fact that both the Future Forum and the Government’s response to it said that "Competition will not be an end in itself", on the one hand, and "We wish to reassure people with regard to integration" on the other-so integration is going to be promoted-I wondered, in relation to the amendment that I have drawn attention to, why there is an emphasis on preventing anticompetitive behaviour but not an emphasis on preventing anticollaborative behaviour. If you are really going to give integration the same weight as competition, there should be a role in Monitor to prevent anticollaborative behaviour where that is clearly in the patient’s interests as well, surely.

Mr Lansley: You referred to amendment 149, which places a duty on Monitor to exercise its functions with a view to enabling services to be provided in an integrated way where this would improve quality or efficiency or reduce inequalities for patients, and that is what it does. In a sense, it positively does that which we are not intending to do where competition is concerned. It positively requires Monitor to seek to promote that kind of integration of services for the benefit of patients. I think, legally, you do not need any parallel duty for Monitor to seek to act against anticollaborative action because that is implied in the positive duty. If you take the positive duty to promote competition away, in a sense you have to create alongside it the new structure of the duty, which is to act against abuses of competition. Otherwise, you would have left Monitor in a vacuum where it does not promote competition but, equally, it does not protect patients’ interests by acting against abuses of competition.

Q215 Andrew George: No, but you know that, in order to maintain safe tertiary services where you have ITUs and the kind of anaesthetic and emergency cover that is required for those types of services, you need a range of specialties which could easily be eroded by the loss of, if you like, elective services. You were talking earlier about competition in the area of certain elective procedures, but if you do not have a critical mass of specialties on a site, then you cannot justify the retention of-

Mr Lansley: These are the practical issues but, in truth, is that not fundamentally the role of the commissioners, to seek to commission services? There may be a specific issue about the extent to which the commissioners need, for example, emergency services. You might need emergency surgery to support it and, if you need emergency surgery behind it, it may be dependent on the extent to which you have elective surgery taking place in the same location. If the issue arises, I do not think it is fundamentally addressed through Monitor’s role. It is addressed through the relationship between commissioners and providers.

Q216 David Tredinnick: I would like to ask a couple of questions about clinical senates and then one about NICE guidelines. In your response to the NHS Forum, clinical senates are one of the key mechanisms to strengthen multiprofessional involvement in commissioning. Who will decide the makeup of clinical senates and ensure these include appropriate representation from allied health professionals and others?

Sir David Nicholson: The senates will be hosted by the NHS Commissioning Board. We have not yet worked through how people will be nominated, what sort of process they will go through and what the makeup would be, but the whole point of it is that it has the confidence of the clinical community. It is very important that, however we design it, we design it with that in mind.

Q217 David Tredinnick: I agree with you. I think this is a critical issue in terms of patient choice and involvement. What checks and balances will be in place to ensure that all statutorily regulated health professionals, such as osteopaths and chiropractors-both regulated by their own Acts of Parliament-have the opportunity to input, through clinical senates or other means, in the design of relevant patient pathways, such as those for musculoskeletal services, for example? How are you going to bring them in? Will they have a voice? They are statutory bodies. There are other bodies, too, out there regulated through their own mechanisms. There are aromatherapists with different bodies-there are two bodies there, there are the nondoctor homoeopaths who have their own quite robust regulatory regimes and so on. There is a whole list of therapists. If we are going to get that choice, may I suggest, respectfully, that you need-as I am sure you are, Secretary of State-this thought through in a wider context.

Mr Lansley: It is important not to see the clinical senates in isolation. They are part of a process by which the NHS Commissioning Board and the clinical commissioning groups work together in order to see the broader shape of services in an area and to provide advice. Remember, they are not executive bodies. To that extent, we can be flexible about how they bring advice together. For different circumstances they might bring different people together. They don’t design the individual pathways of care. Clinical networks will be responsible for the design of pathways of care, and clinical commissioning groups will look at how those are to be delivered in their area. They will draw on advice from clinical networks. They may draw on advice from clinical senates. They will clearly draw on the advice of the National Institute for Health and Clinical Excellence, which will prepare those kinds of commissioning guidelines. There is a range of expert and clinical advice. In each of those forums, whether it be the clinical networks or when NICE are producing their commissioning guidelines, or indeed even when the clinical senate is there, I would expect a relevant range of health professionals and patient involvement directly in each of those discussions.

Q218 David Tredinnick: That is great. As a supplementary to that, I have in Hinckley, in my constituency, the International Federation of Professional Aromatherapists. They have been working at George Eliot A&E hospital across the LeicestershireWarwickshire boundary-you know it well-to develop support for neonatal and postnatal services. The aromatherapists are reducing the number of patients that the obstetricians need to see because they are taking out the stressed patients and doing the aftercare, thus making it much more effective for obstetricians to operate. It is fully supported by the management of the hospital. There is a mass of data showing how effective aromatherapy has been in reducing the burden on these hardpressed doctors and providing a more effective service. I am concerned that this kind of good example of practice is available to the senates and is something that you can roll out and make available throughout the Health Service. Certainly there should be notification of it.

Mr Lansley: You make an interesting point, because it illustrates what I would see as a distinction between clinical senates and clinical networks. In relation to clinical networks, we would expect the establishment of maternity networks which bring providers and commissioners together to discuss the nature of the services provided to expectant mothers. I think it would be entirely appropriate for maternity networks to ensure that they discuss, agree and be clear amongst themselves, when the commissioning groups are commissioning maternity services, as to the nature of the service that should be provided, taking account of advice and feedback on the whole range of services and therapies. That is the place. The clinical senate for this purpose is not really a relevant consideration.

Q219 David Tredinnick: Thank you very much. That is extremely helpful, and I am speaking on behalf of my constituents in the sense that Hinckley has become an aromatherapy centre, with Shirley Price Aromatherapy, and all the other different disciplines there, and nurses have been trained in this practice. It has been used in the Leicester Royal Infirmary and in Leicestershire for a long time.

My last question is about the effectiveness of NICE guidelines. The NICE guidelines on lower back pain have been extremely helpful. The guidance released in May 2009-your guidance CG88-recommended that a course of manual therapies, to include osteopathy, chiropractic or acupuncture, is considered for patients with lower back pain. A study by the British Osteopathic Association a year after the guidance was issued by NICE showed that osteopathy was being funded in only 18% of PCTs. That is only a 3% increase from when the NICE guidelines were issued. These guidelines, as I have said, have been extremely helpful, but there is a rollout problem in that not all primary care trusts are taking note of these guidelines. I know that primary care trusts are being wound down, but I wonder if you could perhaps share some thoughts, based on my remarks, about the implementation of NICE guidelines.

Mr Lansley: We attach considerable importance to the way in which NICE does its job of establishing commissioning guidelines. It does so in an evidencebased way, taking account of a wide range of clinical, professional and patient input. From our point of view, they do this not only to secure advice to the service about what is clinically effective but what is also the most cost-effective route to treatment. From that point of view, our wish is always for primary care trusts-and, in future, clinical commissioning groups-to take commissioning guidelines produced by NICE, and endorsed by the NHS Commissioning Board, very seriously. However, at the end of the day, there is a role for local clinical leadership in deciding how they structure the design of services locally and how they deliver those priorities. We are constantly, I think, going to be in an engagement between the NHS Commissioning Board and clinical commissioning groups about ensuring that they deliver a comprehensive service and that they do so to the best possible effect and using an evidence base to enable them to do so.

David Tredinnick: Thank you. Finally, if you want to achieve a wider range of therapies out there for patients, I think it is very important that NICE look more closely at other therapies and come up with guidelines. They should continue with the good work.

Q220 Dr Wollaston: Can I come in on the back of that? I don’t think you can have it both ways, David. If we are going to use an evidence base, there are many complementary therapies for which there is no evidence base whatsoever. Therefore, you might find pressure groups of patients wanting to have access to therapies for which there is no evidence base.

David Tredinnick: I would say there is evidence-

Valerie Vaz: Speaking as a doctor.

David Tredinnick: We had better not accept that as evidence.

Chair: Shall we focus on gathering evidence from our witnesses rather than having a private debate within the Committee?

David Tredinnick: I think, Chairman, it is justified now I have been challenged. I would say there is evidence for all therapies but it is just that it has not been properly recorded. That is something we have to address. Thank you, Sarah.

Q221 Chair: Secretary of State, can I bring you back to one of the things you said at the beginning of this session? You said, following the Future Forum report, that the main focus of the work had been clarifying what was going to happen between the Commissioning Board at the centre and the commissioning groups in the locality and how the middle ground, effectively, was going to be developed. While this session has been going on, I have been noting down the list of functions which are being attributed, in the legislation as it is evolving, to the Commission Board. I have what seem to me to be five key functions for the Commissioning Board-and there are, no doubt, many others: authorisation of the commissioning groups; the direct commissioning of primary care; the direct commissioning of specialist services; commissioning support to the commissioning groups; and oversight of the commissioning groups. Those are the medium-term responsibilities of the Commissioning Board. When Sir David appeared at an earlier evidence session, he emphasised that, although the intention was to delegate responsibility in the medium term to the new world, if we were going to achieve the Nicholson challenge in the short term, it was going to require greater centralisation in order to drive necessary changes. I wonder if you see both that shortterm perspective and that mediumterm list of functions attributable to the Commissioning Board, whether this legislation really constitutes a localisation or whether there is, as some have been observing, considerable potential for the centralisation of power in the Health Service against the background of those developments.

Mr Lansley: Let me say one thing and then perhaps David would like to add to it. I am not sure that your list is complete.

Q222 Chair: I am not suggesting that it is complete.

Mr Lansley: No, but I mean even in terms of the principal functions of the Commissioning Board. One has to bear in mind that the Commissioning Board has a specific responsibility in relation to the allocation of resources in the NHS. It has a specific key responsibility in relation to financial control. I think, when one looks, for example, at the QIPP challenge, there will be the Commissioning Board itself in the context of securing financial control, and performance will have a continuing role in driving forward those kinds of issues.

It is also fair to say that any summary of the role of the Commissioning Board would be incomplete if it did not make very clear that the Commissioning Board will have a statutory responsibility continuously to improve outcomes in the National Health Service, agreed through the mandate, and the duty continuously to improve quality under the legislation. That is as to the structure.

You make a fair point. It is in the nature of people to try and treat what are balances as if they were necessarily conflicts. In the National Health Service we have a balance. We have a balance between a national service with national resources, national standards, and, indeed, some elements of commissioning which are clearly led nationally. In order to deliver the best possible and most responsive services to patients, we want to shift as many decisions as possible close to patients-even, in some cases, directly into their hands, but especially into the hands of the doctors, nurses and other health professionals who are responsible for delivering their care and working through clinical leadership. The drive to promote clinical leadership is absolutely instrumental.

In between those two pillars is that whole area of people who have tried endlessly to set up structures and tiers of management that somehow correspond to what they regard as natural sizes of health economies. As David quite rightly says, you could arrive at maybe 15 to 20 broad health economies, and that probably corresponds to the times of the regional health authorities.

Sir David Nicholson: Fourteen.

Mr Lansley: Fourteen, yes.

Q223 Chair: Everyone has seen it move from 14 to 15 as the minimum.

Mr Lansley: Then the NHS was shifted closer to the Government planning regions, but not quite, and as to primary care trusts there were 303 and everybody said, "They are too small." Then there were 152 and people said, "They are still not the right size." When you look at cancer services, it has to be a million-plus patients. When you look at serious neurological conditions, you might be looking at 3 million or 4 million patients in order to deliver the best services. What we are trying to do is to say, "As best we can, we want form to follow function." In the legislation, there is an essential characteristic called clinical commissioning groups that are locally led and there is a clear relationship with local authorities. It is not something we are going to make absolutely immutable, but there is a clear relationship with local authorities. That is an important set of considerations. There is also the issue of local authorities, for these purposes, that only have a 90,000 population and local authorities that have a population of over a million. By its nature, locality commissioning will, in some cases, be disaggregated below the level of local authorities but, ideally, not to a great extent. However, in the territory between the national responsibility of the Board and the clinical commissioning groups there is space for the flexible design of clinical networks to enable the clinical commissioning support to be delivered. That is on the clinical side.

There is also a range of other support functions which the Commissioning Board will work on not only itself but with a wider structure of providers-be they from the voluntary or independent sector, from social enterprises or from the Board itself-in order to try and capture economies of scale in the commissioning support function. We will combine, wherever possible, greater economy and efficiency in how we deliver commissioning activities with a constant focus on clinical leadership at a local level.

Q224 Chris Skidmore: Is there not a danger of what you might call "mission creep"? When the White Paper came out, it talked of handing the budgets to the GPs and to localised commissioners, yet the document that has appeared on the Health Service Journal’s website says quite clearly on page 3 that "the purpose of the Board will be to use the commissioning budget of around £80 billion a year to secure the best possible health outcomes for patients".

On page 11, the document talks about the authorisation process not being "a oneoff assessment, but rather as part of a broader developmental relationship between clinical commissioning groups and the Board." This particular document seems to be a power grab towards making a more centralised Commissioning Board, in particular, on page 3, saying:: "An alternative description for the NHS Commissioning Board, based on this rationale,"-the rationale of localised boards being named in a geographic focus-"could be NHS England." My concern is as to whether we are going down a route of creating a rather large super-quango here. Obviously, someone shares my concerns because someone has put, in the draft notes, "Is this too far". I obviously do not know what the finalised document will be, but someone in the Department shares my concerns that the Commissioning Board might take too much power-

Rosie Cooper: It used to be called the NHS.

Chris Skidmore: --when the very rationale of what we need these reports to deliver is greater lowpriced services and the budgets going to the GPs.

Mr Lansley: The legislation is absolutely clear. With the exception of those specific commissioning activities that are reserved to the NHS Commissioning Board, the leadership, in terms of commissioning, is clinical and local. That is a big change from what is effectively much more of a topdown structure. We are strengthening both elements of what the public have a right to expect in the NHS. We are strengthening the transparent national leadership in terms of standards and services, and we are strengthening local clinical leadership. Of course, it does involve the formal abolition of strategic health authorities and primary care trusts. The reason for that is very straightforward. Neither of those organisations, in the way in which they have been structured in the past, has met the public’s expectation that, in a National Health Service, they have national criteria, standards and resources, but they also have what they regard as generally locallyled access to services.

There is a balance. If we are debating the balance, that is a proper debate to have. We are trying to make sure that we strengthen commissioning at a national level, strengthen standards at a national level and strengthen the support we give to commissioning activities across the NHS. Equally, we have to make absolutely certain that, through the authorisation process, once we have competent, capable and clinical commissioning groups, they have a statutory basis on which they are making the decisions. It is not the Commissioning Board telling them how to make their decisions. They are taking responsibility and they will then lead the commissioning at a local level.

Q225 Chair: We have moved from assumed independence to earned autonomy for those local commissioning groups.

Mr Lansley: We are in a position where, yes, we are very clear that the clinical commissioning groups must show that they have the capability to do this. When you look at the past, as David quite rightly said, it was assumed that primary care trusts could do all this. When they were all established, and for years thereafter, it was evident that many were not capable of doing these things but they were given the responsibility anyway. From the public’s point of view, this is one of those really good safeguards. We are going to be clear that people assume responsibility when they have the capabilities to discharge it effectively.

Q226 Rosie Cooper: When will the figures be available on how the NHS is doing for the first quarter, meeting the 4% savings that we know as the Nicholson challenge in its first year? When will this first quarter be reported on?

Sir David Nicholson: We normally report the first quarter about the end of August.

Q227 Rosie Cooper: We will get them then.

Sir David Nicholson: Yes. Quarter one will be produced.

Q228 Rosie Cooper: Have you any idea how it is doing?

Sir David Nicholson: We have been through the planning process and we have done a review of every region’s plans now. In terms of what people are saying, and what is in their plans and what they have started to do, we think we have a plan for 201112 which will deliver both the financial and the service requirements that we have. We know we have plans that we think are robust and can deliver. There is monthly information that comes out during the period-bits of information which reflect that-and we are confident that we will be able to deliver the totality of the service offer and the financial position for 201112.

If I say anything about the Board, I will be accused of something, but I would say that it is a real dilemma when we start to write the paper on the Board. If you start to write the paper about the Board you hold yourself open to being obsessed with the national arrangements, but somebody has to do it. We had to set out what we thought the overall approach of the Board would be. The important thing about the document, and the thing about the Board, is that it is based and focused around outcomes for patients and on clinical and patient interests. It is a very important part of the way the Board is going to be established and the way it is working.

Underpinning it is the fact that it is a body which is there to help and support clinical commissioners in doing their job. In broad terms, if you think about the number of people who are working on the kind of work it does now-which is about 8,000-and then you think about the 3,500 that the Board will probably have, that is massive. Even if you wanted to manage everything, you simply could not because you do not have the capacity to do it, but we genuinely believe that clinical commissioning will make a massive impact on patients and on outcomes. It is my ambition, as the designate Chief Executive, to get all of these clinical commissioners up and running as fast as we possibly can and fulfilling the totality of their responsibilities. That is the way we will improve outcomes and that is absolutely at the heart of what we are trying to do.

Chair: Thank you.

Q229 Valerie Vaz: I want to turn to what we feel is a fairly major issue, which was perhaps neglected earlier on in the White Paper. That is the issue of public health. You are now going to form it as an executive agency. Could you describe how that is going to be set up and also how they feed into local authorities? Do you envisage directors of public health talking directly to the Chief Executive of a local authority? What is their role going to be?

Mr Lansley: There is quite a lot to say about that. When you say "not in the White Paper," it was in the White Paper but, of course, the "Equity and excellence: Liberating the NHS" White Paper did make reference to the strategic intention. Obviously, in the legislation we are creating a legislative structure through Health and Wellbeing Boards where local authorities lead on health improvement in their area. The public health strategy is set out in the "Healthy lives, healthy people" White Paper that was published in November. It has, to that extent, a strategy and a White Paper that is particular to the public health objectives.

As to Public Health England, we have set out our decision that it should be an executive agency. People were very clear about what they wanted. They understood the objective of being able to bring in a more integrated public health service on a national basis. I could give you examples of how that can work. For example, if you really want to have an immunisation programme for HPV that is integrated together with the decisions of the cancer screening committees and the management of cancer registries, you can do that in Public Health England. At the moment, they are all sitting in different bodies. Quite clearly, we can have a much more integrated structure of public health. Public Health England will be engaged in health protection, health promotion and the provision of health services in the public health sphere-populationbased health services. It will do so in support of local authorities who themselves, as directors of public health, will lead a public health responsibility, again, for health protection in their area. They will essentially be working as part of a single integrated structure with Public Health England, but also in their local authority driving health promotion and the delivery of some populationbased health services through the public health budget that, from 1 April 2013, is intended to be transferred to local authorities. We will ask local authorities, in doing so, particularly as part of the public health strategy, to focus on impacting positively on the wider and social determinants of health, which are likely to give us the biggest overall health gain in the longer term. There will be issues like reduction of poverty, access to economic opportunities, educational opportunities, quality of environment, housing and transport that impact directly, in the long term, on the overall health of the population.

Directors of public health are therefore critical appointments that are integral to the delivery of a response to health threats, like a pandemic-influenza or something of that kind-and form part of, in effect, a chain of control and command right through the public health service. The appointment of a director of public health will be, in part, through the powers of the Secretary of State and Public Health England. They will also, however, be, in effect, the chief medical officer for their local authority. They will be directly employed within that local authority for that purpose. They will be joint appointments between the local authority and the Secretary of State through Public Health England. They will need to meet, in the characteristics of that appointment, the objectives of both.

Inside the local authority, it is a matter for local authorities precisely how they structure themselves. We expect that directors of public health, by the nature of their responsibilities, seniority and indeed-if you look at Health and Wellbeing Boards-the scale and shape of their responsibilities, to be local authority officers. They are likely to be chief officers reporting directly to a chief executive.

Q230 Valerie Vaz: They will always be part of the NHS, although it is an executive agency.

Mr Lansley: They will continue to be part of the NHS as well because of the character of the joint appointment. They will be, in effect, accountable through the local authority-but, none the less, accountable-for the management and delivery of public health functions and the public health budget, which is part of the NHS budget.

Sir David Nicholson: They will also give public health advice to the clinical commissioning groups.

Q231 Valerie Vaz: Turning to the Public Health Observatories, I am looking at the report and it is not clear whether they are going to be abolished. You say they are going to be subsumed into Public Health England. Will they still exist after that?

Richard Douglas: They will become part of Public Health England. The functions will still exist, but it will be one of the elements brought together in Public Health England.

Q232 Chair: Can I come back to the directors of public health? You say it is assumed they will be chief officers responsible to the chief executive of the local authority. There are reports around the country of directors of public health being recruited in positions where they report to the director of social services. That, surely, is not compatible with the Government’s policy.

Mr Lansley: To say we have a policy for this is probably overstating it. We are setting out to make clear, with local authorities and the public health profession, the nature of the task that we are asking them to do. There have already been joint appointments, between the NHS and local authorities, of directors of public health. That is customary in any case. Of course, as directors of public health do not have that status within local authorities, to some extent that is continuing at the moment. We are expecting, through the establishment of health and wellbeing boards and the transfer of the public health budget, an enhanced status for directors of public health in future.

Q233 Chair: It clearly would not be consistent with the principle of enhanced status for a director of public health who used to be a chief officer of the NHS, responsible for 80% of the health and social care system, to be a junior officer reporting to the director of social services responsible for 20% of the health and social care system in a local health and social care economy.

Mr Lansley: Let me put it like this. Health and Wellbeing Boards may well, in due course, become the most significant executive committee of a local authority and there will be an expectation that there might well be number of chief officers who relate to that-a director of children’s services, a director of adult social services and a director of public health. It is a matter for local authorities themselves precisely how they structure their reporting responsibilities within the local authority to the chief executive, but my expectation is that a director of public health would rank, in a sense, alongside directors of adult social services or children’s services as a budget holder with executive responsibility.

Chair: It is likely to be a subject to which the Committee would wish to return.

Q234 Dr Wollaston: It is very important for public trust that public health doctors are independent of political bias. If Public Health England is an executive agency of the Department of Health, how free will it be to challenge Government policy? For example, if directors of public health felt that the new Responsibility Deal was not the best approach to addressing obesity or, for example, alcohol problems, how free would they be to challenge that policy?

Mr Lansley: Individual directors of public health would be entirely free to do that because they are not responsible to the Secretary of State in that sense. Within Public Health England, there will be independent sources of expert advice and scientific advice. To that extent, the parallel is the Medicines and Healthcare products Regulatory Agency, who are an executive agency of the Department of Health. I do not think anybody would imagine that the MHRA was not entirely capable of acting independently, including being able to express, as an agency, their own views about some of these issues.

Q235 Dr Wollaston: So Public Health England would not be able to do that.

Mr Lansley: I have to say my objective is that we bring public health and the responsibilities of the Department, in terms of policy and action on public health, closer together so that we shape policy together. Not that the Department has a public health policy and Public Health England has a view about it, but that we work together in order to make this happen.

Q236 Dr Wollaston: There has been concern-I think it is fair to say-about the influence, for example, of the drinks industry and the fastfood industry in shaping the new Responsibility Deal, and indeed several stakeholders have pulled out of negotiations because of their concerns, particularly on the issue of alcohol policy. It is important to establish that if, say, Public Health England took the view-I am not saying they would, but if they did-that that was inappropriate, would they be in a position to reshape Government policy in that area?

Mr Lansley: No. The policy of the Government would be the policy of the Government. The intention is for a shared public health policy. The job of the Responsibility Deal is very simple. It is to bring people together in a collaborative fashion to secure greater progress on a range of public health challenges than would be possible without it. There are 223 partners to the Responsibility Deal, including a range of public health and other health organisations. For example, the Faculty of Public Health are participants in the Responsibility Deal. They are there not because they agree with the food and drink industry about everything, but by being there, by constructive participation and challenge in a collaborative process, we can deliver more improvement more quickly.

A classic example where the drinks industry is concerned is the pace at which we are going to arrive at increased unit labelling through what has been a process. Up to now, we have, from memory, figures of something like 30% alcohol unit labelling with the industry. We have now set a target to achieve 80% unit labelling. With the food industry, if we went down a legislative route to eliminate artificial trans-fats, it would take another three or four years. We are intending, by a collaborative route, to do it by the end of 2011. We intend to achieve more effective outofhome calorie labelling. We have pledges from the drinks industry in relation to things like the reduction of alcohol promotions at the front of store by a retailer like Asda.

I do not think many of these things would have happened if it weren’t for the Responsibility Deal. It is unambiguously making progress. From my point of view, it is a curious ideological fixation which says, "We shouldn’t even be talking to the drinks industry." The drinks industry is not shaping public health policy. We are talking to them about the things that they are directly responsible for-things like alcohol marketing, unit labelling and the enforcement of legislation in relation to underage drink sales. We are not talking to them about alcohol pricing, because that would be contrary to competition law, and we are not surrendering any control over public health policy to any commercial organisations through that process.

Chair: I am now getting bids for closing questions.

Q237 Valerie Vaz: I have one. Do you have a final figure for the costs of the pause, the listening and reflecting exercise, and was it worth it?

Mr Lansley: Do we have a current figure?

Richard Douglas: The cost of the listening exercise itself-the actual cost of running it-will run to tens of thousands of pounds-I would say £100,000 tops. We did it very cheaply. We will have the cost in terms of its impact-changes resulting from it-when we produce the impact assessment for the Bill, which will be as it enters the House of Lords. We will have the final cost of it then. I would not anticipate, at this stage, that the changes have a particularly significant impact on costs. What we have done is effectively extend the life of strategic health authorities by a year. David is reshaping and shrinking the strategic health authorities during that time, so I would not think that the cost is significant. There will be some offset in savings, probably in redundancy, with some slowing down of the pace around strategic health authorities. We will have a reduced redundancy cost.

Q238 Valerie Vaz: You do not know the final figure-any figure?

Richard Douglas: I know the final figure but I-

Q239 Valerie Vaz: Any figure?

Richard Douglas: I wouldn’t want to quote a figure at the moment.

Q240 Valerie Vaz: The Secretary of State has.

Richard Douglas: I would not want to quote a figure for the costs-

Mr Lansley: Did I quote a figure?

Q241 Valerie Vaz: Yes, you have, in the House.

Richard Douglas: Not for the changes.

Q242 Valerie Vaz: £36,000 I think you said. I was just asking-

Richard Douglas: For the listening exercise, it was up to about £40,000 at that point. As I say, it might get up to £100,000 by the time we have been through everything, but it wouldn’t be any more than that.

Q243 Valerie Vaz: You consider there will be an impact on costs once all these changes have come in.

Richard Douglas: There will be offsetting costs and benefits inevitably-yes.

Q244 Valerie Vaz: Was it worth it, Secretary of State?

Mr Lansley: Yes.

Q245 Valerie Vaz: So you were wrong.

Mr Lansley: Did I say it wouldn’t be?

Chair: You are not required to say yes to that.

Q246 Rosie Cooper: I have three very quick factual questions. As to the news this week of GPs selling their buildings and making substantial profits, what plans do you have in this new world to make this process and those profits completely transparent, as surely there is nothing to hide?

Sir David Nicholson: I do not know what the issue is, to be frank.

Q247 Rosie Cooper: In essence, GPs or groups of practices buying buildings-

Mr Lansley: They are reimbursed through the cost rent scheme and, at the end of the day, they might end up with an asset which they can sell. That has always been true.

Q248 Rosie Cooper: What are you going to do to make that truth transparent because the public want to know about it?

Mr Lansley: In what sense is it not if it has always been true?

Q249 Rosie Cooper : Are GPs’ accounts published? No, they are not.

Mr Lansley: No.

Q250 Rosie Cooper: It is something you might think about.

Mr Lansley: Are you proposing they should be?

Q251 Rosie Cooper: What is there to hide?

Mr Lansley: I thought they were independent contractors. That position does not change.

Q252 Rosie Cooper: Absolutely, and if they are making huge profits, there is a public interest. In the public interest, are you prepared to do anything about-I am not asking you to change it-making it transparent?

Mr Lansley: The rules are transparent because they are part of the General Medical Services contract. They are entirely transparent. The financial circumstances of the individual GP practice are not transparent because that is their own private business.

Q253 Rosie Cooper: Absolutely, so when they make profits in this little game-

Mr Lansley: It is not a game. It is providing health care services for their local population.

Q254 Rosie Cooper: No doubt we will come back to that one in greater detail. Could I ask how the chairs and other board members are going to be appointed to commissioning groups?

Mr Lansley: By the commissioning groups themselves. They can seek external commissioning support in that process too.

Q255 Rosie Cooper: Will the Appointments Commission be compulsorily engaged in this?

Sir David Nicholson: The Appointments Commission is going to be abolished.

Q256 Rosie Cooper: That’s right, so it is. Who will supervise this?

Sir David Nicholson: We have to work all this out, but clearly clinical commissioning groups will need help and support to enable them to fulfil their obligations around the Nolan principles and all the rest of it. We will have to find a mechanism to enable them to do that. We have not worked that through yet, but we will have to do that.

Q257 Rosie Cooper: You will possibly recreate the Appointments Commission, do you think? A final question. What assistance and training are you putting in place or going to give to commissioning group members who, on making what may be an unpopular decision, may well find themselves or their surgeries picketed or subjected to lobbying, the likes of which politicians would be used to but would come as a great shock to GPs and their families?

Sir David Nicholson: I do not think any of the GPs that I have spoken to involved in the pathfinders are under any illusions as to the difficulties that they are taking on. Fair do’s to them that increasing numbers are prepared to take it on, because they know there is a really important set of decisions to be made over the next few years about the NHS and its direction, living within the financial circumstances that we find ourselves in. Large numbers of them are volunteering to do it. We are helping and supporting them, through the pathfinder network, to identify what development and training they need and we are providing them with all of that. If they have problems around really difficult and important decisions that they need to make locally, we will provide them with whatever support they need. It is very important we do that as a board.

Q258 Rosie Cooper: Absolutely, because the degree of vocalism and increasing distance between them and their patients that will come with that will come as a great shock to those GPs who make a difficult decision in the face of huge opposition locally.

Sir David Nicholson: I do not think that is necessarily the case. Of course, part of being a doctor is being responsible for resources. That is part of your role. It is absolutely written into the GMC arrangements whereby you have to take account of those people who are deprived care by the care that you give to an individual. It is absolutely part of what doctors are about at the moment.

Rosie Cooper: I think there will be some shocks there, but there you go.

Q259 David Tredinnick: On the back of Sarah’s question about fizzy drinks, at the Food and Health Forum meeting the other day there was a professor of nutrition who was suggesting that socalled zero sugar drinks actually stimulate the appetite because of the sugar substitutes. I think this should be looked at more carefully in the context of the worries about obesity. I make that suggestion to you.

Chair: It is in the record.

Q260 Chris Skidmore: Can I ask a final question about the future of the NHS Future Forum? You stated on the record that you are keen for it to continue. We had Steve Field here the other week, and he said he was very keen to engage and take part in any future processes but had not had any direct conversation about what that future might hold and what sort of role the NHS Future Forum would play. Are you in a position to clarify how the Future Forum might, in future, help the NHS with any decisions that need to be made?

Mr Lansley: Yes. First, we found it an extremely valuable means by which we could engage with people to try and understand the nature of specific concerns, but also to help with the design of responses to issues. From that point of view, it can be a continuing feature of how we do our business. As for specifics, we have already made it clear in discussion with the Future Forum that we would welcome it if they were able to take forward the work on education and training, which they have already begun, and develop those issues further.

Secondly, we are keen-and I think they may well be willing-to work on the NHS contribution to public health so we are very clear about how the two structures of a public health service and local clinical commissioning groups work together on the public health side. Thirdly, in the course of their listening exercise, the Future Forum derived a great deal of positive engagement on patient and public involvement. There is a further area of work that we want to develop, which is about how patients can access higher-quality information and use it to help them to participate more in their own care and to make decisions about their care. We may well find that is an area they are able to help us with because it was very much about creating that broader engagement to make that happen.

Chair: Thank you very much. We have more or less protected our lunches. Thank you for your evidence. We will see you again in the autumn.

Prepared 8th July 2011