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Schedule 157. Paragraph 1 provides for the matters which must be specified in the order, and should be read with the new section 16A.
58. Paragraph 2 allows for a preparatory period between the date of establishment of a Primary Care Trust and its operational date. During this period the Primary Care Trust will have limited powers to carry out activities in preparation for becoming fully operational. It is envisaged that the preparatory activities will include:
Health Authorities will be able to provide funding for Primary Care Trusts for such purposes, or settle bills incurred by them.
59. Paragraphs 4 to 7 provide for the membership of a Primary Care Trust. Each Primary Care Trust will have a chairman appointed by the Secretary of State and a number of members. Some of those members will be employees of the Trust, for example the Chief Executive. The members of the Primary Care Trust will be responsible for running the Trust and, in effect, will constitute its governing board. The detailed provisions for the membership and procedure of Primary Care Trusts will be set out in regulations made under the provisions in these paragraphs.
60. Paragraph 9 confers a power of direction on the Secretary of State which enables him to require Primary Care Trusts to loan their staff to other Primary Care Trusts, or to employ former employees of other Primary Care Trusts. It mirrors the provision for Health Authority staff under paragraph 10(3) of Schedule 5 to the 1977 NHS Act. The power could be used in the event of a problem in a Primary Care Trust, where there is a short-term need for staff with particular expertise. The exercise of this power is subject to consultation by the Secretary of State with the member of staff involved or his representative body. These provisions will not detract from an employer's duty to consult staff under other mechanisms (e.g. TUPE Regulations or General Whitley Council Regulations).
61. In particular circumstances, such as in cases of temporary emergency or where consultation has previously been fully carried out with the individual concerned, the Secretary of State may require a Primary Care Trust to make the services of its staff available to another Primary Care Trust without consulting with the member of staff concerned or his representative. Again this mirrors the provisions for Health Authorities in paragraph 11 of Schedule 5 to the 1977 Act. One example where it might be used would be if a Primary Care Trust employed an individual with specialist skills (e.g. public health skills in the case of an epidemic) which were needed in an emergency by a Primary Care Trust elsewhere in the country.
62. Paragraph 10 brings the staff of Primary Care Trusts within the scope of current powers in paragraph 10(2) of Schedule 5 to the 1977 Act. Under paragraph 10(2) the Secretary of State may make regulations in respect of the transfer of staff from one Health Authority to another and the arrangements under which Health Authority staff are made available to other Health Authorities or local authorities. Paragraph 10 of Schedule 5A therefore enables regulations to be made which provide for permanent staff transfers between Primary Care Trusts, for example where functions transfer from one Primary Care Trust to another. This paragraph also enables the Secretary of State to regulate any temporary arrangements under which Primary Care Trust staff are put at the disposal of other Primary Care Trusts (by direction under paragraph 9 of the Schedule) or local authorities. Primary Care Trusts would make their staff available to local authorities under the provisions of section 26(1)(b) and (3)(b) and (c) of the 1977 Act. Paragraph 6 of Schedule 4 to the Bill extends these provisions so as to cover PCT staff. The intention is to have as much freedom for movement of Primary Care Trust staff as is currently available for Health Authority staff and to facilitate partnership arrangements made under clause 24 between Primary Care Trusts and local authorities. Before making regulations under paragraph 10(2), the Secretary of State has a duty to consult any individuals or their representative bodies who are, in his opinion, likely to be affected.
63. Paragraph 12 confers a general power on Primary Care Trusts to do things ancillary to their main functions. This includes a power to acquire land (which will enable them to obtain their own premises), to enter into contracts, and to accept gifts of money, land and other property. The latter power enables the Primary Care Trust to accept and administer charitable property, e.g. gifts of medical equipment donated by voluntary and charitable organisations, bequests of shares or gifts of vehicles.
64. Paragraph 13 concerns legal proceedings and the enforcement of rights and liabilities. It provides that a Primary Care Trust will take legal proceedings in its own name, and will be sued in its own name, even though it is exercising functions delegated to it by a Health Authority. For example if a Primary Care Trust is providing services in the exercise of a function delegated to it by a Health Authority, a patient who is injured while receiving those services will bring legal proceedings against the Primary Care Trust rather than the Health Authority.
65. Paragraph 14 enables Primary Care Trusts to carry out and fund research activity, and make their staff and facilities available for that purpose. Funded from the NHS research and development budget (raised by levy on Health Authorities), the Primary Care Trust will be able to host clinical trials of a new drug or the evaluation of different treatments for e.g. chronic back conditions. NHS trusts have similar powers under paragraph 11 of Schedule 2 to the 1990 Act.
66. Paragraph 15 enables the Primary Care Trust to make staff available to assist the provision of education and training of NHS employees or prospective NHS employees, or persons employed (or to be employed) by local authorities to provide social care (section 63 of the Health Services and Public Health Act 1968 concerns the provision of education and training to such persons). NHS trusts have similar powers under paragraph 12 of Schedule 2 to the 1990 Act.
67. Paragraphs 16 and 17 confer specific reporting duties on Primary Care Trusts. These paragraphs place duties on a Primary Care Trust to prepare and provide reports and information on its activities to the Health Authority to whom it is accountable, and to the Secretary of State. This will enable Health Authorities to monitor the performance of Primary Care Trusts in their area. Paragraph 17 also enables the Secretary of State through regulations to place a duty on any Primary Care Trust to publicise its accounts, annual report, any auditor's report pursuant to section 8 of the Audit Commission Act 1998 and any other documents specified in the regulations. Under this power the Secretary of State will be able to require any Primary Care Trust to hold a public meeting at which such documents shall be presented. Regulations will set out the circumstances in which and the time or times at which such public meetings shall be held. This puts Primary Care Trusts on a similar footing to other NHS bodies.
68. Paragraph 19 provides for the exercise by Primary Care Trusts of powers of compulsory purchase and mirrors the provisions for other NHS bodies (e.g. NHS trusts: paragraph 26 of Schedule 2 to the 1990 Act). The exercise of these powers will be subject to the provisions of the Acquisition of Land Act 1981. The Act makes provision for the procedures which apply to the compulsory purchase of land by Government departments, local authorities and certain other public bodies, for example, requirements for a compulsory purchase order, the publication of notices and the holding of inquiries.
69. Paragraph 20 provides for the transfer of property, rights and liabilities on the dissolution of a Primary Care Trust. Whenever a Primary Care Trust is dissolved, section 1 of the National Health Service (Residual Liabilities) Act 1996 (as amended by paragraph 64 of Schedule 4 to the Bill) will require the Secretary of State to exercise his powers so as to secure that all of the Primary Care Trust's liabilities are dealt with.
70. Paragraphs 21 and 22 make provision for the transfer of property to Primary Care Trusts, similar to that in section 8 of the 1990 Act in respect of NHS trusts. The property which Primary Care Trusts will require in connection with the exercise of their functions will often already be under the ownership or management of the Secretary of State, Health Authorities or NHS trusts. Paragraph 18 gives the Secretary of State the power to make an order to transfer or provide for the transfer of such property, and the attached rights and liabilities, to Primary Care Trusts.
71. Paragraph 21(1)(b) is intended to cater, for example, for circumstances where property transfers from an NHS trust to a Primary Care Trust but the NHS trust wishes to continue using the property for the services it retains. In such a case, the Secretary of State might wish to create a right for the NHS trust to continue using the property transferred to the Primary Care Trust.
72. Property, rights and liabilities may need to be apportioned between the different parties, for example where a Primary Care Trust is to provide services previously provided by an NHS trust at premises held by the trust. Any such apportionment will be provided for in the transfer order. The order might provide, for example, that the Primary Care Trust and the NHS trust divide the rights and liabilities under a lease on premises which they both will use.
73. Where the transfer order provides for the transfer of land or assets held on lease from a third person, the transfer will be binding on that person, even though it would otherwise have required his consent. So if, for example, the property to be transferred to the Primary Care Trust were a health clinic, leased by the NHS trust from a private company, the lease would automatically transfer to the Primary Care Trust without requiring the consent of the private company concerned. However, under such circumstances the Secretary of State must make appropriate provisions to safeguard the interests of third parties, including, where appropriate, the payment of compensation.
74. Paragraphs 23 to 26 provide for the transfer of staff to a Primary Care Trust. This will frequently occur when a Primary Care Trust is established.
75. Paragraph 23 confers on the Secretary of State a power to transfer by order staff from a Health Authority, NHS trust or another Primary Care Trust. The exercise of this power is subject to consultation by the Secretary of State with the staff involved.
76. Paragraph 24 provides for safeguarding the terms and conditions of service of staff transferring by order to a Primary Care Trust. This will ensure that such a member of staff retains his existing terms and conditions of employment, that the contract of employment with the Primary Care Trust is regarded as a continuation of the employee's original contract and that he maintains any rights, powers, duties and liabilities he has under that original contract. Where a member of staff declines to transfer to the Primary Care Trust he will not be treated as having been dismissed. Where there is a change in his terms or conditions of employment that is both significant and to his disadvantage, nothing in these provisions will remove any right he has to terminate his contract.
77. Where staff who are to be transferred are to remain working for part of their time at the original Health Authority, NHS trust or original Primary Care Trust, in addition to working at the Primary Care Trust to which they are to be transferred, paragraph 25 enables an order under paragraph 23 to provide that the person's contract is be divided into two separate contracts (one with the original employee, the second with the new Primary Care Trust). This will safeguard the employee's terms and conditions of service.
78. Paragraph 26 gives the Secretary of State the power to transfer staff from a dissolved Primary Care Trust, but only after consulting the staff involved or their representatives. These consultation requirements will be set out in regulations under paragraph 20(2). In these circumstances the terms and conditions of employment will be similarly protected.
Clause 3: Primary Care Trusts: finance79. Clause 3 inserts two new sections into the 1977 Act (sections 97C and 97D) which provide for the funding and financial duties of Primary Care Trusts. The sections are similar to sections 97 and 97A of the 1977 Act which provide for the funding and financial duties of Health Authorities.
80. Health Authorities receive both cash-limited funding (under section 97(3)) and non-cash-limited funding (under section 97(1)) as follows:
81. The allotted sum covers the provision of hospital and community health services, the payment of certain expenses incurred by Part II practitioners (in particular the costs of GP practice staff, premises improvements and information technology), and, from April 1999, the costs of the drugs and appliances prescribed by GPs (and by some community nurses). In the absence of directions under section 97(6)(a) (see below), the various elements of the allotted sum are not ring-fenced.
82. Section 97C provides for the funding of Primary Care Trusts by Health Authorities to mirror as closely as possible the provisions for funding Health Authorities. It provides for the funding of a Primary Care Trust's main (i.e. cash-limited) expenditure and of any non cash-limited general Part II expenditure it incurs. The Health Authority will pay sums to Primary Care Trusts in their area up to a limit set by the Health Authority for the financial year (the "allotted sum"). This limit can however be altered during the year (subsection (4)).
83. The Secretary of State sometimes gives Health Authorities allocations earmarked for particular purposes, under section 97(6)(a) of the 1977 Act. In future these sums will often be passed to Primary Care Trusts. The new section 97C(6) obliges the Health Authority to earmark such sums in the same way, when allocating them to Primary Care Trusts. This will enable the Secretary of State to direct Primary Care Trusts to apply some of their allocation for a particular purpose. The power may be applied to all Health Authorities and Primary Care Trusts or to individual bodies.
84. In the past this power has been used to protect, for example, funding for HIV and AIDS treatment and care. The current power of direction is used only sparingly and exceptionally (for example, to ring-fence the Out of Hours Development Fund for GPs) and when extended to Primary Care Trusts the Government intends to continue to use it in such a way.
85. Subsection (5) of section 97C regulates the payment of capital charges on Primary Care Trust assets. It is modelled on the existing provision for Health Authorities (section 97(6)(b) of the 1977 Act) and enables Primary Care Trusts to be brought within the capital charging system, placing them in the same position as other NHS bodies. The system ensures that capital costs are included as an overhead when a Primary Care Trust is calculating the cost of any services it provides.
86. Section 97D places a financial duty on Primary Care Trusts not to spend more than the sum of the amount allotted to them by their Health Authority (the cash limit) and any other receipts. It also enables the Secretary of State to give directions to Primary Care Trusts to ensure they comply with their financial duty. These provisions mirror those in respect of Health Authorities in section 97A.
87. The rest of the new section 97D is concerned with what is or is not to be covered by the provisions of this section, and with defining expenditure or receipts (mirroring the provisions in section 97A(6) to (9)). In particular subsection (4) ensures that funds held by Primary Care Trusts as charitable trustees or obtained by their fund raising activities are outside the scope of the financial duty. Subsections (7) to (8) enable the Secretary of State to give directions defining the categories of expenditure and receipts which are to be counted when considering whether or not a PCT has met its financial duty.
Clause 4: Primary Care Trusts: provision of services etc.88. This inserts a new section 18A into the 1977 Act, which confers various powers on Primary Care Trusts.
89. Primary Care Trusts will be able to enter pilot scheme arrangements to provide personal medical services and personal dental services under the Primary Care Act (see paragraph 65 of Schedule 4 to the Bill). The new section 18A enables a Primary Care Trust also to provide personal medical services and personal dental services under sections 28C and 28D of the 1977 Act (see paragraphs 38 and 39 of the Background section of these notes for a brief explanation of these provisions and the Primary Care Act).
90. Section 18A also provides that a Primary Care Trust may arrange to provide any service, which it is able to provide to its own population, to other patients under an NHS contract (under section 4 of the 1990 Act). For example, if it is able to provide health visiting and district nursing to its population, and has the appropriate facilities and staff, it may provide those services to other patients under an NHS contract with a Health Authority or another Primary Care Trust.
91. Clause 18A(3) provides a power to make premises available for GPs, general dental practitioners, pharmacists and ophthalmists. This power enables Primary Care Trusts to provide for the delivery of all these services from under the same roof.
92. The provisions in subsections (4) to (7) concern powers to recover from private patients the costs of accommodation and services, and to carry out other activities to raise additional income for the health service. The provisions are in line with similar NHS trust powers and are subject to the same restrictions. See the commentary on clause 9 below.
Clause 5: Primary Care Trusts: trust-funds and trustees93. Clause 5 enables the Secretary of State to provide for the appointment of trustees for a Primary Care Trust to manage the trust funds held by the trust. Such trustees have a duty to ensure that the trust funds are used effectively and that the wishes of the benefactor are taken into account. The Bill provides that Primary Care Trusts will be able to hold and manage charitable property and other property held on trust, and to accept gifts of money and land on trust, for the purpose of the health service (see paragraph 12(2)(c) of the new Schedule 5A to the NHS Act 1977 as inserted by Schedule 1).
94. In addition to this clause, paragraphs 15 to 18 and 21(2)(b) of Schedule 4 to the Bill extend to Primary Care Trusts the existing provisions of the 1977 Act relating to private trusts for hospitals, the transfer of trust property, and the accounts of trustees.
95. The Bill provides that Primary Care Trusts are able to receive and administer the charitable donations. It is expected that this will concern mainly those Primary Care Trusts that provide as well as commission services, as these trusts may inherit funds from NHS trusts.
Clause 6: Payments relating to past performance96. The clause inserts three new subsections into section 97 of the NHS Act 1977, which is concerned with the funding of Health Authorities. The insertions enable the Secretary of State to increase the initial allocation he makes to a Health Authority where certain conditions are satisfied. The White Paper The new NHS signalled the intention to reward Health Authorities that perform well with modest extra non-recurrent funding.
97. The intention is to reward Health Authorities who demonstrate most progress in implementing their plan for improving health and health care, the Health Improvement Programme (see clause 21). Health Authority performance will be assessed against the achievement of targets and objectives set out in their Health Improvement Programmes. All Health Authorities - including those making good progress from a low baseline - will be eligible.
98. The new subsection (3D) enables the Secretary of State to attach conditions to the use of the additional funding. The intention is that these funds will be used to accelerate Health Improvement Programmes by bringing forward projects contained in the later years of these Programmes and to meet the targets associated with that action. The new subsection (3E) enables the Secretary of State to recover the additional funding, if a Health Authority does not meet the conditions attached to it.
Clause 7: Directions99. This clause restates the direction-giving powers conferred on the Secretary of State by sections 13 and 17 of the NHS Act 1977, expands section 17 to cover NHS trusts, and provides for a scheme of delegation under which Primary Care Trusts have their functions conferred upon them.
100. The new sections 16C to 17B provide a flexible structure under which the Secretary of State may arrange for the exercise of functions by Health Authorities and Primary Care Trusts and determine the level to which functions are to be devolved while maintaining appropriate control over how those functions are to be exercised.
101. Section 16C restates section 13 of the 1977 Act. It enables the Secretary of State to delegate his functions in relation to the health service to Health Authorities. At present the Secretary of State delegates most of his functions to Health Authorities, and he will continue to do so. Schedule 1 to the National Health Service (Functions of Health Authorities and Administration Arrangements) Regulations 1996 (S.I. 1996/708) lists those functions which the Secretary of State has delegated to Health Authorities. For example, the Secretary of State currently delegates to Health Authorities the responsibility for securing the provision of hospital and community health services in their area (see section 3(1) of the 1977 Act).
102. In a similar way, the new section 17A enables Health Authorities to delegate their functions to Primary Care Trusts, subject to certain exceptions in subsection (3). Primarily, the functions exercised by a Primary Care Trust will consist of the commissioning, and in some cases the provision, of services under Part I of the 1977 Act for their local population. A Health Authority may delegate its Part I functions by directing Primary Care Trusts to exercise those functions. Such directions may encompass both functions delegated by the Secretary of State, and those conferred directly on Health Authorities by statute or by regulations. The Health Authority will be required to issue such directions where directed to do so by the Secretary of State. The Secretary of State will also be able to determine which functions may or may not be delegated to Primary Care Trusts (section 17A(4)), and the extent to which they may be delegated.
103. The practical effect of delegation under these provisions is that the function becomes the function of the Health Authority or Primary Care Trust to which it is delegated. Legal proceedings in relation to the exercise of the function will be brought by, or against, that body, rather than the person or body which made the delegation.
104. The Bill does not specify what services Primary Care Trusts will or will not commission. The intention is that responsibility for commissioning the majority of hospital and community health services will be delegated to Primary Care Trusts (with some exceptions, such as some specialised services, which will continue to be commissioned at or above Health Authority level). With respect to the provision of services, it is envisaged that, initially, Primary Care Trusts will be able to provide and manage only community health services (i.e. those services which the Secretary of State has a duty to provide under sections 3(1)(d) and (e), 5(1) and (1A) and Schedule 1 to the 1977 Act). The Bill does not restrict Primary Care Trusts to the provision of community health services, however. Any restrictions will be set out by the Secretary of State in directions or the order establishing a Primary Care Trust. This will provide the flexibility to change the functions of Primary Care Trusts where necessary.
105. Subsection (3) of the new section 17A prohibits the delegation of functions relating to high security psychiatric services, family health service functions under Part II of the 1977 Act other than general medical services functions and certain other specified functions. A limited range of general medical services functions will be delegated to Primary Care Trusts. The delegation of such functions will be set out in regulations and will not affect GPs' independent status.
106. The Government intends to require Health Authorities to delegate to Primary Care Trusts the function of determining such GP remuneration as is to come from cash-limited funds. It will also consider requiring the delegation of other GMS functions: for example, making arrangements for the temporary provision of services where a GP retires or is suspended.
107. Section 17 extends the current powers of direction under section 17 of the 1977 Act (which currently applies to Health Authorities and Special Health Authorities) to include Primary Care Trusts and NHS trusts. This allows the Secretary of State to give instructions to any of the bodies concerned about how they are to exercise their functions.
108. Section 17B provides that Health Authorities will also be able to direct Primary Care Trusts about the exercise of functions they have delegated to them. Any Secretary of State directions under section 17 will take precedence. It is not intended that Health Authorities should use their powers to seek to control the detailed day-to-day operation of Primary Care Trusts.
109. The current direction-giving powers in respect of NHS trusts are conferred by paragraph 6 of Schedule 2 to the 1990 Act and relate to a limited number of very specific matters. The new section 17 replaces these powers of direction with a general power, in line with that relating to Health Authorities and Primary Care Trusts, which enables directions to be given in relation to the full range of NHS trusts' functions. Particular examples of where the direction-giving power might be used initially include: ensuring that major investment decisions of NHS trusts are consistent with their strategy for improving local health and health care; requiring that laboratories in all NHS trusts report certain test results to strengthen communicable disease control; limiting the borrowing and investments of NHS trusts (see clause 12 and paragraph 58 of Schedule 4).
110. The new sections 18(1) to (1B) specify how directions under the Act are to be given. Any directions given by regulations are subject to parliamentary scrutiny. The existing section 18 provides that regulations must be used to give directions delegating the Secretary of State's functions relating to special hospitals (see clause 34 for a further discussion of special hospitals) and any directions about the Secretary of State's functions regarding the establishment of Community Health Councils (section 20(1) and (2) of the 1977 Act). The new section 18(1A) also includes any directions specifying that Health Authorities may or may not delegate GMS functions to Primary Care Trusts.
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