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Coupled with the proposals in the public health White Paper, there is the opportunity, if it is handled appropriately, to transform the healthcare experience for patients in our country and, more importantly, to start to focus resources in such a way that we maintain good health rather than continuously focusing only on

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treating patients, many with chronic disorders. The real question is how effectively we can take forward what is ultimately agreed, and therefore applied, to improve the outcomes and lives of our patients. That will require clinical leadership. It is regrettable that over so many years the National Health Service has failed to develop a sustainable mechanism to ensure that we can engage clinicians in leadership rather than just management. There is a very important distinction between the two.

One of the approaches in which I have been involved-I declared my interest in University College London Partners-is the establishment of the NHS staff college. It is modelled on the Army staff college. Indeed, we have engaged the faculty of the Army staff college to work with us in helping us to identify, through the self-reflection of those involved, and then to develop clinical leaders across the spectrum of primary care, including physicians, those working in secondary and tertiary care, managers and other healthcare professionals, to provide true leadership and ensure that the interests of patients and the utilisation of resource available within our healthcare system is applied effectively, to help these and other changes that may be applied for the benefit of the country. Will the Minister say what arrangements are being made and what strategy is in place to run in parallel with any changes proposed in the health and social care Bill for the sustained development of clinical leaders? That is a crucial issue, which warrants careful attention and appropriate thought to organise a leadership strategy that will help to deliver any changes that are finally agreed.

It is also well recognised that research and academic endeavour is hugely important to improving healthcare. Indeed, patients treated in systems where there is active research activity often tend to have better clinical outcomes. The academic health science centres have been discussed previously debate in your Lordships' House in the excellent debate initiated by the noble Baroness, Lady Finlay, on academic health partnerships. The academic health science movement is now well established in our country. The issue with the proposed reorganisation is whether the focus on academic health-the partnerships that are required to ensure the leavening effect of academic medicine in improving standards across the entire system-will be sustained. That will require some careful thought in terms of the approach that the future NHS commissioning board takes on the nature of services and some of the innovative work that the academic health science centres can undertake, not only in improving outcomes and ensuring the best delivery for populations within their own remit, but as a test bed for ideas and innovations. By that I mean not only new treatments but new pathways of care that can be tested in the populations associated with the current academic health science centres. If proven effective, they can then be rapidly adopted throughout the National Health Service. Therefore, I ask the Minister whether there will be some opportunity to ensure that, in any discussions about the specific work and purpose of the commissioning board, the importance of academic medical research is well established and plays an important role in determining some priorities that the board may set.

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Finally, I turn to education and training, which has been covered somewhat in the response on the White Paper that was published yesterday. We all recognise that the education and training of future generations of doctors-specialists, those working in primary care and those working in hospital practice-and allied healthcare professionals, who play such an important role in ensuring that we have effective teams, must remain a priority. From looking at the response, I understand that there will be further responses on education and training, which should be available shortly. However, there are concerns about the direction in which the education and training of a future workforce are going. Of course, it is well recognised that those commissioning local services will have a rightful interest in understanding what type of workforce-after a period of specialist training -will be available to look after the local healthcare needs for which they have commissioning responsibility. There must also be the opportunity to identify and set priorities at a national level for certain elements of very specialist training, to ensure that our country is able to offer the full range of healthcare that its people require. By that, I mean what is set at a local level and more specialist training, ensuring that we have the very best specialists to deal with some of the most complex problems. Therefore, it is important that education and training remain centre stage in all the decisions and discussions moving forward. I hope that the Minister can address that.

2.02 pm

Lord Hunt of Kings Heath: My Lords, I thank my noble friend for securing this debate and for his excellent contribution. I declare an interest as a non-executive director of the Heart of England NHS trust; president of the Royal Society for Public Health, of the Health Care Supply Association and of the British Fluoridation Society; a trustee of the Terrence Higgins Trust; a self-employed consultant on the NHS; and a consultant and trainer for Cumberlege Connections.

The paper published yesterday by the Government claimed widespread support for what they propose, but I have not detected that. In fact, there is wide dismay in the health service about what is proposed and the inevitable train crash that will occur. Of course, many of the White Paper's intentions are supported-who could argue with wanting a service that puts patients first? However, I fail to understand the means chosen to achieve that. Why not build on what is there? Why is the health service being given four years of disruption and disorganisation? I would have more understanding if the NHS was in such a critical condition that it needed major surgery, but it is anything but. The last decade has seen great strides made-300,000 more staff, new facilities, new services, and waiting times cracked. I refer the noble Lord, Lord Alderdice, to the US Commonwealth Fund's report last month, which looked at 11 major developed healthcare systems and gave the NHS a glowing report; in fact, it said that the NHS was extremely cost-effective. Only two days ago, the British social attitudes survey showed that when Labour entered office in 1997 only 34 per cent of people were satisfied with the NHS. By 2009, the figure stood at 64 per cent, the highest since the survey

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began in 1983. What is the case for drastic change? The Government have certainly not made out that case.

There is a great risk in what will happen in the next few years and I would like to make three points to the noble Earl, Lord Howe. The first is on the danger of instability. PCTs are in meltdown, facing a lingering death by cluster. GP consortia, untried and untested, are meant to take up the reins. If resources were flowing, perhaps the system could just about cope, but resources will not flow. Some £20 billion has to be taken out of efficiency savings, at the same time as the NHS is facing the consequences of a huge cutback in adult social care funding. The financial challenge is immense. David Nicholson told the Commons Select Committee:

"It is huge ... it has never been done before in the NHS context".

What an extraordinary time to dismantle the very bodies on which one would depend to achieve the efficiency savings. What are the Government doing to the people who will achieve those savings? It will not be the clinicians-the clinicians are never to be found when it comes to these issues-it will be the managers, and the Government are cutting management costs by 45 per cent over four years. That is sheer madness. No wonder Professor Chris Ham said in October that,

That view is shared up and down the NHS. Whichever part of the country you are in, that is the view that people express.

I then come to GP consortia. I would be interested if the noble Earl could clarify how many consortia he thinks will emerge. When the White Paper was published, some briefing clearly took place that suggested that there would be around 500, with populations of 100,000. Since then, indications are that they will be much larger than that to spread the financial risk. I understand that but, if you make them very large, do you not undermine the whole purpose of giving individual GPs involvement in the consortia? The Government are taking a laissez-faire attitude towards that, according to the documents published yesterday. However, if the intention is for each contract holder to have a clinician representative on the consortium, as is stated, I wonder about the practicalities. Indeed, I suspect that some consortia will make your Lordships' House seem rather modest in size.

Then there is accountability. Billions of pounds are to be handed over to GPs. What corporate governance safeguards are to be put in place? As a minimum, surely we must have a non-executive chair and non-executive members. The kind of structure that the Government propose would not reach first base of any corporate governance test in any other organisation in this country. How can it be possible to leave that to each consortium to decide? If noble Lords reject that argument, I ask why we have non-execs on public companies. Why do we have trust boards? Why not just hand things to the consultants and let them develop a consortium and make the decisions? It is absolutely incredible that we should hand so much money over to a group of professionals without proper accountability and without the public interest being maintained by

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non-executives. When the relevant Bill comes to this House, that is one of the most powerful points that my noble friends and I will make.

I shall finalise my theme in relation to GP consortia. Mr Lansley wants the management of care and the management of resources to be put together at the GP level. What happens when, as is happening at the moment, contracts are overperformed by hospitals because, essentially, the GPs cannot manage demand? In the new structure, the consortia will have to face the financial consequences of that. They will then need to tell poorly performing GPs to change their behaviour, but there are no levers in the White Paper for them to do so. I would have supported the contract being placed at the consortia level, but placing it at the national commissioning board level will lead to huge bureaucracy and leave the consortia with no levers whatsoever. Of course, there would be probity issues, but if you had non-executives, you could deal with those.

I hope that the noble Earl, Lord Howe, will reflect on that. The Secretary of State has shown little sign of being willing to have a proper dialogue. My experience is that Secretaries of State who are not prepared to listen or have dialogue will face the consequences.

2.10 pm

Lord Rodgers of Quarry Bank: My Lords, I welcome the noble Lord's success in the ballot and listened to his speech with great interest. However, I am disappointed that there has been so little discussion of the future of the NHS in your Lordships' House since the White Paper was published in July, five months ago. I had expected a substantive response on one of the Opposition days, as the National Health Service has been a central political issue for more than 60 years. This House is at its best in considered and fair-minded scrutiny, including Official Opposition scrutiny.

I am also disappointed that yesterday's government response to the lengthy process ended with a Written Statement. The House greatly respects my noble friend Lord Howe, but we would have liked to hear his own words. In a recent speech, the Minister said:

"The rhetoric about our reforms is overheated. This is evolution, not revolution".

With respect, there seems to have been relatively little rhetoric around the White Paper. There are legitimate and strong differences, and a balance of opinion between welcoming radical change and genuine anxiety about upsetting the much improved 21st century NHS. Now, in a document three times longer than the White Paper, the Secretary of State broadly endorses his original thesis.

I was agnostic about the White Paper. I thought that there was too much hyperbole and too much fashionable jargon, and I am not yet wholly persuaded. But I do not share verdict of the hesitant critics, or cautious friends, such as the King's Fund: "Too far too fast". Once the health Bill has appeared and pre-legislative scrutiny has been completed, I would much prefer Ministers to get a move on. In speaking to the NHS Alliance conference, my noble friend Lord

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Howe said that, while NHS managers are sometimes misrepresented as bogeymen,

He said that he wants a more innovative NHS but that,

I hope that my noble friend will repeat that today and on other major occasions. Hard-working, high-skilled and committed managers are too often diminished as nameless bureaucrats; in contrast to virtuous, efficient doctors and caring nurses.

On the National Health Service as it now stands, it is right to acknowledge that there have been outstanding improvements in the past 10 years. From my personal experience, the National Stroke Strategy is a success story compared to the Comptroller and Auditor General's report, Reducing Brain Damage, covering the earlier part of the decade. Similarly, a few years ago, there was a minimum waiting time for a hearing aid of between nine months and two-and-a-half years, and often there is now no delay at all. Waiting lists for treating major, critical conditions are dramatically down. I will be worried, and patients will be depressed and angry, if there is any reverse of that trend.

On the central issue of the White Paper, I am fascinated by the new NHS commissioning board. It threatens to become the quango of all quangos. In the White Paper, it is described as,

despite its huge responsibilities-and the new document suggests that there may be more. Its original, tentative, regional dimension seems to have disappeared. I would be grateful if the Minister would explain the regional role of the NHS when the primary care trusts and the strategic health authorities have gone. There is a related problem. Will my noble friend explain the role of A&E departments within the new structure? On the eve of the general election, the then Secretary of State announced that he was personally intervening to prevent the closure of a dozen A&E departments.

Localism is the order of the day. Local people, say Ministers, with real powers, are to decide the services and facilities that they want. On the face of it, local people want high quality and very expensive treatment in every hospital. Who will choose the priorities? Who will decide? I say that because I was impressed by a recent consultation to choose a limited number of new sophisticated stroke hospital units in London. Thirty-one primary care trusts came together to reach an agreement. Who will now come together to make use of the highly contentious and political question of the future of other hospital departments nationwide when the PCTs have gone?

There are still many questions of how to turn the White Paper and yesterday's document into an even better NHS. I hope that I shall soon join the Ministers in the sunny uplands of success, but I have not travelled there yet.

2.17 pm

Baroness Masham of Ilton: My Lords, I thank the noble Lord, Lord Touhig, for securing this debate. I have been involved with the National Health Service for many years and it is without doubt in my mind the

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most valuable asset we have. It is an insurance policy for anyone who may be hit at any time by accident, illness, infection, disability or an act of violence. Over the years, the National Health Service has been subject to reorganisation after reorganisation. It is a vast and complicated organisation and recently, the training of junior doctors has complicated care of patients. Being restricted to 48 hours has compromised their training to be safe and competent doctors and surgeons.

If the reorganisation is going to work, the best people must be involved in leadership who can take responsibility and work in unity. There should be efficient systems in place; patients should not have to be left for long periods in x-ray waiting for a porter to return them to a ward; hospital food should be edible and nourishing; and nurses should see that patients are not left without food and fluid. The correct drugs should be administered by competent people; there should be responsible leadership to see that patients are always looked after; and nurses and care assistants, when at the nurses' station, should be working on behalf of patients, not chatting about their next social engagement. There are many dedicated, hard-working staff in many hospitals, but in many more improvements should be made as soon as possible.

"Putting patients and the public first" is the heading of Chapter 2 of the White Paper Liberating the NHS. It states that the principle of shared decision-making is to become the norm-

Many patients will tell you that they have difficulty getting an appointment with a GP of their choice-it can take weeks. It is important that at this time of change in the NHS, the patient's voice is heard and listened to. First we had the community health councils, then the health forums, and now LINks. The general public do not really seem to know much about them. When something happens, such as a disaster like the tragic situation at the Mid Staffordshire hospital, the Patients Association is asked to comment by the press. It is a small, independent, voluntary organisation supporting patients and it has been inundated with work and inquiries. This shows what a need there is for an independent body to help and protect patients of all sorts throughout the country.

In the health White Paper it is suggested that there should be an organisation locally called HealthWatch, and a national body called HealthWatch England. I went to Google to find out what it said about HealthWatch. What came up was:

"HealthWatch is an independent registered charity ... since 1991, who try to promote EBM. We are not Andrew Lansley's HealthWatch".

Several other HealthWatches came up. Could there not be confusion? With different HealthWatches, it is possible.

I tend to agree with the NHS Confederation when it says:

"We applaud the adoption of the principle of shared decision-making between GPs and their patients and the responsibility that will be given to the NHS Commissioning Board to champion patient and carer involvement but it is far from clear what levers they will have to enable this".

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It would be sad if relationships between the doctors and patients were damaged because GPs did not give patients what they feel they need. At least now they can blame the PCTs. Rather than give responsibility for complaints advocacy to the local HealthWatch, it would make greater sense to build on the existing well established network of local citizens advice bureaux. These already deal with health complaints as well as complaints about other local services and benefits. However, this would require appropriate additional resourcing and requirements to link with the local HealthWatch. HealthWatch is unlikely to have sufficient public profile or the resources or capabilities to deliver these functions.

If this new NHS is going to work, people and organisations, primary and secondary health, should be working together with enhanced communication for the good of patients. There should not be conflict and a silo situation. That would be a total disaster.

There is concern from many groups representing people with specialist conditions about the specialised commissioning. Will the 10 specialising groups still exist? I ask the Minister, but I am used to him not answering my questions. GPs who are generalists cannot be expected to know everything. I hope the Minister will be able to help with the uncertainties and concerns surrounding these issues, which include community care.

2.24 pm

Baroness Williams of Crosby: My Lords, I, too, thank the noble Lord, Lord Touhig, for introducing this crucial debate in such an effective way. I strongly agree with my noble friend Lord Rodgers of Quarry Bank when he suggests there should be more opportunities for this House-which has a very substantial level of medical knowledge which is not so clear in another place-to debate and discuss reorganisation, an issue which is still very much in the making. The greater the discussion and debate, the more likely it is that we will get an outcome on which everyone can agree.

I should like to add a personal note, and I hope I will not in any way embarrass my noble friend in saying it. My noble friend Lord Rodgers of Quarry Bank is a remarkable example of the successes of the NHS. Anyone who knows what he has climbed back from will, I think, agree with me. On another personal note, my family and I have always been NHS patients and never private patients. I have to thank the NHS for, on at least two occasions, saving the lives of relatives in the most remarkable conditions. I can find very little to fault it with when it comes to critical illnesses and accidents as compared with other health services, some of which I know very well indeed.

I should like to begin by considering the current position, and here I find myself in some agreement with the noble Lord, Lord Hunt of Kings Heath. If you read-as I hope every noble Lord will, especially those involved in health discussions-the quite remarkable report of the Commonwealth Fund, which is nothing to do with the United Kingdom but to do with the Commonwealth of Massachusetts, which is where the word comes from, you would be standing on the rooftops cheering-or at least you would if you were

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in any other country except our own. The report is remarkable. It shows that our NHS, along with the one in New Zealand, is almost certainly the most cost-effective system we know. Surprisingly-indeed, amazingly-it also shows that the gap between the service provided to those in very low income groups and those in very high income groups is less than in any other developed country. The gap here is 5 per cent whereas in other countries it ranges from 20 per cent in what one might call core Europe, to as much as 60 per cent in the United States. Perhaps even more amazingly, it also shows that the amount of time taken up in waiting to see a consultant or senior clinician in the NHS is very near the bottom of the list. In other services, some of which are much more inclined to be clinician-led, the time spent waiting is much greater.

We have to think very carefully about how to ensure that reorganisation improves the existing NHS and not try to indicate that the NHS has been a failure. By any international standard it is not a failure. It is one of the most remarkable, dedicated public services anywhere in the world.

There is another truly important point. It is clear that the NHS has, over more than 60 years now, won an astonishing level of public trust. The noble Lord, Lord Hunt, mentioned that. Anyone who cares to look at, for example, the recent study of social attitudes in the United Kingdom will see that the NHS is rated as being at the top of all the large public services. It is, rather sadly, ahead of education, but also ahead of almost all other public services. That means that we have to consider very carefully what we do to reorganise it. The bar has been set very high indeed in terms of public trust and public attitudes.

I should like to say one word to the noble Lord, Lord Kakkar, who is no longer in his place. There is a great importance in giving clinicians the widest public say and influence in the services that their patients can expect. I think that all of us in this House-some of us in this House are clinicians, although I certainly am not-would recognise the importance of their influence on the NHS and any other health service. Picking up on the words of my noble friend Lord Alderdice, I suggest that clinicians on their own will not be an adequate response to the need to change the health service for the better.

Wonderful men and women though many of them are, they are not, any more than the rest of us, completely immune from occasional selfish attitudes. I will give an example, which, in the spirit of a bipartisan approach to the problems of the health service, I hope even the noble Lord, Lord Hunt, might conceivably nod at. Many of us recognise that one of the things that went wrong with the NHS in recent years, apart from the increases in expenditure which were clearly good, was the unfortunate contract that enabled GPs to get very much more money and to do so without making any commitment at all to out-of-hours service. I have quite a lot of GP friends, including my own GP NHS trust, who are embarrassed at the way in which they got so much more money for less work at a time when almost all of us can expect not much more money for a great deal more work. The outcome of this debate would be improved if most of us were able to hang up for the

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moment our tribal loyalties and look at the responsibilities all of us owe to the NHS and to the reorganisation of the NHS. Those responsibilities are honesty, frankness and admission of our own mistakes.

I move on to what most worries me about the reorganisation, apart from the fact that it did not appear in the coalition agreement in any shape or form. Indeed, the coalition agreement specifically promised no more top-down reorganisation and, at least as important, there is reference after reference to PCTs, which would mean that anyone who read it carefully would think that PCTs were likely to survive and not suddenly to disappear.

I want to suggest to my right honourable friend the Secretary of State-and perhaps at least as much to the greatly admired Minister of State, my noble friend Lord Howe, whose devotion to the National Health Service is known to us and who we all, I think, trust and respect very deeply-that a reorganisation needs to carry with it changes that are seen by the public to be improvements. One of those was referred to by my noble friend Lord Alderdice and he is absolutely right. I suggest that clinicians look at the significance of accountability in a public service that is massively financed by the taxpayer.

The provisions for accountability are very weak and not clearly spelt out. I do not understand why it would not be possible with the White Paper to move towards a different system. PCTs are disappearing very fast, as the noble Baroness, Lady Masham, and others have suggested. Commissioning bodies should include not only clinicians but also representatives of the public, some from local areas. The noble Lord, Lord Hunt, was right when he said that there should be an executive lay chairperson whose responsibility would be to the community and not to clinicians or any other group which is bound to have its own concerns and special interests, rather than the wider interests of the public as a whole. The public would buy strongly into that kind of reorganisation. One which leaves that issue of accountability so vague and so little spelt out will not carry the trust that we need. My right honourable friend in another place who is today the Minister of State in the Department of Health, Paul Burstow, has suggested on several occasions the strengthening of accountability. The outcome has been existent certainly, but not strong. We need a much clearer system of accountability.

I will not detain the House for very much longer, but next I want to refer to my noble friend Colwyn who, in discussing the issues of NHS dentistry-I defer to him because he is much more knowledgeable on that subject than I could ever hope to be-referred to trial or pilot schemes.

Baroness Northover: My Lords, I hate to do this, but this is a strictly time-limited debate. When the figure seven shows, noble Lords have exceeded their time.

Baroness Williams of Crosby: I apologise. I did notice that it was not completely stuck to in several other speeches, but never mind. I will wind up quickly. First, if there were to be a trial period with an outcome that would be open to discussion and debate, I would

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support it. But that is not my understanding. I believe that these are called pathfinders and are the first wave of the reorganisation. Lastly-

Baroness Northover: I am sorry, but no one has got close to this length of time. I realise that this is very significant and I hope that we will come back to it in debate.

Baroness Williams of Crosby: I apologise. I said that I would wind up in two sentences and here is the second. I am very worried that if we do not think about the reorganisation thoroughly, we will be in real trouble with the public.

2.35 pm

Baroness Finlay of Llandaff: My Lords, like others, I thank the noble Lord, Lord Touhig, for securing this debate at this significant time. Having watched the Health Select Committee questioning yesterday of the Secretary of State for Health, Andrew Lansley, I was left with more concerns than I had previously. As always, the devil is in the detail and the detail is where the problems lie.

The importance placed on the patient voice is welcome, but the new local HealthWatch organisations should have powers to call for an inquiry when there are concerns. Of course, there should be no decision about a patient without the patient being involved in and informed of what is going on. There must be respect for the individual, and provision of care that enhances dignity should be at the heart of every clinician, patient encounter. Attitudes in some areas certainly need to change, both in primary and secondary care, if we are really to have the patient's concerns at heart. Let us push forward with those measures.

However, my two areas of concern are, first, the "any willing provider" approach and, secondly, the wholesale disbanding of PCTs and the effect on patients of the consequent destabilisation of secondary care. As has already been mentioned by the noble Lord, Lord Hunt of Kings Heath, Chris Ham writes today that,

The "any willing provider" requirement risks fragmentation and cherry-picking, which would leave NHS organisations to struggle to provide for those with multiple co-morbidities and complex needs. The Royal College of General Practitioners and the Royal College of Physicians-I declare that I am a fellow of both-and the King's Fund and the BMA, of which I declare that I am a member, have all alerted us to the dangers. All support using private and voluntary sector providers to fill the gaps-hospices are a prime example-and to support defined roles. However, hospitals need a critical mass of activity to be efficient. Without that, how will good seven-day cover be achieved?

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The Government's response recognises the fluctuations in need that occur in any one area. Neonatal cots, winter beds and so on are obvious examples. How will flexible provision be achieved if foundation trusts are destabilised by being stripped of their profitable elements by the cherry-picking of private sector providers? Clinicians can tell of many examples of patients suffering when providers are in direct competition and not in collaboration.

The tariffs look crude and contain perverse incentives. For example, specialties that have invested in IT teleconferencing follow-up will not be paid. Clinical leadership in primary and secondary care, underpinned by good management, is overdue, but such leadership must be around pathways of care for patients. That means that secondary care needs to be at the table with primary care, because people do not know what they do not know-advances in different branches of medicine are moving forward so fast that GPs cannot possibly be up to speed with everything. In areas where there are good GPs and good relationships between GPs and secondary care providers, cross-fertilisation will happen but in many areas such relationships are not in place.

What will drive up standards of primary care at local level to ensure that patients with long-term conditions are supported in their own homes? To speak of unscheduled care is to gloss over the reality of out-of-hours work. With only 30 per cent of the week adequately covered, how will the reforms specifically address the needs of patients who want to stay in their own homes? All too often, such patients are put in an ambulance and land in A&E if secondary care provision is not integral to the process of determining pathways of care.

The US model seems to underpin much of the thinking, yet we all know that healthcare per capita in the US is vastly more expensive than that of the NHS despite there being 40 million US citizens without any adequate care. Will the profits from services organised by American systems go to the US? That is not the John Lewis Partnership model, which would reinvest in the NHS.

I turn to PCTs. To have evolution not revolution, why did the Government not put GPs in the driving seat by putting a majority of GPs on the boards of merged PCTs, which could have had a lay chairman? The PCTs could have retained the skills of managers in responding to particular local needs and could have used primary and secondary care working arrangements to make joint plans. If patients can register with any GP anywhere, how will care be provided in the patient's home when he or she is sicker, older and frailer? Who will want to take on a patient who poses a lot of work? If a GP can jump between consortia, how will stability of commissioning be achieved? Without some baseline stability, quality will not be driven up. We have all seen short-term projects wither. Sir David Nicholson has today exhorted trusts to maintain quality standards. To do that requires stability, not the fragmentation of services.

Many of the partnership agreements between PCTs and local authorities are legal agreements under the Health Act 1999. How will the more than 134 statutory

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functions of PCTs be discharged? Those include safeguarding children and commissioning for vulnerable groups, prison services and so on. Local authorities are already struggling, so I have no confidence that they will be able to take all this on too. Where will pooled budgets and joint commissioning sit? Will the consortia disband those arrangements, or will they have to respect them and build on them?

With estimates of one in four GPs having a commercial conflict of interest, how will the new model ensure probity in healthcare delivery, given that tendering, done properly, can cost around £500,000? How will the £20 billion saving be found with this massive reorganisation? Redundancies in PCTs are already costing money and losing organisational memory. Staff are then re-employed by private providers. That takes people away from the core task of quality assurance of patient care. The Mid Staffs trust is a glaring reminder of that.

The process seems to be storming ahead, with the detail being clarified as we go. We will be faced with legislation when, as the Health Committee suggested yesterday, the train has left the station at a dangerous speed before we have even had time to scrutinise the Bill.

2.43 pm

Lord Rea: My Lords, in thanking my noble friend Lord Touhig for initiating this debate, I apologise to him for missing the first part of his speech because the business moved a little faster than I had been led to believe. In my allotted time I shall talk about the new arrangements for commissioning patient care that are proposed in the White Paper. To illustrate the current situation, let us suppose that Andrew Lansley, the Secretary of State, is a fruit farmer, with PCTs as the trees producing the fruit, which are patient services. The Health Select Committee report on commissioning published in March this year found that some of the trees-the PCTs-were not in good health, with which the incoming Government agreed. Some of the trees were yielding well, but others were in bad shape. They were in need of heavy pruning as they contained a lot of dead wood. However, the Select Committee did not recommend cutting all the trees down. Properly pruned and treated with fertiliser, which can be equated with clinical input, and insecticide, which can be equated with statisticians and healthcare public health specialists-about which I shall say a bit more later-it was felt that the trees would recover and yield adequately.

However, it seems that Farmer Lansley is determined to cut all the trees down and plant new ones of an untested variety that he, an amateur plant breeder, has developed. He thinks they might be of superior taste without seeing first whether they would thrive on his land. Admittedly, he is now nurturing a rapidly growing form of the new variety called "pathfinder", but this is being grown in special conditions under glass and there is no guarantee that it will grow successfully on a large scale in the open. A new problem has recently arisen; the main PCT orchard has developed a fungal disease popularly known as planning blight, so that yields may well be less for the next few years. This is an

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especially unpleasant condition in that healthy and productive branches-the most skilled and experienced managers-are starting to drop off and disappear elsewhere. That is because these managers are easily able to find new employment.

By deciding to grub up and remove the current orchard, Mr Lansley has involved himself in considerable expense-much more expense than pruning and treating the existing trees would have incurred. This is before the new variety has even been market-tested and at a time when loans to cover the interim period are very hard to come by.

To leave the analogy for a moment, I mentioned earlier the healthcare public health specialists. These are doctors or other healthcare practitioners who receive special training in assessing the healthcare needs of whole populations and how they can best be met using evidence-based interventions. These are the very skills that are required by commissioning organisations, whether they be PCTs or consortia. Although I am a former GP I believe, like the BMA, that the clinical membership of new commissioning bodies should include representatives of all the healthcare professions, not only GPs. They should perhaps more properly be called clinical consortia. However, I take the point made by the noble Baroness, Lady Williams, that due attention should be paid to the representation of patients and the community on commissioning boards.

One of the criticisms of PCTs made by the Select Committee at paragraph 194 is that:

"PCTs employ large numbers of staff, but too many are not of the required calibre"-

the dead wood, perhaps.

"PCTs need to become better at collecting data, for example of the needs of their population, and at analysing it. In particular, it is essential to exploit existing and developing data sources to provide comparative performance information in terms of cost, activity and outcomes".

These are exactly the skills provided by healthcare public health specialists, but they are in scarce supply. There are perhaps enough of them to staff the current PCTs, and if they are established in roughly the same numbers, they might be able to cover the new consortia, but their skills will also be needed at the local level to act as directors of public health or as their advisers. Therefore, very careful thought needs to be given to where they are appointed and the powers given to them. Perhaps they should have an executive rather than merely an advisory role, so central to policy are their assessments of the healthcare needs of the population that is to be covered.

There is a lot more about this White Paper that I would like to say, but that will have to wait. I would like just to recommend that the noble Earl passes on to his right honourable friend the Secretary of State two documents, both of which are serious contributions to the current debate. They are Public Health Support for GP Commissioning, which is published by the British Medical Association, and the parliamentary briefing sent to all of us by the King's Fund in preparation for this debate. It is very sound in its assessment of the situation and in its considered advice to the Government.

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2.49 pm

The Earl of Listowel: My Lords, I, too, thank the noble Lord, Lord Touhig, for calling for this timely debate. As a citizen I share with him his concern at the emphasis on competition in this paper. Reflecting over the past 20 years, a lack of emphasis on collaboration and co-operation, and a lack of respect for the professionalism of all our providers working on the front line, has tended to undermine morale. That has led to situations, to which the noble Baroness, Lady Williams, referred, such as doctors feeling that they want to go for the best deal for themselves because they are not respected for their work and the care they give the public daily.

In the time available I shall ask the Minister about the impact of reform on specialist mental health services for children. I shall also ask him for reassurance on the future of the family assessment unit at the Cassel Hospital in London. I apologise for not giving notice of that.

I applaud the Minister and his colleagues for deciding to pass decision-making, as far as possible, back to the social workers, teachers, probation officers and doctors nearest the front line. I welcome the fact that it was recently decided that an offender will no longer be automatically incarcerated if he breaches an order twice but that the probation officer will decide what needs to be done. It seems that the Government are operating on a principle across policy in this area, which I welcome. Of course it has to be balanced and not move from one extreme to another, and it has to recognise the problems of professional capacity near the front line.

I am particularly grateful for the comments of my noble friend Lord Kakkar on leadership in the NHS. His reference to clinical leadership led me to reflect on the work of the National College for Leadership of Schools and Children's Services and the parallels to be found there. I also welcome the injection of more health visitors, an issue about which we will speak on other occasions.

I am concerned about the future of specialist looked-after children's mental health services, of child and adolescent mental health services and of targeted mental health services for schools. Can the Minister reassure the House that the lessons learnt from the move to commissioning by primary care trusts some years ago have been fully digested by him, particularly in regard to the difficulty in the strategic commissioning of specialist health services?

Specialist looked-after children's mental health services have been an important success story in an area that urgently needed improvement. In 2004, the Office for National Statistics found that more than 69 per cent of children in children's homes had a mental disorder and about 40 per cent had a conduct disorder. The latter can be extremely challenging for staff to deal with. The needs of English children in residential care are generally far more intense than those of children in Denmark and Germany. About half the children in local authority care in those countries are in children's homes. The figure here is only 10 per cent, and they tend to be the ones with the highest needs because of the high cost of residential as opposed to foster care.

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In Denmark, 90 per cent of staff have a degree-level qualification and in Germany 50 per cent have such a qualification, while here only 20 per cent of staff are qualified to such a level. Clearly in these circumstances it is imperative that staff have access to the best professional mental health support both to enable them to reflect on their work with their children and for the referral of children.

A psychiatrist managing one such specialist service for a local authority has pointed out that the needs of the children in children's homes often differ very little from those in adolescent psychiatric units, and yet the latter are managed by clinicians and staffed by nurses while the former may be managed by someone without a degree, and some staff may have no relevant vocational qualification. Certainly when social workers from Germany and Denmark visit this country the thing that shocks them most is the low status of staff in children's homes. They would say that the most vulnerable and challenging children demand care by the best professionals.

A 16 year-old woman recently spoke at a meeting in the Committee Corridor. Also attending were several mothers who had had their children removed from them by their local authority. The young woman explained that, for her, being taken into care had been a positive experience. In particular, she felt that she had benefited greatly from the therapy she had received from her mental health services. Another woman, in her early 20s, speaking at a meeting of the Associate Parliamentary Group for Looked After Children and Care Leavers, expressed her view that the child she had recently had removed from her would not have been removed if she had had access to mental health services when she had been in local authority care. There is a great deal at stake here.

Specialist looked-after children mental health services have begun to address these issues, but they are not available everywhere. They are expensive to maintain and so are vulnerable to cuts. I ask the Minister for his reassurance that reform will not endanger these services.

Turning briefly to general child and adolescent mental health services, can the Minister say how they may be impacted by reform? In particular, there is concern that senior posts in CAMHS are already being lost under the pressure of spending cuts. How might the reforms play into this? Will they distract from the urgent need to encourage more medical students to choose child and adolescent psychiatry as a specialism? We urgently need more child and adolescent psychotherapists, together with clinical psychologists. Would the money that is being spent on reform be better spent on recruiting more of these professionals? How may the reforms impact on the transition from CAMHS to adult mental health services, which are currently so poor in many areas?

Let me take this opportunity to briefly express my concern about the fate of the Cassel Hospital family assessment service. The hospital is designated as a beacon of best practice; it is an exemplar of what can be achieved. It trains up many excellent professionals and provides hope in an otherwise somewhat barren landscape. It enables mothers who have experienced abuse and failures in the care system to bond with

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their child and break the generational cycle of failure. We have learnt that its local health trusts will not fund the service in future. Will the Minister please communicate my concern to the Secretary of State about the future of this beacon service and my request that national funding is found to sustain it if possible? I refer your Lordships to the coverage of the Cassel Hospital in, I think, the Times last weekend if they are interested in finding out more.

I look forward to the Minister's reply. I recognise that I have not advised him of those questions, and if he would prefer to write to me, that would be very welcome.

2.56 pm

Lord Turnberg: My Lords, I, too, congratulate my noble friend Lord Touhig on introducing the debate at such a cleverly opportune moment.

As a physician who has spent most of his life working, in one guise or another, within the NHS, I have always thought it self-evident that patients have to be right at the centre of the health service and that much greater responsibility for providing that service should be devolved to the professionals in the field. So I cannot fault the Government's aspirations. However, when we consider how these aims are to be achieved, we run into formidable difficulties and I cannot help but feel apprehensive.

It is with the roles and responsibilities of the GP consortia, which will play a pivotal role in the Government's plans, that I have most concerns. These concerns are largely shared now by the Royal College of General Practitioners. First, there is a suggestion that there will be 500 consortia. Is that so? If it is, we will have a range of problems. Where will they all get the expertise in managing the contracting for services? We have enough problems with the variability between PCTs in commissioning-some are good and some are poor-and so 500 will be very difficult. Then there is the problem of the extra cost of all the staff and infrastructure needed to run 500 new organisations. I ask the noble Earl: how many do the Government imagine we will need?

On contracting for uncommon or unusual diseases, it is proposed that larger groupings of consortia will be formed to gather together the relevant specialist expertise. So we will then have at least three tiers of commissioning organisations-consortia, super consortia and the commissioning board. This system is ripe for confusion, overlap and a potential for competition between commissioners, to say nothing of the difficulties of hospital trusts faced with a confusing array of contractors. We know from experience with GP fundholding that the kind of arrangement where groups of fundholders are supposed to join forces just does not work.

Of course, it is valuable to devolve responsibility to the local level but we cannot ignore the likely effect of this on the variability of the services provided in, presumably, 500 or so different areas of the country. Is the postcode lottery likely to be made better or worse in such a system? What safeguards will be put in place that will ensure that patients of one consortium do not

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complain that they are getting lesser treatment than their neighbours? I know that the Minister takes these matters very seriously. I will in a moment make some suggestions that might help him overcome some of the problems.

GPs will now have financial responsibility for the care of their patients. Two tensions will arise. First, GPs will make decisions about what care the patient sitting in front of them in their surgery should or should not have. If they feel that they cannot afford a particular treatment, it is a recipe for a loss of trust by the patient in their doctor. GPs will have that responsibility. Let us remember that they will no longer have the back-up of NICE to take these difficult decisions off their shoulders. The doctor/patient relationship is threatened when doctors are seen to be the agents of rationing on behalf of the NHS. It could, for example, tempt GPs into trying to tailor their list of patients to those with the least demanding diseases.

The second tension will arise from the patient being able to choose from "any willing provider", as the White Paper puts it. Quite apart from the conflict that could arise between the GP trying to balance the books on the one hand and the patient demanding some expensive treatment on the other, there is the whole question of whether this combination of choice and willing providers conflicts with the efficiency with which the service can run and the equity of access that we all cherish so deeply. I do not think that this issue has been given sufficient attention in the rush to push the changes through.

It is not much wonder that GPs are worried and that the Royal College of General Practitioners has voiced clear concerns. They are worried about the financial risks that will be placed on their shoulders, about their lack of expertise in the new skills that will be expected of them and about the threats to the doctor, patient relationship.

Noble Lords have mentioned integrated care. There seems little doubt that the best way for patients to have access to a safe, effective and efficient service is through those in primary, secondary and social services working closely together both in designing care pathways and delivering the care. In the words of the college of GPs, this is the essential cornerstone of an effective healthcare system.

When I brought this up in our debate on 28 October, the noble Earl expressed his strong support for the concept, but there is unfortunately little information around as to how it might be put into practice. Indeed, the competitive environment gives little encouragement that integrated care will be given more than lip service. So I ask again whether the Minister has any information on how integrated care might be put into practice.

Perhaps I may make three proposals that might help ease some of these difficulties. First, the number of consortia should be kept low-probably no more than 20 to 50. This will keep the costs down, allow specialist expertise in management and contracting to be equally available to them, reduce the number of confusing tiers of commissioning bodies and take a burdensome load off the many reluctant GPs. It will be interesting to hear about the experience of the

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pathfinder consortia. Clearly they are the keen minority, but I suspect that they would welcome such a proposal.

Secondly, I respectfully suggest that we keep the roles and responsibilities of NICE as they are and do not change them at all, at least until we can see how GPs get on with their new responsibilities. Thirdly and finally, can we see whether it is possible to develop a proper system of commissioning that incorporates the concepts of integrated care?

3.04 pm

Lord Mawson: My Lords, I thank the noble Lord, Lord Touhig, for securing this debate. We are entering one of the biggest reorganisations of the health service since 1948 by passing budgets and power locally to GPs. I welcome this move. However, difficult questions must be asked, not just about how we can more efficiently manage, organise and run the health service but about whether the story that we tell as a nation about our health is true, life-giving and sustainable.

In the health debate in October, I asked how we could provide quality healthcare that meets the real needs of patients in today's world. Is the popular biomedical model of health in which we invest good for our health and sustainable? Will it help those most in need, or does its internal logic present us with a costly and limited view of what a healthy human being is?

The GPs with whom I work tell me that in deprived communities such as Tower Hamlets 50 per cent of the patients whom they see do not need a doctor. One GP at an NHS walk-in centre told me that, out of the 80 patients he saw in one day, only 20 really needed to see him. A nurse told me of one patient who came into her surgery last week to ask her for hand cream on the NHS rather than buying it at the chemist. Let us tell a story about the personal responsibility of patients. Often, "patients" do not need a doctor; they need something else. What presents itself as a health issue may be more to do with a patient's isolation or the need for a better job or lifestyle. People have bought into a culture of illness because it costs them nothing, but in reality the cost to our society is running into millions of pounds. A Times article this week stated that 7 million patients failed to show up for hospital appointments in the past year, costing the NHS millions of pounds. If those 80 patients at the clinic had had to pay £5 each to see the doctor, they would first have asked themselves, "Is this visit really necessary?".

A sensible balance and perspective need to be found. There is a cultural belief that there is a pill for every ailment, and that if there is not there should be. We are in danger of medicalising people out of existence and creating levels of anxiety that have unintended consequences. Only last week, "experts" advised those of us over 50-I declare an interest here-to take an aspirin every day, but the sting in the tale was that, for some of us, it might mean bleeding to death internally. I am in danger of becoming a nervous wreck.

We must return to the question that the innovative Dr George Scott Williamson from the Pioneer Health Centre in Peckham asked all those years ago before the founding of the NHS: "What is health?". Although

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we love them dearly, the BMA and their powerful allies in the medical profession have many financial and other interests in keeping the health narrative unchanged and unchallenged. Our health is matter not just for our doctors.

Most of us engage with the health service through primary care and not, fortunately, through the acute sector. It is in preventive medicine in primary care that limited funds can have the most impact. Some fantastic innovative attempts in preventive health care have been made, and some successes achieved, by using the power of modern media to change behaviour. Jamie Oliver, a well known social entrepreneur-not a doctor-challenged our preconceptions about unhealthy eating. The Government have published an excellent white paper on public health, Healthy Lives, Healthy People. It underscores the importance of preventive actions taken at the initiative of the community and local businesses.

My colleagues and I have radical plans for a social business to regenerate communities in east London through good food-I declare an interest here, too. We want to teach non-cooks how to cook in their communities and young mums how to create healthy meals for their children. We have partnered with Jamie Oliver's team and the most well-known academics in the field. We also have support from the local NHS. However, obtaining start-up grants to support this work has not been easy. We suspect that this is because we are unashamedly a social business and not a charity. Why are innovative projects such as this, with all their potential for cost saving, still so hard to get going? Why are more innovative partnerships such as this not being brought together by local GPs and social entrepreneurs? It is because they live in different worlds, and because government and charitable funding silos discourage cross-fertilisation and make it so hard to do. New thinking comes not out of theoretical clouds but out of novel and unexpected practical partnerships. Yet the present professional structures discourage this. Why?

What might a new health narrative sound like? First, the NHS needs to tell a story about a changing demography and the financial realities that lie behind it. We have an ageing population and a health system that is unsustainable. Let us tell people the truth. We all need to take more individual responsibility for our health. The NHS should be a supportive shoulder on which to lean, if and when required, instead of encouraging a dependency culture and maintaining its present stranglehold.

Secondly, Governments must tell a new story about the importance of preventive medicine and illustrate it by telling the stories of GPs who are now forming relationships outside the box. Governments must be more honest with us all and stop feeding on papers, statistics and structures that can magically be manipulated to tell them exactly what they want to hear. They go home happy; the patients do not.

Why not start asking how government can help to bring together doctors and social entrepreneurs, innovators, artists and creative people in shared health buildings so that we develop innovative approaches to basic health care and prescriptions that meet people's

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real health and social needs? This is not about new money but about asking how money that already exists in local communities can be brought together in a more integrated and efficient way. Let us bring together practitioners from different disciplines into the same building and move beyond the collocation of services to integration. We have in east London.

Thirdly, let us tell a story that admits that ploughing vast amounts of money into the health service does not inevitably improve people's health; it can have unintended consequences. People in poorer areas still die seven years earlier than in richer areas, and health inequalities between rich and poor are getting progressively worse, even after all the investment in recent years. More money is not necessarily the answer. We need to think more imaginatively than this.

I leave a couple of questions for the Minister. How in practice is government going to use the restructuring of the health service to create a new narrative relevant to modern health? Secondly, what is government going to do to ensure that doctors engage with innovators and entrepreneurs?

3.11 pm

Baroness Sherlock: I add my thanks to my noble friend Lord Touhig for securing this debate. Before I start, I declare an interest in that I did some work recently for the Social Care Institute for Excellence on the establishment of a college of social work. The SCIE is interested in the social care elements of this debate.

I spent some time as an adviser in the Treasury, and whenever a new idea came up the kiss of death from Treasury officials was to bill it as "a solution looking for a problem". When I came up with a pet idea, it was incredibly annoying-I would be pretty clear that it was a great idea-and I would not for a moment suggest to the noble Earl that this was a solution looking for a problem. However, that experience taught me that even when reform is desirable and well implemented, the costs of transition in so many different ways are so huge in terms of a reduction in productivity and all the disruption that it causes that the test has to be set very high to decide that the game is worth the candle. That is something that concerns me now. We have heard a very good defence today from my noble friend Lord Hunt of Kings Heath and the noble Baroness, Lady Williams of Crosby, who remind us that the NHS, with which we are perhaps over-familiar, is a real and rare jewel and something that we should celebrate and defend. It is something that we should take very careful steps to amend only very slowly, if at all, unless the case for change was overwhelming.

Secondly, if there is a case for change, surely if it is on this scale it should happen only when the weather is fair and the wind is at our back. I am afraid that at the moment it does not feel so. We are aware of the constant pressures on the NHS finances of demographics, complex health needs, and the price of drugs and technology. That is why there has been so much investment in the health service in the past decade, which the noble Lord, Lord Alderdice, was kind enough to acknowledge. Now the NHS will face an enormous

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squeeze; it has to find £20 billion of efficiencies a year, which is a huge challenge. Who will have to find those efficiencies? It will be the PCTs, which will close and their staff face losing their jobs. The PCTs will have to address themselves to the management of change and prepare for the brave new world.

In that circumstance, the only argument for introducing this level of structural change will be if it can be shown that it was necessary in order to achieve those economies. The King's Fund, for which I have a great deal of respect, as do other Members of this House, has this week disagreed with the idea that structural changes will help to meet the productivity challenge. Indeed, it said that it shared,

We should take that warning very seriously.

Thirdly, I shall comment on the new governance arrangements. Like many observers, I have been concerned from the first time I heard of these proposals about what would happen to the community aspects of health. We do not live as individuals and we do not experience our health or welfare as individuals; we live in communities. If we move to commissioning by GP practices gathered together in commissioning groups, who will be responsible, and how, for the health of a whole community? I understand from the Government's response that the local health and well-being boards will be the vehicle for securing collaboration between the NHS, public health, adult social care and other services. Of course, there is also the local government scrutiny, but will not some health and well-being boards have GP consortia that straddle their boundaries, making co-ordination more difficult? How will that be addressed?

There is also the specific role of local authority scrutiny, but this adds up to quite a complex piece of governance machinery. Accountability will run downwards to service users and communities, and sideways through the health and well-being board, the local authority scrutiny group, and perhaps Local Health Watch. It will run upwards to the national commissioning board and perhaps to the CQC, the national health watch Monitor, and the national public health service. That is quite a complex form of governance. What will happen when those different parts of the system pull in different directions? How should a judgment be made by a consortium if one set of pressures comes down from the national commissioning board and another comes locally or sideways for the local variations? How will that work in practice?

I have two specific questions for the noble Earl. Because they are so specific, I would quite understand if he would prefer to write to me. First, much is said about the need for the integration of health and social care. I am very much behind that principle and wish the Government every success in pursuing it, but could the Minister explain how, in practice, social care will be represented on the commissioning boards? How will it have a place in the commissioning structure to ensure that it is delivered in practice as well as thought about in theory?

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My second set of concerns relates to the safeguarding of children. I am sure that the Minister is aware of the comments reported in the Telegraph last week by Tim Loughton, the Minister in another place who is responsible for children, who said that it would be more difficult for doctors to spot child abuse as groups of GPs already adopt widely different standards in relation to that. I am sure that the Minister is aware that a number of children's charities are concerned that aspects of the health service have long been the weak link. That can be a significant concern when one reads serious case reviews. What will happen in this new system? Will the Minister explain how, if the system is to be changed in the way that is described, the Government will ensure consistently high standards of policy, training and practice in safeguarding under the new commissioning arrangements?

Finally, will the Government think of another way of doing this? I was struck by the comments by the noble Baroness, Lady Williams of Crosby, about the expertise in this House. Given that pathfinders will try this in practice-even allowing for the idea of the noble Lord, Lord Rea, that they might do this under canvas-will the Minister consider, when the pathfinders have run their course, pressing the pause button, evaluating carefully what the results tell us and bringing something back for the scrutiny of this House and another place so that we can work out whether people such as me who are worried are wrong? It is very hard for me to admit that I might be wrong, but I concede that on rare occasions this happens-a little less laughter, please. It may even be true of other noble Lords in this House. That would give us an opportunity to take a step back and consider whether our worries have turned out to be right. If they have not, we can carry on with less concern. However, if we are right, we could protect the NHS from damage. The NHS is a jewel in our crown, and we risk public wrath if we do anything that could damage it.

3.18 pm

Lord Patel: My Lords, when you are a tail-end Charlie, most of the things that you wanted to say may already have been said. However, the breadth and depth of the proposed reforms are such that there is plenty left for me to say. First, I declare an interest. Like many other noble Lords, I have been a lifelong clinician-in my case for 39 years, in different forms. I have also chaired NHS regulators, standard-setting organisations in quality and safety, and facilitative organisations.

Like other noble Lords, I feel that we need much clarification of the proposed reforms. Apart from the White Paper and the myriad different documents, I have read all the speeches that the Minister has given recently. While his message has been consistent, explanation of how it will all work is not clear. No doubt when we get the legislation in your Lordships' House we will spend many happy days scrutinising it-and, on my part, helping to improve it.

Today I have some general comments and one or two specific ones. As others have mentioned, the main conclusion of much of the coverage concerns the bringing in of major institutional reforms that attract major costs, coupled with the drive to realise greater

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efficiency savings in both the health and social care budgets. Small organisations such as consortia may well drive up costs or reduce clinical delivery times. GPs have said that they will need time and resources to develop and deliver a professional-led service. Will the Minister say how this will be possible?

One component of the White Paper is the introduction of an outcomes framework for holding the NHS commissioning board to account. One problem with PCTs was that they contracted with organisations rather than contracting for services and outcomes. The outcomes framework maintains the three domains of quality identified by the noble Lord, Lord Darzi-those of effectiveness, patient experience and safety-and has developed five domains, which on the face of it is all good. However, if the outcomes framework is the means by which the Secretary of State can hold the national commissioning board to account for the performance of the whole NHS, it needs to be much broader. Currently it is focused too narrowly on clinical outcomes. It should be broad and high level. Furthermore, the relationship between the outcomes framework and the commissioning framework needs careful consideration. National goals often become targets that are used for the assessment and management of performance. Does the Minister agree that the commissioning framework for assessing the performance of GP consortia needs to go beyond the outcomes framework to include the commissioning skills and performance of GP consortia?

I turn now to international comparability. Why are we not going to use an internationally recognised framework for assessing healthcare performance, such as the one developed by the OECD, especially as this not only has parallels with the proposed outcomes framework but includes health improvement and risk factors, as well as the three themes of effectiveness, safety and patient experience, with equity as an overarching dimension? The framework also needs to measure integrated care, care pathways and the quality of care, including social care. How will improvement be assessed? What will constitute acceptable and unacceptable performance and how will it be measured?

My next point relates to process measures. The framework accepts that these are important and are needed locally. Why are these not considered appropriate for the outcomes framework? The relationship between GP consortia, health and well-being boards and local authorities seems unclear. GP consortia will have to commission and deliver high-quality care. How will their accountability to the board work, in particular when contracts are held by boards and not by local authorities or consortia?

I turn to regulation. The Care Quality Commission will be the quality inspectorate. In an environment where there will be willing providers and patient choice, how will the CQC ensure the equity or safety of quality for all providers and who will monitor that? The second regulator will be Monitor-the new, stronger economic regulator-with functions to ensure access to key and essential services. What are key and essential services? What is the definition? Will they be available in each geographical area? That needs to be clarified, as does the question of who will ensure that it happens. The other function of Monitor will be to set prices.

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While sufficient pricing is a worthwhile ambition, the challenge is to set prices at a level that does not compromise quality. In health, as in everyday life, you get what you pay for.

The Government seem to have changed their mind about how maternity services will be commissioned. Initially, they said that they would be commissioned by the national commissioning board. Now it seems that the consortia will do that. The Minister may well be aware, however, that all the professional organisations have accepted that it would be better for the maternity services to be commissioned by the commissioning board and for the maternity networks to be developed to be able to do this.

While we await the Government's new cancer strategy, I hope that the framework that is produced will recognise that not all cancer services will be appropriate to be commissioned by GP consortia and that commissioning groups should include clinicians with expertise in cancer. Appropriate data related to cancer diagnosis and survival will need to be included and are important as part of the outcomes framework. How information on outcomes is provided to patients so that they can make a choice will also be crucial.

On the question of competition, what evidence exists that increasing marketisation will benefit patients? Is there an example of a country that has had a defined and conscious change to a market-based approach that has led to improved patient outcomes?

3.26 pm

Lord Beecham: My Lords, I join previous speakers in congratulating my noble friend Lord Touhig on ensuring that we have had this debate today, and I thank other noble Lords for the thoughtful contributions that we have heard. In particular, I congratulate the noble Lord, Lord Colwyn, on being the only Conservative Back-Bencher to have participated.

I have to begin, somewhat unusually, by declaring a non-interest. The BBC website, in referring to this debate, refers to me as "former president of BUPA". I have been neither a member nor a president of BUPA. I am, however, a former president of BURA, the British Urban Regeneration Association, in which position I succeeded the noble Lord, Lord Jenkin.

There is a celebrated case in what used to be called "master and servant" law when a workman was denied compensation in a claim against his employer because he had been injured not while going about his employer's business but when he was on "a frolic of his own". That phrase might well be applied to the Secretary of State. After all, despite the fact that he has promoted the mantra of "no decision about me without me", major decisions have been taken without support, or certainly with very little support, from a wide range of consultees including the BMA, the royal colleges, the NHS Confederation, many patient groups and a number of think tanks. Small wonder, then, that he seems to have been supplied with a minder, in the somewhat unlikely shape of Oliver Letwin, to run a rule over what he is apparently doing, and small wonder that apparently today's Times editorial questions whether No. 10 is continuing to give wholehearted support to these proposals.

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Your Lordships have already been reminded of the high level of public satisfaction with the health service by my noble friend Lord Hunt and the noble Baroness, Lady Williams. In addition, as part of the background to this debate, there are of course the pledges that the Government made in their various component parts. There is the issue of top-down reorganisation, to which the noble Baroness referred. That was explicitly excluded in the coalition agreement, but we are now getting not only a top-down reorganisation but a great deal of top-down commissioning as well.

Then of course there is the pledge about the real-terms increase of the health service. Contrary, I am afraid, to the assertion made by the noble Lord, Lord Colwyn, there is to be no real-terms increase for the health service; I refer, as an authority for that, to paragraph 51 of the report of the Health Select Committee, chaired by Stephen Dorrell, the once-and perhaps future-Secretary of State for Health.

Those pledges join a long list of broken pledges across a range of policy areas. There are tuition fees, of course, which we debated in this House this week, real-terms funding increases for schools and, indeed, a range of health issues including a pledge not to close A&E and maternity units, which have in fact closed on the present Secretary of State's watch. This indeed has become a Government of serial pledge breakers. In fact, there is some danger that they may be becoming addicted to it and need treatment for it.

On the other hand, it is only fair to say that there are changes in the Government's position, seen in this week's Statement and Command Paper, which are welcome. I certainly welcome the restoration of public health responsibilities to local government and the decision-in this respect, I beg to differ from the noble Lord, Lord Patel-to have maternity commissioned locally rather than nationally. I also welcome the maintenance of the powers of scrutiny of the health service being to local government, which the original White Paper had proposed to take away. Yet there are governance issues that need to be addressed.

The noble Lord, Lord Rodgers, referred to commissioning at a regional and sub-regional level for services which go beyond an immediate locality. There is the accountability of the national commissioning board to the Secretary of State as opposed, perhaps, to Parliament as a whole. There is, if I may say so, something of a degree of naivety in the praise that the document gives this week to the success of the governance of foundation trusts. Whatever their merits, the membership of foundation trusts is very small in relation to their potential membership and the turnout of votes in elections to them is even smaller. There is also the issue, which noble Lords have already referred to, of whether it is sensible to rush forward with the conversion of all trusts into foundation trusts.

Much of this debate has turned on the issue of GP commissioning and it is certainly the case that this is being piloted in a number of pathfinders. I would hesitate before adopting my noble friend Lord Turnberg's recommendation, which would lead to perhaps only 50 commissioning authorities, but I join him in asking: what number is envisaged and of approximately what average size, when the present range within the pathfinders

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is enormous? It ranges from 18,000-which is, I suppose, a general practice-to half a million. That is quite extraordinary. What is important is that there should be a strong degree of coterminosity between the GP commissioning consortium and the principal local authority which has responsibility in particular for social care but also for other relevant services.

Moreover, this week's document says that consortia will be able to contract, to dissolve, to merge and that their boundaries can be flexed. Is that not a recipe for perpetual motion, in a field where we really need stability? Finally, there is the commissioning of GP services, to which many of your Lordships have referred. I return to the proposition of the Local Government Association, and declare an interest as an honorary vice-president of it, to suggest that GP commissioning should be signed off by the local authority in the relevant area. Of course, coterminosity would be needed to do that.

Part of the debate has focused on the issues of choice and personalisation. I said in a previous debate on this matter, as I have said elsewhere and to my own party when in government, that blurring the distinction between choice and personalisation does not help the debate. The two things are not synonymous. Yet if we are to make choice a reality, particularly in providers, to what will it extend? Will it extend to the closures of facilities and will any group of potential patients ever agree to a closure of a facility?

How will the framework proposal for greater choice in mental health services-the framework document was published yesterday-be met under national commissioning? The noble Lord, Lord Alderdice, referred to the problems in urban areas caused by people moving in from outside, very often with acute social problems. Ought not the services for those people to be commissioned locally rather than nationally? Yet that is not what the framework document says. Again, the document makes a rather bold claim for the national commissioning board. It will, it says,

How will a national board do that, as opposed to local organisations?

There has run through this debate and much of the public debate a thread of deep concern about the competitive principle. The BMA is very clear that co-operation, rather than competition, ought to be the watchword. Several noble Lords, including the noble Baroness, Lady Finlay, referred to the issue of willing providers and the need to avoid cherry picking. I ask the Minister whether there will be any safeguards against such practices. Would he care to comment on the OFT investigation into the private healthcare market that has been initiated this week? Five providers apparently deal with 85 per cent of that market, and there has been a suggestion-which is subject to investigation-that that market may have been neutrally managed, not necessarily to the benefit of the consumers. How will that be avoided in the new set-up? To repeat the question of my noble friend Lord Touhig: will the Government ban companies from advising commissioners on the one hand and providing services on the other? It seems fairly obvious that external organisations will

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do that. Finally, in this rather Darwinian world of competition, what happens to institutions, hospitals and other services that are deemed to be failing? Will they, as we have learnt about schools this week, simply be allowed to fail and close? What happens then to patient choice?

Finally, there is the issue of cost, which the Select Committee looked into in considerable detail this week. It complained that even now there is no robust estimate of the cost of this reorganisation. It has criticised the Government's figure of a cost of £1.7 billion. Nor does it agree that social care can be sustained without restricting eligibility on the basis of the recent local government finance settlement. I understand from my brief reading of the documents that were published yesterday that a figure for the overall cost of this reorganisation may be given in the impact analysis to be published in January. If it approaches the £3 billion that credible authorities suggest, is that not a complete distortion of spending needs at a time when services will be very much under pressure? Should the Government not reconsider the scale, the timing and, above all, the cost of the reorganisation?

3.37 pm

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, I join other noble Lords in thanking the noble Lord, Lord Touhig, for calling this debate, which has been both wide-ranging and characterised by some extremely thoughtful and eloquent contributions. I welcome the opportunity to discuss these issues, which are so important to us all. Of course, being impressed by eloquence is not the same as being swayed by argument. It will not surprise your Lordships that I cannot identify with the criticisms of the Government's policy voiced by several speakers. By and large, those criticisms are either misplaced or exaggerated and I hope to show why.

It is perhaps appropriate to start with the question posed by the noble Lord, Lord Hunt of Kings Heath, about why we are reforming the NHS. First, as good as the NHS is, in what is most important for patients and many health outcomes-for many cancers, respiratory disease and heart attacks-we lag behind. Secondly, in its current state, the NHS is unsustainable. We can no longer meet increasing demand by spending ever more money. In every western economy, cost pressures from healthcare exceed GDP growth. There is a basic challenge of affordability. Without reform, the NHS will quickly bend until it breaks.

We seek to address a good part of that challenge through the four pillars of the QIPP programme-quality, innovation, productivity and prevention. In many ways the White Paper is a vehicle for the QIPP reforms, squeezing the most out of every penny invested and creating a better-value and entrepreneurial NHS. Looking more particularly at the prevention agenda, our focus on public health through Public Health England will do as much to keep people healthy as the NHS does to make them well.

Although some see the reforms as a big step-I do not disguise the fact that there will be some big changes-they amount in several other respects to a series of small steps. GP-led commissioning builds on the experience gained from previous reforms, particularly

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practice-based commissioning and GP fundholding. Our any willing provider policy is an extension of the choice agenda initiated by the previous Government. Without lowering the quality bar-I say that particularly to the noble Lord, Lord Touhig-we are completing the rollout of foundation trusts, only this time with robust arrangements for provider failure. The reforms resolve and bring coherence to a series of sometimes disjointed measures rolled out under the previous Administration. Our aim in doing this is very clear: it is to transform the health service into a sustainable system with outcomes as good as any in the world.

Noble Lords need to ask themselves what the alternative would be. Without reform, the alternative is to salami-slice the health service as it is now, with obvious risk and detriment to patients. We know that the previous Administration put aside £1.7 billion for NHS reorganisation of some sort. We will never know what precisely they would have done, but if it was not something similar to our proposals then I wonder what it was.

The other vital strand to the new NHS-again, this was a clear ambition of the previous Administration-is the genuine integration of health and social care, which was mentioned by a number of noble Lords, including the noble Baroness, Lady Sherlock, and the noble Lords, Lord Turnberg and Lord Beecham. We are putting a lot of money into integrated care. I say to the noble Baroness, Lady Sherlock, that the involvement of social care in commissioning will be a key role of the health and well-being boards and the related joint strategic needs assessments that will need to be undertaken by consortia and local authorities working together. What she will see, based on those joint strategic needs assessments, will be better, more integrated health and social care services for patients.

The Government's response to the White Paper consultations was also published yesterday. This sets out the legislative framework and next steps for the White Paper as we move towards publishing a health and social care Bill in the new year. I wish to pick out two or three issues from this. First, as regards commissioning, the best decisions are those taken closest to those whom they affect. Unfortunately, time prevents me from expatiating on the excellent theme of the noble Lord, Lord Mawson. However, GP-led commissioning will place decisions about the future design of local health services in the hands of clinicians-GPs and their colleagues across the NHS and social care working together. These are people who see their patients and service users every day.

Last week, in response to the consultation, we announced the first 52 in a rolling programme of GP consortia pathfinders. These are in essence the pilots to which the noble Baroness, Lady Williams, urged us to direct our efforts. This first batch involves more than 1,800 GP practices and covers a quarter of the population-some 12.8 million people. The noble Lord, Lord Turnberg, doubted whether integrated care was truly achievable. I visited a pathfinder last week in Nottinghamshire and came away completely inspired by what I saw there in terms of joint working, creative thinking and the breaking down of professional barriers. Noble Lords who have thus far viewed the Government's

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proposals solely from the printed word should consider experiencing what is actually happening on the ground. Pathfinders will enable emerging consortia to become more involved more quickly in commissioning. They will explore the issues involved in effective implementation before consortia take on their statutory duties in 2012-13.

The noble Lords, Lord Hunt and Lord Touhig, and others somewhat poured cold water on the whole concept of GP-led commissioning. However, it will remove the current disconnect between clinical decision-making and financial decision-making by putting both in the same place. Those who question the wisdom of that approach should speak to some of the pathfinder GPs. They do not see themselves as being presented with a problem; they see themselves as being able at long last to manage budgets in a way that will change services and bring maximum benefit to all their patients without "the system" getting in their way. The brutal truth is that a budget that is subject to the kind of managerialism referred to by my noble friend Lord Alderdice risks depriving some patients of the care that they need. To those who question the enthusiasm of GPs, I say that the first application for becoming a pathfinder was oversubscribed. More will be coming on stream. By the middle of 2011, we believe that the vast majority of GP practices will be members of pathfinder consortia.

At the centre of everything should be the patient. The noble Baroness, Lady Masham, was right in her general point, although I did not agree with everything that she said subsequently. The NHS should be accountable to the people whom it serves. Patients and the public should have a say in how local NHS services are shaped and should be able to hold them to account in a meaningful way. Beyond a straightforward legal duty for NHS organisations to consult the public, the new local patient champion, HealthWatch, will ensure that people's voices are heard and acted on. It will be supported by a new national patient voice, HealthWatch England-a short step from what we have at the moment with local LINks, but an absolutely crucial one. The patient voice will also be vital for the new health and well-being boards, which will join up the local NHS, public health and social care. The fact that these boards will be based in local authorities will, of itself, inject a high degree of local democratic accountability into commissioning.

The noble Lord, Lord Touhig, and others referred to the trend towards competition, arguing that there is little evidence of its benefits. As we set out in the White Paper, choice and competition can be powerful drivers for quality and efficiency and can force providers to develop services that genuinely meet patients' needs and preferences. However, we do not want to introduce the choice of any willing provider for its own sake. That makes sense only where it is likely to deliver real benefits. Competition should not be at the expense of co-operation and there is no reason why it should be. There will still be a duty in the health Bill for NHS organisations to co-operate in patients' interests.

The noble Baronesses, Lady Williams and Lady Finlay, and, indeed, the noble Lord, Lord Rea, with his arboricultural hat on, suggested that we keep PCTs and simply populate them differently. Let me say why that would not have delivered the outcomes that we

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want. PCTs are administrative units. The way in which they are configured bears no automatic relationship to the way in which clinicians want to deliver services, and clinicians feel no sense of ownership of them. The pathfinder consortium that I visited in Nottinghamshire last week is configured in a way that takes account of patient flows between primary and secondary care, is logical in terms of how health and social care services are best integrated and works on the ground in terms of close professional relationships. Doctors and other health professionals have designed it; they own it and they believe in it. That is the difference.

The noble Lord, Lord Touhig, referred to fundholding, which I agree was not a successful enterprise in some respects, although it had some valuable lessons which we are now picking up on. Fundholding had a conflict of interests because, as the noble Lord said, underspends of the commissioning budgets tended to go to the practice involved. This will not be the case for GP consortia. The only way in which GPs will be able to benefit is if they can improve outcomes for patients.

The noble Lord, Lord Turnberg, and the noble Lord, Lord Touhig, referred to the risk of recreating or accentuating the postcode lottery. Perhaps I may say that the prime purpose of the National Health Service commissioning board will be to inject two main things, consistency and quality, into commissioning. The NHS commissioning board, supported by NICE, will develop a commissioning outcomes framework so that there is clear, publicly available information on the quality of healthcare services commissioned by consortia. It will include measures to reflect a consortium's duties to promote equality and to assess progress in reducing health inequalities.

The noble Baroness, Lady Finlay, and the noble Lords, Lord Touhig, Lord Patel and Lord Beecham, criticised the injection of competition and choice into local health economies and expressed fears about cherry-picking. In the new system, the NHS board and Monitor will develop packages of services and tariffs for services, taking account of the need for individual providers or partnerships of providers to deliver integrated care. Monitor will have a duty to ensure that competition, where it is appropriate, functions effectively, which means developing systems where providers cannot cherry-pick the easiest patient groups.

The noble Lord, Lord Hunt of Kings Heath, and others raised various issues concerning accountability and governance. I suspect that we will get into the weeds of this when the health and social care Bill reaches your Lordships' House, as there is no time to do so today. We think that consortia should be free to define their own governance processes but within a broad framework that will be set out in the legislation. Noble Lords will have to wait to see what that legislation says but I can tell the House that the NHS commissioning board will have a role in establishing consortia and, in doing so, it will seek to ensure that consortia have the systems in place to fulfil their statutory functions in a proper way that takes account of the stewardship of public money.

My noble friend Lord Rodgers of Quarry Bank asked whether there will be a regional role for the NHS commissioning board. It will be for the board itself to decide how it designs the most effective and

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cost-effective operating model. The board will determine the optimal configuration of its sub-structures with the freedom to adapt over time.

The noble Lord, Lord Kakkar, spoke, as he always does, about education and training, particularly their impact on research and academic medicine. We shall shortly be publishing a consultation document on future arrangements for education and training, which I hope will begin to answer his questions. The noble Lord talked about the importance of research. As Research Minister, I am enthusiastically on his side on that score. Supporting and promoting research and development will be a core function of the future Department of Health, and the Government remain committed to providing the right environment for innovation to flourish. I think that the increased funding for health research in the recent spending review gives us a strong platform to fulfil that ambition.

The noble Baroness, Lady Masham, asked about the position of the 10 specialised commissioning groups, and the noble Earl, Lord Listowel, referred in particular to specialist mental health services. The new NHS commissioning board will commission national and regional specialised services. The consultation has highlighted the need for criteria to be developed to determine which services should be commissioned by the board or by a lead consortium across a population. We will consider the best way to keep the specialised services portfolio under regular review and, as Minister for specialised services, I can tell the House that I will keep a close personal eye on those issues.

The noble Baroness, Lady Masham, doubted whether the HealthWatch model was the way to proceed and she referred to the constant reinvention of patient and public involvement. While local HealthWatch organisations will retain the current functions of LINks, they will also gain additional functions, providing advice and signposting, as well as advocacy, for NHS complaints. We are continuing to work with LINks to build on the valuable work that volunteers have taken forward. As I mentioned, HealthWatch England will be established as a national consumer champion both to give patients and the public a voice at a national level and to provide advice and support for the new local HealthWatch organisations.

The noble Baroness, in her criticism, was doubtful that the local LINks and HealthWatch, as they are to become, will be up to the job. The Command Paper sets out that, while HealthWatch should have an advocacy role, which is one of the roles that we envisage for it, this will not have to be through its own staff. Local authorities will have the flexibility to commission services from other providers, which could include citizens advice bureaux, for example. We have done this. We have created that flexibility, as we recognised the expertise that is required in advocacy services.

The noble Lord, Lord Kakkar, asked what arrangements there were for the sustained development of clinical leaders. Clinicians with leadership skills are central to our efforts to deliver better outcomes for patients and a critical part of successful commissioning. The National Leadership Council's commissioning work scheme will provide targeted development for GPs who wish to lead consortia. Its work will ensure that, with the

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advent of consortia in 2013, there will be a suitably skilled group of individuals prepared to lead these organisations.

The noble Lord, Lord Turnberg, spoke about the role of NICE. There is no time for me to reply in detail, except to say that on this subject he was 100 per cent wrong. I will write to reassure him. He also asked about the likely number of GP-led consortia, as did the noble Lord, Lord Beecham. We are intending this to be a bottom-up process, so we have no set expectations of how many consortia there may be. There are, as I mentioned, 52 pathfinders, which we announced the other day, covering 25 per cent of the population. What we will see emerging is the pathfinders exploring the issues involved, including which services are best commissioned at which level.

The noble Lord, Lord Patel, asked what the key essential services will be and how we will make sure that they are available. We will set out the definition of essential services in the health Bill, but broadly a service will be defined as essential if the commissioner could not turn to a suitable alternative service for patients if the incumbent provider stopped offering it. Monitor will be responsible for the process of identifying essential services and ensuring that they are protected, working closely with the board, consortia and other stakeholders.

As the noble Baroness, Lady Sherlock, suggested, we will return to these issues. The Government are committed to the values of the National Health Service: healthcare for all, free at the point of need. In view of all the talk about privatisation, that needs stating. But we are equally committed to doing everything possible to ensure that the quality of that healthcare, as measured by clinical outcomes, is as good as it is possible to be. I believe that our reforms will enable us to achieve exactly that.

3.57 pm

Lord Touhig: My Lords, as barely a minute is left in this debate, I am unable to thank all noble Lords individually for taking part. Other than a general thanks, I cannot comment on all the points that were made. The standard of debate here was much better than in the other place. There is such wide experience, which is a huge benefit. I thank the Minister, who did very well in responding to all the questions raised by noble Lords. His eloquence does not equate to the power of his argument, as those who expressed doubts and questioned these changes won the argument. I have no doubt that we will return to these issues.

Motion withdrawn.

Wireless Telegraphy Act 2006 (Directions to OFCOM) Order 2010

Copy of the SI
7th Report from the JCSI
7th Report from the Merits Committee

Motion to Approve

3.58 pm

Moved By Lord De Mauley

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Lord De Mauley: My Lords, the Wireless Telegraphy Act 2006 (Directions to OFCOM) Order 2010 will direct Ofcom to take certain action in respect of radio spectrum management. It is an important step in achieving the Government's objectives on broadband and the contribution that it can make to a balanced economy.

Wireless communications are now an integral part of everyday life in the United Kingdom. There are now more active mobile connections than people: 3 million access broadband using wireless modems, or dongles, and the arrival of smartphones is changing the way in which people communicate and interact. These devices all require radio spectrum. Without sufficient spectrum being available, mobile services cannot continue to function nor can new and innovative services be brought to market.

The explosion of data traffic across networks is putting the networks under strain. Technical advances can play a part in mitigating the impact of this increased demand but ultimately what is needed is access to additional spectrum. However, spectrum is finite and therefore a scarce resource. Spectrum suitable to deliver mobile broadband services is even scarcer. Where spectrum is available, we need to bring it into use at the earliest possible opportunity. The Government's proposals will achieve that and accelerate the deployment of high-speed mobile broadband services that can deliver benefit to consumers, citizens and business. It is that desire to secure the release of spectrum suitable for mobile broadband services that is behind this statutory instrument.

I will not detain the House with the detail of the long and tortuous route that has been travelled to bring us to this point, although some of your Lordships will recall it in vivid detail. Some of the issues involved, such as the liberalisation of the 900-megahertz and 1,800-megahertz spectrum, have been the subject of discussion and consultation stretching back several years. This issue has made the progress towards the release of suitable spectrum particularly difficult. That this matter is not particularly politically contentious is demonstrated by the fact that the previous Administration laid a statutory instrument in March, with measures that they considered would address some of the most difficult areas of concern. However, there was insufficient parliamentary time prior to the general election to debate it. There was therefore a need for the new Government to make a decision on how to proceed.

The Government have made it clear that one of their key priorities is to rebalance the economy, in terms both of supporting growth in a broader range of economic sectors and of seeing a more even distribution of economic opportunities across regions and industries. For that balanced economy to develop and thrive, a critical requirement is the right telecommunications infrastructure, specifically the provision of superfast broadband connectivity. The Government have already set out their agenda for accelerating the deployment of higher speed broadband connectivity, and we recognise

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that the widespread deployment of superfast mobile broadband services will contribute to that objective, delivering significant benefits to businesses and consumers.

In the light of these objectives, careful consideration has been given as to how best to proceed. We have taken into account responses to the initial consultation and have held further discussions with Ofcom and operators to inform our decision. As I have already mentioned, the principal objective is the earliest possible release of this spectrum and to give certainty to the market, so that new mobile broadband services are deployed as quickly as possible. We are already seeing 4G services deployed across the world, including Europe. Further delay would result in the UK falling behind in the availability of these services, and I am sure that noble Lords agree that we simply cannot afford that. We are justly proud of our position as a leading mobile market and we stand to lose that position; indeed, some argue that we already have.

We concluded that intervention by the Government, in the form of this direction to Ofcom, is desirable to achieve an early release of this spectrum, but we are also of the view that the previous set of proposals would have had a disproportionate impact on the functioning of the market. The United Kingdom has enjoyed a competitive mobile market that has resulted in widespread availability of services, and it remains our view that competition will drive the deployment of new mobile broadband services.

For that reason, the Government have decided on a simplified direction. We have been able to remove much of the detail in the draft laid by the previous Administration which we now consider unnecessary. That decision has been further informed by additional analysis by Ofcom on the competitive distortions that might occur through the liberalisation of the 900-megahertz and 1800-megahertz spectrum. Ofcom concluded that the risk of distortion was less than it had previously thought, primarily because of the establishment of Everything Everywhere, the joint venture in the UK between Orange and T-Mobile. It was Ofcom's view that the joint venture is in a better position to respond to changes in the use of the spectrum than was the case when Orange and T-Mobile were independent of each other.

I recognise that there may be concerns about the removal of the coverage obligations that were included in the original draft order. The Government are committed to achieving the best superfast broadband infrastructure in Europe, and we have recently published our strategy to achieve that goal. Rural and remote areas of the country should benefit from that infrastructure upgrade at the same time as more populated areas.

We also remain committed to ensuring that by 2015 virtually all homes will have access to a minimum level of service of 2 megabits per second. I recognise that there may be concerns about the removal of the coverage obligations that were included in the original draft order. The Government are committing £530 million over the lifetime of this Parliament to supporting the rollout of these services to less well served areas. We will be working with local authorities and communities to ensure that local needs are met. Four superfast broadband pilots have already been announced, which

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will provide valuable insight into possible technical solutions that can be further exploited. We can expect wireless, whether fixed or mobile, to play its part in achieving these goals.

Alongside that government investment, we expect the market to deliver most of the necessary connectivity. That is why we are directing Ofcom to carry out a competition assessment in advance of the auction, to ensure a strongly competitive market that will help to drive the deployment of services. Ofcom is currently looking at the issue of areas of the country where there is no mobile coverage-either 2G or 3G-known as mobile "not-spots" and how they might be addressed. We also expect Ofcom to consider, as part of the competitive assessment, whether other conditions, such as coverage obligations, are necessary to enable it to deliver its primary duty of ensuring a wide range of electronic services throughout the United Kingdom to consumers, citizens and business. We expect that approach to address the issue of rural connectivity, but we will of course continue to monitor, with Ofcom, the extent to which these services are being delivered to rural and less urban areas.

The statutory instrument will fulfil a number of objectives. First, it will allow the United Kingdom to meet its obligations to implement the European Union's revised GSM directive, which came into effect on 9 May 2010. That will liberalise the use of 900 megahertz spectrum for new technologies in the hands of the incumbents, and will also implement the accompanying Commission decision harmonising the use of 1,800 megahertz spectrum with 900 megahertz. Those licences will be made indefinite, subject to revocation on spectrum management grounds, and tradable. They will be subject to revised annual fees to be determined by Ofcom.

Ofcom is also being directed to amend licences for the use of spectrum at 2.1 gigahertz, so that they are made indefinite. Those licences will be subject to an annual licence fee once their initial term has expired in 2021. The licence holders will also be required to meet additional coverage conditions, and the licences will also be made tradable. We consider the extension of these licences to be necessary to encourage further investment in 3G services. This technology will continue to be an important part of the wireless broadband landscape for a number of years before 4G services can be fully rolled out. Without the change to the licences, further investment in those networks will be uncertain, to the detriment of users.

We are also directing Ofcom to begin immediately with preparations for the 800 megahertz and 2.6 gigahertz auction. As I have already mentioned, we are requiring Ofcom to carry out an urgent competition assessment in regard to further developments of 3G and future 4G networks, including the potential for new entrants, to inform the design of the auction rules for this spectrum. Maintaining a healthy competitive environment post-auction is a clearly desirable outcome.

That direction to Ofcom will permit the earliest possible release of this important spectrum, benefiting business, the consumer and the telecommunications industry alike, and I look forward to hearing the views of noble Lords.

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Lord Berkeley: My Lords, I rise to identify a few problems that are occurring in the relationship between this order, which provides for a clearly welcome increase in spectrum availability, and the railways. I declare an interest as chairman of the Rail Freight Group, but the issue covers the whole railway-passenger, freight and Network Rail itself-and could result in some serious problems in the safety and the operations of the railways.

I welcome the Minister's comments about the need to rebalance the economy and the provision of superfast broadband being an important part of that. However, it is not much use having superfast broadband if it prevents the running of superfast trains-or even ordinary trains-which are another of the Government's priorities. Perhaps I can explain the problem in a little more detail.

The problem for the railways is that the 900 megahertz spectrum for mobiles sits quite close to that of the GSM-R railway radio system, which is the modern digital replacement for the very much life-expired analogue system. In terms of safety and operations, GSM-R has very great importance. Its rollout on the railway network is largely complete, and about 6,000 driving cabs are being modified to install the new cab mobiles. All this work is being funded by the Department for Transport. As I understand it, the worst-case scenario is that, in order to contain and eliminate interference between GSM-R-both track-side and in-train systems-and the 900 megahertz mobile systems, there would need to be significant modification, which would cost about £100 million. Network Rail would of course seek funding from the Department for Transport, or maybe from BIS depending on how it all worked.

I think that it is extraordinary that things have got this far. As the Minister said, there has been widespread consultation and I am aware that Network Rail responded pretty heavily, as no doubt did other departments, including the Department for Transport.

We seem to be getting into a situation in which the railways and the broadband systems are both seeking to comply with EU-wide rulings that appear to conflict. Network Rail, which identified this issue quite some time ago, aims to move forward from GSM-R to the new signalling system ERTMS, which is being rolled out. ERTMS already operates in many other member states, including Germany and Finland. Network Rail was involved in commissioning a report-report O-8700-that clearly demonstrates the absolute need to co-ordinate the use of technologies such as UMTS 900 where those are used within four kilometres of any railway infrastructure. In this country, four kilometres either side of a railway does not leave much space. From the little that I know about the issue, I am sure that that would not work for the mobile technology.

Unfortunately, the timing of the order is not terribly good, given that Network Rail has employed consultants ATDI to validate previous work and to produce a set of conclusions to inform a meeting of stakeholders that will take place next month. Therefore, the timing is not very helpful. Everyone wants to work together-as indeed they should-to make sure that everyone fully understands the issues involved. However, the problem is that two independent European studies already

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show that the deployment of UMTS 900, operating at 900 megahertz, affects the performance of GSM-R and causes interference in radio signals between the trains and the signallers.

These technologies are very different from pulling levers-which you still see in one or two parts of the country-that then make the signal go up or down. As we all know, telephone systems, signalling systems and mobile systems sometimes do funny things. As a safety-related matter, the issue is extremely important. It is important that the GSM-R used on the railways is instantaneously available across the whole network to maintain the protection measures. Some measures must be put in between the railway system and the UMTS900. Otherwise, there may be detrimental effects.

Apart from the cost, which is estimated to be about £100 million to change the railway system, I understand that filters would need to be added to the set in each train. There are also timing implications. As with the mobile phone network, there are concerns about the mandatory withdrawal of existing radio systems and the European requirements to have all these things in place by a certain date, which has already slipped. Given the seriousness of the problem and that £100 million plus a lot of delays is at stake, I would be very grateful if the Minister could comment on what could be done to mitigate the effects. Implementing the order without anything else could raise serious issues for the railways. Going through a signal at red-to use older terminology-could cause accidents.

BIS says that it is required to provide UMTS for mobile in order to comply with EU regulations; railway operators say that they are required to do something similar under other EU regulations. I suggest that the aim is for interoperability, which I am sure we would all welcome, whether for mobile phones or the railways. The existing systems are perhaps well past their sell-by date and something should have been done years ago. If we have really have a situation in which the European Union, for better or for worse, has issued two such regulations-or directives or whatever-that need to be complied with across the EU, it is extraordinary that they should come into conflict with each other. Otherwise, someone has got it wrong. I hope that the Minister can tell us a bit more about that.

As for what the Minister might consider by way of giving assurances to the House, I suggest that he could perhaps withdraw the order completely for further consideration. I suspect that a small change to the order would make life a lot easier for everyone and might save us from some of the problems. I believe that it would be possible for Ministers to require Ofcom to ensure that, within the spectrums, the relevant wavelengths-or frequencies or whatever-that cause the biggest problem for the railways are not sold or issued until it has been fully agreed that the railway operators' system can be maintained in a safe condition. Perhaps the Minister will comment on whether that would be possible for him to give an instruction to Ofcom to do that.

Finally, given that the railways were there first-the issue has been going on for a number of years now-and the telecom spectrum came later, perhaps the Minister will confirm that, if there is any additional cost of

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modification for the railway system, his department, rather than the Department for Transport, will provide any extra funding necessary.

Lord Faulkner of Worcester: My Lords, the Minister will be aware that I wrote to him about this matter earlier today. I apologise for the late notice I gave him, but I did not receive notification about this problem until seven o'clock last night when a member of the railway industry wrote to me to draw my attention to exactly the points just alluded to by my noble friend Lord Berkeley.

This is clearly a significant issue for the railway. It is not a situation where we can take a chance and see what happens. If it is the case that the new broadband width is going to interfere with signalling, obviously the railway will become unsafe. The solution would seem to be the fitting of filters not just to the train sets, as my noble friend Lord Berkeley says, but I understand to trackside equipment as well. The estimate of costs he gave is a figure that I am familiar with as well.

We are all anxious to see the extension of digital Britain. I played a small and modest part in the legislation passed in the previous Parliament, as the Minister knows, and I am keen to see the benefits of broadband extended as widely as possible. This is a potentially unfortunate unintended consequence, but the operation of the railway, if not endangered, will certainly be embarrassed as a result of the introduction of these broadband widths without some mitigating measures. My noble friend Lord Berkeley referred to the possibility of the Department for Business, Innovation and Skills paying the costs, but perhaps it would prefer that the purchasers of the new broadband width should have them built into their contracts. However, it is clearly unacceptable to expect the railway to pay for it, and indeed if the railway were to do so, it would then be for the Department for Transport because it is responsible for the cost of the new signalling system which is being introduced progressively over the next six years.

Again, I apologise for bringing this up so late. It is not a matter that has been considered either in the other place or in your Lordships' Merits of Statutory Instruments Committee, but it needs to be taken into consideration. I hope that the Minister will be able to give us some assurance.

Lord Clement-Jones: My Lords, I suspect that, looking at the numbers in the House, we are in rather arcane territory with this order. We are indebted to Kip Meek, the former independent spectrum broker, for having come up with some solutions that are reflected in the order, but of course he has now gone to run YouView, and good luck to him in that very important project. But luckily today we have my noble friend Lord De Mauley, who was fully conversant with all the discussions over spectrum during the passage of the Digital Economy Bill, so I am confident that he will be able both to reassure and to enlighten me about some of the issues underlying this order. It is also a little bit of a reunion when I see the noble Lord, Lord Young, across the way as well.

I broadly support the order, and for those of us who worked in the salt mines of the Digital Economy Bill, the legislative and regulatory background to spectrum

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allocation is familiar. For the most part so is the content of this order since we were all ready to debate it before the last election. Indeed, we assumed that it would be reintroduced immediately after the election, but the Department for Business, Innovation and Skills appears to have been ruminating on it for some time.

The Minister helpfully mentioned some of the differences between this order and the draft order we saw in March, particularly simplification of the order and the removal of the coverage obligations, but otherwise it is not entirely clear what other differences there are between this regulation as tabled and the previously tabled regulation. The essence, as I understand it, is because there will now be a competition assessment before the auction takes place. What is the thinking behind this change? Is it because this means that the auction conditions can be tailored in the light of the assessment? This is an important and welcome addition, and if so, can my noble friend say exactly when that assessment will happen and what the process will be? I think he described the assessment as "urgent", so I assume that means that the assessment is imminent.

Given the importance of fair allocation below 1 gigahertz spectrum, can the Minister confirm that Ofcom will conduct the assessment before the existing 900 megahertz licences are varied? Can he also confirm that the key element of the combined auction for the 800 megahertz and 2,600 megahertz licences will continue?

There is then the issue of timing which, according to the CEO of Ofcom, will be 2014. It will be at least a year before Ofcom issues an invitation to bid for the so-called four key radio frequencies that will allow mobile network operators to offer network speeds that are competitive with fixed-line broadband.

As I understand it, the timetable as set out by Ed Richards is as follows. Starting in February 2011, there will be consultation on steps for a competitive auction. On the consultation finishing, in the early autumn there will be a statement on future competition. At the end of 2011 the final auction regulations will be published. The auction will take place and then finally, in 2014 the 4G networks will be up and running. It will be helpful if the Minister can confirm that that is the expected timetable.

Mr Richards appears to describe this timetable as ambitious, but to many it appears rather slow. After all, the first Meek report came out in May 2009 and the final report came out in September 2009. Mobile network operators have been waiting for 4G spectrum in the 800-megahertz and 2.6-gigahertz bands for several years; they want and need the higher frequencies to relieve congestion in their urban networks and they want the sub-1-gigahertz frequencies, which carry further than 3G frequencies for the same power, so that they can extend their coverage cheaply.

These frequencies are also needed to enable networks to roll out the next generation mobile transmission technology known as LTE. The industry, however, has said that this timetable will put the UK well behind other markets. LTE services are already up and running in other European countries; a few networks in Europe are already running or testing LTE in 1800-megahertz and compatible devices, notably dongles for laptops.

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What has been the cause of the delay? Was it the threat of legal action by Everything Everywhere because it feared being locked out of the sub-1-gigahertz spectrum, or the threat of litigation by BT on rather different grounds? Is the competition assessment the price of its withdrawal? Or is the real reason why Ofcom has been delaying the 2.6- gigahertz spectrum release until 2014 because it has no other spectrum ready that could be used for wireless cameras during the Olympics?

Have the Government thought seriously about the consequences of this delay? Is there any way the auction can be brought forward? It has been calculated that delay in the 800-megahertz and 2.6-gigahertz auctions is estimated to have already cost the Treasury £6 billion in lost revenues as industry has spent the money elsewhere in the EU buying spectrum. The longer we delay before the auction takes place, the less money industry, it appears, will have left to spend in the UK. Can the Minister tell us frankly what the situation is and why we are so late coming to this order and adopting such a leisurely timetable?

The form in which the spectrum is released also matters. In the current plans, 2.6- gigahertz is split into two blocks; this means that it is less suitable for use by the technology known as WiMax. Does this not need to be changed to ensure technical neutrality between LTE and WiMax? Alternatively, could some of the 2.6-gigahertz allocation be for WiMax and some for LTE? Otherwise, we run the risk of prejudicing WiMax deployment and failing to be technologically neutral, as Ofcom is obliged to be.

On the position of the emergency services and the spectrum allocated to them, I recently asked the Government a number of Written Questions. Had they agreed to find spectrum for secure broadband services for the emergency services from below 1- gigahertz? If so, what steps were being taken to set aside an allocation from within the tuning range of existing Tetra radios and exempt it from being auctioned? Thirdly, did they need to produce a business case to do so? The reply that I have received is baffling if I have not understood, and unsatisfactory if I have.

The Minister, the noble Baroness, Lady Neville-Jones, has said that it is unlikely that the emergency services will use a spectrum band below 1-gigahertz due to the lack of available spectrum in the range. Furthermore, she claims that the technical benefits would be minimal. Public sector organisations apparently "must engage with the market"; BIS does not currently anticipate exempting any spectrum from auction and no business case has been produced. That is what I would call the dustiest of dusty answers.

4.30 pm

As I understand it, we have an obligation under EU law to agree on spectrum for the emergency services, and agreement was reached at a recent European Council of Justice Ministers. The only really suitable spectrum bands for the emergency services to use are at a much lower frequency, so the state does not have to invest in double the number of masts. The emergency services network has about 3,500 masts to operate in the 400 megahertz band. It would need nearly double the number to operate in the 800 megahertz band.

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This rule applies universally: the higher the frequency, the more base stations are needed. This is why there is such interest in the digital dividend spectrum-it is at relatively low frequencies.

The problem for the emergency services is that it appears that Ofcom and BIS do not intend to make any spectrum available to them at any frequency. They will simply say that the business case, which is required for a direction to be made, is too weak. My interest in raising this matter and urging that some spectrum be exempted from the auction is to protect our population and our first responders. Can we please learn the lessons of past disasters? We must have proper communications for our emergency services.

There appears to be something fundamentally wrong with a situation where the emergency services in Dorset cannot use their radios and do not have enough spectrum, while there is spectrum lying fallow here and not being released in a timely fashion. Is it really the case, too, that some police forces are being asked to send text messages from their mobiles rather use their radios because the spectrum is too expensive? Why cannot a direction be given to Ofcom on use of spectrum for the emergency services?

Finally, there is the aftermath of the settlement with the PMSE sector, which ran such an effective Save Our Sound campaign. I am glad that my honourable friend Mr Vaizey ensured that a better deal than that envisaged by the Labour Government was agreed, so that compensation was not based on residual value of equipment. However compensation will cover only 55 per cent of the replacement cost of new equipment. Some people will struggle to find the balance needed. In addition, I understand that final funding will be signed off by the Treasury only in March 2011. Is this correct? It would be extremely awkward to say the least if the Treasury backed off at the last minute. What is the current status of the agreement? When will payments be made? I would be grateful if my noble friend could answer those questions.

Spectrum allocation may not make the front pages of newspapers, but it is a fast-changing area with fast-changing requirements. The last fundamental review of the UK's spectrum strategy was the 2005 Cave review. The previous Government did not update it more recently, so it seems that all current decisions are based on a policy which we know to be out of date and where the balance between auction and other means of allocation has gone. Some would say that what we are doing is all a bit ad hoc. Are we really confident that we are proceeding in the right way today? I hope that my noble friend can reassure me and I look forward to his reply.

Lord Young of Norwood Green: My Lords, this debate is definitely one for the techies. As a football commentator said, it certainly feels like déjà vu all over again.

I was grateful to the noble Lord, Lord De Mauley, for being one of the few Ministers who has not said that he is doing this because of the terrible deficit left by the previous Government. It was a great relief. I hope that that is not a career-limiting observation.

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The last spectrum auction took place 10 years ago under a Labour Government and is widely considered to have been a success in injecting much needed competition into the mobile market. The 3G auction specifically reserved a licence for a non-2G licence holder so as to kick-start competition. The result today, with each of the four mobile networks holding roughly the same amount of 3G spectrum, is a highly competitive market where the operators compete to expand and increase their mobile broadband networks.

While we on this side of the House support this statutory instrument, the proposals to liberalise the existing 2G spectrum ahead of agreeing the rules for the auction of the 2.6 gigahertz and 800 megahertz spectrum run the risk of significantly upsetting that competition. I note that Ofcom has concluded that liberalisation does not distort competition, but that is because its competition assessment examined the effect of liberalisation only on the basis of 80 per cent population coverage. Its assessment completely ignored the advantage that holders of the existing 900 megahertz spectrum gain from being able to use that spectrum for rolling out mobile broadband in more rural areas.

Your Lordships will be aware that sub-1 gigahertz spectrum enables network operators to cover significantly larger geographic areas. Indeed, it was estimated that holders of low-frequency spectrum are able to roll out their networks five times more cheaply than operators who hold high-frequency spectrum. It is this low-frequency spectrum that is critical to ensuring that mobile broadband supports the Government's own broadband strategy and delivers universal broadband coverage to rural areas. However, there is much less likelihood of this being achieved if competition is significantly weakened. It would be ironic if the outcome of this spectrum auction, under the watch of Conservative/coalition Ministers, undermined the competition delivered by a Labour Government. I noted that there were a couple of attempts to cover that area. Although these are indefinite licences, there was the question of revocation and an annual assessment. I welcome those aspects.

What assurances will the Minister give the House that Ministers will give a clear steer to Ofcom that the auction of the 800 megahertz spectrum must be done in such a way as to ensure that the advantage gained by the current holders of low-frequency spectrum is corrected either through a spectrum cap or, as in 2000, through reserving a licence for a non-2G spectrum holder? In another place, the Minister Ed Vaizey said that Ofcom,

Would the Government consider an auction that resulted in the concentration of low-frequency spectrum in the hands of the two networks that already hold low-frequency spectrum to be a failure? If so, what discussions have the Government had with Ofcom to ensure that the auction is structured so as to avoid this? I welcome the commitment to competition assessment prior to any decisions. I was interested in the point made about the hope that there would be universal coverage. We talk about the importance of rural connectivity, but the fact that it is not stipulated gives some cause for concern.

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Given the importance of the digital economy to the UK's wider economy, do the Government agree that it is essential that Ofcom actively protects competition in the mobile broadband market? While I share the Government's view that release of spectrum to the market as quickly as possible is critical, does the Minister agree that the long-term interests of consumers depend on ensuring that the release of new spectrum is achieved through an auction that preserves a level playing field in spectrum holdings? Can the Minister give the House an assurance that Ofcom will have the Government's full support in taking steps to preserve competition in the mobile broadband market, particularly if that is opposed by companies whose actions have delayed the release of spectrum to the detriment of consumers? I share the concerns of the noble Lord, Lord McNally, about the timetable.

A noble Lord: Lord Clement-Jones!

Lord Young of Norwood Green: My apologies. I meant the noble Lord, Lord Clement-Jones. I hope that he does not take legal action.

I share the noble Lord's view on the timetable. It would be good for Ofcom to be challenged on the length of the timetable, given the importance of the introduction of 4G.

There is an ambivalent attitude in this country, in that everybody wants a mobile phone and universal coverage, but people do not want a mast anywhere near them. That pushes to one side those who believe, in my view mistakenly, that they will suffer some deadly effect from the rays from mobile masts. It is usually the aesthetics that concern most people. Will the Minister give any steer to Ofcom to ensure that we maximise mast sharing, so that we do not have the countryside or towns littered with more mobile phone masts than we need? I also welcome the commitment to the previous Government's policy of ensuring universal 2 megabit per second coverage by 2015 and to the superfast broadband trials.

I conclude by sharing the view expressed by the Minister on the role that mobile broadband can play in delivering universal broadband coverage. Does he agree that the best way of extending coverage is through a market where all operators can compete equally? I share the concern of my noble friends Lord Faulkner and Lord Berkeley about the possible impact on rail signalling systems. I would have thought that that would have been drawn to the attention of Ofcom a while ago. No doubt it is something that the Minister will comment on.

Lord De Mauley: My Lords, I am very grateful to noble Lords for their comments. We have covered a number of key areas, and a number of interesting and important points have been raised. The Government note the concerns that your Lordships raised during the debate. The noble Lords, Lord Berkeley and Lord Faulkner, raised the important issue of the conflict with the GSM-R rail operators' frequency. I thank them for that. The Government are fully aware of the potential safety issues involving the use of spectrum, specifically of the 900-megahertz band for mobile

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broadband services, and of the adjacent spectrum planned for the rail safety network system. Noble Lords are absolutely right that safety is a key priority for the Government, and we will not allow it to be compromised. The level and severity of any possible interference is still being investigated, but discussions are taking place between Network Rail, the mobile operators, Ofcom, BIS and the Department for Transport to address the matter. Further technical work is under way to determine the likelihood of any potential interference and the available technical solutions.

As the noble Lord, Lord Berkeley, said, this is not just a UK issue. The use of these bands is harmonised across Europe, so we are discussing this with the Commission, too. I thank the noble Lords, Lord Berkeley and Lord Faulkner, for their helpful suggestions. I will definitely take them back to the department.

Lord Faulkner of Worcester: Will the Minister say something about who might have to pay for modifications?

Lord De Mauley: I thank him for that. That issue needs to be part of the discussions to which I have just referred.

My noble friend Lord Clement-Jones asked about the reasons for the delay. That is a very justifiable question. The new Government had to consider the options that are open to them and what they wanted to do against a backdrop of a changing market. The process was completed before Parliament rose in July for the Summer Recess. It was not considered immediately after Parliament returned because of the threatened judicial review by Everything Everywhere, and the need to address that threat.

My noble friend asked about a timetable. Ofcom intends to consult on its assessment in February. The 900-megahertz licences will be liberalised before the 800-megahertz licences become available, but Ofcom's latest analysis is that the competitive distortion is not so great as to require action in the 900-megahertz spectrum. I confirm broadly that my noble friend's outline timetable is what is anticipated, although if there is anything I can add, I will write to him after the debate. I certainly agree with him that speed is of the essence. However, it is a very complex area and it would be equally dangerous to rush things through.

My noble friend also asked about the emergency services. The Government fully recognise the importance of spectrum in allowing the emergency services to operate effectively. The safety and security of the United Kingdom's citizens is of paramount importance, and the Government have consistently stated that spectrum management should pay due regard to this. However, as I said, spectrum is a scarce resource for which there is increasing demand. In these circumstances, the allocation of spectrum should be as efficient as possible. For that reason, the Government's agreed approach is that, in the first instance, such requirements should be sourced through the market. I hope that my noble friend will be somewhat reassured to hear that where this is not possible, a case will need to be made for an administrative allocation to be considered. Any requirement for additional spectrum by the emergency services will be considered within that framework.

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4.45 pm

Lord Clement-Jones: I am sorry, my Lords, but the timing of that is rather important. Once the spectrum is subject to auction, the emergency services will not have access to it. The spectrum below 1 gigahertz is of extraordinary importance because it means that the masts do not have to be so close together. It means that you have fewer masts, less cost to the emergency services and so on. What worries me in all this is the question of whether the emergency services should be subject to a market test. It is rather like the NHS-we do not subject that to a market test.

Lord De Mauley: I agree with the noble Lord about the seriousness of the matter. It is, as I said earlier, a complex area. It might be helpful if I wrote to him further about that matter.

The noble Lord, Lord Young, expressed a number of concerns about the auction, competition and coverage. The important thing is that we have asked Ofcom to conduct a competitive assessment of the future development of the 3G and 4G markets in the United Kingdom to inform the design of the auction. Ofcom may well decide that some form of capping is appropriate; the noble Lord referred to that. I agree with him about the importance of competition.

The noble Lord also asked about the benefits for consumers. Again, I broadly agree with him. Widespread next-generation mobile broadband services, which are capable of delivering data at speeds that are considerably in excess of today's offerings, will be of huge value both to consumers and indeed to business. For the consumer and citizen, access to real-time information while on the move will be invaluable as well as offering a considerable market opportunity to creative industries wishing to develop content.

The noble Lord asked about the perceived blight of masts across the country. One has to say that if people want additional coverage of mobile broadband services, some increase of masts is likely. Given the capital expenditure involved, though, no operator will want to deploy more masts than are necessary to deliver an acceptable level of service.

Lord Young of Norwood Green: I agree with the Minister that they will not, but I made the point about encouraging mast-sharing. While I am on my feet-I do not want to do this any more than I have to-there is also the question of universal coverage and how concerned the Government are to ensure that the mobile service is less effective in some parts of the country than in others. How much premium do we put on that?

Lord De Mauley: I broadly agree with the noble Lord about mast-sharing. We have it already and I have no intelligence that it is not going to continue. It seems to be in the economic interests of all parties.

The noble Lord's other question is about coverage. Again, I agree with him about its importance. The Government believe that our approach, particularly given the need to crack on with it, is the way to achieve that, and that the competitive pressures and the number of participants will assist it. A number of technical advances will also assist that.

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Lord Berkeley: On the European network for the GSM-R, my understanding is that Network Rail responded to Ofcom on this some time ago, as well as to BIS. I am concerned about the reported reaction of BIS to these comments, which was, "We understand where you're coming from, but basically you should have incorporated something into your design in the first place to ensure that the receivers and all the other equipment on the railway were robust".

The legislation from the commission has been around for a number of years, and I am pretty persuaded that Network Rail and the Department for Transport have got it right, because they take it all very seriously. It seems a trifle arrogant for anyone now to say, "Sorry, mate, something new is coming up and you'd better go and change all your systems-and, by the way, possibly pay for it". I hope that I have got this wrong. Maybe the Minister could look into that as well.

Lord De Mauley: I am grateful to the noble Lord for his comments. If there is some interdepartmental fencing, that is extremely concerning. I will go back to my department and shake some cages. Having said that, I hope that I have addressed as many of your Lordships' questions as possible and if I have not I will, as I say, write to noble Lords. This is-

Lord Clement-Jones: My Lords, I am sorry to interrupt but, when the Minister says that, I hope specifically that he will include the radio mikes PMSE issue as well.

Lord De Mauley: I certainly intend to include that.

This area is, as I say, immensely complicated, as I am sure has become abundantly clear in the course of the debate. There are those who assert that the

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Government's approach is flawed or lacks ambition, but it is clear that years of debate and consultation have shown that any proposals-whether they come from the Government, the regulator, or indeed the European Commission-are unlikely to receive universal acclaim. Experience shows that any proposal will receive differing levels of opposition and support. The point is that a consensus on what should be done is, frankly, unlikely.

That lack of consensus has been the case over a number of years. Ofcom's attempts to find proportionate measures to deal with the issues raised by the refarming of 2G spectrum have faced challenges which, in turn, have led to delay. Any further delay cannot be to the benefit of consumers or business users, nor, I suggest, to the operators themselves. Regulatory uncertainty is seldom helpful to industry. The longer we delay, the further the UK will fall behind other countries that are already deploying new high-speed broadband services.

The issues involved have, as I say, already been the subject of considerable discussion, debate and consultation involving industry, the regulator and the Government. In our view, this direction to Ofcom represents the most appropriate way forward to allow the earliest deployment of next-generation mobile broadband services, to make a valuable contribution to the broadband infrastructure of the United Kingdom and to ensure that this country remains competitive in a digital world. I commend the order to the House.

Motion agreed.

House adjourned at 4.52 pm.

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