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Baroness Finlay of Llandaff: My Lords, will the noble Lord clarify the situation of university staff who work in trusts but are employed on an honorary contract by the university to provide a major clinical service? Is it envisaged that they will be included or excluded under the terms of his amendment? In some

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major university hospitals associated with medical schools, the employment contracts of many key clinicians are lodged with the university.

Lord Hunt of Kings Heath: My Lords, that is a very good point. I understand and have every sympathy with it. The answer depends on how those people would be treated in the Bill as it stands. If honorary staff from universities are treated in the Bill as staff for the purposes of becoming a member of the staff constituency, my amendment would apply to them, too, but it depends on how my noble friend responds to the noble Baroness's specific question. Doctors on honorary contracts with NHS trusts should certainly be considered eligible.

Lord Warner: My Lords, as usual, my noble friend Lord Hunt argues, in Amendments Nos. 16 and 20, that NHS foundation trusts should be allowed flexibility to have membership on an opt-out basis. I wish to respond to both amendments. He presents his case persuasively.

I share his aim of ensuring that the membership of NHS foundation trusts is large and fully representative. Ensuring that all staff and a defined group of past patients are included as members can help to achieve that goal. As he says, that is protection against entryism. I anticipate that many foundation trusts will want to consider using an opt-out approach. I agree that there might be some provision to allow them discretion to do so, but we will need to consider carefully how best to provide for that alternative approach. In particular, we want to ensure that people who may not wish to participate as members are not placed under any obligation or disadvantage. We are not unsympathetic to the principles behind my noble friend's amendments and we would like to consider how best to achieve their objectives with a view to bringing forward government amendments at a later stage.

Lord Hunt of Kings Heath: My Lords, I am most grateful to my noble friend for what is, again, a most constructive response. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 17 to 21 not moved.]

Lord Lipsey moved Amendment No. 22:

    Page 110, line 10, leave out second "a" and insert "an advisory"

The noble Lord said: My Lords, with permission, with this amendment I will speak to the other amendments standing in my name—not all of which bear the name of the noble Lord, Lord Clement-Jones—because they are a package. It will be a quicker way of getting through what I want to say.

This morning I made a case in the strongest possible terms for the danger that I see in the present governance arrangements. The House has sent that back to the Commons and we must hope that honourable Members there reconsider the issue. However, it may return to us and we will then face a

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difficult decision. We are all extremely reluctant to overrule the elected House however much we may feel that they err.

With this group of amendments I am taking a different approach. If I were organising the governance structure I would not be starting from here, but from an entirely different point. However, we are where we are and I ask myself whether it is possible to devise a minimal set of arrangements whereby the worst of the dangers that I tried to point out to the House this morning could be avoided. Could we table amendments that it would not be unreasonable to expect the Government to consider and accept, but, at the same time, would protect particularly against the concern of that highly motivated tiny minority of extremists or fanatics who could take over our hospitals? That is the purpose of my Amendment No. 22 and the others that insert the word "advisory"—Amendments Nos. 32, 55, 60 and 65. I will introduce them with as much brevity as I can.

Inserting the word "advisory" every time "Board of Governors" appears is barely a change in policy. The Minister most helpfully gave a description of what the board of governors is supposed to do, which was jolly close to the description that I would have given. However it would be helpfully clarified if the board were clearly labelled "advisory".

Incidentally, I do not think that being advisory is something that should be downgraded in any way. When there is a strong election in which lots of people vote and there is a strong mandate, it would be a mad board of directors that chose to ignore that opinion. However, clarifying the board's advisory position—and Her Majesty's Opposition have tabled amendments that would also have that effect—would help.

The amendments would also broaden the base of the board of governors. At the moment, the Bill lays down that the majority should be elected. I can see a role for some elections to the board, but if we are to make sense of the provision, I would like the board of governors to have the widest possible stakeholder approach. For example, I would give particular importance to having substantial representation for the relevant primary care trusts, which would help to deal with the worst of all the problems in this Bill—that of removing hospitals from the primary care trust remit just when most policy aims to increase the role of primary care trusts in the setting of health priorities. I would like to see strong representation from the PCTs.

I would like to see substantial local government representation, a range of staff interests and rather less representation for elected members. My Amendment No. 32 is very flexible and would provide for between two members and up to one half of the board being elected. Different people would experiment with different amounts. That is a stronger, wider board that is not just reliant on the vagaries of elections and their turnouts.

Amendment No. 55 would remove the power of the governors to hire and fire the non-executives and the chairman. Again, such power could be extraordinarily dangerous in the hands of a few people who turn up. It

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would mean that the chairman of the board of directors and the non-executives would not be getting on with the job of running a hospital, they would be looking over their shoulders all the time to see if they were going to be voted out. The Bill protects against that happening by requiring a 75 per cent majority vote of the board of directors. I do not disagree with that, but that provision is vitiated by another provision that I wish to tackle—that the pay of the non-executives will be set by the board of governors. If I wanted to get rid of all the non-executive directors, I would not try to get a 75 per cent majority to fire them. I would simply move a resolution to reduce their pay to zero. It would be passed by a simple majority and would soon get rid of them. Then the extremists and fascists could take over their places. Amendment No. 60 would provide that the pay would in future be set by,

    "the board of directors in consultation with",

the board of governors. The consultation is important.

My final amendment, Amendment No. 65, provides that rather than having a single person chairing both bodies, there should be a separate chair for the board of governors and for the executives. It is a more controversial proposal, but I think that there is a great advantage to separating those bodies. Being good at chairing an advisory body—collecting the voices, making them articulate and so forth—and being good at chairing a managing body of directors requires a substantially different set of skills. I am not saying that it is impossible to combine both, but on the whole we would do better to separate the two roles.

The Government may not necessarily welcome the set of amendments, but they would cope with the worst problems in the clause. Ministers will be tempted to say "no", and this afternoon I am ready to test the opinion of the House on any amendments for which I am not convinced of the reason for that "no". However, following this morning's debate, I say to Ministers that, even if they manage to reverse what happened in this House this morning—and they may—the Bill must be changed. We cannot simply lie down before the elected majority. If the Bill were a manifesto commitment, a Green Paper Bill, White Paper Bill or a consulted-on Bill, it would be different. But this House would be quite within its legitimate rights to refuse to accept this Bill—even if it is sent back to us at the end of the day—if the Government do not heed the remarks that were made, especially from the Cross Benches, but from all quarters of this House this morning in criticism of the detail of the governance procedures. I beg to move.

3.45 p.m.

Baroness Carnegy of Lour: My Lords, I would like to support what the noble Lord, Lord Lipsey, said about the governors being advisory. I received a letter this morning that I expect other noble Lords also received from the Local Government Association. It is very concerned that plans in the Bill, should it survive, would lead to a duplication of the role of local councillors as directly elected community representatives. The association feels that two conflicting pieces of

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advice could come from the electorate. The noble Lord, Lord Hunt, gave one vision of an electorate of many thousands voting about something in the case of one hospital trust. That would be extremely difficult for people to understand alongside local government, which perhaps has a similar electorate and might express a different view, so I think that the noble Lord has a very good point.

The Government should try, if they persist with this clause of the Bill, to think of ways of getting it to work better having listened to the debate that we had this morning. The noble Lord has been very constructive in making this suggestion, and I back him.

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