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Part of the significance of all this is the message that it sends out to the independent sector. Not only will it envy the fact that foundation trusts are to be 100 per cent underwritten by the taxpayer, it will also realise that the Department of Health’s view of what constitutes core NHS services does not include it. A medium secure mental health unit run by the private sector is every bit as integral to the delivery of core services as a foundation trust, yet the failure regime applicable to it would be quite different. How confident will the independent sector now be that it has a realistic long-term prospect of playing a significant role in the provision of NHS services? Not very.
Part of the context of the creation of foundation trusts was the desire of the Government to create a plurality of health provision under the NHS umbrella, with providers competing on level terms. I say to the Minister again that the measures outlined in the Bill undermine that aim. Nevertheless, I rather suspected
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Earl Howe: Amendments 73 and 75 deal with two separate but important issues. New Section 65B(2) of the National Health Service Act 2006, to be introduced under Clause 13, covers the trigger for the appointment of a trust special administrator. It states:
“An order may be made under subsection (1) only if the Secretary of State considers it appropriate in the interests of the health service”.
What does “appropriate” mean in this context? Does it mean that the Secretary of State does not have to consider and reject alternatives before deciding to make an order? One could imagine circumstances in which several options were open to the Secretary of State, administration being one. Most of us, I think, would agree that administration should be a last resort after eliminating other possibilities. Unless the pros and cons of all available options are examined thoroughly and unless administration is seen as not only appropriate but also necessary, I do not think that we will have a recipe for achieving the best outcome either for the NHS or for patients.
Putting an NHS trust into administration, were it ever to happen, would be a highly charged decision in terms of its local politics. I would like to see the Secretary of State legally bound to consider all options before going down that road. I do not say that I know of any case where local party politics have influenced a Secretary of State in a decision surrounding service reconfiguration. But once in a while suspicions of this sort arise and I believe that it is important to take steps to avoid them arising.
It is worth noting that new Clause 65B(5) obliges the Secretary of State to lay a report before Parliament stating the reasons for making the order to appoint a trust special administrator. I welcome this but it is important to ensure that the mechanism, which is designed to promote transparency, is used to demonstrate that the logic of the Secretary of State’s decision was inescapable rather than merely persuasive.
Sentiment in a not dissimilar vein underlies Amendment 75: trust special administrators must be independent of Ministers. They must be allowed to act professionally and not be subject to direction, or even the threat of direction, from those who may have a political agenda to fulfil in relation to the failing trust. The trust special administrator must act in the best interests of the NHS, patients and the taxpayer, and he must take his decisions objectively, so far as possible, while taking into account the views of all those whom he has consulted. I repeat that the closure of any NHS hospital is going to be highly politically charged, if it
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Baroness Cumberlege: I support my noble friend in stating that administration would be the last resort. That goes without saying. I welcome the fact that in the event of administration a very specific timetable is laid out in the Bill. That is very helpful. My problem with the timetable, though, is that it takes a long time for the Minister or the Secretary of State to reach a final decision. If one takes it in terms not only of the working days but of weeks, which would include weekends and bank holidays, it could take up to five months. That is a long time before a final decision is made, and the people who are working in the trust and those who use it are left dangling, not knowing what that decision will be.
The Bill also states that at the end of those five months the Secretary of State may say to those people, “I’m very willing to reinstate you”. If I was a chairman or a member of the board and after five months was offered a return to my job, I would say, “Stuff your job”. I would be very upset about it.
I can see that this is very unlikely to happen, but we need to ensure that the legislation is precise. Will the Minister consider whether there are any methods to shorten the timescale so that it is not as long as five months? That would mean reducing some of the consultation and so on in terms of working days, but it would be preferable.
When there is a reconfiguration issue, the independent reconfiguration panel is brought in. We know that on some occasions the panel has overturned the proposals put forward by the strategic health authority. So the Secretary of State will have two sets of advice, one from the independent reconfiguration panel and one from the special trust administrator. I wonder whether that is a clear way forward or whether it could cause quite a bit of confusion. Perhaps there needs to be something in legislation to clarify the roles of each so that the Secretary of State is not left with conflicting advice, which would be unhelpful for those who were subject to administration.
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Lord Darzi of Denham: Amendments 73 and 75 seek clarification on how the powers will be used in relation to triggering the regime and the powers to direct the trust special administrator. Amendment 73 seeks to limit how the Secretary of State could use the provisions outlined in the Bill.
In drafting the legislation, we have drawn on the existing text in the National Health Service Act which relates to orders dissolving NHS trusts, where the test for making the order is that the Secretary of State considers it,
The amendment removes some of the flexibility that exists in the application of the regime. Using “necessary" rather than just "appropriate", as the amendment proposes, imposes a higher standard before the Secretary of
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Let me clarify what we mean by “appropriate”. The established term, used in existing legislation, is,
In making the decision, the Secretary of State will be guided by the principles of the regime, particularly that patients’ interests must come first. That is a judgment that the Secretary of State will take into account with other relevant factors.
As I have said, the vast majority of hospitals and trusts are performing well, providing high-quality services to patients and managing resources effectively. Where they are not, interventions will have to be made through the NHS performance framework or Monitor’s compliance framework. In the very rare cases where these interventions are unsuccessful or the strategic health authority is not able to get plans agreed on how to address the situation, that may include recommendations from the independent reconfiguration panel, which I believe comes well before a trust reaches the stage when a trust special administrator might be appointed.
Let me also reassure noble Lords that these provisions outlined in the Bill will not simply be used to tackle management issues; earlier stages of performance intervention will address such issues. They might, however, be applied to address fundamental, perhaps systemic issues, where local interventions have not been successful.
Amendment 75 attempts to make it clear that the Secretary of State is not able to direct the trust special administrator with regard to the preparation of the draft report, the consultation process, or the final report. Let me reassure the noble Earl, Lord Howe, and the noble Baroness, Lady Cumberlege, that I understand their concerns. For this reason, I would like to place it on record that although the Secretary of State has general powers of direction in the 2006 Act, this applies only to direct the trust itself and not to direct the trust special administrator. The Secretary of State has no powers of direction on the outcome of the trust special administrator’s final report.
The Secretary of State will issue guidance under new Section 65N, but this will act as an aide to the trust special administrator. It will cover general issues in relation to persons to be consulted, the factors to be taken into account and relevant publications to consider when preparing reports and information on the publication of notices. It will not be an instrument for dealing with specific cases, as trust special administrators will be required to use their judgment to adapt to the individual situation.
The noble Baroness, Lady Cumberlege, referred to the independent reconfiguration panel. That panel plays an extremely important role, as we know, in advising the Secretary of State. I acknowledge that
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I hope that I have been able to give sufficient explanation and background to allow the noble Earl to withdraw the amendment.
Earl Howe: I thank the Minister for his reply; I shall have to read in Hansard the first part of it, which I did not totally follow—the part that referred to the difference between “necessary” and “appropriate”. I must admit that I got confused when listening to him. That is not his fault, but it is important that I totally understand what he is saying.
However, I cannot help observing—I hope that the Minister will take this point away—that he mentioned that the wording in this part of the Bill is modelled directly on the wording of the 2006 Act. It is worth noting that although the Secretary of State needs only to consider it “appropriate” to make an order appointing a trust special administrator, Monitor under new Section 65D must be “satisfied” that the foundation trust is failing and likely to continue to fail. I suggest that that is a much stiffer test for Monitor. I wonder why the Government have not put the two on an equal footing.
I shall just pick up one other point that the Minister made. He said that the Secretary of State did not have power to direct an individual, only the NHS body. In that case, I wonder why new Section 65H(7) refers to the Secretary of State directing the administrator. I am not taking issue with that provision, because if there are people whom the Secretary of State believes that the administrator should consult, he should consult them, but it does imply that there is a power of direction.
Lord Darzi of Denham:The Secretary of State can direct the trust special administrator on how to consult. That is only a power of direction rather than a power over the trust or the report of the trust's special administrator. The Secretary of State has no power over the report itself, but he has power to direct the trust special administrator on issues of consultation and process.
Earl Howe: I understand and I am grateful to the Minister for that clarification. I beg leave to withdraw the amendment.
Earl Howe: I shall speak at the same time to Amendments 77, 78 and 80. The amendments can be dealt with very simply. They are all to do with who is consulted on what and when. In new Section 65B(4),
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No mention is made there of the staff at the trust, and I ask the Minister why that is. No one would deny that the most important people in this equation are the service users—the patients—but we need to remember that there are others with important rights here, and those are the people who work for the trust and provide the services which, in the circumstances envisaged, would be under threat of closure. Those are the people whose jobs are at risk. There is a strong case for putting the staff in the Act as statutory consultees. For the same reason, the staff of a foundation trust deserve to be consulted by Monitor before it gives the Secretary of State a notice that would serve to put the administration process into motion.
Again, later on, when the trust special administrator prepares his draft report, provision is made in new Section 65F for him to consult any relevant strategic health authority and the service users, but no mention is made of the staff of the trust. That is wrong. The employees have a highly relevant interest in what the report recommends and their views should be heard.
There is another dimension to the consultation issue, which relates to foundation trusts. In new Section 65D we find that, before giving a notice to the Secretary of State that a foundation trust is failing and is likely to continue to fail, Monitor must consult the trust, any relevant SHA and the trust’s service users. I have already mentioned the absence of staff in that list, but in the context of a foundation trust there are surely others with an extremely important set of interests who are not referred to here.
The first group is the board of governors—in other words, the group of individuals who are elected to represent the members. We should remind ourselves that the members of a foundation trust are its local owners. The second group not referred to is the trustees of the fixed assets used by the trust. Again, we need to remind ourselves that under Section 51 of the NHS Act 2006 provision is made for trustees to hold trust property on behalf of the foundation trust. We would surely wish to say that these people would have a relevant interest if ever there were a question of their fiduciary duties being affected by the appointment of a trust special administrator. I hope that the Minister will at least wish to give careful thought to these amendments, and I beg to move.
Lord Darzi of Denham: The effects of Amendments 74, 77, 78 and 80, tabled by the noble Earl, Lord Howe, and the noble Baroness, Lady Cumberlege, would be twofold: Amendments 74, 77 and 78 would add requirements to consult staff, governors and trustees prior to the trust special administrator being appointed, while Amendment 80 would require the trust special administrator to consult staff when preparing the draft report. I understand why the noble Earl and the noble Baroness have tabled the amendments and I could not agree more with the sentiments behind them. Having worked in the NHS for many years, I passionately believe that achieving high staff morale
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My understanding is that when a trust becomes unsustainable it will, understandably, be an extremely unsettling time for the staff. To help address that point we have designed the regime to produce a swift resolution while ensuring that staff are engaged throughout that process. I want to place on record that the staff should be engaged through the process, and that essential principle will be further strengthened in the statutory guidance that we will produce.
Amendments 74 and 77 would require staff to be consulted prior to the appointment of the trust special administrator. It is important to consider who would be the most appropriate person or body to engage with staff at that stage. The Bill includes a requirement for the Secretary of State for the NHS trust, or Monitor for a foundation trust, to consult the trust prior to the trust special administrator’s appointment. In turn, we would expect the organisation in question to engage its staff prior to that appointment. It would be most appropriate for the individual trust or foundation trust to do so. The Secretary of State, or Monitor, should not bypass the existing leadership of the trust or foundation trust at that stage, which is probably quite a sensitive stage. We have built in a delay of up to five working days between the announcement of the trust special administrator and them taking up their post to allow time for staff in the organisation to be briefed on the issue, to understand how the process will work and to understand how they will be able to engage with and influence it. Once the trust special administrator is appointed, they will communicate to the staff about their role and, again, will set out how individuals can input into that process.
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Amendment 78 seeks clarity on how foundation trusts and their governance arrangements fit into this regime. Boards of governors play an integral role in foundation trusts and, because of this core role, foundation trust governors should be aware of performance issues within their foundation trusts. They should also be aware of any previous performance interventions that Monitor has taken. Because of this role and the established relationship they will have with the board of directors, we would expect governors to feed directly into the response that Monitor requests from the trust in new Section 65D(4). Foundation trust members have an important role in influencing the strategic direction of a foundation trust. They will also be able to input into the formal consultation process at new Section 65H. In our response to the consultation on the policy we recognised that both the governors and the members would be able to provide a valuable contribution to the process and agreed that we should provide details on how a trust special administrator should engage with them in the statutory guidance.
The trustees of a foundation trust are appointed to hold its charitable funds. As such, trustees will have an interest in the trust special administrator’s
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Finally, Amendment 80 seeks to insert a requirement for staff to be involved in the production of the draft report. I have already set out the importance that is given to engaging staff in this regime. There is already a requirement for the trust special administrator to hold at least one meeting with staff and their representatives to seek their responses on the draft report. Of course, individual staff and staff representatives will also be able to respond formally, in writing, to the consultation on that draft report. This valuable input will help inform the trust special administrator in compiling their final report. There is also a requirement for the trust special administrator to produce a summary of all responses to the consultation with the final report itself, which will include responses from meetings with staff. This means that the views of staff will be represented in a clear and transparent manner when the final report is submitted to the Secretary of State. Given these steps it will not be necessary to specifically require staff involvement in the draft report. As I said earlier, tremendous engagement will have happened and the opportunity to contribute is there.
I hope these explanations reassure the noble Earl, Lord Howe, and the noble Baroness, Lady Cumberlege, and that they will feel able to withdraw the amendment.
Earl Howe: I welcome the Minister’s reassurance as to what he expects to happen prior to and during an administration as regards who is consulted and when. Nevertheless, it still seems a little odd that some of the key groups which he recognises are important are not mentioned specifically in the Bill as consultees. I hope that the words he has just uttered will be noted. If ever there is a time when, sad to say, an NHS trust is put into administration, I can only trust that this will happen and that Ministers at the time will ensure that the good intentions the noble Lord has outlined are carried through. For now, however, I beg leave to withdraw the amendment.
Baroness Cumberlege: Continuing with the theme of consultation, the three amendments in this group would include the Care Quality Commission within the scope of the Secretary of State’s consultation, first, for the appointment of a trust special administrator; secondly, for the giving of a regulator’s notice by
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There is a strong argument that as the main regulator of quality in health and social care, the Care Quality Commission needs to be included in the list of those to be consulted. If the trust is failing on grounds of the quality of the services it provides, which is likely to be the case in most instances, the CQC needs to be consulted in order to advise on the decision to appoint a trust special administrator. The CQC, in carrying out its duty to make an assessment of the current quality of services, will have important information which may be critical in reaching the very important decision. The CQC is likely to have been involved in the earlier stages of managing the failure through its duty of registration, which may be followed by enforcement action. Again, it will have information to inform the decision.
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