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Baroness Noakes: I thank all noble Lords who have taken part in this interesting and important debate on our understanding of how foundation trusts are expected to work. All noble Lords, with the exception of the Minister, recognise that there was a problem with the lack of clarity about the respective roles of the different parts of the foundation trust structure. I am grateful to the noble Lord, Lord Hunt, for exposing the very conflicts that trouble so many people who consider this matter in detail. While I was grateful for the detailed explanation given by the Minister, at the end of it I am still not clear that the Bill could survive without alteration. I shall certainly read carefully what he has said. Although the Minister has stated how he sees the matter, my instinct is that we have not satisfactorily resolved the issues.

The noble Lord, Lord Hunt, said that it would be a recipe for trouble if governors do not govern, but I believe that there will be a recipe for trouble if governors try to interfere in management. That is the tension at the heart of the matter and it has to be resolved. I do not believe that this is a matter that can be left to local flexibility, although I know that we shall hear that said about almost every debate in relation to Schedule 1.

The matter is far too important to be left to local flexibility. I believe that there is a fatal flaw in the way in which Schedule 1 has been constructed. There may be different views around the Committee on how it should be reconstructed, but I earnestly hope that the Minister will take away from this debate the fact that Schedule 1, with its lack of clarity and ambiguity about the respective roles of the board of governors and the board of directors, cannot be allowed to stand in the Bill. I shall carefully read what the Minister has said, but I would not like him to be left with anything but the impression that we on these Benches are firmly resolved to see the issue dealt with satisfactorily in the Bill. I beg leave to withdraw the amendment.

Amendment by leave withdrawn.

[Amendments Nos. 32 to 34 not moved.]

Earl Howe moved Amendment No. 35:

The noble Earl said: One of the many subjects on which the Bill is silent is the issue of the appropriate electoral system for the election of governors. If one

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goes around the country asking people what system of election they consider is best or fairest, one will encounter sharply differing views. Some may favour the first-past-the-post system, others the single transferable vote and others a different form of proportional representation altogether. Each of those systems has its merits.

I am of the view that the first-past-the-post system has the most to recommend it in the context of this debate. I believe that is a much surer guarantee against entryism than the single transferable vote—we can debate that. However, the point is whether we want different foundation trusts to decide to adopt different electoral systems. That kind of DIY approach sits oddly with the rest of these provisions, which seek to set the basic ground rules within which foundation trusts must work. We are looking at a mutual model. In imposing such a model on the health service, it seems extremely odd that the Government disclaim all interest in having a consistent voting system around the NHS as a whole. I believe that the consequences of having different voting systems around the country, as may happen, will cause immense resentment and a huge amount of argument and controversy. I believe that that energy could be better spent. I beg to move.

Lord Lipsey: As many Members of the Committee know, I speak as a member of the Jenkins commission and, as such, I have spent some time considering electoral systems. I have not thought in depth about the electoral system for this instance, save that this is an incredibly important matter. The noble Earl, Lord Howe, says that he fancies the first-past-the-post system. If this scheme goes ahead, it would be perfectly possible for there to be a large number of candidates for the posts on the governing body and under a first-past-the-post system there would be nothing to say that people could not be elected with just 25 per cent of the vote in a constituency—that happened in the 1992 election in Inverness—or with 15, 10 or 5 per cent of the vote. I applaud the vision that the optimists put forward about how this will all work out in that it will be part of local communities, but can any noble Lord explain how it can be right for hospitals to be responsible to people whose sole claim to legitimacy is that they have the support of 5 per cent of the vote?

I could go through all the options. I hope that proportionality is a red herring. Proportionality is a concept that applies only if one conducts elections on a party system—if people stand on a party ticket—although STD avoids that problem. If this scheme goes ahead we cannot stay silent on such matters. Given the nature of expertise required, it would be ridiculous to leave the matter to individual trusts to sort out.

I spent 12 months under the chairmanship of Lord Jenkins thinking day and night about appropriate electoral systems. There were things that I did not understand even by the end. To ask people who are supposed to be in charge of running hospitals to work out the best electoral system seems to be a bizarre diversion of effort. Therefore, we clearly need a change to the Bill—possibly along the lines proposed by the

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noble Earl, Lord Howe—and consultation on appropriate electoral systems, which can produce the least undesirable system.

12.30 p.m.

Lord Clement-Jones: As the Minister will no doubt understand, these Benches have very strong views about electoral systems, both historically and currently. I thought that the noble Lord, Lord Lipsey, put his finger on the issue, but I want to retrace our steps. Having no specification of electoral systems demonstrates the lack of sense involved in this whole public constituency aspect of the Bill.

However, the situation is worse than stated by the noble Lord, Lord Lipsey. He said that one needs a proportional system—I recognise that the noble Earl, Lord Howe, is in favour of a different system—only if there is a party system. Actually, with a ticket system one needs a proportional system. So, for instance, groups of council tax payers or groups of individuals can gather together under a particular banner and seek election. In those circumstances a proportional system would be extremely important. Indeed, one could have entryism on a massive scale. I know how much that frightens the Government with respect to these particular proposals. Therefore, I cannot understand why they do not scrap them and start again.

However, unless an electoral system is specified, all kinds of recipes for disaster will ensue. For instance, there is the clean sweep. If one has a first-past-the-post system and different groups of tickets, one ticket can sweep the board. We have seen that happen in local councils. In those circumstances, what kind of representative nature for that public constituency will the board of governors have?

One can see all kinds of problems involved in this issue and I hope the Minister will consider it very carefully.

Baroness Cumberlege: This has been a very interesting debate. It is not a subject to which I have really put my mind. What advice has been taken by the Minister's colleagues on this issue? We have the Electoral Commission, which I think does an extremely good job. As the noble Lord, Lord Lipsey, said, we have other bodies within this country with expertise in the matter. If we are to go down this road, which I do not support in any way, then at least we should try to ensure that the provision is as good as possible.

Lord Hunt of Kings Heath: I should have great concerns if the amendment were pressed, either today or on Report. If one were to go down the route of Secretary of State regulations and prescription on how elections are to be conducted, either those regulations will be so vague as to be virtually meaningless regarding the individual foundation trusts, or, as I suspect, they will create a straitjacket, which simply will not suit the individual circumstances of each foundation trust.

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We have 400 NHS trusts in England. They have very different circumstances. Some are local district general hospitals, some are specialist hospitals serving the rest of the country and some are university teaching hospitals. It would be difficult for the Department of Health to produce meaningful regulations without either severely constraining and therefore producing an inappropriate electoral system, or probably, as we have seen from the guidance that has already been given on governance, it will produce wishy-washy sentiments which will be of no help whatever.

Furthermore, if, as this Chamber has now discovered, the role of the governing body is advisory, why on earth should we be so worried about the electoral system? If the governing body is indeed a governing body, then I would understand the need for rigour in the process.

Lord Warner: Some warm words have come from behind me. I am grateful for them. Before I get down to the detail of this issue, I must say that, from memory, securing agreement with Liberal Democrats on electoral systems in the past proved to be a rather difficult task. So it would be quite remarkable for me to achieve success on that point today.

I do not want to go through the flexibility issue too much. My noble friend Lord Hunt made the point very well. I should like to elaborate on some of the arguments. The legislation deliberately allows NHS foundation trusts the flexibility they need to ensure that their membership and boards of governors are genuinely representative. There are, as my noble friend said, a wide variety of trusts. I indicated some of that breadth earlier, and we shall no doubt return to the issue.

Some NHS foundation trusts will want, in particular, to take steps to ensure that minority interests, such as deprived wards, are genuinely represented on their boards of governors. Flexibility of the electoral system will allow for local circumstances to be taken into account.

I am not sure why we are getting so hyped up about this issue. We have accepted very different electoral systems for different levels of governance—for example, building societies, mutual organisations and others. Why are we taking such a rigid view about NHS foundation trusts? The principle that seems to be increasingly established as we look at the needs of particular organisations, whether it is a tier of government or otherwise, is whether the electoral system is fit for its purpose? That should be what we are concerned about.

Looking at the range of electoral systems, we could, as the noble Earl said, have a first-past-the-post system. That is a very straightforward system. The Labour Party is very attracted to it; and it may be suitable for NHS foundation trusts with simple demographics.

Full membership voting is another alternative. Here people would stand for particular posts. We shall turn to some of the issues around that at a later stage, and there may be a need for technical amendments. But

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with this system one can actually have a degree of separation within, for example, a community group of the territory or groups which would be voting.

One could have a single transferable vote if that was thought beneficial. That system can help minority candidates achieve election, so there are some cases for that. Noble Lords are concerned that at the local level we are turning loose without any help these poor characters who are trying to invent electoral systems. That is a little wide of the mark.

Let me try to give some reassurance about the support available to applicants. NHS foundation trusts will be encouraged to draw on advice from organisations recognised as being expert in managing election processes. They will be able to draw on best practice in mutual and other organisations. It is perhaps worth mentioning the New Deal for Communities policy which enables the community to determine its own structure and election methods. Most new deal elections have achieved an electoral turnout double that of local government elections. It is worth bearing in mind that kind of consideration.

The Guide to Governance Arrangements will be supplemented with the learning from the experience of the first wave applicants. I repeat a point I made earlier: we are very willing to encourage the regulator to have a review of the governance arrangements and experience of the first wave applications. So I do not believe that this amendment is helpful or that the NHS foundation trust applicants are being turned loose in quite such an unsupported role as some noble Lords seem to think.

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