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Lord Warner: My Lords, I believe we are getting tired. Some of the comments made make me believe that we are getting to the point where we want to take on the job of parliamentary counsel. We remain fully committed to ensuring that NHS foundation trusts do all that they can to achieve a representative membership, and to avoid capture of the governance arrangements of NHS foundation trusts by particular interest groups or sections of the community. I reiterate that.

However, we accept, as the noble Earl has recognised, that there was a potential difficulty with the drafting of Clause 6(2)(b) which is the condition of authorisation that required the regulator to be satisfied that the foundation trust's,

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    "public constituency will be representative of those eligible for such membership".

That is why we propose to change that to "taking steps". Therefore, we propose to amend that provision—as well as in Clause 27(5)(b), which is the corresponding provision relating to NHS foundation trust mergers—so that the regulator is required to be satisfied that the foundation trust applicant has taken steps to secure that the membership is representative. That mirrors the wording used in Clause 36 and should deliver our intention without placing an impossible duty on applicants for NHS foundation trust status.

I know that some noble Lords have concerns about foundation trusts' abilities to achieve a representative membership. I would argue that most hospitals have a pretty good idea about the make-up of the communities that they serve. If certain groups seem to be under-represented, a foundation trust would need to consider what steps it could take to reach out to those particular groups and encourage them to get involved. We have had much experience in that area in terms of user-group involvement in both health and social care so it is not totally untrammelled territory. The Governance Sourcebook, about which I spoke in Committee and which is available in the Library, includes some ideas for tackling those issues.

Some noble Lords believe that this is a fine aspirational goal and now my noble friend is worried about judicial review. We believe that the wording is right. It represents the reality of the world that probably the build-up of the membership would take time before there was full representative membership and the wording in the new government amendments reflects that. But provided the applicants and the foundation trust can show that they are taking steps and providing the regulator satisfies himself that those steps are being taken, there are no reasonable grounds for thinking that judicial review will be brought into the proceedings.

Earl Howe: My Lords, I have no objection to the government amendments, which we will doubtless reach shortly. I am grateful to the Minister for his reply. I agree with the noble Lord, Lord Hunt, that the amendment inserted in another place was well intentioned; I certainly cannot think of any objection to its purpose. My only worry is whether it is achievable. It is dangerous to make something that may not be achievable a legal requirement.

Nevertheless, I have listened carefully to what the Minister said. I am glad that he is confident that the process is unlikely to be open to judicial review under the current wording; I acknowledge that the wording will be much better when we have agreed to the government amendments. I certainly hope that foundation trusts will be guided by good advice when the time comes, so that they genuinely have an inclusive and representative membership. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Lord Warner moved Amendment No. 156:

    Page 3, line 31, leave out from beginning to "will" in line 32 and insert "the applicant has taken steps to secure that (taken as a whole) the actual membership of any public constituency, and (if there is one) of the patients' constituency".

On Question, amendment agreed to.

Earl Howe moved Amendment No. 157:

    Page 3, line 39, after "provide" insert—

"( ) the applicant has met quality thresholds set by the regulator and reported on by the Commission for Healthcare Audit and Inspection,"

The noble Earl said: My Lords, I move the amendment only as a means to tell the Minister that I am grateful for listening to the points I raised in Committee and responding to them as constructively he has. I beg to move.

Baroness Andrews: My Lords, I am grateful to the noble Earl for receiving our amendments in such a gracious spirit. In Committee, I emphasised that financial ability and quality were matters that could be considered by the regulator, but we wanted to be clear that we had listened. To ensure that the regulator takes account of those matters, we propose to amend the Bill to require the regulator to consider an applicant's financial position and any CHAI report or recommendation on the applicant in making the assessment under Clause 6(2)(e). I am extremely grateful for that welcome for the amendments.

Earl Howe: My Lords, I beg leave to withdraw the amendment.

Amendment, by leave, withrawn.

[Amendment No. 158 moved.]

[Amendment No. 159 unallocated.]

Lord Warner moved Amendments Nos. 160 to 161A:

    Page 3, line 40, leave out "he" and insert "the regulator"

    Page 3, line 40, at end insert—

"( ) In deciding whether it is satisfied as to the matters referred to in subsection (2)(e), the regulator is to consider (among other things)—
(a) any report or recommendation in respect of the applicant made by the Commission for Healthcare Audit and Inspection,
(b) the financial position of the applicant." Page 3, line 42, at end insert—

"( ) The regulator must not give an authorisation unless it is satisfied that the applicant has sought the views about the application of the following—
(a) if the applicant is an NHS trust, the Patients' Forum for the trust and the staff employed by the trust,
(b) individuals who live in any area specified in the proposed constitution as the area for a public constituency,
(c) any local authority that would be authorised by the proposed constitution to appoint a member of the board of governors,
(d) if the proposed constitution provides for a patients' constituency, individuals who would be able apply to become members of that constituency,
(e) any persons prescribed by regulations."

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On Question, amendments agreed to.

[Amendment No. 162 not moved.]

Lord Warner moved Amendments Nos. 162A to 164:

    Page 3, line 43, leave out from "regulations" to "the" in line 44 and insert "make provision about consultation"

    Page 3, line 44, leave out "he" and insert "it".

    Page 4, line 1, leave out subsection (5).

On Question, amendments agreed to.

[Amendment No. 165 not moved.]

Clause 7 [Effect of authorisation]:

Lord Warner moved Amendment No. 166:

    Page 4, line 16, at end insert—

"( ) The validity of any act of an NHS foundation trust is not affected by any vacancy among the directors or by any defect in the appointment of any director."

The noble Lord said: My Lords, this amendment introduces a provision to ensure that NHS foundation trusts can function effectively by ensuring that their actions are not invalidated as a result of any vacancies or defects in appointments of directors. Such provision is standard for a number of bodies with board structures in both public sector bodies such as the HFEA and FSA and companies. I reassure noble Lords that it is a purely technical amendment proposed by the parliamentary draftsman to ensure that the Bill's provisions will work effectively. I beg to move.

On Question, amendment agreed to.

[Amendment No. 167 not moved.]

Clause 8 [Amendments of constitution]:

Lord Warner moved Amendment No. 168:

    Page 4, line 24, leave out subsection (2).

On Question, amendment agreed to.

[Amendment No. 169 not moved.]

Clause 9 [Variation of authorisation]:

Lord Warner moved Amendments Nos. 170 to 172:

    Page 4, line 30, leave out "him" and insert "it".

    Page 4, line 33, leave out "him" and insert "it".

    Page 4, line 37, leave out subsection (3).

On Question, amendments agreed to.

[Amendment No. 173 not moved.]

Clause 10 [Register of NHS foundation trusts]:

Lord Warner moved Amendments Nos. 174 to 177:

    Page 5, line 2, leave out "registrar of companies" and insert "regulator".

    Page 5, line 9, at end insert—

"( ) a copy of the latest document sent to the regulator under paragraph 26 of Schedule 1(forward planning)" Page 5, line 16, at end insert—

"( ) Members of the public may inspect the register at any reasonable time.
( ) Any person who requests it is to be provided with a copy of or extract from any document contained in the register on payment of a reasonable charge." Page 5, line 17, leave out subsections (4) and (5).

6 Nov 2003 : Column 1001

On Question, amendments agreed to.

[Amendment No. 178 not moved.]

Clause 11 [Power of Secretary of State to give financial assistance]:

5.45 p.m.

Baroness Noakes moved Amendment No. 179:

    Page 5, line 25, at end insert "including the guarantee of any obligations of an NHS foundation trust"

The noble Baroness said: My Lords, in moving the amendment, I shall speak also to Amendments Nos. 180 and 181. The amendments relate to borrowing by foundation trusts.

Amendment No. 179 permits the Secretary of State to guarantee foundation trusts' borrowing. When we debated the matter in Committee, the Minister said that, despite the Treasury saying earlier this year that the Crown will be responsible for the overall liability of foundation trusts, the Government would not back foundation trusts' liabilities. The Minister used the rather coy language of not bailing out poor management, but it is not management who are on the receiving end of financial failure; it is lenders and other creditors. We shall return to their plight in a later group of amendments.

The amendment would give a power, not an obligation, to guarantee liabilities. We are mystified by the Government's earnest desire to carry on guaranteeing PFI liabilities but their flat refusal to take even a power to guarantee other foundation trusts' liabilities. There can be only one reason for that: the Government have no real desire to let foundation trusts have access to private sources of money other than through PFI. We know that that is what the Chancellor of the Exchequer wants, so that is what is in the Bill. That will distort financing decisions, so we do not support that aspect of the financial regime.

Amendment No. 180 simply asks for an annual report of all the moneys that the Government will pass on to foundation trusts. In Committee, the Minister somewhat disingenuously argued that, because foundation trusts would individually lay their accounts before Parliament, that provided enough scrutiny. That missed the point. The issue is the Secretary of State's accountability to Parliament. The amendment calls for a report on what he has done during the year. NHS bodies outside the magic circle of foundation trusts will want to know whether the chosen few get special treatment; so, too, will Parliament. That is what lies behind the amendment. I hope that the Minister will reconsider his response.

Amendment No. 181 proposes the deletion of Clause 11. As part of a financial regime that we think is in a mess, it is an amendment with considerable merit. But I shall not move it on this occasion. I beg to move.

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