National Health Service (Amendment) Bill

HL Deb 30 July 1986 vol 479 cc910-45

8.12 p.m.

The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington)

My Lords, I beg to move that this Bill be now read a second time.

This short Bill contains provisions on three important health issues. Although dealing with different aspects of health care, all the provisions demonstrate the Government's continuing commitment to promote the interests of patients, while making the best use of available resources.

Clause 1 seeks to apply the food hygiene legislation to health authorities and thus remove Crown immunity from hospital catering. This will make hospital catering subject to hygiene standards in the handling, storage and temperature control of food. Lifting Crown immunity will also give local authority environmental health officers a legal right to enter health authority premises. Hospitals and other health authority premises will be subject to the same food hygiene requirements, with the same enforcement powers, as apply to other premises where food is stored, prepared and served.

I want to make it clear to your Lordships that these changes should not greatly affect the day-to-day position in the vast majority of hospitals, which maintain high standards. Health authorities have been in the habit of inviting local authority environmental health officers to inspect kitchens at will, and to make appropriate recommendations. However, environ-mental health officers have not been able, because of Crown immunity, to enforce the food legislation.

The removal of Crown immunity in respect of the food legislation will make an important contribution to the continuing process of raising food hygiene standards in hospitals. But it should not be taken as an instant "cure-all" to food hygiene problems. It will provide a firm basis for action. Revised guidance to health authorities will also be issued; once again to emphasise the standards which must be accomplished and to reinforce the need for staff to receive adequate supervision and training. Together, these measures will help and support general managers in their task of ensuring that proper standards are achieved and maintained.

There can be no substitute for effective management and supervision in hospital kitchens. I would like to pay tribute to all those staff who play their part in ensuring that patients and fellow members of staff get a decent service. The numbers involved are, as may be imagined, vast.

I now move on to Clause 2. This proposes to change the arrangements for allocating NHS pharmacy contracts to retail pharmacists. It provides powers for family practitoner committees to grant an application for an NHS contract, only in circumstances where it is necessary or desirable for the NHS to pay to ensure the adequate provision of patient services.

At the outset, let me say that the new arrangements will apply to retail pharmacy only. There are about 25,500 working pharmacists in Great Britain. The 6,700 or so who work in hospitals, in industry or in education will not be affected by the new arrangements.

The present situation (and it is just as well to spell it out) is as follows. Retail pharmacists are contracted with the NHS on a cost-plus basis; that is, they are reimbursed the costs of dispensing NHS drugs plus a margin for profit. Their total payment consists of a number of elements: the ingredient cost of the drugs used in dispensing NHS prescriptions; a container allowance; a differential on-cost allowance, based on the average cost of prescriptions dispensed; and a dispensing fee of 55p for each NHS prescription. For those pharmacies in England and Wales in contract on 1st July 1980 or who have entered into contract since that date and are located at least 1 km from the nearest pharmacy, a basic practice allowance of £3,000 a year is awarded. There is also an essential small pharmacy allowance for those pharmacies considered essential to the wellbeing of the community in sparsely-populated, mainly rural, areas.

Under our new proposals, the following changes will take place: a flat rate on-cost allowance of 5 per cent.; and an increased dispensing fee ranging from £1.20 to 62 pence, depending on the number of prescriptions dispensed

. The basic practice allowance will be abolished, since it has no relationship to the amount of NHS business undertaken by a pharmacy and does not increase the efficiency of a pharmacy. The essential small pharmacies scheme will be financially strengthened.

Let me set out the background that has led us to this situation. In 1985, after more than a year of negotiations, between the retail pharmacists' negotiating body, the Pharmaceutical Services Negotiating Committee and officials, agreement on a new NHS contract for pharmacists was reached. However, in the light of legal advice, the Government decided not to proceed with the new contract until new powers in primary legislation had been obtained. Clause 2 provides those powers.

The overall aim of the new contract is clear: to develop a pharmaceutical service that will better satisfy the interests of the patient, the profession and the taxpayer.

Under the present system any pharmacist can apply for an NHS contract. Except in rural areas, where special arrangements already operate, that application must be granted. At present the local family practitioner committee has no discretion in the matter. Because contractors are paid on a cost-plus basis, every additional NHS contract automatically adds further costs to the NHS, to be met by the taxpayer. Therefore, under the existing arrangements there is little to promote efficiency, innovation, or improved services for patients.

Over the past five years, the net rise in the number of pharmacies with NHS contracts has been about 150 a year; and the present rate of increase is higher still. Most of the increase has been in urban areas, where provision is, in many cases, already excessive. An excessive supply of services serves no useful purpose: it merely consumes scarce resources that could be put to better use elsewhere in the health service.

Under the new arrangements new contracts will be granted only where family practitioner committees consider that it would be necessary or desirable for patient services. This will enable FPCs to make progress towards a more suitable distribution of pharmacies which will better meet patient needs without being extravagant of NHS resources. Independent FPCs are responsible for planning local primary care services. Deciding the level of pharmaceutical services required is clearly within their remit.

I should like to emphasise that the new arrangements would exercise no control whatsoever over non-NHS retail pharmacy. Failure to obtain an NHS contract does not take away anybody's right to set up a dispensing pharmacy. The Government would not wish to interfere with private enterprise and we are not doing so now. The issue here is about paying taxpayer's money to award contracts to provide a public service, and how to avoid the cost of over-provision.

The proposed new arrangements on the allocation of contracts are not the only feature of a contract negotiated as an integrated package of measures. First, there will be more frequent and effective cost inquiries, with annual remuneration settlements to limit the potential levels of under- or over-payments to pharmacists, which were a significant feature of the previous arrangements. Secondly, there will be a new payment structure which is simpler to understand, and some modest savings. Thirdly, there will be greatly enhanced financial support to essential small pharmacies in sparsely populated rural areas. In addition, pharmacies will be encouraged to be more efficient through changes in the pattern of remuneration.

Some of those savings that I mentioned earlier will be available to develop the pharmacist's wider role, following consideration of the Nuffield report into pharmacy and the Government's primary care discussion document.

I am very pleased to note the Nuffield report's general endorsement of the new contract arrangements, arrangements which the report considers are "basically well conceived". One of Nuffield's three reservations on the new contract concerned the appeals system under the proposed new arrangements for allocating contracts. There was a constructive debate in another place about the appeals system. Some thought that a national appeals system would be the best way to proceed.

As a result of the debate, the Government agreed to look again at the appeals system. We have considered carefully all that was said in another place. We have considered carefully the representations of interested parties and the views of the Nuffield report on this issue. We have also considered carefully the views of the pharmacists' representatives.

We still think, following this discussion, that a locally convened appeals procedure is the best solution for three solid reasons. First, it is consistent with the functions of FPCs. Secondly, we have built in a number of important safeguards against bias. Thirdly, a local system can operate quickly; a centralised system would be a serious bottleneck, which is in no-one's interest.

In another place, the possibility was raised that bias and collusion could creep in when new contracts were being considered by the family practitioner sub-committees. The new arrangements have been specifically designed to avoid just these possibilities. Let me give one example. Although pharmacists will have a role on the family practitioner sub-committees, there will be special quorum arrangements so that they can never be in a majority. It is not unusual for a profession to have a role in such decisions: for example, doctors are involved in deciding applications to enter general practice through the medical practices committee.

Your Lordships will be interested to note that we have decided to change the appeals system to respond to the two recurring themes of the representations received. They are, the need for consistency, and the need to avoid vested interest in decision making. The first change is that chairmen and members of appeals panels will be drawn from a national list of persons, unconnected with the local FPC, approved by the Secretary of State for Social Services. This is instead of regional lists. Secondly, pharmacists on the appeals panels will be present to give advice and guidance; but they will not, as originally proposed, have a vote. These changes strike a balance between the need for consistency and independence, and the need for appeals to be dealt with promptly, with local circumstances in mind.

I am sure that it is common ground that we are seeking the right aim: to provide an appeals system that is objective and fair to all parties involved, one that meets the needs of local people. The overall principle is not in question; there is only a difference of view on how best to achieve our aim. The Government simply wish to ensure that the best possible system is implemented. We have considered this issue vey carefully. We are confident that we have got it right.

The new contract is not a rigid, centrally-planned scheme. We have deliberately put the emphasis on local needs and local decisions. I should be surprised if differences between the need for public service and the commercial instincts of pharmacists wanting new NHS contracts will turn out to be as great or as frequent as some fear. There should be no conflict between the successful businessman's need to provide a decent service for customers and the ethics of public service. Combining business motivation with public service is one of the great strengths of community pharmacy in this country.

The new contract offers many benefits and a substantial improvement on the current arrangements. Patients will have a service which more accurately reflects their needs; some of the expected savings will be available to finance the development of the pharmacist's wider role; and the taxpayer will get some small savings and better value for money.

Clause 3 deals with the remuneration and reimbursement arrangements for the NHS contractor professions, general medical and dental practitioners, opticians and pharmacists.

Since the NHS was set up, the principle underlying payments to the contractor professions has been that they should receive their average costs plus an element for profit or professional remuneration. Their true costs can only be established retrospectively through periodic inquiries. In the interim period, payments are based on cost estimates and forecasts. Under such an arrangement it is only fair, both to the professions and to the taxpayer, that there should be a mechanism for correcting past payments which are shown to have been either inadequate or excessive. Payments to contractors include some £2.5 billion a year to reimburse the average costs of the service they provide, so even small margins between estimated and actual costs can represent considerable sums due to one side or the other.

These arrangements, which have been established and operated for many years, have recently been challenged by legal action. Let me briefly explain the position.

The 1977 National Health Service Act gives health Ministers powers to make regulations and determinations for the fees payable to the four contractor professions. In 1984, the legal basis of the long-standing arrangements was challenged by the body which represents retail pharmacists—the Pharmaceutical Services Negotiating Committee. The High Court ruled against this challenge and in favour of the existing arrangements. But, in order to make the statutory position clear, the Government, as part of the 1984 Health and Social Security Bill, amended the 1977 National Health Service Act. This amendment had a single intention: to clarify the arrangements as they have been understood and operated by the professions and successive governments for many years.

The Government and most professional interests believed this had been achieved, but the Association of Optical Practitioners and the Federation of Optical Corporate Bodies, two organisations representing opticians, challenged the use of these powers in both the English and Scottish Courts. They questioned the Government's attempts to recover some £11 million over-reimbursed for NHS spectacles. As a result of the courts' consideration, the 1984 legislation was shown to be defective in that it did not achieve what had been intended. The aim of this clause is to re-establish the position so that the long-standing remuneration and reimbursement arrangements can continue. This clause does not represent any change in policy. It does not change our firm commitment to full negotiations and consultations with the professions, as appropriate. It simply seeks to put beyond reasonable doubt the statutory basis for the NHS contractor professions' remuneration arrangements, in the interests of both the professions and the taxpayer.

I should like to remind noble Lords of two assurances that have been given during the passage of this Bill, so far. First, there has been the assurance that this Government would not use these powers to make an attempt to recover the £11 million over-reimbursement to opticians, which was the subject of the recent court proceedings.

Secondly, there has been the assurance that there is no intention whatsoever to use this Bill to change the current system for determining the pay of medical and dental practitioners, which is based on the recommendations of their independent review body. I think that these assurances simply confirm the point that this clause does not represent any change in policy.

Finally, I should point out that, although the remuneration systems of the contractor professions are similar in principle, there are significant differences in detail and this requires, in some cases, flexibility and discretion. The aim of this clause is to put beyond doubt the statutory basis for the long-standing remuneration arrangements for the contractor professions. I think that it achieves this aim in a way that is fair to both the professions and the taxpayer.

I should like to take this opportunity to remind your Lordships of the Government's intention to introduce a new clause to the Bill at Committee stage. During consideration of the Disabled Persons (Services, Consultation and Representation) Bill the Government gave an undertaking to secure a reserve power to provide for the statutory regulation of joint planning of health services in Scotland. This power could be used should the present administrative arrangements prove ineffective after a proper period of trial.

Attempts to secure an extension to the Long Title of the Bill on disabled persons, so that the provision could cover all priority groups, proved unacceptable to the House authorities.

My noble friend Lord Skelmersdale announced, during Committee stage of the disabled persons Bill, that the Long Title of the National Health Service (Amendment) Bill would be amended and a new clause moved to secure the power on joint planning committees for Scotland to which I have referred. This will fulfil the undertaking given to the sponsors of the Bill on disabled persons and to this House.

The provisions of the National Health Service (Amendment) Bill reflect the Government's continuing commitment to the National Health Service: on Clause 1, a commitment to take action to safeguard the interests of patients, rather than to sit back and hope the problems will go away; on Clause 2, a commitment to implement new policies where the interests of patients require new thinking; and on Clause 3, a commitment to preserve existing arrangements which continue to serve the needs of patients.

Your Lordships will be aware that we have a time problem this evening. I hope that your Lordships will understand my situation and will allow me to write to far more noble Lords than I had intended. I apologise and I know your Lordships will agree that we will meet again, and we do know where and when. I commend this Bill to your Lordships. My Lords, I beg to move.

Moved, That the Bill be now read a second time.—(Baroness Trumpington.)

8.34 p.m.

Lord Ennals

My Lords, may I first thank the noble Baroness for her very clear explanation of the Bill and say to her that I shall read very carefully what she had to say in her concluding remarks about the new clause concerned with the Bill on disabled persons, so that I may fully comprehend what is to be done.

As the noble Baroness said, there is no clear principle running through the Bill, dealing with three issues, though I suspect that the Government hope to carry through Clauses 2 and 3 on the back of Clause 1, which I think we shall all welcome. I believe that pressure from both sides of your Lordships' House played its part in influencing the Government to propose the ending of Crown immunity in NHS kitchens. This was an issue which was raised many times from both sides of the House and I naturally welcome the decision of the Government to introduce this part of the legislation.

The tragic outbreak of salmonella at Stanley Royd Hospital last year created the occasion to take action, which had already become urgent after the report of the environmental health officers in which they said that their evidence showed that there were 97 NHS kitchens which would have been closed if it were not for the fact that Crown immunity protected totally unacceptable standards of hygiene.

In September last year a paper was presented to the Congress of the Institution of Environmental Health Officers, who have, of course, been strongly campaigning on this issue, which gave these examples: The kitchen at a leading teaching hospital had jelly containing bird droppings, rice coated with bacteria, infestations of ants and several large dead oriental cockroaches. Sparrows were flying around the restaurant at Charing Cross Hospital, London. Slicing machines were thickly coated in grease and gullies in the wash room were choked with debris and slime". So reported the Hammersmith Environmental Health Officer, Mr. David Rowley.

He continued:

A cutting board was on the floor next to a dead cockroach and mouse droppings littered a disused oven. Live cockroaches were near the washing machines and a week after the management decision was taken to bring in pest controllers the place was still infested". I am not suggesting for one moment that that is typical of NHS kitchens, but the fact that such a situation should occur shows the urgent need for this legislation. In any case it is not tolerable that patients should be treated any worse, so far as hygiene is concerned, than they can expect to be treated in a public restaurant. But I do not understand why the Government have limited their action to the kitchens. Staff and patients should also be protected by the health and safety at work legislation—a point of view taken by the British Medical Association and a number of other organisations.

May I quote a paragraph from representations that I have had from the Royal College of Nursing in which they say: Staff, and in particular nurses, are exposed in the NHS to an unacceptable degree of risk from a wide range of sources—physical, chemical and biological. RCN members continue to express their concern about the lack of safe systems of work, equipment and protective clothing. For example, the lack of safe systems for the correct disposal of clinical waste from NHS hospitals is well known and well documented: not only does this endanger the hospital staff, but the general public as well". I, too, am concerned about some of the waste disposal procedures which can put patients and staff at risk. It is sometimes said that a hospital is the most likely place to become the victim of infection. I think that the noble Baroness, when she winds up, must produce some convincing reason why the advance, which we welcome, has been limited to kitchens. I am sure that we shall want to come back to this in Committee and that the views which I have expressed are not ones which will be limited to just one party.

Perhaps I may now turn to the much more controversial clause, Clause 2. I have heard the case of the Pharmaceutical Services Negotiating Committee which negotiated this agreement with the DHSS, and I have to say that there are a number of issues which cause me concern. It is now for the Government, not the PSNC, to convince the House that what is now proposed is in the best interests of the public and of the profession.

It may be that I take more convincing than some other noble Lords, because it was I who was personally responsible for the present system of remuneration, including the special protection for small pharmacies and the arrangements made in the rural areas. That was at a time when the number of pharmacies was decreasing at a very dangerous and disturbing rate. I should like to express my concerns through a series of questions to the Minister for her to deal with when she replies, or at a later stage if she feels that time does not permit tonight.

First, is it the Government's view that there are too many pharmacies, bearing in mind that there are 3,000 fewer than there were 20 years ago, and that with the exception of Switzerland, the United Kingdom has the lowest number of pharmacies per head of the population of any of the Western countries? Do we think we have too many pharmacies? Secondly, is it not in the interests of the consumer, particularly the elderly and the disabled, to have pharmaceutical services as near to their homes as possible? Thirdly, did the Government agree with the conclusions of the Pharmaceutical Society and the PSNC in August 1984 that; financial incentives and disincentives alone were sufficient to bring about a better distribution of pharmacies"? If they did agree with it then, what led them a year later to introduce this regulatory system? I do not understand.

Fourthly, was there consultation with the whole profession? The noble Baroness said in her speech that this did not affect other pharmacists. I submit that it does because other pharmacists who may be working in hospitals or in other fields may decide that they wish to go into a high street pharmacy; and in a sense to go into business. Their opportunities of doing so are obviously limited by the terms of the Bill. If they were not consulted, should they not be consulted? We are after all talking about 34,000 pharmacists. Is it not proper that they should be consulted about something which affects them as well as simply the contractors alone?

Fifthly, if there is to be some system of controls as proposed in the Bill, do the Government agree with the Nuffield Report on pharmacy, referred to by the noble Baroness and quite recently debated in your Lordships' House, that, we think it wrong that pharmacists should play so large a part"— this is in terms of the licensing system, if we may call it that; since, they are inevitably interested parties [and] should have no vote". I certainly agree that they should not have a vote, I should be interested in the views of the noble Baroness because if you have a committee on which there are three pharmacists it will be thought, be it true or not, that they are in a sense protecting their own interests and discouraging competitors.

Sixthly, in assessing the estimated savings of what I think the Government have said is £4 million, how many pharmacy closures do the Government expect to achieve? Clearly part of the purpose is to reduce the number of pharmacies. I was seeking to do exactly the opposite and increase the number of pharmacies. Does the noble Baroness expect 300 to close, 500 to close, or 1,000 to close? Surely the number of closures will affect the amount of saving, because it will directly affect the amount of compensation that will be given to those who are encouraged to get out of the game. Why do the Government want to put these skilled and experienced pharmacists out of business? How will this benefit consumers? What is the estimated cost of the administration of the local licensing committees? I think it was suggested that there should be 100 of them. They will require servicing. How is the estimate made of savings of £4 million?

Having put these questions, perhaps I may briefly indicate my own concerns. First, if there is money to be saved for the NHS then of course I welcome it. We would all want to see an increase in efficiency and a saving in costs. But is there to be a saving in costs?

Secondly, I have no interest in subsidising chain-stores such as Underwoods, Boots or anyone else. What concerns me is the effect on the high street pharmacists, who have such an important role to play, as was outlined in the Nuffield Report. Many of them perform an invaluable service, and, so far as I am concerned, the nearer the pharmacist for an elderly person the better for that person.

Many of these pharmacists are extremely concerned about their future. I have had, as I expect have other noble Lords, a considerable amount of correspondence in which they express their concern. Perhaps I may give a few examples. I have one letter from a London pharmacist who says: A reduction in pharmacy numbers will not benefit the public as we supply many other services besides dispensing. The smaller contractor is more likely to remember the drugs that individuals take, and so is more likely to spot errors in prescriptions where one GP prescribes a drug for a patient and a different GP in the same practice prescribes an incompatible drug for the same patient". This is the great advantage of the local pharmacist who understands his or her patients.

Perhaps I may give another example, which comes from Swanage in Dorset. The pharmacist writes: We are an old established family business of over 60 years. I know from 36 years qualified experience and thousands of patients all well wishers … that we give an outstanding personal service, especially for the urgent out of hours patients. People phone in from 30 miles away such is our reputation for helping when needed". The letter states earlier: Without the Basic Practice Allowance we will almost certainly go to the wall". Perhaps I may quote a third letter, although there are many other letters I could quote. It says that, this contract, if implemented, will affect the future prospects of all pharmacists, not just existing shop owners, but employee pharmacists, and those working in hospitals and industry. All of these equally qualified pharmacists could one day wish to set up a shop. So why is the majority of pharmacists not being represented at all in this matter? I have received representations which fully support the proposals that are now before your Lordships' House but all the individual pharmacists who have written to me have expressed anxiety. The House should know that. My noble friend and I and others on these Benches will decide what action to take in Committee in the light of the answers which the noble Baroness gives to the questions that I have put forward and to others which will no doubt be asked by my noble friends.

Finally, and briefly, I shall deal with Clause 3, which the Government have introduced because they were found to be acting illegally in their implementation of Clause 7 of the Health and Social Security Act 1984. Your Lordships will recollect that Section 7 of that Act (then a Bill) was strenuously opposed in your Lordships' House because of its retrospective effect on the remuneration of pharmacists and opticians in particular. I remember speaking in rather sharp terms when this was being debated. I should add here that there have been several instances in the past of large arrears of pay accumulating. I am told that most recently in 1983 the department owed opticians £90 million for the period 1978 to 1983. As an aside, this was introduced because, as the noble Baroness said, the Secretary of State was caught acting illegally. I think I shall table a Question some time to ask how many times the Secretary of State has been found to be acting illegally since he took his post.

In conclusion, may I ask the noble Baroness for an assurance that the retrospective nature of this clause will apply only back to the date of its implementation? The noble Baroness dealt partly with this but I am not quite certain whether she gave that absolute assurance. Such an assurance, if she gave it, must in my view be inscribed in the Bill and I shall certainly table amendments at Committee stage to ensure that we can avoid the sort of misunderstandings and disruption that have led to the need for this clause in the Bill.

8.49 p.m.

Lord Winstanley

My Lords, were a thoughtful person wholly unconnected with politics to learn that this evening, the day before your Lordships disperse for the Summer Recess; the House was remaining here to unsocial hours to debate a new Bill dealing with the National Health Service, then such a person might jump to the conclusion that at long last some of the major deficiencies in the National Health Service of which we are all so very much aware were being attended to. Not so.

As the noble Baroness said, this Bill deals with three specific points that will not materially affect the National Health Service so far as concerns ordinary folk, save in one or two ways to which I shall come presently. As the noble Baroness has also made clear, the Bill deals with three particular matters. It makes a very limited start on phasing out Crown immunity. It introduces a new contract for pharmacists. Finally, it will amend the law regarding remuneration to members of the contracted professions who are under contract to family practitioner committees. All those things probably need to be done but I personally have doubts about them all, and I shall express one or two of them.

First, there is the matter of Crown immunity. There have been at least four attempts by private Members in another place to introduce Bills to abolish Crown immunity althogether. The Bill does so in a very limited fashion, and that arises very largely from the outbreak of salmonella at the Stanley Royd Hospital. It is of course right and proper that Crown immunity should be removed from those concerned with hospital food.

What about other aspects of the law? I should have thought that the whole operation of the Health and Safety at Work Act ought to apply to persons working in the National Health Service. There are other matters. I believe that we have moved into a state of society in which the presumption should be that there is no Crown immunity save in certain areas where it is found to be absolutely essential. I accept that Crown immuntiy may be essential in certain limited areas, and I am sure that that is a matter to which my noble friend Lord Wigoder may return when he comes to his speech. I shall merely say that having taken that little step, it is a pity that we have not gone much further in removing Crown immunity, in particular in relation to the National Health Service in all its aspects.

I now turn to the new contract for pharmacists. When we debated the new Nuffield Report we welcomed the new contract, for many of its provisions are very necessary. It is true that when we discussed this matter in relation to a rather curious Scottish Bill, the title of which I now forget, some of us resisted the idea of placing restraints upon the right of a properly qualified and experienced pharmacist to enter National Health Service practice as and when and where he wished. Some of us were rather suspicious. We felt that it was introducing a closed shop, and that there was a possibility that that closed shop would be controlled by those who were already happily in the shop.

It seemed rather strange to us that a Government who appeared to be wedded to the operation of market forces were not prepared to allow market forces to operate in relation to this matter. Indeed, to some of us it seemed that were it found to be unnecessary for a pharmacist to set up in a certain area, he would not be able to make a living and so he would not establish himself there.

However, since then, and I say this with all the clarity that I can, I have listened to all the arguments and have read all the debates very carefully. I have had endless discussions with the different bodies about which we have spoken—the PSNC, the British Pharmaceutical Association and the Pharmaceutical Society—as well as with individual chemists. I am bound to say that I am now convinced by the arguments that such a measure is necessary. We have changed the system of remuneration of pharmacists, and indeed we are changing it still further, so that such a measure has to some extent become necessary.

If we were to revert to the original system under which the pharmacist was paid purely by piecework, then a pharmacist who set up in practice where he was not needed would not be doing any piecework and so he would not be receiving any remuneration; whereas now that we have basic payments and an allowance a pharmacist setting up where there was no need for that particular pharmacy would still receive a basic remuneration from the National Health Service. It would merely be receiving a subsidy to operate a cosmetics business, a camera business, or something of that kind. So such a measure is justified on that ground.

Having said that, I have certain anxieties. The noble Baroness's comments have reassured me about some of them but I should not like to think that the initial arrangements, never mind the appeal—to which I shall come later—and decisions as to whether or not a person or a new pharmacy is necessary in a certain area would be too much in the hands of pharmacists and the family practitioner sub-committees that will be responsible. I should like to feel that there will be some form of consumer representation on those bodies. It is an area in which the community health council ought to be able to say a word. It is not only for the professionals to say that there is a need but it is for the patients to do so as well. I hope that at a later stage of this Bill we shall be able to explore the extent to which there is a consumer voice to be heard somewhere in the decisions as to who may or may not enter into National Health Service pharmacy practice.

With regard to the appeals, I certainly look forward to seeing the new arrangements. I hope that they are rapid, as the noble Baroness said, and I hope also that they are relatively local. I hope that they will be detached from vested interests in the way the noble Baroness said they would be. I hope also that even in the appeal bodies there will be a consumer voice to be heard.

I move rapidly to the whole question of amending the law regarding remuneration of the contracted professions. It is complex and there are many matters that we shall wish to examine when we come to consider the Bill further in Committee.

At the moment, I do not want to say very much more, save to return to one specific point concerning pharmacists. The noble Baroness may recollect that when we debated that matter recently I put to her certain anxieties I had with regard to hospital pharmacists, who are no longer able, for one reason or another, to do work that they were formerly doing. An additional load is therefore being placed on general practitioners. Patients individually are being caused much inconvenience and distress. Instead of being able to obtain their drugs as outpatients from the hospital pharmacy, they are now told to go to their general practitioner, who must then hold an unnecessary consultation. The patient then has to go to the pharmacist. The pharmacist, who is under contract to the local family practitioner committee, dispenses the prescription. That system saves the hospital money but it actually costs the public purse money, because it is probable that the cost of a prescription provided in that way is higher to public funds than it would be if it was provided by the hospital.

The noble Baroness was not able to deal with the various points I raised on that previous occasion. However, I have had a great deal of correspondence since I raised them. I am aware that that particular aspect is not dealt with in the Bill but I am absolutely certain that the Long Title of the Bill covers such matters fully. Therefore, should there be a need to do so I could ventilate those matters at a later stage of the Bill, and I give warning of that now.

I may say also that I received a letter from an officer in the Guild of Hospital Pharmacists dealing with the point I have made. It states: There is now a very real problem in recruiting hospital pharmacists, such that in many hospitals the remaining pharmacists who are providing essential services to in-patients are unable to maintain the out-patient dispensing service". The letter goes on to underline some of the points that I made in our earlier debate. It continues: The only solution to this problem is to resolve the recruitment problem of hospital pharmacists. The main causes of this problem are the serious differentials between hospital and retail salaries and the fact that hospital pharmacists are still not being paid for the provision of out of hours service". The Bill does not deal with hospital pharmacists, but if there really is a problem in their recruitment then one would really like to hear what the answers are and whether the Government intend to do something. The noble Lord, Lord Ennals, asked many questions. I look forward to hearing the answers to his questions in due course. In view of the noble Baroness's earlier remarks, I doubt that I shall hear those answers tonight. However, I assure her that I shall want to hear them some time. If I do not hear them tonight then I shall be pressing for those answers on other occasions.

The noble Lord, Lord Ennals, asked in particular how many pharmacists are needed, and he asked also what was to be done about this, that and the other. I may add another question. In anticipation of the new legislation a great many properly qualified pharmacists, feeling that there will presently be an impediment to their setting up in practice in the district of their choice, are now making haste to do exactly that while there are no constraints. What provision does the noble Baroness have in mind to undo the mess that may arise from precipitant action of that kind, taken by people in the belief that it is necessary for them to take such action in order to pre-empt the effects of this particular Bill? I shall say no more, save that I look forward to renewing this discussion at much greater length, and possibly at a much later hour, when we return, restored to health, after our holidays.

9 p.m.

Lord Cullen of Ashbourne

My Lords, I have in the past declared an interest in optical matters as President of the Federation of Optical Corporate Bodies. Today, I declare the same interest except that, following organisational changes within optics, the FOCB has now become known as the Federation of Ophthalmic and Dispensing Opticians. Altogether the members of the federation are responsible for almost half the optician activity in this country and do therefore make a very significant contribution to our optical services. I will confine myself to Clause 3 of the Bill although, of course, it concerns not only opticians but also other health service professions as well, including doctors, dentists and pharmacists.

First, I should like to welcome the very fair undertaking given in another place on behalf of Her Majesty's Government, and confirmed by my noble friend, that the new powers in this clause will not be used to deprive the opticians of their victory in the High Court last year. The fact that such a small profession should have been driven to seek a remedy in the courts is something to be regretted but so far as that issue is concerned it is now water under the bridge and I believe that it is probably right to let bygones be bygones.

Nevertheless we are looking at a very important clause which Ministers have claimed: simply seeks to put beyond reasonable doubt the statutory basis for the NHS contractor professions remuneration arrangements in the interests of the professions, the taxpayer and the users of the NHS". Not only will it set the statutory framework for the future but the clause also contains a retrospective element, referred to by the noble Lord, Lord Ennals, in so far as it covers "earlier determinations", which have been defined so as to include determinations made before the passing of the Act. Because of the importance of the clause for the NHS contractor professions and because of the apparently unfettered nature of the powers which the Government are seeking, the federation thought it prudent to seek the opinion of senior counsel as to the effect of the clause. Counsel has advised that, as it stands, the clause gives the determining authority or the Secretary of State powers to do all the following.

First, to recover at any time moneys which on further thought it considers to have been "overpaid"—however long ago the alleged "overpayments" occurred and without the agreement of the professions involved. Secondly, to do so despite the fact that every part of such moneys must have been paid under a determination of the authority itself. Thirdly, to do so despite the fact that such determinations gave individual contractors who rendered services relying on such determinations as part of their contracts a right at law to be paid such moneys.

Fourthly, to recover such moneys, not specifically from the persons who actually received them, but by way of adjustment or reduction of future fees for work to be done by them or others (and which may be in a different category). Fifthly, to do so despite the fact that such a system must inevitably produce at least one result which is unjust and unfair; that is, that part of the moneys allegedly "overpaid" would be "recovered" from people who did not receive some part, or indeed any, of the "overpayments".

Sixthly, all that has to be shown by the determining authority is that, if the earlier determination had been made at the date of a later determination, it would have been made on the basis of "different information". This seems to be regardless of whether the persons to be penalised had any responsibility for the fact that the determining authority did not have that information nor even any knowledge of it.

These are very sweeping powers which the DHSS is seeking and yet I see in another place Ministers appeared to be saying that it was "not seeking additional powers" (col. 104, Standing Committee E, House of Commons, Tuesday, 13th May 1986). If additional powers are not being sought, why is the clause necessary?

Much has been said by Ministers in a soothing tone of reasonableness about the need for balancing arrangements which are fair in the interest of the taxpayer and the professions. I agree with that, but at the end of the day it is, of course, the determining authority and the DHSS who decide in their discretion where that balance lies. The DHSS may choose to say at the end of a long round of complex negotiations, "These are the terms on which we are prepared to do business—like it or lump it. We have all the powers and we are entitled to take any of the six courses of action outlined above." That does seem to me to leave the health professions in a most unequal bargaining position in the context of their remuneration negotiations.

In conclusion, while I do welcome the assurance which the Government have given about their intentions in regard to the use of the powers in this clause, nevertheless I would wish to see some restrictions placed on those powers. I do not like retrospective legislation, so I feel concerned about that aspect. Nor do I feel that I am alone in my dislike of retrospective legislation; the noble Lord, Lord Ennals, I know, agrees with me.

I should also like to see the nature of the "different information" much more clearly defined. Again, it would perhaps provide some safeguard and reassurance for the professions if a duty upon the determining authority to fix fair and reasonable remuneration were to be written into the clause.

I hope that some response will be made to these points of concern regarding the drafting of the clause and that suitable amendments to that effect will be presented at the Committee stage.

[For Continuation of Proceedings seeOfficial Report for Thursday, 31st July 1986.]

9.8 p.m.

The Earl of Buchan

My Lords, I rise to congratulate the noble Baroness and the Government on this very necessary Bill. Anything to do with the National Health Service must cast its own special, warm glow, acknowledged momentarily even by those who have to find the money to pay for it.

I want to address your Lordships briefly on Clause 2. I feel most anxious about Clause 2 and so I believe do many supporters of the Government. I acknowledge what the noble Baroness has said and the frequent use of the words "costs" and "savings". I was so perplexed by this clause that I was reduced to looking at it in terms of who gains from it and who loses. The losers are numerous and the gainers are very few indeed. Among the losers must be supporters of the Government and on 10th June a Back-Bencher in another place really said it all. I quote: I look to my noble Friends in another place to make it a better Bill and one more fitting for a Conservative administration to introduce". Who else might be a Conservative and object to this Bill? What are those people to make of this denial of market forces, which was a point made by the noble Lord, Lord Winstanley? I cannot believe that Conservative supporters are in favour of the establishment of many small monopolies. Most certainly they would be against any more bureaucratic interference and the creation of more dreaded quangoes. I accept the assurance given by the noble Baroness about the change of the appeals system here. I also have read the Nuffield Report and I have a quotation from it in rather a different style from that of the noble Baroness. The Nuffield Report said about the remuneration package that it was a "thoroughly retrograde step".

There is really nothing in this clause for consumers. They will find their choice restricted as competitors are kept out of the business. Casual observers of the High Street will have noticed the arrival of many new companies, such as Sharedrug, Superdrug and Underwoods, which has already been mentioned, not to mention the many smaller concerns that have been started up by enterprising Indians and Pakistanis, many of whom, incidentally, were ejected from Uganda and who are only the latest of enterprising exiles whose gingering up of the lazy and "opaque" inhabitants here has been so very beneficial. I speak as a Scot. Others who have done this for the English include the Normans, the Huguenots and the Jews.

Lord Stoddart of Swindon

What about the Welsh, my Lords?

The Earl of Buchan

My Lords, strangely enough, another objector to this Clause 2 is the Office of Fair Trading, of all organisations. It has expressed major reservations about attempts to restrict entry into the pharmaceutical trade. And what of the patients? They will get scant comfort from the fact that the Pharmaceutical Services Negotiating Committee decrees that a new pharmacy in an urban area is not necessary or desirable if it is within one kilometre of another. A kilometre is 1,180 yards and it is a mighty long way when one is not feeling well. In fact it is the distance from Parliament Square to Leicester Square. Most certainly I should not want to run that distance with a broken leg in order to get my prescription completed. The point that was made by the noble Lord, Lord Ennals, concerns what I refer to as budding or trainee pharmacists. They will certainly feel that their opportunities to start up in business are damaged by Clause 2.

Having mentioned some of the losers from Clause 2 perhaps we may then look at the gainers. Possibly the Pharmaceutical Services Negotiating Committee members will be gainers; possibly the Treasury will be a beneficiary—and the rather wild figure of £4 million has been mentioned, but I shall believe that when it happens; possibly members of the new quangoes may feel that they will benefit. I hope that your Lordships will not feel that I am being unnecessarily tart when I say that it does not take much imagination, knowing the cosy nature of British professional organisations, to see how they might work: "an inclination to keep out" is putting it mildly. I speak with some knowledge of this matter as for many years I worked in a trade which very loosely might be said to have been bound by a form of professional restrictive practice. I refer to the Stock Exchange's fixed commissions which are now all to be blown up in the Big Bang. What was cosy before may well be bracing afterwards, and none the worse for that, but I see no Big Bang coming in the pharmacists quango.

Nearly finally, what is the position of Boots the Chemist, known to us all, which has approximately 14 per cent. of this business? I believe that it is fair to say that it is strongly in favour of competition.

To sum up, therefore, I consider that a very strong case indeed can be made against Clause 2 of this Bill; and may I remind the noble Baroness of the good work done by the Government in the cause of breaking the opticians' monopoly? Surely sauce for the opticians' goose must be sauce for the pharmacists' gander.

Very finally, I can offer a minute crumb of comfort to the noble Baroness and the authors of this clause. HOLAAS (the House of Lords Abolition of Acronyms Society) approves of it. It can make nothing of the Pharmaceutical Services Negotiating Committee or the pharmacy practices sub-committees, if only because of the absence of vowels. They may mean, incidentally, something in Polish.

9.14 p.m.

Lord Bruce-Gardyne

My Lords, I very much agree with the comments of the noble Earl, Lord Buchan, on Clause 2. I also intend essentially to confine my remarks to that clause. I am sure that there are many other excellent aspects of the Bill, but I share the noble Earl's considerable reservations about Clause 2.

I must say that my noble friend did what I would call a splendid sucking dove job on this clause, as indeed does the Bill itself, and I congratulate her upon it. It would be hard to deduce very much from what she told us about the clause, as indeed it is impossible from the Bill. But, as I understand it, the end result of the passage of this clause is that access for new pharmacists wishing to set up in business in a given area would depend on the say-so of a committee of seven, of whom three would be pharmacists; three pharmacists out of seven, and at the first stage they would all have a vote.

I recognise that they would be exclusively concerned with the wellbeing of their area and it would never enter their heads to wish to control the trade in their own interests. If my noble friend needs reassurance on that aspect, she should consult what Adam Smith had to say in the Wealth of Nations about what happens when two or three traders get together.

I accept that there are legitimate grounds for anxiety in my noble friend's department about the present arrangements for automatic access to the right to dispense NHS drugs. I equally accept that there is a great deal to be said against the cost-plus contract. But, so far as I understand it, we do not get rid of that element in the new contract. We should have learnt by the experience of the Ministry of Defence the entire folly of cost-plus contracts a long time ago in this as in other areas.

But, as I see it, this new contract does not deal with that problem at all. The provision of an effective veto—for that is what it amounts to—in the hands of a profession about who should and who should not be able to enter that profession is, as the noble Earl said, an extraordinary proposition, as it seems to many of us, coming from my right honourable friends. The noble Earl referred to the judgment of the Office of Fair Trading. It expressed strong reservations, and well it might.

I was grateful to my noble friend for what she had to say about the proposed adjustment in the appeal procedure. But I do not feel entirely comfortable with the idea that the appeal will still pass to what one might call the adjacent hunts—the neighbouring committees of the same type. The pharmacists at that level would not have the right to vote, but again I find it hard to believe that they would not have (shall we say?) some judicious influence on the appeal committee which was to settle the fate of those who had been turned down at the committee of first instance.

Baroness Trumpington

My Lords, I pointed out that the appeal committee would consist of people who had nothing to do with the local FPCs; and, furthermore, those who were pharmacists would not have the right to vote. But the important point is that they would come from places far distant from the local committees.

Lord Bruce-Gardyne

My Lords, of course one will want to study this proposition with care. My noble friend will think that I have a suspicious mind. It is not unknown, I believe, for pharmacists, like the rest of us, to indulge in telephonic and personal communications with members of their own profession.

Baroness Trumpington

Like journalists, my Lords.

Lord Bruce-Gardyne

My Lords, I do not find this a matter of total reassurance. All that I want to say to my noble friend is that 1 personally hope that between now and when we return in October, she will consider very carefully the comments, particularly those of the noble Earl, Lord Buchan, that have been made.

When we had a not dissimilar proposal to this, referred to by the noble Lord, Lord Winstanley, in a piece of Scottish legislation a year ago, I found myself in the uncomfortable position of having to march into the Lobby behind the noble Lord, Lord Ross of Marnock. I have no doubt that the experience was even more uncomfortable for him than for me. I appeal to my noble friend, in the watches of the summer recess, to consider this clause most carefully so that we might be spared a similar experience when we come back for the Committee stage.

9.21 p.m.

Lord Graham of Edmonton

My Lords, it is clear that noble Lords are faced with dilemmas and conflicts against what they believe their party ought to do. As the last two speakers in the debate have indicated, they are appalled at what they see to be as a betrayal of basic principles. If indeed—

Baroness Gardner of Parkes

My Lords, only one of those speakers was from our party. I should like to draw the noble Lord's attention to that fact. The other was a Cross-Bencher.

Lord Graham of Edmonton

My Lords, I am glad that the noble Baroness, Lady Gardner of Parkes, is in such good form—and before she has said a word on the Bill! I look forward with interest to what she has to say. The previous two speakers have expressed their astonishment at what is contained in the Bill. The speaker before the noble Lord, Lord Bruce-Gardyne, reported what was said by a member of the party of the noble Baroness, Lady Gardner of Parkes, in another place. And he certainly shared those views. Perhaps, for the same reason that those noble Lords have expressed such astonishment, I see a great deal of merit. Indeed, noble Lords will not be surprised that these matters should be viewed from strictly party or partisan standpoints.

Like other noble Lords, I have to declare an interest. I am a director of the Enfield and St. Albans Co-operative Society. We have pharmacy businesses. I also represent and declare, an interest in the Co-operative Movement. Those who follow these matters will see that on the negotiating committee, among the 25 members, there is a member who represents the interest of the Co-operative Movement. The movement has about 400 to 500 pharmacies throughout the country. Some are organised in a national chain. Some, like those in my own business, operate individually, It is not easy to say that there is a uniformity of experience on which to decide what is best in totality. There has been reference—I have read the documents—to the synthetic nature of the democracy or the negotiations. I am certainly aware of the frailty of a person speaking on behalf of all the members of a large organisation. It is very difficult. Yet, looking at the documents, we are told that the body that supports this in the main claims to represent 98.5 per cent. of all pharmacy proprietors.

Lord Ennals

Proprietors, my Lords.

Lord Graham of Edmonton

My Lords, proprietors have an interest in these matters. Those proprietors collectively own more than 10,000 pharmacies. Whatever other interests noble Lords have in these matters those people have an interest in the matter as well.

As I understand it, we wish to see what is in the best interests on a number of aspects. Reference was made by the noble Lord, Lord Winstanley—I was glad that he did—to the apparent absence of any direct reference to the best interests of the consumers. They are the patients, the users, of the service. I should want the noble Baroness tonight, and in Committee, to take that on board.

The Co-operative Movement has more experience than almost any other business in seeking to remain in isolated communities long after other traders have decided that they should pack their bags and go. There are communities throughout the country where the Co-operative Society—once part of a big market but where the market has gradually changed by virtue of the car-borne shopper and the expansion of the big town—hangs on and on. I am attracted in the arguments that I have read by the desire to make the access to pharmacies and pharmacists more equal. That is held out to be one of the attractions here. There are a great many premises built into the. documentation that we have received which will need to be tested. The noble Lord on the Cross-Benches paid due tribute to the diligence, hard work, enterprise and entrepreneurial skill of a range of people. I see nothing wrong, in an urban situation, in more and more businesses attempting to establish themselves. However, if we are told that there is a better arrangement, not for the urban area, but for the country as a whole, I am certainly prepared to look at it.

We are told that there is the possibility of saving money. We have heard reference to the figures by the previous speaker. There will be turmoil at the end of the day. It will result in a miserable saving. It would be unworthy of the Government to put forward, for the House to accept, that part of the nexus for doing this is to save the Treasury money.

Lord Bruce-Gardyne

My Lords, I apologise for interrupting. The noble Lord will correct me if I am wrong. My understanding is that the saving of £4 million, to which reference was made, is divided between the profession and the Treasury. The only saving to the public purse is £2 million.

Lord Graham of Edmonton

My Lords, I am very grateful. The noble Lord has doubled the value of my argument by halving the amount that I thought was going to be saved.

The point I make, which I believe the noble Lord, Lord Bruce-Gardyne shares, is that this exercise cannot possibly be built upon a premise that it is due to save public money. It may or may not save a fraction in the event. We have to look for other reasons why this is a good thing to do. One of the arguments is that there is a genuine attempt to improve not only the accessibility or availability but also to improve the standard that the public enjoy. There is built into these arrangements the opportunity better to monitor and better to scrutinise the quality of the service which will be made available. In the event that may or may not turn out to be true.

So far as I am concerned and so far as the Co-operative Movement is concerned, we should like to take the opportunity of this Second Reading debate to indicate general reactions to the proposals. The Co-operative Movement considers that this Bill would be in the best interests of consumers and in the best interests of those who are professionally involved in its provisions, and to that extent I certainly give the Bill a welcome at this stage.

9.31 p.m.

Lord Wigoder

My Lords, I hope that those noble Lords who have been taking part in this very interesting discussion on Clause 2 of the Bill will forgive me if I do not follow them and if I go back to Clause 1 to deal with the point of principle that appears to arise on that clause. As your Lordships know, that clause applies the food legislation to health authorities and health services by removing Crown immunity. In other words, it deals, so far as hospitals are concerned, with kitchens and catering. I welcome the removal of Crown immunity for the reasons so admirably set out by the noble Lord, Lord Ennals, and I have no doubt that all your Lordships will welcome it too.

However, I want to consider for a moment the very basic issue as to whether or not it would be wise to extend the removal of Crown immunity from the catering and the kitchens and to ensure that the health and safety legislation applies in future to the whole of hospital premises. In other words, Crown immunity should be removed in toto from the hospitals. In a sentence, the reason for that is quite simple. There has been in recent times an increasing recognition of the very great importance of occupational health—in other words, ensuring that people are fit to work in their place of work and that their place of work is made fit for them and is so organised as to ensure maximum health and safety and efficiency for all those who use the premises.

The provisions of the Health and Safety at Work Act apply to public employers and to private employers as well. They apply, for example, to private hospitals and it is quite right that they should do so. However, for historical reasons they do not apply to National Health Service hospitals. Yet if one were to consider what type of premises are appropriate to come within the ambit of the health and safety at work legislation, perhaps hospitals would rank among the most suitable.

Inevitably, by their very nature, many hospitals are old and extremely difficult to keep hygienically clean. In many of them there are bound to be fire hazards as a result of their antiquity. There are, of course, germs that are liable to spread and cause cross-infection. There are also dangerous drugs which have to be kept secure under lock and key and properly looked after. There are also dangerous instruments that have to be properly safeguarded. As the noble Lord, Lord Ennals, pointed out—and it is really self-evident—there is a problem in relation to noxious waste and refuse which is perhaps peculiar to the scope of hospital work.

I need hardly say that my observations are not intended in any way as a criticism of the National Health Service or its hospitals. Of course they are not. However, when one looks at the hospitals and at the records of recent incidents, it is clear that there is a very substantial risk to all those who work in them—that is, to doctors, to nurses, to the ancillary staff and and also to the patients who are treated in them and, indeed, to the members of the public who visit them. In those circumstances it seems that we may perhaps have a duty to all those people to ensure that the conditions of work inside hospitals are conducive to the public safety. As your Lordships will know, at present it is attempted to ensure that by means of the Crown notice system under which inspectors may go in and may serve notice on the relevant authority to carry out certain improvements. I am bound to suggest that that system is not working adequately or entirely satisfactorily so far as concerns hospitals.

There are perhaps four reasons why one can say that. First, under the Crown notice system a visit can only be made by the inspector by agreement with the local health authority. There can be no question of surprise visits, which really are the crux of the enforcement of the legislation, unless the health authority agrees to what it calls in advance the surprise visit. Secondly, no time limit can be imposed for the enforcement of any notice which the inspector cares to serve. Thirdly, there can be no compulsion in the carrying out of any work which the inspector deems to be necessary. Fourthly, as a result of all those discouragements it is clear from the figures that the system is not working. For example, in one year, 1984, there were only some 32 notices issued in relation to some 2,000 hospitals.

One might, I suppose, say that that proved that therefore the overwhelming majority of hospitals are working in entirely satisfactory conditions, but I believe that all one's experience disproves that, and the real reason that so few visits are being made and so few notices being served is that the inspectors realise that they are much better employed in visiting premises where they can enforce their notices than those where they have so little effect.

In those circumstances I would suggest that a strong case is made out for extending the removal of Crown immunity proposed under Clause 1 of this Bill from the kitchens and the catering to the rest of the hospital premises. I do not believe that the Government object to that on the grounds of expense. Indeed, one of the more astonishing observations in the Bill is in the Financial Memorandum that even Clause 1 has no financial implications. So even removing the Crown immunity from the kitchens and the catering is apparently to have very limited financial implications. I am sure that the noble Baroness would not want to say that the cost of extending the removal of immunity to the whole of the hospital would be any very substantial sum.

At the same time, the noble Baroness will perhaps concede, on reflection, that the fact that it has been necessary in Clause 1 to remove Crown immunity from the kitchens and the catering shows that the Government are not able any longer to rely on the Crown notice system as working entirely satisfactorily in relation to the kitchens and the catering. If that is so, I would suggest equally that the Government can no longer have any great confidence in that system in relation to the hospital as a whole.

In those circumstances, I hope that when we come to Committee stage your Lordships will consider with great care the proposal that will be put forward that the removal of Crown immunity should be extended to cover the whole of the hospital premises in future.

9.38 p.m.

Lord Rugby

My Lords, I listened with great interest to the words of the noble Baroness in introducing Clause 2. I picked on the words that they are really aiming to improve efficiency, innovation, and initiative in the pharmacies. That is to be welcomed. In this situation I should like to say that I come from a rural area, and the rural chemist, or provincial chemist, is an important and integral part of our community.

I would even say that he is like a part of the furniture. He is recognised by everybody, and trusted by everybody. In this situation, as your Lordships know, I have taken a big part in trying to open up the market whereby the consumers can get their optical prescriptions dispensed much more easily than in the past, especially since the opticians do not find a very congenial habitat in the country. One is more likely to find them strung out rather like a murmuring of starlings along the high street.

It is difficult for people in the country areas to get their prescriptions dispensed. I can think of no better person in this regard than the local pharmacist, who is used to prescriptions. He is a thoroughly responsible man. He understands exactly how these things should be dispensed. All he requires is a focimeter. As I understand it, the rural pharmacist is being funded with quite large sums of money just to be there. I should have thought that it would be simple, instead of giving him such a large funding, to present him with a focimeter presented free, gratis and for nothing, so that the local residents in his area could come with their prescriptions, which they own (they are their property) and he could send these to the prescription houses to be made up. He would then check that they are correct when they arrive and hand them over. I am sure that would be beneficial. I hope that the noble Baroness will take that into consideration because it would provide an extra string to the bow of pharmacies who may be finding it rather difficult to keep themselves in business. That would be of great help to them from that point of view.

With regard to the comment about the £11 million, I think it would be just as well if it were forgotten about. It was a most salutary lesson on how these things should be funded. I agree wholeheartedly with the noble Lord, Lord Bruce-Gardyne, that this should not be on a cost-plus basis because in such circumstances one will find that clandestinely the costs will always be minimised and there will always be some way in which the plus side will be maximised. Business people are very good at doing that. I am pleased that the noble Baroness will remove that loophole with her Bill. With those remarks I shall wait until we reach the next stage of the Bill.

9.43 p.m.

Baroness Gardner of Parkes

My Lords, I welcome Part I of the Bill because I remember so clearly when my husband contracted salmonella abroad and was admitted to an isolation hospital that he found that all the other patients there had contracted salmonella after being admitted to hospital. It is good to know that Clause 1 will deal with that.

My main concentration will be on Clause 2, which is the most controversial. I feel that there is a lack of understanding on this point. When I listened to the noble Lord, Lord Winstanley, I thought he was absolutely spot on when he said that it will not make very much difference to the National Health Service as a whole over the whole nation. I agree with him on that. I agree because we have both been in general practice of different types; therefore we are both grass-roots practitioners as opposed to all the people who are discussing the theory of these matters.

The noble Lord, Lord Ennals, made an interesting statement about how he introduced the present system of payments. I remember when he did that. He did it because at the time the small pharmacies could not survive. They were going out of business. All round London we were most concerned that the small pharmacies were closing up. It was necessary to do what he did.

As time has gone by, the system has worked too well. People have found that it has reached a point where it is profitable to set up a small pharmacy because they are given such good allowances. This is why we have had such a proliferation of pharmacies in the attractive areas where they are not really needed. In other areas, where they are needed, the people are more deprived. That is why it is now time to be considering these matters again. These requests have come directly from the pharmacists themselves. There have been considerable consultations and individual pharmacists have expressed anxiety and have written to the noble Lord. I know that people are anxious.

On 4th June in our debate, at col. 1029, I said I understood that in this new Bill there was an agreement to provide benefits and early retirement for such pharmacists as were really anxious and could not continue. I understand also that a number of pharmacists find themselves locked in to small, inefficient, unsaleable businesses and would be very glad to be able to close up and go, leaving it to others near them who are more successful. The noble Lord, Lord Winstanley, made the point that if pharmacists were paid simply on a piecework rate, as are dentists, without any of these extra allowances, then the situation with this open competition would exist which the noble Lord, Lord Bruce-Gardyne, and the noble Earl, Lord Buchan, were talking about. But there is no open competition. These people are having all their basic costs met. When I had a heartrending letter from Underwoods I did not feel too moved by it at all. It said how upset they were going to be. I see that in Queensway they have two huge lots of premises already and have just opened a third.

Does that mean that three lots of premises owned by the one concern in the same street within four blocks are all being paid a basic allowance to be open because they happen to be dispensing national health prescriptions? If those three of theirs are complemented by at least two more independent pharmacists in that same four blocks—and there are only four blocks if you count one side the street and three blocks if you count the other side of the street—it is a fairly small area to have all those pharmacists each getting that basic allowance.

So it is only right that there should be a saving on those basic allowances which are being paid to people so that that same money can then be applied to helping people, the very people whom the noble Lord, Lord Graham of Edmonton, spoke about—the Co-op, which is staying in areas from where other people have gone. That is the very type of pharmacy that I understand will be helped by this Bill; so those isolated communities will be better off.

There has been a lot of talk about how these people have had no say on their pharmaceutical groups. But of these people on pharmaceutical services negotiating committees, 14 are elected by the pharmacists themselves—14 for England and also one for Wales. So everyone has a right to a vote. If everyone is interested enough to work their way up to a point where they themselves can stand for election, then every pharmacist has a right to stand for election. Those pharmacists who write in and say, "I've never had any say and no one has ever asked me" have probably never taken any active part in the working of their local pharmaceutical committee.

When other points are being considered, it is important to realise that this new system is intended to provide a network of pharmacies located where they can best serve the needs of patients without the extravagant use of NHS resources. I was quite fascinated by the comments of the noble Lord, Lord Bruce-Gardyne. He said that this majority of pharmacists can vote any way they like to restrict people—and that they are three out of seven. I thought that four out of seven was a majority and that those pharmacists who were three out of seven would be the minority. So I am slightly lost by his figures, when I know he is normally better at figures than I am. Does the noble Lord wish to say something?

Lord Bruce-Gardyne

My Lords, I apologise for interrupting. If I did refer to three as a majority, it was a slip of the tongue. I am aware that three does not constitute a majority out of seven. But I have to say to my noble friend, nevertheless, that three members of a profession in a group the rest of whom are made up of non-directly interested parties are likely to carry a considerable amount of weight.

Baroness Gardner of Parkes

My Lords, that shows that the noble Lord has never been in national health practice; because I can tell you that that is not so at all. Usually, those lay people gang up very hard against the professional people and I think you would find those four to be fairly effective. To quote him, what he said was that they would be an effective veto. He did not actually say that three was a majority. He said that they would be an effective veto. I just followed the argument through.

It is intended that this Bill will give greater incentives for economy and efficiency and disincentives for oversupply in the service. Also, I believe that this Bill will provide safeguards for the funding of essential small pharmacies. There are special arrangements to enable small pharmacies adversely affected by the contract arrangements to withdraw from their NHS contracts, as I have mentioned to your Lordships. In June, the pharmaceutical services told me that compensation could be as high as £22,000. I have not had the figures confirmed, but they certainly seem very generous and I think that many pharmacists will welcome that.

So I really think that all these stories about the concern for people and how hard done by everyone is going to be are exaggerated; and when the noble Lord, Lord Bruce-Gardyne, says that this is a restriction I would re-emphasise that it is not a restriction on a pharmacist as such. Any pharmacist will be able to set up anywhere. It is simply that if you want that NHS money you will have to go to a practice committee, which the doctors have had for many years and which has worked perfectly well. I believe that before many more years we are going to see the dentists requesting something of that type. I support this Bill.

9.51 p.m.

Lord Mottistone

My Lords, I have to declare an interest as a vice-president of the Association of Optical Practitioners. I have not very much to add to what my noble friend Lord Cullen of Ashbourne had to say. Like him, I should like to say how grateful I am for the assurance that was given, to which my noble friend the Minister referred, that the Secretary of State would not seek to recover the moneys which had been the subject of a successful court case last autumn. But notwithstanding that, I am puzzled to read on the front of the Bill that, "Clause 3 makes provision to put beyond doubt the legal basis of the longstanding practice of adjusting future payments to offset past underpayments or overpayments when determining … remuneration …". and so on, My noble friend Lady Gardner said, as did my noble friend Lord Cullen, that the Government were not seeking additional powers.

My noble friend Lord Cullen spelt out very carefully six points. There are those six areas—and I could add to them if there were time—in which it seems to the optical practitioners that long-standing practice is not being adhered to. New practices are being introduced, and the new practices being introduced are faulty in the respects detailed by my noble friend Lord Cullen. That of course will be the subject of many amendments in order to pursue the Government on the matter.

My noble friend said (and I understand this) that because there is further business we could not spend undue time on this Second Reading. If she intends to write to my noble friend Lord Cullen of Ashbourne to spell out the Government's thoughts on the six points to which he referred, may I ask her to be so good as to write to me too?

Lord Ennals

And to me, my Lords.

Lord Mottistone

My Lords, I have no doubt the noble Lord, Lord Ennals, would also like to have a copy, as would other speakers who have touched on this subject. These matters are crucial. Speaking from these Benches, I hate to say it to the Government, but it strikes me that there is a bit of skulduggery going on which the statements on the front of the Bill are trying to pretend is not going on. I would hope very much that my noble friend can completely convince me about that or, alternatively, accept amendments which really will put beyond doubt the long-standing practice as heretofore adopted. I shall look forward to hearing much in the meantime, but otherwise to a nice, energetic Committee stage.

9.54 p.m.

Lord Kilmarnock

My Lords, broadly speaking, we support the aims of this Bill, although our level of enthusiasm varies in the three main parts and we question, in two clauses at least, the means by which the Government seek to achieve the aims.

No one, as the noble Lord, Lord Wigoder, together with other noble Lords, has said, can quarrel with Clause 1 so far as it goes on the removal of Crown immunity from the provisions of the Food Act 1984 and also the food and hygiene regulations. The terrible toll of life taken as a result of the food poisoning at the Stanley Royd Hospital in 1984 would alone furnish pressing grounds for this step. Of course, that was not an isolated instance. It was alarming to learn the claim by the Institute of Environmental Health Officers that 97 hospitals, or 16 per cent. of those it surveyed, would have qualified for prosecution under the Act had it applied to them. The remark of the catering manager of the Royal Free Hospital that cockroaches in the chicken stew were harmless if properly cooked may raise a smile, but is evidence an attitude that hardly commands confidence for the future.

Obviously, a great deal can be achieved by better managment and improved inspection, backed by statutory sanctions. The noble Baroness Lady Trumpington said that there was no effective substitute for management. She has a point there. There is also the question of resources. Hospital kitchens have long been a low priority for capital expenditure. Some of them, as has already been said, date back to the nineteenth century. It is hardly suprising that they should attract certain inhabitants into their woodwork.

Can the noble Baroness say whether the Government agree that there are resource implications that will have to be faced in addition to the question of Crown immunity? Can she say what provision the Government propose to meet them? I agree with the noble Lord, Lord Wigoder, that Crown immunity itself has no resource implications, but I submit to the Minister that there are some resource implications.

As the noble Lord, Lord Wigoder, has also said eloquently and authoritatively, there is the question whether the clause goes far enough. There are other aspects of health not necessarily related to kitchens. He referred particularly to the Health and Safety at Work Act 1974. It was my understanding that this was not imposed on the National Health Service in 1974 because it had just gone through the throes of two reorganisations and the general concern at that time was with patient care rather than the well-being of employees. It was also argued that it was not possible always to identify who would take responsibility under that Act nor where the managerial responsibility would lie.

These objections no longer apply. The National Health Service is the largest employer in the country and should not be outside this legislation. As the result of the Griffiths Report, each regional health authority and district health authority has been required to appoint a general manager and a clear line of management structure is now being laid down. Management should therefore be in a position to cope with the responsibilities under that Act as has already been said, a visit to any hospital would provide examples of disregard of the Health and Safety at Work Act—laboratory conditions, storage of materials, collection and disposal of rubbish, fire hazards and ventilation. While breaches of the Act may be pointed out by the health and safety inspectorate, there is no compulsion on the health authorities to put the condition right at present.

Another point that I should like to bring to the notice of the noble Baroness is that general practitioners who employ more than five people are subject to the Act. Hospitals in the private sector are similarly constrained, as are local authorities. Therefore, surely it is appropriate for the National Health Service to be brought into line with the requirements placed on other health professionals and health providers. I think therefore that I can almost certainly say that we will be tabling an amendment to this effect in Committee.

The kernel of the Bill to which most noble Lords have addressed their remarks is Clause 2, which is to effect the proposed new pharmacists' contract. Our position, as my noble friend Lord Winstanley has indicated, is that we broadly support the concept of a more rational distribution of community pharmacies. The current arrangements are expensive to the National Health Service, cause clustering and leap-frogging in the High Street and discourage the opening of new pharmacies in less favoured areas.

The new proposals have been carefully negotiated over a longish period with the negotiating body representing the profession. Against this there have been criticisms from a number of quarters, some of which have been voiced this evening. The noble Earl, Lord Buchan, spoke of a denial of market forces. Reference has also been made to this being an action in restraint of trade. But I am bound to say that there was not much free trade going before, with indiscriminate state subsidies to anyone wishing to become an NHS contractor. Subsidising chain stores such as Underwoods and Boots is not my understanding of free trade. I very much agree with the noble Baroness, Lady Gardner of Parkes, on this occasion, that it is absurd that large chain stores like Underwoods, with a huge turnover on other goods such as gifts and toiletries, should qualify as small pharmacies and obtain a basic practice allowance. So I do not think that the strength of the free trade argument really holds up.

I thought that the worries of the noble Lord, Lord Ennals, had more substance. I do not share all of them, or not to the same extent, but to my mind the crucial tests of the package proposed by the Government lie in two areas. The first is the appeal system. The original proposals for pharmacy practice sub-committees of the FPCs were obviously unacceptable and the appeal to an immediately adjacent area was quite inadequate. The noble Baroness has acknowledged that the Government now propose a modification of these arrangements whereby the membership of the appeal panel will be drawn, as I understand it, from a national, not a regional, list and the pharmacist members will not have a vote—

Baroness Trumpington

Correct.

Lord Kilmarnock

My Lords, I suppose that that is an improvement, but it is hard to see how national members will be able to travel round the country attending regional appeal panels, and it appears that there is no ultimate court of appeal beyond the regional appeal panel, if I heard the noble Baroness aright. I rather share the scepticism of the noble Lord, Lord Bruce-Gardyne, about this. Will these national appeal members be paid, will they get expenses and how will it all work? We need to hear a great deal more about it. We shall have to read carefully what the noble Baroness said, but my impression is that the Government's proposals do not remove all the unease which has been expressed, and my suspicion is that what the Government are proposing falls a good deal short of a proper national appeal system.

The second crucial test of the package is whether it really results in a better spread of pharmacies. This is surely one of the main objectives. I share some of the concerns of the noble Lord, Lord Ennals, here. Currently, we gather from the Government's notes, there are 1,380 small pharmacies, some of which will presumably close, of which only 135 are defined as "essential small pharmacies". It seems to me of the highest importance that the incentive should be adequate for this number to increase, whether in inner city areas, on housing estates, in rural communities or in any other deprived area.

I heard the noble Baroness say—I noted it down and I think I quote her correctly—that the essential small pharmacies scheme will be financially strengthened", and elsewhere she spoke of, "greatly enhanced financial support". I shall be most grateful, when she comes to wind up, if she can respond expand on that a little further or if, as she has already indicated, she cannot do so here and how perhaps he will write to me and other noble Lords who are interested in that aspect of the Bill.

Turning rapidly to Clause 3, this is primarily motivated by the case brought successfully against the Secretary of State by the Federation of Optical Bodies, in which it was ruled that he did not have the right to claw back the £11 million of "unintended profits", by cutting sight test fees and dispensing charges, thus, in effect, punishing all opticians for the supposed over-payment which had been fixed by the DHSS itself. It is right for us to be on our guard against special pleading by any of the professions and some kind of clawback mechanism is probably necessary. But at the same time a fair system of remuneration has to be established for the health professions if they are to fulfil their functions.

It therefore seems far too sweeping—I think that was the word used by the noble Lord, Lord Cullen, who is not in his place, but I agreed with it—to legislate for unrestricted retrospective recovery, not specifically from persons who actually received the fees, but by way of adjustment or reduction of future working fees for work done, quite possibly, by people who were not concerned in the first place. The noble Baroness talked about re-establishing the position, but it appears to me to go further than the existing position. She said that there was no change in policy. That may be so, but there certainly appears to be a change in powers in the Bill.

The grounds on which the Secretary of State is permitted to decide on clawback as set out in Clause 3(2) appear to let him act virtually on whim. Having made an earlier determination, presumably on the basis of all the relevant information available to him at the time, he is allowed to change it if he decides later that he should have made it on the basis of different information. This empowers him constantly to change the ground rules as he goes along. I find all this rather unsatisfactory and it is simply a further instance of giving the Secretary of State virtually unbridled powers. 1 can forecast that there will be some amendments in Committee designed to put a time limit on the clawback and to ensure that the basis of determination is fairer than is provided in the Bill.

We agree that action needed to be taken in all the areas the Bill tackles, but we are not satisfied (to use the phrase of the noble Baroness) that the Government have it entirely right. From this debate this evening it is clear that, although there are only three clauses of substance in the Bill, we shall have a lively Committee stage in which we on these Benches shall certainly play an active part.

10.6 p.m.

Lord Prys-Davies

My Lords, it is a late hour and I shall not detain the House long as I am sure noble Lords are anxious to hear how the Minister will respond to the many points of concern and also the arguments which have been advanced in the course of the debate.

There has been support for Clause 1 as far as it goes, but it will come as no surprise to the Government that my noble friend Lord Ennals and the noble Lords, Lord Winstanley and Lord Kilmarnock, are asking why it does not go further, and indeed are asserting that it should go further. It would have been a very much better clause had its scope been extended so as to apply the provisions of the Health and Safety at Work Act 1974. We promise to return to this clause in Committee.

The debate has really concentrated on Clause 2, which is controversial. The arguments against this clause were advanced in this Chamber in the debate on an Unstarred Question in June last year and again on 22nd October last year when a similar clause which appeared in the Law Reform (Scotland) Bill was rejected by your Lordships' House. Those arguments have been repeated tonight.

The clause should really be read in conjunction with the new contract for community pharmacists. It has to be recognised that the contract weakens the financial position of the small pharmacist unless his business is classified as an essential small pharmacy, in which case its financial position will be strengthened by the Bill. The letters which I have read—and I received one today from a pharmacist in my home town of Pontypridd—express concern and indicate a depth of feeling that pharmacists will lose out. This has been referred to by my noble friend Lord Ennals, but it is something which the noble Baroness the Minister did not acknowledge in her opening address. If a small chemist writes to me and says that this Bill will be extremely damaging to his position as a small contractor, is the Minister saying to me that his fear is unfounded?

My noble friend when he was Secretary of State for Social Services took the initiative to change the system of payment by paying more per prescription to the small chemist. This principle is still recognised in the new contract. Nevertheless, the fact remains that the small chemist will be paid less than now, and in some cases substantially less.

We are right to ask the Minister whether the department has calculated the number of small chemists outside those classified as essential small pharmacists who will no longer be financially viable when the new contract comes into operation. If the department has worked out its sums, then the Minister should be frank and give the House those calculations. Indeed, she should reply also to the number of questions that my noble friend Lord Ennals addressed to her on that aspect.

The heart of the clause is concerned with limiting entry by dispensing chemists into retail pharmacy businesses. It will be more difficult for a dispensing chemist to open a successful business, yet setting up in business is a basic objective that the Government claim to hold dear. I do not propose to cause any more embarrassment to the Government on that issue; but it simply is not good enough for the Government to deny that the contract prevents any chemist from setting up his own business. In reality it does so because the chemist will be unable to undertake any NHS dispensing.

I believe with all the other Members of your Lordships' House who have spoken to Clause 2 that the applicant who is unable to obtain a contract to dispense NHS prescriptions should have a right of appeal to a body that is objective and fair. The new appeals procedure outlined by the Minister appears to be adopting the right approach, but we shall have to study the wording carefully. We are particularly anxious that the consumer should be given a strong voice in the appeals committee. Lay people should be able to speak for the consumer's point of view, as to where pharmacies should be located.

If I understand the Minister correctly, there will be three professional members of the committee and three lay members. However, I fear that the professional members could well dominate the thinking of the appeals committee. Obviously, we shall have to study carefully what the Minister has said about the appeals procedure but I have a feeling that we shall come back to this matter in Committee.

I return to the principle of control of entry. There is evidence that some districts are by now over-endowed with high street chemists, each with an NHS contract in his pocket, while there remain rural areas and large housing estates—and in Wales we have large rural areas and large housing estates—where there is under-provision. However, it appears that with this Bill we could be moving towards a planned distribution of retail pharmacies, which I for my part would welcome. The new contract, by limiting entry by dispensing chemists into retail businesses in areas of over-provision, could substantially increase the chance—and we put it no higher than that for the moment—of pharmacies opening in rural areas and on large housing estates. That would bring benefits to many patients in many parts of the country. Such patients would gain from the contract.

If the mechanism of appeal is right (and that is a big "if), if the essential small chemist scheme is reviewed, and if the savings, modest though they may be, are redistributed within the NHS and the pharmacy industry, then, as the dean of a faculty of pharmacy indicated to a friend of mine, Clause 2 could be heading in the right direction.

Finally, I turn to Clause 3. I agree with noble Lords who have asserted that it is fair and just that a government should be able to recover from those who have benefited when there have been overpayments in the past. I believe that as a statement of principle that must be fair and just. Notwithstanding the assurances given by the Minister that the clause is not intended in any way to change the existing practice, considerable concern has been expressed by noble Lords—my noble friend Lord Ennals, the noble Lords, Lord Cullen of Ashbourne, Lord Mottistone, and Lord Kilmarnock—that the clause is too wide, to vague and too sweeping.

The noble Lord, Lord Cullen of Ashbourne, concentrated on six points of difficulty which had been identified by a leading counsel. I hope that the noble Lord will send that counsel's opinion to the department for its consideration and enlightenment. Basically, what is wrong with the clause is that it could authorise recovery from the wrong people. There is an element of subjectivity in one of its subsections which could be hazardous. There is a feeling in the House that the Government should not be entitled to reopen a settlement at any time in the future. After a length of time—and there may be difficulty in determining what that period should be—the settlement should be accepted as settled in the interests of certainty and finality. Therefore, we shall return again to Clause 3 in Committee; but I believe that I should now make way for the Minister.

10.17 p.m.

Baroness Trumpington

I agree with the assumption of the noble Lord, Lord Ennals, and the noble Lord, Lord Kilmarnock, that the tragedy of Stanley Royd was a factor which contributed to the legislation in Part I of the Bill.

Many noble Lords have raised wider issues concerning Crown immunity, and these points are, of course, important; but in no instance has the case to lift Crown immunity been made with the same strength as was made for food hygiene legislation. I believe that for the time being the most effective way of tackling the problems is to continue the efforts we have been making to strengthen management procedures rather than by way of a general listing of Crown immunity.

Various noble Lords, asked why should not Crown immunity be removed from health authorities in respect of the Health and Safety at Work etc. Act. Health authorities are liable to comply with the Health and Safety at Work etc. Act in the same way as private bodies but they may not be prosecuted. However, where health and safety inspectors consider that changes are necessary, they may issue Crown notices which must be complied with. Failure to do so may be referred to the Secretary of State. Although over 300 notices have been issued since 1980, in no case was it found necessary to take action. That suggests that health authorities are fulfilling their responsibilities. That view is supported by the Health and Safety Commission.

Much has been achieved by co-operation and good will between health and safety inspectors and health service administrators; for example, in the setting up of time scales for improvements which take account of the need for local authorities to continue to meet the needs of patients. The Crown notice arrangements provide adequate safeguards to ensure that health authorities comply with health and safety legislation and the Government do not at present intend to remove Crown immunity in this field.

With regard to the financial implications of Clause 1, mentioned by the noble Lords, Lord Wigoder and Lord Kilmarnock, a statement that the financial effect of Clause 1 has no implications for public expenditure means that no further public money is being allocated for Clause 1. It is up to health authorities, if necessary, to consider re-ordering their priorities within their budgets to take account of Clause 1. Incidentally, I was most grateful to the noble Lords, Lord Winstanley and Lord Kilmarnock, for their general welcome for Clause 2.

Turning to the points raised by the noble Lord, Lord Ennals—and I shall touch at the same time on points raised by other noble Lords—he asked whether it was the Government's view that there were too many pharmacists. No; the Government are saying that the pattern of distribution is not meeting changing patient needs. The noble Lord, Lord Winstanley, asked about pharmacists who were buzzing in before the legislation was made. My reply to him is that those pharmacists who are trying by opening now to beat the results of this Bill are free to do so. When the change comes they, like others, will have the same financial changes. If they have sufficient business they will make a go of it; if not, like any other commercial enterprise they must diversify, or the result will be not so happy. But above all, the interest must be for the patients. The interests of the patients ar paramount. The overriding criterion is, "What is necessary to meet patients' requirements?"

In answer to a question of the noble Lord, Lord Ennals, about why there should be a regulatory system, the new contract is a package which consists of a new remuneration system together with the controls on entry. The overall aim of the contract is to ensure a distribution of pharmacies which is appropriate to patients but which is not extravagant of NHS resources. Under the present arrangements, any pharmacist can open a pharmacy knowing that his NHS costs will be met by the taxpayer. Change is necessary.

The noble Lord, Lord Ennals, asked whether the whole pharmacy profession should have been consulted. Negotiations on the new contract were conducted between the department and the PSNC. Since that time, discussions have taken place with the PSNC, the PSGB which represents the profession as a whole, and other interested bodies such as the British Retailers Association.

I have so many answers that I shall reply to something which I read in the newspapers during the course of the week—that the Minister certainly was well briefed. I found that I suddently lost my sense of humour when listening to the noble Earl, Lord Buchan, and to my noble friend, Lord Bruce-Gardyne, and I found myself thinking rather wistfully about the Big Bang—whatever that is—that was mentioned by the noble Earl.

I have an answer to his points about fair trading. There are six points that I should like to make. The new arrangements would in no way exercise any control over non-NHS pharmacies. There seems to be no reason in principle why the NHS as a contractor should be denied the right, which is open to other contractors, to be selective in its award of contracts, so that an efficient and effective service can be provided for patients. This is the main objective—to provide adequate patient services while avoiding the cost to the taxpayer of excessive provision.

In the supply of pharmaceutical services most of the normal market mechanisms necessary for effective competition do not operate. The pharmacists cannot compete by offering a better price or a better quality product. Also, the overall level of NHS work that is available is outside the pharmacist's control. The DHSS and the Pharmaceutical Society of Great Britain are considering what progress needs to be made on the description and maintenance of standards of pharmacy practice. Changes in the pattern of remuneration will encourage pharmacists to be more efficient and there will be added incentives for the better practices.

I was interested in the ideas of the noble Lord, Lord Rugby, for widening the future role of the pharmacist. That is certainly something that I shall want to have noted in our primary care consultations. My noble friend Lord Mottistone will not be surprised to learn that I shall write to him on his charge of skulduggery. I find myself frustrated by not being able to answer all the questions of noble Lords.

The aims of the Bill are to improve the quality of the service provided to patients at the same time as ensuring value for money. I am confident that those aims will be achieved in a way that is fair to those who provide health services, to the taxpayer and above all to the patient. I urge noble Lords to give the Bill a Second Reading.

On Question, Bill read a second time, and committed to a Committee of the Whole House.