Lords Sitting of 18 March 1999

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by Lord Bishop of Norwich.): The LORD CHANCELLOR on the Woolsack.
The Marquess of Cholmondeley—Took the Oath.

Scotland: Unemployment Statistics
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish asked Her Majesty's Government:
What was the total number of unemployed people in Scotland in February; and how this compares with the numbers in January 1999 and February 1998.
The Minister of State, Scottish Office (Lord Macdonald of Tradeston): My Lords, the total number of people unemployed, on the Government's preferred measure of ILO unemployment, is not available on a monthly basis. However, the total number of people claiming unemployment related benefits in Scotland in February 1999 was 136, 100. That is 300 higher than in January 1999, but 4, 100 lower than in February 1998.
Lord Mackay of Ardbrecknish: My Lords, first, perhaps I may welcome the noble Lord to his first outing at Starred Questions. I commiserate with him on having to reply to a Question on Scottish unemployment, which has risen pretty consistently since he was invited to take the poisoned chalice of the industry job at the Scottish Office. On the preferred ILO count, does the noble Lord agree that over the year for which the latest figures are available the number of unemployed in Scotland has increased by 12, 000 and now stands at 7.5 per cent? There are job losses in Scotland day after day, to such an extent that the Labour supporting Daily Record recently ran the headline:
"Scotland the Grave—Union warning to Labour as job losses reach crisis point".
When will the Government take responsibility for the policies that are bringing this about?
Lord Macdonald of Tradeston: My Lords, the signals from the latest unemployment figures for Scotland are mixed. Certainly, the ILO count was up. However, the ILO count in Scotland is unadjusted. The sample allows a range in the present circumstances between 169, 000 and 202, 000. Therefore, while the figure has risen to 7.5 per cent. on the ILO count, I am delighted to say that that is 4.1 per cent. below the unemployment rate for London.
In the year following the 1998 count employers in Scotland have reported the creation of 32, 000 extra jobs. That is not based on a random sample. There is an increase of more than 2, 200 job vacancies on the total for the same time last year.
Lord Campbell of Croy: My Lords, does the noble Lord agree that unemployment in Scotland will worsen
822
considerably if the trade dispute with the United States involving cashmere woollen goods is not settled quickly, and that it will affect northern Scotland, where there is also a textile industry, as well as the Borders?
Lord Macdonald of Tradeston: My Lords, I agree with the sentiments expressed by the noble Lord. He will be pleased to hear that the Secretary of State for Scotland is presently in the United States and that he met the President yesterday. I am sure that at every opportunity he is pressing the case of the textile industry, and in particular that of the producers of cashmere.
Lord Harris of Haringey: My Lords, is my noble friend aware that there are 26 parliamentary constituencies in London with unemployment levels higher than in any parliamentary constituency in Scotland? Does my noble friend therefore agree that the time has now come to think again about the Barnett formula for distributing public expenditure?
Lord Macdonald of Tradeston: My Lords, the formula that is presently used is based on need. It can be reassessed in discussion with the Scottish executive in the future. It is important to bear in mind that, while Scotland faces a tough year, especially in relation to employment in the oil and gas industries which represent over 100, 000 employees in Scotland, we fight back from the strongest base. The claimant count of 5.5 per cent. has remained steady for six months. That is the lowest rate for 22 years. I can say with some pleasure that the unemployment rate among young people is the lowest for a generation.
Lord Barnett: My Lords, my noble friend referred to something which I did not know was a formula 20 years ago when I invented it. Will he recognise that if, as he said, the formula is based on needs, there is a case for changing the formula—keeping the name of course, but calling it a Mark II?
Lord Macdonald of Tradeston: My Lords, if that judgment were left to the people of Scotland, I am sure that in appreciation of what my noble friend has done for them over the years they would preserve the name for posterity. I am certain that the formula will be under review in the years to come. That will be a matter for the Government and the new executive in Scotland.
Lord Monro of Langholm: My Lords, the generally accepted figure in the media for the increase in unemployment is around 7 per cent. That is before the impact on the textile industry that was mentioned by my noble friend. Have the Government undertaken an evaluation of the increase in unemployment as a result of the swingeing increase in fuel duty as it affects road haulage and industry generally?
Lord Macdonald of Tradeston: My Lords, by increasing fuel duty we have continued the policies of the previous government. We take very seriously our concerns about the environment, which I am sure are

823
shared by the whole House. We believe that the policies that we are pursuing will create jobs in Scotland. Considerable public spending will go into health and education and other social areas. We estimate that 30, 000 new jobs will be created in areas such as childcare, classroom assistance, and in the construction industry if our radical plans for the transfer of housing stock are implemented. We believe that tens of thousands of new jobs will be created simply as a result of government investment in public services.
Lord Hogg of Cumbernauld: My Lords, does my noble friend agree that there is a great deal of public confidence in the policies that are being pursued by Her Majesty's Government in Scotland? That is instanced by an opinion poll published in today's Scotsman indicating that the Labour Party has increased its lead in Scotland over its opponents by 14 per cent. and that the Conservative Party does not appear to have benefited at all. Does my noble friend agree that the policies offered by the Scottish National Party whereby working people in Scotland would pay more tax for doing the same work as those in England and Wales are nonsense?
Lord Macdonald of Tradeston: My Lords, I readily agree with my noble friend. We should be aware that 224, 000 sole proprietors and partnerships in Scotland would be affected were the Scottish nationalist measures on tax ever put into effect. It would be very damaging for employment in Scotland. It would be damaging for inward investment to Scotland, where we have an unmatched record in the United Kingdom. It would allow the Welsh Development Agency and the nascent regional development agencies of England to try to persuade inward investors that Scotland was a uniquely high-tax enclave, and that is certainly something that the Government would not welcome.

Scottish Parliament: Ceremonial Arrangements
3.11 p. m.
Lord Napier and Ettrick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I declare an interest as a descendant of one of the most ancient noble families in Scotland.
The Question was as follows:
To ask Her Majesty"s Government what arrangements have been made for the ceremonial, and for the attendance of the Peerage of Scotland, at the opening of the new Scottish Parliament by the Sovereign on Thursday, 1st July 1999.
Lord Macdonald of Tradeston: My Lords, arrangements for 1st July are being developed by the Opening Ceremony Working Group, which includes representatives from a range of interested organisations. Details of the plans for the day will be announced shortly.
Lord Napier and Ettrick: My Lords, I thank the Minister for that chink of light. Does he agree with me
824
that when this event occurs it will be the most momentous thing to have happened in Scotland since the last sovereign Scottish Parliament adjourned on 1st May 1707? Is it not of paramount importance that nobody should rubbish our history and traditions if we are to maintain this Kingdom united?
Lord Macdonald of Tradeston: My Lords, the opening ceremony for the Scottish Parliament will be a ceremony appropriate for a modern parliament, while fully recognising Scottish traditions. It will be a dignified ceremony appropriate to the occasion. Careful planning and consultation are in hand for the ceremony, including continuing discussions between the Scottish Office and Buckingham Palace. However, no final decisions have been taken. The events of the day will be full of colour and pageantry and will be an opportunity to celebrate the establishment of the new Parliament. I hope no noble Lords in the House today are related to any of those Lords denounced by Robert Burns as a parcel of rogues for voting in favour of the Union!
Lord Steel of Aikwood: My Lords, is the Minister aware that at least seven Members of your Lordships' House will be either hoping or expecting to be in attendance on the Sovereign at that occasion because they are standing for election to the Parliament? Is he aware that in some cases the expectation is greater than the hope and in others the hope is greater than the expectation? Does he accept that, whatever advance work is being done, no one can determine what the arrangements will be until the Parliament has met on 12th May and made its own decisions as to what will happen at the official opening on 1st July?
Lord Macdonald of Tradeston: My Lords, I am sure that the noble Lord is correct. As I said, discussions are in progress through the Opening Ceremony Working Group. Representatives on that body include representatives of the Palace, the military, the police, Edinburgh council, the consultative steering group, which has been influential in preparing for the new Parliament, and other interested bodies. I look forward to seeing a number of noble Lords in the Scottish Parliament. I am sorry that I am not standing myself, but I wish them well.
The Countess of Mar: My Lords, does the noble Lord accept that, as the holder of the most ancient peerage in the United Kingdom—which coincidentally happens to be a Scottish peerage—despite the length of my lineage, my mind is not cast in stone, going back to 1114?
Lord Macdonald of Tradeston: My Lords, I am delighted to hear that. I look forward to seeing as many noble Lords at the ceremony as can be accommodated, but we should be aware that the public space in the assembly hall in Edinburgh is restricted to fewer than

825
500 seats. We believe that, with full consultation, we shall be able to achieve the appropriate balance at the opening ceremony.
Baroness Carnegy of Lour: My Lords, I am not an hereditary Peer, of course. Can the noble Lord tell the House whether the Peerage of Scotland is one of the interested bodies which the working group is consulting?
Lord Macdonald of Tradeston: My Lords, we are currently considering who should be invited to the opening ceremony. Clearly many groups and individuals will have a claim.
Baroness Carnegy of Lour: My Lords, if the noble Lord will forgive me, I asked whether the Peerage of Scotland was one of the interested bodies that the working group was now consulting.
Lord Macdonald of Tradeston: My Lords, in answer to the noble Baroness, I was going on to say that many groups and individuals with a claim will be invited. The Scottish Peers will be considered, along with the other groups. Although not everyone will be able to attend the ceremony, we expect to see many people in Edinburgh and across Scotland.
Lord Mackay of Ardbrecknish: My Lords, I congratulate the noble Lord on his baptismal outing in the past 15 minutes. Perhaps I may ask him when I may expect my invitation as a Peer who is not standing for election to the Scottish Parliament.
Does the noble Lord agree that it is important that we combine a modern parliament with some degree of pageantry and colour to show that this is a serious and historic event? Will he assure me that, whatever decisions are taken by the working group and transmitted to Her Majesty, it will be made clear, especially to the press, that Her Majesty will be attending at the request of the Parliament?
Lord Macdonald of Tradeston: My Lords, I can assure the noble Lord that all these matters are being given full consideration. We believe that the noble Lord's concerns for the historic organisation of the day will be fully met. The challenge is to balance the traditional elements with a forward-looking modern event that befits a new parliament and a new millennium. I stress that detailed plans are being finalised to try to achieve that; there is still opportunity to influence the outcome.
The Earl of Kintore: My Lords, I declare an interest as a Scottish Peer. Are the Government aware that the current Sword of State was deliberately broken for concealment purposes and, although now repaired, is still rather fragile? To celebrate the return of a parliament to Scotland, will the Government take the opportunity to commission a new sword from craftsmen living in Scotland?
Lord Macdonald of Tradeston: My Lords, I am sure that the noble Lord's suggestion will be taken into
826
consideration by the Opening Ceremony Working Group. The sword looks fragile but rather splendid in its historical setting, which I think we owe to Sir Walter Scott for rediscovering it after the centuries during which it was lost.

Tobacco Smuggling
3.19 p. m.
Lord Jacobs Lord Jacobs asked Her Majesty"s Government:
In view of the success of Customs and Excise in detecting the illegal importation of hard drugs, what new measures are being taken to prevent the loss of £1 billion per year from tobacco smuggling.
Lord McIntosh of Haringey: My Lords, the Comprehensive Spending Review of July 1998 allocated Customs £35 million to tackle evasion of alcohol and tobacco duties, and this has enabled them to employ over 100 extra front line staff who will be operationally effective from 1st April. The Paymaster General announced after the Budget an independent evaluation of the strategy and measures deployed to tackle excise duty fraud and evasion and in particular the growing threat of tobacco smuggling.
Lord Jacobs: My Lords, I thank the noble Lord for his reply. Does he agree that HM Customs and Excise have been exceedingly successful in detecting hard drugs coming into this country where a packet the size of a packet of cigarettes may have a street value of several thousand pounds? Can he therefore explain why Customs and Excise have had difficulty in detecting what must be a convoy of 40-tonne trucks coming into this country loaded with tobacco?
Lord McIntosh of Haringey: My Lords, I do not believe it is true that Customs and Excise have been notably unsuccessful. The seizures in 1997–98 were valued at £76 million compared with only £29 million in the preceding year. One of the problems has always been that, for example, the illegal freight import of tobacco is not so easily susceptible to detection by sniffer dogs, although some have been trained for that purpose, and we do not yet have in place extra equipment at all ports to enable us to identify freight loads.
Lord Higgins: My Lords, should not Customs and Excise be congratulated on their actions in the detection of illegal drugs? But is it not the case that other European Union governments take a more schizophrenic attitude to the taxation of tobacco than do we who give priority to health? That being so, can the noble Lord inform the House whether the list of unfavourable tax practices that is being examined by the Paymaster General includes the taxation of tobacco?
Lord McIntosh of Haringey: My Lords, I do not understand what the noble Lord means by "schizophrenic". Perhaps at a later time he will explain to me his use of that word. The list to which the noble

827
Lord refers contains possible examples of harmful tax competition. I do not believe that excise duties fall into that category.
Lord Gisborough: My Lords, will the noble Lord look into his history book? Mr. Pitt, the younger, reduced the tax on tea from 110 per cent. to 25 per cent., thereby ruining the smuggling trade and increasing the take by the Exchequer.
Lord McIntosh of Haringey: My Lords, I hope that the noble Lord is not inviting us to,
"Watch the wall, my darling, while the Gentlemen go by".
A significant element in the growth of smuggling is the big difference in duty between our tobacco taxes and those of other countries. But that is by no means the whole story. There are issues related to transportation costs and tobacco margins. It is also true that Italy and Spain have much lower tobacco duties, but they still have a very serious smuggling problem.
The Earl of Northesk: My Lords, is it not the case that persistent application of the escalator by successive Chancellors has meant that the annual revenue loss has risen from £560 million in 1996 to £1.5 billion in 1999? Does this not represent a triumph of ideology and political correctness over common sense?
Lord McIntosh of Haringey: My Lords, the noble Earl attacks the escalator policy. Presumably, he also applies that to fuel duties and calls that "ideology". First, it was begun by his own government and, secondly, the reason for the escalator policy on fuel duties is based on global warming and environmental protection. The escalator for tobacco is a public health issue. I do not believe that those are negligible considerations.
Lord Stoddart of Swindon: My Lords, does my noble friend agree that the law of diminishing returns appears to be operating in relation to the over-taxation (if I may put it that way) of tobacco? Does my noble friend also agree that that has an adverse effect on government health policy since the Government and the authorities are increasingly unable to determine whether tobacco smoking is increasing or decreasing?
Lord McIntosh of Haringey: My Lords, I simply do not agree with my noble friend that we have reached the point of diminishing returns. In purely financial terms the income from tobacco excise duty is very substantial. While I do not in any way condone smuggling or underestimate the cost to the Exchequer of that activity, nevertheless it is important for both public health and financial reasons that we should continue this policy.
The Earl of Onslow: My Lords, is it not true that the Government believe that if wages are taxed and social costs are imposed on wages on the Continent jobs will come to Great Britain? However, the Government then state that if they tax petrol and tobacco it will have only a beneficial cost. I am a simple fellow. Is it not
828
self-evident that if a whacking great tax is imposed on tobacco a person will bring a Ford transit van across the channel loaded to the axles with smoke-your-own and say that all of it is for his personal consumption even though that person does not smoke? One does not have to be other than a simple fellow like myself to understand it. Why cannot the Government understand that—or are they not simple? Perhaps they should be.
Lord McIntosh of Haringey: My Lords, the noble Earl is, as he knows, a very subtle fellow. I am astonished to find him arguing from the Conservative Benches in favour of tax harmonisation, as he appears to be.

EU Budget: Erroneous Expenditure
3.26 p. m.
The Earl of Clanwilliam The Earl of Clanwilliam asked Her Majesty's Government:
What is their current assessment of the level of fraud and corruption in the European Commission.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, the European Court of Auditors annual report presented to Parliament on 17th November 1998, which covered the financial year 1997, estimated that the amount of erroneous expenditure in the EU budget was around £2.8 billion. A small percentage of this sum was suspected fraud, the remainder down to irregularities concerning the payments made against the Community budget. The Committee of the Wise report catalogued a culture of complacency, lack of accountability and in some cases nepotism, which is unacceptable. The consequent resignation of the entire Commission presents an opportunity to make changes to the structure of the Commission and to ensure that the standards of management and public administration in the European institutions are as high as we expect them to be in the national governments of Europe.
The Earl of Clanwilliam: My Lords, I thank the noble Baroness for her excellent intimation that there is a need for a structural review of the operation of the Commission. How many of the 20 commissioners who presided over departments were adversely reported upon by the committee? Can the Minister assure the House that none of those commissioners will be supported for re-appointment by Her Majesty's Government? In addition, do the Government agree that the common agricultural policy is itself a major cause of fraud and corruption and that only a lasting solution and proper reform will lead to a considerable reduction in the budget of the CAP?
Baroness Symons of Vernham Dean: My Lords, the noble Earl raises a number of enormously important points. The report was critical of a number of Commissioners for different reasons. Commissioners Santer, Cresson and Marin were criticised for lax

829
management of expenditure programmes or departments under their control. It was also critical of Commissioners Cresson, Pinheiro and Wulf-Mathies for favouritism or irregularity in the making of appointments. It will be up to individual countries to decide what to do about re-nomination. The noble Earl is aware that my right honourable friend has made clear what the Government intend to do about the nomination of our own commissioners upon whom there is no taint. The noble Earl also referred to issues related to the common agricultural policy. These matters, together with other important issues related to the structural funds and financial matters of great interest to all of us, will be discussed at the meeting in Berlin on 24th and 25th March.
Lord Thomson of Monifieth: My Lords, I declare a somewhat ancient interest as one of Britain's first commissioners 25 years ago. Is the Minister aware that I find particularly painful the findings against the present members of the Commission of nepotism and administrative failure to manage their affairs? Is the noble Baroness aware that none of the commissioners was personally found guilty of either fraud or corruption? Is she also aware that I welcome the fact that she spread the net more widely about looking at the institutions of the Community? In declaring a more recent interest as a member of the Nolan committee, perhaps I may ask whether the Minister believes that there may be a strong case for a truly independent Nolan committee of the European Union to consider not only the European Commission but also the European Parliament and the Council of Ministers.
Baroness Symons of Vernham Dean: My Lords, the findings are very painful indeed. My right honourable friend described the report as damning. The noble Lord is quite right that none of the commissioners was found to be personally culpable of fraud or of having gained himself financially from those irregularities.
However, what the noble Lord says is absolutely right. It is no good simply identifying some individuals. We need to consider not only the systemic difficulties but also the ways in which those might be put right. I draw the noble Lord's attention to the fact that the committee of les Sages is due to report again in a few weeks' time to make some recommendations about reform. In the Statement repeated in your Lordships' House by my noble friend the Leader of the House earlier this week, my right honourable friend put forward a number of suggestions about the reforms on a wider basis which should be contemplated for the European institutions.
Lord Mishcon: My Lords, will the Minister be good enough to indicate to the House Her Majesty's Government's policy in regard to the payment of compensation for loss of office where Ministers or members of the Commission are involved who will not be reappointed but who are ultimately responsible therefore for the disgraceful level that has been announced?
Baroness Symons of Vernham Dean: My Lords, commissioners' terms and conditions are set down in
830
the statutes which govern their employment. The statutes contain generous provision for the end of service remunerations. I have details of those provisions. I do not think it is worth repeating them now. I can send them to the noble Lord if he finds that helpful. However, as the Prime Minister made clear in another place on 17th March, we believe that any commissioner who is found guilty of fraud or misconduct should not receive those remunerations. Indeed, the statute states that in the event of resignation as a result of gross misconduct— what it terms as a faute grave—the commissioner would not qualify.

Tax Credits Bill
Brought from the Commons; read a first time, and to be printed.

Health Bill [H.L.]
3.32 p. m.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hay man): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report. —(Baroness Hayman.)
On Question, Motion agreed to.
Earl Howe Earl Howe moved Amendment No. 47:
After Clause 18, insert the following new clause—
INDEPENDENT HOSPITALS
(". —

(1) The Secretary of State may by regulations—

(a) extend the duty in section 13, or

(b) extend the functions of the Commission for Health Improvement, or any of them, to any independent hospital.

(2) In this section "independent hospital" means premises—

(a) within the meaning of "hospital" given by section 128(1) of the 1977 Act;

(b) which are not a health service hospital within the meaning of the 1977 Act nor any other premises maintained or controlled by a government department or local authority or any other authority or body instituted by special Act of Parliament or incorporated by Royal Charter; and

(c) which are used or intended to be used for the provision of health care within the meaning of this section, but excludes—

(i) any premises used, or intended to be used solely or predominantly, for the reception of and the provision of nursing for persons suffering from any sickness, injury or infirmity;

(ii) any sanatorium provided at a school or educational establishment and used, or intended to be used, solely by persons in attendance at, or members of the staff of, that school or establishment or members of their families;

(iii) any first aid or treatment room provided at factory premises, at premises to which the Offices. Shops and Railways Premises Act 1963 applies or at a sports ground, showground or place of public entertainment:

(iv) any premises used, or intended to be used, wholly or mainly—

831

(a) by a medical practitioner for the purpose of consultations with his patients;

(b) by a dental practitioner or chiropodist for the purpose of treating his patients; or

(c) for the provision of occupational health facilities,

unless they are used or intended to be used for the provision of treatment by specially controlled techniques as defined in section 21 of the Registered Homes Act 1984 and any regulations made thereunder;

(v) any premises used, or intended to be used, wholly or mainly as a private dwelling; or

(vi) any other premises excepted from the definition of a "nursing home" for the purposes of section 21 of the Registered Homes Act 1984 by regulations made thereunder by the Secretary of State. ").

The noble Earl said: My Lords, this amendment is a reformulation of a number of separate amendments tabled in Committee, but in a less prescriptive form. Its purpose is to permit but not oblige the Secretary of State to extend both the duty of quality and the remit of the commission for health improvement to the independent sector.
In Committee the Minister made some helpful comments on the issue. She recognised that the regulation of the independent sector was an issue of importance which needed to be addressed. She confirmed that the Government were committed to consulting on it and suggested that the right time to look fully at the subject would be after the Select Committee in another place had reported. If I do not misrepresent her, she wanted to avoid a straightforward transposition of the structures and systems in the Bill on to the private sector without first listening to the views expressed from all quarters.
That for me is a position with which it would be hard to disagree. However, the concern which some of us had in Committee was that the Health Bill represents an ideal opportuniy—and probably the only legislative opportunity for some time—to make provision for regulating the private sector. If we do not take this opportunity, we could be kicking the issue into some very long grass.
My noble friend Lord Skelmersdale suggested the obvious way to get round the dilemma: to insert enabling powers into the Bill allowing the Government to apply as many of their clinical governance provisions as seemed to them appropriate to the independent sector at some point in the future. One of the remarks I hear on occasions is that the independent sector does not want to be regulated. If that were once true, it is true no longer. As I mentioned on the last occasion, the independent sector has already responded extremely positively to the Government's quality agenda on a voluntary basis. A lot of work has been done under the auspices of the private practice forum of the Academy of Royal Medical Colleges. There is, I believe, a real recognition in the sector that quality in the delivery of healthcare should apply across the board as a matter of principle in independent hospitals and the NHS; and that the regulatory framework supporting that should not be subject to any artificial barriers or boundaries.
There is, after all, a considerable day-to-day overlap between the two sectors. A high proportion of the doctors and consultants who work in the private sector also work for the NHS. Many NHS patients are treated in private hospitals. NHS hospitals treat private patients. In fact the extent to which the private sector now shoulders the burden of elective surgery across the country as a whole is not often appreciated. The estimate I have been given is about 15 per cent. of all waiting list type treatments. For some procedures such as hip and knee replacements and heart bypasses, the figure is probably nearer one in four. It is as important for patients to know how well doctors are performing in their private practice as anywhere else, and to know that the highest possible standards are being followed in private hospitals.
I know from personal experience of two excellent private hospitals, one brand new and one well established, which are struggling to achieve recognition, that private insurance groups require hospitals on their preferred lists to demonstrate certain standards. I believe that the amendment would help those hospitals to demonstrate such standards.
The other criticism is: "The NHS should not be regulating the private healthcare sector". That is a complete misreading of the proposal I am advancing. The Government are establishing two brand new bodies: the national institute for clinical excellence; and the commission for health improvement, at either end of a continuum of clinical guidance. At one end we shall have NICE producing guidance for doctors on the treatments that work and those that do not. In the middle we shall have local clinical governance arrangements in hospitals, GP practices, and so on. We shall have the professions and the colleges overseeing those arrangements. At the other end of the continuum we shall have the commission for health improvement in the role of inspector and auditor. It cannot make sense to exclude from that national framework a significant part of this country's healthcare providers.
Indeed, we need to remind ourselves that the Secretary of State has the duty to promote the health of the nation. That does not mean the health of only those who happen to be treated under the state system, but the health of everyone. It means that he has a responsibility for the totality of healthcare delivered in this country by whomever it is delivered. Anything less than that and the patient will be short-changed.
It is not my intention to force the Government to act now or to prescribe a set of clinical governance arrangements which do not fit. The amendment deliberately allows for flexibility. I believe that it is a sensible proposal; it is a proposal that is in the interests of patients and I commend it strongly to the House. I beg to move.
Lord Clement-Jones: My Lords, I rise to lend strong support to the amendment and I remind the House that it is the offspring of amendments tabled by both Opposition Front Benches in Committee and the ensuing debate.

833
In Committee, the Minister said that the Government intend to consult soon on the regulation of the independent or private acute healthcare sector. Regrettably, however, she gave no assurance that a duty of quality, identical to that proposed for the NHS, will be required for that sector. Nor did she address the point that considerable benefits would accrue from that sector being regulated by the same body, and largely in the same way, as the NHS. Some of the benefits of this approach have already been outlined by the noble Earl, Lord Howe.
They include consistent standards when NHS and private care are provided alongside each other in independent hospitals such as in medium-secure psychiatric units; and consistent standards of clinical governance nationwide so that consultants have no doubt as to the standards expected in all their practice. It makes no sense at all to exclude some 800, 000 treatments a year carried out in private hospitals and work done by more than 17, 000 doctors, most of whom also work in the NHS. Very few consultants practise only in the private sector.
The overwhelming majority of independent sector hospitals, in membership of the Independent Healthcare Association, actively support the need for such change, as do key leaders in the medical profession. Individual independent sector companies such as BUPA and PPP have gone clearly on the record in support.
The major players in the independent sector have already committed to a framework for the conduct of private medicine under the auspices of the Private Practice Forum of the Academy of Medical Royal Colleges. This framework matches the quality in clinical governance duties proposed to the NHS, but it now applies only on a voluntary basis. The Government should seize the opportunity that the amendment presents; to reserve the power to apply these duties to non-NHS providers of healthcare by regulation.
The amendment, as the noble Earl explained, has been revised in the light of the Minister's previous comments. It would allow the Secretary of State to delay using the powers until the Government have reflected on their own consultation and the deliberations of the Health Committee in the other place. The amendment is not prescriptive in any way. It does not, for instance, prevent separate registration requirements being instituted. It merely provides a framework for the extension of the duty of quality and the functions of the commission for health improvement.
The amendment clearly commands widespread support. Regrettably, the Secretary of State seems, if a recent article in the Independent is accurate, to have set his face against it. Forgetting, no doubt, that separate amendments in Committee stood in the name of both Opposition Front Benches, a "ministerial spokesman" is quoted as saying:
"The Tories are again pushing the agenda of the private health sector. We do think it needs regulating, but we don't think it's for the NHS to regulate private health care. The NHS would end up picking up the tab. We don't think it is right".
834
After all our discussions about charging by CHIMP, that final comment in particular seems very wide of the mark. But in general, the comment appears to have no concept of the benefits of common regulation for healthcare in this country.
The noble Baroness herself said in Committee that there is no intention of applying the commission to the private sector as regards providing care for private patients. So much for future consultation. Indeed, from reports in today's Times, it appears that the Secretary of State is planning to set up a separate inspectorate to regulate the independent sector. It appears that the Government have firmly made up their mind on purely ideological grounds.
In a recent column, the health correspondent of the Financial Times and the author of the definitive history of the welfare state, The Five Giants, Nicholas Timmins, writes:
"If the NHS wants a true picture of how well its doctors perform it needs the full picture, not just the NHS one".
He concludes:
"Mr. Dobson has the chance to become the first Secretary of State for Health, not just the NHS. He should take it".
This Secretary of State prides himself on his common sense image. This amendments makes common sense.
On these Benches, we have no particular axe to grind for private health. However, we believe that every patient should have the right to minimum standards of quality care and safety, irrespective of the: sector in which they are treated. I urge the noble Baroness to consider the amendment most carefully at a time when we have the legislative opportunity before us and to demonstrate the open-mindedness she has shown in many other parts of the Bill.
3.45 p. m.
Lord Skelmersdale: My Lords, it must be very rare for a Back Bencher in Committee to draw a bow to venture and land not one but two palpable hits on the senior spokesmen representing the two Opposition Front Benches. I am grateful to both of them for what they have said. They made a much better fist of it than I would have been able to do today.
It is absolutely vital that regulation and inspection of private hospitals and private practice is achieved by hook or by crook. From what the noble Baroness said in Committee, I know that she believes that too, but she wants to wait. I readily understand why she wants to wait, but I hope that that is not an argument for promoting the doctrine of unripe time. There is never a right time for these things, but she should grab the opportunity. After all, primary legislation is an uncertain vehicle as regards timing. That is why in Clause 47 and Schedule 3, which we shall debate later today, the Government are taking the opportunity to speed up the process of registration and so forth by—guess what—secondary legislation. That is exactly what my noble friend is asking for today.
Baroness Carnegy of Lour: My Lords, I believe that the resistance to including independent hospitals in the Bill is most revealing and rather distressing. We are told

835
a great deal about how the third way involves partnership between the private and public sectors and the resistance is clearly a means of doing something different for people who pay as opposed to those who do not. It will be very disappointing to the public who are at present watching new Labour very carefully.
However, the Minister is the first to know that the people who are keenest of all to keep an eye on the standards of care for patients are the nurses. My experience is that when any maltreatment, or possible maltreatment, is occurring in a hospital, or involving a doctor, where nurses are involved it is often the nurses who blow the whistle. They may do so in a number of ways, but they do. They are the people who are writing most clearly to noble Lords to inform them that the issue is important now and that we should not wait. They are saying that extremely clearly.
Amendment No. 77, which relates to Scotland, matches this amendment. The feeling about the issue is every bit as strong in Scotland as it is south of the Border. Because there is no CHIMP in Scotland, it is important to discuss the matter separately and we look forward to hearing what the noble Lord, Lord Macdonald, has to say about it.
I support the amendment most strongly not only because the nurses are so keen on it, and they know, but also because it is very odd to treat people who pay, or people who are in pay beds but paid for by the public, differently from the rest.
Baroness Masham of Ilton: My Lords, is it not a fact that it is common practice for some health authorities to use the independent sector to clear some of their waiting lists? Therefore, should not those patients have the same protection as any other patient treated in National Health Service hospitals?
Viscount Bridgeman: My Lords, I too rise to support the amendment. The noble Baroness, Lady Masham, has just made the point about the interdependence at all levels between the private and NHS sectors in the service. I speak as chairman designate of an independent charitable hospital. The independent sector is more regulated at present than the NHS. Nevertheless the sector very much welcomes the possibility of further accreditation. Most hospitals are already accredited under the King's Fund. This is an extension of that. It is a more public and transparent standard of which all patients can be assured so that, wherever they are treated, they will be treated to the same standards in all hospitals—private and national health.
Lord Patel: My Lords, not having been in your Lordships' House in Committee, I beg your Lordships' indulgence for speaking now. I have read the Hansard report of that debate and noted in particular the statement made by the Minister to which the noble Earl referred earlier.
There are many issues to be addressed in relation to the regulation of the independent sector. Not least of those is the registration and inspection to ensure that standards of service and practice are met and enforced.
836
There are other issues too and I shall refer in particular to those which mainly concern the medical profession. I believe that the public would expect that all doctors who provide care in the independent sector would have undergone the same level of training and assessment as those specialists who work in the NHS.
As has already been said, the vast majority of doctors who practise in the independent sector also hold consultant positions in the NHS. However, significant numbers do not. They should also be subject to the same regulatory processes, not only those of the General Medical Council but also of the other regulatory bodies, some of which have been mentioned; for example, the Royal Colleges. When I was chairman of the Academy of Medical Royal Colleges I was responsible for instituting the forum to which reference has been made. While it has had ongoing discussions, it has not resolved the issue.
In respect of the training of those who provide service in the independent sector, in my capacity as chairman of the specialist training authority I shall give evidence to the Select Committee.
There are other issues; for example, appropriate procedures relating to complaints and clinical governance. So yes, I agree with many of the things that have been said. We need regulation in the independent sector. I know that the independent sector would welcome a properly structured regulatory process established after consultation. I ask the Minister whether she will assure the House that an opportunity for the commission to have a potential role in the independent sector will not be missed if the amendment is not accepted at this stage.
Lord Walton of Detchant: My Lords, most of what has been said has covered the points that I wished to contribute to this short debate. Regulation of the independent sector is long overdue. Approximately 15 per cent. of the population of this country will now be covered by insurance for private medical care. I wholly agree that the majority of the doctors who work in the private sector and who give their services in private hospitals also hold consultant posts in the NHS; but there are some who do not.
When I was president of the General Medical Council, which is now more than 10 years ago, we had a number of serious concerns about small private institutions which were employing doctors who had not undergone a full programme of training in the NHS and who were not properly qualified to carry out in all respects the procedures which they were performing.
Some of those doctors came before the General Medical Council on disciplinary grounds. But it seemed to me that if there had been a proper statutory system of regulation to cover the whole of the independent sector, particularly those hospitals providing acute and specialist services, many of which give a quite outstanding quality of service to the community, problems of that nature would have been avoided.
Bearing in mind the report in The Times in which it was said that the Secretary of State proposes to regulate the private sector, would it not be best to have an

837
enabling clause in this Bill? When the Select Committee has reported and the Secretary of State has decided upon the kind of regulation that he wishes to recommend, would it not then be appropriate, under such an enabling clause, for those procedures to be introduced by regulation?
Lord Winston: My Lords, I hesitate to detain the House, given that I heard a rumour that there may be a Division, and I know that no one wants to miss his tea. However, I have one or two questions for the Minister on this issue.
I work in an area of medicine where there is a huge amount of private practice. In fact, it is the area in which there is probably more private practice than any other sector because, sadly, it is not funded by the National Health Service to the extent that it might be. Consequently, we see a significant number of patients who have been treated in an unregulated way.
Of course, with regard to in vitro fertilisation, there is a Human Fertilisation and Embryology Authority which does a good regulatory job. I say that with some reservations. But it cannot regulate the whole of reproductive medicine because it is not empowered to do so. Therefore, for example, if a patient goes to a free-standing in vitro fertilisation clinic in the private sector, she and her husband are likely to get in vitro fertilisation even if it is not the most suitable treatment for the couple. There may be alternative, more effective treatments. That pattern is extremely common in the private sector.
Of course, the standard of private medicine in this country is high. Indeed, it is. But unfortunately there are places where standards are poor. Therefore, I wish to support what the noble Lords, Lord Walton and Patel, said. It is extremely uneven. There are occasions when people who would not be employable in the NHS are practising privately and carrying out surgical procedures about which we should have considerable concern. I see on a regular basis a number of patients who I feel have been badly damaged by some of those procedures.
I do not know whether this Bill is the vehicle to use to introduce such legislation. However, is there not a place for better regulation of the private sector in general? What does she intend to do about that? In many areas in private medicine there is extremely poor audit of what goes on.
The second question is as to what is the exact status of private medicine in NHS hospitals. A large number of hospitals, including my own NHS trust, need and do excellent private practice. I am not quite certain whether or not those patients will be covered by the Bill. If we contract out to a private hospital, those patients would still be NHS patients. Therefore, although the Minister will answer the question. I believe that the answer to the noble Baroness, Lady Masham, is that they will be covered. Lastly, it is not only fertility services which are concerned. For example, plastic surgery falls into that area which is not funded by the NHS. Therefore, there is a certain advantage in achieving evenness in the private sector.
838
Another reason for regulation is the fact, as has been pointed out by the noble Lord, Lord Walton, that a large number of patients are privately insured, mainly by BUPA and PPP. Often it seems they arbitrarily decide whether or not they will fund patients at a particular hospital, often to the detriment of patients who come to an individual doctor.
I believe that those are very poor decisions by the insurance companies. If there were an audit of what those hospitals were doing, there would be a yardstick by which one could say that a particular private sector hospital was doing a good job. Perhaps that might be looked at in legislation, although I accept that the Government may not see this Bill as the right one in which to do that.
4 p. m.
Baroness McFarlane of Llandaff: My Lords, I rise to support the amendment, as many others have done. As far as concerns nurses, we are anxious that every patient should have the right to minimum standards of quality, care and safety, irrespective of the sector in which they are treated.
There is still a considerable amount of confusion regarding the Government's proposals on quality for the independent sector. Many important questions remain to be asked. We are still unclear, for instance, whether the duty of quality will apply to independent healthcare providers. Perhaps the Minister could give us an assurance on that. Her reply in Committee seemed to indicate that, but we were uncertain about the details of what she said. It is not clear whether the duty of quality will apply to the independent sector institutions.
We are also interested to have further clarification about how the commission will work to ensure that National Health Service-funded patients who receive their care in the independent sector will be guaranteed the same standards of care. We are conscious that the Government intend to consult on the future regulation of the independent healthcare sector. Without pre-empting the consultation, it would be good to have reassurances that the consultation will look at options for improving the regulation of independent healthcare and that deregulation is not on the agenda. Perhaps the Minister could give us information about the timescale for launching and completing that consultation.
As Amendment No. 47 stands, it seems that nursing homes would not be included. That gives me cause for concern. Perhaps we could have clarification about that as so many National Health Service patients are nursed in nursing homes.
Lord Harmsworth: My Lords, will the Minister, in her reply, help the House on the legal position of the Secretary of State in this matter? My memory is that the National Health Service Act 1946 makes no distinction between public and private sector health, but that the Secretary of State is responsible for the health, both physical and mental, of the people of England and Wales. Could the Minister tell the House how that fits

839
in to the amendment put forward by my noble friend Lord Howe, who raised this important legal point when he spoke?
Baroness Berners: My Lords, I also rise to support the Bill and the amendment tabled by the noble Earl, Lord Howe. I also agree with all the points put by other speakers. The general public needs to have confidence in the overall quality of both medical and nursing care throughout all sectors of health. I hope that the Government will feel able to put this amendment on the face of the Bill.
Baroness Hayman: My Lords, we have had an interesting follow up to the important debate that we had on these issues in Committee. Issues such as the regulation of the independent sector, whether the commission for health improvement has a role to play in the regulation and safeguarding of standards within that sector, and how we can ensure quality of services in the independent sector, which I fully accept are matters of responsibility, are all important.
I have no grave disagreement with the tenor of any of the contributions made in the debate today. The Government have made clear their recognition of the real concerns about the inadequacies of the existing regulatory structure. We should not pretend that there is no regulatory structure at all for the independent sector. It is regulated under the Registered Homes Act. It is a responsibility of health authorities and a responsibility of such authorities in regard to nursing homes—to take up the point made by the noble Baroness, Lady McFarlane—as well as to acute sector providers.
Much of this debate has been sparked off because we have a set of proposals before us for the regulation of the nursing homes sector. I suggest that the reason the noble Earl, Lord Howe's amendment does not extend to the nursing home sector is that he accepts, by implication, the need for a coherent and comprehensive look at registration, monitoring, inspection and sanctions in that sector, and I would argue that we need to do the same for the independent sector.
We need to ensure, and the Government have a duty to ensure, that independent healthcare services are appropriately regulated. We need to protect all members of the public. I take the point made in the debate that that includes private patients as well as patients in NHS hospitals. Perhaps I can clarify the position. It is important that patients who choose to use the independent sector are reassured that they receive services that are safe.
It is because of the concerns expressed about the various issues—the issues that the noble Lord, Lord Walton, raised, the issues about complaints procedures and the issues about whether the Registered Homes Act is too creaky a vehicle to do the job properly—that a Select Committee in another place is looking into those matters. Department of Health Ministers will give evidence to the committee after Easter. Officials have already done so.
840
As I have told the House, currently we are working on a consultation document to be issued shortly about regulation of the private sector in health. I want to assure the House that we do not take a minimalist view of regulation in this area. There are concerns that there has been too much framework and not enough flesh and bones in terms of the Registered Homes Act, and that we need to look carefully at standards of clinical care in that sector.
I also recognise the anxiety that the drive for quality in the NHS should have an effect in the private sector. I believe it will do so. The national institute for clinical excellence is not included within the Bill, but everything that it does will be publicly available. I recognise the desire—the noble Earl, Lord Howe, made this point— of the healthcare sector to improve standards and it will be able to access and take up the recommendations. The clinical governance guidance on quality in the NHS, published this week, is equally available. I am certain that those clinicians who work across the two sectors will bring their experience of clinical governance in the NHS into the private sector.
The strengthening of professional self-regulation under this Bill will apply to all professionals and will improve the protection of patients in the private sector as well as the NHS.
To those noble Lords who have said that we should act now and that in some way the Government are behaving less than responsibly in not doing so, perhaps I may say that it is my belief that the issues surrounding the improvement of regulation in the private healthcare sector justify a coherent approach and that the Government intend that such an approach will be the outcome of the consultation process on which we are about to embark.
The noble Lord, Lord Clement-Jones, somewhat chastised me for not giving assurances about the exact route that we intend to take or about exactly what model we shall adopt for the private sector. I suggest that I would equally be chastised if I pre-empted now the results of the consultation and of the Select Committee inquiry in another place about the right way forward. Equally, again, noble Lords should not assume that what is being done in the context of a managed health service for the NHS can be picked up wholesale, transposed into the private sector and give adequate protection across the whole range of issues.
It is clear that although we have responsibilities for patients receiving care in the private sector, their situation is different from that of NHS patients receiving care. The Government have a particular responsibility to NHS patients—I am talking about responsibilities under the 1977 Act—as a result of being a provider of national health services. The Government's responsibility to private patients and private establishments is as a regulator of the independent care sector. We must ensure that we have the appropriate mechanisms and systems for ensuring that standards in both are coherent, comprehensive and enforceable.
It is clear that a regulatory system for the independent healthcare sector would need to exercise three broad functions: a licensing or registration function, a

841
monitoring or inspection function, and an enforcement function. Those elements cannot be dealt with in isolation. An inspection might reveal unacceptable standards which call for sanctions. Those might relate to the continuation of registration. That is not an area in which the commission—if that was the body that found things wrong—would be able to take action. That is a serious concern. It is different in the National Health Service because the Secretary of State can take action either by direction or by removing the chairman of the institution concerned. The Secretary of State has direct responsibility.
If we are to put responsibilities on to the private sector, we have a responsibility for ensuring that there is an enforcement mechanism. It is salutary to take the example of the nursing home sector. The Government have proposed to establish regional commissions for care services, as set out in the White Paper, Modernising Social Services. That is an example of the range of functions needed in any statutory regulation system. The commissions will deal with a range of care services, including nursing homes.
Perhaps I may use nursing homes as an example of how the commissions will carry out their task. The commissions will have to register nursing homes, setting out specific conditions, criteria and standards that must be met before registration is given. That is, in effect, a licence to trade, and it will be unlawful for a nursing home to operate without having a registration with the commission for care standards. The commissions will also have to monitor and inspect nursing homes, both on a routine basis and in response to any concerns or allegations. The aim of those inspections will be to demonstrate that registration conditions and standards are continuing to be met. The commissions will also have to take enforcement action against a nursing home that is failing to meet the required standards. That would include serving improvement notices, prosecuting through the courts for specific offences and, if necessary, deregistering the nursing home, causing its closure.
The commissions for care standards will therefore have the power to control entry to the market and to take out of operation any providers that are not up to standard. Those statutory powers and procedures are essential to proper registration. Inspection—the role of the commission—is not the only or even the crucial part of the system when we are dealing with a commercial operation rather than with the NHS government-managed system.
However, the commission for health improvement, which we are setting up under this Bill, is not a regulator. We have not designed the commission and the duty of quality to fit that model. The commission monitors standards, but it does not have enforcement powers. That will be a matter for the NHS and, if necessary, the Secretary of State through directions under Clause 7. However, the Secretary of State's general ability to issue directions does not extend to the private sector, so under this amendment there is no way of enforcing the commission's recommendations.
842
I take the point raised by the noble Lord, Lord. Skelmersdale, and I understand that in this amendment noble Lords have tried to take on board the fact that this might not be the way forward. However, I believe that if we "pick and mix" the provisions for regulation and legislate now, we shall probably get it wrong and would have to relegislate in the future.
Perhaps I may give the noble Lord a couple of examples and I shall then give way to him. We are giving the commission powers to inspect but without any sanctions or powers of enforcement. We would have to consider an appeals mechanism if, for example, sanctions were involved. We have to recognise that that is designed to fit in with the NHS systems and that we need to design a system that fits what is in one way a market transaction. I quite understand that the service being bought is of crucial importance and that we must safeguard standards within it. That applies in this area more than to many other services. However, we are not talking about the same situation as in the NHS—
Lord Skelmersdale: My Lords, I am grateful to the Minister for giving way. I readily accept what she says, but she is not being asked to legislate now; she is being asked to put on the statute book what one might call a "delayed fuse timebomb", so that should the government of the day, at a particular time in the future, wish to activate it, they can. If they do not wish to activate it, it remains on the statute book and is not activated. It is as easy as that.
Baroness Hayman: My Lords, what I am saying is that, as legislators, we should not legislate at the wrong time and with something that might explode in our face. We should try to get it right.
Perhaps I may point out why I think that we might want to take a number of potential approaches to the regulation of the private sector. One suggested option is that the commission for care standards, which I have just described and which will deal with nursing homes, could be extended to cover registration, inspection and enforcement in the independent care sector. Another option might be to set up a parallel, completely separate body that focuses only on the more acute end of independent healthcare. Another option might be a registration body which contracts with another body to provide a monitoring or inspection function. I should acknowledge that, if that model were adopted, any regulator of independent healthcare might want to take advantage of the particular expertise of the commission of health improvement. There might be a certain synergy between the responsibilities of the regulator and the work of the commission in the NHS.
National Health Service patients in the private sector will be covered by the work of the commission. We will be saying to health authorities that in any contracts that they have with the private sector they must deal, first, with the quality standards and, secondly, not award contracts except with provision for inspection by the commission for health improvement. That is an interesting example of having to use the contract mechanism. Because one is dealing with the private and independent sector, cover cannot be automatic just

843
because NHS patients are being treated. In the same way, pay beds and private beds in NHS institutions will be covered by the commission and by clinical governance because, in all their activities, those institutions will be subject to the framework.
I am not ruling out the possibility that the commission might be given some responsibilities in the future. I am trying to explain to the House that there are a wide range of options that we might take forward. I understand that many people feel that the commission might pre-eminently have a role to play and I undertake to the House that we will consult specifically on this point in the consultation document that will be published. We hope that it will be published soon; we hope to be able to complete the consultation over the summer. There is therefore no question of kicking this into the long grass.
However, if we chose to go down that route, we would have to look at the relevant clauses of this Bill that we wanted to apply in some way to the independent sector. We would need to make available the appropriate legislative time at that point. But I understand the concerns expressed that regulation of the independent sector should not be allowed to fall down a crack between the current Bill and any future legislation to implement the proposals in the Government's White Paper Modernising Social Services. I offered some thoughts on this issue at Committee and I hope that what I can say today provides further reassurances that the Government believe this issue to be too important to let that happen.
Any legislative follow-up on the social services White Paper on the regulation of independent social healthcare would of course involve a fundamental revision of the Registered Homes Act 1984. That piece of legislation also governs the regulation of the independent acute sector. Noble Lords will understand that no Minister can give an absolute guarantee of the timing of legislation beyond that which is in the Queen's Speech. But it is our clear intention that any legislation we bring forward to implement our plans set out in the White Paper should be wide enough also to address the sorts of issues that we are discussing today. In that legislation we could make any appropriate consequential amendments to the Bill before us today.
I am absolutely clear in my view that we will not, somehow, miss the boat if we do not include provisions in the current Health Bill. However, it would be precipitate to adopt the amendment as it stands at the moment for two reasons. First, it is anticipating the result of a debate which is not one promised for some time in the future, but one that is ongoing and will come to clear conclusions. Secondly, if we go down this route, we put in place fragments of a system. The whole tenor of the debate this afternoon has been that we need a system that is coherent, comprehensible and enforceable and that it is worth waiting to get it right.
Earl Howe: My Lords, I am grateful to the Minister. Before I respond at any length, perhaps I can seek one point of clarification. Do I understand her to say that the Government are committed in principle to a common set of quality standards for
844
both the NHS and the independent sector? That sort of commitment would be important for both sectors to hear, if that is the general thrust of what she is saying. I do not mean to tie her down to any details, but commitment to a common set of quality standards for both is an important principle.
Baroness Hayman: My Lords, the noble Earl cannot expect me to commit the Government as to quality standards that private providers will offer people who are buying services from them. I cannot say whether the private sector will offer single rooms or wards of 20 beds. It is not my responsibility to do so.
On the broad issue of regulation of standards of quality within the private sector—perhaps going beyond the bricks and mortar issues to some of the skeletal issues that have been dealt with in the past—I cannot deliver the commitment required because I have no mechanism of enforcement and no mechanism for stopping people offering services for sale other than those which are safe and to standards which are safe. The noble Earl cannot expect me to take on responsibility for standards of quality across the board and in the wider sense within the private sector. It is a hard enough responsibility to take it on for the NHS.
Earl Howe: My Lords, the last part of the noble Baroness"s answer was singularly disappointing; it almost spoilt what she said before. I was not asking about the ability to enforce standards. As the House will recognise, this is an amendment which gives an enabling power only. My question related to standards as a whole, not whether patients should have a single room or bacon for breakfast. We are talking about the standards of medical and clinical care in general terms.
Baroness Hayman: My Lords, that is precisely my point. The noble Lord is talking very broadly of quality standards. I am saying that there is a whole range of quality standards and it would be absolutely wrong for me, at the Dispatch Box, to say now that the Government are taking on responsibility for that. We certainly take on responsibility, through professional bodies strengthening self-regulation, for the quality standards of the people who are working in those organisations. But the noble Earl cannot expect me to take complete responsibility for all of the standards delivered within the private sector. That is a different responsibility. As I was trying to point out earlier, the responsibility as regulator is different from the responsibility as provider.
Earl Howe: My Lords, again I find that answer disappointing. I was with the noble Baroness almost all the way in her main reply. I could see that what she was saying made a great deal of sense. But I am afraid the Government are in a bit of a bind. First, the noble Baroness has not really taken on board the point made not only by me, but by other noble Lords, that the Secretary of State has a duty to promote the health of the nation. That is a clear duty on him. To me that

845
implies that, if she promotes quality standards in the NHS, then, ipso facto, those quality standards should be good enough all round. That sort of commitment is one that I hoped to hear from her.
Baroness Hayman: My Lords, I give the commitment to promote the health of the nation across the board. Health promotion will be given to everybody in exactly the same way. I give the same commitment to any NHS patient to whom we are providing services, whether in the private or public sectors. However, I cannot take on responsibility for the services that private contractors provide to someone who contracts with them in the same way as I can for the services provided by the NHS.
Lord Walton of Detchant: My Lords, with the leave of the House, may I ask the Minister a question about the point that has been put very clearly by the noble Lord, Lord Howe? I am sorry, it has just been pointed out to me that I cannot do so.
Earl Howe: My Lords, I realise that I have asked the Minister to rise to her feet to respond quite a few times. I am grateful to her for what she has said. I apologise to the House in that I was out of order in that respect.
Nevertheless, I believe that the Government are in a bit of a bind over this for another reason. They are saying that the functions of the commission will extend to independent hospitals but only as far as the patients who are being treated there under the NHS. That seems to me to be an extraordinary position to take. It implies that what a private hospital does is of little concern, except when there happen to be NHS patients in it. That exemplifies the artificiality to me of the public/private divide about which I spoke earlier.
The Minister talked about taking the opportunity in future legislation to do this. I welcome what she said about taking an early opportunity to legislate, and I accept that the Government have a commitment to do so. But I wonder whether a future Bill covering social care is at all the right place in which to try to regulate the independent hospital sector. These hospitals have little or nothing to do with social care; indeed, they are sophisticated providers of healthcare delivering a huge range of acute and elective treatments. They are not long-stay institutions for the chronically sick and elderly. There does not seem to me to be a very good fit there.
We all look forward to reading the consultation document when it is issued and look forward to the results of that consultation. I do not want the Minister to pre-empt that exercise or, indeed, the findings of the Select Committee in another place. I agree with her in that it may not be appropriate to transpose the framework set out in the Bill in its entirety on to the private sector. That is why the amendment allows for a kind of mix and match approach if that is what the Secretary of State chooses to do.
The way to achieve coherent standards is, in my estimation, to make the duty of quality apply across the board. That is all that this amendment suggests. I recognise that the commission's remit would not
846
provide a complete range of enforcement functions but, in a sense, no one ever said that it would. It is part of a continuum of clinical governance which needs to be put in place. It is being put in place as regards the NHS, and I dare say that there will be other elements that need to be found that are appropriate to the private sector.
I am in difficulty over this issue. I recognise the strength of the points made by the Minister. When the noble Baroness was half way through her response I felt that I owed it to her to reflect further on what she had said because there were some extremely powerful points in it. However, I am somewhat dismayed and a little deterred by the latter part of her answer. Therefore, although I recognise that the Minister has gone to a great deal of trouble to respond to the concerns that have been raised this afternoon, I believe that this is an issue which would benefit from taking the view of the House.
4.33 p. m.
On Question, Whether the said amendment (No. 47) shall be agreed to?
Their Lordships divided: Contents, 161; Not-Contents, 113.

Division No. 1

CONTENTS

Aberdare, L.

Elliott of Morpeth, L.

Addington, L.

Elton, L.

Ailsa, M.

Ezra, L.

Alexander of Tunis, E.

Falkland, V.

Anelay of St. Johns, B.

Ferrers, E.

Annaly, L.

Foley, L.

Archer of Weston-Super-Mare, L.

Fookes, B.

Ashbourne, L.

Forbes, L.

Astor of Hever, L.

Gisborough, L.

Attlee, E.

Glanusk, L.

Beaumont of Whitley, L.

Glasgow, E.

Berners, B.

Glentoran, L.

Blackburn, Bp.

Goodhart, L.

Blaker, L.

Haig, E.

Blatch, B.

Halsbury, E.

Blyth, L.

Hamwee, B.

Boardman, L.

Hanningfield, L.

Brabazon of Tara, L.

Harding of Petherton, L

Bridgeman, V. [Teller.]

Harlech, L.

Broadbridge, L.

Harris of Greenwich, L.

Brougham and Vaux, L.

Henley, L. [Teller.]

Buckinghamshire, E.

Higgins, L.

Cadman, L.

Holderness, L.

Campbell of Alloway, L.

HolmPatrick, L.

Carlisle, E.

Hooper, B.

Carnegy of Lour, B.

Howe, E.

Charteris of Amisfield, L.

Hunt of Wirral, L.

Chesham, L.

Hylton-Foster, B.

Chilver, L.

Ilchester, E.

Chorley, L.

Inglewood, L.

Clement-Jones, L.

Jacobs, L.

Colwyn, L.

Kitchener, E.

Cranbome, V.

Knollys, V.

Cullen of Ashbourne, L.

Lamont of Lerwick, L.

Dacre of Glanton, L.

Lane of Horsell, L.

Davidson, V.

Lauderdale, E.

Dholakia, L.

Lindsey and Abingdon, E

Dixon-Smith, L.

Long, V.

Downshire, M.

Lucas of Chilworth, L.

Eames, L.

Ludford, B.

Ellenborough, L.

Luke, L.

Elles, B.

McConnell, L.

847

Macleod of Borve, B.

Renwick, L.

McNair, L.

Rodgers of Quarry Bank, L.

Maddock, B.

Rowallan, L.

Malmesbury, E.

Russell, E.

Mar and Kellie, E.

Ryder of Warsaw, B.

Marlesford, L.

St Davids, V.

Masham of Ilton, B.

St John of Fawsley, L.

Mersey, V.

Saltoun of Abernethy, Ly.

Methuen, L.

Sandberg, L.

Miller of Hendon, B.

Sharp of Guildford, B.

Milverton, L.

Shaw of Northstead, L.

Montgomery of Alamein, V.

Skelmersdale, L.

Mountevans, L.

Skidelsky, L.

Moyne, L.

Smith of Clifton, L.

Munster, E.

Soulsby of Swaffham Prior, L.

Murton of Lindisfarne, L.

Steel of Aikwood, L.

Napier and Ettrick, L.

Stockton, E.

Naseby, L.

Strathcarron, L,

Newall, L.

Strathclyde, L.

Newby, L.

Sudeley, L.

Northesk, E.

Swinfen, L.

Norton, L.

Taverne, L.

Onslow, E.

Teviot, L.

Oppenheim-Barnes, B.

Thomas of Gwydir, L.

Oxfuird, V.

Thomas of Walliswood, B.

Palmer, L.

Thurso, V.

Park of Monmouth, B.

Tope, L.

Pender, L.

Trefgame, L.

Pike, B.

Trenchard, V.

Plummer of St. Marylebone, L.

Trumpington, B.

Poole, L.

Vivian, L.

Rankeillour, L.

Wade of Chorlton, L.

Rawlings, B.

Westbury, L.

Razzall, L.

Wharton, B.

Reay, L.

Wilcox, B.

Redesdale, L.

Winchilsea and Nottingham, E.

Renton, L.

Wise, L.

Renton of Mount Harry, L.

Wynford, L.

Young, B.

NOT-CONTENTS

Acton, L.

Fitt, L.

Ahmed, L.

Gainsborough, E.

Allenby of Megiddo, V.

GladwinofClee, L.

Alli, L.

Gordon of Strathblane, L.

Amos, B.

Goudie, B.

Archer of Sandwell, L.

Gould of Potternewton, B.

Ashley of Stoke, L.

Graham of Edmonton, L.

Bach, L.

Grenfell, L.

Bassam of Brighton, L.

Hacking, L.

Berkeley, L.

Hanworth, V.

Blackstone, B.

Hardie, L.

Borrie, L.

Hardy of Wath. L.

Bragg, L.

Harris of Haringey, L.

Brooke of Alverthorpe, L.

Haskel, L.

Brookman, L.

Hayman, B.

Bruce of Donington, L.

Hilton of Eggardon, B.

Burlison, L,

Hollis of Heigham, B.

Carew, L.

Howie of Troon, L.

Carter, L. [Teller.]

Hoyle, L.

Christopher, L.

Hughes, L.

Clarke of Hampstead, L.

Hughes of Woodside, L.

Cocks of Hartcliffe, L.

Hunt of Kings Heath, L.

Crawley, B.

Irvine of Lairg, L. [Lord Chancellor.]

David, B.

Janner of Braunstone, L.

Davies of Oldham, L.

Desai, L.

Jay of Paddington, B. [Lord Privy Seal.]

Diamond, L.

Jeger, B.

Donoughue, L.

Jenkins of Putney, L.

Dubs, L.

Judd, L.

Eatwell, L.

Kennet, L.

Emerton, B.

Kintore, E.

Evans of Watford, L.

Laming, L.

Falconer of Thoroton, L.

Lawrence, L.

Farrington of Ribbleton, B.

848

Levy, L.

Randall of St. Budeaux, L.

Lockwood, B.

Rea, L.

Longford, E.

Richard, L.

Lovell-Davis, L.

Rogers of Riverside, L.

Macdonald of Tradeston, L.

Sainsbury of Turville, L.

McFarlane of Llandaff, B.

Shannon, E.

Mclntosh of Haringey, L. [Teller.]

Shore of Stepney, L.

Mackenzie of Framwellgate, L.

Simon, V.

Milner of Leeds, L.

Simon of Highbury, L.

Molloy, L.

Stallard, L.

Monkswell, L.

Strabolgi, L.

Montague of Oxford, L.

Symons of Vernham Dean, B.

Morris of Castle Morris, L.

Tenby, V.

Morris of Manchester, L.

Thornton, B.

Nicol, B.

Tomlinson, L.

O'Neill of Bengarve, B.

Turner of Camden, B.

Patel, L.

Uddin, B.

Pitkeathley, B.

Walton of Detchant L.

Plant of Highfield, L.

Warner, L.

Ponsonby of Shulbrede, L.

Weatherill, L.

Prys-Davies, L.

Wedderbum of Charlton, L.

Puttnam, L.

Whitty, L.

Ramsay of Cartvale, B.

Williams of Elvel, L.

Winston, L.

Resolved in the affirmative, and amendment agreed to accordingly.
4.44 p. m.
Clause 19 [Co-operation between NHS bodies]
[Amendments Nos. 48 and 49 not moved.]
Baroness Pitkeathley Baroness Pitkeathley moved Amendment No. 50:
After Clause 20, insert the following new clause—
HEALTH AUTHORITIES TO ASSIST WITH COMMUNITY CARE ASSESSMENTS
(". —

(1) Section 47 of the National Health Service and Community Care Act 1990 (assessment of needs for community care services) is amended as follows.

(2) In subsection (3), for the words "invite them to assist, to such extent as is reasonable in the circumstances, "there shall be inserted the words "request them to assist".

(3) After subsection (3) there is inserted—

"(3A) A Health Authority whose help is so requested shall comply with the request if it is compatible with its own statutory duties and obligations and does not unduly prejudice the discharge of any of its functions. "").
The noble Baroness said: My Lords, this amendment is a modified version of one that I put forward in Committee. It seeks to place a duty on a health authority to assist a local authority in carrying out a community care assessment if—that is an important if—the local authority requires such assistance, and if complying with such a request is compatible with the health authority's duties and does not unduly prejudice the health authority's functions. There is a similar provision for co-operation between agencies in the Children Act 1989.
Section 47 of the National Health Service and Community Care Act 1990 requires local authorities to invite health authorities to assist in the assessment of an individual's needs where it appears to a local authority that an individual has health needs. This amendment would require a health authority which has been asked to do this by a local authority, to assist in the assessment if providing such assistance would be in accordance with the health authority's functions. Thus the

849
amendment does not place a duty —I must emphasise this —on health authorities to be involved in every community care assessment. However, there will be cases where the assessment of a person's health needs will be an essential part of a local authority's community care assessment. For example, a person with learning disabilities and mental health problems may have complex needs and the assessment of such needs will require input from health professionals working with their colleagues in social services. I believe this measure would give government another mechanism by which they can ensure closer working between these two bodies. I know the Government are committed to that.
The amendment is necessary in my view because while Section 47 of the National Health Service and Community Care Act places a duty on local authorities to invite health authorities to assist in a community care assessment where they believe that a person has health needs, there is no corresponding duty on health authorities to assist, as they have been requested. Thus, if health authorities fail to assist in such assessments, there is no mechanism requiring them to do so. The section states that the local authority —that is usually social services —will, when making the assessment, take into account any services that are likely to be made available by the health authority. If the health authority refuses to co-operate —I accept that those occasions would be few —the local authority's ability to carry out an effective assessment will be undermined and as a result the user, and possibly the carer, will suffer.
Failure to provide a comprehensive, multi-disciplinary assessment can lead to a deterioration in the health of the individual. This amendment would therefore support the Government's aims in providing a more public health oriented agenda. This amendment has the support of the Local Government Association, the Association of Directors of Social Services, the Law Society, the Carers National Association, the Alzheimer's Disease Society and many others. Its aim is to underpin existing policy and guidance on community care. The expectation that health authorities will be involved in community care assessments where necessary has been made clear in a number of government documents relating to community care. I beg to move.
Baroness Thomas of Walliswood: My Lords, I rise briefly to support the noble Baroness, Lady Pitkeathley, in this new version of her former amendment. As she has just explained to us, she has removed one of the major objections to the original amendment which the noble Lord, Lord Hunt of Kings Heath, brought forward on the second day of the Committee stage. The sooner the health service in general is brought into the process of assessing a client's need —someone who is receiving social services help is called a client —the better.
If we are to go down the road foreseen by the report of the Royal Commission on long-term care the health service has to begin to understand that what it does at the earlier stages of the deterioration in, say, the health of an elderly person will have a great deal of bearing on the costs of that care if the elderly person becomes more disabled than might otherwise be the case. The earlier
850
the health service is brought into the care of elderly people the better it will be not only for the elderly person but for the health service. For that reason, I shall be extremely interested in what the Minister has to say in response to the amendment.
Lord Laming: My Lords, I also support the thrust of the amendment. I am sure that your Lordships will agree that in recent years many demands have been placed on local authorities to respond to the requests from health authorities to meet the needs of a wide range of patients, clients or users of services, however they are described. These requests have been not only to respond to need but to respond very speedily. That must be a two-way process. Local authorities and health authorities are separate corporate bodies and the amendment seems to go with the grain of the Government's commitment to a duty of partnership, which is to be welcomed. Good health care can be undermined by poor social care, but good social care can also be undermined by poor health care. In this context, "poor" generally means delay and failure to respond. I hope that the Minister will consider carefully the thrust of the amendment.
Baroness Masham of Ilton: My Lords, I heard on Radio 4 this morning that 3, 000 elderly people's beds have been closed. Rehabilitation beds are also being closed. Professor Millard said in his report that there was a Berlin wall between health and social service. There needs to be a smooth transition between hospital and home for seriously ill patients. It should always be the aim to get patients back to their own homes, but if they are elderly, frail or seriously disabled good quality care with adequate support in the community is vital. After anaesthetics, elderly people can become disorientated. They often take longer to get better than younger people and there is such pressure on hospitals that they are put out into the community rather too quickly. Health and social services should work together for the common good of patients; they should build common teams. But it is difficult. They have different budgets, different ways of working and even a different language.
There was an occasion when there was an argument between health and social services about who should wash a patient. It was decided that the upper end of the patient was the responsibility of social services and the bottom half of the patient was the responsibility of the health service. That is totally ridiculous. If there were co-operation with assessments there might be co-operation over care. I support the amendment.
Lord Hunt of Kings Heath: My Lords, we return to a very important issue which was raised by my noble friend at Committee stage. I have listened with great interest to the contributions of noble Lords who have spoken in the debate. I very much agree that the spirit of partnership that is required between the NHS and local government is essential to developing services in the way we wish and for avoiding some of the points and issues that the noble Baroness, Lady Masham, has brought to our attention. I do not think that there is anything between us when it comes to the need to tackle those issues. The question is how best to do it.

851
Since your Lordships discussed this matter in Committee we have given the issue further consideration. We have taken on board the concerns that were expressed that, where an individual is identified as requiring a health assessment during his community care assessment that assessment, in a minority of cases, is not taking place. That is a genuine concern which we believe has to be addressed.
We have already taken some action to deal with the problem. Last year the Social Services Inspectorate carried out a special study of multi-disciplinary assessments and we have now commissioned work to follow this up to develop a self-audit tool for authorities. We believe this will help authorities to address local problems in partnership at the local level.
I mentioned at the Committee stage that our Better Services for Vulnerable People initiative set out the requirement for health and local authorities to develop a framework for multi-disciplinary assessment. The first joint investment plans developed under this initiative will address the needs of older people. From April 2000 joint investment plans will cover the full range of client groups. We will issue guidance on the development of joint investment plans to help authorities work up their plans for services from April 2000. I am pleased to confirm that we will, in this guidance, require health and local authorities to set out how they will work together to ensure that all the assessment needs of individuals are met.
My noble friend will appreciate that we welcome the spirit of the amendment but we believe that it would not solve the problem which it seeks to address. These are local problems which require local solutions. We must ensure that local partners deal with the underlying causes of the problems. We will make sure that this happens through our work on the better services for vulnerable people initiative. We are committing ourselves to ensuring, through guidance, that health and local authorities work together to address these issues as they develop their joint investment plans for April 2000.
Finally, I wish to refer back to the point I raised in Committee that the Secretary of State has a power under Section 17 of the 1977 Act—inserted by Clause 7 of the Bill—to direct health authorities, NHS trusts and primary care trusts to provide services. Where NHS bodies have failed to act in partnership as required by the provisions in this clause of the Bill; where they have failed to follow guidance on developing joint investment plans; and where NHS bodies appear to be acting unreasonably in failing to provide an assessment when required to do so by a local authority, we will have no hesitation in using this power.
I hope that your Lordships will understand that therefore the right way to deal with this problem is to address its causes at ground level. I believe that I have set out today our commitment to a clear programme of work to deal with this problem. On that basis, I hope that my noble friend will consider withdrawing her amendment.
Baroness Pitkeathley: My Lords, I am most grateful to my noble friend both for his reply and for the extra
852
consideration he has given to this important amendment. I am grateful also for the support of other noble Lords from around the House. I thank him for his commitment to putting a requirement for this co-operation in the guidance which will be issued. I am confident that that, together with the willingness to work together with local authorities, will address this issue. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 21 [Plans for improving health etc.]:
Baroness Thomas of Walliswood Baroness Thomas of Walliswood moved Amendment No. 51:
Page 16, line 10, at end insert—
("( ) Health Authorities shall, before drawing up any plan under this section, consult key partners in the delivery of NHS healthcare and the promotion of health. ").
The noble Baroness said: My Lords, this amendment is very similar to Amendment No. 138 which was moved at the Committee stage. At that time the amendment was criticised by a number of noble Lords for what one might call its "shopping list" aspect. We withdrew it and said that we would think again. On the other hand, a number of noble Lords felt that it was a useful requirement to place on the face of the Bill; that is to say, that it would be desirable to require health authorities to consult "key partners" prior to drafting health improvement plans.
There have been objections to the expression "key partners" in the context of other amendments during the course of this Report stage. It is used in an attempt to describe in the most general of terms those bodies of all kinds which in any local circumstances should be regarded as the most important people to consult. It is very difficult to find a phrase that does that and so we have stayed with "key partners". As those key partners may not be exactly the same consultee organisations in every geographical area (or, for that matter, for every part of the health improvement plan), we believe that such a requirement should be on the face of the Bill.
The noble Lord, Lord Hunt of Kings Heath, in responding to my noble friend Lady Sharp, said, as many of us know from our own personal experience, that the health service has not been notable for the skill and depth of its consultation processes in the past. It is for that reason that we would like a general requirement of this kind on the face of the Bill, which is such an important Bill for the health service.
5 p. m.
Lord Hunt of Kings Heath: My Lords, again the noble Baroness has raised a very interesting point. I shall start by acknowledging what she said in repeating my words about the track record of the NHS in consultation in the past. One can look back— probably to 1974—to when governments of various shades issued instructions, circulars and guidance to the health service, which made it pretty clear that it needed to consult with all and sundry about any significant changes in services. Indeed, I go further and say that the health service can show that it consults with many organisations whenever it is faced with a difficult issue. The problem is that it has adopted a "tick box"

853
mentality. The general approach has often been first to decide what it wants to do, then consult and then make marginal changes.
We return to the point about health improvement programmes. I believe that they do not have any hope of succeeding in the way we want them to succeed unless they engage in real consultation and partnership with organisations and the local community. Noble Lords will realise that I very much take the message of the noble Baroness. We want to see not merely consultation but active engagement and participation by local stakeholders in the health improvement programme process and we want to see them as real partners with the health service.
Having said that, I am not convinced of the case forputting this provision on the face of the Bill. I acknowledge that the amendment before us avoids the dangers of shopping lists which we referred to in Committee, but it still leaves us with the problem of how key partners should be defined and by whom. There may be uncertainty about whether the definition of the clause is broad enough to cover all those we envisage being part of the process. Is it broad enough, for instance, to cover the recipients of health care, partners in the delivery of social care, partners in research and development, partners in education, training and in workforce planning?
We certainly know what we mean by way of partner involvement in the health improvement programme process. That is common ground between us. Let me stress again that we are committed to ensuring that this develops in practice. We are requiring that each health improvement programme includes a statement of who has been involved, how they have been involved and plans to develop the arrangements for the future. We shall expect NHS regional offices to pool that information on the first round. That will enable us to identify problems in development needs and ensure that they are addressed in future rounds.
We also have it in mind to pursue the theme of involvement in the research we mean to commission on implementation of the health improvement programme process to help identify and disseminate good practice. We have already challenged the health action zones to make good progress on widening and deepening local partnerships. We will be looking to draw early lessons about their experience. I believe that action of that sort will be more productive in securing full involvement of all the key players, including the appropriate consultation, than attempting to write a general requirement on the face of the Bill.
I would say to the noble Baroness, as we discussed in Committee, that Clause 21 includes a power of direction which we can use if we need to target particular issues of involvement. I believe that that combination of clear policy and intention, active monitoring, development and dissemination of good practice, backed by a power of direction which is available to us to target any
854
particular difficulty, offers a comprehensive package. On that basis, I ask the noble Baroness to withdraw her amendment.
Baroness Thomas of Walliswood: My Lords, I should like to thank the Minister for a very full and well directed answer. Anyone reading Hansard tomorrow (which after all is a record of intent) will be in no doubt as to what the Government have in mind for the consultation process. I was particularly interested in the ideas and dissemination of best practice. Experience in many other fields shows that that is one, of the best ways of getting a change of habit or culture. With that I am very happy to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hayman Baroness Hayman moved Amendment No. 52:
Page 17, line 21, leave out ('13") and insert ("13(4)").
On Question, amendment agreed to.
Clause 24 [Arrangements between NHS bodies and local authorities.]
Earl Howe Earl Howe moved Amendment No. 53:
Page 19, line 1, after ("the") insert ("social services departments of).
The noble Earl said: My Lords, one. of the creative features of this Bill, for which I give the Government full marks, is Clause 24, the provisions of which will allow the NHS and local authorities to work much more closely together than hitherto in areas where there is a commonality of interest. Joint working is, of course, nothing new either to the NHS or to local authorities, but the current legal barriers are such as to preclude the kinds of practical day-to-day arrangements that are conducive to maximum efficiency in the use of resources.
Clause 24 contains some important new powers which will allow the NHS to delegate functions to local authority departments and vice versa. They will allow for the provision of health and local authority services by a single managed provider, and they will allow for the pooling of money. Perhaps the obvious area where these arrangements will make a difference is that of delayed discharges from hospital, the causes of which, as noble Lords will be aware, are far from straightforward but can very often be traced to a lack of co-ordination between hospitals and social services. Greater flexibility in this sense is bound to pay dividends.
The amendment I have tabled is therefore for clarification. As Clause 24 is worded it would appear possible for the Secretary of State to allow for pooled budgetary arrangements between a health authority and a local authority if he feels that such a pooling of funds would assist in the delivery of health-related services. My first question to the Minister is exactly what that means. The functions of a local authority that are health related include practically all of its functions. Spending money on treating damp in the walls of a school classroom could be seen as health related. The same

855
might apply to free school milk, council house repairs, waste management, cleaner public transport, road maintenance—and the list goes on.
If NHS money is allowed to support the wider public health agenda, I should have real concerns about seeing a reduction in the money devoted to patient care. Can the Minister reassure me that the phrase, "health-related functions", in subsection (8) are those areas of local authority activity such as social services which are intimately bound up with patient services as delivered by the NHS?
My second concern relates to accountability. We are told that once money goes into a pool it ceases to possess a health or local authority identity. If that is so, how will it be possible to maintain proper accountability for the way in which health or local authority funds are used, and who will be the person accountable? My hope is that, despite health money losing its identity in the pool, the chief executive of the health authority will still be answerable for its use. It would not be satisfactory if the loss of the money's health identity were allowed to dilute or confuse the normal accountability mechanisms that ensure financial propriety. I beg to move.
Lord Rea: My Lords, when first reading the amendment I thought how restrictive it was. Having praised the purposes of Clause 24, the noble Earl has now included wording that restricts the provision to social services. I understand now that his purpose was simply to allow my noble friend the Minister to expand on how the clause will work, and I welcome that.
I take the noble Earl's point that every department run by a local authority could have a health-related aspect. However, there are particular areas in certain departments which could well be thought of as helping in the delivery of personal health services. I am thinking particularly of housing and education as front runners. But, as the noble Earl says, there are many other functions. I shall be extremely interested to hear how my noble friend will describe how the extent of the spread of NHS funds through local authorities will be managed.
Lord Laming: My Lords, many of the new unitary authorities have introduced structures which, although their social services functions are clear, are not all conducted in departments that are called social services departments. Many of the new unitary authorities have introduced structures where children's services are linked with education, and where adult services are linked with other functions such as housing, environmental health and the like.
5.15 p. m.
Lord Hunt of Kings Heath: My Lords, that was a helpful intervention.
I welcome the opportunity to debate this issue and to clarify some of the points that the noble Earl has raised. I also accept the positive comments he made about the need to oil the wheels of collaboration between health and local government. When one thinks of NHS/local
856
government relationships, one thinks first of social services. I have no doubt that that will continue to be of prime importance. However, there are areas in the services offered to the public by local authorities where they can have a real impact on health-related issues. The arrangements that the Government are putting in place will allow us to take advantage of that, albeit with the safeguards in place which I believe the noble Earl would support.
We have an ambitious agenda for the future of the health service. Underpinning that agenda is the need to tackle the root causes of ill health and to improve services from the point of view of users and carers by breaking down the barriers that exist between organisations. That must go wider than purely health and social services barriers. In order to achieve that, we wish to have the greatest degree of flexibility in the use of resources. We want local partners to be able to develop "joined-up" solutions to "joined-up" problems.
The Government are committed to breaking down barriers. I point to the work of the Social Exclusion Unit, the Better Government initiative and the proposals in Partnership in Action as evidence of our commitment. This amendment would tie our hands. We want to allow partnerships to develop between NHS bodies and local authorities as a whole. Failure to do so would mean the isolation of social services within local government. It would mean that the needs of some of our most vulnerable citizens would not be met in the most effective way. We want to allow education and housing to work in partnership with the NHS to meet the needs of vulnerable people.
If this amendment were to be accepted, local partners would not be able to put in place improved support for children with special educational needs as regards the provision of speech and language therapy in schools, or better co-ordination and sharing of responsibility for the provision of specialist aids and equipment which do not fit neatly into the responsibility of one agency, and pool budgets, for example, to cover home alterations such as for wheelchair accessibility or which would facilitate the discharge of people from hospital. Those are all areas where local partners have suggested that they would like to use the new flexibilities.
In the discussion document Partnership in Action, we have consulted on these flexibilities and asked specifically for views as to how they might be used between the NHS and corporate local government beyond social services. Of 171 organisations which responded to that consultation process, not one questioned the need to extend the flexibilities. Indeed, the majority were adamant that wider local government must have the opportunity to be involved. Health action zones, for example, have been keen to use the extended flexibilities and we believe that they will probably act as a test bed for some of the more innovative ideas.
In addition, the Department for Education and Employment conducted its own consultation exercise on the document, seeking views from local education authorities and others in the education field about whether and, if so, how education might be involved. Again, it found no one signalling that the wider use of

857
the flexibilities was undesirable or unnecessary. Overall, the strongest lobbies were to include education and housing. But there were also other suggestions involving areas such as transport, leisure and environmental health.
At this stage, it is not possible to second-guess how the flexibilities might be used in all cases. It is for authorities locally to come up with ideas within the framework that is set. However, we must be sure that we do not deny them the opportunity.
These and other ideas need to be worked out in detail. They would need to comply with the regulations laid down by the Secretary of State. The point of that is that the regulations would enable us to ensure that the necessary consideration has been given to how the flexibilities will operate and to the outcomes that they are intended to achieve.
We recognise that, in the early days, health and social services will lead the way in using the new flexibilities. Clearly, social services is the area where the majority of partnership working with the NHS has been developing and where the pressure for the flexibilities has originated. We want to learn the lessons from this experience. That will be invaluable in generating ideas and building up the wider partnership.
If we were to limit the scope of the provisions that are now before us by accepting the amendment, we should still be able to dismantle the barriers that exist between the NHS and social services, but in a sense it would leave remaining barriers between the other areas of local government. That would be unfortunate.
The noble Earl asked about accountability arrangements. I refer him to the discussion document, Partnership in Action. Paragraph 4.27 of the document makes it clear that the service and financial management accountability in audit—for instance, in the pooled budget—means that ultimate accountability for that budget links back to the existing accountability arrangements for each partner authority. That is extended to the chief executive of the NHS executive, the Secretary of State for Health and Parliament, on the one hand, and, on the other, to the local authority members and ultimately to the local electorate.
Before I sit down, perhaps I may correct a figure that I gave. We had 700 written responses to Partnership in Action; 171 of those responded on that point.
Earl Howe: My Lords, I am grateful to the Minister for that very helpful answer. It was, of course, intended to be a probing amendment; I did not intend to press it in any way. Nevertheless I have the feeling that the more distant NHS money becomes from the NHS, by definition the more distant it becomes from what is normally understood by "healthcare". Having said that, I recognise the need for flexibility and the need to break down artificial barriers. I also appreciate what the noble Lord said about the safeguards that will be built into the system. It has been an extremely helpful short debate and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 26 [Powers relating to voluntary schemes]:
Baroness Hayman Baroness Hayman moved Amendment No. 54:
Page 20, line 44, after ("section") insert ("and sections 27 and 28").
The noble Baroness said: My Lords, we now turn to that part of the Bill, Clauses 26 to 31 and Clause 48, concerned with the purchase of NHS medicines. There are a large number of amendments to deal with and I apologise for the length of what I am about to say. I hope to clarify the government amendments and to speak also to the amendments tabled by noble Lords.
The overall purpose of the government amendments is to give greater clarity to our intentions for Pharmaceuticals and the purchase of NHS medicines and to meet the concerns which were expressed in Committee and in the report of the Delegated Powers and Deregulation Committee.
Amendments Nos. 54, 55, 56, 58 and 59 make clear on the face of the Bill which of Clauses 26 to 31 apply to which manufacturer and supplier and under what circumstances. There was some debate about this in Committee.
Clause 26 gives the Secretary of State powers exercisable only in relation to those companies which are party to the voluntary scheme. These amendments to that clause add to the definition of the conditions to be met by suppliers and manufacturers who choose to be members of the voluntary scheme. They also make explicit the ways in which such membership will be handled in cases where a scheme member appears not to be complying with the scheme. If the Secretary of State decides that a supplier or manufacturer is not abiding by the terms of the voluntary agreement, he will write to that supplier or manufacturer giving reasons for his decision. The supplier or manufacturer will have the opportunity to respond and the Secretary of State will consider the response and reply with his decision. The importance of these changes becomes clearer when we look at the two amendments to Clauses 27 and 28.
Clause 27 replaces the power of Section 57 of the 1977 Act to limit the prices of medicines bought by the NHS. This clause is widely drawn because it is difficult, maybe impossible, to envisage all the circumstances when such an action might need to be taken. But, in all cases, the Secretary of State is obliged to consult with the industry body before embarking on any such action. A concern expressed in Committee was that Clause 27 might be applied to suppliers and manufacturers who were members of the voluntary scheme. That was never the intention of the Government. We wish to proceed, as I have said many times before, by co-operation and agreement with the pharmaceutical industry in this and to find a solution which recognises both the interests of the NHS and those of the industry and deals fairly with both. This amendment fulfils our commitment to a voluntary scheme and makes it explicit that those companies who are members of that voluntary scheme shall not be subject to the powers conferred by Clause 27.
Clause 28 allows the Secretary of State to make a statutory scheme. The application of a statutory scheme is the alternative to a voluntary scheme. It would apply generally if a voluntary agreement with the industry is not reached or specifically to companies which, for

859
whatever reason, chose not to be members of that voluntary agreement. In Committee it was said that Clause 28 could be read to imply that the Secretary of State could apply a statutory scheme to those companies which were abiding by the terms of the voluntary agreement. This was not our intention and the proposed amendment to Clause 28 underlines that by giving explicit exemption to those companies which are members of the voluntary scheme.
The two amendments, Nos. 56A and 67A, tabled by the noble Earl, Lord Howe, have effects which are quite undesirable. The first amendment would add to the circumstances which could give a right of appeal. The appeal provisions recognise the recommendations of the Delegated Powers and Deregulation Committee in connection with the statutory scheme and the statutory provisions connected to the voluntary scheme to make provision for an appeal against a decision by the Secretary of State regarding the control of prices or profits, or the disclosure of information, to an independent tribunal.
The decision under appeal would be that the voluntary scheme was not effective in the company's case because of its conduct. But this is a voluntary scheme. It is based on co-operation and agreement between the Secretary of State and a supplier or manufacturer. Whether there is agreement between those two parties is surely a matter easily determined by the actions of the involved parties. If they cannot agree that they are in agreement, then I suggest that the agreement has failed and both parties have an equal right to leave it. This is not a matter for appeal on one side and not the other. We have made provision which provides for the position where a company is seen not to be complying with the voluntary scheme. The Secretary of State must inform the company formally of that view and take into account the company's response. Further, in his final response the Secretary of State must give his reasons; and, as always, he must act reasonably. I would expect—and I say this in no way to prejudge the outcome of the current negotiations with the Association of British Pharmaceutical Industry—that the voluntary arrangements will contain an agreed mechanism to allow for the resolution of dispute between companies and the Secretary of State. All this adds up, I would say, to more than sufficient protection. Perhaps noble Lords might consider the position were the Secretary of State to be given a parallel right of appeal against a company's decision that it was no longer a member of the voluntary scheme. Were he successful on appeal, the company would be forced to comply with a voluntary agreement. I suggest that that is a nonsense and that we should not go down that route as far as the companies are concerned.
The second amendment would place the Secretary of State in a potentially very interesting position. Under the proposal, the Secretary of State is only entitled to decide that the voluntary scheme ceases to apply to a company if that company increases the prices of health service medicines without approval or fails to record, keep and supply information needed for the voluntary scheme. I remind noble Lords that the voluntary scheme is
860
intended to deliver medicines to the NHS at reasonable prices by having regard to the profits made from their sale by a supplier or manufacturer. This amendment would allow a company to make excessive profits, refuse to make an appropriate payment to the Secretary of State and still remain a member of the voluntary scheme. That cannot be right.
The cumulative effect of these five government amendments is to bring some extra clarity to the Bill. They confirm our commitment to a voluntary scheme and protect the position of those companies which are members of that scheme: they will not be subject to any of the powers conferred by Clauses 27 and 28. In Committee, the noble Earl, Lord Howe, said that the enactment of new compulsory powers of price and profit control which could operate indiscriminately against saints and rogues alike was inappropriate. I believe that we have divided the saints from the sinners by these amendments and I hope that the noble Lord will accept that.
As I have just said, in dealing with the industry it is our hope that we may continue through co-operation and voluntary agreement. To this end negotiations are currently taking place with the Association of British Pharmaceutical Industry. But the Bill allows for two further eventualities: first, where a voluntary agreement is not reached—although I think that unlikely—and, secondly, where a voluntary agreement is reached but one or more companies do not abide by its terms. Amendments Nos. 63 and 64 deal with this area.
Clauses 27 to 31 enable the Secretary of State to deal with these two cases in a way which is equitable, both to the industry and to the NHS. Our intention that companies who abide by the terms of the voluntary scheme will be unaffected either by the alternative statutory scheme or by price controls has also been made explicit on the face of the Bill through earlier amendments. Clause 27 allows the Secretary of State to limit any price which may be charged by any manufacturer or supplier for the supply of any health service medicine after consultation with the industry body. That power would apply only in the absence of a voluntary scheme or in the case of suppliers and manufacturers not complying with a voluntary scheme. Amendments Nos. 63 and 64 to Clause 29 mean that the Secretary of State must consult the industry body before making any provision to enable and facilitate the introduction of such a price limitation. This requirement to consult also applies to the amended Clause 29(2) which extends the requirement to record, keep and provide information to the Secretary of State. I hope that these amendments will be welcomed by the House.
The extensive Amendment No. 67 deals with several concerns expressed so far throughout the passage of the Bill and by the Delegated Powers and Deregulation Committee. In its consideration of Clauses 26 to 29 the committee concluded,
"that, as presently drafted, the power of the Minister to give directions is not circumscribed by sufficient safeguards that this power will only be used in an appropriate manner. In taking powers to ensure that prices are fair and reasonable to the NHS and to companies, the Government has an obligation to ensure that those powers are of themselves fair and reasonable. We invite the House to consider amending the Bill to make provision for an appeal

861
against a decision by the Secretary of State regarding the control of prices or profits, or the disclosure of information, to an independent tribunal (either on the face of the Bill or by way of a requirement to provide an appeal in the regulations), in a process which is speedy and as open as commercial confidentiality allows".
In our debate at Committee stage the noble Earl, Lord Howe, pointed to the extra advantage of providing a mechanism for the swift resolution of disputes between companies and the Department of Health which an appeal system would afford. That point is well taken. The existing PPRS lacks such a mechanism and that has been one of its weaknesses.
The noble Earl also spoke of his concerns in connection with the Secretary of State's power to require companies to provide any information which the Secretary of State required for the purpose of enabling the scheme to operate. The problem was that on the face of the Bill the Secretary of State seemingly had the power to require any information. I offered my assurances to the noble Earl that the voluntary scheme itself would determine what was required for its effective operation and we intended that the information required would be in the voluntary agreement that we sought to reach with the industry. I recognised that Clause 26(3) was wide in terms of the information that could be sought and, with the permission of the Committee, took the matter away for further consideration. Amendment No. 67 has been drawn to meet the recommendations of the Select Committee and the concerns expressed at Committee stage. It will enable the Secretary of State to provide for a right of appeal by an affected supplier or manufacturer against decisions of the Secretary of State specific to a particular supplier or manufacturer to require information, to limit any price or profit, to refuse his consent to a price increase, or to pay any amount by way of excess profits, prices or penalties. An appeal will represent a very considerable additional safeguard to members of the pharmaceutical industry covered either by the voluntary arrangements or the statutory scheme.
The addition of subsection (4D) in this amendment requires some explanation. It provides:
"A requirement or prohibition, or a limit, under Sections 26 to 29 may only be enforced under this section and may not be relied on in any proceedings other than proceedings under this section".
A concern of the pharmaceutical industry has been that the effects of either a voluntary agreement or a statutory scheme may inadvertently go wider than intended and enable third parties to seek recovery of excess prices. This matter was aired at Committee stage by the noble Earl, Lord Howe, and the noble Lord, Lord Clement-Jones. It is agreed that the intention of either a voluntary agreement or a statutory scheme is clear: to ensure that the prices paid by the NHS for its medicines are fair and reasonable. There is no reason to extend this requirement beyond the proper business of the NHS. It is certainly not the business of the NHS to influence the prices paid by third parties for their medicines, although in view of earlier debates perhaps the noble Earl believes that we should also meddle in that. An amendment refining the definition of a health service medicine was suggested and I said then that I was unsure whether it was appropriate or that it should be on the face of the Bill. We have now decided that an
862
explicit statement to the effect that the operation of Clauses 26 to 29 shall have no effect beyond the operation of Clause 30 is the best way to proceed. I am confident that this will remove the problem to which I referred.
Amendment No. 100 to Clause 48 takes account of another recommendation of the Delegated Powers and Deregulation Committee. Clause 30(6) provides for an increase in financial penalties arising from contraventions under Clauses 26 to 29. At Committee stage the noble Earl thought it wholly wrong for Parliament to give a blanket power to the Secretary of State to enable him to set any amount as a penalty. That sentiment was strongly endorsed by the noble Lord, Lord Clement-Jones. I agree. Therefore, this amendment ensures that the Secretary of State cannot proceed in these matters other than with the approval of Parliament. We hope that these measures will be used infrequently over the lifetime of the Bill. Nevertheless, it remains sensible to circumscribe the use of Clause 30(6) in this explicit way.
At Committee stage the noble Earl also suggested an amendment so that there should be consultation with the industry body about the regulations to impose penalties payable because of non-compliance by a company. I said at the time that it was entirely proper that the industry body should be consulted over matters of detail relating to the sales of medicines to the NHS but that the amendment as proposed might not be the best way of extending the consultation process. Amendment No. 68 accommodates the purpose of the noble Earl's amendment and makes the matter explicitly clear: the Secretary of State must consult the industry body before making regulations under Clause 30.
Clause 31 deals with the way in which the Secretary of State is to exercise the powers conferred in earlier clauses. Subsection (1) allows the Secretary of State to make regulations and issue directions. Amendments Nos. 69, 70 and 71 by introducing and defining "specific" make it clearer that directions are specific to an individual supplier or manufacturer in contrast to regulations which are general. Amendments Nos. 75 and 76 separate the existing composite definition of what is meant by the term "health service medicine". The definition incorporates the words "medicinal product" with the meaning of those words by reference to Section 130 of the Medicines Act 1968 being given in brackets. Instead, they would be defined in a free-standing definition. The amendments incorporate no change of meaning.
I turn next to Amendments Nos. 72 and 73. At Committee stage the noble Baroness, Lady Sharp of Guildford, moved an amendment to ensure that any statutory scheme of price regulation that was introduced took account of the importance of research and development in that industry. The importance of the pharmaceutical industry and nurturing its research and development capacity was a recurring theme of our debates. Certainly, it is not an area in which I wish to disagree with the central importance of that point. Amendments Nos. 72 and 73 are tabled to make clear on the face of the Bill that the costs of research and development are an important component of reaching a

863
decision on the reasonableness of prices. I believe that the amendments as worded meet what was asked in the noble Baroness's amendment and reassure both this House and the pharmaceutical industry that the Government understand and value the importance to the NHS as a whole of research and development.
I turn to Amendment No. 73A. I understand what the noble Earl has in mind with his amendment: to make clear that the Secretary of State in exercising powers under Clauses 27(a), 28(1) and 28(6)(a) must have regard to the right of suppliers and manufacturers to make a reasonable profit from business with the NHS. But I suggest that Clause 31(4) shows that the Secretary of State must already act by
"reference to the prices or profits which would be reasonable in all the circumstances".
I hope that the noble Earl agrees that the point is therefore covered and that it is unwise to add words to legislation that do not bring to it any new meaning or add to clarity. With my apologies for the length of my remarks, I commend these government amendments to the House.
Earl Howe: My Lords, we warmly welcome the amendments. I thank the Minister for having responded so constructively to the concerns that I and other noble Lords voiced in Committee on these clauses. The noble Baroness has gone to great trouble which I am sure the whole House will appreciate.
The Minister has fulfilled in almost all respects—I should like to have said in all respects—the undertaking given in Committee to meet those concerns. It will probably seem ungracious and churlish of me to have tabled Amendments Nos. 56A, 67A and 73A which seek to add to the wording of the adjacent government amendments. I make clear that these additions are intended to do no more than make the government amendments work in the way that I thought was intended. It is no part of my purpose to be confrontational.
I am grateful to the noble Baroness for her comments on the amendments. It may assist the House if I introduce them briefly. Amendment No. 56A is designed to make clear that the ability of the Secretary of State to take companies out of the voluntary scheme is limited to circumstances where they have breached the terms of the scheme. At present subsection (2B) of the amendment seems to give the Secretary of State virtual carte blanche to take a subjective view of the matter on which he may then base a decision. That does not seem right. Nevertheless, I am grateful for the noble Baroness's comments, upon which I shall reflect.
Amendment No. 67A concerns the right of appeal. I believe that the right of appeal should include an appeal against a decision of the Secretary of State to remove a company from the scope of the voluntary scheme. At present if one looks at the amendment together with one of my previous amendments, one sees that the Secretary of State has complete discretion to remove companies from the voluntary scheme without apparently having to determine that they had breached the scheme and without a right of appeal for the
864
companies concerned. That is why I believe that my proposed addition to the government amendment is important. Again, I shall read carefully what the noble Baroness said on the matter.
Amendment No. 73A attempts to make clear that the statutory objectives set out for Clauses 26 to 31 should strike a fair balance between the requirement of the Secretary of State to secure safe and effective medicines on reasonable terms and the rights of manufacturers and suppliers to receive reasonable profits on the supply of medicines to the NHS, and their research and development costs. I did not think that the Government's new text did quite enough to recognise the interests of companies to make a fair return. One reason was that other statutes—for example, Section 3 of the Electricity Act—include language which recognises explicitly the objective of enabling companies to obtain a reasonable rate of return. I need to emphasise to the Minister that the wording of her amendment is extremely helpful. However, perhaps I may suggest that she considers the point again. I take note of what she said in relation to Clause 31(4).
Finally, I revert to the right of appeal. Will the Minister confirm that it is the Government's intention to introduce regulations at an early date after the enactment of the Bill? In other words, can she confirm that the permissive format of her amendment is no more than an adherence to the conventions of drafting?
Baroness Hayman: My Lords, before the noble Earl sits down, I can confirm that it is permissive, but we have every intention of setting up such an appeal scheme.
Earl Howe: My Lords, I am grateful to the Minister.
5.45 pm
Baroness Sharp of Guildford: My Lords, I thank the Minister for her full explanation of the amendments. On these Benches, we are pleased at the degree to which she has recognised the importance of research and development to the industry. Nevertheless, at present the amendments reflect substantially the amendments tabled at Committee stage by the noble Earl, Lord Howe. We understand why the amendments were tabled. In many respects they reflect the wishes of the pharmaceutical industry. Incorporating the amendments into their own, the Government have in many senses gone along with the wishes of the pharmaceutical industry about the regulation scheme. We agree that they provide greater clarity and meet many of the criticisms of the Delegated Powers and Deregulation Committee, for example about appeal mechanisms.
Nevertheless, from these Benches we maintain the view we expressed at Committee stage. We believe that a voluntary agreement should be what it states: a voluntary agreement. It should not be propped up by the Government. The industry should not have to look to the Government to enforce its own voluntary agreement when firms do not obey it. That the Government are now getting into bed with the industry to enforce its own agreement smacks too much of a cosy relationship—"I"ll scratch your back if you'll scratch mine".

865
On these Benches, we would prefer to see a more distant relationship—a voluntary scheme run by the industry, not having to be enforced by the Government. Alternatively, if the voluntary scheme does not work, we are prepared to condone a statutory scheme which is incorporated in Clauses 27 and 28. As it is, the statutory scheme will remain a fallback provision which is unlikely to be used provided that the voluntary scheme, with government backing, is effective. In effect, we are now being offered this voluntary scheme—a voluntary provision that provides for the Government to help enforce it.
Given that we have that cosy relationship, it becomes more vital that the Bill incorporates the transparency provisions of the new clause proposed by the noble Lord, Lord Desai, which we shall debate shortly. We recognise the benefits that the PPRS has brought to the British pharmaceutical industry over the past 30 years. We are sorry that it does not remain what it has been: a voluntary agreement voluntarily enforced; and that the Government have succumbed to being a partner in enforcing it. We remain unhappy at the degree to which it muddies the water between state and industry and encourages a degree of corporatism which we on these Benches cannot condone. I therefore register our unhappiness with some of the amendments as they stand but accept that the Government have made a considerable number of moves in the direction that we ask. I thank them.
Lord Lyell: My Lords, I hope that I shall not tread on the toes of the noble Lord, Lord Clement-Jones. I declare an interest in that I had a delicious free dinner last night from one pharmaceutical company. It is the only financial, tangible interest that I have received from the pharmaceutical industry over 22 years. Noble Lords will be aware of perorations from me in praise of the good work that can be done by the industry.
Concerns were expressed to me at Second Reading and an earlier stage of the Bill. The noble Baroness seems to have covered virtually every point. However, perhaps today or later she can clarify this point. The Minister referred to prices and profits, although in separate compartments. Am I right to think that those are part of a weird amalgam, a formula that has developed over the years? I believe that it used to be called the voluntary price scheme. It then became the pharmaceutical price scheme. It is an arcane formula that evolved on an industry-wide basis and from time to time on individual large companies with a specific product that is greatly in demand. Will the factors of both price and profit be part of the discussion between the Government and the industry? I hope that the Minister's amendments will not muddy the waters, be more prescriptive, or add something unforeseen.
The noble Baroness pointed out that reasonableness is behind the amendments. That is a factor which has appeared in all the discussions between the industry as a whole, individual companies and the department. The amendments appear to meet all the issues which were brought to my attention by various sections of the
866
industry. After the large dinner last night, I would not wish to appear greedy, glutinous or curmudgeonly towards the scheme.
I am grateful for what the Minister has done and I hope that the amendments will enable the scheme to continue beyond its 30 years. It should be discussed beyond your Lordships' House, and I say that advisedly, because we are not experts in the complicated formula. Discussions should take place in a discreet and reasonable way and I and the industry are grateful for what the noble Baroness has done.
Lord Walton of Detchant: My Lords, I, too, welcome the amendments which have been tabled by the noble Baroness. When the Bill was first published, the ABPI, and even pharmaceutical companies which were not members, expressed several important concerns. The first was that the voluntary scheme which had served the country and the NHS well should continue and should be on a voluntary basis and that those companies adhering fully to that voluntary scheme would not be subject to statutory control. That point has been properly met.
The second concern was that companies outside the voluntary scheme, for whatever reason, some of which had without any consultation increased the prices of medicines being supplied to the NHS which were, in the view of the Government and others, and to some extent in the view of the ABPI, beyond a reasonable amount, should be subject to a statutory scheme. That intention was clearly accepted by the ABPI.
The third and most important point, bearing in mind the enormous contribution made by the pharmaceutical industry to our balance of payments and recognising the fact that some of the most effective medicines available in the NHS have resulted from research and development carried out in the UK, was that research and development costs should be taken into account in relation to agreements under the voluntary scheme.
Those were the three principal concerns of the industry. In my view, the noble Baroness's amendments have met virtually all those anxieties and I congratulate her upon them.
Baroness Hayman: My Lords, I am most grateful to the noble Lord, Lord Walton, and others who have welcomed what I intended to be helpful amendments in striking the right balance. I reassure the noble Lord, Lord Lyell, that what we are doing will enable a new voluntary arrangement to be created. The current arrangement is coming to an end and we are in negotiations to create a new one which will allow for flexibility between profits and prices and will enable us to strike a balance between fairness to the NHS and to the companies in terms of profit. The advantages of such flexibility to a voluntary scheme are great and we shall try to safeguard them. I have always made it clear that the Government's intention is to do their best to negotiate a successful voluntary scheme and to abide by it.
Perhaps I may reply briefly to the points made by the noble Earl, Lord Howe. I hope that he is reassured that we have put on the face of the Bill the responsibility to

867
take into account reasonable profits in respect of schemes. I hope that he will reflect on whether it is sensible to set up an appeals mechanism against a conclusion reached through a proper process, which I described, and that a voluntary agreement which needs "two to tango" has not come to an end.
I fundamentally disagree with the noble Baroness, Lady Sharp, in her analysis of what we are doing by the statutory provisions which could be called into effect with the voluntary agreement. I understood her desire that we should not have a hybrid scheme, which she expressed in Committee. The amendments we have brought forward more clearly separate out the voluntary agreement from the statutory agreement, but I cannot believe that she would not share my concern that the voluntary agreement, as it existed, was not as effective in delivering as any of us would have wished. I believe that companies which were party to it—and I refer to the minority—could choose not to supply the information and could increase prices without notifying the department. There is no mechanism whatever to fall back on. I do not believe that that was a satisfactory arrangement. The industry has understood it to be unsatisfactory, which is why it has accepted the need for some statutory back up. We are not therefore diluting the voluntary nature; we are making it stronger so that those who complied with it because they believed that it was the right thing to do would not see other people getting away scot-free with non-compliance. I disagree with the noble Baroness's analysis, but the House has been most generous in its response to our proposals and I am grateful.
On Question, amendment agreed to.
Baroness Hayman Baroness Hayman moved Amendment No. 55:
Page 21, leave out lines 9 to 12 and insert ("and sections 27 and 28, a voluntary scheme is to be treated as applying to a manufacturer or supplier to whom it relates if—

(a) he has consented to the scheme being so treated (and has
not withdrawn that consent), and

(b) no notice is in force in his case under subsection (2C).

(2A) For the purposes of this section").
On Question, amendment agreed to.
[Amendment No. 56A not moved.]
Baroness Hayman Baroness Hayman moved Amendment No. 56:
Page 21, line 15, at end insert—
("(2B) If, in the opinion of the Secretary of State, any acts or omissions of any manufacturer or supplier to whom a voluntary scheme applies (a "scheme member") have shown that, in the scheme member's case, the scheme is ineffective for either of the purposes mentioned in subsection (1), the Secretary of State may give written notice of that fact to the scheme member stating his reasons.
(2C) If, after the Secretary of State has given the scheme member an opportunity to make representations about the acts or omissions in question, he continues to be of that opinion, he may by a further written notice given to the scheme member (and stating his reasons) determine that the scheme should cease to apply in the scheme member's case.
868
(2D) Consent under subsection (2)(a) must be given, or withdrawn, in the manner required by the Secretary of State. ").
On Question, amendment agreed to.
Earl Howe Earl Howe moved Amendment No. 57:
Page 21, line 23, at end insert (", for the purpose of giving effect to a voluntary scheme").
The noble Earl said: My Lords, the point at issue is that Clause 26(4) does not, as currently drafted, make it clear that the powers it contains are to be exercised within the parameters of the voluntary scheme. That may well be implied from the structure of the clause taken as a whole, but the point is an important one on which there should be no ambiguity. When companies sign up to the voluntary scheme, the control powers in Clause 26(4) should be related to the provisions of the voluntary scheme itself. I beg to move.
Baroness Hayman: My Lords, I hope that I can reassure the noble Earl. All the powers conferred by Clause 26 are exercisable only where there is a voluntary scheme in existence between the Secretary of State and the industry body. The voluntary scheme is described in Clause 26 as having the purpose of limiting the prices charged for medicines supplied to the NHS or of limiting the profits made from such sales.
Subsection (4) allows the Secretary of State to prohibit any increase in prices without his approval and also to recover any sums charged in contravention of that prohibition. But the prohibition can only relate to medicines covered by the scheme. It is clearly not the case that the prohibition would operate outside the scope of the provisions of the voluntary scheme. It is Clause 27 which deals with the control of prices in the absence of the voluntary scheme, or in the case of suppliers and manufacturers not abiding by the terms of the voluntary scheme.
While I accept that this amendment is intended to add clarity to the purpose of Clause 26, I hope that the noble Earl will feel that it is already clear as to what Clause 26 provides and the way in which it will operate.
6 p. m.
Earl Howe: My Lords, that is a very helpful reply. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 27 [Power to control prices]:
Baroness Hayman Baroness Hayman moved Amendment No. 58:
Page 21, line 40, at end insert—
("( ) The powers conferred by this section are not exercisable at any time in relation to a manufacturer or supplier to whom at that time a voluntary scheme applies. ").
On Question, amendment agreed to.
Clause 28 [Statutory schemes]:
Baroness Hayman Baroness Hayman moved Amendment No. 59:
Page 22, line 31, at end insert—
("( ) A statutory scheme may not apply to a manufacturer or supplier to whom a voluntary scheme applies. ").
On Question, amendment agreed to.
Earl Howe Earl Howe moved Amendment No. 60:
Leave out Clause 28.
The noble Earl said: My Lords, notwithstanding the very helpful amendments being moved by the Government today which place the Bill's provisions onto a much sounder footing, I hope that the House will allow me to make one or two observations on the reserve powers contained in Clause 28.
What we still have in the Bill, admittedly as a reserve power but nevertheless available for use by the Secretary of State with little further formality, is a power to create an entirely new operating climate for the pharmaceutical industry in the UK. The considerable worry shared by those of us on these Benches is that to interfere with the voluntary arrangements of the PPRS, which have, by and large, worked supremely well for over 40 years to the shared benefit of government, industry and the NHS, is a course upon which we should embark at our peril.
The introduction of a statutory scheme, were that to occur, with all the cards stacked in the Secretary of State's favour, would represent a huge risk to the continued stability of the pharmaceutical industry. The ethos which has underpinned the PPRS from its inception has been that, by mutual agreement, there really can be a fair deal for the NHS and patients combined with a flourishing R&D base in the UK. The clear message here would be that that ethos has been consigned to history. For a statutory scheme allowing prices to be controlled by Whitehall would, at a stroke, skew the present delicate balance of advantages away from the industry.
But who then would be the beneficiaries? I suggest that it would not be the NHS. Compulsory price fixing would act as an instant disincentive to pharmaceutical companies to continue operating in the UK. Why should they invest in research if they cannot earn a fair return on capital here? If the research base migrates overseas, it will no longer be the British patient who first sees the benefits of new treatments emerging onto the market.
I fully acknowledge that the government amendments have gone a long way to allay the fears of the industry. The Minister will say that there is no present intention to create a statutory scheme. All right, but I maintain that even the existence of a reserve power such as we find in Clause 28 will create sufficient uncertainty among pharmaceutical companies, particularly foreign-owned pharmaceutical companies, to undermine long-term business confidence. The threat of a compulsory scheme, however veiled, combined with that other hurdle created by NICE of the requirement on a manufacturer to demonstrate the cost-effectiveness of a drug, will create the perception of an unfriendly business environment in this country. One does not need much more than that perception to cause businesses to start packing up their tents and looking elsewhere.
The pharmaceutical industry is global. The UK industry represents 3 per cent. of the world market. The competitiveness of the UK as a home for pharmaceutical activity is already declining. The only things which make the UK attractive to foreign investors are the
870
strength of our science base and the ability to operate in a more benign and stable business environment than some others overseas.
Peter Mandelson, in an evocative phrase, spoke of wanting to create a knowledge-driven economy. The pharmaceutical industry is surely the largest knowledge-driven sector that we have. It is the second largest earner of foreign currency after the oil industry and yet here suddenly we seem to have a Government acting schizophrenically: they sing the praises of the knowledge-driven economy and simultaneously take powers to clamp down on it.
The Minister will have gathered that I am uneasy about those provisions remaining in the Bill. I await her reply with interest. In the meantime, I beg to move.
Baroness Sharp of Guildford: My Lords, from these Benches, we cannot support the noble Earl, Lord Howe. We accept the response which the Minister gave us in relation to our reservations about the amendments that she tabled earlier. We recognise that if the voluntary scheme is to work satisfactorily, it needs the back-up of the statutory scheme which is incorporated in Clause 28. Therefore, on these Benches we support the Government in maintaining Clause 28.
Baroness Hayman: My Lords, I am grateful to the noble Earl for giving me the opportunity to say once again that we value one of Britain's most successful industries—the pharmaceutical industry—and wish to create a climate in which it flourishes. We recognise in particular the research and development strength and what we can offer the industry and what the industry can offer this country.
I believe that the industry itself recognises that having a sophisticated and discriminating home market is an advantage and not a disadvantage. I can underline too, as I said earlier this evening, that we have every intention of wholeheartedly renegotiating a voluntary price regulation scheme with the industry.
The noble Earl accused us of being schizophrenic in our attitude by having reserve statutory powers. I suggest to him that it is not schizophrenia but responsibility which is underlying our attitude here. We believe that it would be unwise totally to rely on a voluntary scheme.
Some pharmaceutical industries may not be willing to sign up to it or to comply fully with another voluntary agreement that is reached between the Government and the pharmaceutical industry. I am afraid that experience under the present scheme, as I mentioned earlier, provides evidence of that. I told your Lordships in Committee that one significant company has not submitted information required under the present scheme since 1990. In 1998 alone 24 companies increased prices without the agreement of the Secretary of State, outside the terms of the PPRS and at an annual cost to the NHS of £30 million.
Although the Government wish and believe that they will conclude another agreement with the industry, it is prudent for us to provide for a situation in which it is not possible, after the best endeavours of both sides, to

871
reach an outcome which the Government and the industry are prepared to accept. The provisions in this clause are the minimum necessary to enable the Secretary of State to establish a statutory scheme.
There are a number of important safeguards written in if it proves necessary for the Secretary of State to use those powers. The noble Earl seemed to suggest that a statutory scheme would somehow undermine the industry and there would be no ability to make any form of profit whatever. We have made it clear that there will be the same considerations of reasonable profit and fairness to the NHS in a statutory scheme as we shall be aiming for in a voluntary scheme.
However, branded medicines are specialised products, the development of which incur considerable research and development expenditure. Those products have limited interchangeability in many circumstances and new medicines are subject to patent protection. That gives companies a period of market exclusivity. For that reason, the Government have concluded that it is necessary to continue to take steps in that area to ensure that prices are fair and reasonable, both to companies and to the NHS. We want to reach another agreement with the industry but, as I said earlier, it would be unfair on those companies which agree to abide by that new agreement while other companies are able to opt out of the scheme and be subject to no scheme at all.
As a last resort the Government must protect the interests of the NHS by having available reserved powers to implement a statutory scheme if it proved impossible to reach agreement with some or all of the pharmaceutical industry. For those reasons I urge the noble Earl to withdraw his amendment.
Earl Howe: My Lords, the Minister has made some reassuring comments. As I said earlier, the Government have done a lot to allay the initial fears expressed by the industry. For that we are extremely grateful.
My main point was that often markets and investment decisions turn on perceptions, sometimes quite irrational perceptions, but nevertheless that happens. If, in the future, a multi-national pharmaceutical company considers whether or not to invest in the UK, credibility is not stretched too much to imagine such a company looking at the reserved powers for a statutory scheme and asking whether the UK represented the most favourable place for that investment.
I hope that the Government are right in their judgment. If they are not right, the consequences will be very serious for us all. I still have nagging doubts about the criticisms that the Minister has voiced against the existing PPRS. If, as she maintains, the present PPRS is not working properly and we have an unacceptable minority of companies which are the cause of that, why not simply introduce a system of arbitration, combined with penalties for infringement? Why is it necessary to have reserved powers for a fully-fledged statutory scheme? I am still not convinced, but this is not a matter that I shall press. I believe that it is right to have voiced these concerns, but I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Desai Lord Desai moved Amendment No. 61:
After Clause 28, insert the following new clause—
PUBLICATION OF DETAILS OF VOLUNTARY OR STATUTORY SCHEME
(". The Secretary of State shall publish a statement of any voluntary or statutory scheme he has agreed with the industry, which statement shall include—

(a) the criteria he will use for the purposes of making determinations under sections 26(1)(a) and (b), and 28(1)(a) and (b) above;

(b) the categories of information he determines to be commercially confidential and his reasons for their justification;

(c) details of the outcomes of his consultation with the industry and other bodies representing consumer and public interests in establishing the scheme;

(d) the mechanisms he will put in place for independent audit of the negotiation and operation of the schemes and the mechanisms for publishing the results of such an audit; and

(e) when he will next review the scheme. ").

The noble Lord said: My Lords, perhaps I should begin by declaring a non-pecuniary interest. Unlike the noble Lord, Lord Lyell, I am not in the habit of getting dinner, but I have spoken to the National Consumer Council, which has expressed reservations about the scheme. Noble Lords will remember that I pursued this point in Committee. It was well past midnight on that halcyon evening and we marched into the lobbies at 1.30 a. m. in the morning. I was brief at that time and thought that I would not try the patience of noble Lords too much.
However, I have returned to this issue because it is an important one. There are questions about the voluntary arrangement for PPRS or even the statutory ones. There is a missing actor and that is the consumer. I am grateful to the noble Baroness, Lady Sharp, for having welcomed my amendment before I had moved it; I hope that I shall have her support.
The first problem is that the Secretary of State is obliged not only to secure reasonable prices for the medicine board of the National Health Service but to promote the pharmaceutical industry. In Committee I argued that that is schizophrenic. If there is schizophrenia, that is it. I do not understand why the DTI does not undertake the task of promoting the pharmaceutical industry. What does it have to do with the Secretary of State?
The scheme that we have is a kind of bilateral monopoly. It is a very cosy arrangement. One large buyer can influence a few large sellers. The fact that there is a large stable buyer no doubt has immensely benefited the pharmaceutical industry. That fact is seldom mentioned when people talk about how efficient the pharmaceutical industry is. I do not deny that it is efficient. The advantage that a large stable demand from the National Health Service has on the pharmaceutical industry is not to be underestimated.
My amendment asks for a certain amount of transparency in these arrangements. First, if the Secretary of State is to determine prices or profits, paragraph (a) of Amendment No. 61 says that the criteria he will use for these purposes ought to be made explicit.
Secondly, given the schizophrenic role of the Secretary of State, we must be quite clear what information will be suppressed because it is commercially confidential and the justifications for that. Whose interests are we protecting?
Thirdly, it is a matter of concern that in all the consultations industry bodies are mentioned but consumers are seldom mentioned. Basically, consumer bodies and public interest bodies ought to be consulted on this matter. While I entirely trust the Minister and my right honourable friend the Secretary of State for Health to look after national interests, it will still be good to have consumer interests specifically represented when the scheme is discussed.
Lastly, it mentions an independent audit of the way in which the scheme is set up. It is a fairly modest amendment, but it proposes to introduce a culture of transparency and accountability in the voluntary or statutory scheme and it introduces, in a major way, the interests of consumers. I beg to move.
6.15 p. m.
Lord Lucas: My Lords, perhaps I may speak to Amendment No. 74 which is grouped with Amendment No. 61. I am delighted to see the noble Lord, Lord Desai, and myself as Back-Benchers grouped together, producing a cross-party Back-Bench amendment. I hope the Minister will be suitably impressed. After our discussion in Committee, she was kind enough to write to me a long and helpful letter on the amendments that I tabled at that stage, avowing a commitment to freedom of information. I am delighted to note that the noble Baroness shares that commitment, striking again, as we did in Committee, the rock of commercial incompetence.
My reply to that is Amendment No. 74, which says that details should be published, except that which is "commercially in confidence". I hope the noble Baroness will think that that provides a reasonable answer to all the problems that she has raised. In case she does not, it would be helpful if the Minister or her officials in a letter could give examples of what sort of confidential information would generally come to light in such cases. If a company is fined or given directions as to price or market behaviour, I do not believe the fact that directions have been given to that company would be considered as "commercially in confidence". How can the fact that the Government have given directions to a company be "commercially in confidence"? Perhaps one can go beyond that and say that it could be in respect of a particular preparation. Again, how can that fact be commercially in confidence? One can work a long way down the circumstances that we have envisaged being covered by this scheme, before discovering anything that is "commercially in confidence" of which a competitor could take advantage.
It is commonplace for those who have sinned and have been found out and punished to have their names published, unless they are minors or people who should be protected. I do not believe that pharmaceutical companies come into that category. In the interests of
874
freedom of information, in the interests of openness and good government, I believe that the Government should publish as much information as they can. I hope that the noble Baroness will agree that my amendment will give them that option.
Baroness Sharp of Guildford: My Lords, I rise to support both amendments. As the noble Lord, Lord Desai, said, the pharmaceutical industry has done, does and will continue to do, extremely well out of the pharmaceutical price regulation scheme. The benefit has been a research-based industry which is the UK's most successful industry. We recognise that. It is nice to have a few very successful industries.
However, that industry's profits are extremely large. Like the noble Lord, Lord Desai, we argued in Committee that the scheme was a piece of industrial policy and that, as such, it should be within the orbit of the Department of Trade and Industry rather than of the Department of Health. As I said, it is a cosy arrangement, settled behind closed doors. Perhaps I may advise the noble Lord, Lord Lucas, that individual negotiations take place with individual companies behind closed doors when they reveal much about their costs which they regard as being very commercially confidential. They do not want that to be revealed to their competitors—and one recognises why. Nevertheless, that deal is done in the interests of consumers and it is important that consumers should know as much as they can about such deals. Transparency is an important issue. We on these Benches entirely endorse the two amendments.
Baroness Carnegy of Lour: My Lords, I may have misunderstood the discussion, but I am amazed at what the noble Baroness just said. If a big manufacturer is negotiating this deal with the NHS—because the Government are prepared to accept the "schizophrenia" which the noble Lord, Lord Desai, mentioned in order to achieve the best possible prices for the NHS—presumably the facts discussed when making the deal include the manufacturing costs of producing a particular product; and the world will know the selling price and "confidential information" passes to the world of commerce. The noble Lord knows that very well.
The schizophrenia point is valid. It is strange that we have to do this, but it is accepted as necessary. Some products will be sold across the counter for their real price. However, I do not think that one can possibly say that just because pharmaceutical companies make a lot of money they should have to reveal everything in such discussions. Of course, because they make a lot of money it is possible to contemplate such an arrangement. I see that, but perhaps I am misunderstanding the point. I simply do not think that you can say that because people make a lot of money they must give away their entire trade. We very much value those industries.
Lord Haskel: My Lords, perhaps I may remind my noble friend the Minister that this matter of commercial information involves a two-way road and that under corporate governance regulations, limited liability

875
regulations and the Companies Acts, companies have to give out a certain amount of information. It is not only a matter of the Government giving out such information; it is also up to the companies to do so. The Minister should bear that point in mind when responding to the amendment.
Regarding the point made by my noble friend Lord Desai about Financial assistance to the pharmaceutical industry, perhaps I may remind him that in the Budget the Chancellor announced £1.3 billion of assistance to technology-based companies, many of which are in the pharmaceutical industry, and that seven centres of excellence are to be established. That will be very much in the interests of the pharmaceutical companies. The Government are doing quite a lot to encourage this.
Baroness Sharp of Guildford: My Lords, perhaps I may—
Noble Lords: Order!
Lord Clement-Jones: My Lords, in that case, perhaps I may give some clarification on behalf of my noble friend Lady Sharp. We on these Benches fully support the amendment. Indeed, the noble Lord, Lord Haskel, has just given even further reasons for doing so.
Of course, one is not asking for the ultimate in terms of commercial information, such as the cost base, but City analysts have a fair idea of gross and net margins. Such information is not absolutely secret from competitors. I do not believe that the amendment suggests that a company should reveal anything unreasonably. The provisions seem eminently reasonable. It was no part of my noble friend's case to say that because companies make profits they should therefore have to reveal everything. That was certainly not her case.
Baroness Hayman: My Lords, we have had a useful short debate on this issue. I share the concerns expressed by the "unholy alliance" of the two Back Benches, if I can put it that way, that we should do all that we can to ensure that information is available, that there is transparency in the terms of the agreements between government and the industry, and that there should be adequate consultation on matters of public interest.
My noble friend set out the reasons for his amendment very clearly. I hope that I can reassure him that I believe that what he is seeking to achieve will, indeed, be achieved.
The details of the new voluntary scheme itself will be written into the document agreed by the Secretary of State and the industry body. Given the key need for greater transparency, the new agreement will have to be very much more specific than previous ones. It must be clear from its face how it is going to operate in a fair and transparent manner and apply equitably to the suppliers and manufacturers. We will continue the practice adopted with previous voluntary arrangements and publish the agreement. We intend to report regularly on the working of the agreement and to include in those
876
reports the level of detail required. I shall come to any caveats about the level of detail that it might be appropriate not to share.
The idea is to publish as much information as we can, rather than as little as we are forced to. The statutory scheme, if it is needed, will be set out in regulations and those regulations—again, public documents—will have to be very detailed and formulaic and contain the criteria to which my noble friend's amendment points.
Perhaps I may turn to the vexed question of what is commercially confidential. There is obviously tension between information that should freely be available and any legitimate right to privacy. The noble Lord, Lord Clement-Jones, and my noble friend Lord Haskel rightly said that companies already have to publish much information in terms of their corporate governance responsibilities. That is not the level of information with which we are dealing. However, the effective operation of the scheme depends on companies providing information to a level of detail that is not in their published accounts and where such publication could harm their commercial interests. We are talking about a great deal of detail being given. Such areas could include sales and profits forecasts, and information on profits on individual segments of the market to a level not required to be published in any statutory accounts but which could be of great value to competitors.
The exact definition of what generally constitutes "commercially sensitive information" is very difficult to render precisely. I accept the spirit of some of the comments made about it being used in the past as a blanket term and an excuse for not being as transparent as we could be. In that connection, a minimum definition needs to take account of information which, were it to be disclosed, would at least be likely to result in damage to suppliers and manufacturers. Looking at it from the other end of the spectrum, it is easier to say what is not commercially sensitive and previous reports to Parliament achieved a great deal in describing the operation of the PPRS.
The amendment of the noble Lord, Lord Lucas, would require the Secretary of State to publish details of payments recovered under the statutory scheme arising from excess profits or prices and the publication of otherwise confidential directions made under Clause 31. It is our intention to publish all that can be published without breaching a tight definition of commercial confidentiality. It is important that decisions made under the voluntary arrangements or the statutory scheme are correct, correctly arrived at and can be seen to be so. But we do not want this to be an area of dispute with companies and the Secretary of State coming to different decisions in relation to confidentiality. We want to maintain a climate of confidentiality when it comes to individual suppliers and manufacturers, which is necessary if the operation of both the voluntary and the statutory schemes is to command the confidence of all interested parties.
An additional problem is that, should a supplier or manufacturer perceive a danger of disclosure of commercially sensitive information, he would be less likely to provide the information freely and frankly and therefore push us more into the statutory scheme.

877
The noble Lord, Lord Lucas, asked for an example of the circumstances where a company might not be a clear "sinner" but might have excess profits recovered from it. Excess profits do not necessarily mean that there has been a transgression of the statutory or voluntary scheme, or that prices have been increased without reference to the Government, or that information has not been disclosed. The profit derived from sales to the NHS can increase beyond what was expected because of unexpected changes in volume. In those circumstances it is right that excess profits should be paid back, but it could be commercially damaging if that was disclosed in terms of the individual company to which it applies.
I have some sympathy with the noble Lord's view in circumstances where companies increase prices charged to the NHS without the agreement of the Secretary of State. While it would be unwise to have such a requirement placed on the face of the Bill, it is certainly something at which we should look carefully in terms of future reports to Parliament on the operation of the schemes.
Directions are provided for so that the Secretary of State may communicate with a specific supplier or manufacturer other than by regulation, thereby respecting commercial confidentiality. In that regard the amendment would defeat the necessary mechanism and jeopardise the successful operation of the scheme.
I turn now to consultation. Clause 30, as amended, requires the Secretary of State to consult with the industry body before making regulations. The industry body is alone specified in Clause 30. That is common sense, given that it is the body which stands to be most affected by the implementation and operation of either a voluntary or statutory scheme. But that does not mean that others—consumers in particular—are not affected by those schemes. Nor does it mean that the views of other interested parties will not be sought by the Secretary of State. He is free to consult more widely than with the industry and I am certain that he will consult interested parties appropriately.
I am not convinced that there is a need to put requirements to publish details of the outcome of such consultations on the face of the Bill though, as I said at Committee stage, we have made it absolutely clear in most responses that the Government intend to consult the representatives of patients. The outcome of consultations in those cases will be the schemes themselves. Their form and content will be a clear indication of what the Secretary of State decided after consulting with interested parties. It always remains open for his decisions to be questioned here or in another place. I am not sure that there is value in his being required to describe those decisions separately.
Equally, on the question of an independent audit, I am not sure that we need new mechanisms specifically directed towards the operation of those schemes. The National Audit Office is a highly competent and respected body which has the required expertise and experience to deal effectively with the audit of the schemes. I trust that my noble friend will accept that that body, in undertaking an audit and publishing its
878
findings, will provide more than adequate assurance that the operation of the schemes will be properly scrutinised.
I hope that I have convinced your Lordships that, in urging noble Lords to withdraw the amendments, we are absolutely clear that we wish to move towards more transparency, giving more information in these areas, and that we will not be using the limited circumstances of commercial confidentiality as some sort of blanket exemption to shroud the operation of these schemes in any kind of unwarranted mystery.
Lord Desai: My Lords, I am grateful to my noble friend the Minister as well as to all noble Lords who took part in this debate. One way to measure the usefulness of an amendment is to measure the proportion of the mover's time as compared with that of everybody else, including the Minister. In that respect the multiplier has been very high. I am especially grateful to my noble friend for a careful, detailed and thorough answer. It has put many of my concerns at rest and it is therefore with pleasure that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 29 [Statutory schemes: supplementary]:
Baroness Sharp of Guildford Baroness Sharp of Guildford moved Amendment No. 62:
Page 22, line 33, after ("body") insert ("and the National Institute for Clinical Excellence").
The noble Baroness said: My Lords, the brief point that I wish to make with this amendment is that NICE (the national institute of clinical excellence) is being set up under this Bill in order to develop a wide expertise about the relative efficacy of different therapies. In implementing a statutory scheme, which is what this part of Clause 29 is about, it is important to include NICE within the consultations as well as the industry itself. The amendment seeks to ensure that such consultation is written on the face of the Bill. I beg to move.
Lord Walton of Detchant: My Lords, I fully understand why this amendment was tabled, but I find it difficult to support it, if only for one important reason.
NICE is a body which is to be established to be pro-active and not reactive. In other words, its responsibilities will include examining different forms of medicine and treatment to be available to the National Health Service; to look at the validity of that treatment and its cost-effectiveness. As I understand from public statements made by Sir Michael Rawlins, its chairman, it will be examining whether it is appropriate, within the NHS, for a specific treatment to be made available and whether it will be cost-effective for a specific group of patients.
To impose upon NICE the responsibility of reacting to consultations with the pharmaceutical industry in relation to issues set out in the Bill, would be an inappropriate measure. Solely for that reason I find it difficult to support the amendment.
Baroness Hayman: My Lords, I agree with the noble Lord, Lord Walton of Detchant. We all accept that

879
consultation is a good idea, but if we write on the face of the Bill that a body is to be statutorily consulted, we must make sure that it is appropriate that that body should be so consulted.
In this case we are talking about the imposition of a statutory scheme which will be necessary if there is a failure to arrive at an overall voluntary agreement with the pharmaceutical industry, or if an individual company or companies fail to abide by the terms of such agreement. It is hoped that we will not get into that situation, but were that to happen, the form of such agreement would mirror those previous agreements which existed between the Government and the pharmaceutical industry over the years. That is to say, it would aim to ensure that the prices paid by the NHS for its medicines were fair and reasonable, having regard to the overall profits made by a supplier from its trade with the NHS. Of course, we would be looking at issues about appropriate recognition of research and development. Alternatively, if that supplier exceptionally refused to supply information necessary to make a determination, consideration would then be given to the reasonableness of the prices paid for individual medicines.
However, the real focus of Clause 29 is the measures that would be needed in practical terms to introduce such a statutory scheme; for example, what information might be needed before a scheme was in place? In matters such as these it is reasonable to be required on the face of the Bill to consult the industry body; but, as I said in reply to the amendment of my noble friend Lord Desai, the Secretary of State is free to consult whoever he wishes. But, for the reasons explained by the noble Lord, Lord Walton of Detchant, I am not sure that NICE is the right body. The clause is concerned with procedural matters which I believe are outside that body's immediate remit. I therefore urge the noble Baroness to withdraw the amendment.
Baroness Sharp of Guildford: My Lords, I thank the Minister for her reply. I take on board the fact that, as she said, the Secretary of State is free to consult whosoever he wishes in relation to setting up a statutory scheme. Therefore, if it were appropriate to consult NICE on such an occasion, he would do so. In the light of that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hayman Baroness Hayman moved Amendments Nos. 63 and 64:
Page 22, line 35, after ("scheme") insert ("or of a limit under section 27").
Page 22, line 38, leave out from ("person") to second ("to") in line 39 and insert ("to whom such a scheme or limit may apply").
On Question, amendments agreed to.
Clause 30 [Enforcement]:
Earl Howe Earl Howe moved Amendment No. 65
Page 23, line 2, leave out ("£100, 000") and insert ("£50, 000").
The noble Earl said: My Lords, I shall be brief with this amendment. First of all, I should be grateful to know what considerations led the Government to propose levels of financial penalty in this part of the Bill
880
that appear, at least to me, extremely steep. For example, what bench-marks did they use, and why? Further, what principles will govern the imposition of particular levels of penalty within the maxima laid down?
My second concern bears directly upon the latter, although it relates more to subsection (3). I hope that the Minister is in a position to answer a few questions in that respect. The ability of the Secretary of State to impose a surcharge of 50 per cent. of whatever penalty arises from subsection (2) is a seemingly draconian provision. It is certainly not a provision which, if it were inserted into a private contract, would be likely to be upheld by the courts. Can the Minister say what the model is for that provision and what precedent there is for it?
The only parallel of sorts that I have been able to find is in VAT legislation, but that is surely a poor model for legislation that has nothing to do with taxation; indeed, this is legislation which seeks to regulate the pricing of pharmaceuticals. The penalties are not a tax. Can the Minister say what will govern the imposition of a 50 per cent. surcharge? Moreover, does not the Minister think that such a power is inherently incompatible with the spirit of a voluntary scheme?
I realise that I am guilty of straying outside the strict confines of the amendment on the Marshalled List, and I apologise for that fact. However, this question is intimately bound up with the absolute level of penalties laid down in the Bill, and I believe that we should look at the whole question in the round. I am uneasy about the amounts which might be charged to a pharmaceutical company under Clause 30. Therefore, I beg to move.
6.45 p. m.
Baroness Hayman: My Lords, the noble Earl asks what considerations were taken into account when setting the level of these penalties. The considerations were to ensure that they were effective and that they were of a sufficient amount that those who might contravene any provision of regulations or directions under Clauses 26 to 29 would wish to avoid incurring them. However, I recognise that they must not be out of proportion to what is needed. It was finding the balance in respect of those considerations which led us to the amounts set out in the clause.
The NHS spends billions of pounds each year on medicines. Several companies have sales in excess of "100 million. Many companies derive annual profits of tens of millions of pounds. Over 500 medicines have sales to the NHS of £1 million individually. I would ask noble Lords to bear those figures in mind when looking at these penalties. I should also like noble Lords to recognise that amounts stipulated in subsection (2), at which this amendment is directed, are the maximum amounts of those penalties.
It is not the intention to use the maximum amount in all, or possibly in any, cases, but there remains the need to have an effective deterrent against the non-compliance which we have seen with earlier schemes. Clearly the amount of the penalty will be

881
affected by the amount of excess profit or prices made or charged by a non-compliant supplier or manufacturer. That, in turn, will be influenced to a great extent by the level of sales. The detail of how the level of penalties for a given case will be determined will be contained in regulations. Amendment No. 68 to Clause 30 also means that the Secretary of State must consult with the industry body before making such regulations. I remind noble Lords that we have also introduced an amendment which means that these maximum penalties cannot be increased other than by the affirmative resolution procedure.
I have to say that the proposition that the survival of a supplier or manufacturer with sales of, say, in excess of £50 million to the NHS each year is going to be jeopardised by penalties in the range up to those specified is not one that I believe to be realistic. I believe that we have reached an appropriate point.
Perhaps I may now deal with the penalties uplift issue raised by the noble Earl. Clause 30(3) provides that where a supplier or manufacturer increases the price of a product under the statutory element of a voluntary scheme or under a statutory scheme, the amount required to be repaid may be increased by an amount not exceeding 50 per cent. This means that a company which contravened regulations made under these provisions would be liable to repay the amount overcharged to the NHS as a result of the unapproved increase and the penalty of up to 50 per cent. of that amount, plus an interest charge to be specified in regulations.
As I said, the purpose of penalties is to deter companies increasing prices outside the terms of a voluntary agreement or a statutory scheme. What is required is a scale of penalties which is sufficiently flexible to accommodate various types and sizes of transgression. Persistent offenders, or particularly large price increases implemented without the agreement of the Secretary of State, would face higher penalties.
It seems obvious to me that a penalty of £10, 000 per day or a single penalty of £100, 000, as provided for in Clause 30(2), would be an inadequate deterrent against unapproved price increases which might cost the NHS millions of pounds before the excess could be recovered. In all the circumstances, we believe that these arrangements are proportionate.
In terms of the voluntary scheme, these penalties can only be used where a company disregards the terms of that scheme, which would be contrary to the provisions and the spirit of it. In such circumstances, it is reasonable for there to be adequate powers to deal with companies that flout the terms of a voluntary agreement. I hope that my response explains the thinking behind the clause to the noble Earl.
Earl Howe: My Lords, I am grateful to the Minister, especially for what she said about the flexibility inherent in the system and for what I understood her to say about tailoring the penalties to suit each situation. Her remarks merit careful study. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 66 not moved.]
Baroness Hayman Baroness Hayman moved Amendment No. 67:
Page 23, line 11, at end insert—
("

(4A) Provision may be made by regulations for conferring on manufacturers and suppliers a right of appeal against enforcement decisions taken in respect of them in pursuance of sections 26 to 29 and this section.

(4B) The provision which may be made by virtue of subsection (4A) includes any provision which may be made by model provisions with respect to appeals under section 6 of the Deregulation and Contracting Out Act 1994, reading—

(a) the references in subsections (4) and (5) of that section to
enforcement action as references to action taken to implement an enforcement decision,

(b) the reference in subsection (5) of that section to interested
persons as a reference to any persons.

(4C) In subsections (4A) and (4B), "enforcement decision" means a decision of the Secretary of State or any other person to—

(a) require a specific manufacturer or supplier to provide
information to him,

(b) limit, in respect of any specific manufacturer or supplier,
any price or profit,

(c) refuse to give his approval to a price increase made by a
specific manufacturer or supplier,

(d) require a specific manufacturer or supplier to pay any amount (including an amount by way of penalty) to him;

and in this subsection "specific" means specified in the decision.

(4D) A requirement or prohibition, or a limit, under sections 26 to 29 may only be enforced under this section and may not be relied on in any proceedings other than proceedings under this section. ").

[Amendment No. 67A, as an amendment to Amendment No. 67, not moved.]
On Question, Amendment No. 67 agreed to.
Baroness Hayman Baroness Hayman moved Amendments Nos. 68:
Page 23, line 13, at end insert ("and the Secretary of State must consult the industry body before making any regulations under this section").
On Question, amendment agreed to.
Clause 31 [Controls: supplementary]:
Baroness Hayman Baroness Hayman moved Amendments Nos. 69 to 72:
Page 23, line 19, leave out ("particular") and insert ("specific").
Page 23, line 21, leave out ("particular") and insert ("specific").
Page 23, line 21, at end insert ("and in this subsection "specific" means specified in the direction concerned").
Page 23, line 28, leave out from ("powers") to ("are") and insert ("to refuse approval under section 26(4)(a) or 28(6)(a) or to impose a limit under section 27(a) or 28(1)").
On Question, amendments agreed to.
Baroness Hayman Baroness Hayman moved Amendment No. 73:
Page 23, line 32, at end insert ("and in so exercising those powers (in the case of sections 27(a) and 28(1) and (6)(a)) the Secretary of State and any other person must bear in mind, in particular, the need for medicinal products to be available for the health service on reasonable terms and the costs of research and development").
[Amendment No. 73A, as an amendment to Amendment No. 73, not moved.]
On Question, Amendment No. 73 agreed to.
Lord Lucashad given notice of his intention to move Amendment No. 74:
Page 23, line 32, at end insert—
("( ) The Secretary of State shall publish details of any payments made under sections 28(4) and (5) and of any directions given under this section, but such publication may not include information supplied to the Secretary of State by a manufacturer or supplier commercially in confidence. ").
The noble Lord said: My Lords, I thank the noble Baroness for the answer she gave me when she replied to the amendment in the name of the noble Lord, Lord Desai, with which this amendment is grouped. I shall read that with great interest. I thank the noble Baroness again for that. I shall not move the amendment.
[Amendment No. 74 not moved.]
Baroness Hayman Baroness Hayman moved Amendments Nos. 75 and 76:
Page 23, line 41, leave out from ("product") to ("used") in line 42.
Page 24, line 2, at end insert—
(""medicinal product" has the meaning given by section 130 of the Medicines Act 1968, ").
On Question, amendments agreed to.
Clause 32 [Evasion of charges etc.]:
Lord Hunt of Kings Heath Lord Hunt of Kings Heath moved Amendment No. 76A:
Page 24, leave out lines 9 to 15 and insert—
(""Recovery of other charges and payments.
122A. —

(1) Where goods or services to which this section applies are provided and either—

(a) any charge payable by any person under this Act in
respect of the provision of the goods or services is reduced, remitted or repaid, but that person is not entitled to the reduction, remission or repayment, or

(b) any payment under this Act is made to, or for the
benefit of, any person in respect of the cost of obtaining the goods or services but that person is not entitled to, or to the benefit of, the payment,

the amount mentioned in subsection (2) below is recoverable summarily as a civil debt from the person in question by the responsible authority.

(2) That amount—

(a) in a case within subsection (l)(a) above, is the amount of the charge or (where it has been reduced) reduction,

(b) in a case within subsection (l)(b) above, is the amount of the payment.

(3)Where two or more persons are liable under section 122(1) above or this section to pay an amount in respect of the same charge or payment, those persons shall be jointly and severally liable.

(4)For the purposes of this section, the circumstances in which a person is to be treated as not entitled to a reduction, remission or repayment of a charge, or to (or to the benefit of) a payment, include in particular those in which it is received (wholly or partly)—
884

(a) on the ground that he or another is a person of a particular description, where the person in question is not in fact of that description,

(b) on the ground that he or another holds a particular certificate, when the person in question does not in fact hold such a certificate or does hold such a certificate but is not entitled to it,

(c) on the ground that he or another has made a particular statement, when the person in question has not made such a statement or the statement made by him is false.

(5) In this section and section 122B below, "responsible authority" means—

(a) in relation to the recovery of any charge under section 122(1) above in respect of the provision of goods or services to which this section applies, the person by whom the charge is recoverable,

(b) in relation to the recovery by virtue of this section of the whole or part of the amount of any such charge, the person by whom the charge would have been recoverable,

(c) in a case within subsection (l)(b) above, the person who made the payment.

(6) But the Secretary of State may by directions provide for—

(a) the functions of any responsible authority of recovering any charges under this Act in respect of the provision of goods or services to which this section applies,

(b) the functions of any responsible authority under this
section and section 122B below,

to be exercised on behalf of the authority by another health service body.

(7) This section applies to the following goods and services—

(a) dental treatment and appliances provided in pursuance of this Act,

(b) drugs and medicines provided in pursuance of this Act,

(c) the testing of sight,

(d) optical appliances,

(e) any other appliances provided in pursuance of this Act.

Penalties.
122B. —

(1) Regulations may provide that, where a person fails to pay—

(a) any amount recoverable from him under section
122(1) above in respect of the provision of goods or services to which section 122A above applies, or

(b) any amount recoverable from him under section
122A above,

a notice (referred to in this section as a penalty notice) may be served on the person by the responsible authority requiring him to pay to the authority, within a prescribed period, that amount together with a charge (referred to in this section as a penalty charge) of an amount determined in accordance with the regulations.

885

(2) The regulations may not provide for the amount of the penalty charge to exceed whichever is the smaller of—

(a) £100,

(b) the amount referred to in subsection (l)(a) or (b) above multiplied by 5.

(3) The Secretary of State may by order provide for subsection (2) above to have effect as if, for the sum specified in paragraph (a) or the multiplier specified in paragraph (b) (including that sum or multiplier as substituted by a previous order), there were substituted a sum or (as the case may be) multiplier specified in the order.

(4) Regulations may provide that, if a person fails to pay the amount he is required to pay under a penalty notice within the period in question, he must also pay to the responsible authority by way of penalty a further sum determined in accordance with the regulations.

(5) The further sum must not exceed 50 per cent. of the amount of the penalty charge.

(6) Any sum payable under the regulations (including the amount referred to in subsection (l)(a) or (b) above) may be recovered by the responsible authority summarily as a civil debt.

(7) But a person is not liable by virtue of a penalty notice—

(a) to pay at any time so much of any amount referred to in subsection (l)(a) or (b) above for which he is jointly and severally liable with another as at that time has been paid, or ordered by a court to be paid, by that other, or

(b) to a penalty charge, or a further sum by way of penalty, if he shows that he did not act wrongfully, or with any lack of care, in respect of the charge or payment in question.

(8) In spite of section 126(1) below, no order is to be made under subsection (3) above unless a draft has been laid before, and approved by resolution of, each House of Parliament.

Offences.
122C.—(1) A person is guilty of an offence if he does any act mentioned in subsection (2) below with a view to securing for himself or another—

(a) the evasion of the whole or part of any charge under
this Act in respect of the provision of goods or services to which section 122A above applies,

(b) the reduction, remission or repayment of any such charge, where he or (as the case may be) the other is not entitled to the reduction, remission or repayment,

(c) a payment under this Act (whether to, or for the benefit of, himself or the other) in respect of the cost of obtaining such goods or services, where he or (as the case may be) the other is not entitled to, or to the benefit of, the payment. ").

The noble Lord said: My Lords, this group of amendments introduces further sanctions to deal with incorrect claims to exemption from NHS charges. They amend and add to Clause 32 and introduce a new clause after Clause 46 in Part II of the Bill. These measures support the Government's comprehensive strategy to tackle fraud and charge evasion in the NHS.
In order to deter the evasion of NHS charges, it is important that there are sanctions available which are both appropriate to the scale of the offence and cost-effective to administer. Clause 32 already creates a new criminal offence of knowingly making a false claim for exemption from an NHS charge or knowingly making a false claim for payment towards the cost of an
886
NHS charge or service. Due to the differences with Scottish law, there is no need to replicate this provision in Part II for Scotland.
As NHS charges involve relatively small sums, it would not be practicable to prosecute most individual cases. For this reason, the amendments introduce a new civil penalty charge in England and Wales and a similar penalty charge in Scotland. It would be the sanction normally imposed where a person fails to pay an NHS charge or claims a payment to which he is not entitled towards the cost of an NHS charge or service. The penalty charge, like the offence, would apply to charges for prescriptions, dental services and optical services, including those provided for hospital out-patients, as well as payments or benefits such as optical vouchers.
It may be helpful if I explain how it is intended to work. I will use the prescription system to illustrate this. Patients who do not have to pay prescription charges are required to indicate on the prescription form the reason for their exemption and to sign a declaration to that effect. Exemption is granted to patients for a number of reasons, including age, certain medical conditions or where the patient is claiming one of a number of benefits or is on a low income. Unfortunately, a large number of exemption claims are made falsely. We estimate that every year in England and Wales alone about £150 million is lost through people evading payment of the prescription charge when they have no right to exemption and should pay.
In this situation, and where checks show that a claim for exemption is incorrect, a penalty notice would be sent requiring the patient to pay the original charge and an additional penalty. The amount of the penalty and the period within which payment must be made will be stated in regulations setting out the detailed arrangements for each service. But the maximum amount of the penalty charge is clearly set out in the amendments at £100, or five times the unpaid charge, whichever is the less.
For evasion of the prescription charge—which currently stands at £5.80—this would mean that a penalty notice would be served requiring the payment of a £29.00 penalty plus the repayment of the £5.80 which should have been paid in the first place, making a total of £34.80. The amendments allow that the maxima of £100 for the penalty charge and the multiple of five may be changed by order. Such orders would be subject to affirmative resolution, which would allow the opportunity for appropriate scrutiny in your Lordships' House and in another place. This would allow the potential for revision of the penalty charge maxima and multiple from time to time, for example, to keep pace with inflation or to take account of our experience in operating this scheme.
Following the issuing of a penalty notice we would intend to allow 28 days for payment to be made. If the penalty charge is not paid within this period, a surcharge would be made of up to 50 per cent. of the penalty charge. If payment is still not forthcoming after a further 14 days, the total debt would be pursued through the civil courts. Liability for the penalty would normally be

887
incurred simply by an incorrect claim to exemption. The amendment provides that a patient may offer a defence that he did not act,
"wrongfully, or with any lack of care".
This would cover such cases as a patient acting on wrong official advice or a patient's representative acting on wrong information provided by the patient.
A patient may make representations as soon as he receives a penalty notice if he believes it is incorrect. There will be an internal process to reconsider the correctness of the penalty, making additional checks as necessary, for example with the DSS if the patient claims to be receiving a benefit. The whole procedure will be carefully monitored. Any patient who wishes to challenge liability for the penalty charge in England and Wales will be able to do so in the county court; or in Scotland in the sheriff court. This right of access to an independent hearing will satisfy the demands of natural justice and fulfil the requirements of the European Convention on Human Rights.
Where a patient has a representative—for example, where an individual goes to a pharmacist to have a prescription dispensed and signs for exemption on the back of the form on the patient's behalf—and a penalty notice is issued, they would, together, be held responsible for payment "jointly and severally". In practice, either the patient or the representative could be held liable to pay the penalty, according to the circumstances, but as only one incorrect claim had taken place, only one charge would be payable. The provision of this financial penalty charge would allow use of the criminal offence under this clause to be reserved for those more serious cases where intentional, fraudulent evasion of an NHS charge is clear. In practice, this will be where evasion has happened repeatedly or persistently. A clear safeguard is provided to ensure that a person cannot, in respect of the same incident, be both liable to pay a penalty charge and convicted of the new offence.
I should like to make clear that it is only a small minority of patients who abuse the National Health Service, but I believe we owe it to the vast majority of honest NHS patients to do all we can to stop abuse. This is money that should be going into patient care, not into people's pockets. The new measures in Clause 32, 33 and 46, and also the amendments, show our commitment to tackle all types of fraud and charge evasion in the National Health Service. The Government are investing in measures for the greater detection of those who evade charges. However, for maximum effective deterrence it is vital that detection is backed up by appropriate sanctions and redress. These amendments are essential to deal with those who deliberately set out to cheat the National Health Service. If we wish to tackle charge evasion against the NHS, we must provide the right tools to do this. I beg to move.
Lord Renton: My Lords, I do not have a point to make which will affect the National Health Service, but I have a drafting point to make which I make with some
888
seriousness. I make it because there are too many occasions in this Bill and in other Bills in which, although primary legislation deals with most of the matter, nevertheless power is given to make regulations which in this particular case—I shall draw attention to the detail in a moment—seems a quite unnecessary power.
On the third page of the amendment on the Marshalled List—on page 9—under the heading "Penalties" new Section 122B is proposed to the 1977 Act. The proposed new Section 122B states:
"Regulations may provide that, where a person fails to pay—

(a) any amount recoverable from him under section 122(1) above …

(b) any amount recoverable from him under section 122A",

a notice may be served within a prescribed period. Frankly, most of what is going to be relevant is already set out in the proposed new section. The idea that it should need to be amplified by regulation seems to me to be very strange because the regulations will have little more to do. I know that it is not part of the ministerial responsibilities of the noble Lord who moved the amendment, but I hope that he will carry the message to officials advising him, and especially to parliamentary counsel, and point out that there should be no necessity to make regulations when practically all of what is needed can be stated in primary legislation.
There are other examples to come—I shall not bore your Lordships with the earlier examples. Some are in the Bill and some are in the amendments. I picked this out as a very obvious example of a clause in which the whole of the law could be perfectly well stated in the primary legislation without the need to amplify it by regulations.
7 p. m.
Baroness Carnegy of Lour: My Lords, the noble Lord's strictures will, I am sure, be heard by the Government. I wish to ask a simple, practical question. I am one of those people who has occasionally to get some medicament or other with a prescription, and I sign a form to say that I am a pensioner. You can tell by looking at me that I am a pensioner. I know the chemist, who probably knows the year in which I was born and a good deal more about me than I would like to think. Many people are not like that. I was surprised when the Minister said that very few people dodge payment in this way. It is an enormous temptation and the Government are absolutely right to do something about it. I have often wondered why there was not a sanction.
I should like to know how the system will work. To begin with, how will people know that it has come into being? How will they know what it will cost them if they get it wrong? Will it be set out in enormous letters on every counter? Will the pharmacist be obliged to tell the customer that this is the case? It is only right that it should be very obvious indeed and well publicised. How will the penalty, if there is one, be paid? Will it be paid over the counter to the pharmacist? Who will issue the penalty? Who will receive the payment? Where will it

889
go? These matters may be mentioned in the amendment but I have had great difficulty in discovering exactly how it will work.
Will the pharmacist be obliged to tell the customer that an item can be bought more cheaply over the counter than £5.80 if there is the ordinary exemption? I am not sure whether the pharmacist is obliged to do that at the moment. I think not. For example, if one is prescribed Aspirin, one can buy 100 Aspirin, I think, for 90p. But it would cost £5.80 if one bought it on prescription. If one takes an Aspirin a day, as many of us do, will the pharmacist be obliged to tell one about that? That question is linked. I hope that I am not being dim about this, but I should like to know the answers.
Baroness Fookes: My Lords, I am as anxious as anyone to avoid fraud. It has always seemed to me that, with prescriptions, it is extraordinarily easy to be fraudulent if one so chooses. I am interested in detection. It does not matter how great is the scale of charges or how fearsome it all looks; if there is to be no means of finding out easily whether people are defrauding the NHS, all these penalties will be of no use. Perhaps the Minister could expand a little more on that point.
Lord Brougham and Vaux: My Lords, like my noble friend, I, too, do not want fraud to appear. I mentioned to the noble Baroness, Lady Jay, when she was in the shoes of the noble Baroness, Lady Hayman, that I used to have a pre-payment prescription form which lasted for a year. One paid one's money up front and then one would get one's prescription for a year. At the end of the year I never received a reminder that that pre-payment prescription form had expired. Occasionally, when one keeps it in one's wallet, for example, one cannot see the date on the form properly. If we want to stop fraud, why do not the people who issue these pre-payment forms send out a reminder to people that their form has run out of date and that they have to renew it?
Lord Clement-Jones: My Lords, I rise briefly to say that I share some of the reservations about the amount of practical detail that the Minister has made available. I certainly believe in the spirit of the amendment. It is quite clear that this is something which probably should have been on the statute book some years ago. I thank the Minister for his very clear exposition when he moved the amendment and I hope that he will give some more practical details. As I understand it, we are creating a new criminal offence. It is of significance that we are doing so. The mechanics of how notices are to be issued, by whom and in what circumstances are clearly important. The noble Lord, Lord Renton, made an interesting point about the drafting. It seems to me that the primary legislation contains all that is required. I do not understand why there is reference to regulations. It is belt, braces and suspenders—the whole shooting match
890
really—which is interesting in a piece of legislation. But generally we on these Benches welcome the amendment.
Baroness Masham of Ilton: My Lords, I wish to ask a very brief question. This change should be made clear to patients. But as so many people have language difficulties, will it be made clear in different languages?
Earl Howe: My Lords, I wish to ask the Minister a very brief question following on from what the noble Lord, Lord Clement-Jones, said. Are we talking about a new criminal offence or about a set of administrative penalties? That is what I understood us to be talking about.
Lord Hunt of Kings Heath: My Lords, this has been an extremely interesting debate. I shall attempt to answer the points that have been raised. I have not been in your Lordships' House very long but I know that when the noble Lord, Lord Renton, rises to question a piece of legislation your Lordships pay that matter full attention. In relation to the specific point that the noble Lord raised, I am advised that the regulations contained in the clause to which he referred were to allow administrative procedures for sending out and collecting the penalty notice. They are to give flexibility to, for example, changing the time limit for sending the notice in the light of experience. They are also for setting the different times for different services; for instance, contrasting between a general medical prescription and dental services. Nonetheless, I shall take back the more general point that the noble Lord raised.
I have been asked a number of questions about the extent of false claims. It was right for me to say that the vast majority of NHS patients are honest. However, the estimate that I originally gave in relation to the potential loss of £150 million was based on an investigation by the Prescription Pricing Authority's fraud investigation unit. It undertook a check over a two-month period and in that period estimated that false claims amounted to 7 per cent. As noble Lords can see, that is quite a high percentage and it is essential that we deal with it.
In relation to what is to be done about it, it is important to say that the position arising from these amendments is but one step in a number of actions that are being taken. The Prescription Pricing Authority's fraud investigation unit will institute more checks in the future. In addition we are introducing dispensing checks in pharmacies in the future and those will provide for the simple verification of claims to exemption within the pharmacy. The pharmacist or a dispensing doctor will ask the patient claiming exemption from the prescription charge if they have supporting evidence for exemption. If the patient does not have the evidence available the pharmacist will mark the prescription form to show no evidence. This will allow subsequent checks of exemption claims by the Prescription Pricing Authority's fraud investigation unit.
In ensuring that through these measures we reduce the degree of evasion in the National Health Service, it is important that we make it abundantly clear to users of the service that we shall introduce this new system. It is

891
intended that an advertising campaign to target prescription evasion will be instituted for a four-week period from the middle of March. Leaflets will be available to the public in pharmacies and surgeries. We will also be advertising in national magazines and women's magazines. I take on board the point made by the noble Baroness, Lady Masham, concerning the need to ensure that the leaflets are in a number of languages. It is something that I will take back to the Department of Health.
The noble Baroness, Lady Carnegy, asked whether pharmacists should be obliged to tell patients with prescriptions that they can buy cheaper medicines over the counter for less than £5.80. I do not have an answer for her at this stage and I hope she will allow me to write to her on that point. In relation to the question of prepayment certificates, health authorities often issue reminders when they expire, but they are not obliged to do so. I very much take the point and we would encourage the issue of reminders by health authorities; but the responsibility to renew a prepayment certificate is clearly that of the holder.
Lord Brougham and Vaux: My Lords, reverting to what the noble Lord said earlier regarding the pharmacist asking for proof, I have now reached the stage where I do not have to pay for my prescription but I do not have any proof that I have reached the age of 60. It is only that those at the pharmacy know me. If I went to another one, how should I be able to prove that I can get my prescription free?
Lord Hunt of Kings Heath: My Lords, there are various ways in which one might offer proof; for example, a driving licence which might have one's date of birth on it. The important point is that if a customer does not have evidence on him or her to prove that, it does not mean that the prescription will not be given to that patient. Indeed it will be. A mark will be made on the form enabling the exemption claim to be checked in a future improved and developed checking system. I hope that I have answered most of the points. I am advised that it is not a criminal offence, as was suggested, and I beg to move.
On Question, amendment agreed to.
7.15 p. m.
Lord Hunt of Kings Heath Lord Hunt of Kings Heath moved Amendment No. 76B:
Page 24, line 43, at end insert—
("(7) Where, in respect of any charge or payment under this Act—

(a) a person is convicted of an offence under this section, or

(b) a person pays any penalty charge, and any further sum by way of penalty, recoverable from him under section 122B above.

he shall not, in a case within paragraph (a) above, be liable to pay any such penalty charge or further sum by way of penalty or, in a case within paragraph (b) above, be convicted of such an offence. "").
On Question, amendment agreed to.
Lord Hunt of Kings Heath Lord Hunt of Kings Heath moved Amendment No. 76C:
Page 25, line 3, at end insert—
("(3) Sections 122A to 122C of the 1977 Act apply to charges which may be made and recovered under section 20 of the National Health Service (Primary Care) Act 1997 as they apply to charges under the 1977 Act which may be recovered under section 122(1) of that Act; and the reference in section 122A(7)(a) to the 1977 Act includes a reference to a pilot scheme (within the meaning of the 1997 Act). ").
On Question, amendment agreed to.
Clause 33 [Disqualification etc. of Part II practitioners]:
Lord Hunt of Kings Heath Lord Hunt of Kings Heath moved Amendment No. 76D:
Page 25, line 10, leave out from ("receive") to end of line 18 and insert ("from a Health Authority representations that—

(a) a person who is included in any list meets either of the conditions for disqualification, or

(b) a person who has applied to be included in any list meets the second condition for disqualification, ").

The noble Lord said: My Lords, Clause 33 already provides for new powers for the NHS tribunal to disqualify Family Health Service practitioners who commit fraud against the NHS. These clauses and amendments are put forward as part of the Government's strategy for countering fraud in the National Health Service. I shall be speaking in some detail about the overall purpose of these clauses, as we have not had the opportunity to debate them previously. I want to set the Government amendments in context.
As in our previous debate, there is general agreement that fraud in the NHS is unacceptable. These clauses expand the role of the NHS tribunal to allow it to deal specifically with fraud among the independent family health service practitioners. The NHS tribunal is an independent non-departmental public body with judicial powers. It derives its powers from the National Health Service Act 1977 and, like the Act, covers England and Wales. The tribunal is the ultimate NHS disciplinary body for family health service practitioners on a health authority's medical, dental, pharmaceutical or ophthalmic list. It is a very small minority of practitioners who abuse the NHS in this way. The vast majority are honest and hardworking. I am sure noble Lords will agree that, however small the minority, this activity cannot be tolerated.
Currently the NHS tribunal decides whether the continued inclusion of an FHS practitioner's name on a health authority's list would be prejudicial to the "efficiency" of the service in question. If it does so decide, it must direct that the practitioner is disqualified from providing the service.
This efficiency regime has meant that health authorities have generally sent cases to their tribunal about practitioners' standard of practice rather than any fraud they may have committed. Clause 33, together with these amendments, introduces an explicit power for the tribunal to tackle fraud. The new power is clearer and more wide-ranging than could be achieved through the efficiency regime, and will give health authorities, via the independent NHS tribunal, a clear route to deal

893
with fraudulent FHS contractors. This clause will not change the constitution or composition of the tribunal, but does extend its role.
The clause allows a fraud case to be referred to the NHS tribunal where a practitioner has applied to be included on a health authority's list, as well as when they are already on the list. This is important as there are instances currently where health authorities may be obliged to engage a practitioner, even one who has made dishonest claims on the NHS.
The existing sanction of interim suspension under the efficiency regime will also apply to fraud cases where there is a significant risk that a fraud will continue or that the investigation of the case will be prejudiced. This also will be important as we are aware of fraud cases where the investigation may indeed have been prejudiced because, for example, the practitioner has continued to practise while awaiting a criminal trial, enabling him to continue to deal with patients or staff who are potential witnesses.
The existing sanctions of local, national or total disqualification (a declaration of unfitness) which can be applied by the NHS tribunal for cases under the existing efficiency regime are applied in relation to cases for the new fraud regime. Clause 33 also introduces a new sanction, which can in future be applied by the NHS tribunal for both efficiency and fraud cases of "conditional disqualification".
Conditional disqualification gives the tribunal a new flexibility. Under this new sanction a tribunal could disqualify a practitioner but provide that the disqualification shall take effect only if the practitioner fails to comply with conditions imposed by the tribunal. That allows the individual to continue practising within those conditions.
For example, if a dispensing GP had used his or her dispensing activities to commit fraud, the tribunal could insist that the right to dispense be withdrawn. If the practitioner broke the specified terms, the tribunal could reconsider its decision and, for example, allow the original disqualification sanction to take effect.
The Government are determined to root out fraud against the NHS. As a result, the NHS tribunal can rightly take severe measures to deal with it. Nevertheless, we do not wish to treat family health service practitioners unjustly. This clause provides that no sanction should be applied where it would be unjust to do so.
Perhaps I may briefly explain some of the main points that the amendments deliver. Noble Lords will note that the majority of the amendments are textual changes which are consequential to the larger changes. Amendment No. 76J allows the NHS tribunal to disqualify bodies corporate which commit fraud from providing general ophthalmic or pharmaceutical services in the family health services. The amendments provide that disqualification will apply if any director or any person controlling the body corporate or ophthalmic and pharmacy business respectively meets the condition for disqualification, whether or not he was a director or person controlling the body corporate when he first met the condition. It is clearly necessary, for example, to
894
prevent a practitioner who has been disqualified for fraud from setting up a company in order to be able to practise again in the family health services.
Amendment No. 76J also provides for liability to fall on the practitioner for the conduct of employees or deputies in fraud cases, where the practitioner has failed to take reasonable steps to prevent this. We believe that these powers are necessary for the prevention of fraud.
Amendment No. 76F makes changes to the definition of fraudulent conduct by the practitioner which would lead to disqualification. This still includes a. "mental element", but this is now "knowledge". The amended condition for disqualification would be that the practitioner knew that he was not entitled to the benefit, which he secured or tried to secure. His knowledge would have to be proved to the satisfaction of either tribunal. The definition in the current clause,
"that a person … has fraudulently acted in a way detrimental to any health service",
is not commonly used in legislation and could, in our judgment, make it difficult for the tribunals to decide whether the test had been met. The amendment provides a clearer definition against which the NHS tribunals would test the conduct of practitioners.
This and the following amendment, Amendment No. 76G, also clarify the kinds of acts which might constitute fraud against the NHS or another publicly funded health service. These acts could include securing a benefit for another person or attempting fraud.
The phrase "detriment to a health scheme" (in new subsection (5B) of Amendment No. 76G) is now defined as including detriment, not only to a patient, but also, as amended, to another person working in that scheme. This provision is to capture a particular type of fraud. Some general medical services, such as capital ion fees, are funded on a "pool" arrangement—there is a fixed overall budget and GPs in effect defraud their colleagues if they register non-existent patients. We believe that that is also unacceptable, even though there is no net loss to the NHS, and so it would be caught by the amended clause.
Amendment No. 102A provides procedures for the application to England and Wales of decisions of the NHS tribunals for Scotland and Northern Ireland. Decisions by any of the NHS tribunals for national disqualification already apply automatically in each country. The amendment would provide for a decision for total disqualification by the NHS tribunals for Scotland and Northern Ireland to be recognised similarly. The amendment also allows for the conditions specified in a conditional disqualification given by the NHS tribunal in Scotland or Northern Ireland to be translated for equivalent effect in England and Wales.
There are a number of more technical amendments, including those on procedures of the NHS tribunals. For example, Amendment No. 76ZC, which provides for the conditions for a health authority to request a review of a conditional disqualification, are now set out in detail. Amendment No. 102A to Schedule 4 allows the tribunal to make appropriate arrangements to manage two inquiries about the same practitioner when they are running concurrently.
Noble Lords will be aware that Clause 46 delivers the same new powers to tackle fraud to the NHS tribunal in Scotland as Clause 33 gives to the tribunal in England and Wales. I should like to take this opportunity to inform the House on behalf of my noble friend Lord Macdonald of Tradeston that he is looking to bring forward similar amendments to the Scottish tribunal at Third Reading to those I am bringing forward today.
These amendments are an essential part of the Government's programme to deal with those practitioners in the family health services who defraud the NHS. It is important, if we are to tackle fraud in the round, that we must also tackle fraud committed by practitioners. These amendments do not change the fundamental purpose or impact of Clause 33, but they are needed for clarity and to ensure that the clauses work as intended.
I apologise for taking up so much time in explaining these amendments. I beg to move.
Lord Clement-Jones: My Lords, I thank the noble Lord for that lucid explanation which has made this set of amendments easier to understand. I thank the Minister also for the benefit of the newly "re-jigged" clause as a result of previous amendments. It is extremely helpful.
The newly amended subsection (4C) is particularly welcome, in that "knowledge" is now a requirement. That brings the provision much more closely into line with commonly accepted concepts of criminal law. That is particularly helpful. We strongly support the amendment.
Lord Hunt of Kings Heath: My Lords, I thank the noble Lord for those comments. I commend this amendment to the House.
On Question, amendment agreed to.
Lord Hunt of Kings Heath Lord Hunt of Kings Heath moved Amendments Nos. 76E to 76ZF:
Page 25, line 20, leave out ("representations within subsection (2)(a) above") and insert ("such representations").
Page 25, line 25, leave out from beginning to ("a") in line 30 and insert—
("where the representations are that the second condition for disqualification is met and regulations prescribe the time within which such representations are to be made, within that time.

(4A) Subsections (4B) to (5C) below apply for the purposes of this group of sections.

(4B) The first condition for disqualification is that the continued inclusion of the person concerned in the list would be prejudicial to the efficiency of the services which those included in the list undertake to provide.

(4C) The second condition for disqualification is that the person concerned—

(a) has (whether on his own or together with another) by an act or omission caused, or risked causing, detriment to any health scheme by securing or trying to secure for himself or another any financial or other benefit, and

(b) knew that he or (as the case may be) the other was not entitled to the benefit.

896
(5)").
Page 25, line 41, at end insert—
("

(5A) "Health scheme" means—

(a) any of the health services under section 1(1) above or any corresponding enactment extending to Scotland or Northern Ireland, and

(b) any prescribed scheme;

and regulations may prescribe any scheme for the purposes of this subsection which appears to the Secretary of State to be a health or medical scheme paid for out of public funds.

(5B) Detriment to a health scheme includes detriment to any patient of, or person working in, that scheme or any person liable to pay charges for services provided under that scheme.

(5C) Cases in which representations are made that the first condition for disqualification is met are referred to below as efficiency cases; and cases in which representations are made that the second condition for disqualification is met are referred to below as fraud cases. ").

Page 25, line 44, after ("sections") insert ("and Schedule 9 to this Act").
Page 26, leave out lines 1 to 41 and insert—
("The NHS Tribunal: supplementary.
46A.—(1) Where an ophthalmic optician is a body corporate, the body corporate is to be treated for the purposes of this group of sections as meeting the second condition for disqualification if any director meets that condition (whether or not he first met that condition when he was a director).
(2) Where a body corporate carries on a retail pharmacy business, the body corporate is to be treated for the purposes of this group of sections as meeting the second condition for disqualification if any one of the body of persons controlling the body corporate meets that condition (whether or not he first met that condition when he was one of them).
(3) A person who is included in any list ("the practitioner") is to be treated for the purposes of this group of sections as meeting the second condition for disqualification if—

(a) another person, because of an act or omission of his occurring in the course of providing any services mentioned in section 46(5) above on the practitioner's behalf, meets that condition, and

(b) the practitioner failed to take all such steps as were reasonable to prevent acts or omissions within section 46(4C)(a) above occurring in the course of the provision of those services on his behalf.

(4) The Tribunal is not required to inquire into a fraud case if they have previously inquired into representations in respect of the person concerned and the same acts or omissions.
(5) In a fraud case, regulations may make provision (including provision modifying the effect of this Part of this Act) for the purpose of securing that the person subject to the inquiry is not added to any list until proceedings in that case are finally concluded.
(6) For the purposes of this group of sections, in a fraud or efficiency case proceedings are finally concluded—

(a) if the Tribunal determine not to exercise their power under section 46B(2) below, when they make that determination,

(b) if they determine to exercise that power and no appeal is brought against the determination, at the end of the period for bringing an appeal,

(c) if they determine to exercise that power and an appeal is brought against the determination, when the appeal process is exhausted.

(7) An inquiry under section 46 above is not affected by the person subject to the inquiry withdrawing from, withdrawing any application to be included in or being removed from the list to which the case relates.
Powers of NHS Tribunal.
46B.—(1) Subsection (2) below applies where the Tribunal are of the opinion—

(a) on inquiring into an efficiency case, that the person meets the first condition for disqualification,

(b) on inquiring into a fraud case, that the person meets the second condition for disqualification.

(2) The Tribunal—

(a) shall disqualify him for inclusion in the list to which the case relates, and

(b) may disqualify him for inclusion in all lists within the same paragraph of section 46(5) above as that list. ").

Page 26, line 43, leave out from beginning to ("they") and insert ("(2)(b) above").
Page 26, line 45, leave out ("in question") and insert ("to which the lists in question relate").
Page 27, line I, leave out from ("section") to end of line 8 and insert ("shall have effect when proceedings in the case are finally concluded").
Page 27, line 9, leave out from ("disqualified") to end of line and insert ("for").
Page 27, line 13, leave out from ("The") to ("that") in line 14 and insert ("power to disqualify under section 46B above includes power to make a conditional disqualification, ").
Page 27, line 15, leave out ("they") and insert ("the Tribunal").
Page 27, line 23, leave out from ("any") to end of line 24 and insert ("acts or omissions within section 46(4C)(a) above, ").
Page 27, line 25, at end insert—
("( ) Conditions so imposed shall have effect when proceedings in the case are finally concluded.
( ) Section 46B(5) above applies to a conditional disqualification as it applies to a disqualification").
Page 27, line 26, leave out ("in writing").
Page 27, line 29, leave out ("or").
Page 27, line 33, leave out from ("References") to ("do") in line 34 and insert ("in any enactment to a disqualification by the Tribunal").
Page 27, line 39, leave out ("(whether or not conditional)") and insert (", conditional disqualification").
Page 27, line 40, after ("disqualified") insert ("or conditionally disqualified").
Page 28, line 5, leave out ("46B(2)") and insert ("46B(2)(a) above").
Page 28, line 7, leave out ("46B(3)") and insert ("46B(2)(b) above").
Page 28, line 9, leave out ("46B(3)") and insert ("46B(2)(b) above").
Page 28, line 11, leave out ("46B(3)") and insert ("46B(2)(b) above").
Page 28, leave out lines 13 and 14 and insert—
("(3) If any Health Authority request a review of a conditional disqualification on the ground that—

(a) there has been a change in the circumstances by reference to which the conditions were imposed,

(b) the person concerned has failed to comply with the conditions, or

898

(c) in a fraud case, the person concerned has since the Tribunal imposed the conditions (or made the disqualification conditional) again satisfied the second condition for disqualification,

the Tribunal shall review the conditional disqualification.
( ) In the case of a person who is providing services in Scotland or Northern Ireland, the reference in subsection (3) above to a Health Authority includes any corresponding authority under the: provisions in force in Scotland or Northern Ireland corresponding to this Part of this Act. ").
Page 28, line 20, leave out ("46B(2)") and insert ("46B(2)(a) above").
Page 28, line 22, leave out ("46B(3)") and insert ("46B(2)(b) above").
Page 28, line 25, leave out ("46B(3)") and insert ("46B(2)(b) above").
On Question, amendments agreed to.
Clause 41 [Duty of quality]:
Earl Howe Earl Howe moved Amendment No. 77:
Page 31, line 27, at end insert—
("(4) The Secretary of State may by regulations extend the duty in this section to Special Health Authorities of any particular description and to any independent hospital.
(5) In this section "independent hospital" means premises—

(a) within the meaning of "hospital" given by section 128(1) of the 1977 Act;

(b) which are not a health service hospital within the meaning of the 1977 Act nor any other premises maintained or controlled by a government department or local authority or any other authority or body instituted by special Act of Parliament or incorporated by Royal Charter; and

(c) which are used or intended to be used for the provision of health care within the meaning of this section,

but excludes—

(i) any premises used, or intended to be used solely or predominantly, for the reception of and the provision of nursing for persons suffering from any sickness, injury or infirmity;

(ii) any sanatorium provided at a school or educational establishment and used, or intended to be used, solely by persons in attendance at, or members of the staff of, that school or establishment or members of their families:

(iii) any first aid or treatment room provided at factory premises, at premises to which the Offices, Shops and Railways Premises Act 1963 applies or at a sports ground, showground or place of public entertainment;

(iv) any premises used, or intended to be used, wholly or mainly—

(a) by a medical practitioner for the purpose of consultations with his patients;

(b) by a dental practitioner or chiropodist for the purpose of treating his patients; or

(c) for the provision of occupational health facilities,

unless they are used or intended to be used for the provision of treatment by specially controlled techniques as defined in section 21 of the Registered Homes. Act 1984 and any regulations made thereunder;

(v) any premises used, or intended to be used, wholly or mainly as a private dwelling; or

(vi) any other premises excepted from the definition of a "nursing home" for the purposes of section 21 of the Registered Homes Act 1984 by regulations made thereunder by the Secretary of State. "").

The noble Earl said: My Lords, this amendment, in one sense at least, mirrors my earlier Amendment No. 47 in that it seeks to impose the duty of quality in Scotland on the independent hospital sector.
Having carried the House with me on the earlier amendment, I give notice that I propose to press this amendment. I shall not repeat the arguments that I advanced earlier in relation to England and Wales, but the amendment enables me to highlight the same issues in the context of Scotland, as well as a general issue relating to Clause 41.
There is no question in my mind that quality standards in the independent sector in Scotland are as much in dispute there as they are in England and Wales, and that a unitary framework of regulation for both the NHS and the independent sector would provide a necessary and welcome degree of assurance to patients in Scotland.
My general point takes the form of a question. How is it proposed that adherence to the duty of quality will operate in Scotland given that the commission for health improvement is to cover England and Wales only? How will quality standards be monitored? How will doctors and hospitals be inspected and audited on a basis comparable to that south of the Border? I beg to move.
Lord Clement-Jones: My Lords, I support this amendment as we supported Amendment No. 47 in relation to England and Wales. Exactly the same arguments apply. The argument having gone one way on Amendment No. 47, it would seem highly illogical for it not to go the same way in relation to this amendment. I hope that for the purposes of future argument on the Bill in another place, the Government will accept this proposal.
Baroness Carnegy of Lour: My Lords, I support the amendment and I hope that the Government will accept it, the House having accepted Amendment No. 47. My noble friend asked how this will operate in Scotland. It seems to me that this is, like the other amendment, an enabling amendment. It would enable each special health board or NHS trust to put and keep in place arrangements for this purpose. Perhaps the Minister can tell us whether it will be left to the health board or to the trust to put these arrangements in place or whether it will be prescribed to them if the amendment is accepted. Obviously, he has not had time to think this through, but it would be helpful if we could have an indication. Quality in Scotland matters so much.
Lord Macdonald of Tradeston: My Lords, as was said, the amendment covers similar ground to that covered by Amendment No. 47, debated this afternoon. It seeks to extend the duty of quality to special health authorities. This is unnecessary as the clause as drafted achieves this already. Scottish special health boards are the counterparts of special health authorities in England. There is no statutory provision for the creation of the latter in Scotland. Special health boards will be subject to the duty of quality under the terms of the Bill.
In reply to the noble Earl, Lord Howe, perhaps I should say a little more about the arrangements that we have in Scotland relating to quality. As I explained in Committee, we have the well-established Clinical Resource and Audit Group (CRAG). We are in the
900
process of establishing the clinical standards board for Scotland, which I am delighted to say that the noble Lord, Lord Patel, who spoke earlier today, has agreed to chair. These bodies are primarily concerned with the National Health Service, but their guidance and advice will be available to the private sector. We expect the private sector to take that advice and guidance fully into account.
The amendment also seeks to extend the duty of quality to independent hospitals, which it attempts to define. As was explained in Committee, we do not believe it would be appropriate to attempt to use the current Bill to place new statutory obligations on the independent sector. That will be a matter for the Scottish Parliament to consider in due course. No doubt it will wish to take account of the conclusions of the health committee's current inquiry into the regulation, monitoring and inspection of healthcare outside the NHS.
The guidance on clinical governance issued to the National Health Service in Scotland last November makes clear, however, that its provisions apply to services which the NHS commissions from other bodies. Thus, where the NHS contracts with a provider in the independent sector to provide a service to NHS patients, it should use those contracts to ensure that clinical governance principles are applied.
As your Lordships may be aware, my honourable friend the Minister for Health for Scotland published earlier this week a White Paper proposing new arrangements for the registration and inspection of nursing homes in Scotland. That would require a reconsideration of the current arrangements for regulating the private acute hospital sector. We expect the Scottish Parliament to take that work forward.
Your Lordships will understand the Government's reluctance to accept the amendment, given the earlier debate on Amendment No. 47. Furthermore, Amendment No. 77 does not properly reflect the Scottish legislation on these issues. However, in the light of the House's decision on Amendment No. 47, I am prepared to consider whether there are any further steps I can take to provide reassurance to your Lordships on this matter.
I should say, in reply to the noble Baroness, Lady Carnegy of Lour, that the Government have issued guidelines on clinical governance and that the clinical standards board will provide further guidance. If there is any detail that I have overlooked in that reply, I shall try to supply it to the noble Baroness in writing as soon as possible.
Baroness Carnegy of Lour: My Lords, before the noble Lord sits down, is there any reason why the Government should not put an enabling clause into the Bill which the Scots Parliament could then pick up? With all the careful arrangements that the Parliament will have with regard to secondary legislation, it could then proceed with the matter. It seems to me that there should be the same provision for Scotland in the Bill in that respect as there is for England. I understand that the

901
arrangements will be totally different, but could there not be an enabling clause of that kind? I realise that this amendment is flawed.
Lord Macdonald of Tradeston: My Lords, as I said in the light of the House's earlier decision on Amendment No. 47, I am prepared to look at the matter again. It will be one of the issues that we shall consider. I hope that I shall be able to provide reassurance to your Lordships on this matter.
Earl Howe: My Lords, I am grateful to the noble Lord for that assurance. In the light of that and of his clarification that the amendment is technically defective, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carter: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion I suggest that the Report stage begin again not before 8.20 p. m.
Moved accordingly, and, on Question, Motion agreed to.

Prevention of Terrorism (Temporary Provisions) Act 1989 (Continuance) Order 1999
7.36 p. m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs)The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs) rose to move, That the draft order laid before the House on 4th March be approved [12th Report from the Joint Committee].
The noble Lord said: My Lords, in introducing this order in another place two evenings ago, my right honourable friend the Home Secretary took time to reflect upon the mixture of signs of optimism and violence that have characterised the 12-month period since the last debate extending the life of the prevention of terrorism Act; and I too would invite your Lordships to consider briefly with me some of the key events that have taken place this past year.
But perhaps I may first touch briefly on one other issue referred to by my right honourable friend in his opening remarks. As many noble Lords will be aware, the Government, in their consultation paper Legislation against Terrorism propose the introduction of permanent UK-wide counter-terrorism legislation which we hope will do away with the need for the annual renewal of temporary provisions, and so this debate may be one of the last annual debates on the renewal of the prevention of terrorism Act.
The proposal to introduce permanent counter-terrorist legislation recognises the sad but incontrovertible reality that even a lasting peace in Northern Ireland— something we all hope will be firmly established soon— would not remove the need for anti-terrorist provisions. Terrorism and the threat of terrorism from a range of fronts are likely to continue to exist for the foreseeable future. I intend to say more about our proposals for
902
future legislation in closing. But now, if I may, I shall remind noble Lords of some of the significant events over the past year which form the context of this debate.
Not six weeks after the prevention of terrorism Act was renewed in 1998, the Good Friday agreement was signed. It was subsequently endorsed by 71 per cent. of the people of Northern Ireland and provides the means to take Northern Ireland on the road to lasting peace. My right honourable friends the Prime Minister and the Secretary of State for Northern Ireland and many others on both sides of this House, and outside it, continue to work tirelessly with all the parties to achieve full implementation of the agreement and to see the executive established by the first anniversary of the Good Friday agreement.
But the year has also brought savage reminders of the residual threat from renegade groups opposed to the Northern Ireland peace process. The dreadful atrocity in Omagh on 15th August last year, which claimed the lives of 29 people and injured over 200 more, brought this home in the most appalling manner. And on Monday of this week we had a further terrible reminder of the depths to which such groups will stoop, with the murder in cold blood of Rosemary Nelson, the prominent human rights lawyer. Her death was "claimed" by the Red Hand Defenders, a loyalist splinter group opposed to the Belfast agreement. The proscription of this group—and, subject to parliamentary approval, its specification—was announced just two weeks ago.
The Royal Ulster Constabulary has invited the Chief Constable of Kent to oversee the inquiry into the death of Rosemary Nelson, demonstrating its commitment to a full and independent inquiry into this terrible crime. I am sure that your Lordships will wish to join me in echoing the sentiments of my right honourable friend the Home Secretary in conveying our sympathy to the family and friends of Rosemary Nelson particularly today, the day of her funeral. I am sure noble Lords will agree with me that her death in these dreadful circumstances should serve only to strengthen our efforts to secure a lasting peace for Northern Ireland. Regrettably, I should also at this point remind your Lordships—if it is necessary to do so—that yesterday we were served another grim reminder of Northern Ireland's past with the murder of Frankie Curry in Belfast. There is little we should say about the brutality of an action such as this other than to condemn it in the most forceful terms possible.
The threat of international terrorism has also been with us this past year. The bombings, also in early August, of the United States embassies in Kenya and Tanzania, with the loss of more than 250 lives, were a terrible and shocking illustration of the scale of indiscriminate violence international terrorists are prepared to unleash. The horrific events in the Yemen and, more recently, Uganda, which resulted in the deaths of four and eight tourists respectively, including seven British citizens, have further emphasised the global reach of international terror.
The Government's response to all this is two-fold. First, we do all we can in the international and domestic context to help establish peace and stability; and,

903
secondly, we do all that we can with the police and security services to counter terrorism. The recall of Parliament in early September last year to enact the Criminal Justice (Terrorism and Conspiracy) Act 1998 was an illustration of this twin approach. The Act strengthens our anti-terrorist laws against renegade Irish terrorist groups and our conspiracy laws in relation to terrorism and other crimes. The key to the prevention of terrorism is to ensure that the police and others have all the powers that they need to deter, disrupt and investigate. I am sure that the whole House will join me in paying tribute to the diligence, hard work and bravery of the police and the security forces in their efforts on our behalf.
Turning to the Act itself, I am grateful for the report prepared by the reviewer, John Rowe QC, which informs our debate today. I am pleased to say that Mr. Rowe has once again concluded that the powers available under the Act in 1998 were used appropriately and proportionately. I say "available under the Act" because, as your Lordships will recall, the exclusion powers were not included in last year's order and Mr. Rowe has not considered these powers in his report this year.
The order before us now does not contain exclusion powers. I do not propose to explain in detail this evening the reasons for this; they have been well rehearsed in the past. Suffice it to say that it has been the Government's long-standing view that exclusion orders are wrong on policy grounds and in any case have proved to be of limited utility. While the exclusion powers remain on the statute book they could be re-activated on security grounds. But I should remind your Lordships that our consultation paper on proposals for future legislation makes it clear that we do not envisage carrying these powers across into the new permanent anti-terrorist laws. Our ability under the Immigration Act 1971 to deport, or deny entry to, suspected international terrorists will remain unchanged.
To return to Mr. Rowe's report, it was heartening to read of the care that he found was taken in respect of the relatively small number of complaints received about the operation of the powers under the Prevention of Terrorism Act. We must never lose sight of the fact that the powers available under the Act are exceptional and must be exercised with integrity and diligence. If I may add a personal word of testimony, I should like to bear witness to the scrupulous care with which the powers have been used in my experience. I am very conscious of the exceptional nature of the powers when called upon to exercise them, as I am occasionally required to do when giving consideration to police requests to extend detention periods under the Prevention of Terrorism Act.
Noble Lords will recall that the specific anti-terrorist provisions in the Criminal Justice (Terrorism and Conspiracy) Act 1998, which amended sections of the Prevention of Terrorism Act, also fall to be renewed for the first time in the order before the House today. Your Lordships may recall these measures mean that the opinion of a senior police officer is admissible in court as evidence of membership of proscribed and specified
904
terrorist groups (that is, the Real IRA and Continuity IRA but, subject to parliamentary approval, not INLA); and courts may draw inferences from a suspect's refusal to answer questions during the course of an investigation into memberships of a proscribed and specified terrorist group. Noble Lords may recall that it is not possible under the legislation for a suspect to be convicted solely on the basis of inferences allowed under the Act or on the statement of a police officer alone.
As Mr. Rowe states in his report, so far there have not been any convictions in connection with these new provisions. But I am sure your Lordships will agree that that cannot be the sole criterion for judging their effectiveness. These measures were introduced as a targeted response to the small but very dangerous renegade groups whose aim is to bring down the Good Friday agreement and who have no regard for human life. The fact that similar action was taken simultaneously in the Irish Parliament sent a powerful signal of the total repudiation of the action of these groups and all that they stand for.
But the provisions offer more than a mere symbolic gesture. They exist to enable robust action to be taken against those who, in the face of the express wishes of the people of the island of Ireland, choose to support groups that do not observe total and unequivocal ceasefires. I am sure noble Lords will, like me, sincerely hope that support for these groups withers away, but if it does not, the strengthened provisions are there to assist in bringing these people to book.
That leads me to touch upon the observations that Mr. Rowe makes in Chapter 2 of his report about the provisions of the Prevention of Terrorism Act and the European Convention of Human Rights (ECHR). He concludes that most of the measures in the Act do not raise possible issues of incompatibility. He is at pains to stress that, although it has been possible for individuals to bring cases to the European Commission of Human Rights since 1966—long before the Prevention of Terrorism Act first came into force—only two cases have been dealt with by the European Court of Human Rights in all this time and a violation was found in only one of those. Therefore, our ECHR record vis à vis the Prevention of Terrorism Act is good.
But Mr. Rowe raises concerns about the compatibility of the new provisions on membership enacted last year in the Criminal Justice (Terrorism and Conspiracy) Act 1998 with the ECHR, in particular Article 6 (the right to a fair trial). As was made clear when the 1998 Act was considered both here and in another place, the whole issue of compatibility was looked at extremely closely before publication of the Bill. We were then, and remain, satisfied that the provisions are compatible with the convention. Noble Lords can be assured that we would not have introduced this legislation in the form we did if we had believed it was incompatible with our obligations under the convention. But in the light of the remarks made by Mr. Rowe in his report we have looked at the issue again carefully. His arguments do not, however, cause us to change our position. This is therefore something on which we shall have to agree to differ, unless and until these questions are settled in the courts.
I mentioned that I would in closing say a few words about our proposals for new counter-terrorist legislation. As I reminded noble Lords at the outset, the Government issued its consultation paper Legislation Against Terrorism just before Christmas and invited responses by 16th March (Tuesday of this week). In that paper we argue that the range of terrorist threats which the United Kingdom faces, and may potentially face, creates a need for United Kingdom-wide anti-terrorist powers, even when lasting peace is established in Northern Ireland. We believe the time has come to put the necessary legislation on a permanent footing. We envisage legislation that is flexible enough to be able to respond to the ever-changing nature of terrorism, is effective and proportionate to the threat that the United Kingdom faces, protects the rights of individuals and complies with our international commitments. It is our sincere hope that by the time new legislation is introduced the threat from Irish terrorism will have diminished to the point where no additional special powers are necessary to combat it. But if the security situation suggests that some particular measures are needed, it is proposed that they would be included in a temporary additional section of the Act, subject, as is the Prevention of Terrorism Act now, to additional independent review and to Parliament's annual approval to their staying in force.
I do not intend to detail now the measures we have included in the document. As I made clear earlier, I hope that those noble Lords with a particular interest in these matters have been able to read and respond to the paper, which seeks to strike a balance between giving the police and other agencies the powers they need to fight terrorism and guarding the civil liberties of those affected by the exercise of these powers. However, we recognise that it is not an easy task to get the balance right; and we shall consider carefully all the responses we receive to our paper.
Returning, finally, to the focus of today's debate, the question before your Lordships is whether the Prevention of Terrorism Act should remain in force for a further 12 months. In this regard, the Government firmly endorse the conclusion of the Act's reviewer, John Rowe QC, that it should. It is vital that those engaged in the fight against terrorism have all the powers that they need. I commend the order to the House.
Moved, That the draft order laid before the House on 4th March be approved [12th Report from the Joint Committee]—(Lord Dubs.)
Earl Attlee: My Lords, I am grateful to the Minister for reminding the House with his usual clarity of the background to this order. It is interesting that it is mainly a Northern Ireland team playing tonight; and that the legislation is aimed at what is termed Irish terrorism. However, it is also essentially a Home Office matter relating to all types of terrorism. It is merely circumstances which lead to the noble Lord, Lord Dubs, moving the order and my responding to it for the Opposition.
The Minister mentioned the brutal murder of Mrs Rosemary Nelson whose funeral took place today. Other than to say that it is a most evil and disgusting
906
attack which left me feeling very bitter, I shall save my comments until next Monday when somewhat more relevant orders will be discussed. I welcome and agree with what the Minister said on the subject.
In the global context, we agree with the thrust of the consultation paper on legislation against terrorism mentioned by the Minister. The consultation paper recognises that terrorism is changing and that the legislation must also change. We look forward to comprehensive anti-terrorist legislation which will combat internal, external and overseas threats. As the Minister suggested, this may be the last time we debate this order. Does the noble Lord hope to be able to introduce a Bill in the next Session? There are obvious advantages in having (if one may put it this way) normal anti-terrorist legislation which would cover residual domestic terrorism and acts of international terrorism.
Order-making powers under primary legislation would enable the Government to take more draconian powers if necessary. The degree of parliamentary scrutiny and approval procedures would depend upon the nature of the powers sought. Those matters will be handled by my noble friend Lord Cope of Berkeley when the Bill appears before the House.
Future legislation will have to cater for all likely forms of terrorism in order to avoid having to rush through suitable but knee-jerk reaction primary legislation. The consultation paper covers electronic terrorism, although apprehending an electronic terrorist presents an obvious challenge. The risk from a nuclear, biological or chemical attack is well recognised in the paper and has already been seen in Japan. No doubt the officials at the Home Office and elsewhere will be undertaking brainstorming sessions to identify all other threats and ensure that they are covered by future legislation.
There is also the challenge of ensuring that the legislation does not infringe the ECHR which the Government have so thoughtfully incorporated into UK law. The Minister covered that point and the observation in Mr Rowe's report. The UK Government are quite good on this matter. Therefore we need not be overly worried.
All Parliament can do is to ensure that the legislative framework provides the necessary tools and safeguards for use by the police and security forces. We are highly indebted to them for their efforts in preventing and detecting terrorism wherever it arises and their integrity in using those powers. I am sure the House will join me in paying tribute to their efforts and the sacrifices that they have made.
Although we cannot guarantee the elimination of terrorism, we can take the necessary steps to prevent and react to terrorist acts. Mr Rowe's report makes clear that the powers have not been abused.
The renewal of the order is necessary to protect the United Kingdom and Northern Ireland from terrorist attacks. With that in mind, we are content with the order.
Lord McNally: My Lords, this debate is again as topical as the evening headlines on our television

907
screens. No one has ever doubted the capacity of the men of evil to make headlines. I wish to associate myself with the remarks of the Minister and the noble Earl, Lord Attlee, upon the death of Rosemary Nelson.
The approach of these Benches to terrorism legislation has always been somewhat akin to Thomas More in A Man for All Seasons when Richard Rich advises expediency and More replies, "But where then do you hide when the wind of tyranny blows?".
We understand why the security services need special powers. But those powers have to be reluctantly given by Parliament in a free society. We believe that the legislation is necessary. We think that its renewal is necessary. We support it tonight. However, in considering legislation we must ensure that special powers for special circumstances remain just that and that unnecessary powers do not become permanent. For that reason, we welcome the constant parliamentary review of special powers.
I was interested to hear the Minister talk about the consolidation of counter terrorism measures into a single UK Act. The Minister stated that if extra powers were still retained they would be in an annex, subject to annual review. That is important. We on these Benches still regret the way in which the emergency legislation was brought before the House after the Omagh bomb. We do not believe that some of the international aspects were a genuine emergency and that Parliament was "bounced" in these matters. It is important philosophically to get the balance right between the need to counter terrorism and to underpin civil liberties. Under the pressure of terrorist threats, it is easy to have our civil liberties chipped away. For that reason, we support the Government's non-use of exclusion powers. We accept that there may be a case for comprehensive and permanent legislation. However, we give fair warning to the Minister that when that legislation comes forward, we shall be assiduous in checking it in terms of civil liberties.
I had the pleasure of meeting Mr Rowe earlier this year. I believe that we are fortunate in having a public servant of his quality and dedication willing to take on this work. The report was thorough and impressive. However, as the Minister noted, Mr Rowe makes a specific point about the human rights commitment that we have undertaken without recent human rights legislation. My colleague, the noble Lord, Lord Lester, would quarrel with some of the Government's judgments as regards whether the Acts are compatible with our human rights commitments.
The Minister gave us the Government's assurances based, I am sure, on fine legal advice, but I thought that the sting in the tail from Mr. Rowe was on page 47 of his conclusions. He stated:
"My analysis of the human rights situation in Chapter 2 does not in any way impair this conclusion"—
the conclusion that the legislation had been used properly—
"that Chapter was intended to show what shape the future may take; and it is a future which is near at hand".
908
That is what Ministers must take on board when looking at the new legislation which they are drafting. I do not believe that their confidence—I do not say complacency—that the legislation is compatible with human rights commitments will stand up to judicial tests, but we shall see.
The other aspect which stood out in Mr. Rowe's report appears at paragraph 114 on staffing. He states:
"I wish to make the point that staffing levels of port officers should not be allowed to fall".
He points out that the number of immigration officers and other groups has, for cost or other reasons, been reduced. He concludes:
"Thus, a greater burden falls upon Special Branch officers. And I emphasise that there is as much need as ever for the presence of port officers, from the point of view of both terrorism connected with the affairs of Northern Ireland, and terrorism in the international field".
The House needs to be assured by the Minister that that point made by Mr. Rowe has been taken on board and that the dreaded Treasury and budgetary constraints will not undermine the work of the security services which, as Mr. Rowe points out in the report, is extremely important at port of entry.
We will support the legislation tonight. The Minister gave a review of the present situation in Ireland, but perhaps I may make a personal comment. Your Lordships might gather that with a name like McNally my roots are in Ireland, although some four or five generations ago, from County Mayo. My Irishness was brought up to date by education by the Irish Christian Brothers, but I have never considered myself an ersatz Irishman, as do some Americans with Irish names. I am certainly proud of my Irish roots. The heavy burdens of my business forced me earlier this week to go to Cheltenham where I was reminded how many common interests the Irish and the English have in our history, culture, economy and sport.
The links between Ireland and the rest of the United Kingdom have sometimes been painful, but sometimes they have been magnificent. With those roots and that background, I believe that the Good Friday agreement provides an opportunity to create something better, not just with the people of Northern Ireland but perhaps with the Council of the Isles, building on the co-operation and natural friendship between all our people.
The interesting aspect of the renewal of the Act, and the attitude of the people throughout the troubles, is that when civil societies, particularly those based on human rights, face terrorism the terrorists do not understand what makes democrats tick. We support the renewal of this legislation, but we do so on the basis of the old Spanish Civil War poem,
"We came not for glory, honours, medals or pay
We came because with our open eyes we see no other way".
We see no other way to combat the men of violence. We have no enthusiasm for legislation which restricts civil liberties. What we do have is enthusiasm for united

909
resistance from all democrats to the men of violence because from that unity of purpose may come the circumstances which give peace a chance.
Lord Eames: My Lords, I welcome the way in which the noble Lord, Lord Dubs, introduced the debate tonight with his usual clarity and care. Not for the first time, as someone living and working in Northern Ireland, have I had occasion to thank him for the care in which he has exercised the office given to him. Tonight has been no exception.
I, too, regret that this legislation is necessary, but necessary it is. The balance to which the Minister alluded between the protection of democracy and allowing democracy to be a democracy is very narrow, as we know from our history. The terms of Mr. Rowe's report should be of some satisfaction to Her Majesty's Government in so far as it reassures us that in his opinion the exercise of what could be described by others as draconian legislation has been fair and above board.
Nevertheless, we must be very well aware that there are those who are only too ready to misuse the concept of civil liberties in criticism of the way in which a democracy attempts to protect itself. I am conscious that this is a very difficult argument to refute, particularly when it comes with consistency and is based on false information and propaganda. Therefore, I welcome the opportunity for Parliament to review this legislation at regular intervals, as the noble Earl, Lord Attlee, reminded us.
I also welcome, on behalf of those of us in Northern Ireland who seek the peace that so much of this is geared to produce, the fact that Her Majesty's Government are preparing a Bill to come before us at a future date. I personally would like to see the very word "emergency" eradicated from our dictionaries. We have memories of the arguments for and against the special powers Act in Northern Ireland and the opportunity which the existence of that legislation gave to those who wish to undermine our concept of democracy. Therefore, I hope that we shall live to see the day when legislation such as that before us tonight is totally unnecessary.
My mind goes back to the aftermath of the atrocity at Omagh in which the British and Irish Governments acted together to introduce legislation which would enable the forces of law and order to try to bring more speedily to justice those who have been responsible for that atrocity. The key to all this, as I am sure the Minister will agree, is the role of the courts and the fact that at times it is so immensely difficult to produce the necessary evidence to gain convictions. Nothing in the order, or in accompanying legislation, or in the Bill which will eventually come before us must be open to the interpretation by anyone that it is removing the priority given to the courts of our land and the need for evidence and witnesses which will allow convictions.
The fact that that has not happened as yet in the case of the aftermath to the atrocity at Omagh is something which we regret. It is also something which obviously must not be taken as any form of denial of the careful,
910
combined work of the security forces north and south of the Irish border. We must welcome and encourage that co-operation.
The other aspect to which I wish to refer briefly is the fact that when we talk about terrorism we inevitably think of Northern Ireland. As the noble Lord, Lord Dubs, explained, the legislation before us tonight is meant to extend the whole concept of the prevention of terrorism right across these islands. I hope and pray the day will come when we can debate legislation such as this without particular reference to my homeland. I hope the day will come when we can debate it in terms of what it does and does not do to a democracy free from the threat of the sort of things that we have seen in Lurgan in the past few days. I am glad that the Minister referred to the murder of Rosemary Nelson.
But we must not forget all the other Rosemary Nelsons. We must not forget all the other events which have scarred my native land and the land that was represented by some noble Lords this evening. I would beg that in consideration of this necessary legislation, we pay due attention to the fact that, at times, democracy demands legislation of this, nature. However, we should never be driven by the terrorists to a point where what this Parliament stands for in terms of the freedom of the individual and the nature of democracy is eroded to the extent that the terrorist has won. The ultimate victory of the terrorist—and I believe this was very much part of the Minister's thinking—will come when the whole concept of democracy is eroded to the extent that we are defending something in which we do not ourselves believe.
Therefore, I thank the Minister on behalf of many people in Northern Ireland for the care that he has shown in dealing with his various portfolios. In this instance, I thank him in particular for the clarity with which he has brought this very difficult subject before the House.
Lord Dubs: My Lords, I am grateful for the comments that have been made, and the support expressed for the Government's proposal before the House this evening. I shall deal with some of the specific questions that have been asked.
The noble Earl, Lord Attlee, suggested that this would be the last time that the order would be renewed. I said that it would be one of the last occasions. We hope to introduce legislation at the earliest suitable opportunity, but it is too early to say yet whether that will be in the next Session.
The noble Earl referred also to the European Convention on Human Rights, as did the noble Lord, Lord McNally. As has been said, it is important that we take full account of our obligations under the ECHR in drafting any new and permanent legislation. I am happy to give the assurance that we shall certainly approach the new legislation in that light.
I do not believe that we can take that matter very much further this evening, in particular the doubts raised by John Rowe's report. We may differ a little as regards the emphasis given by that report and possibly by the noble Lord, Lord McNally. The Government have taken

911
their view after careful assessment of his report and all our obligations under the ECHR. When the legislation is brought forward, there will be ample opportunity to go into that in more detail.
More generally, in the speeches this evening we heard some useful and interesting comments about the proposed new legislation. It would not be sensible for me to respond in detail because we are talking about a consultation process that has just been concluded and which the Government will have to assess in detail before bringing forward their proposals. We shall certainly make sure that we take on board comments made in this short debate this evening to inform the Government's thinking about the new legislation.
The noble Lord, Lord McNally, asked me a specific question about staffing. By mat I take it that he meant staffing at the ports by special branch officers. Perhaps I may give him a few figures with the assurance that the Government are aware of the problem and they do not intend to weaken the strength of that provision at the ports. For 1996–97, there is a figure of 742; the following year, it was 797; the following year it was 897; and for the period 1999–2002, we are talking about a figure of 960. Therefore, if anything, the figure has increased in the past three years and will increase further. Therefore, the noble Lord can feel assured that we shall not neglect the need to have adequate protection at the ports in terms of the issue which he raised.
The noble Lord, Lord Eames, and other noble Lords referred to the balance between our need to have legislation which can deal with terrorism and the need to protect our civil liberties. As I said in my speech, it is clearly a balance which is important to bear in mind but not always easy to strike. However, we are seeking to do just that. If we go too far in the direction of having tough anti-terrorist legislation, that may detract from the value that we place on civil liberties. If we do that then, as the noble Lord said, that gives credence to the terrorists themselves. Therefore, we must make sure— and I use his words—that we have a democracy which is worth protecting and not one which we have undermined. We have certainly taken that point close to our hearts throughout our approach to the PTA and even more so in relation to the new legislation which we propose to bring forward.
I thank the noble Lord for his generous comments. I reciprocate by saying that I found his speech deeply moving and very important as it comes from detailed experience of having lived with that problem for many years. Some of us have seen it more at a distance than close to. Therefore, the views of anyone who has lived with the problem clearly command enormous respect. The Government certainly listen to such views.
In particular, I take to heart the noble Lord's hope, which we all share, that the day will come when Northern Ireland will not be the reason that we have anti-terrorist legislation; that Northern Ireland will have a period of prolonged peace with the terrorist problem going away; and we shall merely confine ourselves to me wider international aspects of terrorism. I hope that
912
they go away also but, if anything, they seem to be becoming rather more serious. I gave several examples in my speech.
I repeat that I am grateful for the support that the House has shown for the Government proposals and I commend the Motion to the House.
On Question, Motion agreed to.
Baroness Farrington of Ribbleton: My Lords, I beg to move that the House do now adjourn during pleasure until 8.20 p. m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.17 to 8.20 p. m.]

Health Bill [H.L.]
8.20 p. m.
Consideration of amendments on Report resumed.
Clause 42 [Expenditure of Health Boards and other bodies]:
Lord Macdonald of Tradeston Lord Macdonald of Tradeston moved Amendment No. 77A:
Page 32, line 21, at end insert ("or
(e) remuneration which is referable to the cost of drugs for which the Health Board is accountable in that year (whether paid by it or by another Health Board)").
The noble Lord said: My Lords, in speaking to Amendment No. 77A I shall also speak to Amendments Nos. 77B, 77C and 77D. These amendments are the Scottish equivalent to government Amendments Nos. 13, 15 and 17 debated and approved by the House last Monday.
In brief, the amendments refine the definition of the prescribing costs that will be included in a health board's unified budget, the provisions for which are made by Clause 42 of this Bill.
Your Lordships have already considered the principles behind the amendments at some length. I shall refrain from going over that ground in detail again today. However, to recap, the provisions introduced by the amendments need to be considered against the introduction of funding health boards through the concept of unified budgets.
The White Paper, Designed to Care, announced the introduction of unified budgets to provide a single financial envelope to cover the commissioning of hospital and community health services, primary care prescribing and investment in general practice infrastructure.
At present the funding streams for such items are, with limited exceptions, allocated and managed separately from each other. Clause 42 introduces provisions for Scotland that unify the hospital and community health service funding stream with that of general practice infrastructure. The amendments before you now bring primary care prescribing into the financial envelope and, in so doing, will give health

913
boards and, in turn, Scottish primary care trusts, greater flexibility in deciding the most appropriate balance between the three areas of expenditure.
As explained when the equivalent English amendments were introduced earlier this week, while the effect of the amendments is to bring all prescribing expenditure within a unified cash limit, they do not put a cash limit around prescribing expenditure itself. Health boards, and through them Scottish primary care trusts, will be able to transfer funds into and out of their prescribing cost provision to reflect the relative priorities and the financial needs of the local area.
On Monday, the noble Baroness, Lady Carnegy, asked if primary care infrastructure resources in Scotland would be protected within the unified budget. I have written to her, but to put the matter on the record I can reassure your Lordships that those resources will be protected in Scotland as they will be south of the Border.
The amendments themselves are essentially technical. Their primary effect is to make health boards responsible for the cost of drugs prescribed by the GPs in their areas and not, as at present, for the cost of drugs dispensed in their areas. However, they also provide for the Secretary of State to make appropriate funding flow arrangements between health board areas to ensure that dispensing practitioners continue to receive their remuneration in exactly the same way as at present.
The amendments complete the provision for introducing unified budgets in Scotland. That will give health boards and, in turn, primary care trusts in Scotland increased financial flexibility to secure more cost-effective care and greater value from the total resources available. I therefore commend these amendments to the House. I beg to move.
Baroness Carnegy of Lour: My Lords, I thank the Minister for the extremely clear letter that he wrote to me. He wrote very promptly and explained everything very well.
I have shown the letter to the British Medical Association—he may also have done that—and it was concerned about the matter. The matter has been considered by bodies in Scotland, and they too are reassured, although there are two questions which I believe the noble Lord will find easy to answer.
First, they want assurance of the ability of local health co-operatives to go back to the primary care trust if they run out of money for prescribing. The arrangements that the noble Lord has just described will mean that individual doctors in Scotland will be able to prescribe all the necessary medication to fulfil the clinical needs of their patients. It would be helpful if the noble Lord could reassure them on that.
Secondly, when the unified budget comes into being, will savings from the prescribing budget remain for use with the primary care trust, or will they revert to the health board for use, for example, in acute hospitals? Perhaps it may not be possible to answer that immediately. I was not able to give the noble Lord notice of that question. I repeat: will any money saved
914
on prescribing revert to the health board, or will it be used in acute hospitals; or can it be retained within primary care?
Lord Macdonald of Tradeston: My Lords, I can assure the noble Baroness, Lady Carnegy, that if the local healthcare co-operatives run out of money they will be able to turn to the primary care trust and ensure that their needs are properly met.
On the second question, I am advised that any savings will remain within the primary care trust resources.
On Question, amendment agreed to.
Lord Macdonald of Tradeston Lord Macdonald of Tradeston moved Amendments Nos. 77B, 77C and 77D:
Page 32, line 22, leave out ("paragraph (b), (c) or (d)") and insert ("paragraphs (b) to (e)").
Page 33, line 4, at end insert—
("(11) In this section and section 85AB, "drugs" includes medicines and listed appliances (within the meaning of section 27). ").
Page 33, line 4, at end insert—
("Further provision as to expenditure on drugs.
85AB. —

(1) For each financial year, the Secretary of State shall apportion, in such manner as he thinks appropriate, among all Health Boards the total of the remuneration referable to the cost of drugs which is paid by each Health Board in that year.

(2) A Health Board is accountable in any year for remuneration referable to the cost of drugs to the extent (and only to the extent) that such remuneration is apportioned to it under subsection (1).

(3) Where in any financial year any remuneration referable to the cost of drugs for which a Health Board is accountable is paid by another Health Board, the remuneration is to be treated (for the purposes of this section) as having been paid by the first Health Board in the performance of its functions.

(4) The Secretary of State may, in particular, exercise his discretion under subsection (1)—

(a) so that any apportionment reflects, in the case of each Health Board, the financial consequences of orders for the provision of drugs, being orders which in his opinion are attributable to the Board in question;

(b) by reference to averaged or estimated amounts.

(5) The Secretary of State may make provision for any remuneration referable to the cost of drugs which is paid by a Health Board other than the Health Board which is accountable for the payment to be reimbursed in such manner as he may determine.

(6) The Secretary of State shall determine what remuneration paid by Health Boards to persons providing pharmaceutical services is to be treated for the purposes of section 85AA and this section as remuneration referable to the cost of drugs. ").

On Question, amendments agreed to.
8.30 p. m.
Lord Macdonald of Tradeston Lord Macdonald of Tradeston moved Amendment No. 78:
After Clause 45, insert the following new clause—
("Indemnity cover
INDEMNITY COVER FOR PART II SERVICES
.—(1) After section 28B of the 1978 Act there is inserted—
"Indemnity cover.
28C.—(1) Regulations may make provision for the purpose of securing that, in prescribed circumstances, prescribed Part II practitioners hold approved indemnity cover.
(2) The regulations may, in particular, make provision as to the consequences of a failure to hold approved indemnity cover, including provision—

(a) for securing that a person is not be added to any list unless he holds approved indemnity cover;

(b) for the removal from a list prepared by a Health Board of a Part II practitioner who does not within a prescribed period after the making of a request by the Health Board in the prescribed manner satisfy the Health Board that he holds approved indemnity cover.

(3) For the purposes of this section—

"approved body" means a person or persons approved in relation to indemnity cover of any description, after such consultation as may be prescribed, by the Secretary of State or by such other person as may be prescribed;

"approved indemnity cover" means indemnity cover made—

(a) on prescribed terms; and

(b) with an approved body;

"indemnity cover", in relation to a Part II practitioner (or person who proposes to provide Part II services), means a contract of insurance or other arrangement made for the purpose of indemnifying him and any person prescribed in relation to him to any prescribed extent against any liability which—

(a) arises out of the provision of Part II services in accordance with arrangements made by him with a Health Board under this Part of this Act; and

(b) is incurred by him or any such person in respect of the death or personal injury of a person;

"list" has the same meaning as in section 29;

"Part II practitioner" means a person whose name is on a list;

"Part II services" means general medical services, general dental services, general ophthalmic services or pharmaceutical services;

"personal injury" means any disease or impairment of a person's physical or mental condition and includes the prolongation of any disease or such impairment;

and a person holds approved indemnity cover if he has entered into a contract or arrangement which constitutes approved indemnity cover.
(4) The regulations may provide that a person of any description who has entered into a contract or arrangement which is—

(a) in a form identified in accordance with the regulations in relation to persons of that description; and

(b) made with a person or persons so identified,

is to be treated as holding approved indemnity cover for the purposes of the regulations."
(2) In section 19A of the 1978 Act (medical lists), at the beginning of subsection (3) there is inserted "Subject to any provision made under section 28C".
(3) In section 25 of that Act (arrangements for provision of general dental services), in subsection (2)(b), the word "and" before sub-paragraph (iii) is omitted and after that sub-paragraph there is inserted "; and
(iv) any provision made under section 28C".
(4) In section 26 of that Act (arrangements for provision of general ophthalmic services), in subsection (2)(b), after "practitioners" there is inserted "and any provision made under section 28C". ").
The noble Lord said: My Lords, this amendment stands in the names of myself and my noble friend Lady Hayman. It applies to Scotland and is the same in all essential respects as Amendment No. 19, which was moved by my noble friend Lord Hunt and debated thoroughly on Monday evening. With your Lordships' leave I shall, therefore, be brief.
The Government's intention is to ensure that GPs, dentists, pharmacists and optometrists practising in family health services in Scotland are able to meet any damages that might be awarded against them in cases of death or personal injury caused to their patients. This includes cover for other persons prescribed in relation to the practitioner such as employees, assistants or deputies. These practitioners employed in NHS trusts are automatically covered by NHS indemnity.
As in other parts of the UK, the vast majority of practitioners in Scotland already act responsibly by arranging suitable indemnity cover for their work. By ensuring that every relevant professional is covered in future, this amendment seeks to address the small minority of practitioners in Scotland who are not so responsible. The scheme would work in the way described by my noble friend on Monday, and I do not propose to repeat what has already been covered.
This amendment will enable patients to be protected and properly compensated on those rare occasions when something goes wrong. Where a patient is deserving of compensation, we believe that he or she should be able to receive it.
Perhaps I may now reply to a question of which the noble Baroness, Lady Carnegy, has been kind enough to give me notice. She wanted to know why "indemnity" is referred to rather than "membership of a medical defence organisation". The intention behind this provision is to ensure that all practitioners are indemnified so that a patient can be sure of getting proper compensation, when that is warranted. As my noble friend explained on Monday, that indemnity might be obtained from a range of sources. It would not be appropriate in this Bill to limit how such indemnity should be obtained. This is especially so as the clause covers those providing ophthalmic and pharmaceutical services as well as doctors and dentists. The principle underlying the amendment has been warmly welcomed by your Lordships' House. I beg to move.
Baroness Carnegy of Lour: My Lords, again, I thank the Minister very much. He has partly answered my question in advance in relation to why the word "indemnity" is used when the phrase "medical defence organisation membership" would be a better description. This point may also interest the noble Baroness, Lady Hayman. It has been pointed out to me that medical

917
defence organisations have the discretion as to whether or not to assist in negligence claims in certain circumstances and that because they have that discretion, this is not really what is normally understood to be "indemnity". I think that this is an interesting point, which the Government may want to consider. I do not expect an answer now, but the Government may want to alter both parts of the Bill to meet that point if the provisions are not in order, although they may be.
Lord Macdonald of Tradeston: My Lords, I thank the noble Baroness for that point, which we shall certainly consider.
On Question, amendment agreed to.
Clause 46 [Disqualification of Part II practitioners]:
Lord Macdonald of Tradeston Lord Macdonald of Tradeston moved Amendment No. 78A:
Page 35, line 29, leave out ("29E") and insert ("29C").
The noble Lord said: My Lords, this amendment simply corrects an inappropriate cross-reference in the Bill. I beg to move.
On Question, amendment agreed to.
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 79:
Page 38, line 10, at end insert—
("( ) After section 30 of the 1978 Act (as substituted by subsection (2)) there is inserted—
"30A. The Tribunal shall make, and publish, an annual report to the Council on Tribunals. "").
The noble Lord said: My Lords, this amendment brings the NHS tribunal into line with virtually all others in the tribunal system. The Council on Tribunals makes reports on the effectiveness of particular tribunals and may make recommendations as to improvements that can be made. Given the importance of the NHS tribunal, it would seem sensible for it to make an annual report to the Council on Tribunals in order that its workings may be exposed to expert scrutiny. That would also ensure that recommendations can be made to keep its work up to date. It would also ensure a measure of consistency between the manner in which it operates and that of other tribunals.
An annual report would be in the public interest. The NHS employs more people than any other public sector organisation and is the one part of the welfare state with which almost everyone comes into contact at some stage. That tribunal should not sit apart from the rest of the tribunal system and it should not be allowed to operate without being subject to a reasonable level of public and expert scrutiny. I beg to move.
Lord Macdonald of Tradeston: My Lords, the Council on Tribunals, through its Scottish committee, will be aware of any cases heard by the NHS tribunal as it has the right to attend any hearings before the NHS tribunal. Its own report contains appropriate information about the NHS tribunals. The Scottish committee has given us no indication that it would require an annual report. The proceedings before the tribunal must be held in private unless the practitioner has applied for the inquiry to be held in public. The Secretary of State
918
already has a duty to publish any decisions of the tribunal, and such cases are likely to remain relatively rare, because it is only a very small minority of practitioners who commit fraud.
Given those arrangements, I do not believe there is a need for the tribunal in Scotland to make and publish an annual report to the Council on Tribunals. The value of such a report would be limited anyway, as I hope I have made clear, as it would be able to provide no more information than will be available through established means.
Lord Astor of Hever: My Lords, I thank the Minister for that helpful reply. Obviously, I shall read carefully what he said but, in the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Macdonald of Tradeston Lord Macdonald of Tradeston moved Amendment No. 79A:
After Clause 46, insert the following new clause—
RECOVERY OF CHARGES AND PAYMENTS
(". —
(1) After section 99 of the 1978 Act there is inserted—
"Recovery of charges and payments.
99ZA. —

(1) Where goods or services to which this section applies are provided and either—

(a) any charge payable by any person under this Act in respect of the provision of the goods or services is reduced, remitted or repaid, but that person is not entitled to the reduction, remission or repayment; or

(b) any payment under this Act is made to, or for the benefit of, any person in respect of the cost of obtaining the goods or services but that person is not entitled to, or to the benefit of, the payment,

the amount mentioned in subsection (2) is recoverable as a debt from the person in question by the responsible authority.

(2) That amount—

(a) in a case within subsection (l)(a): is the amount of the charge or (where it has been reduced) reduction;

(b) in a case within subsection (l)(b), is the amount of the payment.

(3) Where two or more persons are liable under section 99 or this section to pay an amount in respect of the same charge or payment, those persons shall be jointly and severally liable.

(4) For the purposes of this section, the circumstances in which a person is to be treated as not entitled to a reduction, remission or repayment of a charge, or to (or to the benefit of) a payment, include in particular those in which it is received (wholly or partly)—

(a) on the ground that he or another is a person of a particular description, where the person in question is not in fact of that description;

(b) on the ground that he or another holds a particular certificate, when the person in question does not in fact hold such a certificate or does hold such a certificate but is not entitled to it:

(c) on the ground that he or another has made a particular statement, when the person in question his not made such a statement or the statement made by him is false.

919

(5) In this section and section 99ZB, "responsible authority" means—

(a) in relation to the recovery of any charge under section 99 in respect of the provision of goods or services to which this section applies, the person by whom the charge is recoverable;

(b) in relation to the recovery by virtue of this section of the whole or part of the amount of any such charge, the person by whom the charge would have been recoverable,

(c) in a case within subsection (l)(b), the person who made the payment.

(6) But the Secretary of State may by directions provide for—

(a) the functions of any responsible authority of recovering any charges under this Act in respect of the provision of goods or services to which this section applies;

(b) the functions of any responsible authority under this section and section 99ZB,

to be exercised on behalf of the authority by another health service body.

(7) This section applies to the following goods and services—

(a) dental treatment and appliances provided in pursuance of this Act;

(b) drugs and medicines provided in pursuance of this Act;

(c) the testing of sight;

(d) optical appliances;

(e) any other appliances provided in pursuance of this Act.

99ZB. —

(1) Regulations may provide that, where a person fails to pay—

(a) any amount recoverable from him under section 99 in respect of the provision of goods or services to which section 99ZA applies; or

(b) any amount recoverable from him under section 99ZA,

a notice (referred to in this section as a penalty notice) may be served on the person, by or on behalf of the responsible authority, requiring him to pay to the authority, within a prescribed period, that amount together with a charge (referred to in this section as a penalty charge) of an amount determined in accordance with the regulations.

(2) The regulations may not provide for the amount of the penalty charge to exceed whichever is the smaller of—

(a) £100;

(b) the amount referred to in subsection (1)(a) or (b) multiplied by 5.

(3) The Secretary of State may by order provide for subsection (2) to have effect as if, for the sum specified in paragraph (a) or the multiplier specified in paragraph (b) (including that sum or multiplier as substituted by a previous order), there were substituted a sum or (as the case may be) multiplier specified in the order.

920

(4) Regulations may provide that, if a person fails to pay the amount he is required to pay under a penalty notice within the period in question, he must also pay to the responsible authority by way of penalty a further sum determined in accordance with the regulations.

(5) The further sum must not exceed 50 per cent, of the amount of the penalty charge.

(6) Any sum payable under the regulations (including the amount referred to in subsection (1)(a) or (b)) may be recovered by the responsible authority as a debt.

(7) But a person is not liable by virtue of a penalty notice—

(a) to pay at any time so much of any amount referred to in subsection (1)(a) or (b) for which he is jointly and severally liable with another as at that time has been paid, or ordered by a court to be paid, by that other; or

(b) to a penalty charge, or a further sum by way of penalty, if he shows that he did not act wrongfully, or with any lack of care, in respect of the charge or payment in question.

(8) Section 99ZA and this section apply to charges which may be made and recovered under section 20 of the National Health Service (Primary Care) Act 1997 as they apply to charges under this Act which may be recovered under section 99; and the reference to this Act in section 99ZA(7)(a) includes a reference to a pilot scheme (within the meaning of the 1997 Act). ".

(2) In section 105(3) of the 1978 Act (Parliamentary procedure for certain regulations) after "endowments)" there is inserted "or orders under section 99ZB(3)". ").
On Question, amendment agreed to.
Clause 47 [Regulation of health care and associated professions]:
Lord Morris of Manchester Lord Morris of Manchester moved Amendment No. 79B:
Page 38, line 14, at beginning insert—
(" ( ) Her Majesty shall by Order in Council make such provision relating to the regulation of the profession of chiropody and podiatry as set out in paragraph 1A of Schedule 3. ").
The noble Lord said: My Lords, I beg to move Amendment No. 79B. In moving the amendment, I shall also be speaking to the other amendments standing in my name. I have an interest to declare in the debate as president of the Society of Chiropodists and Podiatrists, but the office is honorary and involves no financial interest.
My noble friend will recall that both at Second Reading and in moving my amendments in Committee I raised with her the society's concerns that the Bill made no specific mention of protection of title or of any definition of the future regulatory regime. I made it clear that state registered chiropodists/podiatrists, for whom the society speaks, are wholeheartedly in support of the Government's stated aim of strengthening self-regulation to protect the public. Not unnaturally their principal concern is to ensure that future practice matches current precept in the case of their profession.
My noble friend's response in Committee to my amendment on protection of title on 4th March is welcomed by the society, as I said it would be when withdrawing the amendment. But it is less happy with the response to the amendments that I moved in Committee about the future regulatory structure for the profession once the 1960 Act is repealed. Thus the aim

921
of my further amendments today is to clarify the role and powers of any board or committee to be set up to regulate chiropodists/podiatrists.
The society is by no means alone in believing that a profession ceases to be a profession unless it maintains statutory control of the functions set out in sub-paragraph 8(2) of Schedule 3: namely, keeping the register of members admitted to practice; determining standards of education and training for admission; advising on standards of conduct and performance; and disciplining members.
My noble friend said in Committee that "uni-professional input" would be preserved where appropriate, and that:
"In some areas, such as fitness to practice, it is absolutely appropriate that they (individual health professions) should be in the majority when considering cases which come before them".
It would be most helpful if she can now provide any more detail on this and, in particular, whether she can say as much today as she did in Committee on "fitness to practice" about how and to what extent she foresees the potential for uni-professional input in the other key areas to which my amendment refers.
If self-regulation is to have any real meaning, then surely at least the functions set out in my amendment ought to be carried out by a statutory committee with a chairman and a majority of members who are state-registered chiropodists/podiatrists. I have said that the Society of Chiropodists and Podiatrists is by no means alone in holding this view. Let me, therefore, quote from a letter I received yesterday from the Chartered Society of Physiotherapy (CSP). It says:
"As you stated at Committee Stage, one possible option for reform includes the abolition of the individual professional boards in favour of committees on which each profession would have only one or two representatives. If this were to happen, essential functions of self-regulation will have been taken from the profession—against its will.
"To protect professional self-regulation the Society believes it is essential that physiotherapists constitute a uni-professional majority in all boards/committees that decide on all essential regulatory functions, which obviously include: fitness to practice, educational standards, validation of courses and entry to the profession".
The letter then recalls that the Minister clearly stated in Committee that there should be uni-professional majorities when considering issues of fitness to practice, and it proceeds:
"However, it is not clear whether other elements of professional self-regulation, educational standards, validation of courses, entry to the profession etc, will be protected. It is of the utmost importance that the Government clarify their intentions".
The CSP's letter concludes,
"The Government need to go further to reassure this profession that its professional self-regulation is not under threat. In this regard we believe your amendments are proving to be very useful. We would particularly welcome anything you can do at Report Stage to secure more reassurances from the Minister on uni-professional majorities".
State-registered chiropodists/podiatrists diagnose and treat patients independently of medical practitioners. They carry out highly invasive bone surgery and have access to anaesthetics and other prescription-only medicines. That is why a strong regulatory regime, based around self-regulation, is essential for the profession.
In Committee I pointed to some recent research at Manchester University showing that, among patients with diabetes, leg amputations increased by 50 per cent. in the absence of timely intervention and appropriate treatment by a qualified chiropodist/podiatrist. And I make no apology for recalling today a statement made to me during this Bill's Committee stage by Mrs. Sue Sharpe, the Director of Professional Standards of the Royal Pharmaceutical Society of Great Britain, on the danger to patients of using non-state-registered chiropodists, and her advice to members of her society to promote the services only of state-registered chiropodists. She wrote:
"our advice makes the case for your amendments when you consider the possible consequence of services for diabetics being provided by individuals who may have no insurance and no qualifications".
Nothing could more strongly emphasise how important it is in the public interest for fully qualified and insured chiropodists/podiatrists to play their rightful part in effectively regulating their profession.
Since moving my amendment in Committee, I have also heard most helpfully from Professor Andrew J. M. Boulton, MD, FRCP, Professor of Medicine at Manchester University and consultant physician at the Manchester Royal Infirmary, who writes:
"Foot problems remain the commonest cause of hospital admission amongst diabetic patients in this country. They account for 1 in 5 of admissions. Ensuring a quality foot care service for patients with diabetes is, therefore, essential for both medical and economic reasons".
He goes on to say that chiropodists/podiatrists form a pivotal part of the footcare team and that indeed many teams are led by members of the profession. He adds:
"It is essential also that a fully informed regulatory body is responsible for entry into the profession and also for overseeing standards of training to avoid anomalous situations that exist today, when individuals can self-proclaim themselves as chiropodists after the shortest of courses.
"Whereas most State-Registered practitioners provide an invaluable service to diabetic foot care, there are some individuals who lack sufficient experience in such care and can cause irreparable damage to diabetic feet, resulting in devastating end points such as gangrene and even amputation".
Professor Boulton also has the distinction of being Chairman of Post-Graduate Education for the European Association for the Study of Diabetes and chairs its Diabetic Foot Study Group. I am sure noble Lords in all parts of the House will be grateful to him for this eloquent and authoritative testimony to the importance of effective self-regulation for the profession of chiropody/podiatry.
I know my noble friend appreciates that state-registered chiropodists/podiatrists are not seeking aggrandizement for their profession and that any suggestion that they are being unhelpful in pressing their concerns is totally unwarranted. Their abiding concern is to protect professional standards in the public interest and Professor Boulton's letter to me shows how vitally important that is to people whose disabilities make them at once highly vulnerable and vitally dependent on fully qualified help.
I look forward to hearing from my noble friend that her objectives on self-regulation are identical to those of the profession. Perhaps she would also now confirm that

923
it will be the Government's intention to continue the Privy Council's role in relation to the profession of chiropody/podiatry as well as to the medical profession. Meanwhile, I conclude by thanking her again for what she has already done in relation to protection of title and for her readiness to arrange further dialogue with the society. I beg to move.
Lord Walton of Detchant: My Lords, it has been drawn to my attention that when the noble Lord, Lord Morris of Manchester, proposed amendments on this topic at Committee stage, I made a comment which may now be regarded as being outdated.
Some years ago, when I was consulted by the Society of Chiropodists and Podiatrists, it was then the case that the chiropodists with the primary qualification undertook minor procedures on the feet, whereas those who called themselves at that time podiatrists, undertook an additional period of post-graduate training, often of some two years, with surgical training as part of that to enable them to use local anaesthetics and to carry out surgical procedures of a much more invasive nature. That was the case several years ago; but, in fact, the term "podiatry" has become internationally recognised as being virtually synonymous with chiropody as it stands in this country. So, as the noble Lord said in Committee, the terms are now interchangeable.
However, when the issue of self-regulation of this profession is further considered under that body which is instituted under the Bill in succession to the Professions Supplementary to Medicine Act, I hope that it will, like the other professions—such as, physiotherapy, and so on—receive separate consideration. When that happens, I trust that those chiropodists and podiatrists who have undergone that specific period of post-graduate training to enable them to carry out surgical procedures on the feet will be properly and separately identified in any register which may be established. I know that this is a matter of concern to the Royal College of Surgeons and to the British Orthopaedic Association.
Lord Skelmersdale: My Lords, I would add to that the public at large because there are all sorts of naturally invasive procedures conducted by professions allied to medicine which are currently not regulated or, indeed, are insufficiently regulated. That is a very wide concern.
The whole point of Clause 47 is to change the statutory regime whereby these professions are regulated by Act of Parliament into professions regulated by order. I go along with that to a great extent. However, it is important that the same sort of controls, the same sort of inspections and the same sort of registration as are currently conducted under an Act of Parliament should continue to be conducted under regulation. That is something I would very much like the Minister to confirm this evening.
Baroness Hayman: My Lords, I am grateful to my noble friend for introducing his amendments. I shall certainly do my best to be reassuring. I hope that he will understand that if I cannot give firm commitments on
924
matters of detail it is because of the stage in the legislative process at which we currently find ourselves, rather than any lack of concern regarding the fact that these are important matters that we need to address.
As ever, my noble friend has put a powerful case for respecting the contribution to healthcare given by chiropodists and podiatrists; and, indeed, by members of other professions supplementary to medicine. As the noble Lord, Lord Skelmersdale, rightly said, they can have a crucial role to play in the health of patients and we all have an interest in ensuring that they have effective self-regulation.
I should point out to the noble Lord, Lord Skelmersdale, that the reason I shall not give him an assurance that it will be the same sort of regulation that will replace the current Professions Supplementary to Medicine Act is because I believe that that framework is too weak. We are looking to provide stronger professional self-regulation. I shall quibble with the noble Lord on the semantics and say that it is not that we wish to take any functions away from any successor body, but that the many criticisms which the chiropodists and the podiatrists have made of the current regulatory structure—indeed, other professions supplementary to medicine have grave concerns about the weaknesses that are there—are one of the main reasons for seeking an order-making power to enable progress to be made on establishing a more effective regulatory structure for these professions.
The Bill makes clear our intention to repeal and replace the Professions Supplementary to Medicine Act under which the chiropodists and podiatrists are currently regulated. A review of the Act was published in 1996, following extensive consultation with the professions concerned, education providers, employers, consumer representatives and those who wished to be accredited under the Act. The review made important recommendations for new legislation to cover the professions allied to medicine, the broad thrust of which was accepted by the Government.
Given that the review was published almost three years ago, I understand the impatience of the professions to get into the detail of the replacement legislation. But perhaps I should remind the House that the Bill before this House does not contain any specific proposals other than that the 1960 Act be repealed. This is precisely because the proposed order-making power is an enabling measure, which is subject to the checks and balances and the limitations on the scope of orders that we have already debated. I believe that all Members of your Lordships' House agree that they are necessary, given that we are changing from a situation of primary legislation to one of secondary legislation.
During the passage of the Bill we have rightly debated what use the scope of the order-making power should have and the procedures for using it. Indeed, we shall do a little more of that later on. However, this is not the time to debate the detailed proposals of a future order. There will be plenty of opportunities for such a debate in the future as set out in the Bill. We are committed to full consultation on any proposals for replacement legislation. Once a draft order has been

925
developed the Bill provides for the publication of it; for consultation, including with the professions concerned; reporting the responses to the consultation to Parliament; and, finally, affirmative resolution procedures. It is our intention to work closely with all the professions concerned in creating an appropriate legislative framework for the professional self-regulation of the professions allied to medicine.
Although I cannot go into detail as regards what the outcome of that process would be, perhaps I may repeat that our aim is not to diminish but to strengthen the regulation of chiropodists, podiatrists and all the other professions allied to medicine. I explained in Committee that we want to take action to ensure the proper protection of title. I was grateful for the welcome that my noble friend gave to that proposal. I have also explained, and am happy to repeat, our intentions in relation to the Privy Council; namely, that we will consult on the basis of retaining accountability to the council, not just for the chiropodists and podiatrists alone. I believe that that is what my noble friend was suggesting. We will be consulting for all the professions which will be regulated under the successor legislation.
Lord Morris of Manchester: My Lords, it was not my intention to exclude any other profession. As I believe I explained, I was speaking as president of the Society of Chiropodists and Podiatrists. Thus, naturally my concern was to obtain for them the assurance that my noble friend is now giving. I know from my very close contacts with other professions allied to medicine that they will also be extremely glad that this important link with the Privy Council is to be maintained.
Baroness Hayman: My Lords, I completely understand why my noble friend used that particular example. I was only drawing attention to the breadth of my reply because the way that he phrased his introduction did relate to chiropodists and podiatrists. It is important to understand that it is accountability to the Privy Council for the successor body dealing with all the professions supplementary to medicine.
Perhaps it might be helpful at this stage to explain that one of the most fundamental recommendations of the review report was a move away from parent uni-disciplinary boards towards a federal council with a much stronger strategic role. Within this structure it envisaged that input on matters specific to individual professions would be secured through extensive advisory networks and provision for "peer review" in fitness to practise cases. The review recommended the establishment of a strong cross-professional council in order to strengthen the overall effectiveness of the regulation of the professions supplementary to medicine, as there is a great deal to gain from more collaborative working, both for the professions concerned and for patients.
As I have said, I understand and share the concern of chiropodists that the distinctive contribution of each profession within a joint regulatory framework should be properly acknowledged. Areas such as the content of education and training syllabuses and fitness to practise cases are matters where uni-professional input will be essential.
926
Your Lordships will, however, understand that many fitness to practise cases deal with issues not directly related to the practice of the profession itself but with the conduct of the registrant, for example, in cases of abuse of patients or criminal convictions. This is an area on which the professions could usefully share and develop common values and standards for the better protection of patients. I do not think it is in the interests of patients for there to be a variety of standards of protection according to the individual profession concerned. However, fitness to practise cases on matters of clinical competence are obviously an area where uni-professional input must be properly secured. Getting the system right will be a delicate balancing act.
But, equally, the health professions have many aims and values in common, and we see great merit in strengthening the collaboration between them so as to promote genuinely patient-focused team-working of the kind to which my noble friend referred. It is worth noting that nurses, midwives and health visitors are jointly regulated, and that the recent review of the Nurses, Midwives and Health Visitors Act recommended that this arrangement continue, although there too we have to ensure that the right uni-professional input exists on appropriate matters.
It is therefore our intention to work closely with all the professions concerned to ensure that the new arrangements strike the right balance. It is useful to remember that there are nine other professions within the CPSM and three more hoping to join, all of whose views will need to be taken into account. What we all share is a desire to see a stronger and more effective successor body to the CPSM.
I hope my noble friend will understand that I have given as much detail as I can at this stage on our proposals. But I can certainly give an undertaking to ensure that, in working closely with the professions to develop proposals for replacement legislation, I will ensure that this very important issue of securing proper individual contributions from each of the professions concerned is paid the closest of attention, as indeed must be the case with nurses, midwives and health visitors. I hope that, given my assurances about how the next stage in the process will be tackled and that we will have proper regard to the concerns my noble friend has raised today, he will feel able to withdraw his amendments.
9 p. m.
Lord Morris of Manchester: My Lords, I am grateful for the kindliness of the remarks of my good friend Lord Walton this evening. I know that the Society of Chiropodists and Podiatrists will also be most appreciative of what he said about our exchanges in Committee. He is a friend and colleague for whom I have the highest regard.
I am grateful also to my noble friend Lady Hayman for her reply which I shall discuss with the Society of Chiropodists and Podiatrists before the Bill's Third Reading. I know that it will carefully consider all that my noble friend has said and that its starting point will be the hope that agreement can be reached with the

927
Government in pursuit of shared objectives. It is on that basis that I withdraw the amendment at this stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hayman Baroness Hayman moved Amendment No. 79C:
Page 38, line 16, at end insert ("so far as appears to Her to be necessary or expedient for the purpose of securing or improving the regulation of the profession or the services which the profession provides or to which it contributes").
The noble Baroness said: My Lords, it has been our aim from the beginning in matters of professional self-regulation to strike an appropriate balance in the provisions in this Bill between the flexibility required to enable the modernisation of the legislation concerning professional self-regulation and the safeguards appropriate to such a broad power. I listened carefully to the concerns that were expressed on all sides of the House at Committee stage at certain aspects of the order-making power and undertook to bring forward amendments on a number of issues. These amendments reflect that undertaking.
First, I shall discuss consultation and the recommendations of the Select Committee of your Lordships' House. We have been mindful in taking these powers of the great responsibility to use them carefully and reasonably. We have built into the process for the making of orders a number of checks and balances: the requirement for draft orders to be published at least three months before they are laid before Parliament; the requirement for consultation on the draft order during that period; and the requirement for approval of Parliament under affirmative procedures.
As I said in Committee, the Select Committee on Delegated Powers and Deregulation has given these proposals its usual thorough scrutiny. I am particularly grateful for the assistance of the committee in proposing a way of meeting the concerns expressed at Second Reading. Taking these powers imposes an obligation on the Secretary of State to act reasonably and responsibly, and this requires transparency. The suggestion that the Minister should be called to account by a requirement to report on the outcome of consultation appears to us to be a sound one and we have included provision for a report on the consultation to be made to Parliament in paragraph 9(2) of Schedule 3 by Amendment No. 97.
This would be particularly important when the unqualified agreement of the profession concerned has not been secured to the change but where the strength of the argument is for the order to be made. I envisage that the report would provide a summary of the representations made to the Secretary of State and, in particular, would include whether the proposals have the agreement of the professions concerned and the points of disagreement if there are any. It would certainly need to include the points that most influenced or contributed to any decision to go ahead without the agreement of the profession.
The Select Committee also recommended that the Bill,
"might also be amended to include a statement of the criteria against which the Minister could act in the absence of agreement with the professional body or bodies concerned".
We believe that an important aspect of professional self-regulation is that the statutory regulatory bodies should be accountable and act transparently. It behoves us as a Government to do the same when using these order-making powers. We have therefore gone one step further and built into the main clause, at Clause 47(1)(a), a statement of the purpose for which the order-making power may be used to make any changes to professional self-regulation. Amendment No. 79C addresses that matter.
We believe that protecting patients is at the heart of professional self-regulation. It is clearly of fundamental importance, therefore, that the order-making power may be used where this would improve the services provided to patients. The order-making power could therefore be used to strengthen protection of title; to improve fitness to practise provisions; to institute measures to deal with poorly performing practitioners; or to institute revalidation or mandatory continuing professional development. These are all issues of protection of patient safety.
Secondly, the power may be used for the better regulation of the profession concerned. This is extremely important, not least to ensure that modern, effective and flexible legislation can be made to replace some of the overly detailed, overly specific legislation of the past. For example, an amendment to the Dentist Act is required simply to enable the GDC to increase the number of lay members on its board. An amendment to the Medical Act is required to enable the GMC to bring forward a single procedure for the registration of overseas doctors.
I was grateful to the noble Baroness, Lady Wilcox, for reminding us in debate in Committee last week that the primary purpose of regulating the healthcare professions is the protection of the public. That was clear in the contributions of the professionals who spoke. She made that point very much in the context of taking into account the consumer interest—that of patients, families and carers—in developing healthcare policies. The whole House will agree that this is of fundamental importance in the development of professional self-regulation, where patient protection is such a key issue.
It has always been our intention that consultation should be wide so that we capture the views of the professions, the National Health Service and the public in all parts of the United Kingdom. We do not wish to create a list on the face of the Bill. But we want to make it quite clear that the Secretary of State should be required to consult not only the profession affected by the proposed order but also representatives of the users of professional healthcare services. That is the issue to which the noble Baroness's amendment addresses itself.
At Committee stage I said that I would give the issue some thought and bring forward a suitable amendment at some stage in the further progress of the Bill. I assure

929
the noble Baroness that we remain committed to doing so. But I hope she will understand that there were quite a large number of amendments to be drafted in rather a short period of time and we have not managed to deal with everything in time for Report stage. This is a matter of timing, not of intent. On that basis, in order to allow us to draft a suitable amendment, I hope that she will be willing not to move her amendment when we reach it. Perhaps it would be helpful to mention to the House that I hope to bring forward other government amendments in time, if possible, for Third Reading so as to meet other commitments made to the House in Committee and at the Report stage, in particular on Part II with regard to remuneration and to make some other minor improvements.
Lord Skelmersdale: My Lords, the noble Baroness is speaking more and more quietly as the evening progresses. I am not surprised by that. Will she repeat her last two or three sentences because I did not catch them?
Baroness Hayman: My Lords, I apologise. I shall clear my throat and try to do better. I asked the noble Baroness, Lady Wilcox, whether she would be willing not to move her amendment on the basis of the Government bringing forward an amendment at a later stage, and I flagged up that I would hope to be able to bring forward some other government amendments, if possible in time for Third Reading, to meet commitments made in Committee and on Report, in particular on Part II regarding remuneration and to make some other minor improvements.
Lord Skelmersdale: My Lords, I am grateful to the noble Baroness.
Baroness Hayman: My Lords, some concern was expressed at the Committee stage, and by the professional regulatory bodies, that the Government might seek to use the order-making power to impose a lay majority on regulatory councils. That was never our intention. Therefore, we have brought forward Amendment No. 94 which prevents the order-making power being used to impose a lay majority on a regulatory body.
I should like to emphasise, however, that this in no way reflects any doubt about the value of the contribution of lay members on professional regulatory bodies both in developing policies and in the fitness to practise committees. Rather we welcome the moves of some councils to increase lay membership and improve accountability to the public. We believe that lay membership offers an opportunity to involve people with different expertise and experience; helps ensure that regulatory bodies do not operate in isolation from developments and changes in other parts of the professional world or society at large; and demonstrates the bodies" commitment to open and accountable self-regulation.
The order-making power can still be used to increase the number of lay members or to enable a regulatory body itself to ensure a lay majority. But many of the
930
professions believe that a key element of professional self-regulation is that there is a majority of the profession on the statutory regulatory body. We would not wish therefore to impose a lay majority against the wishes of the profession.
As I said during the Committee stage, I understand the importance that many of the professions attach to their accountability to and relationship with the Privy Council, and that is why we have provided that for the existing regulatory bodies they should not be transferred to another person. In response to the proposed amendment of the noble Lord, Lord Walton, I promised to consider this matter further and to bring forward an appropriate amendment if it were possible. It was. Amendment No. 94 preserves the role of the Privy Council in respect of pharmacists, doctors, dentists, opticians, osteopaths and chiropractors. I hope it provides the reassurance that these professions and the noble Lord, Lord Walton, were seeking.
I also said that I believe that it is right that the lines of accountability for new and replacement organisations should be fully explored. We propose to set up bodies to replace the CPSM and the UKCC. Their current accountability arrangements differ. As with other bodies, the CPSM is accountable to the Privy Council. The UKCC, however, is accountable to the Secretary of State, and that relationship has proved a very effective one. The Review of the Nurses, Midwives and Health Visitors Act recommended that accountability to the Secretary of State should be retained under new arrangements. The review of the Professions Supplementary to Medicine Act left open the question of accountability under the new arrangements. As I have already indicated on previous amendments, in view of the strength of feeling expressed on this issue, we intend to consult on the basis of retaining Privy Council accountability for the CPSM's successor body.
On 9th February I announced the publication, with a government response, of the independent report of the review of the Nurses, Midwives and Health Visitors Act. One of the main recommendations, which we: accept, is that the dual regulatory structure of a council and four national boards be replaced with a new UK-wide body, with ultimate responsibility for regulating the professions, and that national arrangements be made in respect of some functions previously carried out by the boards. The Government response to the report was issued with a health service circular inviting views, particularly on a number of issues of detail. Following consultation on specific proposals for new legislation, we propose to bring forward new legislation to replace the current arrangements.
We have therefore brought forward an amendment which allows for the repeal of the Nurses, Midwives and Health Visitors Act once new arrangements are in place. It should be noted that the successor body to the UKCC will be subject to the same protection under the order-making power as the remaining regulatory bodies: the four fundamental functions will not be able to be transferred from the successor body, it will not be able to be abolished, and a lay majority will not be able to be imposed.

931
It might also be helpful to note that although the intention to repeal both the Professions Supplementary to Medicine Act and the Nurses, Midwives and Health Visitors Act are included within the same subsection, this in no way prevents their repeal at different times. That means that the repeals can be made as and when the replacement legislation is ready to be brought into effect. We have already provided that the power may not be used to abolish the existing main regulatory bodies, and I have been quite clear that such action should require primary legislation. I explained in Committee that this is the reason that the Bill itself provides for repeal of the Professions Supplementary to Medicine Act and the Nurses, Midwives and Health Visitors Act. These amendments ensure that the same provision applies to the regulatory bodies that succeed the CPSM and the UKCC and to any other main regulatory body established by an order; that is, it will not be possible to abolish these bodies by order.
Perhaps the most strongly argued issue in Committee was that of the protection of the four fundamental functions. We have brought forward an amendment (Amendment No. 95) which will prevent the order-making power from removing the four fundamental functions from the relevant regulatory body except, of course, the CPSM and UKCC, which we are to replace. However, the provision safeguarding these functions would then apply to the successor bodies to the CPSM and UKCC and to the regulatory body of any further professions regulated by order in future. These four fundamental functions are essential to what we understand as professional self-regulation: keeping the register; setting the standards of education for entry into the profession; the provision of guidance on standards of professional conduct; and fitness to practise procedures. We believe that the responsibility for them should not be removed by order—such a measure could only be taken through primary legislation.
I shall now deal with Amendments Nos. 106 and 107. Section 10 of the Professions Supplementary to Medicine Act enables new professions to be brought within the umbrella of the CPSM. There are several professions which have made petitions to be included under the CPSM and those are being considered. However, the order-making power makes Section 10 of the Professions Supplementary to Medicine Act 1960 redundant, as Clause 47 can be used to bring new professions into the CPSM. Perhaps more importantly, it enables such new professions to be regulated on a UK-wide basis, whereas Section 10 cannot do so in a post-devolution world, where the regulation of these new professions is not a reserved matter. Under Clause 48(7) a draft of such an order will have to be laid before, and approved by resolution of, the Scottish Parliament, in addition to the UK Parliament. Section 10 will therefore be repealed immediately on enactment of this Bill.
Amendment No. 98 removes the definition of "professional body" because it is no longer required. With the amendment of paragraph 8, the phrase does not need to be defined.
932
With reference to Amendment No. 92 on the charging of fees, this amendment is consequential on the removal of the definition of "professional body". Paragraph 4 ensures that provision can be made for new professional self-regulatory bodies to be given the financial independence which the other statutory regulatory bodies enjoy through the charging of fees for registration and certification, or indeed for any other services they provide.
I should make clear that repealing this Act would not affect the reserved status of the regulation of nurses, midwives and health visitors.
I hope that what we have done in bringing forward these amendments has properly covered the concerns raised both by the professions and by Members of this House. I beg to move.
9.15 pm
Lord Skelmersdale: My Lords, following certain activities behind the scenes in this House, the noble Baroness the Minister might well regard me as a "PMM". Neither of the M's stands for "medicine" or "medical"—they stand for "parliamentary moaning Minnie". Therefore, I must begin my comments by thanking the noble Baroness for answering my moans. She did so, first, in a private letter to me on the subject of the late arrival of information from the department, for which I am truly grateful. I readily accept her information and explanation. Secondly, I received, as I suspect many noble Lords did, what was essentially a Keeling schedule to this enormous group of amendments, for which, incidentally, (another slight moan) I did not hear the noble Baroness apologise. The amendments could happily have been split up into more digestible groups. Another "mini moan" is that Amendment No. 85 pre-empts my Amendment No. 86. That is why I have risen to speak on this group of amendments. No one bothered to tell me—no one from the department, the Whip's Office, the Public Bill Office, the Minister's private office or anywhere else, or indeed my noble friend on the Front Bench. Your Lordships are all guilty.
There is a very serious point in Amendment No. 85 and my Amendment No. 86. Amendment No. 88, of course, is consequential and the noble Baroness will have been briefed on that subject.
The Explanatory Notes on the Bill point out that Clause 47 provides,
"for Her Majesty by Order in Council to modify the regulation of pharmacists, doctors, dentists, opticians, osteopaths, chiropractors and nurses, midwives and health visitors",
all of which are currently registered and controlled under Act of Parliament.
Paragraph 256 of the Explanatory Notes goes on to state:
"However, the scope of the order-making power is not limited to those Acts".
My hackles immediately rose. We are talking about two sorts of professions. In all the documents I have ever seen, the noble Baroness and the department have talked only about what might be described as professions

933
supplementary to medicine. The noble Baroness has not talked about alternative therapies. And I am very worried about the control of alternative therapies.
There was a very good reason for the control of chiropractors and osteopaths by Act of Parliament. First, it was the only way at that stage of regulating them, and I readily accept that. The other reason is that noble Lords and Members of another place had views on how the registration should be conducted. If my memory serves me right, there was alteration to the Government's original plans by Members of both Houses of Parliament during the passage of those Acts.
As I read the Bill, under the current proposals in the noble Baroness's enormous group of amendments it will be possible to regulate other alternative therapies by order. The noble Baroness is nodding so I assume that I have got that right.
In Committee, I questioned whether that was desirable. I chose the illustration then of the acupuncturist, who must be in the list to which the noble Baroness referred a few moments ago. When I mentioned acupuncturists in Committee, the noble Baroness gave a speedy reply, totally ignoring that point. She said:
"It might well be that a profession joins a successor body of the CPSM. At the moment it is possible, by secondary legislation, for a new profession to be regulated for the first time. It has been done with the art therapists recently".
Art therapy is non-invasive and, with the best will in the world, cannot be described as an alternative therapy. The noble Baroness went on to say:
"There are now three applications to the Privy Council including one from clinical scientists". —[Official Report, 4/3/99; col. 1804.]
That again is something which is readily understood and accepted by the medical profession. But there are other therapies of various kinds—for example, reflexology and aromatherapy—all of which, if badly conducted, could cause injury resulting in hospitalisation for the patient who has voluntarily undergone the therapy and paid for it.
I do not believe it is right that such therapies should be considered as professions supplementary to medicine, which is what the Bill, even as about to be amended, gives the impression will be the situation. The noble Baroness shakes her head. I am sure that she will shortly explain at length why I am wrong and why I should sit down and shut up.
In her introduction to this group of amendments, the noble Baroness said something about Scotland which worries me even more. One of the amendments to which she spoke concerns the new Scottish Parliament "doing its own thing". That is all very well and, as I understand it, that provision is already established in law under the Scotland Act. But could the position ultimately be different either side of the Border? In other words, am I more likely to go to an alternative therapist and end up in hospital as a result of mal-treatment on one side of the border than the other? If that is the case, it must
934
be totally wrong. I believe that I have said enough to prove my point and so I shall now, as I said, sit down and shut up.
Baroness Carnegy of Lour: My Lords, for the benefit of my noble friend, and to save time, perhaps I may put on record my gratitude to the Scottish Office Minister for clarifying the point to which my noble friend has referred. I have had several letters from him and have asked further questions. I quote from his last letter, which puts the matter very clearly:
"The Scottish Parliament will … have no legislative powers whatsoever in this area [of regulation] either over existing bodies or any self-regulatory bodies which might be set up after 1 July 1999".
The noble Lord goes on to explain that that does not rule out the possibility that the Scots Parliament could have an interest in professional self-regulation when it touches on matters to be devolved, but that in those circumstances there would have to be close consultation between the Scots Parliament and the Westminster Parliament. I have satisfied myself and those with whom I have discussed the matter that there is no question of any regulation or alteration to regulation being devolved; it is all in Schedule 5 to the Scotland Act and will be done at Westminster.
Lord Walton of Detchant: My Lords, at Second Reading and in Committee I expressed some concern about the provisions of the Bill relating to the regulation of various professions, the regulation of which at present is enshrined in individual Acts, such as the Medical Act, the Dentists Act and many more. I am happy to say that the amendments which have now been tabled by the noble Baroness on behalf of the Government have met the concerns of those professional bodies. It seems to me and the organisations that I have consulted that by these amendments the Government have walked that important and difficult tightrope between, on the one hand, enabling order-making powers to be used to modify in some respects a few of the functions of these regulating authorities and, on the other hand, leaving their basic structures and functions intact. The evidence from each of these organisations, not least the General Medical Council and the General Dental Council, is that they are very satisfied with these amendments and commend them.
I comment briefly on the points made by the noble Lord, Lord Skelmersdale. I had the privilege of sponsoring the Osteopaths Bill and the Chiropractors Bill in this House. I did so following the reports of the King's Fund upon these particular professions. Like the King's Fund and the inquiry that it sponsored, I was satisfied that those professions had developed a formal training programme of adequate length and content such that those with the protected title of chiropractor and osteopath had been sufficiently well trained for the protection of the public.
The noble Lord, Lord Skelmersdale, is absolutely right. There are many other professions in the field of complementary medicine that would welcome the opportunity of self-regulation. But as yet relatively few of them have achieved the standing and recognition in training and other matters that is sufficient in my view

935
at least—I speak as a member of the Council of the Foundation for Integrated Medicine established by the Prince of Wales—to seek self-regulation. I believe that that time will come. It may well be that under order-making powers it is proper for them to be included in the body that will subsequently succeed the Professions Supplementary to Medicine Act. But in the meantime I commend these amendments which I believe answer the anxieties of the existing regulatory bodies. I congratulate the Government upon the skill with which they have tabled these amendments.
9.30 p. m.
Lord Skelmersdale: My Lords, before the noble Lord, Lord Walton, sits down perhaps I may put one question. Does he believe that the alternative therapies that are in the queue, albeit, as he said, a very long way off, can be happily regulated by order as opposed to Act of Parliament?
Lord Walton of Detchant: My Lords, that is certainly my belief.
Baroness Fookes: My Lords, the Minister always presents her case so reasonably and with such charm. Clearly, she has taken a great deal of trouble over these amendments and therefore it seems positively churlish even to raise a slight query. Nevertheless, I do so. I fear that I shall join that select group of parliamentary moaning minnies to which my noble friend belongs. Is it not true that, even though these powers are now hedged about in a way that they were not before, a determined Secretary of State still has considerable powers to bring forward changes that it is hoped will be agreed with the professions concerned, but may not be? Does she agree that when we are faced with an order that must be accepted by both Houses or rejected entirely the Secretary of State is still left with a considerable amount of power? That is the purpose of my rising to speak now. Quite a number of powers remain, do they not?
Baroness Emerton: My Lords, I too thank the Minister for the way in which she introduced this set of amendments. I join my noble friend Lord Walton in saying that the nursing profession is very pleased by the way in which these amendments together answer its queries on the order-making powers.
As to Amendment No. 79C, the profession is concerned about one matter in particular and asks the Minister to clarify it. It concerns the functions set out in the schedule. Standards for professional conduct could be set out. At present there is reference to administering procedures. Amendment No. 79C gives a wide scope. Therefore the profession is anxious that the standards for professional conduct could be better provided for than by using the word "administering". I ask the Minister to clarify that point which was raised during Second Reading. I was not present, unfortunately, at Second Reading but have read the debate in Hansard.
936
I congratulate the Minister on achieving the balance between flexibility and safeguards which is extremely difficult in such legislation.
Lord Monkswell: My Lords, I, too, wish to join the noble Lord, Lord Walton of Detchant, in thanking my noble friend and the department for producing what appears to be an extremely satisfactory regime. It may be my inadequacy, but I wish to ask my noble friend two minor questions and one of more significance.
Am I right to believe that Amendment No. 96 is a transition facility or arrangement enabling the current regime to continue while the new regulatory system is formulated and brought into play? Am I also right to think that the middle paragraph of Amendment No. 94 applies to midwives? As my noble friend said in Committee, a committee consisting of a majority of registered midwives could deal with the self-regulatory aspects of midwifery.
The more substantial question relates to Amendment No. 87 which will result in the repeal of the Nurses, Midwives and Health Visitors Act 1997. Section 16 of that Act states that:
"A person other than a registered midwife or a registered medical practitioner shall not attend a woman in childbirth".
I am sure the whole House will agree that that is an important safeguard for expectant mothers. It is late at night and I shall not delay the House with a list of horrendous situations which have occurred in the past where a woman in childbirth has not been attended by a midwife or doctor.
I have two questions. First, under this Bill will the Government have the power to enshrine in law the Section 16 provision of that Act? Secondly, and almost inconsequentially but hoping for a positive reply, is it the Government's intention to enshrine in law such a provision if they have the ability?
Lord Clement-Jones: My Lords, I add the appreciation of these Benches for the fact that the Minister has brought forward the amendments and responded so comprehensively to the concerns of the professions and their regulatory bodies. As the noble Baroness, Lady Fookes, reminded us, there are still considerable powers under the Bill for the Secretary of State. We on these Benches believe that the amendments go a long way towards mitigating those powers. We welcome them.
However, there are still some concerns by the profession about the way in which the safeguards will work. The Minister went some way towards answering them, but perhaps I may replay one or two in order to make sure that we on these Benches have understood her reply. The noble Lord, Lord Morris of Manchester, raised the issues of importance to the chiropodists. Others in the professions allied to medicine also have concerns about not being too narrowly confined, in terms of uni-professional majority to fitness to practice, but also involved is the whole issue of education standards, the validation of courses and entry to the profession. Those professions will appreciate the Minister's assurance about securing proper individual

937
contributions from those professions in the debate as we go forward. One cannot anticipate the result of those consultations.
A further question for the professions allied to medicine relates to the role of the Privy Council. I understood the Minister to say that she will be consulting on the basis of the retention of that Privy Council role. That will be much appreciated.
A further question surrounds the combination of the effect of Amendments Nos. 95 and 97. The wording is difficult and confusing, but I understood the Minister to say that, although in the first instance one must jump over the hurdle of those Acts, successor bodies will be protected. Therefore, it will not be possible to have their functions transferred by order, even though it will be possible for the UKCC and the CPSM.
Furthermore, there is the issue of devolution and the regulation of professions. Although the noble Baroness, Lady Carnegy, was clear in her understanding, I am not sure that my own understanding is quite so clear. It is important that the Minister confirms to the more confused of us that, despite the repeal of the 1960 and 1970 Acts, the professions currently covered by them will continue to be regulated on a UK-wide basis.
Another concern is that if the healthcare assistants are brought into a regulatory scheme, that is not reserved. Therefore, there would have to be agreement by the Scottish Parliament to any joint UK regulation of that set of staff in the health service.
The noble Baroness answered the question about the timing of the repeals. I understand that one can have a different appointed day for elements of a particular subsection. It would be helpful to have confirmation of that.
Finally, I make a cognate point to that raised by the noble Lord, Lord Monkswell, about the committee of a newly constituted UKCC or successor body. It would be helpful for the noble Baroness to reconfirm her understanding of the state of play so far. For instance, will it be an equally balanced body between nurses and midwives? If so, it may well be unnecessary for there to be a committee. If it is not balanced, a committee, that uni-professional majority which deals with issues such as entry to the profession, will be necessary. It would be helpful if the Minister, even at this late hour, were able to throw a little more light on that aspect.
Earl Howe: My Lords, I have little to add to what other noble Lords have said. The amendments represent a very satisfactory resolution of the difficulties highlighted at Second Reading and in Committee. The Minister deserves our thanks for all that she has done. I beg to differ slightly from my noble friend Lord Skelmersdale because I do not believe that any apology from the Minister is called for after all the hard work that she has done.
My only question relates to Amendment No. 79C. I have been asked by the Association of Optometrists to obtain an assurance from the Minister. As the Government say in their Explanatory Notes to the Bill, the purpose of professional regulation is to set a standard of conduct and competence for each profession
938
which protects the public. By implication, the purpose of the order-making power in Clause 47, as amended, is not only to keep the legislative framework surrounding the professions up to date but also to strengthen that legislative framework. That was a point which the Minister made this evening.
Therefore, will the Minister respond to the concern expressed to me by the Association of Optometrists that the order-making power in Clause 47 and Schedule 3 will be used essentially to preserve and develop the statutory regulation of health professions and that, in particular, it will not be used to reduce the responsibility of the profession for a particular reserved activity such as the testing of eyesight?
9.45 p. m.
Lord Rowallan: My Lords, my noble friend Lord Skelmersdale mentioned alternative medicine, which I use very readily. I felt that he cast aspersions—twice in fact. He said that often people, having been to alternative medicine therapists, then needed "proper" help from the NHS. I believe that that needs to be looked at.
Lord Skelmersdale: My Lords, I must interrupt my noble friend on that. I said that intervention by alternative therapists could—and I stress "could"— result in hospitalisation. I gave three examples of which I had personal knowledge where that was the result. That is most certainly not to say anything damning about alternative medicine therapies. Not only have I used many of them myself, but I was also the Minister responsible for them when I was at that department at the relevant time.
Lord Rowallan: My Lords, I am delighted to accept my noble friend's assurance on that. I have certainly come across many cases where the opposite was the case. People have found great help from one of those alternative medicine therapies.
Further to that, such therapies have existed for a very long time indeed. I have spoken to therapists although only in Scotland, because that is where I live. However, they have led me to believe that they would all be more than happy to welcome self-regulation, compulsory if necessary. There would be little argument from them on that. I believe that it is an extremely good idea. I certainly welcome the amendments which the Minister has brought forward.
Baroness Hayman: My Lords, I am grateful to noble Lords for their generous acceptance of the fact that we have tried hard with these amendments. I say first to the noble Baroness, Lady Fookes, that I accept her point absolutely. There are still considerable powers given to the Secretary of State under secondary legislation. The Delegated Powers and Deregulation Committee and those who have participated in the debates have recognised that if the order-making power were to be effective to do that which the profession wants it to da— for example, to provide a successor body for the CPSM

939
and the Nurses, Midwives and Health Visitors Act and to allow sensible and flexible changes in the regulation of the professions—it had to be a substantive power.
The argument has always been to make sure that that power was not untrammelled and that the appropriate safeguards were built in. Our concern has been to ensure that we strike what I think the noble Baroness referred to as the balance between flexibility and the safeguards. The reaction of the professions indicates that we have managed to do that in the numerous changes which have laid me open to the strictures of the noble Lord, Lord Skelmersdale, of having too many amendments at one time. I understand that that makes it difficult for noble Lords.
Perhaps I may deal with one or two specific points raised in the course of the debate. I should say to the noble Baroness, Lady Emerton, as I tried to make clear in Committee, that I share her concern about the word "administering" not seeming to be particularly clear. It is simply a matter of drafting and covers the issues upon which she had concerns.
In dealing with nurses, midwives and health visitors, perhaps I can answer the questions about the transitional nature—if I can put it that way—of some of the amendments relating to UKCC and CPSM, particularly concerning Amendments Nos. 96 and 97.
In drafting the government amendments on this issue, we have had to balance the need to protect the fundamental functions in respect of the professions supplementary to medicine and the nurses, midwives and health visitors with a need to replace the current bodies. It has not proved possible to draft provisions which would both secure these functions to the CPSM and UKCC and allow us to transfer them to successor bodies, but although in theory we could, therefore, transfer the four core functions to another body—I make it absolutely clear that the Government have no intention so to do—I would like to give the clearest of undertakings on this point. We framed the amendment in order to allow for the transition from the current to the successor bodies which will, of course, have those core functions protected. We shall not remove the four core functions from the CPSM or the UKCC, except to transfer them to the successor bodies when the orders creating those successors come into effect.
On the issues relating to midwifery, perhaps I could reassure my noble friend on the absolutely basic point that it is, and will remain, an offence for anyone who is not a midwife or a doctor to attend a woman in childbirth other than in an emergency. I would also like to reassure him that we value the independent practice of midwives and have no intention of diluting it. In consulting on our proposals for replacing the current Act, we have made it clear that the new council will have a duty to make rules on the midwifery practice and will have a continuing responsibility for the statutory supervision of midwives.
Midwives will have a decisive voice in these arrangements because we intend to provide that matters solely affecting their profession cannot be determined
940
on the votes of other professions or lay members. I hope that the noble Lord, Lord Clement-Jones, will find that reassuring, bearing in mind the questions that he asked.
As regards the question from the noble Earl, Lord Howe, on optometrists, we intend to use the power to strengthen professional self-regulation. It is not our aim to preserve the roles of the existing professions which, quite rightly, develop over time. Our aim must be to ensure that any professional is properly trained to carry out procedures and that they maintain their competence. That is very much the purpose behind these provisions.
Perhaps I can also reiterate to the noble Lord, Lord Clement-Jones, that I believe that I made clear the position with the Privy Council and the CPSM and the reserve nature of the professions supplementary to medicine and nurses, midwives and health visitors.
That brings us to the Scottish issues to which reference has been made. All professions regulated under statute as at 1st July 1999 are considered to be reserved to the UK Parliament. Professions seeking statutory regulation after that date will need the approval of the Scottish Parliament to come into a UK-wide scheme, but it is not possible to change the UK-wide powers and the reserved nature of the powers for the existing professions.
Lord Skelmersdale: My Lords, I am grateful to the Minister. Perhaps I may take the purely hypothetical example of the reflexologists. If a UK-wide scheme is proposed from Whitehall, that is fine. The Scots can either accept it or reject it. If, however, the idea comes from Scotland, are the Scots then allowed to do their own thing? Equally, if it comes from Whitehall, are they allowed to say no?
Baroness Hayman: My Lords, perhaps I may deal with the regulation of new professions, which was the main issue to which the noble Lord, Lord Skelmersdale, referred. I was not quite sure whether the noble Lord was concerned that a new profession could be regulated by order only as part of the successor body to Professions Supplementary to Medicine or whether he was concerned with what is in fact the case, which is that a separate, free-standing regulatory scheme can be provided for by order which will include the four main functions.
Perhaps I may clarify the position. Both situations are possible under the order-making power. There is a precedent for one in that it has been possible by secondary legislation to add professions to the Professions Supplementary to Medicine. It will be an innovation to be able to regulate a new profession by an order-making power.
We believe—the noble Lord, Lord Walton, confirmed that it was also his belief—that, given the very detailed nature of the consultation that would take place, the laying of the draft orders and the consultation upon them, that is an appropriate way to deal with those groups. The noble Lord, Lord Skelmersdale, referred to alternative therapists. Psychologists spring to mind as a group that might seek professional regulation. We

941
believe that there are sufficient safeguards to make this an appropriate way forward, but the noble Lord may not share that view.
Lord Skelmersdale: My Lords, what springs to the mind of the noble Baroness is somewhat different from what springs to my mind. As the noble Baroness has mentioned psychologists, which profession is very close—
Earl Howe: My Lords, we are on Report.
Lord Skelmersdale: My Lords, I know, but the noble Baroness gave way.
As the noble Baroness mentioned psychologists, who are very close to the established medical profession, that is fair enough, but others are very worried about, for example, psychotherapists, who are very akin to them, although the psychologists regard them as very much a lower form of animal.
Baroness Hayman: My Lords, whatever the profession—or the putative profession—concerned, there will be the opportunity to debate whether it is appropriate for it to be given professional self-regulation and the status of a profession that regulates itself. We shall have those debates with each group with which it seems appropriate to deal. I do not think that we can anticipate that. We have to decide whether it is appropriate, with the order-making power, to include new professions either within the new umbrella organisation that will replace the UKCC or in a separate free-standing regulatory scheme. The latter is the proposal which is envisaged in the Bill and I think that it is the appropriate one.
I turn now to the related devolution issues. If an order is made for a profession not reserved to the UK Parliament under the Scotland Act 1998—that is, those that are already regulated—and the proposal comes from Whitehall, to use the noble Lord's formulation, the Secretary of State must also lay the order before the Scottish Parliament. It must be approved by resolution of the Scottish Parliament before he can recommend to Her Majesty that the order be made for the whole of the United Kingdom. If within Scotland anew profession wants to be regulated on its own or refuses to be regulated with England and Wales, equally that will be a matter for the Scottish Parliament. So, there is an alternative approach for the new professions.
It is unlikely that Scotland would want to go ahead alone, for example, with the reflexologists. We would hope that both administrations would consider the issue in tandem and agree the best way forward. Our overall aim must be the protection of patients, wherever they live and wherever they are treated. That is the rationale for professional regulation being a reserved matter. We are dealing with the fact that we may have a changing situation. But I hope that that changing situation will be dealt with on a common basis and a common approach.
I hope that I have covered most of the points that were raised in the debate. I commend the amendment to the House.
On Question, amendment agreed to.
10 p. m.
Baroness Hayman Baroness Hayman moved Amendments Nos. 80 to 85:
Page 38, line 17, leave out from ("any") to end of line and insert ("other profession which appears to Her to be concerned (wholly or partly) with the physical or mental health of individuals and to require regulation in pursuance of this section. '").
Page 38, line 18, leave out ("those") and insert—
("(a) the professions").
Page 38, line 20, after ("1993") insert ("and").
Page 38, line 21, leave out first ("and") and insert—
("(b) the professions regulated by").
Page 38, line 21, at end insert—
("
(c) the professions regulated by the Professions Supplementary to Medicine Act 1960,
(d) any other profession regulated by an Order in Council under this section. ").
Page 38, line 22, leave out subsection (3).
The noble Baroness said: My Lords, with the leave of the House I shall move Amendments Nos. 80 to 85 en bloc. I beg to move.
On Question, amendments agreed to.
[Amendment No. 86 not moved.]
Baroness Hayman Baroness Hayman moved Amendment No. 87:
Page 38, line 29, leave out ("is") and insert ("and the Nurses, Midwives and Health Visitors Act 1997 are").
On Question, amendment agreed to.
Schedule 3 [Regulation of health care and associated professions]:
[Amendments Nos. 88 and 89 not moved.]
The Earl of Northesk The Earl of Northesk moved Amendment No. 90:
Page 51, leave out lines 21 to 23.
The noble Earl said: My Lords, on this amendment I shall lead in place of my noble friend Lord Skelmersdale. I should emphasise that I do not approach this issue from any expertise in health matters. I should perhaps also say that I regret that this amendment "slipped through my net" at Committee; I suspect that it would have been more appropriate to debate it at that time. While in no way excusing my lapse, I offer by way of token defence the fact that it may also have escaped the attention of other noble Lords.
As the Select Committee on Delegated Powers and Deregulation observes, the effect of paragraph 2 of Schedule 3 is to make the order-making power contained in Clause 47 a Henry VIII power. My limited experience of your Lordships' House advises me that, with every justification, we are always nervous of such powers being granted to Ministers. As my noble friend Lord Mackay of Ardbrecknish commented in debate only yesterday, it was this House that set up the Delegated Powers Scrutiny Committee to examine primary legislation and to be particularly vigilant on Henry VIII clauses.
Of course, the real difficulty here is the generally agreed perception that neither House is in a position to

943
scrutinise secondary legislation properly. The order-making power on the face of the Bill of,
"amending or repealing any enactment…or prerogative instrument and any other instrument or document",
creates the position where secondary legislation can be used to amend primary legislation. At any time that is a dangerous precedent. Indeed, as the Minister herself said earlier, it is important to ensure that these wide-ranging powers on the face of the Bill are not untrammelled.
As a matter of principle, Henry VIII clauses sit very uneasily with me, the more so because I simply cannot see the justification for such in this instance. That may well be my own failing. However, I hope that the Minister can elucidate the matter for me. The Explanatory Memorandum offers no assistance. I beg to move.
Lord Skelmersdale: My Lords, my noble friend has virtually said it all. However, I shall read from page 6 of the 7th Report from the Select Committee on Delegated Powers and Deregulation which says, at paragraph 30:
"The Committee wishes to draw the attention of the House to its recommendations concerning the lack of Parliamentary control over the creation of Primary Care Trusts"—
in which we are not presently interested—
"the provisions in the Bill for pharmaceutical price regulation"—
with which we dealt with a little earlier—"and", most importantly,
"the provision enabling the Queen to regulate health care and associated professions by Order in Council (Clause 47 and Schedule 3)".
In this case, Schedule 3 gives the nuts and bolts, as schedules are wont to do, for Clause 47. I feel it necessary to repeat my question. I have had an answer from the noble Lord, Lord Walton, but I have not really heard an answer from the Minister. Are such wide ranging powers appropriate for secondary legislation?
Baroness Hayman: My Lords, the noble Earl and the noble Lord have raised a fundamental issue. It is a fundamental issue that I tried to address on Second Reading, in Committee and on Report. The reason for taking these powers and suggesting that they are appropriate is very much the need to be able to protect patients by being able to provide strong and effective professional self regulation. We need to be able to do that not only in theory but also in practice. The delay that has taken place in terms of waiting for primary legislative slots to do something as simple, for example, as increasing the number of lay members of the General Dental Council as well as something as substantial as replacing the Professions Supplementary to Medicine Act 1960 has been the motivation for the professions being willing and, I believe, from their reaction this evening, welcoming of a properly constrained order-making power in this respect.
The amendment before us would prevent the order-making power being used to amend any current legislation. I appreciate the concerns that have been raised in general, in principle and, indeed, specifically. However, when one looks carefully at the report of the
944
Select Committee on Delegated Powers and Deregulation, it will be seen that it recognised the need for such a power in this case if appropriately safeguarded.
We had a very helpful debate in Committee on our intentions as regards the power and on the safeguards and limitations that were needed to reassure Parliament and the professions of those good intentions. We have taken note of what has been said at the various stages of the Bill, the concerns raised by the professions and the recommendations of the Select Committee on Delegated Powers and Deregulation. I hope that noble Lords will agree that we now have provisions that strike the appropriate balance between flexibility and safeguards and which allow us to make progress in what is a very important area.
We are not taking these powers for the sake of it; indeed, we are taking them because we need to work with the professions to strengthen professional self-regulation in a way that will protect patients. I hope that the government amendments brought forward today—and, in the case of consultation, to be brought forward at a future stage—will reassure the House and the professions that we have taken care to ensure that the safeguards and limitations on the use of this power are sufficient to meet the concerns that have been expressed. Indeed, I trust that the noble Earl and the noble Lord will not feel it necessary to press the amendment.
The Earl of Northesk: My Lords, I am extremely grateful to the Minister for that explanation. However, I still remain extremely concerned because we are, to a certain extent, being asked to legislate in the dark. One of the fundamental features which brought this matter to my attention was the considerable reference in Committee by the noble Baroness to the fact that everything that the Government intend to do is not on the face of the Bill. Therefore, the fundamental issue of being required to legislate in the dark remains; indeed, it remains to worry me deeply. None the less, I shall read the Minister's response with extreme care. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn
Baroness Hayman Baroness Hayman moved Amendments Nos. 91 to 96:
Page 51, leave out lines 25 to 27.
Page 51, line 37, leave out from second ("the") to end of line 38 and insert ("charging of fees").
Page 52. line 3, leave out ("47(1)(a)") and insert ("47(2)(a)").
Page 52, line 3. at end insert (", any regulatory body established by an Order as the successor to the Council for Professions Supplementary to Medicine or the United Kingdom Central Council for Nursing, Midwifery and Health Visiting or any other regulatory body established by an Order.
( ) An Order may not impose any requirement which would have the effect that a majority of the members of the regulatory body of any profession would be persons not included in the register of members admitted to practice.
( ) An Order may not provide for any function conferred on the Privy Council, in relation to any profession to which section 47(2)(a) applies, to be exercised by a different person. ").
Page 52, line 4, leave out from ("provides") to ("to") in line 7 and insert ("in relation to any profession, for any function mentioned in sub-paragraph (2) to be exercised by the regulatory body or any of its committees or officers, an Order may not provide for any person other than that regulatory body or any of its committees or officers").
Page 52, leave out line 14 and insert—
("( ) In sub-paragraph (1), "enactment" does not include any enactment contained in or made under the Professions Supplementary to Medicine Act 1960 or the Nurses, Midwives and Health Visitors Act 1997").
On Question, amendments agreed to.
Baroness Wilcox Baroness Wilcox moved Amendment No. 96A:
Page 52, line 20. at end insert—
("( ) consult representatives of patients and carers; and
( ) consult any other persons he considers appropriate. ").
The noble Baroness said: My Lords, I shall withdraw this amendment. I tabled Amendment No. 96A because in response to my amendment at Committee stage the Minister indicated her intention to put a broader requirement to consult on the face of the Bill. It was disappointing indeed to note that no amendment had been tabled by the Minister at this point despite the fact that she had tabled a number of other amendments. I wondered whether I would get this amendment past her this evening because all I have done is to redraft it in a way that I hoped would be attractive to her. However, I was delighted to hear her say that this was a matter of timing, not of intent, and that was the reason she had not tabled an amendment. That is an honest revelation for which I am grateful. I fully understand the pressures of time which impinge on her. The enormous sweep of this Bill—some would say that it is too enormous—makes it a complex Bill with many audiences to satisfy from management and organisation right through to the crucial relationship between professionals and the people they serve. I look forward to seeing an amendment at the next stage of the Bill. With the Minister's encouragement, I beg to move.
Baroness Hayman: My Lords, I am grateful for the comments of the noble Baroness and for her stated intention to withdraw the amendment. I reiterate my desire to fulfil her aspirations.
Baroness Wilcox: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hayman Baroness Hayman moved Amendments Nos. 97 and 98:
Page 52, line 23, after ("appropriate, ") insert ("together with a report about the consultation, ").
Page 52, leave out lines 30 to 32.
On Question, amendments agreed to.
[Amendment No. 99 not moved.]
Clause 48 [Regulations and orders]:
Baroness Hayman Baroness Hayman moved Amendment No. 100:
Page 39, line 7, at end insert—
("( ) No order is to be made under section 30(6) unless a draft has been laid before, and approved by resolution of, each House of Parliament. ").
On Question, amendment agreed to.
Baroness Hayman Baroness Hayman moved Amendment No. 101:
After Clause 49, insert the following new clause—
INTERPRETATION
(". In this Act—
"the 1977 Act" means the National Health Service Act 1977,
"the 1990 Act" means the National Health Service and Community Care Act 1990,
"the Commission" means the Commission for Health Improvement,
"enactment" includes an enactment whenever passed or made. ").
On Question, amendment agreed to.
Schedule 4 [Amendments of enactments]:
[Amendment No. 102 not moved.]
Baroness Hayman Baroness Hayman moved Amendments Nos. 102A, 102B and 102C:
Page 55, line 2, at end insert—
(". In section 29A(3)(b) of the 1977 Act (medical lists), for the words from first "disqualified" to "46" there is substituted "disqualified for inclusion in the list by, or by virtue of a direction of, the NHS Tribunal".
In section 48 (disqualification provisions in Scotland or Northern Ireland)—

(a) in paragraph (a), for the words from "services" to "above" there is substituted "any of the services mentioned in any of the paragraphs of section 46(5) above",

(b) in paragraph (b), at the beginning, there is inserted "in relation to the services in question" and for the words from "a list" to the end there is substituted "any list and (if also the subject of a declaration under those provisions corresponding to a declaration of unfitness) be treated as if a declaration of unfitness had been made in respect of him.

(2) Where under the conditional disqualification provisions in Scotland or Northern Ireland—

(a) any conditions are imposed in relation to the provision by any person of any services mentioned in section 46(5) above, or

(b) any conditions so imposed are varied, the Secretary of State may, by a notice in writing given to each Health Authority and to the person in question, impose those conditions in relation to the provision by that person of those services under this Pan of this Act.

(3) A notice under subsection (2) above may make such modifications of the conditions as the Secretary of State considers necessary for them to have the like effect in relation to England and Wales as they have in relation to Scotland or (as the case may be) Northern Ireland, but only if the Secretary of State has previously given the person concerned written notice of the proposed modifications and an opportunity (in accordance with such requirements, if any, as may be prescribed) to make representations about them.
(4) Conditions imposed by a notice under subsection (2) above shall cease to have effect if the Secretary of State withdraws the notice by giving written notice to the person concerned.
(5) In this section, "the conditional disqualification provisions in Scotland or Northern Ireland" means any provisions in force in Scotland or Northern Ireland corresponding to sections 46C and (so far as relating to conditional disqualifications) 47 above. "
. In section 49 (regulations as to sections 46 to 48)—

(a) in paragraph (c), after "disqualifications"' there is inserted "or conditions",

(b) at the end of that section there is inserted—

947
"(2) Regulations under subsection (l)(a) above may in particular provide that, where (apart from the regulations) it would be the duty of the Tribunal to inquire into both an efficiency case and a fraud case in respect of the same person, they may inquire into one case before inquiring into the other and, after proceedings in the first case are finally disposed of, may if they think it appropriate adjourn the other case indefinitely. "
In section 49A (application for interim suspension)—

(a) after subsection (1) there is inserted—

"(1A) A Health Authority may, if they have requested a review of a conditional disqualification on the ground mentioned in section 47(3)(b) or (c) above, at any time before the review is concluded apply to the Tribunal for a direction to be made under subsection (2) below in relation to the person to whom the review relates",.
(b) in subsection (2), for the words from "it" to "patients" there is substituted "either of the conditions for doing so is satisfied" and after "in question" there is inserted "or the case to which the review in question, ",
(c) after that subsection there is inserted—
"(2A) The conditions for giving such a direction are—

(a) that it is necessary to do so in order to protect persons who are, or may be, provided with services under this Part of this Act to which the case in question, or the case to which the review in question, relates,

(b) in, or in the case of a review relating to, a fraud case, that unless they do so there is a significant risk that—

(i) an act or omission within section 46(4C)(a) above will occur, or

(ii) the investigation of the case or the review will be prejudiced",.

(d) in subsection (3)", for the words from "under" to "engaged in" there is substituted "of unfitness in relation to".
(e) in subsection (4), after "case" there is inserted "or review",
(f) subsection (5) is omitted,
(g) in subsection (6)(a), "prepared under this Part of this Act" is omitted.
. In section 49B (continuation of suspension pending appeal)—

(a) for subsection (1) and the preceding sidenote there is substituted—

Suspension pending appeal
"49B. — (1) Where, on disposing of a case under section 46B above, the Tribunal disqualify the person concerned under subsection (2)(b) of that section, they may, if they consider that either of the conditions mentioned in section 49A(2A) above is satisfied, direct that section 49A(3) above shall apply or, if a direction has been given under section 49A(2) above, shall continue to apply to him as respects services of the kind to which the disqualification relates. ",.
(b) in subsection (2), in paragraph (a), for "direction under section 46(2)(b) above" there is substituted "disqualification under section 46B(2)(b) above" and, in paragraph (b), for "that direction" there is substituted "the disqualification",
(c) in subsection (3), for the words from "direction" to "section 46(2)(c) above" there is substituted "disqualification which is not coupled with a declaration of unfitness",
(d) subsection (4) is omitted.
. In section 49D (suspension provisions in Scotland or Northern Ireland), for "46(1)" there is substituted "46(5)". ").
Page 56, line 25, at end insert—
(". In section 122(2) (recovery of charges), "as a simple contract debt" is omitted. ").
Page 57, line 31, at end insert—
(". In Schedule 9 (NHS Tribunal), in paragraph 5A—

(a) in sub-paragraph (2)(a), for "section 46" there is substituted "sections 46 to 46C",

(b) in sub-paragraph (2)(b), after "disqualification" there is inserted "conditional disqualification or declaration of unfitness",

(c) in sub-paragraph (2)(d), for the words from "the application" to the end there is substituted "section 49A(3) may be made to apply or continue to apply". ").

On Question, amendments agreed to.
Lord Macdonald of Tradeston Lord Macdonald of Tradeston moved Amendment No. 102D:
Page 58, leave out line 16 and insert—
("(a) in subsection (2)—

(i) after paragraph (a) there is inserted—

"(aa) Special Health Boards;",

(ii) after paragraph (k) there is inserted—

"(ka) Primary Care Trusts established under section 16A of the National Health Service Act 1977;",.

(iii) paragraphs (d) and (j) are omitted, and").

The noble Lord said: My Lords, the amendments in my name to Schedules 4 and 5 make minor and consequential changes to ensure that all Scottish National Health Service bodies are able to make service agreements with each other and with relevant bodies, such as the new English primary care trusts, outwith Scotland. They also tidy up paragraph 41 of Schedule 4. I beg to move.
Lord Skelmersdale: My Lords, does that mean that the internal market continues?
Lord Macdonald of Tradeston: No, my Lords.
On Question, amendment agreed to.
Lord Macdonald of Tradeston Lord Macdonald of Tradeston moved Amendment No. 102E:
Page 59, line 6, after (""or") insert ("Health").
On Question, amendment agreed to.
[Amendment No. 103 not moved.]
Schedule 5 [Repeals]:
Lord Macdonald of Tradeston Lord Macdonald of Tradeston moved Amendment No. 103A:
Page 64, line 48, column 3, after (""or") insert ("Health")
On Question, amendment agreed to.
Clause 51 [Devolution]:
Baroness Hayman Baroness Hayman moved Amendments Nos. 104 and 105:
Page 39, line 37, leave out ("(3)") and insert ("(4)")
Page 39, leave out line 39.
On Question, amendments agreed to.
Clause 52 [Commencement]:
Baroness Hayman Baroness Hayman moved Amendments Nos. 106 and 107:
Page 40, line 16, after ("Act") insert ("(including the Schedules)").
Page 40, line 19, at end insert—
("( ) Subsection (1) does not apply to the repeal of section 10 of the Professions Supplementary to Medicine Act 1960 (power to extend or restrict application of Act), which accordingly comes into force on the day on which this Act is passed. ").
The noble Baroness said: My Lords, I beg to move.
Lord Skelmersdale: My Lords, I cannot let the day go without congratulating the noble Baroness on her
950
enormous stamina. When I criticised her a little while ago for her voice fading I said at that time, if I recall correctly, that I was not in the least surprised. I would be well under floor level, not to say Guy Fawkes level, by this time of night were I in her position. My only reason for speaking in that vein was to have the acoustics improved by the magic intervention of those who manage the acoustics system in your Lordships' House. I must say that I achieved my objective and it was absolutely no slight on the noble Baroness.
On Question, amendments agreed to.
House adjourned at a quarter past ten o'clock.