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On 20 May at col. 61WS, I announced the completion of the initial stage of the review of my department's arm's length bodies (ALBs). I made it clear then that there is considerable scope to improve efficiency and reduce bureaucracy in the ALB sector and I laid down the following parameters for the review:
The next stage of the review has now been completed and decisions taken on a reconfiguration of the ALB sector and its functions. Some of these functions provide reassurance to patients about standards in an increasingly devolved health and social care system. Others provide functions that can literally be life
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saving. The reconfiguration will enhance these essential functions while eliminating overlaps and devolving functions where possible. It will not put the safety and welfare of patients in jeopardy. The changes are summarised below and explained in a report, Reconfiguring the Department of Health's Arm's Length Bodies, copies of which have been placed in the Library.
I want now to move to detailed discussions with all interested parties about how to implement these changes. Some changes will require primary or secondary legislation and the parliamentary scrutiny that goes with that. Some statutory consultation will be required on specific changes.
Last week, my right honourable friend the Chancellor of the Exchequer announced the Government's overall plans for releasing resources to the front line. The ALB review contributes to those plans. It will also lift the burden that the central overhead can place on frontline staff. The way in which we achieve the ALB reductions will be linked to the analysis undertaken for the Gershon efficiency review. The changes I will be making reflect the Prime Minister's wider Civil Service reform agenda and will also deliver the expectations of the Lyons review on public sector relocation.
The ALB review covered the work of standalone national organisations sponsored by the department to undertake executive functions. Thirty eight of these existed in the baseline year of 200304, although the review also looked at four prospective ALBs. A list of the bodies can be found in the report. The decisions I have taken so far will reduce the number of ALBs by almost half to 20, in the following four main categories.
The Healthcare Commission (whose statutory name is the Commission for Healthcare Audit and Inspection), the Independent Regulator of National Health Service Foundation Trusts and the Commission for Social Care Inspection will continue to regulate providers and their services. The Healthcare Commission will take on the main role of the Mental Health Act Commission, which will be abolished.
The Council for the Regulation of Health Care Professionals will continue to oversee the statutory health professional self-regulatory bodies and the General Social Care Council will continue to regulate social care workers. The Postgraduate Medical Education and Training Board will take on the role of the Dental Vocational Training Authority, which will be abolished.
The National Institute for Clinical Excellence (NICE) will take on the work of the Health Development Agency (HDA) in order to link standards work on both the prevention and treatment of ill health. The HDA will be abolished.
The National Clinical Assessment Authority (NCAA) will be brought into the National Patient Safety Agency (NPSA) which will also support high-quality, independent ethical review of all research that could affect patients. The NPSA will take on the lead national perspective on hospital food, cleanliness and safe hospital design. NPSA will also take over responsibility for the national confidential inquiries from NICE.
The Health Protection Agency (HPA) has taken on functions from the Public Health Laboratory Service and will take on the role of the National Radiological Protection Board under the Health Protection Agency Act 2004. The PHLS and the NRPB are to be abolished. The National Biological Standards Board will also be abolished and its functions taken on by others, primarily the HPA.
The regional functions and staff of the National Treatment Agency for Substance Misuse will be transferred to existing mainstream structures as soon as possible. A further announcement on this will be made shortly. Centrally the NTA will continue in existence until we are confident that a detailed programme of mainstreaming drug treatment within the NHS is successfully in place. A review of progress will take place in 2006 to agree any further action needed to ensure drug treatment is fully mainstreamed into the NHS including agreeing the future of the NTA's national functions.
The Commission for Patient and Public Involvement in Health will be abolished. Patients forums will remain the cornerstone of the arrangements we have put in place to create opportunities for patients and the public to influence health services. Stronger, more efficient arrangements to provide administrative support and advice to forums will be put in place after consultation. The NHS Appointments Commission will appoint forum members. A clearer quality framework for forum activities in monitoring and reviewing health services will be established and communicated to forums as quickly as possible.
The NHS Litigation Authority (NHSLA) will be reconstituted to oversee the proposed NHS redress scheme and manage the financial compensation element at national level. Further details on how the scheme will operate will be published later this year, and implementation will require primary legislation. The NHSLA will also take on the functions of the Family Health Services Appeal Authority (Special Health Authority) which will be abolished.
The NHS Appointments Commission will be reconstituted as an executive non-departmental public body with wider powers to make public appointments. It will also make appointments to patients forums and to research ethics committees.
The NHSU is subject to a more detailed study, within the overall ALB review process, which will be completed shortly. The NHS Modernisation Agency will have most of its budget and staff devolved to the NHS, with a smaller core remaining within the department for the present.
A new Health and Social Care Information Centre will be created to reduce burdens on the front line by co-ordinating information requirements across a wide range of bodies. The new centre will retain some of the information-related functions of the current NHS Information Authority and will take on the statistics and information management functions of the department. The NHSIA will be abolished. To build on the progress and momentum achieved to date, and reflect its sheer scale, the national programme for information technology will become a time-limited executive agency for three to five years and will incorporate the IT functions of the NHSIA.
A new NHS Business Services Authority will be created to replace the NHS Pensions Agency, the Dental Practice Board, the Prescription Pricing Authority and the NHS Counter Fraud and Security Management Authority, all of which will be abolished.
The NHS Purchasing and Supply Agency will be reformed. The role of the NHS Logistics Authority will be market-tested. It is anticipated that the function will be contracted out and that the NHS Logistics Authority will be abolished.
NHS Direct and NHS Professionals will retain their ALB status for two to three years. In the mean time, we will work with both organisations to consider how they may prepare to transfer to independent status as bodies established on foundation principles to operate in the public interest.
The principles outlined in Sir Peter Gershon's efficiency review will be applied to the ALB sector to generate more than £200 million in cash-releasing savings for the front line, for example by sharing back
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office services and by carrying out activities more efficiently. No ALB will be exempt from the need to improve efficiency. In addition, £150 million to £200 million will be released to front-line control by devolving functions from ALBs. The scope for achieving full cost recovery for regulation will be investigated and taken forward.
The department's commercial directorate is scrutinising the business processes and procurement activities of many of the central services ALBs to establish the full scope of the efficiencies to be made, especially in relation to the money (about £3 billion) that is spent by ALBs on behalf of front-line organisations on NHS supplies, temporary staff and litigation services. The commercial directorate's work on the NHS supply chain is already well advanced, suggesting savings of approximately £150 million to £200 million in the period to the end of 200708.
We are confident that expenditure on ALBs can be reduced by at least £0.5 billion by 200708. Savings of this magnitude will be associated with a reduction in the number of posts in the ALB sector of about 25 per cent.
The ALB review will now move to implementation. Over the next three to four months my officials will work closely with the devolved administrations, ALBs, staff interests and other stakeholders to draw up implementation plans and to resolve outstanding issues on allocation of functions. These plans will include decision points on new ALB functions and processes, staffing levels, budgets, location and time scales for transfer. A small team in the department will oversee this process. These arrangements will ensure delivery of the saving of £0.5 billion by 200708 and the reduction of posts within ALBs.
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