Previous Section Back to Table of Contents Lords Hansard Home Page

Currently, the private patient work of foundation trusts is dealt with through the private patient income cap. This was introduced in the context of the establishment of foundation trusts by the Health and Social Care (Community Health and Standards) Act 2003, and was restated in the National Health Service Act 2006. The cap was imposed by Parliament in response to understandable fears that allowing an open approach to income from private patients may radically change the nature of the NHS. I think that these fears remain valid today.

I declare an interest as chair of a foundation trust. Most Members of the Committee will be aware of that from previous debates However, I emphasise that our trust in east London has no interest at present—I cannot say what it will be in 20 years’ time—in developing private patient services. I am not coming here to plead for something from which my trust would benefit.

I was approached by the Foundation Trust Network to raise this issue, which I was content to do. The network has received expressions of concern from foundations across the country about the detriment to their work caused by the PPI cap as it is currently structured. I hope that in the minutes available to me I can capture those concerns and persuade the Committee that there is a case for reform, whatever that reform looks like.

5.30 pm

The proposed new clause would not abolish the cap. Rather, subsection (1) would require that whatever the framework is in the future—we do need a new framework, in my view—it must be the same for NHS trusts that are not foundation trusts and for foundation trusts themselves. There are six problems with the current private patient cap. First, and most obvious, is the uneven playing field. Those NHS trusts which are not yet FTs are not subject to any cap and can provide services to private patients without limit. At the other end of the scale, a mental health foundation trust has a zero cap and cannot provide any private patient work. As I have said before, that is not a problem for me, but it is a fact. In the middle are foundation trusts that provide acute care. The level of the cap depends on the amount of private work that a trust did in 2002-03, the year before the first foundation trusts were authorised. The cap varies because of that slightly odd way of doing things. One FT has a 30 per cent cap, whereas many others have a 5 per cent cap. It just depends on what proportion of their work was private in 2002-03. Over time, the inequities are likely to have perverse consequences. Trusts may elect not to become foundation trusts because of the private patient cap on the FTs, but not on NHS trusts. That would thwart the Government's public sector reform agenda. The aim is that all provider trusts should become foundation trusts.

Secondly, Monitor has expressed the concern that there are real administrative problems in basing the level of the cap on the 2002-03 earnings from private

17 Mar 2009 : Column GC66

work. As we extend further into the future, even getting hold of the data could be a problem. Thirdly, the Foundation Trust Network is concerned that the structure of the private patient cap is preventing a substantial and growing part of the NHS family from gaining income from privately funded work, which could be invested in improving NHS services. For example, apparently, a mental health foundation trust wants to set up a mother and baby unit. Through its business case, it has established that in order to be cost-effective the unit needs to have 20 beds. It has also estimated that NHS demand for these beds is 15 beds. The mental health foundation trust’s argument is that, if it could have five private patients in its mother and baby unit, the unit would be cost-effective and, thus, it could have one. It says, without that, it might not have one.

A further example is that of an NHS foundation trust which is concerned that the private patient income cap will impact on the development of its cancer services.

Lord Campbell-Savours: On this mother and baby unit case, which I have looked at, in what circumstances would a person seek to go into a mother and baby unit as a private patient?

Baroness Meacher: That is an extremely good question. Perhaps people coming from, say, the Middle East to Great Ormond Street Hospital would want to come to a very specialist service, which probably would not exist in a lot of other countries. It is not something that I am planning in my trust. Obviously, the Foundation Trust Network has looked into the possibilities and has established that this would be feasible from its point of view.

A further example is a completely different foundation trust, which wants to deliver a model of care to NHS patients that is not currently available under the NHS; namely, cancer care. It can achieve this only by increasing substantially its private income in that area, which it cannot do because it would take them over the private patient cap. In a completely different example, another trust wants a private company to provide equipment for laser dermatology for private and NHS patients. The equipment is very expensive and is not available under the NHS. That foundation trust knows that its NHS patients would benefit if only it could get hold of that equipment. Those are just a few examples of the arguments coming forward to the Foundation Trust Network from trusts around the country.

The fourth general problem reported to the Foundation Trust Network is that the cap means that NHS foundation trusts are precluded from supporting and delivering some of the Government’s policies. I shall give a couple of examples. Mental health trusts are precluded from contracting with private insurance companies to deliver services for employees they cover, and also from delivering the return-to-work activity, which I happen to know a little about. I suppose that we probably could not do that work; it is no problem for us, but it might be a problem for patients.

Another area is the top-up issue; again, it is rather controversial, but there we go. NHS patients will not be free to choose a foundation trust to receive their

17 Mar 2009 : Column GC67

top-up treatment if that treatment would take the foundation trust above its cap. This is particularly likely to be a problem in cancer care, where the treatments are very expensive and some of them have not been approved by NICE, and also in dementia care where, again, expensive treatments have not necessarily been approved by NICE.

There is a barrier faced by some leading NHS providers against becoming foundation trusts, because of the extent of their private patient work. For example, Great Ormond Street has highly specialised care for tiny groups of children. To provide that care, it brings a couple of children over from some other countries so that they can sustain their highly specialist units within the hospital. However, it is in trouble in terms of becoming a foundation trust; it is not a foundation trust, ironically.

A very different issue, which happens to be important to me, is that some foundation trusts—I do not know how many—use NHS resources to help them provide private patient services. These trusts are below the PPI cap and, therefore, as foundation trusts, no one can actually do anything about this, as I understand it—or are not doing anything about it, anyway. I would want to see a change in the law so that a foundation trust cannot use NHS resources to support its private patient work. Rather, to the contrary, if it is to do private patient work, it must demonstrate that that is beneficial to NHS patients and of no detriment to others.

The new clause does not indicate whether the level of private patient services should be higher or lower. I happen to have a personal view on that, but the amendment does not indicate it. If we can achieve agreement about the principles for the purposes of the Bill, I know that the Government will want to go in for a major consultation exercise about how the detail of this should be sorted out, ideally in regulations. This is not a simple matter. It is quite controversial, but if we could get the principles right, we could have something far better than what we have at the moment; certainly, what we have is pretty inadequate.

I propose two further safeguards in addition to the three principles that I mentioned at the beginning, which are important for me. One is a restricted rate of change in the percentage of private patient work over a period of time. You should not be able to leap to some huge private patient involvement, partly because that would threaten the public service ethos of the trust. Secondly, private patient work would not create an unacceptable divergence from existing services.

Will the Minister confirm her agreement with the following four propositions? They are, first, that proper control of the extent of private patient services within all health trusts is desirable—that should not be too difficult; secondly, that the current framework for controlling the extent of private patient services is unfair and needs reform; thirdly, that reform should be done in a way that ensures that private patient work enhances and avoids detriment to services to NHS patients; and, fourthly, that the system should have an equal impact upon all trusts, whether NHS or foundation.

In conclusion, I suggest that getting the treatment of private patient income right could greatly help the NHS to weather the storm of public service restrictions

17 Mar 2009 : Column GC68

in the years ahead. In crafting a solution, however, the essential nature and integrity of the resources of the NHS must be safeguarded.

Lord Judd: Will the noble Baroness deal with two questions which occurred to me while she was in her usual style putting a very powerful case? She argued that the foundation trust concerned estimated that the number of patients from National Health Service quarters would be 15, whereas they needed 20 for the service. But how far is that a reflection of the seriousness with which the needs of such patients—

Baroness Thornton: Because we are in Committee, the noble Lord does not need to interrupt the noble Baroness in the middle of her speech. The amendment needs to be moved.

Lord Judd: So I am just speaking?

Baroness Thornton: No, you need to sit down.

Baroness Meacher: I beg to move.

Lord Judd: Well, I am very happy to sit down and now stand up again. Will the noble Baroness, who knows that I hold her in great respect, deal with two questions? The first goes back to the mother and baby unit. How far does that estimate of 15 patients from National Health Service quarters reflect the seriousness with which the contribution that could be made by such a unit is regarded by GPs and others within the area? How do we know that, if such a unit exists, we would not find that the demand from health service quarters quickly increased? Would the hospital or trust concerned then be tied into giving access to private patients when it had become clear that the need from health service quarters was larger than anticipated?

My other question is a simple one. The noble Baroness said that her foundation trust had no interest in this issue at all and that she was simply putting the case for the network. I am quite certain that, if she were in the chair in such a situation, a facility would be honourably and in the spirit implemented. Is she absolutely convinced that it would be approached in quite the same way in all trusts, and that, once having had a facility provided under such regulations, a trust might not be tempted to seek wherever possible to maximise income for the trust from private quarters as distinct from health service need?

Baroness Meacher: I shall have a go at answering those questions. My own trust runs a very small mother and baby unit. It is interesting that the demand is very limited. For those severely mentally unwell mothers with newly born babies who come into the unit, it is immensely important, partly to get early treatment for the mother and partly to assess her capacity to mother that baby. It is a highly specialised service. However, we do not have a lot of demand coming at us, and I had never thought of private work. Whether we can continue to run a mother and baby

17 Mar 2009 : Column GC69

unit has become a serious issue for us, because of the limited demand for such a specialist unit, even in east London.

I say in answer to the noble Lord’s second question that I am as conscious as he and others of the incredible importance of protecting the NHS—its principles, style and everything that we know and love about it. That is why I have not rushed into saying, “And the future framework should look like this”. I have been very careful in agreeing to table this amendment, and in tweaking it a bit, to say, “All we’re saying here is level playing field and no detriment to the NHS”. I am assuming, and it is my understanding, that there would be lengthy consultation by the Government on how we achieve those principles. However, if you have clear principles—we have had long discussions in the context of the Mental Health Act about having clear principles in the Bill—it should be possible to adhere to them and to ensure that what the noble Lord and I fear would not occur.

5.45 pm

Lord Campbell-Savours: I thought we would all be rushing to our feet on this amendment because it is, in my view, the most controversial amendment. It is an Exocet amendment. If it were to be implemented—and we will come to the motive of the noble Baroness in a minute—it would completely undermine the National Health Service. I understand where the noble Baroness is coming from. She has tabled this as a probing amendment because she wants to provoke a debate about these issues. She is not saying that this is exactly what she would pursue. She made it clear that she would not wish it to apply to her trust, certainly while she is leading it. She said that there may be some interest in it in the longer term in a more refined form.

I regard this as a very dangerous amendment. I have talked to Anne Campbell, the former Labour MP who I presume has written to a number of Members of the Committee about her views on this matter. We have to go back to what happened in 2003 when the Bill establishing foundation trusts went through the House of Commons. Many MPs were opposed to foundation trusts being established. I recall moving between the tea room, the bars in the House of Commons and other places lobbying, not officially on behalf of the Government, in favour of the creation of these trusts. I believed in them because I believed the assurances that were being given by Ministers that they would not go down the route that this amendment suggests. If the undertakings that were given to Parliament at that time had not been given to Parliament, there would—

Baroness Meacher: The noble Lord referred to the road that we might go down in future. The fact is that we are down the road. The problem is how to make sure that we get the road designed in the best interests of the NHS. I am not suggesting that we go into private patient work. One hospital gets 30 per cent of its income from private patient work, and many other foundation trusts do similar things.

Lord Campbell-Savours: I understand that. We have gone so far down this road, but I do not want to go any further, which is why I am arguing my case. I call

17 Mar 2009 : Column GC70

in aid the comments made at the time. The Minister said in the House of Commons:

“The rules have been the subject of extensive comment both in Standing Committee and elsewhere. We have introduced a cap on the income that NHS foundation trusts can earn from private patients, so that NHS patients will always come first. We have also moved to ensure that the NHS in England will not become a two-tier service”.

He then went on to say:

“Let me make it clear that under clause 15(2) the regulator must impose such a restriction on the amount of private business that an NHS foundation trust can undertake. There is no question at all about that: he must exercise that provision”.

Further on, he said:

My colleagues asked about the threshold to make sure that hospitals would not go further down this route, and undertakings were given. When we came to ping-pong between the Houses, a further assurance was given by Dr Reid, who was then Secretary of State, to try to make sure that we did not have problems in the Division Lobbies in the House of Commons.

In other words, this structure was based on those undertakings. This amendment challenges those undertakings. It may well be that there is an uneven playing field, but that is what Parliament decided at that time. It was on that basis that it went through. Members of Parliament must have known at that time, on the basis of the 2002 assessments, that individual trusts must have had different levels of private patient care in operation. It would have been known to them when they voted. They knew they were voting for an uneven playing field. It was on that basis that a large number of Members of Parliament abstained and many voted against it in one of the biggest rebellions in the House of Commons in the previous Parliament. It was not a full turn-out; the Lobbies were down, because many Members abstained.

I have gone to my old friends in Unison, who have very strong views on these matters. They are part of the story. The noble Baroness knows their involvement in all this. I now turn to what they have said to me and what they would like me to say to the Committee, just to remind the Committee of where we are.

In the event that this amendment was passed, it would simply replace the cap with a vague public interest test, which would be highly subjective and impossible to administer. Such a fundamental change would clearly run contrary to the Government’s position when they set up foundation trusts. Many foundation trusts would obviously like to increase their income from private patients, and this amendment would mean that there was no limit on the amount of money that they could take in from cash-paying private patients. The logical outcome of this amendment is a two-tier system, which normal National Health Service patients—

Baroness Meacher: Can I—

Lord Campbell-Savours: If it is all right, I shall give way in a minute. Normal National Health Service patients are seen as less important because they are not bringing any extra income into the hospital.



17 Mar 2009 : Column GC71

Baroness Meacher: I want to make the point that I made to the head of health in UNISON. This initiative is not designed to abolish the cap, unless a clearer, firmer and more even framework could be put in its place. I explained that, and I agree that you could read the amendment as implying the removal of the cap. All that it actually says is that the framework will be the same for foundation and NHS trusts. UNISON has a misunderstanding on that, which is the basis on which it has briefed the noble Lord, in my view.

Lord Campbell-Savours: However, the noble Baroness did, if I recall, correctly quote some figures of between 5 per cent and 30 per cent. Even with the increase from 5 per cent to 30 per cent in those National Health Service trusts, they are not able to have the advantage—as they might see it—or the privilege of the 30 per cent cap. There would inevitably be a lot more increased private treatment work inside those hospitals as they go to the higher cap limit. It was the noble Baroness who quoted the distinction between the 5 per cent and the 30 per cent, based on the 2002 figures. I am only quoting the fact that if National Health Service foundation hospitals move to 30 per cent, it inevitably means that they must be taking on more private work.

Baroness Meacher: Can we have a little bit of clarification? There is no suggestion here that everyone move up to 30 per cent. I was stating facts. One NHS foundation trust has a 30 per cent cap, while others have 5 per cent. What we need is an even playing field and what that should look like is a matter for discussion with Ministers and a consultation across the country. No one is suggesting any increase in the cap—any loosening of the system. I would like to see a tightening of the system, while others would like to see a loosening of the system, but this amendment does not address those issues.

Lord Campbell-Savours: I do not think that those hospitals that already have a 30 per cent cap will volunteer to reduce it, will they?

Baroness Meacher: No.

Lord Campbell-Savours: Exactly. In other words, the ones taking 5 per cent will want to get up to 30 per cent as soon as possible, so it is inevitable that there will be more private work in those National Health Service hospitals. I give way to the noble Lord.

Lord Walton of Detchant: I do not propose to spend too much time, except to say that I support the amendment, for a variety of reasons. When I spoke enthusiastically a few moments ago in favour of the amendment proposed by the noble Lord, Lord Palmer—

Lord Campbell-Savours: Forgive me, but is this an intervention? I am still on my feet.

Lord Walton of Detchant: I did not realise that the noble Lord was still talking. I beg his pardon.



17 Mar 2009 : Column GC72

Lord Campbell-Savours: I can understand why the noble Lord might not want me to carry on, but I do want to carry on and complete what I have to say. The logical outcome of the amendment is a two-tier system, in which normal National Health Service patients are seen as less important because they are not bringing in any extra income into the hospital. The stated purpose of foundation trusts, whether or not one agrees with the concept, is to allow those hospitals that have achieved foundation trust status extra flexibility in the way in which they run their affairs, not to allow them to erode the founding principles of equality and universality that lie at the heart of the NHS. To quote the then Health Secretary from the debates around the foundation hospitals when they were set up:

“First and foremost, NHS foundation trusts will be NHS hospitals. They will treat NHS patients according to NHS principles”.—[Official Report, Commons, 7/5/03; col. 709.]

That principle must always remain at the heart of our debates when we discuss these matters.

There is more to this question than preserving the principles of the NHS, although that should be paramount in our thinking. There is also a pragmatic reason for us to reject the amendment, relating to the conduct of the foundation trusts’ regulator, Monitor, and an ongoing potential legal situation. UNISON has repeatedly aired its concerns that Monitor has failed to produce accurate guidelines on what NHS foundation trusts need to declare on income derived from providing services to private patients. The union engaged with Monitor for more than a year to end the dispute, but with no success. This began in late 2007, when Unison challenged the legality of Monitor’s financial guidance to foundation trusts, which lets them avoid a cap on private patient income by setting up legal entities in the form of joint ventures or charitable organisations to do private patient work, creating a major loophole for foundations to exploit.

The cap limits the percentage of total income that trusts can get from treating private patients to the level of 2002-03. While the 2003 Act defines private patient income as charges relating to the treatment of non-NHS patients, prior to 2008, Monitor’s financial reporting manual defined private income as that arising from activity provided directly to patients. In accountancy terms, this means that income received via special purpose vehicles—a very interesting phrase—does not count against the cap.


Next Section Back to Table of Contents Lords Hansard Home Page