Health and Social Care (Community Health and Standards) Bill

HL Deb 06 November 2003 vol 654 cc911-51

Report received.

Clause 1 [NHS foundation trusts]:

[Amendment No. 1 not moved.]

Earl Howemoved Amendment No. 2: Leave out Clause 1.

The noble Earl said: My Lords, in moving Amendment No. 2, I wish to speak also to Amendment No. 97.

From the very start of our debates at Second Reading I have made clear not only my doubt about the supposed benefits of foundation trusts as envisaged in this Bill but also, and more importantly, my deep disquiet about their adverse consequences—consequences which I believe are inevitable. If our disagreement with the Government amounted just to a difference of opinion on whether or not the freedoms on offer to foundation trusts are really as significant as Ministers maintain they will be, frankly we on these Benches would feel that we had done our duty simply by explaining our point of view, but because we believe that these proposals carry profound dangers for the NHS itself we are into a much more serious realm of disagreement.

One of the main advantages of all those marathon sessions in Committee was that, by taking our time in examining the minutiae of the Bill, we were able to tease out its underlying implications quite successfully. Certainly one or two spectres were banished and that was helpful, but on the whole our exploration of Part 1 served only to confirm the worries that we entertained previously, and, I may say, to add a few more to the list.

We do not argue with the core case far foundation trusts. The case for foundation status is that by being freed up from the dead hand of central control hospitals will become more entrepreneurial and creative and thus more responsive to the needs of patients. The problem with that simple concept is that since it started out on its journey various people in high places have thought twice about it and the plan for its implementation has been successively diluted and devalued.

If as a chief executive you are subject to a legal lock on your hospital's assets and a cap on the amount of private income you can earn and a regulator who tells you how much you are allowed or not allowed to borrow, it does not seem to me that you have much scope in which to be creative and entrepreneurial. If on top of that you are subject to national pay agreements and unable to develop your own IT systems in the way that suits your own hospital's needs, you will start to wonder what managerial flexibility is really available to you. If you are then told by the regulator what clinical services you have to provide in your hospital, what services you may not provide and what programmes of research you have to conduct, you might be forgiven for questioning whether the entire game is worth the candle.

If freedoms are being granted to a publicly funded system of healthcare, I for one do not have a problem with the idea of an independent regulator. Where I do have a problem is with a regulator who is constrained in almost every move he makes by his relationship with the Secretary of State. He owes his appointment to the Secretary of State; he is financially dependent on him; and in a very real legal sense, he must walk in the Secretary of State's shoes.

I described the duties in Clause 3 as a back-door power of direction over foundation trusts by the Secretary of State. Although the Minister took issue with that description, I do not think that it is very wide of the mark. Not even the business of authorising new foundation trusts is in the regulator's sole gift. We have what my noble friend Lord Peyton so aptly refers to as the double banking arrangement whereby all applications for foundation status first have to meet with the approval of the Secretary of State. The Secretary of State's presence runs through this part of the Bill like the message in a stick of rock. For foundation trusts the main problem with this arrangement is not just its scope for prescriptiveness from the centre but its lack of equity. If they look around for a route of appeal against the regulator's pronouncements, they will find that there is not one.

That lack of equity extends a lot further. Insolvency provisions may not be everyone's idea of an absorbing read at bedtime, but I do not exaggerate if I say that the proposals that the Government have published for the insolvency of foundation trusts are truly outrageous. My noble friend Lady Noakes will speak on this issue later. Let me simply say that as the implications of these provisions dawn on the business community, I shall be interested to see how many banks or businesses will believe that foundation trusts represent an acceptable trade risk.

I need to move on to what I consider to be the most serious consequences of this part of the Bill. The first is its effect on the NHS as a whole. There is to my mind one pre-eminently damaging feature of the Government's proposals and that is the ability of foundation trusts to gain privileged access to capital at the expense of the rest of the health service. It is what my noble friend Lady Noakes referred to as the zero-sum game. The issue can be described very simply. We know from the Treasury that the total pot of capital available to the NHS, including money borrowed from the private sector, is a strictly limited one. If foundation trusts are allowed readier and freer access to that pot of money than are other NHS bodies, then as night follows day every pound of foundation trust borrowing means a pound less for the rest of the NHS. The trusts that really need more capital and that are trying desperately to raise their standards. and improve their services will actually find that with the advent of foundation trusts it is more difficult for them to do so. Patients will be the losers from the proposal. As I said at Second Reading, it amounts to a dog-eat-dog culture, and it is one that we should not countenance.

The Minister's reply to my noble friend in Committee was completely unconvincing. He said that the limited amount of available capital was not in practice an issue, because the pot of money was very much bigger now than it ever had been in the past. Anyone who knows how tight the finances of the NHS currently are—that is anyone who has spoken recently to managers of trusts—will realise that the Minister's argument is bogus. Record sums of money are indeed flowing into the NHS, but the vast bulk of it is already spoken for, not least in pay and pension rises, but also in funding past deficits.

It will take several years for every trust to become a foundation trust—five years at the very least. During that time, the increases in the health budget will be nothing like those that we are now experiencing. That means that NHS trusts will need to compete as hard as ever for capital. Those trusts that are not foundation trusts will find that they are competing on a decidedly unlevel playing field.

This part of the Bill stands or falls on its detailed provisions. That brings me to the other area of profound difficulty for us. The governance arrangements for foundation trusts carry very serious risks for the health service. Set aside the obvious fact that running elections and maintaining membership lists are a cumbersome and expensive distraction for the NHS from its core task, which is looking after patients. Set aside that democracy of such a kind and on such a scale has never been attempted in the NHS before; look instead at its implications for the care of patients.

In the words of the noble Lord, Lord Lipsey, the system will embed politics in the management of our hospitals. He spoke of governing boards consisting of party-slate politicians, single-issue campaigners and, at worst, extremists. The influence of the elected board of governors on how a hospital is run will be enough to ensure that its board of directors has its hands tied in ways that may run completely counter to its professional judgment.

We debated the phenomenon of entryism. I have yet to hear a convincing argument from the Minister that demonstrates that the risk can be eliminated. A small group of agitators on a board will wreak havoc, and there will be no remedy for it, because of the lack of accountability that lies at the heart of the arrangements. Those whose interests really need to be represented—the inarticulate, the disabled, the mentally ill—will be excluded. Again, the Bill provides no remedy for that. It substitutes one kind of politicisation for another, in a potentially much more dangerous form. As my noble friend Lady Hanham emphasised, how a hospital is run is not just a detail, but very important. Innovation, change, well motivated management and rapid decision-making are being put seriously at risk.

It is no small thing to ask the House to reject a major part of an important Bill. However, I feel justified in doing so on this occasion. The proposals are either ill-thought through or, to the extent that they have been thought through, misconceived and wrong. Grave concerns were expressed on the issues when the Bill was in another place. The slim majority secured by the Government was testament to that. I do not therefore believe that it would be inappropriate to ask the other place to think again on whether foundation trusts, as conceived in the Bill, are the right way forward for the NHS. I beg to move.

11.15 a.m.

Lord Clement-Jones

My Lords, I shall speak to Amendments Nos. 2 and 97.I support the arguments of the noble Earl; we on these Benches agree with many of them. I also want to place further arguments on record.

I have been asked on a number of occasions whether the Liberal Democrats object to foundation trusts in principle or as a practical matter. The answer is both. When a concept is fundamentally flawed in so many ways and becomes beyond redemption, practical objections essentially become ones of principle. No one argues with the principle that more devolution is necessary. That is a view of the NHS nowadays held in common by all political parties, and particularly strongly on these Benches. The issue is whether foundation hospitals essentially deliver that. Our view is that foundation hospitals are completely flawed as a mechanism, in terms of both their impact on the health system and the governance system adopted.

On a number of occasions in Committee, the Minister rather stoically said that he did not accept that foundation hospital arrangements were a dog's breakfast. The conclusion all the way round the Committee after many days was that they were. As we discussed then, the basis for selection is subject to considerable criticism. Star ratings are a flawed mechanism. They are arbitrary in many cases, and there is evidence that the assessment process can be manipulated.

As the noble Earl said, the impact of foundation hospitals will be adverse. It is doubtful whether all NHS trusts can achieve foundation status within four to five years. During the course of the passage of the Bill through Parliament, the Government have increased the number that may be eligible to 63. Even if they stated that the number would be 200, that would still not be achievable in the period of time. In the mean time, foundation hospitals will affect the viability of other hospitals in their areas. Despite ministerial assurances in Committee, after an initial phase during which foundation hospitals need to adhere to Agenda for Change, they will be able to vary employment terms and conditions and draw staff away from non-foundation hospitals.

As regards borrowing, which we debated at length in Committee, foundation trusts will compete with other trusts for resources. The NHS budget for acute hospitals will remain unchanged and foundation trusts will be playing a zero-sum game with NHS resources in competition with other parts of the NHS. There is no duty on foundation trusts when borrowing to have regard to the impact on the rest of the NHS. That inevitably will lead to greater inequalities between hospitals.

Then we come to the extent to which foundation trusts can compete with the independent healthcare sector and the provisions of Clause 15. I am all in favour of strong finances for NHS trusts, but if we genuinely believe in achieving capacity for the NHS and in a mixed economy which allows the private sector to compete to deliver services to the NHS, it is important firmly to restrict the provision of private healthcare by NHS hospitals. We know from the recently announced NAO review that that body has considerable doubts about the provision of private healthcare in NHS hospitals as regards whether it is being delivered as a loss leader. That NAO review is long overdue.

At the end of the day, the key issue is whether there will be any resulting benefit for patients. The well respected Health Select Committee rightly questioned whether such competition between hospitals would benefit patients. There is also a great deal of uncertainty about the nature of the duty to consult before a foundation hospital is established. We are promised regulations and we know that guidance has been issued for the existing applicants. Indeed, throughout the Bill we are promised regulation at every turn. But there should be a minimum requirement on the face of the Bill

There is the issue of patient and public consultation. Foundation hospitals, even under the Government's current proposals, will have no duty to maintain patients' forums. There is huge disappointment that patients' forums are not provided for in the Bill. Simply having a board of governors or a few non-executive directors is no substitute for a properly constituted patients' forum.

In Committee, much faith was placed on the regulator. But at that stage we established that the regulator will have limited powers and duties in regulating foundation trusts. Indeed, throughout the Committee stage the Minister said, rather bizarrely, that the regulator was a referee, not a regulator.

At the end of the day, rather than going down the foundation hospital route, the essence must be to free the providers of healthcare from bureaucracy and central control and to increase democratic accountability where it really matters—with the commissioners of NHS healthcare. They are the ones who hold the budgets; they are the ones charged with improving health outcomes; and they are the ones charged with improving public health and reducing health inequalities.

It would be much better to make the commissioning system democratic. On these Benches we say that the best way to achieve that is by integrating health and social care. But, ultimately, under these proposals, it is very likely that, despite all the rhetoric, foundation hospitals will be no more free than they were before the legislation.

Turning to Schedule 1, in Committee Members on all sides were in agreement that the "architecture" of the governance set out in the Bill as the Minister described it is of an unbelievably Gothic nature and quite unsuitable for delivering genuine devolution of power to acute hospitals. In the amendments tabled today, the Minister has tried to install a few flying buttresses, but, if anything, he has made the situation worse. No doubt we shall be debating those further.

The constitution of what are described in the Bill as "public benefit corporations" promises to be a nightmare of bureaucracy. Each trust will have two tiers, a board of governors and a board of directors, but the board of governors will have virtually no powers. A membership—the so-called "public" constituency, staff constituency and patients—will elect the majority of governors. But what constitutes a patient? Who will be eligible? The area to be covered for membership purposes will be entirely arbitrary.

The membership and governance system in each foundation hospital will be locally determined within an overall template. It will be cumbersome and complex. We hear that the average membership of a foundation hospital is likely to be 10,000. But that membership will be self-selecting, giving rise to the danger of take over, as the noble Earl, Lord Howe, mentioned, by sectional interests. What are the limits on how foundation hospitals define membership?

The cost of maintaining the register of members and communicating with members will be massive. This is not cutting red tape, but creating more; and it will not lead to better clinical governance. Something like £250,000 to £400,000 could be spent on the governance of some of the foundation hospitals to maintain and communicate with their membership. That is a staggering figure when we consider for what other purposes the money could be used. Until the Minister's amendment tabled today, there was no minimum requirement for clinicians to be members of the board of governors, so the Government are still tacking on additional bits to this incredibly gothic structure.

We believe that public benefit corporations could be quite adequately run as companies limited by guarantee, as are many of our major charities, with trustee directors nominated to represent the communities or stakeholders they serve. But the bottom line of all this is that none of it will lead to better clinical outcomes for patients. We have had too much tinkering already.

It may be that throughout these debates the Government will not listen to the Opposition parties. Obviously, we would prefer that they did, but if they will not at least they might listen to their own members and supporters. Virtually every organisation affiliated to the Labour Party representing staff in the NHS either has doubts about or opposes foundation hospitals. Look at the vote of the Government's own conference in October. Who will this Government listen to if they will not listen to their own members and supporters?

This is an opportunity for the Government to think long and hard about these proposals and take them away and rethink them. We on these Benches very much hope that they will take that opportunity.

Lord Lipsey

My Lords, noble Lords may feel that in seeing me rise today they are seeing Dame Nellie Melba in action because for some time I have been saying that I will not be present for much longer. The Minister will be greatly relieved to hear that my surgery is booked for next week and so I shall be getting off his back.

As it is an important experience to go into our NHS hospitals, it is right that I should begin by paying tribute to John Coltart and Graham Venn and their wonderful team of nurses and technicians at St Thomas's. As the House would expect, they have shown to everyone wonderful professionalism, wonderful humanity and, more surprisingly to me, great efficiency. That is why, as we enter today's debate, I blink in disbelief at the Government's rank frivolity that will deliver such people into the hands variously of party hacks, single-issue fanatics and fascists. It will not happen everywhere, but it will happen to many of our greatest hospitals. That is why I trust that your Lordships will support the removal of Clause 1 today.

Let me make it clear to my noble friend that I am not opposed to foundation hospitals. If properly thought through, I can see their virtues. I do not accept all the strictures of the noble Earl, Lord Howe, against them. There is also common ground in that every one of us believes that there must be much more local and individual involvement in hospitals. We want to see more consultation and accountability. We want to see the use of focus groups and citizens' juries and all the devices which in a modern democracy can create a genuine stakeholding community in our hospitals. We want all that. But instead the Government have fixated themselves on a single method of accountability— namely, election—in a way which, in my view, will have all the adverse consequences to which I have referred.

They are doing that partly on a completely mistaken analogy with schools. There are problems with the greater accountability and local involvement which we now have in schools. In many areas, it is difficult to obtain governors. But the point is that a school is rooted in its community. Parents go to the playground every day and talk to each other. They know what is happening in that school.

A hospital is not like that. I hope to go in and come out cured. A waiting room is not like a school playground. I have three children who went through state education. When we went to the school playground, we talked all the time about how the school was doing. In waiting rooms, people do not talk about key performance indicators, standardising mortality rates or the kind of subjects that are discussed in school playgrounds. Indeed, something approaching silence is to be found there. That relationship simply does not exist among the members of the boards to make the concepts in the Bill stack up.

I am afraid that we are seeing that now in the consultation process on this issue. I was told about the consultation on foundation hospitals that took place in Yorkshire. It was attended by the executive boards of the hospitals and the regional officer of UNISON but no one else—not one member of the local community. I do not say that all consultation has been like that, but that is an example.

How have we come to that situation? I shall tell noble Lords what I believe has happened. The very concept of foundation hospitals is not popular in some quarters in my party, for reasons that I understand. Therefore, the Minister was left to sell an uncomfortable concept and the Government thought up a jolly good wheeze. Local Labour groups and MPs love elections; that is what they are in business for. Therefore, they decided to introduce a load of elections without thinking through in any way how they were going to do that. But that is what they decided—they thought that elections would cheer up the troops.

We see that now in the talk about mutuals. I strongly believe in mutuals but not the kind that one finds in the other place. It was a political wheeze or fix to get the concept through the other place. I believe that there is too much politics in our health service rather than too little. When our hospitals become subject to a political wheeze of that kind, I tremble for their future.

In addition, the Government are in a tearing hurry. No one can read Schedule 1 to the Bill and believe that the issue has been thought through in any detail, as the noble Lord, Lord Clement-Jones, pointed out. It is a democratic disgrace that, while the Bill is still before our Houses of Parliament, the Government are pushing ahead, with crucial steps being taken in December to set up foundation hospitals so that some will be in action by next April.

One cannot legislate sensibly in that way. We have a model for dealing with legislation. It starts with a manifesto pledge, followed by Green Papers, White Papers, Joint Committees for pre-legislative scrutiny and scrutiny in both Houses. Then one can introduce legislation that works, as we showed when we dealt with the Communications Bill. One cannot introduce legislation in the way that it is being done in this Bill or at this speed and get it right. The House now has a chance to send the Government away to think through the matter.

This proposal is Alan Milburn's bathtub musings turned into half-baked legislation. We now have a different Minister, a very sound Government and a sound Minister in this House. Let us take this opportunity to change foundation hospitals so that they work.

What does someone in my position do? I remember the story of the boy who never spoke. He reached the ages of five, six and seven and was seen by all the specialists, but he never spoke. One day, he turned to his mother at breakfast and said, "Mother, this porridge is too cold". His mother said, "That's marvellous. You haven't spoken up till now". He said, "Well, nothing has been wrong up till now, mother".

I have been in the House for more than four years. Until this Bill came before us, I never voted against the Government. I did not even abstain on any proposition before the House. I hope very much that I shall not have to break that record today. In this grouping is a set of amendments tabled by me and by noble Lords on the other side which I believe would draw the fangs from this animal. It would make it just about workable; it would not be ideal but it might be tolerable.

If, in replying to the debate, the Minister indicates that he will accept the amendments that I and others have put forward, I shall be spared my dilemma. However, if not—I fear that that will be the case—I shall be faced with a difficult choice between my loyalty to my party, which I hope has been great, and my loyalty to the National Health Service, on which my life and that of millions of our fellow citizens depend. In those circumstances, I am afraid that I shall not hesitate to vote to save our National Health Service.

11.30.a.m.

Lord Desai

My Lords, unlike the boy in the story told by my noble friend Lord Lipsey who did not speak until the porridge was cold, I was born screaming, crying and protesting. My record on supporting the Government is, I should say, patchy. However, on this occasion, I stand proudly behind my noble friend. I stand behind the Bill, and I hope that the House rejects this set of amendments.

Listening to the noble Earl, Lord Howe, and the noble Lord, Lord Clement-Jones, one has the feeling that somehow policy is born absolutely perfect with not a blemish on it. One has the impression that, until now, we have done nothing but fashion perfect policies and that, once a policy is perfected, we never revisit an issue. It is as though, in history, we have had only one education Bill, one health Bill and one criminal justice Bill and so on.

We are making a major change that worries many people. The people who are worried about such changes are wrong, in the sense that they want to maintain the old National Health Service. We are saying that it is time to move on and to make—this is a horrible cliché—a really radical change. In doing so, we must take people with us. If there are doubts, we must admit that there are doubts—we cannot have the whole loaf now.

Of course, the foundation hospitals that I want to see are not set out in the Bill, but there is something here on which we can make progress. The important point is: are we going to do it now or are we going to wait for everyone's perfect dream world and then, perhaps a few years later, once again go through this debate?

I was surprised by the argument that the noble Lord, Lord Clement-Jones, made against local democracy. As a boy, I used to hear people in colonial India say, "You can't trust these people with democracy. You never know who might capture the government. All sorts of corrupt people may capture government— even fascists". That is very interesting. Why do we not simply trust the people to know their own interests, to look inside their own stomachs, hearts and livers— whatever it is that people look into—and trust them to do the right thing? That is better than saying, "We are never going to have democracy until we write down here a condition in such and such a schedule that only perfect people will vote, and those perfect voters will do only what we, the great and the good, tell them to do. Of course, we shall not have any control over them. We are going to decentralise. We want to devolve and decentralise so long as they don't take part".

Schools are not like hospitals. Indeed, secondary schools are not like primary schools. When my children went to primary school, I went to the playground. When they went to secondary school, I did not go to the playground. Each parent-teacher association reacts differently. I was a governor of primary schools and secondary schools and have taken part in many meetings. A parent-teacher association meeting to which no one comes makes a very happy school.

I believe that foundation hospitals are a good experiment. Problems are involved, but let us launch the scheme. In the National Health Service let us give back some ownership to the patients and the professionals. That is the essence of this measure. For a little time when I was young, I believed that the revolution would come before I died; now, I am very happy when a radical change occurs. Therefore, I shall support the Bill, and I hope that the House will reject the amendment.

Lord Hunt of Kings Heath

My Lords—

Lord Peyton of Yeovil

My Lords, could someone from this side of the House say a word? I am much obliged to the noble Lord. I shall be very brief.

In Committee, in Amendment No. 17, I made a modest attempt to limit the number of people, to check the growth of a public benefit corporation to something short of a regiment. At the moment the Bill requires a minimum whereas a maximum is required. It seems to me that the idea of a public benefit corporation is an attempt on the part of the Government to give a superficial impression of being democratic. The likelihood is that it will be a mess. For those reasons I would have liked there to be a Division on this amendment, but it is absorbed into a forest of other amendments so I suppose that will not happen. However, I support every word that my noble friend Lord Howe said in moving the amendment. I hope that it will come to a Division, in which case I shall support him with pleasure.

Lord Hunt of Kings Heath

My Lords, I hope that noble Lords will not follow the advice of my noble friend Lord Lipsey. I have tremendous admiration for him and I am delighted that he has taken part in our debates on the National Health Service because he brings a very refreshing intellectual mind to bear.

This is a very important reform for the National Health Service. It would be devastating if the House were to reject the whole concept of foundation trusts and if that were to be confirmed in another place. We cannot continue to run the health service as we have done for 50 years through a command and control approach, with Ministers supposedly held to account by Parliament for every aspect of the running of a huge organisation. By 2008 the NHS will spend over £90 billion. It employs 1.2 million people and has a management structure that makes it impossible to run effectively and efficiently, with the ludicrous concept that everything that happens in the NHS is, in the end, forced to be held to account in this place and another place.

Such a situation leads to the fact that we have had so much restructuring over the past 20 years. I see a number of noble Lords in their places who have had a hand in that restructuring, including myself. It has lead to the concept of targets, targets and targets, central interference and micro-management. The very people to whom one wants to give space to run the health service effectively at the local level are disincentivised; their morale breaks down because they cannot carry out an effective job in the quite ludicrous over-centralised structure that we have.

The whole point about foundation trusts is the transfer of accountability from Parliament to local people. That is why the issue of democracy is so important. I say to my noble friend, having had a small role in the development of that policy, that the idea of democracy was not tacked on at a later stage. It was at the heart of the whole process when the policy was devised. Responsibility cannot be transferred from national level to local level without a transfer of accountability as well. To be accountable locally a democratic base is needed. That is why a membership structure is required for those foundation trusts that will enable the transfer of accountability to take place.

It is true that I, too, have had concerns about the Government's structure. I have made that clear on a number of occasions. I, too, do not understand why the board of governors is not the sovereign body in this legislative programme. I have never received a convincing response to that point. I share with the noble Lord, Lord Peyton, concern about the huge groupings. I can assure noble Lords that I intend to speak fully on my amendments in those groupings and I shall expect a full response. However much Front Benches may try to curtail debate and try to sort out the timing of votes, as individual Members we are permitted to debate our own amendments.

Here we are talking about the substance of the debate on foundation trusts. There are faults and flaws in the legislation, but my noble friend Lord Warner, in Committee, responded—I think very positively—to many of the points put forward. The noble Earl, Lord Howe, is a very fair person and often he acknowledges the fact that the Government have moved on many issues. I put to him this point: I would understand a principled opposition to the issue of foundation trusts if, in Committee, my noble friend had simply pushed away all the issues and concerns that had been raised. But he has been generosity itself. Not only does he bring forward today a swathe of government amendments responding to points raised, but he also accepted in Committee a number of amendments that improve the governance structure. On that basis, that is fair dos. I ask noble Lords whether they really believe, in the light of that flexibility, that it is in the tradition of the House to reject the whole concept of foundation trusts.

At the end of the day, if we want an excellent health service, we need to give those running the health service locally the responsibility and the trust to do a good job. Surely foundation trusts are one major way to do that. I hope that the House will support the concept.

11.45 a.m.

Baroness Cumberlege

My Lords, I want to respond to the noble Lords, Lord Hunt and Lord Desai. I fully support the case that has been put in opposition to this form of devolution to local hospitals that has been outlined by my noble friend Lord Howe. The noble Lord, Lord Hunt, and I used to work very closely together and at one time I was actually his boss. He was my chief executive and he was exceptional. He was imaginative, entrepreneurial and a person with huge skill.

A noble Lord

My Lords, and judgment.

Baroness Cumberlege

My Lords, not judgment, as I heard a noble Lord say.

The noble Lord and I worked extremely well together in the NHS and we knew it very well indeed. That is why I find it breathtaking that the noble Lord suggests that nothing has changed in the governance of the National Health Service over the past 50 years. He will remember very clearly, as I do, the right honourable Kenneth Clarke introducing many reforms that brought in a new concept that was NHS trusts. That took place just before a general election and members of the Labour Party were telling people that NHS trusts were set up to privatise the National Health Service. I remember visiting hospitals where elderly gentlemen and ladies had their wallets and purses because they thought that they would have to pay for the National Health Service. It was a disgrace.

Trusts were brought in and huge freedoms were given to most people: to the executive team, to the non-executives and to the chairs. They excelled and we saw tremendous improvements. In 1997 the Labour Party came to power. The new administration felt that they really understood the whole concept of power and how to run the National Health Service. Increasingly, they took more and more power; they took power away from those who were appointed to run hospitals, demoralised them and neutered them to some extent so that they could no longer do what they thought was appropriate for local people.

Now I want to be a little humble. I remember distinctly that when we—the Conservative administration— bought in NHS trusts, one of the things that we did was to concentrate all the skills, energy and excitement on hospitals. That was a flaw. All those attributes should have gone to the health authorities who were the commissioners. The same mistake exactly has been made this time round: the Government have again concentrated on the hospitals.

The purpose of hospitals is to treat and to cure and to do so with compassion and efficiency, so that there is cleanliness and clean linen and that there are good treatments that are effective and efficient. I am delighted that the noble Lord, Lord Lipsey, has had such good treatment at St Thomas's. St Thomas's is an extremely good hospital, and there are others. But there are also others that are poor, where records are lost, where there is no clean linen and where there are staff who are not employed but who come through agencies and do not have the same kind of commitment. It is that which needs addressing. It is the efficiency and the effectiveness of our hospitals that needs addressing. We should not be playing around with their governance.

If we need democracy in the health service—I am not denying that we do—we need it at a different level. We need it with the primary care trusts, which decide the priorities in their area, where the money is to be spent and the major policies, working with strategic health authorities. I share enormous misgivings about the governance arrangements, not least because we are distracting the managers who should be running the hospitals but are now spending their time having to work through a whole new concept.

I thank the Minister, who sent me a copy of a letter after the Committee stage, addressed to my noble friend Lady Noakes, reminding me of a very interesting document entitled A Guide to the Preparatory Phase. On page 7, it states: The minimum framework for the governance arrangements is set out in legislation". What arrogance. It says, "set out in legislation", not "proposed legislation". That sounds as though it is all signed and sealed.

The guidance sets out a heavy burden of documentation, consultation and crystal ball gazing. It is complex; it is difficult; and for the first time it sets commissioning in a legal framework. It is onerous, but it has a comforting paragraph entitled, "Department of Health Reassurance". The reassurance given by the Department of Health to the brave people who are going forward is to set up a help line: a help line for people who should be running their hospitals. But they are going to attend, we are told, specialist events. Chief executives and treasurers are going to go for training. There will be seminars and source books. There will even be supplied secondees to hold the hands of top executives in the applicant hospitals.

I do not deny that that is necessary; I am sure it is. This is a whole new concept. Those people are going to need a lot of help. My point is that those people are managers. They have talent and skills, and there are not enough of them. They should be running the hospitals and concentrating their mind on reducing hospital infections and all the things that we know are not brilliant, but which need addressing—not in all hospitals, because some are good, but there are many that need a lot of help.

So I share very much the views expressed by the noble Lord, Lord Lipsey. It is absolutely right that we should not be tinkering with governance when there are better things that we should be doing with the National Health Service.

Lord Dubs

My Lords, when I first heard about the idea of foundation trusts, I was sceptical. I have listened to the arguments over many months—perhaps even years—and I have been persuaded that I agree fully with my noble friend Lord Hunt.

I can develop my arguments briefly. Before I do so, perhaps I may say that my experience of the health service, other than as a patient, is based upon having served as a local councillor on an area health authority and then, more recently, on an NHS trust. I agree with the noble Baroness, Lady Cumberlege: I believe NHS trusts were a sensible development. Indeed, I was enthusiastic to be a member of an NHS trust. That stopped at the 1997 election, when I was transferred to Northern Ireland.

Let me draw on some of my experiences when serving on those bodies because they are directly relevant to the proposals before us today. I do so on the assurance—I have heard the Secretary of State on a number of occasions give this assurance—that the fundamental basis of the National Health Service will be maintained; that is to say, that the service will be free to people who need hospital care. Provided that that principle is accepted and continued and the assurance is there, the way is open for us to see what kind of improvements will come to patients through the adoption of foundation trusts.

Some people say that there will be two classes of hospital—foundation trusts and others. But of course we have had two classes of hospital ever since the beginning of the NHS. Teaching hospitals have dominated. They have dominated because they have attracted the lion's share of the money; and they have dominated because they have been, in my experience, a bit less accountable than others. Certainly when I served on the area health authority, such hospitals were powerful bodies and were less susceptible to accountability. Maybe, that has changed more recently. Teaching hospitals have dominated because they have attracted the best staff. Doctors, nurses and so on want to be in teaching hospitals. That dominance will be lessened through the foundation trusts because it will be open to other hospitals, not just teaching hospitals, to get that status.

My main argument is about management. I am actually surprised that the party opposite—which prided itself for a long time on its adherence to management principles and said that the economy should be run on the basis of sound management at every level, including in the public sector—has taken the argument the other way. I have listened over the years to the noble Earl, Lord Howe. I have found him to be a moderate and persuasive speaker, but today he reminds me of the days when we were in opposition. We got a line from the other end—"Never mind what you think, stick by the line".

Noble Lords

Oh!

Lord Dubs

It happened. Those of us who still remember will know what it was like. One has to put the arguments as well as one can. I do not want to make this in any way personal, but I have to say that the noble Earl, Lord Howe—who is reasonable, balanced and measured—had to use arguments that came to a conclusion with which, I do not think, he fully agreed. I am surprised at that. He could well have reached a different conclusion and supported the idea. Anyway, I do not want to make it a personal point.

The local management argument is crucial. When I served on an NHS trust, the welcome change from the old AHAs was precisely that we, as non-executive directors, got nearer to where management was. Those of us who remember the AHAs will remember that we did not have a chief executive. We had an administrator, a chief medical officer and a chief finance officer. Occasionally, as members, we asked questions. Those three would look at each other, and it was difficult to pin down accountability. Yet, they were all excellent high-calibre individuals. With hospital trusts, we, as non-execs, got nearer to the management issues. I certainly felt that we unearthed a history of not much management before the trusts. Management matters had been neglected. Yet, when we wanted to make key decisions, we were stymied because we had to go through the region and the department.

I give an example. The mental health hospital trust of which I was a non-executive director had a great deal of land which we did not need any more. We wanted to dispose of it. We could dispose of it, but the money would go to the region or the department. We would not get the money, even though there was a cost to us in selling the land and transferring services from that land further into the community. We were stymied. I thought, "I hope that the day will come when we can make local decisions and benefit from them ourselves, not do so with no benefit—in fact, as a burden—to us".

When I heard about foundation trusts, I thought, "If that brings management to the level at which it can be effectively exercised, that must be a good thing". That is why the Government's proposals are right and I am unhappy with the amendments. Yes, of course there are concerns about governance. There have been ever since the NHS began; we have always been unhappy about it. This is a move in the right direction. We may later discuss points of detail that the Government must consider, but essentially, it is right.

I say that because when I was a member of an area health authority, I was a local councillor. I felt that I was local; my ward was within the health authority area; I was confident that I spoke for the needs and concerns of local people. That gave me a strength that I did not have when I was on the board of an NHS trust, where I did not have quite that sense of local accountability. If we can get more accountability into governance, that must be a good thing.

In conclusion, for all the difficulties that have been described about foundation trusts, they will give us a good chance to make the NHS better for the people that matter: the patients.

Noon

The Lord Bishop of Oxford

My Lords, like many in your Lordships' House, I felt ambivalent about foundation trusts from the beginning. A niggle that has been in my mind from the first is: if the proposals are passed, will they really make the kind of difference that we would all love to see in our NHS? What characterises a good regiment, a good business, a good school, a good hospital or even a good church? It is what goes under the name of the ethos, the milieu. People feel proud to belong to it; they give not only their best but more than their best. They feel valued to be part of that organisation or business.

We know that good political decisions can help to create the kind of ethos in which people feel proud to belong to the organisation. We know that bad political decisions can certainly help to undermine that kind of ethos. That kind of ethos is dependent on more than good political decisions—good political decisions are vital; but, in the end, it has something to do with certain intangibles about local leadership. Local democracy can help to create that kind of ethos, with a greater sense of participation and local belonging. As I try to make up my mind which way to vote, I especially want to hear from the Minister how he thinks that these arrangements for local democracy will help to create the kind of the ethos in which people connected with the hospital give of their best and more than their best and feel valued as part of it.

Lord Blackwell

My Lords, like the right reverend Prelate—and, I suspect, many others in the House—I face a real dilemma over the Bill and the clause, a dilemma that was not helped by our discussion in Committee. I am not one of those who opposes the concept of foundation hospitals in principle; to the contrary, in concept it is a welcome first step in dismantling what, it is generally recognised, has become an inefficient state-managed monopoly. I welcome the fact that the Government have crossed the Rubicon by recognising that such command and control state management cannot deliver the health service that we want and that it must, sooner or later, be dismantled.

Indeed, I look forward to the day when all hospitals and other parts of the health service become independent. I am not too bothered by the argument that that will create a two-tier structure, because it should be possible to move all hospitals to independent status sooner rather than later. I should welcome an assurance from the Government that that is their goal.

As so many noble Lords have said, the trouble is that the proposals are flawed. The notion of a foundation hospital as an independent institution able to run and manage itself to serve the local community with medical practices at the forefront has been hobbled by the level of regulation proposed under the Bill, the financial restrictions to be imposed and the layers of government and the political interference to which the noble Lord, Lord Lipsey, referred so well.

So the proposals are highly flawed. The question in my mind is whether, nevertheless, they are a useful step in accepting the principle of independent provision of healthcare on which a future government can build.

I have a second point. As other noble Lords have said, hospitals are only part of the equation The far more important part of reforming the health service is freeing up the purchasing of healthcare.

In Committee, I and others tabled amendments to test whether the Government were willing to accept that PCTs—commissioning units—should also be able to apply for foundation status. Those amendments were unacceptable to the Government, but I was encouraged by the response of the noble Baroness, Lady Andrews, to the noble Lord, Lord Clement-Jones—on Clause 5, I think—that the Bill does not restrict PCTs from applying for foundation status although, in fairness, she made it clear that the Secretary of State would not look favourably on that at present. I hope that I was right about that and that the Minister can confirm it when he comes to reply.

So, if one feels that a fundamental shift of the NHS provision structure from being a state-managed monopoly is the way to go, there are reasons to believe that the concept behind the Bill is worth supporting. As I said, the dilemma is that the current measures are deeply flawed. Like others, I shall listen carefully to hear whether, even at this late stage, the Minister suggests that the Government are sufficiently flexible and responsive to listen to those voices from all sides of the Chamber who say that there is a better way to do this, while maintaining the principle embodied in the Bill.

Lord Walton of Detchant

My Lords, I shall be brief. I am not opposed to the principle of foundation hospitals. The concept of separating hospitals in the ultimate from the direct control of the Department of Health and offering them independence in running their affairs has a great deal to commend it. In Committee, I mentioned my experience when, in Newcastle-upon-Tyne in the 1970s, we created a university hospital management committee that included representation from the public, the university and the professions. All the hospitals in the city were combined under the management committee, which worked extraordinarily well.

Then came the ill-conceived reform of 1974 with the McKinsey management consultants report. Keith Joseph, the sadly lamented late Lord Joseph, introduced a form of consensus management with district health authorities, area health authorities and regional health authorities—a multitude of tiers. It soon became evident that the management of the hospital service was impossible because decision-making congealed because everything had to be achieved by consensus management at every level. That simply did not work.

We then had several debates about what to do. It became perfectly clear that at least one tier of management should be removed. One of my colleagues wisely suggested that the tier of management that should be removed was the department, but that did not achieve support in many quarters.

The concept is therefore attractive, but I warn the Government of what was referred to in Committee by me, the noble Baroness, Lady Cumberlege, and others. When the late Lady Castle introduced her reforms introducing democracy into the National Health Service, the health authorities were loaded with very many local councillors. They were in the majority over professionals and people with a great deal of management experience. We all wish to see democracy in the NHS, but at that time, because of the enormous majority of people representing, as they saw it, their constituents, all too often they filibustered to try to look after constituents' interests and to ensure that a small hospital in their constituency was not closed. At times, decision-making almost ground to a halt. It is therefore very important that the Government recognise that the governance machinery set out in the Bill is impossibly complex and fraught with danger.

Although I accept the concept and would like eventually to see every NHS hospital achieve foundation status, the Bill is framed dangerously and is likely to create even more problems than envisaged by the speakers today.

The noble Lord, Lord Dubs, talked about the old teaching hospitals. That concept is long outdated. Practically every hospital in the NHS is now involved in teaching medical students. The number of students has increased so much that they have to be sent for part of their clinical training to regional and local hospitals. The dominance to which the noble Lord refers is a thing of the past. In many parts of the country, regional hospitals that were previously uninvolved in teaching are now very much involved. Teaching and research as a major function of the NHS is spread much more widely than it ought to be. I am concerned about whether those aspects, so crucial to the future of the NHS, can be achieved with the Bill as framed at present.

Lord Turnberg

My Lords, I am beginning to think that there may not be much left to say. I admit to finding the reasons behind Amendment No. 2 confusing. However, I must express my interest as a rather simple and naïve physician without much nose for the political background to some of the amendments.

Words such as "bath water" and "babies" come to mind. The Bill makes the first steps away from control by central government and the Secretary of State. But, instead of trying to make the proposals work, with the many amendments that the Government have moved and accepted, and instead of pushing away from the centre, we are being asked to get rid of it altogether.

At Second Reading, I said that we should look towards the not-too-distant future, when all hospitals will be able to become foundation hospitals. I accepted that we must start somewhere, with some hospitals that seem best prepared. The morale of everyone I know in the National Health Service, including all the doctors and nurses, depends on being free of constant regulation, the constant drive from the centre and constant jumping to what one Minister or another has said. That devolution is essential if we are to run a health service that will be good for patients in the way that the right reverend Prelate seeks. They want to get the Government out of their hair as quickly as possible. It seems to be a given that that is desired on all sides of the House; in fact, there is almost desperation to get rid of central control. But, instead of starting down the route that we all want to take, we are being asked to close off even that opportunity. I accept that there is much more to do, but I cannot accept Amendment No. 2.

12.15 p.m.

Baroness Carnegy of Lour

My Lords, unlike the noble Lord, Lord Dubs, who said that he was sceptical about the concept of foundation hospitals when he first heard of it but has become convinced that it is a good idea, I was extremely encouraged when I heard that we were to have foundation hospitals. Ever since the ending of the idea that the money should follow the patient, which I thought was developing well under the previous Conservative government, it has become clear that we need hospitals with some independence. As time has passed, notably during Committee stage, it has seemed that foundation hospitals were like a ship that was well built at the start, and a good idea, but that has became encrusted with so many clusters of barnacles that there is a problem over whether it can work as intended originally.

When noble Lords and, I hope, Members of another place read carefully the remarks of the noble Earl, Lord Howe, they will see that he made a pretty devastating account of what has happened to a good idea during the development of the Bill. The noble Lord, Lord Clement-Jones, added to that. Interestingly, he indicated what he thought community politics would do to foundation hospitals. He knows all about that, as his party is expert at community politics, so I listened to him with great interest.

We will look at various clusters of barnacles during Report. At present, we are looking at the system of governance. The noble Lord, Lord Desai, made an unusually vague speech on the subject, ending up by saying, very laudably, "Trust the people". The noble Lord, Lord Hunt of Kings Heath, told us that the present system cannot possibly work and described why. He certainly knows about that, as he has been trying to run the system, with a great deal of expertise, and knows the difficulties. One of the answers, he said—I do not quote him precisely—was to change the answerability to Parliament to answerability to local people.

The noble Baroness, Lady O'Neill, a most distinguished philosopher, who sits on the Cross Benches and whom we all respect—alas, she is not with us today—gave last year a very interesting set of brief lectures entitled "A Matter of Trust". She described the accountability culture that has developed in this country, why accountability is necessary, how professional people know that it is necessary, but how it can go wrong and make it very difficult for professional people to operate well. It is a very interesting account of which I am reminded constantly as the Bill proceeds.

The noble Lord, Lord Lipsey, puts his finger on the button very adroitly and hits nails on the head very smartly. He said that the problem with Schedule 1 is that politics will become embedded in the National Health Service. That is a problem that the noble Baroness, Lady O'Neill, discussed in her lectures. The noble Lord is a good socialist, so far as I know, and a loyal supporter of the Government at this time. He can criticise on detail, but, at present, he is criticising the Bill. He said a very brave thing—that he would like to take this clause out of the Bill. I hope that Members of another place will read what he and others on that side of the House have said, because we have come to a point at which our thinking about accountability has gone badly wrong. We will spoil the whole concept of foundation hospitals if we do things in this way.

The elaborate construction of an electorate in the Bill, the proposed way that governors will be elected, the way that governors will appoint managers and managers will run the hospitals make it clear that it will be possible for community activists—whether party politicians or any other sort—to ruin the whole thing quite easily. They very likely will. They may not mean to and may think that they are doing the right thing, but those of us who know how these things work can see what is likely to happen.

We want hospitals to create a setting in which professionals can function to high standards and communicate with their communities in a way that they need to do in order to keep in tune with what is wanted, but that will never happen with local activists breathing down their necks. The Bill asks for just that. There are so many simple ways that patients and potential patients could have a say, and ways in which competent hospitals could be set free to operate professionally to work out their own methods of working. There are so many ways that that could be done, but this part the Bill precludes that happening. I hope that noble Lords will examine this issue with great conscience and not vote to spoil our system just because of one quite small thing—the way in which hospitals will be governed.

I have one detailed question for the Minister if it is not out of place. I hope that he will forgive me. It may be in his briefing for the previous amendment that was not moved. If it is not, perhaps he could write to me. Is it possible for foundation hospitals in England to refuse under any circumstances to treat a patient based in Scotland? If that is so, it really would not be fair. At the moment, any Scottish hospital would treat anyone based in England who came to it for treatment and any English hospital would do the same for someone based in Scotland. If that will no longer be the case under the Bill, it would be a matter of great concern. I hope that he can give me a precise assurance, because it is an anxiety north of the Border and I feel that it is something about which your Lordships would want me to ask. I hope that noble Lords will take courage and support my noble friend if he divides the House.

Baroness Finlay of Llandaff

My Lords, this has been a very complex debate to date. We have had complex speeches previously and very powerful speeches at this stage. I do not wish to detain the House for very long. I would simply like to represent to the House the concerns of healthcare professionals. In every system that they have worked in, they try to look after patients who are extremely ill.

New technologies are emerging very fast in healthcare—faster now than in the days when I qualified. There is a very real concern among those trying to deliver frontline care—the cars that counts at the end of the day—that the changes proposed will truly enable them to do their job better than they do at the moment. There is a desperate plea to remove the hand of interfering politics from the way in which healthcare is delivered. Healthcare has to be delivered to absolutely everybody with a degree of equity based on need, not on demand.

I sincerely believe that the healthcare professionals will function professionally in whatever system is in place, because they have high ethical standards and codes. The Minister has certainly listened very carefully to comments that have been made and I will not be speaking to my amendment in this group because it has been superseded by a much better amendment tabled by the Minister.

This has been a complex debate, but we are being asked to take a leap of faith. Will the new arrangements improve or burden the top end of the health service? Will consulting with local people really improve the way that healthcare is delivered at the coal-face with this revolution before us, or were we better off looking at evolutionary change? Change is certainly needed. Nobody is a dinosaur. Nobody is against change, but there are some real concerns about how these arrangements will work in practice.

Many of your Lordships will have received correspondence from population groups concerned that somehow they will not be consulted on hospitals that they use. A sense of disenfranchisement is beginning to be felt by some groups from the hospitals that they would like to have a role in.

The Minister has a huge burden on his shoulders and I do not envy him, but the task to convince many Members of this House that the proposals before us will really bring about change and will be worth the expenditure and upheaval involved in them is difficult to undertake.

Baroness Barker

My Lords, the noble Lord, Lord Lipsey, set us off on the right question for this debate—whether the legislative process in relation to this Bill has worked. We on these Benches are convinced that, at this stage, it has not. We have in front of us one central question to answer: do the proposals add up to a National Health Service delivering a truly national health service with all that is good about local knowledge, involvement, participation, flair and imagination? Is what is proposed fit for its purpose? At the end of a very long and detailed Committee stage, we have come to the conclusion that it is not. The noble Earl, Lord Howe, pinpointed the one factor that belies that—the way in which the Secretary of State runs through this legislation from beginning to end as the final arbiter.

The noble Lord, Lord Desai, in a characteristically rambunctious speech and the noble Lord, Lord Turnberg, and others, have talked about the dead hand of regulation on the NHS. This proposal will not change that at all, but it could be changed very effectively and quickly. The best thing that could happen to the NHS is a bonfire of targets, but we do not need this legislation to do that. In fact, it makes it worse. The Bill is the worst of management-speak and targets.

The noble Lord, Lord Hunt, was near the mark, but wrong. He described the Committee stage as long on detail and where there were many answers. That is true, but there were many key issues on which there were either no answers or the wrong answers. Those of us who care about a National Health Service that works well locally have considerable concerns about the equity—as the noble Baroness, Lady Finlay, mentioned—and ethics of setting healthcare targets, and about the need to safeguard those with specialist needs and those who are the expensive patients in this new world of tariffs and diagnostic treatment centres. We did not receive convincing answers on these matters, which are the key issues we have to decide.

I have not yet met a healthcare worker who has not said that what they want is to provide healthcare, which is what they should do. We should be requiring local hospitals to focus completely on that. It is not their job to give the Electoral Reform Society a run for its money on questions of governance. Ultimately, we have failed very badly in the proposals in this amendment.

Many of the early hospitals in this country were charities. In my working life I advise charities on governance structures and constitutions. I would not advise a charity to accept these proposals and hope that they would be fit for any purpose, still for less for running a hospital service on which, as the noble Lord, Lord Lipsey, said, people's lives depend.

In voting against these amendments today I believe that we give ourselves and another place one more chance to do our job properly. It is for us to sort out a system of clear membership, decision-making and accountability. It is for us to do our job properly so that health workers can do theirs without hindrance.

12.30 p.m.

Baroness Noakes

My Lords, I shall not repeat what my noble friend Lord Howe said at the beginning of this debate, but address one specific issue which the noble Lord, Lord Hunt, has described as generosity itself, which is to say, the government amendments to Schedule 1. We concede that the Government have tabled some amendments which help to tidy up the drafting. That was in response to points pressed by a number of noble Lords in Committee. But we wish to make it quite clear that these are not concessions or generosity, but the ordinary act of a department tidying up an ill drafted Bill. Ultimately, there are many significant concerns—and the noble Baroness, Lady Barker, referred to some of them—which are completely untouched by these amendments. I wish noble Lords to be quite clear on our position on the amendment.

The Parliamentary Under-Secretary of State, Department of Health (Lord Warner)

My Lords, it has been a colourful debate: we have had reference to ships and barnacles and gothic architecture and buttresses. It has also been a pretty synthetic debate as regards contributions from some parts of the House. I am grateful for the wise and balanced contributions from my noble friends Lord Desai, Lord Hunt, Lord Dubs and Lord Turnberg, from the right reverend Prelate and from the Cross Benches, particularly the remarks of the noble Baroness, Lady Finlay. I am also grateful for the temperate and balanced response from the noble Lord, Lord Blackwell. I hope that I shall be able to detach him from his party, having heard what I have to say.

I wish my noble friend Lord Lipsey a speedy recovery despite his remarks. I share his views on the staff at St Thomas's hospital and on NHS staff generally, but not those on the Government's arrangements. I doubt whether I shall change his views with my advocacy. We shall not have time during this debate to go through the details of this group of amendments.

As I said, I believe that there is a synthetic quality to this debate. The Conservative opposition say that they believe that our approach is fundamentally right, but our proposals on NHS foundation trusts do not go far enough. They are in alliance with the Liberal Democrats, who believe that they go too far. From these totally different perspectives they want to combine to wreck a core element of the Bill, the establishment of NHS foundation trusts. Talk about my enemy's enemy is my friend!

The biggest would-be wreckers are the Conservatives, who do not appear to be content with deleting Clause 1. They appear to want to remove the whole of Part 1 of the Bill. At least the Liberal Democrats have confined themselves to Clause 1. It may be that they want the image of a mini-opposition. The noble Lord, Lord Clement-Jones, is reported in the Independent today as saying that we are cack-handed. But lining up with the Conservatives on this issue hardly seems to be a masterpiece of political coherence.

Perhaps I may briefly remind noble Lords opposite that the NHS needs a huge level of investment after the long period of neglect by the party opposite. It certainly looks as though the NHS would return to that parlous state if the new Conservative leader, crowned today, I believe, ever reaches No. 10 Downing Street. We have invested about £8 billion in capital since the 2000 NHS Plan, that is to say, over the period 2000–01 to 2003–04, and we are increasing revenue expenditure by over 7 per cent a year in real terms for five years in succession.

The noble Earl, Lord Howe, brushes these considerations aside and asserts that the needs of foundation trusts would deny the rest of the NHS access to the huge amount of extra money that we are providing. That is simply not true. If the foundation trust applicants remained as NHS trusts they would still be competing for the enhanced resources with other NHS trusts. There would be a priority system in that capital allocation process. We have not changed the rules of the game in that respect; all we have done is to give foundation trusts far more freedom.

The idea that we are damaging the NHS through this Bill and that the Conservatives are the saviours of the NHS by wrecking it will convince very few people other than their own supporters, whose morale needs to be maintained. Our huge investment in the NHS has to be accompanied by modernisation and reform with far greater local freedoms for the NHS at its heart. My noble friend Lord Hunt has put the case extremely well.

NHS foundation trusts bring these local freedoms, but removing Clause 1 would prevent that. We know that local staff and communities have often felt disempowered by top-down control of the NHS while a lack of local accountability has impeded local services being properly attuned to the differing needs of their communities. These are the important considerations to which the right reverend Prelate was alluding when he spoke about trying to produce the most satisfactory ethos for the NHS.

The scare-mongering approaches that I read in the paper and which were mentioned by others today, whipping up arguments about extremists in the BNP taking over boards of governors, do them no credit. We have brought in safeguards against that. It will also be possible to make further amendments in regulations, as I believe is well known. That is why I referred to the synthetic quality of some of the debate.

The party opposite does not appear to want local people to have a bigger say in how the NHS is run although it claims to want to have local sheriffs. If the noble Lord, Lord Clement-Jones, wants to improve the governance arrangements he should settle down with us today and tidy up Schedule 1 rather than endlessly looking for reasons for not trusting local people to have a bigger say in the NHS.

The creation of NHS foundation trusts is part of the process of moving from an NHS controlled nationally towards an NHS where standards of inspection are national, but delivery and accountability are local, with far more diversity of provision including the involvement of the private sector, offering more choice to patients. That will create the kind of beneficial ethos that the right reverend Prelate was rightly concerned about with far more local involvement by staff and patients in their local healthcare system.

The noble Lord, Lord Walton, and the noble Baroness, Lady Finlay, rightly drew attention to the concerns of the healthcare professions. These changes will give them far more autonomy and freedom than there is at the moment. They will have a bigger say in the way in which their local NHS is run. Despite whingeing about excessive control, throughout the consideration of this Bill some of the parties opposite have consistently wanted to stop the devolution of power, if their amendments are to be believed. They are certainly giving out the message to all those applying for NHS foundation trust status that their views and preferences do not count.

Perhaps I may turn to that point and remind noble Lords opposite of what I said on the first day in Committee. As we speak, 25 NHS trusts are consulting on proposals to apply for NHS foundation trust status from next April. Now, another 32 have applied to be considered in the next wave. They include many deprived areas where healthcare systems can be better adapted to local needs. If all those applications were successful, more than 25 per cent of the population in England would have access to NHS foundation trusts by the end of 2004. We have said that there is no reason why all NHS trusts should not achieve NHS foundation trust—

12.45 p.m.

Lord Hoyle

My Lords, before my noble friend sits down, will he tell me why, if this is such a good thing, we did not have a pilot or pilot schemes? That would have allayed the fears of people like me who believe that we are setting up a two-tier health service.

Lord Warner

My Lords, we discussed the subject of pilots in Committee, and I gave many of the figures that I have just used. We have a groundswell of movement towards foundation trusts from people locally. As I have just said, we are talking about more than 25 per cent of the population in England moving to foundation trust status by the end of 2004. If we had pilots of the kind moved by the noble Lord, Lord Clement-Jones, we would have held up progress for many years. I hope that that will reassure my noble friend.

Of course, people will learn from the experience of the first wave. In a sense, there is an element of the pilot in that. People will learn from that experience; the trusts in the first wave will learn from that experience. We are not stopping that learning process in any way, but it is not right to stop people moving along that path when they are performing at the level that suggests they can earn greater local autonomies and they want to go in that direction.

With all the investment and help that we are providing to ensure that the less well performing trusts can raise their game, there is no reason why all NHS trusts should not achieve foundation trust status in five years. We are not promoting a two-tier NHS. Nor are we letting it become the mediocre service that the Conservatives would provide to justify promoting the private healthcare system. Those are the kinds of policies that emanate from their party.

There is no doubt that NHS foundation trust status is seen by many local people and staff as offering real opportunities to improve services for NHS patients. It is clear that the Government are right to proceed with legislation and that those who have expressed doubts are out of step with what the service wants.

To reassure noble Lords that we believe foundation trusts will produce a better health service with more local autonomy, foundation trusts will remain fully a part of the NHS. But they will have greater management and financial freedoms, including freedoms to retain surpluses. The noble Lord, Lord Dubs, referred to the issue of surplus land and premises. They can use that much more under these arrangements for local development. They will be able to invest more easily in the delivery of new services, manage more flexibly, reward their staff in a way that is more appropriate to local circumstances and have access to a wider range of options for capital funding. As I said, given the large amounts of money that we are providing to the whole NHS, that will not damage the rest of the NHS.

Of course, their borrowing must be prudent, although some noble Lords opposite seem opposed to that, which I find slightly curious. NHS foundation trusts will not be subject to direction by the Secretary of State, but they will be overseen by an independent regulator. Incidentally, in response to the noble Lord, Lord Clement-Jones, I did not say just that the regulator was a referee; I was trying to give a simple differentiation between the regulator and CHAI. Under the proposals brought back today, the regulator will not be a single office holder. There will be a board structure, which is a good example of the discussions in this House producing change.

The regulator and the board have a similar relationship to the Secretary of State to that of other regulators. I do not think that his independence has been called into question by other noble Lords. We are not setting that person up in a different relationship with the Secretary of State. I think that noble Lords opposite know that, when they think quietly and soberly about the issues. They are all things that, at times, the Conservatives have said they support, but they persist in tabling amendments that would wreck the Bill.

The burden of the noble Earl's remarks seems to be that we have kept NHS foundation trusts in the NHS, working in co-operation with other parts of the NHS, and that we have not created the kind of healthcare market that he and his colleagues would like to see. He is right; we have not. They tried that once, and we think that it failed. The noble Baroness, Lady Cumberlege, rather poked fun at our attempts to help people with the transition to foundation trusts. I thought that the contributions of many other noble Lords suggested that that was the right approach. At least we are offering help in making the transition, which is more than can be said for one or two other previous reorganisations that have been attempted.

We have heard a great deal from the Benches opposite that the devil is in the detail of the governance arrangements. They imply that the Government have not listened to legitimate concerns. Perhaps I may remind your Lordships that there were more than 29 hours of consideration of Part 1 in Commons Committee. Before today, the Government had made at least 21 concessions on the Bill to meet concerns expressed here. On Report, we have responded to detailed concerns expressed in Committee by proposing 147 amendments on 26 substantive issues in the Bill. Of those concessionary amendments—I will use the words, "concessionary amendments" despite what the noble Baroness, Lady Noakes, said—110 relate to Part 1 and Schedule 1, covering at least 16 substantive issues. I am grateful to my noble friend Lord Hunt for pointing some of that out. Those on the Benches opposite do not have the patience to work their way through the detail. They just want to kick over the traces and wreck the Bill.

I assure the noble Lord, Lord Walton, that we recognise the need to get the governance arrangements right. That is why we listened carefully to the points raised and responded with the swathe of amendments in the Marshalled List today. Even with those changes, we are not so arrogant as to suggest that there should be no review of the governance arrangements once they are in place. In response to an amendment moved by the noble Earl, Lord Howe, in Committee, I agreed to take away that matter. I can now tell the House that the Joseph Rowntree Foundation is planning a major review of public service governance, including NHS trusts and NHS foundation trusts. The inquiry will be chaired by the very distinguished Sir Alan Langlands, former chief executive of the NHS. I suspect that, effectively, it will do for public services what the Higgs review did for private sector companies. I have discussed it with the noble Lord, Lord Best, who, unfortunately, is unable to be here today, but he said that I could mention that development.

The Government see no reason to establish a rival review, when such a respected body as the Joseph Rowntree Trust will be conducting one that is likely to report by the end of 2004. With more hope than expectation, I ask noble Lords opposite to think again before going down the path on which they are moving. Even if the Conservatives' radar is too wonky for them to find the centre ground, I hope that the Liberal Democrat Benches will not follow them along the path they seem to want to tread.

Earl Howe

My Lords, the House will have listened with great interest and appreciation to the Minister's extensive reply, but I may not be the only noble Lord who thinks that he has somewhat over-egged his arguments. It is clear that there is a divide between us, but the divide is not the one presupposed by the noble Lord, Lord Desai, or by the noble Lord, Lord Hunt. We do not argue with the principle of devolution in the health service; far from it. What we argue with is the form and detail of the devolution that is now proposed. The devil really is in the detail. I am genuinely disappointed that I feel compelled to oppose devolution in the NHS, but it is no good thinking that we can put a flawed set of provisions on to the statute book and sort out the problems later.

The noble Lord, Lord Dubs, mentioned management. I am as keen as he and any other noble Lord is on sound and efficient management, but it is for that very reason that I am desperately worried about these proposals, because of what they will do to force and tie the hands of management in ways that could be profoundly counter-productive to people's healthcare.

It is no good the Minister talking about consultation with local people; I feel that he is being disingenuous. The one question local people are not being asked is whether they want a foundation trust. I think that that is a funny way to pay respect to local opinion, as the Government purport to do.

We can refer to these governance arrangements—as did some noble Lords in Committee—as a bold, democratic experiment, but that phrase obscures the huge dangers that this experiment poses to the competent and responsive management of hospitals. We can all be in favour of NHS devolution, but unless we get the governance arrangements right before we launch the ship, I believe that we will bitterly regret it. The fact is that, from the outset, the Government have remained wedded to the central blueprint that they devised for governance. I hope that the House will back the judgment of those of us who are urging the Government to resist the detail of these arrangements. In doing so, I ask noble Lords to reject both Clause 1 and Schedule 1 as a clear and firm exhortation to the Government to that end.

12.51 p.m.

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

Their Lordships divided: Contents, 150; Not-Contents, 100.

Division No.1
CONTENTS
Addington, L.	Crathorne, L.
Alderdice, L.	Crickhowell, L.
Allenby of Megiddo,V.	Cumberlege, B.
Alton of Liverpool, L.	Dahrendorf, L.
Ampthill, L.	Dholakia, L.
Anelay of St Johns, B.	Dixon, L.
Arran, E.	Dixon-Smith, L.
Ashcroft, L.	Eccles of Moulton, B.
Astor of Hever, L.	Elis-Thomas, L.
Attlee, E.	Elton, L.
Avebury, L.	Emerton, B.
Barker, B. [Teller]	Evans of Parkside, L.
Biffen, L.	Falkland, V.
Boothroyd, B.	Feldman, L.
Bradshaw, L.	Finlay of Llandaff, B.
Bridgeman, V.	Flather, B.
Brooke of Sutton Mandeville, L.	Fookes, B.
Byford, B.	Forsyth of Drumlean, L.
Campbell of Alloway, L.	Fowler, L.
Carnegy of Lour, B.	Freeman, L.
Carrington, L.	Gardner of Parkes, B.
Clement-Jones, L.	Glenarthur, L.
Cope of Berkeley, L. [Teller]	Goodhart, L.
Cox, B.	Greenway, L.
Craig of Radley, L.	Hamwee, B.

Hanham, B.	Phillips of Sudbury, L.
Hayhoe, L.	Pilkington of Oxenford, L.
Higgins, L.	Plummer of St. Marylebone, L.
Hodgson of Astley Abbotts, L.	Quirk, L.
Holme of Cheltenham, L.	Reay, L.
Howe, E.	Redesdale, L.
Howe of Aberavon, L.	Rees, L.
Howe of Idlicote, B.	Rennard, L.
Howell of Guildford, L.	Renton,L.
Hunt of Wirral, L.	Renton of Mount Harry, L.
Jacobs, L.	Roberts of Conwy, L.
Jenkin of Roding, L.	Rodgers of Quarry Bank, L.
King of Bridgwater, L.	Rogan, L.
Kingsland, L.	Roper, L.
Knight of Collingtree, B.	Russell, E.
Laing of Dunphail, L.	Ryder of Wensum, L.
Lester of Herne Hill, L.	Saatchi, L.
Linklater of Butterstone, B.	Saltoun of Abemethy, Ly.
Lipsey, L.	Scott of Needham Market, B.
Liverpool, E.	Seccombe, B.
Livsey of Talgarth, L.	Selborne, E.
Lofthouse of Pontefract, L.	Selsdon, L.
Luke, L.	Sharp of Guildford, B.
Lyell, L.	Sharples, B.
Mackay of Clashfern, L.	Shaw of Northstead, L.
Mackie of Benshie, L.	Shutt of Greetland, L.
McNally, L.	Skelmersdale, L.
Maddock,B.	Smith of Clifton, L.
Mar and Kellie, E.	Soulsby of Swaffham Prior, L.
Marlesford, L.	Strathclyde, L.
Marsh, L.	Swinfen, L.
Masham of Ilton, B.	Taveme, L.
Mayhew of Twysden, L.	Tenby, V.
Methuen, L.	Thomas of Gresford, L.
Miller of Chilthorne Domer, B.	Thomas of Walliswood, B.
Miller of Hendon, B.	Thomson of Monifieth, L.
Montrose, D.	Tordoff, L.
Mowbray and Stourton, L.	Trefgarne, L.
Moynihan, L.	Trumpington, B.
Newby, L.	Ullswater, V.
Newton of Braintree, L.	Vivian, L.
Noakes, B.	Waddington, L.
Northover, B.	Wakeham, L.
Norton of Louth, L.	Walmsley, B.
Oakeshott of Seagrove Bay, L.	Walpole, L.
Ouseley, L.	Walton of Detchant, L.
Palmer, L.	Wigoder, L.
Patten, L.	Williams of Crosby, B.
Peel, E.	Williamson of Horton, L.
Peyton of Yeovil, L.	Wolfson, L.
NOT-CONTENTS
Acton, L	Colville of Culross,V.
Alli, L.	Crawley, B.
Amos, B. (Lord President)	Davies of Oldham, L. [Teller]
Andrews, B.	Desai, L.
Archer of Sandwell, L.	Donoughue, L.
Ashton of Upholland, B.	Dormand of Easington, L.
Bach,L.	Dubs, L.
Bassam of Brighton, L.	Evans of Temple Guiting, L.
Blackstone, B.	Farrington of Ribbleton, B.
Borrie,L.	Faulkner of Worcester, L.
Boston of Faversham, L.	Gale, B.
Bragg, L.	Gavron, L.
Brett, L.	Gibson of Market Rasen, B.
Brooke of Alverthorpe, L.	Goldsmith, L.
Brooks of Tremorfa, L.	Goudie, B.
Burlison, L.	Gould of Potternewton, B.
Campbell-Savours, L.	Graham of Edmonton, L.
Carter, L.	Grantchester, L.
Chandos, V.	Greengross, B.
Chorley, L.	Grocott, L. [Teller]
Christopher, L.	Harrison, L.
Clinton- Davis, L.	Haskel, L.
Cohen of Pimlico, B.	Hayman, B.

Hilton of Eggardon, B.	Plant of Highfield, L.
Hollis of Heigham, B.	Ponsonby of Shulbrede, L.
Howells of St. Davids, B.	Radice, L.
Howie of Troon, L.	Randall of St. Budeaux, L.
Hughes of Woodside, L.	Rendell of Babergh, B.
Hunt of Kings Heath, L.	Richard, L.
Jay of Paddington, B.	Rooker, L.
Jones, L.	Sainsbury of Turville, L.
King of West Bromwich, L.	Sawyer, L.
Kirkhill, L.	Scotland of Asthal, B.
Lockwood, B.	Sewel, L.
Macdonald of Tradeston, L.	Simon, V.
McIntosh of Haringey, L.	Stone of Blackheath, L.
McIntosh of Hudnall, B.	Symons of Vernham Dean, B.
MacKenzie of Culkein, L.	Taylor of Blackburn, L.
Mason of Barnsley, L.	Temple-Morris, L.
Masseyof Darwen, B.	Thomas of Macclesfield, L.
Merlyn-Rees, L.	Thornton, B.
Mitchell, L.	Tomlinson, L.
Morgan of Huyton, B.	Turnberg, L.
Morris of Aberavon, L.	Turner of Camden, B.
Morris of Manchester, L.	Warner, L.
Oxford, Bp.	Warwick of Undercliffe, B.
Patel of Blackburn, L.	Whitaker,B.
Paul, L.	Whitty, L.
Pendry, L.	Williams of Elvel, L.
Pitkeathley, B.	Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.

1.2 p.m.

Earl Howe moved Amendment No. 3: After Clause 1, insert the following new clause—

"REVIEW OF DEMOCRATICALLY ACCOUNTABLE GOVERNANCE

1. (1) It shall be the duty of the Secretary of State to establish an independent review body to carry out the functions specified in subsections (4) to (6).
2. (2) The Secretary of State shall appoint at least nine members of the independent review body.
3. (3) The independent review body shall elect a chairman from amongst its members.
4. (4) The independent review body shall prepare reports containing proposals relating to the establishment of a local, democratically accountable system of governance for NHS foundation trusts and Primary Care Trusts.
5. (5) The independent review body may in particular make proposals in accordance with the provisions of subsection (4) relating to—
1. (a)methods of securing wider public participation in the governance of NHS foundation trusts and Primary Care Trusts;
2. (b) methods of increasing public awareness and access to information about the governance of NHS foundation trusts and Primary Care Trusts; and
3. (c) the membership of public benefit corporations.
6. (6)The independent review body must—
1. (a) lay a copy of any report prepared in accordance with the provisions of this section before Parliament, and
2. (b)once they have done so, send a copy of it to—
1. (i) the Secretary of State, and
2. (ii) the regulator."

The noble Earl said: My Lords, I tabled this same amendment in Committee and was pleased that the idea underlying it, if not the amendment itself, found some favour with the Minister. He kindly said that he would think about the matter further, and he has just referred to that.

My views and those of the Government on what is a sensible and appropriate governance model for foundation trusts are poles apart and are likely to remain so. But we might be able to agree on two points: first, this is brand-new ground for the NHS, and foundation trusts may not get things right first time. Secondly, if it is left to foundation trusts to devise their own systems of democratic governance, we are likely to see a patchwork quilt of arrangements spreading out all over the country. Local flexibility is one thing, but what if the results are flawed or in some way unfair?

We have been told by the Minister that a review of governance arrangements will be carried out by the regulator after the first wave. That is of some comfort. However, I cannot help thinking that for those trusts, a review is likely to be a little late. How would a foundation trust be expected to put its arrangements on to a different footing if those arrangements were found wanting in some way? What would that do to the legitimacy of the board of governors and the directors? I suspect that at present there is no real answer to that. It would be helpful if the Minister could tell us what specific ideas he has had for ensuring that governance arrangements across foundation trusts are fair and that they work as well as they can. That is the concern here.

I welcome what the Minister said about the Joseph Rowntree Foundation, which is an excellent organisation. However, we may need to go further than that. If there is to be a role for the regulator in looking at these issues, I wonder whether that should not be on the face of the Bill. I beg to move.

Lord Warner

My Lords, as I said earlier, we have some sympathy with the ideas behind the amendment, as the noble Earl has recognised. However, we do not think it is necessary to put this on to the face of the Bill. It will not be in anybody's interest—ours or anybody else's—not to distil the wisdom from the first wave and the subsequent waves of experience in this area. The regulator will be able to do that and we know, as I said on the earlier amendment, that the Joseph Rowntree Foundation will have a look at the governance arrangements of a wide range of public bodies, not just NHS foundation trusts. That has the benefit of looking at NHS foundation trust governance in the context of some other public bodies. As I understand from the noble Lord, Lord Best, it will also look at NHS trusts which are not foundation trusts, so some interesting comparators will be made.

That kind of review is likely to be more beneficial than a separate review on the NHS alone. Noble Lords referred constantly in Committee—not unreasonably— to the Higgs recommendations. The Rowntree proposals would give us a context in which to look at the experience of NHS foundation trusts. So while we are sympathetic to the principles behind the amendment, we do not think that putting such a requirement on the face of the Bill is the right way forward.

On primary care trusts, we have never said that we are opposed in principle to the idea of PCTs moving along some similar path. We have said that the Bill is not the right place in which to do that, as it is concerned with the provider side of the NHS. If we were moving along the commissioning side, it would be for the government of the day, at an appropriate time, to come forward with ideas after consulting a wide range of opinion.

Earl Howe

My Lords, I thank the Minister for that reply. I welcome the thought that the Government have clearly given to this issue during the past fortnight. It is a pity that nothing will go on the face of the Bill. I accept the Government's decision on that; nevertheless, it would be nice to find some way of coming back to this subject as a matter of certainty at some time during the next 18 months or two years in the light of initial experience. I shall try to be ingenious enough to find a way of doing that. Like the noble Lord, I shall look forward to what the Joseph Rowntree Foundation has to say on the broader canvas of governance arrangements. No doubt it will be possible to find a vehicle for debating its report if we feel so minded. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 4 [Amendments relating to NHS foundation trusts]:

Lord Warnermoved Amendment No. 4: Page 109, line 12, leave out sub-paragraph (1) and insert— (1) The persons who may become or continue as members of a public benefit corporation are—

1. (a) individuals who live in any area specified in the constitution as the area for a public constituency,
2. (b) individuals employed by the corporation under a contract of employment and, if the constitution so provides, individuals who exercise functions for the purposes of the corporation otherwise than under a contract of employment with the corporation,
3. (c) if the constitution so provides, individuals who have attended any of the corporation's hospitals as either a patient or the carer of a patient."

The noble Lord said: My Lords, in moving this amendment, may I offer some procedural advice which has been agreed by the authorities of the House? Amendment No. 97, which would leave out Schedule 1, is consequential on Amendment No. 2 and should therefore be agreed by the House when we reach it. Schedule 1 will then be left out.

Normally, the House would not spend time discussing amendments to such a schedule. However, we are not prohibited from discussing amendments to Schedule 1, and I understand that it may be for the convenience of the House if we debate the amendments grouped with Amendment No. 4 now.

If I have the support of the House, I will now speak to my Amendment No. 4.

Lord Hunt of Kings Heath

My Lords, may I ask my noble friend a question? I had some amendments in the previous group headed by Amendment No. 2. In fact, we had a principled debate on foundation trusts and I do not think any of us spoke to the huge number of amendments in that group. Should I speak to those amendments in the group that he is now introducing; or do we go back to this huge group headed by Amendment No. 5 and debate that as a group when we have disposed of Amendment No. 4; or do we unpick the whole grouping so that one waits until one's amendment is reached? I do not know whether the business managers have agreed this—it would be helpful to know.

Lord Warner

My Lords, it is always a pleasure to hear from my noble friend. The short answer as I understand it from the House authorities is that we will deal with Amendment No. 4 and the amendments grouped with it, then move to Amendment No. 5 and then work through the amendments sequentially. So he will have a chance to move his amendments when we reach that point in the Marshalled List.

In Committee, I said that I would listen to arguments, try to take on many of the concerns and bring forward amendments to the Bill where it was appropriate to do so. I shall now try quickly to demonstrate just how reasonable we have been in this by setting out our thinking on these amendments.

Amendments Nos. 4, 7, 9, 12, 13, 14, 15, 27, 34, 37, 38, 40, 52, 90, 258 to 260 and 262 form the first group to which I shall speak. It has always been our intention that NHS foundation trusts should have flexibility to "sub- divide" their public constituencies to provide for different groups to be represented on the board of governors. These amendments ensure that the Bill allows NHS foundation trusts to have a number of geographical public constituencies, and a separate patients' constituency, with each constituency able to elect its own representatives to the boards of governors. I should draw noble Lords' attention to a mistake on the Marshalled List. Amendment No. 52 appears under the wrong names; it is in fact a government amendment which is incorporated in this group.

I turn to Amendment No. 8, on the definition of "carer". The intention behind including carers in the Bill was to provide for informal carers such as family members and others who provide care to patients because of a pre-existing close relationship, to become members of an NHS foundation trust. "Professional" carers such as care home workers, social workers and voluntary workers should not be included. The Government resisted earlier amendments to define "carer'' in Schedule 1 in case it removed flexibility to adjust to the changing nature of caring over time. However, we have listened carefully to the concerns that, without a definition of carers, this intention might not be clear. We are therefore proposing to amend the Bill so that people who are employed as carers are excluded.

Amendments Nos. 28 and 256 deal with the regulations on elections. These amendments seek to build on an amendment passed in Committee requiring the Secretary of State to make regulations specifying the electoral system to be used in elections to NHS foundation trusts' boards of governors. They provide an alternative draft which provides for a much broader regulation-making power and specifies some of the issues which regulations will cover. These issues include among others: nominations procedures, obligations on candidates to declare their interests, election systems, methods of voting, allocation of places on the board of governors to particular constituencies and election expenses.

The new clause draws on both the Representation of the People Act 1983 and the European Parliamentary Elections Act 2002 to ensure that the regulation-making power is sufficiently wide and addresses the key issues to ensure that elections to NHS foundation trusts' board of governors are conducted in a fair, open and appropriate way.

The Delegated Powers and Regulatory Reform Committee has today tabled a report recommending that the regulations under this new clause should be subject to the affirmative procedure. We are today tabling an amendment to Clause 191 responding to those recommendations, which would require the affirmative procedure in the first instance, and thereafter the negative resolution. Given that we have accepted the spirit and intention of the amendment passed, I hope that this modified version is acceptable across the House.

Amendments Nos. 48 and 73 deal with the chief executive being an accounting officer. In response to concerns raised in Committee, we are proposing to amend the Bill to clarify that the chief executive of an NHS foundation trust will be the accounting officer. The accounting officer is responsible for the preparation of accounts and their transmission to Parliament and the regulator.

On Amendment No. 50, we have listened to the concerns raised in the other place, and much earlier in discussions in Committee. In recognition of the concerns raised, I propose government Amendment No. 50, which replicates the requirements on NHS trusts to have a medical or dental director and a nurse or midwife as an executive director. I understand that the British Medical Association supports this amendment.

Amendment No. 66 is consequential on continuity of non-executive directors. The Bill was amended in Committee in your Lordships' House to provide for continuity of the chair, non-executive directors and chief executive of an NHS trust applicant for NHS foundation trust status. A consequential amendment is required to ensure that where a non-executive director from an NHS trust is appointed to an NHS foundation trust, the requirement under paragraph 15(3) of Schedule 1 that they be a member of the public or patient constituencies, or, in the case of a teaching hospital, a university representative, is waived. Without this amendment there would be a barrier to transitional continuity of the non-executive directors.

Amendments Nos. 68 and 72 deal with governors' interests. The issue of alternative interests, and potential conflicts of interests, is particularly important for members of the boards of directors, who have decision-making powers and are responsible for the day-to-day running of NHS foundation trusts. That is why we accepted amendments in the other place providing for a register of interests of directors, and placing a requirement on NHS foundation trusts to include provisions in their constitutions for dealing with any conflicts of interest that arise. Concerns were raised in Committee that it was important that similar provisions should apply to the members of the boards of governors, to ensure proper transparency and accountability in these large public bodies. We have listened carefully to these concerns and are bringing forward these amendments to address them.

I turn to Amendments Nos. 73, 86, 88, 164, 168, 172, 174 to 177, 233, 241 and 270. During the passage of the Bill, it has become apparent that the location of the register of foundation trusts with Companies House has caused confusion about the corporate form of NHS foundation trusts. In order to address that, we are proposing to require the independent regulator to hold the register rather than Companies House. This amendment should have an additional benefit of reducing costs, since the regulator would already hold most of the documents required for the register for the purposes of fulfilling his other functions. Members of the public will have free access to inspect the register of NHS foundation trusts.

Amendment No. 73 ensures that the information held on the register relating to each NHS foundation trust is also available from the NHS foundation trust itself. Together, these amendments will ensure that information on NHS foundation trusts is readily and widely accessible to the public. I think that they meet concerns raised by the opposition Front Bench in Committee, so I hope that they can support them.

I turn, finally, to Amendments Nos. 76,79 and 82. We are still firmly of the view that, in line with the principle of greater freedoms and flexibility, NHS foundation trusts should be free to appoint their own auditors. Paragraph 22(3) provides for reputable sources of auditors for NHS foundation trusts, but we have listened carefully to arguments that the Audit Commission should be included in the group of bodies eligible for appointment as NHS foundation trust auditors. These amendments allow Audit Commission auditors to audit NHS foundation trusts, if appointed by an NHS foundation trust as its auditor. I beg to move.

1.15 p.m.

The Deputy Speaker (Lord Elton)

My Lords, I have to tell your Lordships that if Amendment No. 4 is agreed to, I shall be unable to call Amendments Nos. 5 or 6 for the reason of pre-emption.

Baroness Pitkeathley

My Lords, I very much welcome the changes which the Government have proposed to the Bill, particularly Amendments Nos. 4 and 8. Your Lordships will remember that many of us were concerned about which carers would be included in the Government's arrangements. Amendment No. 4 will ensure that carers are part of the members of the public benefit corporation. That is hugely welcome. Amendment No. 8 then defines "carer" and protects that definition by ensuring that carers are neither employed nor volunteers. In other words, they are the informal carers, the family members, who are caring as a result of a pre-existing relationship. They are not in either a voluntary or a financial arrangement. What my noble friend has done essentially is to ensure that there is clarity around the definition of "carers", which is extremely welcome, while ensuring that they also have a place at the table and therefore an opportunity to use their expertise and knowledge to support the new body. The amendments are welcomed by Carers UK and will be welcomed by carers everywhere.

Lord Hunt of Kings Heath

My Lords, I very much welcome all the amendments in this group save Amendment No. 256 which relates to the conduct of elections. This follows the passage of, I believe, an opposition amendment in Committee. Although Amendment No. 256 states, "Regulations may make provision", I take it to mean that regulations are required to be made. How long will that delay the establishment of foundation trusts? Subsection (3) of the new clause in Amendment No. 256 states: An NHS foundation trust must secure that its constitution is in accordance with regulations under this section". I assume that it will take some time to put those regulations in place. They have to be written, consulted upon and come before Parliament under the affirmative procedure. I believe that my noble friend mentioned the affirmative procedure in relation to these particular regulations.

If foundation trusts are now consulting on their constitutions with their own scheme of elections, what is the impact on that if we now have an amendment accepted which states that the constitution cannot be decided upon until it is, in accordance with regulations under this section"? Will that delay the matter by, say, six months? Alternatively, I hope that it is my noble friend's intention and that of his colleagues in the other place to get rid of this section when the Bill goes back to the other place. I certainly hope that that is the intent.

Lord Lipsey

My Lords, my noble friend Lord Hunt welcomed all the amendments in the group with the exception of Amendment No. 256. However, in welcoming all the amendments in the group I particularly welcome Amendment No. 256. It is an important gesture on the Government's part in response to the Opposition's concern not to have an electoral system that makes it particularly easy for all the adverse consequences that the House discussed earlier to occur. After the previous debate on the subject I thought about electoral systems. You can design perfectly plausible electoral systems that will give a large range of results, particularly with regard to the threshold which extremists would have to pass to get in. This is an admirable amendment. If, as my noble friend fears, it has the coincidental advantage of delaying the setting up of some of the trusts while we sort out the rest of the governance, that is an additional argument in its favour.

Baroness Noakes

My Lords, the noble Lord, Lord Lipsey, tempts me to say how much I support what he has just said. I wish to speak briefly to the amendments in this group. In general we are either indifferent to them or we are pleased that the Government have listened to the points that we made in Committee. I wish to raise just one point. Amendment No. 76 adds an officer of the Audit Commission to those auditors who can be appointed. We have no problem with that. However, I remain concerned that the remaining elements of paragraph 22 of Schedule 1 allow persons to be appointed as auditors even if they are not qualified to carry out audits under the Companies Act, which is the only properly approved set of processes available to test the competence of those who hold themselves up as auditors. I believe that is unfortunate. I hope that if the schedule ever sees the light of day again, the Minister will reconsider that matter.

Baroness Carnegy of Lour

My Lords, I ask the noble Lord particularly about Amendment No. 68 and the register of interests of members of the board of governors. I know that there has been a great cry for this in another place. I think that noble Lords on the Liberal Democrat Benches asked for it before and they have tabled Amendment No. 69 today. Have the Government thought about this? It is very important that the right people should be available to be governors. They will have a key role. It will be important to think out what sort of interests people are expected to declare. They must surely be relevant interests, not just any interest. To be asked to be a governor may be a great honour or it may be something that people are not frightfully keen on and need to be persuaded to do. But if they have to declare all their interests, I believe that many people will be put off this job.

It occurs to me that one relevant interest might be that a member, or a member's family, had a propensity to some sort of illness and was going to need acute treatment, perhaps frequently. Would that be something someone would be expected to declare? I do not necessarily expect the Minister to give a detailed answer on that but I believe the Government must have thought that relevant interests must be identifiable and written down somewhere so that people who should be governors are not put off that job.

Lord Clement-Jones

My Lords, like the noble Baroness, Lady Noakes, I believe that some government amendments which the Minister introduced today are ones that we on these Benches would prefer to draw a veil over. A kind of triple decker public constituency is not something that we would wish to see incorporated in any schedule. However, I do not think that now is the time or the place to debate the detail of a number of those government amendments.

I welcome government Amendment No. 50. I believe that members of the Royal Colleges of Nursing and of Midwives, the BMA and a number of professional organisations will very much welcome it. We on these Benches had tabled an amendment to include three such people as executive directors but to bank two will be perfectly respectable.

Government Amendment No. 68 sprang directly from a debate that we initiated in Committee on the interests of members of the board of governors. As regards government Amendment No. 76, the solution is not quite as mandatory as we would have argued for in Committee but the fact that it opens the way for the Audit Commission either to specify the auditors or to have its staff audit foundation hospitals would be an advance if such a creature were ever created. The amendments in this group constitute a mixed bag but some are to be welcomed.

I am rather torn whether or not to agree with the noble Lord, Lord Hunt, or the noble Lord, Lord Lipsey, but the Government's drafting as ever is extremely cunning. Paragraph 6(5) of Schedule 1 states—this is an insertion at the behest of the Conservative opposition in Committee: If contested, the election must be by secret ballot using an electoral system to be specified in regulations made by the Secretary of State". However, government Amendment No. 256 now specifies: The regulations may in particular provide for … systems and methods of voting, and the allocation of places on the board of governors, at contested elections". That is some very fancy footwork by the Government. If this had a greater measure of reality and if we were discussing a real Schedule 1 as opposed to a virtual Schedule 1,I would prompt a Division on Amendment No. 256. Clearly, the Conservative amendment referred to an electoral system. The set of regulations that the Government propose in Amendment No. 256 refers to "systems". That is exactly the nub of the argument that was made both on these Benches and on the Conservative Benches; namely, that a plethora of systems is exactly what we do not want. To have different bases for election in different foundation hospitals is absolutely not what we want.

1.30 p.m.

Lord Lipsey

My Lords, I disagree with the Opposition for once on the issue. There is a case for different systems in different areas. It makes sense to have geographical constituencies in an area that is geographically dispersed, such as the Scottish Highlands. It probably makes no sense at all in an inner-city area where there is a much greater geographical concentration and other matters are of more importance. I hope that the noble Lord will not slam the door on the possibility of variety. It is a question of horses for courses. The noble Baroness nods her head. Some systems will not work anywhere.

Lord Clement-Jones

My Lords, the noble Lord knows all about horses, so naturally I would not dream of disagreeing with him at this stage, particularly as we are in a virtual debate. However, I caution the Government that the drafting could give rise to problems and fractiousness from these Benches.

Baroness Finlay of Llandaff

My Lords, I place on record my sincere thanks, and I believe those of my noble friend Lady Emerton, to the Minister for a very helpful discussion that we had that I think helped him bring forward Amendment No. 50, which we support. It improves on the amendment that we tabled.

It is extremely important for the professions to have the strong declaration of confidence in their role on the board that has come from the Government through Amendment No. 50. It means that the Government recognise the importance of the clinical directives from medicine and nursing in developing strategy and business plans; providing professional advice; communicating professional views and the trust's views to clinicians; being responsible for operational aspects of clinical governance and maintaining clinical standards; clinical risk management; safeguarding confidentiality; and research and development on information that the Government issue. The amendment will also allow a board to work with primary care colleagues, another important role in its liaison to primary care.

As a doctor and nurse, or a dentist if it is a dental trust, will be on the board there will be a huge responsibility on them to liaise with all the allied professions throughout the trust, to ensure that there is true multi-professional working and that all the issues of governance and strategy are filtered out, with information gathered from the whole multi-professional team. I am sure that I speak for my noble friend in saying that we have every confidence that the people in that position on the board will be able to discharge such duties. It is crucially important for any service to have that input at board level.

Baroness Emerton

My Lords, I thank the Minister and endorse the words of the noble Baroness, Lady Finlay, in relation to Amendment No. 50. The professions will be extremely appreciative of it. As the Bill has progressed through the House, there has been rising concern about the position that the professions would have. It is clear that they have a real leadership role, and they will welcome the amendment. The Royal College of Nursing, the BMA and the council of deans of nursing have all been very supportive to our amendment, and I know will support Amendment No. 50.

Lord Warner

My Lords, I am grateful for the supportive remarks of the noble Baronesses, Lady Pitkeathley, Lady Finlay and Lady Emerton.

I shall reply first to my noble friend Lord Hunt. The regulations clearly cannot be made in time for the establishment of the first wave of NHS foundation trusts for authorisation from April 2004. We intend to make regulations in time for waves established from the following year. We will have to issue guidance to prospective applicants on the areas that the regulations are likely to cover, to ensure a minimal impact. The regulator will have power to ensure that all NHS foundation trusts comply with the regulations once they are made. I hope that my noble friend will accept that that is a reasonable way to proceed.

Lord Hunt of Kings Heath

My Lords, I realise that we are on Report, but new matters have been introduced. I seek guidance on when I might ask the noble Lord a question on them. I am grateful to him for his reassurance, which essentially means that the current wave of foundation trusts can carry on. However, I point out to him that subsection (3) of the proposed new clause in Amendment No. 256 states: An NHS foundation trust must secure that its constitution is in accordance with regulations". I realise that subsection (4) states that, Pending the coming into force of regulations", elections can still take place. However. Clause 6(2)(a) states that the regulator has to be satisfied that, the applicant's constitution will be in accordance with Schedule 1". Schedule 1 states that regulations will have to be laid, but those regulations will not be laid in the first tranche.

I am not trying to be awkward. I act as an honorary adviser to a trust going forward to foundation trust status, which will be very confused on the matter. Perhaps between now and Third Reading my noble friend will give it further consideration.

Lord Warner

My Lords, in view of the time, I am happy to give the matter further consideration and report at Third Reading.

I shall briefly turn to the points made by the noble Baroness, Lady Noakes, about auditors. The audit provisions in the legislation have been modelled in part on those of the Audit Commission Act, reflecting the fact that the bodies are public sector bodies. Auditors from the private sector appointed to audit public bodies under the Audit Commission Act 1998 must be members of the bodies listed in that Act or another body approved by the Secretary of State. Similarly, auditors appointed by an NHS foundation trust must be members of the bodies listed in that Act or another body approved by the independent regulator.

The Companies Act, referred to by the noble Baroness, Lady Noakes, would exclude members of the Chartered Institute of Public Finance and Accountancy, as those are people qualified to audit NHS trusts and other public bodies. We intend that they should also be able to audit NHS foundation trusts. I hope that that clarifies matters for her.

The noble Baroness, Lady, raised the issue of medical interests, in effect. That is not a relevant category of interest to be declared.

I always like to hear the Liberal Democrats adopt a liberal approach to electoral systems. I know that they would like us to say that PR was the only way forward in the area, but we are trying to pursue the thinking behind the remarks of my noble friend Lord Lipsey. There is scope for different electoral systems, but they will be prescribed in regulations. As I said, we have drawn on the experience of a number of other pieces of electoral legislation in framing the amendment.

On Question, amendment agreed to.

Baroness Crawley

My Lords, I beg to move that consideration on Report be now adjourned.

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

Baroness Crawley

My Lords, I beg to move that the House do now adjourn during pleasure.

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

[The Sitting was suspended from 1.38 to 3 p.m.]