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Lord Warner: Let me be clear that the structure and model set out in the Bill were designed specifically for provider organisations, as my noble friend Lord Hunt has reminded us. It requires the principal purpose of any NHS foundation trust to be the provision of NHS services. Moreover, the Bill does not provide any framework for dissolving a PCT and transferring its staff, assets and liabilities to an NHS foundation trust. Noble Lords cannot achieve even their objective by this particular amendment.

We have no objections in principle, as the noble Earl, Lord Howe, indicated, to applying democratic and foundation principles to PCTs, but I suggest that now is not the right time to do this. That is not just a standard Government line on the principle of unripe time. PCTs are new and embryonic organisations which are not ready to go through this stage of change. They are taking on a very major set of new responsibilities, as my noble friend Lord Hunt has suggested. I gently say to noble Lords that I find it surprising that this House, which often criticises the legislation coming before it for not being thought through and properly prepared, is suggesting slipping in a few amendments here possibly to introduce change on the hoof without having thought through the model that we want to use. My noble friend Lord Hunt made those points very eloquently and I will not repeat them. This is not the way to make legislation; if there is a case for changing PCTs over to a different basis, that change has to be thought through and not rushed and imposed on the NHS without proper thought—the very criticisms that were made in an earlier part of our debate this afternoon.

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In terms of long-term contracts for providers, I think the noble Earl, Lord Howe, is being a bit unkind. Those long-term contracts would also provide the reassurance to patients of the kind that the noble Baroness, Lady Finlay, was anxious about in the previous discussion.

Lord Blackwell: I thank the Minister for that response, and my noble friend Lord Howe and the noble Lord, Lord Hunt, for their thoughtful comments.

The principle that we must free up the purchasing as well as the supply side of the NHS should be addressed sooner or later. That is a bridge that must be crossed, and no reform will secure the Government's objectives until they eventually achieve that. I take the point that the Minister made that these amendments may not be the most effective way in which to do that. The Bill may be too complex for us to introduce such amendments to it, but I should like to consider what has been said before I decide whether we should bring the amendments back in a different form at another stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 1 shall stand part of the Bill?

Earl Howe: This is not an occasion to repeat our debate at Second Reading. Nevertheless, there is value in setting down some markers for our forthcoming debate in Committee. I do not intend to take long, but some key points need to be made.

Whatever side of the line one is on in the great foundation trust debate—whether one is for it or against it—one fact should trouble all of us. I refer to the lack of public consultation and discussion that has gone into these policies. We on this side of the House have always sought to encourage the Government to move in the direction of freeing up the NHS from central control and giving more autonomy to local managers and clinicians. However, we have never suggested that the most radical departure for the NHS in 50 years should be mapped out as a desk exercise in Whitehall—but that is broadly speaking what has happened. It has resulted in a Bill full of really controversial detailed provisions; that detail, if we get it wrong, could sink and discredit the whole vision.

None of us is in the business of wanting to jeopardise the future of the NHS, and we are not in the business of tabling amendments out of a sense of devilment or party political needling. The details of the Bill really matter if the bold concept contained in Clause 1 is to take wing with everyone cheering it on.

I admit that I am a cautious sort of person. After the BSE crisis, the National Audit Office said:

    "There are risks involved in doing things differently and new forms of service delivery need to be implemented in a way that minimises the risk of them failing or the quality of public services being maintained or improved".

That message should resonate with us as we debate this part of the Bill.

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There is a curious antithesis in what the Government have done in their proposals for foundation trusts. As regards governance arrangements, they have been much too bold. As for the freedoms to be granted to foundation trusts, they have been much too timid. The risk of getting the governance arrangements wrong is that they could ruin the whole concept; once in place, they will be very difficult to reverse or radically amend. The risk of getting the balance wrong between freedom and regulation is that one might expend vast efforts in charting a new course for the NHS without much tangible benefit at the end. In the process, one may also gloss over very damagingly some of the wider dimensions of the NHS as a cohesive and co-ordinated entity.

Some will argue—including, no doubt, some of my noble friends—that, taken as a whole, half a loaf, in the form of Part 1 as it stands, is better than none. With great respect, I do not agree with that. The one thing that we should not do to the NHS is to subject it to yet another reform, and a big one at that, without being as sure as we can be that we have got it right for the long term. It is not satisfactory for the plans underlying the Bill to be half-baked or still at the planning stage. As our debates proceed, I for one shall study very carefully what the Minister tells us for any signs that the grand façade of the building now being shown us may actually conceal a half-completed and poorly designed collection of rooms.

Lord Clement-Jones: I support the proposition of the noble Earl, Lord Howe. It must be admitted that the Bill contains an incredibly complex set of provisions to set up this new creature. However, the whole argument is that there are also an incredible number of objections that are equal and opposite to so many of those complex provisions.

I do not intend to repeat all the points made at Second Reading. Heaven knows, there were enough. I thought that one of the more amusing remarks made by the Minister came in response to the noble Lord, Lord Harris of Haringey, on the subject of governance. The Minister said that he was glad that the noble Lord was not making a speech against the Bill, after the noble Lord had made a devastating critique of the Government's provisions. Those arguments in themselves would be enough to justify voting against Clause 1—and, indeed, Part 1—as they show the half-baked nature of the foundation hospital proposals, as the noble Earl, Lord Howe, pointed out.

The lack of equity underlying foundation hospitals is probably what sticks in the gullet of most commentators, more than other issues. The basis for selection—the star-rating system—is subject to considerable criticism, but that is the basis for the choice of foundation hospital status. When one has that status, there will be the possibility of further inequity in the local health economy, whether by terms and conditions, borrowing powers or a range of other aspects. They may even affect the viability in other areas.

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No one argues with the principle that more devolution is necessary; that is a view of the NHS held in common between all political parties. The issue is whether foundation hospitals do that.

As the noble Earl, Lord Howe, pointed out, the process is probably unique. We have had consultation paper after consultation paper in the NHS. I think back to the idea of getting ahead of the curve, and to all the devolution proposals in other areas that have been debated in consultation papers over a period of time, often as precursors to NHS reform Bills. Yet there was a deafening silence on the subject of the clause, apart from speeches by the Secretary of State. No consultation has taken place whatever. That has been compounded by the lack of local consultation taking place in the run-up to the formation of these foundation hospitals. I suspect that the Minister will reassure us that consultant will take place, that foundation hospitals will be required to do so, and so on. However, the consultation to date has been grossly inadequate.

Then there is the whole issue of whether the proposals will genuinely provide a better model for patient and public consultation in localities that have foundation hospitals than the arrangements that were fought for so hard in previous NHS reform Bills. To find that no patients forums are being established for foundation hospitals is another addition to objections to the Bill.

As the noble Lord, Lord Harris of Haringey, said at Second Reading, the governance system will be a nightmare of bureaucracy. Spending public resources wisely has been a mantra that all Chancellors and all governments are so keen to repeat. However, something like #250,000 could be spent on the governance of some of the foundation hospitals, to maintain their membership. That is a staggering figure when we consider for what other purposes the money could be used. All of that will not lead to better performance or more democratic accountability. In fact, by and large, the membership of foundation trusts will be self-selecting. I think that that is another cause for considerable concern. It will be open to people to come forward and make themselves members by paying their #1.

So we have very strong objections to a huge number of aspects of the proposals. Ultimately, we believe that this is treating the wrong end of the NHS—in complete contrast to the noble Lord, Lord Blackwell, who moved an amendment on foundation status for commissioning bodies and PCTs. We believe that the accountability of commissioners, and bolting that into local government, should be the first priority, not whether provider bodies have a local membership, however artificial, and a governance system which seems to be based on some sort of two-tier Dutch company structure. I do not know whether that was the result of health tourism by the Secretary of State, but it seems fairly outlandish to seek to introduce it into the NHS. I do not think that any DTI body has ever suggested that we should have two tiers in any commercial body.

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So, at the risk of coining a phrase, this proposal for foundation hospitals is not even a curate's egg, it is a rotten egg.

6 p.m.

Baroness Hanham: I am the chairman of an NHS trust. I declare that interest now and, if I may, for all the occasions on which I hope to take part in the debate. I support the opposition to clause stand part. This is probably our only opportunity to comment generally on the NHS foundation trusts and specifically on the governance issues. Those issues are not a curate's egg, they are a complete nonsense. Those currently trying to establish foundation trusts, and I have spoken to a number of them, are labouring against the background of insufficient information and insufficient knowledge of what this bureaucracy and bureaucratic way of proceeding is about.

It matters a lot how an NHS hospital is managed. It matters a lot that those who are involved with it actually care about it. It matters a lot that they are going to bother to spend the time to pay attention to the patients and to the services that are provided. What is not required is a great diversion whereby a hospital becomes an electoral reform society. I do not understand the mechanism—there is absolutely no clarity about it in the Bill—for the selection that will have to take place. It is not at all clear who will have to keep the constitutional arrangements up to date or how people will be able to dip in and out of membership without the maintenance of a rolling register. Local authorities have enough trouble doing that for elections without hospitals being required to do the same.

The situation is completely unclear. I hope that the amendments will begin to provide some clarification about what the board of governors will do. As far as one can see, the board will include a huge number of people, presumably all of whom will want to dip in and out of the hospital's activities. We cannot have 30 to 50 people with a right to dip into and out of those activities. A hospital is where people go to be cured, not to be bossed at. They do not want to be part of a bureaucratic trust. In my experience, people and patients do not want to take part in the management of hospitals. They want to have access to management when things go wrong. They want a prompt resolution of their complaints. They want to be cared for and they want to be treated. They do not want to run the place. One worries about those who want to run the place at the same time.

So we will be left with this extraordinary animal, the board of governors. It is unclear who will be on the board of directors—or whatever it is to be called; the name seems to change every five minutes—and how they will be appointed and from where. Later amendments tabled by the noble Lord, Lord Hunt, seek to tighten up what could have been a complete hiatus in the organisation, to maintain the status quo to some extent for that board of governors.

Whatever happens with the Bill, the arrangements for the governors have to be sorted out. They have to be sorted out in a way which establishes absolutely

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what the board of governors will do. That is currently unclear. The arrangements seem at present to provide for the appointment of the chief executive and for an annual meeting. I cannot see anyone being elected to do just that. That point has to be sorted out. We must also clearly establish the independence and the right of the directors to run the hospital. That point also is not clear.

We have to ensure that the Bill is in a practical state by the time it leaves this House—not in an ethereal state, as has been said, based on the dreams of someone sitting at a desk. Those of us with some practical experience of how a hospital is run need to ensure that the Bill is much stronger when it leaves this House. I therefore support the opposition to clause stand part.

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