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Baroness Andrews: The two amendments deal with different aspects of funding. The first is the responsibility for funding the regulator's office and the regulator's potential to raise fee income. We have made clear in Schedule 2 our intention that the Secretary of State will fund the office of the independent regulator directly. I do not have to explain in detail why that is the case. As part of his overall responsibility, for which he is accountable to Parliament, he must have control over that expenditure.

Amendment No. 104, which would effectively remove that power, is not acceptable in those terms. If, as the noble Baroness suggested, the amendment is aimed at ensuring that the Secretary of State provides sufficient resources or does not unreasonably withhold them, I assure her that the independent regulator will be a very significant office with a major new responsibility in the health service. It will be funded appropriately. As we discussed earlier, the regulator is accountable to Parliament and required to report to it each financial year in the exercise of his functions. That information will include a report on the office's expenditure. There can be no better check. If the Secretary of State funds the office appropriately, he must make it clear to Parliament.

It is not so bitter a pill for me to address the question of a guarantee, which the noble Baroness raised. Members of the Committee will know that this is hardly a unique model for accountability. There are many examples of bodies funded similarly by Government. The Government's record on NHS funding should provide reassurance. We can be confident that the office will be funded to do its job properly, because we intend that the NHS should be funded to do its job properly. This will be no different, so we see no reason for different legislative provisions.

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On those grounds, it is inappropriate for the chairman of the Health Select Committee to determine government expenditure.

I shall now discuss Amendment No. 188 and the regulator's ability to raise fees under Clause 21. The Bill refers to "a reasonable annual fee". That simply indicates that we are building foresight into the provision. It is included simply to ensure that the option of funding the regulator's office through a fees structure is not ruled out. We do not intend to commence the provision currently. There is no question of integrity being challenged here.

I accept that there is a reason for raising the concern in Amendment No. 188 that the regulator might make a profit through his power to raise fees. I reassure Members of the Committee that that is simply not possible. Even after the commencement of Clause 21, the regulator would not be able to generate funds through fees that exceed the total expenses of his office. Clause 21 requires that fees be reasonable. The Bill does not give the regulator any power either to generate a surplus or to distribute surplus funds to anyone under the legislation. If we commence the provision to allow the independent regulator to charge fees, it will be for him to determine the level of fees payable by the trust.

The noble Baroness asked whether we have in mind a system, and whether the fees will be set according to criteria. There is a specific legislative requirement only that the fees be reasonable. But if the fees structure was size-based, according to the number of trusts or the increase in a trust's size, for example, the fee might grow accordingly. But those are matters for the future, as are the recovery issues.

I reiterate that, as a matter of law, the regulator will simply not be able to charge fees that exceed the total expenses of the office. Those safeguards will ensure that the running costs of the office will not be unreasonable but will be appropriately funded. I hope that, on those very reasonable grounds, the noble Baroness will be able to withdraw her amendment.

3.45 p.m.

Baroness Noakes: I thank the noble Baroness for her response. I was particularly pleased to hear that there is no current intention to implement the fee-charging provisions. That helps for the moment, at least.

On the core issue of financial independence, the noble Baroness said that the Secretary of State must have control. That is at the heart of the issue. The Secretary of State must have control of money because he must have control of the regulator. That is implicit in many of the models cited today. I thought that we were trying to get a genuinely independent regulator for the NHS. Advertisements for the regulator stressed the peculiar independence of the office. We do not have that here; therefore, we will need to reflect on that aspect on Report as part of our overall view on the regulator. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Baroness Noakes moved Amendment No. 105:

    Page 114, line 28, at end insert—

"Accounts and audit

(1) The regulator shall keep proper accounting records.
(2) The regulator shall, for each financial year, prepare accounts in accordance with directions given by the Treasury.
(3) The accounts prepared by the regulator for any financial year shall be submitted by the regulator to the Comptroller and Auditor General.
(4) The Comptroller and Auditor General shall examine and certify any accounts submitted to him under this paragraph and shall lay before each House of Parliament a copy of the accounts as certified by him together with his report on them."

The noble Baroness said: The amendment would add a new paragraph after paragraph 5 of Schedule 2. It is a probing amendment setting out requirements for the regulator to keep proper accounting records, to prepare annual accounts and to submit them to the Comptroller and Auditor General, who then audits them and lays them before Parliament. It is a pretty standard formulation for a public sector body. But the purpose of the amendment is not to refer to the detail of that, but to establish what are the accounting and auditing arrangements for the regulator, as I could find no reference to them in the Bill.

I hope that that is not an oversight on the part of the Government. I invite the Minister to explain the auditing and accounting arrangements for the regulator. I beg to move.

Baroness Andrews: One rises always with trepidation to discuss public accounts with the noble Baroness. Of course I agree with the principle that the independent regulator must keep proper accounts to ensure both probity and proper accountability. But there is no need to include that in a statutory provision.

Members of the Committee may well know that detailed public accounting rules apply to non-ministerial government departments. The office of the independent regulator would be a non-ministerial department so the provisions will apply automatically. The noble Lord, Lord Warner, indicated earlier that we would review the structure of the office in the light of the Better Regulation Task Force report on independent regulators, and that we would ensure that such accounting requirements continue to apply—if necessary, by including explicit provision in legislation if any changes are made in that way to the relevant clauses or schedule.

The regulator is also required to report to Parliament in the exercise of his functions. That will also include a financial report. I hope that, with those assurances, the noble Baroness will be satisfied that we have made appropriate provision.

Baroness Noakes: I am grateful for the noble Baroness's response and her confirmation that the office will be a non-ministerial government department. I understand that from that flow the auditing and accounting arrangements. That was the assurance that I sought. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Baroness Noakes moved Amendment No. 106:

    Page 114, line 32, at end insert—

"( ) The annual report shall include a summarised account for all NHS foundation trusts for the financial year."

The noble Baroness said: The amendment would add a new sub-paragraph to paragraph 6 of Schedule 2. Paragraph 6 concerns the regulator's annual report, to which reference has been made, which must be laid before Parliament. Our amendment would make it a requirement for the annual report to contain a summarised account for all foundation trusts for the financial year. I am not sure that I will hold the attention of all noble Lords on the subject of summarised accounts, but I shall do what I can to sex it up. Apparently, the Department of Health produces summarised accounts for the NHS each year—I have brought a copy, so Committee Members can see the exciting tome that is available each year. It is a weighty document. It summarises the different flows within each part of the NHS and includes a section on NHS trusts. The summarised accounts therefore give a financial overview of the NHS that is not otherwise available.

For example, if we want to see the amount of money that flows through NHS trusts or PCTs altogether, that is where one can look for the information. Importantly, the Comptroller and Auditor General includes an informative narrative at the beginning of the summarised accounts that reveals data that are interesting to some people, such as the amount of deficit and who has financial problems. It is my understanding that, unless we do something in the Bill, there will not be a summarised account for foundation trusts which means that Parliament will be deprived of access to important information. It may also make it difficult for the Public Accounts Committee in another place to conduct a review of the issues arising from the foundation trust sector as a whole.

Our amendment does not involve the C&AG, but it would be essential if there were a summarised account. If the Government were minded to accept our amendment, I am sure that that could be dealt with later. I beg to move.

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