SCOTTISH HOSPITAL TRUST (Hansard, 9 April 1974)

§ The Under-Secretary of State for Scotland (Mr. Robert Hughes)
I beg to move, That the Scottish Hospital Trust Scheme 1974, a draft of which was laid before this House on 2nd April, be approved. With permission, I shall deal at the same time with the draft Scottish Hospital Trust (Amendment) Regulations 1974, laid on the same date. Although these two instruments are quite separate and distinct in their purpose, they cover the same subject, namely, endowments to which the Hospital Endowments (Scotland) Act 1971 refers. They replace or amend, as a consequence of health service reorganisation, existing statutory instruments, and it may be convenient if I first refer briefly to these earlier provisions.
Under the 1971 Act, endowments held by voluntary hospitals at 5th November 1946 and, from July 1948, vested in the hospital boards, were transferred, with minor specified exceptions, on 1st April 1972 to the Scottish Hospital Trust—a new body set up to hold and manage these funds and to distribute the net income from them in accordance with schemes made by the Secretary of State. The Trust was empowered to receive new endowments in its own right and to distribute the income in the same way. Further, it might accept for management purposes other capital transferred to it voluntarily by hospital boards. For income distribution purposes, the Scottish Hospital Trust Scheme 1972 was made. At the same time, the Scottish Hospital Trust Regulations 1972 were made to provide for such matters as exceptions from transfer, valuation of endowments transferred, and borrowing by hospital boards against the capital of the endowments.
It is these two statutory instruments that the two now being debated will replace or amend. The need to do this is a consequence of reorganisation of the health service in Scotland, which renders obsolete the references in existing legislation to hospital boards. Section 38 of the National Health Service (Scotland) Act 1972, which came into operation on 1st April, transferred the rights in these endowments from hospital boards to health boards and also contained certain 384 provisions relating to distribution of income to which I shall return shortly.
Before dealing with the two instruments in detail, I should explain that in general they continue the effect of existing provisions. The only new features are in the draft scheme, and I shall make reference to these.
Paragraph 3 of the scheme continues the existing basis of income distribution —that is, £3 per bed per annum, plus a balance based on the amount of capital which was transferred to the Scottish Hospital Trust by the hospital boards which have now been succeeded by the 15 area health boards. However, there is in paragraph 3(a)(i) one new provision which will enable hospital beds in local authority institutions to be counted for the £3 per bed payment. I should perhaps mention that the State Hospital will continue to benefit to the extent of £3 per bed only because it did not contribute any capital to the trust.
Paragraph 4 provides for conditions as to the use of the income, and I should draw attention to the way in which we are giving effect to the requirement of Section 38(3) of the 1972 Act that the effect of the former income distribution should be retained. That is, although we now have health boards administering an integrated health service, this endowment income will continue to be used for hospital purposes or medical research. Further, groups of hospitals will continue to enjoy approximately the same level of income as they did when they were managed by boards of management. This is the purpose of paragraphs 4(3) to 4(5), which the House will note prescribe that 90 per cent. of the income being received from the Trust shall be allocated in this way. The groups which we determine for this purpose will correspond to the hospitals previously managed by the respective boards of management. We have provided a certain flexibility here because, although hospitals must be individually identified for this purpose, these details are changing from time to time as new hospitals open and old ones close, and it would be inconvenient to have to make a new scheme every time this happened.
When the endowments of which I have been speaking were transferred to the Trust, income which had been accumulated from these endowments was left 385 with the hospital boards. But no provision was made covering the use of these particular funds. We think that this should now be done, and paragraph 5 applies the same rules to the use of this money as will apply to income paid by the Trust.
The schedule contains certain special provisions laid down originally by the donors and still acceptable to the boards concerned. As we are required to do, we have consulted health boards and also the former hospital boards about the draft scheme. It has been accepted with very few comments.
I turn now to the draft regulations. Here I need only say that they in no way alter the effect of the 1972 Regulations, apart from omitting a provision no longer required in respect of a particular block of capital previously held by the Board of Management for the Royal Infirmary of Edinburgh. Provision to enable the health board to withdraw these funds from the Trust for capital development is no longer required as the whole of the funds have in fact been withdrawn for such purposes.
For the rest, the regulations merely substitute appropriate references to health boards in place of references to hospital boards and provide for transfer of the rights and obligations which the 1972 Regulations placed on hospital boards.
I hope that the House will approve the two instruments.

§ Mr. Graham Page (Crosby)
I regret that this is another matter that the Select Committee on Statutory Instruments had an opportunity of considering only this afternoon. What puzzles the Committee is that the Scottish Hospital Trust Scheme 1972 still remains effective. It is not repealed by the present scheme that we are considering.
This scheme is made under the Hospital Endowments (Scotland) Act 1971, and by that Act the Scottish Hospital Trust Scheme was established in September 1971. Such endowments as have been given to Scottish Health Service hospitals before 5th November 1946 were transferred to the Scottish Hospital Trust in April 1972.
The Scottish Hospital Trust Scheme 1972 was set up by statutory instrument 386 No. 391 of 1972 under Section 7(1) of the 1971 Act. The Scottish Hospital Trust was to distribute the income from the endowments among boards of management, regional hospital boards and State hospitals in accordance with the scheme set up by the statutory instrument No. 391 of 1972. Therefore, the Scottish Hospital Trust Scheme 1972 provides for the distribution of the income from these endowments to certain named boards of management and regional hospital boards which will no longer exist. But Part VI of the National Health Service (Scotland) Act 1972—in particular, Section 40—requires that the Hospital Trust property, both capital and income, which was held in trust for the previous hospital bodies, shall be held in trust for the new health boards.
I submit that that keeps alive the trust scheme in the Statutory Instrument No. 391 of 1972. That statutory instrument is not repealed by the present scheme, because the 1971 Act did not give power to repeal the trust scheme. I think that was an error in the Act with which we are now faced. We cannot repeal it under the provisions of the 1971 Act or by this statutory instrument, so we have two schemes to some extent contradictory, still effective.
I suggest that the Secretary of State has a way of getting round this difficulty. He has wide powers under Section 61 of the National Health Service (Scotland) Act 1972 which provides that he may by order make such incidental, consequential, transitional or supplementary provision…for giving full effect to the reorganisation of health services in Scotland. I believe that the Minister could use those powers to remove Statutory Instrument No. 391 of 1972 from being effective—that is to say, to repeal it —and not cause the confusion of having two contradictory statutory instruments still effective.
I do not ask the hon. Gentleman to give an undertaking off the cuff but I do ask him to look at this carefully and see whether he can put matters right by using Section 61 of the National Health Service (Scotland) Act 1972.

§ Mr. Robert Hughes
I am grateful to the right hon. Member for Crosby (Mr. Page) for raising this point. Our legal advice is the same as the right hon. Gentleman's, namely, that there is no 387 power in the Hospital Endowments (Scotland) Act 1971 to repeal the scheme. The power is given to the Secretary of State only to prepare schemes from time to time.
The 1972 scheme, although it is still in existence, will, we believe, be inoperable because the hospital boards and the regional hospital boards no longer exist. The only continuing authority is the State hospital at Carstairs and the provision is carried forward for the payment of £3 per bed. Therefore, there is the point that the two schemes will stand as matters rest now.
Perhaps, in defence of the Government, I should point out that we were not responsible for the passage of the 1971 Act. Nevertheless, I take the point. We have had a chance to look only briefly at Section 61 of the National Health Service (Scotland) Act 1972. We shall look at that again, and I assure the right hon. Gentleman that if the matter can be put right and it is thought necessary to do so we shall take the necessary action.