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Lord Hunt of Kings Heath: I said earlier that we do not need the clause to make the current performance payments that we are making because they are made on a fair-share basis. At present, every NHS organisation will receive its fair share of the performance fund. Organisations which do well will have much greater freedom to use the funds in the way that they wish. This clause would allow us to move on from that situation. At some stage in the future, we

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may well wish to make additional payments to green light organisations as an extra incentive. That is what the clause allows us to do.

Earl Howe: I am most grateful to the noble Lord for that clarification. I take the point that he made about red light status. Of course, it could act as a spur to those who work for the health body to institute measures to improve the performance of the body. However, I believe that if red light status lasts for more than a short time, there is a distinct risk that it will become, as it were, a self-fulfilling prophecy because it will lead to the migration of staff. I believe that the challenge will be to ensure that red light status does not hang over an organisation for more than a certain time.

This has been a useful short debate. I thank the Minister again for what he said.

Clause 2 agreed to.

Clause 3 [Supplementary payments to NHS trusts and Primary Care Trusts]:

Earl Howe moved Amendment No. 22:

    Page 3, line 17, at end insert ", at the request of any Health Authority or any trust with the approval of a Health Authority,".

The noble Earl said: In speaking to Amendment No. 22, I shall speak also to Amendments Nos. 23 and 25. These amendments have an obvious purpose: to introduce greater transparency into the way in which additional payments are determined. We cannot expect the Bill to go into minute detail. However, it is remarkably silent as to the basis on which supplementary payments to trusts and PCTs are to be made. Unlike Clause 2, which refers to good performance, there is not even a mention in Clause 3 of any type of criterion or benchmark.

Effectively, what is being proposed is a bypassing of the normal purchaser/provider relationship whereby health authorities pay trusts and PCTs for the services provided. That has a distinct look of central micro-management about it, which makes me uncomfortable. I am prepared to be persuaded that there may be infrequent occasions when an accelerated process of that kind is justified by the prevailing circumstances. When it occurs, it is important for everyone to know what has happened and why. There needs to be a clear public statement of how the payment powers have been used, and health authorities need to know exactly how and why the normal contractual systems have been overridden.

It would be helpful if the Minister could tell us how often he expects those powers to be used, and in what circumstances. The Explanatory Notes speak of rewarding staff performance and improving facilities. Why should those not be dealt with through the normal service level agreements? If they are exceptional, one-off payments, what will determine them?

I fear that the normal system will be undermined either by special pleading from a trust, a PCT or, heaven forbid, even by ministerial favouritism. It is easy to imagine Ministers being lobbied as they go around the country so energetically.

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There is nothing in the clause that would prevent that happening. That is why I suggested in my amendments that it should be the health authority itself that requests the supplementary payment, or at least approves it, so as to retain the semblance of accountability through the normal commissioning chain. In itself, that device would not alter the mechanism for payment, but it would promote transparency and a slight check would be built into the system to prevent money being paid across to trusts in inappropriate circumstances, such as those to which I referred.

Baroness Cumberlege: I rise to support my noble friend Lord Howe. I am concerned that the Secretary of State is seeking powers directly to reward staff working within a particular trust, or to improve facilities. This is very detailed stuff, according to the Explanatory Notes.

The Secretary of State will bypass the allocation formula, the health authority and the management of the trust. In my view, that is micro-management writ large. In the helpful meeting that the Minister held in the Moses Room, he explained that it was a way of cutting red tape and bureaucracy. I have some sympathy with that because I know how frustrating it can be. However, systems bring safeguards, which are extremely important in a public service. Service level agreements are drawn up with enormous care; there is a great deal of consultation and many people are involved. They take account of local need, and the input from a large number of people, including the public, is immense. They also implement the health improvement programme, which is the strategy that is adopted locally.

It is possible that under this clause the Secretary of State could act quite arbitrarily and perhaps make some perverse decisions, which have no place in the public service. In the private sector, where there is much more freedom to move, the boards of companies still have to comply with the Greenbury and Cadbury codes--those ethical tenets that have been laid down. It is even more important that a Secretary of State, who is in charge of a huge publicly owned body which affects all our lives, should work in an open and transparent system.

If the system is wrong, or the Minister feels that the bureaucracy has a stranglehold on the NHS, it is time to streamline the bureaucracy. Perhaps the Minister should be humble enough to recognise that local decisions should be taken locally, especially on these detailed matters of rewarding staff and improving facilities.

10.30 p.m.

Lord Hunt of Kings Heath: Those who launched the NHS trust movement would be disappointed to hear the words of the noble Earl, Lord Howe, and the noble Baroness, Lady Cumberlege. In a sense we are trying to provide a mechanism by which, on occasion, we can make direct payments to NHS trusts with the normal commissioning arrangements.

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This is not an undermining of the commissioning arrangements; it is designed to enable us, on occasion, not to have to go through the normal bureaucratic system under which commissioning operates. The underlying principle of supplementary payments is to make timely direct payments outside the scope of service agreements. The kind of things for which the power would be used is, as has been described, the direct improvement of infrastructure to enable the provision of better services. A good example of that was the injection of £32 million for ward cleaning. The Government took a view some months ago, quite rightly, that the cleanliness of the NHS was a matter of great concern--indeed, your Lordships' House debated it on a number of occasions. To kick start a new approach extra money was injected into the service mid-year. Our ability to do that quickly is important and this clause will allow us to make those payments directly to NHS trusts.

Another example of where this system could be used is money given to ward sisters to improve facilities and the appearance of their wards. That was an outstanding success. It was very much welcomed and was a great boost to morale at ward level. Again, there is a case for allowing the department to make those allocations direct to NHS trusts without going through the normal commissioning arrangements.

I heard the concerns expressed and want to assure Members of the Committee that this is not meant to undermine the normal role of commissioning. It is not meant to take the place of commissioning; indeed, to do so would undermine the whole approach to the development of NHS services. It is simply a more effective and efficient method to make the occasional direct payment to NHS trusts.

In relation to the notification to Parliament, raised in the second amendment spoken to by the noble Earl, I covered those matters in previous debates. The reporting arrangements to Parliament, which are the same as those under the last government, are sufficiently rigorous. When extra direct payments are made such as those for cleaning or for ward sisters to spend on their wards, they are always made as public announcements. I hope, on that basis, that the noble Earl will consider withdrawing his amendment.

Earl Howe: The Minister was a little hard on me and my noble friend Lady Cumberlege in drawing the conclusions he did from what we said. I made clear that I was prepared to be persuaded that infrequently there could be compelling and good reasons to make supplementary payments to trusts and PCTs and to do so in a speedy fashion.

I am glad to hear from the Minister that this is a mechanism that is likely to be used relatively rarely and that it will not undermine the normal commissioning process. I am a little disappointed that the Minister could not be more sympathetic to my arguments in favour of somewhat greater transparency and I wonder whether the normal NHS accounting requirements will provide the kind of immediate and accessible information that is so valuable.

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Members of this Committee and no doubt Members of another place can table Written Questions to prise out details of supplementary payments when they are made. But it should not be necessary to do that. They should be on the record almost as soon as they have taken place. The announcements to which the Minister referred may or may not apply to every single instance. If they do, that may be satisfactory. We shall have to see.

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