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Lord Patel: My Lords, I require clarification about the current provisions for Monitor's authority to deauthorise a trust and pass it back to the Secretary of State. We have heard several noble Lords and the noble Baroness, Lady Murphy, a member of the board of Monitor, say specific things about the powers that Monitor has in regard to financial controls. The issue with mid-Staffordshire was not as much about financial

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control as about patients' health and safety. If we can be reassured that Monitor has the powers currently to act on issues related to patient health and safety, to bring the trust into order and maybe even deauthorise it, then I would be content that these amendments are not necessary. I am persuaded by much of the argument made by the noble Earl, Lord Howe-it is difficult not to agree with his arguments as they are often so well studied-but one issue that concerns me is whether Monitor has the provisions currently to act solely on patient health and safety issues and not only financial issues.

Baroness Meacher: My Lords, I support the comments of the noble Earl, Lord Howe. I have been involved in the National Health Service off and on over the past 30 years and Monitor has been the first body to really transform trusts as I have been aware of them. Inefficiencies in the NHS, I am afraid, are a commonplace; they have been there over the years. In their preparations to become foundation trusts, the trusts have to work extremely hard to sort out their governance, to sort out their boards, to appoint new people and to improve their professionalism. Certainly our board-it is quite typical-is now completely different because we had to be different in order to justify our existence as a foundation trust. Therefore I find it difficult to think that somehow it would be a step forward for a trust to be moved from regulation by Monitor to some sort of regulation by the Secretary of State.

I agree with the comments that have been made by my noble friend about the fact that Monitor has been required to focus on finance until very recently. My understanding now is that Monitor will have a very good look at the quality accounts of every foundation trust in order to judge us on our quality of service as well as our financial probity. On that basis, the government amendment will be unhelpful and I add my support to the words of the noble Earl, Lord Howe.

Lord Crisp: My Lords, I also speak with sympathy for the position that the noble Earl, Lord Howe, is advocating. I was chief executive of the NHS when Monitor was created and therefore I have some background in it. There are two points to make. First, there are times when it would be sensible to deauthorise a foundation trust, and that is when the problem is not resident within the trust but within the wider local health economy. That may be solved by sorting out issues on a slightly wider scale than only within the individual organisation.

I agree with the point about the separation of government and DH from Monitor. The point of Monitor was that it would be independent, objective and ultimately accountable to Parliament. However, this amendment seems to suggest that when government, for whatever reason, decides that it wants Monitor to answer to it, it is expected to do so on a fortnightly basis. That seems a very short period of time and takes away the basic point. We wanted to see these sorts of decisions taken in an objective fashion and as far away as possible from any political considerations. It is on that basis that I have a great deal of sympathy with the noble Earl's position.

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Baroness Thornton: My Lords, there is no doubt that the noble Earl is right and that this is not the most satisfactory way in which to proceed with legislation. However, as he also said, we are where we are.

The amendments strengthen the foundation trusts regulatory regime and reaffirm the Government's commitment to the foundation trust ideal and the independence of Monitor. They fill a gap identified in the wake of the events of mid-Staffordshire by showing that foundation trust status must continue to be earned and by providing further democratic transparency to foundation trust regulation.

The noble Earl's amendment would remove new Section 54E from Commons Amendment 1, which allows the Secretary of State to formally request that Monitor consider deauthorising a foundation trust. I think that the noble Earl would agree that the independence of Monitor is vital and that maintaining this independence is an extremely important part of the foundation trust model. The Government's proposals are based on that very principle. They will preserve Monitor's independence, as the decision to deauthorise rests solely with Monitor.

Section 54E does not limit Monitor's independence when making decisions. However, it reflects that the Secretary of State is ultimately accountable to Parliament for the overall provision of NHS services. In extreme cases, Parliament and the public might legitimately expect that there should be an enhanced level of transparency. Indeed, in another place, Conservative Members representing constituencies served by the mid-Staffordshire trust pushed us to go further, insisting that the Secretary of State should be able to force deauthorisation. The amendments make it clear that the Secretary of State could only make requests, not force any action. This is because, while we recognise the concerns raised by honourable Members in another place, we believe in and are committed to the benefits of independent regulation.

The circumstances in which such requests may be made are also constrained by the proposals. They do not appear from the ether, as the noble Lord, Lord Crisp, suggested, to be dealt with in two weeks. Section 54E provides that a request could be made only when it appeared to the Secretary of State that there were grounds for Monitor to consider deauthorisation; that is, it must be satisfied that there has been a breach that is sufficiently serious to justify deauthorisation. As we have heard, it will be for Monitor to set out the detailed matters to be considered, using the framework in the amendment. I am sure that we can all agree that transparent decision-making in difficult times is vital. This is a valuable lesson following the events of mid-Staffordshire.

I turn to some of the points made by noble Lords in this debate. The noble Earl and the noble Lord, Lord Patel, referred to the evidence of a regulatory gap. We think that mid-Staffordshire is a wake-up call that shows the necessity for the option to deauthorise, because it became an issue of public confidence. That should not be underrated here.

On patient safety and public confidence, it is important to send a message that foundation trust status is not a one-way ticket. Ministers need to have a way in which

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to make their views known on such an issue of public confidence. However, this is not about correcting the past; it is about driving behaviour in the future. It is only one of a number of things that we have done in relation to mid-Staffordshire and this issue. Monitor does an excellent job and this power will strengthen its hand, as well as the Government's.

The noble Earl and others asked how this measure will benefit patients. The power to deauthorise makes it clear that foundation trusts must maintain the high standards that are expected of them and that foundation status is not something that can be taken for granted. We believe that it will act as a further incentive to foundation trusts to maintain the highest standards of care for patients. We believe that this, linked to the regulatory regime that my noble friend referred to and to which I will return in a moment, is the best way forward.

The noble Earl also asked why the Secretary of State would have any better skills than Monitor to deal with issues such as those in Maidstone and Tunbridge Wells. The new performance framework relating to NHS trusts, which has been rolling out across the NHS since April this year, will improve the transparency and consistency of the process of identifying and addressing underperformance in NHS trusts. The performance framework clearly emphasises the roles and responsibilities of PCTs as commissioners and strategic health authorities as system and performance managers in driving up improvements, alongside the transparent role for the Department of Health. We believe that world-class commissioning and the strategic health authority assurance programme will complement the framework by holding PCT commissioners and SHAs to account for the roles that they play in tackling underperformance and failure. Consistently poor performers will either be supported to recover or their exit will be managed through a time-limited process.

The noble Earl asked why there was no requirement in new Sections 52B and 65D to exhaust other intervention powers. He asked whether that lays Monitor open to judicial review. Of course, Monitor is always potentially at risk of judicial review when exercising its powers and has to exercise its powers in accordance with the principles of public law. In deciding whether to deauthorise, Monitor will need to consider whether it is dealing with this in an orderly fashion by steps that cannot be used against it. That will be a relevant factor in considering whether it should exercise its powers in this manner. If Monitor can show that its decision whether to deauthorise or not is reasonable in the circumstances, that decision will be lawful.

I was not completely clear whether the noble Baroness, Lady Murphy, was speaking in favour of Monitor or not, but I was surprised by her intervention. Monitor has declared itself content with these proposals. Indeed, the amendments give Monitor an important new power. The Government are fundamentally committed, as I have said on many occasions, to the independence of Monitor. Surely we can all agree that, when patients' lives are at risk, action needs to be taken. Both the Secretary of State and Monitor should be able to defend their actions publicly. Given the amount of consultation with Monitor that led to this amendment

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being tabled, I was surprised at the noble Baroness's intervention, although I accept that the noble Earl is very persuasive in these matters. In addition, Monitor's guidance will deal with the matters that it considers when deciding whether to deauthorise. That will include consideration of whether lesser steps of intervention would be appropriate.

Again on the issue of Monitor's consultation process, I quote from the consultation document, which states:

"In such circumstances, we ... accept that it would appropriate for the Secretary of State to request that Monitor consider proposing de-authorisation and that Monitor's response should be published".

That is what Monitor had to say on this matter.

The noble Baroness, Lady Barker, raised the issue of 14 days and the timescale. The proposal is for 14 days or longer. In extreme circumstances, speed is of the essence, but so is due process. If the Secretary of State sets an unreasonably short timescale, he will be subject to judicial review. The Secretary of State will have to work closely with Monitor to ensure that the appropriate timescales are met.

My noble friend Lady Pitkeathley and the noble Baroness, Lady Meacher, raised the issue of the CQC and Monitor. As noble Lords may remember from earlier discussion of the Bill, Monitor and the CQC are bound by law to work together. In September 2009 they signed a Memorandum of Understanding. This takes account of the relationship and details the way in which they will work together and alongside each other in delivering their respective statutory functions. The CQC is an independent corporate body established under the 2008 Act. It is responsible for the regulation of the quality of health and social care services. Monitor is an independent corporate body established under the 2006 Act. It is responsible for authorising, monitoring and regulating NHS foundation trusts. They have to collaborate and co-operate together to ensure the effective discharge of their statutory functions and efficient and effective regulatory frameworks for NHS foundation trusts.

My noble friend Lady Pitkeathley asked about the responsible officer for medical revalidation. The amendment will have no impact on this. I am sure that we can agree that transparent decision-making is vital in these difficult times. I hope that the noble Earl will feel reassured that the proposals ensure that decision-making remains, rightly, with Monitor. I hope that he will also support the Government's view that transparency is vital in these difficult circumstances and feel able to withdraw his amendment.

4 pm

Baroness Murphy: Before the Minister sits down, I want to say a word of clarification and ask a further question. I can clarify that I was indeed speaking on my own behalf, as I believe everybody in the House should. We are all members of organisations; we do not always speak on their behalf. I was expressing a personal view. Much of the amendment is good and Monitor has been supportive of those parts of it.

As a point of clarification, I would like to ensure that the Minister and other Members of the House are aware that the quality standards by which Monitor

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assesses, and has formerly assessed, foundation trusts are exactly the same as those used by ordinary National Health Service trusts. Information from the Healthcare Commission until last week, information that is gathered by local organisations and from the governors and members, and information from achievement-against-performance targets form the basis on which foundation trusts are monitored, so they are just the same.

Monitor is now involved with the Care Quality Commission and the Department of Health. The chairman sits on the National Quality Board and is working closely with other organisations to see how we can all monitor quality better in a prospective fashion, to complement the way in which the CQC monitors it retrospectively so that our systems dovetail and work together. I hope that that is clear. When talking about mid-Staffs, it is important to understand that it was being monitored in exactly the same way as every other NHS trust.

Finally, I raise the issue of new Section 52E. All it does is enable the Secretary of State to make a request. Why is it necessary for the Secretary of State to have such a power in a Bill? There is no reason not to exclude that section, which sounds pretty heavy and interventionist and requires a response within 10 days. Nothing in normal day-to-day non-departmental government body business would preclude the Secretary of State from making a request. Most months now, expressions of anxiety are passed between various organisations in the health field. I cannot imagine a situation where this measure would be necessary. On that basis, I do not understand why it needed to be included in the first place. The rest of the amendment is very helpful to the process of regulation without it.

Lord Patel: Further to that question, was it not the case that in the first instance patients and their families showed concern about the care and safety of patients who were being treated in mid-Staffordshire? In that circumstance, who would patients approach? Would it be the Secretary of State, the Minister, their Member of Parliament, Monitor or the Care Quality Commission? Who would they approach?

Baroness Thornton: The only reason why I expressed surprise at the intervention of the noble Baroness, Lady Murphy, is that she opened her remarks by saying that she had been involved in the lengthy discussions between Monitor and the Government, and Monitor has said that it was very satisfied with this process. Obviously the Secretary of State can request information and can request Monitor to consider matters at any point, and does so, but the measure that we are proposing would mean that Monitor was bound to explain its answer. That is the key point. That is why new Section 52E is framed as it is. Of course, we know that Monitor applies the same standards to foundation trusts as are set out in the legislation for all CQC registration. I say to the noble Lord, Lord Patel, that, were a trust to be deauthorised, it would then go back into the NHS system and the same framework for the patient voice to be heard would kick in.

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Lord Mackay of Clashfern: My Lords, is new Section 52E premised on the idea that the Secretary of State may have information coming to him that will have escaped Monitor? If that is not the case, I do not understand why he should take it on himself to tell Monitor about something that it is already investigating. I should have thought that one's basic confidence in a foundation trust was based on the independence, skill and competence of Monitor. If you have a system that allows the Secretary of State to say to Monitor, "You are not doing this very well", that will tend to reduce confidence in Monitor and reduce public confidence in the system, as it would suggest that public confidence could be bolstered only by the fact that the Secretary of State had power to intervene.

Baroness Thornton: The Secretary of State will not intervene; he will ask Monitor to consider deauthorisation. The key point is that Monitor then has to explain its decision. It can say no, as it is an independent regulator. It has every power to say no but, if it chooses to say no, it has to do so publicly. This is about transparency and having to say no on the public record. The measure also gives Monitor a new power to deauthorise, which it did not have previously and which it has said that it wishes to have.

Earl Howe: My Lords, I thank all noble Lords who have taken part in this debate, not least those who have supported the position that I have taken. I am particularly grateful to the noble Baroness, Lady Murphy. Having listened to her, I accept that there could be rare circumstances in which the power that the Government are seeking might be warranted and might be appropriately used.

However, the main issue that I raised relates to new Section 52E. Essentially, the Government have looked at mid-Staffordshire, acknowledged that there has been a failure of management and decided that the way to solve that management problem is by legislating. That is a classic piece of wrong-headedness, although, for the reasons that I gave earlier, it could be even worse.

New Section 52E is all about putting Monitor under political pressure and, as my noble and learned friend said, could serve to do the very opposite from what the Government are intending; namely, it could undermine confidence in the system. If people do not think that Monitor is doing its job properly, that is an even worse situation. Not only does Monitor have to act when instructed or requested to act, but it may have only 14 days in which to do so because, as the noble Baroness, Lady Barker, pointed out, the Secretary of State could insist on 14 days. If it then delivers what seems to the Secretary of State to be the wrong answer, there seems to be nothing to prevent the Secretary of State from repeating the request straightaway, thereby redoubling the political pressure. To me, none of that is a very appealing prospect.

We then come back to whether deauthorisation is a measure of last resort. From the Minister's answer, I was not entirely clear about that. The fact remains that Monitor could be trapped by the wording of the amendment. Having taken a detailed look at the facts of the particular case, it might well find that the trust was in breach of its authorisation terms. It might well

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find that that breach was serious enough to justify the Secretary of State making an order to deauthorise a trust yet, despite that, conclude that it was inappropriate to go down the deauthorisation route. How easy will it be for Monitor to hold fast to that conclusion in the face of intense political pressure? Without wording in the new section to make it clear that deauthorisation should be considered only when other measures have failed, that will not be easy at all.

The way to secure improvements in the performance of foundation trusts is much more straightforward than any of this, and noble Lords have referred to it. It is to make sure that there is close liaison between the Department of Health, Monitor and the Care Quality Commission. We do not need legislation to do that. I am sufficiently encouraged by the support that I have received from other noble Lords that I should like to test the opinion of the House.

4.13 pm

Division on Amendment 1A

Contents 103; Not-Contents 164.

Amendment 1A disagreed.

Division No. 1


Allenby of Megiddo, V.
Anelay of St Johns, B. [Teller]
Ashcroft, L.
Astor of Hever, L.
Baker of Dorking, L.
Bates, L.
Blackwell, L.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Caithness, E.
Campbell of Alloway, L.
Carrington, L.
Cathcart, E.
Chorley, L.
Cobbold, L.
Colwyn, L.
Craigavon, V.
Crickhowell, L.
Crisp, L.
Cumberlege, B.
De Mauley, L.
Dear, L.
Denham, L.
Dixon-Smith, L.
D'Souza, B.
Eccles, V.
Elton, L.
Emerton, B.
Flather, B.
Fookes, B.
Fowler, L.
Freeman, L.
Freud, L.
Gardner of Parkes, B.
Garel-Jones, L.
Geddes, L.
Goodlad, L.
Griffiths of Fforestfach, L.
Hamilton of Epsom, L.
Hannay of Chiswick, L.
Harries of Pentregarth, L.
Hooper, B.
Howard of Rising, L.
Howe, E.
Howe of Aberavon, L.
Howe of Idlicote, B.
Hunt of Wirral, L.
James of Blackheath, L.
Jenkin of Roding, L.
Jopling, L.
Knight of Collingtree, B.
Lamont of Lerwick, L.
Listowel, E.
Luce, L.
Luke, L.
McAlpine of West Green, L.
McColl of Dulwich, L.
MacGregor of Pulham Market, L.
Mackay of Clashfern, L.
Mancroft, L.
Manningham-Buller, B.
Mawson, L.
Meacher, B.
Miller of Hendon, B.
Monson, L.
Montrose, D.
Morris of Bolton, B.
Murphy, B.
Naseby, L.
Neville-Jones, B.
Noakes, B.
O'Cathain, B.
O'Loan, B.
Palmer, L.
Patel, L.
Perry of Southwark, B.
Plumb, L.
Rees-Mogg, L.
Rotherwick, L.
Rowe-Beddoe, L.

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Saltoun of Abernethy, Ly.
Seccombe, B. [Teller]
Selborne, E.
Selsdon, L.
Sharples, B.
Shaw of Northstead, L.
Skelmersdale, L.
Slim, V.
Stern, B.
Stoddart of Swindon, L.
Strathclyde, L.
Swinfen, L.
Thomas of Winchester, B.
Trumpington, B.
Ullswater, V.
Verma, B.
Wakeham, L.
Walpole, L.
Walton of Detchant, L.
Warnock, B.
Williamson of Horton, L.
Willoughby de Broke, L.
Young of Hornsey, B.


Addington, L.
Adonis, L.
Ahmed, L.
Anderson of Swansea, L.
Archer of Sandwell, L.
Ashdown of Norton-sub-Hamdon, L.
Bach, L.
Barker, B.
Bassam of Brighton, L. [Teller]
Berkeley, L.
Best, L.
Bhatia, L.
Bhattacharyya, L.
Billingham, B.
Bilston, L.
Bonham-Carter of Yarnbury, B.
Boothroyd, B.
Borrie, L.
Bradley, L.
Bradshaw, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Campbell-Savours, L.
Carlile of Berriew, L.
Chandos, V.
Christopher, L.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clement-Jones, L.
Clinton-Davis, L.
Cohen of Pimlico, B.
Corbett of Castle Vale, L.
Crawley, B.
Davies of Oldham, L.
Desai, L.
Dholakia, L.
Donoughue, L.
Dubs, L.
Dykes, L.
Eatwell, L.
Elder, L.
Elystan-Morgan, L.
Evans of Parkside, L.
Evans of Watford, L.
Falkender, B.
Falkner of Margravine, B.
Faulkner of Worcester, L. [Teller]
Fearn, L.
Finlay of Llandaff, B.
Foulkes of Cumnock, L.
Garden of Frognal, B.
Gavron, L.
Gibson of Market Rasen, B.
Golding, B.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Greaves, L.
Grenfell, L.
Griffiths of Burry Port, L.
Grocott, L.
Hamwee, B.
Harris of Haringey, L.
Harris of Richmond, B.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haskins, L.
Haworth, L.
Henig, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Hooson, L.
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