HL Deb 03 July 1997 vol 581 cc306-16

3.38 p.m.

Read a third time.

Clause 1 [Powers of NHS trusts to enter into agreements]

Lord Brightman moved the amendment: Page 1, line 26, leave out subsection (6) and insert— ("(6) The fact that an agreement made by a National Health Service trust has not been certified under this section does not affect its validity.").

The noble and learned Lord said: My Lords, this amendment worded in plain English is designed to replace the original, wholly obscure, wording of subsection (6) of Clause 1.

Subsection (6) was described by my noble and learned friend Lord Simon of Glaisdale as "incomprehensible". The noble Lord, Lord Hooson, a Queen's Counsel of many years' standing, as your Lordships will know, told your Lordships that he could not understand it. Happily, the problem is now behind us, thanks to the helpfulness of the noble Baroness the Minister. I should like to express my grateful thanks to her and also to parliamentary counsel for drafting the amendment.

The amendment reads: The fact that an agreement made by a National Health Service trust has not been certified under this section does not affect its validity".

With your Lordships' approval, I should like just to add a word for the future. I came to this Bill at the Committee stage with one main purpose: to plead that subsection (6) should be written in plain English. It read: Nothing in this section affects the validity of any agreement made by a National Health Service trust if the agreement—

  1. (a) has not been certified under this section; but
  2. (b) would have been an externally financed development agreement for the purposes of this section if it had been so certified".

I tendered three alternative versions of subsection (6) for the consideration of the Government. I was supported in my crusade for plain English by my noble and learned friend Lord Simon of Glaisdale, who, at Report stage, spoke these memorable words: We have simply no right to legislate in a manner that is incomprehensible to the people to whom the legislation is addressed … It is extremely important because the legislation is a vital part of the process whereby democratic society frames rules … If the rules are incomprehensible, then the process of democratic legislation has broken down".—[Official Report, 26/6/97; col. 1649]

The same sentiment was expressed by the noble Lord, Lord Renton, when he said, we have a duty to make our laws easily understood",—[col. 1649.] and added that we should be vigilant in performing that duty.

I should like to say to all parliamentary draftsmen, with the greatest respect to their profession, please draft our Bills in plain English. I beg to move.

Lord Simon of Glaisdale

My Lords, I am very disappointed that the noble Baroness did not add her name to this amendment. It was obvious from her speech in Committee that her brief on Report would end with the word "reject". I encouraged her to follow the example of the noble Earl, Lord Ferrers, when he was faced with that situation. He solemnly read out the negative brief and finally, in obedience to common sense, accepted the amendment. The noble Baroness could not go quite that far, but she did depart from what I surmised was at the end of her brief to say that she would consider the matter. I am sorry that the consideration has not led to support for the amendment of my noble and learned friend.

It was obvious from the reply of the noble Baroness at Report stage that parliamentary counsel and other advisers had a point. Naturally they want to close every possible loophole. But the point was an extremely subtle, remote and exiguous one. It is the sort of case where a Minister is fully entitled to override the advice that is tendered. I am extremely sorry that we are to foist on the ordinary people to whom this provision is addressed a farrago of incomprehensibility.

Lord Renton

My Lords, for the first time—and possibly for the last time—perhaps I can come to the rescue of the noble Baroness. She may have decided not to add her name to the amendment so that the credit for it could go to the noble and learned Lord, Lord Brightman.

Baroness Anelay of St. Johns

My Lords, I thank the noble and learned Lord, Lord Brightman, for his courtesy in writing to me on this amendment as he did at the last stage in relation to the amendments he tabled then. There are some issues upon which all sides of your Lordships' House can unite. The need to frame legislation in plain English has proved to be just such an issue.

We on these Benches made it clear at every stage of the Bill that we welcome efforts to improve the clarity and intelligibility of the Bill, with two provisos: first, that the amendment should not undermine the policy intention behind Clause 1(6); and, secondly, that amendments which seek to achieve clarification should not unwittingly create the loopholes which give lawyers the opportunity to while away fruitful hours—fruitful to them, that is—arguing different constructions of a clause.

As the noble and learned Lord, Lord Brightman, said, this is the third time upon which he has sought to help this House by amending Clause 1(6) so that it has greater clarity and yet still preserves the policy intention which underlies it. At Report we on these Benches supported the amendment which the noble and learned Lord tabled at that stage. I argued that he had successfully overcome the objections which the Minister had raised previously at Committee stage to the amendment he tabled then. But, since Report, I have had the opportunity to read carefully in Hansard the reasons put forward by the Minister for rejecting the amendment. At col. 1653 she pointed out that the amendment in a sense required precognition of the Secretary of State's opinion. She said: The amendment sets out to identify the class of agreements to which subsection (6) is to apply by reference to the conditions in subsection (3) [and that] on close examination of the conditions, the exercise turns out to be very difficult, because it is necessary first to determine the attitude of the Secretary of State to the particular agreement. Paragraph (a) of subsection (3) requires that: 'in his [the Secretary of State's] opinion the purpose or main purpose of the agreement is the provision of facilities in connection with the discharge by the trust of any of its functions'".—[Official Report, 26/6/97; col. 1653]. I recognise that the Minister made a valid point on that occasion. The history of the discussions on the noble Lord's amendment has been one of the pursuit of that elusive creature—the simple but effective clause. I believe that the noble and learned Lord's persistence in pursuit of that elusive creature has brought him and thereby all of us in this House success in that the Minister has given assistance in this matter and shown that she is receptive to the amendment tabled today.

The amendment overcomes all the objections raised by the Minister at Report stage. However, I hope that in general terms this will not be the end of our concerns for the pursuit of plain English. Last week I made the mistake of referring to my aversion to the complexities of Latin syntax. I say a mistake because, after that Report stage, a wag on my own Benches presented me with his own version of a Latin quote which he expected me to translate and scan. With that in mind I would say today that I hope that our efforts to improve the clarity of this Bill will be seen as a terminus a quo rather than a terminus ad quem—I risk being followed up on that later.

At Report stage the noble and learned Lord, Lord Simon of Glaisdale, reminded us that we have no right, to legislate in a manner that is incomprehensible to the people to whom the legislation is addressed". and that it behoves us all, including parliamentary counsel, to show a little humility.

I appreciate the fact that the Minister was receptive at that stage to the advice of the noble and learned Lord, Lord Simon, and to the efforts of the noble and learned Lord, Lord Brightman, to improve the drafting of Clause 1(6). I hope that the Minister is able to confirm today that she can accept the amendment. We on these Benches support it.

3.45 p.m.

Lord Hooson

My Lords, from these Benches it is our hope and I am sure the hope of all noble Lords that the noble Lord, Lord Renton, from his chivalrous position on his white charger, will be proven to be correct; that is, that the noble Baroness did not put her name to the amendment because she wished to give credit for it to the noble and learned Lord, Lord Brightman.

Baroness Jay of Paddington

My Lords, I am sure that I speak on behalf of the whole House—I am tempted to say on behalf of all democrats or at least all legislators—when I say how grateful we are to the noble and learned Lord, Lord Brightman, for what he has done in the course of our animated discussions on this subject. I am grateful to all noble Lords who have taken part this afternoon in continuing this discussion, particularly the noble Lord, Lord Renton, for what the noble Lord, Lord Hooson, rightly described as his accurate chivalry.

Since we debated this matter at Report the noble and learned Lord, Lord Brightman, has been extremely courteous in discussing his concerns with me, the parliamentary draftsman and counsel and with officials from my department. The amendment before us today sets out in the most plain and simple language what is a relatively straightforward notion: that is, that an agreement which has not been certified is unaffected by the Bill; it is left to stand or fall on its own merits.

Of course, those are my words and not the words of the Bill or the amendment. As we discovered in the course of our discussions both in Committee and at Report, those words alone would not suffice because they are too imprecise and open to legal misunderstanding. That is the essence of the problem we have faced in trying, all of us, to improve the wording of the Bill; there is always a danger that we may sacrifice precision on the famous altar of simplicity.

However, today we have before us an amendment which strikes a satisfactory balance, meeting the objectives of precision but translating the words into a form which may be more readily understood by all concerned. Your Lordships will see at a glance that the wording could not he more straightforward or transparent. As such it has achieved one side of the balance: it is obviously simple. But is it precise? The answer, I am advised by all of my advisers, both legal and in terms of the officials drafting the original Bill, is that it is precise enough.

The only direct consequence of accepting the amendment is that Clause 1(6) will refer to all agreements entered into by trusts and not just those which have been EFDAs—externally financed development agreements—if they had been certified. The subsection now makes clear that no agreement by an NHS trust, not even those which are patently not PFI deals, is invalidated simply because it does not have a certificate. This enlargement of the coverage of subsection (6) does not materially affect the Bill in any way. It is a very small price to pay for the clarity it brings. Importantly, banks waiting to lend into the lending schemes have confirmed that they are content with the change and the British Bankers' Association has also signalled its agreement.

Given your Lordships' enthusiastic support for the noble and learned Lord's proposal to simplify the Bill and indeed to simplify legislation in general, and in recognition of the fact that we have now before us both clarity and precision, I invite your Lordships to agree that amended Clause 1(6) should stand part of the Bill.

On Question, amendment agreed to.

3.52 p.m.

Baroness Jay of Paddington

My Lords, I beg to move that the Bill do now pass. This is an important if rather simple piece of legislation. The National Health Service is very much in need of new hospitals and the private finance initiative offers in many cases the best ways of providing them, the way that we feel offers the best value for money.

However, the banks which are ready to lend into the leading schemes have been concerned that NHS trusts might not have the legal power to enter into private finance contracts. For that reason, they have been reluctant to sign on the dotted line, and this has left us until now with many potential schemes but not a single major hospital actually built. I am glad to be able to tell the House this afternoon that the passage of the Bill through your Lordships' House in conjunction with the review of the private finance initiative schemes conducted by my honourable friend the Minister for Health in another place has already borne fruit.

The Department of Health has announced today that 14 major acute schemes have been selected for development, representing almost £1.3 billion of new capital investment in the NHS. The contracts for the hospitals at Gravesham and at Norwich which we have all awaited for so long have now been signed. The details of the announcement and the prioritisation review are being placed in the Library in response to a Written Question. With your Lordships' permission, I shall outline the Answer to the House as I feel it is clearly appropriate to do so as the Bill will be passing from this House to another place, we hope this afternoon.

The review—that is the prioritisation review—was undertaken by officials and all schemes were graded according to three criteria: (i) their service need; (ii) status—how far and well negotiations have progressed; and (iii) "PFI-ability"—how well the scheme fits with the PFI process and hence its likelihood of delivering a successful outcome.

This process was both fair and open. Officials from the department shared with the trusts the criteria against which the projects were judged and their relative markings. My honourable friend Mr. Milburn, the Minister of Health in another place, and the Secretary of State for Health as far as the schemes in the Northern and Yorkshire region are concerned examined the gradings and the reasons why officials recommended schemes either to be included or excluded. They also received representations from many local bodies and from many Members of Parliament.

The 14 schemes which most successfully met the three criteria will be asked to continue with their PFI proposals, with the objective of reaching an early and acceptable financial close over the next 18 months. A complete table listing of all the scores, along with a note explaining the criteria, has been placed in the Library. Officials have been instructed to prepare programmes and milestones for every successful scheme. The schemes will be subject to the normal rigorous approval processes and any of the 14 schemes that subsequently fail to deliver on time or price will be cancelled.

Those schemes not selected will be asked to cease any further action on their contract. They should stand down their partners if they have selected one and cancel all tendering procedures.

Any trust or consortium whose scheme has not met the three criteria and which wishes to make representations to the Secretary of State should do so within the next 10 days. Otherwise such trusts should now take steps to stand down their partners or cancel the tendering procedure.

Those schemes not selected will be eligible for consideration as part of a national capital prioritisation scheme exercised by the NHS Executive's Capital Prioritisation Advisory Group. This group will review major acute schemes for health service need and will recommend those which should go forward either as part of the next tranche of PFI schemes which we plan to announce next spring or for funding from the public sector capital that is available.

The exercise did not consider the schemes affected by the London review, which is due to report in the autumn. These schemes are also listed in papers deposited in the Library.

The longer-term review of the PFI product and process will report its recommendations later this year. This will look to consolidate the improvements in the PFI begun with this new exercise.

As I said earlier, 14 schemes will go ahead immediately and two contracts have been signed. That was the object of the Bill before us. The Bill identified a specific issue—of blocking progress—which urgently needed resolving. It addresses that issue briefly, simply and effectively.

Moved, That the Bill do now pass.—(Baroness Jay of Paddington.)

Baroness Cumberlege

My Lords, I am aware that this is the first Bill the noble Baroness has taken through your Lordships' House as a Minister for Health. I congratulate her and thank her for her courtesy and her willingness to meet the improvements put forward with such skill and determination by the noble and learned Lord, Lord Brightman, throughout the course of the Bill. I hope that will become a pattern for the future. I should also like to thank my noble friends for their participation in the Bill, and particularly my noble friend Lady Anelay of St. Johns who has responded from our Front Bench.

I shall be brief because I know there is a long session before us today. But I cannot leave the Bill without making two points. The first concerns the definition of "clinical support services" about which there has been so much discussion. At Second Reading the Minister acknowledged that it was a "grey area". At Committee stage we were still in a fog, for the Minister told us that it was difficult to define those services in a way which was legally and professionally watertight. She described her discussions with officials as discussions which, more resembled linguistic philosophy seminars than drafting committees for a Bill".—[Official Report, 19/6/97; col. 1359.] She told us that every attempt she had made had met with objections. But government is not about intellectual aerobics; it is about ensuring that those affected by legislation have a clear and precise understanding of the law. This issue sadly leaves your Lordships' House still unresolved. That is a great pity. We should not pass on our Bills with so little clarity, with so much ambivalence and so many grey areas, especially when, as the noble Baroness knows, there is no need for it.

We gave her the solution at the very beginning. Indeed, when we initially drafted the Bill we had thought through all the implications—for of course, in essence, this is our Bill. But like borrowed clothes it does not quite fit this Government, for this Government are of a different shape; they have a different philosophy which cannot always be disguised by borrowed clothes.

Our solution was very simple. It was simply to trust the local people. Unlike the Government, we believe that they should be in charge of their destiny. They know locally what works best. They are grown-ups and do not need nannying and central bureaucratic direction.

The second issue that goes forward unresolved is the Government's review of PFI schemes. I feel sorry for the noble Baroness. She must take this legislation forward while there is a general review of PFI, a departmental review of PFI and, as the noble Baroness told us last Thursday, on top of a review of a review there is a third review taking place in London. The Minister was unable to tell us whether schemes in which private companies had invested huge sums and were being stopped mid-stream by the Government would receive compensation. Only this afternoon the Minister has informed us that out of 43 schemes 14 are to go ahead, with two that have been previously agreed. That leaves a large number of firms and companies disappointed. What is more, together they have invested millions which will prove to be abortive. The issue of compensation has not been addressed even this afternoon. That issue must be addressed. This bodes ill for the private/public partnership for the future. This matter must be speedily resolved if the Government are to maintain the private sector's confidence in PFI schemes and the NHS is to get its hospitals.

This is a simple, modest Bill, but despite the successful efforts of the noble and learned Lord, Lord Brightman—I again congratulate him on clarifying the wording—it goes forward with very ragged edges. I hope that it will return from the other place in better condition and that by then the Government will have decided what they want to do on these issues. We wait in anticipation.

Baroness Robson of Kiddington

My Lords, I am certain that all noble Lords hope that the passing of this Bill will be instrumental in getting at least some of the backlog of much needed hospital building off the ground. The Minister has just told us about the recent decisions on 14 schemes, two of which have been signed. I very much regret my inability to be present at the Committee stage of this Bill. I am grateful to my noble friend Lord Ezra for moving the amendment standing in my name.

I have the same concern about clinical services but looked at from a point of view different from that of the noble Baroness, Lady Cumberlege. In an amendment to subsection (5) we attempted to exclude clinical services from other services that might be provided by the private contractor. I regret that the Minister was unable to accept that, but I am grateful that she provided a definitive statement that at least pathology and radiology would be excluded. However, I should like to have that assurance on the face of the Bill because, however strong may be the present Government's commitment, it is no guarantee of the policies and actions of any future administration.

In his Budget Statement yesterday the Chancellor of the Exchequer announced that the Government had accepted Mr. Malcolm Bates's report in full and foreshadowed further legislation to implement the report. It is to be hoped that any further legislation that is introduced will provide us with further opportunities to clarify which services can be provided by private contractors. With those few words, I wish the PFI experiment—we must still look at it in those terms— success in the 14 schemes that have been approved.

Lord Donaldson of Lymington

My Lords, for a variety of reasons I was prevented from attending the House on the previous occasions when this Bill was considered. For this reason I hope that I may be permitted to say a few words in support of it. I do so with greater enthusiasm because it seeks to remove actual or perceived uncertainties in the law, which is one of the primary objectives of the Financial Law Panel of which I am chairman. It does so simply and neatly. It declares, bluntly, that NHS trusts have power to enter into externally financed development agreements. Although such agreements are not expressly defined, their nature is clear enough from Clause 1(3). So far so good.

The Bill then rightly recognises the difficulty with which a person providing the financial assistance may be faced in ascertaining whether the main purpose of the agreement or agreements is in fact and in law the provision of facilities in connection with the discharge by the trust of any of its functions. The Bill takes that head on. It meets the problem by providing a system of certification. If the agreement or agreements are certified by the Secretary of State to be externally financed, ipso facto they are agreements that an NHS trust is empowered to enter into. Furthermore, Clause 1(3) gives the Secretary of State a margin of appreciation. Although others may have doubts, within that margin of appreciation the view of the Secretary of State prevails. But—this is the problem—surprisingly the Bill fails to contemplate the possibility that the Secretary of State may have misdirected himself in law, or may have taken account of an irrelevant consideration, or that he may have ignored a relevant consideration.

What then? Probably no one will object, so the answer is that nothing will happen. But if someone does object, as indeed he may, the courts will have to consider whether the certificate should be set aside. It does not follow that if the Secretary of State has been mistaken in one respect or another the courts will set aside the certificate. They will have to take account of the public interest in deciding how their undoubted discretion should be exercised. But if the worst comes to the worst and the Secretary of State's certificate is set aside, it will be upon the basis that the agreement was not in fact or in law an externally financed agreement within the meaning of the Bill, or that there have been serious procedural irregularities. The likelihood is that it will be because the agreement is outwith the powers of the NHS trust and that the Secretary of State should never have certified it.

I do not suggest that this is a likely contingency but it is a possibility. Where does that leave the external financiers? It leaves them in a wholly unenviable position, and one to which in my view they should not be exposed bearing in mind that they will have relied on the validity of the Secretary of State's certificate.

My noble and learned friend Lord Brightman raised this issue at Committee stage by moving a somewhat complex amendment (col. 1366 of the Official Report of 19th June). The amendment was taken from the terms of the Local Government (Contracts) Bill. I understand fully his reasons for adopting that course, but the structure of that Bill is somewhat different from this.

The noble Baroness the Minister rejected it upon three grounds. First, she said that local authority contracts were bilateral whereas NHS contracts were multilateral. I am not entirely certain that that is correct but I am quite sure that it is immaterial. Secondly, she said that the amendment would validate an ultra vires contract, which I agree would be a quite unacceptable concept. However, it would do nothing of the sort. It would provide compensation for innocent third parties who were the victims of an invalid contract.

Thirdly, she said that the Bill was designed to remove uncertainty as to the validity of PFI contracts and it could not he seen to contemplate that there might still be some uncertainty; in other words, one should not frighten the horses. But the plain fact is that it is a very sophisticated bunch of horses that is well capable of evaluating the risk such as it may he. I do not doubt that that is a factor when the price structure is being formulated.

An objection based on not frightening the horses shows an ostrich-like mentality. Everyone involved is aware that Ministers are not infallible, even if on the basis of experience of the previous administration it can fairly be said that some Ministers were more fallible than others.

In my judgment, expressly contemplating that possibility cannot increase or create uncertainty. If the certificate is set aside and not reinstated upon further consideration, as could happen, it would not be right for the external providers to be left out in the cold. Nor would it be right that they should he in exactly the same position as though the agreement was performed. What would be right, fair and reasonable is that they should be compensated on exactly the basis on which they would have been compensated if at that moment the National Health Service trust had voluntarily repudiated the contract.

I welcome the Bill. It is a good Bill. I hope that it will he made a very much better Bill in the other place on the lines that I have suggested. It would be simple to draft a clause to give effect to my suggestion.

Baroness Jay of Paddington

My Lords, I am grateful to noble Lords who have taken part in this brief debate, in particular to the noble Baroness, Lady Cumberlege, for her kind personal remarks. In the interests of time—I know the pressures on the timetable of your Lordships' House today—and following the successful comments of the noble and learned Lord, Lord Brightman, about simplicity, which we have all taken so much to heart, perhaps I may make two brief points in response.

The first relates to clinical services. I hope that the noble Baroness, Lady Cumberlege, will be reassured that I am aware of the difference between intellectual discussion and legislation when I say that I am sure she will remember that on Report we accepted that there were particular issues about specific clinical support services which should be specifically excluded from the Bill. The noble Baroness, Lady Robson, mentioned them in her contribution. They were pathology and radiology. The rest will be identified in a clear and specific list before the new PFI agreements are undertaken.

As has been mentioned several times, this is a simple Bill with a simple objective. It has been demonstrated today that it has done what it is intended to do. Two new hospital agreements to build have already been signed and the others are in the process of reaching financial conclusion. I commend the Bill to your Lordships.

On Question, Bill passed, and sent to the Commons.