HL Deb 26 April 1990 vol 518 cc744-64

8.26 p.m.

House again in Committee on Schedule 2.

[Amendments Nos. 98 to 100BA not moved.]

Baroness Blatch moved Amendment No. 100C: Page 66, line 14, leave out ("provision") and insert ("transfer").

The noble Baroness said: This amendment and Amendment No. l00D are essentially technical. When an NHS trust is first established some time before it becomes fully operational it will have no premises of its own. The premises which it will own will be transferred to it from the Secretary of State. Paragraph 4(1) currently allows for an order to require a health authority to make premises available to a trust free of charge until the trust itself provides premises.

However, it is possible that the transfer of premises may not be completed until after the trust becomes fully operational when it could be deemed to be providing premises. The trust would then be liable to pay rent for any premises it uses. It would not be right for a trust to be penalised because of a delay in the completion of the conveyance of the property, which may well be none of its fault. The amendments therefore specify that the period during which authorities may be required to make premises available to a trust free of charge will run until the premises are transferred to the trust. With that not very lengthy explanation, I commend the amendments to the Committee. I beg to move.

On Question, amendment agreed to.

Baroness Blatch moved Amendment No. 100D: Page 66, line 15, leave out ("by it") and insert ("to the trust").

On Question, amendment agreed to.

Baroness Blatch moved Amendment No. 100DA: Page 66, line 28, at end insert: ("(3) If an order nnakes the provision referred to in sub-paragraph (1) above, the order may require a Regional, District or Special Health Authority to discharge such liabilities of the NHS trust as —

  1. (a) may be incurred during the period referred to in that sub-paragraph; and
  2. (b) are of a description specified in the order.").

On Question, amendment agreed to.

[Amendment No. 100E not moved.]

Lord Walton of Detchant moved Amendment No. 100F: Page 66, line 37, at end insert ("The trust shall also be required to provide such clinical, teaching, research and other services as the relevant Regional and District Health Authorities shall specify.").

The noble Lord said: One of the strengths of the National Health Service since its inception has been that the planning and distribution of health care facilities have been based upon the regional and district structure. However from time to time there have been changes —for example, when for a period of years there were area health authorities.

One of the difficulties one sees in countries such as the United States is that in the absence of such regional planning there is a tendency for many small hospitals to embark upon highly specialised and extremely expensive services. All too many small hospitals in parts of the country which are not capable of maintaining and sustaining such specialised facilities embark upon, for example, neurosurgery or even cardiac surgery. The consequence is that although in the United States these specialties can provide some of the best care available anywhere in the world, in many smaller hospitals such facilities are attempted but with considerable detriment to patient care. The level of mortality in some of those hospitals is far higher than in the specialised centres.

In the National Health Service we have seen from time to time in the past few years in the regions and to a lesser extent in the districts a squeeze on undergraduate teaching and research and on funds available for postgraduate and continuing education. This is an issue to which we have referred in earlier debates this evening. However in earlier debates we have had some important assurances from the noble Baroness about protected funding for teaching and research. We are also aware of the provisions of SIFT.

The problem is that under the Bill it would be possible for a self-governing trust running a hospital to be over-ambitious in establishing highly specialised and highly expensive services in specialties which were inappropriate to the hospital. This might be at the expense of what may appear to be rather more mundane and less glamorous services such as those to the elderly and the mentally ill.

This is a probing amendment and simply seeks to ensure that a self-governing trust plans and provides services within and under the overriding authority of the district and regional health authorities. That is the purpose underlying the amendment. I beg to move.

8.30 p.m.

The Minister of State, Scottish Office (Lord Sanderson of Bowden)

I think that it would be for the convenience of the Committee if we considered not only the noble Lord's amendment but also Amendments Nos. 101 AH and 101AJ. If the Committee will forgive me, I shall cover all three amendments, because the other two throw a slightly different light on the problems that have been raised by the noble Lord, Lord Walton.

The duty of the Secretary of State to specify the functions which a National Health Service trust must carry out is a guarantee that trusts will have to provide a minimum range of services which the Secretary of State, after careful consultation with local health boards, authorities and other relevant interests believes are needed. Teaching, training and research would be included in these functions where appropriate and particularly in the case of a teaching hospital. The functions order will therefore act as a safety net.

In addition, trusts will make their contribution through the National Health Service contracts system to the overall level and pattern of services secured by health boards and authorities. Boards and authorities will decide and procure a pattern of health services after careful assessment of local health needs and full consultation with the medical profession. National Health Service trusts, along with other service providers, will run the services which are needed by the local population under contract to boards and authorities. The boards and authorities will be able to make stipulations about a trust's teaching role where necessary. Where a National Health Service trust is the major service provider in an area, it follows that the trust will be providing something approaching the full range of health services. In other circumstances, National Health Service trusts may make a more modest contribution to the overall level of service. In either case, there is no question but that patients will receive and have access to all the services they need.

Turning to the individual amendments under this grouping, perhaps I may take Amendments Nos.

101AH and 101AJ first and then come to the noble Lord's amendment after that. Amendment No. 101AH would prevent Scottish teaching hospitals becoming National Health Service trusts. All types of hospital stand to benefit from self-governing status, which will encourage a stronger sense of local ownership and pride, and stimulate the commitment and initiative of those who are directly responsible for providing services. It would make no sense to exclude any particular type of hospital, least of all teaching hospitals, from this major opportunity.

As I have indicated, the Secretary of State will be able to specify teaching as one of a teaching trust's functions and the relevant health board will be able to make further stipulations about a trust's teaching role under the terms of the National Health Service contracts it makes with that trust. But there are further safeguards for teaching and research. To underline the importance which the Government attach to continued co-operation between teaching hospitals and universities, the Secretary of State will be required to appoint one of the non-executive directors of the teaching trust from the relevant university or medical or dental school. This will be possible, even if that academic holds an honorary contract with the hospital which would otherwise have made him or her ineligible to be a non-executive director.

There is nothing in the Bill, or the White Paper Working for Patients, which would in any way hinder the ability of a National Health Service trust to maintain full co-operation with a university, including such matters as the awarding of honorary contracts. Indeed, Schedules 2 and 6 explicitly state that National Health Service trusts have the power to provide training and to make staff and facilities available to universities or other bodies in connection with training. In the unlikely event —and this is important—of such arrangements appearing not to be working properly the Secretary of State would be able to step in under his powers in paragraph 6 of Schedules 2 or 6 to issue appropriate directions to the trust.

Amendment No. 101AJ would require a Scottish hospital, because it was self-governing, to continue to provide all the services it was providing before. The National Health Service has two duties to fulfil. It must guarantee the continued provision of essential services but it must also look to the future in terms of developing services, adapting to changing needs and making the best use of resources. While change can be painful, it is clearly essential for health bodies to have the freedom to develop new specialties, build new units and, where appropriate, run other units down. If anyone suggested that all hospitals should continue in perpetuity to provide the same services they are providing now, they would not be taken seriously.

Yet this is the same—I have to say—rigid prescription that I believe is embodied in the spirit behind the amendments we are discussing, particularly Amendment No. 101AJ. Trusts, like other National Health Service hospitals, need to be able to adapt to changing circumstances.

Perhaps I may turn to Amendment No. 100F, which was proposed by the noble Lord. It would require trusts in England and Wales to provide the services which RHAs and DHAs specify. Again it makes specific mention of teaching and research. I hope I have already made clear that what this amendment seeks will actually happen in practice. Trusts will be required by law to provide the services specified in their establishing order and will be under contract to provide services demanded by health authorities. Indeed, to be viable, trusts will have to sell services to health authorities, since they will be the dominant purchasers. It will be a question of authorities paying the trust piper and thus calling the tune.

I am sorry to have spoken at such length but these three amendments are slightly different. I know that the Committee will appreciate that it is important to give a full explanation. As the noble Lord said that this was a probing amendment, I hope that I have given enough information to reassure him.

Lord Carmichael of Kelvingrove

The Minister mentioned two amendments standing in my name. I was pleased with the explanation that he gave. He has gone a little further than his honourable Friend went in Committee in another place, but he still has not gone quite far enough in terms of the representation of a member of the teaching staff on the board of the hospital as a non-executive director. The Minister has given us all kinds of assurances on this matter. I take his word for it that one of the teaching staff will always be a non-executive director. However, the Minister will be aware that his word is not binding.

I cannot find on the face of the Bill any specific reference to such appointments. The White Paper said that non-executive directors in teaching hospitals would need to include someone who was drawn from the relevant medical school. I have checked this matter because of what happened in Committee in another place, but perhaps the noble Minister can clear it up.

Lord Sanderson of Bowden

I shall have the natter checked, but it is my understanding that the Secretary of State will be required to appoint as one of the non-executive directors of the teaching trusts someone from the relevant university, medical school or dental school. I hope that that reassures the noble Lord.

Lord Walton of Detchant

In the light of the assurance given by the Minister, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 100G and 101 not moved.]

Baroness Blatch moved Amendment No. 101ZA: Page 67, line 14, after ("its") insert ("audited").

The noble Baroness said: These amendments are essentially technical in nature. They relate to the information which trusts will have to present at their annual meetings. The Bill currently provides that the trusts' annual accounts shall be presented to those meetings. It is clearly right that those accounts should have been subject to proper audit before they are presented. The first amendment provides for that. It will, of course, be the responsibility of the Audit Commission to audit the accounts of the trusts.

We also believe that it is important that where an auditor issues a report in the public interest on the accounts of a trust, that too should be presented at a public meeting, or else its force will be lost. I hope and expect that such reports will be rare because they would reflect serious failings or improprieties by a trust. Nonetheless, it is right that where such a report is made on a trust it should be presented publicly, just as it would for a health authority. I beg to move.

On (Question, amendment agreed to.

Baroness Blatch moved Amendment No. 101ZB: Page 67, line 14, after ("report") insert ("and any report on the account;; made pursuant to subsection (3) of section 15 of the Local Government Finance Act 1982").

On Question, amendment agreed to.

[Amendment No. 101ZBA not moved]

Lord Butterfield

I am sorry to interrupt the Committee but I was hoping that I might be able to speak to Amendment No. 101A which we seem to have passed over.

Noble Lords

That comes later!

Lord Peston

I am not sure whether one is allowed to intervene on a procedural matter, but I should say that Amendment No. 101A was grouped with Amendment No. 100G. The noble Lord, Lord Pitt, was not present when Amendment No. 100G was called. We are hoping that when we reach the other amendments in that group we can proceed. I hope that that is agreeable to the Committee.

8.45 p.m.

Lord Ennals moved Amendment No. 101ZC: Page 68, leave out lines 5 to 8.

The noble Lord said: On a number of occasions both in another place and certainly in this Chamber, the Secretary of State and his Ministers have assured us that this Bill is not designed to privatise the National Health Service or even to prepare it for privatisation. Yet repeated assurances have not killed the concern. Part of the concern is caused by the paragraph that I seek to delete. It states: According to the nature of its functions, an NHS trust may make accommodation or services or both available for patients who give undertakings (or for whom undertakings are given) to pay, in respect of the accommodation or services (or both) such charges as the trust may determine".

At this stage I am only probing, but I find those lines disturbing. It seems to me that an NHS trust would be empowered to sell its accommodation — accommodation presumably means the buildings of an NHS trust —or its services. It could perhaps rent out the accommodation. That matter is not clear to me. I have glanced through the Bill, but I can find no similar right to sell services to the private sector accorded to those hospitals that are administered by authorities. I believe the right of a trust to sell whatever of its services or accommodation to the private sector that it wishes is limited only by the discretion of the Secretary of State. Nowhere can I find the obligation on a National Health Service trust to meet the health care needs of its local population being given priority over the private sales that I have just referred to. Any reference to any obligation on a trust to provide NHS health care is absent. In theory such a hospital could sell any part or even all of its NHS services to the private sector. That is restricted only by the Minister's discretionary powers. Perhaps that is not the intention of the Secretary of State and perhaps I am misreading this part of the Bill. However, I am sure that the private sector can and will bid for part of the NHS services. I should imagine that if the private sector had that opportunity, it would bid for the best medical opinions, the best operations, investigations and other things that the NHS can offer. I find that disturbing.

I hope that the Minister will be able to convince me that I have misread what I have termed "the privatisation clause". Perhaps it can simply be deleted. If it simply concerns pay beds or some similar matter, presumably the Minister will explain that. However, as long as the provision remains in the Bill in this form some suspicious people will think it is a part of the Bill which is in a sense a gateway, controlled only by the Secretary of State, through which the whole pantechnicon of privatisation can ultimately flow. It could be an administrative virus that is inoffensively tucked away in a little schedule of the Bill. However, perhaps I am being too suspicious. I beg to move.

Lord Sanderson of Bowden

I hope to prove to the noble Lord that his fears are without foundation. These amendments would create an anomaly in the National Health Service because they would deny to National Health Service trusts the right that is enjoyed by all directly managed hospitals to provide pay and amenity beds. This power allows hospitals to generate useful income for the benefit of patients as a whole; increases choice for patients and reduces the burden on the NHS.

We believe that this amendment will be of no help to patients and it could indeed harm their interests and put trusts at a disadvantage compared with NHS hospitals. I could understand the concerns underlying the amendment if there was any possibility that a hospital's pay bed work could harm its National Health Service functions. In fact pay and amenity beds have been provided in National Health Service hospitals for some years, as the noble Lord knows, without in any way undermining the interests of the National Health Service patients.

There are various reasons for that, including the power of the Secretary of State to intervene if National Health Service patients' interests are seen to be at risk and the fact that all National Health Service hospitals must conform to a detailed code of practice on the provision of pay and amenity beds.

Similar and very explicit safeguards will apply to National Health Service trusts. First, as the noble Lord said, subsection (6) of Clause 5 and of the equivalent Scottish NHS trust clause in the Bill makes it clear that a trust's power to provide pay and amenity beds can only be exercised if it does not to any significant extent interfere with the performance of its obligations under the National Health Service contract.

Lord Ennals

Perhaps I may ask the Minister whether the clause uses the term "pay and amenity beds". I could not find it anywhere.

Lord Sanderson of Bowden

I need to look that up. Perhaps I may finish and then check that point.

Secondly, the Secretary of State will be able to direct National Health Service trusts on any aspects of their provision of pay and amenity beds if that appears necessary. Thirdly, under the Bill the Secretary of State can direct trusts to comply with any guidance issued to health boards. We intend that National Health Service trusts should comply with the code of practice which I have already mentioned.

Apart from the provisions relating specifically to pay and amenity beds, I remind the noble Lord of the very detailed specification which will be made concerning the National Health Service services which are to be provided by every trust and which will firmly establish the National Health Service trusts' prior commitment to their National Health Service work.

As I have mentioned in relation to previous amendments, the Secretary of State will have a duty to specify in the establishing order all the National Health Service functions which he considers a particular trust must provide. Furthermore, the range of National Health Service services which a trust will have to provide will be spelt out in the National Health Service contract under which it will provide services to health boards and other purchasers. Those contracts will not only detail which services are to be provided, but will specify quality, outcomes and monitoring. In practice therefore it will be very difficult for a National Health Service trust to fall down on its National Health Service work without it very quickly being picked up and rectified.

I should not want to end on a negative note. It is important to emphasise the safeguards which exist, but I should also like to stress the positive side; namely, that National Health Service trusts will have a clear incentive to provide the best quality National Health Service services.

Turning to the noble Lord's intervention, he is quite right that the Bill does not use the term "pay beds"; but the wording follows that used for the equivalent power of the health authorities.

As a further explanation, paragraph 14 of Schedule 2 gives trusts the specific power to provide accommodation and services for paying patients. The separate provisions giving National Health Service trusts the powers specified in the Health and Medicines Act 1988 to undertake income generation activities include the power to provide accommodation and services for private patients.

I shall look carefully to see whether as the noble Lord suggested, there is a loophole in line 5 of page 68. However, as I read it at the moment there is not a loophole. Nevertheless, I shall certainly consider the matter in order to see whether that is the case. I hope that from what I have said the intention of the Government is clear. With that assurance, I shall certainly look at the matter and see whether the clause needs tightening in any way.

Lord Ennals

I am grateful to the noble Lord for his detailed explanation. He went through it at a cracking rate. I do not criticise him for doing so. I shall have to read very carefully what he said. He will obviously have to do some careful reading. I have a little document that I can send him to help him in the course of that reading.

It may be that he will feel on reflection that the term "pay beds", which is an accepted term and is understood, is one that might find its way into the Bill. The Government ought to use every legitimate means at their disposal. If it is not their intention to use any part of this Bill for any part of privatisation, they should let the world know that. One of the ways of letting the world know is to write something in the Bill which makes it specific. That was what I wanted to do in moving this particular amendment.

Perhaps together we can come back with something that writes this very important principle into the Bill very clearly. It is one thing for Ministers to say, "Don't worry, we have no intention of doing this". That is a very different matter from having it in the Bill. At some stage there may be another Secretary of State —and I am not thinking of one from this side of the House—in some other place who does want to privatise the NHS and who might use the facilities here to do it in this way.

If we both agree to look at the matter very carefully, I am happy to withdraw the amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Murton of Lindisfarne)

If Amendment No. 101ZD were agreed to, it would pre-empt Amendments Nos. 101 A, 101AZA and 101AA and I should not be able to call them.

Lord Walton of Detchant moved Amendment No. 101ZD: Page 68, leave out line 23 and insert: ("(d) to employ such staff as the trust may require to fulful its duties under this Act on terms and conditions no less favourable than those recommended by the General Whitley Council and any relevant Pay Review Body recognised by the Secretary of State in relation to specific groups of staff.").

The noble Lord said: In speaking to the amendment, I wish also to speak to all of the other amendments which are grouped with it. From the very inception of the National Health Service, a fundamental principle has been a uniform distribution of standards of provision. A crucial factor in determining improved equality of care has been the distribution of consultants in the service.

Salary and terms and conditions of service have always been of considerable importance in ensuring that even geographical spread. As long ago as 1948 the report of the inter-departmental committee on the remuneration of consultants and specialists noted that equality could be achieved only by increasing the mobility of specialists throughout the service and facilitating the interchange of staffs between teaching and non-teaching hospitals. The report emphasised the great importance of regional hospital centres not being inferior to teaching centres, stating that both should be able to attract specialists of the highest calibre and concluding that the same range of remuneration for clinical work should apply to specialists in both teaching and non-teaching hospitals. In that regard the health service has been extremely successful.

Forty years later those same considerations continue to apply. Inequality in the provision of health care was identified as a major problem before the introduction of the NHS. In medicine the movement away from national salary scales could result in the best consultants being concentrated in areas where the highest salaries were to be paid and a consequential reversion to inequality of standards. National terms and conditions of service and salaries therefore provide considerable protection for both patient care and the medical profession. The terms of consultants' contracts give them freedom to exercise judgment in clinical matters.

Perhaps of even greater importance is the question of mobility, especially for junior staff in training. It is important that junior hospital doctors should be enabled to move between different hospitals. However, if they do so, they must surely be secure in the knowledge that they will not suffer from fluctuations in basic salary. Extensive experience must be available to all hospital staff to provide equality of opportunity.

What is of even greater importance is the position in teaching hospitals where clincal staff employed at all levels —training grades and consultant grades —in the NHS work alongside, on equal terms with, university academic staff of clinical departments who are carrying out almost identical work in patient care, teaching and research and whose salary scales at present equate with those in the National Health Service. If self-governing trusts were in a position to provide differential salary scales, there would be serious problems in the inter-relationship between those paid on the one hand by the National Health Service and those paid on the other by the universities. That would give all of us very great anxiety.

The existing national negotiating machinery has many major advantages. First, it makes economic and administrative sense. Local pay and conditions bargaining would involve considerable manpower and time on the part of health managers and representatives of the professions involved and similar negotiations would be occurring across the country in all self-governing hospitals using major NHS resources.

Structures have evolved over many years to deal effectively and objectively with NHS salaries and terms and conditions of service. The independent Doctors and Dentists Review Body was set up in an attempt to avoid recurrent pay disputes. More recently a similar review body for members of the nursing professions has also been established with the objectives of arriving at settlements that are fair both to the profession and to the taxpayer. Despite some problems, the system has retained its credibility and I hope very much that it can be preserved.

To turn to the details of the amendments themselves, Amendment No. 101ZD would simply require that staff should be appointed and remunerated in self-governing hospital trusts on salary scales not inferior to those agreed by the general Whitley Council and the review bodies for the professions.

The noble Lord, Lord Butterfield, will be proposing Amendment No. 101A, which, if it were passed, would effectively make it clear that only non-clinical staff could be employed on other than national salary scales. Amendment No. 101AA, also standing in my name and that of the noble Lord, Lord Rea, would mean that staff would be employed in the medical and other caring professions—indeed in all NHS grades —only on nationally agreed salary scales and terms and conditions of service, subject only to the provision that local allowances could be paid to assist for local reasons in the recruitment and retention of staff These are in a way linked amendments, all with the similar objective of not losing the enormous advantages which the National Health Service has gained by having nationally negotiated terms and conditions of service and salary scales. I beg to move.

9 p.m

Lord Carmichael of Kelvingrove

In supporting this group of amendments, I do not think I can do as well as the noble Lord who has just spoken. On going through the amendments, I should like to emphasis to the Minister the difference in the Scottish amendment. After all, in the Bill we are not starting new legislation but amending an existing Scottish Act, the 1976 Act. Amendment No. 101KA refers to the schedule and I should like to stress that that would be included in the same group for the same reasons. I am very glad to be able to say that one of the good things about the health service is that national agreements have given us relatively good stability in the service and I hope that that continues.

Lord Butterfield

I should like to speak to Amendment No. 101 A. I deliberately chose to reduce to a minimum the interference with the Bill by inserting "non-clinical" in this way. It would mean that the leaders of trust hospitals keep their salary offers in line with those which have been nationally agreed. I am grateful to my noble friend Lord Walton for his very able introduction of this clutch of amendments.

I was hoping to show that my amendment might provide a means of achieving some reconciliation between the profession and the Secretary of State. All through the run-up to this debate there has been an innuendo that the inevitable consequence of developments in trust hospitals must be a tiering of the quality of service as between the trust and the other hospitals. I have not been susceptible to that argument. It has always seemed to me that the quality of hospital care in any place depends on the people there, and at certain stages of their careers consultants are more up to date and more lively than at others. I imagine there is an infinite graduation of the standard of care in any hospital with the passage of time, and also between hospitals.

My area of concern has been illuminated very well by my noble friend Lord Walton. In the days when I was a schoolboy, if you wanted a second opinion in Warwickshire you probably went on a train to Harley Street. One of the great triumphs of the development of the National Health Service, from the days of Nye Bevan onwards, has been that gradually over the intervening 40-odd years since it was started the quality of care has been brought up on the periphery, so that, as was indicated, regional hospitals can have standards of care as good as one would find in the teaching hospitals.

I want to make it clear that that is the ethos that one finds in the medical profession, in the medical schools, in the nursing profession and among dentists generally. It is still possible to say to any young person completing his or her training, "I can assure you that in terms of your contribution to the people of this country it does not matter where you work: it is the quality of work that you perform which is going to make its mark".

I want slightly to extend the argument about the salaries settled upon by the review bodies. Incidentally, let me at this point assure the Minister that on those review bodies are just the kind of people I would expect to find, as we all would, among those serving on the administrative bodies of the trust hospitals.

The noble Lord, Lord Carr, has asked me to apologise because he cannot be here. He was in the Cabinet in 1971 which set up the Doctors and Dentists Review Body. On that body and also on the body concerned with the midwives, nursing and ancillary professions and the health visitors review body there are people from the large accounting companies and people who are great captains of industry—the admirals of industry one might almost say—as well as experts in industrial relations, insurance and pay scales generally.

I am intrigued—I hope the noble Baroness will not mind if I pull the Government's leg over this—that these people were deliberately set up to report to the Prime Minister. I hope that the Prime Minister does not mind that there is now a risk that that direct link will be bruised if the trust hospital administrators take advantage of their new-found authority.

At one time or another during their careers 60 per cent. of consultants will receive merit or distinction awards in addition to their basic salary. They are most carefully monitored; they are the beginning of the idea of professional audit. I was chairman of such a committee for East Anglia. Each year I and the committee went through the names of all the consultants in all the specialties in East Anglia. We looked at their track records and decided whether to recommend them for an augmentation of their salaries.

I wish to point out that in doing so we were anxious to try to equilibrate the proportion of every specialty as regards the consultants who were receiving distinction awards. Up and down the country as a whole —including Scotland, Wales and Northern Ireland—persistent efforts are made by those concerned to ensure that across the country there is an equality of reward for merit and distinction. Many of us in the profession are worried about that —it is hardly spoken about —and for that reason I wish to make what I hope is a helpful suggestion. People are worried by the fact that perhaps the trust hospital authorities will disturb the careful and smooth distribution of our best and most able graduates throughout the country.

I have already told the Committee that I qualified at Johns Hopkins University in America. The dreadful thing about the American scene—and I say so without offending my American doctor friends because they all recognise it to be true—is the maldistribution of specialisms and high quality care. There are fewer than 100 citizens on Manhattan Island per specialist doctor. We have 3,000 people per consultant spread evenly across the country.

I do not wish to drive the point too hard but I do not know that many doctors in this country wish to have said of them what is said about the medical profession in New York whenever one asks a New York taxi driver what he thinks about the doctors. We shall be assured that that will not happen if all doctors in the NHS—and let us remember that the trusts are in the NHS—have the same basic salary scale.

I do not wish to inhibit trust hospitals helping the people who work for them in any other way. I may be wrong but my experience shows that NHS hospitals cannot hold trusts for research. If there are trusts for research in ordinary, that is district, hospitals they must be held outside the hospitals' accounting systems. Throughout the development of the Bill I assumed that, like the old board of governor hospitals, the trust hospitals would be able to have trusts under their authority. That was one of the ways in which the great board of governor hospitals were able to conduct such a wide-ranging research programme. When they were drawn in under the NHS the able men in the teaching hospitals passed those trust funds over to their medical school as a way of ensuring that the rules were not broken. I imagine that when the trust hospitals come back—I do not worry about them because I had a happy time at Guy's as a board of governor hospital—it is almost certain that they will be in a position to raise money for their research and different activities. In that way the trust hospitals will be able to ensure that their able people receive the kind of help and remuneration that they want.

I was about to suggest—and I do not mean it entirely in jest—that there are various ways in which the Secretary of State and the department can bring help and reward to its staff. As regards the NHS consultants, one way might be by helping them with resources for their private patients. I can imagine that perhaps medical beds are being used during the summer and might be made available to ear, nose and throat or ophthalmic surgeons. Under those arrangements some private patients may obtain pay beds. As regards the teachers in trust hospitals, nothing would make them happier than the prospect of the hospital giving them sabbatical leave. That is extremely difficult to obtain even under the university regulations. As regards the true academics and the research workers, research facilities could be given They attract the large number of applicants for posts in the old board of governor hospitals and still attract them to the main teaching centres.

I wished to end by indicating my keeness to achieve reconciliation. I hope that the Secretary of State will not consider it impossible that, rather than having Nobel prizes in the trust hospitals, they might have Kenneth Clarke prizes. If the individual wants it, this might be a new motor car; a more discerning person might want a valuable oil painting.

It seems to me—and this backs up everything said by my noble friend Lord Walton—that if we can possibly maintain a smooth and even distribution so that there is no feeling of jealousy between the peripheral hospitals and the district hospitals and the centres of excellence that are likely to arise and if we can avoid any jealousy over basic salaries, we shall breathe more easily about the future prospects for the health service. I beg to move.

9.15 p.m.

Baroness Hooper

We believe that the amendments proposed would compromise trusts' freedom to manage their own affairs and to determine the terms and conditions of service for all their employees, which we believe to be an important—not to say fundamental—part of the greater freedom that we are giving to trusts.

In this context it is important to remember that the introduction of contract-based funding will exert a powerful moderating influence on pay in National Health Service trusts. Trusts will compete with other National Health Service providers of services, both other trusts and directly managed hospitals, for contracts on the basis of quality and cost. So trusts which pay exorbitant salaries, whether to medical staff or others, are likely to price themselves out of work. Our intention is to give all units the greatest possible measure of freedom to operate to their maximum effectiveness. The contractual process will ensure that those freedoms are exercised so as to bring maximum benefits to patients.

Amendment No. 101A, to which the noble Lord, Lord Butterfield, spoke, is aimed at exempting clinical staff only from the general freedom that we intend for trusts. I have listened with interest to the reasons that have been set out for adopting that approach. I understand the concern that has been expressed that trusts might offer very high salaries to clinical staff and therefore affect the standard of services offered in other units by enticing staff to their employment. However, I do not believe that allowing trusts to determine their own terms and conditions will lead to that. After all we are gradually introducing pay flexibility in all parts of the NHS to ease recruitment problems and reward skills and performance, and I believe that the greater freedom which we are giving trusts in this respect will be used wisely by them to the ultimate benefit of patients. Furthermore those to whom this freedom will be given will already have demonstrated their capacity to make proper use of the whole range of freedoms which trust status confers.

I also believe that excluding clinical staff in that way from the general freedoms being given to trusts to set their own terms and conditions of service would be wrong in principle as well as practice. It has often been said that teamwork is at the heart of medical practice and leads to the high standards of care on which we pride ourselves in this country. This proposal could be inimical to the continuation of such teamwork in trusts and would lead to claims of double standards in relation to pay arrangements. Furthermore, it would seem perverse for clinical staff, however defined, to be unable to benefit from any improved terms and conditions of service which a trust might wish to make available to its staff. I understand the points being made about the need for a common approach to setting terms and conditions of service for clinical staff on a national basis, but I believe that it is much more important for there to be a common approach to setting the terms and conditions for all staff working in a trust.

I should like to reassure the noble Lord, Lord Butterfield, on one or two of the points that he raised. With regard to merit awards, I can assure the Committee that the staff of National Health Service trusts will remain eligible for distinction awards administered by the advisory council in the same way as at present. There is a specific power of direction in the Bill to ensure that that happens.

I believe that the noble Lord also suggested that National Health Service trusts cannot hold money on trust.

Lord Butterfield

My point is that I believe that trust hospitals will be able to hold trusts and that the district non-trust hospitals will not be able to do so. That is something that we need to see resolved because it will tell us whether it is worth while going into a trust hospital to try to raise money for the various things that one may want to do there. That, I believe, is inherent in the notion of a trust hospital. As I understand it from my experience in East Anglia, if one is in a district hospital one is unable to hold any trust moneys in the hospital's own budget and one has to operate from outside. That means that one is setting up sub-divisions of all the charitable organisations that are being run centrally by excellent organisations in London.

Baroness Hooper

I must have misheard the noble Lord previously. I was about to reassure him of what he already knows: that National Health Service trusts can hold money on trust.

Lord Peston

I believe that I am right in saying that a National Health Service trust of the kind which the noble Baroness is about to introduce in the Bill is not a trust in a legal sense. It therefore cannot hold money on trust. The point is completely wrong. Many of the great teaching hospitals have trustees who have such "free" money. If they wish for research funds the NHS trust hospitals will have to set up similar trusts. One is using the word "trust" in a quite different sense. We ought to get the point right. I do not fully understand it, but I believe that what I have said is right.

Baroness Hooper

I agree that the term "National Health Service trust" does not mean "trust" in the legally defined sense. Nevertheless when I say that National Health Service "trusts" can hold money on trust, it would obviously involve setting up a special trust fund. There is no doubt about that. They are empowered to do so by Clauses 11 and 32 of the Bill. I hope that we are all relatively clear on that point.

It has been suggested that the technical effect of Amendment No. 101A might be totally to prevent trusts from employing doctors. I regret to tell the noble Lord, Lord Butterfield, that the amendment could be interpreted as going further than merely restricting their power to set pay and conditions at any level.

I should also like to deal with the point raised by the noble Lord, Lord Walton, with reference to the mobility of junior doctors. We made it clear in the publication SelfGoverning Hospitals an Initial Guide that regional health authorities will be responsible for determining the arrangements for rotational training programmes, which, like all training posts, will continue to require educational approval by the royal colleges. I hope that the noble Lord, Lord Walton, will accept that the establishment of trusts will not affect the current arrangements for providing this rotational training. I hope that that goes some way to reassure him.

On the specific amendment, two amendments would also give trusts limited flexibility to move away from nationally agreed terms and conditions of service for their staff although as a minimum both would require the trusts to meet the nationally agreed terms and conditions. I am confident that trusts will use their greater freedom in that area wisely and carefully. They will be committed to delivering a high quality of patient care and will wish to recruit and retain the right quality and mix of staff to achieve that. If their terms and conditions of service are perceived to be inadequate, they will have difficulty in so doing. However, we do not believe that trusts should be tied statutorily to providing terms and conditions of service no less favourable than those agreed nationally. Rather they should have the flexibility to determine their terms and conditions in the light of their own circumstances.

Similarly I do not accept that trusts should be able to deviate from nationally agreed terms and conditions of service only by paying local allowances. Apart from the more general arguments that I have set out, such an approach would prevent trusts from offering non-financial benefits such as improved leave arrangements to help recruit and retain staff.

Amendment No. 101AZA falls within that grouping. It is perhaps the most basic in the whole group of amendments because it requires trusts to employ all their staff on nationally agreed terms and conditions of service. To do that would take away completely the very important freedom which we think is part of the raison d'étre of the creation of trusts and is one of their most distinguishing features. It would lock them into the rigidities of national bargaining and stifle their ability to provide the best deal for their staff in response to their local circumstances.

I trust that I have said enough to convince the Members of the Committee who have proposed these amendments to withdraw them.

Lord Ennals

Before the noble Lord who proposed the amendment replies, perhaps I may say that I found the Minister's reply very disturbing. It seems to me that if this new freedom is given for self governing hospitals to determine their own pay and conditions of service for medical staff without reference to national agreements, that is the way towards a two-tier service.

What is achieved by this flexibility—and the Minister spoke about the quality and conditions of service—is that if you get the best people, someone else will get the worst people. If you pay more, you get what you pay for. None of us knows how many of these trusts there will be. However, surely we shall find that the great NHS trusts with all this additional freedom will pull in the best people. What will then happen to the other hospitals? What is to happen to the rest of the health service? Is that not an absolute recipe for a two-tier service, which is what many of us have feared for a long time?

Furthermore, is it not going to be extremely expensive? Self-governing hospitals will need large and experienced personnel departments to deal with local negotiations and disputes. Let us not imagine that there will be no disputes to be settled. These days most can be settled at a national level. Local representatives of staff groups will find that negotiations will mean a considerable time commitment, and that is money—it always is. Those arrangements must be duplicated in every hospital where national agreements have been abandoned.

I found almost every word that the Minister said so cheerfully in giving freedom to this one group of trust hospitals utterly depressing for the rest of the health service. I am saddened by the whole tone of the Minister's response.

Baroness Hooper

At the outset I made it quite clear that National Health Service trusts will be competing with other National Health Service units in gaining contracts. If they price themselves out of the market they will not obtain the contracts necessary for their wellbeing.

In answer to the noble Lord's question as to what will happen to the other hospitals, in seeing the competition from National Health Service trusts, they will raise their standards in order to win the contracts themselves.

Lord Ennals

Does the Minister think that they will be able to do that if the best of the medical and nursing staff have been sucked into the trust hospitals? Will they be able to compete effectively for contracts with the trust hospitals? My fear is that they will not.

Baroness Hooper

We believe that, given the increased freedom and ability to manage their own resource, they will become more efficient and be in a better position to compete.

Lord Walton of Detchant

On many occasions in the course of our debates in Committee in relation to this Bill I have been greatly reassured by the answers which we have received from the Minister. However, I regret to say that on this occasion I cannot feel reassured. It is difficult to underestimate the strength of feeling in the medical, nursing and allied professions over the single issue of nationally agreed salary scales for staff in the NHS whether or not they serve in hospitals, under district health authorities or in self-governing trusts in the future.

The problems relate not only to the concerns which I and the noble Lord, Lord Butterfield, expressed, but also to the position of the review bodies for doctors, dentists and nurses and the problem of the university interface—the clinical university staff working alongside NHS staff. Hence, with the utmost and greatest reluctance at this late hour on a Thursday, I find it difficult to take any other course of action than to test the opinion of the Committee.

9.30 p.m.

On Question, Whether the said amendment (No. 101ZD) shall be agreed to?

Their Lordships divided: Contents, 17; Not-Contents, 36.

Butterfield, L. Richardson, L.
Carmichael of Kelvingrove, L. Robson of Kiddington, B.
Russell, E.
Carter, L. [Teller.] Saltoun of Abernethy, Ly.
Ennals, L. Stoddart of Swindon, L.
Hatch of Lusby, L, Thomson of Monifieth, L.
Houghton of Sowerby. L. Tordoff, L.
Hunter of Newington, L. Walton of Detchant, L. [Teller.]
Hylton, L.
Peston, L.
Arran, E. Hives, L.
Balfour, E. Hooper, B.
Belstead, L. Kimball, L.
Blatch, B. Long, V.
Brabazon of Tara, L. Lyell, L.
Brougham and Vaux, L. McColl of Dulwich, L.
Caithness, E. Mills, V.
Caldecote, V. Monk Bretton, L.
Carnegy of Lour, B. Morris, L.
Carnock, L. Mottistone, L.
Cork and Orrery, E. Murton of Lindisfarne, L.
Craigmyle, L. Reay, L.
Cross, V. Sanderson of Bowden, L.
Davidson, V. [Teller.] Strathclyde, L.
Denham, L. [Teller.] Strathmore of Kinghorne, E.
Glenarthur, L. Torrington, V.
Henley, L. Trefgarne, L.
Hesketh, L. Ullswater, V.

Resolved in the negative, and amendment disagreed to accordingly.

9.37 p.m.

[Amendment No. 101AB had been withdrawn from the Marshalled List.]

[Amendments Nos. 101A to 101AA not moved.]

[Amendment No. 101AC had been withdrawn from the Marshalled List.]

[Amendments Nos. 101AD to 101ADC not moved.]

Schedule 2, as amended, agreed to.

Clause 6 [Transfer of staff to NHS trusts]:

[Amendments Nos. 101AE to 101AF not moved.]

Clause 6 agreed to.

Clause 7 agreed to.

Clause 8 [Transfer of property, rights and liabilities to NHS trust]:

Baroness Blatch moved Amendment No. 101 AG: Page 9, line 6, leave out from ("section") to end of line 7.

The noble Baroness said: This amendment need not detain us for long. The purpose is to delete two clauses of the Bill which would exempt NHS trusts from paying stamp duty on transfers of property. I beg to move.

On Question, amendment agreed to.

Baroness Blatch moved Amendment No. 101AGA: Page 9, line 28, at end insert: ("( ) In the case of any transfer made by or pursuant to an order under this section, a certificate issued by the Secretary of State that any property specified in the certificate, or any such interest in or right over any such property as may be so specified, or any right or liability so specified, is vested in the NHS trust specified in the order shall be conclusive evidence of that fact for all purposes.").

The noble Baroness said: This is a technical amendment which seeks to ensure that all property which the Secretary of State transfers to NHS trusts is properly registered with the Land Registry on transfer. I beg to move.

On Question, amendment agreed to.

Clause 8, as amended, agreed to.

Clause 9 [Originating capital debt of and other financial provisions relating to NHS trusts]:

Lord Sanderson of Bowden moved Amendment No. 101AGB: Page 9, line 365, leave out from ("assets") to ("over") in line 36 and insert ("which, on or in connection with the establishment of the trust, are or are to be transferred to it (whether before, on or after its operational date)").

The noble Lord said: In moving this amendment, I shall speak to Amendments Nos. 101AGC, 101AM and 101AN. This group of amendments simply makes it clear that the originating capital debt to a National Health Service trust takes account of the value of any assets transferred to the trust irrespective of whether the transfer takes place under an order under the new Section 12B(1) for Scotland or Clause 8(1) for England and Wales and irrespective of whether the transfer takes place before, on or after the operational date of the trust. I beg to move.

On Question, amendment agreed to.

Lord Sanderson of Bowden moved Amendment No. 101AGC: Page 9, line 37, leave out from ("liabilities") to end of line and insert ("which are or are to be so transferred").

The noble Lord said: I beg to move.

Lord Hylton

Public dividend capital is mentioned at the bottom of page 9 of the Bill. Is that a device for extracting dividends from some super-efficient hospital; or, on the other hand, is it a way of avoiding paying loan interest on debt which might possibly be attributed to it?

Lord Sanderson of Bowden

That question has obviously been uppermost in the mind of the noble Lord for some time and I am glad that he has come to join us. I shall certainly seek to have this matter checked as quickly as possible; but so far as I am aware the whole object of the exercise here is that the amendment makes it clear that the originating capital debt of the National Health Service trust takes account of the value of the assets. Looking at the rate of interest of 6 per cent. which is available for National Health Service hospitals, it is unlikely that a National Health Service trust will go for a higher rate of interest.

I shall look very closely at what the noble Lord has said about dividends. I suspect that I shall have to write to him very urgently. I shall seek advice on what to say.

Lord Ennals

One must get a Treasury view on this issue.

On Question, amendment agreed to.

Clause 9, as amended, agreed to.

Clauses 10 and 11 agreed to.

Schedule 3 agreed to.

Clause 30 [National Health Service trusts]:

[Amendments Nos. 101AH to 101AK not moved.]

Baroness Blatch moved Amendment No. 101AL: Page 34, line 50, leave out from ("section") to end of line 52.

On Question, amendment agreed to.

Lord Sanderson of Bowden moved Amendment No. 101AM: Page 35, line 37, leave out from ("assets") to ("over") in line 38 and insert ("which, on or in connection with the establishment of the trust, are or are to be transferred to it (whether before, on or after its operational date)").

On Question, amendment agreed to.

Lord Sanderson of Bowden moved Amendment No. 101AN: Page 35, leave out line 39 and insert ("which are or are to be so transferred.").

On Question, amendment agreed to.

Clause 30, as amended, agreed to.

Clause 31 agreed to.

Clause 32 [Trust property of NHS trusts]:

Lord Sanderson of Bowden moved Amendment No. 101AP: Page 37, line 15, at end insert: ("(4) Trustees appointed by virtue of subsection (2) shall cause proper accounts to be kept of the capital, income and expenditure vested in, received by and expended by them; and shall cause such accounts to be audited and an abstract thereof to be published in such manner as the Secretary of State may approve.").

The noble Lord said: I should like to speak at the same time to Amendment No. 118D. This amendment specifies the arrangements for the keeping and auditing of accounts of the trustees responsible for the endowment property of NHS trusts. It parallels an amendment made at Report stage in another place to the equivalent English clause, which now appears as Clause 11(7) of the Bill. I beg to move.

Lord Peston

I do not wish to delay the Committee but the question of trusts arose a little earlier. I for one found it rather difficult. Would it be possible for the noble Lord to write to me and to other interested noble Lords clarifying the question of trust property, meaning trusts in the legal sense of NHS trusts? I should find it helpful to have that clarified. I do not seek to delay the Committee at the moment.

Lord Sanderson of Bowden

I shall be happy to do so and to explain in detail what the English amendments and the Scottish equivalents are.

On Question, amendment agreed to.

Clause 32, as amended, agreed to.

Schedule 6 [Schedules to be inserted after Schedule 7 to the National Health Service (Scotland) Act 1978]:

[Amendments Nos. 101B to 101E not moved.]

Lord Sanderson of Bowden moved Amendments Nos. 101EZA to 101EZC: Page 79, line 38, leave out ("provision") and insert ("transfer"). Page 79, line 39, leave out ("by it") and insert ("to the trust"). Page 80, line 5, at end insert: ("(3) If an order makes the provision referred to in sub-paragraph (1) above, the order may require a Health Board to discharge such liabilities of the NHS trust as —

  1. (a) may be incurred during the period referred to in that sub-paragraph; and
  2. (b) are of a description specified in the order.").

The noble Lord said: These amendments have already been spoken to. I beg to move.

On Question, amendments agreed to.

[Amendments Nos. 101EA to 101J not moved.]

[Amendment No. 101K had been withdrawn from the Marshalled List.]

[Amendment No. 101KA not moved.]

[Amendment No. 101L had been withdrawn from the Marshalled List.]

[Amendments Nos. 101M to 101Q not moved.] Schedule 6, as amended, agreed to.

Baroness Blatch

I beg to move that the House do now resume.

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

House resumed.