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The Chairman of Committees (Lord Brabazon of Tara): I should point out that there is a mistake in the Marshalled List and that Amendment No. 27 should come before Amendment No. 26. Therefore, I shall call Amendment No. 27.

Lord Clement-Jones moved Amendment No. 27:

The noble Lord said: In moving Amendment No. 27, I shall speak also to Amendment No. 26. It must be apparent to the Minister after a day in Committee and in the short time we have been speaking today that there is deep scepticism about the Government's arrangements

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as set out in Schedule 1, and in particular, as the noble Earl, Lord Howe, made clear, to the whole concept of the public constituency. It is notable that those criticisms come not only from the Opposition Benches but with great force from the noble Lords, Lord Lipsey and Lord Harris. I think that they have both made a particularly telling contribution in the course of the Bill.

In the Committee's first sitting, the Minister was very adamant about the shape of the governance. He said:

    "We were trying, as we have done all along, to design something that was fit for the purpose".—[Official Report, 7/10/03; col. 214.]

That is precisely the bone of contention between us. Our view particularly on these Benches is that these provisions are not fit for the purpose. Undoubtedly as we go through the Bill and when we reach Report stage some of those propositions will be tested.

The Minister believes that we are all being far too pessimistic in our view of the governance arrangements. It is always tricky in these circumstances, but, as the Minister heard last time from my noble friend Lady Barker, we would like to see fundamental changes to the governance arrangements. However, on the basis that there is to be a public constituency, I think that the biggest nonsense within these provisions surely must be the requirement to pay #1. We do not know whether 5,000 people will pay #1, or 10,000, or whatever. When the noble Lord, Lord Hunt, speaks later we can hear whether he has something similar in mind.

The Minister also made great play of the fact that our current company law, and indeed the law appertaining to companies limited by guarantee, was not appropriate. The one thing that companies limited by guarantee do—and quite often those companies consist of 10 or 15 members—is to pay #1 for form's sake. That derives from a very 19th century concept. Becoming a subscriber to the memorandum of association of a company limited by guarantee is purely for form's sake. There is absolutely no need to do that. If we are talking about new forms of organisation—bright, shiny, new forms of organisation, about which the Minister was so eloquent in our earlier sitting—it seems to me that the requirement to pay #1 is completely superfluous. That is the very first thing that he should perhaps relinquish. Perhaps he was foreshadowing that in his previous speech. I beg to move.

The Chairman of Committees: I should point out that if this amendment is agreed to, I cannot call Amendments Nos. 26, 28 and 29.

Lord Hunt of Kings Heath: I should like to speak to my Amendment No. 28. I come at the issue from a rather different viewpoint from that of the noble Lord, Lord Clement-Jones. While I readily accept that the governance arrangements are by no means perfect, I do not take as pessimistic a view as the noble Lord or the noble Earl about how they will be implemented in practice. Clearly, we all want a large number of people to be interested in the work of their local National Health Service. I believe that having a strong membership based around each foundation trust is one very effective way of doing that.

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As for the #1 issue, when it was first proposed one could see the logic of asking people to show a visible sign of commitment to that organisation. Other organisations have a similar requirement; the noble Lord, Lord Clement-Jones, referred to some of them. I am a member of the Midlands Co-operative Society. Some years ago I had to pay over #1 to become a member, and I receive a calendar every year as a reward for having made that commitment. However, I am not really sure whether paying over that #1 has made me any more committed to the Midlands Co-operative Society than if I had simply signed an application form to join.

I have been persuaded by discussions with a number of the chairs and chief executives of the first tranche of applicants for the first wave of foundation trust status who believe that the #1 qualification requirement on the application form for those wishing to join might inhibit some from joining. As I should have thought that we all want as many people as possible to join these foundation trusts, I think that it would be wise, as the noble Lord, Lord Clement-Jones, said, to remove the #1 qualification.

Earl Howe: I should like to speak to Amendments Nos. 26 and 29 standing in my name. The public constituency works on the basis of members nominating themselves for membership and the hospital accepting the nomination, or not, as the case may be. Providing that they are accepted, all they then have to do to become members is undertake to pay #1 if called upon to do so at some time in the future. I differ slightly from the interpretation put on this part of the Bill by the noble Lord, Lord Clement-Jones—and, I think, from the noble Lord, Lord Hunt—in that what it says is that one has to undertake to pay #1, not actually pay it. I cannot imagine that the #1 will be collected by anyone; surely it is just a token contingent liability. While the noble Lord, Lord Hunt, speaks in terms of needing to have a visible sign of commitment, I think that this provision is not that. It is not a sign of commitment; it is only a token. I think that the Minister really does have to explain what on earth the point of it is.

We see from paragraph 5(2) that members can be disqualified. However, I should like to ask the Minister how and in what circumstances that could happen. It is not clear. It would be helpful if the Minister could bring us in on the Government's thinking. Surely it cannot mean that a hospital could exclude someone simply by virtue of the opinions they might hold on a moral issue such as abortion or stem cell research or the opinions they might hold on prioritising the care of patients afflicted with a particular condition. What are the implications of having different exclusion rules for different foundation trusts? I am troubled by that thought.

If the system underpinning the entitlement to vote is to be genuinely fair, this might be an area where there ought at least to be guidance from the Government—if not anything on the face of the Bill—to indicate what kind of exclusions a trust should countenance.

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Lord Lipsey: Those Members of the Committee who are not with me on the pessimistic side of these governance arrangements say that there is tremendous enthusiasm out there to join these trusts. Therefore, it seems to me rather curious that some of them are now worried that the possibility of having to pay #1 will stop people participating. That is not a lot to pay to indulge one's enthusiasm.

Lord Warner: I am sure that the Committee will be pleased to hear from a sinner repenting. The Government have listened to concerns raised in the other place and by NHS foundation trust applicants. The requirement to make a nominal payment has been seen by some as a barrier to encouraging a large and representative membership which is, as I said earlier, our aim. I notice that the noble Lord, Lord Peyton, is not present but I should make it clear that I was not arguing that there should be more committees but that there should not be a limit on the membership, which was what his amendment was about. We do not wish to place a limit on the size of membership but in the light of the concerns that have been expressed the Government are willing to remove the requirement that members commit to pay up to #1.

However, the Bill still needs to make provision on how a member is to indicate that he or she is signing up to be a member. As I said, we are trying to achieve active participation. In return for making a commitment to their NHS foundation trust, local people, patients and staff receive a real opportunity to influence its governance and stewardship through the board of governors. I realise that not all Members of the Committee are as enthusiastic as we are about achieving that objective, but that is the Government's objective and that is what the Bill seeks to do.

The provisions and structure of Schedule 1 reflect that approach in requiring prospective members actively to sign up for membership. In removing the nominal sum, that commitment will instead be signified by actively applying to become a member. We propose to accept Amendment No. 28 in the name of the noble Lord, Lord Hunt, rather than the other amendments on the #1 payment as it replaces the requirement to commit a nominal sum with a requirement to make an application to the NHS foundation trust. Because the trust is able to set out additional detail in its constitution under paragraph 1(2) of Schedule 1 to the Bill, we expect that each trust will specify in that document the application process for becoming a member. That deals with our response to Amendments Nos. 26, 27 and 28.

On the subject of limits to eligibility for membership—I refer to Amendments Nos. 29 and 27—it is important that NHS foundation trusts have a safety net so they can ensure that their membership is appropriate to local circumstances. However, we believe that there needs to be our old friend, flexibility, here. That means that foundation trusts must have a way to deal with circumstances where membership would be inappropriate. For example, an NHS foundation trust might need to exclude persons who have persistently harassed or assaulted staff and exclude persistently vexatious individuals. Sadly, we all know people who

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behave in that manner. I assure the noble Earl that we are not trying to be thought police but we feel that it is important to give trusts that flexibility where particularly difficult local circumstances exist; for example, if members of a children's trust had concerns about an individual on the sex offenders' register being a member of that trust.

We are not clever enough to prescribe all that in primary legislation; we should leave that to the judgment of individual foundation trusts taking account of guidance in this area provided by the regulator. We do not object to guidance. We are not arguing that there should not be guidance in this area but we do not think that it is right to prescribe these matters in primary legislation.

11.45 a.m.

Lord Hunt of Kings Heath: I thank my noble friend for his generosity in indicating that the Government welcome my amendment. I say to the noble Earl, Lord Howe, that I did not envisage #1 having to be paid over. I believe it was made clear in another place that that would not happen. I do not know whether it is proposed that one would have to tick a box on an application form and whether that box would state: "In the event of future failure, you may have to pay #1". That is not necessarily an attractive way of getting members. Although I am delighted that there is enthusiasm for foundation trust status among the public, we should do everything we can to make it easy for staff to join a foundation trust.

Will my noble friend reflect further on the matter of exclusions? I appreciate that it is perfectly appropriate to consider excluding from membership the people he mentioned. However, what about local people who campaigned against a mental health facility or a secure hospital being established in their area? Those people might try to take over the relevant mental health foundation trust. Would it be acceptable for that foundation trust to exclude people on that basis? Presumably, it could be argued that they were campaigning against a core aim of that trust. Or is it fair game for local people to be able to join a foundation trust on that basis?

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