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Baroness Finlay of Llandaff: In the event of a trust having greater demands on its services than it has the capacity to deal with, it will have to ration. If a form of wording is not contained within the Bill to stipulate that there is equality between England and Wales—if I may take that as an example, with due deference to Scotland—the trust may decide to ration on the basis of geography rather than on the basis of clinical need. It may decide to break its contract to provide for the patients of a local health board in Wales even though their clinical need may be greater than that of patients provided for under a contract with a primary care trust in England.

Can the Minister reassure me that there will be safeguards to ensure that those with the greatest clinical need will have their contracts respected preferentially over those with less clinical need, irrespective of the geography of where they live?

Lord Warner: With the greatest respect to the noble Baroness—I pay all due deference to her long experience in this area—and given the previous debate, I cannot see how in primary legislation we can prescribe for every conceivable circumstance of every

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conceivable case. There is nothing in the Bill that suggests that people from Wales, Scotland and Northern Ireland will be discriminated against. There are equity provisions in the Bill. We would be going down an extremely dangerous path if in primary legislation we tried to prescribe for every kind of individual healthcare circumstance that might happen at some time on some day in the future.

Earl Howe: I am grateful to the Minister for the reassurance that he has tried to give, although I am not totally reassured. It has been brought out in the debate that Welsh patients are already finding it difficult to access elective facilities in England. The concern is that, with the greater degree of autonomy to be enjoyed by foundation trusts, there would be nothing that anyone could do if a trust decided to turn away Welsh residents for its own reasons—perhaps under the circumstances outlined by the noble Baroness, Lady Finlay.

It may be that nothing in the Bill precludes Welsh patients from receiving treatment in England and that, indeed, Clause 14(1) permits that to happen. The issue, however, is whether Welsh patients are on a different and less advantageous legal footing than patients living in England. That is the only conclusion one can reach from reading Clause 14(2). We are talking about the need for equality of access and equality of provision for all British citizens.

I shall read carefully what the Minister said today. I reserve the right to bring the issue back at Report stage. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Blackwell moved Amendment No. 9:

    Page 1, line 7, at end insert ", including provision by means of commissioning other organisations"

The noble Lord said: Amendment No. 9 is a simple but potentially very significant amendment which seeks to ensure that the Bill has the scope to secure the decentralising of NHS services that it sets out to achieve.

At present, foundation trusts are defined in Clause 1 as providing goods and services. Depending on how the word "providing" is interpreted, it could be taken to exclude NHS organisations that provide by means of commissioning other organisations. That would exclude, for example, primary care trusts from being designated as foundation trusts.

As I and others argued at Second Reading, it is desirable that the framework of the Bill should be extended to allow PCTs to be in the same position as foundation trusts. This would allow their commissioners of services the same freedoms from central control as are offered under the Bill—perhaps inadequately—to NHS hospital trusts. It is argued that if we relax only the monopoly of supply by freeing NHS hospitals from the central NHS structure, but still retain tight control over the purchasing organisations, that will continue to be the means by

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which the central NHS exercises the same control over priorities and targets imposed through the central control of funding. As long as the PCTs, through that control, are the mechanism for central initiatives, central control, central targets, we will not get the level of devolved decision making and responsiveness to local needs and priorities that everyone, in discussing the Bill, sees as a key requirement if we are to achieve innovation and the proper interests of patients are to be served.

It is important that it is made clear in the Bill that the commissioners of services should be able to apply for and receive the same freedoms, within the same constraints, as the providers of services in hospitals. If the Government are serious about relaxing the command and control culture, they must sooner or later offer PCTs a route to a similar foundation status. Amendment No. 9, therefore, seeks to extend the definition of "provider" to make clear—not only in Clause 1 but, by implication, wherever the word "provider" appears throughout the Bill—that it is intended to include providing by means of commissioning from other organisations. Amendment No. 117, which stands in the name of my noble friend Lord Howe and is grouped with Amendment No. 9, provides that PCTs explicitly should be able to apply for foundation trust status.

Even if the Government are not prepared to commit to doing this immediately—they may want to take a more gradual route—it surely makes sense to avoid having repeat legislation coming back to this House by ensuring that this Bill provides scope for that as a follow-on activity, although I, and no doubt others, would argue that it should be done sooner rather than later.

In moving Amendment No. 9, I wish to explore whether the Government accept in principle that foundation trusts should accommodate commissioning organisations, including PCTs. If so, is this widening of the definition a necessary requirement in the Bill to make it clear that this can take place? I beg to move.

Earl Howe: I would like to speak to Amendment No. 117, standing in my name. I very much support my noble friend in all that he has said. Much has been said today and at Second Reading about creating a sense of local ownership of foundation trusts as a means of engendering better accountability and responsiveness to patients and local people. These are all good concepts, and I have no quarrel with them in themselves—quite the opposite. But if democratic processes are to be introduced into the NHS, the question is where they should most logically be applied. I agree with my noble friend that logic dictates that they should be applied to the commissioning bodies—the primary care trusts—which are the mechanisms for delivering patient choice and which directly control 75 per cent of the NHS budget.

The argument for allowing PCTs to become foundation trusts is, if you like, the opposite side of the coin to the argument that I shall be making later that the democratic apparatus devised for foundation hospitals is both misconceived and futile. PCTs are

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where the real decisions about health spending get taken and local priorities are decided. The Government are creating a sense of expectation by going down the democratic path, and if that is really the route down which we are going, it is very important that those expectations are fulfilled, not disappointed. In the case of foundation hospitals, they will inevitably be disappointed, but the same thing may not necessarily happen if, at the commissioning end, people are allowed to feel that they have a stake in the decisions being taken on their behalf.

The Government have accepted the logic of foundation status for PCTs but they do not yet think that the time is ripe for it. I am prepared to bow to their judgment on that. The issue, though, is whether we take the opportunity provided by the Bill to enable PCTs to apply for foundation status at some time in the future. If we do not, it is clear, as my noble friend said, that further primary legislation will be required. That seems an unnecessary complication, given that Ministers have already accepted the underlying principle of what I am suggesting.

The irony of the Bill is that it is likely to result in less autonomy and less flexibility for PCTs than they enjoy at the moment. That is because of the long-term contracts that Ministers want to see established between PCTs and foundation hospitals in order to secure the financial stability of foundation trusts. To my mind, this artificial rigging of the market works directly counter to all the much trumpeted initiatives to enhance patient choice. Patient choice will in practice be trimmed back in the higher cause of bolstering up foundation hospitals.

There is, therefore, an immediate downside for PCTs as regards Part 1 of the Bill unless they are brought within its umbrella via these amendments. They will no longer have the same flexibility to commission services where they want them or to bring some services into the primary care sector, let us say, where they deem that to be appropriate. That is another reason for saying that the democracy in the NHS should feature not at the provider end but in the area where decisions are made about the purchasing of care and local priorities.

5.45 p.m.

Lord Hunt of Kings Heath: I have some sympathy with both amendments. I well understand the arguments that one wishes to see as much devolution to primary care trusts as possible. However, I do not follow the argument of the noble Earl, Lord Howe, about the impact of long-term contracts. My reading of the choice mechanism is that primary care trusts will have less to do with discussions on elective procedures in the future because the main discussion will be between the individual patient choosing at which hospital to be treated. That is a very good development.

On the general principle, it must be right to seek to devolve to primary care trusts. The problem with the argument that foundation trust status should apply to primary care trusts is threefold. First, there is the

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argument about whether primary care trusts are ready for further change. At the moment, they are having to put a lot of energy into simply making the system work. To ask them now to consider seeking foundation trust status would be a divergence from their main task.

Secondly, the noble Earl has said that 75 per cent of the budget of the NHS is to be devolved to PCTs. That is about 75 per cent of #60 billion at present, going up to #90 billion in 2008. That is an awful lot of resource voted by Parliament. One has to think very carefully about the implications of devolving that kind of resource to a non-fundraising organisation.

The third reason for caution is that I am not convinced that the foundation-type structure in the Bill should apply to primary care trusts. They are different organisations; primary care trusts are population-based. It would be just as attractive to look to local government, for instance, to commission services for the NHS in the future as to the kind of membership structure proposed in the Bill. I understand the point about having enabling legislation to allow PCTs to take advantage of this at some time in the future, but I am not convinced that the membership structure in the Bill ought to apply to population-based organisations. Quite clearly, all the people living within a primary care trust area ought to be members or voters within a primary care trust structure.

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