Health and Medicines Bill

HL Deb 14 July 1988 vol 499 cc933-80

3.33 p.m.

The Earl of Arran

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(The Earl of Arran.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1 [Vesting of property etc. of Corporation in a company nominated by the Secretary of State and dissolution of Corporation]:

Lord Ennals moved Amendment No. 1: Page 1, line 6, leave Out subsection (1).

The noble Lord said: If the amendment standing in my name on the Marshalled List is carried a number of subsequent amendments would need to be made to Clauses 1 to 6. However, let me move the amendment first.

The case has not been effectively made out for any change in government policy such as is proposed in the Bill to abolish the General Practice Finance Corporation, and in fact to privatise it. In the debate on Second Reading of this Bill, the issue of the abolition of the GPFC, and the establishment of a new body to replace it, was hardly touched upon in any speech and certainly not by the Front Bench. Nothing was said that would justify what is being proposed here. It would be wrong that the matter should pass through the Committee stage without the issue being properly considered.

As it stands, the clause would abolish the General Practice Finance Corporation if my amendments were not accepted. That is basically because the Government wish to reduce the public sector borrowing requirement. Amendment No. 1 would omit subsection (1) and therefore leave the GPFC in existence because there are insufficient grounds for its abolition. Indeed, to improve primary health care the Government should examine how they can extend the powers and influence held by the GPFC.

The government proposal is ideologically motivated as opposed to being a practical move. The corporation funding represents only about one-hundredth of 1 per cent. of the PSBR. We are therefore talking about cutting one-hundredth of 1 per cent. of the PSBR. Not only is that an ill-judged motivation, in my view, but its effect could be a serious threat to primary health care. There has been some discussion about private capital. I am in no way opposed to private capital being formed. In fact, the GPFC is not debarred from raising private capital. It is certainly within its power. If the motivation is to increase the use of private capital, abolition of the corporation is certainly not necessary. It can already obtain money from the private sector if it wishes to do so.

If we are talking about public spending, the corporation has in no way been a drain upon the Exchequer. It has made a modest profit. We look for assurances from the Minister about what will happen to the profit if the amendment that I move is not carried and the corporation's future is threatened.

General practice premises, as is well known, are extremely important. General practitioners are the anchor of primary health care. They must be able to provide a 24-hour service. They must deal in prevention as well as treatment. We should encourage them to develop a wider range of services such as family planning and ante-natal and postnatal care. We also expect them to be involved in psychiatric and other work. Most patients' contact with the health service is with their general practitioner. Accepting that GPs are involved in such a wide range of care, it is important that they have a proper base on which to operate and proper premises. I am sure that noble Lords in all parts of the Chamber would wish to ensure that that is so.

If things go wrong with the primary health care system, as sometimes happens in inner city areas, it has unfortunate consequences for hospitals. For example, if there is not a proper range of prevention, one is likely to have more people in hospitals because the GP service has not been able to help. If people are not confident of the treatment that they are likely to have from their GP, they are more likely to badger the GP to refer them to hospital for a second opinion. One already sees accident and emergency departments being clogged up by people who ought to be seen by their GP but who cannot get their GP to come out at night and do not have confidence in the deputising service.

What has led the Government to the conclusions that they have reached in this Bill? On 4th April 1984, when the Second Standing Committee on Statutory Instruments was being considered, the former Minister of Health, Mr. Kenneth Clarke, was cited: Honourable Members may know that at one stage I had doubts about the continuing need for the corporation. We carried out a review of its work to consider the possibility of encouraging doctors to look for their finance from banks and ordinary commercial sources. The review was thorough, conducted by myself and my colleagues at the Treasury and our respective Departments. We had discussions with the clearing banks about other options. Our findings showed that the corporation continued to provide a necessary and important service to general medical practitioners in a very cost-effective way compared with any other possibilities that we could find. I think we all accept that we have a long way to go before every general practitioner operates from premises which are attractive and really suitable, and it is therefore essential that the corporation should continue its work. The review satisfied me that this is the right way to go and I therefore have particular confidence in commending to the Committee the work of the corporation and this order increases its borrowing powers".—[Official Report, Commons, 4/4/1984; cols. 4–9.]

Not long after that, on 2nd May 1984, in dealing with Clause 2 of the Health and Social Security Bill the Minister said: As I said when we debated the statutory instrument recently, there has been a review of the corporation, and we have examined that method of financing improvements to the surgeries of family doctors. As a result, my Treasury colleagues and myself are fully satisfied that it is a fully effective and cost-effective way to enable doctors to carry out those improvements, from which doctors and patients throughout the country benefit".—[Official Report, Commons, 2/5/1984; cols. 365–366.)

Even in the White Paper which preceded the Bill in paragraph 3.55 it is stated: if evidence should emerge that private sector funds are not available to doctors practising in these areas, the Government will he prepared to consider making arrangements to ensure that funds are made available".

One could hardly have from a former government Minister, the Minister at that time, a more confident assessment of the role of the corporation.

Before we abolish a body so highly praised by the Government and yet doing such a necessary task we should ask the Government for what reason they have totally changed and repudiated the views expressed by the former Minister after what had been a thoroughly detailed study? At this stage I warmly welcome a statement from the Minister which justifies this remarkable about face, which as I said before in no way denies the opportunity of private capital being involved together with public capital in doing the essential task of ensuring the GPs have a proper place from which to carry out their functions. I beg to move.

Lord Winstanley

I wish to support the noble Lord, Lord Ennals, in his amendment, despite the fact that were it to be carried, as I hope it will be, I should not be able to move my subsequent Amendments Nos. 2, 8, 9 and 10 which are designed to introduce certain safeguards were we to go ahead with privatising the General Practice Finance Corporation. I concur entirely with the noble Lord, Lord Ennals, as no doubt will other noble Lords in all parts of the Committee, on the importance of general practice and its being conducted on premises which are wholly adequate and fully staffed. The staffing complement of a general practice is in many ways closely related to the adequacy of the premises used.

The General Practice Finance Corporation over the years has done a great deal to improve standards of general practice by providing money to build purpose-designed practice centres in which the practitioners and their staff are adequately housed and proper provision is made for the patients. That work has been immensely valuable and has done a great deal to improve the standards of that part of the National Health Service, notably the family practitioner committee services, which I believe are crucial and which the former Minister, Mr. Kenneth Clarke, also thought were crucial. He paid many tributes, as the noble Lord, Lord Ennals, said, to the work of the corporation.

My later amendments, which I may not be able to move, are designed to introduce certain safeguards. I shall not go into those in detail, except to state my anxieties about the present system. I agree entirely with the noble Lord, Lord Ennals, that if this major change is to be made—in other words if the General Practice Finance Corporation is to be privatised—the case has to be fully made out in your Lordships' Committee because it was not fully made out in another place and nor was it tested there because of the constraints of time. We are not under quite the same constraints here in Committee and therefore one wishes to hear the arguments deployed fully as to why this major step should be taken.

My anxieties about it are that a privatised General Practice Finance Corporation may be motivated much more by financial considerations than by the needs of the National Health Service. For example, I fear that it might find it more attractive to lend money for the building of practice premises in areas of the country in which property values are high and therefore risks are minimal, rather than to lend the money where it is most desperately needed for National Health Services purposes, in parts of Merseyside and other urban areas where property values are not high and where a privatised finance corporation might regard risks as unduly high. That is my fear. I also seek to make sure that if the corporation becomes privatised it will act invariably in the interests of the National Health Service rather than of the finance corporation or in other ways in the interests of government finance.

I shall say no more at the moment, but I shall be interested to hear the Government's justification for making this major change in an institution which has served the nation so well for so many years.

3.45 p.m.

The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Skelmersdale)

I do not want to start off on the wrong foot with the noble Lord, Lord Ennals, by being too brief on this or any other amendment, but I have to advise the Committee that if my throat totally siezes up my noble friend Lord Arran will be taking over at very short notice.

On Second Reading, and contrary to what the noble Lord, Lord Ennals, said, I referred to Clauses 1 to 6 when I said: Also of relevance to GP premises are Clauses 1 to 6, which concern the General Practice Finance Corporation. As we announced in the White Paper, our intention is to change the constitution of that body in order to allow maximum use of private sector funds. These clauses give effect to that intention. We sec no reason to maintain the existence of a public sector body to lend to GPs when the private sector has in recent years shown itself perfectly capable of doing the job".—[Official Report, 26/5/88; col. 1033.] So this is the core of my argument. Reducing the public sector borrowing requirement is in itself a laudable aim and one that this Government have been signally successful in achieving over the years. But that is not our primary reason for wishing to place the General Practice Finance Corporation in private ownership.

Financing the acquisition and improvement of the premises of family doctors is an activity which is already well established in the private sector. I agree, incidentally, with the noble Lord, Lord Ennals, and everything he has said about the need for achieving that very desirable aim. The question which concerns the Committee is whether this can be better done in the public sector or the private sector.

A number of leading financial institutions are clearly very interested in offering this and a package of other financial services to general practitioners. We are also encouraged that several such institutions with what one might describe as household names have already expressed an interest in acquiring the corporation. This tells us that there are ample funds for this high class business readily available.

Competition among lenders would be very healthy. In the financial climate which this Government have generated no one would be arguing a case for establishing a GPFC in 1988. This is not 1966, when it was established. The need which now exists is to concentrate public resources on those issues which only the public sector can realistically be expected to cope with.

I have been asked what has changed since my right honourable friend, currently the Chancellor of the Duchy of Lancaster, made his statements about the GPFC back in 1984. That is exactly what has changed. The financial climate of this country has been climbing year by year to what may now be regarded as a very healthy temperature. It seems clear to me that the essence of what the then Minister said was that it is essential that the work of the corporation should continue, and the noble Lord, Lord Ennals, and I agree about that. The means, however, by which it is carried out is not sacrosanct.

Circumstances can alter cases. In the light of a further review in 1986 by Hambros Bank, the Government have taken the view that the corporation not only can but should survive and prosper as a viable independent company within the private sector. We are not seeking to abolish or even to modify the essential role of the GPFC as a lender to family doctors. Indeed, the effect of our proposals will be to expand it, for example, to other classes of borrower.

I have been asked what would happen to the profits. Any profits generated by the new corporation after it ceases to be wholly publicly owned will be utilised by it as it thinks fit. That would he the case with any other Companies Act company.

The noble Lord, Lord Winstanley, suggested that the GPFC can borrow from the private sector at the moment and asked what will he the difference. First, because the borrowing still counts towards the public sector borrowing requirement it will affect macroeconomics and the state of the currency on the international market, and so forth. The GPFC is a public body and its borrowing is backed by Treasury guarantee; that is to say that the public sector underwrites the risk. Secondly, because there is no longer any need for such enterprise to be conducted in the public sector, it can properly be left to private enterprise to provide those services as is increasingly becoming the case.

The noble Lord, Lord Ennals, was interested in the situation in the inner cities and remote rural areas after privatisation. Because of the special allowances made to general practitioners for the use of their surgery premises, the unrivalled track record that they have for the repayment of loans and the level of remuneration and reimbursements generally, family doctors are a very attractive prospect for private sector lending institutions. Nonetheless, I am aware that some doctors are worried about the implications of the proposed reconstitution of the GPFC for the continuing availability of loans in commercially difficult areas.

I do not altogether share their view about the likelihood of any difficulties of that kind. However, I believe that it is right that we should seek the necessary powers—in this case in Clause 2 of the Bill—as a safeguard so that we arc fully equipped to tackle any special needs which may in future arise. That is entirely consistent with our aim to ensure that recent improvements in surgery premises are maintained, particularly in underprivileged areas.

Finally, we fully expect and believe that the ethos of the corporation will be preserved in the successor company. We are at present engaged in discussions with representatives of family doctors directed to that end. The outcome of the discussions will be reflected in the memorandum of sale and will form part of the negotiation with prospective purchasers. We expect to achieve a stronger GPFC with ample funds available for lending and offering a wider range of financial services to all the family practitioners in contract with family practitioner committees. That is why we are carrying this out and why the original purport and the safeguards are in Clauses 1 to 6 of the Bill. If the amendment was passed not only would the amendments tabled by the noble Lord, Lord Winstanley, fall but so would approximately one-third of the Bill.

Lord Ennals

We could get through it quicker that way, could we not? I should like to express sympathy with the noble Lord for his throat condition. If I rise to my feet and put a number of questions it is not that I am trying to tire his throat but that I am trying to satisfy myself about what best to do in the interests of the Bill and the general practitioners involved.

I should like to ask the noble Lord one or two questions. I am grateful to him for the assurances that he has given. First, I quoted from the remarks of the right honourable Kenneth Clarke which were made following an inquiry carried out by the DHSS and the Treasury. At that time there was great satisfaction with the performance of the corporation. The Minister may say that the situation has changed because the economy is stronger. Has there been a further inquiry which has led the Government to believe that their present proposals, which are so different from those put forward four years ago, are based on a sound assessment'? Has there been a further inquiry?

Secondly, in the decision reflected in the Bill is there in any way dissatisfaction with the performance of the corporation which now exists? Normally, if there is to be privatisation, the Government come forward and imply that in some way or other the system that they wish to change has not proved to he totally in the national interest. Does the Minister have any criticism or comment to make on the performance of the corporation so far and are there any last words before its demise?

Thirdly, I referred in my introduction to the paragraph in the White Paper. I said that should evidence emerge that private sector funds are not available to doctors practising in those areas will the Government be prepared to consider the matter? I now read that the Government will be prepared to consider making arrangements to ensure that funds are made available.

The anxiety reflected is also shared by the British Medical Association. It said that the GPFC was set up in 1966 when doctors in unattractive or underprivileged areas found it difficult to raise money from private sources at economic rates in order to improve their premises. It states that there is evidence to show that that is a continuing anxiety and that there is no conclusive evidence that practices in those areas will he able to raise funds entirely from the private sector. The Minister touched on the issue but I should like to know whether he is entirely satisfied that the private sector will be able to meet the needs which the BMA anticipates.

The BMA goes on to raise the point that in Clause 2 the Secretary of State is given discretion to guarantee certain loans. It seeks reassurance that general practioners working in underprivileged areas will be able to obtain the necessary funding for their premises. I should like to have reassurance that that is a real commitment and that underprivileged inner city areas, and other areas for that matter, can, under the proposals made by the Government, rest assured that they will receive the necessary funding. I hope that the Minister will be able to give me the assurances for which I am asking.

Lord Skelmersdale

I said earlier that circumstances have changed since 1984 when my right honourable friend the then Minister for Health made his comments. Not only have the economic circumstances of the country changed but there was a further review in 1986 carried out by Hambros Bank and the Government have now taken the view that the corporation can and should survive and prosper in the private sector.

No, 1 cannot sell this to the Committee as government dissatisfaction. The corporation is doing a perfectly good job and I cannot see that there is now any point in its being backed by the private sector. I can see no rationale for that at all.

As regards Clause 2, with which we shall deal shortly, the purpose is to provide a kind of insurance policy for doctors. I am sure that that is what the noble Lord would like. Its purpose is to enable the Secretary of State to exercise powers of guarantee or indemnity in respect of the whole or any part of the loan to a family doctor for his or her practice premises where they are used for the provision of general medical services under the health service. That happens at present and it will continue to happen in the future. I hope that that will provide reassurance for the noble Lord.

Lord Ennals

I am grateful to the Minister for that reassurance. My concern is not to raise an ideological issue but to ensure that what we are doing is best for the general practitioners. I am grateful to the Minister for the assurances that he has given and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4 p.m.

Lord Winstanley moved Amendment No. 2: Page 1, line 14, at end insert— ("(1A) The Secretary of State shall, after consulting such bodies as appear to him to represent the interests of the public within the national health service, appoint three directors to the successor company to represent the interests of the public in the management of the company.").

The noble Lord said: I note that this amendment is grouped with Amendment No. 7 in the name of the noble Lord, Lord Prys-Davies, and my Amendment No. 8. These amendments relate to what I said on the earlier amendment moved by the noble Lord, Lord Ennals; in other words, if we are to proceed with a privatised General Practice Finance Corporation, we must have certain safeguards.

Amendment No. 2 seeks to establish one particular safeguard. Under the Bill as it now is, it is noted that the Secretary of State has the duty to appoint the directors of the new corporation, and he appoints them all. In his earlier reply the Minister told us about the extent of discussions with doctors and general practitioners, and I know that detailed discussions have been going on with the General Medical Services Committee and others. Therefore, I have no doubt that the interests of the doctors will be amply considered.

Amendment No. 2 states: The Secretary of State shall, after consulting such bodies as appear to him to represent the interests of the public within the national health service, appoint three directors to the successor company to represent the interests of the public in the management of the company".

Much has been said about the interests of general practitioners and I have no doubt that they will be safeguarded, as will the interests of the DHSS and the Treasury. But very little has been said about the interests of the patients, and the public are the patients. I should like to see appointed as directors—and the Secretary of State does the appointing—people who in the opinion of the Secretary of State can represent the opinions and attitudes of the patients.

Why do I ask for three? One would not be enough, because we have to consider the different geographical areas. The amendment states: after consulting such bodies". Which bodies are those? It is possibly with the community health councils or their equivalent in Scotland. At least it will be bodies which could give authoritative opinions as to the need for substantial improvements in practices in certain areas. On that amendment, I hope that the Minister can give us some reassurance.

Since this amendment is grouped with Amendment No. 8 perhaps I may speak to that now. That amendment comes under Clause 3 and adds the words: provided that no such power shall be exercised in a manner prejudicial to the interests of the national health service". That is the introduction of a further safeguard in the event of this privatised finance corporation being established.

The first amendment is quite simple. I hope that the Minister will see no objection to it, though he may quarrel with the numbers and procedures. Surely he must agree that, among the directors of such an important company, performing a very important public service, a service which is vital to members of the public as patients, there should be adequate representation on the board of people who can speak on behalf of the public.

I accept that the Minister may well say that everybody is a potential patient. I know that. Doctors are potential patients, as are members of the Civil Service and Ministers in the departments. I should like to see the Secretary of State give some thought to appointing to that body people who are known to be able to represent the interests of the patients so that we can take care of the anxieties expressed earlier; namely, that a privatised body of this kind might be inclined to lend money very readily in areas where property prices are very high and the risks are minimal but might be reluctant to lend money in areas where it is desperately needed—urban areas and possibly some rural areas where there is a higher risk. Those are matters upon which I am sure directors appointed by the Secretary of State to represent the public interests might well be able to voice an opinion on the board of this new company. I would hope that those opinions would be considered carefully. However, they cannot be considered carefully if they are not heard. I hope that the Minister will respond favourably and sympathetically to these amendments. I beg to move.

Lord Prys-Davies

I should like to support the amendment moved by the noble Lord, Lord Winstanley, and adopt his arguments. I believe that it is important that the opinions of the public, and in particular those members of the public who have a special interest in the health service, should he voiced within the successor company.

Amendment No. 7 is grouped with Amendment No. 2 and I should like to speak to Amendment No. 7, if that meets with the convenience of the Committee. That is really a probing amendment. The noble Lord, Lord Skelmersdale, has already referred to the powers conferred by Clause 2. I particularly welcome his interpretation of subsection (1)(a). This amendment refers to Clause 2(4), which appears to be a sweeping clause investing considerable powers in the Secretary of State. We should like to know from the Minister what is the Government's justification for vesting that sweeping power in the Secretary of State.

In legislation one does not often come across the words: "in the national interest", though obviously we do from time to time. Is this phrase in the context of subsection (4) synonymous with the phrase: "in the public interest"? I ask that because if it is synonymous with the public interest, one can weigh in the balance concepts or issues such as fairness or indeed justice itself. I am not quite sure whether one is entitled to bring the concept of justice and fairness into the scales when deciding an issue of national interest.

There is another question. Who ultimately is to decide whether the exercise of the power on a particular occasion is in the national interest? Can the Minister explain to the Committee whether that is to be in the sole discretion of the Secretary of State or, linking that to what I said earlier, will the courts have the right to question the Secretary of State's judgment to decide the issue? They would obviously exercise their judgment according to the facts of the case.

I ask that question because in the last limb of subsection (4) we have this reference to the power being exercised: notwithstanding any rule of law". Does that override the courts' right to weigh in the balance the concept of justice? As I said, this is a probing amendment and I should he very grateful if the Minister could throw whatever light he can on the clause.

Lord Skelmersdale

I understand that in these three Amendments, Nos. 2, 7 and 8, both noble Lords are seeking reassurances on what is meant by the various parts of the Bill.

I should like to begin by advising the noble Lord, Lord Winstanley, that it is already our intention to arrange for representatives of the medical profession to nominate directors to the successor company. Clearly that would be right. What I am not so sure is right is what the noble Lord is asking for; namely, for the Secretary of State to appoint directors to what will be a private limited company. I cannot think of any other place in English law where that has happened and I can imagine that there would be constitutional questions on that. It would be unlikely to be acceptable to a prospective purchaser and could adversely affect the prospects of sale.

The successor company will he lending money to family doctors in a competitive market. Many family doctors already obtain their finance from other companies to which the Secretary of State does not appoint directors. That has not proved to be against the public interest. We expect and believe that the financial institution investing in the successor company will be of a type which will be very much aware of the need to safeguard the interests of the public in the conduct of its business. Indeed, there is the Companies Act and the various consumer Acts to back that up, as there would be with any other Companies Act company.

The noble Lord, Lord Prys-Davies, with his lawyer's eagle eye, asked what we mean by the public interest in Clause 2(4).

Lord Prys-Davies

The national interest.

Lord Skelmersdale

I am sorry, the national interest. The purpose of that subsection is to deal with a problem that could arise concerning the successor company's borrowing during a possible interim period between vesting and sale. Between establishing the company and the sale of it there might be circumstances where the public interest would override that of the company and the Secretary of State may wish to exercise his powers in accordance with the former. An example would be where, although increased borrowing by the company might be beneficial to it, it would be undesirable on grounds of public policy.

This problem has arisen in the past and provision in privatisation legislation to avoid it is well-precedented. For example, I am advised that it is found in the Airports Act 1986, Section 9, the Gas Act 1986, Section 68(1) and the Telecommunications Act 1984, Section 67. In parenthesis, let me say that I regard the three stages of the GPFC as described in the Bill as rather like the three stages of man. There is the GPFC as it currently is, a fully-fledged public sector organisation—a quango, if one prefers. There is a short period where it will still be publicly owned but it will be a Companies Act company. There is then a third and presumably very much longer period where it will he fully in the private sector.

As I said earlier, I cannot see that its role and rationale will be any different. During the 22 years of its existence the corporation has never exercised any of its powers in a manner prejudicial to the interests of the National Health Service. There is no reason to believe that it will exercise its new powers in that way. However—and this is the reassurance that the noble Lord, Lord Winstanley, seeks—in the unlikely event of its attempting to do so, the Secretary of State has the powers of direction under Section 4 of the National Health Service Act 1966. I hope that all three points reassure noble Lords.

Lord Ennals

I have to say that I am not impressed by that reply from the Minister. He seemed to rest part of his argument on the fact that the amendment would perhaps be giving too much power to the Secretary of State. However, the amount of power given to the Secretary of State in Clauses 1 and 2 is enormous. Clause 1(3) states: The Secretary of State shall have power, with the consent of the Treasury"— that does not reduce his power very much— to acquire, hold and dispose of stocks, shares or other securities of the successor company". Clause 1(5) states: The Secretary of State may by order made by statutory instrument not later than the day on which an order is made … provide that such provisions of the memorandum or articles of association of the successor company as may be specified shall not be alterable without his approval". Clause 1(9) states: An order under subsection (8) above may make such provision as the Secretary of State thinks fit with regard to the disposal of the Corporation's assets and the discharge of its liabilities". We then come to Clause 2, in which subection (1) states: The Secretary of State may by regulations made by statutory instrument with the consent of the Treasury make provision". There then follow paragraphs (a) and (b) setting out what he may do. There is also the paragraph referred to by my noble friend which gives the Secretary of State powers to overrule the law of the land. The Secretary of State is given enormous powers and no one can doubt that.

However, the Secretary of State has not been given the powers that the noble Lord, Lord Winstanley, proposes and which I and my noble friends wish to support. We are to see a new corporation in private hands where the motivation is, as the Minister rightly said —and I am not disparaging it—that it is a private company for private profit. The original corporation had written into its articles its obligations under the National Health Service Act to the National Health Service and to the tasks of general practitioners. I have no knowledge that anything like that is to be written into the terms of the new company.

Therefore, I want to be assured not just that the medical profession is to be there—the profession may have some interest in it—but that the public interest will be represented. Certainly nothing that the Minister said satisfies me in that respect, which is why I reiterate our support from these Benches for the proposal made by the noble Lord, Lord Winstanley.

4.15 p.m.

Lord Trafford

The noble Lord is being slightly ingenuous here. In the first instance the powers refer to the successor company. They do not refer to an indefinite time in the future. It is clear that it is during the transmogrification, the change in the corporation, that these powers are needed by the Secretary of State. That is when he must exercise them, when the new corporation is set up.

The corporation is a different animal to the subsequent company, which is no longer the successor company. These powers refer to when the corporation—referred to in the Bill as the successor company—is in the hands of the Crown. It is subsequent to that that it would be a different animal. One cannot then carry on to say that when it is in the private sector it will nominate this director for this or that director for that, and so on, because that is not within the usual practice of private corporations.

During the period of time that it is a successor corporation, of course any such instructions to or by the Secretary of State could apply. It would be different if, as is intended according to my understanding, it goes into the private sector fully as a private corporation. My understanding of the major advantage in this connection concerns the range of services and the flexibility thereof, and not other causes. If it helps the noble Lord, I do not think that doctors would be any better protected in the second circumstance of that corporation than they would be under the first. It is, as I understand it, only to the first circumstance that these powers could apply.

Lord Winstanley

I cannot wholly agree with the noble Lord, Lord Trafford, that the matters we are discussing refer merely to the transitional stage—

Lord Skelmersdale

Perhaps I may be allowed to interrupt the noble Lord. My noble friend Lord Trafford is absolutely right. Clause 1 is entirely the intermediate stage, as I described it earlier, of the GPFC; in other words, while it is still in the public sector but is already on its way to being privatised, so to speak, and that should be for a very short period indeed.

Lord Winstanley

As the Minister has intervened may I ask him to go a little further? Earlier he told us that arrangements have already been completed for nominations to the board of the new company to be made by the General Medical Services Committee. Is that in the future or purely in the transitional period?

Lord Skelmersdale

Once the corporation is in private hands, as it were, the directors will be at the disposition of the shareholders, whoever they may be, so no guarantees can be given on that score in the long term. As I said, in the interim period there will be representatives or nominations of the General Medical Services Council on the board.

Lord Winstanley

I listened to both the Minister and the noble Lord, Lord Trafford, and I absorbed what they said, but I have a suspicion that whatever is introduced for an interim period tends to remain when the interim period is over. I can give many examples where that has happened in regard to other matters and I see no special reason why normal procedures should suddenly be departed from in this respect.

In one of his earlier replies the Minister said that he thought Amendments Nos. 2, 7 and 8, which are grouped together, were tabled to seek reassurances about the manner in which the newly established corporation would exercise its powers. He is correct. We are seeking reassurance and I do not want the Minister to think that we are not grateful to him for the reassurances he has given. He has made many points which are worth thinking about, particularly the one he has just reiterated in regard to doctors nominating people to the board, though, as he said, that is in a sense the provisional board.

As I said earlier, I am not too concerned about the doctors. I am quite sure that they will be able to fight their own corner and that the doctors will make quite sure that they are adequately represented on the new board. I am by no means sure that the patients will be adequately represented and that we have any clear guarantee that the newly-established privatised finance corporation will in fact act overall in the general interests of the National Health Service and of its patients. I believe that it would be a great mistake to leave the Minister with the impression that we are wholly reassured as regards the future of this body. We are not wholly reassured but partly reassured. though not sufficiently reassured. That being the case, it is only right to test the opinion of the Committee.

4.20 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 89; Not-Contents, 135.

DIVISION NO. 1
CONTENTS
Addington, L.	Hanworth, V.
Ardwick, L.	Hart of South Lanark, B.
Attlee, E.	Hatch of Lusby, L.
Aylestone, L.	Howie of Troon, L.
Banks, L.	Hughes, L.
Birk, B.	Hunt, L.
Blackstone, B.	Hutchinson of Lullington, L.
Blease, L.	Hylton, L.
Bonham-Carter, L.	Ilchester, E.
Bottomley, L.	Irving of Dartford, L.
Brain, L.	Jacques, L.
Briginshaw, L.	Jeger, B.
Bruce of Donington, L.	Jenkins of Hillhead, L.
Campbell of Eskan, L.	Kagan, L.
Carmichael of Kelvingrove, L.	Kilbracken, L.
Carter, L. [Teller.]	Leatherland, L.
Cledwyn of Penrhos, L.	Listowel, E.
Cocks of Hartcliffe, L.	Llewelyn-Davies of Hastoe, B.
Diamond, L.	Longford, E.
Donaldson of Kingsbridge, L.	Lovell-Davis, L.
Elwyn-Jones, L.	McNair, L.
Ennals, L.	Mais, L.
Ewart-Biggs, B.	Milford, L.
Ezra, L.	Monson, L.
Falkender, B.	Morton of Shuna, L.
Falkland, V.	Nicol, B.
Gallacher, L.	O'Neill of the Maine, L.
Galpern, L.	Oram, L.
Gladwyn, L.	Peston, L.
Grey, E.	Ponsonby of Shulbrede, L.
Grimond, L.	Prys-Davies, L.
Hampton, L.	Rea, L.

Ritchie of Dundee, L.	Stedman, B.
Rochester, L.	Stewart of Fulham, L.
Rugby, L.	Tordoff, L.
Russell, E.	Turner of Camden, B.
Sainsbury, L.	Underhill, L.
Scanlon, L.	Wallace of Coslany, L.
Scear, B. [Teller.]	Wells-Pestell, L.
Sefton of Garston, L.	Whaddon, L.
Serota, B.	Williams of Elvel, L.
Shackleton, L.	Winchilsca and Nottingham, E.
Shepherd, L.
Somers, L.	Winstanley, L.
Stallard, L.	Winterbottom, L.

NOT-CONTENTS
Abinger, L.	Harvey of Prestbury, L.
Aldington, L.	Hesketh, L.
Alexander of Tunis, F.	Holderness, L.
Allenby of Megiddo, V.	Home of the Hirsel, L.
Alport, L.	Hooper, B.
Ampthill, L.	Jenkin of Roding, L.
Annan, L.	Johnston of Rockport, L.
Annandale and Hartfell, E.	Joseph, L.
Arran, E.	Kemsley, V.
Auckland, L.	Killearn, L.
Bauer, L.	Kinnaird, L.
Beaverbrook, L.	Long, V. [Teller.]
Belhaven and Stenton, L.	Lucas of Chilworth, L.
Beloff, L.	Lurgan, L.
Belstead, L.	Lytton, E.
Besshorough, E.	McFadzean, L.
Bethell, L.	Macleod of Borve, B.
Blatch, B.	Manchester, D.
Bolton, L.	Mancroft, L.
Borthwick, L.	Margadale, L.
Boyd-Carpenter, L.	Marley, L.
Brahazon of Tara, L.	Massereene and Ferrard, V.
Braye, B.	Merrivale, L.
Butterworth, L.	Mersey, V.
Caithness, E.	Milverton, L.
Cameron of Lochbroom, L.	Morris, L.
Campbell of Alloway, L.	Mowbray and Stourton, L.
Campbell of Croy, L.	Moyne, L.
Carnegy of Lour, B.	Murton of Lindisfarne, L.
Carnock, L.	Nelson, E.
Cathcart, E.	Newall, L.
Chelmer, L.	Norrie, L.
Chelwood, L.	Nugent of Guildford, L.
Coleraine, L.	Orkney, E.
Colnbrook, L.	Orr-Ewing, L.
Colville of Culross, V.	Oxfuird, V.
Colwyn, L.	Pender, L.
Constantine of Stanmore, L.	Penrhyn, L.
Cox, B.	Porritt, L.
Cullen of Ashbourne, L.	Portland, D.
Dacre of Glanton, L.	Pym, L.
Daventry, V.	Quinton, L.
Davidson, V. [Teller.]	Rankeillour, L.
Dilhorne, V.	Reay, L.
Dundee, E.	Reigate, L.
Elibank, L.	Renton, L.
Elliot of Harwood, B.	Renwick, L.
Elton, L.	Rochdale, V.
Erroll of Hale, L.	Saltoun of Abernethy. Ly.
Fanshawe of Richmond, L.	Sanderson of Bowden. L.
Ferrers, E.	Seebohm, L.
Ferrier, L.	Selkirk, E.
Fraser of Kilmorack, L.	Sempill, Ly.
Gainford, L.	Skelmersdale, L.
Gibson-Watt, L.	Strathcona and Mount Royal, L.
Gisborough, L.
Glenarthur, L.	Strathspey, L.
Grantchester, L.	Sudeley, L.
Gray of Contin, L.	Swansea. L.
Gridley, L.	Swinfen, L.
Grimston of Westbury, L.	Swinton, E.
Hailsham of Saint Marylebone, L.	Terrington, L.
	Thomas of Gwydir, L.
Hankey, L.	Thorneycroft, L.
Hardinge of Penshurst, L.	Trafford, L.
Harmar-Nicholls, L.	Trefgarne, L.

Trumpington, B.	Wise, L.
Ullswater, V.	Young, B.
Vaux of liarrowden, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.28 p.m.

Lord Skelmersdale moved Amendment No. 3: Page 1, line 20, at end insert ("or rights to subscribe for any such securities").

The noble Lord said: In moving Amendment No. 3. with the leave of the Committee I shall speak to Amendments Nos. 4, 5, 6, 57 and 59. Clause 1(3) enables the Secretary of State, with the consent of the Treasury, to acquire, hold and dispose of stocks, shares or other securities of the successor company. It does not refer to the rights to subscribe for securities. That is to say, it does not cover rights issues. While I am not presupposing that there will be any need for rights issues, it is clearly right that we should insure ourselves against that need. The purpose of Amendment No. 3 is to ensure that it does so.

The Committee may be interested to know that it is precedented in Section 52(1)(b) of the Gas Act 1986. As the Bill stands, all moneys received by the Secretary of State in connection with the reconstitution of the GPFC must be paid into the Consolidated Fund. However, it may be that the Secretary of State will wish to discharge liabilities either of the corporation or of the successor company and pay the balance into the Consolidated Fund. Clearly this is another matter that needs to be allowed through the Bill. That is what Amendment No. 4 does.

Amendment No. 5 is consequential upon that. The largest amendment of the block is the new schedule, which looks much more complicated than it actually is. Its purpose is twofold; first, it ensures that any agreement made by the GPFC will have effect after vesting day as if made by the successor company. We wish to ensure in particular that, where the GPFC is a lessee subletting to doctors, any covenants restricting assignment shall not prevent the substitution of the successor company as lessee in place of the GPFC—in other words, all contracts and arrangements will continue in exactly the same way as they had existed theretofore. Secondly, we wish to ensure that the transfer on vesting day will not operate so as to terminate the contract of any person employed by the GPFC, and that the terms of the contract will not he varied in any way apart from substituting the successor company as the employer—again, perfectly fair and reasonable. Both these objectives are secured by the new schedule.

The other amendments in the group will mean that the GPFC provisions will all commence immediately on Royal Assent. I cannot guarantee when that will be because it is hardly in my hands, but clearly it will not be until some time this autumn. There has already been a good deal of interest from major financial institutions in the purchase of the corporation and we may be ready for sale by the autumn. If we do not by then have the powers in Clauses 1 to 6, we might have to miss that valuable opportunity. Amendment No. 57 would avoid that risk.

I think I have covered the various amendments. If noble Lords would like to address any matters of detail to me, I shall do my best to answer them.

4.30 p.m.

Lord Ennals

I am very happy with the amendments. I should be grateful if the Minister could say a little more about the job protection aspect on which he touched briefly just now. Does it give an absolute guarantee that no jobs will be lost? What provisions will be made? Otherwise, the arrangements made by the Government are entirely satisfactory and perfectly reasonable.

Lord Skelmersdale

Obviously I cannot guarantee that no jobs will be lost. The new schedule ensures that the contract for a particular job is handed over to the sucessor company in the interim period and then again to the privatised company in the ultimate period. As to individuals, although new employers will get the man or woman employee originally, one cannot guarantee that individual employees will continue to be employed. However, there is no earthly reason why they should not be.

Baroness Turner of Camden

Is the Minister saying that there will be continuity of contracts? Is that essentially the point?

Lord Skelmersdale

That is essentially what I am saying.

Lord Prys-Davies

This means that not only will the terms of a lease be honoured by the successor company but where there is an existing loan the loan cannot be called in and the terms of the loan cannot be varied by the successor company.

Lord Skelmersdale

We have whistled from contracts of' people to contracts of things. However, as I understand it, the noble Lord is quite right. Any existing contract will be carried forward in exactly the same way.

On Question, amendment agreed to.

Lord Skelmersdale moved Amendments Nos. 4 to 6: Page 1 line 20, at end insert— ("(3A) The Secretary of State, with the consent of the Treasury, may use—

1. (a) sums received by him under subsection (2) above; and
2. (b) dividends or other sums received by him in right of, or on the disposal of, any securities or rights acquired under this section,

for discharging liabilities of the Corporation or the successor company."). Page 2, line 19, at beginning insert ("Subject to subsection (3A) above,"). Page 2, line 23, at end insert— ("(13) Schedule (Provisions supplementary to s.1) to this Act shall have effect for the purpose of supplementing the provisions of this section").

On Question, amendments agreed to.

Clause 1, as amended, agreed to.

Clause 2 [Potters of Secretary of State to give guarantees and indemnities]:

[Amendment No. 7 not moved.]

Clause 2 agreed to.

Clause 3 [Corporation's powers pending dissolution]:

[Amendment No. 8 not moved.]

Lord Winstanley moved Amendment No. 9: Page 3, line 21, at end insert— ("2BV. The Corporation shall have the duty to furnish the Secretary of State with an Annual Report on the performance of its functions, and the Secretary of State shall have the duty to publish the report and to lay copies of the report before both Houses of Parliament.").

The noble Lord said: This amendment is also very much related to the matters we discussed earlier in regard to reassurance as to the conduct of the newly established and privatised General Practitioner Finance Corporation. The amendment is quite simple. It says: The Corporation shall have the duty to furnish the Secretary of State with an Annual Report on the performance of its functions, and the Secretary of State shall the duty to publish the report and to lay copies of the report before both Houses of Parliament".

I am quite sure that the corporation will have the duty to furnish the Secretary of State with reports and that he will have access to its activities in many ways. However. it is not clear from the terms of the Bill that a report will be made to Parliament. As the activities of this body are of great concern to the public and to patients throughout the country, they must clearly be of great concern to the people in both Houses of Parliament who represent those patients. Therefore I feel sure that the amendment will commend itself to all Members of the Committee and I very much hope that it will commend itself to the Minister as well. I beg to move.

Lord Ennals

I should like to support the amendment. We are dealing with an unusual case in which a public corporation, established by the Government with a clear and distinct function within the National Health Service and owing allegiance to the Secretary of State, is to be replaced by a new and private company. We have to ensure that that new and private company fulfils its public role no less efficiently than its predecessor. This is not like any ordinary private company that is simply in the market and is doing, its business for profit, as is the natural responsibility of a private company. It is established by this Bill and it is to be given a precise job. We all accept that it has a heavy responsibility to the doctors and other practitioners whom it serves and to the health service as a whole. If it has a responsibility to the health service as a whole, it has a responsibility to Parliament.

Under the original Act the Secretary of State is responsible to Parliament for the provision of a health service. Part of the service being provided will in this connection be provided by a private company. We have to be certain that that private company has the same kind of responsibility to the Secretary of State and indeed to Parliament as its predecessor company. Therefore it is absolutely logical and right that it should make a report to both Houses of Parliament and that we should have the opportunity to discuss the report. It will be the only opportunity we have to ensure that a private company set up by statute is fulfilling its responsibility to the National Health Service. We all want it to do so and we all hope that it will do so.

I very much hope that we shall not need to divide the Committee on the amendment. I should have thought that, in all reasonableness, the Minister would accept it.

Lord Skelmersdale

Those are indeed honeyed words and I hope that the noble Lord will not find me too unreasonable in my answer to the amendment moved by the noble Lord, Lord Winstanley. The duty which the amendment seeks to place upon the corporation, while it is in its current form, and while it is in what I call its "intermediary form'', is already imposed in law under Section 8(3) of the National Health Service Act 1966. At those moments it is therefore not required.

What happens when the GPFC gets into the private sector? The answer is that under the Companies Act it would be required to publish its annual report and accounts, and therefore a special report will not be necessary. The noble Lord, Lord Ennals, asked whether we can debate a company's published accounts either in this Chamber or another place. That is not normally done. However, as far as I know, there is no constitutional reason why that should not be done, if there is such a crisis going on that it is found to be necessary to debate such accounts of a private company.

Lord Nugent of Guildford

Perhaps I may add a word of support for the amendment. This is a special sort of company taking over a special sort of public duty in financing the new health centres. I think that we have a special case here. The question is just what form it should take. My noble friend is right in that all companies must publish an annual report; so the annual report is published. But I think it ought to be made conveniently available to both Houses of Parliament because of the special nature of the body. I wonder whether my noble friend could, with the help of his advisers, give some thought as to how this might he done.

As my noble friend rightly says, a question could be asked about the matter or indeed a debate could he raised. But we should make it easy for Members of both places to be able to get hold of it and read it, should they wish to do so, because of the very special nature of the corporation. Perhaps my noble friend would be good enough to give some thought to the matter.

Lord Ennals

Does the noble Lord accept that if questions were put in this place about a report for which the Secretary of State has no responsibility, he has a perfect right to say, "This is not for me"? Will he not agree that that is right? Therefore there is no opportunity for questions in this place.

Lord Nugent of Guildford

That is true.

Lord Skelmersdale

When large private corporations get into trouble debate is indeed raised either in this Chamber, or another place, from time to time. My noble friend Lord Nugent will no doubt know that even better than I. However, I take my noble friend's point on the interest of Members of both places in the matter.

I am trying to rack my brains to remember whether, for example, the annual accounts of British Telecom, British Gas or Amersham International—or whatever—are placed in the Vote Office of another place and the Printed Paper Office of this place. If such an arrangement would satisfy the Committee, I shall certainly look into the matter to see what can be done. However, I see that the noble Lord is shaking his head.

4.45 p.m.

Lord Ennals

I am shaking my head because I do not think—for the reasons given by the noble Lord, Lord Nugent of Guildford—that they are on all fours. British Telecom, Amersham International or any other public corporation are not fulfilling part of a statutory responsibility held by a Secretary of State in another place and accountable to both Houses of Parliament. So this is, as he said, a unique situation. If the Minister cannot think how best to deal with the matter now, perhaps he can take it away with him and think about it. We must find a way to deal with this.

It is, admittedly, a small part of what is being done to ensure that the National Health Service works and that the Secretary of State is properly fulfilling the obligation laid upon him by an Act of Parliament. As I said, the situation is totally different from any other public corporation that I can think of. There must be some way that this place can question the way in which that part of the health service is being carried out, in the same way as we can question every other part for which the Secretary of State has a responsibility. Frankly, that is one of the arguments I should have developed when I moved the first amendment. Once you take it out of the public domain and put it totally into the private domain there is a little bit of the National Health Service, or something which enables the National Health Service to work, which is beyond the ken of you and I—I mean those of us in this place; perhaps not you, but certainly I.

Therefore I hope that the Minister will take it away and try to think whether there is some way to deal with it or whether there is some amendment which he can introduce, if he does not like this one. I consider that this amendment is most satisfactory, but perhaps he can find another way to ensure that the matter will come before this place at some stage. maybe in the form of a report, which will afford us an opportunity to ask questions.

My fear is that this is the thin edge of the wedge—an awful phrase which is so often used—and that it might happen in some other part of the provision to ensure that the National Health Service works. Whereas now the National Health Service is the responsibility of both Houses of Parliament, bit by bit we shall discover little bits of it which are not the responsibility of Parliament, where we cannot put questions and where we have no right to complain because it has gone from the public to the private domain.

The Minister may think that it is a very small issue, but I plead with him that there is an issue of quite substantial principle here.

Lord Trafford

Are we not getting slightly on to a cross-wired course here? As I understand it, the amendments can apply only to the successor company and corporation: they cannot apply subsequently to the private corporation in the private sector, although one could make some arrangement for them to be put—as my noble friend the Minister said—in the Printed Paper Office, the Library or somewhere else. You cannot in fact apply these amendments as they stand to any company other than the successor company.

I have a suspicion that my noble friend Lord Nugent was under the illusion, or perhaps misapprehension, that this successor company was going to run for ever more and that it was not simply a successor company. I suspect that this can only apply so long as the Crown retains the control of the company and not thereafter. That is the position as I understand it. If so, what my noble friend the Minister said must be right: namely, that he can only advise subsequently.

Lord Nugent of Guildford

I should like to make just one further point for the consideration of my noble friend the Minister. The people who work in the new centres are employed by the health service and carry out an essential part of it.

Lord Skelmersdale

No!

Lord Nugent of Guildford

Surely the health service pays the salaries of the GPs who work there.

Lord Skelmersdale

I am sorry, I misunderstood my noble friend. When he referred to people who are employed in the company, I thought he meant the people employed in the GPFC: but obviously he did not.

Lord Nugent of Guildford

I apologise if I did not make myself clear. I am talking about the doctors who work in the health centres. They are an essential part of the health service, as the noble Lord, Lord Ennals, rightly said. Therefore it is a special situation. I am not sure by what means my noble friend will he able to meet the wish which has been expressed, but I am sure that a way can be found which will make it, first, convenient and easy for Members of both places to get the reports; and, secondly, for them to have access to the Minister if they so wish.

Lord Winstanley

As I understand it, the Minister's earlier reply was that the situation which I should like to see under the amendment is in fact wholly covered with regard to the interim stage: it already happens. But we are anxious to ensure that it happens in the future. Indeed I am quite sure that the noble Lord, Lord Nugent of Guildford, is also anxious to ensure that it happens in the future because, as he rightly pointed out, it is not a private company in the ordinary sense; it is a private company set up by statute with certain public functions to pursue.

I took the Minister's earlier reply to be sympathetic and I accept that he understood that Parliament had some right to see such reports. Of course it is perfectly true that the Secretary of State, having set up the company originally, would obviously receive a copy of its annual report and accounts—that is quite clear. However, he will not necessarily have a duty to lay the copy which he receives before Parliament. That is the additional provision we should like to see. I cannot see any great difficulties about that and I doubt whether the Minister can see any difficulties in the matter.

If I was right to assume that the Minister said he would think about the matter to see whether some mechanism can he discovered, I shall be most happy to withdraw the amendment. But I should like to know that first.

Lord Skelmersdale

I said to my noble friend Lord Nugent, unless I am very much mistaken, that I shall of course take this matter away and look at it. I am not sure what guarantees I can give; but it occurs to me, literally off the top of my head, that we might be able to do something through the articles of association. That is only a first thought. I shall consider the matter further.

Lord Winstanley

I am grateful to the Minister for those final words. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Clauses 4 to 6 agreed to.

Clause 7 [Extension of powers of Secretary of State for financing the Health Service]:

The Deputy Chairman of Committees (Baroness Cox)

I should point out that if Amendment No. 10 is agreed to I cannot call Amendment No. 11.

Earl Russell moved Amendment No. 10:

Page 5, line 24, leave out paragraph (f)

The noble Earl said: The amendment seeks to delete the words contained in paragraph (f) which confer on the Secretary of State the right, to develop and exploit ideas and exploit intellectual property".

The reason for seeking to delete those words is the concern, which I think is widespread, about the new research contracts administered by the DHSS since approximately the beginning of last December. Those contracts impose a new restriction on the publication of research work commissioned by the department. Under them publication is subject to the prior consent of the Secretary of State, which consent shall not he unreasonably withheld.

There has been a considerable amount of discussion about those contracts and a considerable number of justifications offered, not all of them entirely the same as one another. In The Times of 7th June, Mr. Partridge, a second secretary at the department, was quoted as expressing a concern about legal issues. He said that the change was to strengthen the legal position in case the Secretary of State might be liable. The same line has been taken by the Secretary of State himself when writing to the chairman of the Committee of Vice-Chancellors and Principals.

I can well understand the Secretary of State's concern that he should not be liable for an action in damages; but if that is his concern he has taken a hammer to crack a nut. He needed only to look at the standard proforma publisher's contract in which there is a regular clause indemnifying the publisher against any libellous or blasphemous matter. I have never signed a publisher's contract without that clause. Just in passing, I am a little curious as to why the Secretary of State is not anxious about blasphemous matter in medical research. I shall pursue that point no further. If that is the concern, this provision is not the appropriate way to meet it.

Concern has also been expressed about questions of confidentiality of copyright. The British Medical Association has had the old contract vetted by two professors of law who have been unable to see any defects in it. The BMA has also drawn attention to the Home Office research contract as providing a possible alternative model which might meet the Secretary of State's concern. It provides: The Secretary of State will not delay publication of submission unless, after consultation with the research body, he considers such delay necessary in the national interest or to enable patent or like protection to be obtained".

That is a much more acceptable form of words because it states a specific reason. The concern about the clause is that it does not. It could he used not only by this Secretary of State but by others to do pretty well anything.

The matter has also been considered by your Lordships' Select Committee on Science and Technology. The committee was also unhappy about the clause and stressed the importance of the right to publish in maintaining academic independence and standards of research. It was not entirely reassured by the Minister for Health's statement about the revision of the DHSS contract in the light of Crown copyright. There is a widespread body of concern. Concern has been expressed by many people about the possibility of research being influenced by political bias. I do not intend to pursue that line at the moment. I do not think we are dealing with a collection of Stalinists. I do not see here a sinister, hidden agenda. Whether I shall be as successful in persuading everyone outside this place who is concerned about the matter, I am not so sure. Speaking for myself, that is not the object of my concern.

We are painfully familiar with the obsessive desire of civil servants to take refuge in secrecy to avoid embarrassment. That is something which we encounter almost every day and it is something that I think the contracts might unduly encourage.

The big argument is about the quality of research. If the Secretary of State wants to commission research, it must be presumed that he wants the best research possible. If he does not, I should like to know what he is doing commissioning it. There is a good deal in common, not everything, between academic research in different subjects. One can stop and think about how much the process of publication and the expectation of publication contribute to the intellectual quality and probable truth of the research.

It is a long process. There are a great many corners which are capable of being cut. There is restraint at all stages by the thought of publication and what comes after. If, for example, one is making a note in a hurry it is easy to make a paraphrase which seems to say the same thing in fewer words. It is important that at that stage one sees the irate face of Professor so-and-so looking over one's shoulder telling one that it is not a paraphrase, it is distortion. One tries to do that all the time even if one does not know that one is going to publish. Researchers are not superhuman. They are liable to all the ordinary human weaknesses and all the temptations to cut corners felt by the rest of us.

The same happens of course when one reaches the point of checking something before printing. Again one would not go over everything and ensure that it was right if one did not know that some irate colleague would spot it if it were not. It is that knowledge which keeps one on the straight and narrow path. It is that knowledge which one cannot have without the certainty or near certainty of publication. Finally, if one makes an error, as all of us have, that error does not become falsifiable until it is printed. An error has about it a quality of fecundity. Once one has made one error. one builds other errors on top.

If the Committee will forgive one more reminiscence before I sit down. I remember one occasion when I misinterpreted an obscure Exchequer account in the Public Record Office and allowed the matter into the footnote of an article. Two years later one of my post-graduate students told me that I had got it wrong. I looked at it again and he was quite right. The error that he took out was unimportant, but I had been just about to build on top of one error a major superstructure of further errors. Had I not published at the initial stage, I should not have been saved from a superstructure of further error. I have no doubt that the same applies to medical research.

I am trying to say that if one commissions research without the near certainty of publication, one is inviting one's supplier to supply goods which are not of merchantable quality. When goods of merchantable quality are freely on offer, that is a rather unwise process. I hope that the noble Lord will think about it again. I beg to move.

5 p.m.

Lord Prys-Davies

We want very strongly to support the arguments advanced by the noble Earl, Lord Russell. It seems to me that there are at least two main grounds for concern which have been advanced by the noble Earl. First, the very existence of the power to prohibit or to delay publication, whether or not it is exercised, is damaging to research. The first-class researcher will he very reluctant to accept a research contract under those conditions. He will want to see his work published to the whole world and not published within the confines of the DHSS. He will want to see it published to the whole world so that it can be discussed by independent researchers. That in turn will lead to further debate and further research.

The first-class researcher does not want to see the publication of his work delayed. He wants to see his conclusions published at the earliest possible moment because every research worker wants to be a first discoverer.

The second ground for concern follows inevitably from that first concern. It is that the quality of the research undertaken for the department under those conditions will probably be second-rate, as the first-rate researchers will keep clear of the contract. But the Secretary of State currently enjoys this power. It is linked with the revised contract published in February 1987 which stipulates that the publication of research is subject to the prior consent of the Secretary of State, which consent shall not he unreasonably withheld.

Ministers have stated that consent will he withheld only in exceptional circumstances and that the consent will normally be given within 28 days. There is one snag with this assurance—that it is not necessarily binding on another Secretary of State or on another administration. We accept what the noble Earl. Lord Russell, has told the Committee: that there could he exceptional circumstances which would justify the Secretary of State withholding his consent. That would he the case if he had been advised that the document was defamatory or in breach of copyright or if it contained a major factual error.

However what puzzles us is this. Why cannot the Secretary of State, in order to safeguard his position, follow the precedent which is acceptable to the Home Office so that the contract specifically defines the circumstances which enable the Secretary of State to withhold or delay his consent? Perhaps the Minister can answer the question posed by the noble Earl. Why is the Home Office contract not acceptable to the DHSS?

There is one other question which I wish to ask the Minister. Who, again, is to judge whether the consent is being unreasonably withheld or whether the consent is being unreasonably delayed? Does that again lie in the sole discretion of the Secretary of State, or can his decision be challenged?

Lord Trafford

This clause and the amendment apply to income generation and give various powers to health authorities, via the Secretary of State, to generate income. It says that the Secretary of State can do a number of things. To quote two of them, he has the power

1. "(a) to acquire. produce, manufacture and supply goods;
2. (dl to supply services to any person".

etc. In the course of that it also says: (f) to develop and exploit ideas and exploit intellectual property". Therefore this clause which is concerned with income generation, which is of some importance to the National Health Service at the present time because it expands the funds, has suddenly been turned into a talk about contracts. I do not know that I say this with total accuracy, but I am probably more aware than anybody in this House of the nature of the DHSS research contract and of the regulations and conditions attached to it. We discussed at very considerable length in the education Bill in Committee and on Report the iniquity of contracts from research councils, from the Ministry of Agriculture, from the Department of Health and Social Security, and so on. However, with due respect to the noble Earl and the noble Lord, this is not relevant to income generation. Where this question about whether consent is reasonably withheld is relevant to the exploitation of ideas I am not quite sure. Surely the main thrust of the noble Earl's argument was that in some way the Secretary of State would sit on this research, refuse to publish it or in some way adapt it or require it to be adapted so that it was acceptable, though perhaps not as academically pure as when he had presented it or when his postulated medical researcher had presented it in the first instance.

I suppose, incidentally, while we are on the subject, that the answer to the noble Lord, Lord Prys-Davis, as regards who reviews it is that, if it is not at the discretion of the Secretary of State, it would possibly he subject to judicial review with regard to the administrative functions of the Secretary of State. I cannot think of any other way in which it could be directly reviewed.

However, surely that is not relevant. None of the part on income generation, as it is now called, applies to this clause in order to carry out these functions. I do not disagree with the noble Earl's comments about research and the basic mistake that might be made upon which a huge superstructure of subsequent errors could take place. All that is totally acceptable. I seem to recall the noble Earl saying exactly the same on education. I did not disagree with him then and I do not disagree with him now. I also accepted that he said that the dark forces, which he hinted were suspicious of the Secretary of State in general. did not apply on this occasion. I presume that my right honourable friend the Secretary of State for Social Services is in some way immune from the dark suspicions of the noble Earl. They do not seem to apply to my other right honourable friend the Secretary of State for Education, to whom apparently dark forces do apply. Of course, if the noble Earl wishes me to, I shall give way.

Earl Russell

Only for the time being.

Lord Trafford

That presupposes that he expects that either they will switch positions or the Secretary of State for Social Services will change. The noble Earl also hinted—and it would be unusual for one of the speeches of the noble Earl not to hint— that if his advice were not followed, desperate events would happen and the state of the nation would be at risk. If I quote him correctly, he said that he himself was not going to attribute this but that outside he would have great difficulty in persuading others that dark forces were not at work. All these dark forces are at work on income generation in the National Health Service. The clause says: to supply accommodation to any person; to provide instruction for any person: to develop and exploit ideas and exploit intellectual property". I see nothing wrong with that. Many of the functions which are performed lead to universities doing this now through their science department. through their joint companies. Why should not the National Health Service? That is the sort of thing that the Bill is giving the Secretary of State power to achieve. It looks to me as though it is a way forward which would suit or could suit all parties.

There is no shadow of doubt that many of these functions could be abused. But without good will all sorts of things that we do or arrange to do could he abused. With due respect. I do not think that most of the arguments we have heard apply to this clause or amendment. It would and could be very helpful to the National Health Service, to income generation for the hospital service, without any of the terrible drawbacks that are described for those who produce the intellectual property.

Lord Winstanley

I fear that the judgment of the noble Lord. Lord Trafford, on this matter may have been clouded by the fact that he has enjoyed an entirely satisfactory contractual arrangement with the DHSS for many years. He is apparently, entirely content that the department will make no improper use of these particular powers, and that we need have no fears at all.

Since he feels so entirely happy about the situation I wonder whether he can explain why it is that Sir Mark Richmond and the other members of the Committee of Vice-Chancellors and Principals of the universities of the United Kingdom are deeply anxious, and have written to so many noble Lords to say that they are anxious. Can the noble Lord tell us that?

Lord Trafford

Yes, I can. I agree with the noble Lord that Sir Mark Richmond and others, including the noble Earl, are anxious about the substance of some of these contracts. I am not arguing about that. As I said in reply to the noble Lord, Lord Swann, when he first moved that Motion, I accepted what he said about the restriction on academic matters of those particular contracts. But I am arguing that this is not part of this amendment. Nobody is going to exploit anybody.

What we wish to do is to create income generation for hospitals. We are really going way overboard. We have walked the plank, and I am sorry to see that the noble Lord, who is also in the profession, is walking the plank also.

Lord Winstanley

I am glad to have that reassurance from the noble Lord, Lord Trafford, but I would prefer to hear precisely the same words coming from the Minister. We have not had those words yet. It may well be that our fears are groundless. My own personal anxiety —I am associated with one of these amendments, and I ventilated it in a recent debate in your Lordships' House on priorities in medical research—is that if there are to be delays put on the publication of important research (and I am not saying there are, but if delays were to be put on it) that would be damaging to the recruitment of postgraduate research workers on medical research. It would be damaging to the morale of those engaged in medical research work, because what they want is publication.

I have no objection to the exploitation of intellectual property in the way that is referred to, but I would have serious objections if the fears of the committee and Sir Mark Richmond and others were realised; namely, that there will be a freeze put on the publication of certain items of important research. I also fear that if that freeze is prolonged—and it has been sometimes—the department may find to its cost that somebody else will have done the research and somebody else will be exploiting their intellectual property in some other part of the world because we have missed the bus by delaying things. That is the source of my anxiety. I am glad to be reassured by the noble Lord, Lord Trafford, but I would rather be reassured by the Minister.

Lord Prys-Davies

The noble Lord, Lord Trafford, has overlooked the fact that Clause 7(1)(f) has to be read in conjunction with subsection (2). Certainly if Clause 7(1)(f) stood on its own I would not be unduly concerned, but what worries me is that you have to read that in conjunction with subsection (2), which gives authority to the Secretary of State to impose directions. One direction would be to prohibit publication.

Lord Ennals

Before the Minister adds his own honeyed words to all this, may I say that when I was listening to the noble Lord, Lord Trafford, it seemed to me that he was just looking at paragraph (f) as if there had not been an enormous debate on the principle of new contracts. Of course there is an enormous debate and it has been going on for many months. I am looking at a piece of paper dated 9th October 1987, which says: A new contract being enforced whenever grants come up for renewal states that publication requires the consent of the Secretary of State. While it adds that approval 'shall not unreasonably be withheld', the Department of Health can attach conditions to publication". One unit director says: This is virtually a censorship clause, and it makes my hair curl". After all, there are 30 leading research bodies which have been affected by this new contract. There are some bodies that have reluctantly entered into an agreement, and I see that the personal social services research unit at the University of Kent is one of those. Professor Bleddyn Davies said: We have signed on the dotted line, although very reluctantly". He added: We had been negotiating for months, and we reached a point where staff had little time left in their contracts". Therefore, it is not just a bright idea as to how the Secretary of State can make a little money on the side. As my noble friend says, you have to relate it to the rest of this clause and the whole background to this contentious issue about new contracts. The Secretary of State quite clearly, before this Bill reached this Chamber, was seeking to take powers to control the publication of research, and if we do not challenge it under this clause I do not know when we can challenge it.

5.15 p.m.

Lord Trafford

I did not say, and I do not say, that I disagree with a lot that the noble Lord has just said about contracts. Indeed, it was said over and over again on many sides of the Chamber throughout the Education Bill. I am not disagreeing with the noble Lord. What I say is that this clause is about income generation and not about basic researchers' rights or the dark forces of Secretaries of State, or anything else.

It is about a fairly straightforward income generation, and it is difficult to see that this is closely related to the question of the contracts which I agree with the noble Lord are a source of some concern to a lot of people. I would not dispute that at all, but that is not relevant to this amendment, in my argument. I would also say that if for some reason we wished to discuss this point, it should be brought up under a more relevant clause.

Lord Rea

With regard to the contention of the noble Lord, Lord Trafford, that this is inappropriately placed, surely it is parliamentary practice, when there is a matter of considerable concern, for it to be raised and placed into a Bill which is relevant as a whole and which is passing through either another place or this Chamber. For instance, who would have thought that a local government Bill would be the place for a hotly contentious issue such as the promotion of homosexuality? It does not in the first place seem to be appropriate that homosexuality and local government are necessarily connected.

I do not think that the Government have succeeded in convincing anybody who is seriously interested in the subject that they need to change the rules for research contracts. Nobody, to my knowledge, has been mortally hurt by research findings critical of aspects of the National Health Service, whether those aspects were mainly of administrative parts of the service or clinical practices which were perhaps upheld by some powerful sections of the medical profession.

A worrying aspect of the more restrictive rules may well be that first-class researchers who expect to publish their findings in internationally respected journals will be deterred from taking up research contracts funded by the DHSS. Should not the DHSS support the very best, and not be content with possibly having to hire less successful researchers who might be prepared to compromise for the sake of getting a grant and a job in a situation where grants are not easy to come by?

If DHSS research is governed by a contract thought by some to be censored, it would surely have less academic credibility in the way in which the noble Earl, Lord Russell, has said. That this is a real fear was made clear to those of your Lordships who sat on the Select Committee on Science and Technology which took evidence and made recommendations on priorities in medical research, with special reference to the National Health Service. The strong impression of the committee was that too little research into the actual functioning of the National Health Service was being done, and we made recommendations as to how this could be strengthened and put on a sounder footing.

Interestingly, this type of research is never very popular, as we found out on the other side of the Atlantic as well. This is because it probes and questions established practices or decisions that have been made, or are about to be made, which might be uncomfortable. That type of research is very necessary even if it may embarrass some people. Most research into health care is presented in very diplomatic terms. Names are not named. The original contract had a clause in it that ensured confidentiality. Even those in the field that is being discussed may not know the name of hospital A, for instance, which has twice the mortality from prostrate operations or coronary artery bypass operations as hospital B. The research should surely he published because the reasons for the differences are vitally important.

Recent research shortly to be published in the British Medical Journal will show that the results of eliminating gallstones by using the expensive machine Called a lithotrypter in St. Thomas' Hospital are rather less good than a far less expensive percutaneous method. I shall not give further details of that because the paper is still in the press. (This is parliament, in which I think one is allowed to say such things!) This is just the kind of research in which the department might feel it necessary to step in and not allow publication to go ahead. It is the kind of research that is necessary to provide not only a cost-efficient but a humane and effective health service, just what any Government need to know if they are interested in catering for the needs of their citizens whether in the capacity of taxpayer or consumer. The fact that the Government seem hypersensitive to possible critical research findings suggests to many that cost containment rather than improvement of the service may he their main concern.

The select Committee was not entirely satisfied with the Government's defence of the change of rules. Mr. Newton, the Minister, said: The changes were intended first of all to enable us to safeguard ourselves on legal grounds Where, for example, we might ourselves he open to challenge in circumstances where a particular report was published". I think that the Minister was being unnecessarily cautious. As I have said, researchers are very careful not to apportion blame that might provide a basis for litigation. Most of the research funded by the DHSS results in findings that may have some political overtones. This is as it should be. I feel that the dividing line between legal challenge and political challenge is being regarded by the Government as too fine. The scientific community will draw its own conclusions if the Government persist in implementing the new arrangements and not going hack to the original ones.

Dr. Ann Cartwright, director of the Institute of Community Studies—and I quote from Volume III of the evidence to the Select Committee—said: The new contract is unacceptable because it gives the Secretary of State an unchallengeable power of censorship. This could restrict not only the publication of critical research findings but also the nature of research that is undertaken''. I hope that the Minister will pay attention not only to those noble Lords who have spoken in support of the amendment but also to the large number of submissions that the department must have had, as expressed in the Chamber, from researchers, directors of research units and learned societies who have asked the department to revert to the earlier form of contract.

Lord Skelmersdale

This has been a substantial debate on what is obviously a serious subject that much concerns the Committee. I must admit that at one point I was wondering whether J. R. Tolkien wrote The Lord of the Rings or "The Earl of the Rings"—I heard the dark forces of Mordor swooping down over my right shoulder.

Members of the Committee will of course recall that this issue was discussed on Second Reading on 26th May. Following that debate I wrote to the noble Lords, Lord Winstanley and Lord Prys-Davies, to explain that Clause 7(1)(f) does not in any way alter the existing arrangements set out in the recently revised standard conditions for support for research grants made by the Secretary of State. In this standard contract it is made clear that the Secretary of State has ownership of, and power to exploit commercially, the results of research work carried out by university staff and funded by the DHSS. That is all that it has. The individual universities or sometimes the individual researchers enter into a contract with my right honourable friend. It is in the subject of this contract that most members of the Committee have been interested in the discussion today.

I can confirm what my noble friend Lord Trafford said is right: the subject of the contract, important though it is and of such concern as it is to the Committee, has absolutely nothing to do with Clause 7 of the Bill. The noble Lord, Lord Prys-Davies, will recall that when I wrote to him on 9th June I said in regard to Clause 7(1)(f): The intention of this provision is to allow health authorities to benefit more from any research and development work carried out on their own premises by employees and to the results of which research such authorities already hold the ownership rights under common law". In other words, health authorities are not being allowed by licence, as it were, to poach from the researchers and the universities. The clause does not then change the existing arrangements for rights to intellectual property and should neither attack intellectual freedom nor inhibit medical research. Therefore, the argument is not about what is in the Bill; it is about what is not in the Bill. That I fully accept.

Our intention remains that research commissioned by the department will normally lead to publication without restriction. I understand from all the academics whom I have met that this is a vital part of conducting their work. Indeed, their reputation is made on publication of the research—or, in the case of the noble Earl, very nearly not made by the publication of research, but that perhaps is a different matter.

However, there may be perfectly reasonable legal reasons for such a libel, breach of confidentiality or error of fact where an unrestricted right for the researcher to publish would be wrong. I am sure that the noble Earl, with his experience of academic research and writings, could confirm that.

The revised DHSS contract gives the power to avoid such dangers. However, I think that it would be very difficult for any general contract on every occasion to spell out the conditions or times when such things might be used. I understand that this is what the Home Office contract seeks to do. I am advised that a better recourse would be to get the Home Office to use a DHSS contract rather than the other way round. I shall look into this as I do not have the two contracts with me to compare them side by side. The whole objective of such a contract is to give the power to avoid the dangers to which I have referred.

However, the DHSS contract contains a very important safeguard for academic freedom. It states explicitly that agreement to publish shall not be unreasonably withheld. We all know what happens when the test of reasonableness of the Secretary of State gets applied: the roof falls in, and there is application to the courts for judicial review and all the other serious matters. I think that the noble Earl will be able to accept that that is a very real safeguard. As regards Clause 7(1)(f) of the Bill, that has no bearing on the matters which the noble Earl and the rest of the Committee wish to address.

5.30 p.m.

Earl Russell

This is a debate in which it has been a pleasure to take part. It has been conducted to a high level. I must confess that I rather like the idea of being Earl of the Rings. The noble Lord, Lord Trafford, made an intervention which raised the level and the pleasure of the debate. Perhaps I may reply briefly to him.

The Bill confers on the Secretary of State the right to exploit intellectual property. It seems to me to be perfectly relevant to consider the capacity of the Secretary of State's stewardship of intellectual property. That is something about which I believe we need to be satisfied. The noble Lord also said, in effect, that the Secretary of State did not need the powers and was never going to use them. If he does not need them, why is he taking them?

I take the point which was made regarding judicial review. The point is significant. However, judicial review is a very slow process. As my noble friend Lord Winstanley has said, the process of medical research is very rapid. While judicial review takes place, many people's names will, as Tom Lehrer would have it, need to be cursed in Itopetrovsk because they published first.

I thank the Minister for the care with which he has listened to the debate and for the thoughtful qualities of his reply which suggest that the gap between the two sides of the Chamber is not infinite. I take note of the restrictions he mentioned—libel, confidentiality and error of fact. Those seem to me to be perfectly reasonable. I understand that there are difficulties in the way of specification. However, if some attempt could be made to see whether it is possible to reach an agreement on words, that would be a big advance.

I also take note of the tendency to cast me—as I was going to say before the noble Lord put it in another way—as Cassandra. I shall bear that very much in mind. However, I should like the noble Lord to bear in mind in his turn what happened to those who did not listen to Cassandra. After all that I have said about the need to read documents with care, it would not be reasonable for me to reach a snap decision on the Minister's reply. Therefore, I shall read that reply very carefully. Meanwhile, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Lord Ennals had given notice of his intention to move Amendment No. 11: Page 5, line 24, at end insert ("without prejudice to the academic and intellectual freedom of people from universities, and other research establishment or freelance researchers contracted to carry out work for the Department of Health and Social Security".).

The noble Lord said: Both the Minister and the noble Lord, Lord Trafford, seemed to think that in our previous debate we were seeking to make something out of nothing. I hope that the Minister does not feel that that is the case. Certainly he made no offer to reflect upon the matter. I hope that I shall be rather more successful in persuading him to reflect on the next paragraph which we are debating in Clause 7(1)(g).

I submit that the wording of paragraph (g) gives to the Secretary of State powers which are excessive to an extraordinary degree. In that paragraph we are not simply asked to give additional powers for financing the National Health Service. It provides for additional income for improving the health service. Paragraph (g) states that the Secretary of State has power: to do anything whatsoever which appears to him to be calculated to facilitate, or to be conductive or incidental to, the exercise of any power conferred by this subsection;"— I shall jump a few lines— and may give directions … with respect to the manner in which any such body is to exercise any such power; and it shall be the duty of the body in question to comply with the directions".

It is surely not possible to be much tougher than that. The powers given in that clause, unless the words are either deleted or changed, will give the Secretary of State adequate power to reorganise the National Health Service in any way that he thinks fit. After all, we are speaking of—

The Deputy Chairman of Committees (Baroness Cox)

Perhaps it will be for the convenience of the Committee if I say that I called Amendment No. 11. I have just realised that the noble Lord is speaking to Amendment No. 12. May I take it that Amendment No. 11 is not moved?

Lord Ennals

Yes.

[Amendment No. 11 not moved.]

The Deputy Chairman of Committees

Perhaps I may now call Amendment No. 12.

Lord Ennals moved Amendment No. 12:

Page 5, line 25, leave out paragraph (g).

The noble Lord said: I have been suitably demoted, defrocked and undermined! Perhaps I may return to my exciting theme.

If the clause is passed unamended, whatever the Prime Minister's review body may recommend can be carried out by the Secretary of State under the wording of' the paragraph. He will be able to do anything which appears to him to facilitate or be conducive or incidental to the exercise of any power conferred by the subsection. The subsection confers powers to finance improvements to the National Health Service. The principal issues that the review body will he looking at will be how the National Health Service is to he funded; whether that should be done by means other than taxation; what the role of the private sector will be and whether a system of insurance or health maintenance should be introduced. Anything can be done under the words of the subsection.

The Minister must recognise that there is concern about what the review body may put forward. We get leaks, nudges and winks that such and such a matter has not been decided on or will not be fundamental. However, we do not know who will be on the review body, what its terms of reference will be and when it will report. We do not know the sorts of things that we would know about, for instance, a Royal Commission. I am not suggesting that we should have such a commission. We had a commission under Sir Alec Merrison some years ago.

However, my worry is not about the method by which the Prime Minister will carry out the review. My concern is that I do not want the Chamber to give powers to carry out any recommendations which may be made without giving the Chamber an opportunity to consider them. If the Prime Minister or the Secretary of State come up with recommendations in the autumn or at the party conference, undoubtedly those recommendations will come before us, either in the form of a Bill or some other form. If this clause is passed, there is no need for a Bill. The Secretary of State is given power to do anything he likes. He may give directions and it will be the duty of the body in question to comply with them.

I submit that the powers which are given in paragraph (g) are quite extraordinary and must be explained by the Minister. In my view they must be changed before we can authorise anything like the powers which are set out. I beg to move the correct amendment.

Lord Winstanley

I do not wish to prolong the discussion on this amendment. However, I should like to say that it seems to me that paragraph (g) is very wide; it could not possibly be wider. It virtually empowers the Secretary of State, to do anything whatsoever which appears to him etc. etc. Having said that, why on earth do we need subsections (a), (b), (c), (d) and (e)? They read:

1. "(a) to acquire, produce, manufacture and supply goods;
2. (b) to acquire land by agreement and manage and deal with land:
3. (c) to supply accommodation to any person;
966
4. (d) to supply services to any person and to provide new services:
5. (e) to provide instruction for any person;
6. (f) to develop and exploit ideas and exploit intellectual property".

If paragraph (g) says that the Secretary of State can do anything whatsoever, why do we need paragraphs (a), (b), (c), (d) and (e)? It seems to me that this has been put into the Bill merely for there to be something for us to take out. Therefore I support the noble Lord.

Lord Trafford

I should like to congratulate the noble Lord, Lord Ennals, on now being back on the rails and speaking to an amendment which is relevant to this issue.

Lord Skelmersdale

I think that there has been a certain amount of misunderstanding in all this. If noble Lords would like to look at line 15 at the beginning of Clause 7, they will find that the first line curtails the rest of the clause: In order to make more income available for improving the health service (as defined in the National Health Service Act 1977 …), the Secretary of State shall have power". In other words, he will not have power for any other reason. The clause relates solely to income generation.

Lord Ennals

Will the noble Lord allow me to intervene'? Thank you very much. The purpose of the clause is to raise income for improving the health service. That is what is covered by the clause. How could it be more all-embracing?

Lord Skelmersdale

If I am allowed to develop my argument perhaps we may get a little further forward. The point about paragraph (g) is that it does not give power to reorganise the health service, as the noble Lord, Lord Ennals, suggested. The wording is similar to that already contained in Section (2)(b) of the National Health Service Act 1977 under which the Secretary of State can—'and I almost quote—do anything whatsoever which is calculated to facilitate or is conducive or incidental to the discharge of' his duty to provide the health service. In other words, the clause in the existing legislation is a belt and braces clause, and it is a belt and braces clause which paragraph (g) is also intended to provide. There is nothing sinister in it at all.

Lord Winstanley

Is it the noble Lord's advice that we should all wear belt and braces?

Lord Skelmersdale

If that was supposed to be a suggestion that I am hinting that Members of the Committee should belt up, I am not doing anything of the sort. I was trying to explain to the noble Lord that paragraph (g) is not unusual. When legislation confers powers to carry out certain activities every situation that might arise in the exercise of those powers obviously cannot be foreseen. It therefore makes sense to give powers to do anything incidental to the activities with which the legislation is principally concerned as, as I said earlier, is shown by Section 2 of the National Health Service Act 1977.

The activities which we have in mind in this clause and for which health authorities need this new power include advertisement of the services which authorities have to offer and employment of staff for business purposes. That is what we intended with this paragraph. Not to have that provision would be akin to building a ship without the means to launch it. I described it earlier as a belt and braces provision and that is exactly what it is.

Earl Russell

I take the point about income generation, which clearly covers this clause. However, the power to do anything whatsoever to generate income is still a quite sweeping power. For example, if I may ask a not entirely frivolous question, would it be lawful under the terms of the clause to raffle the office of Secretary of State to raise funds for the health service?

Lord Skelmersdale

I think that I would have to take legal advice on that question! I cannot imagine that there would be many takers for some Secretaries of State in those circumstances.

Lord Ennals

I am very disappointed by the Minister's reply. He says that it is perfectly OK: do not worry about it; we already have it in another piece of legislation—Section 2 of the National Health Service Act 1977. I suggest to him that two wrongs do not make a right. If we made a mistake then why should we make another mistake now? Perhaps he will look at the words. I challenge him to say what cannot be done under those terms. It is not just a case of whether someone could raffle the office of the Secretary of State. He should get a lot of money for it because it is a very expensive office in the centre of London.

To be more serious about this, what happens if someone comes forward with a proposal as to how we could, in their view, more effectively fund the National Health Service? They might say that it could be better funded by private contributions; by people paying for the services that they receive; by some system of insurance cover. The Secretary of State is allowed to do anything whatever which appears to him to be calculated to facilitate such schemes.

It is really not good enough for the Minister to say that those words have been used before. I do not care whether they have been used before; I am determined that they will not he used again. We cannot give power to the Secretary of State over issues which must be debated by this Parliament and by organisations which have a right to a view. The Minister has not said anything which would justify the use of such extreme wording: the Secretary of State "may give directions", and, It shall he the duty of the body in question to comply with the directions". That really is going too far. I have every intention of dividing the Committee on this issue, I can tell the Minister, unless he is prepared to make some concessions or withdraw it. The powers in this Bill seem to me to be absolutely unjustified.

Lord Skelmersdale

The noble Lord is perfectly entitled to divide the Committee over words which were used in his own legislation which was introduced when he was Secretary of State. He may well find that they are not pertinent today.

Returning to Clause 7 of the Bill, which was where we came in, paragraph (g) enables the Secretary of State to licence the health service, to do anything whatsoever which appears to him to be calculated to facilitate. or to be conducive or incidental to"— and these are the important words— the exercise of any power conferred by this subsection". In other words, so long as it comes within the subsection relating to income generation and the various categories of income generation which are described in what will be Section 7, then it is all right. If it is for any other purpose it is all wrong.

Lord Ennals

I am very grateful to the Minister for responding as he has. However, I cannot see that the Secretary of State is not given powers here to adopt a different method of funding, other than tax funding, for the purpose of improving the National Health Service. I am very sorry, but I must press this to a Division.

5.48 p.m.

On Question, Whether the said amendment (No. 12) shall be agreed to?

Their Lordships divided: Contents, 65; Not-Contents, 110.

DIVISION NO. 2
CONTENTS
Addington, L.	Mclntosh of Haringey, L.
Ardwick, L.	McNair, L.
Aylestone, L.	Mais, L.
Banks, L.	Morton of Shuna, L.
Blackstone, B.	Nicol, B. [Teller]
Bottomley, L.	Oram, L.
Bruce of Donington, L.	Ponosby of Stulberde, L. [Teller.]
Carmichael of Kelvingrove, L.
Cledwyn of Penrhos, L.	Prys-Davies, L.
Diamond, L.	Rea, L.
Elwyn-Jones. L.	Ritchie of Dundee, L.
Ennals. L.	Rochester, L.
Ewart-Biggs. B.	Ross of Newport, L.
Falkender, B.	Rugby, L.
Fisher of Rednal. B.	Russell, E.
Gallacher, L.	Seear, B.
Galpern, L.	Seebohm, L.
Gladwyn, L.	Serota, B.
Grey, E.	Shepherd, L.
Hampton, L.	Stallard, L.
Hanworth, V.	Stewart of Swindon, L.
Hart of South Lanark, B.	Stoddart of Swindon, L.
Hatch of Lusby, L.	Strabolgi, L.
Hooson, L.	Tordoff, L.
Houghton of Sowerby, L.	Turner of Camden, B.
Howie of Troon, L.	Underhill, L.
Hughes, L.	Wallace of Coslany, L.
Jacques, L.	Whaddon, L.
Jeger, B.	Williams of Elvel, L.
Jenkins of Hillhead, L.	Winchilsea and Nottingham, E.
John-Mackie, L.
Longford, F.	Winstanley, L.
Lovell-Davis, L.	Winterbottom, L.
McCarthy, L.

NOT-CONTENTS
Aldington, L.	Beaverbrook, L.
Alexander of Tunis, F.	Beloff, L.
Allenby of Megiddo, V.	Belstead, L.
Ampthill, L.	Bessborough, E.
Arran, E.	Blatch, B.
Auckland, L.	Blyth, L.
Bauer, L.	Bolton, L.

Borthwick, L.	Lytton, E.
Boyd-Carpenter, L.	McFadzean, L.
Brabazon of Tara, L.	Margaadale, L.
Caithness, E.	Marley, L.
Cameron of Lochbroom, L.	Massereene and Ferrard, V.
Campbell of Alloway, L.	Merrivale, L.
Carnegy of Lour. B.	Mersey, V.
Carnock, L.	Milverton, L.
Chelmer, L.	Morris, L.
Chelwood, L.	Mowbray and Stourton, L.
Coleraine, L.	Munster, E.
Colnbrook, L.	Murton of Lindisfarne, L.
Colwyn, L.	Nelson, E.
Constantine of Stanmore, L.	Norfolk, D.
Cox, B.	Nugent of Guildford, L.
Craigavon, V.	Orkney, E.
Craigmyle, L.	Orr-Ewing, L.
Cullen of Ashbourne, L.	Oxfuird, V.
Dacre of Glanton. L.	Pender, L.
Davidson, V. [Teller.]	Penrhyn, L.
Dilhorne, V.	Peyton of Yeovil, L.
Dundee, E.	Portland, D.
Eden of Winton, L.	Pym, L.
Elibank, L.	Quinton, L.
Elliot of Harwood, B.	Rankeillour, L.
Elton, L.	Reay, L.
Ferrers, E.	Reigate, L.
Ferrier, L.	Renwick, L.
Gardner of Parkes, B.	Rochdale, V.
Gibson-Watt. L.	Saltoun of Abernethy, Ly.
Gisborough, L.	Sanderson of Bowden, L.
Grantchester, L.	Sandford, L.
Greenway, L.	Selkirk, E.
Gridley, L.	Skelmerdale, L.
Hanson, L.	Somers, L.
Hardinge of Penshurst, L.	Strange, B.
Harmar-Nicholls, L.	Strathcona and Mount Royal, L.
Hesketh, L.
Holderness, L.	Sudeley, L.
Home of the Hirsel, L.	Swinfen, L.
Hooper, B.	Swinton, E.
Hylton-Foster, B.	Teviot, L.
Jenkin of Roding, L.	Thorneycroft, L.
Johnston of Rockport, L.	Trafford, L.
Lawrence, L.	Trumpington, B.
Lindsay, E.	Ullswater, V.
Lindsey and Abingdon, E.	Vaux of Harrowden, L.
Long, V. [Teller.]	Westbury, L.
Lucas of Chilworth, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.56 p.m.

Lord Ponsonby of Shulbrede

Before we take the next amendment, perhaps I may ask the noble Viscount the Government Whip whether it is the intention of the Secretary of State for Trade and Industry to make a Statement to the House shortly after 6.30 p.m.?

Viscount Davidson

I can confirm that my noble friend Lord Young will make a Statement on Rover at a convenient moment after 6.30 p.m.

Lord Ennals moved Amendment No. 13: Page 5 line 28, leave out paragraph (h).

The noble Lord said: The principle at stake in this amendment is very similar to that in the amendment which we have just discussed and on which we have voted. Clause 7(1)(h) states: the Secretary of State shall have power … to make such charge as he considers appropriate for anything that he does in the exercise of any such power and to calculate any such charge on any basis that he considers to he the appropriate commercial basis: and may give directions … and it shall he the duty of the body in question to comply with the directions".

I do not need to go into as much detail as I did in relation to the previous amendment, when we were discussing powers to facilitate the powers which might lead to organisation. We are now concerned with powers to charge, and I make a similar submission to the one I made previously; namely, that the Secretary of State is being given powers to introduce charges.

In the same way as in the previous amendment, whatever may have been passed in 1977 at a time when the Government were not considering either the reorganisation of the National Health Service or the introduction of charges, we are now dealing with a situation in which the Government are considering the introduction of charges and have made clear in this Bill that they will introduce charges which have not existed before. Later we shall be debating those charges in the context of dental examinations and eye tests. However, unless the Minister can persuade me that I am totally wrong—particularly when this paragraph is taken together with paragraph (g) which the Chamber in its wisdom, or lack of it, has decided to keep—I submit that this measure would enable the Secretary of State to introduce charges that would affect the hospital service; it would enable him to authorise charges for general practitioner visits, for meals and other services within the hospital and to levy charges for consultants and anything else that he might decide upon, without the introduction of further legislation. In my view, that would be wrong.

If there are ever to be any such proposals, they should be brought properly before this Chamber in legislation and effectively debated. Clause 7(1)(h) cannot be allowed to pass without question. I submit that it gives to the Secretary of State powers which it would be quite wrong for this Chamber to give to a Minister.

I am reminded of an experience I had a few years ago when my wife was ill in the United States. She was admitted to the Hilea Hospital in Miami. She was there for three days. The charges amounted to 4,400 dollars for the services. They came in a succession of bills from different groups of consultants, and from the hospital for different types of services. I do not wish to see that system introduced into our National Health Service. The Minister will say that the clause is not drafted to provide for that. I want him to prove to me that those words would not give the Secretary of State the powers to introduce charges without this House and another place having the opportunity of challenging them.

The introduction of phrases such as this—and I have read them, I therefore do not need to do so again—show an arrogance of power, and a failure to recognise the concerns and the sensitivities that exist not only on this side of the committee but in the country in general about what the Government may be planning to do about the health service. Because of those sensitivities, I believe that the Minister ought to agree to consider this amendment again. I believe that he ought to have done the same with the previous amendment. This one is perhaps even more sensitive. Bearing in mind that paragraph (g) is still there, paragraph (h) is even more dangerous. I hope that the Minister will take my protest seriously this time, and that he will give serious consideration to whether these words are necessary in this part of the Bill. I beg to move.

Lord Trafford

I understand the argument put forward by the noble Lord with regard to the extent of the powers. He is certainly managing to extend these powers on every part of this clause. We have discussed paragraph (f), and that led us to contracts. The debate on paragraph (g) led to discussion of a National Health Service review by my right honourable friend the Prime Minister which apparently could be introduced under paragraph (f). Now bills of 4,000 dollars could be introduced under paragraph (h).

If we adopted the amendment put forward by the noble Lord, it would also have other deleterious effects even if it prevented the charging to which he referred. It would rule out any charging under this clause. This would include a number of quite minor activities in hospitals and elsewhere which generate income. I refer to snack bars, and some of the services where volunteers take items around for sale such as toiletries and so on, for which no charge could be made in these circumstances. I am sure that the Minister will say that this is not what the clause envisages. However, apart from that, and whether it would be extended to other forms of charging, it would also rule out any possibility of making those relatively minor but significant forms of income generation. It is my understanding that they generate about £70 million to £100 million a year in the health service. Even if the amendment were right in spirit, it would be wrong in practice since it would stop that happening and deprive the health service of money.

Lord Wallace of Coslany

I intervene briefly because I referred to this at Second Reading. I consider that these powers are far too sweeping and should be subject to some change. I appeal to the Minister on the ground that further consideration be given to this issue before the Report stage. The powers are somewhat sweeping. I appeal to the Minister at least to consider it, and perhaps come back to it at the Report stage when we can sort matters out.

Lord Skelmersdale

Yes. I shall certainly think about it. However, it can only do my case justice to point out that Section 1(2) of the National Health Service Act 1977 states: The services so provided shall he free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment whenever passed". In other words, if my right honourable friend should have a sudden coup de foudre and decide to change her mind, on the subject, for example. of raising income by the sale of hospital meals—which she has specifically and categorically excluded from her thinking—it would be necessary to pass primary legislation to enable my right honourable friend to do just that. In other words, the worries expressed by the noble Lord, Lord Ennals, simply do not exist. My noble friend Lord Trafford is quite right. The power contained in paragraph (h) is needed so that health authorities may charge for goods and services provided to various people and organisations in the context of income generation. For example, without these powers an authority could not charge people for items sold to them in authority-run hospital shops. snack bars, from trolleys, or whatever.

That is totally without prejudice to what I am about to say to the noble Lord. Lord Wallace of Coslany, about the tremendous value of the Leagues of Friends. However, should the hospital authorities decide to take their own trolley services, without phraseology such as is contained in Clause 7(1)(h), they would not be allowed to charge for chocolate bars. I cannot think that that is a terribly good idea.

Lord Ennals

The Minister cannot imagine that I would wish to leave a situation in which Leagues of Friends with their trolleys could not charge 22p for a Yorkie.

Lord Skelmersdale

I must correct that straight away. I said that if the League of Friends did not provide the trolley and the health service decided to do so, it would be the health service that would not be allowed to charge 22p. or whatever it is, for the Yorkie.

Lord Ennals

I do not wish to deprive the Secretary of State charging 22p, or even making a profit from 23p for a Yorkie. I am perfectly satisfied that, if I am successful in securing the deletion of this extraordinarily dangerously widely-worded clause, we should be able to put it right at the Report stage. We should be able to put in a clause. I would offer all my support to the Minister to get it right to ensure that such modest items could be provided for. It is not the modest items to which we refer, but the implications of a very much more substantial order that could be covered by this clause. Nothing that the Minister has said relieves my worry any more than he did when we debated Clause 7(1)(g). I am afraid that I have no alternative but to press this to a vote.

6.8 p.m.

On Question, Whether the said amendment (No. 13) shall be agreed to?

Their Lordships divided Contents, 61; Not-Contents, 100.

DIVISION NO. 3
CONTENTS
Addington, L.	Hart of South Lanark, B.
Ardwick, L.	Hatch of Lusby. L.
Aylestone. L.	Hooson. L.
Banks. L.	Houghton of Sowerby. L.
Bruce of Donington. L.	Howie of Troon. L.
Carmichael of Kelvingrove. L.	Hughes. L.
Cledwyn of Penrhos. L.	Jacques. L.
Diamond, L.	Jeger. B.
Elwyn-Jones, L.	Jenkins of Hillhead. L.
Ennals, L.	John-Mackie. L.
Ewart-Biggs, B.	Kearton, L.
Falkender, B.	Longford. E.
Fisher of Rednal. B.	Lovell-Davis, L.
Gallagher, L.	McIntosh of Haringey. L.
Galpern, L.	McNair, L.
Gladwyn, L.	Morton of Shuna, L.
Grey, E.	Mountevans. L.
Hampton. L.	Nicol. B. [Teller.]
Hanworth, V.	O'Neill of the Maine. L.

Oram.	Stoddart of Swindon. L.
Ponsonhy of Shulbrede, L.[Teller.]	Strabolgi, L.
	Tordoff, L.
Prys-Davies, L.	Turner of Camden, B.
Rea, L.	Underhill, L.
Ritchie of Dundee. L.	Wallace of Coslany, L.
Rochester, L.	Whaddon, L.
Ross of Newport, L.	Williams of Elvel, L.
Russell, E.	Winchilsea and Nottingham, E.
Serota, B.
Shepherd, L.	Winstanley, L.
Stallard, L.	Worcester, Bp.
Stewart of Fulham, L.

NOT-CONTENTS
Aldington, L.	Hooper, B.
Alexander of Tunis, E.	Hylton-Foster, B.
Allenby of Megiddo, V.	Johnston of Rockport, L.
Arran, E.	Lawrence, L.
Auckland, L.	Lindsey and Abingdon, E.
Bauer, L.	Long. V. [Teller.]
Beaverbrook, L.	Lucas of Chilworth. L.
Beloff, L.	Lytton, E.
Belstead, L.	McFadzean, L.
Bessborough, E.	Margadale, L.
Blakenham, V.	Marley, L.
Blatch, B.	Massereene and Ferrard, V.
Blyth. L.	Mersey, V.
Bolton, L.	Mowbray and Stourton, L.
Borthwick, L.	Munster, E.
Boyd-Carpenter, L.	Murton of Lindisfarne, L.
Brabazon of Tara, L.	Nelson, E.
Caithness, E.	Nugent of Guildford. L.
Cameron of Lochbroom, L.	Orkney. E.
Carnegy of Lour. B.	Orr-Ewing, L.
Carnock, L.	Oxfuird, V.
Chelmer, L.	Pender, L.
Colnbrook, L.	Penrhyn, L.
Colwyn, L.	Peyton of Yeovil, L.
Constantine of Stanmore, L.	Pym, L.
Craigavon, V.	Quinton, L.
Craigmyle, L.	Rankeillour, L.
Cullen of Ashbourne, L.	Reigate, L.
Dacre of Glanton. L.	Renwick, L.
Davidson. V. [Teller.]	Rochdale, V.
Dilhorne, V.	Saltoun of Abernethy, Ly.
Dundee, E.	Sanderson of Bowden. L.
Eden of Winton, L.	Sandford. L.
Elibank, L.	Seebohm, L.
Elliot of Harwood, B.	Selkirk, E.
Elton, L.	Skelmersdale, L.
Ferrers, E.	Somers, L.
Ferrier, L.	Strange, B.
Fortescue, E.	Strathcona and Mount Royal, L.
Gardner of Parkes, B.
Gisborough, L.	Sudeley, L.
Greenway, L.	Swinfen, L.
Gridley, L.	Swinton, E.
Hankey, L.	Teviot, L.
Hanson, L.	Torrington V.
Hardinge of Penshurst, L.	Trafford, L.
Harmar-Nicholls, L.	Trumpington, B.
Harvey of Prestbury, L.	Ullswater, V.
Hesketh, L.	Vaux of Harrowden, L.
Holderness, L.	Wyatt of Weeford, L.
Home of the Hirsel, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.16 p.m.

Lord Winstanley moved Amendment No. 14: Page 5, line 42, at end insert — ("(3A) The directions may not be given to Community Health Councils nor to Local Health Councils.").

The noble Lord said: I need hardly remind the Committee that Clause 7 deals with income generation. The Minister told us that and the noble Lord, Lord Trafford, told us three times very firmly that that was what it was all about. Perhaps I may remind the noble Lord, Lord Trafford, of the words of Lewis Carroll in the Hunting of the Snark: What 1 tell you three times is true. I accept that what the noble Lord, Lord Trafford, said three times is true: the clause is about income generation. We have already referred to the fact that the Secretary of State shall have power to do this, that and the other. But in addition the clause states that that he may give directions, for the exercise of any of those powers by any body constituted under the National Health Service Act"— and so on. My amendment merely removes from the question of directions the community health councils in England and Wales and the local health councils, their Scottish equivalents.

Why should the community health councils and the Scottish equivalents not be regarded as one of the bodies within the National Health Service to which the Secretary of State shall be able to give directions with regard to income generation? I believe that the community health councils are in a slightly different situation from other health service bodies. They are there to monitor the way in which the other bodies work. They are there to supervise the adequacy or otherwise of the health service provisions in their areas. They are there to monitor the activities of the local health authorities, but they are not there to do things within the National Health Service. The community health councils are representatives of the public.

I accept, and I am sure that the Minister will tell us so, that community health councils have powers to raise funds for their own use and purposes. I have no objection to that, but to direct them to raise funds for other purposes in connection with the National Health Service seems to me to be inappropriate, bearing in mind the real functions of the community health councils. That is one reason.

My second reason for believing that they should be exempt from this provision is that, as is well known to any Member of the Committee who has had any dealings with community health councils, they are extremely short-staffed. Most of the work is done voluntarily by members of the councils and some of them give a great deal of time. To add to their already heavy burdens the kind of burdens which might result as a consequence of directions from the Secretary of State would be unfair, inappropriate and might cause grave difficulties to the community health councils.

I have no doubt that the Minister will have something to say about this when he replies, but I hope he appreciates that the community health councils are by definition slightly different from the other bodies within the National Health Service to which it is entirely appropriate for the Secretary of State to give directions in relation to fund-raising. I hope that in his reply the Minister will agree that these bodies should be regarded in a different light. I beg to move.

Lord Skelmersdale

This is an extremely complicated matter and I hope that I can explain it to the noble Lord's satisfaction. If not, I suggest that we have consultations between now and the next stage.

Although community health councils and the Scottish equivalents are bodies constituted under the 1977 Act, they are not given functions by means of directions as is necessary in the case of health authorities. In other words, they do not operate normally by carrying out the suggestions or guidelines of the Secretary of State; they are, in a sense, bodies corporate. I hope that the noble Lord, Lord Prys-Davies, will not haul me over the coals about that. I do not mean it in the legal sense but in the sense that they are freely constituted bodies which operate under Schedule 7 to the 1977 Act. Therefore they are not analogous to health authorities or to special health authorities.

The functions of the community health councils and their Scottish equivalents therefore bear no relation to the functions which health authorties have been directed to perform. As I have said over and over again, Clause 7 is specifically about the powers delegated to district health authorities via the Secretary of State.

This is a complicated matter and if I need to have colloquia with the noble Lord I shall be delighted to do so.

Lord Winstanley

The noble Lord appears to agree with every word that I have said. He said that they were different bodies and appeared to suggest that they should not be subject to directions in this way. Does he agree with the amendment? I shall be delighted to have consultations with him at any time.

Lord Skelmersdale

No, I was trying to point out to the noble Lord that the amendment is unnecessary because Clause 7 does not cover community health councils.

Lord Winstanley

If the amendment is unnecessary because the clause does not cover community health councils I shall be much happier. However, I do not necessarily feel deprived of the right to have consultations about the matter with the noble Lord—

Lord Skelmersdale

The noble Lord may be my guest.

Lord Winstanley

In the light of that further explanation, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Skelmersdale moved Amendment No. 15: Page, 5, line 43, leave out from ("The") to ("the") in line 46 and insert ("Secretary of State shall exercise the powers conferred by subsection (1)(c) and (d) above only if and to the extent that he is satisfied that anything which he proposes to do in the exercise of those powers does not fall within section 65 of the National Health Service Act 1977 or section 57 of").

The noble Lord said: In moving the amendment, I should like also to speak to Amendments Nos. 16, 17. 20, 21, 23, 24 and 25. This group of amendments, large though it may seem, seeks to achieve the same end. That the group is so large is in part due to the fact that they seek to make parallel changes to both English and Scottish legislation.

My honourable friend the Parliamentary Under-Secretary for Health promised in another place that the Government would bring forward amendments which would address the points made by the Opposition in relation to private patients. These were that provisions relating to a definition of a "private patient" and to consultants' rights in law to admit their own private patients be reinstated in legislation. They had been removed during the drafting of subsection (7) of Clause 7, as part of a tidying up and consolidation of legislation relating to private patients.

Disapproval was expressed in another place and I am now honouring my honourable friend's pledge to reinstate them in legislation. Therefore, this group of amendments ensures that there is a clear definition of what constitutes an NHS "private patient" and also reinstates the Secretary of State's discretion to permit NHS consultants to admit their own private patients. I could say more but for the moment I think that it is sensible merely to beg to move.

Lord Ennals

It would be churlish of me to challenge this series of amendments. Indeed, I am grateful to the Minister for introducing them. As he said, there were in another place a number of requests for some definition. The amendments that have been proposed by the Minister go a long way to making a fair definition. Amendment No. 17 reads: ('for private patients to such extent as he may determine') and insert ('. to such extent as he may determine. for patients who give undertakings … to pay. in respect of the accommodation and services made available. such charges as the Secretary of State may, determine')". That is one example of the need for clarification.

Even without this legislation I believed that we were reaching the stage of having a narrow and unclear line between those who were private patients for a period of their stay in a National Health Service hospital and were not private patients for another period. I believe that the role of consultants in introducing patients—sometimes, as it may appear. in obtaining an advantage in doing so—has been cleared up by the amendments. It may be that there are colleagues in another place who are not satisfied with the amendments proposed by the noble Lord. I do not believe that to be the case but, if it is, they will have an opportunity to speak in another place. I am satisfied that the Minister has quite properly fulfilled the obligation he undertook, and I am grateful to him.

Lord Winstanley

On behalf of my noble friends on these Benches I should like to say that we are most grateful to the noble Lord for bringing forward the amendments. We believe that they are helpful and we support them.

Lord Skelmersdale

I am grateful to both noble Lords.

On Question, amendment agreed to.

Lord Skelmersdale moved Amendments Nos. 16 and 17: Page 6, line 13, leave out ("as private patients") and insert ("under section 65 of the National Health Service Act 1977 or section 57 of the National Health Service (Scotland) Act 1978''). Page 6, line 29, leave out ("for private patients to such extent as he may determine") and insert (", to such extent as he may determine, for patients who give undertakings (or for whom undertakings are given) to pay. in respect of the accommodation and services made available, such charges as the Secretary of State may determine").

On Question, amendments agreed to.

Lord Prys-Davies moved Amendment No. 18:

Page 6, line 36, leave out ("to a significant extent interfere") and insert ("interfere in any way").

The noble Lord said: I should like to speak to Amendments Nos. 18 and 19. They relate to the new Section 65 of the National Health Service Act 1977. When I read the Marshalled List I was delighted to see that my noble friend and I had been able to convince the Minister that Amendment No. 19 was acceptable to him. I understand that the Minister has—

Lord Ennals

He has withdrawn his name.

Lord Prys-Davies

The Minister has withdrawn his name but we still hope to convert him to the wisdom of Amendments Nos. 18 and 19.

The new Section 65 gives power to the Secretary of State to authorise accommodation and services at an NHS hospital to be made available for private patients. Therefore it empowers him to advance private medicine within NHS hospitals within the limits specified in sub-paragraphs (a) and (b) of the new Section 65. I understand that the two amendments are in line with Amendments Nos. 22 and 27 standing in the name of the noble Lord, Lord Winstanley. They tighten up the limits within which private medicine can he introduced within NHS hospitals.

The Bill as drawn allows the accommodation and services to be made available provided that it will not to a significant extent interfere with the provision of accommodation and services for NHS patients, and provided that it will not operate to a significant extent to the disadvantage of the NHS patients. Therefore the key phrase in sub-paragraphs (a) and (b) is "not to a significant extent".

We say that if the private sector is to be built up within NHS hospitals it should not interfere in any way with the capacity of the hospitals to provide services for the NHS patients and that those patients should not be disadvantaged in any way.

It seems to us that as subparagraphs (a) and (b) now stand they tend to give encouragement to the manager to favour the private sector within the NHS. In our view, the manager, the authority, should be under no doubt at all that if it is wished to build up the private sector within an NHS hospital, that should not interfere with the capacity of the hospital to discharge its duties to NHS patients. We fear that the Bill gives encouragement to the manager to favour the private sector. We think that the words in the Bill should he replaced by the emphasis in our amendments on the need to ensure that the services are in no way affected by the introduction of private medicine within the NHS. I beg to move.

6.30 p.m.

Lord Trafford

I oppose these amendments for three reasons. First, they are impossible. There is no way in which one can guarantee that the admission of one patient will not interfere in any way. One can guarantee that it will not significantly interfere, and so forth, but to guarantee that it cannot makes it virtually impossible.

Secondly, one of the most disastrous things that ever happened to the National Health Service was the deliberate division between the private and the public sector which took place mostly during the mid-1970s. That resulted in the creation of an enormous external private sector which has drawn off nursing staff and consultants. Indeed, they are now accused of being more often up West than down in the inner city in this town in which we sit. Those were disastrous consequences of a mistaken policy. That was not the intention of that policy but that was what happened.

Another reason is that if we can reverse that and bring the nurses as well as the doctors back into the same area, that is beneficial to all patients.

Thirdly, it is another form of quite significant income generation which is for the benefit of national health patients. I understand why the noble Lord moved this amendment and I understand his reasons. We would perhaps never agree on the question of private and public sector medicine. However, there is no Member of this Committee who is a stronger supporter of the National Health Service than I and no member of my profession who would be more distressed to find anybody who was preferring the private sector to the national health sector, or something of that sort. That is to be totally deprecated and I am sure that other members of my profession in this Committee would agree with me on that score.

Nonetheless, there is no need to shackle our feet and to either make it impossible for the provisions of the amendment to be carried out or to deprive the hospitals of a certain amount of income; nor is it bad to allow the coming together again of the various parts of the hospital service in particular which would lead to greater efficiency and, I genuinely believe, a greater benefit to all the patients. For those reasons I oppose this amendment.

Lord Winstanley

I had overlooked and now note that my Amendments Nos. 22 and 26 are grouped with this amendment which we are now considering. I have no doubt that when the Minister replies he will also reply to my amendments, and therefore I should perhaps say a few brief words about them.

Amendment No. 22 is self-explanatory. We are concerned with the same matter which is dealt with by the amendment of the noble Lord, Lord Prys-Davies. Clause 7 of the Bill states: The Secretary of State shall revoke an authorisation under this section only and so on. I delete from the word "section" and insert: if he ceases to he satisfied that sufficient accommodation and facilities are available for services provided by the National Health Service". In a sense, that puts the matter in reverse. It requires that the Secretary of State should be satisfied that satisfactory resources and so on are available with regard to the National Health Service before he authorises certain things and also that he should revoke an authorisation if at any time he ceases to be satisfied that the National Health Service is adequately provided for. That matter is covered by Amendment No. 26, which states: unless he is satisfied that sufficient accommodation and facilities are available for services provided by the National Health Service". I believe that my amendments will become clearer when we hear what the Minister says in response to them. I have no doubt that he understands their purport; namely, to place the efficiency and effectiveness of the National Health Service as the top priority in taking all these decisions. I have not moved these amendments as we have not yet reached that stage, but I have spoken to them because of the grouping.

Lord Skelmersdale

I have never before had to ask a question of Members of the Committee, but perhaps I may ask whether they are satisfied with the situation which pertains at the moment. My answer will differ as to whether or not they are.

Lord Winstanley

I am not satisfied. At such time as I am not satisfied with the conditions in the National Health Service, I would not divert resources to other activities. That is the point. I believe that it is proper for the Secretary of State to use resources for other purposes when he is so satisfied, but it is not proper when he is not so satisfied. I am not satisfied at the moment. I should not make use of these powers at the moment were I the Secretary of State. That appears to be unlikely, but perhaps I may hasten to say that I should not necessarily reject the appointment should it happen to be offered.

Lord Skelmersdale

What I meant was that the Secretary of State already has powers under Section 62 of the National Health Service Act to use private beds for public purposes should he need to do so. These powers are extended by Section II of the Health Services Act 1980.

These amendments restrict that discretion of my right honourable friend to authorise pay beds with regard to the individual merits of each case. As my noble friend Lord Trafford pointed out, health authorities earn valuable revenue of around £60 million a year which can be used to help National Health Service patients. The clause as drafted uses well-established and commonly accepted phraseology which was used in the 1977 Act as extended by the 1980 Act. Therefore, I am not convinced that there is any need to change that established wording. I believe that it is unreasonable to restrict the discretion of the Secretary of State in such absolute terms.

The clause contains provisions which restrict authorisation of private patients' facilities if that would significantly disadvantage NHS patients or interfere with the duties of the Secretary of State under the National Health Service Act 1977, which is clearly right. Therefore, I am confident that there are more than adequate safeguards for National Health Service patients without these amendments. I hope they will not be pressed.

Lord Prys-Davies

It will be helpful if the Minister can explain to the Committee how the phrase "to a significant extent" will be interpreted in the context of this clause.

Let us assume that one has an NHS hospital of 10 wards working under pressure, as they do. If the Secretary of State authorises the use of one ward for private patients, would that be a significant interference in the ability of the hospital in those circumstances to provide services for the NHS patient? Would it make any difference if he were to authorise the use of half a ward instead of a ward?

Lord Winstanley

On the same point and a related one, the noble Lord explained that the Secretary of State must be satisfied in regard to the National Health Service in various ways before he authorises certain things. My amendment provides for the situation when the Secretary of State ceases to be so satisfied. It enables him to revoke a previous authorisation. Can the Minister say something about that? I am sure he believes that to be desirable and that an authorisation should not be in perpetuity. The Secretary of State should have the power to revoke an authorisation if the situation relating to the National Health Service should change.

Lord Skelmersdale

Subsection (7) introduces a new Section 65 to the National Health Service Act. The point at issue is that the Secretary of State must be satisfied that the existence of pay beds does not prejudice the carrying out of public services and, to an extent, vice versa. He has to keep a balance within a given hospital where pay beds are authorised.

Lord Winstanley

Does that mean continuously, and that if the situation changes his decision will change?

Lord Skelmersdale

Yes, obviously if one side robs beds from the other and the situation changes the imbalance must he corrected. The words at issue with the noble Lord, Lord Prys-Davies, are "to a significant extent". To accept the formulation preferred by the noble Lord of "interference in any way" removes discretion from the Secretary of State. In order to keep a balance and correct imbalances discretion continues to be needed. That is why I do not like the formulation proposed by the noble Lord.

Lord Prys-Davies

We on this side of the Committee will have to consider carefully what the Minister said in reply to our amendments. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 19 not moved.]

Lord Beaverbrook

Perhaps this would be a convenient moment to take the Statement. I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.