HL Deb 11 December 2002 vol 642 cc265-77

5.36 p.m.

Lord Hunt of Kings Heath

My Lords, with the leave of the House, I shall repeat a Statement made by my right honourable friend in another place. The Statement is as follows:

"With permission, Mr Speaker, I wish to make a Statement about devolution of resources and responsibilities within the National Health Service. I am today allocating revenue resources to England's 304 primary care trusts. I have written today to all right honourable and honourable Members with information about the PCTs serving their constituencies.

"The NHS today is the fastest-growing health service of any major country in Europe. Just six years ago under the previous Conservative government, NHS budgets were falling in real terms. By 2008, under this Labour Government, they will have doubled in real terms.

"The dedication and commitment of NHS staff is turning these extra resources into improved results for patients. Deaths from cancer and heart disease are falling. Waiting times are down. The numbers of doctors, nurses and other staff are up. The biggest ever hospital-building programme is under way. There is a long way to go but real and steady progress is taking place.

"We can now build on that momentum by coupling record resources to radical reforms. I can tell the House today that I have made significant changes in three major respects to the method by which we allocate resources to the NHS.

"The first is that, for the first time, locally run primary care trusts will receive funding direct from central government rather than through health authorities. This is about devolving power and resources direct to the NHS front line. PCTs will now control 75 per cent of the total NHS budget. That was an election manifesto commitment we made. Today, we honour it.

"Secondly, the resources I am allocating today are not just for one single financial year but for three years. Short-term funding has hindered long-term planning in the NHS for far too long. So I am today distributing to PCTs resources for the years from spring 2003 through to spring 2006.

"This will give PCTs the power to plan with confidence and certainty for the longer term. They will be free to commission services from the public, private or voluntary sectors—wherever they can get the best health services to meet the specific health needs of their local communities. We look to them to use their considerable extra resources to achieve a better balance between services in the community and those in hospitals, to promote prevention as well as treatment.

"Thirdly, the resources are being distributed according to a new fairer funding formula. The existing weighted capitation formula has been widely criticised for failing to get health resources to the areas of greatest health need. It has held back our ability to address the health inequalities which scar our nation. Poverty and deprivation cause excess morbidity and mortality. They bring extra costs to local health services.

"That is why I asked the expert Advisory Committee on Resource Allocation to review the existing formula and to bring forward a new formula. The new formula reflects those costs by using better measures of deprivation and by taking greater account of unmet health needs. It also reflects population changes from the 2001 census.

"The new formula redistributes resources to some of the poorest parts of the country: places such as Tower Hamlets, Newham, Barking and Dagenham in London; Tendring, Basildon and Thurrock in the South; Birmingham, Telford and the Wrekin in the West Midlands; Ashfield in the East Midlands; Liverpool, Knowsley and Manchester in the North West; Bradford in Yorkshire and Easington in the North East.

"The new formula, in calculating health need, takes account of the effects of access, transport and poverty in England's rural areas, too.

"In addition, the new formula recognises not just the challenges for the NHS in areas of highest need, but the challenges, too, in areas of highest cost.

"We all know that the cost of living in some parts of the country is higher than in others. That impacts on the cost of health care too. The new formula takes account of this through a more refined assessment of labour market costs. The allocations also reflect the impact of the recent Agenda for Change agreement on regional pay flexibilities and the need to expand capacity in areas where waiting times for treatment are longest.

"These changes benefit almost 180 primary care trusts, including over 140 in London and the South and almost 30 in the North West.

"The new funding formula is fair to all parts of the country. It reflects extra needs and extra costs. It benefits primary care trusts in both the North and the South. The average PCT budget will grow over the next three years by almost £42 million. In real terms this is an increase of 22 per cent; in cash terms of over 30 per cent. No PCT will receive an increase in funding over the next three years of less than 28 per cent.

"For the information of Members on all sides of the House, this means that the real terms increases in resources for local health services in this Parliament will average almost 7 per cent. In the 1992–97 Parliament by comparison it averaged just over 1 per cent. That is the difference a Labour government makes.

"These resources, together with the reforms we are making, will make a difference to the care patients receive: better emergency care; shorter waiting times; improvements in cancer, heart, mental health, children's and elderly services.

"The allocations to PCTs include resources to finance the costs of pay reform, new drugs and treatments and additional NHS capacity. It includes the commitments we set out in the NHS Plan. However, none of the growth money has been identified for specific purposes. PCTs will be able to use these extra resources to deliver on both national and local priorities.

"PCTs are about shifting the balance of power in the health service so that while standards are national, control is local.

"I am today placing in the Vote Office copies of a document which provides details of the help, in cash and in kind, which the Department of Health will now make available to all NHS trusts to raise standards of service for patients.

"There will be help, support and, where necessary, intervention to raise standards in all NHS hospitals from the best performing to the worst. We on this side of the House reject the internal market idea that NHS hospitals should be left to sink or swim.

"Equity in health care demands support for all, just as it demands national standards of care. But for over 50 years, uniformity in health provision has not guaranteed equality of outcomes. Indeed, health inequalities have widened not narrowed. Top down Whitehall control has tended to stifle local innovation. It has too often ignored the differing needs of local communities. Sustained improvements in local services can happen only where staff feel more involved and local communities are better engaged; where improvement is something done by local people not just done to them.

"That is why devolution is at the heart of our reform programme for the NHS. It is why PCTs are so important and it is why we now look to reconnect local hospitals to the local communities they serve.

"I am today publishing a guide to NHS foundation trusts. Again, copies are available in the Vote Office. These NHS foundation trusts will usher in a new era of public ownership where local communities control and own their local hospitals. NHS foundation trusts will be part of the NHS, providing NHS services to NHS patients according to NHS principles; services free based on need not ability to pay. They will be subject to NHS standards, to NHS star ratings and to NHS inspection.

"They will be owned and controlled locally not nationally. Modelled on co-operative societies and mutual organisations, these NHS foundation trusts will have as their members local people, members of staff and those representing key organisations such as PCTs. They will be its legal owners and they will elect the hospital governors. In place of central state ownership there will be genuine local public ownership.

"Subject to Parliament, NHS foundation trusts will be guaranteed in law freedom from Whitehall direction and control so that we can unleash the spirit of public service enterprise which so many NHS staff share and which central control holds back.

"By putting staff and public at the heart of this key public service these NHS hospitals will have the freedom to innovate and develop services better suited to the needs of the local community.

"NHS foundation trusts will operate on a not-for-profit basis. They will earn their income from legally-binding agreements with PCTs based on a national tariff. They will not be able to undercut other NHS hospitals.

"They will be free to borrow either from the public sector or the private sector. They will be able to retain any surpluses and any proceeds from the more efficient use of their assets where this is for the benefit of NHS patients.

"They will have the freedom to recruit and employ their own staff. Indeed, NHS foundation trusts will be among the first NHS organisations to implement the new pay system we have recently negotiated with NHS trades unions. And, provided they can undertake extra work and make improvements in productivity, they will also be able to offer staff extra rewards.

"They will operate under a statutory duty of partnership under which they use these freedoms only in a way that does not undermine other local NHS organisations, for example by poaching their staff.

"There will be other safeguards to protect the public interest. NHS foundation hospitals will operate according to a licence issued and monitored by an independent regulator, accountable to Parliament, to guarantee NHS standards and NHS values.

"The presumption will be light-touch regulation but there will be intervention powers where they are needed. In extremis, foundation status can be withdrawn.

"I can confirm today that the proportion of private patient work undertaken by any NHS foundation trust will be strictly capped to its existing level. Indeed, we would be particularly interested to see applications for NHS foundation trust status that propose to convert existing private patient facilities for the exclusive use of NHS patients.

"And to prevent any demutualisation or any future Tory government seeking privatisation, there will be a legal lock on the assets of NHS foundation trusts. They are there to serve NHS patients, not just for now but for all time. They are about the Labour ideal of common ownership, not the Tory pursuit of privatisation.

"The freedoms NHS foundation trusts will have will be a powerful incentive for others to improve. The first round of NHS foundation trust hospitals will be drawn from trusts rated three star next summer. Forty per cent of existing three-star trusts are in some of the most deprived areas of the country; places like Sunderland and Liverpool; Doncaster and Bradford; Southwark and Hackney. As more NHS trusts improve, more will be eligible to gain foundation status. There will be no arbitrary cap on numbers. Over time, foundation trust status will become the norm for many—perhaps most—hospitals in the NHS. Subject to Parliament, the first will be in place by Spring 2004.

"Today I am announcing large-scale investment accompanied by radical reform: investment to get more resources to the NHS front line and reform to give more power to the NHS front line.

"This side of the House has an unquestioned commitment to the NHS. It is time not just to invest more resources in frontline services but to invest power and trust in those frontline services. That is what we seek to do. I hope it is what the House will support".

My Lords, that concludes the Statement.

5.49 p.m.

Earl Howe

My Lords, I thank the Minister for repeating the Statement, which, as he will acknowledge, is really two Statements rolled into one. It contains a good deal that we can welcome, but also a good deal that is not yet clear and which we will need to study.

I shall deal first with the new resource allocations and the revised formula for calculating them. In principle, a three-year allocation is a welcome departure, but I wonder whether it carries risks. Bearing in mind that there has been no consultation on the formula, what happens if there is an error, for example' How would that be dealt with? How would the Government deal with a material change of circumstances in a PCT where, for example, there had been an influx of immigrants? Unless some flexibilities are built into the formula, it could turn out to be a straitjacket, with unpalatable consequences for patients. I should be glad if the Minister could say whether money will be held back at the centre and, if so, how much.

It is unsatisfactory—indeed, unacceptable—that such a major change in the formula could have been agreed without any public discussion or consultation. It redistributes the NHS budget in fundamental ways, yet we do not know the basis on which this is being done. When will we know? When we find out, how easy will it be to interpret? I hope the Minister agrees that transparency in such an important matter is not just desirable but essential. I note in passing that there is nothing in the Printed Paper Office today to shed any light on any of this.

The increases to the overall budget are, without question, substantial, but how much extra care does the Minister anticipate that the new money will buy and how many more patients will be treated? The Government's record is of a lot of new money being poured into the service but very little extra activity coming out. That theme was taken up by my noble friend Lady Noakes in our recent debate on the gracious Speech.

The Statement says that none of the growth money has been identified for specific purposes. Perhaps the Minister can tell us how much that growth money will be, bearing in mind the calls on the budget from pay reform, trust deficits, the drugs budget and all the central targets set out in the NHS Plan. What money will be left over when all those have been funded?

Turning to the other issue covered by the Statement, as the Minister knows, I welcome the concept, of foundation trusts. I am not sure on what evidence the Government base the proposition that, Sustained improvements in local services can only happen where … local communities are better engaged". However, I agree with one phrase in the Statement, which, interestingly, the Secretary of State in another place did not read out. It referred to central control holding back the spirit of public service enterprise. I can only infer that the Secretary of State did not read that out because to do so might have implied an indictment of the policy meted out to the majority of NHS providers.

If we all agree that such improvements are a goal worth aiming at, the real question is whether the freedoms to be given to foundation trusts will bring about such change over time. There are three key areas in which we can assess how substantive such freedoms will be: autonomy, ownership and accountability. I wonder what sort of autonomy foundation trusts will really enjoy when they will remain subject to star ratings, which, by definition, are arrived at by reference to centrally set targets. I wonder whet her the freedom to recruit and employ their own staff will be all that one might imagine when at the same time they will be forbidden from poaching staff from other NHS organisations, however one defines poaching, which is an interesting question. If foundation trusts will really be able to retain any surpluses and proceeds from the more efficient use of their assets, as the Statement makes out, yet at the same time will have a legal lock on their assets, it is not clear to me that the freedom to dispose of those assets will amount to a real degree of freedom in practice. Perhaps the Minister could shed some light on that.

The use of the word "ownership" throws up all sorts of issues. Who will choose the members of a foundation trust and how will that happen? In what ways, if at all, will a local authority be represented on a board? Which local interest groups will be represented? If local people really own the trust, how is that consistent with the ability of the Secretary of State to withdraw foundation status? The ownership of the trust will, de facto, rest at the centre.

Arising out of that, it would be helpful if the Minister could tell me exactly how a foundation trust will be accountable and to whom, bearing in mind on the one hand that it will be subject to star ratings and concomitant targets and on the other that it will be run and owned locally. There is an inbuilt conflict there.

A key figure in all this will be the independent regulator, who, if I read the documents correctly, will effectively be a proxy for the Secretary of State. He will have considerable powers, but his accountability to Parliament will be through the Secretary of State. I question whether that arrangement is satisfactory. If he is independent, a great deal rests on his judgment. I find that worrying.

As the Minister knows, my criticism of foundation trust status is that it will not be rolled out widely enough. There is scope for more trusts to become foundation trusts in due course, but the Statement equivocates about how many. To say that, Over time foundation trust status will become the norm for many—perhaps most—hospitals in the NHS", carries the implication that many, perhaps most, hospitals in the NHS may not acquire such status. That in turn implies a two-tier system in the starkest possible sense.

I look forward to the legislation when it reaches us and to the opportunity of debating these and many other questions in close detail.

5.57 p.m.

Lord Clement-Jones

My Lords, I, too, thank the Minister for repeating the Statement made in another place. We welcome a number of aspects of it, particularly as much of it represents an admission that the additional resources allocated, amounting to 3.5 per cent, in the Government's first term of office were inadequate, and not enough was done to address health inequalities during that period. We welcome the new resource being allocated to PCTs and the three-year time-span for the allocation.

I shall raise two issues. First, we are concerned about specialised commissioning by PCTs. As the Minister knows, we have raised this issue a number of times. It currently falls firmly within the remit of PCTs. Now that the resource allocation has been made, can the Minister clear up the confusion surrounding specialised commissioning? When will that be cleared up? When will the review commissioned by his colleague Mr Hutton be produced?

My second point, touching closely on a point made by the noble Earl, Lord Howe, relates to the whole question of the allocation formula. When will the details be given? We are somewhat buying a pig in a poke today. Of course the extra resources are welcome, but how are they allocated? We have yet to judge whether it will be fair for the different areas of the country. Is it intended that the formula will be reviewed or will it last for three years come hell or high water?

I do not know whether to be pleased that the Government have published their proposals about foundation hospitals or affronted that, so far ahead of primary legislation, they assume that that legislation will be passed and that foundation hospitals in the form that they propose will be legislated for. I have mixed feelings about the publication today.

Of course we share the Government's objectives in seeking a form of decentralisation that will improve patient experience and provide value for money. However, the Government's scheme set out in the Statement and the new guide is totally inadequate. It does not go nearly far enough. The starting-point is not to separate sheep from goats by simply rewarding three-star hospitals with special status, and so on; it must be to provide genuine freedom for local hospitals from a plethora of government targets, and to provide inspection that really reflects clinical excellence—not government micro-management, or, as Sir Ian Kennedy put it, "a confetti of regulation".

The raising standards document goes someway in that direction. I realise that the Government have some intention of moving down that road. There should be fewer and better co-ordinated inspections, but we need an inspectorate that sets the clinical criteria for excellence. We need to rationalise the bodies that exercise clinical governance and inspection. As the Minister is aware, some 20 bodies are now entitled to enter, or inspect, NHS hospitals.

We also need fewer targets for all our hospitals, not just for a chosen few. Above all, we need local hospitals with their roots in local communities. Noble Lords on these Benches would prefer to see a system that is clearly a much more community-mutual model, and one which is available to all hospitals and not just to a chosen few; otherwise, as Mr Dobson pointed out, we risk having a two-tier National Health Service which would serve only to demoralise NHS staff still further.

There are many inconsistencies and contradictions in the Statement over foundation trusts. The Secretary of State seems to give on the one hand, while he grabs back with the other hand. For example, such trusts are to have more freedom from Whitehall control, but their status under licence can be taken away and their assets locked at all times. It is said that they are to enjoy more freedom, but they will still be subject to the star-rating system. They will have "light touch regulation", but will still have to meet a plethora of targets. That is not the freedom and real devolution that we were all led to believe would come out of foundation status.

We look forward in due course to debate on the Bill, which will bring forward such reforms. However, many questions surround foundation hospitals. What will their borrowing powers be? Will they be allowed to borrow both capital and revenue? What freedom in the provision of clinical services will these hospitals have? Will they be able to open or close clinics at will? If they are to have freedom, why cannot they set their own treatment prices?

What number of foundation hospitals does the Minister plan—if, indeed, this is the case—for the future? The Statement seems to imply that that status will be available for a wider number of hospitals than just three-star hospitals after, say, five years. Can the Minster give the House an estimate of how many foundation trusts might exist after that period? I share the doubts expressed by the noble Earl, Lord Howe, about exactly how such hospitals will be accountable and how independent the independent regulator will be. Most crucially, will the latter report to Parliament or to the Secretary of State?

In summary, I suspect that we are witnessing a reinvention of fundholder status but at acute hospital level. That is why in the House of Commons, although not so much in this House, Conservatives have given these reforms such a warm welcome. However, we have grave doubts about whether, in the words of the Statement, the spirit of public service enterprise", will be unleashed. We look forward to continued debate.

6.3 p.m.

Lord Hunt of Kings Heath

My Lords, I am grateful for the somewhat constructive comments made by the noble Earl, Lord Howe, and the noble Lord, Lord Clement-Jones. I very much look forward to introducing the Bill and to our no-doubt consensual debates on the important questions that surround it.

Judging by my experience of the NHS, the risk in terms of a three-year allocation is well worth taking. When I started to work in the service in the 1970s, the allocation used to arrive halfway through the financial year in which the money was meant to be spent. This has gradually been pulled back. The value of certainty for a three-year period is well worth while. If there is some inflexibility involved, so be it. I should point out to the noble Earl that we are not holding back money. Indeed, despite the scepticism that has been expressed by some, we are determined to ensure that primary care trusts do receive the vast bulk of resources destined for the NHS.

A review of the formula was supervised by the Advisory Committee on Resource Allocation (ACRA), which had a broad-based membership—NHS management, general practitioners and academics. The latter were given a very clear mandate. I believe that the committee has produced a very sensible outcome. In addition to our existing policy objective of equal opportunity of access for equal need, the committee was given a mandate that the formula should also contribute to a reduction in avoidable health inequalities. In my view, the formula meets the criteria. As far as concerns more detail being made available, the new need element of the formula was carried out with the help of a team of researchers led by the University of Glasgow and ISD Scotland. I can confirm that the report on the allocation of resources will be published in English areas after allocations have been announced.

The noble Earl, Lord Howe, asked me to provide precise figures on how much money we would expect to be spent as regards different resource demands on the health service. However, I shall not do so. PCTs are all in different circumstances. They also face generic cost pressures relating to pay inflation, capital charges, and the increase in prescribing. The minimum increase that PCTs will receive is 8.3 per cent in the first year, 8.9 per cent in the second year, and 8.5 per cent in the third year, which represents a large level of increase—indeed, an unprecedented increase. I do not deny that the health service will continue to have to make difficult judgments about where the extra resource is spent.

Similarly, I do not deny that it is most important that the health service should look at existing resources to ensure that the money is wisely spent. However, the combination of the extra resources and the three-year certainty will enable PCTs to plan in a way that has not previously been available to the health service. The ultimate aim is to ensure that we deliver on the NHS Plan. The noble Earl, Lord Howe, seemed to suggest that the health service was not spending the extra money wisely. I disagree with that view. I believe that the increase in capacity that we are seeing, the increase in the number of training places available, and the new services to be provided, all reflect greater resources as well as an improvement for the public. This announcement will allow us to move on to ever-better improvements in the future.

Concerns were expressed about whether foundation trusts will have real autonomy. They will certainly enjoy real autonomy. There would be 'very little point in the Government going down this route of transferring ownership from Ministers to local communities if we were not also determined to ensure that the fullest use is made of the freedoms that such trusts will receive. There is no inconsistency between establishing a national framework in which foundation trusts work and ensuring that they have much greater autonomy. The fact that we have star ratings, national standards, and national service frameworks means that we can remove our power of direction over foundation trusts, as we intend to do. We can then give those trusts much inure freedom in the future.

As for accountability, each foundation trust will be accountable to its membership. We want such trusts to have as broad-based a membership as possible. The majority of the members of such trusts will be representatives of public and patient groups. They will elect a governing body, which, in turn, will appoint the board of directors, including the chair. As to accountability to Parliament by the regulator, it is appropriate that that is through the Secretary of State. I think that that is consistent with a number of other regulators at the present time.

The noble Lord, Lord Clement-Jones, and the noble Earl, Lord Howe, asked whether this is a two-tier approach. Surely it makes sense to put one's faith in investment in the best performing NHS trust. It is the trusts that will innovate. They will use those freedoms to best effect.

I cannot answer the question regarding how many foundation trusts there will be in five years' time. I hope that there will be many. That is the aim. The aim is for all trusts to improve. Those that get through the barrier to three-star trust status will show that they are capable of becoming foundation trusts. We wish to see that happen.

I have overspent the time that I am allowed. I just say that as to the provision of pinnacle services, the licensing regime will ensure continuity of services for NHS patients. Foundation trusts will be subject to an obligation to offer certain NHS services for NHS patients. These will be known as regulated services. That will ensure that foundation trusts concentrate on their core purposes of providing a wide range of services for all NHS patients.

6.11 p.m.

Lord Chan

My Lords, I also thank the Minister for repeating the Statement on NHS resources. I particularly welcome the three main areas: 75 per cent of NHS funding to go through primary care trusts; funding in primary care trusts to be for three years; and a new formula for deprivation. Here I must declare that I am a non-executive director and vice-chairman of a primary care trust in the Wirral—the Birkenhead and Wallasey Primary Care Trust.

It was said that the deprivation formula was based on population changes in the 2001 census. I understand from the census office that in some inner-city areas even fewer people filled in their census forms in 2001 than in 1991. I fear that that deficiency in statistics will be a disadvantage to some inner-city areas.

As to the issue of the 30 north-west PCTs which will benefit from the deprivation formula, I heard Liverpool and a number of other places, but I did not hear any names from the Wirral. That gives me cause for concern. However, I have no doubt that we shall be getting details about that because our PCT has five wards, as I mentioned previously, where there is severe deprivation, some of which are within the worst 20 wards in England.

The increase in funding is to be welcomed. I am pleased to note that, on average, it is under 9 per cent per year, which is higher than in previous years. The issue here is that at the moment we, the primary care trust, need to give money to the hospital. If the hospital is expecting a greater, or at least a 9 per cent increase, then we would be in big trouble because that means our growth money would be further restricted.

The other issue concerns foundation hospital trusts. We have only one hospital in our area. If that becomes a foundation area, would we need to continue to give it money?

Finally, there is the issue of debt. I have mentioned before that we are still dealing with debts inherited from the defunct health authorities. Will that still be the case in the future?

Lord Hunt of Kings Heath

My Lords, I am grateful to the noble Lord, Lord Chan. I have the figures for the Cheshire and Merseyside Strategic Health Authority. Bebington and West Wirral will receive a 28.85 per cent increase over three years; Birkenhead and Wallasey, 31.85 per cent; Central Cheshire, 31.33 per cent; Central Liverpool, 40.32; and Cheshire West, 29.76 per cent. I would be happy to place a copy of this list in the Library rather than to read out any more primary care trust allocations. But I think that the noble Lord would agree that there is a great deal of money there. We need to make sure that it is spent wisely.

As to the issue of funding responsibilities, I am quite clear that the liabilities of restructured NHS organisations must be passed on to their successor organisations. That principle has been adopted through any number of reorganisations and restructurings and must apply to primary care trusts. Primary care trusts must operate in financial discipline. The very fact that they have a three-year funding certainty must make it much easier for them to be able to respond to some of those challenges.

In relation to the foundation trusts, the point I make to the noble Lord is that the great bulk of their resources will come through the service agreements that they reach with primary care trusts. So primary care trusts will be in the driving seat in terms of defining the range and quality of services they wish to see provided. Of course there will be a major challenge for primary care trusts. We know that. But from what I have seen so far in the few months that they have been up and running throughout the country, I am confident that they can meet that challenge.

I noted what the noble Lord said in relation to the census. I must say that overall the ONS is confident that the 2001 census data are probably the most accurate that it has ever been able to receive.

Baroness Pitkeathley

My Lords, this morning I was at the Middlesex hospital, where I was for a long time last year a patient. The charge nurse was telling me how much better things are since I was last there in terms of numbers of staff and the equipment available. He raised with me concerns about the employment of nurses who are currently employed by one trust and should move to a foundation trust. Can the Minister give us information about that?

My other area of concern is whether the boards, including the chairmen of the new foundation hospitals, will have any system for sharing experience and learning. While I think that it is excellent that they will relate to the needs of their local area, we would not want them to be reinventing the wheel.

Lord Hunt of Kings Heath

My Lords, I was very glad to hear my noble friend's comments about the changes at the Middlesex hospital. It has dynamic new leadership. I should like very much to pay tribute to it and to the staff of that hospital. As to the staff nurses, he should have no concerns at all. People who are employed by NHS foundation trusts will be NHS employees. There is no change. We expect that the greater flexibilities through the Agenda for Change agreement will be adopted with enthusiasm by NHS foundation trusts.

One of the tests to be applied as to whether a trust receives NHS foundation trust status is its ability to use the freedoms and flexibilities that we want all NHS trusts to operate under Agenda for Change. Those staff will be NHS staff. Foundation trusts will be NHS organisations. They are fully part of the NHS. The difference is that they are accountable to their local community rather than to the Secretary of State.

Baroness Pitkeathley

My Lords, my noble friend did not answer the second part of my question about sharing experience.

Lord Hunt of Kings Heath

My Lords, I apologise to my noble friend for not answering her second point. I very much agree with the need to share experience. We have already met with the chief executives of three-star trusts to talk to them about foundation trust status. Over the next few months, as we develop the programme and reach decisions about which trusts will go forward to the next stage, it will be important to enable them to meet and share experience. I accept the point that my noble friend made in relation to governing bodies. We are drawing on mutuality concepts and organisational concepts from the Cooperative movement. That will be new to the National Health Service; we shall have new governing bodies and new boards of management. It will be a new experience and we will want to learn from each other to ensure that, as more foundation trusts are established, they learn the lessons that the first NHS foundation trusts have learned.