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Health and Social Care (Community Health and Standards) Bill

8.34 p.m.

House again in Committee on Clause 6.

Baroness Barker moved Amendment No. 135:

"( ) the application is endorsed by the relevant local authorities, Primary Care Trusts, patients' forums and representatives from local staff side organisations,"

The noble Baroness said: Shortly before the House resumed, there was an interesting debate on the issue of consultation. I apologise to the Committee for not

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being able to be present. The question of authorisation of trust status is one to which we have paid considerable attention, not least in the light of the statement by the Minister here and by his colleague in another place about the keystone of foundation trusts being the extent to which they are creations that are owned by the local authority in which they exist. Amendment No. 135, which stands in my name and that of the noble Lord, Lord Clement-Jones, would address exactly that point.

Something that has not always been at the forefront of our deliberations on the Bill is that an acute trust is one part—admittedly a very key part—of the local health economy. However, it is only one part and the partnership with which it does its work is of key importance. The decision to apply for foundation status can work in practice only if it has the support not only of key individuals in the community—I note that, in some parts of the country, they are already being consulted about the proposal that their local hospitals should become foundation trusts—but of organisations that have a key part to play in the health economy. That is why our amendment would create a requirement for an application to be endorsed by the relevant local authorities, primary care trusts, patients forums and representatives of staff.

It is unlikely that a foundation trust could operate to the standards required throughout the Bill if it did not, from its inception, have the support of the key bodies in the area. If those bodies do not give their consent to the application, it is highly likely that the whole creation will be flawed from the beginning, not least because the trust's governance arrangements will be set at an early stage. The bodies that represent the people who have now and will continue to have the biggest investment in the NHS and in the outputs of foundation trusts must be involved in them.

If an applicant foundation trust cannot convince the bodies set out in the amendment, there will be a significant question over whether it can convince others in the wider population and, indeed, conduct its business, once it is established. An application should, as a matter of good practice, have the endorsement of those bodies. I hope that the Minister will give the amendment a positive response. I beg to move.

Baroness Andrews: It is good to see the noble Baroness back in her place for another debate on consultation. We missed her in the earlier debate. The noble Baroness will not be pleased when I say that, for some of the reasons that I explained in the earlier debate, we do not believe that the amendment is necessary.

Clause 6 allows for regulations to prescribe who should be consulted as a minimum about an application. It is an important measure, which ensures that the views of local communities are sought and listened to. Consultation will always involve key local parties and players. I agree with the noble Baroness: without the agreement of the partners that she

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identified, an application would not stand a chance of success. That is why there is no need to prescribe the key partners separately.

Another reason is that we have already specified a range of local partners, including those listed in the amendment, in the list of consultees in the guidance on consultation. We intend to specify those partners, including those listed in the amendment, in the regulations. I made a commitment earlier that we would consult on the regulations, and I am sure that the noble Baroness will want to have an input into that.

It is self-evident that, if applicants are serious about their application, they will have to have had discussions with staff, primary care trusts, stakeholder groups and local authorities. That is the only way in which they will be able to gauge the depth of support or opposition. They must make sure that they know those views. However, we should also be sensible about what we are trying to do. Although we want to be sure that an applicant trust is not just going it alone, against the views of staff, patients and all the critical people, we cannot give local partners what is, in effect, a veto over an application. The views of those partners are critical, but the power to veto is inappropriate. In response to a similar debate, the Minister in another place said:

    "Both the Secretary of State and the regulator would carefully examine the situation to see if there was significant local opposition: that is right".—[Official Report, Commons Standing Committee E, (Part 2), 20/5/03; col. 281.]

That information must be obtained. The Secretary of State and the independent regulator will scrutinise applicants, ensuring that all partners are consulted and their views taken on board. In some local areas, there may be disagreement. We believe that it is right that there should be a thorough scrutiny of the application, but not a veto. I hope that the noble Baroness agrees and withdraws the amendment.

Baroness Barker: I thank the Minister for her reply, which, as she guessed, is the one that I thought she would give. A requirement to consult, as opposed to a requirement to have an agreement, is qualitatively different in a context in which the resources at stake are not equal between the partners. Given the concentration of resources, first, within PCTs as opposed to social services, and, secondly, within the acute sector as opposed to the community sector, there is a difference in the extent to which consultation and agreement are necessary in order that a local health function is not upset. I have no wish to take the noble Baroness back through our interesting and fascinating discussions on the Community Care (Delayed Discharges etc.) Act, but it is a good example by which to judge.

In putting forward the amendment, perhaps we are tilting the balance in an uneven situation rather more in the right direction. I shall read in the Official Report the comments made by the noble Baroness. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Baroness Noakes moved Amendment No. 136:

    Page 3, line 39, at end insert—

"( ) The applicant may at any stage make written representations to the regulator about the terms of its authorisation and the regulator shall reply in writing to the applicant."

The noble Baroness said: In moving Amendment No. 136, I shall speak also to Amendments Nos. 147 and 189, which seek to insert the ability of a prospective or actual foundation trust to make representations to the regulator. One of the things that is missing from the scheme for the regulation of foundation trusts is the right of appeal. I believe that regulatory systems set up elsewhere have included appeal rights. A regulatory system without appeal rights has no remedy, other than judicial review, against a regulator who may be acting perversely or, simply, may not have understood a point of importance to the appellant. The amendments go nowhere near as far as full appeal rights, but offer a middle way.

Amendment No. 136 introduces into Clause 6 the right for a prospective foundation trust to make representations to the regulator about the terms of its authorisation and requires the regulator to reply in writing. A foundation trust applicant is not only interested in whether it has passed or failed the regulator's tests for becoming a foundation trust. It will also have an interest, for example, in the restriction on private patient income, under Clause 15, in assets designated as protected property, under Clause 6, or in its authorised services, under Clause 14. If the applicant thought that the regulator was likely to authorise it on terms that the trust would find difficult or even unacceptable, it would need an outlet for its concerns. Amendment No. 136, which falls far short of an appeal mechanism, allows the issues to be raised and dealt with on a semi-formal basis.

Amendment No. 147 deals with Clause 9, under which the regulator can vary an authorisation. This is curious. Under Clause 9(2), the regulator is required to consider what a local authority overview and scrutiny committee or the Commission for Patient and Public Involvement in Health think, but he is not obliged to consider what the foundation trust thinks. Since technically alterations can be made whether or not the foundation trust agrees with them, this amendment is important because the regulator would then have to consider the representations of the foundation trust.

Lastly, I turn to Amendment No. 189, which deals with Clause 23. If a foundation trust is threatened with a notice that it is failing to meet the terms of its authorisation, it has the right to appeal in writing to the regulator. This is stronger than simply making representations as sought in my other amendments because what is at stake is greater. Even here, however, we have not suggested a major appeal process involving outside parties.

When this matter was considered in standing committee in another place, the Minister said that there was no issue to be dealt with because regulators have a duty under general public law to act proportionately and reasonably. While that is all very

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well, it means that the only remedy would be judicial review. Most would consider that remedy rather akin to using a heavy and blunt instrument, difficult both to use and to achieve effective results. It would also significantly restrict the ways in which a foundation trust can properly be heard.

We were minded to draft a full-blown appeals mechanism for this part of the Bill. Whether we do so at a later stage will depend on the Minister's response. I beg to move.

8.45 p.m.

Baroness Andrews: As the noble Baroness said, this issue was debated in another place. I shall probably give her the same reply as that given at the time by the Minister.

I turn first to Amendments Nos. 136 and 147. It is important to reiterate that the independent regulator, who will be fully independent of the Secretary of State and the Department of Health, will be responsible for granting authorisation to applicants for NHS foundation trust status and for setting the terms of authorisation under which they will operate. He will also monitor trusts' compliance with those operating conditions, with powers to intervene where necessary to bring a trust failing to meet its obligations back into line.

Under Clause 8 the independent regulator will be able to vary the terms of authorisation of an NHS foundation trust. In deciding whether and how to vary such an authorisation, the regulator will be required to take account of the results of any recommendations arising from the statutory consultation process, no matter in what form. He will also have to take into account other relevant evidence, including the views of those affected by the variation. I suggest that that covers the points of concern for the noble Baroness and that her amendments are not strictly necessary.

I wish to add a further assurance and repeat once more the point about the common law, because it is a powerful argument. The common law imposes a number of duties on statutory offices such as that of the independent regulator. One very important duty is that a statutory office holder is required to give a fair hearing to both sides when making a decision. Discussions with an NHS foundation trust would therefore always form a natural and fundamental part of the process for setting and reviewing the terms of authorisation, and the regulator would be required to seek the views of a trust and take them into account. So I do think that the concerns are met by those points.

Amendment No. 189 seeks to allow a foundation trust to make a "written appeal" to the regulator where a warning notice is issued under Clause 23. The intention seems to be to ensure that the regulator does take into account the views of a trust when issuing a warning notice. However, as I have said, the requirement is already imposed on the regulator by common law.

A warning notice, along with the more serious powers available to the regulator under Clause 23, can be exercised by the regulator only once he has given a

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foundation trust a fair opportunity to put its case. This is a well-established legal principle and I do not think it appropriate for the legislation to interfere with it in the way suggested by the amendment. It may well be a harmful intervention.

Let me cite an example. If a CHAI report indicated a potential breach of terms of authorisation, the NHS foundation trust would have an opportunity to prepare a response to the report which the independent regulator would consider alongside the CHAI report in deciding whether any action is appropriate. For all those reasons, I would argue again that Amendment No. 189 is unnecessary.

Finally, I want to reiterate that, just as with the Secretary of State, while there is no formal mechanism for appeal against the independent regulator's decisions, if the regulator failed to act reasonably and proportionately in response to any representations made by the foundation trust, he would be subject to judicial review. That is not a light sanction and, on those grounds, I hope that the noble Baroness will reconsider her amendments.

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