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I have discussed this issue with the Minister since my original amendment was discussed in Committee, and I am grateful to her for giving me time to go over my concerns. However, I feel very strongly that using RPI instead of CPI is wrong, and taking powers to
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However, I recognise the pressures on the system and the need to recoup some of the costs. So I offer a late Halloween deal to the Minister: why not have one rate of interest for the period when young people are studying and a different one when they are earning enough to begin repaying what they have borrowed? The change in rate from constant value to a real rate of interest could be tied to the point at which they begin repaying. This is what is set out in my amendment. I hope this version of trick or treat is an attractive proposal for the Government, and I would be grateful if, in the event they cannot accept it tonight, they take it seriously and agree to have further discussions with me about it before Third Reading. I beg to move.
Baroness Verma: My Lords, the amendment moved by the noble Lord, Lord Stevenson, seeks to place a statutory requirement in the Bill whereby the interest rate at which borrowers are charged while they are studying and until their first repayment is no more than the government rate of borrowing for the preceding financial year. I thank the noble Lord for raising this issue, and I hope that he will find my response helpful. I will not put it in the context of trick or treat.
The current system provides borrowers who go on to earn the highest incomes with an interest subsidy while they are studying. This amendment is unnecessary because high-earning graduates are well placed to contribute to the cost of their higher education, and it also makes it unprogressive. The new arrangements that we are proposing mean that, in practice, the only people who are affected by the decision to charge a real interest rate while studying are those high-earning borrowers who pay back their loans in full. Those who do not fully pay back their loans will see that part of their borrowing written off. What is more, charging a real rate of interest is part of a progressive package of reforms, and any proposal to change this rate of interest should be considered in the round.
The changes that the noble Lord is suggesting would have a significant cost and impact on the sustainability of the new student finance package. Our analysis shows that charging students the government rate for borrowing-currently, RPI plus 2.2 percentage
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The noble Lord spoke about women being affected disproportionately. We estimate that around 35 per cent of female graduates will repay less than those on the current system. This is in large part because since women are more likely to be lower earners, they are more likely than men to benefit from the features of the progressive repayment system, including the protection afforded by the higher repayment threshold.
We do not want to have a negative impact on disadvantaged groups, and that is why the Government are committed to ensuring that our universities remain open to everyone with the ability to succeed in higher education. Our equality impact analysis indicates that our student funding reforms will not have a negative impact on protected groups. With our new repayment terms, we estimate that around a quarter of graduates- those on the lowest incomes-will pay less than they do on the current system.
The noble Lord asked about Sharia-compliant loans. We are actively investigating the possibility of introducing an alternative finance system and are working with organisations such as the Federation of Student Islamic Societies and the National Union of Students. We are clear that we want a single student loan system that can meet the needs of the majority of students, where possible. We will seriously consider proposals to change the administration or presentation of the system in ways that can address the doubts that members of some faiths might have about accessing student finance. However, any proposals would need to ensure that the overall financial outcomes for government are the same and that all student loan borrowers are treated the same in accordance with existing legislation. It is important to get this right, and I know the noble Lord agrees with me that it may take a little longer, but the outcome must be absolutely right.
The noble Lord raised the RPI/CPI question. No single measure of inflation is appropriate for all purposes. It is important to view the package of reforms in the round. We need a student finance system that is progressive, sustainable and affordable for the taxpayer, and that is what we have delivered. A measure of inflation that brought in lower contributions from the highest earning graduates would require us to be less generous with the progressive elements of the system that protect our low earners.
The Government's student finance package is progressive and sustainable. It rebalances investment in higher education so that there is less public subsidy and a greater contribution from those who benefit the most. This can only be right. Our proposals create a system that provides more generous support for students from lower-income households and protects low-earning graduates. We believe that this is a fair deal. For those
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Lord Stevenson of Balmacara: My Lords, I thank the Minister very much for that and in particular for her closing remarks about continuing the discussions. I think it would be worth having a further round of that. I gather there is a date now in the diary and perhaps we can pick it up at that point.
I would like to make three small points, and one at the end. First, it was good to hear that the difference in the cost to the public sector of going from 2.2 per cent to 3 per cent was only £100 million a year. I say "only" in a casual, flippant way-of course it is a lot of money, I understand that, but it is not a lot if one has to balance the impact and the damage done because of the increase. I think that is worth bearing in mind. I am grateful to have that information and I will think about it.
Secondly, the Minister said that the proposed changes will not have an adverse impact on admissions, but I think I am right in saying that the reduction in admissions reported last week was highest among mature students and women. That is a worrying sign. It may not be reflected when the full admissions figures come in, but even at this early stage of admissions, which is primarily for medicine, veterinary science and Oxbridge, those reductions are worrying and we need to bear them in mind.
Thirdly, on the point of whether or not the loans as currently proposed are Sharia compliant, I am grateful to the Minister for saying what she did on that. This is something that we perhaps could do by correspondence because we share a common wish that this works out well and that there is not an artificial or even a real division between the systems of loan that are appropriate across the whole country.
Finally, although it is fantastic that both full-time and part-time students who go on to higher education will be able to do so free at the point at which they enter the system, there is a price to pay for that. Underneath all the rhetoric, the truth is that this is a progressive system only because out of it will come a very large number of people-perhaps 50 per cent of the cohort-who do not earn enough to go on to a statutory repayment basis. It is a sort of race to the bottom and a crude way of depressing wages, and that cannot be right. There must be a better way of getting this across. If the progressive nature of this is really a way of separating out those who are benefiting from higher education and get more than the average wage in the country from those who do not, the phrase that is being used-those who earn more should contribute the most-begins to sound more like a graduate tax than anything else. Having said that, I hear what has been said tonight and I beg leave to withdraw the amendment.
No part-time student shall be required to repay their loan until-
(a) they have completed their studies, or
(b) four years and six months has passed since the start of their course, whichever occurs first."
Baroness Brinton: I rise to speak to Amendment 89ZA in my name. I thank the Minister for her letter of 25 October, in which she reports that the Minister for Universities and Science has agreed to accept that the statutory repayment date for all those studying part-time will be the April that falls four years after the start of their course. This seemingly small decision will have a very large impact on part-time students across the country, and I am absolutely delighted with the news.
The Open University has said it will make a significant difference to many of its over 200,000 students, and Birkbeck College has written to me to say that this is also very important for its non-traditional students, who are often juggling their study with work, mortgages and family commitments. I am also concerned that we need to ensure that the budget for widening participation, which the Government have provided this year and is being distributed by HEFCE, continues because these non-traditional students must get the right support to enable them to access the university courses that they need. I hope that the Government will ensure that the current HEFCE widening participation grant will continue beyond 2012.
I also thank the Minister for arranging a meeting with the Minister for Universities and Science later this week. I wish to raise with him the points I covered in Grand Committee, which also relate to the issue of part-time students repaying their loans. First, I am hoping for confirmation that the arrangements for part-time higher education students on fee loan repayments will also apply to the other new group of students now able to access loans to cover fees-that is, adult students over 25 studying a level 3 qualification, including but not only access to HE. That would, after all, be only fair and equitable.
Secondly, in Grand Committee I mentioned a letter from the Minister for Universities and Science to million+ at the beginning of September regarding the proposed government fee caps for part-time students, which may well leave universities and part-time students with an inadvertent problem. The impact assessment for the Education Bill says:
"The Bill also proposes to give the Secretary of State the power to specify in regulations the maximum tuition fee that higher education institutions (HEIs) may charge part-time undergraduate students in a given year. The level of the cap will be set through regulations, and the Impact Assessment will be published at that stage.
The current proposals for the cap, taken in isolation, will have no significant costs and benefits that can be monetised. This is because our analysis suggests that part-time course tuition charges do not currently exceed the maximum amounts proposed for the cap. The upper fee amount will be £6,750. The lower fee amount will be £4,500".
This means that for part-time students there are proposed fee caps of £6,750 and £4,500, which relate to 75 per cent of a £9,000 full-time fee and 75 per cent of a £6,000 full-time fee respectively. This proposal assumes that part-time students do not study at more than 75 per cent intensity and that universities would be seeking to raise part-time fees excessively if the cap
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Part-time and full-time study are both based on modules and credits rather than percentage intensity. There are 120 credits in an academic year and it would be much more helpful for students if universities were able to charge these part-time fees on a pro rata basis linked to credits undertaken and the full-time fee set by the university for the course in question, with an eligibility floor of 25 per cent intensity. This would provide more flexibility for students and would be no more costly overall in respect of fee loans, especially since part-time students will not be eligible for maintenance loans or grants.
Pro rata charging would also ensure that there was equity of funding between full-time and part-time modes as well as transparency of costing. The most transparent costing methodology is credit based, but this will not work if students and universities are limited in how they deliver their courses. As well as being difficult for universities to administer, this arbitrary cap of 75 per cent could well have many perverse consequences. These could include students on the same courses and studying at the same intensity being charged different prices as a result of studying at different intensities in previous years. It could mean that students end up paying less or more than 100 per cent of their degree cost.
I am quite sure that the Government never planned for this law of unintended consequences to prevail, and I am looking forward to discussing this with the Minister and the Minister for Universities and Science later this week. I hope that we will be able to have a letter on this complex issue before Third Reading.
To end on a high note, and to make it absolutely clear to the Labour Opposition, who seem to have taken delight in mischievously not noticing when the Government have given significant ground on issues, I thank the Government for changing the fee loan repayment arrangements for part-time students, so that now they match the arrangements for full-time students. Our universities will now have a clear message that part-time higher education will be free at the point of study for the vast majority of students. I beg to move.
Lord Stevenson of Balmacara: My Lords, I shall also speak to Amendment 89ZA in the names of the noble Baronesses, Lady Brinton and Lady Sharp of Guildford, and myself. We are of course delighted that the Government have accepted that the statutory payment due date for all those studying part-time will be the April which falls four years after the start of their course. A potential injustice has been avoided and the change represents a step towards breaking down the barriers to part-time study.
Once this Bill becomes law, the situation seems to be that part-time fees are set to go up from about £1,000 per annum, which is the latest DES figure, to
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I have some questions to leave with the Minister. Why are the Government regulating part-time fees when the existing system seems to be working? If a university is setting a fee which it thinks the market will bear and the Government are prepared to extend its voucher system to part-time students, why put in an inducement to raise that fee, which will be hard to resist, to £6,750? Why not try it for a year or two and, if necessary, regulate at that point if it is not working?
As has already been said, not all university part-time course structures fit neatly across four years and not all students wish to study at the same level of intensity each year. It must be to the student's advantage to study at the pace that best suits their lifestyle and commitments. Universities have reacted to that by becoming more flexible in terms of evening and weekend study, and study outside the traditional academic year.
Given that, I have some sympathy with the case that has been made by million+ that it would be much more helpful for students if universities were able to charge part-time fees on a pro rata basis linked to the credits undertaken and the full-time fees set by the university for the course in question.
HEFCE currently provides £368 million to institutions to support them with the additional costs of attracting and retaining students from the most deprived areas and those in receipt of disabled student allowances. The early years allocation from this fund has led it to attract 20 per cent of its newest students from the 25 per cent most disadvantaged communities in the country, 12,000 current students with registered disabilities and 18,000 students who access higher education through targeted access, taster and opening programmes. When the Minister replies, perhaps she will reassure us that the earmarked funding of this nature will continue. I look forward to hearing the answer to these questions.
Baroness Verma: My Lords, first, I thank my noble friend and the noble Lord for their warm welcome to the Government's response. The amendment in the names of my noble friends Lady Brinton and Lady Sharp, and the noble Lord, Lord Stevenson, seeks to extend the repayment due date. I also thank them for championing this point and apologise for the delay in arranging a meeting with my right honourable friend the Minister for Universities and Science and myself. As noble Lords know, I take pride in delivering on my commitments and I am sorry that there has been this delay.
My right honourable friend has listened carefully to the debate in this House. He has considered all the arguments and has asked his officials to have those further discussions. While we are not able to accept the amendment as it was laid, I am pleased to confirm that through secondary legislation we will set the
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My noble friend Lady Brinton asked about widening participation. To ensure a fair deal for poorer students, we have announced a new £150 million national scholarship programme to support students from disadvantaged backgrounds. I will write to my noble friend on HEFCE's widening participation funding. I also hope that she and the noble Lord will take the opportunity later this week to discuss this and all other issues raised by noble Lords today with my right honourable friend.
My noble friend and the noble Lord asked about regulation. My noble friend proposes a more rigid system of regulation than that put forward by the Government. We do not believe that there is evidence that such a system is needed. Our proposals establish a common framework within which higher education institutions have flexibility to set their own pricing. They need to be sensitive to the level of pricing that potential students will bear. Part-time students may simply not accept charging over and above the relevant proportion for their full-time equivalent. Our proposals protect students by ensuring that their loan will cover the full amount charged and by securing investment in widening participation and fair access. We will of course carefully monitor the new system and, if we need to, we will review and revisit it.
The noble Lord, Lord Stevenson, asked about the regulatory burden. This cap will enable higher education providers to set their own charges as they do now but up to a maximum amount specified in regulations. We do not believe that this will cause an unnecessary regulatory or administrative burden. Our proposals establish a common framework.
I look forward to further discussions with the noble Lord, Lord Stevenson, and my noble friends Lady Brinton and Lady Sharp. This week, my right honourable friend will speak to them and I hope that we will have some fruitful discussions. Therefore, I hope that my noble friend will withdraw her amendment.
Baroness Brinton: I thank the Minister for her response and the noble Lord, Lord Stevenson, for his contribution. There is much agreement about the principle of the repayment of fee loans for part-time students. The other issues raised are complex and they sit beneath the primary legislation. I am grateful for the meeting to be held later this week and I am pleased that the Minister thinks that we can have fruitful discussions.
The only point that I would make is that neither myself nor the noble Lord, Lord Stevenson, think that we are proposing a tighter regulation base. In fact, the present system will constrain universities and students because it is rigid and, as I said earlier, may provide a law of unintended consequences where some students may bizarrely end up paying more than the cost of their course because of this structure of breakdown. Those are the discussions that I hope we are aiming for.
As I said at the end of my speech when introducing this amendment, I want to end on a positive note. I thank the Minister and the Government for agreeing to the principle of this amendment. I look forward to the revised legislation coming through and I beg leave to withdraw the amendment.
Lord Hill of Oareford: My Lords, I end with a whimper and not a bang. As noble Lords will recall, we agreed four government amendments when we discussed school inspections last week. Those amendments to Clauses 39 and 41 mean that, with the exception of the first set of regulations made under the new powers inserted by these clauses, regulations will be subject to the affirmative procedure. I refer to the amendments that I introduced in response to the points raised by the noble Lord, Lord Hunt of Kings Heath.
The two amendments before us are consequential to those amendments and were unfortunately overlooked. Amendments 89ZC and 89ZD make minor drafting changes to Clause 78, "Commencement", so that it refers to the right subsections, including those applying the affirmative procedure. This does not affect the commencement of the clause. I beg to move.
Baroness Jones of Whitchurch: My Lords, I was trying not to get drawn into ending on a whimper as well. I was not going to say anything, because there is nothing to be said, except to thank the noble Lord for his courtesy so far. I look forward to Third Reading in due course.
"( ) section (Academy orders: local authority powers);"
"( ) section (Direct payments: persons with special educational needs or subject to learning difficulty assessment);"
Baroness Thornton: My Lords, in moving the Motion on the NHS Commissioning Board Authority (Establishment and Constitution) Order 2011, I will also speak to the NHS Commissioning Board Authority Regulations 2011.
These statutory instruments were laid before Parliament on 15 September, and the date when they expire is therefore 10 November. However, the NHS Commissioning Board Special Health Authority website says that it was,
Technically speaking, the NHS Commissioning Board has not jumped the gun by broadcasting its existence before the parliamentary process has been completed. However, given the whole way in which the change agenda for the NHS is progressing, there is an extent to which I feel our views may not count for very much at all, and may count for less as time goes on.
I would like the Minister to clarify whether there was a period of consultation before the order was laid, because I can find no evidence of it. I am aware that there was a statutory period of consultation with the staff unions during the summer under Section 28 of the National Health Service Act 2006. I am also aware that there was a consultation on the White Paper published last year. However, I am not aware that the decision to establish a shadow authority was taken or mentioned during that consultation.
The Explanatory Notes to the statutory instruments make play of the fact that the Future Forum said in its deliberations that the NHS Commissioning Board should be established as soon as possible. However, I do not regard the deliberations of the Future Forum as a substitute for a properly managed consultation involving all the bodies that have an interest in this matter. The Future Forum is a body with no official or statutory status or accountability to Parliament. Its members have not been appointed through the Nolan procedures and do not even need, for example, to register their interests. Praying them in aid of an order before Parliament is slightly odd.
The procedure for putting in motion important statutory instruments such as this should not be treated in a cavalier manner. Indeed, it is so important that there was an exchange of letters between the noble Lord, Lord Goodlad, the chair of the Merits of Statutory Instruments Committee, and the Leader of the House, the noble Lord, Lord Strathclyde, last summer when a matter of consultation was clarified. In answer to a question from the noble Lord, Lord Goodlad, about the consultation procedures, the Leader of the House said:
This order outlines how the proposed new commissioning architecture for the NHS might be delivered, so it is of huge importance. I would like some assurance from the Minister that, as we move forward with other orders pertaining to the Bill, proper consultations will take place.
Today, as the NHS Commissioning Board commences a period of shadow running before becoming fully operational, the emergent commissioning architecture has become far more complex. The paper developing the NHS Commissioning Board offers some insights as to what a very complex organisation is being developed. Between the NHS Commissioning Board at one end and the clinical commissioning groups at the other, the variety of commissioning support agencies is growing exponentially to include regional-I think I need to amend that to subnational-arms of the NHS Commissioning Board, PCT clusters, commissioning support units, clinical senates, special clinical networks, health and well-being boards and trustees of clinical commissioning groups. Public Health England, local health improvement boards, regulators such as Monitor and the Care Quality Commission, the National Institute for Health and Clinical Excellence, local GP councils, third sector suppliers, and individual practices that are enrolled as clinical commissioning group members can also be added to this list. Indeed, patients too are becoming commissioners, as they wield personal health budgets.
This is presumably the structure to be delivered by the shadow board. I do not object to being properly prepared for these huge changes-that is very wise. However, there are some very important questions to be considered about the statutory instruments before us today. Can the Minister confirm what the timetable is, subject to the passage of the Bill? My understanding is that October 2011 is the start date for the board in shadow form as a special health authority, although the word "shadow" appears nowhere that I could find on the website. Given that the board has already recruited its chair-a matter that I will return to in a moment-can the Minister tell the House how and when other board members will be recruited, and whether the Department of Health will be using the same company of head-hunters that recommended Professor Malcolm Grant? Can he confirm that another five board members will be appointed? I am asking because I am not clear from Regulation 6 of the NHS Commissioning Board Authority Regulations, on the
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If the shadow board is to run from October 2011 to October 2012, I gather that at that point it transmogrifies into an executive non-departmental public body responsible for planning for 2013-14. I ask the noble Earl: is that it then? Is that the status of the quango being created to run this part of the National Health Service? We know that strategic health authorities and PCTs will be disestablished in April 2013.
I have a series of questions arising from the timetable, and I am sure other noble Lords will have as well. I am going to limit myself to two main themes, accountability and cost, after which I will have a few questions about the appointment of Professor Malcolm Grant. What powers does the NHS Commissioning Board have at this point and what budget? How many people are employed by it at present, how many will be employed by it eventually and at what cost? We know that the board will be responsible for £100 billion of taxpayers' money. When will they start disbursing that funding and what accountability measures will have been established before April 2013, or indeed before October next year? Am I right in thinking that from yesterday the board has been established as an independent statutory body with some accountability, such as the authorisation of clinical commissioning groups? If this is indeed the case, does the new board have control of the budgets that develop the clinical commissioning groups? How will it disperse that funding? Who will be responsible for the strategic health authorities and PCT boards and their continuing delivery of healthcare in their areas? Who will be responsible for the delivery of the Nicholson challenge while Sir David Nicholson is busy, presumably, with all of the above?
I turn now to the appointment of Professor Malcolm Grant, whom I know from my work with academic organisations in the past. I have the highest respect for his current position as the head of University College London, but I think he was put in an impossible position by the Department of Health. I have now read the transcript of his interview with the Health Select Committee, where he was approved only by the casting vote of the chairman. It seems clear to me that Professor Grant had been told that it was a rubber stamp exercise and that he did not expect to be cross-examined in the robust way in which the Health Select Committee proceeded to question him-a way that we all know and cherish, particularly when a Select Committee may suspect that it might be being taken for granted.
Will the Minister take this opportunity to clarify exactly what was meant by that remark? It has had negative media coverage because it has been interpreted as meaning that Professor Grant does not use the NHS at all. That is most unfortunate.
According to the record, Professor Grant instead pointed to his 37-year marriage to a central London practice GP as his experience of the NHS. I am married to a world expert on internet safety, but it has given me neither a passion for nor a particular knowledge of IT and the internet. Much as I support my husband in his work, I am not at all sure that it is good practice to use that in a job interview. However, it raises a separate question: did the department take legal advice about whether Professor Grant's GP wife makes him a relevant person in terms of conflicts of interest? Given that GP primary care will be dealt with directly by the NHS Commissioning Board, which I understand is to have responsibility for GP contracts, will Professor Grant have to exclude himself from any discussions and decisions that might be to the advantage or disadvantage of GPs? What a curious state of affairs that would be. In fact, the whole episode is curiouser and curiouser.
I agreed with Professor Grant in his remarks to the Select Committee about the health Bill, which he thought was completely unintelligible. I suspect that the Minister may not. I look forward to the Minister's remarks because I know that I will be wiser as a result. I beg to move.
It is unfortunate that we are considering these statutory instruments before we have had a chance in Committee to discuss the clauses of the Bill relating to the NHS Commissioning Board. I shall try not to trespass on the ground that we will undoubtedly cover in the Bill, but there will inevitably be some overlap.
The board's main role is to ensure a coherent and effective commissioning system as a proper counterbalance to the NHS's historical dominance by provider interests. In considering these statutory instruments, it is important that we are clear that this is its main role. If it is to succeed in using commissioning to improve patient health outcomes, not only individually but across populations, it will be vital that the board is not sidetracked by being given other roles that Ministers cannot find other homes for. We will discuss these issues further, but can the Minister give some assurances today that we will not end up with a situation in which the board's empire continues to grow and its membership may not be the most effective to deal with the range of circumstances and problems that it has to deal with? Can he give an idea of the scale of the board's budget and staffing issues?
I always travel optimistically when I see a government department produce an impact statement and I always hope that there might be the odd number or two in it. However, in these statutory instruments, the numbers are conspicuous by their absence. I would therefore like to explore with the Minister what the scale of the board's budget and staffing will be.
It is very difficult to judge whether the governance arrangements for the board in regulations such as these are satisfactory without knowing a lot more about the scale of the operations. Could the Minister give us more information about what he anticipates
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This request for numbers is not just a matter of idle curiosity on my part. It relates to the question of what is the most appropriate size for this board and its committee structure. From what we have learnt so far, the board seems likely to have responsibility for spending at least £80 billion a year. I have heard figures of up to 5,000 staff being bandied about as the possible number of people that the board will employ. With an annual expenditure of this size, my first question to the Minister is: is it right to be thinking about having a board with only five non-executive members? How does this compare with a FTSE 100 company with a similar turnover? With such a turnover each year, what is likely to be the scale and nature of the committee and sub-committee structure that the board requires? Is there a danger that, with only five non-executives, the board will end up with committees or sub-committees taking decisions on large sums of public money where board non-executives are in a significant minority in those decision-making committees? Certainly at first blush, the governance structure for the large sums of public money that this board will be disposing of looks potentially weak compared, for example, with a big local authority. Are the Government sticking with five non-executives or do they contemplate having a larger number of non-executives on this board?
Having made this comparison with local government, I will turn to the issue of the board and its committees meeting in public. As I understand the regulations, there is no requirement for the board or its committees to meet in public other than when the board presents its annual report. Given the sums of public money likely to be involved, this seems to me totally unsatisfactory. As someone who was a chief officer in a big local authority for six years, I thought it was good for my soul to have to argue my case in public. I think most members of elected local authorities accept that their way of having to account for large sums of public money is to talk about how it is going to be spent and to account for it in a public arena. I cannot see why this board should not be required, as a matter of course, to meet in public and conduct its discussions in a transparent way, except where perhaps personnel or commercial issues are involved. Can the Minister say why the regulations do not require this, when the Government themselves tend to make rather a song and dance about how they prefer there to be much more transparency in public bodies?
Finally, I turn to the issue of board competence and training. I was a little startled to learn of some of the answers provided to the Health Select Committee
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I could go on because there were many other issues that were raised, but I will save those for Committee. In conclusion, I regard these regulations as looking somewhat feeble for a body operating on the scale that the Government seem to envisage and in such a complex environment. We will come back to some of these issues in Committee. In the mean time, I would welcome the Minister's answers to my questions.
Baroness Barker: My Lords, reading these regulations, I was taken back to 2008, when the then Government set up the Care Quality Commission. We had a set of regulations that were not dissimilar to these to start the process of establishing that board. The CQC became operational on 1 April 2009; its chair was appointed on 15 April 2008 and spent a year in the process of setting up that body. Noble Lords who took part in the legislation around that discussion will remember that we had not begun the Committee stage when the chair was appointed, and there were in subsequent weeks major discussions about the role of the CQC board, its objectives and its composition, all of which were subsequently translated into legislation and regulations and which today carry through into the CQC.
Echoing some but not all the questions asked by the noble Baroness, Lady Thornton, and the noble Lord, Lord Warner, I too want to ask the Minister whether, as with the setting up of previous bodies, it is the intent that there should be an initial process when a basic structure for establishing the body takes place, and whether it will be added to and changed as the legislation governing the body goes through Parliament. I too want to know whether this board will be required to meet in public, if that is the outcome of the debates that your Lordships are due to have in the next few weeks on the legislation. Also, is it a de minimis position to have five members? That might well be changed in future. Like the noble Lord, Lord Warner, I want to understand the scale of the budget and staffing structure that this board has to oversee.
Can the Minister say more about conflicts of interest? In these regulations, we have a clear but standard definition of conflict of interest, which is about pecuniary interests of board members. This board is going to operate in relation not just to the Secretary of State but to clinical commissioning groups, which opens up the capacity for there to be different conflicts of interest other than direct pecuniary ones, which I imagine that the Government can foresee and would wish to prevent. Would it be reasonable for noble Lords to assume that as the legislation progresses matters like that will be decided and will be the subject of further regulation?
Finally, how long does the department believe the process of transition will take and who will be responsible for monitoring the cost of the establishment of what I take to be a shadow board, which, as I said, is not an unprecedented step for a Government to take in a matter such as this?
Lord Turnberg: My Lords, many of the points that I might have raised have been raised by my noble friends, but I still have some concerns and quite a lot of confusion as to what this body will do. Will it have budgetary responsibilities from day one and, if not, when will it start having some responsibilities for the huge amount of money at its disposal? What controls will be placed upon it? If it is going to meet in public only occasionally, who will hold it to account if things seem to be going wrong? What role will the Secretary of State play if it does not seem to be delivering what it should? It has an enormous set of responsibilities. Will it have sub-committees or will it be decided, among the five non-execs and others, how it will go about its business? I find the whole thing rather confusing at this stage. It would be nice to have some clarity and I hope that the noble Earl will be able to give it.
Lord Willis of Knaresborough: Perhaps I might say first to my noble friend that I support and appreciate the idea of bringing forward a special health authority to shadow the new Commissioning Board. That is right and proper but, like other noble Lords, I think the idea of doing that is a little confusing before we have had a chance to examine this proposal in Committee, and to test it against the large number of amendments which are coming in to tease out what role the Commissioning Board will ultimately perform and what its form and functions will be.
I do not want to add to the questions asked by my noble friend Lady Barker, the noble Baroness, Lady Thornton, and the noble Lord, Lord Warner, all of which I am sure the Minister will get to in his response, but I particularly want to raise one issue with my noble friend. It is the question of research; he will not be surprised that I have raised that. In another place, the Government conceded that research ought to be put into the Bill and that it will be a duty not only of the Secretary of State but of the Commissioning Board and commissioning groups to promote research. At the moment, research within the NHS is of course promoted by the Chief Medical Officer of health, who has responsibilities for the National Institute for Medical Research. To be fair, I think that Sally Davies carries that job out very well indeed. She has done a remarkable job since the Cooksey report and the setting-up of
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However, will this shadow authority have a duty to commission research? In which case, will that budget be within the £80 billion to £100 billion identified by noble Lords? Will it in fact take over the duties currently held by the Chief Medical Officer, Sally Davies, or will she continue to retain them and report to the Commissioning Board? In short, where will NHS research reside and who will have authority for it in making the decisions within the new arrangements?
Baroness Finlay of Llandaff: My Lords, I too would like to ask a question in relation to conflict of interest. As the noble Baroness, Lady Barker, has said, it seems that conflict of interest is much more likely to be in the non-financial sphere than the financial sphere. Would members of the board be expected to declare it, perhaps particularly in relation to their own health and that of members of the family who may be affected by commissioning decisions? Also, who will the Commissioning Board be required to take advice from in its commissioning decisions and who will it be required to work with? Will education and training, just as with research, actually become a core duty of the Commissioning Board at the outset or will it come along later? I note that it is said that this is a transition process and that the Commissioning Board will ultimately have responsibility for primary medical services. However, I would be grateful if the Minister could explain at what point that transition will occur, whether it will be phased across the country gradually or happen all in one go, and what plans are being made for the potential risks that can occur with such a major transition of funding from the current system, with the whole of primary medical services being taken over by the Commissioning Board.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, I welcome this, the second in a series of debates tabled by the noble Baroness, Lady Thornton, scrutinising various pieces of secondary legislation which together are intended to provide continuity and security to NHS staff, as well as maintaining the continuity and quality of NHS services, and delivering the £20 billion efficiency challenge.
This second debate provides an opportunity for me to set out the need for a proposed new preparatory body to ensure the most effective transition to a new system for commissioning NHS services. As noble Lords will know from our debates on the Health and Social Care Bill, a key part of the Government's agenda is to turn the NHS into a more patient-centred organisation, with a clearer focus on improving patient outcomes, and designed around the needs of the local population.
The Government intend to create a more autonomous and accountable NHS, with greater clarity about the roles and responsibilities of different organisations for
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The NHS Commissioning Board will be rigorously held to account by Ministers and Parliament as a whole for delivering improved patient outcomes instead of top-down process targets. While it will be free from interference on a daily basis from Ministers, it will have clear duties set out in primary legislation, and will be held to account for objectives set by the Government through an annually refreshed mandate, giving it a clear long-term direction.
The board will allocate resources to clinical commissioning groups and support them to commission services on behalf of their populations, according to evidence-based quality standards. It will directly commission services in six areas: specialised services, primary care, specialised dental services, military health, prison health and some aspects of public health. It will develop a high-quality market for commissioning support, while minimising redundancy costs, living with reduced running costs and retaining the best of NHS talent. This means that the board will be at the centre of delivering improved, patient-centred services while cutting waste and bureaucracy.
This shows that there is a recognised need to begin work now to ensure that the transition arrangements to the new system allow the NHS Commissioning Board to undertake its full responsibilities from the day it is established.
The NHS Commissioning Board Authority, as established in the statutory instruments that we are debating tonight-as well as the functions which were not laid before this House, but noble Lords may have seen earlier this week-is a preparatory vehicle, which will allow the organisation to recruit a leadership team; establish robust governance processes; develop an open and supportive ethos and culture; and begin to develop some of the key relationships with other organisations in the system. It will take on only limited functions, delegated by the Secretary of State for Health, with regard to the health system during the course of 2012.
The authority will ensure that the NHS Commissioning Board is able to function as intended as soon as it is established as an executive non-departmental public body, subject to the passage of the Bill. The authority will help the NHS to manage some of the challenges of the transition from the current system to the new one. Through establishing a body at arm's length from the department, we can ensure robust accountability and governance arrangements.
There will be a letter from the Secretary of State setting a series of objectives that the special health authority will be expected to deliver. In addition, there
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Establishing an arm's-length body also allows us to recruit a strong leadership team, who can provide strategic input and challenge. Wherever possible, we have drafted the establishment legislation for the special health authority to reflect the legislation that noble Lords have been scrutinising in this House. This has been done to build in continuity wherever possible, particularly around the balance of the board. Officials have sought and received the approval of the Appointments Commissioner to roll over the key non-executive director appointments to provide continuity of leadership as the body moves from being a preparatory one to an operational one, subject again to the passage of the Bill. The preparatory arrangements will ensure that the culture of national and local accountability is embedded in the board from an early stage, and does not see the centrally administered, top-down, performance-managed culture merely transferred into the board on the date of establishment, by transferring all staff and working practices on day one.
We have taken our administrative responsibilities extremely seriously during this process. We have been careful to balance appropriately the need for transparent and accountable preparatory arrangements, while ensuring that we still respect Parliament's role in scrutinising the legislation for which these regulations prepare. Establishing a special health authority at this stage does not pre-empt the Bill's progress through this House. It is intended as a short-term measure. The Secretary of State for Health can abolish the authority, subject to consultation with staff and parliamentary scrutiny. We are working to ensure that the costs of establishing the body are kept to a minimum, and the body will employ only staff whose roles are considered business-critical to its preparatory functions. The Government are committed to creating an NHS that is able to shape health services that are patient-centred and locally accountable. The NHS Commissioning Board Authority is a key step in this process.
I shall now address the specific questions raised by noble Lords in this debate. I was very grateful to my noble friend Lady Barker for reminding the House of the legislation passed under the previous Administration in relation to the establishment of the CQC. That is not an unreasonable comparator to the present situation. The orders before us do not pre-empt the outcome of the scrutiny of the Health and Social Care Bill. There are good reasons for establishing the authority now. They are, in sum, to ensure strong governance around the organisation's preparations; to identify and induct a strong, independent board who could lead the NHS Commissioning Board, subject to the passage of the Bill; and to provide an important signal to the NHS about the future.
I say to my noble friend Lord Willis that this legislation is not subject to the successful passage of the Bill. It is a supporting measure, which could be reversed or amended as necessary, subject to consultations with affected staff. The functions of the authority, which are outlined in directions issued by the Government, could be updated as the Bill progresses.
The NHS Commissioning Board Authority was established as a special health authority yesterday. As I say, it will have a preparatory role and will be replaced by an executive non-departmental public body by October 2012, subject to the passage of the Bill. It is expected to be fully operational by 1 April 2013.
The noble Baroness, Lady Thornton, asked me about consultation on the setting up of the special health authority. Section 28 of the NHS Act 2006 is the basis for establishing special health authorities. The Act requires consultation with staff, which was carried out. It does not require consultation with others. As stated in the government response to the Future Forum report, the authority-the preparatory body, in other words-will continue operating until the provisions of the Bill relating to the establishment of the board are brought into force some time between July and October 2012. Only at this point will the full executive non-departmental public body be established with responsibility for establishing and authorising clinical commissioning groups. This would be followed in April 2013 by the executive non-departmental public body taking on its full suite of statutory responsibilities. The special health authority would therefore only have a preparatory role; it is currently envisaged that it will exist for a maximum of one year. The noble Baroness, Lady Thornton, asked a number of questions about the powers of the special health authority: how many would be employed; how many would be recruited and at what cost.
In order to prepare for the establishment of the board, we have established this authority with the purpose of developing the details around the processes and relationships required to carry out the board's functions, developing the business model, and making such other practical arrangements that are necessary and appropriate for the effective running of the board on its establishment, including developing HR and governance models. I would simply say to the noble Baroness, Lady Finlay, and indeed my noble friend Lord Willis that that encapsulates the functions of the authority. The functions of the board are of course subject to the passage of the Bill and not dealt with in the orders that we are currently considering.
As regards staff, the publication of the NHS Commissioning Board People Transition Policy in July 2011 gave staff in relevant bodies, including PCTs, SHAs and arm's-length bodies in the Department of Health, a description of how the NHS Commissioning Board would manage the transfer of functions and staff from other organisations. While further detailed work will need to be undertaken during the preparatory phase on the detail of transition, the People Transition Policy was able to set out how transfers will be managed and appointments will be made. The chair, as the noble Baroness mentioned, has been appointed-Professor Malcolm Grant. Other non-executive board members are recruited by the Appointments Commission; however,
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Recruitment to the NHS Commissioning Board is being managed in two phases. This phased appointment process will allow the senior leadership team to help take the NHS Commissioning Board forward, together with their support teams and some key transition and priority roles, while more of the work on the detailed structure is carried out. The immediate priorities for appointments as part of the first phase for recruitment are: first, the senior team and their support staff; secondly, the transition functions; thirdly, functions that have early deadlines; and, fourthly, transfers from organisations that may not be sustainable until October 2012.
The noble Lord, Lord Warner, asked about induction training of non-executives and the chair. An induction process has been developed for the chair by the authority transition team. It will also be adapted for the non-executive directors. The noble Lord also asked a series of questions about the budget of the board during its first year; what it will be responsible for in terms of that budget and about the number of non-executive directors.
The preparatory NHS Commissioning Board Authority has access to a transition budget of up to £6 million during the financial year 2011-12 to establish itself and to undertake consultation and analysis to design its future functions. This excludes staff costs and capital expenditure on estates and infrastructure-
Lord Warner: That was not the point of my question. It was what the board budget was going to be, so that we knew what this authority was preparing itself for. I am not frankly very fussed about the odd million or two going to this authority. I am more concerned about how it prepares itself for the transition to the board if it does not know what the expenditure and scale of the board's operation is going to be.
Earl Howe: My Lords, I appreciate that and I was coming on to providing him with the answers to those questions. The impact assessment published alongside the Bill includes an analysis of the costs and benefits of establishing the NHS Commissioning Board. Preliminary estimates for the annual running costs of the board are in the region of £400 million. That budget will, of course, be partly dependent on the detail of secondary legislation that will be subject to parliamentary scrutiny.
The noble Lord expressed concern that we should not end up with a board that is too large and with the wrong membership for the remit placed upon it. We need here to distinguish between the role of the authority and that of the board. The authority has a clearly defined preparatory role. It is not responsible for commissioning in the NHS but rather for preparing for the establishment of the NHS Commissioning Board. The board will, when fully established, be responsible for the £80 billion commissioning budget.
As regards who will sit on the board when it is in its fully fledged form, the Health and Social Care Bill sets out details of the proposed membership of the board,
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The noble Lord, Lord Warner, asked me to outline what the board will do with the money that it receives from the Government. The board will directly commission a wide range of services, including local primary care and the most specialised services in the country-meaning that the board will have direct responsibility for around £20 billion of commissioning spend. It will be accountable nationally: for the outcomes achieved by the NHS, which will be set out in the Government's mandate to the NHS Commissioning Board; for contributing to improving broader public health outcomes; for how the NHS commissioning budget of around £80 billion is spent; and for maintaining financial control across the system.
As regards how the NHS Commissioning Board Authority will be held to account, the authority will operate in line with the establishment order, regulations and directions set by the Secretary of State. The Secretary of State will issue a letter as guidance under the directions setting out more specifically the priorities against which the special health authority board will be held to account. The Department of Health's Permanent Secretary is its principal accounting officer. She will appoint the special health authority's chief executive as its accounting officer. The principal accounting officer has responsibility to Parliament for overall expenditure in relation to the department and its arm's-length bodies-thus making sure that an overall system of control is in place for ensuring proper stewardship of public funds and the issuing of grant in aid to the special health authority.
The noble Lord, Lord Warner, referred to the issue of the board meeting in public. The authority is not required to meet in public. The board is required to meet in public, subject to the passage of the Bill- I refer the noble Lord to paragraph 7 of Schedule 5. The authority is a preparatory body, and there is therefore a stronger case for the board rather than the authority to meet in public. The framework agreement between the department and the authority that we expect to be published in the coming weeks includes a commitment by the authority to carry out its activities transparently.
My noble friend Lord Willis asked whether the shadow authority will have a duty to commission research and whether it will take over the duties of the Chief Medical Officer. The authority, as I think I have made clear, will not commission research. The NHS research strategy policy will remain in the Department of Health until the board is established. The board, as my noble friend knows, will be under a duty to promote research.
The noble Lord, Lord Turnberg, asked further questions about the accountability of the board and the role of the Secretary of State, and whether there
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The noble Baroness, Lady Thornton, referred to the appointment of Professor Malcolm Grant as the chair of the authority. Professor Grant was selected as chair of the NHS Commissioning Board because he was the best candidate for the job. His experience as the head of an internationally respected organisation such as UCL means that he is highly qualified, and his appointment is backed by the Health Select Committee. I understand that when he remarked to the Health Select Committee that he was not an NHS patient, he was simply referring to the fact that he is not ill and is therefore not currently an NHS patient. I understand that he is registered with an NHS practice.
Baroness Williams of Crosby: My Lords, perhaps I may just draw the Minister's attention to the point raised by the noble Baroness, Lady Finlay, concerning pecuniary interests. In Regulation 13(4) of the NHS Commissioning Board Authority Regulations, there is an indication that the Secretary of State may be able to decide that somebody suffers from a disability because of his pecuniary interests. From that, can we assume that if any member of the authority has a pecuniary interest in a particular contract or a particular outcome, he or she will be expected to make their interest absolutely clear and to excuse themselves from the decision?
Baroness Thornton: My Lords, I thank the Minister for that very comprehensive answer to the debate. I also thank all noble Lords for their contributions to what I think was a very worthwhile discussion. I particularly thank my noble friends Lord Warner and Lord Turnberg. The questions put by my noble friend Lord Warner were, of course, as forensic as I would have expected. I did wonder about the lack of an impact assessment being attached to the order and regulations.
In response to the noble Baroness, Lady Barker, I did not object to the fact that the chair has been appointed in advance. Indeed, I completely took the point that it is happening at almost exactly the same stage in the passage of the Bill as occurred with the appointment of the chair of the CQC. However, my concern relates partly to the lack of consultation. We
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The noble Baroness, Lady Finlay, raised a crucial point about conflicts of interest. I am not at all sure that the Minister answered my question about legal advice on the position of the wife of the new chairman of the authority being a GP but I am quite happy to
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