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The fundamental point is that Section 202 of the Equality Act inserts into the Civil Partnership Act 2004 the statement:

"For the avoidance of doubt, nothing in this Act places an obligation on religious organisations to host civil partnerships if they do not wish to do so.".

As the noble Baroness, Lady Royall, seemed to imply, one does not need to be much of a lawyer to know that that is about as clear as you can get. We need only to repeat those words:

"For the avoidance of doubt",

again and again to make that quite clear. Therefore we are grateful that the noble Lord, Lord Alli, made it clear as could be when he put in his amendment. I think this was back in March of last year, as we were rushing towards the election. Similarly, the order makes it clear when it says, in proposed new Regulation 2B:

"Nothing in these Regulations places an obligation on a proprietor or trustee of religious premises to make an application for approval of those premises".

You do not have to be a lawyer to know that that is pretty clear.

It cannot be argued that religious organisations could be at risk of successful legal challenge under other provisions in the Equality Act 2010 when it was that Act which itself put that statement into the Civil Partnership Act. We can, indeed must, assume that Parliament speaks consistently in one Act and, I would hope, in all other Acts. The regulations, similarly, cannot override primary legislation and the primary legislation that enables these regulations makes it clear there is no obligation. To make this abundantly clear, that is reiterated in new Regulation 2B, which is inserted by these regulations and which I read out.

There are further protections for ministers of religion. As the process is to approve premises rather than individuals, it ensures that no ministers will be able to host civil partnerships unless the premises they lead the worship at are approved. Ministers also benefit from the protections in Schedule 23 to the Equality Act, which allows faith groups to restrict the use of their premises on the basis of religious doctrine or the strongly held convictions of the religion's followers.

Finally, other protections exist in the regulations we are debating. When making an application for religious premises to be approved, the trustee or proprietor of the premises will be required to provide the necessary consent from the governing authority of the faith or faith groups using the premises. Where more than one organisation uses the premises for worship, all will need to provide their consent to an application being made. If one organisation does not consent, the approval would be refused or immediately revoked by the local authority. There will also be a period of 21 days for public consultation on each application, where the local authority will consider the objections.

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The Government consider that this package of protections is comprehensive and removes the possibility of legal challenge.

I want to keep this brief because I think that the House wants to come to a conclusion. I turn finally to the letter I sent out. What I was trying to get over in that letter to all Members of the House was this important point:

"I must stress that this provision is entirely permissive".

I also stress that we are entirely confident that faith groups will not be forced to host civil partnerships. We have taken legal advice, and we have listened to a great deal of it today in this Chamber. I am grateful for all those who spoke because it made it absolutely clear.

My noble friend Lady O'Cathain thought that by inserting the last paragraph into my letter, I was expressing that I had some doubts. I assure her that I have no doubts but, in the extraordinarily unlikely event that there was some legal challenge that we had to face, I will repeat what I had to say in that last paragraph. I made it clear that, while we do not believe that this will happen, if a successful legal challenge were ever brought, I would like to provide reassurance-I provide it now, from this Dispatch Box-that the Government would immediately review the relevant legislation. We are absolutely clear that the voluntary nature of this measure must be maintained.

Lord Alton of Liverpool: My Lords, before the noble Lord leaves the very important statement that he made, both in his letter and again to the House today, I notice that it says that if a successful legal challenge were brought, the Government would carry out a review. Will he bear in mind what the right reverend Prelate the Bishop of Blackburn said earlier, and the point I raised with the noble Lord, Lord Lester, about vexatious litigation? It might not be successful litigation, but it would nevertheless be litigation, and it could involve people in considerable expenditure, as the noble and learned Lord, Lord Mackay of Clashfern, said earlier. In those circumstances, will the Minister given an undertaking to the House that the issue will be generally kept under review without having to wait for litigation? Will there be, if necessary-although most of us accept that it is highly improbable-an amendment to the Equality Act? That is, if those circumstances were to occur, would legislation be brought forward along the lines suggested by the noble and learned Lord?

Lord Henley: I hope that this debate has brought a considerable degree of clarity to this issue. I think that it is now generally clear-most people understand the legal aspect-that there is no doubt about this matter. However, as the noble Lord has raised this point, which was also raised by the noble and learned Baroness, Lady Butler-Sloss, we will obviously keep all matters under review, and if we saw a problem, we could act. I do not think that that is likely. Particularly after what we have heard in this debate, it would be a very vexatious litigant who tried to bring such an action, and I do not think they would have much chance in the courts.

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I hope that I have spoken briefly and with some clarity about what the Government's intentions are. I repeat again, this measure is entirely permissive; it is not designed to go any further. On that I am at one with the Opposition Front Bench, with the noble Lord, Lord Alli, and with a large number of the legal luminaries who have spoken. I hope that my noble friend will feel able, therefore, to withdraw her amendment.

Lord Mackay of Clashfern: Is my noble friend speaking on behalf of the Government at this Dispatch Box, having regard to the case to which he referred about reference to statements? Is he saying on behalf of the Government that this Act, in Section 202, refers to the 2004 Act and to the Equality Act 2010? Is it the position of the Government that this includes the Act of 2010?

Lord Henley: My Lords, I am making, as my noble and learned friend put it, a considered ministerial Statement from the Dispatch Box, in line with the case he referred to, Pepper v Hart. Yes, I believe that this Act covers both the 2004 Act and the Equality Act 2010. As I said earlier, it would be very odd if the Equality Act was considered to have spoken inconsistently. However, I can give my noble and learned friend the assurance that he seeks.

Lord Tebbit: Could my noble friend address the point I raised earlier? In the event that the permissive nature of this is overridden by a judgment from a European court of any kind, what action will the Government take then?

Lord Henley: My Lords, I am not sure which European court my noble friend is referring to. If he is referring to the European Court of Human Rights, we discussed that somewhat earlier in the day. I think that it was the noble and learned Lord, Lord Lloyd of Berwick, who referred to a judgment in a Finnish case in the European Court of Human Rights, and then to the later remarks of the Lord Chief Justice that we must give due weight to the decisions of that court but not necessarily be bound by them. If it was the European Court of Justice, obviously we would have to comply with that, as with other matters, but I do not see quite how it would get involved in these matters.

Baroness O'Cathain: My Lords, I thank everyone who has taken part in this debate. I was very relieved that I was not at the butt-end of accusations of being homophobic, toxic, odious or even old, as I was in some of the letters that I got. I know I am old, but I do not like it to be said pejoratively.

I have listened intently. I remember-this is a flashback to my childhood-that when my parents asked me what I wanted to do, I said I wanted to become a lawyer. Thank goodness I did not, that is all I can say; it is even more confusing than being an economist.

I have listened particularly to the Minister. I just want him to agree once more, so that my noble and learned friend Lord Mackay has satisfaction. In the 2004 Act no one was in any doubt and yet there was protection for the avoidance of doubt, but there is

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doubt around the 2010 Act-whatever we think about it, there is doubt out there. If the Minister is saying, in a ministerial Statement from the Dispatch Box, that he is convinced that the protection for the avoidance of doubt in the 2004 Act applies to the 2010 Act, then in view of the opinion around the House I will withdraw my Motion. But I want to make sure that the Minister has the chance to say so.

Lord Henley: My Lords, I confirm again to my noble friend that that is exactly what I said. Section 202 inserts an amendment into the 2004 Act but it is equally true that it is in the Equality Act; it is a vehicle for this. It is proper to say that it is Parliament's intention that that is the position. I do not think I can be any clearer than that.

Lord Lester of Herne Hill: My Lords, since I raised the matter of Pepper v Hart-

Noble Lords: Sit down!

Baroness O'Cathain: I was speaking. I apologise to the noble Lord, Lord Lester, but I was in the middle of my request to the Minister. I beg leave to withdraw the Motion.

Motion withdrawn.

Health and Social Care Bill

Main Bill page

Committee (13th Day)

1.13 pm

Clause 148 : Governors

Amendment 296

Moved by Baroness Williams of Crosby

296: Clause 148, page 148, line 11, leave out subsection (2) and insert-

"(2) For paragraph 9(3) of that Schedule (requirement for at least one member of council governors to be appointed by PCT) substitute-

"(3) At least one member of the council of governors must be appointed by the NHS Commissioning Board."."

Baroness Williams of Crosby: I begin with an apology on behalf of my noble friend Lord Marks of Henley-on-Thames, who wants to explain to the House that he is unavoidably-

Baroness Garden of Frognal: With due apologies to my noble friend, it is very difficult to hear her when people are leaving the Chamber. I wonder if we might just wait for people to clear the Chamber as quickly and quietly as they can so that my noble friend may resume with her amendment.

Baroness Williams of Crosby: I thank my noble friend Lady Garden very much indeed for intervening. I would like to express the apologies of my noble

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friend Lord Marks of Henley-on-Thames for being unable to be here on this occasion. Unfortunately he has been taken ill and will probably not be in the House again before the Christmas Recess. He extends his apologies to the House and his deep regrets at being unable to be here to move this amendment. It is therefore my honour to do so on his behalf.

The first amendment amends paragraph 9(3) of Schedule 7 to the National Health Service Act 2006 to remove the requirement for a governor to be appointed by a PCT. The reason for governors being appointed by PCTs, of course, is that they were the key sub-national level of organisation under the previous National Health Service. The Act of 2006 therefore reflects that organisational structure. I submit to the House that in the new structure it is as important that the national Commissioning Board should be able to appoint at least one-and, one hopes, more-governors to the board because of the need for a clear link between the clinical commissioning groups and the boards of the foundation trusts. Our amendment requires that at least one member be appointed by the NHS Commissioning Board in the place of the PCT appointee who will no longer be able to take his place. A substantial number of NHS patients-one hopes a majority-are patients under the foundation trusts. It is therefore important that the concerns of the CCGs and of the board should be represented on foundation trust governing bodies.

I will also briefly speak to Amendments 300, 301, 302 and 303 in the same group. All relate to the decisions to be made about the mergers or dissolutions of foundation trusts. The purpose of the amendments is to add the name of the Secretary of State to those who are required to consent to either a merger or a dissolution. I shall explain very briefly why we believe this to be of great importance. Despite these amendments looking rather petty, they are not.

The Secretary of State is in a unique position to decide on the strategy of the National Health Service over the whole country. He is in an especially good position to be well-informed on the balance between demand and supply across the territory of England. If there is no requirement for him to emerge at this point as the figure who makes the ultimate decision as to whether there should be a dissolution or a merger, there is nobody else able to detect whether the needs of all patients in England are met. As the House will be aware, if a foundation trust merges and perhaps one part of that merger ceases to offer services, that may be very much in the long-term interests of the National Health Service. The noble Lord, Lord Warner, spoke eloquently on this point yesterday. Where a foundation trust is the centre of, for example, pathways in a particular chronic illness, and where it meets the hospital needs of a substantial part of an area of the country, only the Secretary of State is in a position to decide whether that foundation trust merger or dissolution will have a major impact on the health services available in that part of England.

We suggest, once again, that this is not a tactical or micromanagement issue, but a strategic one, given the significance of foundation trusts in many parts of the country. We therefore very strongly urge the Committee

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to agree to this amendment. We believe it is a crucial part of the strategy of running a National Health Service in England. I beg to move.

Baroness Thornton: My Lords, we have all been precipitated into this debate some 10 minutes earlier than we might have expected. I should like to speak to Amendments 296A and 298A, and to whether Clauses 176 and 177 should stand part.

Amendment 296A provides that foundation governors must,

under a "duty to protect confidentiality". Amendment 298A provides that the accounts of a foundation trust or other public benefit corporation,

I accept that the Minister has an amendment that is not totally dissimilar to this, but it does not include the words about the need to audit and have income and expenditure on the public record, which we think are rather important. Clause 176 stand part would leave out the clause that abolishes NHS trusts. Clause 177 stand part objects to the repeal of various provisions in the authorisation of foundation trusts.

We have already touched on aspects of foundation trusts. Our position is that we support the concept of foundation trusts as a model for developing a form of multi-stakeholder or community-based governance, and allowing earned autonomy for NHS providers from direct performance management. As we discussed on Tuesday, we accept the role of Monitor as a regulator of foundation trusts. We agree with my noble friend Lord Warner that the plethora of other roles that Monitor has been asked to play poses risks, and we have set out our objections to and worries about that.

We accept that the foundation trust journey is still being travelled. I suggest that it is probably time for a proper independent study of how the foundation model might be taken forward. We are where are, not where someone might have hoped we would be. We make no great claims for foundation trusts but we would agree that the more trusts that can meet the standard the better. However, some will not meet it, for many different reasons. The rush to force them into hasty mergers and takeovers will bring great risks. I point to the fact that only today the House of Commons Public Accounts Committee has issued the report Achievement of Foundation Trust Status by NHS Hospital Trusts, which I have asked the Printed Paper Office to make available. I said that it is quite possible that other noble Lords might be interested in it in the course of today's debate.

On the point about how many trusts will make it to foundation status, I quote from the document:

"By 1 October 2011 there were 139 NHS foundation trusts, and 113 NHS trusts at various stages in the 'pipeline' towards foundation trust status. Only 14 trusts have achieved foundation status since the end of 2009 ... The Department expects the majority of trusts to achieve foundation trust status by 2014, but recognises that a small number may not do so before 2016".

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The report goes on to say that there is indeed a very serious problem of hospitals not achieving foundation trust status:

"Twenty hospital trusts have declared themselves unviable in their current form".

It suggests that more than,

and goes on to say:

"A particular concern is what will happen to trusts that are unable to achieve foundation status but nevertheless provide an essential service to local people".

This report's very timely publication needs to be acknowledged in the course of our debates on these matters.

We do not accept that every NHS provider must be a foundation trust. We agree with Sir David Nicholson that there is scope for some NHS trusts to be permitted. This also allows us to say that a foundation trust can be de-authorised in exceptional circumstances. This Committee needs to discuss the issue of the Government's rush to say that all trusts must have foundation status. That is clearly not going to work and we have no satisfactory answers at the moment about what is intended under those circumstances.

We will discuss the issue of the private patient cap so I will not refer to it now. We do not go the whole way in deregulation and see a continuing role for Monitor, not just in authorising foundation trusts but, as we said in our earlier debate, in retaining oversight and intervention powers. We agree that the authorisation process should be rigorous and demanding, so the question there which the Minister needs to answer is: if the department is determined to push hospital trusts into foundation status, what does it mean for standards-will they be relaxed? We think that they should not be. If further lessons are needed from Mid Staffs then I suspect that this is one that the inquiry will raise.

We share the view expressed by several noble Lords on Tuesday that there may be examples where the cause of a foundation trust's problem lies with the local health system rather than poor foundation trust management. A more effective approach to reconfiguration and a sensible pre-failure regime is absolutely necessary. We understand and hope that the Minister is looking into this and look forward to being part of those discussions. Our view is that while having a great deal of autonomy, foundation trusts remain within the NHS; they are not to be hived off as quasi-businesses. We believe that in general only the two extremes differ from our view-those who want a fully publicly owned, public-provided NHS with no split, and a small band around the current Secretary of State who want to make foundation trusts into businesses and, like a private provider, free from all scrutiny. The rest of us are probably somewhere in the middle.

I turn to the amendments. We support the idea that foundation trusts must open their governance and must meet in public-which is vital. We support the idea that to be effective in their duty to hold the board, and especially the non-executives, to account, the governors must have the right to access and observe all meetings and to see all papers. The confidentiality issues which this might involve can be resolved through

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appropriate codes of conduct, but if governors are to be the main lines of defence then they must be able to know what is happening. Sadly, that is not the case in some foundation trusts.

We support the need to separate properly the accounts in respect of non-NHS business. It is important to avoid smoke-and-mirrors accounting, especially on the issue of the private patient cap, which we will discuss later. Transparency on that issue is vital. The bottom line is that NHS resources should not be provided at knock-down prices. We have had an undertaking that foundation trusts will provide information showing how non-NHS income acts for the benefit of NHS patients, but in the absence of detailed regulations about how that is to be done it would be best to maintain a sceptical view.

In line with our view that foundation trusts remain part of the NHS family, we support the amendments that ensure the Secretary of State must approve major transactions such as mergers. We do not support the Government's amendments which are a further example of layering of bureaucracy and paperwork to try to justify their failure regime, which pretty much got a hammering on Tuesday and must be thought about again.

1.30 pm

Baroness Finlay of Llandaff: My Lords, I have amendments in this group to which I shall speak briefly. The noble Baroness, Lady Williams, introduced her amendments clearly and concisely. Some figures from the latest Health Service Journal underpin the reason why these amendments are so important. It has reported that foundation trusts are planning to cut at least 30,500 staff over the coming two years and that at least five acute foundation trusts have forecast a wage-bill cut of 10 per cent or more over the coming two years. According to the Health Service Journal's analysis, patients in the poorest areas are 63 per cent more likely to find it difficult to see a GP than are patients in the richest locations, and 53 per cent more likely to attend accident and emergency.

I put those figures into the debate now because they demonstrate the pressure there will be on trusts. Changing to foundation trust status will put additional pressure on them. Amendment 304C in my name is a probing amendment. I tabled it to seek reassurance from the Government that the timetable for repealing NHS trust legislation will not revert to the originally proposed date-1 April 2014. I hope that the deadline will be extended to April 2020. I was going to say more but I await the Minister's reply.

Lord Mawhinney: My Lords, I should like briefly to comment on the amendments proposed by my noble friend Lady Williams of Crosby. In one respect, I was sorry that she spoke so briefly because I should have liked to have heard more of her reasoning for Amendment 296. I am not at all clear about what the advantage is to either the Commissioning Board or the hospital if one serves on the board of the other. Is it because that is the only conduit of information? Frankly, I do not think that anyone believes that. If that is actually the argument then the whole NHS is in a much greater state of peril than any of us thought

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was the case until now. I honestly do not see the importance of or justification for the amendment. It may be a probing amendment, but it would have been helpful if the noble Baroness had given us a bit more of the thinking behind it. As of this moment, pending her winding up, I am not at all convinced that the amendment is either important or necessary.

However, I turn to the noble Baroness's Amendments 300 to 303, which are also in the name of our noble friend Lord Marks of Henley-on-Thames, who I am sorry to hear is unwell. I very much support what she said about those amendments, even though-to use the word of the noble Baroness, Lady Finlay-she explained them concisely. They take us back to one of the main issues of this legislation: where is the Secretary of State in this brave new world? The Minister knows that a number of us think that the Government are thus far underplaying the role of the Secretary of State.

As my noble friend Lady Williams of Crosby was speaking, I thought of the condition of a number of foundation hospitals that have been the product of a PFI system. That was triggered in my mind by her comment that if there was a coming together of hospitals, or if some element of service was not provided, it may be of a sufficient scale for the Secretary of State to want to take a significant interest. The truth, to the best of my probing, is that a number of hospitals out there-the products of PFI-are in very difficult and probably, without help, unsustainable positions.

I know that the Minister understands that and that it is a matter of concern to the department, so I do not make any comment prejudging the outcome, but my noble friend brought the Secretary of State into this precisely because there could be serious, significant or catastrophic effects on the provision of healthcare in the hospital sector which, by definition, would include the importance of ministerial-that is, Secretary of State-involvement and consideration.

I welcome Amendments 300 to 303, but I say to my noble friend Lady Williams of Crosby and the Minister that I think they are part of the bigger picture of where the Secretary of State will be when the Bill finally reaches the statute book. The Minister has kindly and, I think, genuinely agreed to reconsider all those issues and bring them back for our consideration at Report. Subject to him saying the same about the issues raised by our noble friend Lady Williams, I hope that she in turn, hearing his response, will not feel it necessary to push the amendments to a vote today, although that might become an issue, depending on where we are at, on Report.

Baroness Williams of Crosby: Perhaps I may respond briefly to the points raised by the noble Lord, Lord Mawhinney. I apologise if I spoke too briefly, but I am conscious that there are an awful lot of amendments to get through and I do not want to steal the time of other people on other crucial amendments.

On the group of four amendments that the noble Lord is in accord with me about, as he will be well aware, consideration has been given to the material put before us by my noble friend Earl Howe, the Minister of State, about an attempt to bring together discussion within the House and among lawyers about

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the issue which the noble Lord, Lord Mawhinney, rightly identifies as being central to the Bill: the responsibility and powers of the Secretary of State. Because we are in Committee and the Committee will, we hope, be ending in a few days' time, the only opportunity we have to table amendments that would bear on the issue of the Secretary of State's powers is on the Bill as it stands-prior to any changes that may be made. It is in the light of that that we tabled this group of amendments to highlight the areas where, in our view, the responsibility of the Secretary of State is central. That is true of this group of amendments, and I am delighted that the noble Lord, Lord Mawhinney, takes the view that they should be seriously considered by the Minister.

The point of Amendment 296 is to recognise that, in many cases, CCGs have to take account of the services given by foundation trusts-not least in respect of, for example, pathways and networks for people with chronic conditions. We thought, therefore, that it was important that there be not just sharing of information between the two but, rather, a process of interactive education, where the foundation trusts become increasingly aware of the responsibility that CCGs bear, particularly for those clinical conditions that lie beyond the capacity of a single CCG. That is why we suggested that a governor should be named by the national board to set up that communication-which, as the noble Lord, Lord Mawhinney, knows far better than I do, because he is an expert on the subject, sometimes, sadly, does not exist.

Lord Warner: My Lords, I will just raise a couple of points about Amendments 300 and 301, tabled by the noble Baroness, Lady Williams, in relation to the Secretary of State's role in mergers. The other day, I tried to express a little about my concerns, which I continue to have, about the speed at which the Government are expecting some of these trusts to become foundation trusts. One thing that I am beginning to see happening in the NHS-this will lead to some questions to the Minister for clarification-is the rush to merge. Mergers can take a number of forms, and a good example is in north-east London, where there is a proposal to merge Barts and The London with Whipps Cross and Newham. These three hospitals have failed to become foundation trusts but it seems to be thought that by some osmotic process, which I am not altogether clear about, such a merger will improve their prospects of doing so.

Discussions are also going on in other parts of the country about merging non-foundation trusts with successful foundation trusts. The evidence here is that there are some very high-risk ideas floating around regarding trusts which so far have not been good enough to become foundation trusts, and causing risks to stable foundation trusts by merging them with trusts which are in some degree of difficulty. However, I can see that the NHS might feel under pressure to try to get people to secure foundation trust status by the deadline that the Government seem to have in mind.

As I said the other day, trusts have had eight years to get themselves ready to become foundation trusts and they have failed to achieve it so far. You have to be one of life's great optimists to believe that somehow,

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because the Secretary of State has set a deadline for 2016, it is going to happen. There is a serious question about whether the necessary checks and balances are in the system to stop what I would call silly and fruitless behaviour. Is the Minister confident that the Co-operation and Competition Panel will be a sufficient bulwark to stop what I am calling silly behaviour in relation to mergers, or do we really need the kind of strengthening that I think is implicit, if not explicit, in Amendments 300 and 301? This is a serious issue. We are beginning to see behaviour which may not be in the public interest as people try to get foundation trust status without the necessary skills and competences, or indeed the necessary financial situation in their locality, to achieve this.

Baroness Murphy: My Lords, I echo many of the words of the noble Lord, Lord Warner, although I wish to put a slightly different slant on the issue. It is crucial that we press on with the project to get all trusts to foundation status. There is no doubt in my mind that having this two-tier system, which we have allowed to continue for too long, has led to difficulties in foundation trust hospitals becoming more self-reliant, more seriously entrepreneurial in the way that they think about their services, and more responsive to the local agenda, and so on. They have not had to bother because they have always had Big Brother watching. The de-authorisation process, which threatens to drag them back to the Department of Health, has acted as a sort of brake on their thinking. That has been quite difficult. I seriously think that we should move trusts to foundation status. The noble Baroness, Lady Thornton, is looking puzzled, but I think that it has been a really serious problem.

Baroness Thornton: I was looking puzzled only because I wondered what evidence there was for some kind of break in the system.

1.45 pm

Baroness Murphy: Some kind of break in the system? I shall continue with my theme: it is crucial that we move all trusts to foundation status. I quite agree that the dates that have been set before have come and gone, but quite often they have come and gone because the strategic health authorities have not provided the necessary support to move trusts to foundation status. In fact, some strategic health authorities were positive blocks in the system to the development of expertise within the foundation trust. I accept that there are some at the moment which, as the noble Lord, Lord Mawhinney, has mentioned, face the PFI problem. Te recharge is too great for them to subsume and the debt is too great. Others have long-standing debts that cannot be written off. Some are not viable because of the populations they serve. Unless we have a definite aim and objective to get them there, they will never get there. We can get there if there is a concentration on the problem. Each hospital is different. I share the concerns of the noble Lord, Lord Warner, about some of the projects to merge one failing hospital with another, or one failing hospital with a less than successful one.

The evidence from NHS trusts' failing hospitals merging has been that they continue to fail in a bigger way. The Barking, Havering and Redbridge three-trust

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hospital merger was a striking example of one that did not work and never could. I have that anxiety. If we are going to move away from the process that we have put into this Bill and retain de-authorisation and NHS trusts, we accept that we are continuing with a two-tier system for ever. That would be seriously detrimental to trying to get everyone moved over into a properly regulated system. It is going to be difficult. Certainly, the role of governors needs strengthening. Governors in some places are wonderful. In other trusts, they are mixed-ability classes, let us say. They will need considerable support and development to get there. Nevertheless, it would be catastrophic to have a two-tier system continuing to run after the introduction of the Bill. We need a fixed end point to work to.

Lord Warner: I totally support the idea of getting everybody into foundation trusts. I am questioning whether the processes that we have in place will actually deliver that in the time scales that are being set by the Government. I suspect that in practice you can make the kind of progress required to achieve the Government's objective only if you reconfigure services rather than just pursuing merger mania.

Baroness Murphy: I wholeheartedly agree with the noble Lord's final point.

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, this has been an extremely valuable short debate on Part 4. I hope it will be helpful if I explain briefly why I feel that the provisions of this part of the Bill are so important.

They are very much part of our overall vision of modernisation and improvement to meet the needs of changing circumstances: changes in demands, in resources and in innovation. They are about ensuring that foundation trusts are accountable, transparent and autonomous in the way they operate so that they can innovate and provide high-quality and responsive patient care.

Part 4 of the Bill will reform the legal basis of foundation trusts to bring them in line with the new system of sector regulation. Protecting patients' interests will be at the heart of the system and we will strengthen the governance of foundation trusts to ensure that this happens. We are also taking steps to ensure that all trusts become foundation trusts as soon as they are able. This will mean that all patients can benefit from services provided by organisations that put them first and provide high-quality, accessible care. It will also mean that all NHS providers would be able to take their own decisions on organisational change, such as mergers, acquisitions and separations, based on what is best for patients.

To ensure the best use of taxpayers' money and the continued delivery of high- quality services, we will make the financing system more transparent and rules-based. Foundation trusts will be required by Monitor to report separately within their accounts their NHS and private-funded income and expenditure, increasing transparency about whether private patient activities are making a profit or a loss. We intend that foundation

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trusts should decide matters such as which partners they will invite to appoint their governors and how best to equip their governors with the skills they need for their role. Foundation trusts should develop their own good practice to ensure that their governors have the training they need and build up close working relationships with the board of directors so that governors have the information they need to hold the directors to account on behalf of the members whom they represent: the public, staff and patients.

I understand the intention of my noble friend Lady Williams in proposing that the NHS Commissioning Board should appoint a governor to each foundation trust, but I agree with my noble friend Lord Mawhinney because I believe that the right kind of close partnership working between foundation trusts and their commissioners can be achieved in a whole lot of ways and that trusts should be able to develop this relationship in the way that best works for them. To mandate an arrangement such as the one that my noble friend proposes would not be the right way to do it. I also quite agree that it is important for the provision of integrated services that foundation trusts should work closely with their partners in local authorities and other healthcare sectors. However, again, foundation trusts should be free to set up the most effective ways of doing this, including executive and professional collaboration. Similarly, we would not want to prescribe governor attendance at all parts of the directors' board meetings. It is for foundation trusts themselves to decide how to deal most effectively with discussions and decisions on sensitive and confidential matters so that the trust's interests are best served.

I also feel strongly that it would not be appropriate for the Secretary of State to become involved in the approval of mergers and separations of foundation trusts. Foundation trusts are themselves best placed to decide what will work well for their patients and staff, and to involve the Secretary of State would be to add an extra layer of bureaucracy for no good purpose, in our view.

The amendments tabled by the noble Baroness, Lady Thornton, seek to preserve the current position where foundation trusts can be subject to terms of authorisation applied by Monitor and, if they fail to meet their principal purpose, they can be de-authorised and returned to central control. The obvious point to make about this idea is that it would be incompatible with our proposal to repeal NHS trust legislation once the foundation trust programme has been delivered. The more deep-seated objection is that these amendments would depend on an infrastructure which we propose to replace with a comprehensive new regulatory system. There would be no obvious body to manage the performance of reverted NHS trusts, including measures for dealing with providers at risk of becoming unsustainable. We have looked at this from a different angle. Our proposed system would shift the emphasis from maintaining the existence of an unsustainable provider, often at great cost to the taxpayer, to ensuring continuity of essential services to local populations. That is surely what matters. It is surely right for the system to be geared towards continuity of service provision.

15 Dec 2011 : Column 1457

A further amendment by the noble Baroness, Lady Finlay, proposes that abolition of NHS trust legislation and repeal of Monitor's authorisation powers should not happen before 2020. We are taking a stronger, more testing and more transparent approach than before to managing the foundation trust pipeline, and we expect the vast majority of NHS trusts to become foundation trusts by 2014. This would give patients a clinically and financially sustainable NHS provider system, by definition, because otherwise the trust would not have been authorised as a foundation trust. I am afraid that the noble Baroness's amendment would not support the change in momentum and mindset that is now evident within the NHS. I very much agreed with the cogent points raised on that topic by the noble Baroness, Lady Murphy.

The noble Baroness, Lady Finlay, quoted the HSJ saying that some foundation trusts plan to make major reductions in staffing. I have not read my HSJ this week yet but I think that foundation trusts themselves are best placed to make decisions about how to provide services efficiently and effectively, which includes ensuring that they have the right levels of staff. What matters are those services. It is always regrettable if front-line staff posts are reduced, but if the service can be maintained in as good a way or better, that is surely what should matter in the end.

Baroness Finlay of Llandaff: I apologise to the House, having regained my voice. The point I wanted to make was that there is a tension sometimes between changes of administration and management and the pressure to try to maintain the quality of patient service. We have already seen a situation where it went too fast and in the wrong direction without sufficient regard to quality. The Minister has often given us reassurances that quality of patient care lies at the heart of what the Government are trying to do. I just want to have reassurance that there would not be undue pressure. While there is always a need, if you are bringing about change, to have some pressure because organisations have an inherent resistance to change, rather than unduly pressurising an organisation that was not in a fit state to cope with that change, going a little more slowly might allow it to cope better.

Earl Howe: I understand that point. That is why we have built additional flexibility into the system. Although we have target dates for each of the NHS trusts that we plan to move to foundation trust status, we understand that nothing can be fixed in stone. There is some latitude here but at the same time it is important to have target dates; otherwise the momentum that the noble Baroness, Lady Murphy, referred to will be lost and that would be very regrettable.

That brings me to the point made by the noble Lord, Lord Warner, that there appears to be a rush to mergers. We agree with the Public Accounts Committee and the noble Lord himself that mergers are only one way of creating more sustainable providers and services. Mergers must be assessed robustly to ensure that they really will deliver the promised benefits. The Co-operation and Competition Panel does that but at present it can only make recommendations. The NHS Trust

15 Dec 2011 : Column 1458

Development Authority, which we propose to establish, will play an important complementary role in avoiding what one might call silly mergers. The key has to be local ownership and accountability, not oversight by the department. I was interested to see the amendment tabled by the noble Lord, Lord Warner, about the gathering of management accounting data. I am personally a strong advocate for effective financial and management controls. I am sure we all want to see the NHS become more efficient. The problem with the amendment as drafted is that the system it proposes looks a bit clunky and bureaucratic. It goes against the grain to impose an extra layer of accounting and reporting requirements from the centre and it would clearly cut across the responsibilities of the foundation trusts' governors and directors.

It is right for me to emphasise by way of concluding remarks that these reforms have been developed in discussion with, and informed by, the Foundation Trust Network, the Foundation Trust Governors' Association, Monitor and individual foundation trusts. They are built on the experience of what foundation trusts know will work. I hope that in itself is a reassuring statement. I have not addressed the point by the noble Baroness, Lady Thornton, about the PAC report, which I am happy to do once she has intervened.

Baroness Thornton: In terms of discussions the noble Earl is having, are all the parties happy with the fact that if a foundation trust fails it goes into receivership instead of being de-authorised?

2 pm

Earl Howe: My understanding is that the emphasis that we are placing on continuation of services rather than receivership and failure regimes has been welcomed. There are ways around what some might see as an inevitable conveyor belt to receivership. That should be only a last-ditch resort. We are putting mechanisms in place to ensure that the essential services on which patients depend should continue. That is a better way of looking at things.

Lord Mawhinney: I have been thinking about something that my noble friend the Minister said a moment ago. The amendment would require the Secretary of State's approval, in addition to that of more than half of the members of the council of governors, for an application made under this section. He did not welcome the amendment of the noble Baroness, Lady Williams, on the grounds that the approval of the Secretary of State amounted to an added layer of bureaucracy. It would be helpful to the Committee if we were to know whether the Secretary of State is always considered to be an added layer of bureaucracy and, if not, can he give us a couple of examples of when the Secretary of State is a net plus?

Lord Newton of Braintree: My Lords, since my question to the Minister, before he rises, is in similar territory, I might as well leave him sitting down for the moment and get my question in. As I indicated the other day, I have been involved in what is legalistically an acquisition, although we have always talked of it as a merger, of a foundation trust by its neighbour, due

15 Dec 2011 : Column 1459

to come to fruition at the turn of the year. The last hurdle that we had to overcome, though it was not much of hurdle, was the need for the Secretary of State to sign off dissolution orders for the existing trust, and at least one other order, to allow this to happen. Is my noble friend saying that, under this Bill, such things could proceed untouched by the Secretary of State? I do not have a strong view one way or the other, but it is quite an important change if that kind of reconfiguration can occur without the Secretary of State even having to agree.

Earl Howe: My Lords, I would not dream of putting my right honourable friend the Secretary of State's nose out of joint by calling him "an added layer of bureaucracy" in all circumstances. If I did so, I retract it immediately before it catches up with me. The answer to my noble friend is that the Secretary of State is not that of course; he has a major role in the structure of accountability and decision-making in the architecture of the Bill.

The issue to which my noble friends Lord Mawhinney and Lord Newton have referred is, however, complicated. I have asked for briefing on the way in which the merger process will work. It is quite extensive. To cut to the chase, an application from an NHS trust to merge with a foundation trust must be supported by the Secretary of State. That reflects current rules. However, the Bill removes the requirement for a foundation trust to consult the local authority on a merger. Section 244 of the Act, as amended by the Bill, would provide powers for regulations to make provision as to matters on which NHS bodies, including foundation trusts, must consult local authorities. We intend that foundation trusts will continue to be required to consult local authorities on particular matters set out in regulations and we will consult on those. That is the local authority bit of it. There will also be a duty of public involvement on foundation trusts in relation to such matters as the planning of service provision, proposals for changes in the way in which services are provided and decisions affecting the operation of services. I would be happy to write to both my noble friends-it would probably be better if I did so-to set out exactly what we envisage in the circumstances that they have raised.

I do not want to delay the Committee unduly, but perhaps I could refer to the PAC report to which the noble Baroness, Lady Thornton, referred. We welcome the report, which says that the NHS is in need of major overhaul. What is interesting about the report is what it shows about the state of the provider sector when the Government took office last year. It had problems such as hidden bail-outs, inadequate leadership and toxic PFI deals. These matters had not been addressed and we have made the firm decision that we cannot continue on that basis. That is why we are proposing independent assessments of trust boards as part of the foundation trust authorisation process.

As regards that process, trust boards will be independently assessed. The point of that is to ensure that they are up to scratch and able to lead their hospitals to foundation status. The underlying issue here is that we want all trusts to be clinically and financially sustainable in the future. The Public Accounts Committee has, very properly, drawn to our attention

15 Dec 2011 : Column 1460

various issues around the capacity and capability of leadership, among other things, and my noble friend Lord Mawhinney mentioned PFI as another issue. All NHS trust boards will have to identify their strengths and weaknesses before being independently assessed. That is a robust discipline.

As my right honourable friend made clear in October, if, even after receiving support, management teams fail to improve their performance, then action will be taken. This could include their possible removal as a last resort. The Government will provide help to a small number of challenged hospitals to turn themselves around where necessary, but only after they have met the four tough tests that we have laid down. The problems they face must be exceptional and beyond those faced by other organisations; they must be historic; they must have a plan to deal with them in the future; they must demonstrate that they are improving their productivity; and they must deliver high-quality, sustainable services.

Before I conclude, I should like to speak to a number of minor and technical government amendments-for that is indeed what they are-in this group. These make consequential amendments in line with the revised provisions of the Bill; they correct drafting errors to correct references and numbering, or they remove redundant references to repealed legislation. Their purpose is to make the Bill work properly and to ensure that the legislation is up to date.

Baroness Williams of Crosby: I beg leave to withdraw my amendment, with the simple comment that I thought the reply of the Minister-which was, as usual, very well argued-strengthened the case for both of my amendments even more than I had thought before, and I am grateful for that. Strong leadership, as the Public Accounts Committee calls for, was exemplified by the Minister but should include the Secretary of State. However, may I now move on to the next group?

The Deputy Chairman of Committees (Baroness McIntosh of Hudnall):If the noble Baroness would indicate what she wishes to do with Amendment 296, that would be helpful.

Baroness Williams of Crosby: I apologise. I thought I had begun by saying that I would withdraw the amendment and then made some remarks afterwards.

Amendment 296 withdrawn.

Amendment 296A

Moved by Baroness Thornton

296A: Clause 148, page 148, line 34, at end insert-

"( ) After paragraph 10C of that Schedule insert-

"10D The governors shall be notified of and have the right to attend all meetings of the Board and its sub-committees and have access to all relevant documents and papers.

10E For this purpose, governors will be required to acknowledge their duty to protect confidentiality."."

Baroness Thornton: My Lords, I listened with interest to what the Minister had to say and I was surprised that he dismissed, in a rather cavalier fashion, our two very small and modest amendments about access and transparency for foundation trust boards. We had to

15 Dec 2011 : Column 1461

force foundation trusts to meet in public. They do not have a good record for their transparency or their willingness to be accountable. That is not so across the board-some are absolute models. I looked in vain for something among all the amendments that the Minister has proposed that might address this important issue of accountability.

I am very disappointed with the answers to my Amendments 296A and 298A. They are modest amendments about accountability. I beg to move, and I would like to test the opinion of the House-

Earl Howe: If the noble Baroness would like a fuller answer, I would be happy to give her one. I am glad to give the Committee an opportunity to hear a slightly fuller answer to the noble Baroness's amendments. I apologise that I skirted over them in the need to move on.

On Amendment 296A, the purpose clearly is to ensure that governors of foundation trusts have all the relevant information about their board's activities and decisions to be able to hold them to account. That is not a controversial idea, but the amendment may have the opposite of the effect that the noble Baroness intends. If boards are forced to have governors present at all meetings, they may instead discuss confidential matters in private to maintain confidentiality and hold robust and frank discussions. If governors are admitted to private board meetings, the directors may be inhibited from discussing those confidential matters. The governors can best be kept informed of directors' activities by close working relationships with them, regular performance reports, meetings with directors including the chair and chief executive, access to all directors and joint activities with directors. It does not have to be the formula that the noble Baroness has suggested.

The noble Baroness said that we had to force foundation trusts to meet in public. That is not right at all. It was we who made foundation trusts have their meetings in public; the previous Government resisted doing that for the whole of the time when they were in office, or from the whole of the time when foundation trusts were set up in 2003, so I do not think that that criticism is at all fair.

On Amendment 298A, the purpose is to require foundation trusts to account separately for NHS and private activity, to show whether that activity is making a profit or a loss. We agree with the broad principle of separate accounting, as we indicated earlier, but we are concerned that putting a requirement like this in statute would impose high costs on foundation trusts with low levels of private activity. Many foundation trusts have little, if any, private activity. We have given a commitment that to provide assurance and transparency we will require foundation trusts to produce separate accounts for NHS and private funded services where they exist. To support its new regulatory functions, Monitor will require foundation trusts to report separately within their accounts their NHS and private funded income and expenditure. That will increase transparency.

We are onside with the theme of the noble Baroness's amendment, but we do not think that she is setting about it in the right way. It is too heavy handed, and I hope that she will withdraw it.

15 Dec 2011 : Column 1462

Lord Clement-Jones: It seems rather extreme and extraordinary to be plunged into the possibility of a vote on a matter such as this without further consideration of what the Minister has had to say, particularly with a fairly thin House at the moment, although I have some sympathy with the noble Baroness. But it is obviously up to her to make her own dispositions.

Baroness Thornton: My Lords, the problem with transparency and accountability is that the issues of confidentiality and expense are always used as excuses. I do not deny that my own Government almost certainly used them as reasons for not proceeding with issues of confidentiality and accountability. I am struggling with the idea that we should withdraw this amendment, because I feel that this is a really rather important matter. It may be a very small and minor matter, but it is actually rather important and I would like to test the opinion of the House.

2.15 pm

Division on Amendment 296A

Contents 126; Not-Contents 153.

Amendment 296A disagreed.

Division No. 1


Adonis, L.
Bach, L.
Bannside, L.
Bassam of Brighton, L. [Teller]
Billingham, B.
Bilston, L.
Blackstone, B.
Boateng, L.
Boothroyd, B.
Borrie, L.
Boyd of Duncansby, L.
Brennan, L.
Brooke of Alverthorpe, L.
Browne of Belmont, L.
Butler-Sloss, B.
Cameron of Dillington, L.
Christopher, L.
Clinton-Davis, L.
Cohen of Pimlico, B.
Collins of Highbury, L.
Coussins, B.
Crawley, B.
Crisp, L.
Davies of Oldham, L.
Davies of Stamford, L.
Dean of Thornton-le-Fylde, B.
Donaghy, B.
Donoughue, L.
Dubs, L.
Elder, L.
Emerton, B.
Evans of Watford, L.
Falkender, B.
Falkland, V.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Finlay of Llandaff, B.
Foulkes of Cumnock, L.
Fritchie, B.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Golding, B.
Gould of Potternewton, B.
Grenfell, L.
Grey-Thompson, B.
Harries of Pentregarth, L.
Harris of Haringey, L.
Hart of Chilton, L.
Haworth, L.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Henig, B.
Hennessy of Nympsfield, L.
Hollis of Heigham, B.
Howells of St Davids, B.
Howie of Troon, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Irvine of Lairg, L.
Jay of Paddington, B.
Jones of Whitchurch, B.
Jordan, L.
Kennedy of Southwark, L.
King of West Bromwich, L.
Knight of Weymouth, L.
Lea of Crondall, L.
Liddle, L.
Lipsey, L.
Lister of Burtersett, B.
McAvoy, L.
McDonagh, B.
McFall of Alcluith, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
McKenzie of Luton, L.
Mandelson, L.
Masham of Ilton, B.
Massey of Darwen, B.
Maxton, L.
Mitchell, L.
Montgomery of Alamein, V.

15 Dec 2011 : Column 1463

Morgan of Huyton, B.
Morris of Manchester, L.
Morrow, L.
Moser, L.
O'Neill of Bengarve, B.
O'Neill of Clackmannan, L.
Paisley of St George's, B.
Pannick, L.
Pitkeathley, B.
Ponsonby of Shulbrede, L.
Prosser, B.
Quin, B.
Quirk, L.
Rea, L.
Reid of Cardowan, L.
Rendell of Babergh, B.
Rosser, L.
Royall of Blaisdon, B.
Sawyer, L.
Scotland of Asthal, B.
Sherlock, B.
Simon, V.
Smith of Basildon, B.
Snape, L.
Soley, L.
Stevenson of Balmacara, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Thornton, B.
Tunnicliffe, L. [Teller]
Turnberg, L.
Turner of Camden, B.
Wall of New Barnet, B.
Walpole, L.
Warner, L.
Warnock, B.
Warwick of Undercliffe, B.
Wheeler, B.
Whitaker, B.
Whitty, L.
Wilkins, B.
Winston, L.
Wood of Anfield, L.
Woolmer of Leeds, L.


Addington, L.
Ahmad of Wimbledon, L.
Alderdice, L.
Anelay of St Johns, B. [Teller]
Armstrong of Ilminster, L.
Ashton of Hyde, L.
Astor, V.
Astor of Hever, L.
Attlee, E.
Barker, B.
Benjamin, B.
Best, L.
Bonham-Carter of Yarnbury, B.
Boswell of Aynho, L.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Brinton, B.
Brooke of Sutton Mandeville, L.
Browning, B.
Burnett, L.
Byford, B.
Campbell of Alloway, L.
Campbell of Surbiton, B.
Carlile of Berriew, L.
Chalker of Wallasey, B.
Clement-Jones, L.
Colwyn, L.
Cormack, L.
Courtown, E.
Crickhowell, L.
Cumberlege, B.
De Mauley, L.
Dear, L.
Denham, L.
Dixon-Smith, L.
Dundee, E.
Dykes, L.
Eccles, V.
Edmiston, L.
Elton, L.
Empey, L.
Erroll, E.
Faulks, L.
Forsyth of Drumlean, L.
Freud, L.
Garden of Frognal, B.
Gardiner of Kimble, L.
Gardner of Parkes, B.
Geddes, L.
German, L.
Glasgow, E.
Greengross, B.
Griffiths of Fforestfach, L.
Hamilton of Epsom, L.
Hamwee, B.
Hanham, B.
Hannay of Chiswick, L.
Harris of Richmond, B.
Henley, L.
Higgins, L.
Hodgson of Astley Abbotts, L.
Hollins, B.
Hooper, B.
Howard of Lympne, L.
Howard of Rising, L.
Howe, E.
Howell of Guildford, L.
Hussain, L.
Inglewood, L.
Jay of Ewelme, L.
Jenkin of Kennington, B.
Jenkin of Roding, L.
Jolly, B.
King of Bridgwater, L.
Kramer, B.
Laming, L.
Lee of Trafford, L.
Lester of Herne Hill, L.
Lexden, L.
Lingfield, L.
Low of Dalston, L.
Lucas, L.
Lyell, L.
McColl of Dulwich, L.
Mackay of Clashfern, L.
Maclennan of Rogart, L.
McNally, L.
Maddock, B.
Marland, L.
Marlesford, L.
Mawhinney, L.
Mayhew of Twysden, L.
Moore of Lower Marsh, L.
Morris of Bolton, B.
Murphy, B.
Newlove, B.
Newton of Braintree, L.
Noakes, B.
Northover, B.
Oakeshott of Seagrove Bay, L.
O'Cathain, B.
Palmer of Childs Hill, L.

15 Dec 2011 : Column 1464

Perry of Southwark, B.
Phillips of Sudbury, L.
Powell of Bayswater, L.
Randerson, B.
Rawlings, B.
Redesdale, L.
Rennard, L.
Ribeiro, L.
Risby, L.
Roberts of Llandudno, L.
Rowe-Beddoe, L.
Sandwich, E.
Sassoon, L.
Seccombe, B.
Selborne, E.
Selkirk of Douglas, L.
Selsdon, L.
Sharp of Guildford, B.
Shaw of Northstead, L.
Shipley, L.
Shutt of Greetland, L. [Teller]
Soulsby of Swaffham Prior, L.
Stedman-Scott, B.
Stirrup, L.
Stoneham of Droxford, L.
Storey, L.
Stowell of Beeston, B.
Strathclyde, L.
Taylor of Holbeach, L.
Tenby, V.
Thomas of Gresford, L.
Thomas of Swynnerton, L.
Thomas of Winchester, B.
Tope, L.
True, L.
Trumpington, B.
Tugendhat, L.
Verma, B.
Vinson, L.
Wade of Chorlton, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walmsley, B.
Warsi, B.
Wasserman, L.
Waverley, V.
Wheatcroft, B.
Wilcox, B.
Williams of Crosby, B.
Willis of Knaresborough, L.
2.25 pm

Clause 148 agreed.

Clause 149: Directors

Amendment 297

Moved by Baroness Williams of Crosby

297: Clause 149, page 149, line 20, after "whole" insert "for the purposes of the National Health Service"

Baroness Williams of Crosby: My Lords, I shall speak also to Amendments 299A and 299AA.

Before I do so, let me say just a word or two about two other amendments in this group, that is, Amendments 299ZA and 299AZA. I warmly thank the Minister, my noble friend Lord Howe, for having listened with such care to those of us who spoke to him about the issue of foundation trusts, in particular the issue of the private income paid into foundation trusts and the question of how that private income should be used ultimately for the benefit of the health service. He has been very patient, very willing to listen and extremely helpful. On behalf of these Benches and my own party I would like to thank him, and I am sure that others in the House will share that gratitude for the way in which he has responded.

I do not want to go into detail, because the amendments are very clear and have been laid, beyond saying that the first of those amendments, Amendment 299ZA, clearly states the situation with regard to income that comes into a foundation hospital-that is, that that income must be ultimately devoted to the health service. It sets beyond question or ambiguity the Government's position on this critical issue. I am therefore extremely grateful to the Minister for that.

I also strongly support the proposals about the annual report. I take to heart the Minister's distinction between the way in which the annual report deals with the funding of National Health Service patients in foundation trusts and with the separate funding of private patients in foundation trusts. On both those

15 Dec 2011 : Column 1465

issues, it is extremely helpful that the annual report should be clear and open, so that we can all discuss not only the very serious issues that have been raised by the noble Lord, Lord Warner, but also, as pointed out by the noble Baroness, Lady Thornton, the very disturbing report from the Public Accounts Committee, which reiterates over and over again the need for leadership and for a clear statement of where the trusts stand, and the real concerns it has about the difficulties that some of them now confront. It is a dramatic report, and we should commend it to this House as far as we possibly can. Perhaps a separate debate on that issue in the Public Accounts Committee report would be appropriate on some future occasion.

Having said that, I will add only one other thing with regard to the first two amendments I mentioned, which are familiar enough to the noble Earl. In my view, it would be very helpful if there were "belt and braces", by which I mean a government amendment which would indicate that, in the case of foundation trusts, the majority of patients should be NHS patients. That is, there should be an unquestionable commitment to having a majority of NHS patients. There are two reasons for that. One is simply that, good as the amendment unquestionably is, it is difficult for the general public-I certainly include myself in this-to understand the precise thrust of Amendment 299ZA, which I have quoted. It is helpful in this complicated Bill to have some islands of clarity that those who are not experts in the field-again, I include myself-can understand. People could understand the simple concept that a majority of patients should be from the NHS, not the private sector.

The other reason why I beg him to look at this carefully is that it is also important from the point of view of the complex debate that we have already had in this Committee on the issue of competition policy and EU competition policy. If there is a clear statement that the majority of patients must come from the NHS, that should be immensely helpful in ensuring that we are not then subjected to the rigours of the extreme competition policies defended at present in the EU and, indeed, by our own Competition Commission. My noble friend Lord Clement-Jones, who knows a great deal about the legalisms of competition policy, may have something to add on this point.

I turn briefly-well, fairly briefly; I am now conscious of the disapproval of the noble Lord, Lord Mawhinney, so I shall be a little more detailed-to the three more minor amendments in the group that my name is associated with. The first of those is Amendment 297, where we would like to add the words,

In order to persuade noble Lords of the importance of this, I will read out the text that the Bill currently inserts:

"The general duty of the board of directors, and of each director individually, is to act with a view to promoting the success of the corporation so as to maximise the benefits for the members of the corporation as a whole and for the public".

In that wording, the public trail far behind the interests of the members of the corporate body. That is unfortunate and unwise. We are therefore proposing the simple

15 Dec 2011 : Column 1466

amendment that the words "for the purposes of the NHS", which, as noble Lords will appreciate, recur in other parts of the Bill on many occasions, should be added to this section about the directors of foundation trusts. It is important to reiterate that foundation trusts work for the interests of the NHS, which is why we have suggested this simple amendment.

On Amendment 299AA, on which my noble friend Lord Clement-Jones will speak in slightly more detail, the point here is quite straightforward. Clause 162(1)(a), which we are suggesting should be left out, removes the existing subsection in the National Health Service Act 2006 that limits the provision of private services. In particular, the 2006 Act permits not the abolition but the restriction of private health services within foundation trusts. Section 44(1) of the 2006 Act provides that,

"An authorisation may restrict the provision, for purposes other than those of the health service in England, of goods and services by an NHS foundation trust".

In other words, that subsection again sustains the argument that there is a role for the private sector but that there must be restrictions on it if the NHS trusts and foundation trusts are to sustain their fundamental legal obligation to the NHS. It is important that these restrictions should be upheld. Indeed, the authorisations that I have referred to are critical to the concept of maintaining the foundation trusts within the health service system and therefore making it less vulnerable to competition legislation.

The final amendment that I want to refer to is Amendment 299A, where we are simply bearing out what I have already said. I therefore hope the House will now hear additional arguments from my noble friend to show why this group of amendments is very important in order to retain the current status of foundation trusts, which is very welcome, and which will assist in meeting some of the trenchant criticisms of the Public Accounts Committee about this whole sector of the health service. I beg to move.

Lord Newton of Braintree: My Lords, I will come in very briefly. I declare a past interest as former chairman of the Royal Brompton and Harefield NHS Foundation Trust, which probably has as large a private patient income as any in the country. Frankly, that income considerably benefits the two hospitals and their NHS patients.

I welcome the amendments of my noble friend, and hope that the Minister will give them careful consideration. All of us in this House, not least those of us who are former Ministers of health, have been united in our wish to see a successful and flourishing NHS, and in being really dedicated to it. It would be an oddity if a hospital designated as an NHS trust-whether foundation or otherwise-were treating a majority of patients who were not NHS patients. That is quite a simple proposition, and it is the one advocated by my noble friend Baroness Williams.

The amendments already tabled by my noble friend on the cap on income are extremely welcome and sensible. However, I hope that he might think of-dare I say it-embracing the thoughts of my noble friend Lady Williams as well in some further modification of those amendments so that they refer both to income

15 Dec 2011 : Column 1467

and to numbers. The numbers thing will be more readily understood by many members of the public. Clearly we do not want NHS trust hospitals to gain most of their income from doing non-NHS work or from treating non-NHS patients. That just does not make sense. It would helpful if we could make that clear.

Lord Clement-Jones: My Lords, my noble friend Lady Williams very clearly set out the approach of these Benches to a number of amendments in this group. I simply want to return to EU competition law for a moment. The noble Earl's amendment regarding limits on the cap goes quite some way to mitigating one of the elements of risk associated with the greater application of EU competition law. As I outlined on Tuesday, there are some really significant issues in the Bill which will introduce EU competition law to a much greater extent if we are not careful. One of those, clearly, is the uncapping of private patient income of foundation trusts. I am very pleased that the noble Earl has gone some way to dealing with some of those concerns. However, I of course very much share the view of my noble friend Lady Williams that we are not quite there yet, and that it would be belt and braces to have the additional safeguard of a limit on the numbers as well as on the revenue.

Generally, four key issues arise from the changes to Sections 43 and 44 of the 2006 Act, quite apart from that of EU competition law. First, there is the question of limits on the cap-what kind of limit is appropriate? Secondly, there is the question of being absolutely certain that any income from private patients is exclusively devoted to the National Health Service. Thirdly, there is the question of prospective transparency-of being well aware of what the plans of foundation trusts will be. Fourthly, there is the question of transparency after the event, in terms of reporting in an annual report.

As far as the limits on the cap are concerned, as I have mentioned, the noble Earl's Amendment 299ZA is welcome, but it would be useful if he could consider whether any further qualification of that cap was appropriate. There is also the question of being absolutely certain that we are talking about this income going exclusively to the NHS, which is what my Amendment 299A goes towards-that is why I seek to add the word "exclusive" to the changes to Section 43 of the Act.

On the question of prospective transparency, I very much welcome the Minister's Amendment 299AZA, but that simply provides for reporting after the fact. It is important to share prospectively with the general public and people in the locality the governors' process for determining the right balance between private income and the NHS activities in a trust. That is what my amendment seeks to achieve by requiring the situation to be set out in an annual plan.

There are four elements. We are some way down the track towards achieving a number of them. At that point, I think that on at least one of the limbs that I and many others are concerned about-the further introduction of competition law to the NHS-we will be satisfied. We will at least have knocked over one of the green bottles, so to speak, with several more to come.

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Baroness Thornton: My Lords, the noble Lord, Lord Clement-Jones, has put his finger exactly on the point here. I absolutely agree that, welcome though the amendments in the Minister's name are, they do not go far enough. Counting things after the fact will not necessarily provide the kind of protection that is required in this area.

Section 44 of the National Health Service Act 2006 currently provides for a limit on the proportion of income that an NHS foundation trust obtains from private charges. I am familiar with this; I had to deal with it in the Health and Social Care Act 2008. That was the point at which my party agreed that there needed to be a review of the private patient cap. That is absolutely the case and we would agree on that. The restriction was introduced to ensure that NHS foundation trusts continued to focus primarily on NHS patients, as the noble Baroness, Lady Williams, explained. However, as we accepted at the time, the way that the cap was based on the financial year cemented in a widely varying range of restrictions, from zero to a little more than 30 per cent, with the average being around 1.5 per cent.

2.45 pm

The Bill lifts the cap completely. The abolition of the cap on the amount of income that foundation trusts can earn from other sources has the potential to act as an incentive for foundation trusts and could earn them income. However, we believe that it is not right for the Bill to lift that cap unconditionally. I would pray in aid of this many organisations. For example, the Royal College of Nursing said in its response to the October 2010 White Paper:

until foundation trusts can credibly demonstrate,

The Royal College of Midwives similarly said that its,

The King's Fund, in the consultation on Liberating the NHS, supported reform of the cap. However, it stated that processes need to be in place to ensure that there is no conflict with or compromising of quality of care for NHS patients or efficient use of taxpayers' money. The question is: have the Government achieved that? I think that there is still a question mark over it. In its briefing on the Bill's Second Reading, the BMA said that,

and could come at the expense of NHS patients' ability to access facilities.

In fact, the Department of Health's legislative framework of December 2010 acknowledged that concerns were legitimate, but chose to rely on FTs' "social ethos and values" rather than impose proper procedures, accountability, transparency and regulation which would ensure the protection of NHS patients. We oppose the Question that the clause stand part of the Bill in order to have this necessary discussion.

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I refer briefly to Amendment 299 in the name of my noble friend Lord Beecham, which is a probing amendment. His concern was that the regulator must be satisfied that any application for FT status is able to provide goods and services for the purposes of the National-National-Health Service in England. In parts of the Bill, that is not absolutely clear.

Baroness Murphy: My Lords, I welcome the comments of the noble Baroness, Lady Thornton, that her opposition to the Clause standing part of the Bill is for probing purposes, as are some of the other amendments. We have all welcomed the review of the private patient income cap introduced by the previous Government following the judicial review by Unison of Monitor's interpretation. The Government's amendments go a long way to addressing our concerns about the extension of private income diverting NHS hospitals into private activity. I understand and have great sympathy with the amendments tabled by the noble Baroness, Lady Williams, and the noble Lord, Lord Clement-Jones, in that respect.

I ought to say that I have never, as an NHS consultant, practised privately. This is both an ideological and a practical matter. As I mentioned before in Committee, my own professional activity simply could not be done effectively without working in conjunction with social services, housing and the voluntary sector. It would not, therefore, have sat very easily with my activities. I have, of course, seen the very important role that private income plays in swelling the NHS coffers in many foundation trusts. However, it is worth reminding ourselves how dreadfully unfair that private patient cap has been. Hospitals like the Royal Marsden have a cap of 30 per cent, but they manage to do that work without any diversion of activity from their brilliant NHS service. Many acute FTs and all mental health foundation trusts have a cap of zero. For NHS FTs as a whole, the average PPI cap is 1.5 per cent of their income. The overall figure is therefore tiny. Foundation trusts' private income was less than 2 per cent of their total income across the board. However, this income can be very welcome to individual hospitals. Anything that makes the system fairer for hospitals is extremely important. It is of course worth saying that ordinary NHS trusts do not have a cap and can make as much income as they like.

We need a mechanism to enhance FTs' commitment to remaining focused on NHS patients. I believe that all existing foundation trusts are focused on that, but if we approve the government amendments-Amendment 299AZA and one other-they will go some way to ensuring that at least the majority of activity remains as it is. In reality, private practice is not likely to extend very much. The provisions will prevent the kind of unfairness and terrible bureaucracies that have been associated with joint ventures and the complexities of the current rules which even the judge in the judicial review of the private patient income cap admitted were real practical difficulties for foundation trusts that needed to be addressed.

The government amendments are strong, but I would not entirely not support some of the stronger amendments tabled by the noble Baroness, Lady Williams.

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Baroness Williams of Crosby: I have listened closely to the noble Baroness. I should perhaps add that within these Benches we discussed, and at one stage talked to Monitor about, the possibility of an individual cap for hospitals outside London. I completely take the noble Baroness's point that in places such as Newcastle the figure for private patients is less than 2 per cent-even though the hospital there is renowned. One can think of many similar examples. We would therefore be perfectly open to reaching an agreement under which Monitor was responsible for there being lower caps in different parts of the country. The proposal that the number of patients from the NHS should be greater than the number from the private sector is an overall statement of principle that virtually every hospital can easily meet. We hope that it might, among other things, disincline our friends from the competition area from deciding that foundation trusts were undertakings and not private agencies.

Baroness Finlay of Llandaff: My Lords, this has been an interesting short debate because the whole business of the cap has imposed wide variations on trusts. Where trusts cannot have any private activity, there has been an unintended consequence if some staff, particularly consultants, undertake private work. They have carried out that work offsite and not been available if there has been an emergency onsite, and travel times also have worked against patient care.

I can therefore completely understand why these amendments are before us and why the Government wish to act as has been outlined. Perhaps in his closing remarks the Minister can provide us with an assurance that any guidance-it is not necessary to include this in the Bill-will ensure that trusts do not inadvertently double-pay staff. The point of splitting private and NHS treatment was precisely to ensure that staff do not carry out private work in their NHS time and receive double pay, and that the accounts are clear. There are advantages to staff doing private work on NHS premises and to a flexible interpretation whereby, when there is a medical emergency, staff can run down the corridor. Private patients completely understand when someone has to be called away because there is a life-threatening emergency. They are happy to wait until the staff return. That system operates at the hospital in which I work. Although I do not do any private work, some of the oncologists have clinics in the evenings.

There is a need for clarity and I hope that some reassurance will be given that in removing the cap there will be good husbandry of public money.

Baroness Noakes: More than 20 years ago, I was director of finance of the NHS, on secondment from my firm, as some of my noble friends will recall. One of my areas of responsibility was something we called the income-generation initiative. It was sponsored wholly by the Department of Health which was to encourage NHS hospitals to maximise their assets and to generate income for the purposes of the NHS. The origins of the private patient income lie with the Department of Health wanting to ensure that the NHS maximised the returns from its assets and took opportunities to generate income solely for the NHS. Those of us who were involved in developing that initiative would regard all

15 Dec 2011 : Column 1471

these discussions as a mark of success of the initiative, as it has generated so much income that other questions are now asked.

I never supported any kind of cap, because the circumstances of individual foundation trusts vary so significantly that any cap would never be effective. The way in which income can be structured to flow into a trust can markedly change the impact of the cap. By structuring your relationships with partnership organisations, for example, you can massively change whether a cap bites or does not.

I support the amendments in the name of my noble friend, because perhaps it now needs stating that you should concentrate largely on the NHS-although, as I said, those of us who started this find it a rather surprising conclusion-and I support transparency. If I ever had one concern about the income-generation initiative, it was that costing was never particularly well understood in the NHS, and, therefore, neither was the net result from the activity nor how that activity was used. It is important to have transparency. I hope that other noble Lords will not encourage the Government to keep any limits which constrain the NHS from maximising its assets for the purposes of the NHS.

Lord Warner: My Lords, I was not going to speak in the debate and I certainly do not want to speak on the subject of the cap, in case I get into too much trouble from my Front Bench. I would like to pick up the point made by the noble Baroness, Lady Noakes. We are moving into a world in which the NHS will have to look at how it uses its assets. As I have said in earlier discussions, the NHS footprint on its sites and its utilisation of buildings is relatively small given the size of the sites.

We are also moving in a direction where, across the House, we favour integration of health and social care. It would not be surprising if, in the next few years, on some sites of district general hospitals, there were nursing homes run by the private sector which had self-payers as well as state-funded payers. The way the Government are approaching this creates flexibility in how income might be generated. I hope we will not be so prescriptive in how we meet the legitimate concern that NHS trusts should concentrate on their core business, if I may put it that way, that we shoot ourselves in the foot again by having a cap that actually works against the best interests of the NHS.

Baroness Thornton: My Lords, I have never known my noble friend to show particular restraint about how he felt about his Front Bench.

This discretion has morphed into something that says that making efficient use of assets and being effective is the same as maximising private income. Of course, that is not the point here. The point is getting the balance right. The noble Baroness, Lady Noakes, made a very good point: the NHS does not exist to maximise private income profit.

3 pm

Earl Howe: My Lords, this is an important issue and one that I recognise is of considerable interest to the Committee. To start at the beginning, the Government are clear that NHS providers should always focus on

15 Dec 2011 : Column 1472

the provision of care to NHS patients. However, we cannot ignore the fact that the private patient income cap, which Clause 162 would remove, is damaging to the NHS and to patients' interests. We think that there is a very strong case for removing the cap, because doing so will allow NHS patients to derive even greater benefits from foundation trusts. At the same time, we understand the sensitivities. The key to addressing those sensitivities is to have adequate safeguards to ensure that NHS patients and resources continue to be prioritised and protected. I reassure the Committee that we believe we can achieve that through the Bill and through the government amendments, and I shall explain why and how in a moment.

The words "private patient" in the cap's title may have unfortunately given the wrong impression about the substance of the argument. My noble friend Lady Noakes was quite right in what she said. The cap's scope goes far wider than just private patients. It captures income from activities such as innovations involving research, joint ventures and the sale of medicines and intellectual property to private healthcare providers in the UK and abroad. This means that innovative partnerships of the kind that the noble Lord, Lord Warner, indicated might happen are being hampered, and the ability of foundation trusts to earn more income to help to bring in leading-edge technology to the NHS faster-for example, for cancer treatment-is unnecessarily restricted.

Foundation trusts have told us that the cap is detrimental to care offered to NHS patients. They have welcomed our move to remove what they and we see as an outdated, unnecessary and arbitrary legal instrument that locks them into maintaining income from private charges below the levels that applied in 2002-03.

Perhaps I may remind noble Lords of the compelling reasons for removing the cap. As I am sure the Committee will agree, the rule itself is unfair. Some foundation trusts have much higher caps, and hence much more flexibility, than the majority. In 2010-11, around 75 per cent of foundation trusts were severely restricted with caps of 1.5 per cent or less. Meanwhile, the Royal Marsden benefits from a 31 per cent cap and is the country's highest private patient income earner. It has also been consistently rated as a highly performing NHS provider.

Baroness Thornton: I have a question for the noble Earl on this. He is absolutely right that the Royal Marsden is a very effective hospital, but what independent evidence is there that the cap harms the interests of NHS patients? We know that quite a few foundation trusts have been going on about it, and I absolutely agree that the cap needs to be reviewed properly, but what independent evidence is there that it harms the interests of patients?

Earl Howe: My Lords, if the noble Baroness is calling for evidence beyond the testimony of numerous NHS trusts, I am not sure what more I can offer her. I can write to her on this but there is very considerable evidence-almost a priori evidence-that if you restrict a trust's ability to earn income which would otherwise go to improve facilities for NHS patients, you are

15 Dec 2011 : Column 1473

damaging the interests of those NHS patients. That is an argument that we have consistently put forward ever since the 2003 legislation. However, it is also an argument that I recall Ministers in the previous Administration making when we last debated this subject at any length.

I was going to point out too that NHS trusts as distinct from foundation trusts do not have a private income cap. A number of them earn private incomes well in excess of many foundation trusts. There is absolutely no evidence that these providers are ignoring NHS patients as their prime responsibility-no evidence at all. A number of noble Lords, not least my noble friend Lady Williams, have tabled amendments in this area to ensure that foundation trusts must protect the interests of NHS patients above all and that public money should not subsidise private care. I wholeheartedly agree with that. I would like reassure noble Lords of the safeguards that the Bill already contains to this end. Some of these safeguards are prospective in nature and some are retrospective.

First, foundation trusts will continue to be bound by their principal legal purpose, which is to provide goods and services for the NHS in England. I am going to move Amendment 299ZA today to state explicitly that "principal purpose" means that the majority of every foundation trust's income must come from NHS service provision. That amendment will make it certain that the trusts are NHS providers first and foremost. I admit to my noble friend Lady Noakes that this is something of a belt and braces amendment, but I believe that it directly addresses the main concerns voiced by my noble friend Lady Williams.

The second safeguard is that the Bill would make foundation trusts more accountable and transparent to their public and NHS staff. My second amendment in this group, Amendment 299AZA, would support that by requiring every foundation trust to explain in its annual report how its non-NHS income had benefited NHS services. The Bill gives governors, who represent the public and NHS staff, greater powers to hold directors to account and this amendment would help them do so. My noble friend Lord Clement-Jones sought to place additional duties on directors. The Bill would also place an explicit duty on them to promote the success of their foundation trust with a view to maximising benefits for its members and the public. If, for example, directors were to pursue private patient activity against the interests of members and the public, the governors would be able to, and they should, use their new powers to challenge directors or they could use their existing power to remove the chair and non-executive directors.

Lord Clement-Jones: I understand the safeguard aspect there, but what will the members of the trust or the general public know about how a foundation trust plans to use its assets in terms of private patient income?

Earl Howe: My Lords, it will be open to governors to seek information from the boards of directors on the plans that they have for the trust. They will have

15 Dec 2011 : Column 1474

access to key papers. There should be no difficulty about knowing what the board has in mind for the trust in that strategic sense.

Thirdly, the NHS Commissioning Board and NHS commissioners would be responsible for securing timely care for NHS patients. They would be under a duty to exercise their functions with a view to securing continuous improvements in the quality of NHS services. That is an important provision too.

Finally, to achieve a fairer playing field, Monitor's licensing regime would allow it to step in to prevent NHS money cross-subsidising private care. Foundation trusts would also be required separately to report to Monitor their NHS and private-funded income. My noble friend Lady Williams said that in her view it would be useful to have in the Bill that the majority of foundation trust patients have to be NHS patients. While I agree with the intent behind that thought, I cannot agree with her two arguments that support the need for an amendment. First, we do not agree that legislation should be used symbolically in this way. Foundation trusts' principal purpose already covers the point that she raised. Secondly, even if we had such an amendment, it would not make any difference to how the courts interpret and apply EU competition law. It is the nature of the activities that they are undertaking that matter, not how many patients they treat or how much income they earn.

Perhaps I may make a specific point about my noble friend's Amendments 297 and 299. They would duplicate unnecessarily the legal description of the NHS, which since 1946 has been described as "health service". Use of the word "national" would be inconsistent with references to the NHS throughout existing legislation.

Just to elaborate on EU competition law, the Bill, as we discussed the other day, does not change the position on EU competition law or the applicability of the law. It remains the case that there is uncertainty on the status of NHS providers as undertakings for the purposes of competition law because no direct case law exists. In so far as foundation trusts already provide private healthcare services, they may be engaged in economic activity. Therefore competition law, both the prohibitions on anti-competitive behaviour and the prohibitions on state aid, may apply to their activities in these markets. Although the Bill would offer more flexibility to participate in these markets if the cap were lifted, it does not mean that foundation trusts are more or less likely to be considered undertakings in their provision of NHS services.

It was suggested by my noble friend Lady Williams that there might be a sort of case-by-case approach to lifting the cap. I recall that that approach was strongly rejected by the previous Government, and for very good reasons. We agree with those reasons. The disadvantages of that approach would be that it would be very difficult to set up a clear system and it would be likely to be difficult to administer and to increase bureaucracy. It would potentially lead to greater variation between foundation trusts and to claims of unfairness between different trusts, which could possibly be a source of litigation. It would maintain the problematic definitional issues around the cap itself. We are not drawn to that approach.

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The noble Baroness, Lady Finlay, asked whether we could consider including in guidance to foundation trusts the need to avoid double-paying staff. I think she makes a very interesting point and I can confirm that we will give that some active consideration.

While the principles of some of the amendments tabled by noble Lords are ones that we could all agree with, we believe that the amendments are unnecessary and could be damaging. For example, a requirement for non-NHS income to support only NHS services could mean that foundation trusts would find it impossible to invest in their non-NHS activities and therefore make greater profits to support core NHS work. We want to avoid safeguards, no matter how well intentioned they may be, having a perverse legal consequence on foundation trusts' ability to innovate.

I hope I have said enough to persuade the noble Baroness to withdraw the amendment because I am completely convinced that the necessary safeguards are there and that what we are proposing are the right things to do.

Baroness Thornton: If the Minister thinks that the safeguards are here, and if all that is true, should the governors be the ones who decide on the level of the private cap?

Earl Howe: My Lords, I think that the board of directors is best placed to decide how much private income overall a trust should receive, on the proviso that the principal purpose of the foundation trust remains adhered to. Governors should concern themselves with any threat to that status. If they perceive that the board is in danger of overstepping the mark in that sense, then of course it is their province. Otherwise, I think it is for the board of directors to judge what is in the best interests of the trust as a whole and of NHS patients. That could mean expanding the trust's private patient work, capitalising on intellectual property, or whatever it happened to be.

3.15 pm

Lord Clement-Jones: My Lords, I shall intervene briefly before my noble friend Lady Williams sums up on her amendment. What the Minister just said about this relationship between governors and directors and the advancement of the principal purpose of a foundation trust added another dimension. It is not so much the question of the majority of income or of patients coming from the private or the public sector that is important. That is simply a test for competition law purposes. The issue is whether the principal purpose of the foundation trust remains within a social purpose. The element of solidarity established by FENIN is there and it is therefore at less risk of falling totally within EU competition law as an undertaking.

The Minister's comments bear considerable study, but what he has said does not completely take us out of the risk area. I know he does not use the word "risk" in relation to EU law applying further, but that is certainly the mindset of a number of us looking at these provisions, particularly in relation to the cap. It is the question of social purpose and solidarity that is crucial in law, and the question of whether what my

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noble friend has done to date is sufficient. I will obviously read his comments carefully but I do not think we are quite there yet.

Baroness Williams of Crosby: I am happy to withdraw the amendment, but I would like the Minister to consider very carefully the words of my noble friend Lord Clement-Jones because my impression is rather the same as his, although on a much weaker basis of expertise. On the one or two occasions when I visited the Commission to discuss this matter, I had a strong sense that social purpose is one of the main criteria that they look at in deciding whether something counts in the area that captures competition law in the EU. I cannot speak about the Competition Commission in England because I do not have enough expertise to do so, but I hope that the Minister will consider what my noble friend has said because I believe that it is a crucial factor for the EU Competition Commissioner.

Earl Howe: My Lords, I am very happy to consider all these issues in the context of the discussion that my noble friend Lord Clement-Jones and I are going to have on EU competition issues generally.

Lord Clement-Jones: I want to add one further point about "prospectivity", if there is such a word, and governors and/or directors looking at the activities of the trust. It is important that one considers that point from the social purpose point of view. One can then look at the pattern of activity of the trust and see what investments are going to be devoted to private and NHS patients. That is an important part of looking at the risk factors associated with a purpose not being a social purpose.

Baroness Thornton: I am glad that the two parties of government are in discussion with each other about these matters. However, there are Members on the Cross Benches and on these Benches who also have opinions on these issues. If it is appropriate, we would like to be involved in those discussions.

Earl Howe: If the noble Baroness wishes that, it would be my pleasure to accede to her request.

Baroness Williams of Crosby: My Lords, I am perfectly certain that the noble Baroness will contribute even more to this esoteric but very important discussion. With words of thanks to all those who have taken part, I now withdraw the amendment.

Amendment 297 withdrawn.

Clause 149 agreed.

Clause 150 agreed.

Clause 151 : Accounts: initial arrangements

Amendments 298 to 298A not moved.

15 Dec 2011 : Column 1477

Amendment 298B

Moved by Earl Howe

298B: Clause 151, page 151, line 6, at end insert-

"( ) In sub-paragraph (3) of that paragraph, in paragraph (b) for "any records" substitute "the records"."

Amendment 298B agreed.

Clause 151, as amended, agreed.

Clause 152 agreed.

Clause 153 : Annual report and forward plan

Amendment 298C

Moved by Earl Howe

298C: Clause 153, page 152, line 38, at end insert-

"( ) In paragraph 22(1) of Schedule 7, omit paragraph (e) (duty to make forward plan available to the public)."

Amendment 298C agreed.

Clause 153, as amended, agreed.

Clauses 154 and 155 agreed.

Clause 156 : Authorisation

Amendment 299 not moved.

Clause 156 agreed.

Clauses 157 to 160 agreed.

Clause 161 : Goods and services

Amendment 299ZA

Moved by Earl Howe

299ZA: Clause 161, page 159, line 12, at end insert-

"(2A) An NHS foundation trust does not fulfil its principal purpose unless, in each financial year, its total income from the provision of goods and services for the purposes of the health service in England is greater than its total income from the provision of goods and services for any other purposes."

Amendment 299ZA agreed.

Amendment 299A not moved.

Amendment 299AZA

Moved by Earl Howe

299AZA: Clause 161, page 159, line 16, at end insert-

"( ) After subsection (3) of that section insert-

"(3A) Each annual report prepared by the NHS foundation trust must give information on the impact that income received by the trust otherwise than from the provision of goods and services for the purposes of the health service in England has had on the provision by the trust of goods and services for those purposes.""

Amendment 299AZA agreed.

Clause 161, as amended, agreed.

15 Dec 2011 : Column 1478

Clause 162 : Private health care

Amendments 299AA to 299C not moved.

Clause 162 agreed.

Clauses 163 and 164 agreed.

Clause 165 : Mergers

Amendments 300 and 301 not moved.

Clause 165 agreed.

Clause 166 agreed.

Clause 167 : Separations

Amendments 302 and 303 not moved.

Clause 167 agreed.

Clauses 168 and 169 agreed.

Clause 170 : Repeal of de-authorisation provisions

Amendment 303ZZA

Moved by Earl Howe

303ZZA: Clause 170, page 163, line 34, leave out "(but not the following "or")"

Amendment 303ZZA agreed.

Clause 170, as amended, agreed.

Amendments 303ZA and 303ZB not moved.

Clause 171 : Trust special administrators

Amendments 303A to 304 not moved.

Clause 171 agreed.

Clause 172 : Objective of trust special administration

Amendments 304A and 304B not moved.

Clause 172 agreed.

Clause 173 : Procedure etc.

Amendment 304BA

Moved by Earl Howe

304BA: Clause 173, page 168, line 8, leave out "(7)(d)" and insert "(7)(c) and (d)"

Amendment 304BA agreed.

Clause 173, as amended, agreed.

Clause 174 agreed.

15 Dec 2011 : Column 1479

Clause 175 : Sections 171 to 174: supplementary

Amendments 304BB to 304BS

Moved by Earl Howe

304BB: Clause 175, page 173, line 5, leave out "65K" and insert "65KC"

304BC: Clause 175, page 173, line 7, at end insert-

"( ) a copy of any information published under section 65D,"

304BD: Clause 175, page 173, line 8, at end insert-

"( ) a copy of any statement provided under section 65F,"

304BE: Clause 175, page 173, line 9, after "65F," insert "65G,"

304BF: Clause 175, page 173, line 10, after "65KB" insert ", 65KC"

304BG: Clause 175, page 173, line 11, after "statement" insert "published or provided"

304BH: Clause 175, page 173, line 13, at end insert "or 65KC"

304BJ: Clause 175, page 173, line 18, leave out "65K(4)" and insert "65KC(3)"

304BK: Clause 175, page 173 , line 19, leave out paragraph (d) and insert-

"(d) for "65L(2), (4) or (5)" substitute "65L(2) or (7), 65LA(3)"."

304BL: Clause 175, page 173, line 34, leave out "65K" and insert "65KC"

304BM: Clause 175, page 173, line 36, at end insert-

"( ) a copy of any information published under section 65D,"

304BN: Clause 175, page 173, line 37, at end insert-

"( ) a copy of any statement provided under section 65F,"

304BP: Clause 175, page 173, line 38, after "65F," insert "65G,"

304BQ: Clause 175, page 173, line 39, after "65KB" insert ", 65KC"

304BR: Clause 175, page 173, line 40, after "statement" insert "published or provided"

304BS: Clause 175, page 173, line 42, at end insert "or 65KC"

Amendments 304BB to 304BS agreed.

Clause 175, as amended, agreed.

Clause 176 : Abolition of NHS trusts in England

Amendment 304C not moved.

Clause 176 agreed.

Schedule 14 : Abolition of NHS trusts in England: consequential amendments

Amendments 304CA to 304CJ

Moved by Earl Howe

304CA: Schedule 14, page 388, line 10, at end insert ", and

( ) in subsection (3), omit paragraph (a) (and the following "and")"

304CB: Schedule 14, page 388, line 13, after "trust" insert "established under section 25"

15 Dec 2011 : Column 1480

304CC: Schedule 14, page 388, line 14, after "trust" insert "established under section 25"

304CD: Schedule 14, page 391, line 18, leave out sub-paragraph (2)

304CE: Schedule 14, page 394, line 7, leave out paragraph 64

304CF: Schedule 14, page 394, line 11, leave out paragraphs 65 to 67

304CG: Schedule 14, page 397, line 18, at end insert ", and

( ) omit sub-paragraph (ii) of that paragraph (and the preceding "or")"

304CH: Schedule 14, page 398, line 21, after "body"" insert "-

(a) "

304CJ: Schedule 14, page 398, line 21, at end insert ", and

(b) in paragraph (c), for "that Act" substitute "the National Health Service Act 2006" (and omit the "or" preceding that paragraph)"

Amendments 304CA to 304CJ agreed.

Schedule 14, as amended, agreed.

Clause 177 agreed.

Clause 178 : Healthwatch England

Amendment 305 not moved.

Amendment 306

Moved by Lord Warner

306: Clause 178, page 175, line 17, leave out subsections (2) and (3) and insert-

"(2) Healthwatch England is to be appointed in accordance with regulations made by the Secretary of State."

Lord Warner: My Lords, unfortunately the noble Lord, Lord Patel, had to leave before we could get to this amendment so I shall speak on his behalf in moving Amendment 306.

The amendment brings us to Clause 178, which is about HealthWatch England. In simple terms, the amendment seeks to make HealthWatch England an independent body and not a sub-committee of the Care Quality Commission. That is its purpose. We have to some extent already touched on this issue and made the arguments in earlier debates about why we think, in terms of public credibility for HealthWatch England, it should not be nestling within, hosted by or whatever else you want to call it the Care Quality Commission. I shall turn to the issue about that particular body in a moment but, as a matter of principle, whether it is the Care Quality Commission or some other body, we take the view that it should be a free-standing body so that it can exercise-and, perhaps just as importantly, be seen to exercise-a very independent role in pursuing the purposes and interests of patients and the public.

The whole area of public and patient involvement and them having their say in the running of the NHS, the way it works, its standards and its standards of care has caused difficulty across the political spectrum in getting it right. The Government deserve considerable congratulation on having another go at this. It is not a matter of principle, certainly as far as the noble Lord, Lord Patel, and I am concerned, that we should not have a body called HealthWatch England-we totally

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favour that-but you might as well go the whole hog if you are going to claim that it is an independent body. Calling it a sub-committee of the Care Quality Commission does damage to the public perception of its role.

I know that the noble Earl, Lord Howe, has seen recently the NALM to discuss these issues and I want to quote from some of the briefing that it used in that meeting with him. The NALM made it very clear that it saw collaborative working between HealthWatch England and some of the other bodies as important, but that did not mean to say that it wished it to be hosted in one of those bodies. The briefing is most interesting. It says:

"Our work with the CQC over the past year has given us little confidence that this is the right location for the public's independent national body concerned with health and social care".

It is concerned that it will not be seen as independent. Whatever arguments the Government may have, we have to take careful note when representatives of the public and patients do not believe that they will be seen as independent if they are placed in the CQC.

3.30 pm

I do not want to prejudge or make comments on some of the criticisms that have been made about the CQC in recent times. Many of us would say that it has a very heavy load to carry. I played my part in giving it that heavy load, so I own up to that and get my retaliation in first before I am accused of contributing to its heavy load. It is right that we should have that body looking across the NHS and social care, as it is consistent with the enthusiasm for integration of health and social care which has been voiced so eloquently in your Lordships' House. But it has taken on a lot; it has a lot to do. Occasionally, it would be fair to say-and this could be said to be an understatement-it has struggled with the load that it carries.

It does not get HealthWatch England off to a good start to place it as a sub-committee of a body which itself is struggling to maintain its public reputation at present. Rightly or wrongly, it is being seen as a body that is struggling to maintain that reputation. That is not to say that it is not an effective body or that it should not carry on in that particular way but, in the present public mood, to put HealthWatch England in the CQC as a sub-committee is at the very least a major presentational mistake. The Government ought to have the courage of their convictions. Having gone along the path of wanting to set up an authoritative body to argue the case for patients and the public, they should make sure that that body is independent.

A number of amendments in this group deal with how you select that body. Amendment 306 leaves it to the Secretary of State in effect to make regulations governing how that body is established. I do not have a strong view on how that appointment is made, whether it is made by election from the local level-I can see the case for that-or by some other means. What we care strongly about is that this body is independent not just of the CQC-although particularly of the CQC-but of any other body. If is fine if there are economies to be made by having a memorandum of understanding about back-office services between the

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CQC or any other body to help HealthWatch England run its affairs in an efficient and effective way. That would not in any way undermine the publicly seen independence of HealthWatch England.

In conclusion, I quote again the NALM briefing which was used in the meeting with the Minister. It says:

"HealthWatch England needs to be lean, focused and independent and able to freely criticise the CQC and hold it to account. To place it within a bureaucracy which currently has diminishing public confidence hardly seems wise, bearing in mind the fundamental role of HealthWatch England".

That sums up the case for it being an independent body and being seen to be an independent body. I beg to move.

Lord Harris of Haringey: My Lords, we have already debated to some extent the way in which HealthWatch England might operate. However, this group of amendments returns not just to that issue, but to a number of other important issues which go to the core of the extent to which HealthWatch England is genuinely going to be an effective organisation. I give Ministers and the Government the benefit of the doubt on this-that that is something that they want to see happen. Therefore, the way in which HealthWatch England is established, the way in which it functions and the powers that it has are going to be critical to whether or not this body will simply join the long list of organisations that have been set up over the years to represent patients' interests and have then been dismembered after a short period, or in some cases a slightly longer period, because they are not seen to be effective. If the Government are genuine about putting patients at the heart of the new NHS, then they need to ensure that HealthWatch England and healthwatch organisations are effective.

My noble friend Lord Warner, slightly unusually, pulled his punches. He talked about it perhaps being a major mistake to host HealthWatch England within the CQC. I have to say there is a danger that this could be a disaster. It is a disaster because of the sustained attacks that the CQC is currently undergoing, which seem to emanate in some instances from Government and Ministers who clearly are not satisfied with the direction of travel. There are clearly concerns that this is an organisation which is being asked and expected to do far too much at the moment. To add this additional responsibility is not necessarily helpful.

I can understand that it is important that HealthWatch England relates effectively to the Care Quality Commission: that is one of the organisations it must relate closely to. But it must also relate closely to the NHS Commissioning Board. It must also relate properly, under certain circumstances, to Monitor. Simply saying that the relationship with the CQC is paramount does not necessarily make an enormous degree of sense.

My noble friend Lord Warner made a specific point. If the motivation for hosting HealthWatch England within some other national organisation is to save money-I understand that it may not be the prime motivation but it is a concern in all this-then there are plenty of other ways of achieving those savings in terms of back-office functions. Those functions can be provided by agency agreements; you can have organisations which are in the same building and able

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to share some of the physical facilities and so on. It does not necessarily require that the organisation sits as an integral sub-committee within or as part of the organisation concerned. You can do it in other ways; you can achieve those savings in other ways.

However, if you place HealthWatch England in the Care Quality Commission, or for that matter in the NHS Commissioning Board or any of the others, you are in danger of there being either a real or perceived conflict of interest. It may well be the case that HealthWatch England will, on occasions, be asking the Care Quality Commission to do certain things. It may well be the case that there will be, on occasions, circumstances in which HealthWatch England will be saying that the Care Quality Commission has failed to do certain things. That is not a happy situation; nor is it one that is likely to engender the trust of the public if they are seen as being part of the same organisation. That is the principle which underpins some of these amendments.

There is then the question of the extent to which HealthWatch England is seen as being a creature of either the CQC or Government. That then relates to how the ruling body of HealthWatch England-the committee, if it is a sub-committee of the CQC-is appointed. That is why one of the amendments to which I have my name, Amendment 307, specifically refers to the committee of HealthWatch England being,

It is a principle of accountability; it is a principle of ownership; it is a principle of safeguarding that independent viewpoint and voice. That is why that is necessary and that is why Amendment 307 in this group is so important.

We also have a series of amendments, Amendments 308, 309, 312, 313, 315 and 316, which try to make sure that it is absolutely explicit that HealthWatch England's role is not just to provide information or advice but, on occasions, to make recommendations to the bodies concerned. It may be a recommendation to the CQC or to the other major national organisations. This group of amendments specifies that that is part of its functioning. It also makes it clear that there should be proper responses to those recommendations from the bodies to whom they are directed. Again, if the Government are serious about making HealthWatch England effective and about having a genuine and clear voice of the users of the NHS and social care services, surely placing in the Bill the power to make recommendations is central to that.

Amendment 314, to which I have also put my name, essentially requires HealthWatch England to provide the CQC with information and advice on the views of patients and the public, and of local healthwatch organisations. It is not a question of it being a discretionary responsibility but a clear responsibility-it "must" rather than it "may". I know that, in this Committee or in your Lordships' House more generally, we sometimes get into esoteric discussions about the relative force of "must", "shall", "may", and so on and so forth. I am quite clear that must is stronger than may. That is to avoid a situation where the national body fails to take into account the views and opinions being expressed locally. It is saying that this is an obligation on the

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organisation to reflect that. Again, if you want to see an independent voice for patients at national level, it must be clear that that body is obligated to put forward the views of patients, the public and local healthwatch organisations.

Amendment 317 also goes to the heart of the relationship between HealthWatch England and local healthwatch organisations. It is a very simple expectation, which I am surprised was not included in the Bill already. HealthWatch England must send a copy of any report it produces to all local healthwatch organisations. This is about the way in which local healthwatch organisations relate to their national body. I speak as someone who ran a national body for patients for a number of years. I know that we would have had an extremely difficult time with our member community health councils had we been making advice and recommendations at a national level without keeping the local organisations, on whose advice those recommendations were based, fully informed of what we were saying and doing. The Bill sets out some of the people who should receive the reports produced by HealthWatch England, but fails to mention local healthwatch organisations. It is a simple change. I am sure it was a mere error in drafting and that the Minister will be able to accept Amendment 317 without wasting time at Report on the issue.

Amendment 318 relates to the relationship between the Secretary of State and HealthWatch England. Clearly, there is a nagging concern in the Department of Health that HealthWatch England may not do all that the Government are hoping, which it certainly will not be able to do unless they make some of the changes being suggested in this group of amendments. However, the Secretary of State has taken upon himself the power to give directions to HealthWatch England. Personally, I do not have a problem with that. I accept that Secretaries of State like to have that in respect of all sorts of organisations. However, before making those directions, which the Secretary of State should not make lightly, Amendment 318 provides that the Secretary of State,

If the Secretary of State were to give a direction on the basis that it was failing to discharge its functions, that should be in the light of the knowledge that local healthwatch organisations, to which HealthWatch England should be responsible and is, in part at least, servicing and supporting, have been properly consulted.

I think that the amendments are entirely modest, sensible and ones that the Government can accept without further problem. They are integral to ensuring that HealthWatch England is the proper voice of the users, patients and those who depend on the NHS.

3.45 pm

Baroness Jolly: I rise to speak to Amendment 311ZA, in the name of my noble friend Lord Clement-Jones, which calls for people's views on those services commissioned by the board, whether locally or nationally, to be taken into consideration. I need to make a declaration, because I am chairman of the Specialised Healthcare Alliance. When she sums up, will my noble friend the Minister try to give some assurance that

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those with rare and complex conditions, services for whom will be commissioned by the board, will be included in all consultations by local healthwatch organisations and by HealthWatch England?

I have some general remarks about HealthWatch, which is to be the voice of the patient both nationally and locally. I want to tease out what it is all about, where it should be and who should be doing it. HealthWatch has to do far more than its name suggests-it has to do more than just watch. Clearly, it needs to listen. I totally support the amendments of the noble Lords, Lord Rooker and Lord Harris of Haringey, who are pushing the idea that HealthWatch should be able to recommend. This is not just a tacit thing: it has to be very much more proactive, to push things back. Whether it is pushing it back to the Secretary of State, CQC, local authority boards, NICE or even clinical commissioning groups, it is critical that that should be seen as part of HealthWatch's role. "No decision about me without me"-well, we will not know about that unless the recommendation amendment is actually woven in.

The amendment of my noble friend Lady Cumberlege is about local healthwatch organisations. Local healthwatch organisations will have an opinion on clinical commissioning groups' commissioning plans, and that opinion should go to the board.

Where should healthwatch organisations be placed? We have said it before in this Committee and I suspect we shall have to say it again on Report: we on these Benches are not convinced that the role for HealthWatch England is with the CQC-as a sub-committee of the CQC-or that the role locally should be with local authorities. One of the things that these organisations will have to do, whether nationally or locally, is to be quite critical of their hosts. It is very difficult to be critical of your host, so it is perhaps not appropriate that they should be their host.

Along with the question of where healthwatch organisations should sit, another issue-certainly, this is an issue at local level-is funding. Funding is currently held by local authorities for LINk organisations. I suspect that many of us who have been involved in this Committee have been receiving letters from LINk organisations saying that their funding is being cut and they cannot possibly manage. That needs to be taken into consideration. I understand that, currently, the pot of funding for local healthwatch is going to be given to a local authority. Should we be unsuccessful in moving local healthwatch out of the local authority, I would like the Government to give some thought as to how that money might be ring-fenced. I know that they are not happy about ring-fencing money, but should money be ring-fenced and be part of, for the sake of argument, the public health budget? If local healthwatch organisations have to remain with local government, then the funding needs some sort of protection.

Who should be involved with HealthWatch? I support the amendment of, I think, the noble Lord, Lord Beecham, that there should be locally elected delegates. HealthWatch England would be far stronger if there were local voices from local healthwatches. Now that

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we will have not strategic health authorities but sub-national areas, perhaps there should be two members from each sub-national area to represent their patch who could give the views of local healthwatch organisations to HealthWatch England. Perhaps that might be appropriate.

The local healthwatch organisations-LINks and their immediate predecessor organisations-have had problems with who actually forms part of these organisations locally. Some have been very good, but some have been less than effective. The members of these groups have just happened to be whoever was interested and keen at the time. Sometimes the groups were positive, but sometimes they really did not work at all. There might be shades of the past here: I wondered if there was any mileage in suggesting that the local healthwatch should be composed of someone from the local authority, someone from the voluntary sector and, of course, someone representing the patients, so that you weave into the local group some professional expertise in order to help with some of the strategic work.

I pass on apologies from my noble friend Lady Tyler, who was going to speak about children-she had her name down to Amendment 311ZA. Children need to be heard. When you talk about the views of children, you might have a mental picture of very little children, but in this context children go up to the age of 18. A lot of interesting services are currently available for teenage children, teenage individuals, young people or young citizens. It is critical that their views, needs and experiences are sought so that they can be fed into the mix.

I have probably said enough now about HealthWatch for the three groups so I shall sit down and not stand up again, but it is critical that we do this right in the Bill. I look forward to seeing what comes out on Report and to seeing where we need to move on to from there.

Baroness Pitkeathley: My Lords, my contribution in support of the amendments is simple and brief: it is to ask that the Minister ensures that we learn the lessons of history and do not repeat the mistakes of the past when it comes to patient involvement. As we know, there is a huge evidence base about the benefits of patient involvement in health outcomes, and I am sure that the mantra of "No decision about me without me" is something that all noble Lords will accept.

While successive Governments have been committed to patient and public involvement, the history of it has not been a happy one. Some of us can go right back to 1974 when CHCs were first set up. Like my noble friend Lord Harris, I believe that this Government are committed to putting patients at the heart of the NHS, but let us look at why the previous attempts to do so have not been successful. In summary, I suggest that the reasons are these: the efforts have not been sufficiently well funded; they have not been seen as sufficiently independent and therefore have had conflicts of interest; they have not had enough status; and there has not been seen to be enough communication between national and local bits of the set-up.

I leave aside the current problems of the CQC, although I agree with noble Lords who have spoken

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about that, but the very idea of making the new body a sub-committee of anything seems to me to ensure that we are in fact going straight down the route where we have made so many mistakes before. I remind the Committee that those who do not learn from history are doomed to repeat it.

Baroness Cumberlege: My Lords, the noble Lord, Lord Harris, is right that we have already had this debate much earlier in the progress of the Bill, when we discussed the relationship between the Care Quality Commission and HealthWatch England. The debate took place on 22 November and I spoke in cols. 977-79, and your Lordships will be very grateful to hear that I am not going to go through it again.

There are just one or two things that I want to say. The amendments that I tabled at that time were very similar to some of those that have been tabled today. However, I want to make it plain that I am not, in principle, in favour of making Healthwatch England totally independent. I think there are enormous advantages in having a very close relationship with the Care Quality Commission. As I have said, I am not going to go into the reasons why at this time.

The first amendment that I have tabled provides:

"The majority of the members of the Healthwatch England committee shall not be members of the Commission".

I think that is very important, in order to give them opportunities to criticise the CQC. The second amendment provides:

"The provision that must be made by virtue of sub-paragraph (1A) includes provision as to-

(a) the majority membership of Healthwatch England committee being elected from representatives of Local Healthwatch organisations, and

(b) the manner in which those representatives are elected, the term which they must serve and the role that they must fulfil".

That has been very well argued again this afternoon.

Both the independence and the influence of Healthwatch England can be secured, providing that the right sequence of accountability is in place. I see this as follows: Healthwatch England must have a majority membership made of elected people from local healthwatches, and it must be accountable for the way it influences the CQC by local healthwatches across the country. The CQC must be accountable for the way in which it responds to HealthWatch England, and local healthwatches must be protected from interference and bias from local authorities. I will say more about that in the next group.

I want to take up the very good points about history made by the noble Baroness, Lady Pitkeathley. The question of whether Healthwatch England should be a stand-alone organisation is actually answered in history. Fourteen years ago, the then Association of Community Health Councils for England and Wales published Hungry in Hospital?. This highlighted the failure to feed elderly patients in hospital separately. Just a few weeks ago, exactly the same problem was highlighted in the dignity and nutrition programme report from the CQC. We know it is still a problem but have failed as a nation to sort it out. I wonder if ACHCEW had been part of the regulator, whether the CHCs could have ensured that the matter was addressed

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by the regulator and then monitored whether it was or not. Simply making an organisation stand-alone does not give it influence; indeed, it can distract it into supporting its own infrastructure, leaving less capacity for getting on with the job. Its functions, membership and accountability are what make it independent, and not, necessarily, its stand-alone status.

Baroness Emerton: My Lords, my name is not under any of the amendments, but I want to say briefly how much I support what has been said by the noble Lords, Lord Warner and Lord Harris, and the noble Baroness, Lady Pitkeathley.

Following on from the noble Baroness, Lady Cumberlege, I think that, while Healthwatch will have some opportunity to look at the CQC, it will usually look at the negative side. However, I thought HealthWatch was going to be a body that might be able to influence future policy. Certainly, when I had the experience of sitting on a CHC board, it was able to contribute to the future policy of a new development. I feel we are looking very much at the negative, rather than the positive and the contribution that can be made by members of HealthWatch, possibly to future national policies.

Thinking back to the changes that took place in mental health and learning disabilities, I think that it would have been very valuable to have had the contribution of the HealthWatch group of people. We did not have it at that stage. Somehow we need to weave into this the positive side of policy-making and strategy that HealthWatch can often contribute in a very positive way. While HealthWatch will have a contribution to make in looking at the negative side-which usually means the critical side in relation to the CQC-I do not think that that should be its sole role. I hope the Government will take that away and perhaps feed it in.

4 pm

Baroness Wheeler: My Lords, I shall speak briefly in favour of these amendments, which would make HealthWatch England independent of the Care Quality Commission and strengthen its role so that it has the function of making recommendations, not just providing advice and information, to the Secretary of State, the NHS Commissioning Board, Monitor, the Care Quality Commission and local authorities.

I emphasise that we are strongly in favour of HealthWatch England having the powers that will make it the powerful consumer champion for the views and experiences of patients, their families and carers that we want to see. However, we firmly believe that this will not be achieved if it remains a sub-committee of the Care Quality Commission-an important issue that we will return to on Report, and which we believe is crucial to HealthWatch England's success as a public watchdog and patients' champion that is able to make a real difference. My noble friends Lord Warner and Lord Harris have set out the arguments for this very strongly. I will not go over them again. They were indeed thoroughly aired in the previous debate anyway.

The amendments in this group from my noble friends Lord Harris and Lord Rooker also seek to ensure that the Secretary of State consults local HealthWatch

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organisations before he or she gives a direction to HealthWatch England concerning its failure to discharge a significant function that it is required to undertake. We support this requirement. We also support the amendment requiring HealthWatch England's annual report to be sent to all local healthwatch organisations.

On the issue of how the committee of HealthWatch England is to be constituted, although we are supportive of its members being elected from local HealthWatch organisations-as also proposed by my noble friends-we will want to consider this issue more fully in the light of whether the full independence of HealthWatch England from the Care Quality Commission is secured. We also want to consider how we can ensure that members of both HealthWatch England and local healthwatch organisations, are more fully reflective of their communities in terms of gender, disability and ethnicity. A great deal more thought and work needs to be undertaken on this issue, possibly as part of the pathfinder healthwatch transition pilots. I will be interested to hear the Minister's views on how this could be taken forward.

I was going to comment on a number of other amendments but they have been thoroughly gone into by noble friends, so I will leave it at that.

Baroness Northover: My Lords, this has been another excellent debate. We have returned to the topic of HealthWatch, which we also discussed on 22 November. I listened very carefully to the views expressed in that debate. It seemed that there was a consensus, as there has been again today, about the need to have the patient voice very much at the heart of the NHS. There was agreement then, as I think there is today, that the Bill moves us forward in making sure that the patient voice is at the heart of the NHS. I thank the noble Lord, Lord Warner, for his comments in this regard.

However, I fully recognise that there are significant concerns about the way in which the Government are taking forward these proposals. When we discussed this previously, I made a commitment to continue discussing these issues. We have had subsequent meetings, which some noble Lords have attended; I thank them for their input. I found those meetings extremely constructive. I also attended the meeting between the noble Earl, Lord Howe, and the national association.

Our previous debate focused on the independence of HealthWatch England, which will be a statutory committee of the CQC. I understand that this risks, as the noble Lord, Lord Harris, said, dangerously compromising the independence that I talked about as being so important. Let me be clear why we are proposing this arrangement. There is a reason why, at present, there is no national statutory organisation to champion the patient voice. The last body, to which noble Lords made reference-the Commission for Patient and Public Involvement in Health-was abolished for being ineffective and lacking influence as well as being too expensive and too centralising. To quote from the Health Select Committee's 2007 report into Patient and Public Involvement in the NHS:

"The evidence we received was overwhelmingly critical of the Commission".

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The noble Lord, Lord Warner, said that the Government should set up an authoritative, stand-alone body, and others have made similar points. This is, however, precisely the point. While I respect the view of the noble Lord, the Government have not been convinced that it would be possible to have such an authoritative stand-alone body in the form that they suggest. The previous Government's attempt to do this with the commission did not work out well, as noble Lords know. The abolition of the commission was announced five months after it started work. It limped on for a further three years, chewing up £100 million and was universally criticised.

Lord Harris of Haringey: Bandying around figures-"it chewed up £100 million"-gives a completely misleading impression. Could she tell us what proportion of that £100 million was the administrative cost of the commission, as opposed to the provision of patient and public involvement forums in every part of the country? The figure of £100 million is totally misleading.

Baroness Northover: I suggest that the noble Lord talks to his noble friend Lady Pitkeathley about some of the details.

Lord Harris of Haringey: I suggest that if you use a figure like £100 million, which was not the figure used by the noble Baroness, Lady Pitkeathley, you need to explain that that includes the running of the public and patient involvement forums. It is not the cost of the administration of the national body itself.

Baroness Northover: The organisation used up £100 million. There were criticisms from the local organisations that they were not getting the money they needed, so there was widespread criticism. There was criticism at a national level within the NHS and, in particular and importantly, the local organisations did not feel that it was acting in the way they needed it to, or feeding through to them the resources they needed to do what they felt was appropriate.

Lord Harris of Haringey: One of the failings of the commission was that it did not have a relationship with local public and patient involvement. The purpose of the amendment which talks about direct election would be to obviate that problem and provide a constraint in terms of whether or not there were going to be overly centralised administrative costs, because the body itself would be accountable to the local bodies that would be the recipient of most of them. My concern and my frank irritation with the commission-which I had no part in at the time-was the suggestion that all the £100 million was somehow used by the central administration. That was not the case.

One of the failings of the commission was that it was not accountable and did not have a proper direct relationship with local public and patient involvement. That was a fault both of the way it was constructed in terms of the legislation, for which the Labour Government of the time must take responsibility, and of the way in which the commission chose to work, with the support of the Department of Health at that stage.

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