Draft National Health Service (Approval of Licensing Criteria) Order 2013
The Committee consisted of the following Members:
† Baldwin, Harriett (West Worcestershire) (Con)
† Berger, Luciana (Liverpool, Wavertree) (Lab/Co-op)
† Binley, Mr Brian (Northampton South) (Con)
† Burstow, Paul (Sutton and Cheam) (LD)
† Ellison, Jane (Parliamentary Under-Secretary of State for Health)
Farrelly, Paul (Newcastle-under-Lyme) (Lab)
† Jones, Andrew (Harrogate and Knaresborough) (Con)
Lammy, Mr David (Tottenham) (Lab)
† Lazarowicz, Mark (Edinburgh North and Leith) (Lab/Co-op)
† Malhotra, Seema (Feltham and Heston) (Lab/Co-op)
† McDonnell, John (Hayes and Harlington) (Lab)
† O'Brien, Mr Stephen (Eddisbury) (Con)
† Penrose, John (Weston-super-Mare) (Con)
Redwood, Mr John (Wokingham) (Con)
Shannon, Jim (Strangford) (DUP)
† Skidmore, Chris (Kingswood) (Con)
Smith, Mr Andrew (Oxford East) (Lab)
Anna Dickson, Committee Clerk
† attended the Committee
Third Delegated Legislation Committee
Tuesday 19 November 2013
[Mr Jim Hood in the Chair]
Draft National Health Service (Approval of Licensing Criteria) Order 2013
2.30 pm
The Parliamentary Under-Secretary of State for Health (Jane Ellison): I beg to move,
That the Committee has considered the draft National Health Service (Approval of Licensing Criteria) Order 2013.
It is a pleasure to serve under your chairmanship, Mr Hood. The Health and Social Care Act 2012 requires that all providers of NHS health care services that are not exempt must hold a licence from Monitor. This is in addition to the existing requirement to register with the Care Quality Commission under the Health and Social Care Act 2008. Existing foundation trusts were licensed on 1 April 2013, and NHS trusts acquiring foundation trust status will be granted a licence on acquiring that status. Independent sector providers will be licensed from 1 April 2014, subject to the agreement of Parliament to this draft order.
The 2012 Act also establishes Monitor as the sector regulator of providers of NHS-funded health care services. In this role, Monitor will grant licences and regulate providers under the conditions of the licence, building on its previous role as the regulator of foundation trusts. The provider licence is a key tool that Monitor will use in carrying out its function of regulating providers to protect patients’ interests. As is right in establishing a new regulatory framework, the Act requires the approval of the Secretary of State for Health to some key aspects of the new licensing regime, in order to provide a check on their appropriateness. Monitor sets the criteria that providers who are not exempt must meet in order to be granted a licence by it. Monitor’s power to set those criteria is however subject to the approval of the Secretary of State. In the case of the first set of criteria, it is also subject to the affirmative parliamentary procedure, hence the draft order which is the subject of today’s debate.
The criteria proposed by Monitor, which have been agreed by the Secretary of State, are set out in the schedule to the draft order. Monitor has already set the licence conditions: a set of ongoing obligations with which providers must comply once licensed. Monitor published its first set of standard licence conditions in February of this year, after approval by the Secretary of State, as required by the Act.
As the Committee might remember, not all providers of NHS services are required to hold a licence. The Secretary of State has set the exemptions from this requirement, which were considered by the House on 14 October. This order is concerned with the licensing criteria, which set the requirements that providers of NHS health care services must meet to be granted a licence. The licensing process is the entry point into the regulatory regime and provides Monitor with the tool
to regulate providers. The licence conditions, the exemptions and the licensing criteria will give Monitor the tools to operate a regulatory framework on a large but defined pool of providers. It will enable Monitor to fulfil its main duty to protect and promote the interests of people who use health care services by promoting health care provision which is economic, efficient and effective and maintains or improves the quality of services.In this context, Monitor has taken a proportionate and balanced approach to proposing the licence criteria and setting the licence conditions. It undertook extensive engagement and consultation on its approach in order to arrive at a framework that protects patients’ interests by ensuring that providers are subject to proportionate regulation.
Monitor has proposed two criteria, which correspond broadly to two of the ongoing standard licence conditions. The first criterion requires providers to be registered with the Care Quality Commission, if required by law, in order to provide NHS services, and it acts as an objective measure to assess compliance with standards of quality and safety. In order to meet this criterion, applicants for a licence must be registered with the CQC, if required by law to do so, at the time the licence is granted.
The second criterion focuses on providers’ fitness, and its purpose is to ensure that people involved in overseeing the organisation and influencing the provision of health care services meet certain fitness requirements. In particular, no person who is a director or governor of a provider, or is performing an equivalent or similar function, may fall within the specified description of “an unfit person”. The description of an unfit person is designed to ensure that individuals performing these functions comply with statutory fitness requirements equivalent to those set out for directors and governors of NHS foundation trusts, and certain requirements on directors of companies. Examples of these requirements are that an individual must not be an un-discharged bankrupt, have un-discharged arrangements with creditors, be subject to a moratorium period under a debt relief order, have received a prison sentence of three months or longer during the previous five years, or be subject to a disqualification order or undertaking. The criterion also requires that any corporate body which holds the position of director or governor of a provider must not be subject to the insolvency proceedings or arrangements listed in the order. Such proceedings might indicate that the company is not effective in governing the applicant and managing their financial affairs.
Providers must be able to meet these criteria in order to be granted a licence, but they must also continue to meet them in order to keep their licence, along with other licence conditions designed by Monitor to protect and promote patients’ interests.
The Department agrees that these are robust, appropriate criteria for Monitor to assess providers against, and I therefore commend the order to the Committee.
2.36 pm
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): As ever, it is a pleasure to serve under your chairmanship, Mr Hood. I thank the Minister for setting out the details of the order. As she has outlined, it sets two of the criteria that providers will have to meet in order to
be granted a licence by Monitor. All providers must be registered with the Care Quality Commission, and all their governors and directors should qualify as fit and proper persons. These are both reasonable steps, and we all agree about the importance of proper regulation and oversight for all NHS providers. With that in mind, I do not intend to detain the Committee for too long, but I would like to press the Minister on some of the details of the order.These details take on added importance in the context of the Government’s response to the public inquiry led by Robert Francis QC, which has been laid before Parliament today. Indeed, many members of the Committee were in the Chamber just half an hour ago to hear the Secretary of State’s statement. Although I heard him say that he accepted the recommendations of that report in principle, it is clear that the Government are not taking the opportunity to implement them in full, as the Opposition have urged them to do. That is exemplified in the details of the order before us. I listened closely to what the Minister said about “fit and proper” persons, and I remind the Committee of Robert Francis’ view on this matter. In his recommendation 79, he states:
“Directors should be liable to disqualification from the role unless they are fit and proper persons for it. The test of fitness should include a requirement to comply with a prescribed code of conduct.”
He could not have been clearer, yet the criteria before us today differ from what Francis recommended in two significant ways. First, and most obviously, there is no code of conduct included alongside the fit and proper persons test. Monitor did consider requiring governors and directors to comply with additional standards such as those proposed by the Council for Healthcare Regulatory Excellence for members of NHS boards. There was also positive feedback for these proposals during the statutory consultation carried out last year, particularly from representative bodies. I would be grateful if the Minister therefore explained why the Government have chosen to reject Francis’ advice and not include a code of conduct. It is true that a number of different standards already exist, but Francis clearly felt another was needed in this case.
Secondly, the order would allow a licence to be issued to a provider, even if a fit and proper persons test finds that they are not fit and proper at all. I understand that that is designed to allow flexibility for a small number of people who may have a valuable contribution to make, but who do not pass that test. However, very mixed views were expressed about this in the consultation responses, and Francis categorically recommended that directors should be deemed unfit if they do not meet that basic test. I therefore hope the Minister can explain the rationale for the decision to introduce this exemption.
The impact assessment published by Monitor in September 2012 says that this power would be used only in “very exceptional circumstances” and “at their discretion”. Will the Minister please provide us with a clearer idea of what might constitute those exceptional circumstances? How would that discretion be exercised, and who would take this decision?
Monitor has also said that it will
“provide further details of this aspect of license issue and continuance when the licence framework is introduced.”
Can the Minister tell us what those further details might be, and when and how they will be issued?
Let me conclude with five final questions for the Minister. First, bearing it in mind that providers with fewer than 50 employees or turnovers of less than £10 million are exempt, how many providers do the Government estimate will be impacted by this licensing change? Secondly, on the fit and proper persons proposals, Monitor has said:
“The key uncertainty…is the number of directors or governors who may become an unfit person as a result of this condition.”
Do the Government have a latest estimate on how many that might be?
Thirdly, both the fit and proper person and the CQC registration licence conditions are designed to be enforced not only on application, but on a rolling basis. Will the Minister share with the Committee how the conditions will be effectively enforced on an ongoing basis? Fourthly, Monitor considered expanding the definition of “unfit” beyond directors and governors to include other forces
“with a material influence over providers”.
That was made very clear in its impact assessment. However, no further detail has been provided, and the proposal was not consulted on. Does the Minister have any further details to hand on that point? Opposition Members would be very interested to hear what assessment, if any, was made of that.
Fifthly, I noted in the response to Robert Francis’ recommendations, published today, that the Government will set out further details on corporate accountability. Can the Minister tell us when that will happen, and will she provide us this afternoon with any further details that she can? I look forward to her reply, and I hope that her response to my points will allow us not to oppose the order.
2.42 pm
John McDonnell (Hayes and Harlington) (Lab): I do not want to delay the Committee, but I want to put on record a couple of anxieties. I refer Members to paragraph 8.4 in the explanatory notes. I am somewhat confused about exactly where we have got to with fitness tests. The paragraph says that there was consultation on whether
“Monitor should include a requirement to adhere to relevant standards of personal behaviour, technical competence and business practices within the fit and proper persons requirements.”
It goes on to say that this will be wrapped up in the full Government response to the Francis inquiry, so that element is not in the order. May I express my concern about that? Those requirements set a minimum base, so I would not want to see further delay. I echo the request made by my hon. Friend the Member for Liverpool, Wavertree: what is the timetable to which this will be considered, in the context of the Government’s overall response to Francis?
I hope I have got this right: I think that what the Minister and the explanatory notes are saying is that, at this stage, we are not going so far as to require the standards of personal behaviour, technical competence and business practices that are in the definition; we are awaiting the overall response. I do not think that we should. We need to build those into the requirements now; we put the service at continued risk if we do not. I would welcome a timetable for all that.
I apologise for this, but I was a bit confused: paragraph 8.3 of the explanatory notes explains that consultation was undertaken on whether Monitor would continue with its waiver, and that
“As a consequence, this waiver is not included in the intended criteria to be published.”
That flexibility has therefore gone; I want to get that on the record, because I support removal of the waiver wholeheartedly.
2.44 pm
Jane Ellison: I will attempt to respond to some of those issues, but I make the general point that the shadow Minister made: the criteria are interacting with other licensing and regulatory regimes, and are not stand-alone. In their response, the Government are trying to make sure that they are proportionate, given the other regulatory regimes that are in place.
Monitor has considered the proposal and the implications of granting a licence to directors who fail to meet the fitness requirement—Opposition Members had queries about that—but decided not to pursue that course. The proposed licence criteria are consistent with the requirements for directors and governors of NHS foundation trust hospitals, which are set out in the National Health Service Act 2006. There are very limited examples of circumstances in which the discretion to waive the fitness requirements might be used. Monitor wishes to maintain a standard test for all providers, rather than introducing an element of inconsistency. It will keep that decision under review—we have heard the points made today—and will reconsider it in the light of further evidence. It would seek approval from the Secretary of State and Parliament for any changes.
Luciana Berger: Just for clarification, will the Minister confirm that under this secondary legislation, there is still opportunity for discretion to be exercised to allow someone who did not pass the fit and proper persons test to remain in place?
Jane Ellison: I can confirm that the answer is no; there is not.
The licence document says that the position on fit and proper persons is under review. Monitor and the CQC continue to look very closely at all the licence conditions. Monitor has committed to reviewing the licence within a year of its operation, and obviously that will be informed by our ongoing response to the Francis report. The statement that we heard today throws up a number of points. I thought it was perhaps a little bit harsh of the hon. Lady to imply that there was a bit of foot-dragging in the response to Francis. We continue to keep that under review, in the light of the fact that there has been, as the Secretary of State said, an acceptance in full of the spirit of the Francis recommendations, and of the detail of the vast majority of those recommendations.
On the question about the criteria and conditions mirroring each other, the aim, as set out in the order, is that health care providers must meet the requirements in order to be granted a licence and enter the regulatory regime. The requirements are broadly drawn, but we believe that they are proportionate; we are keen to limit the regulatory burden on providers, in line with assurances given to Parliament on that issue.
There was a question about why providers can get a licence if they are not fit. Again, that is because of the interaction between the two regulatory regimes. I will
write to the hon. Lady on the detail of the fitness test, if that is acceptable. She asked how many providers we estimate will be affected by the licence exemption. The Department has already set out the number of providers that we expect to be affected, in part, in the assessment on the National Health Service (Licence Exemptions, etc.) Regulations 2013.The hon. Lady asked how many directors would fail the fitness test. All foundation trust directors and governors must meet a fitness test already. Again, that goes back to my point about there being an existing regulatory regime in place. Some of the fitness requirements already apply to companies. All the fitness requirements are reasonable and are needed if we are to be confident that a provider will be well run, but we think that what is being proposed is proportionate. However, we note any concerns and points made, and I undertake to respond to anything that I have not yet responded to specifically. Of course, as I made clear, Monitor intends to look at this issue very carefully, and to keep under continual review the licensing arrangements, particularly as they interact with CQC and other arrangements, and with our ongoing response to Francis.
Mr Brian Binley (Northampton South) (Con): May I say what a pleasure it is to work under your direction, Mr Hood? I am most grateful for being called to speak. I came to this meeting to do what most people on Committees of this kind do: sit very quietly and behave myself. However, I have been a little disturbed because of my age, which suggests that I am in greater need of medical care than when I was younger, so I want to be absolutely sure that I understand the definition of a fit and proper person. I would like to know in what situation the waiver could apply.
Jane Ellison: The point that I was trying to explain earlier is that people already pass tests set out in the CQC guidelines, which are broader. What we are trying to do is interact with those tests.
Mr Binley: I speak as a Member of Parliament who had the sad experience of five people dying in one of the care homes under the jurisdiction of the Care Quality Commission. One assumes that “fit and proper” people were in charge of that. To make them not fit and proper people, and yet still allow them to operate, seems nonsense. I need to be reassured.
Jane Ellison: I hope that I can give my hon. Friend assurance on the fitness requirements for individuals. They must not be an un-discharged bankrupt; must not have un-discharged arrangements with creditors; must not be subject to a moratorium period under a debt relief order; must not have received a prison sentence of three months or longer in the previous five years; and must not be subject to a disqualification order or undertaking. The waiver has been removed from Monitor criteria, as it is not appropriate.
With those assurances, I hope the Committee will accept the order.