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Lord Clement-Jones: My Lords, I shall speak to Amendment No. 143. I have considerable sympathy with the noble Earl's amendment and what he has said about the duties of the regulator. But we on these Benches wish to go rather further in terms of the general duty of the regulator. Again, we are very much informed by what the Minister said in Committee.

The Minister will notice that the amendment retains the wording that the regulator must exercise his functions in a manner that,

The noble Lord put a rather heavy spin on the fact that the way in which we had worded our original Committee stage amendment might be detrimental to the way in which the regulator exercises his powers.

In addition to retaining that wording, therefore, we have proposed putting a duty on the regulator essentially to exercise his functions in accordance with a number of principles. They are: the principle of equality of access to NHS healthcare; the principle of universality of access to NHS healthcare; and having regard to the impact of an NHS foundation trust on the local health economy.

The Bill is remarkably deficient in respect of how the regulator is expected to exercise his duties and how that will then impact on the way in which foundation trusts operate. The Minister heard the great concerns that were expressed about the possible impact of foundation trusts on new bodies such as cancer networks and collaboratives in the way in which the foundation trusts might choose to operate. He laid great emphasis in his reply on the duty of co-operation

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between NHS bodies which now applies to foundation trusts and brings them within the 1999 Act. But that is fairly thin gruel given how foundation trusts could act. We believe that an explicit duty on the regulator to have regard to these principles and to the impact on the local health economy is desirable.

The Minister asserted a number of points in Committee. He said that the creation of trusts will support the development of NHS services in local health economies, and that foundation trusts will exist to provide and develop healthcare services for NHS patients in a way that is consistent with NHS values. I have no doubt that the Minister confidently believes that the foundation trusts will operate in that way. However, there is a lack of levers to ensure that that happens, as the regulator does not have the power to have reference to that. We believe that we would have a far more secure system in which people would have far greater confidence in the way that foundation trusts operate if the regulator had explicit powers to act in that way.

Lord Warner: My Lords, I shall deal with Amendments Nos. 142 and 143 separately.

I turn first to Amendment No. 142. The duty on the regulator to exercise his functions consistently with the Secretary of State's own duties ensures that NHS foundation trusts are as fully integrated as is possible. The inclusion of these objectives would create ambiguity about what the duty under Clause 3 really means, and could result in conflict between the regulator and the NHS.

I shall discuss the proposed objectives in turn. The objective in paragraph (a) is unnecessary since, as a public office holder, the regulator is under a common law duty to act proportionately and reasonably. The objective in paragraph (b) adds nothing to the regulator's duty to ensure that there is comprehensive provision of healthcare—in line with the Secretary of State's duties under the 1977 Act. As regards paragraph (c), the compact between the Government and the voluntary sector is not and should not be legally binding. It gets its authority from being jointly endorsed by the Government and the community and voluntary sector. This week is Compact Week. I should like to take this opportunity to re-iterate the department's continuing support of the compact. The Department of Health is determined to see all NHS organisations in England signed up to a geographically relevant local compact by 31st March 2004 so that applicants are likely to have local compacts in place when they become NHS foundation trusts.

I shall not go over the ground again but I informed noble Lords in Committee of the progress that had been made in this area at the beginning of this year. We think that we are well on course to deliver the measure. Therefore, paragraph (c) of the amendment seems to us superfluous.

I turn to Amendment No. 143. We believe that this will produce ambiguity in terms of the regulator's duties vis-a-vis the Secretary of State's duties. In addition, the requirements on equity and universality of access in this

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amendment are superfluous because of the Secretary of State's duties under Sections 1, 3 and 51 of the National Health Service Act 1977. These require the Secretary of State to provide a comprehensive health service which is free of charge and to make provision for clinical training and research. The principles of fairness and universality are, therefore, fully established and the amendment is unnecessary.

Turning to the requirement regarding impact on the local health economy, the creation of NHS foundation trusts will support the development of NHS services in local health economies. Foundation trusts will exist to provide and develop healthcare services for NHS patients in a way that is consistent with NHS values. Over 95 per cent of their income will continue to come from NHS commissioning. They will be under a statutory duty to work in partnership with other local NHS organisations and social services to deliver integrated packages of care centred around the needs of patients. They will be expected to use their new freedoms in ways that fit with key NHS principles and do not undermine the ability of other providers in the local health economy to meet their NHS obligations. We have said that many times and we think that the Bill provides that and that the amendment is absolutely unnecessary.

Lord Clement-Jones: My Lords, the Minister repeated almost word for word what he said in Committee about the way that foundation trusts will support the development of NHS services and local health economies. Will he also repeat—this only strengthens our desire to give the regulator explicit duties—what he said in Committee; namely, that,

    "it is also our strong belief that employment contracts are a matter for staff, their unions and the employers. They are not issues which should be arbitrated upon by a third party, such as the regulator".—[Official Report, 13/10/03; col. 628.]?

The reason I seek a duty to have regard to the impact of the measure on the local health economy is precisely that the Minister on the previous occasion that we discussed the matter was so adamant that that was not within the powers of the regulator.

Lord Warner: My Lords, I repeated the arguments because they are very good arguments and we have consistency of purpose on this issue. I confirm what I said earlier: it is not the job of the regulator to interfere in individual wage negotiations and terms and conditions negotiations between employer and employee. I do not resile from what I said at an earlier stage of the Bill in any way at all.

Earl Howe: My Lords, I listened carefully to the Minister. I share the perception of the noble Lord, Lord Clement-Jones, that the Minister's answer was very similar, if not identical, to the one he gave in Committee. It is clear that I shall not get any further with this point and I see little alternative but gracefully to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 143 and 144 not moved.]

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Baroness Noakes moved Amendment No. 145:

    After Clause 3, insert the following new clause—

The Secretary of State may provide in regulations that decisions of the regulator are to be subject to specified appeal or review mechanisms."

The noble Baroness said: My Lords, I rise to move Amendment No. 145 which allows the Government to specify in regulations appeal or review mechanisms against decisions by the regulator.

In Committee I tabled various amendments on the ability of foundation trusts to make representations to the regulator. The Government argued that the common law principles provided a robust framework but we know that that robust framework is the rather inadequate process of judicial review.

Since Committee the Better Regulation Task Force has reported and stated that appeal mechanisms should be introduced for regulators so as to avoid recourse to judicial review which the task force described as time consuming, costly and capable of looking only at process rather than substance. According to the task force, the Government have until next year to issue guidance on best practice for independent regulators but it is not often that a legislative opportunity arises regarding appeal mechanisms. Indeed, we on these Benches hope that there is not another legislative opportunity next year in which to fill the gap on appeal mechanisms. We believe that there is a hole in the Bill related to appeal and review mechanisms. We suggest that it is filled by a regulation-making power so that the Government can implement their own views on best practice with the minimum delay once that decision has been reached. I hope that the Government will seize the opportunity. I beg to move.

Lord Clement-Jones: My Lords, I support the arguments put forward by the noble Baroness, Lady Noakes. She put them admirably. It seems to me that a permissive clause such as this which allows an appeal mechanism to be inserted in a way that has been approved by the Better Regulation Task Force would fit very well within this legislation.

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