The Government’s White Paper proposals for the reform of Health and Social Care Contents

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8Reducing bureaucracy

The Government’s proposals

131.The Executive Summary of the White Paper set out the Department’s proposals to amend the Health and Social Care Act 2012 in relation to procurement and the delivery of healthcare services to better reflect the needs of individual ICSs.198 The ambition is to legislate to reduce the bureaucracy that inhibits flexibility and integration and to streamline accountability.199 The proposals include:

• Enabling the NHS to make decisions on how it organises itself without the involvement of the Competition and Markets Authority (CMA).
• The creation of a bespoke health services provider selection regime.
• Changes to the NHS tariff to enable it to work more flexibly.200

132.The Proposals would also:

• Replace the Competition and Markets Authority with NHS England as the reviewing body of mergers involving foundation Trusts.
• Remove NHS Improvement’s specific competition functions and its general duty to prevent anti-competitive behaviour.
• Remove the requirement for NHS England to refer contested licence conditions or National Tariff provisions to the CMA.201

Changes to procurement and commissioning

133.Commissioners will be given more discretion over when to use procurement process to arrange services, with proportionate checks and balances;202 the commissioning of healthcare services will be removed from the scope of the Public Contracts Regulations 2015 and Section 75 of the Health and Social Care Act 2012; and the Procurement, Patient Choice and Competition Regulations 2013 will be repealed.203

134.The Academy of Medical Royal Colleges supported removing the jurisdiction of the Competition and Markets Authority and the decision to repeal Section 75 of the Health and Social Care Act 2012.204 The BMA were of a similar view. It stated that that Section 75 regime had resulted in costly procurement processes, increased fragmentation of care and has destabilised NHS services.205 It also stated that the provisions of Section 75 had resulted in:

Private sector companies cherry picking some of the NHS’s most profitable contracts, as well as successfully “suing” the NHS for anti-competitive awarding of contracts or behaviour at a significant cost to the NHS.206

135.UNISON also welcomed the proposal. It believed that this would result in commissioners no longer operating under a “default assumption of using competition to arrange services” and therefore would have a greater level of discretion in commissioning.207 In addition, the Royal College of General Practitioners stated that the Section 75 powers had “acted as a significant barrier to the development of new care models and collaboration between NHS providers over the last decade”.208

136.The Academy of Medical Royal Colleges also supported the proposal to remove the jurisdiction of the Competition and Markets Authority,209 as did Unison who described this as a “move away from the current adversarial system”.210 The Royal College of Physicians also welcomed the proposal to repeal the competition role of the Competition and Markets Authority.211

137.However, the BMA argued that the Bill should include provisions to establish the NHS as the preferred provider of services to protect the NHS from instability and prevent further privatisation. The BMA also highlighted the importance of adequate provisions in the Bill to facilitate sufficient scrutiny and transparency over the tendering and awarding of contracts.212 However, it cautioned that any new financial arrangements must work to enable and support collaboration and integration and do not act as a barrier.213

138.The Nuffield Trust broadly welcomed the proposed reforms to procurement, as did NHS Providers, who believed that the proposals to move away from “competitive retendering and burdensome procurement processes” was a positive step.214 However, the Nuffield Trust highlighted the risk of the proposals establishing “an overly cosy approach that favours incumbents and excludes innovators”.215 Therefore, it stated that clear and transparent criteria were required for commissioners to test whether an existing provider was doing a “sufficiently good job.” In a similar vein, the Nuffield Trust noted that “elective services which rely on cross-specialty working” that meet the threshold for renewal: could cover “a very broad range of services”.216 To counter this, the Nuffield Trust suggested the introduction of “formal and particular monitoring of the proportion of contracts which change from year to year”.217

139.The King’s Fund noted that healthcare in England “has never been a truly competitive market” and that the evidence for the benefits of competition was at best “equivocal”.218 However, it saw a need to include in the Bill, provisions to mitigate the risk that new contracts were “automatically handed out to incumbent providers”, and to facilitate “a diversity of provision from voluntary sector, social enterprise, and NHS organisations”.219

140.When he gave evidence to us, Sir Simon Stevens said that the changes to the procurement regime “would free up a lot of time and wasted effort from some of the transactional purchasing arrangements, which tend to reinforce the fragmentation of care that we have otherwise seen”. He believed that formalising those changes would ensure that they were both transparent and accountable.220

141.Sir Simon Stevens further told us that the combined effect of the Section 75 regime and public contract regulations 2015 had resulted in the need to run competitive tendering processes that led to “some pretty spurious processes”. As examples, he cited competition requirements for specialist cancer services and cardiovascular tertiary services when the reality was that there were no competitors that could replace the Royal Marsden or Guy’s and St Thomas’ or Central Manchester foundation trust. In his opinion, that aspect of procurement was little more than “spurious activity”.221

142.Amanda Pritchard also told us that the proposed legislation would make it “easier to avoid having to go through multiple competitive tenders” where “people have gone for very short term, very inflexible contracts that have had to be relet almost year on year”. She described the benefits of the proposals as the ability to “allow a different process that does not require the same sort of formalised procurement arrangement”. However, she stressed that there would be “a proper framework in place, not just to roll things over without due process around looking at value for money, quality and patient feedback and, clearly, an expectation of continuous improvement”.222

143.Amanda Pritchard also told us that a key role for ICSs in this would be to share “good practice and innovation”. She added that while this hadn’t been discussed in relation to legislation, it was something that NHS England was considering issuing guidance on in relation to “the role of ICSs, the role of regions more generally, and our whole approach as we think about planning guidance for the next year”.223

144.We welcome the proposals to reduce bureaucracy in NHS procurement, which have been broadly well received by stakeholders. If they are implemented in a clear and transparent way, they have the potential to both streamline Trusts’ procurement practices and reduce their financial and administrative burdens. That said, a framework of clear guidance and monitoring will need to be put in place to ensure that a lighter touch regime does not inadvertently establish practices that favour incumbents and excludes innovators. We note that implementation of the Health and Social Care Act 2012 led to unintended consequences in terms of bureaucracy and procurement and therefore for this set of changes it is extremely important to make sure implementation is well executed.

145.We recommend that alongside the proposals to remove competition regulation, the Department establishes a framework that formally monitors and makes public annually:

a)the proportion of contracts which change from year to year and the companies that were awarded contracts or had contracts renewed in each year ;

b)the proportion of contracts awarded to small and medium-sized enterprises;

c)value for money of those contracts; and

d)the patient experience.

That framework should also ensure that innovation and diversity of provision from voluntary sector, social enterprise, and NHS organisations is encouraged and supported

146.Because of the importance of implementation, the Committee puts the Government on notice that we will return to these issues before the end of the Parliament in time to assess how effectively the plans have been put in place. We will also ask the Secretary of State, NHS representatives and patient groups to return to the Committee on a regular basis to brief us on progress in implementation.