Previous Section Back to Table of Contents Lords Hansard Home Page

I understand the concern of my noble friend Lord Clement-Jones and others that HealthWatch should have a role here, and I reassure the House that it will. Clause 178 enables HealthWatch to give Monitor advice and provides that Monitor must respond in writing to any such advice. HealthWatch would be able to advise on Monitor's arrangements to secure appropriate patient and public involvement. However, there would be no need for HealthWatch to give such advice if it was satisfied with what Monitor was doing. We are clear that Monitor must be transparent and accountable in the way that it involves patients and the public. I reassure the noble Lord, Lord Kennedy of Southwark, and others, that the requirement in paragraph 21 of Schedule 8 for Monitor to prepare an annual report on how it has exercised its functions includes its duties under Clause 59(7).

The noble Baroness, Lady Finlay, spoke twice to Amendment 267C, which indeed concerns an extremely important issue and deserves to be spoken to twice. This is about the need for Monitor to take advice from people or organisations with experience and expertise in,

as well as in the management of other conditions. She and the noble Lord, Lord Walton, emphasise that the system must be patient-centred-that is the goal of the Government-and, where appropriate, integrated. I assure them that if Monitor did not take advice as appropriate from such people or organisations, it would fall short of its statutory duties. However, as with people or organisations with expertise in patient involvement, including this in the Bill could constrain Monitor's flexibility to decide how and when it was appropriate to seek such help; for example, it would clearly need to seek such advice in setting prices for the treatment of the kind of complex conditions that noble Lords have made reference to, in order to do that in an effective way.

Amendment 270 is in the name of the noble Baroness, Lady Murphy, who of course has considerable knowledge and experience of how Monitor works, having recently completed four years as a member of its board. We are

13 Dec 2011 : Column 1201

very grateful to her for contributing her knowledge and expertise to today's debate. We very much agree that Monitor's responsibilities must be clear, consistent and not excessive. Monitor has only one objective, which is:

That is the overarching responsibility. Clause 62(b) and (c), which her amendment addresses, ensure that Monitor would not inadvertently impede the Secretary of State or the NHS Commissioning Board in carrying out their duties with a view to improving quality. However, although the Government believe that these various provisions are needed in Clause 62, we have sympathy with the points the noble Baroness has made about the need for clarity on Monitor's priorities, and will give this issue further thought.

I will say something briefly in response to the very important points raised by the noble Lord, Lord Warner, the noble Baroness, Lady Pitkeathley, and others, in Amendment 274ZZB. The Government are concerned to ensure that appropriate measures are in place to ensure those who are reliant on care services are properly protected from the adverse consequences of provider failure. I thank the noble Lord, Lord Warner, for what he said about how Southern Cross was handled, and I am glad that other noble Lords' experiences echo that. In October, we published a discussion document on the issue of market oversight in social care. Until we have considered the responses to this and the range of options, it would be premature to make isolated changes to the provision in this area, although I commend noble Lords for flagging up this very important issue.

Finally, I would like to address government Amendment 270A-

Lord Warner: Perhaps I could ask the noble Baroness to go a little further. Does she envisage that after this consultation, the Government are going to require primary legislation to take effective action in this area, or are the Government confident that there are sufficient powers to enable them to deal with that, either by guidance or secondary legislation?

Baroness Northover: Perhaps the noble Lord is seeking for me to pre-empt what will emerge from the discussion document that I mentioned. It is extremely important that this is considered fully and carefully. Therefore, it would be inappropriate for me to pre-empt the conclusions of that-tempting though it might be.

Lord Warner: Perhaps I could pursue this a little further. Is the Minister saying that the current legislation is insufficient and therefore the Government are consulting on what strengthening might be needed? Surely it is possible that this great and glorious machine, the Department of Health and its lawyers, can tell Ministers whether the current legislation is adequate to deal with this issue.

Baroness Northover: The noble Lord himself mentioned that things did not work out quite as badly as one might have expected. I know that my honourable

13 Dec 2011 : Column 1202

friend Paul Burstow was working night and day to make sure that that was the case. However, I will resist the noble Lord's invitation to pre-empt the conclusions of those who are far more expert than I am on this matter.

Lord Warner: I asked a very straightforward question. I am quite happy to pursue this through a Written Question. I just want to know whether the Government consider that the current primary legislation is adequate to deal with this particular issue. That seems to me a yes or no answer, but if the noble Baroness would prefer me to put down a Written Question, I am quite happy to do so.

Baroness Northover: I seem to have been inspired. We do not need primary legislation, it seems, we need regulations subject to the affirmative procedure. However, we are consulting on the best approach to using these. I am sure that that informs the noble Lord far better than my earlier answer, but I return to the point that it is extremely important that we get this right, because we certainly do not want to find ourselves in a situation where things are not as well protected as they were in this last instance.

I will now briefly address government Amendment 270A, which is a minor and technical amendment that makes clear that Monitor is concerned with services provided for the purposes of the NHS. On that basis, I hope that noble Lords will be happy to support it and content to withdraw their own amendments.

Lord Clement-Jones: My Lords, this is a slightly disparate group of amendments so I will certainly not try to respond on any other amendments apart from my own.

I am grateful to my noble friend the Minister for signposting where patient and public involvement come in, in Clause 59(7) and Clause 178, and her explanation that my amendment would "constrain Monitor's flexibility". I am always interested in the kinds of response that the department is able to come up with in these circumstances. After all, HealthWatch and the local healthwatch organisations are the creatures of this Bill and of the department, so it seems somewhat extraordinary that these are not specifically mentioned in Clause 59(7). I understand that in broad terms Monitor has the duty to,

that is a useful word as well-

However, of course, "appropriate" is determined by Monitor. It is not an objective test in those circumstances.

Baroness Northover: I am sorry to interrupt my noble friend, but perhaps I did not make it clear enough that Clause 178 of the Bill allows HealthWatch England to give Monitor advice and provides that Monitor must respond to that.

13 Dec 2011 : Column 1203

Lord Clement-Jones: Yes, my Lords, absolutely. I read that with great interest following my noble friend's speech. However, of course it is still liable to be one-way traffic in terms of healthcare, HealthWatch being the demandeur, rather than being asked by Monitor to provide its advice at the very early stage. So it is not always possible for HealthWatch to know what is in train within the bowels of Monitor, if I may say so, and it will be up to HealthWatch to be extremely nimble in order to divine what is happening within the councils of Monitor, if I may put it that way.

I therefore take the Minister's reply to be a rather less than whole-hearted endorsement of the role of HealthWatch. That may not be the right interpretation, but it seems a bit strange to be a bit mealy mouthed about HealthWatch when it is actually being created by this Bill. However, I will wait as matters unfold. No doubt we will get to Clause 178 in due course, and I look forward to it. In the mean time, I beg leave to withdraw my amendment.

Amendment 267ZF withdrawn.

Amendments 267A to 268 not moved.

Amendment 268ZA had been withdrawn from the Marshalled List.

Amendments 268A and 268B not moved.

Clause 59 agreed.

Clause 60 : General duties: supplementary

Amendment 269 not moved.

Clause 60 agreed.

Clause 61 : Power to give Monitor functions relating to adult social care services

Amendment 269A not moved.

Clause 61 agreed.

Amendment 269B not moved.

Clause 62 : Matters to have regard to in exercise of functions

Amendment 270 not moved.

Amendment 270A

Moved by Earl Howe

270A: Clause 62, page 89, line 26, after "services" insert "provided"

Amendment 270A agreed.

Amendments 270AA and 270B not moved.

13 Dec 2011 : Column 1204

Amendment 271 to 274 had been withdrawn from the Marshalled List.

Amendments 274ZZZA to 274ZZB not moved.

Clause 62, as amended, agreed.

5.45 pm

Clause 63 : Conflicts between functions

Amendment 274ZA

Moved by Lord Clement-Jones

274ZA: Clause 63, page 90, line 16, at end insert "with a paramount duty towards the safety of people who use health care services"

Lord Clement-Jones: My Lords, Monitor has a range of duties which could potentially conflict with each other. Of course, we have discussed that previously, and it is recognised in Clause 63 of the Bill.

In specialised care, it is sometimes desirable to limit the number of providers to ensure that patient volumes are sufficient to support clinical expertise and high quality, safe services, an approach which was promoted by the Bristol inquiry and enshrined in the Carter report on specialised commissioning in 2006. This is entirely consistent with Monitor's main duty under Clause 59(1), to

However, in terms of one of Monitor's duties under Clause 59(3), to prevent anti-competitive behaviour, this could potentially be described as a restriction of competition. It is therefore important, I believe, to get a clear understanding that Monitor's paramount duty should be towards the safety of patients, or, to put this another way, towards their welfare. In other words, it is legitimate for competition to be restricted in the NHS where it is in the interests of patient safety.

This amendment is designed to seek clarification that Monitor's role in preventing anti-competitive behaviour will not debar the designation of providers of specialised services. I beg to move.

Baroness Finlay of Llandaff: My Lords, I have an amendment in this group which really builds on the amendment already spoken to comprehensively and efficiently by the noble Lord, Lord Clement-Jones-that is, to not impose a burden on providers in the process.

One of the difficulties in any type of regulation or inspection is that it is very easy for those who are doing the inspection to require more and more data from a provider to support whatever they view as their outcome and their inspection processes. There is a real danger in here that sometimes the regulatory processes can develop a life of their own, and, quite inadvertently, become a burden on providers. We have already seen that occur with some of the current inspection processes

13 Dec 2011 : Column 1205

in place, which seem to have collected an inordinate amount of data sometimes, but have missed out on real deficits in care.

It is a paramount duty towards the safety of people who use healthcare services, and built into that of course will be good clinical outcomes, because bad clinical outcomes will be unsafe in the process. However, it is also a suggestion-and this is therefore a probing amendment-that the regulatory burden on the providers must not be excessive. They must be able to deliver patient care without diverting resources away from it in order to meet requirements from a regulator.

Lord Davies of Stamford: My Lords, I find it not entirely surprising that a number of us this afternoon have found it difficult to know at exactly what point we should be making the contribution that we wanted to make, because of course there is an immense overlap between the themes that all the clauses we have been reviewing today have brought forward.

All those clauses, and most of the amendments to them, necessarily derive from a single decision by the Government. This was the decision that they wanted to distance the Secretary of State from the operations of the health service and superimpose a set of bureaucracies and regulators that would in future take on the responsibility that the Secretary of State has had until now. That was a decision that has had, and will have, a lot of consequences.

Three consequences in particular are very unfortunate. The first is that there will inevitably be a lack of transparency. You may impose on Monitor the obligation to produce the annual report and occasional statements on the decisions it takes, and impose on clinical commissioning boards, foundation trusts and other bodies within the NHS an obligation to try to relate to the local public and have meetings and report to them and so on. However, you will never get the degree of close oversight that you can get in Parliament when the important decisions are taken by the Secretary of State in Parliament, where they are subject to a weekly or, when necessary, daily scrutiny. That does not apply to the functional decisions, which I will come to in a moment. That is the first inevitable cost of this proposal by the Government.

The second consequence is the cost to democracy. People will no longer feel that the health service is being delivered by their democracy, or is part of their democracy. It will increasingly be delivered by relatively remote and autonomous bureaucracies which will no doubt be staffed by the most high-minded people-a sort of platonic mandarinate who will certainly deliver the best they can for the human beings in their care. However, that is a very different concept from the democratically driven concept of the National Health Service on which a lot of us were brought up and which was, of course, the vision of Beveridge and Bevan.

The third consequence, to which I turn in specific detail, relates directly to the clause and amendments before us. Many contradictions and conflicts of interest will be created in the organisations and bureaucracy that take over the Secretary of State's role. Until now the Secretary of State has been responsible for taking those decisions that are properly political decisions in the true sense of the word. They involve priorities,

13 Dec 2011 : Column 1206

value judgments, trade-offs and strategic decisions for the future, which have properly been decisions of the Secretary of State up to now. Many of them will now be taken by someone else, particularly Monitor, which will take over from the Secretary of State the job of making sure that the whole system works. I have no doubt that the Government hope that that will work out well, but I repeat that I think that the effort, the initiative, is misconceived.

Two types of conflict will inevitably be structurally hardwired into Monitor. There will be the functional conflicts to which I have already referred. Monitor has specific, specialised responsibility for licensing and overseeing foundation trusts and making sure that problems are ironed out. That is one particular sector on the provider side of the equation. It now has a whole lot of responsibility for everyone else on the provider side and for the supplier side. There are some inherent conflicts.

There are also philosophical conflicts. Monitor is being given very many criteria. Clause 59 sets out what probably most of us would write if we were asked to write the most important targets of the health service on the back of an envelope. However, there is no attempt to establish a hierarchy and there will be conflicts between them the whole time. In the short term at least there could be serious conflicts between increases in efficiency, for example in access and improvement in care, and in all the other virtuous objectives set out in that clause.

The noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Finlay, have brought forward their own solution. They say, "Well, let us take one criteria, make that the overriding criteria and then Monitor won't have a conflict any more". That is how I understand the logic of what they propose. Perhaps I may disagree for a moment with the noble Baroness, Lady Finlay. It is not right to say that she builds on the suggestion made by the noble Lord, Lord Clement-Jones, because her proposal comes under different criteria. The noble Lord thinks that the safety of the patient is the most important thing, and the noble Baroness thinks that it is not to place too great a burden on providers. Both are admirable considerations, but by definition they cannot both be the overriding determining consideration where there is otherwise a conflict between desirable objectives. That will occur the whole time. These two amendments highlight the problem created by the way that the Government have decided to approach the future of healthcare in this country.

I turn now to the Government's answer to the problem that I have set out. It is quite extraordinary. Clause 63(2) states:

"Monitor must act so as to secure that there is not, and could not reasonably be regarded as being, a conflict between",

its responsibilities, which in this case are foundation trusts, and the rest. How can Monitor possibly act as if there is not conflict if there is a conflict? You cannot just pretend that there is not conflict and think that that means that the conflict has disappeared. That does not work at all. The same thing applies to subsection (3), which states:

"Monitor must ignore the functions it has under sections 109 and 111 when exercising ... its functions under Chapter 2 ... and Chapter 4".

13 Dec 2011 : Column 1207

What exactly does that mean? It cannot be ignored. Of course, Clause 109 is about when a foundation trust runs into difficulty. When that happens the Government cannot wish away the fact that the foundation trust has a difficulty; they have a responsibility to resolve it. Perhaps they mean that there will be a department looking after the foundation trust's problems but that it will not be allowed to speak to the departments with the general responsibility that Monitor exercises across the rest of the health service.

If that is what the Government are saying, perhaps they should say it explicitly. But if they are going to set up two separate departments which will not be allowed to talk to each other-there is a kind of negative synergy in an organisation having two functions of that sort-why not have two separate organisations? What is the logic for having Monitor at all if it will have to operate in this extraordinary way? I have intervened because the Government need to tell us clearly, before we agree Clause 63 and accept this Bill into the legislation of this country, exactly how they propose to grapple with the serious problems that their decision has created. I do not think that we will accept in this House that their decisions can simply be wished or thought away.

Baroness Williams of Crosby: My Lords, I can address my Amendment 274ZB very quickly. I have to admit that it arises from a fog of misunderstanding. Frankly, I do not know what this subsection means. Under Clause 63(3), there can be a Monitor intervention in a situation where Sections 109 and 111, which address themselves to various aspects of foundation trusts, can be completely waived without any regard to the fact that they are looking at competition and pricing as regards profoundly sensitive subjects. I wish that I could say that I know what it means but I do not. Instead I have put down an amendment which simply proposes leaving out that subsection. If the Minister can enlighten me, perhaps I will put it back in again. At the moment, I simply do not know what I would be putting in or out. I apologise to the House for such absurd and detailed ignorance, to which I confess with great humility. But I hope that the Minister will be able to enlighten me because so far no one else has been able to do so.

Lord Beecham: My Lords, at Second Reading I made a jocular reference to Monitor, recalling that it is also the name of a carnivorous reptile. Having regard to the range of duties and responsibilities that the Bill seeks to impose on Monitor and the number of organisations with which it will have to work-ranging from the Competition Commission, the Office of Fair Trading, the national Commissioning Board, clinical commissioning groups to foundation trusts-carnivorous seems to be the wrong word. Omnivorous would appear to be a better term for the job which the Government seek to give to this unaccountable body.

We certainly accept the need for an organisation-Monitor is no doubt the appropriate one-to be responsible for the rigorous financial regulation of all providers to the National Health Service. We approve the concept of a licensing scheme. Where we part

13 Dec 2011 : Column 1208

company from the Government is that we do not accept that the handing over of economic regulation of the whole of the health service to an unaccountable quango-it is unaccountable-is the right course of action. We think that oversight of the whole system should remain vested in the Secretary of State, as opposed to the detailed regulation of individual parts of that system. Therefore, we think that there are two distinct roles.

We are particularly reluctant to envisage the wider scope that the Bill seeks to confer on Monitor in the light of what its chairman, the noble Lord, Lord Owen, who is not now in his place, reminded us this morning. He was at pains to make it clear that there is an analogy between the health service and the utilities. He cited the railways, gas, water and electricity. The whole nation of course resounds with rejoicing from the users of the railways, and gas, electricity and water, who are thrilled with the services that they obtain and the prices that they have to pay. That, apparently, is the model which recommends itself to the chairman of Monitor.

Much has been said in some thoughtful, forceful and frankly brilliant expositions today by the noble Lords, Lord Clement-Jones and Lord Owen, the noble Baroness, Lady Meacher, and other noble Lords about the need to have a discrete function of dealing with the foundation trusts and the rest of Monitor's responsibilities. Some of that is encompassed within amendments, such as Amendment 274ZB, that are before us this evening. That seems to be right: in particular, if the fears of the noble Lord, Lord Owen, about the position of foundation trusts in relation to European competition law are to be realised, then it is all the more necessary for a continuing role for Monitor in relation to foundation trusts. We certainly see this not merely as a transitional provision, but one for the longer term.

There is a job for Monitor to do, but there is a clear risk of conflict for the organisation in the terms that the Bill now provides. They may be so conflicted as to require the attentions of the noble Lord, Lord Alderdice, if they have to resolve these potential conflicts of interest, and that would not be in anybody's interest. The Government really should think again about what they expect of Monitor and how it is to be rendered accountable, because there is clearly a widely shared view in the Committee and the House generally that the present prescription is simply not adequate for the purposes that the Government wish to see carried out.

6 pm

Earl Howe: My Lords, Clause 63 sets out several provisions detailing how Monitor should deal with potential conflicts in relation to its general duties, and conflicts with regard to its functions. It would be helpful to cover each of these in turn. The noble Lord, Lord Davies of Stamford, will not be surprised to learn that I did not agree with much of what he said. We should not find it surprising, because it is not uncommon for bodies to have potential conflicts of interest. What matters is how they are dealt with, and the Bill sets out a robust framework for Monitor to operate effectively. In theory, there is a possibility that Monitor's general duties, as set out in Clauses 59 and 62, might conflict-if, for example, the most economic,

13 Dec 2011 : Column 1209

efficient and effective provision did not deliver fair access because that access was limited to certain days and times or locations. If a conflict did arise, we are clear that it would need to be resolved effectively.

In order to be a successful independent regulator, Monitor would need to be able to resolve any conflicts that may arise. It would be closest to these conflicts, and it would be best able to weigh up the potential risks and benefits. Balancing competing priorities is just a reality of life, and resolving such conflicts is a key function that all public bodies need to carry out. When considering how to resolve conflicts, we believe that Monitor should do so in the manner it considers best, in line with its overarching duty to protect and promote patients' interests. I am not going to call patients "consumers", but in response to the noble Lord, Lord Beecham, who has tempted me, it was Alan Milburn who said in 2004, when he was Secretary of State for Health:

"In the business world success today depends on being flexible enough to innovate and responsive enough to meet consumer demands. Public services have to apply the same lessons".

I do not want to press that analogy too far, but we all know what we are talking about when we talk of patients as consumers who require the same kind of care in terms of centring priorities on their interests.

I want to reassure the Committee that when resolving any conflict, Monitor would have to take into account the need to maintain the safety of the people who use healthcare services. Indeed, Monitor would be able to take this and a range of other issues into account when resolving any conflict between its duties. However, Amendment 274ZA would go further. Its impact would be that, in resolving any conflicts between its general duties, Monitor would always act with a view to maximising safety-potentially at the expense of its other duties. This would be inappropriate: it could cut across the role of the CQC, not to mention potentially undermine the role of commissioners and the independence of clinicians. It could also undermine individual patient choice. I can elaborate on that if noble Lords would like me to.

Similarly, while I sympathise with the desire to ensure that providers do not face unnecessary burdens, there may be occasions where a conflict solution that imposes the least burden on providers is not the most effective. Amendment 274ZAA, in the name of the noble Baroness, Lady Finlay, would impose resolutions that prioritised the least burden on providers over all other considerations. I think that is a mistaken way to go. We believe that Monitor should be free to decide how best to resolve conflicts between its duties, and therefore I would encourage the noble Lords who tabled these amendments to withdraw them. Nevertheless, I will consider-as I indicated earlier-whether it would be appropriate for the Bill to rationalise within Clause 62 matters to which Monitor must have regard. This would help Monitor decide how to resolve any conflicts. Therefore, I hope noble Lords will appreciate that I am not impervious to their suggestions on this clause.

Let me turn now to potential conflicts between Monitor's functions. For clarity, Monitor's functions include those it has as sector regulator, which are:

13 Dec 2011 : Column 1210

ensuring continued access to NHS services; setting and regulating prices; preventing anti-competitive behaviour and licensing providers of NHS services. In the short term, Monitor would also continue with specific oversight functions over foundation trusts. As with Monitor's duties, we need to ensure that any conflict between these functions is resolved effectively. Clause 63(2) requires Monitor to make arrangements to avoid potential conflicts of interest between its specific functions as foundation trust regulator and its broader functions as sector regulator, which are provided for in this Bill. I think we are all clear that we need to have appropriate arrangements within Monitor to mitigate and manage potential conflicts of interest between its functions. The Bill does not prescribe exactly what arrangements Monitor should make for this; it gives Monitor flexibility to determine the most effective arrangements, but we would expect that this would necessarily involve some separation of decision-making. This may need to be underpinned by informational separation and other working arrangements at operational level.

Lord Beecham: Would such proposals by Monitor have to be approved by the Secretary of State or would it be left entirely to Monitor to decide without reference to the Secretary of State?

Earl Howe: My Lords, I think we will rely on Monitor to make its own arrangements and, as the Committee will appreciate, there are limits to how far it is sensible to prescribe in legislation what the arrangements should be. Nevertheless, picking up the noble Lord's prompt, I am sympathetic to the concerns that have been raised in this general area and I undertake to discuss the matter further with Monitor.

To create legal certainty, Clause 63(3) clarifies Monitor's arrangements to resolve conflicts further, so when preventing anti-competitive behaviour and setting and regulating prices, Monitor must ignore its transitional regulatory functions relating to foundation trusts. I hope that addresses Amendment 274ZB, tabled in the name of my noble friend Lady Williams. The meaning of this provision-

Lord Davies of Stamford: My Lords, the noble Earl keeps on referring to Monitor's responsibilities towards foundation trusts as being transitional, but I recall that earlier today he accepted that in fact they would possibly continue beyond 2016, which is five years away. It hardly seems possible that he should be saying that at one moment and then at the next using the argument that since these responsibilities are only transitional, the conflict of interest will rapidly resolve itself.

Earl Howe: I refer the noble Lord to the remarks I made earlier. The provisions are partly transitional and partly not. It depends on which functions we are looking at.

I come back to the point I was making on the amendment tabled in the name of my noble friend. This provision says that in preventing anti-competitive behaviour that is against patients' interests or in setting

13 Dec 2011 : Column 1211

prices, Monitor must ignore the transitional functions it has as the regulator of foundation trusts. If the subsection were left out as the amendment proposes-although I know that it is only a probing amendment-when undertaking its anti-competitive behaviour or pricing functions, Monitor could also consider its transitional intervention powers. That could result in Monitor treating struggling foundation trusts preferentially by, for example, not subjecting them to its anti-competitive powers. I hope that that is helpful to my noble friend.

My noble friend Lord Clement-Jones spoke about the designation of specialist centres and expressed his view that that should not conflict with the prohibitions on anti-competitive behaviour and that, in essence, patients' interests have to be paramount. I am with him on this and I would like to reassure him that patients' interests would be the paramount consideration for Monitor in resolving conflicts that arise in the exercise of its functions in this way. Monitor need not take issue with decisions to designate specialist centres where this would improve quality and protect patient safety, even if it reduced competition.

I hope that those remarks are helpful and that my noble friend will feel content to withdraw his amendment.

Lord Clement-Jones: My Lords, I thank my noble friend for that reply, which I have found very helpful. It was robust in one sense and has set out a robust framework in another. Although I was also interested in what the noble Lord, Lord Davies, had to say, in that it would tie us all in knots, I think that the Minister's exposition was clear in that it has set out a suitable conflict framework. Although I cannot speak for my noble friend Lady Williams, I thought that the Minister explained the necessity for Clause 63(3) very well. His reassurance on the aspect of patients' interests was extremely helpful as well, although of course it does not mean that the spectre of EU competition law does not still haunt us somewhat and that it will continue to be the subject of discussion, perhaps outside this Chamber. After all, that could override everything else if we are not careful.

I took considerable comfort from the Minister's undertaking to review Clause 62 as well, because that is quite a shopping list. If it could be clarified, that would be helpful. His general undertaking to the Committee on the conflict area was also very helpful. In the circumstances, I am happy to withdraw my amendment.

Baroness Finlay of Llandaff: My Lords, I want to make a brief comment in response to the Minister's reply to my amendment in the group, Amendment 274ZAA. He said that he was minded to rationalise the items in Clause 63 and therefore I feel that I must put in a formal plea that research, education and training should not be deleted from the list in the process of rationalisation. Having said that, I shall not press my amendment.

Amendment 274ZA withdrawn.

Amendments 274ZAA to 274E not moved.

Clause 63 agreed.

13 Dec 2011 : Column 1212

Clause 64 agreed.

Clause 65 : Duty to carry out impact assessments

Amendment 275 not moved.

Clause 65 agreed.

Clause 66 : Information

Amendment 276 not moved.

Clause 66 agreed.

Clause 67 : Failure to perform functions

Amendment 277

Tabled by Lord Clement-Jones

277: Clause 67, page 93, line 20, leave out subsection (3)

Lord Clement-Jones: My Lords, we have gone on rather far. Amendment 276 has not been moved, but that amendment marked the beginning of a group which includes two amendments of mine. In that case, I shall move them when we come to them.

Amendment 277 not moved.

Clause 67 agreed.

Amendment 277A not moved.

6.15 pm

Amendment 277B

Moved by Baroness Thornton

277B: Before Clause 68, insert the following new Clause-

"Duty as to continuous improvement

(1) Regulations must provide that commissioners have a duty to make arrangements to secure continuous improvement in the way in which their functions are exercised, having regard to a combination of economy, efficiency and effectiveness.

(2) Such continuous improvement is to involve-

(a) consideration of costs,

(b) making the most of money spent, and

(c) making sure that services meet the needs of patients, communities and the priorities agreed in any Health and Wellbeing Strategy.

(3) For the purpose of deciding how to fulfill the duty, commissioners must consult the relevant Health and Wellbeing Boards, patients and public, as provided in the regulations.

(4) Commissioners must conduct reviews of the services commissioned in accordance with the regulations, and publish the results.

(5) In conducting a review a commissioner-

(a) shall aim to improve the way in which its commissioning of services is exercised, having regard to a combination of economy, efficiency and effectiveness, and

(b) shall have regard to any guidance issued by the Secretary of State under this section.

13 Dec 2011 : Column 1213

(6) Regulations may specify matters which commissioners must include in a review of a service under this section, and in particular may require a commissioner-

(a) to consider whether the current providers of the service were meeting all reasonable requirements;

(b) to consider the extent to which competition for the provision of the service may or may not be appropriate;

(c) to consider its objectives in relation to commissioning the service;

(d) to assess its performance as regards the commissioning of the current provider;

(e) to consider the outcome of consultation with relevant persons and bodies as specified in the regulations.

(7) Regulations may specify the circumstances for use of tenders as a result of a service review in order to sustain continuous improvement.

(8) These regulations may include-

(a) single tender actions,

(b) restricted tenders,

(c) open market tenders."

Baroness Thornton: My Lords, we have yet again leapt to a larger group, and I know that the noble Lord, Lord Clement-Jones, will get his turn, although possibly not until after dinner. We have moved on to a large group of amendments that concern pricing and the setting of tariffs. Many other noble Lords have tabled amendments in this group, as indeed has the Minister. I do not intend to make a long speech, but I will address the issue of pricing.

On reading the Bill you would think that having a tariff in the sense of a complete list of NHS services with all the prices and currencies set out was just around the corner, but I suggest that that is a bit of a myth. Even well developed healthcare systems that are much more market-orientated than our NHS are still a long way from such a state; we are years or perhaps decades away from that condition. For a start, for many services there are no data-not just bad or incomplete data, but none. Getting the datasets defined, collecting the data, then making the analysis, road-testing and rollout will take time. The Minister might like to tell us just how large the team in the Department of Health working on this task is, because I have to say that I heard that it is small and getting smaller as the cuts bite. But, of course, there is always KPMG or McKinsey to step in. Apart from anything else, it seems that this Bill is intent on creating a lot of jobs for lawyers and now, we see, for accountants too.

We are in the midst of a major argument about how relevant different types of currency and tariff might be, with some suggesting that returning to block payments might be better, in the interest of integration, stability and cohesion. This has been stamped on by the operating framework but that does not mean that it will not happen. Using choice and the right financial incentives to drive change in the system is the new orthodoxy. Some are trying to find out how different currencies, uses of penalties and fines and even bonus payments can reward good outcomes and deter bad. This has now extended to how to incentivise integration. These are all problems for which we would like to have answers. We are years away from a system where all these levers are available in the way that the Bill likes to suggest that they are.

13 Dec 2011 : Column 1214

In mentioning the framework, we should point out that the re-emergence of price competition shows the need for some communication between the chief executive and the Secretary of State.

Who, then, sets the prices? The arguments are well balanced. My noble friend Lord Warner argues in his book that it should be the national Commissioning Board. He is not in his place at the moment, but I have read his book. However, the national Commissioning Board is in the ludicrous position of also being the commissioner of local services. Monitor may also be compromised, as it is aligned to providers. So we return to the role of the Secretary of State. In any event it must surely be for the Secretary of State to determine the strategic approach, namely the global uplift or reduction. Our priorities for a system as determined by the Secretary of State also need translating so that the incentives are aligned to the desired outcomes, something the NHS has not always been good at. If the Secretary of State determines the approach within the strategy, then we may need genuine independent input into the detailed work of pricing and tariff. At the very least, a full list of the proposed tariffs should be published along with all the data and the analysis, so that the big brains of people at organisations like the King's Fund and the Nuffield Foundation can tell everyone what is wrong.

Widespread consultation before any major change is a good idea, as is road testing changes before inflicting them and all the suffering of the unintended consequences that may arise. In the end, we think that the Secretary of State must make the strategic decisions in this crucial part of the economic architecture. It cannot be handed over to a quango.

The details of the amendments in my name and the name of my noble friend are as follows. Amendment 277B would insert a new clause which would place a duty on commissioners as to the continuous improvement in terms of cost, value for money and the needs of patients. It would also encourage co-operation with health and well-being boards, patients and the public. It would allow the Secretary of State to issue guidance, via regulations, including in relation to whether,

and in relation to,

Noble Lords who were here this morning-which now seems like a long time ago-may remember that, when I explained the overall purpose of our amendments to reconfigure Part 3 of the Bill, the setting of prices was part of that.

Amendments 288J and 289 are about setting a national tariff: they would make it a matter of policy for the Secretary of State, and not a matter for Monitor. Amendment 291B would ensure that regulations relating to the national tariff must state how the prices and methods were determined and how any proposed changes to the national tariff,

as well as dealing with evidence of consultation between the Secretary of State and Monitor. As the national tariff should not vary in relation to different descriptions

13 Dec 2011 : Column 1215

of provider, Amendment 292ZC would deal with that issue and the issue of a preferred provider. Monitor should also have no powers over commissioners-in this instance, in relation to the tariff-as commissioners are regulated by the board. We oppose the question that Clauses 116 to 121 stand part of the Bill, because we believe that the Secretary of State should set the national tariff: if the Secretary of State were to set the national tariff, then those clauses would be unnecessary. Once more, as you can see, we are reducing the size of this part through our amendments.

Amendment 294LA would insert a provision that regulations must be laid to issue "guidance on the circumstances" in which there can be local modification of prices. That decision should not be for commissioners and the providers of healthcare services alone. Amendment 294LB would provide that any local modifications of prices would occur with the approval of both Monitor and the board. Amendment 294LC also concerns local modifications of prices: it would ensure that if they were approved, Monitor would have to notify the relevant health and well-being boards. Amendment 294MA deals with situations in which a provider fails to reach an agreement with a commissioner about local variation of prices: in such circumstances it would allow Monitor to authorise such changes only,

Amendment 294MB would ensure that no modification of prices could happen,

In the area of the setting of prices we are perfectly happy to acknowledge that this may not be a perfect set of amendments. But we think that the very important matter of who sets the prices, and where the accountabilities lie, needs to be discussed. I beg to move.

Lord Butler of Brockwell: My Lords, I shall speak to Amendments 288H and 291A, in my name and the names of the noble Lords, Lord Newton of Braintree and Lord Turnberg. The amendments are related. Like other amendments in this group, they relate to the tariff-that is, the remuneration which a healthcare provider receives for a healthcare service. The amendments to which I am speaking are designed to facilitate the introduction of new treatments made possible by the development of new technology. When an innovative treatment requires a new procedure code or an updated healthcare resource group classification, a new code can take up to three years to be implemented and a new healthcare research group can take up to six years to develop. Meanwhile, NHS trusts cannot be remunerated for potentially useful and cost-effective improvements made possible by new technology.

In Germany, an intermediate step has been developed, under which providers can apply for an on-top payment while a new code is being developed. This is known in Germany as the NUB system, although I hope that noble Lords will not ask me to say what NUB stands for. These amendments provide for a similar "innovation tariff" to be provided in the United Kingdom, to allow for providers to be remunerated for an innovative procedure on a temporary basis while a new procedure code or healthcare research group is being developed.

13 Dec 2011 : Column 1216

These amendments are in line with the Government's Strategy for UK Life Sciences, which was published last week, but are not already covered by it. I hope therefore that the Minister will give sympathetic consideration to the introduction of arrangements of this sort to facilitate the introduction of health improvements made possible by new technology.

Baroness Gould of Potternewton: My Lords, I shall speak to Amendment 292A. As it stands, Clause 114(11) will have a negative effect on the provision of sexual and reproductive health services. This arises from the transfer of sexual health commissioning, along with public health, to local authorities.

Clause 114 requires Monitor to publish "the national tariff", but an amendment put down by the Government in the other place inserted subsection (11), which specifically exempts public health services from the national tariff. As sexual health services are set to be a public health responsibility, it will mean that genito-urinary medicine and sexual and reproductive health services will be excluded.

Sexual health professionals are deeply concerned by the impact that the absence of a national tariff may have on the provision of sexual health services. There are a number of providers of sexual and reproductive health services in the community and many are funded by a payment-by-results tariff system, commissioned by PCTs. The Bill as it is now drafted makes it very unclear how those services can expect to be commissioned by local authorities. Without a national tariff, the expectation at best would be to have a local tariff implemented, based on a national tariff. At worst, providers will return to a system of block contracts.

6.30 pm

The removal of the national tariff is particularly frustrating as it is happening in spite of the fact that services have for some time had a national tariff, and that extensive work has recently gone into developing integrated currencies and tariffs for GUM and sexual reproductive health by the London sexual health programme on behalf of the London PCTs. This work not only represents good value for commissioners but also encourages best practice and good public health interventions. It is likely that without a mandated national tariff, sexual and reproductive healthcare providers will return to a system of block contracts, which will threaten the open access nature of sexual health and contraceptive services, and potentially restrict those able to attend services according to their age and place of residence. The disadvantage of block contracts was identified by the department in its response to the HIV Select Committee report.

Patients often require or choose sexual health services away from where they reside, which a tariff system could accommodate by money following the patient. Money following the patient in turn improves quality and patient choice. A national tariff will help equal out payments so that they can reflect the level of service provided and type of treatment given. That reflects the aspirations set out in the White Paper, which said that:

"Money will follow the patient through transparent, comprehensive and stable payment systems across the NHS to promote high quality care, drive efficiency, and support patient choice".

13 Dec 2011 : Column 1217

Block contracts will simply guarantee providers an income and not incentivise innovation. A large proportion of sexual health service delivery focuses on the prevention of sexual ill health, be it STI or chlamydia screening, whereas block contracts will not encourage providers to develop effective health promotion because they will not be specifically reimbursed to do so. Further, the tariff will support the drive to integrate sexual health services and will protect high-quality community services in the same manner as for other NHS services. Any qualified provider will be introduced to community services from April 2012 and, in order to prevent price competition, will be restricted to services with national or locally set tariff prices.

In his letter responding to points raised on this issue at Second Reading, the Minister stated that the Government were aware that some areas of the country are exploring the use of tariffs for commissioning sexual health services based on clinical pathways of care-which are being tested by the Department of Health-and that the results will be published. However, my impression of that work is that currently it is based around a national tariff, not local ones. The response goes on to say that local government will be able to consider the use of tariffs as part of efforts to deliver high-quality sexual health services. The clause works against that assumption. The only way that high-quality sexual health services can be provided and protected is by there being a national tariff in GUM and sexual reproductive health services. If local authorities decided to commission sexual health services under block contract, they would undermine incentives to increase and improve on screening, testing and treatment.

I appreciate that aspects of public health may not require a national tariff, but in this instance one size does not fit all. Not to have a national tariff for sexual health will have a dramatic effect on the ability to provide the current level of service. I put down this probing amendment in the hope that the Minister might rethink the decision to include the clause and consider replacing it with one that provides flexibility in the determinant of the tariff. His reply will determine if I come back to this issue on Report.

Lord Clement-Jones: My Lords, I will speak to Amendment 292ZA, the question that Clauses 119 and 120 stand part, and Amendment 294M. I shall principally speak to Amendment 292ZA, which is designed to make sure that the national tariff recognises the varying costs associated with people who have experienced homelessness or have complex needs in respect of the full range of healthcare services.

The Bill commits Monitor to publishing a national tariff for services which are or may be provided for the purposes of the NHS. Within this, the Bill makes provision for this tariff to be varied to reflect certain circumstances in which it is provided. However, homeless charities believe that the Bill needs to go further and make provision for tariffs to be varied to reflect the level of complexity and disadvantage experienced by certain patient groups. People who have complex health needs can cost more to treat. Unless the tariff structure reflects this, there is a real danger that services will not wish to treat those patients for whom health outcomes can be harder to achieve-such as homeless people.

13 Dec 2011 : Column 1218

Why should this not be reflected in the Bill? There is evidence that health services can already be reluctant to work with homeless people because of the higher costs of treating them. Unless the higher costs of treating some patient groups are taken into account, there is a real danger that the new tariff system may discriminate against homeless people and others with complex needs. In the long term, this will also incur a far higher cost to the NHS and other public services. Failure to treat disadvantaged patients at a primary care level can result in higher rates of hospital admissions, greater demands on acute care and the wider costs of ongoing poor health such as worklessness.

Homeless people have some of the poorest health in our communities. People experiencing acute disadvantage can have complex health needs. As the Department of Health's Inclusion Health report stated, in order to meet the complex health needs of socially excluded groups, we need,

Unfortunately, many mainstream services do not offer this and as a result are not accessible to disadvantaged patient groups.

Currently, some specialist homeless or vulnerable person's health services have negotiated their own tariff system so that they are not unduly penalised for treating complex patients. However, this can be difficult to negotiate and such services are not widespread. Unless there is provision for this and the new tariff system takes the wider factors that affect disadvantaged patients into account, services may be disincentivised from treating them. This will lead to poorer health outcomes and make it harder for the NHS to achieve a reduction in health inequalities.

My amendment builds on the commitment to improve the health of the poorest the fastest. The intention to reduce health inequalities through the reform of the NHS has been embedded in the reform process from the first White Paper in 2010. It was revisited by the NHS Future Forum, which flagged up a number of concerns about incentives against cherry-picking at the expense of more complex and expensive patients. In their response, the Government said that services,

My amendment would help to achieve that.

Amendment 292ZB is simply designed to make sure that when Monitor sets prices, and consults on whether to vary prices, it takes into account its duty to promote integration. That is the reason for the reference to Section 13M of the National Health Service Act 2006 and clinical commissioning groups' duties under Section 14Y of that Act.

On the question that Clauses 119 and 120 stand part, these were referred to in my speech at the beginning of the day-that now seems a long way away. This relates to the reference to the Competition Commission under Clauses 119 and 120. This is also to do with the reference to the method of reaching a price under the national tariff. The Minister dealt earlier with the issue of why an independent body had been chosen for

13 Dec 2011 : Column 1219

that purpose but it could equally well be the OFT, which I believe would be less provocative and probably more apposite. That was certainly the view of my noble friend Lady Williams when she spoke to her amendment, and I very much hope that the Minister and the department will revisit that issue and see whether it is possible for the OFT to be the body that actually looks at the method of setting tariffs in those circumstances where there is disagreement. That would be a lot less provocative and less liable to introduce EU competition law, along with all the other matters that are involved.

I do not currently have Amendment 294M to hand, sadly, but no doubt I will shortly if I keep talking for slightly longer. It ensures that all providers licensed under chapter 3 and operating in relevant clinical commissioning groups are paid the same price for the provision of services. This is designed entirely to make sure that there is a level playing field within clinical commissioning groups' areas. I hope that it is the intention in the setting of national tariffs that they will be uniform and there will be no difference in tariff paid by one provider versus another within the same CCG area. With that, I think that I have completed all the amendments that I intended to speak to.

Baroness Finlay of Llandaff: My Lords, I am tempted to say, "Follow that"; I certainly cannot. The reason why my Amendment 294BZA in this group is a probing amendment is that the wording in Clause 117(1)(a) talks about the,

It seemed to be extremely elegant and important to have in the Bill a recognition of the wide variation in both physiology and pathology that different people will present with and that that should determine the tariff itself, not simply be part of the consultation.

I hope that the Minister will be able to provide some assurance that findings from the consultation may indeed provide the range. Is it correct that additional support to secure continued access to services could come through commissioners and providers or, if they cannot reach agreement, for providers alone to be able to apply to Monitor for a modification of the price determined in accordance with the national tariff? Is it correct that Monitor would have the ability to approve and/or set the level of the modification under certain circumstances, using a methodology agreed between Monitor and the NHS Commissioning Board, if a provider could not, at the tariff price, cover its cost with an efficient service? One of the difficulties that keep emerging as we discuss tariffs is the complexity of applying them in the enormously wide variety of clinical situations that will be dealt with across the whole of the health services.

6.45 pm

Lord Davies of Stamford: My Lords, I shall speak to-I had better read this out; I cannot possibly remember it-Amendment 294AZB in my name. This is a probing amendment, intended to smoke out the Government's real feelings about price competition in

13 Dec 2011 : Column 1220

the health service market. There have been some conflicting signals on this, as we all know, with the general expectation that the Government intended to introduce a greater measure of price competition, and then a spectacular U-turn earlier this year, which the Government said was not a U-turn because they never intended to introduce price competition anyway. A whole lot of clauses were introduced into the Bill that had the effect of banning price competition in the NHS.

I was assured by the Minister only yesterday that the Government's true thinking on this is best set out in the document Protecting and Promoting Patients' Interests, and I am grateful to his officials for giving me a copy. I shall quote what it says on this subject in paragraph 35 under the heading "No price competition", which sounds very decisive:

"We have strengthened the Bill to ensure that where a national or local tariff is in place, providers and commissioners cannot undercut this".

That seems to be straightforward, coherent and, as I shall argue, completely wrong. Paragraph 36 says:

"Where competitive tendering is undertaken for services not covered by the tariff, bids would be evaluated in terms of best value (i.e. awarding contracts to those bidders who provide the best balance of quality and cost".

That seems to be incoherent and complete rubbish. Once you introduce the idea of a balance of quality and cost, you are into price competition. Every time you buy a car, you compare the quality and price of the cars on the market and come to a balance between quality and cost. Every time you go for a coffee and you choose between Costa and-what is the other one?-Starbucks, you are striking a balance between quality and cost. That is clearly incoherent and the result of very sloppy thinking.

Let us assume that that is just bad exposition or bad thinking on the part of the Government, and their real conviction is represented by the first quotation-they do not believe in price competition at all. Why is that a mistake? For two reasons: first, it involves a considerable potential loss of money from public funds. Surely if you can save money with no detriment to the purposes of the health service or the interests of patients, it should be the obligation of the Government to do that.

The second reason is a little more complicated: if you deny price competition a role in the system at all, you are denying the use of the mechanism for price determination. Competition is the only way in which you can really make sure that you understand how prices are put together. If you have a tariff that does not involve any price competition, you are basically into a form of cost-plus price determination, and anyone who knows anything about this-I know a little, having been Minister for Defence Procurement; sometimes we have to use cost-based pricing because there is no competition in the product that we need to acquire-knows that if you produce prices on that basis, you find that you can never exert any downward pressure on the prices that your suppliers are quoting to you. They will put in whatever they think is necessary for that activity and whatever costs they think they ought to put in. They will use the technique that they traditionally prefer to use for producing the goods or

13 Dec 2011 : Column 1221

services that you are buying. You will never be able to second-guess that or look beyond it. It is an extraordinarily wasteful system of procurement and it is completely wrong.

We should have a commonsensical agreement that we should use price competition wherever we can where it does not do damage to other desirable objectives, particularly the objective of patient outcomes. I have endeavoured to produce an amendment-it is a purely probing amendment; I am sure that it is technically deficient, and I do not intend to take it any further in its present form-that establishes one way of doing that. It says that when commissioners wish to use price competition and they find that they get an offer of a price that is more favourable than the tariff price, they should be allowed to take it, subject to checking with Monitor to ensure that there is no damage to other purposes of the health service, to the interests of patients or to the structure and capacity of the health service. In health, there are often good reasons why you might not want to take the nearest offer, and I shall come to a couple of those in a moment, but, where there are no such reasons, surely the onus should be that you should take that offer and save the public money.

There are reasons why in health it may not always be sensible or in the interests of the health service or of patients to take the lowest offer, and I entirely accept that that may often arise. One is in the case where you are making a strategic investment in a new capability. We have had examples that have struck me in the course of these debates-for example, the new stroke systems in London and cardiac systems that cover London. I do not come from London but I believe that they have been a great success. That has consisted of ensuring that a quasi-monopoly has been given to perhaps half a dozen units that contain the best expertise and the best equipment that can be brought together for these purposes. That has been found to be the best solution for maximising patient outcomes or, to put it rather more straightforwardly, actually saving people's lives, which is clearly the priority. I totally accept that there may be decisions of that kind that need to be taken irrespective of cost. Indeed, I welcome that they should be taken irrespective of cost and I have provided in this amendment a mechanism for making clear that when that happens and there are arguments of that kind they can prevail and it can be quite clear and quite transparent why the decision has been taken.

The second reason is also rather specific to healthcare, although not exclusively so. One of the features of the economics of healthcare is that it has a very high operational gearing; in other words, a very high ratio of fixed costs to total costs. In any sector of the market where that prevails there is obviously a great temptation for people to bid opportunistically when they have spare capacity at a price that represents a return over their variable costs and some contribution to fixed costs though not necessarily a very great one. You may get some very cheap offers coming in from people who happen to have spare capacity at a particular moment. It may be dangerous to take those offers rather than ones from other suppliers, such as traditional NHS suppliers which are more expensive, because if you do that you will put those NHS suppliers out of

13 Dec 2011 : Column 1222

business. By definition, if people are bidding at a price below their full costs but over their variable costs then they will not always be providing it on that basis. They will certainly not be investing in new capability or sustaining capability on that basis. One has to be very careful about predatory pricing in the health service. I totally recognise that, and it would be a very good reason for saying, "We do not want to take this particular offer because if we do we shall put out of business capacity we need over the long term that can only be sustained long term at a higher price".

I am very open and sensitive to the reasons for not taking the lowest price in many individual cases, but it seems to me that the Government have got this thing completely the wrong way round. The default option should be to take the cheapest price. We should be saving money. We should be exerting downward pressure on cost. We should be encouraging people to come up with new, cheaper and more efficient ways of doing things consistent with the quality that we require. It goes without saying that quality should be absolute and should be determined for every diagnostic related group, every service and health service procedure. For each of these we should have a clearly defined specification of quality and we should not go below that for reasons of price. Where we can get that quality cheaper and we do not do structural damage to the service it seems to me completely crazy not to go in that direction. I am sorry that the Government carried out the U-turn in February and I hope they may now turn back again.

Lord Warner: My Lords, I have some sympathy with some of the remarks made by my noble friend Lord Davies of Stamford in the sense that a blanket ban on price competition seems rather misguided in the situation the NHS faces. To give one example, under the last Government the price we paid for spot purchasing from the private sector when there were peaks of demand in the NHS was often much cheaper than had previously been the case and could, on occasion, be below a tariff price for some of the services. That was in the interests of the NHS and patients. A blanket ban does not seem to me to be the most sensible way forward.

I want to speak to Amendment 291C which should have been in this group. Assiduous readers of the groupings list will see that there are two commas after Amendment 291B. Between those two commas should have been Amendment 291C and the Whips' Office has confirmed to me that was indeed the intention, so I wish to speak to the missing amendment and I also wish to speak to Amendments 294AA and 294BA which were included in the list.

Amendment 291C adds to Clause 141 some principles that should be applied to the construction of the national tariff. We have already had one debate about the tariff and how the national Commissioning Board might be encouraged to move the tariff away from its dependence on pricing episodes of care, which tend to favour acute hospitals, to a greater emphasis on periods of care that are more appropriate to the high volume of NHS patients with long-term conditions. I withdrew my earlier amendments on this issue but discussed the issue much further with outside interests and experts to see whether there was anything we could usefully do

13 Dec 2011 : Column 1223

to further this particular cause. I think the Minister was not unsympathetic to some of the ideas in the earlier amendment.

These discussions have persuaded me that there is widespread support for trying to move the tariff currencies and pricing in the direction of periods of care but also a belief that this will take quite a long time and it involves a good deal of new data collection and analysis. In the mean time, people seemed to be saying that there was some merit in being clear about what should be the underpinning key principles for developing the national tariff in the future. I have had a shot at encapsulating these key principles-drawing very much on work by the NHS Confederation and I am extremely grateful for the help and advice it gave me-so that principles of this kind could be placed in the Bill to guide those who will be taking forward the difficult but important work of shaping the national tariff. I hope the Minister will be able to agree that we should try to have some guiding principles on the tariff in the Bill even if he does not like my particular wording because this is an important issue. We need to use this legislation to try to shape an important piece of work that will stretch over quite a few years to develop a new national tariff.

Amendments 294AA and 294BAA are technical amendments that reflect concerns expressed to my noble friend Lord Darzi and me by representatives of specialist medical interests about the current wording in Clause 116 on consultation on proposals for the national tariff and Clause 128 on the responses to those consultations. Amendment 294AA is intended to ensure that the relevant specialist groups are consulted on proposals for the tariff. It does not seek to specify the particular groups-that would be left to Monitor in the light of what the particular proposals were, affecting particular specialties. The amendment simply seeks to require that specialist clinical groups are consulted when tariff proposals are made so that they are involved and can bring to bear their expertise on the tariff-setting processes that can be involved with particular quite highly specialised sets of services. Amendment 294BAA merely seeks to ensure that when there are objections to a tariff proposal, assessing the weight of opinion for or against should be restricted to specialist licence holders undertaking work of comparable complexity. This is really to ensure that any objections are raised by the people undertaking work of a similar complexity defined in the original proposals for tariffs. I know that specialist opinion will be much reassured if the Minister could look favourably on these two amendments.

7 pm

Baroness Murphy: My Lords, I would like to make a few remarks about tariff and price setting and echo the words of the noble Lord, Lord Warner, who reminded us that there are two equally important mechanisms: tariff development, which is the responsibility of the national Commissioning Board; and price setting, which is the responsibility of Monitor. It is critical that Monitor retains the responsibility to set prices. That enables it to uphold its responsibilities for sustainability and balance the interests of commissioners

13 Dec 2011 : Column 1224

and providers in the patients' best interest. Independence in price setting is utterly critical. We have seen previously that not having independence from the executive arm in the NHS has been a disadvantage in getting the right prices which reflect the complexity of the issue concerned. I take the point made by the noble Baroness, Lady Thornton, that the development of tariffs is a very complex matter. It is work in progress but the work never stops. That has been the case in all countries that have developed tariffs and will be for the foreseeable future. We need flexibility when designing tariffs.

I say to the noble Lord, Lord Davies, that we have seen how catastrophic simple price competition has been internationally in driving down quality of service. Indeed, we have seen that in this country, too. Price competition was not helpful. In order to drive down prices and get better value, you need to start designing the tariff around best practice. This was mentioned by the noble Lord, Lord Warner. You need to design a pathway of care based on what should ideally happen to a patient, deliver the clinical pathway, cost that out and get the best practice in place. If that amounts to less than the set price, which it often does, that is the way that you can start to drive down costs while improving quality. A tremendous amount of superb work has been done in a group of mental health trusts looking at best practice tariffs for episodes of care. If we can get that work ongoing in a group of people who are dedicated to designing better tariffs, we will be able to improve price competition by designing the tariff correctly while not striving to be competitive on price alone.

Lord Davies of Stamford: I am very grateful to the noble Baroness for giving way. I made clear in my remarks that I believe one should start by specifying quality-that would include her point about best practice-and then allow the market to bid against that. Where potential suppliers, whether NHS or otherwise, can come in below the existing price-call it the tariff price or what you will-that will be a spur to everybody else to consider whether they can deliver that quality-I stress "that quality"-better, more effectively and more cheaply. That mechanism will be totally absent in the National Health Service if the Bill is not changed in the way that I have suggested or something equivalent.

Baroness Murphy: I take the noble Lord's point. I think it is possible to introduce the mechanisms that he would like to see through the existing mechanisms in the Bill on tariff design. Those mechanisms would also address the points made by the noble Lord, Lord Butler, about the need to develop an additional payment for certain kinds of innovation tariff. The possibilities for designing tariffs are wide. We do not need to be rigid about this. I do not know how much needs to be written on the face of the Bill. It seems to me that we need to get that separate in our minds from the actual price setting which is more the role of the independent regulator, having got the design of the tariff correct. Therefore, I would like to see Monitor retain its role as a price setting regulator but I wholeheartedly agree that a lot of creative work needs to be done on the tariff to get it right for integrated care packages and proper best practice design.

13 Dec 2011 : Column 1225

Baroness Hollins: My Lords, I would like to add to what my noble friend Lady Murphy has said by commenting on a couple of amendments in this group which concern the need for the tariff to be able to reflect and adapt to the requirements of people with complex needs. I am thinking particularly about people with learning disabilities who may need additional time to be devoted to them because of their conceptual or communication difficulties, or other disabled people who may require reasonable adjustments to be made in order for them to use a service. I think also of people with mental health problems using hospital services such as maternity services. The provision of maternity care is hugely complicated by the presence of people with an enduring mental illness. The need for the tariff accurately to reflect and encompass these needs poses quite a challenge.

Baroness Tonge: My Lords, I rise to ask a question rather than to make comments. I am rather confused about how tariffs work. I am thinking particularly of sexual and reproductive health services. Therefore, I support Amendment 292A tabled by the noble Baroness, Lady Gould.

Sexual and reproductive health services are currently provided by general practitioners and clinics directly commissioned by primary care trusts. They can be family planning clinics, youth counselling clinics or genitourinary medicine clinics. Under the new system, GPs will presumably carry on providing sexual and reproductive health services and abortion counselling services, although I am unclear exactly how they will be remunerated in the future. Those GP services are very variable. Some GPs provide a superb service while others provide a very bad one. Some do not provide certain services at all so it is common for patients to go to clinics in their area which have been provided by the primary care trust.

Under the new health service, local authorities will commission and provide sexual and reproductive health services and abortion counselling services as well as HIV prevention services, but not the treatment, although I do not want to go into that now. They will be responsible for those sexual and reproductive health services. However, I am puzzled by the following matter. Currently, if a patient does not like their GP or finds that the GP does not provide the service they want, they can go to a local clinic. However, because of political or religious arguments within a local authority it may have made those services a very low priority, or perhaps does not provide them at all. It seems to me that there is nothing to compel local authorities to provide certain public health services. If a patient cannot get the relevant services from a GP or does not like them, and cannot go a local clinic because one is not available, can they go to a clinic in another local authority where they are not resident? This could be a problem for many patients all over the country, particularly young people who tend to go to different areas for their services where perhaps they are not known or the doctor does not know them. So I am very concerned.

Could the Minister please say how these services will be affected if no national tariff is set on public health services? How do we know that local authorities will not only provide services for sexual and reproductive

13 Dec 2011 : Column 1226

health but accept people from other local authorities for treatment? It is a very important question for many people in this country.

Earl Howe: My Lords, I think that this debate has clearly demonstrated the importance of having a robust pricing system in the NHS. At a minimum, it must deliver sustainable reimbursement for efficient providers and promote value for taxpayers' money. In addition, it must support the role of commissioners in securing continuous improvement for patients by strengthening incentives for providers to improve quality and efficiency.

Perhaps I could address one aspect of the opening speech made by the noble Baroness, Lady Thornton. She spoke rather disparagingly, I thought, about the Secretary of State palming issues off on to quangos. Listening to the noble Baroness, the Committee may get the impression that it is this Government who have created quangos for the first time. I make no apology for being part of a Government who believe that arm's-length bodies can play a very valuable role in public services, especially when given the autonomy to deliver those services free of political micromanagement. The Government also believe that the number of such bodies has grown over recent years to an unsustainable level, and that is why the Bill abolishes a large number of them. So I gently urge the noble Baroness to stop complaining quite so much about quangos and remind herself that she was part of a Government who created a very large array of such bodies.

I begin by addressing the amendment tabled by the noble Baroness which proposes a delegated power for the Secretary of State to make regulations on commissioners regarding a duty as to continuous improvement. I am sure that we all agree with much of the apparent intention behind this amendment, first, that commissioners should act with a view to securing continuous improvement in the provision of services in terms of both quality and efficiency, and indeed in reducing inequalities; that is fundamental to their role. The second intention is that there is a role for regulations in ensuring that commissioning processes operate as means to this end; in other words, that tools such as service reviews, procurement and competition are used transparently and effectively to secure continuous improvement in the provision of services in the interests of patients. Our proposal is that such regulations would be made under Clause 71. They could be updated from time to time, subject to parliamentary resolution. While we would not disagree with some of the suggestions proposed under Amendment 277B-which, I recognise, has been carefully crafted-it may be a bit too detailed for the face of the Bill. In any event, we would want to consult publicly on these matters before putting firm proposals before Parliament.

The role of the pricing system is to underpin and enable continuous improvement-for example, by strengthening incentives for providers to adopt best-practice models of care, in line with commissioning priorities. The noble Baroness, Lady Murphy, was quite right in all that she said on that point. Furthermore, the payment by results programme, introduced by the previous Government, has gone a long way to strengthening pricing within the NHS. It has ensured that reimbursement better reflects the volume and

13 Dec 2011 : Column 1227

complexity of patients treated, and it has helped to reduce transaction costs. However, a number of problems have been identified with this system over the last few years, including by the previous Administration. These problems have not yet been fully addressed, and we want to do so.

The problems are as follows. The methodology for setting prices is not transparent for either commissioners or providers. That makes the system unpredictable, and there is evidence of significant variations in the tariff from year to year. That undermines investment and innovation.

7.15 pm

The scope of services covered by the tariff has not been increased in line with the published timetables. That has made commissioning decisions more difficult due to lack of understanding about potential costs. For example, it has made shifting care from hospital to community settings more difficult.

The quality of data used to set the tariff is unacceptably weak. There is a three-year time lag, and costs are based entirely on averages. The previous Government promised to improve the quality of data through sampling providers. Had they been re-elected, I am sure that they would have pursued that, but in fact they did not deliver on that commitment.

Finally, prices can be inaccurate, and sometimes they do not reflect the best variations in complexity. That results in perverse incentives for cherry-picking and risks underfunding treatment for complex patients.

It might be helpful if I explain to the Committee how the Bill seeks to improve on this system. Monitor, with its understanding of provider costs and structures, and the NHS Commissioning Board, with its understanding of patient needs and clinical best practice, are well placed to deliver a more effective pricing system; that is the vision. Prices would continue to be regulated through a national tariff, building on and improving the system of payment by results. We want this system to reflect best practice and extend the scope of the tariff where it is in the interests of patients.

Prices would be based on a published methodology, which would be subject to consultation and independently reviewed by the Competition Commission. Where services were not covered under the national tariff, there would be rules to govern these prices locally. The national tariff would be a fixed price, with any competition based on quality and choice, not price. I will come to the points raised by the noble Lord, Lord Davies, in a moment. There must, however, be provision to vary the tariff in defined circumstances. These flexibilities would not allow price competition, but would prevent cherry-picking, allow innovation, and secure continued access of essential NHS services. Put simply, these flexibilities would only be allowed where the effect is to improve the efficiency or quality of the services provided for the benefit of patients and the taxpayer. I hope that that is helpful.

I will now address some of the amendments in more detail. The noble Lord, Lord Butler, took us to the heart of the very important issue of innovation. I entirely agree with him that innovation is vital, and

13 Dec 2011 : Column 1228

we expect Monitor and the Commissioning Board to incentivise innovation through the tariff-providing it was in the patients' best interests, as I have indicated. We recognise that, in some cases, innovative ideas, technologies, systems and processes have often taken an unnecessarily long time to become common practice across the whole of the NHS. I reassure the noble Lord that the national tariff would not act as a disincentive to innovation but would, in conjunction with other initiatives-such as those announced by the Prime Minister in his life sciences speech last week-look to create an environment where innovation in the NHS is commonplace.

The NHS Commissioning Board may also set out rules that allow commissioners and providers to agree to vary the way a service is specified in the national tariff, and subsequently the way the service is priced. This would prevent the tariff being a straitjacket-which, I think, is the fear of some noble Lords-so that it would support innovative service specification with an appropriate price. These variations would be published so that other providers could see what innovations were possible and what price they could receive for delivering such services. I hope that it is instructive for the noble Lord to note that Clause 117 explicitly establishes a requirement for Monitor and the NHS Commissioning Board to increase the scope of the tariff in the way that I have been describing.

The noble Baroness, Lady Gould, took us to the subject of sexual health. I thank her very much for setting out her concerns so eloquently. Public health is indeed an area that deserves our consideration, and I am sure that the noble Baroness would agree that we discussed this subject at some length in previous debates. However, let me be clear that the purpose of the national tariff is to facilitate the fair reimbursement to providers for NHS services only. It would be inappropriate for Monitor and the NHS Commissioning Board to impose public health tariffs on local authorities. I see no reason why Monitor and the NHS Commissioning Board could not provide expert advice to Public Health England or local authorities on implementing a current tariff or-

Baroness Gould of Potternewton: The difference between sexual health and most of public health is that sexual health provision crosses local government boundaries, otherwise you will restrict any form of open access, which is absolutely essential in providing proper and effective treatment and care for people who need sexual health services. That has to be taken into account. Identifying sexual health provision just in terms of local government areas will make all the work that has been carried out over the past few years to provide better services disappear rapidly.

Earl Howe: My Lords, I appreciate those points and I was coming to some words of comfort for the noble Baroness. Not only could Monitor provide technical advice to Public Health England, provided that that was resourced and managed through the framework agreements and the memorandum of understanding between the two organisations, which would be a given, but Public Health England and local authorities could develop their own tariff, if that is what they

13 Dec 2011 : Column 1229

wanted to do. I understand the noble Baroness's concern about the underfunding of sexual health services and that the mandate may not set out enough on that score. Her amendment is clearly a way of ensuring that public health services-particularly this type of service-have an agreed cost attached to them that cannot be varied by local authorities, unless they adhere to the rules around variation. I understand all that. However, what the noble Baroness proposes would significantly increase the remit of Monitor and the NHS Commissioning Board and cut across the roles of local authorities and Public Health England. I will, of course, reflect on what she said, but there are probably mechanisms to deliver the kinds of objectives that she is aiming for.

Also on the subject of sexual health services, my noble friend Lady Tonge made some important points. I completely agree with the importance of the issue she raised. It would probably be best if she allowed me to write to her in response.

My noble friend Lord Clement-Jones proposed in his Amendment 292ZA that Monitor should include variations to prices for individuals who experience disadvantage or who have complex needs. While I am sympathetic to his intention, this is already provided for in the broad provisions in Clauses 114(4) and 117(1). In addition, the inclusion of "must" rather than "may" would not provide Monitor with flexibility on when to specify variations and rules.

I move on to the amendment of the noble Lord, Lord Davies of Stamford, who argued the case for competition on price, and I listened with interest to what he had to say. Let me explain what we are seeking to achieve. Overall, we want a system of fixed prices, set locally or nationally, that would ensure that competition was based on quality and patient choice, not on price. Only in specific circumstances could the prices determined by the tariff be varied. These flexibilities would not allow price competition but would rather, as I have indicated, prevent cherry-picking, allow innovation and secure continued access to services. Put simply, the flexibilities would be allowed only where the effect was to improve the efficiency or quality of services provided.

The Government made amendments to the Bill in another place to make clear that the tariff would not be a maximum price. That is vital to avoid perverse incentives for providers to cut costs at the expense of quality. That is entirely different from the competitive tendering scenario to which the noble Lord, Lord Davies, referred. In that scenario, whereby services would be outside the tariff, it is quite reasonable to evaluate bids in terms of best value, not the cheapest price. Guidance published by the previous Government made that clear. I think that we are closer together than perhaps the noble Lord appreciates, but I am grateful to him for what he said. However, he will know that it was the firm view of the NHS Future Forum that competition should be based essentially on quality rather than on price alone. There is of course a danger that we have a race to the bottom if we go too far down that road.

My noble friend Lord Clement-Jones in his Amendment 294M made some telling points. While I am sympathetic to some of them, I can reassure him that agreements for local modification of tariff prices

13 Dec 2011 : Column 1230

under Clause 122 are intended not to introduce price competition but to sustain the provision of essential services. For example, a local modification may be necessary to sustain provision of A&E or maternity services in a less populated area. It would be inappropriate to remunerate all providers of an essential service at a modified tariff rate without assessing their circumstances on an individual basis.

The noble Baroness, Lady Finlay, in her Amendment 294BZA proposed that it be explicit that Monitor, in establishing the national tariff, have regard to differences in costs of patients incurred by providers and differences between services provided. Clause 116 makes clear that when developing the draft tariff for consultation, both the NHS Commissioning Board and Monitor should have regard to the differences in costs of patients incurred by providers and differences between services provided. However, that amendment raises a valid point around whether Monitor should have regard to these differences when publishing, as well as when drawing up, the national tariff. I can tell the noble Baroness that this issue will be given consideration to determine whether further clarity is necessary in this area.

I now return to Amendment 292ZA, tabled by my noble friend Lord Clement-Jones. He raised the issue of cherry-picking, which we define as something that occurs when providers undertake only the more simple interventions for less complex patients but are paid an inflated price, based on higher average costs. I hope that my noble friend would agree with that definition. Under the proposals in the Bill, Monitor would ensure that the price paid to providers was accurate and reflective of the services delivered. A comprehensive tariff with more reflective prices will prevent cherry-picking. In particular, Monitor and the board would need to consider among other factors the impact of variations in the range of services provided by different providers and the differing needs of the patients treated. My noble friend again asked why the Competition Commission should be used, and again my answer is similar to the one I gave him earlier. The commission is an expert independent body with experience in considering matters such as this-unlike the OFT.

I now turn to Amendment 294AA, tabled by the noble Lord, Lord Warner. It would duplicate what is already stated in this clause, whereby Monitor must send a notice to other persons as it considers appropriate, which may include other clinical groups. Clause 59(8) makes explicit that Monitor must obtain appropriate clinical advice to enable it effectively to discharge its functions. Clause 116(1)(c) provides that Monitor must notify other appropriate persons of the proposed national tariff, which may include other clinical groups. Monitor must publish its consultation containing the draft tariff.

As regards Amendment 294BA, the share of supply percentage that triggers a reference to the Competition Commission will be considered in secondary legislation and agreed through the affirmative resolution procedure. The share of supply percentage would ensure that providers of a service made up of only a few providers would still be able to object to a proposed national tariff and therefore trigger a reference for independent adjudication.

13 Dec 2011 : Column 1231

7.30 pm

Finally, on Amendment 291C. I listened with great interest to the noble Lord and am grateful to him raising the point. I agree that the principles of the tariff are extremely important. I am not sure that this is an issue to write into the Bill. I respectfully direct the noble Lord to paragraph 65 of our document Protecting and Promoting Patients' Interests, which details a set of guiding principles about how Monitor and the board could collaborate to develop the tariff.

I hope that I have covered most if not all the points that have been raised and that, with that explanation, the noble Baroness will feel able to withdraw her amendment.

Baroness Thornton: My Lords, I do not want to stand between noble Lords and their dinner-and indeed, on this side of the House, yet more defrosting. I would like to be able to say that the Minister had given us some comfort in this debate, as he has in one or two of the others, but I am not sure that that is the case.

I did not moan about a quango. I have mentioned only two quangos today, but they are rather large and important ones. One of them will have a budget of £20 billion, and the whole House has agreed that it is concerned that accountability to the Secretary of State for those quangos is right. We have not quite settled that and have returned to that issue consistently, almost every day throughout discussion on the Bill, but that probably now needs to be left until the new year.

I support my noble friend Lady Gould and the noble Baroness, Lady Tonge. The funding of sexual health services is one of those cases which will have potentially disastrous unintended consequences-in more ways than one, if one may put it that way. My noble friend is right to raise that, and we will support her fully if she decides that she wants to take it to the next stage of the Bill.

As ever, my noble friend Lord Davies gave an original flavour to the debate and raised some important and pertinent questions. I will read more carefully the Minister's answers. Ditto to my noble friend Lord Warner, whose amendments are very important. What underlaid what my noble friend Lord Warner and the noble Lord, Lord Clement-James, said, was that this is not a quick job. This will take a long time and it is important that we get it right. We are not convinced that the national Commissioning Board and Monitor together will not create a very bureaucratic, slow way to set the tariff. We are not convinced that that is the way forward. We need to consider an independent voice and some other way to do that. We will probably continue that discussion at another time, and I beg leave to withdraw the amendment.

Amendment 227B withdrawn.

Clauses 68 and 69 agreed.

Clause 70: Competition functions: supplementary

Amendment 277C not moved.

Clause 70 agreed.

House resumed. Committee to begin again not before 8.35 pm.

13 Dec 2011 : Column 1232

Transport for London Bill [HL]

Bill Main Page

Second Reading

7.35 pm

Moved by Baroness Grey-Thompson

Baroness Grey-Thompson: My Lords, I have an interest to declare in that I am a paid board member of Transport for London, or TfL, which is a public body constituted under the Greater London Authority Act 1999.

This is a Private Bill that was promoted by Transport for London, deposited on 26 November 2010 and ordered to commence in the House of Lords. The Bill was read for the first time on 24 January 2011. Its purpose is to provide Transport for London with a broader set of financial and disposal powers to meet its business needs more flexibly and to allow it to deliver better value for money for the farepaying and taxpaying public.

Specifically, Clause 4 will remove the requirement for the Secretary of State's consent to the disposal of surplus land from Section 163 of the GLA Act, as that consent imposes an unnecessary restriction on TfL, given that the Mayor of London is required to provide an opinion in advance of sale that the land to be sold is surplus to the requirements of TfL in conducting its functions. Clause 4 will reduce uncertainty for TfL when selling land, while maintaining the Mayor's opinion's statutory safeguard that the land to be sold is surplus to requirements.

One petition was deposited against the Bill by the West London Line Group. The petition primarily concerns Clause 4. TfL has entered a dialogue, having met the petitioners' representative, and is hopeful of reaching an agreed position with the petitioner, rather than an opposed Bill Committee being required.

At present, TfL and TfL subsidiaries are not permitted by law to grant security, such as a mortgage, over their assets and revenue streams. That reduces TfL's capacity to finance projects and functions at the best available interest rate or at the lowest risk. That extra cost or risk is ultimately borne by farepayers and taxpayers through higher costs or greater risks on TfL.

Clause 5 will allow TfL subsidiaries to borrow and charge against assets and revenue streams. This will provide TfL with cheaper finance for its projects and more flexibility in how it borrows. Under secured borrowing, TfL subsidiaries can achieve lower interest rates than can be attained through the Public Works Loan Board or issuing bonds-two of the significant debt financing options for TfL now. TfL subsidiaries can also borrow for a discrete purpose, and the security can be structured so that a creditor has recourse only against the subsidiary borrowing, but no recourse against TfL and other TfL subsidiaries. That can better protect the farepaying and taxpaying public from liability for TfL debts.

Clause 5 also allows TfL to purchase subsidiary companies with secured debt. TfL would not be required to restructure secured debt once Clause 5 is operating,

13 Dec 2011 : Column 1233

as was the case with the purchase of Tube Lines Ltd and Tube Lines (Finance) plc. Had this been operating at the time of those acquisitions, it would have spared TfL significant costs at the time of purchase-ultimately borne by farepayers and taxpayers. Importantly, existing TfL creditor rights are reserved in full by the Bill. Also, TfL subsidiary borrowing under Clause 5 will be subject to existing borrowing limits set by the Secretary of State as applied to TfL, operating as an effective limit on the new power.

Clause 6 will allow TfL to form or join others in forming limited partnerships. TfL would like to be able to use a partnership structure to seek third-party investors in its property estate and to manage secondary income generated from that investment. Pension funds are identified as likely investors who often prefer limited partnerships to other legal structures in which to invest. A partnership structure can better attract long-term investors to property development, because partnerships are tax-transparent.

There is very limited tax benefit to TfL from using a limited partnership vehicle, as Clause 6 provides that a TfL subsidiary company will bear the incidence of the tax liability generated by the partnership, as a subsidiary company is not exempt from income, corporation or capital gains tax. The exemption to that relates to stamp duty, where TfL will be subject only to a proportionate share, should any charges relating to stamp duty arise.

At present, TfL is limited to exercising its functions only through a company limited by shares. Clause 7 expands the list of legal structures through which TfL functions can be undertaken to include a company limited by guarantee, a limited liability partnership or a limited partnership. This will allow TfL to conduct its functions more flexibly and better enable TfL to seek third party investors in its property estate.

Clause 8 amends TfL's hedging powers and responds to changes in the way that financial institutions hedge risk away from specific commodity trading to trading by indices. It also expressly permits TfL to hedge risks that impact the rate of contributions that TfL is required to make to the TfL pension fund, including for membership longevity. It also responds to the evolution of the financial markets.

In summary, the Bill will assist TfL in seeking the most cost-effective borrowing. It also allows TfL to mitigate the risk that applies to its pension contribution liabilities through improving the hedging power. The Bill will assist TfL to maximise income from and investment in its assets and allow TfL to deliver better value for money for fare payers and taxpayers. I beg to move.

7.41 pm

Lord Berkeley: My Lords, I welcome the Bill. I think that TfL generally, since its creation, has been a success under both its mayors, and it has certainly improved the general transport in London. Therefore, I congratulate the noble Baroness on achieving a Second Reading for it, which is often quite difficult in this House. I have one concern about Clause 4, which I have already informed the noble Baroness about. Whereas most of the Bill is to do with the financial

13 Dec 2011 : Column 1234

issues for TfL, which is very useful, TfL has managed to slip in a little clause about selling off land, which one might suggest is necessary to help finance some of the new projects. There is nothing wrong with that.

However, my concern is that TfL needs to take a long-term view on the land that it holds and might need in the future. Experience to date is that it is very difficult to forecast with any certainty what land transport, and in particular railways, might need in the future. One recalls Dr Beeching's slashing of lines-closing them down over the years because everyone was going to go by car, and how wonderful that was going to be. Now, of course, everyone is struggling to reopen lines. There was a very welcome announcement last week in the autumn Statement about reopening the Oxford to Cambridge line. The problem is that it goes from Oxford as far as Bedford and no further, because the land was sold off for building probably 20 years ago, and there is a problem-somewhere near Bedford, I think-where the line should have gone across a boating lake. Whatever one thought of Dr Beeching, no one thought that there would be such a demand for new rail transport in the future.

I had an issue about 15 years ago with the then British Rail Property Board, encouraged by the Department of Transport, over a freight terminal. I declare an interest as chairman of the Rail Freight Group. There was a lovely piece of land in Battersea that was ideal for building a concrete batching plant. All the materials could come in by rail and then be distributed locally as concrete to the local buildings. However, there was a competition between the concrete company and Battersea dogs home to have this piece of land because the dogs needed more land for exercise. I made the point to anyone who would listen that dogs do not need to be rail-connected, whereas it is quite useful for concrete work to be rail-connected. No one thought it was particularly funny and Battersea dogs home won, probably with lots of extra traffic on the road.

My message is that it is very difficult to forecast what bits of land might be needed for what in the future. We can talk about station extensions, but we know that no one wants to build extra stations or extra platforms because the services work fine at the moment, except when one suddenly discovers that one cannot lengthen the platforms any more or that one needs to lengthen them or put an extra platform in because of the demand. Then one needs land. Extra land might be needed for the maintenance of new bits of rolling stock or small rail freight terminals around London. The problem is that once these bits of land are sold off, it is almost impossible to get them back again at any reasonable price. Compulsory purchase is a very long and tortuous thing and no one likes doing it. Basically, one is always told, "Can't you go somewhere else?".

I suppose I do not trust anyone to have a long-term policy to hold on to land. That comment applies to what remains of the British Rail Property Board before it gets subsumed into the Department for Transport, to the department itself, and to Transport for London. They all do it with the best of intentions, but my issue with Clause 4 is that whether one trusts everyone or no

13 Dec 2011 : Column 1235

one, it is useful not to have the beneficiary of a sale being the organisation that organises the sale. In this case, the beneficiary is clearly TfL.

I would like to see some wording in the clause-and I am very happy to discuss it with the noble Baroness and Ministers in the future-that retains the requirement to get permission from the Department for Transport, which presumably would not have an interest in the land, for such a sale. I would feel comforted that as much protection as possible had been given to these pieces of land, which are necessarily near railways. If they are miles from a railway line, it probably does not matter very much, unless one is going to talk about river transport, and I have not looked at the land holdings for that. That is the kind of wording that I would like in Clause 4, and I look forward to discussing it with the noble Baroness in the next few days.

7.47 pm

Baroness Kramer: My Lords, I am not sure whether it is an interest because it is a former one, but I am a former member of the board of Transport for London and have an ongoing interest in transport within London which, like most Members of the House, I use extensively. I rise not in opposition to the Bill but to raise issues and questions that could use exploring. The noble Lord, Lord Berkeley, has raised one of the central issues of the Bill, which is whether an outsider-someone other than Transport for London-should be engaged in the authorisation of the sell-off of operational land, particularly if it has implications for overland railway in contrast to simply the tube, bus and tram services that we most often associate with TfL itself.

In the spirit of the Localism Bill, as well as prudent practice, I would rather see the Greater London Assembly, which has an expert transport scrutiny committee, taking on that kind of responsibility rather than the Secretary of State. Understanding the implications of changing the use of land in London requires a real awareness of the intricacies and complexities of the city. I think that the Secretary of State, sitting up at that distant central government level, has relatively little understanding of the detailed dynamics of London. It is within the Greater London Assembly that that range of experience is present in people who understand what may be housing issues, dealing with waste management, transport issues, the whole range of elements that impact on decisions about land use in London. That would be the more appropriate body.

As the Greater London Assembly is not under the control of the mayor, which is evident from the institutional structures, it can provide independent scrutiny just as effectively, if not more effectively, than the Secretary of State. I raise that as a significant element. Transport for London is, after all, the transport arrangement for one particular city and it is certainly not a national transport arrangement, so detaching the Secretary of State from such an entity has a great deal of logic to it in the spirit of the Localism Bill, which we have recently taken through this House.

I raise one other set of issues-again, not in opposition. There is interesting language in the Bill on the securitisation of revenue streams from assets. I understand from

13 Dec 2011 : Column 1236

earlier discussions-I have a letter here from Transport for London that goes into a little detail on it-that the concept behind this is that Transport for London owns property that it happens to rent out, as it sometimes does when it holds property for a period of time but which it believes it will need at some point in the future for a transport project. Alternatively, it has land that is used for parking, perhaps on a temporary basis, and again that land is set aside for some future transport purpose but can generate revenue in the mean time, or it may just have parking land because that is the only way it feels it can safeguard parking that is necessary for various transport facilities. Those revenues could be securitised as a mechanism for creating efficient borrowing. To me, that makes eminent sense.

It seems to me that this language also covers quite comfortably the notion of securitising the fare box. Revenues from the fare box seem to fall within the definitions in the Bill, and I support that. It is an important step forward in providing Transport for London and London itself with the mechanism that is needed to continue building our infrastructure. However, I should be interested in understanding whether that is the perception of Transport for London or indeed the perception of the Government. If so, that makes the Bill increasingly interesting.

None of the other issues covered here, such as the ability to do sensible kinds of hedging or to form partnerships with somewhat more flexibility in the current environment, seems at all controversial. However, I should be interested in hearing comment and response on the issues that I have raised.

7.52 pm

Lord Davies of Oldham: My Lords, I congratulate the noble Baroness on her introduction to the Bill. In a lucid contribution she made clear that which for some of us may have been a little opaque and she resolved many of the anxieties that we might have had.

It will be recognised in the House that Transport for London is a greatly envied transport authority. Many other transport authorities in the country would wish to have the existing powers of Transport for London, let alone the minor additions produced by the Bill. Of course, you cannot discuss bus services in our cities and in our countryside without recognising the advantages that Transport for London has had, and continues to have, in providing such services. It goes without saying that I would be even warmer in my thoughts about Transport for London if it were under a different political direction from the one that it enjoys at present. Nevertheless, the point still holds that it is an authority which we hold in high regard.

In passing, I indicate my regret at the role that TfL might have been able to play, if the financial arrangements had been arrived at differently, in guaranteeing that rolling stock for Crossrail would be provided by a company in Britain. However, it apparently lost that battle in the Department for Transport, so the decision is much more likely to follow the regretted Thameslink decision-namely, the company that may well win the contract will be an external company with the carriages and rolling stock being made elsewhere.

13 Dec 2011 : Column 1237

However, that is not really germane to the Bill. What is germane to the Bill, and I am very grateful to the noble Lord and the noble Baroness who have spoken thus far, is the critical issue of the disposal of assets. I was at a meeting only the other day with the Enfield authority, which I have always held in high regard-I certainly did when I was a Member of Parliament for the area. The Enfield authority has ambitious schemes to improve transport links in the area. Crucially, rail links are determined by the very thing that my noble friend Lord Berkeley identified-namely, that land held by the railway has been sustained and there is therefore capacity for putting down additional tracks to improve a service when that would not have been the case if the land had been sold. Therefore, we have a real interest in the land held by this public authority, and I hope that reassurances can be given on how such decisions are to be made.

One dimension that has not been mentioned thus far in the debate is that any sale of urban land has an impact on neighbours. It has an impact on the people who may already be using the land as tenants of TfL but it also has an impact on those immediately adjoining the land. I accept that it is difficult to put this within the framework of legislation but I hope it is recognised that TfL has obligations as a public authority to engage in proper consultation locally when the disposal of significant pieces of land occurs.

However, in broad terms we very much welcome this measure and I congratulate the noble Baroness once again on having introduced it so ably.

7.57 pm

Earl Attlee: My Lords, I congratulate the noble Baroness, Lady Grey-Thompson, on moving her Bill so expertly, and I am grateful for the contributions of other noble Lords. I shall resist the temptation provided by the noble Lord, Lord Davies of Oldham, to discuss rolling stock purchases.

I do not oppose this Second Reading. However, I should make it clear that the Government also have some reservations about the powers in the Bill as presently drafted. Officials from the Department for Transport are currently in discussion with Transport for London on these provisions and I look forward to a more detailed examination of them in Committee.

Lord Berkeley: As the Bill was, as I understand it, introduced about a year ago, have these discussions been going on continuously for a year? They are taking an awfully long time if that is the case.

Earl Attlee: My Lords, Transport for London is responsible for progressing the Bill. I am just giving some comments on behalf of the Government.

On the subject of the disposal of land and Clause 4 of the draft Bill, which has been one of the principal subjects of this debate, the Government are clear that the protection of strategically important assets must remain a priority. Furthermore, it would appear reasonable for the arrangements in London to parallel those on the national rail network, where there are restrictions analogous to those currently placed on Transport for

13 Dec 2011 : Column 1238

London. I should also point out that Transport for London already has the power, without prior consent, to lease operational land for less than 50 years and to dispose of land that has not been operational for five years or more. I understand that Transport for London is looking further at this option and I look forward to its revised proposals.

8 pm

Baroness Grey-Thompson: My Lords, I thank all the noble Lords who have taken part in the debate this evening on what I think everyone will agree is a very technical Bill. It appears that Clause 4 has raised the most interest.

In response to the Minister, TfL is in discussion with the Department for Transport on the drafting of Clause 4. It recognises that the protection of strategically important railway assets must remain a priority. I understand what the Minister said about the scope of the existing Section 163 to dispose of operational land, and I confirm that TfL is looking further at this option and will be in touch with the department in due course to take this forward.

I understand the concern raised by the noble Lord, Lord Berkeley, on the long-term view that must be taken on the protection of land. TfL wrote to the noble Lord on 20 April 2011, and I reiterate what was said in that letter. TfL is now persuaded of the merit of retaining the requirement for the Secretary of State's consent in circumstances where Network Rail or the British residuary board is an adjacent landowner or has land in close proximity to the land to be disposed of. TfL is liaising with the Government about Clause 4 to resolve their concerns. I hope that that goes some way to easing the noble Lord's doubts over the disposal of land, but I would welcome continued discussion on this matter.

The noble Baroness, Lady Kramer, raised the issue of independent scrutiny and Clause 4. I thank her for mentioning the letter that TfL wrote to her. TfL does not feel that it would be appropriate to move to a consent mechanism which is entirely different from the Secretary of State's consent if it were retained in certain cases. The noble Baroness also mentioned securities. TfL currently has no plans to securitise revenue generated by the Tube. Instead, TfL may use the power to grant security to raise finance from assets generating a secondary revenue scheme, such as car parks and property with a rental income.

TfL subsidiaries may grant security over both physical assets and revenue streams under Clause 5. However, TfL has no plans to do this over key infrastructure such as the Tube. TfL's expectation is that the power to grant security may be used on car parks or property with a rental income, such as office space and new infrastructure that generate specific income. The noble Baroness also raised the issue of limited partnerships. TfL would like to form limited partnerships so that it can utilise a partnership structure to manage secondary income generated from its property estate; to better attract long-term investors to property development on non-operational land, because partnerships are tax transparent, which can be attractive to particular investors; and to better attract pension funds to invest in these developments as likely sources of investment. I am

13 Dec 2011 : Column 1239

very glad that the noble Baroness mentioned the pension fund. If members of the TfL pension fund live longer than the actuarial estimate then TfL will have a prospective liability that is not currently accounted for. Hedging that potential risk is one way that TfL can offset that liability if eventuated.

Once again I thank all noble Lords who have taken part in the debate this evening. I have taken all the points on board, and no doubt all the Bill's provisions will be closely considered in Committee.

Bill read a second time.

8.04 pm

Sitting suspended.

Health and Social Care Bill

Committee (12th Day) (Continued)

8.35 pm

Clause 71 : Requirements as to procurement, patient choice and competition

Amendments 277D to 278BC not moved.

Clause 71 agreed.

Clause 72 : Requirements under section 71: investigations, declarations and directions

Amendment 278C not moved.

Debate on whether Clause 72 should stand part of the Bill.

Lord Owen: My Lords, I wish to draw attention to Clause 72(1)(b), which refers to,

which we discussed earlier, the provision to,

I had understood that the decision not to have competition as one of the main functions of Monitor was a considered political decision, but the more one looks at Clause 71(1)(c), and now at Clause 72(1)(b), the more one realises that this has been got round, effectively, by ensuring that anti-competitiveness becomes a prime responsibility of Monitor.

There are a number of objections to this. The noble Lord, Lord Whitty, put his finger on it, that a good regulator does not also become a policeman in an anti sense to the people he is trying to regulate. There is a deep question as to whether you really want a situation where Monitor can be set against the National Health Service Commissioning Board and the commissioning groups. I am very doubtful that this is a sensible power to give to Monitor.

13 Dec 2011 : Column 1240

I know it is regulating the whole group, but if you look at the way Monitor is approaching its tasks, time and again it is going to be reliant on good will and an atmosphere of trust between Monitor, the NHS Commissioning Board and the commissioning groups, and now there is this question of anti-competitiveness. It is not as if nobody else is going to be looking at anti-competitive behaviour of the National Health Service Commissioning Board. The private sector wants to go into this whole area and will be looking very carefully at whether or not it is being given an even playing field. It will be taking, and threatening to take, the Commissioning Board to law-I am not even raising the issue of EU legislation, but just under British legislation.

I do not think it is fair to argue that there is unlimited freedom for the National Health Service Commissioning Board or the commissioning groups to operate in this area, particularly the board. You are really setting yourself up for a very difficult situation. Also, to do it "on its own initiative"-does that mean Monitor would not consult the board or a clinical commissioning group but just suddenly involve itself in an investigation? I would be grateful if the Minister could give some indication of how he sees this in practice.

Will some guidance be given not to develop an adversarial relationship? It is very easy for animosities to start coming in to this area. As I say, it is not as if it is free from legal challenge. Their actions can be challenged. However, for another NHS body to be able to question the judgment of the Commissioning Board that in this particular case it is best not to put something out to competitive tender, or to make a judgment when it has been done because somebody feels that it is anti-competitive, is a really dangerous power. In the wrong circumstances, where Monitor might be chaired by somebody who is getting into a bad relationship with the NHS Commissioning Board chairman, something not totally unknown in these areas, this is a tool which could be used in a destructive and adversarial fashion.

It would be very helpful, for future occasions, to hear from the Minister as to how he thinks this would actually work out in real life.

Earl Howe: The noble Lord, Lord Owen, has caught me napping, so to speak, because I was not expecting that intervention. I would be very happy to write to him to set it out, if he will allow.

Clause 72 agreed.

Clause 73 agreed.

Schedule 9 : Requirements under section 71: undertakings

Amendment 278D

Moved by Earl Howe

278D: Schedule 9, page 368, line 12, leave out from "contains" to the end of line 14 and insert "information which it is satisfied is-

13 Dec 2011 : Column 1241

(a) commercial information the disclosure of which would, or might, significantly harm the legitimate business interests of the person to whom it relates;

(b) information relating to the private affairs of an individual the disclosure of which would, or might, significantly harm that person's interests."

Amendment 278D agreed.

Schedule 9, as amended, agreed.

Clause 74 : Guidance

Amendments 278E and 278F not moved.

Clause 74 agreed.

Clause 75 : Mergers involving NHS foundation trusts

Amendment 278G

Moved by Lord Clement-Jones

278G: Clause 75, page 98, line 25, at end insert-

"( ) The cases referred to in subsections (2) and (3) shall be (in so far they would not otherwise be) "relevant merger situations" for the purposes of Part 3 of the Enterprise Act 2002."

Lord Clement-Jones: My Lords, I shall speak also to Amendment 278H. This is somewhat of a continuation of the debate that we had at the very beginning of the day, and comes back again to the application of EU competition law. However, it also has merit as an amendment which has its own rationale quite apart from avoiding the full rigour of EU competition law.

Under Part 3 of the Enterprise Act, which Clause 75 of the Bill applies to NHS foundation trusts, mergers are normally looked at by the OFT and the Competition Commission. They consider whether the merger would result in anticompetitive outcomes, governed by Sections 35 and 36 of the Act. However, the Secretary of State can intervene under Section 42 of the Act, where he considers that there is one or more relevant public interest consideration specified under Section 58 of the Act. Such considerations are then taken into account in deciding whether the merger should go ahead, even if there are no anticompetitive outcomes.

8.45 pm

At the moment, the specified public interest considerations are, broadly, national security; free and accurate news presentation; media plurality and other media issues, which of course have been quite a hot topic of late; and, finally, the stability of the UK financial system. Financial stability was added in 2008 as a result of the banking crisis. It was inserted to avoid competition being the sole relevant issue to prompt intervention in bank mergers.

Competition in the NHS takes place in the context of high complexity, high levels of need and very serious consequences for failure for patients dependent on services if greater turbulence or churn in service providers results. Therefore, it is appropriate to add an additional public interest consideration to reflect these special circumstances. If protection of the public's

13 Dec 2011 : Column 1242

money was deemed justification for additional public health intervention, protection of their health service warrants at least the same level of safeguard. This amendment seeks to ensure that competition is not the sole issue where health body mergers, including those involving NHS foundation trusts, are concerned, but that a new public interest consideration-the promotion of a comprehensive health service in England-can be taken into account by the Secretary of State when a merger is proposed.

Amendment 278G seeks to ensure that anticipated mergers, as well as completed mergers, involving NHS foundation trusts are subject to the provisions of Part 3 of the Enterprise Act 2002 in the same way as for other enterprises. Section 42 of the Act, "Intervention by Secretary of State in certain public interest cases", will apply to such mergers.

I tabled these amendments as the lesser of two evils. They are intended to mitigate the effects of EU competition law. They are also designed to make sure that foundation trust mergers are not subject to the full rigour of domestic competition law. There was a debate in the other place, which I think we are now allowed to call the House of Commons, on what was then Clause 71, as to whether the OFT or the Competition Commission should have any jurisdiction over mergers of foundation trusts. My honourable friend Mr Burstow explained that the OFT would have discretion not to review mergers where patient benefits outweighed any adverse effects on competition. But that is not explicit.

My honourable friend went on to provide an explanation of the impact of the clause for mergers involving NHS foundation trusts. The clause means that we would have a single regime for merger control which would avoid duplication of resources between Monitor and the OFT. It would also address the current situation whereby the Co-operation and Competition Panel formally assesses all mergers involving acute or foundation trusts where the turnover of the combined entity is more than £70 million.

None of that seems to be enshrined in the Bill. I do not know whether guidance is provided but this seems to be something that requires a considerable act of faith on the part of those looking at these prospective merger proposals. I very much hope that the Minister can give greater clarity than was provided in the House of Commons on this matter. In due course, I hope that the advice that he receives or commissions will also deal with the question as to whether it is safe to have provisions such as this applying directly the provisions of the Enterprise Act are going to be safe for the purposes of EU competition law application. I beg to move.

Lord Owen: My Lords, I gave notice that I would raise this matter under whether the clause should stand part of the Bill but it is easier and more convenient to do it on this occasion. It is extremely important that this amendment is given serious study by the Government. I hope that either they will produce their own amendment or that the noble Lord, Lord Clement-Jones, will push this on Report to a vote.

Not to have such a provision is ridiculous, particularly in view of what we heard earlier from the noble Lord, Lord Newton, about how long it is taking to conduct

13 Dec 2011 : Column 1243

mergers between trust hospitals in other areas. It is an ingenious way of doing it. I was trying to work out a way in which it could be done and rather failed. The wording that the noble Lord has come up with is very sensible and I hope that the Government will give it a fair wind. It is all part of the policy of trying to curb this uninhibited competition in every aspect of this Bill.

Baroness Greengross: My Lords, I was recently privileged to be the lead commissioner for the Equality and Human Rights Commission on an inquiry, looking at the human rights of older people in their own homes in need of care and support. This inquiry was a very large one with a lot of evidence, involving 500,000 people in total in this country. We found that half of the people were very happy with the care they received. The other half-250,000 people-were rightly not happy with what had happened. There were awful instances of people being abandoned for 10 or 12 hours, having no social interaction or opportunity to talk or chat. They were left without care for many hours. These are very bad instances of poor care and I really believe that had the staff of the 250,000 people been trained properly in what the tool of human rights can achieve-and if their managers had understood that-a whole lot of these instances of very poor care would not have taken place.

My amendment is designed to ensure some clarity on the application of the Human Rights Act to domiciliary care services commissioned from private and third-sector organisations. This amendment would clarify that providing these services is a public function within the meaning of Section 6(3)(b) of the Human Rights Act 1998. It would bring domiciliary care in line with residential care; similarly, this amendment would confirm that health care services commissioned from private and third-sector organisations fall within the scope of the Human Rights Act. It would clarify the extent of the public sector equality duty because the definition of public function under the Human Rights Act also determines the definition of public function under Section 150(5) of the Equality Act 2010 for the purposes of the public sector equality duty. My amendment also uses wording which is consistent with Schedule 1 to the Health and Social Care Act 2008.

In 2008, Parliament introduced amendments to the Health and Social Care Bill-now the Act-to overturn previous case law and ensure that private and third-sector care homes were defined as carrying out a public function. We were delighted that that applied and that they therefore came under the scope of the Human Rights Act. This received cross-party support and was the result of a long campaign by the EHRC and also the Joint Committee on Human Rights. The campaign aimed to ensure that organisations receiving public money were subject to proper regulation.

We also know that a similar problem is likely to be the case in healthcare if the care is commissioned by the health service to private or third-sector organisations. It is very important to make this clear because the fact that private and third-sector providers operate at the moment outside the scope of the Human Rights Act undermines, or threatens to undermine, the pioneering work of the Department of Health itself in promoting

13 Dec 2011 : Column 1244

its Dignity in Care campaign. Further, the Health Service Ombudsman has recently documented 10 investigations into NHS care. All of that demonstrates that we need clarity in order to get this right and make sure that people are protected. We must be certain that people are not subjected to breaches of human rights which no one can do much about in the present situation.

I have cut short what I was going to say because it is late, but I do want to say that support for this amendment will clarify beyond doubt the fact that a person commissioned to provide home-based social care or healthcare is, in providing that sort of service, performing a public function within the meaning of the Human Rights Act and the Equality Act. I hope that the Minister will find it possible to support the amendment.

Lord Low of Dalston: My Lords, I have added my name to Amendment 295G, to which my noble friend Lady Greengross has just spoken, and I strongly support it. As she made clear, it would put an extremely important point beyond doubt. I want briefly to underline three key points.

First, it would remove a major ambiguity about the scope of human rights legislation in relation to health and social care, and with it persisting doubt about the rights of those in receipt of health and social care services. Despite the then Government's intention that responsibility under the Human Rights Act should follow the outsourcing of state functions, it was generally understood-this was confirmed in the case of YL against Birmingham City Council-that the Human Rights Act covered only residential care provided by local authorities. Private and voluntary organisations that provided care home services under a contract with a local authority were not considered to be performing public functions under the Human Rights Act because there was only a contractual relationship between the parties, and so were not covered. This loophole, as my noble friend Lady Greengross has explained, was closed by Section 145 of the Health and Social Care Act 2008, but only for residential care services. It did not apply to contracted-out social care services provided in people's homes. The purpose of the amendment is therefore to clarify that the Human Rights Act extends to services provided in people's homes when provided under contract to a public authority and would remove all ambiguity as to whether the Human Rights Act applies to such services when commissioned from private and voluntary organisations.

As my noble friend has explained, a similar issue arises in relation to health services, especially given the significant increase in the commissioning of NHS services from private and voluntary providers envisaged by the present Bill. Amendment 295G would also place beyond doubt that private and voluntary providers of healthcare services fall within the scope of the Human Rights Act and the public sector equality duty, putting them on a similar footing to providers of residential social care. The amendment would therefore make it clear that those who receive publicly funded health and home care services provided by the private and voluntary sector are guaranteed the same levels of protection and rights to redress as those who receive services provided directly by the state, placing them on

13 Dec 2011 : Column 1245

the same statutory footing as those who receive residential care services commissioned from the private and voluntary sector.

This is not just a matter of academic importance-the removal of a minor technical anomaly. Quite apart from the fact that it puts beyond doubt that a significant swathe of health and social care provision is within the scope of the Human Rights Act, local authority provision of home care services has been on a downward trend for the past couple of decades, with the result that the state now directly provides only 16 per cent of publicly funded services. This means that 84 per cent of such services are provided by the private and voluntary sector. This figure was less than 5 per cent in 1993. Indeed, the proportion of care delivered by the private and voluntary sector has gone up from 56 per cent to 84 per cent in the last 10 years. This means that the possibility that people in receipt of health and social care services may be deprived of the protection of the Human Rights Act has moved from being an issue at the margins of the field of health and social care to being one of central-indeed, dominating-importance.

9 pm

A second reason why this is an issue of overriding importance is that we now know that significant numbers of people are the victims of human rights violations on a daily basis. A seemingly endless sequence of reports-from the Health Service Ombudsman, the Care Quality Commission, the Patients Association and the Equality and Human Rights Commission-shows that the rights of older and disabled people in health and social care settings are regularly ignored or wilfully abused. According to the British Institute of Human Rights, these reports reveal how some of the most vulnerable people in our society are treated in inhuman and degrading ways, with neglect and carelessness, and how they experience,

"Lack of privacy, dignity and confidentiality",

are left without access to food and water, and are bullied and patronised. These incidents are not simply isolated or exceptional cases.

I welcome the statement in the Explanatory Notes to the Bill that contracted-out healthcare services are covered by the Human Rights Act, and the Minister's assurances in this regard would be equally welcome. But these do not have the force of law. Moreover, the Equality and Human Rights Commission does not believe that case law supports this view. Nor should we have to rely on an elderly or disabled service user having to incur the hazard and expense of going to court to vindicate their rights for us to clarify the law. At all events, it is not the same as having it in black and white in the Bill, so I very much hope that the Minister will respond sympathetically to this important amendment.

Baroness Williams of Crosby: My Lords, I strongly support the two very powerful and convincing speeches by the noble Baroness, Lady Greengross, and the noble Lord, Lord Low.

I add only a couple of points. First, it is extremely important for the integration of social care from local authorities with health service healthcare to have a similar regime of rules and standings applying to

13 Dec 2011 : Column 1246

both. All of us in this House have said repeatedly how much we believe in the integration of these two attempts at providing proper care for older people, chronically ill people and disabled people. It is therefore important that we set a standard which is common between the two. That is the first reason why we should all strongly support the amendment that is before us.

The second reason, from my point of view, is that I very much like the phrases used in the amendment, which state in effect that this kind of service is a public service. It is, in a way, ennobled by the fact that it is a service to the public generally, regardless of whether it is provided by the voluntary, independent or NHS sector. That is also very important.

The third point I briefly make is that it has implications which we have to face up to. There is no time to discuss this tonight. But if we actually want there to be a huge improvement in the relationship between the staff of health service and local authority care organisations, whether voluntary, private or NHS, and the elderly and vulnerable people whom we are talking about-and we do want that-then, as this quite clearly implies, the staff themselves must be treated well. It is no good having profoundly exploited, overused, overcriticised staff and expecting them to live up to the great principles of the Human Rights Act. To my mind the importance of this amendment is not just that it passes. It has clear implications for the training, education, support and attitude towards NHS staff, who too often are heavily criticised for what is a difficult yet often extraordinarily well conducted job. In that spirit I strongly support the amendment of the noble Baroness, Lady Greengross, and the noble Lord, Lord Low.

Lord Warner: My Lords, I also support the amendment of the noble Baroness, Lady Greengross. I do so from the perspective of someone who as a special adviser was involved in the framing of the Human Rights Act in 1998. At that time, much of the thinking in the devising of that Act was on the basis that publicly funded services were pretty much synonymous with public delivery of those services. Much of the language around public functions and public authorities was based on that assumption. In fact, that was already out of date at that particular time. Since then, we have never really put this point beyond doubt in legislation. It is timely to do so now, when so many of the services in people's own homes are contracted out by public bodies to voluntary and private providers. It is a lacuna in the arrangements, despite some of the assurances given by Governments of both persuasions since the Human Rights Act 1998.

Baroness Wheeler: I also support Amendment 295G from the noble Baroness, Lady Greengross, replacing the similar amendment from the noble Baroness and the noble Lord, Lord Low, both of whom have argued the case strongly and convincingly on this matter.

The importance of addressing current loopholes in the application of the Human Rights Act to publicly funded healthcare and home care services is underlined by the scale of the legal anomaly that the amendment seeks to address. As we have heard, almost 500,000 older people receive essential care in their own homes provided by the local authority. Some 84 per cent of them lack

13 Dec 2011 : Column 1247

the protection of the Human Rights Act because their care is provided by private or third sector organisations, or independently by 150,000 self-employed personal assistants who care for people in their homes through the application of personal care budgets or direct payments.

The noble Baroness's own work in highlighting the inadequacy of at least 50 per cent of the home personal care received by older people as part of her recent inquiry underlined the prevalence of human rights abuses in home care settings. The report makes painful reading for all who want dignified and appropriate standards of care for older people in their homes. The stark reality is that, if their human rights are violated through inappropriate standards of care, they at present have no direct legal redress against their care providers.

Of course, we need to make the caveat that good practice is often exemplified by the private and voluntary sector. As a carer, the care provided by the private sector agency to the person I care for at home is of good quality and the care support workers are committed and dedicated professionals, despite long hours and low pay. Their care for the person that I care for is not covered by the Human Rights Act but would be if he were in residential care. That is a serious anomaly. I hope that the Minister will be able to reassure us that the Government recognise that this is a major problem and will take the opportunity presented in the Bill to address the matter. With an increasing number of people receiving home care from a private or voluntary sector organisation rather than directly from their local authority, there is a vital need for certainty around the application of the Human Rights Act to these care providers.

I was going to comment on four other amendments but none of them was spoken to so I will leave it at that.

Baroness Northover: My Lords, we have two diverse areas in this particular group. Clause 75 would consolidate the oversight of mergers involving NHS foundation trusts under the UK general merger control regime operated by the Office of Fair Trading's Competition Commission. That is the area addressed by my noble friend Lord Clement-Jones. We argue that the approach that we are taking here would have a number of benefits.

First, it would eliminate the risk of double jeopardy for NHS foundation trusts. Uncertainty currently exists as to when and where the Enterprise Act 2002 would apply to mergers of activities involving foundation trusts. As a result, under the current arrangements for review of mergers involving foundation trusts by the Co-operation and Competition Panel, there is always potential risk of duplication or double jeopardy by both the OFT and the Co-operation and Competition Panel. The Bill proposes to consolidate oversight of foundation trust mergers under the OFT. It would already seem likely that most mergers between foundation trusts would meet the relevant thresholds, eliminating the uncertainty with the current approach. We therefore sympathise with my noble friend Lord Clement-Jones's amendment but feel that it would not be required as foundation trusts would be captured.

13 Dec 2011 : Column 1248

Secondly, the OFT would provide effective, light-touch regulation regarding mergers. This gives confidence to providers that might be considering a merger and ensures that mergers go ahead where they are in patients' best interests and that the process is not unduly delayed by bureaucratic approvals or the risk of political interference. The evidence demonstrates that this approach does not result in excessive intervention, as the Enterprise Act sets a high threshold for looking at the merging of activities.

Thirdly, the approach would avoid the duplication of specialist resources between the OFT and Monitor, ensuring better value for money. Mergers are a specialist area. It therefore seems a far better use of resources to maintain the responsibility and expertise within the OFT and the Competition Commission rather than resource a further sector-specific body. However, we appreciate and sympathise with the argument put forward that Monitor, as the dedicated health regulator, will have a valuable contribution to make in the review of foundation trust mergers.

Next Section Back to Table of Contents Lords Hansard Home Page