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Earl Howe: My Lords, I clearly cannot speak for the noble Lord, Lord Turnberg, but I am a little disappointed that the Minister was not able to issue anything more than warm words for his amendment. I am sure that the Minister will acknowledge that it has received very strong support from all quarters of the House. Nevertheless, he was helpful in pointing out the provisions in the Bill that could comfort the noble Lord as regards the duties of the regulator on this important matter. We must note for the time being what the Minister said and reflect on it.

I will not dwell too long on my amendments. I am clearly disappointed that the Minister has, once again, rejected them. I am not sure what power exists at present to restrict the activities of NHS trusts, apart from the ministerial power of direction. Restricting the activities of foundation trusts seems inherently against the spirit of what the Government are trying to do in the Bill. I am still not sure that I understood why it was necessary to have the power and in what circumstances it was likely to be used.

I have a feeling that I have had before, which is that I shall not get very much further with this particular point. I shall have to go away and see whether I wish to return to it at Third Reading. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Turnberg had given notice of his intention to move Amendment No. 191:

"( ) The requirement referred to in subsection (6) will apply particularly to trusts which include a medical or dental school provided by a university."

The noble Lord said: My Lords, I shall express an interest that I apologise to the House for failing to express before. I was a member of the panel that produced the report of the Academy of Medical Sciences.

I am grateful to my noble friend for his response. I cannot say that I am not disappointed, but I shall have to go away and hide my tears. He has a strong interest in the matter and I know of his work in other areas, so I take some comfort from his words and from what I know that he is trying to do. I do not intend to move the amendment.

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[Amendment No. 191 not moved.]

[Amendments Nos. 192 to 194 not moved.]

Clause 15 [Private health care]:

Lord Clement-Jones moved Amendment No. 195:

    Page 7, line 43, at end insert—

"( ) Every NHS foundation trust shall publish a statement of its total income and expenditure relating to the goods and services referred to in subsection (4) in each financial year."

The noble Lord said: My Lords, it is very important to establish from the outset that the motives of those who wish to see the private patient capacity of foundation hospitals properly used, and if possible maintained at its current level, do not derive from some atavistic desire not to have private patients in NHS trusts, or some disapproval of NHS trusts or foundation hospitals having private patients. Largely, it is simply about the proper use of the capacity of foundation hospitals and ordinary NHS trusts, and to ensure that we—the taxpayers, the public—get proper value for money in terms of how hospitals use that capacity.

When we last debated the issue, there was scepticism on the Minister's part as to whether NHS trusts could properly be accused of loss making on their private beds. But in stunning Technicolor, effectively, since Committee the NAO, largely thanks to the former Secretary of State for Health, Frank Dobson, has set up an inquiry. It is in response to the evidence he has unearthed from University College London Hospital showing that all is not particularly well. Mr Dobson has discovered that the hospital has unrecovered debt worth more than 4 million on a private turnover worth 13.4 million. He is highly sceptical as to whether UCLH is able to make a profit on private work in those circumstances.

All that goes to show that utter transparency as to the costs and income deriving from private patients is required. This is an opportunity to have that transparency in foundation hospitals, which will be freer than ordinary NHS trusts in the way in which they operate.

Ministers may believe that we slavishly recycle amendments from Committee to Report stages, but I have not reintroduced the cap amendment that we tabled in Committee. This amendment is a more effective mechanism. It is designed to elicit from foundation trusts their exact operating costs and income relating to private patients. It would open up that area of their operations to public scrutiny and that is right. We should not expect the NAO periodically to conduct inquiries into whether foundation trusts are genuinely making a profit from their private patient activities. We should expect that as a matter of course from the new foundation hospitals. I beg to move.

Earl Howe: My Lords, I shall speak briefly to Amendment No. 196. The Minister will be well aware that we disagree completely on Clause 15 not simply as to the philosophy underlying it but also as to its unnecessary prescriptiveness. It is unnecessary, even in the Government's own terms taken in the context of

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Clause 14(2), which obliges a foundation trust to have as its principal purpose the provision of goods and services for the purposes of the health service.

I referred charitably to the philosophy underlying the clause but I am not so sure that there is one beyond the purely political antipathy to private medicine. But the clause will bite deeply on hospitals such as the Nuffield Orthopaedic, which depend on a certain amount of private patient income but which for sound, strategic reasons saw a marked drop in that income during the base year 2002–03. If the base year level of private patient income is to be an absolutely fixed and immutable bottom line for the purposes of the clause, hospitals which find themselves in this position will be in great difficulty. Is there room for the regulator to show flexibility in this regard where there are exceptional circumstances to justify it?

My second question relates to an issue I raised in Committee but which the Minister did not address. It is the situation of a trust which perfectly reasonably wishes to invest in an expensive item of equipment, such as a scanner. Let us suppose that the hospital can construct a business case for doing so, but only on the basis that the scanner is let out to the private sector in the evenings and at weekends. If Clause 15 is interpreted rigidly, the likelihood is that the hospital will be unable to buy the scanner because it would breach the ceiling on private income. That cannot be a sensible position. It will force hospitals to adopt solutions that are much less advantageous, but for what purpose? No one gains. Therefore I ask the Minister whether in this type of instance the regulator will have discretion to raise the ceiling of private-patient income that a foundation trust is allowed to generate.

6.45 p.m.

Lord Blackwell: My Lords, I support both amendments in this group, although I realise that procedurally that is difficult. On Amendment No. 196, I believe that the Government is becoming caught by the mantra of zero-sum game in believing that there is only a fixed amount of resource to share out. I would certainly welcome an NHS in which money followed the patient and in which every patient effectively had the money in his or her hands to buy the health service that he or she wanted and in which there was no distinction between private and NHS patients. Patients would have equal choice, not just those who could afford it.

However, we do not have that health service at the moment and the Government are not proposing that. Therefore, we are faced with the reality of a health service in which those who rely on NHS funding are, in effect, rationed by the amount of funding that the Government are prepared to supply. In that situation many people are not able to get the care and attention that they want to receive within the timescale that they feel is appropriate. Therefore, many people find from

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their own pockets or their own insurance schemes the resources to pay for private operations and private care.

I believe that that is a good thing. Such people bring more money and resources into the health service. They end up providing the funding to pay for more consultants, more nurses and more operations and often help to fund equipment that may be used for those treated in that hospital under the NHS. It is an unfortunate circumstance that people feel that they need to pay to receive faster or better quality treatment than they can receive under the NHS, but while we have an NHS that drives people to do so, we should encourage that for the benefit of patients in the NHS as the resources that are applied to the NHS will be shared among fewer people. One person who pays for treatment privately is one fewer person competing for the resources allocated to the NHS. Therefore, I believe that the clause is misguided and that we should have no such limit.

However, I accept, as the noble Lord, Lord Clement-Jones, has said, that if hospitals are to provide services to the private sector, it would be helpful for them to provide an income statement that shows that they are covering their costs. It would certainly be unfair and improper to have a competitive market in which NHS hospitals used their cost position to under-cut private providers in a free market. Therefore, my ideal outcome would be for the Government to withdraw Clause 15 as it currently stands and to substitute in its stead solely Amendment No. 195. I await the Minister's reply without too much expectation.

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