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Lord Clement-Jones: I thank the Minister for that reply. He seems to believe that the words of the chairman of the Audit Commission will be utterly persuasive. I have huge respect for the chairman of the Audit Commission, but on occasions I disagree or agree with him. On occasions, like the Minister, I will selectively quote him and pray him in aid for my arguments. I could agree with him on all sorts of areas, such as the fact that targets are sometimes futile. Perhaps I should riffle through my back copies of the Health Service Journal to use them as an instrument of that kind of verbal warfare.

I thank the noble Baroness, Lady Cumberlege, for her remarks. We need to rely on the experience of previous Ministers to a large degree. Piloting is not designed to hold up the great onward march of progress. I envisage a somewhat Stalinist statue of the onward march of foundation trusts that the Minister seems to think will be held up by this puny arm insisting on pilot schemes. The Government seem to have a completely circular argument with regard to foundation trusts, that of we must have them because we want them. That is a fairly immature attitude towards policy making. It is quite breathtaking. The Government are mostly relying on assertion. I have not seen any evidence that the Government pray in aid that all this will benefit the patient at the end of the day.

The Minister talks about an arbitrary cap on numbers and the fact that we shall hold up the momentum. But who has created the demand well ahead of the legislation? I believe that the previous Secretary of State announced foundation trusts in January of last year and people have planned since then. No wonder there is some momentum. However, I invite the Minister to consider the whole issue of GP fundholders. I think that the Minister and his colleagues would have used similar language at the time that measure was introduced. When that initiative was introduced Ministers said, "We are not giving too many inducements to local GPs to adopt fundholding; it is all spontaneous. Local GPs want to do this". All I say is that local managers and clinicians in the NHS are only too used to spotting the signs and making a beeline for the latest project that the Secretary of State adopts. That is the culture of the

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NHS. There are some extremely fine managers. They are very good at managing change and handling ambiguity.

This is a bit of a steamroller; I do not dissent from the Minister's language in that respect. It is a steamroller; it should not have got up steam quite as early as it did; and there should be pilot schemes. The noble Baroness, Lady Cumberlege, expressed the matter extremely well when she mentioned looking at the experience that we already have in a number of other areas in the health service. I do not believe that it would be a bad thing at all to do that. At the end of the day I believe it would help us to develop a model for devolution that would be considerably better than this extraordinary scheme that seems to have been conjured up by the Government out of thin air. Clearly, I shall not persuade the Minister quickly, if at all. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 [Amendments of constitution]:

Baroness Noakes moved Amendment No. 144:

    Page 4, line 21, at end insert—

"( ) The regulator shall not give his approval under subsection (1) unless he is satisfied that the amendments have been approved by the board of governors of the NHS foundation trust and, if he considers it necessary, by a majority of the members of the NHS foundation trust."

The noble Baroness said: I rise to move Amendment No. 144 which would add a new subsection to Clause 8. Under Clause 8(1) the trust can alter its constitution with the approval of the regulator but there is nothing in either Clause 8 or Schedule 1 which says what processes must be followed in making an alteration.

I am sure that there are good reasons for changing the constitution of a body. Time moves on and things that were not thought about get invented and other circumstances change. I have no problem with that. In the company law sector, which the Minister tends to discount entirely, there are clearly laid down ways of changing a company's memorandum and articles, which is the equivalent of a constitution. They involve resolutions put to the members and have to be passed normally by 50 per cent or 75 per cent of the members voting, depending on the issue. However, this Bill is completely silent on the matter.

When this issue was debated in another place in Committee in the context of a slightly different amendment, the then Minister, Ms Blears, said:

    "At this stage, we do not want to prescribe numbers in the Bill, or to be inflexible about how that change might come about".—[Official Report, Commons, Standing Committee E, 22/5/03; col. 306.]

Let me translate that for the Committee; as with so much of the governance arrangements for foundation trusts we do not have the faintest idea how this will work, so we shall make it up as we go along. The Committee will not be surprised to learn that there is nothing in the guide to developing governance arrangements either. It appears that the Government still do not know the answer.

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Our amendment is an attempt to put some process in the Bill. It states that the regulator must be satisfied that the board of governors has approved a change, which in the corporate sector would be a certified board minute. It would also give the regulator power to require the change to be approved by the members. Other approaches could doubtless be taken but, whatever the imperfections of our amendment, it is many times better than complete silence. I beg to move.

Baroness Andrews: Schedule 1 sets out minimum requirements for the constitution of public benefit corporations, in a statutory framework within which National Health Service foundation trusts must operate with flexibility to recognise their local circumstances. I hope that I can elaborate on that and deal with the accusation that we do not have the faintest idea what is happening.

I shall briefly set out how changes can be made and accommodated. Clause 8 provides for a foundation trust to change its constitution, subject to the regulator's agreement. For example, it might be appropriate to adjust the boundaries of its public constituency or, as patterns of services develop over time, to bring new partner organisations on to the board of governors. Those changes would require a change to the constitution. In that case, a copy of the revised constitution would be included in the register kept by the Registrar of Companies under Clause 10(2). Under paragraph 20(1) of Schedule 1, copies must also be made available for inspection by the NHS foundation trust.

Schedule 1 sets out minimum requirements, but any change to the constitution has to be authorised by the regulator. We have permitted flexibility, quite rightly, in that it is for the constitution of each foundation trust to set out the detailed processes of determining what changes to the constitution will be put to the regulator for approval. The constitution will set out the respective roles of members and the board of governors in the process.

We do not want to prescribe the way in which any changes should be considered. We have enough respect for the autonomy of the foundation trusts to want to leave it in their hands to make such decisions. Some trusts may wish to hold a vote, while others may set out in their constitution a different method to ensure membership involvement in the process, such as additional consultation. The board of governors, as the voice of members in the organisation, would be responsible for ensuring that any changes were in line with and reflected the wishes of the membership. Again, we leave the processes up to the trust itself.

When we come to the implications of the amendment, it is worth emphasising the practical realities that the proposed change would involve. As we stressed in a debate last week, the trust is based on integrity. It is tripartite, with a board of governors, a board of directors and the membership. Together they make up the trust, and it is the trust that has to decide whether the constitution is to change. The board of governors is not a separate entity in that; it has to work

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in concert with its partners. If the trust wanted to make major changes in its constitution, it would surely seek agreement from all parties. Indeed, I suggest that its future success depends on a shared view of the future. Also, the trust would hardly put forward changes to its constitution that had not been agreed by all the relevant parties.

It is also important to recognise again that the constitution itself is subject to consultation with local communities and partners, so the membership will have the opportunity early on to ensure that the process for amendment is proper and appropriate. As the noble Baroness mentioned, a variety of matters may need to be put right or added. They may range from the relatively technical to a change in a major issue of policy. That flexibility is extremely important. As part of the application process, both the Secretary of State and the independent regulator must ensure that provisions in the constitution are appropriate. Therefore, through the checks and balances that we have built in, I hope that the noble Baroness is reassured that the concerns raised by her amendment are answered and that it would be particularly problematic to separate out the board of governors from that process.

Baroness Noakes: The Minister has disappointed me, as I expected she would. She talked about some of the provisions in Schedule 1 as laying copies somewhere. That is not the kind of process that I was talking about. I was talking about the process of agreeing to something. She talked about the regulator having to approve something. Then we heard about some kind of holy trinity of the foundation trust, which would involve all the parts. One part could not make a decision but all three would. We get into a kind of theology of foundation trusts, which was so vague and nebulous that it might even have been invented by the Prime Minister.

The Minister did not pray in aid the f-word—flexibility, of which the noble Lord, Lord Warner, is so enamoured. I cannot see that we should leave so many fundamental issues, such as how a constitution should be changed, to be addressed on the hoof by holy trinities making applications to be foundation trusts. It is another example of the shabby arrangements that the Government have put forward in the Bill. There is no point in my continuing with the amendment. I beg leave to withdraw.

Amendment, by leave, withdrawn.

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