HL Deb 07 October 2003 vol 653 cc148-223

3.19 p.m.

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

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Warner.)

On Question, Motion agreed to.

House in Committee accordingly.


Baroness Cumberlege moved Amendment No. 1: Before Clause 1, insert the following new clause—

"NHS AGENCY FOR ENGLAND (1) There shall be a body corporate to be known as the NHS Agency for England (referred to in this Act as the "English Agency") for the purpose of carrying out the functions transferred or assigned to it by or under this Act. (2) The functions of the English Agency are performed on behalf of the Crown.

The noble Baroness said: I start by declaring an interest. I am employed by the NHS, sometimes in a voluntary capacity, sometimes paid. I serve as a trustee on several charities. I chair St George's Hospital Medical School Council and am a senior unpaid associate of the King's Fund.

In moving Amendment No. 1, I speak also to Amendments Nos. 2 to 6. I speak in the knowledge that these amendments may have the familiarity of a dear and much loved but sadly in the past rejected friend. Some noble Lords may remember that I moved similar amendments 18 months ago when the National Health Service Reform and Health Care Professions Bill was before this House. Your Lordships were generous and my amendments received a good deal of support but, sadly, not from the then Minister, the noble Lord, Lord Hunt of Kings Heath. I hope that the noble Lord, Lord Warner, our current Minister, will be of a different mind and acknowledge the undoubted value of these proposals, which actually enhance the Government's drive to devolution.

I should like to thank the noble Lords who have put their names to these amendments, including the noble Baroness, Lady Finlay of Llandaff, and the noble Lord, Lord Alderdice, who both work in the NHS and experience the daily frustrations of the current arrangements. With the noble Lord, Lord Desai, a past Labour spokesman on health and an internationally distinguished economist, they cover all sides of the Committee. The noble Lord, Lord Haskins, one of the original architects of the concept I am promoting, chaired a group established by the King's Fund. Although he is a strong advocate of these amendments, sadly, he is unable to be here today. Finally, I should like to pay tribute to the King's Fund and its inspirational director, Rabbi Julia Neuberger. I have been working on these amendments with her team.

In the intervening 18 months we have examined the arguments of those who feel that these proposals are at worst misguided or at best are impractical, and we agree with them. We think that it is naïve to think that it is possible, or indeed appropriate, to exclude politicians from taking responsibility for the NHS. Rather, we seek to put politics into its rightful place. We seek to strengthen the role of Parliament, increase accountability and ensure that decisions are made in a transparent way. We want to separate the responsibility for making policy from the responsibility of implementing policy.

The foundation of medicine is based on the Hippocratic oath. One of the key elements of the oath is that all people engaged in the provision of medical services should be bound by it, and that is a good principle. However, in providing medical services, successive governments have selfishly served party political dogma to the great resentment of those who work in the NHS. They and the majority of users believe that we need a service that is above party politics but subject to the most rigorous examination by Parliament and its elected politicians.

One of the great tenets of the Hippocratic oath is that a doctor should do his patients no harm. In the past, it is the party divisions that have done the NHS great harm—never I believe maliciously, but sometimes misguidedly or by pursuit of short-term political gain. We have used the most powerful and emotive issue of life and death for base reasons and that should stop. We should cease playing party games with the NHS. We should have a common oath subscribed to by every party. I believe that now is the time, in the words of the former chief executive of the NHS, Sir Alan Langlands, for a serious re-evaluation of the argument for putting the NHS at arms length from government".

That is what these amendments seek to do.

The clauses I am moving today do not further disrupt the delivery of services to patients. They do not give birth to another quango. Rather, they build a new relationship between the public, Parliament, government and the NHS staff. They seek to re-establish trust in the NHS, to strengthen commitment and to ensure that we have a service that is efficient, timely, compassionate and above all well managed with a minimum of interference. The NHS does need improvement; it is not very well. Is it not a disgrace that not only do we have to scour the world for doctors and nurses to work in this country, but that we export our sick to be treated in other countries? That is no way for a rich, civilised nation to behave.

Just over three years ago, many of us welcomed the NHS Plan. Good will was created by including all parties in drawing it up. However, that good will has now evaporated, largely because new policies have been developed without open debate or collective agreement. That is a view shared by the Government. Only last week, on the BBC's "World at One" programme, John Reid, the Secretary of State for Health, acknowledged that the concept of foundation hospitals would have been better received if there had been consultation in the form of a White Paper. I, too, believe that much of the opposition would have been diffused if this particular Exocet had not exploded without warning.

Throughout the history of the NHS there has been a pull between central direction and local autonomy. Sir Roy Griffiths, in his 1983 report, said: The centre is still too much involved, in too many of the wrong things, and too little involved, in some that really matter".

Today the NHS would resonate with that. We need to define the roles of Parliament, government and the NHS, coupled with a strong mechanism for accountability. I believe that an agency would do just that.

So my first amendment inserts a new clause before Clause 1. This clause establishes a new corporate body, to be known as the, National Health Service Agency for England", whose functions are performed on behalf of the Crown. An NHS agency would put politicians and parliamentarians in their rightful and authoritative place, working in public to develop and refine health policy. It would bring transparency to the way in which the Government are managed and it would increase their accountability. It would give greater ownership of targets by staff working in the NHS, and it would avoid the Exocets that explode when Ministers are under pressure from the media and feel that they have to do something.

An agency which puts the responsibility for implementing policy at arm's length from the Government creates a new space—a new space between government and those who manage and provide health services. This space could be used to construct a system for holding the Government and the NHS agency to account for their respective responsibilities. From time to time the Secretary of State would be required to put before Parliament an agreed framework defining the boundaries within which the agency should work, its targets and the details of its funding. The agency would report at least annually to Parliament and be subjected to a regular review by parliamentary Select Committees. Parliament would hold the chief executive to account for the performance of the service.

Using Parliament as the forum for agreeing the tasks of the agency and the targets of the service would ensure greater openness and more vigorous debate over standards, targets and the impact of implementing policy. This in turn would allow Parliament and the public to focus their scrutiny of government on questions of strategic direction, funding and the coherence, quality and effectiveness of policy. It would enable governments to broaden their horizons away from a preoccupation with accountability for each and every action within the NHS towards a more general concern for the impact on health of poverty, environment, food, housing and education, all factors which have a far greater impact on the health of the nation than any healthcare service.

The second clause sets out the composition of the agency—with 12 members, a chairman, a deputy chairman and five non-executive and five executive members. The chairman of the agency will appoint a chief executive, the appointment to be approved by the Secretary of State. This proposal seeks to get the commitment of both the board and the Secretary of State. Without that—the confidence of both parties— the chief executive simply could not hope to succeed. Since this agency is going to be pivotal in managing the NHS, I have given the Secretary of State the power to prescribe its constitution by regulation.

The third new clause prescribes the functions of the English agency and gives powers to the Secretary of State to amend the functions through affirmative regulation and the power to give directions on strategic matters relating to its functions. The fourth proposed new clause concerns the transfer of property, rights and liabilities that is necessary for the discharge of its functions. The fifth proposed new clause concerns the financing of the agency and the accountabilities necessary for a body spending public money and the sixth and final proposed new clause ensures that the agency is accountable to Parliament, which will have a greater responsibility to scrutinise the agency's activities.

In the past few months several annual reports have been published by public bodies including the Audit Commission, the Commission for Health Improvement, the National Institute for Clinical Excellence, the Department of Health, and possibly several more that have passed me by. These are public bodies carrying out serious activities that affect our daily lives. The reports enter the public domain and yet they are seldom, if ever, debated in Parliament. Those bodies should be held to account and there should be a systematic process whereby their activities are debated in Parliament. Healthcare scrutiny is rich in reports yet poor in accountability. The national service frameworks are major influences shaping the NHS. They are often welcomed but there is no required parliamentary system to scrutinise their progress and ensure that they fulfil their promise. So there is a piece missing in our accountability structure, and the agency is that missing piece.

I am under no illusions that the proposed new clauses could be improved, and we have many models on which to build. There are now 192 established executive non-departmental public bodies in the country from which to learn: the Higher Education Funding Council for England, the Medical Research Council, the Food Standards Agency, the Audit Commission, the BBC—perhaps not the BBC—and so on. Each one is unique and tailored to its purpose, which should not prevent Ministers in the department using their skills and imagination to do the same for the NHS. As the Chancellor of the Exchequer showed the nation when he gave away Treasury powers to the independent Bank of England, it is the political will which is necessary.

In conclusion, governments have a pretty disastrous record of managing organisations. They are poor at it because the majority of members have no experience of running an organisation, although I recognise that the Minister is an exception. They have to work with an impossible electoral cycle and they are nomadic. Ministers and Secretaries of State do not last so there is no continuity. The speed of change in medicine is a huge challenge. Change needs a robust organisation to manage it. We need a separation of powers. We as parliamentarians have a role, the Government have a role and the NHS has a role. However, the picture is confused. An agency would introduce clarity and enhance Parliament's duty of scrutiny, and the Government's role of strategic direction and funding. I hope that the Minister will look favourably on these amendments, consider them carefully, recognise the purpose behind them, discuss them with his colleagues and initiate the work necessary to bring them to fruition. I beg to move.

3.30 p.m.

Lord Alderdice

In supporting with some enthusiasm this group of amendments, I declare an interest as a part-time consultant psychiatrist working in Northern Ireland health and social services. Although I and some others involved in the debate may declare a professional or other interest, there is no one in your Lordships' House or, indeed, in the country who does not have a very personal interest in the health and welfare of health and social services.

Over the past 50 years or so health has become such an important and central issue, and its delivery so crucial, that no one can seriously consider it to be outside the province of government. It is not something that can be left simply to the market or to chance. The question is not whether government are involved but how government are involved in this area and in many others too. Few of us do not have a sense of concern that government are not as appropriately involved in this area as they might be. It seems to me that there are at least three important areas of discontent and concern about how government deal with important matters such as health. It is, of course, health that we are considering today.

The first of these matters for all parliamentarians and all Members of your Lordships' House is the question of the accountability of the executive to Parliament. That seems to consist largely of tabling Written and Oral Questions and initiating debates. There is a general sense that those are no longer entirely satisfactory ways of holding the executive to account. Parliament, and indeed most Members of your Lordships' House, are not happy that the executive is being held appropriately to account. The extraordinarily complex area of health cannot be satisfactorily explored or dealt with by simply tabling Questions.

Secondly, although there is a sense in which the executive is more untrammelled than previously, it is also less powerful in terms of making a change than it was previously. For that reason Ministers tend to involve themselves in more and more micro-management and detail because they are less and less sure what to do about the bigger picture. To some extent that is made worse in our parliamentary system, particularly in the other place, because Members are elected as constituency Members. As time has gone on, due to the laudable development of community politics, they have become increasingly concerned to show their connection with the population by dealing with specific local agenda items. Ministers are expected to deal with the specifics of healthcare delivery in a particular constituency—and that is repeated some 650 times in the other place—rather than deal with the broader issues. Indeed, we even notice during elections that sometimes the accosting of a Minister or a Prime Minister by a particular individual in a particular constituency results in a very dramatic announcement to address that particular matter. That is not the best way to deal with the extraordinarily complex National Health Service which we have. The tendency towards micro-management is not very satisfactory.

The third concern was mentioned by the noble Baroness, Lady Cumberlege, towards the end of her remarks; that is, the problem regarding continuity. All of us who are involved in patient care know perfectly well how unsatisfactory it is for a patient as an individual if their carer changes all the time. One of the complaints we frequently hear at outpatient clinics is a patient saying, "I come along and every six months there is a new junior doctor. The first one says, 'It is nice to get to know you'. The second time you see him or her, they say, 'I shall see you again'. The third time you ask whether there will be a different doctor the next time". In those cases there is some continuity but in others an endless stream of locums deal with patients. We all know that healthcare needs a degree of continuity. It is the same for the service that delivers the healthcare; it needs a degree of continuity. When change takes place—in every system it needs to take place from time to time—it needs the opportunity to bed down and to develop and for people to assess the outcome of the change or reform.

My noble friend Lord Clement-Jones pointed out at Second Reading on 8th September that this Government had introduced some five or six health reform Bills. But in a sense this Bill is no different from its predecessors as health service reform has been repeated time and time again. Every time there is a difficulty the answer is to change the whole board. That often is not the answer but it seems to be the most ready answer. If it is not a radical enough change or proposal, the next time it will be even more radical. "Radical" usually means changing the name and putting in more administrators. Is it possible to address these three problems of the lack of accountability to Parliament, the question of overinvolvement and micro-management and the difficulty regarding continuity?

In the six amendments, we have some move in that direction and, at the very least, an encouragement to think of it. The agency would not be determined or dependent for its staffing on the electoral cycle or Cabinet reshuffles. It is no reflection on any individual Minister—indeed, in some cases it may be because of their sterling value to the Government or the Prime Minister—that they move from one post to another, but it is not satisfactory for a service. Every Minister who comes in wants to make an impact and impression on his or her portfolio and service. The tendency for change on the basis of the electoral cycle or the presence of a particular Minister is enormous, and it is not satisfactory. If it were possible to have an agency with a staff who had some continuity right at the very top, there would be a possibility of some continuity in flow and an absorption of any reforms.

Some of the other amendments, particularly Amendments Nos. 2 and 3, which describe the functions and membership of the agency, give the flavour of an agency that could see more professionalisation of the administration in the health service, rather than the politicisation and sometimes managerialisation that there has tended to be. It might even be possible to have a professional healthcare worker as the chairman or chief executive of the agency. Just think that we might actually have a doctor or nurse or someone like that running the health service. What a radical thought.

Of course, it is not that some of those who have been involved have not been doing their best. However, there is a fundamental difference between a person who decides at a relatively early age to devote their whole life, professional time and career to healthcare delivery, and who at some later stage then takes a very senior responsibility for it, and someone else who happens to have been in a finance department, or even a position such as Secretary of State for Northern Ireland, who then comes in to be the head of a complex organisation such as the National Health Service. It would be an improvement to have someone there who had actually spent a great deal of their life working in the service and being at a very senior level in running it.

One of the most appealing suggestions is the notion that we might improve parliamentary accountability. Amendment No. 6 in particular, but also proposed new subsection (3) in Amendment No. 3, indicates how much better parliamentary accountability might be if an agency were required to produce at least annual reports, and perhaps other reports on specific developments or areas, and lay them before Parliament. Under proposed new subsection (3) in Amendment No. 3, any change would require resolution of each House of Parliament and, under Amendment No. 6, Parliament itself would have the opportunity to explore, discuss, debate and hold to account in a more thoroughgoing way the operation of the health service.

There is a real opportunity for us to improve accountability and continuity, and to ensure a change to the temptation of politicians to either make their name or improve their local popularity for the next election by over-involvement in the particularities of the health service. Politicians would do what they are much better at doing, which is making the broad strategy, deciding the wider policy, conveying the general views of the population, and leaving the professional development and service delivery to people who have committed themselves to that, in the context of an arm's-length agency. I am delighted to support the proposals.

3.45 p.m.

Baroness Finlay of Llandaff

I have added my name to the amendments, and have thought them through in great detail. I also must declare an interest as a working clinician in palliative medicine. Of course, I work in Wales, which is not directly covered by the amendments. I have not tabled amendments specific to Wales because, quite simply, I have not had a chance to do the amount of research that I would need to do on the way in which the devolved administrations would handle an NHS agency in order to table comprehensive amendments at this stage.

The noble Baroness, Lady Cumberlege, pointed out two major truths. The first is that, in medicine, the first principle is do no harm. The second is that all is not well in the health service. The health service does a lot very well, but sometimes it does not do things well. It is sad to say that at the moment the staff are demoralised. I spoke to as many people working in the NHS in England as I could prior to adding my name to the amendments. No one working as a front-line clinician disagreed with the idea that staff were demoralised, or with the principle that somehow the running of the NHS needs to be taken away from the electoral cycle and the pressures of the ballot box.

There is a need for long-term planning and strategy in the NHS. That strategy needs to be enacted at a local level. The clinician faced with 40 patients coming into an out-patient clinic and then faced with targets has a huge dilemma. The person in front of him or her may not fit into any target sector, but may have very complex and time-consuming clinical needs that far outweigh the, say, five people who fit neatly into some target package. At times, the clinicians find themselves torn in half in different directions, with the pressure of still trying to take ethically sound decisions for the patients in front of them.

Resources are limited. It always was so and always will be so. There will never be infinite resources to meet the needs and demands of the population. However, the agency as proposed would have very specific responsibility in delivering healthcare in the longer term. That would then free up the Minister and the Department of Health to look at the overall strategic direction to be given to the NHS. It would allow information from NICE to be delivered to the NHS in a more planned way than is currently available. It would mean that the inspectorate systems proposed through the new CHAI and so on would inform the NHS agency, Parliament and the Minister. It would also mean that, if the agency did not deliver, it could be called to account immediately.

The NHS would not be part of a list of items on a ballot paper that influence how people vote, perhaps affected by foreign policy or whatever, as we do not have a separate referendum on how the NHS is to be run. The NHS agency would also be allowed to enter a long-term and consistent dialogue with clinicians and with those concerned about the strategic direction of clinical services, such as the royal colleges responsible for education, to make sure that the process has long-term, staged planning. Such an agency would allow the principles of subsidiarity to be adhered to, and would re-establish some concept of trust between the patient and the clinician, the clinician and the part of the service in which he or she works, and that part of the service and the greater whole within the concept of a national health service.

It was with great pleasure that I added my name to the amendments. I have also read the report from the King's Fund and heard the people who have been involved in thinking the issues out. Those issues have been thought out to a careful degree.

Lord Desai

I, too, am very privileged to have been able to add my name to the amendments. I have been thinking about de-politicising the National Health Service for a long time. Recently, there was a notice in many newspapers about a supermarket chain withdrawing a certain kind of food that it sold because it was not quite right. If that had happened in the NHS, there would have been a riot in the press. The Secretary of State for Health would have to come to Parliament and propose another target, another programme or another committee. The whole thing would have got completely out of proportion because the Secretary of State is supposed to be answerable for the slightest problem in the NHS. That is not the way it should be run.

Apart from the Chinese Army, the NHS is the largest public sector enterprise run by a single person. It is the last monument of Stalinism in the world, and it illustrates all the problems. We continue to hear that staff are demoralised—and during the past 38 years I have been in this country, I have heard nothing else— because they do not feel that they own the service in which they work. The service is supposed to be the most popular we have, but it is the most criticised we have. Everyone agrees that whether one gives too much or too little money, the staff are demoralised.

To put it simply, the present system is not viable. The proposal put forward in this set of amendments is, first, that we should de-politicise the NHS. While maintaining serious and proper parliamentary accountability, we ought to de-couple the office of the Secretary of State for Health from the day-to-day running of the NHS and the strategic decision taking.

I was sorry to see that Dr Liam Fox, shadow Secretary of State for Health has picked up my idea. I am not responsible if some of my ideas and those of other people are picked up by the Opposition. I can say only that anyone who picks up my ideas does nothing good for his own career! That is life. Health is important. The way in which we have structured decisions in health has brought about the crisis in the NHS. The fault does not lie with the input; it does not lie with the professional services; and not even with the patients. The fault lies with the way in which the system is administratively run.

Instead of there being proper devolution of power and responsibility, even as we set up primary health centres, every arrow points back to the Secretary of State for Health. As the noble Lord, Lord Alderdice, mentioned, every little problem points back to him. Anyone can stop the Prime Minister or Secretary of State for Health in the street and blame him for the delay in their mother's operation. Although the Prime Minister knows nothing about that person or the mother or the operation and there is nothing he can do to speed up the operation because it is not his problem, we somehow have that notion in our system.

Aneurin Bevan's proposition that every time there is a problem with a bed pan under a bed in the NHS the Secretary of State for Health should feel its tremors is the most absurd notion of how to run an organisation. No organisation can be run like that. It is time we decided that 55 years, or whatever, is long enough for the bad model and that we ought to improve it.

The interesting point about the proposal put forward in the amendments is that the model for setting up an independent agency is neither revolutionary nor new. It was used for nationalised industries. It is the Morrisonian model and the one that Willie Robson, former professor at the London School of Economics, proposed a long time ago. Unfortunately, the NHS did not fall into the category of "nationalised industry" and it was therefore taken to be more centralised.

Perhaps also the politics of those days, with strong opposition from the medical profession, led to centralisation, but we no longer have that strong opposition. The medical profession is committed to the NHS. We are all committed to the NHS, so that political difference no longer exists. We can now relax and experiment and say, "Yes, Parliament will have scrutiny. Yes, the Secretary of State for Health will have an oversight. However, let professionals and people committed to the NHS run it". I am not sure that like the noble Lord, Lord Alderdice, I would go as far as letting a health service professional be chairman of the committee. I prefer politicians and radical former Ministers such as my noble friend Lord Hunt of Kings Heath, whose chances I will do no good by naming him.

It is important, however, to think seriously about dovetailing responsibility. I am not sure how my noble friend on the Front Bench will respond. He will probably pour cold water over our ideas because this is not a good season for doing anything. There never is a good season for doing anything with the National Health Service. However, I hope that the idea enters his bloodstream and comes out in a transformed way. Some kind of de-politicisation of the NHS is most urgent, especially now that we no longer have the excuse that the NHS is not working because it is starved of funds. It is no longer starved of funds—that is not the issue. The issue is quite clear. Given sufficient funds, there are still problems—problems with morale and other complaints. If they exist, it is connected with the way in which the NHS is organised.

I welcome this set of amendments and I am happy to put my name to them.

Lord Walton of Detchant

Until I was compulsorily retired from clinical practice in the NHS 11 years ago on the grounds of age, I spent my entire professional career working in the NHS and in academic medicine and I am one of its most fervent supporters. In my professional lifetime, I have seen more than 20 different reorganisations or reforms of the NHS under governments of all political complexions. I confess that in recent years I have been disturbed by the increasing degree of regulation to which the health service has been subject. There has been an obsession with targets, statistics and so forth to an extent that many healthcare professionals have been diverted from their primary role of caring for patients in order to collect information to satisfy the Department of Health.

Furthermore, when 1 first read the report from the King's Fund its idea struck me as unattractive. It suggested that there might be established a new quango within the NHS—and quangos are sometimes to be deplored. Indeed, the idea is not completely new. I well recall that almost 40 years ago there was a highly publicised radio debate between my predecessor as Dean of Medicine at Newcastle University—the late Dr Henry Miller who was subsequently vice-chancellor of the university—and Mr Enoch Powell, then a Minister for Health but not Secretary of State. Henry Miller suggested the establishment of an independent foundation at arm's length from the Department of Health to run the NHS and to handle its finances. Ultimately, his argument was effectively demolished by Enoch Powell for all the wrong reasons. He said that it would destroy the absolute primacy of the Department of Health, which was at the heart of government as a part of government and so the idea foundered.

But the more I read the King's Fund report, the more I listened today to the noble Baroness, Lady Cumberlege, and others, and the more I read these amendments, the more attractive they became. After all, the Government's idea behind introducing foundation hospitals is to devolve the decision-making machinery to a local level and to take away those hospitals from the direct control of the Department of Health. I believe very firmly that that idea has such merit that it deserves a fair wind, and I hope the Government will take it on board. I support the amendments.

4 p.m.

Lord Peyton of Yeovil

I support very much the noble Lord, Lord Walton, whom I have known for many years and who has almost unrivalled experience of the whole field that we are discussing. As we have already been reminded this afternoon, this is the fifth or sixth bite that the Government have had at a fairly substantial cherry. Over the long period that I have been a politician, I have wondered whether governments have any appreciation at all of the labour and pain caused by constant reorganisation. It ends with people being totally demoralised and having not the slightest idea what is expected of them.

In a very distinguished and able speech, which has been widely and deservedly supported, my noble friend commented on just how much damage party politics have done to the health service. In the amendment she calls for some degree of separation from the Secretary of State. However, one thing that I did not understand in her excellent speech was why she preserved the power of the Secretary of State in so many important fields. The Secretary of State will have the power to appoint the chairman, deputy chairman and 10 other members; he will approve the appointment of the chief executive; he will be able to prescribe by regulations the constitution of the English agency; and he will have the power to amend by regulation the functions of the agency. What more powers can the Secretary of State possibly have? He can have as many people in the agency as he wants, and those who owe their position to his patronage are likely to be concerned about what the Secretary of State wants.

I do not want to make a very long speech. However, when my noble friend comes to reply to the debate on the amendment, I ask her to explain as clearly as she can for those who, like me, applaud much of what she said how anyone persuaded her to leave such huge powers in the clammy and unskilled hands of the Secretary of State. The only reason I can see for doing so is to satisfy the desire on the part of the Government Front Bench to perpetuate the long tradition of the bungling amateur.

Lord Chan

I listened carefully to those who put forward the amendment and I was particularly taken with what they said about continuity and long-term planning. As I have already stated in this House, because the NHS has been in a process of continuing change over the past three or four decades due to edicts from Ministers, there has been no opportunity for those of us who work within the NHS to ensure that the changes deliver what they are supposed to deliver. Here 1 declare my interest, having been not only a clinician in paediatrics in the National Health Service but also on the board of a mental health trust and now in a primary care trust.

Therefore, the first important issue for those of us who work in the NHS is that we need time to ensure that the changes deliver what they should. However, I fear that that has not been the case because change has occurred so rapidly. Before one has time to assess what is happening, another change is imposed. Therefore, if a new agency, separate from government and politicians, observed long-term planning and continuity and allowed things to settle and to be assessed carefully, then—I say this on behalf of all of us who work within primary care trusts—I would certainly be in favour of it.

However, we believe that two issues are vital and fundamental to the success of the National Health Service. The first—what patients want in our community—is access to care, particularly from general practitioners. That has come about, certainly where I am based on the Wirral, through a decision, following discussion on the PCT board, which includes doctors, nurses and lay people, to change the appointments system completely. We said that the only appointments that should be accepted should be those which allowed the patient to be seen within 48 hours. We will not take any appointments beyond that time. As a result, 100 per cent of our patients are seen within 48 hours, and that change has taken place in only six months.

However, because that has been so successful, we are now faced with another dilemma because patients say, "Ah, on the other hand, those of us with diabetes, high blood pressure and a whole lot of other conditions would like to have appointments in the general practitioners' register to be seen in three months' time". We are not sure how to solve that dilemma because at present the 48-hour appointments system is particularly good and places the onus on patients to remind the system when they want to be seen.

The second issue which is absolutely essential is that of co-operation and collaboration between primary and secondary care. At present, there appears to be too much competition between primary care and secondary or hospital care due to the questions of funding and, of course, control. Although it is true that the Government have increased funding by a large amount—up to 9 per cent a year—the issue for those of us who operate a primary care trust is that one-quarter of that money still sits in Whitehall in the Department of Health. In other words, we receive three-quarters of what is given to us, and that is certainly not a good measure. Therefore, if we had an agency at arm's length from politics, we would certainly hope that boards would be trusted by management to receive almost 100 per cent of the funds allocated to them.

Co-operation between primary care and secondary care can come about only if time is given for primary care boards and hospital boards to sit down and work out what is best for patients, particularly with local representation. At present, primary care trusts must pay the salaries of hospital consultants, and all our time seems to be taken up discussing the dispersal of money rather than deciding how to work better in order to improve the situation and care of our patients.

I hope I have not given the impression that professionals cannot decide how to behave professionally for the benefit of their patients. However, this type of difficulty arises when the system that we have is tinkered with every now and again by political expediency. Therefore, if those issues can be solved by an independent agency, we should certainly welcome that.

Lord Hunt of Kings Heath

First, I should declare a number of interests that are in the Register of Interests, but for the purpose of this debate I shall mention the King's Fund, Cumberlege Connections, KPMG and Beachcroft Wansbroughs.

This has been an excellent debate. I congratulate the noble Baroness, Lady Cumberlege, on allowing us to discuss once again the nature of the organisation of our National Health Service. The King's Fund has done an excellent job in producing its pamphlet. As one of those bungling amateurs, so beloved of the noble Lord, Lord Peyton, I have to hold up my hands and say that I agree with many of the criticisms that noble Lords have made about the way in which the Department of Health has traditionally approached the management of the health service. As the noble Lord, Lord Walton, suggested, I too would suggest that my own Government are not the only government who have been guilty of such a charge.

We can see that traditionally the NHS has suffered from being a political football; we have seen the impact of "targetitis", as it has been called, micromanagement and constant restructuring. I have indulged in, and thoroughly enjoyed, setting hundreds of targets, micromanagement and constant restructuring.

I have two things to say about that. First, it is clear that the Bevan structure, as opposed to the Bevan principles, is showing its age. Equally, in the rush to change the system that we have, we should be aware of simply saying that politicians should get out of the strategic direction of the NHS. Even some targets are justifiable. Without targets on waiting times, I believe that the health service would never have tackled the issue of cutting waiting times. I have worked in the health service for many years so I know that the NHS has never taken the issue of waiting times sufficiently seriously. Because of the very tough targets that have now been set we are at last seeing dramatic reductions in the amount of time that people have to wait for treatment.

Secondly, I am doubtful that the public corporation model is the right way to improve the way in which we manage the NHS from Whitehall. That has been looked at three times by government commissions of inquiry. First, there was the Guillebaud report in 1956; there was then the Royal Commission report in 1979; and most recently we have had Roy Griffiths's excellent general management report of 1983. The noble Baroness, Lady Cumberlege, quoted from Roy Griffiths's report, although she did not say that he considered the question of the NHS being run by a public corporation and he rejected that option. He said that the NHS is so important, so politically important, that it would be naïve to think that a public corporation would ever be allowed to operate in the way in which noble Lords have suggested today.

I understand why people are critical of political involvement in the NHS, but without politicians the NHS would never have been created in the first place. Without the political process and the political accountability to Parliament I doubt that the NHS would now be enjoying the huge increase in resources that it has been given.

The noble Baroness, Lady Cumberlege, said that the agency would not be another quango, but reading the amendment it appears to be very like a quango to me. Far from creating the space that she desires from political involvement, it would simply replicate and duplicate what is already there. Yes, there would be a national agency, but the risk is that it would simply act in a way in which the department has acted over the past 50 years. What is the guarantee that such an agency would not micromanage, as the service has been micromanaged over the past two decades? In addition to such a national agency, there would still be the Department of Health, and Ministers would still be accountable to Parliament. I worry that such a national agency, far from creating the kind of freedom and space that the noble Baroness desires, would constrain the NHS even more than it is constrained today.

I also worry about the current trend to place as much of the work of government into independent agencies as possible. I have legislated to do that. But I worry that in doing so we undermine the democratic process. I agree with the noble Baroness that in terms of parliamentary accountability very few such agencies, if any, could be said to come under strong parliamentary scrutiny. For all the criticisms that can be made of the way in which we legislate and ask questions, the fact is that at the moment parliamentarians have the right to question and to scrutinise Ministers daily and they do.

The noble Lord, Lord Alderdice, said that he accepts that government will always be involved. The question is what is the best way for government to be involved. I agree with him. I believe that the structure of the Bill shows us the way forward because for the first time we now have national standards and we have an independent regulator. The room to give the NHS much more discretion has now been created. That is the importance of foundation trusts: locally owned organisations but in the NHS, operating according to national standards and subject to independent regulation.

4.15 p.m.

Lord Desai

Does my noble friend agree that foundation trusts have been emasculated in the course of the debate in the Commons precisely because there is too much central control? Had they been set up by an agency they would not have had that much interference.

Lord Hunt of Kings Heath

No, I do not believe that that follows. If they had been set up by a national agency, the national agency would still have been subject to the kind of pressures to which my noble friend refers.

On the general point, on whether the Bill before us contains sufficient freedoms for foundation trusts, I believe that the answer is that it does not. Compromises have been made and I am disappointed that foundation trusts will be so constrained. In the NHS we have learned that it is better to take one or two steps at a time and then build on that. I believe that what is before the Committee is certainly the right way to go forward; that foundation trusts will allow us, in time, to introduce many more freedoms; and I am sure that this is the better approach than setting up a public corporation which, frankly, belongs to the thinking of the 1940s rather than to the current day.

Baroness Carnegy of Lour

I have listened with enormous interest to what the noble Lord has said. He knows all about the matter. I also listened with care to the noble Lord, Lord Desai, and found myself imagining the agency, sitting in all its splendour, chaired by the noble Lord, Lord Desai. One wonders exactly what would go on. I think that would be extremely revealing to us all.

I want to ask my noble friend Lady Cumberlege a couple of questions. I see the strength in what she says and it has been backed up by many people who work in the health service and who know all about it 1 have no interest to declare, so I look at the matter as a patient of the National Health Service.

My first question is based on my recollection as a member, many years ago, of the Manpower Services Commission, which was placed in the same position as my noble friend suggests the agency should be. The commissioners had responsibility for many areas of employment, particularly unemployment and the measures to combat high unemployment at that time. While I was a member of the commission I came to this House and sat on the other side behind the Government, knowing everything that there was to know about the issue with which we were dealing in the Manpower Services Commission. Questions were constantly asked by noble Lords and the answers came from the Department of Employment; they could not come from the Manpower Services Commission as that was not its job. I knew that the answers were almost always inaccurate because the Department of Employment did not know the position; the Manpower Services Commission did. The department could not answer detailed questions. Under this situation what would be the position when questions were asked in Parliament about the National Health Service? Would the department know the answers, which would really be in the hands of the agency? That is a big question about answerability. I ask it in a general way, because it is an important issue.

Members of the Committee will not be surprised that my other question is about Scotland. The amendments concern England; the Bill is largely concerned with England and Wales, although part of it concerns Scotland. But the Scottish National Health Service simply cannot be separated from the rest of the United Kingdom, despite the fact that its running is devolved. It cannot be separated partly because services go cross-Border and standards need to go cross-Border; but also because funding implications for the National Health Service in England hugely affect the funding of the Scottish bloc, and so of the National Health Service in Scotland. That is because, through the Barnett formula, Scottish funding is related to English funding.

Does my noble friend know whether the King's Fund has been in consultation with the National Health Service in Scotland about how the proposals would affect Scotland? We must ask that, because it has much bigger implications than those who have not thought about the matter carefully would suppose. So those are my two questions: answerability to Parliament and where the proposal would leave Scotland.

Earl Howe

It does not surprise me in the least that my noble friend should have wished to focus our minds once again on an idea that excited a lively debate in March last year. She has to be commended for doing so because, as the noble Lord, Lord Walton, observed, the concepts embodied in her amendment are a natural development of the philosophy underpinning the Bill. I say that they are a natural development because trying to distance the NHS from the Department of Health, as her amendments would do, is clearly not the same as devolving decision-making downwards in the NHS. We could create an arm's-length agency and still have a centralised decision-making structure.

If one reads the list of functions of the proposed agency set out in Amendment No. 3, it appears to be a rather top-down body. I hasten to add that that is not a real criticism because we all know that my noble friend would not regard the amendments as a stand-alone set of proposals. Indeed, her views on instilling a spirit of innovation from the bottom up and on motivating staff by good leadership are ones that she has articulated persuasively more than once. The two ideas are complementary. We can debate the merits of the amendments without passing judgment on whether Part 1 has been sensibly put together.

When we last debated this topic, several noble Lords, of whom I was one, referred to the succession of structural changes imposed on the NHS by governments of both parties ever since the 1960s. It is natural for elected politicians who have promised the voters a better health service to believe that the way to deliver on those promises is to reform the way in which the NHS is organised.

As several noble Lords have reminded us today, NHS reorganisation has been a constant feature of this Government's term of office, of the previous Conservative government's term of office and of that of the Labour government before that. It was all well intentioned and some of it has been beneficial, but change is always highly disruptive and sometimes its benefits are at best marginal. That is why the idea of an NHS agency has been around in one form or another for some time. Why has it so often been rejected?

The noble Lord, Lord Hunt, reminded us of the Guillebaud committee in the 1950s, the Royal Commission of 1979 and the subsequent work of such eminent individuals as Sir Roy Griffiths, all of whom came down against the idea of an NHS agency. They did so primarily because of what they saw as a need to maintain proper parliamentary accountability for a service that costs a great deal of public money. There is no denying that that is an important concern, but, like my noble friend, I question whether it is a show stopper. The world has moved on in several significant ways since the most recent serious, high-level review of the agency concept.

One way in which it has moved on is that, although the current Government tend to face in two directions, all three main political parties have accepted that a centralised NHS will no longer work and that politicians should not micromanage. That presupposes a lesser role for the Secretary of State in determining the direction in which the ship is steered. So the argument is now how far that devolutionary process should go; no longer is it about preserving the old Bevanite top-down structure.

The fact is that if you ask people what they most want politicians to do to the NHS, the answer is, "Please stop treating it as a political football". That cry must resonate with us loudly. We ought to be looking for ways to finesse the argument for those who historically have opposed the idea of distancing politicians from the NHS, simply because there is now a public hunger to do just that.

My noble friend reminded us that when this Government came to office, they did something very bold, which was to transfer decision-making on the setting of interest rates to an independent monetary committee bound only by an inflation target set by the Chancellor. That devolution of decision-making has been a triumphant success. The charge levelled at successive Chancellors—often unjustly, but levelled nevertheless—was that decisions on interest rates could never be immune from considerations of party-political advantage. That charge—just or unjust— cannot now be made. The success of the monetary committee is the reason why I believe that the ideas propounded by the King's Fund and my noble friend deserve a lot more air time.

Of course Ministers need to account to Parliament for how public money has been used, but they also need to be able to reduce to the minimum the kicking around of the NHS football, whether through allocation of funds, the appointment process, inappropriate target setting or whatever.

Earl Russell

Is it an appropriate way of making the delimitation that the noble Earl has suggested to stick to the existing rule that politicians do not make clinical judgments and to scrutinise targets to see how many of them contain a concealed clinical judgment?

Earl Howe

The noble Earl makes an extremely important point. To a large extent, I would go along with him. Despite what the noble Lord, Lord Hunt of Kings Heath, said in its favour, the trouble with a lot of target setting is that it conceals many clinical judgments, which it is no part of politicians' remit to make.

I simply conclude by saying that I am very pleased that my noble friend has started our Committee proceedings in this way. She has surely put our minds on to a most appropriate track as we discuss the Bill.

Lord Clement-Jones

Having listened to the speeches in this debate, I have considerable sympathy with the amendment moved by the noble Baroness. Members of the Committee spoke of their response and that of NHS staff to the micromanagement of successive Secretaries of State. Several times in this House I have used the analogy of Groundhog Day when once again, for the fifth or sixth time, we are faced with a new NHS reform Bill that the Secretary of State at the time believes will solve the problems of the NHS. We have a new set of political targets; we have a new body to add to the 40 already entitled to inspect NHS hospitals. To add to the feeling of Groundhog Day, when the noble Lord, Lord Hunt, was giving his panegyric in support of the Government's policy, I felt that we were back to the good old days of the second or third NHS reform Bill.

4.30 p.m.

Lord Hunt of Kings Heath

I am grateful to the noble Lord for giving way. Is it not a fact that most of the interventions that the noble Lord has made from the Front Bench over the past five years have been to call on the Government to take central action and to issue yet more targets for the health service?

Lord Clement-Jones

That just shows that the noble Lord was too busy studying his brief to notice the interventions that I made. If he listens very carefully, he will notice that my current intervention will be entirely of the devolutionary kind of which I am sure he will approve.

One might say that the rot set in with the merging of the roles of Permanent Secretary and NHS chief executive under Sir Alan Langlands. The report of the King's Fund, chaired by the noble Lord, Lord Haskins, claimed that the NHS had become far too politicised. But the term "political football", which was used by the noble Earl, Lord Howe, has been the allegation made consistently. Probably the first time that I heard it was over Keith Joseph's reforms of the NHS in the early 1970s. This is not a new phenomenon. The allocation of resources is often a highly political act.

That said, many of us object to the fact that the Secretary of State has a huge and inordinate amount of power in relation to the NHS. There is common ground on that issue between nearly all Members of the Committee who spoke in the debate. The Bill is meant to be devolutionary, but the powers granted to the Secretary of State are yet again increased. I would hate to think how many additional powers the Secretary of State is taking under the Bill.

There is a very good case for much looser political control over the NHS. But we believe in a much more radical form of devolution for the health service. That is the bone of contention with the current amendments. We believe in a much more devolved system. We believe in national standards, but we believe in regional strategic management of the NHS whereby, regionally, voters can increase the resources available for the NHS if they need or wish to do so.

We believe in locally accountable commissioning, closer to patient needs and tied into local government. That leads in turn to the integration between health and social care, to which the noble Lord, Lord Chan, referred. We believe in a mixed economy of providers, including mutual providers and public benefit organisations. We believe in an independent regulatory system of fewer but effective regulators. We believe in a genuinely plural system of devolution. That is where we differ from the terms of the amendment.

The essence of any new devolved system must be greater public engagement in the commissioning process and in the prioritisation of public health, preventive health and the marriage of health and social care.

Lord Desai

I agree with much of what the noble Lord says, but is he not confusing depoliticisation and devolution? The amendments under debate refer to depoliticisation of the NHS. Devolution is a separate issue that comes later in the Bill.

Lord Clement-Jones

I am arguing the case for devolution, but, at the same time, it is impossible to devolve without political resource allocation. That is what the amendment is all about. We need to be persuaded that this will not be a monolithic organisation that is unresponsive to patient needs. That is the crux of the argument.

In conclusion, we agree very much with the diagnosis of the Members of the Committee who have spoken in the debate and the amendments tabled. But we do not agree with the prescription set out in the amendments.

Lord Warner

The new clauses would place the responsibility for the management of the NHS in England in the hands of a new agency set up for that purpose. Let me say at the outset that that is not what the NHS or the public need. I fear that I will disappoint the noble Baroness as much as did my noble friend Lord Hunt when he stood at the Dispatch Box previously, and as he did successfully earlier.

I sympathise entirely with the noble Baroness's wish to avoid excessive central interference in the running of the NHS. I am sure that we can all agree with that overall intention. But the primary purpose of the Bill is to do just that. I do not doubt the sincerity of the noble Baroness's view on the subject, and she has been consistent in her advocacy of the agency approach. The King's Fund continues to promote the idea, which I freely acknowledge has had appeal in many quarters over many years. Trying to interpret events in Blackpool yesterday, I believe that Dr Liam Fox now seems to want to go down that path, although I note that the Opposition Front Bench in this House seem to be more cautious on the subject.

The King's Fund report and the amendment are only the latest in a succession of so-called attempts—

Baroness Carnegy of Lour

I do not think that the Minister can quite get away with that remark. What makes him think that our Front Bench in this House differs from my right honourable friend Dr Fox?

Lord Warner

I did not hear the Front Bench spokesman say that he would support the amendment if a vote was taken on it. My understanding was that the noble Earl was rather more cautious on the matter.

Earl Howe

It may assist the Committee to know that the amendment does not correspond to what Dr Liam Fox announced in Blackpool yesterday.

Lord Warner

We are still trying to puzzle out what Dr Fox was suggesting in Blackpool yesterday. His comments sounded remarkably similar to many of the ideas advocated in the amendments tabled by the noble Baroness, Lady Cumberlege; hence my remark. I am grateful for the noble Earl's clarification. It will be very interesting to find out the Conservative Party policy on the issue as the Bill proceeds.

The King's Fund report and the amendment are only the latest so-called attempts to deal with the problem of the NHS being a political football. Many Members of the Committee have talked about the unreasonableness of British citizens approaching their politicians to have their grievances about the NHS addressed. They seem to suggest that putting in place a board would prevent that happening. There is no evidence whatever from the events of the past 50 years that people would not still expect elected politicians to address seriously problems raised by them.

The idea of an agency, board or commission— whatever we call it—has emerged under governments of different political persuasions and at different times. But the rationale for the idea has always been the same: to improve the quality of NHS management by removing it from nefarious political micromanagement. The noble Lord, Lord Alderdice, who has attached his name to the amendments, made that point not only today but at Second Reading.

The difficulty is that it is nothing like as easy as the noble Baroness has suggested to separate policy from management. Her right honourable friend Michael Howard demonstrated the problem in relation to the Prison Service in a previous administration.

The Guillebaud committee considered the idea in the mid-1950s and rejected it as flawed. The Royal Commission on the NHS considered the idea again in 1979 and rejected it. I shall give a short quotation from that report: A commission might act as a buffer between the NHS and parliament but the NHS would remain dependent on the willingness of parliament to vote funds. The effect, therefore, might be to duplicate functions that at present are carried out, however unsatisfactorily, by the health departments and the top tier of health authorities".

Earl Russell

I am most grateful to the Minister for giving way. Does he understand that it is impossible to avoid the dangers of excessive centralisation while we have only one purchaser, and that that is the thought underlying the proposal for regionalisation?

Lord Warner

I understand the case, but I do not accept the argument put forward by the noble Earl's party that that is the only way of solving the problem.

In 1983, the late Sir Roy Griffiths, a staunch advocate of good NHS management, came to a similar conclusion to Guillebaud and the Merrison commission: A case could be made for an independent corporation … this has a variety of defects, not least that one would have to formalise unnecessarily the role of the corporation vis-a-vis the Secretary of State, which would be extremely difficult in such an intensely politically sensitive operation". I look forward to hearing how the Conservative Front Bench will address that problem if they wish to pursue the argument. Sir Roy, respected across party lines and with a gift for the pithy, said it all. Although a public corporation has some superficial attractions, it has as many disadvantages as it has advantages. It would mean another reorganisation, which so many in this Committee seem to abhor.

First, and most important, is the issue of accountability. Those who advocate the removal of the NHS from the political arena have never fully satisfactorily explained how proper political accountability would be maintained in a publically acceptable way. As I said, the various expert committees and commissions over the years have all concluded that this is the crux of the matter. Until the advocates of a separate corporation deal satisfactorily with that point, we must treat with the utmost caution any proposals that might interfere with the ultimate route of accountability through Ministers for the NHS. I do not think that those who have spoken in favour of the amendment have done that today. Dr Fox yesterday showed his own confusion by trying, in the same speech, to argue for a contentious health vouchers policy that would undermine the NHS and then claiming that he wants a board to reduce political interference in the NHS.

There is another respect, however, in which these new clauses are defective and which goes right to the heart of what the Bill is about. There is absolutely no guarantee that removing the NHS from under the purview of ministerial control would remove the risk of over-centralisation. A body such as these new clauses would establish would be able, and in my view quite likely, to impose a centralised model of control over the whole system. That would be a return to the nationalised industry territory, which until yesterday, I thought had been vacated by all the political parties and is surely not something the noble Baroness, Lady Cumberlege, and her supporters would regard as desirable. It is certainly pretty difficult to square with Liam Fox's aspiration to reduce bureaucracy. It is the exact opposite of what the Government are trying to achieve through this Bill and their practical actions on a day-to-day basis.

A million-strong health service should not be run from Whitehall or any other central point. The NHS is not the Red Army. For patient choice to thrive, it needs a different environment in which there is greater diversity and plurality in local services which have the freedom to innovate and respond to patients' needs. Within a framework of clear national standards, subject to common independent inspection—provided for in the Bill—power needs to be devolved to locally run services. These amendments would not achieve that.

The Government have devolved day-to-day administration of the NHS to 28 strategic health authorities in England, similar to the regional approach argued for earlier by the noble Lord, Lord Clement-Jones. They oversee the work of local NHS trusts, PCTs and private providers. They have become the local headquarters of the NHS. Their chief executives account, both nationally and locally, for the performance of local health services.

The real power and the huge additional resources that we have provided to the NHS are moving to the NHS frontline. Since April last year, locally-run primary care involving professionals and patients has been up and running in all parts of the country. The reports from Blackpool yesterday strongly suggest that that news has not yet reached Conservative Central Office.

We need to stick to the purpose of this Bill, which establishes NHS foundation trusts as a new type of NHS organisation that will provide local ownership and greater involvement of local communities in the NHS, alongside the huge injections of resources that the Government have made. This may be the first time that the NHS has been allowed to run with an adequate provision of resources. This Bill shifts power to the front line. The amendments would not do that or achieve many of the benefits wished for by their advocates. I recommend that the House does not accept the amendments.

4.45 p.m.

Baroness Cumberlege

I thank the Minister very much for his reply. I had hoped that he would have a warm feeling towards the amendments, but I suspect that it has been a cold shower. However, I would like to thank noble Lords for taking part in the debate. With one very notable exception and a few minor reservations there has been whole-hearted support for the amendments, for which I am very grateful.

The noble Lord, Lord Alderdice, and the noble Baroness, Lady Finlay of Llandaff, brought some additional strengths that enhanced the agency concept still further. It is extremely good to have the expert advice of the noble Lords, Lord Chan and Lord Walton of Detchant. Those who work or have worked in the health service really bring home the reality of what it is like and what this agency could do. I echo the tribute paid by my noble friend Lord Peyton of Yeovil to the noble Lord, Lord Walton of Detchant. I sense that he has had a modest conversion, for which I am extremely grateful.

My noble friend Lord Peyton of Yeovil asked about the role of the Secretary of State. If the agency were established, it would be most important for the Secretary of State to have confidence in the agency. As I said before, we have 192 different role models from which to build and which are succeeding. None would succeed, however, if the Secretary of State did not have confidence in them, so some accountability to the department, Ministers and, ultimately to the Secretary of State, is essential.

On the appointment of members to the agency, the chairman is appointed through the well-established independent appointments commission. Likewise, the appointments commission would appoint the non-executive members. However, when it comes to the appointment of the chief executive, the appointment is made by the chairman, but it is important that the Secretary of State has some say about whether he or she has confidence in that individual. Clearly, the agency would fail without that.

The other mentions of the Secretary of State in my amendments also relate to accountability. However, I wish to stress that in no way do we have all the answers. It takes a long time to work through something as fundamental as this. I appreciate that the amendments are not perfect, as I said at the beginning of the debate. They need more work and I will not press them to a vote this afternoon. I am trying to build a case, over time, that I believe to be irrefutable. It took me 17 years to get neighbourhood nursing recommendations adopted by the government as a national scheme, and to get something as simple as nurse prescribing to happen within the National Health Service.

When we debated similar amendments 18 months ago, I warned your Lordships that I would bore for Britain, which is exactly what I intend to do. I believe that change will not happen overnight. The noble Lord, Lord Warner, is absolutely right that we cannot suddenly do something like this: it needs a lot of working through. That is why I am grateful to have an organisation such as the King's Fund which has considerable intelligence and brainpower in its team to work on the problem.

My noble friend Lady Carnegy of Lour asked about the Manpower Services Commission. Clearly, the agency would have the answer to such detailed questions. Whether the department could answer for the agency depends entirely on the rules of engagement. That is something that would need to be worked out. With regard to the National Health Service in Scotland, I do not know whether the King's Fund has approached the Scottish Parliament. I shall let my noble friend know.

I thank my noble friend Earl Howe for his welcome to the debate and for his careful analysis and wish to give the concept a further push forward. I also thank the noble Lord, Lord Clement-Jones. I agree with him that the rot set in when the role of chief executive merged with that of the Permanent Secretary. I welcome his endorsement of at least the thrust to devolution and to the amendments.

The Minister made a point about the Prison Service, which is an interesting parallel. He is right that in the mid-1990s, there was a considerable hiccup within the devolved Prison Service and we all remember the issue that followed in terms of the chief executive's position. However, the devolved Prison Service is still there. That framework still exists. It exists because there is clarity about who is responsible for what. We are getting better at working with non-departmental government bodies because we are beginning to clarify which role is whose and where the responsibilities lie.

The National Health Service is a candidate for that approach. It is wrong that politicians should be involved in the day-to-day running of the service. Politicians have a serious role, but it is not a role in micro-management or in "targetitis", however enjoyable it might be for past Ministers who have taken part. The role of politicians is strategic; it relates to the sense of direction, and they should not be distracted from that. Our present system does not allow that to happen, and the National Health Service is in serious danger when we come to elections. Only one issue need blow up, and, suddenly, there are different strategies and different policies. Politicians shoot from the hip, and nobody has worked it through because we have aggressive media that prompt such things to happen.

Lord Hunt of Kings Heath

We should take the example of an issue that arises in an election. Is it not likely that, if such an issue arose, Ministers would have to answer for it and involve the Department of Health in a great deal of investigation, as well as the agency? That is the dilemma: the noble Baroness's amendments are well intentioned, but I cannot envisage a situation in which the agency would simply be given or would have the freedom that the noble Baroness suggested, without proper parliamentary accountability. Ultimately, MPs will continue to ask questions that Ministers will have to answer. The risk is that the agency will duplicate that, rather than taking its place.

Baroness Cumberlege

That depends on how the agency is set up. It depends on how the law is fashioned in order to prevent that happening. Of course, Members of Parliament must be interested in their constituency, but I am trying to get a space around the legitimate political activities of parliamentarians that allows the National Health Service to be well managed and to operate correctly.

I am grateful to noble Lords who took part. I am not sure that I mentioned my noble friend Lord Desai—I mean "the noble Lord, Lord Desai"; I think of him as a friend, but I am not allowed to call him that in the Chamber—who, I sense, suggested that he needed a government health warning. That is not true. I am sure that, when he mentions his colleagues and friends, it furthers their career, rather than diminishes it. Perhaps, however, the noble Lord does need a government health warning: he is not just new Labour, he is shining new Labour. His philosophy is that we cannot have a national health service run on Stalinist principles. We all say, "Amen" to that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn. [Amendments Nos. 2 to 6 not moved.]

Lord Clement-Jones moved Amendment No. 7:

Before Clause 1, insert the following new clause—

"CONSIDERATIONS APPLYING TO THE EXERCISE OF POWERS (1) This section applies to the exercise of all powers and functions under this Part of this Act by—

  1. (a) the Secretary of State,
  2. (b) the regulator,
  3. (c) an NHS foundation trust,
  4. (d) the governors of an NHS foundation trust,
  5. (e) the members of a foundation trust,
  6. (f) an applicant under section 4 or 5,
  7. (g) any trustees appointed under section 22.
(2) The paramount consideration for those mentioned in subsection (1) above in the exercise of all powers and functions under this Part of this Act shall be the securing and advancement of the health and welfare of the people of England and Wales through the provision of an equitable accessible comprehensive health service free at the point of delivery and integrated with social services. (3) The persons mentioned in subsection (1) must have regard to the following matters (among others)—
  1. (a) the health needs of those who have received or may receive health services provided by the applicant or NHS foundation trust in question,
  2. (b) the health needs of those who have received or may receive health services provided by other trusts within the area of the same Strategic Health Authority or by a clinical network of which the applicant or the foundation trust is a part,
  3. (c) the views of the public constituency of the applicant or NHS foundation trust in question,
  4. (d) the direct or indirect health impact of the exercise of any powers or functions on the health of the population served by the applicant or the NHS foundation trust in question,
  5. (e) the equitable distribution of resources across the health service.
(4) For the purposes of this section "clinical network" shall mean a network of different NHS providers working together within a single supervisory structure to agreed protocols and standards of care.""

The noble Lord said: In moving Amendment No. 7, I shall speak also to Amendments Nos. 112 and 115. The amendments have a common theme, which is to try to establish some general principles to be applied to the exercise of powers by foundation trusts and by the regulator.

I am sorry that the noble Baroness, Lady Andrews, is not in her place. During the passage of the Adoption and Children Bill, we found it helpful that broad general principles were set out at the beginning. That was helpful to all concerned with working out how the powers of the various bodies referred to in that Bill were to be applied. The same should apply to this Bill. That is particularly important because of the way in which foundation trusts are being set up.

Amendment No. 7 would set out a framework of principles to guide the exercise of powers and functions relating to foundation trusts. Its purpose is to ensure that local autonomy in a foundation trust does not undermine the coherent development of comprehensive health services to meet local need. As I said, that mirrors the approach taken in the Adoption and Children Act 2002 and ensures that the intention behind the legislation is more clearly defined.

The persons named in subsection (1) of the proposed new clause are all those with functions or powers relating to foundation trusts. The amendment covers powers and functions exercised before and after individual foundation trusts are created, irrespective of whether the body applying is an NHS or non-NHS body. Under Clause 5, a body other than an NHS trust can apply to be a foundation trust. Although the department has asserted that that clause would be used only to allow hospices, for example, to apply for foundation trust status, it is clear that the clause gives the Secretary of State the power to entertain applications for public benefit corporation status and subsequent foundation trust status, under Clause 7, from a wider group of organisations. It is important that such bodies use their powers in accordance with the principles set out in the amendment to avoid any disruption to the overall objectives of the NHS. Currently, only the regulator is bound by a version of those principles set out in Clause 3.

Subsection (2) of the proposed new clause is a restatement of NHS principles derived from existing NHS legislation and policy, together with the objective of securing and advancing the health and welfare of the population. That objective is taken from Section 27(2) of the Health Act 1999, where it is identified as the purpose of co-operation between health authorities and local authorities. It seems to be a fitting and consistent objective for the greater plurality of provision that foundation trusts are meant to introduce. Subsection (3) would ensure that strategic NHS objectives were not in conflict with the autonomy to be given to foundation trusts.

What would that mean in practice? First, local needs—the needs of the population for primary care— would need to be taken into account as well as the needs of the hospital as an institution. Needs throughout a strategic health authority area and the interests of patients served by non-NHS foundation trusts in the same area must be considered by foundation trusts. That would, for example, avoid the poaching of staff by foundation trusts. There are also needs within a clinical network. Clinical networks may not be coterminous with the boundaries of strategic health authorities, so they must be dealt with separately. The clinical network is a vital way of ensuring clinical governance throughout a network of NHS institutions and of guaranteeing capacity in scarce resources, such as intensive care beds and renal transplant services. Decisions on such matters must be made throughout a large area, containing, perhaps, 2 million or more people. The interests of those in the intermediate area of the foundation trust must not override those in further-flung parts of the network.

The views of local communities must be taken into account, but they are given insufficient prominence in the Bill. There is the health impact. Providing care in a less accessible location creates health disadvantage for those who must travel further at their own expense. Health impact must, therefore, be considered over institutional interests.

There must be equitable distribution of resources throughout the NHS. The amendment addresses the risk of inequitable access to capital through unregulated borrowing by foundation trusts. The fact that such borrowing counts against the overall capital spend of the NHS means that non-foundation NHS trusts may find their spending curtailed by what the foundation trusts decide to borrow. The amendment would require equity with the rest of the NHS to be considered.

There is a definition of clinical networks, which is derived from the report of the neo-natal intensive care review, published by the Department of Health in 2003. The networks are particularly vital in ensuring that the right patient is offered care in the right place. Patients must be treated in hospitals with the capacity and expertise to treat their conditions. That is particularly important in the treatment of cancer. Patients with complex cancers must be referred to specialist hospitals. It would not be in the patient's interests if a clinical network for cancer is undermined by the autonomy of a foundation trust, perhaps wanting to provide specialist services which are better provided elsewhere.

Amendment No. 112 states that one of the objectives of the regulator is to ensure, specifically that adequate numbers of training posts are provided in the new foundation trusts and that their relationships with deaneries [are] maintained". The Minister is well aware from questions asked on previous occasions that there is considerable concern about the role of teaching hospitals and whether resources will be available if and when foundation hospitals take root.

Finally, on Amendment No. 115—and this is specific to the regulator rather than relating to foundation trusts as well—we believe that the proposed arrangements for the regulator are ill thought through and could have an adverse impact on the NHS. In particular, we are concerned that the regulator will be unaccountable and that he will be free to take decisions that do not reflect the values and principles of the NHS.

We are concerned that in Clause 3 the general duty on the regulator is unclear and fails to place a legal obligation on him to act in accordance with the values and principles of the NHS. Clause 3 requires only that the regulator acts in a way that is consistent with the performance by the Secretary of State of his duties under Sections 1, 3 and 51 of the National Health Service Act 1977, rather than requiring the regulator to act in pursuance of those duties. That could mean, for example, that the regulator could authorise the withdrawal of a particular service by a foundation trust, leaving it to the Secretary of State to make good any gaps that might result in the local provision of services.

Furthermore, while Section 1 of the 1977 Act makes it clear that NHS services must generally be provided free at the point of use, no mention is made of other important principles at the heart of the public's understanding of the nature of the NHS, such as the principle of equality of access to treatment. For instance, would the regulator be under an obligation to prevent cherry-picking of patients by foundation trusts? These issues of principle raise a great many questions for the Minister. I look forward to his reply. I beg to move.

5 p.m.

Baroness Finlay of Llandaff

I support the group of amendments. In particular, I have added my name to Amendment No. 115.1 reiterate the words of the noble Lord, Lord Clement-Jones, about the importance of equity for patients.

Clinical management has become increasingly complex. Patients move between different providers of care within the context of clinical networks. It is becoming increasingly difficult for a patient with a complex clinical problem to be managed solely within the confines of one NHS trust. There are, therefore, very important principles of equity. Patients must be able to be moved to and to receive care from clinicians employed by one trust although they have had their principal treatment instigated in another trust. There must be close collaboration and co-operation between trusts to ensure uniform standards of care and management of patients.

I must also declare an interest as a vice-dean of a medical school. Aspects relating to research and teaching are incredibly important. If we do not teach adequately the next generation, we shall not produce competent clinicians. The juniors of today need good role models. The power of role models as teachers cannot be underestimated. Such teaching is much more powerful than sitting people down in a lecture theatre, sending them on a course or giving them something to read. Juniors need to work with people who have time to teach them. They also need to learn how to do research and to do it well, as opposed to wasting time on badly done research that delivers inconsequential results.

However, academicians within the teaching hospitals have multiple pressures on them. They have pressures to deliver research for the RAE, and to teach both undergraduates and postgraduates. They are clinicians also and have clinical pressures with the immediacy of the patient before them. It would be very easy for management to increase that pressure further, which is already excessive on many clinicians, to deliver against set targets, particularly if some performance targets risk that trust losing its star status or however else the targets are to be measured in the future. Therefore, there is a very important principle of equity. There is also a very important principle enshrined in the amendments; that is, that we look forward to educating and researching for the next generation and not simply to providing for today's care.

Lord Warner

As I explained in our previous debate, a key part of the policy for NHS foundation trusts is that they have operational freedom and are free from direction from Whitehall. However, it is equally important that these trusts remain fully a part of the NHS and that their actions continue to be in the interests of the wider NHS. So I can well understand the thinking behind the noble Lords' amendments.

We have decided to tackle this issue through a mechanism whereby the independent regulator should be required to exercise his functions in a manner that is consistent with the Secretary of State's performance of his general duties under the 1977 Act, including his duties to promote and provide a comprehensive health service in England and to provide clinical facilities to universities with medical or dental skills. The Bill, as drafted, achieves that. For reasons which I shall explain in more detail, these amendments are largely unnecessary and in one case inappropriate and may actually achieve an objective which the noble Lord does not intend.

Perhaps I may take them in some kind of order. Amendment No. 115, which deals with changing the general duty, introduces a requirement to act, "in pursuance" to the Secretary of State's performance of those duties. The duties imposed by Sections 1 and 3 of the 1977 Act should be overriding ones because they will help to ensure that the NHS remains an integrated, coherent and effective national service.

The Secretary of State retains overall responsibility for the NHS. It is right that he should determine the broad direction of travel. It is therefore important that the independent regulator and the Secretary of State should work in an integrated fashion, but without the Secretary of State giving directions to the regulator. However, it would not be appropriate, as I have suggested, for the Secretary of State to have even a backdoor power of direction over the regulator. For a Minister to say that may reassure some Members of the Committee.

I ask the noble Lord to rethink the issue. He might find that his amendment may give the Secretary of State an effective power of direction when the regulator is not operating in pursuance of the Secretary of State's performance of his duties. That duty placed on the regulator means that he should strike the right balance between ensuring consistency with the requirements for the NHS as a whole and retaining his independence. We believe that Clause 3, as currently drafted, achieves that. The independent regulator will be required to take account of the wider interests of the NHS by ensuring that he acts consistently with how the Secretary of State will achieve his duties under the NHS, but it is for the regulator to determine how to achieve that.

The Government's view is that the inclusion of the words, "pursuance of instead of "consistent with" the performance of the Secretary of State's duties removes the regulator's discretion to determine what is or is not consistent with the Secretary of State's policies. The regulator could be required to comply with the Secretary of State's interpretation of his duties, which effectively amounts to a power of direction and undermines his independence. I have tried to say that to the noble Lord as helpfully as I can.

Amendment No. 112 is on the protection of training. We absolutely agree with the spirit of the amendment: it is vital that education and training continues with NHS foundation trusts. However, the Bill includes ample provision to ensure that this is the case. First, under Clause 3, the regulator is required to exercise his functions in a manner consistent with the Secretary of State's duties under the 1977 Act, including the duty in relation to university clinical teaching.

In addition, under Clause 14, an NHS foundation trust's authorisation must authorise it and may require it to provide education and training and to carry out health-related research. For example, foundation trusts will be expected to provide clinical learning opportunities and placements for nursing, medical and dental students, cadets and staff undertaking National Vocational Qualifications, post-graduate training for junior, medical and dental staff and placements for pre-registration students in the other health professions. The specific contributions of individual NHS foundation trusts would be negotiated through local workforce development confederations. The amendment is therefore unnecessary.

I turn to Amendment No. 115 dealing with fairness and universal coverage. These requirements are superfluous to the Secretary of State's duties already established under Sections 1, 3 and 51 of the National Health Service Act 1977. These require the Secretary of State to provide a comprehensive health service which is free of charge and to make provision for clinical training and research. The principles of fairness and universality are therefore fully established. Again, the amendment is unnecessary.

Amendment No. 7 deals with the exercise of powers. This new clause should also be rejected. Only the Secretary of State has the power needed to secure the advancement of the health of the population as a whole and to ensure that there is a comprehensive health service free at the point of delivery. He sets the policy and provides the funding for the NHS as a whole. The duties in the NHS Act 1977 already provide for the advancement of health and for the provision of a comprehensive service free at the point of delivery.

There are also provisions in the Bill that will ensure that the independent regulator and NHS foundation trusts must act in support of these aims. The independent regulator's duty under Clause 3 means that he must ensure there is a comprehensive delivery of care and that NHS foundation trusts are as fully integrated as possible. NHS foundation trusts are themselves under a duty to act in co-operation with other NHS bodies as a result of Clause 29. The noble Lord, Lord Clement-Jones, raised that particular issue, which he will find covered in Clause 29.

Paragraph 25 of Schedule 4 places NHS foundation trusts under a duty to work in co-operation with local authorities. They also have powers to work jointly with local authorities. That will ensure that they continue to be fully integrated with the local health economy, including social care. There is nothing in the Bill which will allow NHS foundation trusts to change the fact that NHS patients receive care that is free at the point of use and delivered on the basis of need, and not on the ability to pay. The Bill also states that public and patient constituency members will elect representatives to the board of governors to represent the interests of the various stakeholders. Taken together, all the provisions outlined make this group of amendments unnecessary.

Lord Clement-Jones

I thank the Minister for his comprehensive gallop through the appropriate legislation incorporated, as he says, into the Bill. That was a very interesting overview. Obviously, the Minister is extremely confident that foundation trusts are carefully bolted into the NHS and the 1977 Act. However, few observers share his confidence. Obviously, he believes that the Bill achieves the bringing of foundation trusts within the general principles of the NHS. The argument that Amendment No. 115 could be counter-productive demonstrates that there are very sophisticated minds at work in the Department of Health as to how there could be a back-door way of getting the regulator to conform to the Secretary of State's policy. Be that as it may, I shall examine what he said in Hansard and decide whether I agree.

I accept the Minister's reassurance regarding Amendment No. 112. There is ample reference in the Bill to protect university teaching. It seems that there is that reassurance to insist research takes place, particularly in Clause 14. Integration with the local health economy is precisely the area where we harbour the greatest doubts: I suspect that that is where further argument will arise. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 [NHS foundation trusts]:

5.15 p.m.

Earl Howe moved Amendment No. 8: Page 1, line 7, leave out "England" and insert "the United Kingdom

The noble Lord said: In moving Amendment No. 8, I shall speak also to Amendment No. 160. This is a probing amendment designed to address a straightforward but serious concern about the Bill as drafted. Would people in areas of Wales, such as Powys, who are reliant on English hospitals for their acute services, still have access to those services if the hospital they tended to use became a foundation trust?

Last year, some 43,000 Welsh patients were treated in English hospitals. Some English hospitals, such as those in Chester, Shrewsbury and Hereford, are the prime point of referral for many Welsh residents. Under Clause 14, foundation trusts will be required to provide, goods and services for the purposes of the health service in England". However, there is no equivalent requirement relating to patients from Wales or Scotland. As regards Welsh patients, we are led to believe that it will be a matter for negotiation between the commissioning body in Wales and the foundation trust. I question whether that provides sufficient comfort to those potentially affected. Given the commercial imperatives under which foundation trusts will be operating, there is a worry on the part of many people, including the BMA, that Welsh patients may no longer be able to access services in England as they have in the past or may be able to do so only at a disproportionate cost to the Welsh commissioning bodies.

We cannot turn the clock back on devolution and health is a devolved matter. Nevertheless, all of us— English, Welsh or Scots—like to regard the NHS as a national and not a regional service. British nationals should have equal access to treatment, no matter where they live in the country. The same concern applies to patients who travel to England from other parts of the UK to receive specialist care in national centres of excellence. I hope that the Minister can resolve these concerns in a satisfactory way. If, for some reason, my amendments are not acceptable, I hope that he may be able to suggest alternatives that are. I beg to move.

Lord Clement-Jones

Amendment No. 168 may be strangely grouped with the amendment tabled by the noble Earl, Lord Howe, but the common factor is to substitute "United Kingdom" for "England". The amendment deals with the limitations in Clause 15 as regards private health care. On reading Clause 15(1), the limitation of restriction to, provision, for purposes other than those of the health service in England, of goods and services by an NHS foundation trust", seems to be providing a loophole as regards the rest of the United Kingdom.

As I read the clause, it could be argued that an NHS foundation hospital could provide goods and services on a private basis for patients in Scotland and Wales— or, for that matter, overseas—but not for those in England and not be subject to any restriction or any power of the Secretary of State to prevent it. That seems to be a rather large coach and horses on which the Minister may care to comment.

Lord Roberts of Conwy

I rise to support my noble friend on the Front Bench and to express my concern about the interests of the people of Wales. My noble friend has put the case strongly; namely, the particular concern that those Welsh people currently served by English hospitals will continue to be so served.

However, we have further concerns arising from the fact that Wales is excluded from the NHS foundation trust concept. I have spoken briefly with Jane Hutt, the Assembly Minister for Health and Social Services, about this. She takes the view that the NHS in Wales is in the process of being reorganised on different lines and that further change is unnecessary at this stage. I can well understand her point of view; the NHS seems to be in a state of perpetual reorganisation.

Health commissioning in Wales is to be dealt with through our 22 local health boards, which comprise local authority representatives as well as health professionals. The local health board system is anchored in the idea of partnership and seeks to harness the powers of local authorities to healthcare promotion and appropriate provision. It represents a holistic approach.

The Minister is convinced that the different system that is to operate in Wales will work well and bring about much-needed improvements. I am bound to say that our inordinately long waiting lists in Wales, with over 5,000 people currently waiting longer than 18 months for hospital treatment, are certainly proof of the need for improvement. So I trust that the Assembly Health Minister is right in expressing the hope that the new system will work.

Nevertheless, the Welsh system was heavily criticised by Labour as well as Conservative Members as being overly bureaucratic when it was pushed through this Parliament and subsequently. It is not as directly geared towards obtaining better health outcomes as the foundation trust system appears to be. I accept that it is too early to pronounce judgment on the performance of the new system in Wales, but let us suppose that it does not come up to the Minister's expectations and that the NHS in Wales continues to perform below par. Of course, voluble expressions of regret will be made that Wales did not follow the English lead and embrace the foundation trust concept, especially since some 15 trusts are already in place. Some, I understand, are already envious of the new possibilities and independence opening up under this legislation for English trusts.

I believe that statutory provision could be made for major Welsh hospital trusts to achieve foundation status where that is patently desirable without unduly disrupting the local health board system. I seek to avoid the growth of the disparity between the NHS services available in Wales and those in the rest of the United Kingdom with no prospect, let us remember, of correction without fresh legislation being brought forward in Parliament.

The Government may say that all this is an inevitable consequence of devolution, but that, I suggest, is a dangerous argument. Devolution was sold to the Welsh electorate on the basis that public services would improve rather than deteriorate, but many would argue that, since devolution, the health service has deteriorated.

To reiterate, I think it would be a mistake to close off the possibility of establishing foundation hospitals in Wales and I therefore support my noble friend's probing amendment in the hope that the Minister may be able to give me some comfort.

Baroness Finlay of Llandaff

I rise briefly to support the amendment. The noble Earl, Lord Howe, has outlined eloquently the problems encountered by people from Wales. When this point was raised in another place, reassurances were given by the Minister. However, many people in Wales fear that those reassurances were not strong enough.

It may be extremely difficult to prove that patients coming from Wales to be treated within a managed clinical network for the provision of care are receiving anything other than equal care to that offered to patients arriving from England. If patients are made to feel that they are a bit of a nuisance simply because they have come from across the border, either that of Wales or of Scotland, that may be impossible to prove. Further, patients will be reluctant to complain about such attitudes because they will feel vulnerable.

There must be enshrined in the legislation a principle of equity that is made very clear in law. Reassurances may not be adequate to deal with the subtleties of the ways in which people might be made to feel that they are unwelcome.

The Lord Bishop of Portsmouth

The longer that I listen to the speeches in this part of the debate, the more I feel that this amendment needs to be considered with care. I am particularly grateful to the noble Baroness for what she has just said about the difficulties in the present system.

Lord Warner

As the noble Baroness, Lady Finlay, has just pointed out, Ministers in another place have already given assurances on this issue and I sought to repeat those assurances as forcefully as possible in my remarks at Second Reading.

Clause 14(2) provides that the principal purpose of an NHS foundation trust must be the provision of healthcare services to NHS patients in England; services are to be provided according to NHS standards and principles free at the point of use. The powers set out in Clause 15(1) provide that the independent regulator can ensure that the requirement in Clause 14(2) is met, so I do not think that we have the loophole that concerns noble Lords.

It would be totally inappropriate to make the principal purpose of these new trusts the provision of healthcare across the UK. As noble Lords have pointed out, healthcare is a fully devolved area. The devolved administrations were consulted on the proposals on NHS foundation trusts and were content for them to be England-only bodies. I am surprised, therefore, to see amendments that seek to give responsibility in relation to foundation trusts across the whole of the United Kingdom. In effect, they would reverse devolution on healthcare.

If I have understood the noble Earl, Lord Howe, correctly, the amendments aim to ensure that NHS foundation trusts can treat patients from Wales and elsewhere in the United Kingdom. However, in our view that is unnecessary. Under Clause 14(1), all NHS foundation trusts must be authorised to provide, goods and services for purposes related to the provision of health care", including services to the NHS in Wales, Scotland and Northern Ireland. So this would be part of the authorisation from the independent regulator.

Where an NHS foundation trust provides cross-border services of the kind referred to by the noble Baroness, Lady Finlay, it is likely that that trust will continue to provide those services as before, provided that the local health board in a devolved administration area continues to contract with that NHS foundation trust. Ultimately, it is a question of whether the commissioning body wants to continue to receive services from an NHS foundation trust located, from the Welsh perspective, on the wrong side of Offa's Dyke.

The regulator will not and should not be able to protect the provision of services to Welsh patients. That is a matter for the National Assembly for Wales, and the Bill tries to make that separation.

5.30 p.m.

Baroness Howarth of Breckland

The Minister has raised a concern in my mind which he may perhaps be able to clarify. I had always understood, and therefore was not concerned, that people in Scotland and Wales who needed specialist treatment—for example, for single ventricle heart conditions in children—could go to specialist hospitals within the foundation trust concept because many will be foundation trust hospitals. I was concerned when the Minister said that it will depend on the commissioning body. One of the concerns that I have about the whole set up is that the commissioning body may decide not to support this kind of specialist treatment. I seek reassurance that that is not so.

Lord Warner

The example given by the noble Baroness is no different from any other kind of specialist care. There is nothing in the Bill to stop NHS foundation trusts from continuing to provide specialist services from an England base to people from Northern Ireland, Wales and Scotland.

The point I was trying to make, without worrying the noble Baroness, is that on all these issues the commissioning authorities in the devolved administrations will have the ultimate responsibility for providing healthcare for their citizens. Where they get that healthcare from is a matter for them to decide in relation to the specialist services that are available across the whole of the UK—or, indeed, increasingly in future, possibly across the EU and elsewhere. Increasingly, there is no requirement always to get healthcare from within the UK.

Baroness Finlay of Llandaff

In the event of a trust having greater demands on its services than it has the capacity to deal with, it will have to ration. If a form of wording is not contained within the Bill to stipulate that there is equality between England and Wales—if I may take that as an example, with due deference to Scotland—the trust may decide to ration on the basis of geography rather than on the basis of clinical need. It may decide to break its contract to provide for the patients of a local health board in Wales even though their clinical need may be greater than that of patients provided for under a contract with a primary care trust in England.

Can the Minister reassure me that there will be safeguards to ensure that those with the greatest clinical need will have their contracts respected preferentially over those with less clinical need, irrespective of the geography of where they live?

Lord Warner

With the greatest respect to the noble Baroness—I pay all due deference to her long experience in this area—and given the previous debate, I cannot see how in primary legislation we can prescribe for every conceivable circumstance of every conceivable case. There is nothing in the Bill that suggests that people from Wales, Scotland and Northern Ireland will be discriminated against. There are equity provisions in the Bill. We would be going down an extremely dangerous path if in primary legislation we tried to prescribe for every kind of individual healthcare circumstance that might happen at some time on some day in the future.

Earl Howe

I am grateful to the Minister for the reassurance that he has tried to give, although I am not totally reassured. It has been brought out in the debate that Welsh patients are already finding it difficult to access elective facilities in England. The concern is that, with the greater degree of autonomy to be enjoyed by foundation trusts, there would be nothing that anyone could do if a trust decided to turn away Welsh residents for its own reasons—perhaps under the circumstances outlined by the noble Baroness, Lady Finlay.

It may be that nothing in the Bill precludes Welsh patients from receiving treatment in England and that, indeed, Clause 14(1) permits that to happen. The issue, however, is whether Welsh patients are on a different and less advantageous legal footing than patients living in England. That is the only conclusion one can reach from reading Clause 14(2). We are talking about the need for equality of access and equality of provision for all British citizens.

I shall read carefully what the Minister said today. I reserve the right to bring the issue back at Report stage. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Blackwell moved Amendment No. 9:

Page 1, line 7, at end insert ", including provision by means of commissioning other organisations"

The noble Lord said: Amendment No. 9 is a simple but potentially very significant amendment which seeks to ensure that the Bill has the scope to secure the decentralising of NHS services that it sets out to achieve.

At present, foundation trusts are defined in Clause 1 as providing goods and services. Depending on how the word "providing" is interpreted, it could be taken to exclude NHS organisations that provide by means of commissioning other organisations. That would exclude, for example, primary care trusts from being designated as foundation trusts.

As I and others argued at Second Reading, it is desirable that the framework of the Bill should be extended to allow PCTs to be in the same position as foundation trusts. This would allow their commissioners of services the same freedoms from central control as are offered under the Bill—perhaps inadequately—to NHS hospital trusts. It is argued that if we relax only the monopoly of supply by freeing NHS hospitals from the central NHS structure, but still retain tight control over the purchasing organisations, that will continue to be the means by which the central NHS exercises the same control over priorities and targets imposed through the central control of funding. As long as the PCTs, through that control, are the mechanism for central initiatives, central control, central targets, we will not get the level of devolved decision making and responsiveness to local needs and priorities that everyone, in discussing the Bill, sees as a key requirement if we are to achieve innovation and the proper interests of patients are to be served.

It is important that it is made clear in the Bill that the commissioners of services should be able to apply for and receive the same freedoms, within the same constraints, as the providers of services in hospitals. If the Government are serious about relaxing the command and control culture, they must sooner or later offer PCTs a route to a similar foundation status. Amendment No. 9, therefore, seeks to extend the definition of "provider" to make clear—not only in Clause 1 but, by implication, wherever the word "provider" appears throughout the Bill—that it is intended to include providing by means of commissioning from other organisations. Amendment No. 117, which stands in the name of my noble friend Lord Howe and is grouped with Amendment No. 9, provides that PCTs explicitly should be able to apply for foundation trust status.

Even if the Government are not prepared to commit to doing this immediately—they may want to take a more gradual route—it surely makes sense to avoid having repeat legislation coming back to this House by ensuring that this Bill provides scope for that as a follow-on activity, although I, and no doubt others, would argue that it should be done sooner rather than later.

In moving Amendment No. 9, I wish to explore whether the Government accept in principle that foundation trusts should accommodate commissioning organisations, including PCTs. If so, is this widening of the definition a necessary requirement in the Bill to make it clear that this can take place? I beg to move.

Earl Howe

I would like to speak to Amendment No. 117, standing in my name. I very much support my noble friend in all that he has said. Much has been said today and at Second Reading about creating a sense of local ownership of foundation trusts as a means of engendering better accountability and responsiveness to patients and local people. These are all good concepts, and I have no quarrel with them in themselves—quite the opposite. But if democratic processes are to be introduced into the NHS, the question is where they should most logically be applied. I agree with my noble friend that logic dictates that they should be applied to the commissioning bodies—the primary care trusts—which are the mechanisms for delivering patient choice and which directly control 75 per cent of the NHS budget.

The argument for allowing PCTs to become foundation trusts is, if you like, the opposite side of the coin to the argument that I shall be making later that the democratic apparatus devised for foundation hospitals is both misconceived and futile. PCTs are where the real decisions about health spending get taken and local priorities are decided. The Government are creating a sense of expectation by going down the democratic path, and if that is really the route down which we are going, it is very important that those expectations are fulfilled, not disappointed. In the case of foundation hospitals, they will inevitably be disappointed, but the same thing may not necessarily happen if, at the commissioning end, people are allowed to feel that they have a stake in the decisions being taken on their behalf.

The Government have accepted the logic of foundation status for PCTs but they do not yet think that the time is ripe for it. I am prepared to bow to their judgment on that. The issue, though, is whether we take the opportunity provided by the Bill to enable PCTs to apply for foundation status at some time in the future. If we do not, it is clear, as my noble friend said, that further primary legislation will be required. That seems an unnecessary complication, given that Ministers have already accepted the underlying principle of what I am suggesting.

The irony of the Bill is that it is likely to result in less autonomy and less flexibility for PCTs than they enjoy at the moment. That is because of the long-term contracts that Ministers want to see established between PCTs and foundation hospitals in order to secure the financial stability of foundation trusts. To my mind0, this artificial rigging of the market works directly counter to all the much trumpeted initiatives to enhance patient choice. Patient choice will in practice be trimmed back in the higher cause of bolstering up foundation hospitals.

There is, therefore, an immediate downside for PCTs as regards Part 1 of the Bill unless they are brought within its umbrella via these amendments. They will no longer have the same flexibility to commission services where they want them or to bring some services into the primary care sector, let us say, where they deem that to be appropriate. That is another reason for saying that the democracy in the NHS should feature not at the provider end but in the area where decisions are made about the purchasing of care and local priorities.

5.45 p.m.

Lord Hunt of Kings Heath

I have some sympathy with both amendments. I well understand the arguments that one wishes to see as much devolution to primary care trusts as possible. However, I do not follow the argument of the noble Earl, Lord Howe, about the impact of long-term contracts. My reading of the choice mechanism is that primary care trusts will have less to do with discussions on elective procedures in the future because the main discussion will be between the individual patient choosing at which hospital to be treated. That is a very good development.

On the general principle, it must be right to seek to devolve to primary care trusts. The problem with the argument that foundation trust status should apply to primary care trusts is threefold. First, there is the argument about whether primary care trusts are ready for further change. At the moment, they are having to put a lot of energy into simply making the system work. To ask them now to consider seeking foundation trust status would be a divergence from their main task.

Secondly, the noble Earl has said that 75 per cent of the budget of the NHS is to be devolved to PCTs. That is about 75 per cent of £60 billion at present, going up to £90 billion in 2008. That is an awful lot of resource voted by Parliament. One has to think very carefully about the implications of devolving that kind of resource to a non-fundraising organisation.

The third reason for caution is that I am not convinced that the foundation-type structure in the Bill should apply to primary care trusts. They are different organisations; primary care trusts are population-based. It would be just as attractive to look to local government, for instance, to commission services for the NHS in the future as to the kind of membership structure proposed in the Bill. I understand the point about having enabling legislation to allow PCTs to take advantage of this at some time in the future, but I am not convinced that the membership structure in the Bill ought to apply to population-based organisations. Quite clearly, all the people living within a primary care trust area ought to be members or voters within a primary care trust structure.

Lord Warner

Let me be clear that the structure and model set out in the Bill were designed specifically for provider organisations, as my noble friend Lord Hunt has reminded us. It requires the principal purpose of any NHS foundation trust to be the provision of NHS services. Moreover, the Bill does not provide any framework for dissolving a PCT and transferring its staff, assets and liabilities to an NHS foundation trust. Noble Lords cannot achieve even their objective by this particular amendment.

We have no objections in principle, as the noble Earl, Lord Howe, indicated, to applying democratic and foundation principles to PCTs, but I suggest that now is not the right time to do this. That is not just a standard Government line on the principle of unripe time. PCTs are new and embryonic organisations which are not ready to go through this stage of change. They are taking on a very major set of new responsibilities, as my noble friend Lord Hunt has suggested. I gently say to noble Lords that I find it surprising that this House, which often criticises the legislation coming before it for not being thought through and properly prepared, is suggesting slipping in a few amendments here possibly to introduce change on the hoof without having thought through the model that we want to use. My noble friend Lord Hunt made those points very eloquently and I will not repeat them. This is not the way to make legislation; if there is a case for changing PCTs over to a different basis, that change has to be thought through and not rushed and imposed on the NHS without proper thought—the very criticisms that were made in an earlier part of our debate this afternoon.

In terms of long-term contracts for providers, I think the noble Earl, Lord Howe, is being a bit unkind. Those long-term contracts would also provide the reassurance to patients of the kind that the noble Baroness, Lady Finlay, was anxious about in the previous discussion.

Lord Blackwell

I thank the Minister for that response, and my noble friend Lord Howe and the noble Lord, Lord Hunt, for their thoughtful comments.

The principle that we must free up the purchasing as well as the supply side of the NHS should be addressed sooner or later. That is a bridge that must be crossed, and no reform will secure the Government's objectives until they eventually achieve that. I take the point that the Minister made that these amendments may not be the most effective way in which to do that. The Bill may be too complex for us to introduce such amendments to it, but I should like to consider what has been said before I decide whether we should bring the amendments back in a different form at another stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 1 shall stand part of the Bill?

Earl Howe

This is not an occasion to repeat our debate at Second Reading. Nevertheless, there is value in setting down some markers for our forthcoming debate in Committee. I do not intend to take long, but some key points need to be made.

Whatever side of the line one is on in the great foundation trust debate—whether one is for it or against it—one fact should trouble all of us. I refer to the lack of public consultation and discussion that has gone into these policies. We on this side of the House have always sought to encourage the Government to move in the direction of freeing up the NHS from central control and giving more autonomy to local managers and clinicians. However, we have never suggested that the most radical departure for the NHS in 50 years should be mapped out as a desk exercise in Whitehall—but that is broadly speaking what has happened. It has resulted in a Bill full of really controversial detailed provisions; that detail, if we get it wrong, could sink and discredit the whole vision.

None of us is in the business of wanting to jeopardise the future of the NHS, and we are not in the business of tabling amendments out of a sense of devilment or party political needling. The details of the Bill really matter if the bold concept contained in Clause 1 is to take wing with everyone cheering it on.

I admit that I am a cautious sort of person. After the BSE crisis, the National Audit Office said: There are risks involved in doing things differently and new forms of service delivery need to be implemented in a way that minimises the risk of them failing or the quality of public services being maintained or improved". That message should resonate with us as we debate this part of the Bill.

There is a curious antithesis in what the Government have done in their proposals for foundation trusts. As regards governance arrangements, they have been much too bold. As for the freedoms to be granted to foundation trusts, they have been much too timid. The risk of getting the governance arrangements wrong is that they could ruin the whole concept; once in place, they will be very difficult to reverse or radically amend. The risk of getting the balance wrong between freedom and regulation is that one might expend vast efforts in charting a new course for the NHS without much tangible benefit at the end. In the process, one may also gloss over very damagingly some of the wider dimensions of the NHS as a cohesive and co-ordinated entity.

Some will argue—including, no doubt, some of my noble friends—that, taken as a whole, half a loaf, in the form of Part 1 as it stands, is better than none. With great respect, I do not agree with that. The one thing that we should not do to the NHS is to subject it to yet another reform, and a big one at that, without being as sure as we can be that we have got it right for the long term. It is not satisfactory for the plans underlying the Bill to be half-baked or still at the planning stage. As our debates proceed, I for one shall study very carefully what the Minister tells us for any signs that the grand facade of the building now being shown us may actually conceal a half-completed and poorly designed collection of rooms.

Lord Clement-Jones

I support the proposition of the noble Earl, Lord Howe. It must be admitted that the Bill contains an incredibly complex set of provisions to set up this new creature. However, the whole argument is that there are also an incredible number of objections that are equal and opposite to so many of those complex provisions.

I do not intend to repeat all the points made at Second Reading. Heaven knows, there were enough. I thought that one of the more amusing remarks made by the Minister came in response to the noble Lord, Lord Harris of Haringey, on the subject of governance. The Minister said that he was glad that the noble Lord was not making a speech against the Bill, after the noble Lord had made a devastating critique of the Government's provisions. Those arguments in themselves would be enough to justify voting against Clause 1—and, indeed, Part 1—as they show the half-baked nature of the foundation hospital proposals, as the noble Earl, Lord Howe, pointed out.

The lack of equity underlying foundation hospitals is probably what sticks in the gullet of most commentators, more than other issues. The basis for selection—the star-rating system—is subject to considerable criticism, but that is the basis for the choice of foundation hospital status. When one has that status, there will be the possibility of further inequity in the local health economy, whether by terms and conditions, borrowing powers or a range of other aspects. They may even affect the viability in other areas.

No one argues with the principle that more devolution is necessary; that is a view of the NHS held in common between all political parties. The issue is whether foundation hospitals do that.

As the noble Earl, Lord Howe, pointed out, the process is probably unique. We have had consultation paper after consultation paper in the NHS. I think back to the idea of getting ahead of the curve, and to all the devolution proposals in other areas that have been debated in consultation papers over a period of time, often as precursors to NHS reform Bills. Yet there was a deafening silence on the subject of the clause, apart from speeches by the Secretary of State. No consultation has taken place whatever. That has been compounded by the lack of local consultation taking place in the run-up to the formation of these foundation hospitals. I suspect that the Minister will reassure us that consultant will take place, that foundation hospitals will be required to do so, and so on. However, the consultation to date has been grossly inadequate.

Then there is the whole issue of whether the proposals will genuinely provide a better model for patient and public consultation in localities that have foundation hospitals than the arrangements that were fought for so hard in previous NHS reform Bills. To find that no patients forums are being established for foundation hospitals is another addition to objections to the Bill.

As the noble Lord, Lord Harris of Haringey, said at Second Reading, the governance system will be a nightmare of bureaucracy. Spending public resources wisely has been a mantra that all Chancellors and all governments are so keen to repeat. However, something like £250,000 could be spent on the governance of some of the foundation hospitals, to maintain their membership. That is a staggering figure when we consider for what other purposes the money could be used. All of that will not lead to better performance or more democratic accountability. In fact, by and large, the membership of foundation trusts will be self-selecting. I think that that is another cause for considerable concern. It will be open to people to come forward and make themselves members by paying their £1.

So we have very strong objections to a huge number of aspects of the proposals. Ultimately, we believe that this is treating the wrong end of the NHS—in complete contrast to the noble Lord, Lord Blackwell, who moved an amendment on foundation status for commissioning bodies and PCTs. We believe that the accountability of commissioners, and bolting that into local government, should be the first priority, not whether provider bodies have a local membership, however artificial, and a governance system which seems to be based on some sort of two-tier Dutch company structure. I do not know whether that was the result of health tourism by the Secretary of State, but it seems fairly outlandish to seek to introduce it into the NHS. 1 do not think that any DTI body has ever suggested that we should have two tiers in any commercial body.

So, at the risk of coining a phrase, this proposal for foundation hospitals is not even a curate's egg, it is a rotten egg.

6 p.m.

Baroness Hanham

I am the chairman of an NHS trust. I declare that interest now and, if I may, for all the occasions on which I hope to take part in the debate. I support the opposition to clause stand part. This is probably our only opportunity to comment generally on the NHS foundation trusts and specifically on the governance issues. Those issues are not a curate's egg, they are a complete nonsense. Those currently trying to establish foundation trusts, and I have spoken to a number of them, are labouring against the background of insufficient information and insufficient knowledge of what this bureaucracy and bureaucratic way of proceeding is about.

It matters a lot how an NHS hospital is managed. It matters a lot that those who are involved with it actually care about it. It matters a lot that they are going to bother to spend the time to pay attention to the patients and to the services that are provided. What is not required is a great diversion whereby a hospital becomes an electoral reform society. I do not understand the mechanism—there is absolutely no clarity about it in the Bill—for the selection that will have to take place. It is not at all clear who will have to keep the constitutional arrangements up to date or how people will be able to dip in and out of membership without the maintenance of a rolling register. Local authorities have enough trouble doing that for elections without hospitals being required to do the same.

The situation is completely unclear. I hope that the amendments will begin to provide some clarification about what the board of governors will do. As far as one can see, the board will include a huge number of people, presumably all of whom will want to dip in and out of the hospital's activities. We cannot have 30 to 50 people with a right to dip into and out of those activities. A hospital is where people go to be cured, not to be bossed at. They do not want to be part of a bureaucratic trust. In my experience, people and patients do not want to take part in the management of hospitals. They want to have access to management when things go wrong. They want a prompt resolution of their complaints. They want to be cared for and they want to be treated. They do not want to run the place. One worries about those who want to run the place at the same time.

So we will be left with this extraordinary animal, the board of governors. It is unclear who will be on the board of directors—or whatever it is to be called; the name seems to change every five minutes—and how they will be appointed and from where. Later amendments tabled by the noble Lord, Lord Hunt, seek to tighten up what could have been a complete hiatus in the organisation, to maintain the status quo to some extent for that board of governors.

Whatever happens with the Bill, the arrangements for the governors have to be sorted out. They have to be sorted out in a way which establishes absolutely what the board of governors will do. That is currently unclear. The arrangements seem at present to provide for the appointment of the chief executive and for an annual meeting. I cannot see anyone being elected to do just that. That point has to be sorted out. We must also clearly establish the independence and the right of the directors to run the hospital. That point also is not clear.

We have to ensure that the Bill is in a practical state by the time it leaves this House—not in an ethereal state, as has been said, based on the dreams of someone sitting at a desk. Those of us with some practical experience of how a hospital is run need to ensure that the Bill is much stronger when it leaves this House. I therefore support the opposition to clause stand part.

Baroness Finlay of Llandaff

In designing a research project, one should have a research question and then ask whether, in an equipoise situation, one way or another way of providing care delivers a better or worse outcome. Many questions have been raised about how the management structure will work. However, we have heard no evidence based on discussions outside this Chamber regarding real, powerful and proven evidence that one system will provide a better outcome than another system. No one would introduce a clinical treatment without sufficient supporting evidence. I am worried that we are considering new arrangements for governance that may have a very adverse effect on how hospitals function managerially. We may be facing huge pressures on managers to skew the delivery of healthcare one way or the other. There are too many unanswered questions to feel confident that we can go forward. The evidence does not seem to be there.

Lord Turnberg

It seems that foundation hospitals do not find favour in a number of quarters around the Committee for a variety of reasons. The proposals in their present form are undoubtedly not perfect. No doubt we will debate ways of improving and changing the way in which foundation hospitals work and the way in which they are governed. We have a long list of amendments to discuss. If we agree at this stage that Clause 1 should not stand part of the Bill, I think that we will be denied the opportunity even to think about the various ways in which the proposals can be put into practice.

It seems rather strange that we are all for the principle of devolving responsibility to the local level. I have not heard anyone speak against the idea that micromanagement, central control and regulation should be reduced; we are all in favour of it. Foundation hospitals seem to be at least the beginning of that process. We should debate all the various ways in which they can be made to work. I think that losing Clause 1 now would be to start at the wrong end.

Lord Walton of Detchant

I may be accused of harking back to the past excessively in debates on this issue. Contrary to the views on this issue expressed by certain other noble Lords, I am not absolutely opposed in principle to the idea of foundation hospitals. I hark back to the early days of the National Health Service. In 1970, there was in my own city of Newcastle-upon-Tyne a board of governors who looked after the single teaching hospital that was answerable directly to the Department of Health. All the other hospitals in the city were under a locally based hospital management committee. The decision was taken in 1970 to create a single university hospital management committee to manage all the hospitals in Newcastle-upon-Tyne with one-quarter university representation, half representation from the local community and one-quarter representation from the professionals—doctors, nurses and others.

For four years that organisation worked like a dream. It was the halcyon time of the National Health Service. Then along came the Keith Joseph reorganisation of 1974 based upon a report by McKinseys with consensus management being the order of the day with district health authorities, area health authorities and regional health authorities. The entire decision-making machinery congealed. It took 14 local, national and regional committees to determine whether it was possible to appoint a new registrar. At the end of the day one committee out of the 14 objected and the whole thing stopped working.

Having said that, I must say that the idea of a foundation hospital based upon the present star system has certain defects. I am talking again about Newcastle. I cannot conceive of the reasons why the splendid Newcastle group of hospitals, which had three stars last year, has now been reduced on the basis of a minor statistical quirk to two stars and will therefore lose the opportunity of becoming foundation hospitals. That is very, very inequitable.

I appreciate the problems which have been highlighted by the BMA. I do not often disagree with my former colleagues and friends at the BMA. I appreciate that the problem of inequity is significant. But surely that can be overcome. The problem with foundation hospitals lies in the devil of the detail. The devil of the detail is as yet improperly and unsatisfactorily set out in the Bill. Very many important safeguards need to be introduced. There needs to be a considerable rethink of the governance and of the committee structure—the board of governors and the directors—before this particular proposal would win general support. The germ of an idea is there; the principle is good but a lot of work needs to be done before this can be properly launched.

Lord Rea

I did not speak on Second Reading because I knew full well that everything I might say would be better said by others. However, there is one point which I do not think came up among the many and various criticisms of foundation hospitals that were made, and this debate gives me a chance to air it.

As my noble friend knows, primary care trusts (PCTs) are a very recent creation and they are still bedding down. I and many other health workers in the National Health Service felt that the concept of the PCT being the commissioning body—the paymaster, if you like—for the hospital services for their population was a fair and intelligent approach. However, large budgets and the urgent historically based needs of NHS trusts have made it difficult for PCTs to tailor their commissioning to the real needs of their population in the way that they would ideally wish. The creation of a new wave of independent powerful foundation hospitals will surely only exacerbate that problem. They will have greater clout and make the commissioning balancing act which faces PCTs more difficult than it already is. Perhaps my noble friend will say how that potential problem will be overcome.

6.15 p.m.

Lord Warner

We do not accept that the governance proposals are a dog's breakfast. I am grateful to my noble friend Lord Turnberg for reminding us that if Clause 1 is not accepted we shall not have the chance to improve the governance arrangements as so many people would like to do.

We have already tried to respond to some of the criticisms in another place. We accept that the governance arrangements need proper scrutiny. We shall listen to good arguments. One or two Members of the Committee may be surprised how responsive we shall be when we discuss some of the later amendments. That does not mean that we think that the whole organisation of the governance arrangements is anything like as bad as one or two Members of the Committee have suggested. However, I do not want to go into the detail of governance arrangements as I hope that we shall have ample time to discuss them at a later stage.

I accept that the intention to oppose the Question that Clause 1 stand part of the Bill is probing in nature. However, if we removed Clause 1 we would deny a large swathe of the population of England the opportunity to have locally controlled NHS foundation trusts by the end of 2004. All those in favour of devolution and speedy devolution should bear that in mind. Twenty-five NHS trusts are already consulting on proposals to apply for NHS foundation trust status from next April. I have already been approached in that regard by Guy's and King's, my two local hospitals. Therefore, a consultation process is going on in that area. I can now announce that a further 32 NHS trusts have applied to be considered in the next wave. We are now working with over 50 NHS trusts moving towards NHS foundation trust status. If all those applications were successful, well over 25 per cent of the population of England would have access to NHS foundation trusts by the end of 2004. Many of these 50 or so NHS trusts cover deprived areas such as Gateshead, Rotherham, Tyneside, Sheffield and many of the poorer parts of London, Birmingham and some other cities. They are not all trusts in the leafy suburbs. Following those two waves there will be many more applications to come on stream in 2005, including many mental health trusts which at present are not eligible but many of which have three star status. I say in passing that it is not correct to suggest that having three star status will be the only criterion for approval for foundation trust status; wider considerations will apply.

The suggestion has been made from time to time, and this afternoon, that, if I may quote Harold Wilson, this is a scheme cooked up by a tightly knit group of politically motivated men. The response by many people at local level such as front-line staff, communities and people who are concerned about their local health services coming forward with applications suggests that there is a groundswell of support for the changes and an appetite for more devolution. I am rather impressed that one or two Members of the Committee think that the Government are sufficiently persuasive to be able to drum up that trade quickly without support at local level.

Some say that we have not gone far enough in terms of local freedoms. However, that is no reason to prevent altogether the considerable package of devolved autonomy that the Bill represents I say to those concerned about NHS trusts that are not in the first waves that the momentum behind these changes will bring many more communities into NHS foundation trust status in 2005 and 2006 as people work to secure these local freedoms. The incentives are there. We certainly do not want to impose the kind of planning blight and local disappointment that would occur if we said that the first wave of applications had to be pilots and that no one else could move to NHS foundation trust status until their experience had been fully evaluated.

There is no doubt in my mind that NHS foundation trust status is seen as offering real opportunities to improve services for NHS patients through more local autonomy. It is clear that the Government are right to proceed with legislation and that those who have expressed doubts are out of step with the many local people and services who now want to move towards that status.

We have not sprung devolution on the NHS or the world. In the NHS Plan and Delivering the NHS Plan, we set out our proposals to give greater operational freedoms to NHS organisations. NHS foundation trusts are a clear example of and way of doing that. Of course we are starting with our best-managed hospitals, but there are mechanisms in place to raise the performance of all NHS trusts, through the £200 million Raising Standards—Improving Performance in the NHS investment programme. We are taking active steps to help people at local level who have not been able to achieve the performances required to raise their game. There will be plenty of scope for all to apply for NHS foundation status over the next four to five years. As I said, that applies to mental health as well as acute and specialist trusts.

The trusts will be set up as new public benefit organisations, with a primary purpose of providing NHS services to NHS patients. They are not opting out of the NHS. The care that they provide to NHS patients will be delivered on the same basis of need rather than ability to pay, and they will continue to be free at the point of use. The trusts will be legally required to use the assets that they hold in ways that promote their primary purpose of providing NHS services, therefore locking them into public ownership. As I said, they remain fully part of the NHS, but with much greater freedoms.

That is the very local autonomy and devolution for which many Members of the Committee argued earlier. We do not think that local communities should be denied those changes, and we strongly suggest that we move on, get the Bill right, and get the changes introduced as quickly as many local people want.

Baroness Hanham

Does the Minister agree that the NHS trusts going towards foundation status at the moment have very considerable reservations, particularly about the governance issues? What discussions are being undertaken with them at the moment, so that there is feedback for them as they try to prepare for foundation status without the benefit of the legislation behind them?

Lord Warner

Of course people undergoing great change want to be sure that they have got the detail right, and would like as much certainty about the future as possible. All human organisations are like that. However, if they have concerns, those concerns are not so strong that they do not want to move along that path. They are pursuing application in a constructive way with the department.

Baroness Carnegy of Lour

The noble Lord said, very helpfully and encouragingly, that Members of the Committee might be surprised how carefully the Government would listen to amendments, and how much they would think about them. For my comfort, and I think for that of my noble friend Lady Hanham, will he say that some of the amendments to which the Government will listen most carefully and pay particular attention will be those concerned with governance? The whole question of whether doctors, nurses and other hospital staff will be able to give better treatment to patients in hospitals because of the public involvement that the Government have contrived is an open one. From my point of view as someone who has been involved in local affairs and local government, I have great reservations on the subject.

Lord Warner

I can certainly assure the noble Baroness that those were the very amendments to which I suggested that we needed to listen, debate and consider carefully. However, that does not mean that I accept some of the arguments that all the governance arrangements are a total dog's breakfast. Some of the amendments have behind them the thrust of an argument suggesting that we need to control more from the centre and do not want to allow flexibility at local level. In our best intentions to get matters right, we must move culturally from the idea that we want to prescribe everything around governance from the centre, while safeguarding the public interest.

Baroness Cumberlege

The Bill will have many days of debate in this Chamber. During its passage even so far, "devolution" and "devolved" have been bandied about. I am in some confusion. It would be very helpful to me, and perhaps to other Members of the Committee, if the Minister could give us a clear definition of what the Government mean by devolution.

Lord Warner

Devolution is one of those words that tends to have different meanings in Scotland, Wales and the regions of this country, as I have observed from listening to a number of political debates over the years. We are trying to give more local autonomy and freedoms to manage assets and design services around the needs of local people. That is the best that I can do on the spur of the moment, but I am happy to write to the noble Baroness to confirm that.

Earl Howe

I am grateful to all Members of the Committee who have taken part in the debate, which I hope that I signalled was intended to be probing. That is indeed what it has been, and it is not my intention to divide the Committee today. However, if we were to take Clause 1 out of the Bill, nothing at all would prevent us debating the rest of Part 1 if we wished to do so. My understanding was that agreement had been reached along those lines through the usual channels.

The central issue that I sought to emphasise was that of risk. The noble Lord, Lord Walton, was absolutely right to say that the devil was in the detail. I am as keen as the Minister to debate the detail of the Bill. He is right that there is enthusiasm for the concept of foundation status, but there are also considerable reservations, as my noble friend Lady Hanham pointed out. There is also considerable bewilderment about how the arrangements will actually work. One of the main purposes of our debates is surely to tease out the implications of the Bill and its proposals for trusts, and for patients and the public. Unless we get satisfactory answers on those questions, I cannot see us supporting Part 1 at later stages.

Clause 1 agreed to.

Earl Howe moved Amendment No.10:

After Clause 1, insert the following new clause—


  1. (1) It shall be the duty of the Secretary of State to establish an independent review body to carry out the functions specified in subsections (4) to (6).
  2. (2) The Secretary of State shall appoint at least nine members of the independent review body.
  3. (3) The independent review body shall elect a chairman from amongst its members.
  4. (4) The independent review body shall prepare reports containing proposals relating to the establishment of a local, democratically accountable system of governance for NHS foundation trusts and Primary Care Trusts.
  5. 199
  6. (5) The independent review body may in particular make proposals in accordance with the provisions of subsection (4) relating to—
    1. (a) methods of securing wider public participation in the governance of NHS foundation trusts, and Primary Care Trusts;
    2. (b) methods of increasing public awareness and access to information about the governance of NHS foundation trusts and Primary Care Trusts; and
    3. (c) the membership of public benefit corporations.
  7. (6) The independent review body must—
    1. (a) lay a copy of any report prepared in accordance with the provisions of this section before Parliament, and
    2. (b) once they have done so, send a copy of it to—
    1. (i) the Secretary of State, and
    2. (ii) the regulator."

The noble Earl said: I freely admit that I tabled the amendment not so much for what it actually proposes, but more as a means of shining a spotlight on the role of local democracy in healthcare and the system of governance devised for foundation trusts in the Bill. Some of that territory has already been very ably mapped out by my noble friend Lady Hanham and the noble Lord, Lord Clement-Jones.

The almost unquestioned assumption underlying the Bill's proposals is that accountability to local people and responsiveness to local healthcare needs necessitate a democratically organised model of governance. The presupposition is that, without direct representation of patients, the public and, for that matter, staff on the board able to influence and steer the way in which an organisation is run, we will not get stewardship or control of hospitals that is truly in the public interest. I am clear that nothing could be more mistaken.

The United States is not always the paradigm of choice in matters to do with healthcare. However, in relation to governance, if we look at how a typical not-for-profit hospital in the US is run—most are run well—success depends on one factor above all: competent directors and managers taking the key decisions. Where there is a board of trustees or shareholders, those individuals are responsible for appointing the non-executive directors, but apart from that they have no role beyond holding the management to account and, where appropriate, providing the benefit of their advice on forward plans.

The trustees or shareholders do not second guess the executive board on how the hospital is run. They have no power to issue it with directions. They are appointed, not elected, to ensure on behalf of the community that the founding principles of the hospital are honoured, and that competent individuals are in place to fulfil the managerial remit. The directors— and only the directors—are responsible for resource allocation.

The governance model devised for foundation trusts places too great an emphasis on democracy and not nearly enough emphasis on competence. A largely elected board of governors having the power to instruct the directors on resource allocation and treatment priorities is a recipe for poor governance and demotivated management. I have unqualified enthusiasm for the concept of patient and public involvement and for patient groups acting in an advisory role, but, to put it at its simplest, patients should not be running hospitals.

What is more, the all-out desire to see boards of governors 20 or 30 strong, populated by every conceivable type of stakeholder from patients to would-be patients, to staff, to local councillors, to commissioners of healthcare, to academics and voluntary bodies is a guarantee that you will get the very opposite of focused decision-making. A board of that unwieldy size and composition is a formula for posturing, for vocal factions and for instilling into each board member the mere illusion of influence. Anyone with experience of corporate governance will tell you that a board of 10 or 12 people is the maximum number needed for effective, tight operation.

The cost of all this should not be overlooked. It is estimated conservatively that the cost for each foundation trust of maintaining membership lists, running elections, communicating with members and servicing the board of governors will be somewhere between a quarter and half a million pounds every year. That will be the cost in hard cash. In terms of opportunity cost, the number of working hours that the chief executive will have to spend on governance matters will be very considerable. One chief executive estimated to me the other day that it might very well take up as much as 50 per cent of his time.

The cost can be measured, too, in terms of the drag on innovation and service development. At a time when healthcare is evolving at a rapid rate, speed of decision-making and hence local responsiveness will not be enhanced by the constant need to refer upwards to an alternative debating forum.

It is probably too late for the Government to row back from this model because its supposed merits have been talked up too loudly, but row back they ought to if this experiment in democracy is not to result in failure. Ministers are attempting in one leap to move from wholly appointed hospital boards to the most complex possible governance model imaginable—and a model of which the NHS has no experience. That fact alone makes the experiment foolhardy.

The most obvious feature of the governance model chosen for foundation trusts is that nobody has asked for it. It is being imposed from above across the entire acute sector of the NHS without consultation. It does not take a genius to discern that in general local people do not want a say in how their hospital is run any more than they want a say in how their branch of Tesco's is run. What they want is a hospital that delivers services that they need in an effective manner. Their expression of need emerges through the commissioning process and through the good offices of GPs as patient advocates. That fact, in the end, is what will lead to disillusionment on the part of those who offer themselves for election as foundation trust governors. They will rapidly find that financial flows from PCTs, not their own attendance at meetings, really determine how a hospital functions and moves forward.

If democracy is to play a role in the governance of hospitals—and I understand all the arguments about local engagement—at the very least hospitals need guidance on what a good system looks like. The Government are saying that it is up to each foundation trust to design its own constitution. It is stating the obvious that hospitals have no experience of this sort of thing.

I was, frankly, disappointed in the guide to developing governance arrangements which the department published last month. The section headed "How will you know the governance arrangements are good ones?" is less than one side of A4. At the end it states that a template constitution and explanatory notes are provided in the annex. When one turns to the annex one finds that it contains nothing at all—it is a blank page. I am sure that soon something will emerge from the great brains in the department, but as and when it does it needs to contain a great deal more meat.

As will be abundantly clear, my view of the governance model devised for foundation trusts is that it is a mess—such a mess that I do not know whether it is possible to remedy it. It will certainly be very difficult to unwind it if it is put in place and then seen not to work. I can only offer my views to the Government in what I assure the noble Lord is a constructive spirit and hope that they will listen. I beg to move.

6.30 p.m.

Lord Harris of Haringey

The noble Earl, Lord Howe, has proposed an interesting and attractive amendment, but, unfortunately, for all the wrong reasons. I find it extraordinary to hear the noble Earl say that there is too much emphasis on democracy when ironically, on the same day, the Shadow Home Secretary suggested that we should have directly elected sheriffs meddling in the operations of local policing, 143 different districts and so forth. But that is an aside.

The question raised by the amendment, but no so much by the noble Earl's speech, relates to where the balance should lie in the parts of the health service in which there should be improvements in democratic accountability. I was particularly attracted to subsection (4), which emphasises that the proposed review should look at, the establishment of a local, democratically accountable system of governance for NHS foundation trusts and Primary Care Trusts". The danger in some of the proposals contained in the Bill is that they will fossilize public support around a democratic structure of institutions. That will produce precisely the wrong dynamics in creating a health service which will respond to changes and changing needs. Democratic support and accountability is most important in the commissioning function, which is clearly the responsibility of primary care trusts.

The noble Earl expressed himself most concerned about the cost of democracy. The point about better systems of local accountability—how those are arrived at is open to question—should not be measured by the cost of that. Rather one should assess whether as a result of that greater accountability of NHS managers, they deliver a service which is more responsive to the needs of the communities they serve. That must be the emphasis which surrounds this measure.

It is difficult to put a price on that and to measure it against the costs of democracy or accountability arrangements, but it must be accepted that if services are to be genuinely responsive to local needs and the requirements of the local population, there must be a mechanism enabling a linkage to the local community. That will cost resources. Indeed, it is a fallacy to assume that leaving it all to the managers will produce an insight, somehow magically, into what is needed to be responsive to the local community.

I welcome the proposed amendment because it provides the Government with an opportunity to think again about the precise mechanisms of governance that are being put forward. It is unfortunate that there is no read-across in the amendment to the existing Commission for Patient and Public Involvement in Health. It is also lacking in what it does as regards the rest of Part 1 and what happens after the learned review has presented its report to the Secretary of State and to the regulator. I believe that real timing issues arise.

However, the Government need to consider very carefully the principle of looking first at the most appropriate accountability structures within the NHS—examining the balance of accountability between primary care trust commissioners and the institutions which will be represented by foundation trusts. They need to recognise that perhaps what we have in the Bill is not at present the final answer. There could be considerable merit in further discussion— perhaps along the lines of the review proposed in the amendment.

Lord Lipsey

I had planned to play a full part in the deliberations on the Bill, many parts of which interest me, but unfortunately I must user-test one of our great hospitals. Therefore, this may be the only opportunity that I have to speak. On the issue of governance raised by the amendment my feelings are so strong that I hope the Committee will indulge me and allow me to say what I profoundly believe.

I start with two preliminary points. First, in our opening debate this afternoon, speakers on all sides of the Chamber were worried about the over-politicisation of the health service. They wanted an independent agency. That might be one method; there could be others. None the less, they were worried that there was too much politicisation and too much political intervention in decision-making. But this Bill seeks to create a system that embeds politics in the management of our hospitals. Is that what we want?

As someone who takes a keen interest in electoral matters, perhaps I may be forgiven a second observation. I observe not only in this country but throughout the world a decline in participation in elections. At the Brent by-election I believe that the turnout was 36 per cent. That poses grave questions in all kinds of areas. However, to respond to a decline in public eagerness to participate in elections by creating yet more seems to me most eccentric. We are in danger of inviting people to spend their whole lives going out and voting, which is the last thing they want to do. What they want is a better health service which provides for their care.

Like the noble Earl, Lord Howe, who raised this matter, I believe that a profound confusion is causing us to go adrift here. It is a confusion between something that is absolutely good and important— that is, democratic accountability—and one particular method which is occasionally appropriate for promoting that, which is election. The two are not the same. I could give examples of many methods by which democratic accountability can be well promoted, such as citizens' juries, consultation exercises and polling. A full range of very interesting techniques achieve what most people want and enable that to be fed in, but I am afraid that election is not a very good instrument in that respect.

We must think about consequences when aiming for better patient care. What are the consequences of elections? Let us be concrete and get away from the abstract. First, I believe we can be fairly certain from experience that most elections will be run on a party-political basis. There will be a Labour slate for the hospital, together with a Tory slate and a Liberal Democrat slate. That is what happens with local councils and with every other kind of election. Of course, where there are party slates, there are whips. Before long, in many cases our hospitals will be run by whipped party activists, many of whom will be good people and many of whom will be bad. However, I do not believe that that is an enormous leap forward to democratic accountability.

Secondly, in some cases—I hope, a small minority— the elections will present an opportunity for extremists; for example, the National Front, which does not want immigrants to be treated. Under the proposal, that organisation will have only to sign up a few of its people and pay a few quid and the votes will be purchased to elect extremist candidates. Will that lead to better patient care? In my judgment, it will not.

The third consequence will be the single-issue candidate. The primary care trust, in setting priorities, will say, "We are not going to spend so much on grommet operations in future. They don't work and we don't much like them". The surgeon who is threatened by that may say, "Oh God, save our grommets". He will have a patient, whose child has recovered from an ear infection, saying, "You know, it's the grommet that did it. I must stand for election and stop this happening". That patient will stand and it will be a very attractive campaign. It will receive media attention and there is a good chance that he will be elected.

The final consequence will be a deep conservatism— not with a large "C" but a small "c". It will make the process of change, which is so desperately needed in our health service and our hospitals, not easier but harder because people will be elected precisely because they resisted change, just as the Member for Wyre Forest in another place resisted the closure of his local hospital. He had every right to do so; 1 do not claim that he should not have done. However, I do claim that hospitals governed in that way will be less well governed from the point of view of the only thing that matters—that is, patient care.

On the general concept of foundation hospitals, I can see what the Government are trying to achieve and 1 am not unsympathetic to it. But surely it would be tragic if a good idea was spoiled because it became mixed up with some half-baked thinking about democracy and democratic accountability when we could have better thinking in relation to all those things and make a greater success of what we are proposing. Because the amendment of the noble Earl, Lord Howe, tends to suggest ways in which we could consider the issue and make progress, I support it and I hope that the Government will think again about the governance arrangements. I say "think again". That gives them the benefit of the doubt in suggesting that they might have thought about them in the first place.

6.45 p.m.

Lord Peyton of Yeovil

I shall be brief. I have a knee-jerk fear of any proposal which suggests that we should have more reviews. We live in a country full of people who are reviewing and monitoring other people, examining the results and reporting them because it is their duty to report. The country is flooded with quite unnecessary, rather ill-written paper which results from such activities.

It is not part of my intention to be over-helpful to the Minister on this occasion, but here I find myself wondering what the effect of my noble friend's amendment will be. Only a limited proportion of the people engaged in the National Health Service are at the sharp end and ever have the effect of making someone feel better, which is the object of the exercise. I should like to know whether my noble friend is certain that his proposal will not take up the time of people who might be better engaged looking after and caring for patients and repairing the patients.

Lord Hunt of Kings Heath

Rather like my noble friend, I was attracted by the wording of the noble Earl's amendment, although not by the arguments that he used to further his cause. As we have already discussed this afternoon, I believe that there is a case for a serious examination of democratic accountability in governance within the health service that does not confine itself only to foundation trusts but looks at the whole organisation of the NHS in a holistic way. I do not believe that we can run away from the fact that we need to consider this matter from the point of view of the whole system rather than simply NHS trusts.

However, I believe that the noble Earl is wrong when he says that patients should not be involved in running hospitals. I believe that they should be involved, just as I believe that it is right that we, as parents, now have a big say in the running of our children's schools. Surely we have something to offer as users of services, not only in a consultative way but in helping to run those organisations, which, after all, are there to serve the public of this country.

I believe that some of the risks that have been postulated around involving local people in the running of their hospitals have been exaggerated. Surely the first point to make is that there is not a hope in hell of transferring accountability from national politicians to the local level without a democratic process at the local level. That is why I do not agree with the national agency approach. The only way in which that can hang together is if local people have a democratic involvement and a right in running their own local health services. That is why it is so important to have a governance structure that allows local people to put their names forward and to be involved.

Hand on heart, I do not pretend that the governance structure in the Bill is perfect. There are problems and I still believe that there is a problem in terms of the powers of the governing body. I disagree with the noble Baroness, Lady Hanham. I believe that the problem is that the governing body has not been given sufficient powers. As far as I can see the only power that it has is the nuclear option of the appointment and replacement of the non-executives and the ratification of the appointment of the chief executive.

I hope that when foundation trusts take forward their proposals they will look closely at ways of involving the governing body in the decision-making process. The worst option would be for people to be elected to the governing body and then to find that all power resides in the board of directors. It will be very important indeed for the board of directors to ensure that when the governing body comes together the board is asked to be involved in the decision-making process.

On an optimistic note, I do not accept the fears of my noble friend Lord Lipsey that the involvement of local people in running their hospitals will lead to a fossilisation or will be a bar against progress. I advise, in an honorary capacity, my own local trust—the Birmingham University Trust—and I have been really excited by the proposals that it has put forward in its consultative document about the way in which it wants to involve local people. The trust also wants to co-opt on to the governing body the leaders of local government, the Churches and industry and for there to be strong staff involvement. Far from being a conservative body, or a body that will get in the way of progress, I believe that it will add enormous strength to that organisation. The progress that has been made in the past few years in that institution will be enhanced and increased in the future.

By all means let us look at democratic accountability across the whole range of NHS services and commissioning, but let us also see whether we can improve the governance structure. I hope that at the end of the day we shall accept in Committee that local people and patients have the right to be and should be involved in the running of their local services.

Baroness Hanham

I hate to disagree in any way with the noble Lord, Lord Hunt, but I do not believe that I said what he said I said. I said that I thought that the board of governors at the moment was inchoate, and that the Bill gives it no particular role. The danger is that it may then become something with which nobody wants to be involved. I agree with him that there must be some parameters if there is to be a board of governors.

I have a great many concerns about this matter, but a particular one which I believe I can raise now is that I am not sure what happens when there is a disagreement between the primary care trust which is commissioning the services, the board of governors that has on it representatives from the local community, which wants to do something entirely different, and the board of directors of the hospital that is trying to manage within a tariff system that does not stack up and against long-term contracts for which it is not being adequately reimbursed.

That seems to me to be a remedy for completely stultifying any system of management and movement at all. There is much to be said for considering the issue more closely if there is to be democratic involvement. All of us in the NHS and managing the NHS have embraced the idea of patient involvement. In my own hospital we have patient/user groups for practically every chronic disorder. That is extremely important because it is suggested that patients will want to be involved on a long-term basis; indeed, the noble Lord, Lord Hunt, said as much. But there is a difference between those patients who come in for a five-day operation and those who are involved in the hospital for months and years because they have a chronic disorder, and consequently become involved and interested, willy-nilly, in the way that the hospital operates.

Is it right that the people who should be involved are those representing people with chronic disorders? Those people will be interested because they already have organisations behind them to enable them to take part in an electoral system. That goes back to what the noble Lord, Lord Lipsey, said about the people who will get on to the board as it is constructed at the moment; they will be people who have the muscle and the power behind them, whether a politician or those who already have a well set-up group behind them. That point needs to be teased out as well as the possible problem of a great deal of disagreement between the three or four elements involved in the whole arrangement, all of which could lead to an impasse if a way forward is not agreed.

Perhaps in passing I may wish the noble Lord, Lord Lipsey, rapid restoration to full health so that he can take part in the remaining stages of the Bill.

Lord Walton of Detchant

Perhaps I may inject a note of caution, echoing some of the concerns expressed by the noble Lord, Lord Lipsey. I hark back to the past: I wonder how many Members of the Committee can remember under a previous Labour administration a White Paper entitled Democracy in the National Health Service. That White Paper, which ultimately led to legislation, doubled the number of local authority councillors and representatives on health authorities. Frankly, in many respects the result was disastrous because health authority meetings were dominated by sectional interests and, as the noble Lord, Lord Lipsey, said, the whole health service was politicised.

I agree entirely with the democratic principle. There must surely be a democratic component, but I believe that the independent component must always dominate over the democratically elected people on the governing bodies of the trusts. I hope that the Minister will take note of that concern based upon experience.

Lord Warner

This has been a very interesting discussion. Before responding to some of the points and setting out the Government's position I assure the noble Earl, Lord Howe, that we were not seeking to thwart him in his quest for knowledge. He received an earlier draft of the governance source book. There was already an annex D but he was not privileged to have it. We shall give him a copy after this session. There is now a full version and I believe he had the version that did not contain some of the annexes. We shall check with the noble Earl and we shall place the full version in the Library.

I am grateful to the noble Lord, Lord Peyton, for his concerns about my welfare. I shall refer to some of the points that he raised as they have some substance. I share many of the concerns mentioned in the perceptive remarks made by my noble friends Lord Harris and Lord Lipsey, whom I also wish a good encounter with the NHS and a speedy return to the House.

Some of the debate has been a little pessimistic about the ability of people to engage with the agenda and participate in the running of their local health services. We know that direct elections have had falling turn-outs, but they have often been for multiple-purpose organisations. In many ways health is a single-interest issue that affects all families. We know from other work that has been carried out that single-interest issues attract many people and much participation. We could be being too pessimistic about that.

We have also put safeguards into the Bill to address some of the concerns that my noble friend Lord Lipsey raised about what may be described as entryism by particular interest groups or particular sections of the community. We were pleased to accept amendments in the other place that will ensure that NHS foundation trusts are committed to real engagement with their membership—not just at the outset, when applicants want to secure the Secretary of State's support or regulator approval.

Under Clause 6(2)(b), the regulator will need to be satisfied that the foundation trust has made arrangements to ensure a representative membership. Under Clause 36, following authorisation, the regulator may require the NHS foundation trust to take steps to ensure a representative membership; and under Schedule 1, paragraph 24(2)(b), each foundation trust must report on the steps that it takes each year to secure a representative membership. Those records will be made public and copies provided to the regulator, enabling him to assess whether he needs to include requirements in the authorisation. So review mechanisms are enshrined in the Bill for the regulator to continue to reassure himself that the body is a representative of the local community.

7 p.m.

Lord Lipsey

I am extremely interested in what my noble friend is saying. Will he explain what miraculous powers are given to the regulator or, on his instructions, to hospitals to force people to get involved when they do not want to?

Lord Warner

The regulator cannot force people to get engaged if they do not want to. He can review the authorisation of the trust if it cannot demonstrate that its body is representative of the local community. Although my noble friend Lord Desai earlier suggested that there was a politburo in Richmond House, I do not think that we have yet reached the point where we think that we can use the regulator to compel people to participate in the health service.

It is worth repeating the arguments about why foundation trusts are different. They are a new form of social ownership, where accountability for health services is to local people rather than to central government. In that way, a much stronger connection is established between the providers of health services and their local communities, extending beyond the current arrangements for consultation.

Although other systems that have been developed over the years provide for consultation and engagement, they are often perceived by the public and patients as management tools. They are put in place by managers and are liable to be ignored if the results do not fit with what is wanted. To cynics, they represent no real shift of power. Direct election takes the process a significant step further. It provides the right to take part in decision-making and can be the key to delivering genuine improvement.

I am surprised by some of the remarks made when one considers the extent to which parents have been engaged with the education sector. Let us face it, many people elected to local authorities may be what one Member of the Committee earlier described as bungling amateurs, but when they are first elected, they have to take decisions about priorities and expenditure on behalf of their local communities. To suggest that people are incapable of growing into that decision-making is to ignore experience in other areas of public service.

The Bill will provide for democratisation of NHS providers, as we hope that all NHS trusts will become NHS foundation trusts in due course. As I said earlier, we also have no objection in principle to applying democratic or foundation principles to PCTs. However, I am a bit doubtful about mandating the review in the way suggested by the amendment. To enshrine that in legislation would commit us to another piece of bureaucracy, which many Members of the Committee have argued strongly against.

However, I should like to reflect further on many of the remarks made by Members of the Committee and consider whether the thinking behind the amendment could be adapted and delivered in another way.

Baroness Carnegy of Lour

I do not think that the Minister should put too much faith in the comparison with the way in which parents are involved in schools. Parents have to do more than half the educating of their children; they are partners with the school all the time in bringing up and educating their children. So they want to be, and are, very much involved. That does not necessarily happen by means of a single parent representing other parents; it is much more about many parents going into schools to discuss with teachers, as the Minister well knows. So I do not think that that is a good comparison.

Also, when the Minister says that he will consider carefully what has been said, I hope that he will pay enormous attention to what was said by the noble Lords, Lord Harris and Lord Lipsey, and my noble friend Lady Hanham. They are people who, from their different standpoints, know very well what happens when people are put on bodies—they are probably members of many other bodies; they go along and take part—and how they justify their existence. I have been one of those people. At one time, I was on about 70 different bodies. I am sure that the noble Lord, Lord Harris, has been on many more ex officio. That may well happen in this context.

I think that what those three Members of the Committee said should point out to the Government that they are taking a very old-fashioned approach to the governance of hospitals, which is in itself a magnificent idea. They may spoil it by using that old-fashioned approach.

Lord Warner

I remind the noble Baroness that many carers and families would say that they are deeply involved in the healthcare of their children and relatives—just as much as parents are involved in the education of their children. I was not trying to make a direct parallel; I was trying to make the point that in other parts of our public services we have engaged people in their running and management.

As I said, we should carefully consider the points made by many who have taken part in the debate, who I acknowledge have a great deal of experience in this area. However, I am questioning—as was the noble Lord, Lord Peyton—whether the amendment is the way to address the problem.

Earl Howe

This been a very good debate and I am grateful to all those who have taken part in it. I also thank those who have seen merit in my amendment. I confess that, as I mentioned at the beginning, my intention was to use the amendment as a hook on which to hang a debate on the role of local democracy generally in the governance of hospitals. I have certainly succeeded in that aim, even though the views from around the Chamber have differed widely on the subject.

Once again, we look to the experience of the noble Lord, Lord Walton, who delivered a salutary lesson from history on how local democracy can upset and impede the effective governance of hospitals. I listened with great care to what the noble Lord, Lord Lipsey, said and agreed with almost all of it. I join other Members of the Committee in wishing him a speedy recovery and a swift return.

One of the noble Lord's points that I should like to pick up is that of voter apathy. There is much voter apathy: one has only to look at the vacancy rates on school governor boards to realise what an uphill task it is to get people interested in running schools. But the idea that, as the Minister said, a trust may lose its foundation status if it cannot drum up sufficient democratic support is quite extraordinary. That may well have nothing to do with how good or bad the hospital is itself. It seems very strange that the whole thing should hang on the enthusiasm of the voters. What matters is surely whether the hospital is good or bad.

Lord Warner

I am grateful to the noble Earl for giving way. I did not say that everything hinged on participation by local communities. There is a distinction between what the noble Earl claims I said and what I actually said. I said that one of the levers available to the regulator was a qualification or change in the authorisation if it was not satisfied that the body was representative of the community it served.

Earl Howe

I would be interested to know what sort of qualification or change the noble Lord is talking about. I thought that the regulator could take away the authorisation or leave it in place. It is not clear to me what kind of halfway house there is where the democratic base falls short of expectations. We may need to cover that territory as we debate the later parts of the Bill.

My noble friend Lady Hanham posited some not improbable situations that could easily lead to gridlock. I was not aware that the Minister answered those points, which seemed well made.

The noble Lord, Lord Hunt of Kings Heath, foreshadowed some of his later amendments on granting further powers to foundation hospital governors. That path is extremely dangerous and potentially disastrous, so I do not think that we will see eye to eye on it.

My noble friend Lord Peyton got to the heart of the question, as ever, when he asked me about the opportunity costs of the proposals in the amendment. He is quite right, as ever, that what matters is patient care and we must not be distracted from that. I will reflect on the noble Lord's concerns very carefully before Report stage.

It would be helpful if the updated guide to governance arrangements could be circulated to all Members of the Committee who have taken part in the debate to enable us to see what thinking has emerged from the Department of Health on the crucial question of the model constitution. Once again, I thank all Members of the Committee.] beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (The Countess of Mar)

Before I call the next amendment, I must tell noble Lords that, if Amendment No. 11 is agreed to, I cannot call Amendments Nos. 12 to 22, as the pre-emption rule applies.

7.15 p.m.

Schedule 1 [Constitution of public benefit corporations]:

Baroness Barker moved Amendment No. 11:

Page 108, line 12, leave out paragraph 3.

The noble Baroness said: I declare an interest in the whole Bill, as I am an employee of Age Concern England. That is my usual declaration, but, on this occasion, I shall go further. My role in Age Concern is to work with small local organisations and to provide them with advice. Germane to this discussion is that frequently I advise small local organisations on constitutional arrangements. It was therefore a great delight to read the governance arrangements proposed in the Bill, not least because they are so curious.

Before discussing the detail of this group of amendments, many of which are probing amendments, I wish to ask the Minister one key question that may enable us to see our way through many of the curiosities in the Bill. Why did the Government not take any of the existing forms of charity governed documents? There are a number of standard formats, such as a company limited by guarantee. Not only are there distinct formats, but they are also governed by charity and company law. There is an in-built framework covering many of the issues that have been raised and those that will be raised in subsequent amendments; for example, auditing and accounting. Why did the Government not pick one of those? Why cook up this very strange arrangement? That question has been burning in my mind.

The amendments hinge upon Amendment No. 40. The noble Lord, Lord Clement-Jones, whose name is also attached to the amendments, and I apologise, as we did not intend to delete paragraph 6. The amendments about the format of the board of governors and stakeholders will actually apply to proposed paragraph (8A). Members of the Committee may have experienced some misunderstanding, for which I apologise.

I intend to discuss many of the issues raised by Members of the Committee in the debate on Amendment No. 10, but I shall do so from a different standpoint. It has not been mentioned that one of the biggest fears of those who have considered foundation trusts as proposed is the consideration of acute provision in isolation, not just from primary care, but from the whole field of social care.

My amendments address the governance of a foundation trust within a whole system of health and social care. That is particularly clear if one considers the composition of the board of governors under Amendment No. 40. There should be a board of governors that is much more powerful than that proposed by the Government, and which involves different stakeholders—I am not keen on the word "stakeholder" but it is shorthand for an idea—such as representatives of employees, PCTs, local authorities and, crucially, representatives of patient bodies and the voluntary sector. Members of the Committee will understand why I am keen to include that.

The amendments also deal with limitations of periods of office. Deliberately they take out individual membership—for three reasons. First, although direct democracy has some merit, as outlined today, it comes at a huge cost. We estimate—perhaps the Minister will advise me whether it is correct—that the servicing of an individual membership is likely to cost a foundation trust upwards of a quarter of a million pounds per year. In that circumstance, it is reasonable to look at a more representative framework for involvement.

The second reason for our stance on individual membership has not been mentioned. Various Members of the Committee have talked about entryism. I was interested in that point, as I am always interested in the ideas put forward by the noble Lord, Lord Lipsey. But nobody has mentioned the provision of specialist and minority services. Recently, as part of my daily work, I had the experience of talking to a representative of a primary care team in the company of a number of people concerned about the provision of services for older people. With refreshing candour, he said, "What you must realise is that the profile of this borough includes a very high number of very wealthy, articulate parents of small children. They are the people who will be right at the top of the PCT agenda". The comment was disheartening on one level, but it was very refreshing to have that level of openness from someone in the NHS.

At Second Reading, I spoke about the disincentives to dealing with the problems of old age under a tariff system, as the noble Baroness, Lady Hanham, discussed earlier. My concern is that under a system of individual membership, as the noble Baroness, Lady Hanham, said, those without ready access to a pre-formed group or organisation to enable their needs to be articulated will lose out. That is one reason why we have talked about having not one representative for the voluntary sector— as in PCTs—but five, because there are different client groups.

Given the strength of the argument that the noble Earl, Lord Howe, made about the representative boards, he will not be terribly pleased with the set of amendments. However, I have one point for him and for the Minister: a whole industry is growing around consultation. There are people who spend most if not all of their time involved in organising consultation about health. The noble Lord, Lord Peyton, is no longer in his place, but if ever a review was needed, it is one that correlates the amount of time spent with output, because for all the level of consultation, very few people who are consulted about health matters, either locally or nationally, feel that that consultation brings about any change.

There is a good reason for that: the process of consultation is often at an operational level and rarely makes it to the strategic level. Precisely because we think that there is a need for a strategic overview of health at the heart of the foundation trust government, a comparatively big and representative body is a good idea. We also hope that it will replace many other similar bodies that are also working throughout the field of health and social care.

There is one reason why the model we are talking about has merit. As I have said before, the idea for foundation trusts was first mooted in the NHS Plan, which was the Government's response to the Wanless committee report. That report spoke at considerable length of the need to develop services of a preventive and rehabilitative nature. There is a great danger in the Bill's proposals that there will be not only a concentration but a unique focus on acute care. As the noble Lord, Lord Lipsey, knows, I believe that that is an expensive way of managing demand on our health services.

I am sure that the Minister will say that many of the amendments are flawed—they are preventive—but I believe that there is much to commend having a representative and strategic body at the heart of the government foundation hospitals. Having that would allay many of the fears expressed so far about the Government's proposal.

Baroness Hanham

I am worried about which end of the telescope we are standing at with these proposals. It seems that the Bill and this amendment are trying to construct a body. What is that body for? It has not been spelled out in the Bill. If the answer is in this deficient publication that has been made available, it would be helpful to have it for the next stage. I am not clear why we are trying to construct a body about which everyone is very perplexed. This amendment makes it even more perplexing. What is the nature and purpose of the board of governors?

To be absolutely clear, an acute hospital is there to deal with acute patients and provide medical services laid down by the Government and by the need of the population for those medical services. There is not a strategic overview of how the hospital runs. It must be run for the people who need it against the services that it provides. If the board of governors is able to dictate what the hospital can do in terms of the services it provides, what will the board say? Perhaps it will say, "Today, we don't really think that cardiac services are the thing. The local population wants diabetics so we will therefore move into diabetics. No, that is not a good idea, it would be much better if we were concentrating on rheumatology".

That conjecture may sound fanciful, but it is not. By definition, an acute hospital must provide what is required to treat more than only its local community— because of patient choice, that community will be very wide. It will include patients from wherever they choose to come. With acute hospitals in London, the community will be nation-wide, because that will be its constituency.

At some stage, could we "bottom out" what the Government believe this body will do? It will be set up with a constitution but who will provide that? Will it be the trust that will draw it all together? That is fine, but if it were my trust and I were going for a foundation I would leave it with nothing to do because that would resolve a huge amount of problems. However, that seems to be an awful waste of everyone's time and will not attract anyone to do anything. There must be a rationale. If there is none, let us abolish and abandon the plan now.

Lord Warner

The amendments would remove the provisions setting out how the board of governors should be constituted and replace them with an entirely different system without any role for the members of the public constituency and which restricts NHS foundation trusts' flexibility to develop arrangements that best suit their local circumstances. Effectively, the new arrangements for appointing members of boards of governors involve staff, PCTs and local authorities making up the bulk of appointments between them—up to one third of the board's members each—as set out in Amendment No. 40.

The removal of representatives elected by members of the public and patients of NHS foundation trusts is totally unacceptable as it cuts right across the principal objective of the policy on NHS foundation trusts, which relates to devolution of power and responsibility for NHS services to the people who operate and use them. In reply to the noble Baroness, Lady Hanham, in a sentence, that gives us a summary of the purpose of the changes. The amendments show a surprising lack of trust in local communities' ability to participate in running their local health services, although I will not go over ground covered in the previous amendments.

The noble Baroness, Lady Barker, asked why we did not just snip and paste from companies legislation and charities law, but that would not have been appropriate. We are trying to establish a new corporate form for which, although trusts have some things in common with companies limited by guarantee and industrial and provident societies, we could not set them up in that form. We are trying to design around locking the assets into public benefit objectives around the particular needs of foundation trusts. If we return to this subject again, there may be difficulties around whether companies legislation in this field would be appropriate under European Union obligations. So, it was not that we were just ignoring those other provisions; we were trying, as we have done all along, to design something that was fit for the purpose.

Amendment No. 40 would require only that "at least one" patient be co-opted as a member of the board. That is unacceptable. It would shift the balance of power on the board away from local people and patients. Patients and public representatives should be in a majority on the board of governors, to reflect the fact that they form by far the largest stakeholder groups.

The amendments would also provide for up to one third of the members of the board of governors to be appointed by local authorities. If the amendments are intended to replace the arrangements for public representation on the board of governors, I question their validity. We want to build on the sense of ownership that people often feel for their local hospital and give them an opportunity to be involved directly. Local authority representation is not a substitute for patient and public representation. Turnout in some recent local elections calls into question any reliance on that source of membership to speak for whole communities on health issues.

The amendment shows a misunderstanding of the role of local authorities with respect to NHS providers. They will have influence through commissioning contracts and agreements on joint working and through local authority representation on the board of governors. They will have powers of scrutiny through the overview and scrutiny committees, on which NHS foundation trusts will be under a duty to work in partnership with local authorities. Moreover, the level of representation proposed in the amendment is disproportionate, considering that the Bill already provides mechanisms for local authorities to influence and scrutinise the activities of NHS foundation trusts.

Amendment No. 40 would also provide for up to one third of the members of the boards of governors to be appointed by primary care trusts, which commission services. Although we have, of course, accepted all along that it is important that commissioner interests are represented—the models set out in the Bill provide for that—it would be inappropriate to give those organisations, as the main customers of NHS foundation trusts, such a large role in their running. Good commissioning in the public services involves standing back a little from service providers, not dominating their management.

The amendments would be backward steps in public service management. They show an unwillingness to trust local people to play a full and effective part in the running of local health services. They should be withdrawn or rejected, as should the consequential amendments in the group.

7.30 p.m.

Lord Walton of Detchant

In Amendment No. 40, the Government's own wording is repeated at sub-paragraph (5), which says: If any of the corporation's hospitals includes a medical or dental school". Is that Government-speak? In fact, not many hospitals include a medical or dental school. They will be closely associated with or work in collaboration with them. A few hospitals include medical school premises, but, in many places, the hospitals used for teaching are separate from the buildings of the medical and dental schools.

Will the Minister consider whether it might be better if, in Schedule 1, where the same wording is used, it said, "If any of the hospitals includes or is closely associated with for teaching and research purposes a medical or dental school provided by a university, at least one member of the board is to be appointed by that university"? The Minister should carefully consider that as a proposal for a possible amendment at a later stage.

Baroness Hanham

Before the Minister responds, I should like to know whether he would be kind enough, before we go too much further, to answer the question that I asked. He stuck to his brief and did not get round to saying what the boards of governors were going to do.

We will be at a huge disadvantage in the rest of our discussion on this part of the Bill if we do not know what the Government have in mind. If the Minister tells me that it is in the document to which my noble friend Lord Howe referred, I would be glad to have a copy. However, until that is available, I will keep asking the Minister the same question. It is the kernel of what the boards of governors are about, who is on them and why.

Lord Warner

This is not the occasion on which to have a debate about the details of the boards of governors in this context. We are discussing some specific amendments tabled by those on the Liberal Democrat Front Bench. I am happy to discuss the matter outside the Chamber with the noble Baroness and, if necessary, write to her, setting things out. We thought that the role of the boards of governors was clear from the Bill. If there is uncertainty, we shall clarify things, but it would not be appropriate to detain the Committee any longer on the issue. The amendments are unacceptable for the purposes of running NHS foundation trusts.

I am happy to consider the points made by the noble Lord, Lord Walton of Detchant, but I am not sure that we would want to lift wording from the amendments.

Baroness Barker

It has been a useful debate, not least because of the points that have been raised and not answered.

I forcefully thank the noble Baroness, Lady Hanham, for raising the critical question of the role of the boards of governors. It is clear that the supposition behind Amendment No. 40 is that there will be a need for some strategic governance of a foundation trust. I take the noble Baroness's point about acute services, but acute services must be planned and the need for such services predicted within an overall health economy and changing patterns of health. That is the thinking behind the amendments. According to the Minister, that thinking was not correct. I believe that it has a coherence far greater than that on offer from the Government about the role of the boards of governors.

As I said, the management of foundation trusts will not happen in isolation. Management in social services and local authorities will, increasingly, work alongside them. One of the key questions that the Minister did not answer related to the strategic relationship of trusts to local government. There is a possibility that, down the line, there will be a great deal of fragmentation in the governance and planning of services. The Minister did not pick up that important point.

I take the point made by the noble Lord, Lord Walton of Detchant, about the wording relating to dental and medical schools. I take the opportunity to say that one of the underlying intentions of the approach that is set out—perhaps imperfectly—in the amendments was to create an informed strategic working relationship between local government, the voluntary sector and the acute sector. That has never been satisfactorily done. In all the areas of my working life, I stumble across people in one of those sectors who never quite understand what the others are talking about. That will bedevil healthcare provision across the board and contribute to the creation of healthcare needs that may have been avoidable.

I accept that the amendments are not perfect, but it has been useful to have the debate. I hope that we have made it clear that the Minister's one-line answer about the role of the board of governors was not adequate. We will have to return to this fundamental matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe moved Amendment No. 12: Page 108, line 12, at end insert "are entitled to free care from the National Health Service and

The noble Earl said: In moving Amendment No. 12, I shall speak also to Amendment No. 13. I want to raise two specific issues relating to the public constituency where the Government's intentions are far from clear. As the Bill reads at the moment, any member of the public falling within the definition of paragraph 3(1)(a) and (b) is eligible to become a member of the public constituency. Personally, I have a problem with the idea that someone from abroad who has no entitlement to comprehensive free care under the NHS might nevertheless be able to vote in the elections for the board of governors. It does not seem to me that such a person has a right to influence the way in which an NHS hospital is run, even if he happens to have received, let us say, free emergency treatment there.

I also have a problem with the idea that babies and children could be given a vote. There is no minimum voting age specified in the schedule, and I must ask why that is. I beg to move.

Lord Warner

To some extent we went into this territory earlier today. The essence of those earlier arguments was that the legislation deliberately sets out only minimum eligibility requirements for membership of NHS foundation trusts. So this allows individual NHS foundation trusts the flexibility to tailor their own arrangements to meet local circumstances and on the basis of their own consultation. As I said earlier, we do not want to go back to this model of trying to set out all the detail on this in legislation from the centre.

On Amendments Nos. 12 and 13, spoken to by the noble Earl, I comment as follows. Although NHS foundation trusts will be part of the NHS and their primary purpose will be the treatment of NHS patients, it is right that the majority of their public constituencies should be people who have used, or are likely to use, NHS services provided by that trust.

However, individual NHS foundation trusts may decide that it is appropriate to offer membership to private patients with an interest in that NHS foundation trust. There are specialist bodies with international reputations which provide services over a long period of time, often to groups of people from other countries, and there is an ability to move around increasingly, particularly within Europe, to secure specialist services which may not be available in another person's country. We do not believe that it is right to actually lay down in law those kind of restrictions. We are happy to leave this to the judgment of people at the local foundation trust level.

I can see what the noble Earl is getting at regarding the provision on children. Again we think that the NHS foundation trusts should have flexibility to decide whether and how to include children in membership. Some children and their parents and carers have long-running contact with the NHS. Some trusts may, for example, decide that it is appropriate for parents as carers to represent their children's interests. We would prefer to leave that flexibility in the legislation rather than trying to rule out those issues.

Earl Howe

I thank the Minister for his reply. I would just say that I do not read my amendment, even reading it again, as being about private patients, but rather about those individuals entitled to free care under the NHS, which is rather a different matter. But I am amazed in many ways by the Minister's reply. He seems to be saying that issues of this magnitude— namely, voting by babies and the enfranchisement of asylum seekers—should be for each foundation trust to determine. They will have a great deal on their plates. Issues of that kind should not be added to their work.

The Government have not stopped short of being prescriptive on a whole range of detail relating to the constitution of a foundation trust, yet on these broad issues of principle—constitutional principles in the widest sense—they apparently remain willing to impose the responsibility on foundation trusts. I find that quite extraordinary. There is time for reflection between now and the Report stage. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 13 not moved.]

Earl Howe moved Amendment No. 14: Page 108, line 20, leave out sub-paragraph (3).

The noble Earl said: In moving Amendment No. 14, I shall speak also to Amendments Nos. 15, 18, 21 and 37. I should like to move on to a group of issues bearing on the broad question of membership of a foundation trust and specifically who the Government envisage should be eligible for membership of the public constituency.

The knottiest issue relating to membership is the problem faced by specialist hospitals which wish to become foundation trusts. Hospitals such as Moorfields and the Royal Marsden treat patients from all over the country, people who live outside the boundaries of the hospital's local government electoral areas. Indeed, the idea of a local catchment of patients and the public is not relevant to the way they operate. It is not the local population that has the primary interest in how they are run, but patients from far and wide and potentially every citizen in the country. It therefore seems odd that including patients as part of the public constituency is expressed in the schedule only as an option. For specialist tertiary hospitals it should be possible to say that the public constituency consisted mainly, or entirely, of patients rather than members of the population living locally.

Indeed, without that approach, I find it hard to imagine how the regulator would be able to agree that the membership of such a hospital was truly representative of those eligible to register as members, as Clause 36 requires.

Perhaps I may raise two further issues about patients. If patients are included in a trust's public constituency, paragraph 3(3) appears to provide that they may only comprise patients who have actually attended the hospital concerned. I might feel aggrieved about that if I was someone who had been looked after by the hospital on a remote basis, say through a telemedicine facility. Carers of patients are also eligible to vote, but a hospital is given no guidance about what constitutes a carer in this context. I believe that there should be an explicit definition in the Bill and have therefore proposed one that is consistent with recent legislation. I beg to move.

Baroness Barker

I speak to Amendments Nos. 16, 17, 19 and 20 in the group. The effect of Amendments Nos. 16 and 17 is to include current patients within the arrangements. I return to some of the points made by the noble Baroness, Lady Hanham, in her speech a short while ago. It does not seem logical that the arrangements should be open only to people who have previously been patients of a hospital. The noble Baroness, Lady Hanham, was quite right to say that the point at which someone is engaged with a hospital as a recipient of services is the point at which one is perhaps most enthusiastic—one might say perhaps of most value to a governance board, given that one has had that experience.

The noble Baroness, Lady Hanham, was also right to draw the distinction between people who are recipients of emergency treatment and may be there for only a short time and those who have chronic conditions. It is also worth pointing out that by including current patients in the arrangements we would be including people who have appeared for treatment for which they have been waiting for some considerable time—elective patients. They perhaps would have a great deal to say about the running and the governance of organisations.

In many ways, this is something which plugs one of the many gaps foreseen in previous health Bills when CHCs were abolished in favour of the new system of patient involvement. During those debates, I said that there were two major omissions. While the new system of PALS and patient forums saw and dealt with patients who had concerns as recipients of services, they risked missing out the involvement of users in the strategic governance of hospitals. The fact that there are to be no patient forums in foundation trusts is one of the biggest omissions.

The effect of Amendments Nos. 19 and 20 would limit involvement to those who are NHS patients. Within the context of the Bill, that seems to be the right thing to do. Therefore, I hope that the Minister will give these amendments a warm welcome.

Baroness Pitkeathley

I, too, support the attempt at a definition of "carer" in Amendment No. 21. In a sense, the carers movement has been a victim of its own success. A word which was not even in the dictionary 12 years ago is now so popular that everyone wants to get in on the act. While I am delighted that "carer" is now added to every document and every paragraph— sometimes, I think, to every sentence in every paragraph—of documents which have anything to do with health or social care produced by the Department of Health, nonetheless, we should be clear about which carers we mean. Social workers are called carers these days, as are paid home-care workers, foster carers, and so forth.

I am sure that the intention of the Bill is to include informal carers—that is, family members or neighbours who provide care for patients or people who are to be patients as a result of a pre-existing relationship rather than people who are drafted in as a result of a need. Therefore, it is important to provide a definition.

I am not sure that this amendment is entirely right. For example, as currently drafted, it would include any representation of young carers. It may be that some foundation trusts would want to include young carers in that, but I believe that the Bill intends focusing on the so-called informal carers; namely, family members, neighbours and such like. This amendment is helpful in providing such a definition. I hope that the Minister will either accept the amendment or at least place on record his own definition of the carers who are to be included in the Bill.

Baroness Hanham

My point does not really arise directly out of this amendment, but I believe that it is relevant. I should like to ask the Minister another question about the constitution or the make-up of the board of governors. What happens when a member of staff who has been elected as a staff constituency member leaves? Does he or she remain a member of the board or does he or she automatically have to retire from the board? There is nothing within the constitutional definition which states that. Nor is there any information about what happens if a person who lives within the local area, and who is elected to the board, leaves the local area. Will there be an obligation on them to retire or stand down and thus trigger an election all over again for a couple of positions?

I should be grateful if the Minister could direct me to where that answer might be found. If not, it may be appropriate to put down amendments at a later stage to make the constitutional position clear.

Lord Warner

I will write to the noble Baroness rather than guess at answers to her always interesting, but often rather detailed, questions on this issue. In a sense, all these amendments raise the point that we discussed earlier; essentially the Government's willingness to trust NHS foundation trusts to make considerable judgments of their own about many of their governance arrangements. What all these amendments have in common is a wish to prescribe in more detail than we think appropriate at this stage of the life of foundation trusts.

Against that context, perhaps I may deal with the particular amendments. Amendments Nos. 14, 15 and 37 lay down a rather rigid requirement on the percentage of NHS patients who live outside the membership area being brought into the electorate. Although, rightly, the Bill leaves it to the discretion of foundation trusts whether to have patient members, it is clear that where a trust serves a significant proportion of out-of-area patients, these people should be eligible for membership. But it is not right to specify an arbitrary percentage.

The variation of people who will live outside a particular trust area could be huge if we look at some of the applicants for foundation trust status. There could be an area which draws virtually all its patients from, say, somewhere like Rotherham, whereas somewhere like Moorfields draws its patients from not only a national constituency but almost an international constituency. We do not believe that an arbitrary percentage is the best way of dealing with that issue, which is a real world issue for many of the applicants for foundation trust status.

We have some concerns about Amendment No. 16. Some specialist centres take patients from all over the country. Many teaching hospitals provide a wide range of services to people outside their immediate area. In both cases, it may be appropriate to include patients and carers from outside the local area as members of the public constituency. But other trusts provide almost all their services to people living in a clearly defined area. In those cases, it may not be necessary to make special provision for the inclusion of patients who live outside that area, even though they may treat a small number of patients who pass through while on holiday or are taken ill at work. Again, we do not think that we are clever enough to lay down prescriptively now arrangements which will fit the needs of all applicants for foundation trust status.

Amendment No. 17 raises the issue of current patients' eligibility for membership. I agree with the principle that both current and former patients should be eligible for membership of an NHS foundation trust, if the constitution includes provision for patient membership. However, the amendment is unnecessary as the wording used in the Bill— individuals who have attended any of the corporation's hospitals"— would capture both current and former patients.

Amendment No. 18, in effect, removes reference to attendance at an NHS foundation trust facility. I assume that the intention behind the amendment is to ensure that all patients of an NHS foundation trust would be eligible for membership by removing the requirement to have attended an NHS foundation trust hospital. However, under Section 128 of the NHS Act 1977, the definition of a hospital includes, any institution for the reception and treatment of persons suffering from illness", including clinics, dispensaries and out-patient departments. It is difficult to imagine how someone could be a patient of an NHS foundation trust without attending any of these. Therefore, this amendment is unnecessary.

I have already dealt with the issue of private patients. I managed to surprise the noble Earl in what I had to say. I think that what I said earlier dealt with the issues concerned with Amendments Nos. 19 and 20. Amendment No. 21 is about defining carers. I have the greatest respect for the experience and knowledge in the area of carers of my noble friend Lady Pitkeathley. However, the amendment would strictly define who was a carer. One of the things which we have learned—certainly from my own experience and association with the carers area—is that definitions and expectations of who is a carer have changed historically over time. At this point, it is somewhat difficult territory to have an arbitrary definition of carers which may exclude people who one would want particularly to be able to participate in the work of the new foundation trusts.

Again, using the argument of flexibility, we are doubtful about any attempt to draw up a definition of carers that would limit participation for all time to that particular definition—and I shall certainly not attempt to do so now.

8 p.m.

Earl Howe

I thank the Minister for his explanation. In view of the time I do not propose to speak at length, except to say that I believe he has misunderstood the amendment concerning patients who have not actually attended the hospital. The issue here is tele-medicine, as I mentioned earlier.

Turning to the issue of carers, the definition I have used in the amendment was lifted straight from the draft mental incapacity Bill. It also featured in the Carers and Disabled Children Act 2000, so it has a good pedigree attached to it.

As the noble Baroness, Lady Pitkeathley, indicated, there is real potential for considerable argument if some kind of definition is not put into the Bill. 1 do not think that any noble Lord envisages giving the vote to someone who helps out with the occasional bit of shopping for their next-door neighbour, any more than it is envisaged giving the vote to a professional paid carer who has been drafted in to do a job. The kind of carer with a legitimate personal interest in the way that a foundation trust functions is the individual described in my amendment. I hope that the Government might feel disposed to think again on this point. Given the hour, however, I do not propose to say more and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 15 to 21 not moved.]

Lord Davies of Oldham

I beg to move that the House do now resume.

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

House resumed.