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Baroness Noakes: I thank the Minister for that unsurprising reply. She referred to the common law environment as being powerful but she knows that the only remedy is judicial review, just as it is at the moment if the Secretary of State behaves in a way that dissatisfies an NHS body. Anyone who has ever sought to obtain relief through a judicial review will know that that remedy is costly to obtain and not very often used.

It is easy to satisfy a judicial review. Someone sits in a department with their lawyer at their right hand. The lawyer says, "Secretary of State, you must consider what is before you". The Secretary of State then says, "I have considered it", and puts the matter to one side. It is very easy to deal with the process element of a judicial review.

The noble Baroness did not say why this scheme of regulation does not have appeal rights while other schemes in the public sector do. For example, the railway regulators and the energy regulators all have appeal rights. I am not convinced that we should leave this issue to the common law and we shall return to it with some force at the next stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 137 to 142 not moved.]

Clause 6 agreed to.

Clause 7 agreed to.

Lord Clement-Jones moved Amendment No. 143:

(1) The first seven NHS foundation trusts to be authorised under section 6 shall be known as "NHS foundation trust pilot schemes".
(2) Two years after the authorisation of the seventh NHS foundation trust pilot scheme, the Commission for Healthcare Audit and Inspection shall initiate an independent evaluation of all seven pilot schemes against the criteria set out in subsection (3).

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(3) The criteria against which the independent evaluation will assess the pilot schemes shall be—
(a) the quality and effectiveness of the health care services provided by the pilot schemes;
(b) any changes to the range of services provided or patients treated by the pilot schemes since they were established;
(c) the impact of the pilot schemes on other parts of the NHS, including neighbouring NHS trusts, local Primary Care Trusts, and systems for patient and public involvement;
(d) the impact of the pilot schemes on the speed and equality of patient access to NHS services;
(e) the effectiveness of the pilot schemes in promoting greater community involvement and influence, with particular reference to their success in ensuring that the membership of foundation trusts' public constituencies is representative of their patients and local residents;
(f) the success of the pilot schemes in promoting greater innovation in the delivery of healthcare services; and
(g) the views of residents in the locality of the pilot schemes, of patients and their relatives, and of staff working in the pilot schemes and their representatives.
(4) The results of the independent evaluation will be published in a report, which will be laid before Parliament by the Secretary of State.
(5) Following the authorisation of the seven NHS foundation trust pilot schemes, no further NHS foundation trusts may be authorised by the regulator until after the publication of the independent evaluation of the NHS foundation trust pilot schemes.
(6) In determining which bodies to authorise as NHS foundation trust pilot schemes, the regulator shall endeavour to ensure that the pilot schemes reflect, so far as is possible, the full range of services and contexts that characterise secondary care in the NHS."

The noble Lord said: The amendment seeks to introduce pilot schemes for the first seven NHS foundation trusts. The policy for foundation hospitals has been developed without trial or public consultations, as the Government themselves will admit. They pray in aid the Spanish model as a precedent but, as is now commonly recognised, that is very different.

The Government claim that foundation hospitals will improve local accountability and allow more scope for staff to innovate and improve services. However, no one has been able to show convincingly that that will be the case and that there will not be adverse impacts such as the poaching of staff and the emergence of a two-tier health service. The noble Lord, Lord Warner, used the phrase that reformers always have to demonstrate a negative. In fact, they have to demonstrate a positive—that is the minimum expected of them—that foundation hospitals will have the desired effect.

In their 1999 White Paper, Modernising Government, the Government stated,

    "we must make more use of pilot schemes to encourage innovations and test whether they will work".

Well, amen to that. A number of recent Government initiatives have been piloted, including children's trusts, the savings gateway scheme and the new adult learning gateway grant. Furthermore, the Government recently conceded that they should have piloted the A2 examination, the second half of the new A-level curriculum, whose introduction caused chaos last year.

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What happened to evidence-based policy in the Department of Health? We on these Benches believe, as does a very wide coalition of interests and organisations, that before any decision is taken to introduce foundation trusts, they, too, should be piloted, and their impact evaluated.

Amendment No. 143 would designate the first seven foundation trusts authorised as "NHS foundation trust pilots" and would require their impact to be evaluated before any further foundation trusts could be authorised. I beg to move.

Baroness Cumberlege: I rise to support the amendment. I think the noble Lord, Lord Clement-Jones, is absolutely right. One should see this in the context of what is happening in the National Health Service generally.

If we look at the very recent reforms that the NHS has carried out, Shifting the Balance of Power within the NHS is still in its infancy, with PCTs being responsible for 75 per cent of the budget. I work quite a lot with primary care trusts; I think they are very brave, but many of them are struggling.

We look to the 28 strategic health authorities that have also been introduced only very recently and are taking on duties from 100 health authorities. This month, the four health and social care directorates have been or are about to be abolished.

All these reforms have undoubtedly caused disruption to staff and patients. I do not argue that they have been detrimental, because some of them have probably been a very good improvement. But as these reforms have been introduced, some things have gone backwards. I cite specialised commissioning, which has been held up for a year now because the policy has not been well defined. Some really detrimental things have happened, for instance in neonatal intensive care, where mothers and babies are being transferred long distances because of a lack of cots.

Now we are embarking on more reforms; we know that financial flows will be changed, and that staff structure will be changed through Agenda for Change. We are introducing patient choice, whereby, by 2005, patients will be offered the choice of up to five hospitals by their GPs. Again, that is something I very much welcome. It is interesting that the London Health Link has been involved in a pilot scheme for this, and says that it is going well.

We know that reforms such as these ensure that people get distracted from the business in hand. It is very hard to argue against pilot schemes. In my experience, when we introduced nurse prescribing, we had eight pilot sites and saw how they went. After that, we had a whole trust area and saw how that went. As we were able to evaluate these schemes, it ensured that people had confidence in the new proposals.

I think that the noble Lord, Lord Clement-Jones, has made an absolutely irrefutable case for having some pilot schemes to test out these reforms before they are introduced nationwide.

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Lord Warner: I have already indicated that piloting is unnecessary and unacceptable. Piloting would not achieve the radical and comprehensive reform that is required to deliver the freedoms and local accountability central to the Government's policy.

Interestingly enough, the chairman of the Audit Commission does not seem to agree with the noble Lord, Lord Clement-Jones. I quote briefly from a piece in his name in the Health Service Journal on 9th October. He stated:

    "In Bournemouth, I said the often ill-informed debate about foundation trusts (but certainly not the policy) was a red herring—a distraction from the challenge of improving the NHS by devolving power to the front line. The Audit Commission supports the principle of foundation trusts because they would be part of a more locally owned and managed service which would, in turn, be more responsive to the community and the individuals it serves".

There is more, but I am sure that the noble Lord will be able to check the source in the Health Service Journal of 9th October.

Clearly, we will learn from the experience of the first wave applications. Many of the characteristics of piloting will be evident in the rollout of NHS foundation trust status. For example, the sourcebooks on governance, HR, finance and so on are not static documents and will be updated as we gain experience of the process. I have already given a commitment that we will ask the regulator to conduct a review of governance arrangements in the light of first wave experience.

The amendment allows only seven NHS foundation trusts to be established in the next two years, which would considerably increase the risk that a two-tier system would be created within the health service. That is quite unacceptable to the Government. We want NHS foundation trusts to be a policy for the many not the few—noble Lords may have heard that phrase before. Eligibility for NHS foundation trust status should be based on merit, as we have repeatedly said. As hospitals improve and gain the skills that they need to operate as an NHS foundation trust they should be able to apply for NHS foundation trust status and move quickly to it.

On our first day in Committee, I explained that by the end of 2004, if all current applicants for NHS foundation trust status are successful, well over 25 per cent of the population of England will be able to benefit from trusts that are NHS foundation trusts, and will be eligible to participate in the governance arrangements of at least one NHS foundation trust. Only a fraction of that number would be included if a pilot scheme were adopted on the basis proposed by the noble Lord. We should not exclude all those people from benefiting from the devolution of power and the real opportunities to participate in the governance of their local hospital that come with NHS foundation trusts status, simply because of an arbitrary cap on numbers as part of a pilot scheme.

The noble Lord's proposal would choke off all those coming forward, such as mental health trusts. Many of the 80 mental health trusts would be able to apply for NHS foundation trust status, as applicants in 2004–5.

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We are already talking to some of those mental health trusts—they want to know more about the process. The amendment would break the considerable momentum to become NHS foundation trusts. I know that the noble Lord likes to present the process as a steamroller being driven from Richmond House, but he overestimates our capacity to dragoon all those people into coming forward.

Many people, even as we speak, are considering their options. There is a real momentum, and we do not want to disappoint the growing numbers of local people who want to move in that direction and have local freedoms and the involvement that it provides. The amendment is progress halting, and certainly does not seem to capture the support of the chairman of the Audit Commission.

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