National Health Service (Procurement, Patient Choice and Competition) Regulations 2013 - Secondary Legislation Scrutiny Committee Contents



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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