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Earl Howe: I have a question about fees. How will the funding streams for the social care and the independent healthcare sectors operate? Will money received from each sector be ring-fenced so that there is no cross-subsidy between the social care sector and the independent healthcare sector?

Lord Hunt of Kings Heath: It is a little early for me to be able to answer the noble Earl concerning the financial arrangements when the commission is up and running. As I said, the intention overall is for the commission to be funded through fees from the establishments to be regulated. The fee structures will necessarily have to relate to the costs of the regulation of those establishments, as is the case at the moment. But to talk about ring-fencing may be too rigid an approach to budget setting within the commission, although there will no doubt need to be some consideration of fairness in relation to the resources coming to the commission and the actual service provided.

Lord Jenkin of Roding: I am a little unhappy about this proposal. Many establishments fear that they will be saddled with very considerable costs by way of fees for their own regulation. I have been looking through the Bill and through the Explanatory Notes, and as I can find no indication of what the likely cost of the commission will be, I have therefore been unable to form a view of what the level of fees will be. Where Bills provide that the costs will be met by the Secretary of State, there is a financial memorandum which tells us the additional cost to public funds of implementing the legislation. I may have missed it in what is a quite long volume of Explanatory Notes, but I am beginning to wonder whether we are being asked to buy a pig in a poke.

We are being asked to pass amendments that will allow the commission to charge fees. The Minister told the Committee that the general intention is that fees will cover the cost of the regulatory activities, yet none of us seems to have the slightest idea of what those will

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be. I do not expect the Minister to produce the information today, but I really do think that we should have some kind of financial information before we reach the next stage; otherwise it will be difficult to advise some of the organisations that are to be regulated as to what they will face. Perhaps it would not be unreasonable to ask the Government to produce some figures on what all of this will cost. It would be helpful if we could have those figures by Report stage.

Lord Hunt of Kings Heath: I shall do what I can to provide information to noble Lords in relation to the issue of financing the commission. It has been government policy since the Registered Homes Act 1984 that providers should meet the reasonable costs of regulation. The White Paper, Modernising Social Services, stated the intention that the new regulatory system would be self-financing.

As I said earlier, much detailed work has to be undertaken before one can come up with a new fee structure. A full study of the regulatory impact will be carried out, with providers being given an opportunity to give their views and to prepare for paying fees, particularly in those areas where they have not previously paid fees.

It is important, as I said in reply to the noble Earl, Lord Howe, to have a fair system which reflects the cost of regulating different services. It seems to me that it would be unreasonable, for instance, for small providers to pay the same fee as large providers. There are examples in the current fee structure which will need to be examined carefully, but I shall be happy to see what other information I can obtain and to write to noble Lords.

Earl Howe: Before we finish this group of amendments, perhaps I may ask the Minister a further question. It is prompted by the pertinent observations of my noble friend Lord Jenkin and relates in particular to Wales. What mechanisms will be put in place to prevent the Welsh Assembly from, as it were, using this provision to create an additional income stream and charging fees that do not relate in any meaningful sense to the cost of inspections? What is "reasonable" in this context? It would be helpful if the Minister could give an idea of the Government's thinking, as well as an indication of what mechanisms might be put in place to prevent the Welsh Assembly--this is not to impute any bad motives to its Members--from perhaps regarding this as a useful income stream.

Baroness Masham of Ilton: As Wales has been mentioned, perhaps I may ask about Scotland and Northern Ireland.

Lord Hunt of Kings Heath: The Bill does not relate to Scotland and Northern Ireland, although a later amendment tabled by the noble Lord, Lord Laming, addresses issues relating to the need for co-operation and the sharing of information between the four countries of the United Kingdom.

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The noble Earl, Lord Howe, raised a question about Wales. It stretches the imagination to envisage the Welsh Assembly using this as a huge income generation pool in order to raise resources for other services. I have no doubt that the Assembly will wish to take full regard of the general principles under which fees have been charged in the past. As in England, there will undoubtedly be full consultation between the Assembly and organisations in Wales, with full debates in the Welsh Assembly--although I am treading on rather dangerous ground in commenting on the activities of the Welsh Assembly. I believe that, overall, a sensible approach will be taken, and the general principle that providers should meet the reasonable costs of regulation will be followed, both in England and Wales.

On Question, amendment agreed to.

[Amendment No. 33 not moved.]

10 p.m.

Clause 8 [Inquiries with respect to the Commission]:

Lord Hunt of Kings Heath moved Amendment No. 34:

    Page 5, line 10, at end insert--

("(1A) The appropriate Minister may cause an inquiry to be held into any matter connected with a service provided in or by an establishment or agency.").

The noble Lord said: In moving Amendment No. 34, I speak also to Amendments Nos. 35 and 37. Clause 8 of the Bill enables the Secretary of State to set up an inquiry into the way in which the commission has exercised its functions if there are any concerns that it may not have exercised them properly. However, as currently drafted, this clause applies only to the commission and the exercise of its functions and not to the establishments and agencies that it regulates. The purpose of this amendment is to extend the clause in order to allow the Secretary of State to set up a statutory inquiry into any matter connected with a regulated service. For example, if a consultant surgeon working in a private hospital is found to have unusually high death rates among his patients, the Secretary of State will have power to set up an inquiry to investigate. Without these amendments, he would be unable to do so.

The intention is that the power will be used only very rarely. In the normal course of events, the commission will pick up any problems in the establishments and agencies that it regulates. This may happen during one of its routine visits or inspections, or the commission may be called in to investigate a particular complaint, concern or allegation about the establishment. If the commission discovers that standards are not being met or that regulations are being breached, it will use its powers to ensure that the matter is put right as quickly as possible. If it is not sorted out satisfactorily, the commission can take appropriate enforcement action. In the vast majority of cases, we expect that to be sufficient to sort out any problems. But we consider it essential that if the problem is extremely serious or it falls outside the regulatory functions of the commission, the Secretary of State should have the

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power to set up an inquiry to investigate it. The amendment also gives the Welsh Assembly the same power.

Amendment No. 35 is consequential upon the main amendment and allows the Secretary of State or the Welsh Assembly to direct that an inquiry under subsection (1A) shall be held in private. Amendment No. 37 is consequential on the main amendment and ensures that subsections (2) to (5) of Section 250 of the Local Government Act 1972 apply to any inquiry set up under Clause 8. I am sure that noble Lords recognise the importance of these amendments and I commend them to the Committee. I beg to move Amendment No. 34.

Baroness Masham of Ilton: Can the Minister say whether the process will be speeded up? If a consultant is suspended on full pay for years and years, as has happened, it is a waste of money and the health service is faced with great expense.

Lord Hunt of Kings Heath: We are all aware of the length and cost of some inquiries. I cannot tell the noble Baroness that I have a magic wand to wave to enable such inquiries to be speeded up. A number of factors come into play to explain why some inquiries take such a long time. I believe that these occasions will be few and far between. The essential point is that sometimes it is necessary for such an inquiry to be set up and we are particularly keen that the Bill should allow that to happen.

On Question, amendment agreed to.

Lord Hunt of Kings Heath moved Amendment No. 35:

    Page 5, line 11, after ("State") insert (", or, as the case may be, the appropriate Minister,").

On Question, amendment agreed to.

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