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Lord Warner: My Lords, it would be difficult to disagree with many of the points made by the noble

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Baroness, Lady Finlay, and I have no intention of trying to do so. I appreciate the sentiments and thoughts behind her amendments. However, in as gentle a way as possible, I suggest that there are real problems with the workability of the amendments.

My most important concern is the scope for the interpretation of the term "equity", and the actions that could result. The word could be interpreted in a variety of ways: in terms of fairness, equality, or subsets of those words. Not everyone will place the same interpretations on the word. Such words pose real problems for parliamentary draftsmen and for the inspectorates as to the possible interpretations that might be placed on them.

For example, if equity were interpreted to mean "fairness", there would be considerable uncertainty about how CHAI would apply such a concept to the making of clinical decisions in trusts. CHAI's judgments, in theory and possibly in practice, could cut across difficult clinical decisions involving a weighing up of all the relevant factors. Some will say that equity should relate to access to healthcare, which is what the noble Baroness, Lady Barker, said. However, we already state in subsections 2(a) and 4(a) of Clauses 47 and 68 that CHAI and the Assembly shall be concerned in particular with,

    "the availability of, and access to, healthcare".

When appropriate, therefore, CHAI and the Assembly can already consider equity in the sense that I have described, so I am not sure what the word would add in those situations.

As for equity in terms of ethical decision making, we believe that, traditionally, many of those issues should be left to the General Medical Council, and to the other regulatory bodies of the healthcare professions. I have already mentioned, so I shall not repeat it, the point made by Sir Ian Kennedy, the chairman of CHAI, about promoting the concept of equal citizenship. That deals with many of the concerns expressed about putting equity into the terms of the Bill. The needs of all service users are adequately provided for in the Bill, and we see no reason to believe that CHAI would not champion those issues or ensure that they are properly pursued in the reviews and inspections that it carries out. I am sure that those sentiments will apply to the Assembly.

Amendment No. 316 to Clause 58 is similar to that previously considered in Committee. However, as I said at the time, noble Lords will know from Second Reading that we have made clear in Clause 47 that CHAI is to be concerned with all factors related to the quality of healthcare, when it exercises any of its functions for the provision of healthcare under Clause 47(1) or Clauses 48 to 56. It is our view that regulations under Clause 58 could require CHAI to be concerned with any of the factors listed in Clause 47(2) in connection with any new function, which is what the amendment deals with. To do so could be considered part and parcel of conferring a new function. We do not believe that the provision in the amendments is necessary.

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6.45 p.m.

Baroness Finlay of Llandaff: My Lords, I am most grateful for the Minister's detailed reply, and for the gentle way in which he responded to my points. I am glad that he agrees with the sentiments and thoughts behind the amendments, which I feel very strongly about, and I accept that he has given me information about the workability difficulties with the wording as it stands, and the problems that the amendment's wording might pose for inspectorates.

I do not want to do anything that would make clinical decision making any more complex than it is already. Nor do I want to do anything that cuts across the role of the regulatory bodies, especially not the GMC—with which I am registered, so must declare an interest. That body has done a great deal to raise clinical standard setting and to ensure that clinicians are fully aware of the principles of bio-ethics, producing some excellent guidance on that matter.

In the light of that, I shall take further advice and read the Minister's words. However, I have a nagging concern that the economic factors have been put in place without ensuring that we do not create two-tierism. Therefore, while I will not press the amendment, I do not want to abandon the principle behind it completely. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 48 [National performance data]:

[Amendment No. 296 not moved.]

Clause 49 [Annual reviews]:

Earl Howe moved Amendment No. 297:

    Page 17, line 37, after "rating" insert ", in a form to be determined by the CHAI,"

The noble Earl said: My Lords, in moving the amendment I shall speak to the other amendments grouped with it.

We return to a familiar, not to say perennial, topic of debate in this Chamber—that of star ratings. When I raised the issue in Committee on 20th October, I was grateful for the support that I received from around the Chamber for my criticism of the star rating system. The notable exceptions were the noble Lord, Lord Hunt, and the Minister himself, who resembled no one so much as Nelson with the telescope up against his blind eye. Apart from them, all noble Lords who spoke reflected the widespread disenchantment in the NHS about performance ratings in the form that they currently take.

To put the case at its simplest, star ratings are a crude and very blunt instrument. Not only do they often fail to reflect what is important in a hospital's performance, because by their nature they tend to average out a disparate range of indicators, but they also fail to distinguish adequately the hospital that is failing from the hospital that is succeeding. The successful hospital, according to the Audit Commission, will tend to be one that has competent management running it. Yet the commission also makes clear that the star rating system is only weakly related to either the level of performance or the quality of management.

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Star ratings count for a lot in terms of the rewards that ensue from them, or the lack of such rewards, so they matter very much to NHS staff. A poor star rating can affect morale adversely, not simply because it is seen as a public sign of failure but because everyone knows that the rating is a poor mirror on reality. Hospitals feel, sometimes with justification, that they have been unfairly rated. The difference between a two and a three star rating can be a matter of a very few percentage points.

My belief is that the whole system needs a thorough-going rethink. There is no better body to do that than CHAI, under the chairmanship of Sir Ian Kennedy. I do not know whether the Minister saw Sir Ian quoted in last week's Health Service Journal. Sir Ian himself used the word "crude" to describe star ratings, and suggested that any kind of rating should use the language of improvement to illustrate how well an organisation is doing. The use of numbers, he said, is at best unhelpful. I believe that the performance ratings awarded by CHAI, and, indeed, the equivalent ratings to be awarded by CSCI, should be ones that are devised and formulated by those bodies themselves. Sir Ian's vision is clear. It is not so much to judge organisations as to hold up a mirror to them; not to be governed by a centrally imposed one-size-fits-all formula but to look at a hospital's performance more broadly, using localised targets where these are appropriate.

"The language of improvement" is a phrase I like because it gets us away from crude numbers to something more sophisticated and sensitive which, all being well, will achieve what we want to see from this system, which is a constructive tool for raising standards. The raising of standards would not be by means of hospitals being named and shamed and told what to do by other people, but rather by hospitals taking the initiative for themselves, taking ownership of their failings and being guided by CHAI towards the necessary improvements.

If hospitals can see that the targets they have are directly relevant to their own situation, there will be much more point in devoting management effort to them. As it is, a great deal of management effort is being channelled into chasing targets that often serve to distort clinical priorities and which are therefore regarded with some cynicism. Variations in performance between hospitals need to be exposed to the light of day but this has to be done in a sensitive and relevant fashion so that staff are able to sign up fully to the goals they need to reach.

I hope that the Minister can provide us with a little more comfort on this very important issue than he was able to do on the previous occasion. I beg to move.

Lord Turnberg: My Lords, the noble Earl is absolutely right to say that the current star rating system leaves a lot to be desired. There is much dissatisfaction with the lack of attention being paid to the clinical care angle of what a hospital provides. I should like to see a review of the star rating system. The difficulty lies in giving that job to CHAI. A thorough review and a lot more work are required but

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I am not convinced that that should be done by CHAI. The Bill's present wording suggests that annual reviews,

    "must award a performance rating to each such body".

It says nothing at all about how that performance rating will be carried out or what it should comprise. It does not prescribe how that should take place; it leaves it open. I believe that that is reasonable.

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