INSTRUMENT
DRAWN TO
THE SPECIAL
ATTENTION OF
THE HOUSE
A. NATIONAL HEALTH
SERVICE (PROCUREMENT,
PATIENT CHOICE
AND COMPETITION)
REGULATIONS 2013 (SI 2013/257)
DATE
LAID: 13 FEBRUARY
2013
PARLIAMENTARY
PROCEDURE: NEGATIVE
ALTHOUGH THE GOVERNMENT HAVE ANNOUNCED THAT THEY
INTEND TO REVISE THESE REGULATIONS, THE COMMITTEE DECIDED TO
PUBLISH THE REPORT IT HAD PREPARED SO THAT THE DEPARTMENT MIGHT
BE AWARE OF THE ISSUES IT FOUND OF CONCERN. WE WILL EXAMINE ANY
SUBSEQUENT REGULATIONS WITH PARTICULAR INTEREST TO SEE HOW THESE
POINTS HAVE BEEN ADDRESSED.
SUMMARY: RATHER THAN THE MORE GENERALISED DUTY NOT
TO BE ANTI-COMPETITIVE THAT THE HEALTH SECTOR EVIDENTLY EXPECTED,
THESE REGULATIONS REQUIRE THE WIDER USE OF COMPETITIVE TENDERING
IN THE PROCUREMENT OF MOST SERVICES. THE CONTENTION IS OVER THE
DEGREE TO WHICH, FROM 1 APRIL 2013, NHS SERVICES WILL HAVE TO
BE COMMISSIONED THROUGH COMPETITIVE MARKETS, WHETHER CONTRACTS
WILL HAVE TO BE ADVERTISED AND HOW THE PROCUREMENT LEGISLATION
WILL BE ENFORCED BY MONITOR, A SECTOR REGULATOR.
A LARGE NUMBER OF SUBMISSIONS FROM THE PROFESSIONAL
INSTITUTIONS, UNIONS, AND THE PUBLIC POINT TO DIFFICULTIES IN
THE PROVISION OF COLLABORATIVE HEALTH CARE WHERE CONSIDERATIONS
OF SUITABILITY FOR PURPOSE ARE WIDER THAT JUST THE FINANCIAL COST.
THERE ARE ALSO QUESTIONS ABOUT THE AVAILABILITY OF GUIDANCE AND
HOW THESE MEASURES MAY BE AFFECTED BY THE RECOMMENDATIONS IN THE
FRANCIS REPORT. MOST SIGNIFICANTLY, THE 2,000 SUBMISSIONS RECEIVED
BY THE COMMITTEE INDICATED A BELIEF THAT THE REGULATIONS, PARTICULARLY
REGULATION 5 WHICH REQUIRES CONTRACTS TO BE SUBJECT TO OPEN COMPETITION
EXCEPT WHERE THERE IS "EXTREME URGENCY" OR "TECHNICAL
REASONS", DO NOT MATCH UP TO THE UNDERTAKINGS GIVEN BY MINISTERS
DURING THE PASSAGE OF THE HEALTH AND SOCIAL CARE ACT 2012. THE
DEPARTMENT'S RESPONSE (INCLUDED IN APPENDIX 1 TO THE REPORT) ROBUSTLY
DEFENDS THE GOVERNMENT'S POSITION. THE
HOUSE WILL
WISH TO
EXAMINE THE
WORDING OF
THE LEGISLATION
CAREFULLY BUT
IT IS
CLEAR THAT
FROM THE
WIDESPREAD CONCERN
THAT THE
DEPARTMENT WILL
HAVE A
MAJOR TASK
IN EXPLAINING
THESE PROVISIONS
TO HEALTH
STAFF AND
PERSUADING THEM
TO ACCEPT
THE DEPARTMENT'S
INTERPRETATION OF
THEM.
THIS INSTRUMENT
IS DRAWN
TO THE
SPECIAL ATTENTION
OF THE
HOUSE ON
THE GROUND
THAT IT
MAY IMPERFECTLY
ACHIEVE ITS
POLICY OBJECTIVE
1. These Regulations have been laid by the Department
of Health (DH) under provisions of the Health and Social Care
Act 2012 accompanied by an Explanatory Memorandum (EM).
BACKGROUND
2. These Regulations implement aspects of the
Health and Social Care Act 2012 ("the Act") by imposing
requirements on the NHS Commissioning Board and Clinical Commissioning
Groups (CCGs) to ensure good practice when procuring health care
services for the purposes of the NHS, to protect patients' rights
to make choices and to prevent anti-competitive behaviour. The
Regulations provide scope for complaints to, and enforcement by,
Monitor, an independent health regulator, as an alternative to
challenging decisions in the courts.
RESPONSE FROM THE HEALTH SECTOR
3. There has been an unprecedented reaction from
the public and those who work in the health sector, they have
sent over 2,000 submissions to the Committee, all of which indicate
a widespread belief that these Regulations go beyond what was
promised during the passage of the Act: in particular, that they
require CCGs to undertake competitive tendering for the procurement
of services rather than the more generalised duty not to be anti-competitive
that was expected. Regulation 5 is the particular area of contention.
4. The representations received are published
on the Committee's website.[1]
They come from many of the professional institutions, unions,
councils, charities, academics and a very large number of individuals,
some of whom work in the sector. The bulk of them are linked to
four campaign letters; we publish one example of each citing the
number of copies received, but there are also over 300 unique
expressions of concern. It should also be noted that several of
the submissions claim the support of more than one individual
- for example, the TUC submission has 1,125 short comments appended
to it that their website received within a 24 hour period [comments
not published but available on the TUC's Going to work
website].
5. The Committee has, as usual, sought a response
from the Department to the points raised. Their response is attached
in full at Appendix 1, and is quoted in the report. It is essentially
a robust defence of the Regulations and maintains that they conform
with the Ministerial undertakings given.
CONTENTION OVER WHETHER THERE MUST BE COMPETITIVE
TENDERING
6. The contention is over the issue of whether,
from 1 April 2013, most NHS services will have to be commissioned
through competitive markets, whether contracts will have to be
advertised and how the legislation will be enforced by Monitor,
a sector regulator.
7. Regulation 4(2) requires CCGs to publish a
contract notice on the website maintained by the National Health
Service Commissioning Board for that purpose. Regulation 4(3)
states that it must include a description of the services required
and the criteria against which any bids for the contract will
be evaluated. Regulation 5 allows CCGs to award a new contract
without a competition where there is only a single provider capable
of providing those services. But the CCGs' discretion is further
restricted by regulation 5(2) which states that the services are
to be determined as capable of being provided by a single provider
only for "technical reasons" or for reasons of "extreme
urgency" brought about by unforeseeable events.
8. Other regulations give Monitor extensive powers
to investigate a complaint that a CCG has failed to comply with
the requirements (reg 13), and to enforce breaches of them either
by giving a direction (reg 15) or, in serious cases, by declaring
a contract ineffective (reg 14).
THE DEPARTMENT'S POSITION
9. In its submission (see Appendix 1), the Department
states that the Regulations aim to make the "commissioning
processes... much more transparent and (provide)... safeguards
to protect patients from conflicts of interest, discrimination
and anticompetitive conduct." DH continues :
"The Government is absolutely committed to the
principle that clinical commissioners will decide how to secure
improvements in NHS services because they are best placed to understand
patients' needs and to determine which providers are best able
to meet those needs. The regulations provide a framework for these
decisions that protects patients' interests and is overseen by
a specific regulator for the health sector whose main duty is
to protect and promote the interests of patients."
In respect to regulation 5, DH states:
"The intention of regulation 5 is to recognise
that in such circumstances commissioners should be able to award
contracts without the unnecessary cost and delay of a competitive
tendering process where they are satisfied that there is only
one provider capable of delivering their requirements.
Where there are several providers capable of meeting
a commissioner's request (e.g., to provide a new service), the
regulations would protect against commissioners discriminating
in favour of a particular provider, and will require a transparent
and fair process to determine who can best meet the needs of their
populations.
These requirements go no further than existing UK
procurement law (the Public Contract Regulations 2006). This law
already applies to Primary Care Trusts - and this was reflected
in the previous administration's procurement guidance since 2008."
CONCERNS FROM THE HEALTH SECTOR
10. The general tenor of the submissions that
the Committee received is concern that the clinical discretion
of those commissioning the services will be overruled by the mechanics
of procurement legislation and that Monitor will not understand
the context for a CCG's decisions. Some express concern that the
process will substantially increase the costs and time taken over
commissioning (for example, Chris Frith, GP) and that "commercial
confidentiality would reduce public involvement in the commission
process in violation of the NHS constitution and the Public involvement
and consultation by clinical commissioning groups provisions of
the Health and Social Care Act" (for example, Alison Macfarlane,
Professor of Perinatal health, City University, London). Many
health professionals who have made submissions are not against
transparency and probity in procurement but feel that there are
wider considerations when it comes to commissioning health care.
11. The Royal College of Midwives illustrate
this in their letter:
"the Government's mandate to the NHS Commissioning
Board, ... requires the Commissioning Board to work with partners
to ensure that: "every woman has a named midwife who is responsible
for ensuring she has personalised, one-to-one care throughout
pregnancy, childbirth and during the postnatal period, including
additional support for those who have a maternal health concern."
12. The College is concerned that compulsory
competitive tendering arrangements will lead to the fragmentation
of services:
"The most effective way of ensuring that women
are cared for by a named midwife is by commissioning one provider
to deliver care across the pathway... under the new regulations
this could be ruled out because it effectively restricts competition.
The problem is that most independent maternity providers do not
provide the full range of maternity care ...or are intent on 'cherry
picking' the least expensive and risky elements of care, such
as antenatal classes or breastfeeding support (as per AQP policy)."
13. DH's response states:
"Under the regulations, commissioners have discretion
to decide whether, where and when to introduce the conditions
needed to stimulate or create a market for services. In particular
there is no requirement through the regulations for commissioners
to:
- unbundle or fragment services
in order to facilitate competition, (i.e. to separate out individual
services in order that they could be provided by a larger range
of providers); or
- offer contract terms (eg prices, and contract
durations) that enable new providers to enter a market by offering
a return on the investment cost of market entry.
When and whether to create these conditions and the
services to which they apply remain entirely with a commissioner
to decide. So, for example, a commissioner may decide not to create
the conditions to enable a market for a fully integrated service
(say for End of Life Care, or frail older people with multiple
complex problems, or maternity services, or sexual health services
- linked to screening, particularly where patients are offered
choice of treatment, setting and/or clinician)."
14. While the Regulations do not appear to oblige
commissioners to break up contracts to open them to a wider range
of providers, their decisions remain open to challenge under regulation
10(2): "an arrangement for the provision of health care services
for the purposes of the NHS must not include any restrictions
on competition that are not necessary for the attainment of intended
outcomes". Any supplier who has not been awarded the contract
will have a clear incentive to challenge the procurement process.
The general view of the professional institutions, which we assume
have technical resources to obtain an expert view of the effect
of the legislation and will fully understand the context of the
NHS procurement process, is that the Regulations have the effect
of making competition the default approach, whilst imposing a
burden of proof on commissioners wishing to restrict competition.
15. The Royal College of Nursing points out that
collaboration is a key element of health care because many different
disciplines can be involved in the care of a patient. They are
concerned that focusing on competition, particularly price competition,
will make quality standards a secondary consequence and may lead
to inequalities in provision. The cheapest provider is not always
the most suitable. This is echoed by a number of the individual
responses, for example by Dr Caroline de Cates, in relation to
the care of children with special needs or adult mental health
services.
16. Help the Hospices raises a particular concern
on how these procurement Regulations will operate with charitable
organisations which have different accountabilities to the NHS:
"Local hospices are generally not commissioned
in the same way as other NHS funded care. They frequently receive
a contribution from the NHS towards the costs of the care that
they provide to the local community but that contribution is only
very rarely linked to particular services or volumes. The "price"
they are paid by the NHS for these services is in no way cost
reflective. On average, hospices fund over 60% of the care they
provide from charitable sources."
TRANSITION
17. Another key point raised in the submissions
we received including Template letter 3, is about the management
of the transition. These Regulations will come into force in less
than a month's time but the guidance referred to in the Government's
Explanatory Memorandum is not fully available yet. Although the
DH's additional information in Appendix 1 sets out that the NHS
Commissioning Board Authority has developed a series of procurement
briefings for CCGs that summarise the key elements of legislation,
they are obviously not well known in the health sector. DH adds
that Monitor only plans to formally consult on its draft guidance
in March and that CCGs will be organising their own staff training
on the Regulations but that is yet to be arranged. The Department
points out that many of those managing this system will be existing
professional procurement staff transferred to CCGs from Primary
Care Trusts and that CCGs themselves have not raised any issues
about the proposals. However, we have received submissions from
individuals involved in CCGs who question the plans, for example
Dr Richard Grimes, a patient representative on his local CCG,
who is concerned that cherry picking of services "for competition's
sake could make other services unsustainable" or Alison Dean
who says "We do not have the staff to manage the existing
system at the same time as tendering large parts of it".
TIMING
18. A number of representations, for example
the UNITE union, Mr John Hully and the 29 people who submitted
Template letter 3, also make reference to the report of the inquiry
by Sir Robert Francis into the Mid-Staffordshire NHS Foundation
Trust.[2] They state that
a number of the recommendations made (particularly 124-127, 129-132)
relate to the procurement of services and to the role of Monitor.
The Government have not yet responded to these recommendations
and these submissions suggest that those issues should be resolved
before Monitor is given further powers.
MINISTERIAL ASSURANCES
19. Almost every one of the submissions received
conveys the belief that the provisions of these Regulations are
at variance with ministerial statements made during the passage
of the then Health and Social Care Bill about the commissioning
arrangements:
- In July 2011, the then Health
Minister, Simon Burns MP, insisted that "it will be for
commissioners to decide which services to tender… to avoid
any doubt - it is not the Government's intention that under clause
67 [now 75] that regulations would impose compulsory competitive
tendering requirements on commissioners, or for Monitor to have
powers to impose such requirements".[3]
- The then Secretary of State for Health, Andrew
Lansley MP, wrote to commissioners in February 2012 to assure
them that: "It is a fundamental principle of the Bill
that you as commissioners, not the Secretary of State and not
regulators - should decide when and how competition should be
used to serve your patients interests".
- The following month, Health Minister, Earl Howe
reiterated the Government's position: "Clinicians will
be free to commission services in the way they consider best.
We intend to make it clear that commissioners will have a full
range of options and that they will be under no legal obligation
to create new markets".[4]
20. Those who have written to us find these statements
very hard to reconcile with the narrowness of regulation 5 where
a contract can only be issued without a competition in "extreme
urgency" or for "technical reasons". It does not
help that these limitations are not defined. In their response
to the Committee, the Department explains:
"In many cases, there will only be one provider
capable of delivering those requirements for 'technical reasons'
as envisaged under Regulation 5 (Paragraph 2(a)). Examples of
services where there may typically only be one capable provider
include:
- acute hospital services on single
sites and accessible 24 hours a day 7 days a week;
- a range of integrated services
delivered in the community;
- highly specialised care; or
- services in more rural or remote areas of the
country."
21. It is clear to the Committee that awareness
of this guidance has not widely penetrated the health sector.
We are also uncertain what status this guidance has in law. In
our scrutiny of other instruments we have been made aware of the
position taken by the courts in a number of recent cases, where
the Judge has made a clear distinction between what the legislation
states and qualifying provisions set out in guidance or other
material.[5] In these cases,
the courts have followed the letter of the law: so that law must
be clear.
22. A basic reading of regulation 5 seems to
indicate relief from the obligation to advertise contracts only
in cases of extreme urgency of for technical reasons, terms which
are undefined and therefore appear to leave CCGs open to challenge
from any supplier who has not been given the opportunity to bid.
THE DEPARTMENT
CLEARLY PERCEIVES
A FAR
GREATER FLEXIBILITY
IN THIS
PROVISION THAN
OTHER READERS
DO AND
THE HOUSE
MAY WISH
TO PRESS
THE GOVERNMENT
TO GIVE
A CLEARER
EXPLANATION OF
THE LEGISLATIVE
PROVISIONS THAT
LED THEM
TO THIS
CONCLUSION.
CONCLUSION
23. Whilst those commissioning health services
were previously encouraged to use competitive tendering, these
new Regulations appear to require them to do so for most services.
This is a significant change and rather more than the generalised
duty not to be anti-competitive that the health sector evidently
expected. A large number of the submissions that this Committee
has received all point to difficulties in the provision of collaborative
health care where considerations of suitability for purpose are
wider than just the financial cost. The Department's response
robustly defends its position and maintains that these Regulations
fully match the undertakings given by Ministers during the passage
of the Bill. It is clear that both the professional institutions
and a wide range of individuals across the country do not share
that view. THE HOUSE
WILL WISH
TO EXAMINE
THE WORDING
OF THE
LEGISLATION CAREFULLY.
IT IS
CLEAR THAT
FROM THE
DEGREE OF
CONCERN IN
THE HEALTH
SECTOR AND
BEYOND THAT
THE DEPARTMENT
WILL HAVE
A MAJOR
TASK IN
EXPLAINING THESE
PROVISIONS TO
HEALTH STAFF
AND PERSUADING
THEM TO
ACCEPT THEIR
INTERPRETATION OF
THEM: ON
THAT BASIS
WE DRAW
THE REGULATIONS
TO THE
SPECIAL ATTENTION
OF THE
HOUSE ON
THE GROUNDS
THAT THEY
MAY IMPERFECTLY
ACHIEVE THEIR
OBJECTIVE.
CORRESPONDENCE:
RIGHTS OF
PASSENGERS IN
BUS AND
COACH TRANSPORT
(EXEMPTIONS) REGULATIONS
2013 (SI 2013/228)
24. The Committee's 28th Report[6]
drew this instrument to the special attention of the House on
the ground that it may inappropriately implement EU legislation.
This was because the Committee was unable to consider properly
the potential effects of the derogations proposed, due to the
fact that the Department for Transport failed to provide either
the final Impact Assessment or the analysis of consultation when
they laid the instrument. We also found the Explanatory Memorandum
to be inadequate and wrote to the Minister for an explanation.
The Committee's letter and the Minister's response are published
at Appendix 2.
1 www.parliament.uk/seclegpublications Back
2
http://www.midstaffspublicinquiry.com/sites/default/files/report/Executive%20summary.pdf Back
3
HL Debates, 12 July 2012, col 442 http://www.publications.parliament.uk/pa/cm201011/cmpublic/health/110712/pm/110712s01.htm
Back
4
HL Debates, 6 March 2012, col 1691 http://www.publications.parliament.uk/pa/ld201212/ldhansrd/text/120306-0001.htm Back
5
For example Alvi v The Secretary of State for the Home Department;
Reilly and Wilson v The Secretary of State for Work and Pensions Back
6
28th Report of Session 2012-13 HL Paper 123 Back
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