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Earl Howe: My Lords, I too remain uneasy after our debate on this subject in Committee. We are back to the territory of a previous amendment which focused on resources to implement the quality agenda, and this is yet another example.

I do not know what the annual operating budget of the Commission will be in future years, but it would be interesting if the Minister could give us an approximation. If in a few years' time that budget is charged out to trusts and health authorities, I cannot see how this could fail but to have an impact on the funds available for other areas of patient care. In many instances it would be an unbudgeted outlay. One can easily imagine cases where the commission is sent in to investigate a hospital on a false alarm, does a great deal of work and ends up by giving the hospital a clean bill of health. A fat bill at the end of that would be particularly galling to the hospital management.

I sense that there is a balance to be struck on this question, setting aside for a moment extreme examples like the one I have just given. There has to be a sense of ownership by a trust of whatever the commission recommends, and that is a point which the noble

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Baroness made in Committee. The bill for achieving it, however, should not be so great as to place the hospital in graver difficulties than it was before. It means that the monitoring and policing of the quality agenda should, in large measure but perhaps not completely, be funded centrally.

Baroness Hayman: My Lords, like the noble Lords who have spoken, I too have been reflecting on the debate we had at Committee stage. I drew attention then, and do so now, to the fact that charging is in itself not an unusual arrangement in the NHS. In this way, for example, the Audit Commission supports its statutory duties with regard to financial audit and its value for money studies. Audited bodies fund this work through fees paid to local auditors appointed by the Audit Commission. So NHS bodies are perfectly familiar with this approach and accustomed to the need to budget for this kind of activity. This approach to charging encourages greater local involvement and ownership and provides a greater incentive to ensure that prompt action is taken in following up advice and recommendations.

We have every reason to expect that the NHS locally will value the commission's input. The commission will have a clear role in providing advice and independent expertise. In its local reviews it will identify good practice and areas for improvement. Similarly, where the commission investigates local clinical problems, it will provide external advice and support to identify and address the root causes. In this way, the commission will help strengthen an organisation's capacity to assure and improve the quality of services it provides.

I made clear in Committee that, in the first instance, we intend to finance the commission centrally. But it remains the Government's view that, once the commission has demonstrated its effectiveness in helping the NHS improve quality and tackle service problems, there is merit in moving towards a system where more of its work is directly funded locally. However, I accept the noble Earl's argument that it is perhaps a matter of balance.

It may help if I address some of the concerns that have been raised about how future arrangements may work. The starting point is that arrangements for the recovery of costs must be fair, flexible and reasonable. The commission will recover expenditure only where it has properly incurred costs in carrying out its own functions. And it will be held properly to account for undertaking these effectively, efficiently and economically.

In that respect, I differ from the noble Baroness, Lady Sharp. I see no reason why in the commission's rolling programme of reviews, given reasonable notice, we should not expect local NHS bodies to plan and budget for this activity in the same way as they do now for Audit Commission activity. However, I accept that we need to think carefully about the rather different circumstances where a local NHS organisation decides it needs to call in the commission "off-cycle", as it were, to help investigate or pre-empt a potential problem; or where, exceptionally, the Secretary of State decides to send in the commission to investigate a serious problem.

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I recognise and understand the concern over the possibility of perhaps heavy extra costs falling on an organisation already in some difficulty, and I would certainly want to avoid deterrents to a body inviting early help rather than allowing a potential problem to fester.

I suggest that now is not the time to determine the detailed charging policy for the future, but I hope it will be helpful if I say that these are the kind of considerations we should weigh carefully when we come to do so. We need arrangements to ensure that the commission's role is valued and that its help is brought to bear promptly where it is needed, and this will inform any future plans in this respect.

In summary, our aim will be to ensure flexibility and fairness in charges made by the commission. There will be additional safeguards in that the Bill provides for the Secretary of State to determine the charges that may be made by the commission.

Important issues have been raised and what has been said today is valuable. We can take it into account in due course in developing our thinking on how charging arrangements will operate. I hope that in the light of the undertaking to take those considerations into account and the reassurances I have given, the noble Baroness will feel able to withdraw the amendment.

11.15 p.m.

Baroness Sharp of Guildford: My Lords, I thank the Minister for her reply, although we are not totally satisfied with it. The words "fair", "flexible" and "reasonable" are easily said. It is also fair to say that it is reasonable for the trusts to plan and budget for those costs. But they are real costs and all local health authorities are under very tight budget constraints. However, I shall study the Minister's answer and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hayman moved Amendment No. 33:

Page 12, line 16, leave out subsection (3).

The noble Baroness said: My Lords, I hope that I can be both brief and satisfy the concerns of the House on this issue. In Committee it was suggested that qualified privilege would be more appropriate than the absolute privilege which was written into the Bill for the purpose of the commission for health improvement reports. Considerable concerns were raised and I agreed to take them away for further consideration. This amendment is the result of that consideration. We believe that it is important that the commission is able to be frank and open in identifying areas for improvement, and we will wish the commission to be able to make clear where NHS organisations are falling below the expected standards.

In doing so, however, we should not wish the commission to become involved in unnecessary litigation which could delay the publication of reports and otherwise disrupt its important work. Nevertheless, I recognise the concerns which were expressed in Committee about conferring absolute privilege on the commission. That may well be an excessive provision.

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In the light of those concerns, we have reconsidered the position and have brought forward this amendment. Instead of absolute privilege, qualified privilege will protect the commission's reports against defamation unless it could be proved that the comments had been made with malice.

It is worth stating that we expect the commission to act fairly in producing its reports. It will need to do so if it is to be successful in winning the trust and respect of NHS patients and the healthcare professions. After the comments which were made in Committee and further reflection, we now believe that giving the commission qualified privilege is appropriate. It is not necessary to have explicit provision on the face of the Bill because under common law the commission's reports will be subject to that qualified privilege. Therefore, I hope that this amendment will address the concerns which have been expressed. I beg to move.

Earl Howe: My Lords, perhaps I may say how immensely grateful I am to the Minister for bringing forward this amendment and for taking on board so carefully the points raised in Committee from all sides of the Chamber.

I am convinced that this is the right way forward, not only as a means of leaving open the possibility of legal redress in very isolated cases but, much more important, as a means of ensuring that the culture of the commission will foster co-operation and trust. Removing the right of absolute privilege will go a long way towards doing that. I do not believe that there is any need to fear that without such a right the work of the commission will be in any way frustrated.

It is a highly satisfactory outcome for all concerned. I thank the Minister warmly for the trouble she has taken to bring it about.

Lord Clement-Jones: My Lords, I too thank the Minister. This is a very elegant solution. It is so nice to see the complete deletion of a subsection from the Bill, even at this time of night.

On Question, amendment agreed to.

Baroness Hayman moved Amendment No. 34:

Page 12, line 34, leave out ("13") and insert ("13(4)").

On Question, amendment agreed to.

Clause 16 [Obtaining information etc.]:

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