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Baroness Andrews: I am aware that the noble Baroness has long experience in the health service. I believe that her proposal will leave us with a highly politicised situation—exactly that so deplored by the noble Lord, Lord Peyton. The point of the regulator is to introduce an independent, unconditional element of fair play on which everyone can rely and can take comfort from.

Baroness Cumberlege: I believe that that is a charade. I believe that the whole thing is politicised. The Bill uses the words:

I cannot imagine a regulator going against the Secretary of State. Who will appoint the regulator and ensure that he produces the type of regulations that the Secretary of State wants? We are tied into the political system—which of course is why we need an agency.

Baroness Carnegy of Lour: There is another element, which has not been mentioned. Clause 4(3) states:

    "The applicant may modify the application with the agreement of the regulator at any time before the authorisation is given".

That means that the regulator will negotiate with the hospital about altering its submission. If, having done that, the regulator asks the hospital to change the submission from the one which the Secretary of State has approved, and if it happens in a way that the Secretary of State does not much like, how long will the regulator last, especially if he keeps doing that?

My noble friend Lady Cumberlege made an important and constructive suggestion. This is a political operation. It is no good trying to disguise it by giving the regulator a role which carries the pretence that he is making the final decision if he cannot disagree with the Secretary of State. It would be far better if the Bill stated specifically that, ultimately, the Secretary of State decides. Everyone will want him to decide. There may be a great row or problems in relation to a certain hospital, and everyone will want the Secretary of State to carry the responsibility. I consider that to be a very serious suggestion and one that the Government should take on board.

Lord Peyton of Yeovil: I want to take up what my noble friend Lady Cumberlege said about the noble Baroness's reply to the amendment. It was very gracious. I agree with my noble friend that the response was most amiable, fair and generous. But my difficulty is that, greatly to my regret, the noble Baroness is neither immortal nor the Secretary of State. If she were both those things and if the Government were sensible enough to keep her in office for ever, then my difficulties would be removed. As it is, Secretaries of State are not only temporary but also fallible, which I am sure the noble Baroness is not.

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My anxiety on this matter is huge. The noble Lord, Lord Hunt, suggested that he has been cured since his treatment in the department, but I rather doubt that. What he said just now seemed to me to be absolutely what the noble Baroness was waiting for in support of a case which had been written out for her by the department.

I believe that this is pure double-banking. One assumes that the Secretary of State has done his best to appoint a reliable and competent person as regulator but he is now going to say, "Well, I need to have a first look at this to make sure that this man will not have an opportunity to make an ass of himself". It has been known to man for Secretaries of State to make very grave mistakes and real asses of themselves. Therefore, it is more likely that a regulator, drawing a certain amount of peace of mind and detachment, will sometimes be a fairer judge than a Secretary of State.

Lord Clement-Jones: I return briefly to Amendments Nos. 122 and 128. I believe that perhaps the noble Baroness's response was more illuminating than she intended. She said that CHAI's views on an application by a trust for foundation status would be taken into account. However, that seems to go rather wider than simply considering the star rating of the trusts concerned—particularly the current trusts—and seeing whether they are eligible for foundation trust status. Precisely how will CHAI's views be taken into account? Clearly they will not be determinative but will form part of the process.

Baroness Andrews: Secretaries of State are not immortal, although sometimes they seem to be so. On the other hand, they sometimes also seem to undergo a rather rapid turnover.

I believe I shall have to agree to disagree with the noble Baroness, Lady Cumberlege. With regard to what she and the noble Baroness, Lady Carnegy, said, perhaps I may talk a little about the objectivity on which the process is built. I believe that the processes—for example, those relating to the six heads which a trust is required to prove that it has in terms of governance, clinical governance and consultation, and so on—are objective. They are not processes with which the Secretary of State can interfere. Either they will have been validated or they will not. That is an objective process.

There are other objective processes. Each trust will be required to produce a five-year service development plan setting out its financial and operational business strategies. That is an objective process. The trusts will be required to hold that plan up to a health test, administered by some of our leading accounting firms. I am sure that the noble Baroness will be pleased to know that those include KPMG, Deloitte & Touche and PricewaterhouseCoopers. They will all be involved in examining what a trust aims to do in relation to its objectives and ambitions to become a foundation trust. Therefore, there is a solid, factual-based objectivity about the process, which I believe will be successful. I hope that noble Lords will be reassured to hear that there will be no political input

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into the process at every level. Obviously it is too important for that, and also too many mechanisms have been built in—necessarily and properly so.

The regulator will be able to go back to the trusts and ask for modifications, but the Secretary of State has no locus in that. The regulator will say, for example, "I think your governance arrangements are admirable but I believe that there are some additional questions that I would want to have answered. I seek reassurance on this point, for example. Have you ensured full consultation with this group?" I am simply thinking aloud, but that is the type of question that the regulator will be able to ask. No regulator worth his salt will be afraid to disagree with the Secretary of State. I believe it is extremely unlikely that there will be no dissent and no contradictions.

In response to the question raised by the noble Lord, Lord Clement-Jones, as I said, CHAI's views on performance and quality will inevitably be considered as part of the application process. The three-star ratings will be in place. But the trusts will also put forward other evidence which will show their clinical competence, and so on. I imagine—if I am wrong, I shall write to the noble Lord—that that might form part of the CHAI inspections.

5.45 p.m.

Baroness Noakes: Perhaps I may ask the noble Baroness a question which relates to the provision of CHAI's views on applicant NHS foundation trusts. Clause 54 states that CHAI is to keep the regulator informed about,

    "the provision of health care by or for an NHS foundation trust".

It says nothing whatever about applicant NHS foundation trusts. Therefore, can she explain how CHAI can provide information to the regulator about such applicants?

Baroness Andrews: I believe I have done so already in that I said that CHAI would have gone through the process which generated the three-star ratings. If other aspects of clinical competence are to be judged, then it is possible that CHAI will put those forward. Again, if I am incorrect about that, I shall write to noble Lords.

Earl Howe: This has been a very good debate. I believe that my noble friends Lady Cumberlege and Lady Carnegy got it absolutely right. Let us be honest about this. If it is the Secretary of State's job to ensure that the application is all in order, why have the regulator go through the whole process again? As my noble friend Lord Peyton said so well, it is double-banking.

Amendment No. 130, which I tabled, seeks to get the balance slightly different. It acknowledges the point made by the noble Lord, Lord Hunt, that the Secretary of State has an interest in the decision, but it says that it is up to the regulator, first and foremost, to reach the main decision.

During her first intervention, my noble friend Lady Carnegy asked who should do the real work here. I maintain that the regulator should do it. The noble

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Baroness's answer told me that, in practice, the regulator will play only a secondary role in the decision-making process. He will ask a few detailed questions but will not be truly independent as the arbiter of foundation trust applications. His role cuts in only once a decision has effectively been made in the Department of Health to create a shadow NHS foundation trust. So, right up to the point of the creation of the shadow trust, the regulator is effectively nowhere. His job is a rubber stamp. That is more than just a pity. It is wrong in principle and unnecessary. As I have tried to suggest, there is a better balance to be struck.

Lord Hunt of Kings Heath: I thank the noble Earl for giving way. He suggests that the role of the regulator is that of a rubber stamp. However, does he not agree that the whole history of regulation in this country suggests that regulators are not rubber stamps, and that they have been keen to assert their own independence? Why would the behaviour of the regulator of foundation trusts be any different? Surely, the incoming independent regulator will seek to assert his or her independence. That was the reason I asked my noble friend a question regarding the timetable. It is important that we know the amount of time that is likely to be taken by the regulator so that foundation trusts know when it is that they are likely either to be given their authorisation or finally to have it turned down.

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