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Lord Warner: We agree that the chief executive of an NHS foundation trust is its accounting officer. This amendment is not necessary. Advice to this effect has been included in the guide to governance arrangements that is being distributed to all applicant trusts. The regulator would expect this to happen, as would the Secretary of State, in considering applications. This amendment is not necessary because it is well established that these will be the arrangements.

Baroness Noakes: I thank the Minister for that reply. Could he confirm that all that is required is for the department to write this in the guide to governance arrangements, thus making someone an accounting officer for parliamentary accountability purposes? I am a little confused. Perhaps he could clarify that.

5.15 p.m.

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Lord Warner: The point is that we have given that guidance to applicants. We would expect it to be reflected in their application. Indeed, the regulator would be looking out for that, as would the Secretary of State. This would have to be provided for in their application.

Baroness Carnegy of Lour: I have always understood an accounting officer to be a legal appointment. Should not the Bill say so? Need the Government be so resistant to this rather good idea?

Lord Warner: We do not think that this is necessary. We have made arrangements to ensure that the arrangements are put into effect.

Baroness Noakes: Perhaps the Minister will take this issue away and look at it again. It is my understanding that this cannot be done by the simple publication of a guide by the department or, by the inclusion in an application to be a foundation trust, that a person can nominate himself to be an accounting officer. The creation of the accountability link between an individual and Parliament is established by other more formal means. I hope that the Minister will take this issue away and look at it again because I am not convinced that the answer has the ring of truth to it. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hunt of Kings Heath moved Amendment No. 61:

    Page 111, line 8, at end insert—

"Initial directors of former NHS trusts

17A (1) This paragraph applies, where the application for authorisation is made under section 4, to the exercise of the powers mentioned in paragraph 16 to appoint the initial non-executive directors and the initial chief executive.
(2) The power to appoint the initial chairman of the corporation is to be exercised by appointing the chairman of the NHS trust, if he wishes to be appointed.
(3) The power to appoint the other initial non-executive directors of the corporation is to be exercised, so far as possible, by appointing any of the non-executive directors of the NHS trust (other than the chairman) who wish to be appointed.
(4) A person appointed in accordance with sub-paragraph (2) or (3) is to be appointed for the unexpired period of his term of office as chairman or (as the case may be) non-executive director of the NHS trust; but if, on any such appointment, that period is less than 12 months, he is to be appointed for 12 months.
(5) The power to appoint the initial chief executive of the corporation is to be exercised by appointing the chief officer of the NHS trust, if he wishes to be appointed.
(6) Paragraph 16(4) does not apply to the appointment of any executive director of the NHS trust as an initial executive director of the corporation."

On Question, amendment agreed to.

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Lord Clement-Jones moved Amendment No. 62:

    Page 111, line 13, at end insert "and their interests"

The noble Lord said: This is very straightforward. I beg to move Amendment No. 62 and I shall not move Amendment No. 63, which is already covered by the schedule. On looking at the provisions in paragraph 18, I do not understand why there is no register of interests of members of the board of governors. It speaks about the constituency to which each belongs, but there is no provision for a register of interests of the members of the board of governors. That seems illogical as they are in positions of considerable importance in the trust. It is clear that the directors have a register of interests, under paragraph 18(1)(d). I shall be interested to hear the justification for not having a register of interests when these members make up another tier of governance for the trust concerned.

Baroness Noakes: I shall speak to Amendments Nos. 64 and 65 in the group. The effect of Amendment No. 64 is the same as that proposed in the amendments just spoken to by the noble Lord, Lord Clement-Jones; that is, that a register of interests would be required additionally for boards of governors. In another place, the Government conceded that registers of interests would be required for boards of directors. Personally, I do not understand why they did not concede at that stage that they would be required for boards of governors. That seems to be a well accepted part of the Government's arrangements for all public sector bodies.

Amendment No. 65 takes this point further and specifies what should be included in the register of interests. It requires that the registers include financial interests, which is commonplace, and political affiliations within the previous five years. I hope that the Minister will agree that this disclosure of interests is essential in the interests of accountability, probity and openness, particularly in the context of foundation trusts which might be open to entryism, which we have discussed previously. Can the Minister ever envisage a register that would not include those items? If not, the amendment is a useful addition to the Bill.

Lord Warner: Discussions occurred in another place about the provision of a register of interests of members of boards of governors. We considered the arguments carefully. We do not agree that similar legislative provision is required for the board of governors as for the board of directors.

We have had an exhaustive debate about the role of boards of governors and the boards of directors. As the Bill makes clear, it is the board of directors which exercises the executive powers of an NHS foundation trust because the directors are responsible for the day-to-day management of the trust. There is much greater scope for conflicts of interest to arise for the directors than is the case for the governors, in particular in relation to pecuniary matters.

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However, we would expect governors to declare their interests where relevant when speaking at meetings and, indeed, there is nothing to debar individual NHS foundation trusts including provisions in their constitution relating to this. But we do not think it necessary to specify in legislation declarations of interest for boards of governors.

Turning to Amendment No. 65, I have explained already that the Bill now includes a requirement for foundation trusts to have a register of directors' interests and to include provisions on conflicts of interest in their constitution. We do not think it necessary to specify in primary legislation what constitutes an interest and thus what should be held on the register. Any relevant financial or political interest would necessarily have to be included on the part of the board of directors but, as I have said, we do not think it necessary to prescribe in primary legislation a register of governors' interests in the way proposed.

Lord Clement-Jones: That is a disappointing reply. Throughout our discussions on this part of the Bill the Minister has sought to minimise the role of the board of governors. Indeed, it appears that its role is shrinking by the minute even as we discuss the issue in Committee. That is in itself extremely disappointing when one considers the livelier and much better governance model that would be available if the role of the board of governors was expanded.

The Minister has said more or less that, because the board is not very important, governors do not have to declare their interests, but if they feel like doing so when they come along to a public meeting, that is all well and good. If the trust wishes to include such a requirement in its constitution, that too is fine. I do not believe that that is good enough.

From a practical view—and there may be some movement on this as time goes on—because boards of governors will represent public opinion in the area, they have the potential to play a powerful role, even if they are not specified formally in the schedule. Like it or not, they will have a considerable influence on the direction of foundation trusts. In those circumstances, it is very important for governors' interests to be transparent. After all, it is the public who will have elected them and thus should know what are those interests.

It is only common sense to adopt such a provision and it is disappointing to see such a laissez-faire approach to interests at a time when declarations of interest are treated as a matter of considerable importance by public bodies. I think that this is a retrograde step and we shall certainly reserve our position.

Lord Hunt of Kings Heath: Would the noble Lord give way briefly? Perhaps it is churlish of me to return to the whole issue of boards of governors, given that my noble friend has just accepted my amendments and that we have discussed their role a number of times today, but I think that the noble Lord, Lord Clement-Jones, is right. If it is not considered important for

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declarations of interest to be made by governors, that is yet one more visible sign that the board is not a board of governors; it is much less than that.

I wonder in all seriousness whether we ought to consider changing the name. I say that because it is quite clear that the governors are not there to govern. They are there to give a view. I am very concerned that people will be elected to that body with a false perspective. Before it is too late, ought we not to reconsider in the interval between the Committee and Report stages, how to set out a more realistic assessment of what this body is there to do?

We are in danger of storing up trouble for the future. I know that noble Lords disagree with me about what the role of the board of governors should be, but I think that we are all agreed that it should be made abundantly clear to everyone taking part exactly what the board is there to do. If we are not careful, we are at real risk of ending up with an extremely uncomfortable and unworkable governance structure.

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