Health and Social Care (Community Health and Standards) Bill

HL Deb 18 November 2003 vol 654 cc1858-903

3.16 p.m.

Lord Grocott

My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Health and Social Care (Community Health and Standards) Bill, have consented to place their prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Bill read a third time.

Clause 2 [General duty of regulator]:

Lord Clement-Jones moved Amendment No. 1:

Leave out Clause 2 and insert the following new Clause—

General duty of the regulator

THE REGULATOR MUST EXERCISE ITS FUNCTIONS IN A MANNER THAT—

1. (a) is consistent with the performance by the Secretary of State of the duties under sections 1, 3 and 51 of the National Health Service Act 1977 (c. 49) (duty as to health service and services generally and as to university clinical teaching and research), and
2. (b) has regard to the impact of an NHS foundation trust on the local health economy."

The noble Lord said: My Lords, I make no apology for raising the matter set out in Amendment No. 1 once again, for the third time, on Third Reading. Very similar amendments containing in particular the last subsection of Amendment No. 1 were tabled both in Committee and on Report.

On Report, the Minister made some headway in his response to the amendment in its previous form which imported concepts of universality of access and the regulator's duties in that respect. However, the Minister really did not address the key issue in that amendment and at the core of the current amendment—the impact of foundation trusts on the local health economy and the regulator's duty to have regard to that. I thought that the noble Lord, Lord Warner, was quite cogent in his response to the noble Earl, Lord Howe, on how the regulator would carry out his duties. If the regulator is to be a genuine regulator, that must be at the core of his duties. One of the key concerns throughout the Bill's passage in another place and in this House has been about the impact of foundation trusts on other aspects of the health service in their locality. That is absolutely at the core of this amendment.

On Report, the Minister addressed the local health economy and prayed in aid a number of arguments. He said that, the creation of NHS foundation trusts will support the development of NHS services in local health economies".

That is an assertion. One hopes that will be so but it is not necessarily the case under the Bill as drafted. The Minister continued: Foundation trusts will exist to provide and develop healthcare services for NHS patients in a way that is consistent with NHS values".

To support that, one can pray in aid the duty to act in accordance with, or in a way that is consistent with, the Secretary of State's duties currently contained in the Bill. However, it is not absolutely clear that that is the case. The Minister continued: Over 95 per cent of their income will continue to come from NHS commissioning".

That is the case, but that does not mean to say that foundation hospitals ipso facto will have to have regard to their local health economies. They may well build up their strengths without regard to other facilities of the NHS in their area. I believe the Minister considered that the following point was the crunch point in his argument. He continued: They will be under a statutory duty to work in partnership with other local NHS organisations and social services to deliver integrated packages of care centred around the needs of patients".—[Official Report, 6/11/03; col. 987.]

They have a duty of co-operation—I believe that is the precise phraseology—rather than a duty of partnership. However, that is very much open to interpretation. Foundation hospitals, along with all other facilities in the NHS, will have that duty, but who will police it? There will be no policing available. There will be little recourse to other organisations within a locality affected by the activities of a foundation trust. That is the reason for imposing this matter as a duty on the regulator. That is where it sits most comfortably. To assume that a foundation trust will act in accordance with the NHS Act and its duty of co-operation, particularly in the light of concerns expressed in both Houses and outside Parliament, seems to me a trifle optimistic.

I challenged the Minister regarding the intention that the regulator would have no oversight of the impact of employment contracts. I asked him to repeat what he said in Committee at col. 628 of Hansard of 13th October; namely that: They are not issues which should be arbitrated upon by a third party, such as the regulator".—[Official Report, 6/11/03; col. 987.]

I agree with that. I do not see that the regulator has a particular role in arbitrating employment contracts. However, it seems utterly right that the regulator should have regard to the impact of such employment contracts. That is a very different matter. It is not a matter of meddling in industrial relations or employment matters; it is a matter of seeing what impact those employment contracts have on the local health economy. The regulator could then make representations and exercise his powers under the Act relative to foundation trusts.

I very much hoped that between Report and Third Reading the Minister would have had a chance to reflect on the matter because it is absolutely at the core of the Bill. If the Minister were able to be more positive in this area, there would be a great deal more good will towards foundation trusts. It will not have escaped anyone's attention that the BMA recently wrote to the Secretary of State urging him not to introduce foundation trusts.

It is in the Minister's hands to provide considerable reassurance in respect of the regulator's duty. I beg to move.

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

My Lords, during consideration of Part 1 of the Bill both in this House and in another place much of the debate has been about the need to balance the ambitions, and relative strength, of individual organisations against the wider interests of local health economies, the NHS nationally and the particular interests of individual patients. I assure the noble Lord, Lord Clement-Jones, that I have reflected on the debate that we had at earlier stages. I acknowledge that these are very important issues that go to the heart of the way we run the NHS. In that regard I have some sympathy with the points that the noble Lord made. However, it is a major strength of the NHS that following implementation of the Government's reform programme there are clear processes for ensuring that the system works as it should. I wish briefly to discuss these arrangements.

First, we have put responsibility for commissioning where it belongs—with primary care trusts—and we are in the process of introducing national tariffs. We have created strategic health authorities with responsibility for planning and supporting delivery of national policy for the NHS within local health economy areas. We have created duties for NHS organisations to co-operate with each other and to work in partnership with local authorities to develop integrated systems of care. We have developed, and will strengthen through this Bill, national quality standards and national inspectorates across health and social care. We have given patients and local people a greater say through patients forums and the creation of overview and scrutiny committees.

The noble Lord, Lord Clement-Jones, made much of the policing point and asked whether we had "policemen" to enforce proper standards and checks in relation to "aggrandising" NHS foundation trusts. I have tried to illustrate that, just as this Government have put many bobbies on the beat, we have many "policemen"—perhaps we should call them community support officers—in this area of the NHS to provide checks and balances. NHS foundation trusts are not entering a totally unregulated and uncontrolled system.

Those are the mechanisms that will ensure the right balance is achieved. I believe that it would create nothing but confusion and uncertainty to overlay those processes with a statutory requirement on the independent regulator in carrying out his duties to have regard to the impact of foundation trusts on the local health economy. To do so in addition to his duty with respect to the 1977 Act could well create confusion over how the regulator is to exercise his functions and could extend the regulator's remit into areas that he will not have the knowledge and expertise to determine, and in which the levers he has to take action are limited to one sector only—NHS foundation trusts. He will not have any leverage over other parts of local health economies for the reasons that I have already given.

Such a measure could give the regulator a role in second-guessing the way that NHS organisations fulfil their duty to co-operate with other NHS organisations, and potentially in arbitrating between NHS foundation trusts and other bodies. The effect would be to fetter the freedoms that NHS foundation trusts have to determine locally how best to deliver their NHS obligations and in our view runs counter to the policy of replacing central control with local flexibility and accountability.

NHS foundation trusts will, of course, have to develop and consult on their forward plans taking account of what is going on in the local health economy. That is what the application process and new governance arrangements are designed to achieve. However, this amendment would require NHS foundation trusts to be continually looking over their shoulders and seeking direction from the regulator in a way that would be counter to the policy intention of setting up those trusts. In practice, we believe that it would be likely to stifle rather than promote a culture of innovation. I do not believe that the noble Lord intends that to happen but in our view that would be the effect of this amendment. I hope that when the noble Lord has reflected on my remarks he will feel able to withdraw the amendment.

Lord Clement-Jones: My Lords, I thank the Minister for that reply. That was a splendidly gloomy prognosis for one sentence in the Bill. I shall use it for future occasions. The number of negative verbs— confuse, fetter, second-guess, stifle a culture of innovation—was probably a record in such a short ministerial speech. It was a splendid collection of verbs.

There is a fairly irreconcilable difference. The Minister believes that the amendment would create confusion. On this side of the House, we believe that it would create clarity. It is not intended to fetter. Everything depends on how the phrase would be interpreted, but it would not mean that foundation trusts would need to go back to their nanny to find out what was going on. It is simply a broad, general failsafe mechanism to make sure that foundation trusts operate in a way that is generally congenial to their local health economy. That seems an entirely laudable public policy aim.

I do not believe that all that negativity will occur. It is a matter of opinion and, in those circumstances, I should like to seek the opinion of the House.

3.30 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 153; Not-Contents, 119.

Division No.1
CONTENTS
Addington, L.	Henley, L.
Alexander of Weedon, L.	Higgins, L.
Allenby of Megiddo, V.	Hodgson of Astley Abbotts, L.
Alton of Liverpool, L.	Howe, E.
Anelay of St Johns, B.	Howe of Aberavon. L.
Ashcroft, L.	Howe of Idlicote, B
Astor of Hever, L.	Howell of Guildford, L.
Attlee, E.	Hurd of Westwell, L.
Avebury, L.	Hussey of North Bradley, L.
Barker, B. [Teller]	Jenkin of Roding, L.
Beaumont of Whitley, L.	Kimball, L.
Biffen, L.	Kingsland, L.
Blackwell, L.	Knight of Collingtree, B.
Blatch, B.	Laing of Dunphail, L.
Bowness, L.	Lamont of Lerwick, L.
Bradshaw, L.	Lester of Herne Hill, L.
Bridgeman, V.	Lindsay, E.
Brooke of Sutton Mandeville, L.	Liverpool, E.
Brookeborough, V.	Lyell, L.
Brougham and Vaux, L.	Mackie of Benshie, L.
Buscombe, B.	McNally, L.
Byford, B.	Maddock, B.
Caithness, E.	Mancroft, L.
Campbell of Alloway, L.	Mar and Kellie, E.
Carnegy of Lour, B.	Masham of Ilton, B.
Cavendish of Furness, L.	Mayhew of Twysden, L.
Chadlington, L.	Methuen, L.
Chalker of Wallasey, B.	Michie of Gallanach, B.
Chan, L.	Miller of Chilthorne Dorner, B.
Clement-Jones, L. [Teller]	Miller of Hendon, B
Coe, L.	Molyneaux of Killead, L.
Cope of Berkeley, L.	Monro of Langholm, L.
Craig of Radley, L.	Montagu of Beaulieu, L.
Crickhowell, L.	Montrose, D.
Cuckney, L.	Mowbray and Stourton, L.
Cumberlege, B.	Naseby, L.
Dean of Harptree, L.	Newby, L.
Dholakia, L.	Noakes, B.
Dixon-Smith, L.	Northbourne, L.
Elliott of Morpeth, L.	Northesk.E.
Emerton, B.	Northover, B.
Ezra, L.	O'Cathain, B.
Falkland, V.	Onslow, E.
Ferrers, E.	Park of Monmouth, B.
Finlay of Llandaff, B.	Peel, E.
Flather, B.	Pilkington of Oxenford, L.
Fookes, B.	Plumb, L.
Freeman, L.	Portsmouth, Bp.
Gardner of Parkes, B.	Prior, L.
Garel-Jones, L.	Rawlings, B.
Geraint, L.	Rawlinson of Ewell, L.
Glentoran, L.	Razzall, L.
Goodhart, L.	Reay, L.
Greaves, L.	Redesdale, L.
Hamwee, B.	Rees, L.
Hanham, B.	Rennard, L.
Harris of Richmond, B.	Renton, L.
Hayhoe, L.	Roberts of Conwy, L.

Rodgers of Quarry Bank, L.	Swinfen, L.
Rogan, L.	Tanlaw, L.
Roper, L.	Taverne, L.
Rotherwick, L.	Tebbit, L.
Sandberg, L.	Thomas of Walliswood, B.
Scott of Needham Market, B.	Thomson of Monifieth, L.
Seccombe, B.	Tordoff, L.
Selsdon, L.	Trefgarne, L.
Sharman, L.	Trumpington, B.
Sharp of Guildford, B.	Tugendhat, L.
	Ullswater, V.
Sharples, B.	Vinson, L.
Shaw of Northstead, L.	Vivian, L
Shutt of Greetland, L.	Wade of Chorlton, L.
Skelmersdale, L.	Wakeham, L.
Smith of Clifton, L.	Walmsley, B.
Soulsby of Swaffham Prior, L.	Watson of Richmond, L.
Steel of Aikwood, L.	Wigoder, L.
Sutherland of Houndwood, L.	Williams of Crosby, B.

NOT-CONTENTS
Acton, L.	Grocott,L.[Teller]
Amos, B. (Lord President)	Hannay of Chiswick, L.
Andrews, B.	Harrison, L.
Archer of Sandwell, L.	Haskel, L.
Ashley of Stoke, L.	Haskins, L.
Ashton of Upholland, B.	Hayman, B.
Bach, L.	Hogg of Cumbernauld, L.
Barnett, L.	Hollis of Heigham, B.
Bassam of Brighton, L.	Howells of St. Davids, B.
Berkeley, L.	Hughes of Woodside, L.
Billingham, B.	Hunt of Kings Heath, L.
Borne, L.	Irvine of Lairg, L.
Bragg, L.	Islwyn, L.
Brett, L.	Janner of Braunstone, L.
Brooke of Alverthorpe, L.	Jay of Paddington, B.
Brookman, L.	Jones, L.
Burlison, L.	King of West Bromwich, L.
Campbell-Savours, L.	Kirkhill, L.
Carey of Clifton, L.	Lea of Crondall, L.
Carter, L.	Lewis of Newnham, L.
Chalfont, L.	Lockwood, B.
Christopher, L.	Lofthouse of Pontefract, L.
Clark of Windermere, L.	McIntosh of Hudnall, B.
Clarke of Hampstead, L.	MacKenzie of Culkein, L.
Cohen of Pimlico, B.	Mackenzie of Framwellgate, L.
Colville of Culross, V.	Marsh, L.
Corbett of Castle Vale, L.	Mason of Barnsley, L.
Crawley, B.	Massey of Darwen, B.
Davies of Coity, L.	Mishcon, L.
Davies of Oldham, L. [Teller]	Mitchell, L.
Dean of Thornton-le-Fylde,B.	Morgan, L.
Desai, L.	Morris of Aberavon, L.
Dixon, L.	Nicol, B.
Donoughue, L.	Orme, L.
Dormand of Easington, L.	Patel of Blackburn, L.
Dubs, L.	Paul, L.
Elder, L.	Peston, L.
Evans of Parkside, L.	Plant of Highfield, L.
Evans of Temple Guiting, L.	Prys-Davies, L.
Falconer of Thoroton, L. (Lord	Radice, L.
Chancellor)	Randall of St. Budeaux, L.
Farrington of Ribbleton, B.	Rendell of Babergh, B.
Faulkner of Worcester, L.	Richard, L.
Filkin, L.	Rooker, L.
Gale, B.	Sainsbury of Turville, L.
Gibson of Market Rasen, B.	Scotland of Asthal, B.
Gilbert, L.	Sheldon, L.
Golding, B.	Simon, V.
Goldsmith, L.	Stallard, L.
Gordon of Strathblane, L.	Stone of Blackheath, L.
Goudie, B.	Strange, B.
Gould of Potternewton, B.	Taylor of Blackburn, L.
Graham of Edmonton, L.	Temple-Morris, L.
Gregson, L.	Tenby, V.

Thornton, B.	Wedderburn of Charlton, L.
Tomlinson, L.	Whitaker, B.
Turnberg, L.	Whitty, L.
Turner of Camden, B.	Wilkins, B.
Walton of Detchant, L.	Williams of Elvel, L.
Warner, L.	Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.

3.41 p.m.

Clause 12 [Prudential borrowing code]:

Baroness Noakes moved Amendment No. 2:

Page 6, line 3, at end insert— ( ) In making the code the regulator shall ensure that the economic effect of all commitments to make payments over periods exceeding one year is taken into account.

The noble Baroness said: My Lords, Amendment No. 2 relates to the borrowing code for foundation trusts under Clause 12. We debated the matter extensively both in Committee and on Report. It is not inaccurate to say that there has been no meeting of minds between the Government Benches and the Conservative and Liberal Democrat Benches.

The Government believe that the borrowing code will somehow solve the problems of the borrowing capacity of foundation trusts. We believe that it is at best harmless and at worst a major distraction. This mystical borrowing code—mystical because no one has ever seen it—is somehow to distil the knowledge and practice of commercial lenders. It is supposed to help the regulator determine limits on total borrowing by any NHS foundation trust. But that is about all we know about it.

On Report, the Minister told us about information that late in the day was made available on the department's website. That information adds almost nothing to our knowledge of the borrowing code. It contains some highly simplistic ratios but no real substance.

We remain highly sceptical about the worth of the borrowing code. It seems to us to be a pseudo-technical device designed to conceal the fact that the emperor has no clothes. We believe that this part of the Bill is ill thought-out and that it will cause problems in practice.

The simple solution would have been to take this silly code out of the Bill, but if the Government are committed to it, it must be absolutely clear that the borrowing code will take account of the economic impact of liabilities which arise from long-term commitments, such as those from the private finance initiative. We have heard the Minister's arguments that PFI obligations will be scored in arriving at free cash flow, but we want the regulator—for it is the regulator who will be lumbered with creating this code—to be in do doubt whatever that the economic impact of PFI liabilities must be taken into account. It is not simply a matter of establishing free cash flow; it is as much about the overhang of liabilities.

I have previously argued that PFI liabilities in the NHS are a serious concern. They are continuing to rise at a rapid rate and we are concerned about the robustness of these deals over time in terms of practicality and value for money. The one thing that is absolutely certain is that PFI deals must be kept fully in mind when determining what borrowing should be permitted for foundation trusts. That is what the amendment seeks to achieve. I beg to move.

Lord Clement-Jones

My Lords, I support the amendment. We on these Benches do not believe that the question has been properly answered. It would be wrong not to have on the face of the Bill a provision of this type, making it clear that PFI was included in the terms of the prudential borrowing limit. The Minister's answers on Report were not fully satisfactory and in those circumstances we fully support the fact that the noble Baroness has brought the amendment back to the House.

Baroness Carnegy of Lour

My Lords, I support the amendment. It is important that foundation hospitals should not become part of the Exchequer's charade in pretending that PFI has nothing to do with real borrowing. The debts incurred by foundation hospitals, and the interest due on those debts, will be no less than any other form of capital borrowing and interest on it. Surely, it should be taken into account and I therefore support the amendment.

Lord Warner

My Lords, on this issue, I feel slightly like someone being asked to keep taking his accountancy exams. It is the Government's view that Amendment No. 2 is unnecessary. As we have already discussed in Committee and on Report, the prudential borrowing limit, which determines an NHS foundation trust's ability to repay debt, must take account of payment commitments which affect the free cash flow of an NHS foundation trust. The checks in the system are not quite as mystical as the noble Baroness suggested.

When we discussed these issues on Report, the noble Baroness raised concerns that the financial ratios which will be used to determine the prudential borrowing code will not take account of balance sheet issues and accumulated liabilities. However, I can reassure her and other noble Lords that we agree that in addition to ensuring that there is enough cash in the business to service debt year on year, total indebtedness is also an important issue. That is why applicants were issued with guidance to model their debt profiles assuming a maximum 10-year debt maturity for the first period of borrowing. The application of the ratios together with this 10-year term limit serve to manage total indebtedness as well as year-on-year serviceability issues. The noble Baroness cannot dismiss those ratios merely as mystical. They are real ratios. She may not agree with them, but they are there as part of the checks on incurring excessive indebtedness.

We also agree that quality of cash flows is an important issue. In this regard, we recommended that the regulator takes into account the quality of the underlying data provided to support projected numbers—such as references from PCTs—and establishes appropriate rules for ensuring that the way the data are reported is transparent and robust. Work has been going on within the department on developing new reporting requirements to aid the regulator—when appointed—in this regard. We therefore believe that appropriate arrangements are in place and that this is not a mystical exercise. There are proper arrangements for ensuring that debt is bearable and that cash flows are adequate year on year.

Baroness Noakes

My Lords, first, I thank the noble Lord, Lord Clement-Jones, and my noble friend Lady Carnegy for their support. I have not tried to subject the noble Lord to accountancy examinations, but I shall keep my own counsel as to whether I believe that he would pass them with distinction.

I was pleased to hear what the noble Lord said about moving beyond simple free cash flow and taking into account indebtedness and the quality of cash flow. But we have argued from the outset that the Government—led, in particular, by the Chancellor— have been trying to account PFI out of existence. We have argued consistently that we must keep it firmly in view. For that reason, I have been trying to make an amendment of this nature to the Bill. Going forward, it will be extremely important to ensure that, when considering the subject of foundation trusts, the full impact of PFI liabilities is scored alongside more conventionally financed liabilities. I was grateful for what the noble Lord said, but he did not meet that point. We believe that it is important, and I should like to test the opinion of the House.

3.49 p.m.

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

Their Lordships divided: Contents, 177; Not-Contents, 122.

Division No.2
CONTENTS
Ackner, L.	Brougham and Vaux, L.
Addington, L.	Buscombe, B.
Alexander of Weedon, L.	Byford, B.
Allenby of Megiddo, V.	Caithness, E.
Alton of Liverpool, L.	Campbell of Alloway, L.
Anelay of St Johns, B.	Carnegy of Lour, B.
Ashcroft, L.	Cavendish of Furness, L.
Astor of Hever, L.	Chadlington, L.
Attlee, E.	Chalker of Wallasey, B.
Avebury, L.	Chan, L.
Barker, B.[Teller]	Clement-Jones, L.
Beaumont of Whitley, L.	Coe, L.
Blackwell, L.	Colville of Culross, V.
Blatch, B.	Colwyn, L.
Bledisloe, V.	Cope of Berkeley. L. [Teller]
Bowness, L.	Craig of Radley, L.
Bradshaw, L.	Crickhowell, L.
Bridgeman, V.	Cuckney, L.
Brittan of Spennithorne, L.	Cumberlege, B.
Brooke of Sutton Mandeville, L.	Dahrendorf, L.
Brookeborough, V.	Dean of Harptree, L.

Denham, L.	Newby, L.
Dholakia, L.	Noakes, B.
Dixon-Smith, L.	Northesk, E.
Eden of Winton, L.	Northover, B.
Elliott of Morpeth, L.	O'Cathain, B.
Elton, L.	Onslow, E.
Emerton, B.	Park of Monmouth, B.
Ezra, L.	Peel, E.
Falkland, V.	Peyton of Yeovil, L.
Feldman, L.	Pilkington of Oxenford, L.
Ferrers, E.	Plumb, L.
Finlay of Llandaff, B.	Prior, L.
Flather, B.	Quinton, L.
Fookes, B.	Rawlings, B.
Freeman, L.	Razzall, L.
Gardner of Parkes, B.	Reay, L.
Garel-Jones, L.	Redesdale, L.
Geraint, L.	Rees, L.
Glentoran, L.	Rennard, L.
Goodhart, L.	Renton, L.
Greaves, L.	Roberts of Conwy, L.
Hamwee, B.	Rodgers of Quarry Bank, L.
Hanham, B.	Rogan, L.
Hannay of Chiswick, L.	Roper, L.
Harris of Richmond, B.	Rotherwick, L.
Hayhoe, L.	Saltoun of Abernethy, Ly.
Henley, L	Sandberg, L.
Higgins, L.	Sandwich, E.
Hodgson of Astley Abbotts, L.	Scott of Needham Market, B.
Howe, E.	Seccombe, B.
Howe of Aberavon, L.	Selborne, E.
Howe of Idlicote, B.	Selsdon, L.
Howell of Guildford, L.	Sharman, L.
Hunt of Wirral, L.	Sharp of Guildford, B.
Hurd of Westwell, L.	Sharples, B.
Hussey of North Bradley, L.	Shaw of Northstead L.
Jacobs, L.	Shutt of Greetland, L.
Jenkin of Roding, L.	Skelmersdale, L.
Kimball, L.	Smith of Clifton, L.
Kingsland, L.	Soulsby of Swaffham Prior, L.
Kingsland, L.	Steel of Aikwood, L.
Knight of Collingtree, B.	Stoddart of Swindon, L.
Laing of Dunphail, L.	Swinfen, L.
Lamont of Lerwick, L.	Taverne, L.
Lester of Herne Hill, L.	Tebbit, L.
Lewis of Newnham, L.	Tenby, V.
Lindsay, E.	Thomas of Gresford, L.
Liverpool, E.	Thomas of Swynnerton, L.
Lyell, L.	Thomas of Walliswood, B.
Mackie of Benshie, L.	Thomson of Monifieth, L.
Maclennan of Rogart, L.	Tordoff, L.
McNally, L.	Trefgarne, L.
Maddock, B.	Trumpington, B.
Mancroft, L.	Tugendhat, L.
Mar and Kellie, E.	Ullswater, V.
Marlesford, L.	Vinson, L.
Marsh, L.	Vivian, L.
Masham of Ilton, B.	Waddington, L.
Mayhew of Twysden, L.	Wakeham, L.
Methuen, L.	Wallace of Saltaire, L.
Michie of Gallanach, B.	Walmsley, B.
Miller of Chilthorne Domer, B.	Walton of Detchant, L.
Miller of Hendon, B.	Wamock, B.
Monro of Langholm, L.	Watson of Richmond, L.
Montagu of Beaulieu, L.	Weatherill, L.
Montrose, D.	Wigoder, L.
Mowbray and Stourton, L.	Wilcox, B.
Naseby, L.	Williams of Crosby, B.

NOT-CONTENTS
Acton, L.	Ashton of Upholland, B.
Amos, B. (Lord President)	Bach, L.
Andrews, B.	Barnett, L.
Archer of Sandwell, L.	Bassam of Brighton, L.
Ashley of Stoke, L.	Berkeley, L.

Bhatia, L.	Islwyn, L.
Billingham, B.	Janner of Braunstone, L.
Blackstone, B.	Jay of Paddington, B.
Borrie, L.	Jeger, B.
Bragg, L.	Jones, L.
Brett, L.	Judd, L.
Brooke of Alverthorpe, L.	King of West Bromwich, L.
Brookman, L.	Kirkhill, L.
Brooks of Tremorfa, L.	Lea of Crondall, L.
Burlison, L.	Lockwood, B.
Campbell-Savours, L.	Lofthouse of Pontefract, L.
Carter, L.	McIntosh of Haringey, L.
Christopher, L.	McIntosh of Hudnall, B.
Clark of Windermere, L.	MacKenzie of Culkein, L.
Clarke of Hampstead, L.	Mackenzie of Framwellgate, L.
Cohen of Pimlico, B.	Mason of Barnsley, L.
Corbett of Castle Vale, L.	Massey of Darwen, B.
Crawley, B.	Mishcon, L.
Davies of Coity, L.	Mitchell, L.
Davies of Oldham, L. [Teller]	Morgan, L.
Dean of Thornton-le-Fylde, B.	Morris of Aberavon, L.
Desai, L.	Nicol, B.
Dixon, L.	Orme, L.
Donoughue, L.	Ouseley
Dormand of Easington, L.	Parekh, L.
	Patel of Blackburn, L.
Dubs, L.	Paul, L.
Elder, L.	Peston, L.
Evans of Parkside,L.	Plant of Highfield, L.
Evans of Temple Guiting, L.	Portsmouth, Bp.
Falconer of Thoroton, L (Lord	Prashar, B.
Chancellor)	Prys-Davies, L.
Farrington of Ribbleton, B.	Radice, L.
Faulkner of Worcester, L.	Ramsay of Cartvale, B.
Filkin, L.	Randall of St. Budeaux. L.
Gale, B.	Rendell of Babergh, B.
Gibson of Market Rasen,B.	Richard, L
Gilbert, L	Sainsbury of Turville, L.
Golding, B.	Sawyer, L.
Goldsmith, L.	Scotland of Asthal, B.
Gordon of Strathblane, L.	Sheldon, L.
Goudie, B.	Simon, V.
Gould of Potternewton, B.	Stallard, L.
Graham of Edmonton, L.	Stone of Blackheath, L.
Gregson, L.	Strange, B.
Grocott, L. [Teller]	Taylor of Blackburn, L.
Harrison, L.	Temple-Morris, L.
Haskel, L.	Thornton, B.
Haskins, L.	Tomlinson, L.
Hayman, B.	Turnberg, L.
Hogg of Cumbernauld, L.	Turner of Camden, B.
Hollis of Heigham, B.	Warner, L.
Howells of St. Davids. B.	Whitaker, B.
Hoyle, L.	Whitty, L.
Hughes of Woodside, L.	Wilkins, B.
Hunt of Kings Heath, L.	Williams of Elvel, L.
Irvine of Lairg, L.	Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.

4.1 p.m.

Clause 14 [Authorised services]:

Lord Turnberg moved Amendment No. 3:

Page 7, line 15, at end insert— and, in deciding how to exercise its functions under this subsection in a case where any of the corporation's hospitals includes a medical or dental school provided by a university, the regulator is to have regard to the need to establish and maintain appropriate arrangements with the university.

The noble Lord said: My Lords, I suspect that this amendment will have a slightly easier ride than the first two. Your Lordships may recognise that, although the words of this amendment have been changed to protect innocent Back-Benchers, they give the same basic message as my two previous amendments, which were moved in Committee and on Report. However, this time I am somewhat more optimistic about their acceptability.

I shall not repeat my speeches from the previous two occasions, save to say that the need to ensure that medical research is fostered and supported in the NHS was well recognised and debated by many who spoke on the previous occasion, including my noble friend the Minister. I am extremely grateful to him for listening so carefully to what was said and for being so actively engaged in the subject of the amendment. I know that it is close to his heart. I believe I am in order in anticipating that the Minister will, indeed, show that his heart is in the right place on this matter. I beg to move.

Lord Clement-Jones

My Lords, I support this amendment. I believe that throughout the country universities and teaching hospitals will be erecting statues of the noble Lord, Lord Turnberg, in years to come, and deservedly so. His persuasive powers are clearly enormous. The subsection itself is so finely crafted that one could not detect the workmanship.

Lord Walton of Detchant

My Lords, I give enthusiastic support to this amendment.

Earl Howe

My Lords, at the risk of adding excessive endorsement—I am told that the word is "cloying"— to the contributions already made, I very warmly support this amendment, which seems to cover exactly the concerns that were raised by so many noble Lords both in Committee and at Report.

Lord Warner

My Lords, noble Lords will be astonished to learn that the Government are minded to accept this amendment. I am extremely grateful to my noble friend for his kind remarks. I compliment him in particular on his persistence in this area. I shall certainly enter into the public subscription for his statue if the noble Lord, Lord Clement-Jones, is to start a fund.

On Question, amendment agreed to.

Clause 15 [Private health care]:

Earl Howe moved Amendment No. 4:

Page 7, line 40, leave out subsections (2) and (3).

The noble Earl said: My Lords, in Committee and at Report, I tabled amendments to remove Clause 15, which we on these Benches view as the single most unnecessary piece of political interference in the Bill. Although our views on the matter have not changed one iota, I have reflected on what it would be best to do at this stage of the Bill bearing in mind that there is a clear divergence of opinion between us and the Minister which we are unlikely to bridge.

I have concluded that the sensible course would be for me to give way to the Government on the main premise of this clause, namely, that the regulator should be allowed to impose a cap on the private patient income of foundation trusts. I do so of course without prejudice to the views which I have just expressed on the over-arching principle.

If the Government are allowed to have their way on the main premise of the clause then they should accept the force of the two points that I have previously tried to put to them. The first is that the clause as it stands is too prescriptive. It proposes that the amount of private patient income permitted to a foundation trust should be calculated by reference to the percentage of its income earned from such sources in 2002–03 and that this base year should apply to every single foundation trust without exception, no matter what its individual circumstances.

That is unreasonable. If the regulator is empowered to impose a cap, let him by all means do so by reference to a base year, if that is what he chooses to do, or by reference to some other benchmark. But the face of the Bill should not dictate to him exactly how the cap is to be calculated. I am sure that I am not the only noble Lord who has been approached by NHS trusts which have expressed grave anxiety about 2002–03 being the base year without any flexibility.

The Nuffield Orthopaedic Centre in Oxford, for example, has told me that in a normal year private patient work accounts for about 10 per cent of its overall income. But in 2002–03 it put in place a building programme specifically designed to enhance its private capacity and at the same time it took a conscious decision to use some of its private beds to treat NHS patients. In other words, 2002–03 was an untypical year for the centre.

I am not in a position to judge whether some other base year would be fairer for the orthopaedic centre or whether it could be allowed to defer the imposition of the cap for a period of time to accommodate its particular circumstances. But I believe that the regulator should be given this discretion. He may decide that hospitals in this sort of predicament will just have to make the best of the cap they are given. He may decide that the interests of the hospital and of the NHS are best served by permitting some measure of flexibility. Either way, it should be his decision. But if he has to apply the provisions of the clause as they stand, which are very strict, then there is no doubt in my mind that perverse and unfair consequences will ensue, which do not benefit anyone.

The second kind of situation which may merit a degree of flexibility is where a hospital wishes to invest in a piece of capital equipment. We need to get away from the mindset of thinking that private work equals private beds. I am not suggesting that foundation trusts should be allowed huge latitude by the regulator to expand their elective bed capacity for private patients. I accept that the term of the licence would need to be clear about that. But I believe that there may be circumstances from time to time where the interests of the NHS would be served by allowing a foundation trust to expand its private patient income beyond the percentage generated in 2002–03, if it could demonstrate a sound business case for doing so, and if the primary aim was to benefit its NHS patients.

The example 1 gave before was a proposal to invest in a new MRI scanner. It could well be that an investment of that kind could only make sense if a certain level of private patient income was assumed. What often happens as regards scanners is that NHS patients are given exclusive use during normal working hours and private patients are allowed access outside those times. The number of private patients per year need not be very many in comparison to the number of NHS patients, but they will often be enough to ensure that there is an income stream to the hospital which justifies the purchase of the machine. Here again, it should be for the regulator to decide what is or what is not a good business case and whether the NHS would benefit sufficiently from the investment. Each case would have to be judged on its merits. But to say that such special cases could never and should never be considered seems to me to fly in the face of all that is reasonable.

This is where the Liberal Democrat amendment, to which I have added my name, comes in. There is a clear and incontestable case for transparency in reporting if the private patient cap is applied and if it is to be monitored properly. I am also fully in sympathy with the wish of the Liberal Democrats to ensure that costings for private patient work are soundly based and that, where a hospital claims that private work contributes to its bottom line, there really is such a contribution after taking into account all costs that can appropriately be allocated or apportioned to the work in question.

Therefore, I hope that the Minister will feel able to give some ground on this matter. It is possible for us to disagree on the fundamental principle of a clause, but if, for a moment, we can put that matter aside, I hope that we can reach a consensus on how exactly the intention behind the clause can best be made to work for the benefit of the NHS. I beg to move.

Lord Clement-Jones

My Lords, I support Amendment No. 4 and speak to Amendment No. 5. The noble Earl, Lord Howe, spoke extremely cogently about the way in which Amendment No. 5 affects Clause 15. To eliminate the whole clause was a bridge too far, but on these Benches we believe that a cap is necessary. I entirely accept his arguments on the base year and the inflexibility built into the current clause.

I thank the noble Earl for his support for Amendment No. 5. It is designed to achieve transparency about such income. In regard to how trusts derive income from private patients, we see some straws in the wind as currently that is not transparent and the NAO review of UCLH shows that. That may be merely one example of trusts—in many cases through faulty accounting and perhaps even without malice aforethought—not really understanding the true costs attached to providing private care.

On Report, the Minister's main argument against Amendment No. 5 was to the effect that it would require a separate annual report—a kind of anti-bureaucratic argument. It would be perfectly possible to include the figures in the annual accounts of a foundation trust and it would then be treated as complying with this new subsection of Clause 15. Nowhere did the Minister address the point of whether there is a mandatory requirement for the profits and the income attached to private patients to be reported properly. For that reason the amendment is important.

Lord Walton of Detchant

My Lords, I support the amendment. Not many of your Lordships will remember the time, under a previous Labour Administration, when as a result of pressure from the unions in the National Health Service there was a move to remove all private beds from all NHS hospitals. That was when Lady Castle—then Mrs Castle—was Secretary of State for Health. In Newcastle, where I was working as a professor of neurology, there were three private beds in the entire body of NHS hospitals—one in each of the major hospitals.

As everyone knows, under the National Health Service there is an appropriate rule that any patients coming to this country from abroad specifically for medical treatment must, if they are admitted to an NHS hospital, be admitted as private patients. At that time I was in the very curious position of having to refuse admission to two patients from the United States referred to my specialist department for investigation because there were no private beds to which they could be admitted. My problem with Clause 15 is that the restrictions that are likely to be imposed could, at the very worst, result in a similar situation where it might not be possible for patients from overseas referred to this country for specialised care to be admitted to an NHS hospital for private care. For that reason I warmly support the amendment.

One great advantage of having private beds in NHS hospitals is that consultants working in those hospitals, who undertake private work—not all consultants do— are geographically there the whole time. The decision made by that previous Labour Administration gave the single most powerful impetus to the development of private hospitals outside the NHS of any other governmental decision. The result was that quite a number of consultants found themselves occupied in travelling distances between the NHS hospital where they worked primarily and the private hospitals where they saw their private patients. The advantages of having private care in NHS hospitals are profound. For that reason I support the amendment.

4.15 p.m.

Lord Tebbit

My Lords, I support both amendments. On Amendment No. 5, if such information is not known already to any hospital, it should be. It would be wholly right to give a hospital that extra incentive by requiring it to report what are those income and costs. However, I am even more interested in the amendment proposed by my noble friend, particularly because of my association with a hospital that he mentioned, the Nuffield Orthopaedic Centre.

Some 14 years ago, I was approached to see whether I would be willing to help raise money to build a new orthotics unit in the hospital. The existing building was literally falling down. Since then I have had the privilege of chairing a group of men and women who have done great things to help that hospital. Shortly, we will have completed putting into the hospital some £12 million or £13 million over the period. It has made an extraordinary difference to the hospital; £6 million will go into the PFI, currently being undertaken at the Nuffield Orthopaedic Centre. Without that £6 million of free, charitable money, the PFI would not have been possible.

I believe that PFIs are a disaster, but at the moment they are the only way in which so many such schemes can be taken forward. I prefer to refer to them as hire purchase agreements. They have all the evils of hire purchase agreements plus the fact that the hospital has to be serviced by those who sold it to the trust, which was not the case under a hire purchase: agreement on a motor car.

In the base year proposed in the Bill, the Nuffield Orthopaedic Centre was making a great effort to reduce waiting lists. To that end, it reduced the amount of private work undertaken to ensure that it could undertake sufficient of the mainstream NHS work to reduce the waiting lists. As a result its income from private practice in the base year fell sharply below its normal level of income. So, in any event, that base year would be unfair to that hospital. It seems quite wrong that there is no discretion available to deal with matters of that kind.

In addition, the Nuffield has an extra problem. At the same time as the PFI building is being undertaken, and in association with it, the hospital is undertaking a substantial building programme to increase its private-sector capacity. That is a classic example of being hit two ways by this Bill. I do not know what the effect will be on the finances of the hospital were the Bill to be enacted in its present form, but they would be serious, not merely for its private practice, but also for the finances of the hospital as a whole. It is a quite arbitrary, a quite unjust, a quite unfair and an extremely wrong way in which to behave towards a hospital that has a fine reputation and which I believe would be a front-runner in achieving foundation hospital status were that to be available to it.

Baroness Masham of Ilton

My Lords, I too support the amendment, especially as I have seen private patients arrive for very specialised treatment, which is often not available in private hospitals. Not only do they bring income into this country, because they have their entourage with them—their friends and relations—but it is a service that we can give. If it is not available in this country, they will go elsewhere. They will go to France, Switzerland or Germany and we shall lose some of our specialties in these fields.

Lord Warner

My Lords, I remind noble Lords that NHS foundation trusts have a primary purpose under this legislation to provide NHS services to NHS patients, based on need and not on the ability to pay and free at the point of use. To ensure that foundation trusts continue to focus primarily on servicing the needs of NHS patients, the terms of authorisation of an NHS foundation trust will place strict limits on the extent that it can undertake private patient activity. Amendment No. 4, with which I deal first, would effectively remove a clear basis for placing a cap on private patient activity and is therefore unacceptable to the Government.

The Government believe that income derived from the provision of services to private patients needs to be capped as a percentage of total income from clinical activities. The percentage will be fixed as the percentage that applied for each NHS foundation trust in the financial year ending April 2003. That will prevent NHS foundation trusts from carrying out a higher proportion of private work than they do today.

I believe that the cap on private activity provides NHS foundation trusts with clear parameters within which to plan their services and decide what private healthcare to provide. The existence of a cap based on explicit rules means that NHS foundation trusts will not need to go to the independent regulator for approval each time they propose to vary the amount of private patient work they undertake. I have to remind your Lordships that relying on a permissive power could of course mean—this point is particularly addressed to the Liberal Democrat Benches—that the regulator would impose no limit on private practice at all. Amendment No. 4 has that effect. I am not sure whether, in giving support to the amendment, noble Lords are aware of that.

I say to the Conservative Benches that, having just moved the amendment to give the regulator the right to interfere with regard to the local health economy, the regulator might take the view, armed with Amendment No. 4, that he should be even more rigorous in the capping of private practice than is provided for under the Bill. Noble Lords might like to think about both those issues before they get too carried away with Amendment No. 4.

On Amendment No. 5, as I have said previously, I do of course support the principle that information about income—

Lord Tebbit

My Lords, I am most grateful to the noble Lord for the elegant way he has read his official brief, but will he deal with my point concerning the Nuffield Orthopaedic Centre?

Lord Warner

My Lords, I thought I had made it fairly clear that we believe that this provision, which sets a limit on capping private patients, should be in the Bill. I know the noble Lord does not agree with me on that, but that is the Government's position. It has been our position throughout the proceedings on the Bill and we are not resiling from it.

Lord Tebbit

My Lords, I am most grateful to the noble Lord. Does he agree that the cap should be fair?

Lord Warner

My Lords, yes, I do. We believe that the cap is particularly fair.

Baroness Masham of Ilton

My Lords, perhaps I may ask the Minister what the cap is.

Lord Warner

My Lords, I shall repeat what I said earlier. The income derived from the provision of services to private patients will be capped as a percentage of total income from clinical activities. The percentage will be fixed as the percentage that applied for each NHS foundation trust in the financial year ending April 2003. So that is the base year for which one calculates one's percentage. The percentage is then fixed in accordance with that particular base year's income in relation to clinical activities.

I know that noble Lords do not agree with this policy, but that is the policy of the Government. We are not changing it at this stage of the proceedings on the Bill.

On Amendment No. 5, as I have previously explained, I do of course support the principle that information about income and expenditure from private healthcare must be available and publicly accessible. However, I say again that Amendment No. 5 is unnecessary. This information will be set out in each NHS foundation trust's annual accounts, which must be made publicly available.

I understand that noble Lords may be concerned that information about income and expenditure related to private healthcare may not be set out transparently within NHS foundation trusts' accounts. But I hope it will reassure them if I explain that under provisions in the late lamented Schedule 1, all NHS foundation trusts must keep and prepare their annual accounts in line with directions set out by the independent regulator.

We expect that the regulator will issue an accounting manual for NHS foundation trusts, setting out the form, content, methods and principles to be used in preparing the accounts. That is likely to include detailed provision relating to income and expenditure from private income because the regulator will need this information in order to operate the private patient cap under Clause 15.

There is, therefore, no question of NHS foundation trusts somehow concealing the financial information relating to private activity within their accounts. Furthermore, since this information will be freely available, there is simply no need to duplicate it in a separate report.

Lord Eden of Winton

My Lords, before the noble Lord sits down, perhaps he could clarify a matter. I take the example given by my noble friend Lord Tebbit. No doubt there are other examples, perhaps even worse than the one he gave. Is there to be any provision for the hospital concerned to make an appeal on the ground that the base year provided exceptional circumstances which were not typical in its normal running; and, therefore, further consideration should be given on the grounds of fairness and common justice to the case it made?

Lord Warner

My Lords, I have nothing to add to that which I have already said about how the base year is decided and the basis on which the cap is decided. I repeat again that I understand that noble Lords do not agree with it, but that is the Government's policy on the Bill and that is the way we have framed the legislation.

Earl Howe

My Lords, I am extremely disappointed by that reply. I thank the noble Lords, Lord Walton and Lord Clement-Jones, and the noble Baroness, Lady Masham, for their support. I thank my noble friend Lord Tebbit for the compelling case he put regarding flexibility for the Nuffield Orthopaedic Centre. The ability for the regulator to impose a cap on private income is, as far as I am concerned, taken as read in this debate. We have got past the hurdle of trying to argue that that should be removed altogether. I am not in the least concerned with disputing the Government's policy in general towards private income, I dispute whether the clause as drafted is right. It seems far too prescriptive.

My contention to the Minister is that the regulator can if he wishes cap the income of a hospital. He can do so if he chooses in relation to the base year 2002–03. Indeed, if he wants to be rigorous towards hospitals he has that ability. The case put by my noble friend Lord Tebbit is absolutely incontestable. By contrast, the Government's position is so unreasonable that I cannot understand how the Minister can articulate it. This is a matter of principle on which I should like to test the opinion of the House.

4.29 p.m.

On Question, Whether the said amendment (No. 4) shall be agreed to?

Their Lordships divided: Contents, 189; Not-Contents, 124.

Division No.3
CONTENTS
Ackner, L.	Campbell of Alloway, L.
Addington, L.	Carnegy of Lour, B.
Alexander of Weedon, L.	Carrington. L.
Allenby of Megiddo, V.	Cavendish of Furness, L.
Alton of Liverpool, L.	Chalker of Wallasey, B.
Anelay of St Johns, B.	Chan, L.
Arran, E.	Chorley, L.
Ashcroft, L.	Clement-Jones, L.
Astor of Hever, L.	Cobbold, L.
Attlee, E.	Coe, L.
Avebury, L.	Colville of Culross, V.
Barker, B. [Teller]	Colwyn, L.
Beaumont of Whitley, L.	Cope of Berkeley, L.[Teller]
Blackwell, L.	Craig of Radley, L.
Blaker, L.	Crickhowell, L.
Blatch, B.	Cumberlege, B.
Bledisloe, V.	Dahrendorf, L.
Bowness, L.	Dean of Harptree, L.
Bradshaw, L.	Denham, L.
Bridgeman, V.	Dholakia, L.
Brooke of Sutton Mandeville, L.	Dixon-Smith, L.
Brougham and Vaux, L.	Eden of Winton, L.
Buscombe, B.	Elles, B.
Byford, B.	Elliott of Morpeth, L.
Caithness, E.	Elton, L.

Emerton, B.	Noakes, B.
Ezra, L.	Northesk, E.
Falkland, V.	Northover, B.
Feldman, L.	Norton of Louth, L.
Ferrers, E.	Oakeshott of Seagrove Bay, L.
Finlay of Llandaff, B.	O'Cathain, B.
Flather, B.	Park of Monmouth, B.
Fookes, B.	Patten, L.
Freeman, L.	Peel, E.
Gardner of Parkes, B.	Peyton of Yeovil, L.
Garel- Jones, L.	Pilkington of Oxenford, L.
Geraint, L.	Plumb, L.
Glentoran, L.	Prashar, B.
Goodhart, L.	Prior, L.
Goschen, V.	Quinton, L.
Gray of Contin, L.	Rawlings, B.
Greaves, L.	Razzall, L.
Greenway, L.	Reay, L.
Hamwee, B.	Redesdale, L.
Hanham, B.	Rees, L.
Harris of Richmond, B.	Rennard, L.
Hayhoe, L.	Renton, L.
Henley, L.	Roberts of Conwy, L.
Higgins, L.	Rodgers of Quarry Bank, L.
Hodgson of Astley Abbotts, L.	Rogan, L.
Holme of Cheltenham, L.	Roper, L.
Howe, E.	Rotherwick, L.
Howe of Aberavon, L.	Russell, E.
Howe of Idlicote, B.	Ryder of Wensum, L.
Howell of Guildford, L.	Saltoun of Abernethy, Ly.
Hunt of Wirral, L.	Sandberg, L.
Hurd of Westwell, L.	Scott of Needham Market, B.
Jacobs, L.	Seccombe, B.
Jenkin of Roding, L.	Selborne, E.
Jopling, L.	Selsdon, L.
Kimball, L.	Sharman, L.
Kingsland. L.	Sharp of Guildford, B.
Knight of Collingtree, B.	Sharples, B.
Laing of Dunphail, L.	Shaw of Northstead, L.
Lamont of Lerwick, L.	Shutt of Greetland, L.
Lester of Herne Hill, L.	Skelmersdale, L.
Lewis of Newnham, L.	Smith of Clifton, L.
Lindsay, E.	Soulsby of Swaffham Prior, L.
Liverpool, E.	Steel of Aikwood, L.
Livsey of Talgarth, L.	Strange, B.
Lucas, L.	Strathclyde, L.
	Swinfen, L.
Lyell, L.	Taverne, L.
Mackie of Benshine, L.	Tebbit, L.
Maclennan of Rogart, L.	Tenby, V.
McNally, L.	Thomas of Gresford, L.
Maddock, B.	Thomas of walliswood, B.
Mancroft, L.	Thomson of Monifieth, L.
Mar and Kellie, E.	Tordoff, L.
Marlesford, L.	Trefgarne, L.
Masham of Ilton, B.	Tugendhat, L.
Mayhew of Twysden, L.	Ullswater, V.
Methuen, L.	Vivian, L.
Michie of Gallanach, B.	Waddington, L.
Miller of Chilthorne Domer, B.	Wakeham, L.
Miller of Hendon, B.	Wallace of Saltaire, L.
Monro of Langholm, L.	Walmsley, B.
Monson, L.	Walton of Detchant, L.
Montagu of Beaulieu, L.	Warnock, B.
Montrose, D.	Weatherill, L.
Mowbray and Stourton, L.	Wigoder, L.
Moynihan,L.	Wilcox, B.
Naseby, L.	Williams of Crosby, B.
Newby, L.	Wilson of Tillyorn, L.
Nickson, L.	Wolfson, L.

NOT-CONTENTS
Acton, L.	Ashley of Stoke, L.
Amos, B. (Lord President)	Ashton of Upholland, B.
Andrews, B.	Bach, L.
Archer of Sandwell, L.	Barnett, L.

Bassam of Brighton, L.	Jay of Paddington, B.
Berkeley, L.	Jeger, B.
Bhatia, L.	Jones, L.
Billingham, B.	Judd, L.
Blackstone, B.	King of West Bromwich, L.
Bragg, L.	Kirkhill, L.
Brennan, L.	Lea of Crondall, L.
Brett, L.	Lockwood, B.
Brookman, L.	Lofthouse of Pontefract, L.
Brooks of Tremorfa, L.	Macdonald of Tradeston, L.
Burlison, L.	McIntosh of Haringey, L.
Campbell-Savours, L.	McIntosh of Hudnall, B.
Carter, L.	MacKenzie of Culkein, L.
Christopher, L.	Mackenzie of Framwellgate, L.
Clark of Windermere, L.	Mason of Barnsley, L.
Clarke of Hampstead, L.	Massey of Darwen, B.
Cohen of Pimlico, B.	Mishcon, L.
Corbett of Castle Vale, L.	Mitchell, L.
Crawley, B.	Morgan, L.
Davies of Coity, L.	Morris of Aberavon, L.
Davies of Oldham,L. [Teller]	Nicol, B.
Dean of Thornton-le-Fylde, B.	Orme, L.
Desai, L.	Ouseley, L.
Dixon, L.	Parekh, L.
Donoughue, L.	Patel of Blackburn, L.
Dormand of Easington, L.	Paul, L.
Dubs, L.	Peston, L.
Elder, L.	Pitkeathley, B.
Evans of Parkside, L.	Plant of Highfield, L.
Evans of Temple Guiting, L.	Portsmouth, Bp.
Falconer of Thoroton, L. (Lord	Prys-Davies, L.
Chancellor)	Radice, L.
Farrington of Ribbleton, B.	Ramasay of Cartvale, B.
	Randall of St. Budeaux, L.
Faulkner of Worcester, L.	Rea, L.
Gale, B.	Rendell of Babergh, B.
Gibson of Market Rasen, B.	Richard, L.
Golding, B.	Rooker, L.
Goldsmith L.	Sainsbury of Turville, L.
Gordon of Strathblane, L.	Sawyer L
Goudie, B.	Scotland of Asthal, B.
Gould of Potternewton, B.	Sheldon, L.
Graham of Edmonton, L.	Simon, V.
Gregson, L.	Smith of Leigh, L.
Grocott, L. [Teller]	Stone of Blackheath, L.
Hannay of Chiswick, L.	Taylor of Blackburn, L.
Harrison, L.	Temple-Morris, L.
Haskel, L.	Thornton, B.
Haskins, L.	Tomlinson, L.
Hayman, B.	Turnberg, L.
Hogg of Cumbernauld, L.	Turner of Camden, B.
Hollis of Heigham, B.	Warner, L.
Howells of St. Davids, B.	Warwick of Undercliffe, B.
Howie of Troon, L.	Whitaker, B.
Hughes of Woodside, L.	Whitty, L.
Hunt of Kings Heath, L.	Wilkins, B.
Irvine of Lairg, L.	Williams of Elvel, L.
Islwyn, L.	Williamson of Horton, L.
Janner of Braunstone, L.	Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.

4.40 p.m.

Baroness Barker moved Amendment No. 5: Page 8, line 7, at end insert— ( ) Every NHS foundation trust shall publish a statement of its total income and expenditure relating to the goods and services referred to in subsection (4) in each financial year.

On Question, amendment agreed to.

Clause 25 [Dissolution etc. ]:

Baroness Noakes moved Amendment No. 6: Page 11, line 19, at end insert— ( ) An order may not be made in respect of property and liabilities under subsection (3) if it appears to the Secretary of State that the property remaining in the NHS foundation trust immediately after the transfer will be insufficient to meet the liabilities remaining in the trust at that time unless the Secretary of State has made arrangements which have the effect of leaving the creditors of the trust in no worse a financial position on a dissolution of the trust than if the property and liabilities had not been transferred by the order.

The noble Baroness said: My Lords, this amendment would insert into Clause 25 a new subsection dealing with what happens when a foundation trust is wound up. We had an interesting debate on the financial failure regime on Report. Throughout, we have expressed surprise that foundation trusts, which are classified by the Office for National Statistics as central government, will not be backed by explicit or implicit government guarantees. If NHS foundation trusts have one differentiating characteristic from NHS trusts of the non-foundation variety, that is it.

Accepting that the Government were set upon the policy, our concern shifted to the effect of the Bill, which appeared to leave private sector creditors and lenders to shoulder the whole burden of any financial loss when a foundation trust goes belly up. That would not have been fair. On Report, I thought that I was crying in the wilderness, so little effect did my words appear to have on the Minister. But I am delighted to see that he has tabled other amendments in this group, particularly Amendment No. 28, which will make the first regulations under Clause 26 subject to the affirmative procedure. I shall say no more on my amendment but look forward to the Minister's explanation of his. I fully expect to be able to withdraw my amendment in due course.

When the Minister speaks to his amendments, will he say whether the Government believe that public dividend capital is a liability of a foundation trust? The implication is that the Government would bear loss proportionately with other lenders or creditors. I am not saying that I object to that, but I would like it to be clear, because public dividend capital, throughout its history, which predates its use in the NHS, has always been a form of hybrid financing, not fitting into any private sector pigeonholes. With the use of the private sector insolvency regime proposed in the Bill, it is necessary to be clear.

Clarity is particularly important to lenders and creditors. The Minister said on Report: It is clearly very important that the insolvency regime applied to NHS foundation trusts is completely transparent so that those who are thinking of doing business with them can properly assess the risks, particularly should one fail".— [Official Report, 6/11/03; col. 1029.]

We agree, which is why I hope that the Minister will clarify today the status of PDC. I beg to move.

4.45 p.m.

Lord Warner

My Lords, we listened carefully to concerns raised by the noble Baroness that the provisions on dissolution could be applied in a way that was unfair to creditors. Although that was not our intention, we saw that we needed to address legitimate concerns. We therefore propose to introduce safeguards to address those concerns, through Amendment No. 10 and its consequential amendments, Amendments Nos. 7, 8 and 9.

In earlier debate about the failure regime for NHS foundation trusts, we made it clear that the Secretary of State must be able to ensure the continuity of essential NHS services. I do not believe that there is any difference between us and the opposition Front Bench on that. New subsection (4), to be introduced by Amendment No. 10, makes explicit that any transfer of assets made by the Secretary of State must be motivated by the need to ensure continuity of the protected services that the NHS foundation trust is required to provide under its terms of authorisation.

Only property linked to the provision of protected services may be transferred—for example, hospital buildings and equipment—and liabilities may be transferred only to the extent that that is necessary to ensure the continuity of protected services, not simply because they relate to, or arise from, the provision of those services. The intention is that the Secretary of State would transfer only those liabilities that relate to his interest in the failed NHS foundation trust, including public dividend capital, loans made for developments in protected services and contractual liabilities relating to staff, together with any fixed charge on property transferred. He would not selectively transfer liabilities beyond that in a way that would favour some creditors over others.

We have also made it clear that the Secretary of State would not remove valuable assets from an NHS foundation trust without recompense, which could penalise creditors by reducing the funds available for distribution in winding up. New subsection (5) requires the Secretary of State to ensure that any transfer does not result in a net loss of value to the NHS foundation trust. That means that if the value of the assets transferred by the Secretary of State to ensure continuity of protected services is greater than the value of the liabilities transferred, as described above, the Secretary of State will need to fund the difference. He can do that under his powers in Clause 11(2). The funds injected by the Secretary of State would then be available to the NHS foundation trust's creditors for distribution in winding up.

New subsection (5) will have the same effect as intended by opposition Amendment No. 6. I hope that the opposition Front Bench will find it an acceptable alternative to their amendment. Subsection (5) includes a power to make regulations setting out the rules on how the net value is to be calculated. That will include rules on how the assets and financial liabilities are to be valued. As a result of Amendment No. 28, the regulations will be subject to affirmative procedure in the first instance, with subsequent sets of regulations subject to the negative procedure.

New subsection (6) ensures that the Secretary of State, in applying a modified version of the Insolvency Act 1986 to wind up an NHS foundation trust, cannot modify insolvency law to discriminate between different types of creditor. Once a winding-up procedure has begun under Clause 25(4), the NHS foundation trust's debts must be dealt with according to the same priority that applies in the Insolvency Act.

We intend to ensure that creditors have sufficient information to assess the risk of doing business with an NHS foundation trust—not in the expectation that every small business dealing with an NHS foundation trust would assess its creditworthiness, but because, as a point of principle, it should be no more difficult for potential creditors that wish to make such an assessment than if they were dealing with a company. NHS foundation trusts will, therefore, be required in their accounts clearly to set out the Secretary of State's interests so that creditors can easily see what property and liabilities may be transferred by the Secretary of State when winding-up procedures begin.

No amendment is required to effect that aim; it is secured through the requirement for the Treasury to approve the accounting requirements for NHS foundation trusts that appear in the schedule on the constitution of public benefit corporations. That schedule would need to be re-introduced if NHS foundation trusts are to be established, and we will look to the other place to do so.

In response to the noble Baroness's question, public dividend capital is an asset of the Consolidated Fund. It is issued to NHS organisations on the basis that it can be required to be repaid, and, as such, is a liability.

Baroness Noakes

My Lords, I thank the Minister for that explanation and for taking on board the points made in earlier stages. I still believe that this is a hugely complicated area. I hope that we now have sufficient legislative cover. As the Minister is aware, I am moving from the health brief to pastures new and would like him to know that I am looking forward to the first affirmative regulations under this clause. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 [Sections 23 to 25: supplementary]:

Lord Warner moved Amendments Nos. 7,8,9 and 10:

Page 11, line 31, leave out subsection (1).

Page 11, line 32, at beginning insert "In sections 24 and 25

Page 11, line 33, at end insert "under section 24(2)

Page 11, line 39, at end insert— (4) The power conferred by section 25(3) is to be exercised with a view to securing the provision of the goods and services which the authorisation requires the trust to provide. (5) That power is also to be exercised (together, if required, with the power conferred by section 11(2)) with a view to securing that any transfer of property in pursuance of the power does not result in a net loss of value to the trust; and the question whether a transfer would result in a net loss of value is to be determined in accordance with regulations. (6)The Insolvency Act 1986 may not be modified under section 25(6) so as to alter the priority of debts or the ranking of debts between themselves.

On Question, amendments agreed to.

Clause 31 [Patients' Forums]:

Lord Warner moved Amendment No. 11: Page 14, line 11, after "each" insert "NHS

The noble Lord said: My Lords, we accepted the will of the House by accepting amendments on Report to Clause 31 that provide for all NHS foundation trusts to have a patients' forum on the same basis as NHS trusts. The amendments are technical amendments to tidy up Clause 31 and to ensure that the provisions on patients' forums in the 2002 Act apply to NHS foundation trusts in the same way as they apply to NHS trusts. I beg to move.

Lord Clement-Jones

My Lords, I would like to thank the Minister for graciously accepting the will of the House—in his words. He is right to do so, and we fully accept the spirit of the amendments.

On Question, amendment agreed to.

Lord Warner moved Amendments Nos. 12 to 14: Page 14, line 11, at end insert— (b) in subsection (9), in the definition of "relevant overview and scrutiny committee", for "or NHS trust" there is substituted ", NHS trust or NHS foundation trust".

Page 14, line 15, leave out from "reports)" to "there" in line 18 and insert "in subsection (2)—

1. (a)in paragraph (c)(ii), after "NHS trust" there is inserted "or NHS foundation trust",
2. (b) after paragraph (d)"

Page 14, line 26, at end insert ", and (b) in subsection (4)(a), after "NHS trust" there is inserted "or NHS foundation trust.

On Question, amendments agreed to.

Clause 36 [Offence]:

Lord Warner moved Amendment No. 15: Page 15, line 30, leave out from "form" to end of line and insert "of the particulars of his qualification to vote as a member of the constituency for which the election is being held

The noble Lord said: My Lords, the Bill requires members of an NHS foundation trust, when voting, to make a declaration that they are eligible to do so. Amendments Nos. 15, 16 and 17 remove that requirement and replace it with a requirement that voters confirm their details, including their qualification to vote. That provides a mechanism for the NHS foundation trust to make sure it has up-to-date details of all its members. That need not be an onerous requirement for members—there could be two sections on the voting paper, for example, one for voting, and another for members to complete with their details. Amendment No. 18 removes the requirement on staff to make a declaration when they vote, since it seems reasonable to assume that an NHS foundation trust would in any case hold up-to-date details on staff members. In addition, noble Lords will recall that, in response to an amendment tabled by the noble Lord, Lord Hunt, on Report, we indicated that we would consider amending the Bill to give NHS foundation trusts discretion to adopt an opt-out system for membership of the staff and patient constituencies. Such amendments would, however, need to be made to the former Schedule 1, which noble Lords voted to remove from the Bill on Report. If we are successful in restoring the Schedule in another place, we may pursue the issue. The amendments would facilitate the introduction of any such provisions. However, I would make the point that they also stand alone, and are not dependent on the making of other amendments in the other place. I beg to move.

On Question, amendment agreed to.

Lord Warner moved Amendments Nos. 16 to 18:

Page 15, line 32, leave out "that he is" and insert "of the particulars of his qualification to vote as

Page 15, line 37, leave out "that he is" and insert "of the particulars of his qualification to vote as

Page 15, line 38, at end insert—

( ) This section does not apply to an election held for the staff constituency.

On Question, amendments agreed to.

Clause 48 [Introductory]:

Baroness Finlay of Llandaff moved Amendment No. 19: Page 19, line 5, at end insert ", and ( ) the implementation of ethical principles in decision making processes

The noble Baroness said: My Lords, at previous stages of the Bill, we have debated issues surrounding equity and ethics and, on Report, the Minister expressed sympathy with my amendment but pointed out the problem with the wording, which included the word "equity". The Minister said that CHAI judgments could not cut across difficult decisions involving weighing up all relevant factors. This amendment, therefore, uses the words, the implementation of ethical principles".

CHAI will not be able to judge on the clinical results alone, but must ensure that the principles are implemented.

The Minister stated that the issues are traditionally left to the General Medical Council and other regulatory bodies—as they should be. I quote briefly from the General Medical Council booklet, Management in Health Care: The Role of Doctors, which is consistent with the guidance set out by the British Association of Medical Managers, the Institute of Health Services Management and the UKCC for Nursing, Midwifery and Health Visiting. It states: Conflicts may arise… when the needs of an individual patient and the needs of a population of patients cannot both be fully met. Dilemmas of this kind have no simple solution. When taking such decisions, doctors should take into account the priorities set by Government and the NHS and/or their employing or funding body. But they must also be clear about their own role. As clinicians, doctors must make the care of their patients their first concern, bearing in mind the effects of their decisions on the resources and choices available for other patients. As managers, doctors must allocate resources in the way that best serves the interests of a community or population of patients. In both roles doctors should use evidence from research and audit to make the optimum use of the resources available".

It is precisely the weighing up of decisions and the difficulty behind clinical decisions that demand an ethical approach.

In the Bill as it is worded, CHAI will be charged with the effectiveness of healthcare economy and efficiency and looking at information provided to the public. It will also need to safeguard and promote the rights and welfare of children. However, I am concerned about groups in the population who are vulnerable but are not children. There are issues for those with severe disabilities, communication problems or complex social needs and for those in custody.

The inspectorate of CHAI is charged not only with looking at NHS providers, but non-NHS providers who provide for NHS patients. That is where my greatest concern lies. Where there is pressure on the resources, it is much easier to provide for those patients who will not be disruptive, will not take up a lot of staff time and who will be easier to discharge back into the community when prioritising. However, that may not be to treat on the basis of clinical need. That is the background to those concerns, and I would like CHAI to ensure that the ethical principles of autonomy, beneficence, non-maleficence and justice— justice to the individual and to the population served, as outlined in the GMC booklet and in guidance to the other professions—are being adhered to. If not, we will fail the very population that any NHS service must seek to meet. I beg to move.

Baroness Barker

My Lords, I support the noble Baroness, Lady Finlay of Llandaff, in her excellent argument. Throughout our debate, we have primarily focused on the issue of equity. Today we move away from that—happily, in my view—to examine the far more important element of ethical principles.

On Report, when the Minister addressed these matters, he said: As for equity in terms of ethical decision making, we believe that traditionally, many of those issues should be left to the General Medical Council, and to the other regulatory bodies of the healthcare professions".— [Official Report, 10/11/03; col. 1148.] I believe that that is a mistake on the issue.

While we are not concerned about whether the General Medical Council adheres to, recognises or upholds ethical principles, we are concerned that, in practice, government policy forces clinicians to abandon some of those ethical principles. Therefore, the reason for wanting these words in the Bill is not to put any restraint on the GMC, but to ensure that government policy does not traduce those important fundamental principles.

Throughout the debates, we have talked about the extent to which management measures have been given greater pre-eminence than medical and clinical principles, which we have always believed to be wrong. It is an important protection for the health service that government policy should not produce the kinds of dilemmas about which the noble Baroness, Lady Finlay of Llandaff, spoke.

I do not understand why it has never been explained satisfactorily why economy and efficiency are sufficiently important to be in the Bill, but ethical principles are not. The Minister has one last chance to convince us on this matter, but his track record to date does not fill me with great hope. This is a fundamental and important matter. I therefore support the noble Baroness wholeheartedly.

5 p.m.

Baroness Masham of Ilton

My Lords, I, too, support the amendment. Ethical principles written in the Bill would safeguard many very vulnerable people; one has to look only at the huge pressures on the National Health Service as regards the mentally ill, drug abusers and some very unpopular kinds of patients.

Lord Walton of Detchant

My Lords, I, too, support the amendment. It is perfectly true that the General Medical Council gives advice to the medical profession about ethical principles that should be followed. Indeed, so, too, does the British Medical Association, which publishes a very weighty volume on the responsibilities of doctors. But, surely, one of the principles of medical care in the National Health Service must be that ethical principles should be foremost in the minds of every doctor and every healthcare professional in the management of disease and in their treatment of patients. I therefore warmly support the amendment.

Lord Warner

My Lords, indeed, this has been an educational Bill; I have had to brush up my accountancy and now my philosophy and ethics as well. I have a great deal of sympathy with what I think is intended in the amendment, but its practical effect continues to bother me.

As I understand it, ethical principles do not have any set meaning, but would cover issues such as patient consent to treatment and the use of novel drugs or treatments by NHS bodies. On enquiring further into this area, it seems that there are differing views as to which precise ethical principles should be used.

I agree that CHAI has a role in considering ethical matters, but that role is adequately covered already. CHAI must consider whether NHS bodies have appropriate procedures in place to ensure that proper regard is given to ethical considerations by appropriate persons when decisions are taken in individual cases; it must consider whether those procedures are being followed. That is relevant to its consideration of the availability of, and access to, healthcare and the quality and effectiveness of healthcare, which is provided for in the Bill.

CHAI's Vision document makes clear the inspectorate's intention to assess the quality of healthcare provided from the patients' perspective. In doing so, Sir Ian Kennedy, has made clear his intention to take the concerns of current healthcare inspection one step further and reflect, particularly, the rights and entitlements of a myriad of vulnerable people in its assessments and, in doing so, promote the social justice concept of "equal citizenship".

However, we do not envisage CHAI reviewing decisions made by doctors or ethics committees in individual cases. Ethical questions typically involve balancing the risks to individuals of particular treatments against the benefits of those treatments for them and the benefits to wider society. Traditionally, that is a matter for doctors, other health professionals and research ethics committees, acting under the guidance of bodies such as the General Medical Council.

As I previously said both in Committee and on Report, the General Medical Council is concerned with giving guidance to doctors on ethical matters. What it considers to be the "duties of a doctor" is already well documented. Furthermore, the council builds on those principles in guidance covering both general aspects of good medical practice and more specific areas, such as confidentiality and consent. In short, it has a long tradition in medical self-regulation, which should continue.

There is a real risk that giving CHAI a core task, which is what the amendment would do, of reviewing the "implementation of ethical principles" would cut right across the remit of the General Medical Council. It could lead to CHAI proposing a set of ethical principles that conflicted with guidance from the GMC. That might be inadvertent, but it could have the same consequence. It could also lead to duplication in inspection activities when we are trying to make the inspection of healthcare more efficient and less burdensome on the professions.

I sympathise with the sentiments behind the amendment, but I continue to believe that it is unnecessary and unworkable. Therefore, with the greatest respect, I ask the noble Baroness to withdraw the amendment.

Baroness Finlay of Llandaff

My Lords, I have listened carefully to the Minister and I am most grateful for the interventions from other noble Lords. The noble Baroness, Lady Barker, was very clear that government policy must not produce dilemmas or pressures which would drive against the interests of the population to be served.

The noble Baroness, Lady Masham, also outlined the pressures on the NHS, particularly from the mentally ill and drug abusers. I am grateful, too, to the noble Lord, Lord Walton, for pointing out that these principles should be at the front of every healthcare professional's mind.

I hear what the Government say about the effect of the amendment and I hear their concerns that it could cut across the remit of professional bodies. I am most persuaded by the argument that there could be a risk of duplication of inspection activities or an increased burden from inspections. As it is, healthcare professionals are already bowed down with the amount of inspections. Perhaps that is the one argument given by the Minister which is beginning to persuade me that giving the task to CHAI may not be helpful.

I am also glad to hear that CHAI will have proper regard to appropriate decisions and procedures being in place for decision making. From the patient's perspective, the quality of healthcare is of concern, as well as their rights to entitlement of healthcare. CHAI will have the ability to look at clinical records. With those reassurances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 102 [Transfer of functions to CHAI and CSCI]:

Baroness Barker moved Amendment No. 20: Page 44, line 13, after "Part" insert "insofar as they do not carry out excepted treatment

The noble Baroness said: My Lords, on Report we had a most interesting debate about the interface between CHAI and CSCI. Noble Lords will perhaps recall the noble Baroness, Lady Howarth of Breckland, intervening in that debate. She helpfully enabled us to clarify that the point of most concern to noble Lords was the involvement of CHAI in the inspection of healthcare in settings that are primarily concerned with the provision of social care.

I expect that noble Lords, like me, have received a letter from the shadow chairs of CSCI and the Commission for Healthcare Audit and Inspection, for which I am most grateful. To an extent, they have gone some considerable way towards addressing the fears expressed by noble Lords. However, I am not sure that they have managed to allay them altogether, in that they repeat many of the arguments made on previous occasions by the Minister.

My concern is not that CHAI should assume responsibility for the inspection of social care services; that is not an appropriate use of that body's experience or resources. My concern has always been that it should be involved in the inspection of the medical care given—perhaps not frequently and not to any great extent—in social care settings. The great disappointment of the letter from the shadow chairs of CSCI and CHAI is that they have failed to recognise that point. Had they admitted that, at the moment, there is a considerable problem which is not being addressed, perhaps I would feel more confident.

Only last week, yet another report was published that was almost unchanged from that produced some time ago by my honourable friend in another place, Mr Paul Burstow, about the overuse of sedation in residential homes. I do not believe that the people employed by CSCI will have the wherewithal to recognise or to deal with such issues. The letter goes on to discuss conditions such as diabetes, those which can be managed well and are unlikely to be life threatening. Indeed they are well managed, but it would be an inspection by representatives of CHAI rather than CSCI that would reveal the bad management or mismanagement of a diabetic condition, which could then become life threatening.

I take heart from and cannot ignore the undertaking given by the shadow chairs that they will seek to work together under the powers provided in Clauses 120 and 123, which places a duty on the two bodies to co-operate. However, I would be a great deal more convinced if the shadow chairs had detailed how they will go about doing that, in particular in the circumstances mentioned by noble Lords throughout our debates. There is an existing problem here.

I accept that providers that are principally providers of healthcare not in an acute setting do not wish to be burdened unnecessarily with inappropriate inspections by CSCI, but the lack of detail is what bedevils me. I hope that, in responding to the amendments, the Minister can put to rest some of my fears. I beg to move.

Earl Howe

My Lords, I should like to support the noble Baroness in all she has said. What concerns me most about this issue is that everything rests far too much on chance. Whether a particular clinic is to be regulated by CHAI or by CSCI often has little to do with logic and much more to do with an accident of history. As the noble Baroness pointed out, the dividing line between what is healthcare and what is social care is not one that can be drawn neatly or easily. Some treatment centres will end up being regulated by CHAI, while others will be the responsibility of CSCI. In such circumstances, where the basis of regulation is haphazard, then we must make an effort to introduce some consistency.

The Government favour CSCI as the regulator for the kinds of establishment we have been discussing. The Minister was right to say in Committee that such clinics focus to a great extent on nursing and personal care, but there is also an important element of acute medical intervention by doctors and specialists. If we do not regulate appropriately the medical care element as well as the nursing care element, then the effectiveness of those treatment centres will suffer.

The question is, therefore, which body is better equipped to undertake both kinds of regulation. I do not think that there is any doubt that it is CHAI. If, as we have been told, CHAI is to be the regulator for some of these establishments, then we need to ask whether the principle of consistency is better served by a conscious decision to make CHAI the regulator of them all.

5.15 p.m.

Baroness Finlay of Llandaff

My Lords, I strongly support this group of amendments. I am concerned about the patient who finds himself in the wrong place of care. I refer in particular to the vulnerable patient who develops an acute medical condition which, if treated, is eminently reversible, but if left untreated may be life threatening or, more seriously, may leave the patient with an ongoing disability that worsens their overall condition and leaves them even more vulnerable. The difficulty here is that only a degree of expert knowledge will pick up the elements of clinical mismanagement that may be taking place, and I am not convinced by the previous arguments put forward that a socially orientated inspectorate will have either the background knowledge or the clinical acumen to spot such problems if they arise. I say that bearing in mind in particular those patients who may be languishing in the wrong type of institution because their clinical status has changed.

We need to see very clearly defined roles and responsibilities for each of the inspectorates, along with working protocols and, I would hope, joint inspections. It is on that basis that I support the amendments.

Lord Warner

My Lords, I must respond to the amendments as they have been tabled on the Marshalled List. However, I do not deny that sometimes there are difficult issues of judgment to be made in relation to the regulatory arrangements about which the noble Baroness, Lady Barker, has expressed her concerns. I have expressed some sympathy for the thinking behind the amendments discussed at earlier stages. However, the amendments before the House do not solve the problem, and I should like to take noble Lords through the arguments.

The amendments would have the effect of giving CHAI the function of regulating under Part 2 of the Care Standards Act 2000 institutions carrying out "excepted treatments". I recall that it was unclear in Committee what the excepted treatments were to be and I am afraid that it remains unclear now. We have debated at length the difficulty in setting boundaries for regulation between health and social care. These amendments would take us no further forward in that debate, but would, if passed, fundamentally undermine the regulation of social care services to the detriment of service users. I shall come back to the letter which has been sent to noble Lords by the shadow chairs of the two inspection bodies.

The intended effect of the amendments is to make CHAI the regulator in the case of all services providing support to people with long-term conditions. I do not doubt the sincerity of noble Lords, but I believe that it would be fundamentally wrong and detrimental to the welfare of many thousands of people using these services to take such a step. To agree to the amendments would be, in effect, to wreck Part 2 of the Bill because they would drive a coach and horses through the system of registration set out in Part 2 of the Care Standards Act 2000.

This system of registration is based on the premise that establishments of a particular type must register as such before they may lawfully operate. Any relevant establishment which does not register will be operating unlawfully and its managers liable to prosecution. Accepting the amendments would mean that the identity of the commission with which the establishment in question was required to register could change on a regular basis, leading to complete confusion and making the registration system established by the Care Standards Act 2000 effectively inoperable.

I shall explain why this is so. Amendment No. 22 would defined "excepted treatment" as the, treatment of long-term conditions and substance and addictive behaviour treatment". This is fraught with difficulties, as we discussed in some detail in Committee. The effect of the amendment is that a care home which has residents with long-term conditions would be regulated by CHAI rather than CSCI. That would be contrary to what all sides have previously accepted as "social care". The Bill does not define a "long-term condition" and so our advice is that it would most likely be interpreted by the courts to mean any medical condition, however manageable, which cannot be cured in the short to medium term, but can be managed with medication.

Let me give one or two examples to illustrate the concerns. There might be in a care home a resident over 65 who has mild diabetes—or, indeed, Parkinson's, as my mother has. These conditions are easily treated by self-medication, with or without the assistance of care home staff, but they are long-term conditions. Treatment for these kinds of conditions may require only intermittent intervention from a GP or other health professional but, on the other hand, because of their general age and infirmity, such persons might need constant personal care. Which is the prime need? In this instance, I would suggest it was personal care rather than healthcare and that CSCI should inspect.

Another example is that of people in care homes who are receiving services for alcohol or drug abuse. They may need some healthcare input but in the majority of cases counselling and support about their life circumstances and lifestyles will be equally important. Such counselling, as well as other support with personal care needs, is as fundamental to the successful treatment of substance abuse as any health support. This kind of counselling has always been considered as part of the social care provision of such services and I find it hard to see how these amendments would ensure the proper regulation of such provision. I could give many more examples but the two that I have given will suffice to support the point that I am trying to make.

I do not believe that it was the intention of noble Lords to bring the regulation of such services within the responsibility of CHAI, given that we are establishing CSCI and taking over responsibilities in social care. But that is the effect of the amendments. They call into question the legal basis of regulation currently applied under the Care Standards Act in a large array of cases. This would have truly perverse consequences and cause great confusion in the services.

There are more than 10,000 care homes in England providing homes to many tens of thousands of older people and adults. As I have explained, the amendment could also have implications for other types of registered services such as children's homes or domiciliary care agencies. I find it hard to believe that, in spite of the potential harm this would cause, especially to older people, noble Lords would want to throw the system of registration established by the Care Standards Act into such array.

The chairs of CSCI and CHAI have written to noble Lords to express their concerns about the amendments. It was their decision to do so. They were not put up to it by the Government. They have made those representations because of their concerns about the disarray that might be caused in this area. I hope that noble Lords will heed their concerns, even if they will not heed me.

As I stated in Committee, the Bill provides in Clauses 120 to 123 for co-operation and joint working between CSCI and CHAI. The intention is that the commissions should be able to plan to work together, to review the quality of any joint services provided by or for the NHS and local authorities and to share expertise where services regulated by either commission have substantial health or social care aspects. This allows, for example, CSCI to seek the assistance of CHAI when inspecting care homes or other social care services providing nursing or associated health services so that professional issues can be appropriately covered.

I ask the House to reconsider the issue very carefully. This is a potentially extremely damaging amendment, as the shadow chairs of both CHAI and CSCI have expressed to your Lordships.

Baroness Barker

My Lords, I thank all noble Lords who have contributed to the debate. On behalf of all noble Lords, I should like to place on record our thanks to the shadow chairs of the two bodies for their letters and for their appreciation of the reasoning and concerns behind the amendments. It is heartening to know that there will be a commitment to co-operation from the chairs of those bodies.

I remain in great sympathy with the noble Earl, Lord Howe. The role that chance plays in the places in which people find themselves and the kinds of services they receive is immense. The blurring between nursing care and residential care is getting greater and greater all the time. There will have to be a step change in the degree of co-operation between CSCI and CHAI if we are ever to have the kind of system we need where the amount of inspection and regulation from each body can vary but is appropriate to the needs of patients. I continue to retain a great fear that people who are receiving what is primarily social care are being subjected to inappropriate medical procedures.

I have listened with great care to what the Minister said about the effect of the amendment on the implementation of the Care Standards Act and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 21 and 22 not moved. ]

Baroness Barker moved Amendment No. 23: Before Clause 113, insert the following new clause—

"COMPLAINTS

1. (1) Complaints under this Act may be made by an individual or a body of persons, whether incorporated or not, as specified in section 3.
2. (2) A complaint may be submitted in respect of—
1. (a) the exercise by an NHS body of any of its functions;
2. (b) the provision by any person of health care for which the body is responsible;
3. (c) the provision of an NHS service by a health professional supplied under private contract; and
1892
4. (d) the provision of services by the body or any other person in pursuance of arrangements made by the body under section 31 of the Health Act 1999 (c. 8) (arrangements between NHS bodies and local authorities) in relation to the exercise of the health-related functions of a local authority.
3. (3) A complaint may be initiated by—
1. (a) the aggrieved patient, or
2. (b) on behalf of the patient by—
1. (i) his personal representative;
2. (ii) a member of his family;
3. (iii) an independent advocate; or
4. (iv) some body or individual suitable to represent him.
4. (4) Where the patient lacks capacity, a complaint may be initiated independently by any person able to exercise an enduring power of attorney for the patient under the Enduring Powers of Attorney Act 1985 (c. 29) or successor legislation, or the patient's carer under the Carers (Recognition and Services) Act 1995 (c. 12) or the Carers and Disabled Children Act 2000 (c. 16) (or both), or their Guardian under the Mental Health Act 1983 (c. 20) or successor legislation."

The noble Baroness said: My Lords, I return, I hope for the last time, to the subject of complaints—a subject which is close to my heart. On Report, the noble Baroness, Lady Andrews, made a characteristically thorough demolition of the amendments that I had brought forward on this subject. She will be delighted to know that I listened to every word she said and that I have come back with a carefully crafted amendment that addresses every point she put forward.

Why do I bother at this late stage of the debate? Because complaint procedures are an important part of patient protection and patient involvement in the healthcare system. While the noble Baroness, convincingly and at length, spoke about the benefits of having complaint procedures in regulations so that they can be changed, there is nothing on the face of the Bill which provides an enabling power to establish a complaints procedure. We believe that to be a major deficiency. The existing NHS complaints procedure is fraught with inefficiencies and does not work. When we move to the new system, as we will, it is important that we do so on the basis of a procedure that does work.

We have tried to address many deficiencies in the amendment. We referred to the role of CHAI. The Minister expressed concerns at an earlier stage that our amendment widened the field of complaint beyond individual patients, and so we have changed it to specify in subsections (3) and (4) who can make a complaint.

We spoke about how CHAI should take over responsibility for second stage health complaints and we have attempted to put right a number of the problems in the existing procedures. We want to ensure the independence of complaints procedures; we want to provide a mechanism for ensuring that feed-back is given to people who make complaints; and we want to drive up standards.

We have spoken about the need to integrate complaints procedures with ICAS and the Commission for Patient and Public Involvement in Health proposals, which, I am delighted to report, are now known on the ground as "Chippy" proposals. We have spoken about fast-track procedures for the ombudsman stage of complaints where CHAI deems that to be appropriate and, crucially, we have spoken about harmonisation between health and social services complaints procedures.

One has only to talk to users out there for not a very long time to find that there are people who are battered back and forth between the two different parts of the complaints procedure and never get a satisfactory answer. It is the potential for being battered between different bodies—between CHAI and local complaints procedures—that may be a possible cause of huge dissatisfaction with the complaints procedure.

We talked again about the need for oral hearings. When people have complaints or, more than that, are simultaneously dealing with matters such as bereavement, the right to have an oral hearing can be extremely important to everyone concerned. So far, we believe that the Minister's promises about regulations have addressed some of our complaints. However, without that power in the Bill, we believe that there is a deficiency.

Finally, the legislation so far includes only complaints about NHS bodies; it does not refer to complaints procedures as they might apply to private contractors when services are contracted out.

For all those reasons, I hope that the Minister accepts that I have gone away and done my homework and presented her with a perfect amendment. I beg to move.

5.30 p.m.

Baroness Andrews

My Lords, I share the sense of déjà vu that the noble Baroness clearly demonstrated. I was obviously far too helpful on Report. Her amendment is a good one but, I am afraid, not good enough. I want to explain why that is so, and to reiterate how much we share her concern that the process should be as robust, sensitive and effective as she said that it should be—and I could not improve on the way in which she said that. The complaints procedure needs to do exactly what it intends to do.

Clause 113(1) is intended to set out in general terms what a complaint under regulations may be about. Clause 115 expands on the types of provision that can be made in regulations. Amendment No. 23 would place a detailed provision in the Bill, stipulating precisely who might make a complaint under the regulations, while stating in slightly more detailed terms what a complaint may be about. I was hoping that I had been able to reassure noble Lords in Committee and on Report that the concerns they are raising through this amendment would be dealt with, and better dealt with, through regulations. This is not a question of the Government being perverse or obstructive; we are convinced of this case, and I shall say again why I believe that.

The amendment has attempted to address one of the deficiencies that I highlighted. The previous version did not address the question of capacity. However, the added wording on capacity highlights the fundamental problem with the amendment, because it adds too much detail. Subsection (4) of the amendment is over-prescriptive, and is not helpful about the persons who may make a complaint on behalf of a person who lacks capacity. Precisely because it would not be possible to modify provisions should circumstances change, the danger is that by having that in the Bill, we would make the system less rather than more accessible to such a person.

The regulation-making power in Clause 115 already allows the Secretary of State to make appropriate provision for persons making a complaint. Subsection (2) of the amendment adds nothing of substance to the existing provision in Clause 113(1). Subsection (l)(b) already covers all healthcare by or for an NHS body, including services commissioned from the independent sector. Therefore, I believe that the noble Baroness's point is covered.

With regard to the specific content of subsections (3) and (4) of the amendment, I assure the noble Baroness, as I did in Committee and on Report, that it is our intention that regulations will make provision to enable the types of person listed in those subsections to assist a complainant in bringing a complaint or, where appropriate, to bring a complaint on their behalf. We intend to consult fully on those regulations to ensure that they are as full and complete as possible. I must repeat again what I said in Committee and on Report—that subsection (3) of the amendment is not detailed enough. It makes little reference to the patient himself or herself, to his or her consent to having the complaint made, or the involvement that he or she might have in the process, despite the fact that the noble Baroness is a great champion of the consent process. We can do all that in regulations; that is the genius of the regulatory system.

Meanwhile, the relationship between subsections (3) and (4) of the amendment is not clear. It is unclear whether a member of a patient's family may initiate a complaint on behalf of a patient without capacity, as such a person, although specified in subsection (3), is not specified in subsection (4). That would create more problems than it solved. Subsection (4) sets out a precise list of which persons may make a complaint on behalf of someone who lacks capacity but does not allow scope for the list to be expanded or contracted, or for the person handling the complaint to exercise discretion over which persons should be allowed to act as representatives. That is why a broad regulation-making power such as is contained in Clause 115 will allow the Secretary of State scope to deal with the very complex issues of patient consent and incapacity in an appropriate way. It also means that the class of persons who may bring a complaint is appropriate and flexible, and not too narrow or too wide.

I reiterate that consultation is very important and that we have to get the process right. I conclude with a positive restatement of that. It is our role to ensure that the complaints procedures that we adopt truly reflect the needs of patients, service users and others who have an interest in the consideration of complaints. The Bill provides us with an opportunity, and we want to make the best possible use of that opportunity. To do that, we must consult widely on the content of the regulations so that we can be in a position to respond to comments received. It would be nonsense not to be able to do so. We must make changes when people come up with sound reasons for doing so. It would be a betrayal of what we were trying to do if we were not in a position to do that. Having the detail in the Bill suggested by the amendment would restrict our ability to respond to the results of the consultation. Indeed, we would have to amend primary legislation if specific changes were required. It would also disable us from dealing with future changes.

I do not really need to add the following, but I shall. At this stage in the parliamentary process, we could not be sure that any detailed provision we produced would be sufficient to cover all possible eventualities— for much the same reasons as I have had difficulties with the noble Baroness's amendment. I agree that the Government have the huge benefit of parliamentary counsel on their side, and the noble Baroness has shown enormous resilience and resourcefulness in returning again with the amendment. I wish that I could accept it, but I hope that she is finally persuaded by my arguments that the provisions are better done by regulation.

Baroness Barker

My Lords, I would never accuse the Minister of being perverse or obstructive. I accept her argument. I believe that the discussion has been helpful and that, in fact, it has been helpful to have it repeatedly and in detail, because there is a great deal of concern out there about the scope and extent of the procedures. At this stage, I shall not treat the House to a summary of the upheaval going on around the ICAS project or the Commission for Patient and Public Involvement in Health. There is a great deal of uncertainty out there about how complaints systems will work in practice. It has been good to hear the Minister's statements about the extent of the consultation and of the involvement that different people will have in the process.

Fair game to the Minister—she has parliamentary counsel on her side and I do not. Several noble Lords in the past few weeks have talked about the rugby, but those of us who are Scots or Welsh are far more interested in the football this week. Therefore, on that note, I shall say that it is a score draw to the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 145 [Co-operation between Assembly and CHAI]:

The Deputy Speaker (Baroness Lockwood)

My Lords, I should point out that, if Amendment No. 24 is carried, I cannot call Amendment No. 25, under the pre-emption rule.

Baroness Andrews moved Amendment No. 24: Page 65, line 7, leave out from "other" to "for" in line 8.

The noble Baroness said: My Lords, I am pleased to speak to government Amendment No. 24 and to respond, at the same time, to Amendment No. 25, standing in the name of the noble Earl, Lord Howe.

When I spoke on Report to an earlier amendment of similar intent tabled by the noble Earl, I undertook to return with a government amendment to meet concerns expressed by him, by the noble Baroness, Lady Finlay, and by other Members of your Lordships' House. Concerns were expressed that English NHS bodies that provided services to Welsh patients under commissioning arrangements made by Welsh NHS bodies—or, indeed, Welsh bodies providing services to English patients—might be the subject of conflicting or duplicated reviews or inspections by both CHAI and the Assembly and that none of that would be in the interests either of those running the health service or the patients themselves.

Government Amendment No. 24 meets the obligation I gave. It strengthens the duty of co-operation between the Assembly and CHAI in Clause 145 by removing all the qualifications. In that way, we are making it absolutely clear that CHAI and the Assembly must co-operate with regard to their relevant functions at all times and in all circumstances in order to avoid unnecessary overlaps or duplication. That will ensure that joint working and mutual support are in place, ensuring that patients' interests are served as well as they can be.

In effect, the government amendment goes rather further than the amendment tabled by the noble Earl, Lord Howe. Clause 145, as it would be amended by the government amendment, requires, as I said, the Assembly and CHAI, without qualification, "to co-operate with each other for the efficient and effective discharge of any relevant function".

They will be under an unequivocal duty to co-operate with respect to all their functions.

The amendment tabled by the noble Earl would seem to oblige the bodies to consult the other body on each occasion that it exercises a function that affects an English or Welsh body, as the case may be. Our amendment goes further. I would expect CHAI and the Assembly to co-operate with each other on the inspection planning process and as regards their general work plans for their proposed activities over a particular period, in order to anticipate and prevent things going wrong. So it is very much a positive and proactive power rather than a reactive power. We believe that it is preferable to give CHAI and the Assembly the widest scope to determine the precise method of co-operation. The Bill will be extremely clear on those points. I think that that is important as they are new bodies. HIW, in particular, is very much in its formative stage. The government amendment sends a crystal clear signal that that is what we expect to happen. As I believe that our amendment is preferable, I invite the noble Earl not to press his amendment. I beg to move.

Earl Howe

My Lords, very briefly, this seems to me a neat amendment, and I welcome it. I agree that it is superior to the amendment that I tabled, for the reasons that the Minister gave. I certainly will not move my amendment.

We had a useful debate on Report in which the noble Baroness, Lady Finlay, and I raised separate but related concerns on cross-border issues. I know that the House was grateful to the Minister for saying that she would look at ways of strengthening the duty of co-operation contained in Clause 145. It has always seemed to me that, with the duty qualified as it is, the success of cross-border collaboration and the avoidance of duplication would depend on the extent to which CHAI and the Welsh inspectorate applied themselves to those issues. With the qualification removed, we can all have a lot more confidence that the potential problem areas will be eliminated or at least minimised.

I thank the noble Baroness for recognising the worries that I and a number of others have raised and for addressing them in the amendment.

Baroness Finlay of Llandaff

My Lords, I feel that the noble Baroness, Lady Andrews, deserves congratulations on the way in which she has listened carefully to all the points and negotiated with both CHAI and the Assembly inspectorates. She has given a crystal clear signal that there must be collaboration and co-operation. All we can do now, other than support her amendment, is to wish those inspectorates well in the task that lies ahead of them. There has been a huge amount of work behind the scenes. I think that the amendment neatly addresses the concerns about the future direction which needed to be addressed.

Baroness Carnegy of Lour

My Lords, if I may, I should like to use this debate on cross-border co-operation to thank the noble Lord, Lord Warner, for a helpful letter he wrote in response to a question that I asked about whether Scottish-based patients would be able to use foundation hospitals in England. It was explained to me that, provided the Scottish health body commissioned work from a foundation hospital, that could take place, and that any Scottish-based patient who required accident and emergency help could receive it from an English hospital. I was grateful for that. Although it does not impinge upon CHAI, I hope that I will be forgiven for saying that.

On Question, amendment agreed to.

[Amendment No. 25 not moved. ]

5.45 p.m.

Clause 185 [Replacement of the Welfare Food Schemes: Great Britain]:

Baroness Andrews moved Amendment No. 26: Page 104, line 39, at end insert—

( ) The Secretary of State may not make a statutory instrument containing the first set of regulations made under subsection (1) unless a draft of the instrument has been laid before, and approved by resolution of, each House of Parliament.

The noble Baroness said: My Lords, I am pleased to move this amendment, which was anticipated on Report. We appreciate that noble Lords felt that there was insufficient detail about our proposals for reform of the Welfare Food Scheme to enable them to be confident that it was appropriate for regulations made under subsection (1) to be subject to negative, rather than affirmative, resolution. We had good debates in Committee and on Report about the emerging scheme.

As I promised on Report, we have considered again the level of parliamentary scrutiny that should be applied to the regulations.

Our amendment will require the first set of regulations made under subsection (1) to be laid before, and approved by resolution of, each House of Parliament. That will ensure that each House has full opportunity to consider carefully the regulations and to debate them. Of course—it goes without saying, but I shall say it—it is still our intention to consult fully all those with an interest in the content of the regulations before they are laid. I hope that noble Lords will find that acceptable. I look forward to our first debate on the affirmative regulations. I beg to move.

Earl Howe

My Lords, it is with much pleasure that I thank the noble Baroness for listening to the concerns raised at earlier stages of the Bill and for fulfilling her undertaking to table the amendment, which I warmly welcome.

On Question, amendment agreed to.

Clause 187 [Appointments to certain health and social care bodies]:

Lord Warner moved Amendment No. 27: Page 106, line 25, at end insert—

( ) Nothing in this section applies in relation to the Commission for Healthcare Audit and Inspection or the Commission for Social Care Inspection.

The noble Lord said: My Lords, I wish to speak to all the government amendments in the group. Amendments Nos. 44 to 46, 48 to 50, 53 to 59, 61 and 64 in this group were tabled following your Lordships' decision on Report. They ensure that a special health authority rather than the Secretary of State will be responsible for appointing the chair and members of CHAI and CSCI. In practice, we intend to give that task to the NHS Appointments Commission, which, at present, is the special health authority charged with the making of appointments to NHS bodies. I will return presently to the issue of why we have not named the NHS Appointments Commission in the Bill.

Given the amendments we are proposing in relation to the role of the Secretary of State, Assembly officials have agreed that it would be inappropriate for the Assembly to continue to maintain the power to appoint a member to the board of CHAI. Consequently, the amendments make similar provision in relation to the Assembly's powers to appoint a member of CHAI. We have also provided that other functions of the Secretary of State relating to appointment or removal may be delegated to the special health authority. That was previously dealt with in Clause 187, but it seemed more logical to deal with the entire position concerning those functions in Schedules 5 and 6, rather than partly in Clause 187 and partly in the schedules.

Amendment No. 27 is a technical amendment that clarifies that Clause 187, which gives the Secretary of State a general power to delegate appointment functions in relation to health and social care bodies to a special health authority, does not apply to CHAI and CSCI, as the exercise of such functions in relation to CHAI and CSCI is now dealt with in Schedules 5 and 6.

We are also proposing Amendments Nos. 51, 52, 62 and 63, which are technical in nature. The amendments clarify that the Secretary of State or the Assembly, in the case of CHAI, may remove a member from office where it comes to light after he has been appointed that he was disqualified from appointment at the time he was appointed.

It may be for the convenience of the House if I give a clarificatory explanation in relation to why the NHS Appointments Commission is not named specifically, which I think is probably the intention behind Amendments Nos. 43 and 60 in the name of the noble Earl, Lord Howe, and the noble Baroness, Lady Noakes. However, the noble Baroness shakes her head so I shall not delay the House further. I beg to move.

Earl Howe

My Lords, it is very good of the Minister to offer to give that explanation. However, in view of the Minister's earlier remarks, I am perfectly prepared to accept not only the letter but also the spirit of the amendments that he has tabled. I thank him for responding in this way to the decision of the House on Report. I am sure that the amendments will be extremely welcome to noble Lords on all sides of the House.

On Question, amendment agreed to.

Clause 195 [Orders and regulations]:

Lord Warner moved Amendment No. 28: Page 109, line 20, after "section" insert "26,

On Question, amendment agreed to.

Clause 199 [Commencement]

Lord Warner moved Amendment No. 29: Page 110, line 22, leave out "section 57" and insert "sections 57 and 61

The noble Lord said: My Lords, in moving Amendment No. 29, I wish to speak also to Amendment No. 30. As a consequence of the removal or addition of clauses to Part 2 I am tabling consequential amendments to the commencement of Part 2 provisions under Clause 199. These are technical amendments being made for purely practical purposes to ensure that the revised Bill can be commenced in the appropriate manner. I beg to move.

On Question, amendment agreed to.

Lord Warner moved Amendment No. 30: Page 110, line 23, leave out "and 139" and insert", 139 and 141

On Question, amendment agreed to.

Schedule 1 [Independent Regulator of NHS Foundation Trusts]:

Lord Warner moved Amendment No. 31: Page 114, line 5. leave out sub-paragraph (2).

The noble Lord said: My Lords, in moving Amendment No. 31, I wish to speak also to Amendments Nos. 32, 33, 34, 35, 36, 37 and 65.

Amendments Nos. 32 and 35 are technical amendments. They ensure that the chair of the Office of the Independent Regulator will have access to the Principal Civil Service Pension Scheme (PCSPS) if he has previously been a member of that scheme. The wording is taken from the Pensions Act 1995. Without this amendment there would have been doubt over his eligibility for the scheme if he were not already an active member on becoming the chair.

Amendment No. 37 amends the Superannuation Act 1972 by adding the Office of the Independent Regulator to the list of bodies that can admit employees to the Principal Civil Service Pension Scheme. Under the current arrangements in the Bill, staff transferring to the Office of the Independent Regulator who were already members of the scheme would be able to remain members of that scheme upon transfer. This amendment will ensure that all staff members will be able to join the Principal Civil Service Pension Scheme irrespective of whether they have previously contributed to the scheme.

Amendment No. 37 also ensures that the Minister for the Civil Service is reimbursed for expenses incurred in the participation of his staff in the Principal Civil Service Pension Scheme. Amendment No. 65 makes similar provision in respect of CHAI and CSCI. These are technical amendments and introduce standard wording for bodies that can admit members to the Principal Civil Service Pension Scheme.

Amendments Nos. 31, 33, 34 and 36 are consequential to Amendment No. 37. I beg to move.

On Question, amendment agreed to.

Lord Warner moved Amendments Nos. 32 to 37:

Page 114, line 12, leave out "a participant in" and insert "an active or deferred member of

Page 114, line 14, leave out from "chairman" to end of line.

Page 114, line 16, leave out from "chairman" to end of line.

Page 114, line 18, leave out "was a participant" and insert "is a member

Page 114, line 19, leave out "or 4(2)

Page 114, line 19, at end insert—

(3) Employment with the regulator is to be included among the kinds of employment to which a scheme under section 1 of the Superannuation Act 1972 (c.ll) can apply; and accordingly in Schedule 1 to that Act (in which those kinds of employment are listed), at the end of the list of Other Bodies there is inserted—

The Independent Regulator of NHS Foundation Trusts".

(4) The regulator must pay to the Minister for the Civil Service, at such times as the Minister may direct, such sums as he may determine in respect of any increase attributable to sub-paragraph (2) or (3) in the sums payable out of money provided by Parliament under the Superannuation Act 1972 (c. 11).

On Question, amendments agreed to.

The Deputy Speaker

My Lords, I have to point out that if Amendment No. 38 is agreed to, I cannot call Amendment No. 39 under the pre-emption rule.

Lord Warner moved Amendment No. 38: Page 115, line 11, leave out from "year" to end of line 13.

The noble Lord said: My Lords, we listened to the persuasive arguments of the noble Baroness, Lady Noakes, in Committee on the importance of a summarised account of NHS foundation trusts and responded by introducing amendments to this effect on Report.

However, the noble Baroness spotted a technical error in the government amendments—I am sure that my noble friend Lord McIntosh will look forward to her spotting similar amendments when she moves jobs—which meant that the summarised accounts of NHS foundation trusts would be one year in arrears. I should like to take this opportunity to thank the noble Baroness for her attention to detail.

Amendments Nos. 38, 40, 41 and 42 replace those made on Report, and ensure that the summary of NHS foundation trust accounts is prepared as soon as the regulator receives the accounts from individual NHS foundation trusts. Given that we have tabled these amendments which have a similar effect to Amendment No. 39, I hope that the noble Baroness will feel able to accept these amendments. I beg to move.

Baroness Noakes

My Lords, I just say thank you.

On Question, amendment agreed to.

Baroness Andrews moved Amendments Nos. 40 to 42:

Page 115, line 15, leave out "each" and insert "the

Page 115, line 16, leave out "them" and insert "it

Page 115, line 16, at end insert—

( ) The regulator must in respect of each financial year prepare a report which provides an overall summary of the accounts of NHS foundation trusts.

( ) The report must be prepared as soon as possible after the regulator has received the accounts of all NHS foundation trusts for the relevant financial year.

( ) The regulator must—

1. (a) lay a copy of the report before Parliament, and
2. (b) once it has done so, send a copy of it to the Secretary of State."

On Question, amendments agreed to.

Schedule 5 [CHAI: supplementary]:

The Deputy Speaker

My Lords, there is a printing error in Amendment No. 44. The amendment should refer to line 28 and not line 29. I shall therefore call Amendment No. 44 next. I shall then call Amendment No. 43.

Lord Warner moved Amendment No. 44: Page 131, line 29, leave out "body specified in section 187(3)" and insert "relevant Special Health Authority

On Question, amendment agreed to.

[Amendment No. 43 not moved. ]

Baroness Andrews moved Amendments Nos. 45 and 46:

Page 131, line 30, leave out from first "the" to end of line and insert "relevant Special Health Authority who appears to that Authority

Page 131, line 32, leave out "Secretary of State" and insert "relevant Special Health Authority

On Question, amendments agreed to.

[Amendment No. 47 not moved. ]

Lord Warner moved Amendments Nos. 48 to 58:

Page 131, line 32, at end insert—

(1A) In paragraph (a) and (c) of sub-paragraph (1), "relevant Special Health Authority" means the Special Health Authority which is directed by the Secretary of State to exercise the function of appointment under that paragraph.

(1B) In paragraph (b) of sub-paragraph (1), "relevant Special Health Authority" means the Special Health Authority which is directed by the Assembly to exercise the function of appointment under that paragraph.".

Page 131, line 34, leave out "by him

Page 131, line 38, leave out "by it

Page 132, line 5, leave out "has become disqualified from holding office" and insert "is disqualified from holding office (or was disqualified at the time of his appointment)

Page 132, line 12, leave out "become" and insert "are

Page 132, line 18, at end insert—

( ) The Secretary of State may direct the Special Health Authority referred to in sub-paragraph (1 A) to exercise so much of any function of his under sub-paragraph (2) or under regulations under sub-paragraph (5) as may be specified in the direction.

( ) The Assembly may direct the Special Health Authority referred to in sub-paragraph (1B) to exercise so much of any function of the Assembly under sub-paragraph (?) or under regulations under sub-paragraph (5) as may be specified in the direction.

( ) The Special Health Authority referred to in sub-paragraph (1A) must consult the Assembly before exercising the function of appointment under sub-paragraph (l)(a) or (c); and the Special Health Authority referred to in sub-paragraph (1B) must consult the Secretary of State before exercising the function of appointment under sub-paragraph (l)(b).

Page 132, line 20, leave out "this paragraph" and insert "sub-paragraph (2) or (5)

Page 132, line 22, leave out "the preceding provisions of this paragraph" and insert "sub-paragraph (3) or (5)

Page 132, line 23, leave out sub-paragraph (9).

Page 132, line 25, leave out "If directions are given under sub-paragraph (9)" and insert "Where directions are given under this paragraph to a Special Health Authority

Page 132, line 30, at end insert—

( ) Subsections (4) and (5) of section 187 apply in relation to directions under this paragraph as they apply in relation to directions under subsection (2) of that section.

On Question, amendments agreed to.

Schedule 6 [CSCI: supplementary]:

Lord Warner moved Amendment No. 59: Page 135, line 13, leave out "body specified in section 187(4)" and insert "relevant Special Health Authority.

On Question, amendment agreed to.

[Amendment No. 60 not moved. ]

Lord Warner> moved Amendments Nos. 61 to 64: Page 135, line 13, at end insert—

(1A) In sub-paragraph (1), "relevant Special Health Authority" means the Special Health Authority which is directed by the Secretary of State to exercise the function of appointment under that sub-paragraph.".

Page 135, line 19, leave out paragraph (c) and insert—

(c) is disqualified from holding office (or was disqualified at the time of his appointment).

Page 135, line 26, leave out "become" and insert "are

Page 135, line 31, at end insert—

( ) The Secretary of State may direct the Special Health Authority referred to in sub-paragraph (1 A) to exercise so much of any function of his under sub-paragraph (2) or under regulations under sub-paragraph (3) as may be specified in the direction.

( ) Where directions are given under this paragraph to a Special Health Authority, the 1977 Act has effect as if—

1. (a) the directions were directions under section 16D of that Act for the exercise of functions relating to the health service, and, accordingly,
2. (b) the functions were exercisable by the Special Health Authority under that section.

( ) Subsections (4) and (5) of section 187 apply in relation to directions under this paragraph as they apply in relation to directions under subsection (2) of that section.

On Question, amendments agreed to.

Schedule 8 [Part 2: minor and consequential amendments]:

Lord Warner moved Amendment No. 65: Page 140, line 16, at end insert—

5A The CHAI and the CSCI must each pay to the Minister for the Civil Service, at such times as the Minister may direct, such sums as he may determine in respect of any increase attributable to paragraph 5 in the sums payable out of money provided by Parliament under the Superannuation Act 1972 (c. 11).

On Question, amendment agreed to.

Schedule 13 [Repeals and revocations]:

Baroness Andrews moved Amendment No. 66: Page 168, line 26, at end insert—

"National Health Service Reform and Health Care Professions Act 2002 (c. 17)

In section 15(1), the "and" before paragraph (b)."

On Question, amendment agreed to.

On Question, Bill passed, and returned to the Commons with amendments.