Health and Social Care (Community Health and Standards) Bill

HL Deb 08 September 2003 vol 652 cc56-111

5.39 p.m.

Second Reading debate resumed.

Baroness Gould of Potternewton

My Lords, I wish to concentrate my remarks mainly on the question and definition of social healthcare, referring in particular to sexual health, and then to support briefly the principle of foundation hospitals. Before doing so, however, I must declare an interest as the chair of the Independent Advisory Group on Sexual Health and as president of fpa.

Sexual health is an aspect of public health which is almost completely ignored in any of the documentation on the role and responsibilities of the new healthcare inspectorate and the new inspectorate for social care.

The Minister said that CHAI and the Commission for Social Care Inspection will have the power to inspect standards, to audit spending and to report on the quality of all aspects of health and social care provision in the public, private and voluntary sectors.

My first question to the Minister, therefore, is, will sexual health be an integral part of public health and priority in the NHS, with CHAI fully inspecting the quality and delivery of sexual health provision? If it is not CHAI's responsibility, will it be the responsibility of the social care commission? Also, will performance indicators be identified by CHAI as incentives to improve sexual health services?

I appreciate that the Government have an action plan for sexual health. These are important steps in a long-term strategy. But improving sexual health has to be given much greater priority if we are to overcome the increase of HIV/AIDS, the explosion of sexually transmitted diseases and ignorance of the consequences of unprotected sex. CHAI has to take on board that the state of sexual health in this country is grim. It cannot be stressed too strongly that STIs and HIV are transmittable infections. Lack of immediate action will create a time bomb for the future, as the rate of infections will grow exponentially.

Latest figures from the Health Protection Agency produced this July so clearly illustrate this growth. Genital chlamydial infection is now the most commonly diagnosed STI seen in GUM clinics. Some 81,000 cases were diagnosed in 2002—an increase of 14 per cent on 2001. Syphilis—a disease which most people assume was a disease of the past—increased substantially between 2001 and 2002 by 67 per cent in men and 33 per cent in women—the highest outbreak since 1984. Approximately 41,000 people are living with HIV, with 6,000 new infections recorded in 2002. So we have a rapid growth of infection but a lack of parallel investment.

I refer to an example from the Commons Health Select Committee report, which highlighted the many clinic premises that are of "an unacceptable standard"—a view I can endorse, having taken the opportunity to visit some of these premises and seen some appalling conditions. Surely that is something that a new inspectorate should take on board. Premises established for seeing 400 clients are having to attempt to cope with 1,000 clients, with open door policies having to be stopped and appointment systems established. The Health Protection Agency identified 1½ million attendances at such clinics in 2002—an increase of 15 per cent on 2001.

The problem for sexual health is also exacerbated by the lack of consultants and adequately trained nursing and support staff. Will CHAI have the responsibility for conducting a multidisciplinary review to assess service capacity, staffing, premises and supporting infrastructure? What guidance will CHAI give to provide a more co-ordinated, holistic approach to the public and sexual health agenda? I refer particularly to co-ordination as it seems to me that it is crucial. I cite as evidence the fact that NICE recently recommended free IVF treatment on the NHS, but that has not been accompanied by any reference to the rising rates of chlamydia, yet there is an identified causal link between chlamydia and infertility. Screening for chlamydia decreases cases of pelvic inflammatory disease—a significant cause of infertility—by 64 per cent. Investment now could help to forestall a huge rise in the costs of infertility treatment in the future.

I am sure that my noble friend Lord Warner will refer to the roll-out of the chlamydia screening programme, but it is clear that a 10-year programme is too long. Surely early treatment and prevention is an evident truth. Particularly as many of the infrastructures required for central co-ordination are now in place, every effort should be made to expedite roll-out across the country.

Fpa, Brook and the Terrence Higgins Trust have recently undertaken a review of local delivery plans published by strategic health authorities. The review showed that sexual health is mentioned in just 10 plans, HIV in seven and contraception and abortion services in none. The Government have to give a lead. That is clearly shown by teenage pregnancy being mentioned, quite rightly, in nearly 60 per cent of all local plans, with respondents citing that that is clue to its being a government priority.

Sir Ian Kennedy has indicated that marginalised communities will be a priority for the new work of CHAI. STIs and HIV are preventable diseases that increasingly affect disadvantaged communities and those on the margins of society. To achieve Sir Ian's aim as part of CHAI's evaluation work there will surely need to be the establishment of cross-cutting targets for sexual health and HIV services for PCTs and NHS trusts.

I wish to refer to foundation hospitals but, before doing so, I shall say a few brief words on Part 4 of the Bill. The new GMS contract fragments sexual health services in a way that is at variance with the levels of the Government's agreed national strategy for sexual health—a concern expressed by the Royal College of General Practitioners' task group for sex, drugs and HIV. The consequence is that sexual health will be reduced to various clinical tasks and procedures which GPs may decide to opt out of, not least because in some areas there is a crisis in GP recruitment and retention—a particular problem in London where there is a shortfall of some 350 GPs. The approach taken under the GMS contract is not practical, sensible or holistic. For many general practitioners sexual health will disappear off the agenda. I hope that the Minister will indicate that that will not be the case.

Finally, I turn to NHS foundation trusts. I originally had many problems in accepting the proposals for NHS foundation trusts, but the amendments introduced in the other place and discussions I have had with practitioners locally who support the proposals have helped me to change my position. I support the injection of a new element of local democratic involvement in the proposed trusts and hopefully their ability to give the NHS greater freedom to provide the best service to meet local needs, but there need to be guarantees that they will work to national standards. The role of the independent regulator has also been improved by having to be accountable to Parliament and not to the Secretary of State and by being inspected on performance ratings by CHAI.

The Constitution Select Committee, of which I am a member, considered the constitutional implications of the Bill. In particular, it looked at how the local membership of the board of governors is to be elected. I ask my noble friend how the boundaries will be defined, by patient or by geography? How will nominations be sought so that the membership, as the Minister said, will cover all elements of society? What will be the role of local authorities? What will be the composition of the electorate and the process of elections? Who will oversee the elections to ensure that they are fairly run? These are important details—they are not trivia—if there is to be confidence in the election process.

I still have some concerns over staffing and the means by which poaching of staff is to be prevented. While I am not as pessimistic as the noble Earl, Lord Howe, that other NHS trusts will lose out financially, there need to be guarantees that that will not happen.

I agree with those who argue that the universality of service does not always provide fairness and equity. I sincerely hope, in supporting the introduction of foundation hospitals, that there will be greater consistency of service, greater co-operation with other NHS and community organisations and that the current inequalities in health provision will be overcome.

5.49 p.m.

Baroness Cumberlege

My Lords, I start by declaring some interests, in that I am a senior associate of the King's Fund, a vice-president of the Royal College of Nursing and the Royal College of Midwives, and chair of St George's Hospital Medical School. I am involved with other charities, and work for the NHS, sometimes in a paid capacity and sometimes unpaid.

I believe that the Bill is the first major piece of government legislation that the noble Lord, Lord Warner, will have taken through this House. It would perhaps be reckless of me to wish him every success, in that noble Lords, myself included, will of course try to amend the Bill. It is a colossal Bill. I wish him well and, above all, I wish him stamina.

I hope that the Minister will recognise our concerns. Some noble Lords here today, and others not in the Chamber, will actually applaud the Government's intention to devolve. Some of us even admire the rhetoric. However, as my noble friend Lord Howe said, it is the detail and the lack of coherence that is deeply troubling. The Government, in moving from the days of spin to counter-revolution, are in danger of gearing the engine so fast from one direction to the opposite direction that it is in danger of blowing up, I fear. There are major changes in the Bill, and I hope that our constructive amendments will help to ensure that we move smoothly into the change of gear.

I speak in this debate in the spirit of a Second Reading, and I shall leave the detailed points that I want to make to Committee and Report, but I would like to thank those who have sent me briefings and say that I hope to do justice to their concerns later.

My first point is a constitutional one, but it perhaps goes wider than that made by the noble Baroness, Lady Gould of Potternewton. I have a considerable worry that, in future, Bills taken through another place by a majority that relies on votes of Members of Parliament from Scotland and assemblies in Wales and Northern Ireland will be challenged in the court of human rights and, if found to be unconstitutional, will become void. As a revising, advisory and perhaps warning Chamber, should we not find some method to test the validity of the votes before we start to plough through eight days or so on the minutiae of the Bill? I am concerned, and I seek the advice of those noble Lords expert in constitutional law and perhaps of the committee to which the noble Baroness referred. Perhaps the Minister will also seek advice to ensure that our work, and his, is not wasted.

Although I acknowledge that the Bill, in the creation of foundation hospitals—whatever they will be called in future—marks a change, it is in reality not much more than a natural progression for the whole system of NHS acute trusts, which was the work of a previous administration. As my noble friend Lord Howe said, the 1997 Labour revolution was the seizure of power away from trusts back to a highly centralised system, to the point where, in effect, the Secretary of State was appointing, disappointing and firing chief executives, bypassing local trust boards.

The purpose of the Bill is to effect a counterrevolution. The difficulties, as voiced by those in opposition to the Bill—Labour Members of Parliament, academics, trade unions, professional organisations and others—is that local autonomy works against the Labour philosophy of equity. While we have a national health service, which of course I strongly support, we shall always struggle with devolving to local management a national health service, because the two are opposites. Anyone with experience of any organisation will know that excellence attracts excellence. Excellence in medical and nursing services produces better outcomes. It is right that foundation hospitals should aspire to attract the best staff, as any hospital should, but with a strong desire for equity, how will the Government reconcile unequal freedoms with equity?

As a district and regional chairman, and later as a Minister, I have spent more than 20 years visiting wards and hospitals. The variations in performance and outcomes are as variable as the numbers of people employed. Two people can clean the same ward and the result will be different. Two people can treat the same patient and the result will be different. Of course we have to insist on the highest standards, but to expect a management system to, guarantee a greater equality in outcomes"— I quote from the Government's brief—is actually naïve. It is no more likely that every school with a set curriculum can obtain the same pass rate in examinations. We know that the variations are vast.

Although I have every sympathy with the Bill's acknowledgement and reward of excellence, there is no doubt that it will not further the cause of equality in health outcomes. That must be a huge dilemma for the Government. As elections draw near, there is a great danger that Ministers will believe that by assuming more central control the service will become more equal. In fact, probably the best that can be achieved is to cover up variations within national statistics.

In reality, the all-important measure is whether patients have faith in their treatment, their doctor, their nurse. Patients are forgiving where the staff have done their utmost. What is inexcusable is neglect of duty. The system of removing incompetent members of staff, whoever they may be, is so difficult, time-consuming and expensive that bad practice and therefore bad outcomes are often condoned. If every hospital could more easily dismiss non-performing staff, the NHS could be improved quicker and by a far greater extent than by the hugely expensive bureaucracy of regulation and inspection proposed in the Bill.

It is not easy to see any consistent principle running through even the major part of the Bill. There is freedom for the best, almost totally constrained by regulation and targets. There is scope enough for politicians to step in and strangle freedom. I believe that the moment has arrived when we must admit that politicians are not good managers, and that the management of the NHS should be removed from politicians. We should also be honest and accept that variations are inevitable, although of course every effort should be made to improve standards. What we should no longer tolerate is the NHS being messed about by politicians for political advantage. It is time we thought more about keeping people well and caring for the sick, and about putting their interests first.

I congratulate the Government on some of their initiatives. not least the national service frameworks. However, they have also wasted billions of pounds taking the NHS for a huge circular tour of management systems. I have to say that it is a temptation that every administration cannot resist. If this Government had developed the NHS from where it was in 1997 to where it might be in two or three years' time, the political management would have been credible. Politicians must now swallow their pride and admit that they must step down, with management placed in the hands of a responsible agency—a model much favoured by the Government in other spheres. I know, too, that the noble Lord, Lord Hunt, would feel very denied if not given yet another opportunity to discuss that issue.

There are huge concerns with many aspects of the Bill, not least the role of the independent or not-so independent regulator, the fanciful governance arrangements, the possibility of eroding the enormous amount of work that has been invested in cross-agency partnerships and the patient's journey, financial systems and the risk of jeopardising vulnerable local health communities with the erosion of strategic health authority powers, the new regulatory bodies, and the loss of opportunities for primary care organisations. My amendments, if carried, will resolve all those concerns at a stroke, so I live in hope.

5.59 p.m.

Lord Alderdice

My Lords, I declare an interest as a consultant psychiatrist working part-time in the National Health Service.

I listened with interest to the Minister's description of more money, more doctors, more nurses and more procedures, and I do not doubt that what he says is accurate. However, is it not striking that it has not led to higher morale among staff in the health service? I have to say that I do not think that I have known it any worse. To some extent that is not despite there being more money, staff and procedures, but because of it. When there is inadequate funding, a clear paucity of staff and poor figures, there is always the hope that if one can persuade the Government to put in more resources things will improve. So why is it that after the Government have put in more resources and volunteered another major reform of the health service, there has been no improvement in morale or a great resounding welcome for the Government's proposal?

There are a number of reasons for that. One is that while the principles which the Government lay out seem to be reasonable, their proposals for implementing them seem unclear and self-contradictory. That was mentioned most notably by the noble Baroness, Lady Cumberlege. The current fashion for making two or three contradictory statements in one sentence and proclaiming that by doing so one has made great philosophical and practical progress is seen through by the vast majority of the population.

Nor is it the case that the population and health service staff are unhappy and dispirited because they have not heard what the Government are saying about their proposals. In fact, the Government's proposals are self-contradictory. For example, the noble Lord, Lord Warner, in his letter to Peers, pointed out that the NHS should become more personal and that there should be greater freedom on locally run services. He stated that local staff and local people have clearer knowledge than Whitehall and that central control should be replaced with local freedoms. I agree with that. But there is an inevitable consequence of devolution; that is, diversity, which the Government say they want to see. They say they want more choice, more opportunities and more capacity for adventuring and experimentation.

However, that means more differences. It means that circumstances will not be the same in every area and that equality of access is impossible. If in a local area it is possible to decide to put more resources into a particular form of treatment, there will he fewer resources for other kinds of treatment. That may be a perfectly legitimate decision, but it will ensure that the access to particular forms of care in that area will be different from the access in another area where different but totally reasonable choices have been made. When we say to the citizens of this country that we will have diversity and choice, that everyone can have what they want and that it will be available equally to everyone, the citizens look at us askance and say, "You're not being very honest, because that is just not possible".

The Government also say that decisions will be made locally. They say, "We will put in place many people who can take responsible decisions". However, at the same time we are being told that the standards and regulation will be national. What is more, we are told that they will not be lowest-common-denominator standards; they will be high. Indeed, they will be so high that many people will not reach them. Well, as all the decisions will be made centrally, how will decisions be made at a lower level? The citizens see that, as do health service staff.

Those members of staff know all about such standards because every time there is a problem an inquiry is set up. If it is any good at all, it produces a whole set of proposals. As the politician who asked for the inquiry is in no professional position to say that although some of the proposals are interesting they will not work, he or she must say, "I accept in total what the inquiry says and we will put all of it into operation". That ensures that there are so many standards, monitoring exercises and committees and so much accountability that no one has much time to see patients. In addition, it is almost inevitable that the standards will be breached because there are so many that it is impossible to fulfil them all. People therefore lose heart, and self-esteem and performance decline. And so does any sense of belief that what is proposed by the Government is likely to be successful.

That is why I have enormous sympathy—indeed more than that. It is why I support the proposition aired by the noble Baroness, Lady Cumberlege. I believe that it is time for the political masters to step back to a position of determining strategy. They should take high-level decisions, of course, but they should not be involved in the professional micro-management of the NHS. The population does not regard the NHS as the prerogative of any particular party or Government, but as being part of the strength and richness of our whole community in the United Kingdom.

There is another inconsistency. It is proposed that the best performing trusts are ideal to become foundation trusts. If foundation trusts represent such a wonderful mechanism for improving performance, surely it would be better to make the lowest performers into such trusts. If the scheme were successful, presumably they would raise their standards.

We in my profession have become familiar with being tutored by the Government in evidence-based medicine; that if we are to prescribe something we need to know that the outcome justifiably can be seen to be possible. Most professionals in the health service would like to see some evidence-based politics; for example, a monitored pilot scheme with an assessed outcome. On the basis of that, the treatment could be made more widely available.

Why take a particular group of hospitals or trusts, insist that the best performers become foundation trusts and say that everyone else will become so good—so good because they were not foundation trusts—that they will measure up in two or three years' time? That would not pass many research ethics committees; it would not pass many statistics tests; and it would not pass many peer reviews in professional journals.

What I believe would pass muster is a proposal that all the trusts in a particular area of the country should be able to become foundation trusts. If after four or five years careful monitoring and assessment showed that the poorer trusts had risen to the level of the better trusts and that the better trusts were even better as compared with the "placebo" of the rest remaining under present government policy, the evidence-based politics would persuade those of us who make our judgments on evidence-based medicine that the proposal was worth while.

Finally, I turn to the issue of money. The noble Earl, Lord Howe, earlier pointed to the inconsistency of maintaining the departmental expenditure limit while insisting that money coming in from the private sector will enrich the health service as a whole. That inconsistency may not be obvious to the citizenry as a whole, which may not be as familiar with departmental expenditure limits as Members of your Lordships' House, but that gaping inconsistency is obvious to those of us here.

As we try to do the best we can with the Bill, perhaps we can try to encourage the Government to work towards an old-fashioned notion of consistency in thinking and to provide rationality in approach and evidence for what they are doing. Perhaps we can also encourage them to pull back a little and allow the professionals and the patients to get on with the health service and to keep the politics to the strategic decisions at another level.

6.10 p.m.

Baroness Masham of Ilton

My Lords, many organisations have sent out briefing papers and professional bodies are taking a great interest in this Bill, as I do. But one always wonders what an untried idea will produce. I take this opportunity to ask a few questions as some parts of the Bill seem to leave important matters to regulations.

I declare an interest as founder and life president of the Spinal Injuries Association. I have a great interest in specialist centres of excellence, which are the lifeline of many people with long-term medical conditions.

In Chapter 2 of the Bill, Clause 44, dealing with quality in healthcare, seems to me to be one of the most important issues that we should discuss. The quality of healthcare should be paramount, be it in a National Health Service body, in a private hospital or in a nursing home. Clause 44 states: It is the duty of each NHS body to put and keep in place arrangements for the purpose of monitoring and improving the quality of health care provided by and for that body. (2) In this Part 'health care' means—

1. (a) services provided to individuals for or in connection with the prevention, diagnosis or treatment of illness; and
2. (b) the promotion and protection of public health".

Over the years I have served on a variety of health bodies: a community health council, a health region and a family health service authority. All governments seem to like changing the National Health Service, but with so many changes over the past 20 years a great deal of confusion and insecurity has been caused. Trying to remember the different names of the different bodies and what they do is becoming a nightmare. For example, Clause 43 states: (1) The Commission for Health Improvement is abolished. (2) The National Care Standards Commission is abolished". No sooner is one body set up than it is closed down.

For various reasons in the past year I have met several consultants and district nurses who all say, "We just want to be able to get on with the jobs we are paid to do rather than being diverted into yet more reorganisation".

The Royal College of Nursing supports the general intention to improve both the transparency of decision making and the involvement of staff, patients and the public through stakeholder councils. I ask the Minister what is and who will run a stakeholder council? Is it to be yet another body?

The noble Earl, Lord Howe, will be one who remembers the debates that your Lordships have had on community health councils. We were given assurances that their place would be taken by patient forums, but it seems that foundation hospitals are to be excluded. Can the Minister say whether that is true and, if so, why? If there are not to be patient forums in foundation hospitals, but there are to be in other hospitals, will that not add to the confusion? I hope that there will be patient input in all hospitals. The public need a point of contact for advice and support.

It would be interesting to hear about the potential liability that falls on an injured person treated by a foundation trust to pay for any treatment given. That could affect many of our future members of the Spinal Injuries Association who may break their backs or necks in road traffic accidents or racing accidents and who remain paralysed. What happens if such a person is not insured?

There is national concern about the dangerous problem of infections in hospitals. Patients who go into hospital for an operation are at risk of being infected by MRSA and thousands of people die each year from that dangerous contamination. I ask the Minister whether the Commission for Healthcare Audit and Inspection (CHAI) covers the inspection of infection control in hospitals and other healthcare facilities? The problem is now so serious that there needs to he an overview and standards should be put in place to make healthcare safer, especially for vulnerable patients. I feel strongly that there should be a national service framework to incorporate all infectious conditions and to bring hospital cleaning standards up to a high level. If that was done the public might think that the Government were trying to tackle that worrying situation. Nurses, doctors and patients move from hospital to hospital. Infections do not mind if a hospital is called "foundation" or otherwise. Our standards should be national.

I should be grateful, as I am sure the House would be, if the Minister would give your Lordships an update on specialised commissioning. What is happening about organising, planning and paying for specialised services for conditions such as HIV/AIDS, spinal injuries, complex neurological conditions, neonatal intensive care and many other vital conditions? The resulting delay in the reorganisation of neonatal care is causing desperate problems for mothers and babies transferred long distances because of a lack of cots. The delay in sending someone who is paralysed to a spinal unit can cause all kinds of complications with the risk of serious pressure sores, bowel problems and urinary tract infections which delay rehabilitation and cost extra money.

Will the Minister tell the House which Bill or Act of Parliament embraces specialised commissioning? Is it this Bill? We need the correct treatments and the highest standards for all patients wherever they are treated. I look forward to the Minister's reply and I wish him a happy birthday.

6.18 p.m.

Lord Hunt of Kings Heath

My Lords, I declare an interest in a number of NHS and NHS-related organisations that I advise listed in the register of interests, including KPMG, Beachcroft Wansbroughs, the Sainsbury Centre for Mental Health and the King's Fund. I am also a member of the advisory board of the Commission for Healthcare Audit and Inspection.

I welcome the Bill before us and thank my noble friend for the careful way in which he developed the argument in favour of the Bill. There are many important issues, and I particularly welcome the provisions for the dental service. I support the aim of embracing the profession much more into partnership with the NHS and ensuring that dentists feel that working for the NHS is no longer, as they describe it, part of a treadmill but something that they want to do. It is significant that the BDA supports the general thrust of the provisions in the Bill.

I want to concentrate on what I believe goes to the heart of our debate: foundation trusts. Many fears are being expressed about foundation trusts. It has been said that they will lead to a two-tier service; that this is the slippery road towards privatisation; and it is claimed that foundation trusts may damage the ethos of the National Health Service. If I believed that I would not be standing here today supporting the concept of foundation trusts. I think that foundation trusts are an essential part of the ingredients needed to ensure that the NHS thrives and prospers over the next 10 to 20 years.

There is no question that the NHS faces a daunting challenge. We all know of the problems that it has faced over many years—the lack of investment and the lack of capacity—and we are starting to see those problems being addressed. The five-year financial investment—the 7.4 per cent per year over a five-year period—is a fantastic investment. By 2008 we will be spending 9.4 per cent of our GDP on health, which is equal to that of the French. That is an extraordinary thing. No one in the health service ever believed that we would receive that kind of investment.

However, that kind of investment comes with a risk. The risk to the NHS is that it will fail to deliver the kind of first-class quality services that people expect. By the end of that period we would probably be the fourth biggest spender on health per GDP of any country in the world. At last the NHS is receiving the kind of resources that one would expect. The public have had to pay increased taxes through national insurance to pay for it. It is an awesome responsibility on all those in the NHS and in the Department of Health to ensure that people feel that that investment is worthwhile.

If at the end of that period the public do not feel that that investment has been made wisely we know that many people will start to walk away from the NHS. Therefore, I am convinced that the test facing the service in the next few years is as hard a test as was faced when the NHS first started in 1948.

Of course part of the test concerns targets. Targets are much maligned in your Lordships' House. There is no question that we have too many targets. However, when one boils the issue down to key targets, such as waiting, I am confident that the health service will achieve the target of a maximum three-month inpatient wait by 2008. But the issue is not just a question of targets, it is really a question of the quality of the service that people receive. Will people receive the choice in the health service that they rightly wish to see? Will they receive an integrated service, so that all parts of it work together? Will people feel that they are at the centre of the treatment programme?

There must be a question mark about that. The reason for that question mark is that the NHS cannot begin to compare itself with the best healthcare systems in the world or with the best consumer services in this country if it continues to be managed in the way that it has been managed, not since 1997, but actually since 1948. By that I mean the model of a service where Ministers are accountable to Parliament for everything that happens within it. It is that model of accountability that has led us into this problem of micro-management of too many targets and of an NHS at local level that feels put upon rather than feeling it has room to change, to innovate and to improve its services.

I listened with great care to the remarks of the noble Earl, Lord Howe, about my own legislative tendency. He is right. I cannot remember how many Bills I was responsible for taking through this House which changed the structure of the health service. The House of Commons Select Committee reckons that this Bill is the 18th restructuring of the health service since 1982. That date is very significant because although the noble Earl, Lord Howe, frequently likes to present himself as a decentraliser, the fact is that his own party when in government was as fond of tinkering and changing the structure as any government have been.

The point is that so long as Ministers are accountable for everything that happens in every part of the NHS, I believe that governments of whatever shade will continue to tinker and to restructure and reform.

So we have to move to a situation where the temptation and the pressure are not there. I do not go down the route of the noble Baroness, Lady Cumberlege, because I do not think that one can completely divorce the NHS from politics. Politicians do have to make judgments about national standards. They do have to make judgments about resources. But I think that when they have done that—and now we have an independent inspector to make sure that what Government have set out in those national standards is delivered—one has much more freedom then to allow local NHS organisations to work within those national standards.

Furthermore, I disagree with the noble Lord, Lord Alderdice, on that issue. I think that within those national standards there is considerable room for discretion. But, having set those national standards, I think that it is possible to give much greater organisational freedom to those organisations which work at local level in the NHS.

That is why I strongly support the concept of foundation trusts. The membership base they are given through an elected board of governors is the means by which accountability can be transferred from national politicians to local people. I very much hope that this House will support these very important principles.

We shall be debating a number of the issues and details around foundation trusts. There are issues in relation to governance that need to be teased out. First, it is very important not to think that only acute trusts will become foundation trusts. There is every reason for other trusts—mental health trusts in particular—to be considered in the front rank of NHS organisations. I am disappointed that much of the debate has been around acute trusts.

Secondly, I believe that there should be continuity of leadership. I know that the guidance states that the chairman and chief executives of a potential foundation trust can follow through into a position in a new foundation trust, but there is nothing in the Bill that says that that may happen. My reading of it is that on 31st March the NHS trust will be wound up; on 1st April the foundation trust will come into being. It is up to the governing body to decide who should be the chairman and the non-executives and that it is for them then to appoint the chief executive and the executive directors.

I am very keen that the governing body has power in this new structure. But, surely, given that the whole basis of foundation trusts in the first wave is that they are the strongest organisations, it would be folly for the current leadership of those organisations not to be automatically transferred lock, stock and barrel to become the board of directors. I hope that we can have some assurance from my noble friend that that can happen and that if necessary he will table government amendments to make sure it does.

I have two other points on governance. One is that it also ought to be consistent with the Higgs report on the role of boards and non-executive directors. There are many chairmen of NHS trusts who are concerned that the guidance issued by the department is inconsistent with the Higgs report. If so, I think that would be a great pity.

I end with one key question for my noble friend. Will he ensure that he and his colleagues in the Department of Health will make these arrangements work? When a problem hits a new foundation trust—a problem which perhaps attracts national attention—it would be too easy for Ministers to rush in and insist that the trust takes certain action, through strategic health authorities and primary care trusts.

The health service will be watching. If it sees very early intervention in the affairs of a foundation trust, it will conclude that this is not for real. I say to my noble friend that an early test of these new arrangements will come into play.

I hope that the ministerial team will pass that test because if the NHS concludes that this is not for real, then we shall lose the great potential that we have for changing these arrangements and for giving people at local level far more power over their own destiny in the NHS. In addition, in a year or two we shall be sitting here debating another NHS Bill—the 19th restructuring since 1982—and it will have been a waste. Ultimately, this is a very well-intentioned Bill and it is essential that the principles are allowed to happen in practice.

6.30 p.m.

Viscount Bridgeman

My Lords, I must first offer my apologies to your Lordships, and to the Minister in particular, for not being present in the Chamber today for the first two speeches and part of the third. My car was incapacitated on the motorway for an hour and a quarter. I am aware that the conventions of this House, strictly interpreted, suggest that speakers in my position should withdraw. I am on this occasion asking for your Lordships' indulgence if I make a speech which will be more brief than I had originally intended.

Perhaps I may also say what a privilege it is to follow the noble Lord, Lord Hunt of Kings Heath. I am sure that I speak for many of your Lordships when I say how greatly his vast experience in health matters, both in government and elsewhere, is valued, as it was in the admirable and thoughtful discourse on the broad picture of the health service which he has just given us.

I declare an interest as chairman of an independent hospital in central London, which has a closer relationship with the NHS than many of its peers in the independent sector through our hospice, which is part of the hospital, and through a number of NHS surgical lists which we are undertaking under the terms of the concordat to the mutual benefit, I hope, of both bodies.

We in the independent sector welcome the bringing together of the regulation of the independent and NHS sectors. At the time of the inception of the old CHI and the NCSC, regulating the independent and private sectors respectively, I, like many others, was at a loss to understand why two separate regulating bodies were required. I can only suggest that it was down to the very different political approach to the interplay of the public and independent sectors by the then Secretary of State, to which the present Secretary of State and his immediate predecessor provide, in my view, a very welcome contrast in their approach.

But that was the system and it threw up a number of anomalies which, I suggest, on the whole discriminated against the private sector hospitals. Perhaps I may give two examples. To date, it has been a requirement for all staff in independent hospitals to have full Criminal Records Bureau disclosure. The vast majority of NHS staff do not have that requirement. Another example is that the NCSC has laid down stringent minimum quality standards for the private sector, while CHI stipulates only broad principles of clinical governance. There is a big difference there.

So, to bring the regulation under one body is to be welcomed so far as it goes. But the Bill does not provide a timescale for the inception of the new CHAI. Therefore, we wish to see CHAI announce the date for implementation of a common set of standards. I should like to suggest to the Minister that a suitable opportunity might present itself in that those standards could be trialled in the new diagnostic treatment centres ahead of being rolled out nation-wide.

I have another serious concern. I have already referred to the absence of a timescale. Indeed, there are indications that for the time being CHAI intends to keep the two sectors apart. I should welcome an assurance from the Minister that either in the Bill or by statutory instrument there will be a fixed time for the total amalgamation of CHAI taking over the regulatory role for both sectors.

There is an additional reason for that. Independent hospitals are caring for an increasing number of NHS patients under the concordat, and consultants frequently work in both sectors. A common approach to inspection would be sensible, leading to greater simplicity for the patient and clarity for both NHS trusts and independent hospitals.

Perhaps I may make a further point concerning the division of the functions of CSCI and CHAI. With such reservations as I have mentioned, I welcome the creation of those two bodies but it is vitally important that the division of responsibility between the two is sensibly and practically worked out. The noble Lord, Lord Clement-Jones, for whose speech I arrived in time, made that point.

The division of responsibility is set out in Clause 100 of the Bill, but there is one anomaly in particular to which I want to draw the Minister's attention. I understand that long-term conditions—for example, acquired brain injuries—and time-limited (that is, up to six weeks) substance and addictive behaviour treatment in respect of, for example, drug and alcohol addictions will be regulated by CSCI and not by CHAI. The reason is, I understand, largely one of precedent in that in many cases those treatments are provided by units currently registered under NCSC.

Therefore, now that the Bill has arrived in your Lordships' House, I urge the Minster to reconsider that distinction. Brain injury and drug treatment centres have much more in common with "mainstream" healthcare than with "mainstream" social care. They need to be regulated by people who understand doctors and nurses and not by people whose main expertise lies in regulating social and community care.

I shall want to return to that matter in Committee but, in the mean time, perhaps I may suggest to the Minister that this problem could be addressed by simply reclassifying those units as "clinics", thus bringing them within the responsibilities of CHAI under Clause 100(2)(b) of the Bill.

To sum up, we, like many hospitals in the private sector, welcome the creation of the two bodies but this bold move should not be impaired because the borderline between the two has between insufficiently thought through. I have no doubt that we shall return to this point in Committee.

6.36 p.m.

Baroness Pitkeathley

My Lords, I thank the Minister for his forceful introduction and look forward to working with him and other colleagues in your Lordships' House on the content of this major and significant Bill.

Your Lordships will know that in the many debates we have had in this House on these important issues my two main concerns have been the relationship between health and social care and the issue of patient representation and involvement. It is on those two aspects that I want to concentrate in my brief speech today.

It is precisely because of my interest in these two aspects that I have followed with some resentment what I might call the "hi-jacking" of the Bill by the foundation hospitals issue. I resent that for two reasons. The first is that it has allowed too many people to think that the NHS and NHS reform are all about hospitals. They are not, and I am especially resentful that this has happened at a time when we have made so much progress through the establishment of primary care trusts, and so on, in understanding that, for most people, healthcare begins and ends at their GP and at the primary care level. The Government have shown their commitment to that by ensuring that in future 75 per cent of the funding will be decided at that level.

The second reason that I feel this resentment is because the publicity about foundation hospitals has drawn attention away from the other important aspects of the Bill—the patient and public involvement arrangements and the setting and regulating of standards in social care.

I shall say only one more thing about foundation hospitals and that is that they are linked with the Government's undoubtedly strong commitment to patient and public involvement. As I understand it, there is currently no provision for patients forums in foundation hospitals. This is a serious omission, even taking into account that patients and their representatives will be in the majority on the boards of the foundation trusts. I hope that we can make appropriate changes as the Bill proceeds through your Lordships' House to ensure that patient participation and involvement is given the importance to which I know the Government are committed. It may well be possible, for example, to ensure that foundation trusts involve patients through primary care trusts or in some other way. But we must be assured that that commitment to patient and public involvement, which has been so hard won, is not compromised.

I turn now to the social care aspects of the Bill, and I am especially concerned with the parts where health and social care aspects overlap. As we know, the Bill establishes a new Commission for Healthcare Audit and Inspection to inspect and raise standards in healthcare. I particularly welcome the fact that it will establish standards of care for every private sector hospital also. The new inspectorate will merge into a single organisation the health functions of CHI, the National Care Standards Commission and the Audit Commission. Leaving aside the unfortunate matter of the creation, and then the almost immediate amalgamation of the National Care Standards Commission, the creation of new CHAI is sensible. I pay tribute to the staff and board of the NCSC, under the peerless leadership of Anne Parker, for the farsighted and flexible way in which they have approached what could have been an extremely difficult situation.

I believe that CHAI will encourage improvement in the quality and effectiveness of care. I would welcome confirmation from the Minister as to whether its remit, as well as including private care sector provision, will extend to regulation of the newly developing diagnostic and treatment centres. I declare an interest as a member of the Clinical Advisory Board of Inventures, which is making great progress in setting up such centres.

The Bill makes another very important change so far as concerns social care: it establishes a sister organisation, the Commission for Social Care Inspection, to do a similar job in social services, or rather social care, to guarantee standards of care for some of the most vulnerable people in our society—we have been forcefully reminded of that today by the publication of the Green Paper—who, for far too long, have been at the bottom of the pecking order for these services. It will be for both commissions to work together to bridge that divide, which has beleaguered our services for so long. They must ensure that health and social care do not compete with each other but work together. I am sure that this will be a priority for the most able new chair of the commission. Patients and carers constantly remind us that they do not understand the divisions between health and social care—why on earth should they? We must ensure that the arrangements are inclusive, not divisive.

I wonder about the position of the General Social Care Council with regard to the new arrangements. Noble Lords will not be surprised to hear my concern, as I chaired the group that advised on its establishment and was its interim chair for six months when it was first set up. The GSCC is doing excellent work on the regulation of all workers in the social care field, as well as their training, and is to be congratulated on publishing its codes of conduct and on beginning successfully the huge task of registering the million-strong social care workforce.

However, both the GSCC and the Social Care Institute for Excellence were established in different circumstances from those that now exist. It would not be surprising if there were some confusion about what is expected of the GSCC now in relation to the new commissions. The GSCC has enjoyed a direct and always productive relationship with the Department of Health. I hope that the Minister will make it clear that that is expected to continue.

It is my earnest hope, in relation not only to the GSCC but to the whole issue of social care, that the transfer of so many expert staff from the Department of Health to the commission, and indeed the loss of so many staff from the Department of Health itself, does not represent any downgrading of social care from the political agenda after so many of us have fought so hard and for so long to give it its proper and much-needed level of importance.

I remember very well how it was good relationships between the carers' organisations, civil servants and Ministers that played such an important role in enabling the huge progress that has been made in the recognition and support of carers to take place. We all worked together, not to oppose or outwit each other, but in a spirit of genuine co-operation and commitment to the client group. It is vital that the professional skill and expertise in social care that exists is not only maintained but allowed to develop. I hope that the Minister will reaffirm his own commitment to making social care just as important in his brief as healthcare. We are fortunate to have a Minister such as my noble friend, who is so experienced in this field, and we must ensure that recipients of social care and their carers benefit from his knowledge not only of needs but of delivery.

I look forward to working with noble Lords on ensuring the best possible outcomes for patients, carers and their families across the broad range of issues covered in the Bill.

6.44 p.m.

Baroness Greengross

My Lords, I welcome much of the Bill and the intentions that have led to its introduction. I am grateful to the Minister for outlining the wide impact that it will have. I declare an interest as the vice-president of Age Concern England and a patron of the Local Government association, Action on Elder Abuse and the Family Planning Association. I am also involved with many other bodies that have sent us helpful briefings. I wish to make some brief comments but mostly to ask questions on several aspects of the Bill. I shall be brief.

I am certainly not against trying new types of NHS organisation. With regard to foundation hospitals, the obvious good news about local accountability must be tempered by the need to sort out that accountability. If we are not careful, there may be accountability to everyone in principle but no one in reality. There is certainly a conflict between the principle of earned autonomy and local accountability, which is inherent in the idea of foundation hospitals.

I have a question about the impact on the National Service Framework, which is very important—for example, the framework on older people and that on mental health. Can we he certain that the standards and service models will rigorously be applied by foundation hospitals?

With regard to flexibility, which is very important in foundation hospitals, there is a question about those patients who might be more expensive than average. Such patients are quite likely to be older people because they take longer to recover and therefore might cost the hospital more than the original budget. To overcome that, should the duties in Clause 38, which are about effectively, efficiently and economically working, include "equitably" or "fairly"? Would that he a way of ensuring that this could happen?

We also need to look closely at the impact on mental health trusts and mental health in general—they must not be second-rate aspects of foundation hospital practice.

On care standards, I am an enthusiast for clearer regulation and inspection. It is long overdue to raise standards across the sector. As has been said, the work of the National Care Standards Commission shows what can be done despite the challenges. I received an excellent annual report from the commission today. I congratulate Anne Parker and my noble friend Lady Howarth, who has carried out fantastic work in that respect.

Health and social care regulations and inspection must be brought much closer together so I welcome the introduction of CHAI and CSCI. But I have some concerns and questions. I agree with Help the Aged that CSCI should conduct research, as recommended by the Royal Commission on Long-Term Care of the Elderly, because we need to ensure that demographic changes are taken into account, as highlighted by the International Longevity Centre UK, which I am privileged to chair. We must ensure that new services are developed, for example, to meet capacity and provision needs.

I hope that CSCI will also protect older people who are self-funding in care homes. In effect, they often subsidise the local authorities, which should not continue. Above all, CHAT and CSCI must promote the rights of all users—both rights to services and their human rights. That applies particularly to older people, especially as two thirds of hospital in-patients and 50 per cent of social service users are older people.

The statutory rights of children are now more detailed and clear, as evidenced by today's Statement on children. Of course I welcome that, but we need some similar joined-up thinking about older people and those who are particularly vulnerable—for example, those in need of mental health services. That aspect needs to be balanced.

I welcome the inclusion in Part 4 of the Bill work on dental and GP services. Dentistry is a very important and long-neglected part of the NHS. For example, I was here in the Palace early one morning talking to two female members of staff, one of whom was going to have all her teeth extracted because she had no hope of gaining access to NHS dental care in the part of London where she lived, which was not far from here. The other one had given up as well. That is absolutely terrible and something that needs our attention.

It is sensible to commission services locally. I hope it works but I am concerned about how we will improve the provision of dental treatment if we do not define in Clause 166 what "reasonable" means. I assume that we will do so in the course of our proceedings.

I also welcome the regulation of private dentistry by CHAI, and the agreement with GPs over their contracts in Clause 171. However, I am worried about one thing: how can GPs' practices meet needs that seem to conflict? How will the need to have advance appointments—which disabled and old people need because any transport arrangements must be fixed—tie in with surgeries being available on a walk-in basis, allowing for quick access to GPs whoever we are? Overall, however, I support the Bill and I look forward to the Committee stage.

6.51 p.m.

Lord Desai

My Lords, I have no interest to declare because I have never been involved in any part of of the NHS, except as a patient. By the time I have finished, people may say that it is a good thing that I am not involved. I welcome the Bill, but I would have preferred the original version that was introduced in the other place. However, even that did not quite answer the problems of the NHS.

My noble friend Lord Hunt made a very radical speech. To have been a Minister is a healthy thing. Ex-ministers are very radical people and the more ex-ministers that there are in the world the better the world will be. I agree with part of his analysis. Any system in which the Secretary of State in charge is said to be responsible for everything that happens in the health service—such as in the great bed pan debate of Nye Bevan—is bound to depress everybody who is not thought to be responsible for the health service. We must drastically de-politicise the health service.

Had this debate taken place three months ago, I would have said that the NHS ought to be autonomous, like the BBC, but that issue has become a no-go area so I will not say that. However, if the Secretary of State runs the health service, in response to every headline in a red top newspaper, we are bound to have the announcement of an initiative or another monitoring group. Every time there is a sudden death, it is a political problem that must be dealt with by the Secretary of State.

We are all very proud of the National Health Service, but we always say, as the noble Lord, Lord Alderdice, said, that morale has never been lower. For the past 38 years that I have lived in this country, morale in the NHS has never been lower. I do not know how low it will get, but no matter what we do, morale has never been lower. It is because the people involved are not in control of their workplace. They are not in control of what they do. Morale will be low, especially when dedicated professionals who spend much of their lives acquiring their skills are not in control of what they produce.

There is a great problem associated with this. There is a confusion in political philosophy that haunts education as well as health—people think that universality and equality means uniformity. Everybody thinks that if it is not uniform it is two-tier and unequal. That is such a deep fallacy and I do not have time in the next three or four minutes to deal with it. However, if society is unequal, for various reasons, we need unequal access to overcome inequalities. However, if we have a rationed system—and it is a rationed system, let us not beat about the bush: it has to be—it cannot deal with people's unequal endowment, needs and health problems. It will deal with them equally. Therefore, the outcomes will be unequal because we are not dealing with equal needs in an equal fashion.

It is no surprise that, after 48 years—no, more than that, for 55 years—we still have inequality in health outcomes. We do not allocate food in such a way, nor water, nor transport, but we allocate health in that way and we are stuck. No political party dares tackle the problem. We must de-politicise and decentralise the problem.

I welcome the Bill because it makes another attempt to decentralise health. I say another attempt, because there was an internal market and we now have the de-politicisation. As some noble Lords may know, I am associated with the Health Policy Reform Group. Nobody ever takes the slightest notice of what we say, but it is still worth saying. I prefer a much more radical proposal. Hospitals should be owned by the people who work in them and the local community. A lock is put on their assets—so that assets cannot be used for anything other than healthcare. We could even say that the assets are owned by the state but could be leased to the local community which could then manage them. I see no problem in allowing them to borrow from wherever they want. I fail to see why the Treasury stepped in. It is remarkable how it has always stepped in over the past 100 years and messed up a perfectly straightforward arrangement, in the interests, it would say, of equity.

If borrowing is only on public account we cannot help but create anomalies. My only hope is that, as many people have said, there will be other Bills because this Bill will not solve everything. In future Bills, we may realise that all hospitals, not only foundation trust hospitals, should be locally owned and run with full freedom to borrow from wherever they want. After all, the people who will lend them money are not stupid. They will see that hospitals will be given money only in a rational way. Nobody will let a hospital run away with a big debt, because we know that hospitals are not a money-making enterprise. Several not-for-profit organisations can borrow and there is no reason why hospitals should not do the same.

By clinging to a certain notion of equality, which has not created equality for the past 55 years, we are preventing a very good set of professionals from achieving the best that they could. It is not their problem that they are depressed. It is because we politicians have not agreed to give up our power. Whenever it comes to giving up powers, people say, "My God!, We are betraying Clem Atlee and Nye Bevan", or whatever. Those ghosts still haunt us. We are not willing to admit that if the service is not achieving what it ought, there must be something wrong with the way in which it is organised. We should de-politicise, de-centralise and give lots of freedom to people to do what they are dying to do, which is to provide good healthcare. I hope that we will pass the Bill. In it and in future Bills, we should remove more of the constraints on good professionals, and we may yet achieve a modicum of the equality in access and outcome that we have waited for for 55 years.

7 p.m.

Baroness Hanham

My Lords, I start by declaring an interest as chairman of a three-star National Health Service trust that is on the verge of considering the implications of assuming or applying for foundation status.

If we decide to go ahead, we will be applying as a second-wave trust, following those who currently have to make applications against the uncertain background of a situation in which the legislation has not completed its parliamentary progress. Had the original concept put forward by Alan Milburn—my noble friend Lord Howe referred to it—amid proud declarations about foundation hospitals, independent of the National Health Service, free to run their affairs in their own way and free to borrow capital and make full use of their assets been pursued, there would have been a great deal of enthusiasm among NHS trusts to go forward quickly and energetically. However, the proposals in the Bill are the timorous offspring of aggressive parents and have paled, over time, into more mundane reality. We have heard much about that today, and I do not propose to take the matter much further, except to say that here is an opportunity to galvanise the health service. One wonders whether the upheavals that will come about because of the Bill, if it is passed in this form, will ever be considered to have been justified.

I make no apology for the fact that I want to talk about the new governance arrangements of foundation hospitals. I will mainly direct my remarks to that issue. In particular, I want to talk about the board of governors that will sit above the trust hoard or management group. Its task will be, apparently, to develop the vision for the foundation trust, represent it to the community and the outside world and appoint and tire the chairman and chief executive, as appropriate, of the management board.

The management board is to he constituted along the lines of the current trust board, we believe, and is to have the responsibility of running the hospital. It is not clear whether it is expected that the currently constituted boards will survive to run the National Health Service while those changes take place. I speak now with less confidence, having listened to the noble Lord, Lord Hunt of Kings Heath, but I assume that it makes sense that that will be so and that they will translate through the reorganisation. I assume that non-executive members will be kept in place for at least the duration of their appointed term. That is the first question that we must address to the Minister: will they?

The second question is, "What, apart from that which I have already outlined, is the board of governors going to do, and how will it relate to the management board and the decisions that the board must make on a day-to-day and strategic basis?". The composition set out in Schedule 1 does not suggest that either the chief executive of the trust board or its chairman is to be one of the number of the board of governors. What will he the links between those two bodies? Will the hoard of governors have the right to intervene and/or override decisions and policies being developed by the management board? Who will service the board of governors? Will there be extra resources to set up a separate office and administrative structures, even if, as I imagine, the board will be able to ask for information from the executive team of the trust? What happens if there is a disagreement between the two boards? Which has the final voice?

The size of the board of governors is to be decided initially by the putative foundation trust. Aside from some appointed members, there will be a representative of the local PCT. Which PCT? Particularly in metropolitan areas, there will be a number of PCTs that would be entitled to sit on the board. My trust alone has 48 commissioning PCTs, and others will have far more. There will be members of the local authority. Which local authority? A number of foundation trusts will straddle more than one local authority area. The board will have to include two elements of elected representatives—the public and the staff. The constituencies for their elections will be their "stakeholders", who will, respectively, be those who live in the local community—how will that he defined?—and/or have been patients or carers in the hospital and the hospital staff. In each case, it will be only those who have paid £1 to the trust to be registered who will be part of the corporate body and thus able to vote.

Here is where the fun begins. Who will run the elections? Who will collect the £1 postal orders and coins? Who will keep up a rolling register? I know the answer: it will be the foundation trust. However, it will require staff to administer it properly and fairly—more resources. Also, who will run the elections? No doubt, it will be the foundation trust. It has no experience of being an electoral reform society. In any event, should it not be using its resources to look after the patients? Can the Minister give us a few thoughts on the administration and organisation of such things?

I will turn for a moment to the public constituency. For what will aspiring candidates stand? Will it be as representatives of the community in general or as representatives of particular aspects of the service—kidney, heart, diabetes, children, cancer or the elderly? What knowledge or experience will they have to have? Will anybody be allowed to put themselves forward, without scrutiny by any independent body? Does not the Minister see a danger that the only people who will be elected will be those who are members of an active organisation—perhaps a lobby or special interest group—that has the muscle and organisation to give its candidates support in the election? Just with reference to that, what role, if any, will be allotted to the National Health Service Appointments Commission, both in respect of the members of the board of governors, its chairman—the guidance, at present, says that anyone from the public constituency can put themselves forward for chair—and the chairman and non-executive directors of the foundation trust, who are, apparently, to be appointed by the board of governors? That is an extremely cumbersome way of trying to ensure that the locality is involved in the trust. It follows on the arrangements that are well in hand now for patient representatives in specialist service areas, for co-ordination with the PCTs in the development of local plans and the strategic part to be played by the strategic health authorities, which will still have a role to play in ensuring that foundation trusts perform for their local communities and that there is a spread of services suitable to their needs.

Under these arrangements, the governors of the National Health Service will encompass the Secretary of State, the regulator, strategic health authorities, boards of governors, management groups, National Health Service bodies, primary care trusts and patients forums. That structure is to administer the National Health Service for patients. That is folly upon folly.

The National Health Service is still grappling with the seismic reorganisation of the creation of the strategic health authority and PCT structure. PCTs are still labouring with the problems of balancing their budgets between responsibilities for maintaining the acute and tertiary hospital services in their areas and developing the requirements of care in their community. Those decisions will, depending on resources, potentially leave one or other or both aspects unsatisfied and poorly developed. Soon they will begin the task of working within national tariffs and the competitive edge which surely they will bring to service provision.

Briefly, I shall touch on the power to borrow which the foundation trusts will have. If ever there was a missed opportunity this is it. As set out now, borrowing arrangements will be severely constrained both by the regulator and the financial repayment arrangements. It is abundantly clear that there will be no extra resources for any foundation trust which has to repay capital and interest. That will have to come from the PCT's budget in its local community because it will have to come as part of the support service and support resource. It is a missed opportunity to allow foundation trusts to have the freedom of flexibilities which had been promised.

This is a maelstrom into which the Government are bouncing foundation trusts. I look forward to taking part to resolve, if nothing else, sensible governance arrangements which will do what we all want; namely, to involve and ensure that patients have a role in their care but which do not lumber the health service with a situation and an administration which it is impossible to manage.

7.11 p.m.

Baroness Finlay of Llandaff

My Lords, this complex Bill deals with many diverse and yet interrelated changes straddling both England and Wales. The NHS seems to be about change. No sooner does one system come in and bed down than it goes out again and another system is introduced. With my declared interest as a practising NHS clinician, I think "here we go again". In the Explanatory Notes, the differences between England and the devolved health service in Wales are highlighted. I should like to thank the Government for the helpful table that summarises the application of the Bill to Wales.

In a world where evidence-based medicine is increasingly called for and the National Institute for Clinical Effectiveness is driving decision making, why do we not have evidence-based management changes? In England, the governing of hospitals, as they become foundation trusts, entails huge changes. The debates and amendments to this Bill will be complex. But at this stage I simply question: why has there been no pilot? Why have these governing arrangements not been evaluated'? Why are the regulator's roles not clearly defined? How will the regulator function in relation to strategic health authorities and others? If a change in care delivery is to be introduced, should it not be evaluated? Can the service management cope with another upheaval or would stability be better maintained by a phased introduction of new structures?

A natural experiment will occur as foundation trusts are not being introduced in Wales. I appreciate the Minister's reassurance that Welsh patients will not be disadvantaged when needing treatment in England. It was a pleasure to hear the noble Baroness, Lady Cumberlege, and the noble Lord, Lord Hunt of Kings Heath, outline the clear reasons to distance the service of clinical care from the management hand of Whitehall and the over-involvement of Ministers in the minutiae of the service.

Yet the introduction of foundation trusts appears to provide a something and nothing approach. The professionals want to get on with looking after patients and do not see their fears allayed. Their reservations will not be answered by theory because they are people used to evidence, who want to see evidence-based management changes. Part 2 deals with standards and the implementation of evidence-based therapies. I seek assurance from the Minister that systems will be in place to track all NICE guidance on medical devices, as well as on pharmaceutical interventions, particularly as new devices may be cost saving in the long term with increased efficacy resulting in decreased on-going prescribing for specific groups of patients.

The ability of the Commission for Healthcare Audit and Inspection to work across all areas of healthcare is a welcome safeguard for patients. It is long overdue. Consistency is needed in the way in which anonymised data are recorded and handled so that meaningful comparisons can be made and disease outcomes accurately classified and monitored. Unfortunately, the commission's name does not help the organisation to be viewed by clinicians as one that gives constructive feedback to encourage standards to rise and encourage managers and clinicians to be open.

The proposal to link complaints and compensation is fraught with dangers. The Kennedy report on Bristol clearly recommended a move from a blame culture to a spirit of openness, learning from near-miss episodes. The proposals will deter openness and encourage the vexatious complainant within an increasingly litigious culture. Linking complaints to compensation is divisive as blame is apportioned. Yet, when things go wrong. it is often a system failure and not an individual. The motive for a complaint is usually to get information, to receive an apology and to prevent the same thing happening to someone else.

Healthcare is not risk free. Negligence must be differentiated from inconvenience and complications of the clinical disorder from avoidable harm. When someone has been harmed they need a proper independent assessment by a professional with appropriate skills and to then receive appropriate just compensation from the NHS pot. However, the current proposals may mean that if a person is vexatious and has the wit to remain unhappy, he or she could get richer. The complainant who receives money feels vindicated and a precedent is set, resulting in spiraling amounts paid.

For all the proposed changes, it is worth remembering that patients want to emerge from the service feeling better. Professional staff want to add years to life and life to years. Patients are vulnerable when ill. Choices are difficult. Often patients have no choice because they are so vulnerable. They want to know that they are diagnosed accurately wherever they are and are offered the best and most appropriate care and treatment for them. Common things occur commonly, but people die because no one thought of the unusual. All change, whatever it is, must ensure that patients and best evidence are brought together in treatment and care strategies. Management structures must support the process to detect the unusual, to research improvements and to ensure that the lessons learnt are disseminated by education and training. Without the fundamentals of research, education and training, clinical care can never improve. Whatever management changes there are, they must not detract and distract us from that.

7.18 p.m.

Lord Harris of Haringey

My Lords, in general I welcome the Bill. In doing so, I declare an interest as a non-executive director of the London Ambulance Service NHS Trust and as yet another senior associate of the King's Fund to speak today.

Parts 3 and 4 have not attracted much controversy. They are sensible and long overdue. NHS costs should be recovered when personal injury compensation is paid. It is an anomaly that this has not been the case, except in road traffic accidents. The changes to GPs' contracts, now widely supported by GPs themselves, and parallel changes for dentists enable and encourage a variety of work patterns, but also focus on the range of services delivered by a particular practice rather than an individual practitioner. That, too, is very sensible.

Likewise, Part 2 is based on good and proper principles. In this case, the audit and inspection regimes covering health and social care should be rationalised and made more coherent. This has meant that in a number of cases institutions that started operating only last year are now being reorganised and merged. It is perhaps unfortunate that the desire to be cohesive could not have been acted on when they were established.

It makes no sense for the NHS and private health care to be regulated separately, as is the case at present. That leads to confusion, complexity and irregularities. Potentially, it is a significant barrier to increasing patient choice. There is little logic in saying. as is the case under the current regime, that the private wings of NHS hospitals are to be regulated by CHI and not the NCSC, despite treating the same patients as any other private hospital, and for independently run diagnostic and treatment centres to be regulated by a e NCSC and not CHI, despite treating NHS patients.

At the moment, the NCSC lays down minimum quality standards for the private sector while CHI stipulates only the broad principles of clinical governance for the NHS. Presumably the intention behind the Bill is for new CHAI to take us towards a level playing field with a read-across between standards set in the NHS and those in the independent sector. Having said that, it is not made clear in the Bill when it is expected that both sectors will operate from a common set of standards and how those standards will be drawn up. I hope that, when he winds up the debate, my noble friend on the Front Bench will be able to clarify that point.

I should like to devote the remainder of my remarks to Part 1. The issue of foundation hospitals has generated the most vigorous and lively debate in another place. Two major concerns have been voiced. The first is that foundation hospitals will lead inexorably to a two-tier service and the second is that foundation hospitals are privatisation by another name. Certainly the first of those concerns might have been valid for the proposals as they were originally framed, but it is difficult to see how either concern can be justified given what is before noble Lords today.

All NHS trusts will now have the opportunity—indeed, they will be encouraged—to become NHS foundation trusts. What is more, they will have a legal duty to work in co-operation with other NHS organisations. They will be policed by the regulator and inspected by the new CHAI. If, in due course, all trusts are to become foundation trusts, it is difficult to see how the two-tier argument can be sustained, and it must make sense to allow the trusts that are in the best state organisationally and clinically to make the transition first. This may not have been the concept originally floated, but it is certainly what is before us today.

Similarly, the privatisation argument seems rather weak. Foundation trusts will be required to use their assets to promote their primary purpose of providing NHS services to NHS patients. Clause 15 provides a lock on the ability of a foundation trust to raise a higher proportion of its revenue from private charges than it would have done as an old-style NHS trust. Indeed, it might be argued that the restrictions are almost too much of a straitjacket in terms of enabling managers to find innovative ways of raising resources to improve the generality of their services.

If, as I would argue, fears about foundation hospitals are not likely to be realised, what are the benefits for patients of yet another NHS reorganisation? The Minister has in effect advanced two benefits. First, the new foundation trusts will be better able to innovate and to deliver services more in tune with local needs. Secondly, the Government's arrangements will enhance local accountability and service responsiveness to patients. My noble friend said that foundation trusts will have the freedom to gear their services more closely to the needs of their local communities and that this—in what I have to say is a rather unspecified way—will improve services in poorer areas and tackle health inequalities. Further, foundation trusts will be at the cutting edge of the Government's commitment to the devolution and decentralisation of public services, with local staff and managers having more freedom to innovate for the benefit of local communities.

I am all for this freedom, and if that is genuinely going to be the case, that alone merits the costs and dislocation of this latest change in the structure of the NHS. However, I am sure it would assist noble Lords if my noble friend was more explicit about how this is to happen. What will be devolved and in what areas will Ministers now resist the terrible tendency of Richmond House to micro-manage? How exactly will this reduce health inequalities and improve services in poorer areas? The best way to do that is normally to target additional resources at the areas most in need—and I am conscious that this Government have injected more money into the NHS than any of their predecessors. But is it going to be targeted? If that is implicit in Part 1, then I am sure that I would welcome it.

I say to my noble friend that this is an important issue. I understand that many NHS managers are excited at the prospect of being able to deliver services more flexibly and innovatively under foundation status, yet what are the extra areas of freedom, aside from the ability to access capital, which of course will mean that they must find additional revenues without falling foul of Clause 15? This is not immediately apparent on the face of the Bill and if those flexibilities could he delivered without legislation, I must ask why we do not do it tomorrow for all trusts, and let a thousand flowers bloom.

I conclude with a few words on governance. I have long believed in enhancing local accountability and democratic control within the NHS. However. I wonder whether the proposals in this Bill have got it quite right. I would rather more time were spent on getting the governance arrangements right, and if it were possible to proceed with the rest of' the Bill but to allow a few more months to work out the precise mechanisms by which NHS bodies would be much more directly accountable to the communities they serve, I am sure that would be desirable.

Indeed, I believe that a fundamental question must be answered first: why is the emphasis on membership and boards of governors applied to provider trusts—in particular hospitals—rather than to the bodies charged with commissioning, in particular the PCTs? Is there not a serious danger that the new governance arrangements will reinforce, if not fossilise, the traditional provider domination of the NHS, when what we should be encouraging in a modern health service is a more flexible approach to how services are delivered, led by local needs determined by commissioning bodies devoted to improving public health and reducing inequalities in outcomes?

Schedule 1 defines membership of a "public benefit corporation", but it begs more questions than it answers. The members are to be people living in the area specified in the trust's constitution, but how big is that area? At one meeting I attended. the former Secretary of State suggested that perhaps it should encompass the local authority area in which the trust is situated. I declare an interest in that I live in a London borough in which there is no general hospital, so the questions raised by my noble friend Lady Gould of Potternewton, now sitting on the Woolsack, are absolutely pertinent. How are the areas to be determined? How large or small can they be? I presume that they could not be so small as to create NHS rotten boroughs reminiscent of the other place before the Great Reform Act 1832. Will the regulators seek to ensure that every citizen is covered in some way? Further, the cost of maintaining such a register will not be insubstantial. In many parts of London the electoral register turns over at a rate of 30 per cent per annum. Then there is the problem of the distortions created by people reluctant to subscribe a pound, or erroneously fearful that such a subscription will bring with it potentially heavy liabilities.

I turn now to the patients' constituency. What constitutes a patient? Again, I declare an interest in that I was born—admittedly almost 50 years ago—in University College Hospital in London. Why should I not be a member of that foundation trust if and when it is set up? Or why not a member of the hospital in which I had my hernia operation some two-and-a-half years ago? I had never been to that hospital before and do not intend to return to it in the future. Or why not the hospital where I spent a few happy hours in A&E with my son? What exactly are the boundaries? No doubt there will be variations. Will they induce confidence in the governance structure?

A trust's constitution can set other restrictions on who can or cannot be a member. Are there limits to those? Could a trust specify that only people of a certain religion could be members, or only those who are freemasons, or members of a particular political party? It is left to the whim of the regulator as to whether that would be possible.

The members, however defined, then elect the board of governors. That would seem straightforward enough, but why does the board of governors have such limited powers? Would it not make more sense to combine the board of directors and the board of governors? Indeed, as set out on the face of the Bill, the powers of the board of governors are minute. Boards will have the doomsday power of sacking members of the board of directors. They must be called together to endorse appointments made by the chief executive of the director of finance or other executive directors. That is a strange process when one considers how it would operate. Aside from a public meeting to set the pay and conditions of the non-executive directors, that is about it. Why does not the schedule specify—as suggested in another context in the Higgs report—that there should be a majority of non-executives on the board of directors? Further, why is there no proposal to require any clinical input into the board? All this requires a major rethink.

This is not put forward with any negative intent, but because I believe that it is important to get it right. New forms of democratic governance are important for the NHS and vital to its future, as are new forms of patient involvement, participation and empowerment. The new trusts will have none of the patients' forums and so forth that were approved in this House only a few months ago, and which are still some way from being established. As I remarked earlier, a little more time spent on the consideration and development of these proposals might make the noble intentions of the Bill a reality. Without it, the achievement of a workable, effective and, above all, meaningful new system of governance for the NHS, genuinely involved with the public it serves, is likely to be lost.

7.30 p.m.

Lord Colwyn

My Lords, although the contentious issue of foundation hospitals may dominate the Bill—I agree with much of what the previous speaker said—there is also a significant dental aspect which I wish to address today. I declare an interest as a practising dental surgeon—I do a little less work now than I used to—who worked in the National Health Service for 20 years.

The changes outlined in the proposed legislation will be some of the biggest ever to NHS dentistry since the system was set up in 1948. We have heard already today, in the debate on the second Starred Question, about the scenes in Carmarthen, where more than 600 people queued outside a local dental surgery. I shall not repeat the details but it shows that the demand for NHS dentistry is high and yet there is a serious shortage of dentists prepared to work on the NHS. What has been a problem in many parts of the country has now become a crisis.

The Government have seemingly spent vast amounts of money on the NHS but very little is finding its way into dentistry. The proportion of the NHS budget spent on dentistry has fallen from 5 per cent to 3 per cent. Dental schools have closed, leaving places for only 800 new dentists each year. The system for payment has remained unchanged and incomes still depend on how many patients can be put through the system each day. This has been described by both the profession and by the Audit Commission as a "treadmill". In fact, the Minister himself used that description today. The number of patients registered with NHS dentists has fallen by 5 million over the past five years, in many cases because they simply cannot find anyone to take them on.

The way in which dentists are paid, the "fee per item of service" system, means that they are constantly under pressure to see as many patients as they can in order to pay their staff and to keep their practices running. A BDA survey last year found that the main reason why dentists reduced their NHS commitment was to spend more time with their patients.

The Government have consistently assured the public that there would be countrywide access to NHS dental treatment. It was promised for September 2001 by the Prime Minister and the Secretary of State at the Labour Party conference in 1999 and confirmed by the noble Lord, Lord Hunt, for whom I and the dental profession have a great deal of respect. The publication of Options for Change in August last year suggested that there should be a gradual process of change in primary dental care guided by work on field sites. There would be a local commissioning by primary care trusts but no new way of remunerating GDPs.

But there is a glimmer of hope. The Chief Dental Officer, Professor Raman Bedi, has informed the profession that the Bill before us, proposes to legislate for far-reaching reform of NHS dental services", in both England and Wales and to deliver the Options for Change objectives. The new system will replace the old item of service payments and finally rid the profession of the treadmill effect. When the PCTs take responsibility for local commissioning of dental services they will have to assess the needs of people in their areas, not only those living there but those who commute into them and those who are visiting. They will have to provide services within centrally set guidelines and Ministers have made clear that PCTs could not restrict provision to an emergency service or exclude other specialities.

In view of the agreement in another place that PCTs and local health boards had to meet only the undefined criteria of "reasonableness", it is of great importance to the profession and to the public who use the service that the Minister should define what is "reasonable" and what treatment will be included.

Access to services, as is shown by the Carmarthen example, remains an acute problem across every part of the country and the changes in the Bill will, in part, address this. However, in properly dealing with the treadmill effect, front-line public dental health prevention is paramount. While I recommend the additional funding promised to PCTs further to address the long-term inequalities, the Government have still not committed themselves on the precise detail of what public dental health should be provided. This is a real problem.

The local health authorities are in an excellent position to ensure that there is a proper joined-up, proactive and preventive dental public health system in their areas—this should include screening in schools—and yet the detail in the Bill addressing this issue is uncertain. Can the Minister confirm that there will be a dental position on the executive committee of all PCTs and that the Dental Public Health Adviser will be dentally qualified and will be someone who fully understands the issues of dental and oral health?

The proposed change from a national to local contract, which must be in place by 2005, is of great concern to general dental practitioners. These PCT contracts will look like existing GDS contracts, with the same safeguards but with no necessity to claim for items of service. It would guarantee continuation of existing funding to a practice, adjusted for inflation, in return for the same level of commitment. The contract would be nationally consulted and available to all PCTs and dentists, who could be in individual practices, groups of practices or individuals, will be offered contracts or, if they have not negotiated an individual contract with their PCTs by April 2005, default contracts.

I know that the new kinds of contracts are being tested in field sites before implementation but, given the very ambitious timescale of 2005, it is extremely unlikely that they will have been fully tested and evaluated. Therefore, can the Minister confirm that the Government will consult and work closely with the dental profession, via the local dental committees and the British Dental Association, on the kind of contract that will emerge to ensure that the best possible outcome is agreed to?

Could the Minister further reassure me that the Government have considered the position of associate dentists? I am not clear whether the Bill provides for them to have their own individual contracts with the PCTs or whether they have to be a part of a group of individuals. What will happen to practices that are expanding, where the previous year's turnover could be totally inappropriate as a base line? I trust that the department and the profession's negotiators will be discussing these kinds of details as a priority.

The new arrangements must be made known as soon as possible in order that practices may plan their finances. The money that is promised for dentistry must be ring-fenced and used only for dental services. Many dentists are making plans to increase the private element of their practices because of the uncertainty created by the Government's lack of clarity on the transitional phase of this radical reform.

With the abolition of item of service payments, patients' charges can no longer be calculated in relation to dentists' fees. A review group will advise on this. Dentists and patients will of course welcome a simpler system. In future, dentists will be able to adopt a more preventive approach without reducing turnover and consider spending longer on more complex work. The dental profession expects the Department of Health to work with it on the planned review into the future structure of patients' charges. I hope that the Minister will agree to this co-operation.

The Bill will change the measurement of dental workload. For 50 years it has been calculated with reference to the number of fillings, extractions, crowns and dentures provided. That is not the way output is measured in the remainder of the NHS. This problem is being assessed in the field sites, with much more emphasis on the patients' perspective. The dentist will no longer be asked how many fillings or crowns were undertaken. It will be more important to know how many patients were seen; how long they had to wait for an appointment; what arrangements were made for patients with chronic gum disease—with a high risk of caries development—with susceptibility to oral cancer. Can the Minister confirm that the current system of patient registration will end with no differentiation between those patients who attend regularly and those who do not?

Finally, with the majority of my dental colleagues I am pleased with many of the changes that the Bill will bring to the profession. But much of the good work in the profession is undermined by the rhetoric from the Minister's colleagues in another place, who continually trot out the "free at point of delivery" soundbite while totally ignoring the basic facts in NHS dentistry today that, unless patients are exempt, NHS patients pay 80 per cent—yes, 80 per cent—of their treatment costs. That is the reality of the treadmill in our dental system today. I am delighted that the Government are doing something about it.

7.39 p.m.

Lord Adebowale

My Lords, I declare interests as an unpaid associate member of the Centre for Health Service Management and as a paid chief executive of a social care charity.

The Bill seeks to make some significant changes to the NHS and I see it as an opportunity to add a finer focus, to add value to NHS customers, to increase choice and to improve quality. There is of course the key issue of foundation trusts. This House will have plenty of opportunity to debate this critical matter, which has generated so much public and media interest.

Many have rejected the foundation trust concept out of hand as an attack on fundamental NHS values, or because it is change, and change is difficult and challenging at the best of times. I have yet to be persuaded, and look forward to the forthcoming detailed debate with interest. Right now, I am more concerned with some of the fundamental principles that I think are missing from the Bill and, sadly, from much of the debate so far. It is not just principles that are missing from the Bill but some key organisations and sectors that need to be part of our consideration of the future of health, social care and the NHS as a whole.

With the exception of the contributions of the noble Baronesses, Lady Pitkeathley and Lady Greengross, the debate so far has not thought through the issues of the NHS and its relationship with social care and mental health. It is worrying that a Bill that seeks to increase choice and develop greater partnership working between the NHS and other bodies across health and social care sectors misses out key references to mental health trusts and social care trusts. I would be interested in the Minister's thoughts on how the Bill will affect those important bodies.

To my mind, the Bill omits a clear role for the voluntary sector and provides little in the way of a framework for how the NHS intends to work with these organisations and the sector in a way that can add value and provide choice. In a recent speech to the NHS Confederation, Health Minister John Reid quite rightly set out his view that choice was a prerequisite of a fair, high quality, value-driven NHS: choice for all, not just choice for those who can afford the private sector or who have the means to employ those who can navigate the miasma of options created by so much change on their behalf. How is it possible to have choice if crucial areas of service provision are absent from the Bill—a Bill which seeks to make fundamental change to the way the NHS operates?

Let me address the principle that I believe is missing from the Bill. It sets up foundation trusts as independent public benefit corporations, with the primary purpose of providing health care to the NHS. In thinking through what I was going to say, I thought about Turning Point. I am mindful of the fact that Turning Point might already be a foundation trust, given what we have been set up to do. We are an independent body contributing to the public good in the area of social care. We may well be a foundation trust, along with many other organisations that are commonly known by many Members of this House, such as Rethink, Mencap and United Response. It could be argued that they have all been established as trusts and charities—organisations that are independent but operating for the public benefit with the primary purpose of providing health and social care to the public, often directly through contracting with the NHS.

While many in this House may applaud the fact that the Bill provides the NHS with greater freedom from the Department of Health and politicians, I am interested in how such freedom will operate in partnership with other bodies which are intricately involved in the delivery of critical social care health services to the British public.

Much of the Bill refers to the NHS framework and operations within this framework. It gives greater freedom to NHS trusts to operate within an independent framework for the public benefit but does not define the NHS's role in the mixed economy of care.

Is the House aware that according to the recent report by Compass Consultancy, 13 of the largest voluntary sector mental health organisations contribute some 10 per cent of spending or mental health? The combined income of these 13 mental health providers was £320 million last year, of which £154 million was spent specifically on delivering mental health services. The range of mental health services alone covered by these organisations critical to the mental health and social care of over 300,000 people every year.

Those figures refer to just one aspect of the contribution that the voluntary sector makes to this debate in relation to mental health. I could also mention learning disabilities and substance misuse as other areas where the voluntary sector is delivering critical services in partnership with the NHS.

My main concern relates to the fact that many of these organisations struggle to establish a level playing field on which partnership can be seen as adding value and sharing risk with the NHS. It is my view that in the delivery of health and social care there is a third way, which the Bill does not go far enough to define and include. That way involves voluntary sector organisations delivering critical social care services and working with the NHS in a framework yet to be defined by the Bill in a way that ensures that they continue not only to add value but make the necessary moves to reverse a law which I have often referred to in speaking to this House—the inverse care law, under which those who need services most tend to get them least.

For this level playing field to be created, the Bill needs to say more about how it expects the NHS, in whatever form, to relate directly to the voluntary sector. In my view, this should be through better contracting and better management of the markets in which the healthcare trusts operate. The Bill could do much more to define or, indeed, create that.

Secondly, I wish to turn from principle to practice. I am surprised that there is scant mention in the Bill of mental health and social care trusts. It is as though the Bill is focused only on acute problems, yet we know through the Sainsbury Centre for Mental Health that 50 per cent of people with acute needs have mental health and other social care problems.

Why does the Bill not take the opportunity to focus on where the NHS is spending large amounts of money in what is often a disorganised and unstructured way and provide a framework within which mental health and social care trusts can operate at the same level of consultation and respect for their contribution? This will of course require some reallocation of resources in order to allow mental health and social care trusts to catch up with those organisations that the Bill focuses on to the detriment, in my view, of social care and mental health. Why is this the case? Can the Government see the Bill as an opportunity genuinely to increase the ability of the NHS to deliver social care and mental health in partnership with not only those organisations contained within its own structure but those currently working as unequal partners but who wish to be equal partners in the delivery of health and social care for all?

7.47 p.m.

Lord Blackwell

My Lords, I declare an interest as a director of a mutual that provides health insurance policies.

Like other noble Lords who have spoken, I welcome the Bill so far as it goes and the direction of the policy it sets for the future. But I am, as others have been, critical that the Bill does not go far enough. Not only does it not go far enough in the provisions for foundation hospitals, but it does not tackle the other side of the equation—the freeing up of the commissioning side of the health service, to which the noble Lord, Lord Harris, referred. I, among others, will want to press the Government as we go through the Bill on whether they are prepared to follow through the logic of what they are setting out in both the Bill and what follows it.

The problem with the NHS, as many noble Lords have mentioned—I was particularly struck by the descriptions of the noble Lords, Lord Hunt and Lord Desai—is that the structure is run as a large nationalised industry. As the noble Lord, Lord Hunt, said, it is the same structure that was introduced in 1948. The NHS is a sad example of the problems that result from a nationalised industry structure with which we have been sadly too familiar in many other parts of the economy in the past. Local management loses control, loses incentives and manages upwards, creating demoralisation and a need for incentives to intervene with initiatives that further compounds the problem and creates a spiral of inefficiency in which the patient is the loser.

Within that structure, according to figures released earlier this year, the 20 per cent additional resources that have been put into the NHS since 2000 achieved only a 2 per cent rise in activity. We can have little confidence that further money put into the same structure will achieve any better outcomes.

I believe that it is time to accept a new reality—the reality that centralised states running nationalised industries simply does not work. We should finally give up the search for ways in which the state could run such structures better and accept that the only solution is for the state not to run them at all. That requires a commitment to a radical vision of a denationalised health service—not a tinkering around the edges but a fundamental shift. We need to ask not only whether the Bill's suggestions are necessary, given the history of health service reforms, but also, if this is the one occasion to get it right, whether the Bill goes far enough. Alas, I believe that it does not.

Two parts are required to create and complete the vision of a denationalised health service. First, as the Bill starts to do, we must break all hospitals and all other facilities out of state control and make them truly independent local entities, whether voluntary, charitable or private companies, which are able to manage their own delivery for the patients whom they serve. That is much as they were before the state stepped in and nationalised them half a century ago.

Such reforms, however, even if they were completed, would be inadequate on their own. As the noble Lord, Lord Harris, pointed out, the real power in a health structure really rests with the purchasers—those who are commissioning. If we complete the dismantling of state control and allow innovation to take root, we also have to take the government out of being the monopsony purchaser. Monopsonies can be as damaging to industries and sectors as monopolies, and in the health sector we have had both. It is damaging because, with all the spend controlled against Whitehall priorities, it still leaves all the control levers in the hands of a centralised bureaucracy. Unless we deal with both sides—the commissioning as well as the provision—we shall not get the change that the Government and the Minister say that they are seeking.

Elsewhere I put forward proposals to create more diverse commissioning structure by enabling patients to take their share of NHS funding and to transfer it to independent healthcare managers who would contract healthcare services on their behalf. That would cover both primary and secondary care, so as to optimise the overall healthcare quality and costs. This is not the time or occasion to repeat those proposals or to go into detail, but it is possible to envisage structures where that can be achieved.

As long as taxation provides the funding for a service that is free at the point of delivery—and I for one fully accept that taxation should remain the core component of health funding in this country—the state needs to set bounds around the core package of care, saying what it should deliver and its costs. However, that should be a minimum and not a maximum or a constraint, and patients should have the option that only the rich in this country currently have to exercise their choice, rather than having to put up with what is delivered to them.

I agree with noble Lords who said that the criticism that foundation hospitals are creating a two-tier structure is not a proper one. At the moment, we have a multi-tier system of inadequate service whereby how inadequate it is depends on where one lives and how well one is able to manage one's way through the rationing gateways. The fact is that it is generally the poorest and those least able to manage their way through those gateways who are treated the worst. The only way in which to improve that is to allow some areas to create standards of excellence and to encourage all hospitals and other health providers to catch up. We need the power of patient choice and free commissioning to drive that, and the problem with the Bill is that it goes only a small part of the way towards that vision of the patient-focused, decentralised and denationalised health service that we need.

First, the objective of fund-holding is not really carried through in the Bill, because in reality the fund-holding hospitals will have to meet the same central targets and initiatives. That will happen through the actions of the regulator and of CHI, with its attempts to make compliance and annual reviews around star-rating systems, and by the fact that the hospitals cannot change their range of services and will be hemmed in by centralised union agreements.

As the noble Baroness, Lady Hanham, made clear, hospitals will be over-burdened by government structures, interest groups and appointees, as well as all the other government structures around the NHS. As the Treasury has recognised, under that set of controls, they are not truly denationalised, so according to the Treasury formula they cannot be allowed to raise significant funds. As my noble friend Lord Howe pointed out, we will have a zero-sum game whereby the funds that hospitals are able to raise will come off the amount to be spent by other hospitals. That is a poor approximation to the kind of independent decentralised fund-holding that we should aim for if we want innovation and service delivery.

Secondly, the Bill does nothing to create more competition and choice in purchasing. The primary care trusts that control 75 per cent of the funds have very little freedom in reality to deviate from centralised priorities. We shall not get innovation or freedom unless that situation is changed.

One immediate step that the Government could take would be to announce that they will create foundation primary care trusts, which would have real freedom to spend their per capita allocation. If they took that step, it would be a simple step beyond that to allow people to move from one PCT to another, creating a basis for the kind of vision that I have proposed. As we go through the Bill, I should like to ask the Minister whether the creation of foundation primary care trusts is any part of the Government's current proposals or of what they would consider putting forward. It is an essential reform that must go hand in hand with a proper system of foundation hospitals.

Even if the Government are not prepared to commit to that, I hope that the Bill as the House may amend it may at least provide some of the basis from which a subsequent and bolder Government may proceed more rapidly to complete the transformation to a decentralised and denationalised structure that is free to deliver the quality of healthcare that the nation deserves. I welcome the Bill as making at least a step in that direction, and I congratulate the Minister on taking that step tonight.

7 57 p.m.

Baroness Howarth of Breckland

My Lords, before I begin my formal speech, I express a hope that the Minister has more success in this complex Bill than some of us have had this evening in trying to do something about the cold in the Chamber. Before we get this health Bill through, some of us may die of hypothermia.

In welcoming the Bill, I declare an interest as the vice-chair of the National Care Standards Commission. However, I shall not be part of the new Commission for Social Care Inspection, so I feel pretty free to comment on the new arrangements as the Bill passes through Parliament.

I recognise that the debate in another place—and the debate today—has largely been about foundation hospitals. However, whatever happens about that issue in the debate, Parliament must retain a clear focus on carrying through the proposed changes to regulation of services for children and adult users of services. Indeed, the National Care Standards Commission has worked hard to ensure that preparation is in hand and that there is readiness for that change.

The size and scope of the social care sector must not be overlooked. The National Care Standards Commission alone regulates 40,000 services which provides just under half a million care homes and supports hundreds of thousands more people so that they can keep on living in their own homes. Add to that the services for children, the relatives of all those folk and the social care aspects of the Bill touch the lives of most of us.

The role of the regulator is essential to both health and social care sectors. Having a single social care regulator with a single set of standards should give individuals the confidence to know that they will receive appropriate care, no matter who provides it or where it is. That is essential if a mixed and diverse economy of health and social care is to flourish. After all, it is a sign of a civilised society that it protects people and helps them to improve the quality of their lives, particularly those with less capacity to do so for themselves. It is important that we all ensure that the Bill has that philosophy at its heart. I ask the Minister to give reassurance on that.

We have thankfully moved away from the era when society took the view, "Out of sight, out of mind", particularly, for example, in relation to frail older people, with care homes regarded as institutions. However, there is still a lot of work to be done. Only last October, National Care Standards Commission inspectors discovered a home where the staff thought it was appropriate to tie an old lady to a chair with a dog lead to restrain her movement. It is that kind of abuse of trust and denial of dignity that we still need to stamp out. Private hospitals, indeed, have not been without their difficulties. More examples of our work can be found in our annual report—which, as background, I think it would be very useful for Members to look at as we go through this debate.

It is, however, also vital that we listen to the voices of those who use our services. Can the Minister assure me that the new commission and the Commission for Healthcare Audit and Inspection will build on the foundation work to develop extensive consultation with service users and their representatives, particularly with children? It is vital that those children's voices are heard and taken account of. No one knows more about the services than those who use them. If we ignore those voices, saying that adults and professionals know best—and I say that as a professional—we do so at our peril.

England's Children's Rights Director, working out of the National Care Standards Commission, has developed a range of consultations with children in public care. We hope that that valuable experience will be carried into the new commission. This Bill, as we have heard today, has its Second Reading on the day of the publication of the children's Green Paper. We welcome the wide range of that paper and in particular the announcement of the office of the Children's Commissioner. It will be essential that the new commissioner, the Children's Rights Director and the new Children and Families Directorate in the Department for Education and Skills work together to listen to the voices of children and to sustain and improve services for them, particularly in the area of health.

Last week, a colleague told me that when he visited a hospital to try to get more focus on children's services, the manager told him, "You don't lose your job for failing children's services, mate". Will the Minister give assurance that all our services working together will ensure that no manager can make such a comment in the future? Perhaps one of the tests for foundation hospitals should be just how child friendly they are, because child friendly places are usually also friendly to adults.

For the foundation hospital debate links to the debate on regulation in that all of these services must work in partnership to achieve best results for all who use them, especially vulnerable users. We must begin to see services as whole systems, not departmental silos, where people can move effortlessly between providers with the same certainty of good service whether in health or social care provision. The boundaries need to be clear, but the provision must be excellent. So it is essential that within this framework proper regulation is much more than inspection or performance management. For example, by conducting a tight control on registration, through rigorous checks and controls, the National Care Standards Commission is able to stop poor services from entering the market, which seems to me far better than picking up the pieces after things have gone wrong.

The NCSC is a watchdog that can bite, and the new commissions, CHIA and CSCI, will have powers contained in the Bill to assume a similar responsibility. That is particularly important, as I said, as a mixed economy of provision develops. However, if I had one complaint about the time I have spent building up the new commission, it would be the problems faced through a lack of independence in implementing the national minimum standards. Such standards are of course vital as a framework to ensure the confidence of users and in setting their expectations of a decent service, but they must not stifle innovation and positive change. To ensure that, the new commissions must have enough freedom and flexibility to resist political expediencies and to focus on sustained improvement in services.

I am vice chair of the John Grooms Association for Disabled People. Although we want to give young disabled people their own larger space, if we did so, we would lose communal space. That would not meet the standards. We have to be flexible enough to give really good services to people such as those young disabled people.

I conclude by again making the plea that, in the important deliberations about foundation hospitals, this House should not lose sight of the importance of those parts of the Bill bringing in a new phase in regulation and inspection. As we move forward, it is important to build on the work of the past two years, when we have seen England's first social care regulator set up and its 2,500 staff develop a substantial knowledge of how to make this work in practice. Most of all, in the debates, let us keep in mind those who will use the services, and build on the work of consultation not only with providers and those who work with users but with the users themselves—whatever the structure the Government put in place to achieve that.

8.6 p.m.

Lord Sawyer

My Lords, it gives me great pleasure to speak in this debate. I should like to declare a couple of interests. I am the chairman of Reed health group, and I am also a member of UNISON. Like most noble Lords, I suspect, I enjoy these debates more on some occasions than on others. However, I think that this debate has been particularly informative. It has made me think a lot about the issues before us. I was particularly impressed by the contribution from the noble Baroness, Lady Hanham, in which she grappled with the issue and heavy responsibility of the need to perform tasks on a daily and real-time basis. She outlined some concepts and ideas which the Bill has given her and tried to work out how the new initiatives and ideas can help in the real world in which patient care must be provided.

In one way, the Bill is very simple. It contains a simple but very big idea—locally owned hospitals. It is a wild thing to say. If we really believe that one day we will have locally owned hospitals funded by the owners—the taxpayers—free from much government interference and perhaps responding to purchasers as mutuals rather than as plcs, then it is a very big idea. I do not believe that it will be achieved by this Bill alone. I do not think that anyone should believe that. I thought that the noble Earl, Lord Howe, explained very adequately how it is impossible to make such a big leap in one Bill. But the Bill is one step along the road that must be followed if we are to move from this huge bureaucratic, monolithic nationalised industry that, by force of circumstances, Nye Bevan had to create, to locally owned hospitals. It will be one important step.

I share the view of my noble friend Lady Pitkeathley. I am sorry that this great, big idea has been damaged to some extent by political divisions. If the big ideas in the Bill had been properly discussed outside Parliament in the wider community and people had been given an opportunity to express a view before we were saddled with the Bill, as it were, those divisions would not have arisen. That is a great pity. I hope that my party leadership will learn the lesson in what we might call the post-Campbell era and understand the importance, which is enshrined in this piece of legislation, of including and involving people and listening to their opinions before we make decisions. I hope that we can learn that lesson in the future.

The Bill was introduced to Parliament by the former Secretary of State, Alan Milburn—a man whom I hold in the highest regard. In my view he was one of the most radical and innovative Secretaries of State in the history of the health service. As I said, his vision of a democratic and accountable health service is at the heart of the Bill. My instincts follow his on that matter. In some ways I do not see this as a complicated matter. If I were to strip it down in terms of how I would run a hospital, I would do so in very much the same way that I would run anything else. I have run trade unions, businesses and charities. In all circumstances the most important people are the customers. In the case we are discussing they are the patients.

The second most important people are the staff. If we do the right thing by the patients and the staff, we shall not go far wrong. I refer in particular to the front line staff and to the cleaners, the cooks and the blue collar workers, as it were, who are often forgotten. Managers, politicians and civil servants should be the servants of the front line staff. I do not think that that has ever happened in the National Health Service. You turn the pyramid on its head and you make the bosses and the politicians the servants of the people who serve the patients. That is the kind of vision I should like to see enacted. That is how I envisage a publicly owned local hospital working.

I believe that Alan Milburn understood that. In Agenda for Change—this is slightly different from the main matter we are discussing tonight but it is still relevant—he hammered that agreement out with the trade unions. I spent 20 years as a union official linked to the National Health Service and I never dreamt of such a good agreement. Agenda for Change offers marvellous opportunities for staff and most of the unions have endorsed it resoundingly. I was very pleased to hear the Minister say tonight that foundation trusts would be required to implement Agenda for Change. That is a wise decision.

My instincts also follow the central aim of the Bill which is democracy and local ownership and giving employees, patients and others in local communities real power over how the service is run. As noble Lords have said, after 50 years of National Health Service provision inequalities of health between the richest and the poorest in our communities have widened. But the issue of inequalities goes well beyond the provision of healthcare and includes much wider issues of class, opportunities, housing, lifestyles and so on. The question is whether a new and more democratic form of governance at local level will make even a small contribution to dealing with those inequalities. I think that it will.

All my experience in all walks of life reinforces my view that if you bring customers and staff together with other interests at local level, whatever they may be, and give them real ownership—I say this to the noble Lord, Lord Desai—you get a very different set of circumstances. You get different priorities and different solutions from those you would have achieved through a Minister, a hierarchy, a chain of command or a management structure. Things start to change when bureaucracy is removed and people start to think about new ideas or providing a different service. That will demand a very different kind of response from the Minister or the regulator or whoever might be involved. That is why I say this is a very big idea. The implications are very far-reaching if we are to respond to people taking local ownership in the way that I have discussed.

That matter is relevant to many parts of the Bill, not least to the regulator who must be accountable arid in some ways appears to take over the role of the Minister. The regulator will need to display much wisdom and courage in responding to what could be very different and challenging situations that arise in locally owned hospitals.

Standing far back and enjoying the vision of the big idea, if I have not been misled in my enthusiasm for it—I do not believe that I have been, but I fully appreciate why people might not want to gel so far back and involved with the practicalities—I think that support will come from communities, managers, staff and patients for a new kind of hospital that belongs to them. I really like the feel of that.

I would like to see people joining hospitals. I do not know very much about what the panel really means, but I am a member of a mutual building society and am really glad that I am in it. It is different from being in a bank, and I am proud of being a member of it as I get different things from it. If I could join my local hospital in something like the same way, I would be very interested in what that might mean for me, my family and my community. If that is the path down which we are travelling, I would be very interested to go down it.

Finally, there is a question about who can run a foundation hospital. The Secretary of State has said that the foundations will not be able to make a profit or pay a dividend, so I presume that that precludes plcs from becoming involved, because it would be against the law. Therefore, I guess that we are looking—if the current people are not running them; I do not see why they should not be—for people with new ideas and new offerings perhaps to come from mutuals or combinations of mutuals, or something like that. We should knock on the head the idea of privatisation, because it does a lot of damage to people who are supportive. If that idea could be killed off, it would be good.

Had the Bill been properly discussed through a Green Paper, some seminars and some debates, it would be the toast of Bournemouth in two weeks instead of the curse that it is going to be. That aside, in this House let us take the challenge as we normally do, bring the reasoned argument to bear and see if we can make the legislation better as it goes through Parliament.

8.16 p.m.

Lord Turnberg

My Lords, it is a great pleasure to follow my noble friend Lord Sawyer and his very perceptive speech, which I enjoyed. I would like to comment on foundation hospitals and the Commission for Healthcare Audit and Inspection. I should first express some of my interests. I am an ex—well, I am an ex-several things, but I am an ex-academic physician, and am now vice-president of the Academy of Medical Sciences, adviser to the Association of Medical Research Charities, and a member of the medical advisory boards for inventures and nations healthcare. Those two bodies were set up in response to government initiatives, to provide support services for the NHS.

Along with almost everyone I know, I am strongly in favour of the principle of devolving responsibility for running health services to more local levels. Anything that can loosen the tight reins of central control is to be welcomed. I resonate very strongly the erudite comments of my noble friend Lord Hunt. I view foundation hospitals as a step in the right direction, and it seems not unreasonable—to me at least—that those who have shown that they can manage their affairs reasonably well should be given the chance to do so soon.

Of course there are anxieties, which many have expressed, about whether the new status will give hospitals unfair advantages over other hospitals, and will drain resources from one to the other. I do not really believe that, but clearly that is not what a national health service should be about. It is for that reason that the Government should ensure that the first wave of foundation hospitals is very closely followed by second and third waves, so that all hospitals should very quickly share in the potential benefits of devolution. If talk that I have heard of 50 per cent of trusts becoming foundation trusts in five years is true, that seems far too slow. We must be quicker in spreading the benefits.

There is another reason for spreading devolution to all, which is the current method of selection—the star system—which may not be entirely without its faults. It may well select for managerial skills and financial control, but I am not convinced that it selects for patient care. If noble Lords will bear with me, I would like to tell them that I spent my summer vacation in Manchester, going from hospital to hospital with sick and ageing relatives. We were all very impressed with the standards of care and service that they and I received. The kindness and attentiveness of staff, the cleanliness, and even the food were hard to fault.

When I spoke to the medical and nursing staff later, they told me that the number of consultants and nurses had risen remarkably in the past few years and that their morale had risen. Pace the noble Lord. Lord Alderdice, I detect a faint breeze of change in the morale stakes. What a change from a few years ago. It made me quite proud of an NHS that seemed different from what we read about in the press, and I believe that that is a credit to this Government.

My point in telling you that is that neither Hope nor Withenshaw hospitals—those in question—have accumulated the stars necessary for foundation status. But if you ask the patients, you will get quite a different story. They believe that they are marvellous. My mother-in-law gave Withenshaw hospital five stars—and she is no push-over. The stars and the views of the patients are not coinciding—there is a discrepancy—so it will be important to avoid delay in the transition to the next phase of those deserving trusts.

I turn now to an important function of foundation hospitals which deserves greater prominence in the legislation; that is, their role in teaching and research. Virtually all hospitals carry out some teaching and research, but those in university centres with medical schools play a vital role in teaching the doctors and nurses of the future and in pursuing the kind of research that is so fundamental for future healthcare. We in the UK have considerable strength in the basic biological sciences. We have excellence in depth in molecular biology, genetics, immunology and so forth and we have a remarkably successful and innovative pharmaceutical industry. However, we lack the facilities and researchers who can translate the fruits of that marvellous basic science into the care of patients. Nor do we have the facility to take full advantage of the potential in the pharmaceutical industry's inventiveness.

The clinical trials in hospitals and primary care, and with patients, are so essential, but the infrastructure for that does not exist. What does exist is being squeezed out by the ever-increasing pressures on the NHS to deliver today's clinical service. I would therefore like to see in the Bill a much greater recognition of the need for the new trusts to take responsibility for ensuring that research and teaching are a fundamental part of the work of university teaching hospitals both in the ways they are governed and in the ways they function.

I want to say a few words about CHAI, the Commission for Health Audit and Inspection. One of the difficulties which besets clinical practice—it was referred to by the noble Lord, Lord Alderdice—is the need to respond to ever-tighter and more detailed regulation. Quite apart from the need for doctors to keep GMS guidelines in mind and to meet the requirements of the medical royal colleges for standards and training, they are increasingly hide bound by government initiatives, guidelines, protocols and regulations which cover every aspect of their clinical practice.

We have now accumulated a long list of requirements. While each of them in themselves may seem entirely rational, when they are seen in their entirety they pose an enormous burden which distracts clinicians from their primary role of caring for patients. What is needed now is a close examination of the multiplicity of regulatory bodies and requirements. I am delighted therefore to see the first steps being taken with CHAI, which seems to subsume three previous bodies. That should undoubtedly help, but I hope that that is just the beginning.

We must take a close look at the effects of current controls. Are they in fact improving healthcare and making it safer, or are they simply a distracting burden, inhibiting good clinical practice? I hope that the Government will build on their commendable efforts on CHAI and look at what more needs to be done to rationalise and reduce this morass of regulation.

8.24 p.m.

Baroness Barker

My Lords, having never been a Minister, I have my usual solitary declaration of interest to make. I am an employee of Age Concern England. I am delighted to be able to sum up a wide-ranging debate which has done the Bill a greater service than was done in another place, where vast sections of it went unremarked. In our debate we have focused on three important matters: evidence-based commissioning; evidence-based planning and evidence-based supply.

In another place and in the press some have sought to characterise the debate around the Bill as concerning those who wish to modernise the NHS to set it free from restrictive and centralised micro-management versus those who want to preserve a monolith. I believe that such a characterisation is unfair. Last year we on the Liberal Democrat Benches put on record our policy paper in which we expressed a commitment to local management of public services, including health. We are in agreement with the stated aim of devolving decision making to local communities. The problem is that we have a great many reservations about the precise proposals in the Bill because we see limited decentralisation, inadequate democratisation and piecemeal reorganisation. Like the noble Baronesses, Lady Gould and Lady Masham, we have considerable reservations about the commissioning of specialist services in particular.

This is a curiously disjointed Bill that has prompted some very unlikely reactions. Many people have focused on foundation trusts as the break up of the NHS, while at the same time they have completely ignored the import into the NHS of private provision of diagnostic and treatment centres. While many organisations have expressed concern about the fairness of access to health services, very few have noticed the potential disincentive inherent in the tariff system for trusts to treat those patients who are more costly than younger people who recover more quickly.

We welcome parts of the Bill, inasmuch as it is possible to discern exactly what effect the regulatory powers will have. It has taken the Government 18 months to accept the argument put most strongly by my noble friends Lord Clement-Jones and Lady Nicholson that private healthcare and NHS healthcare should be subject to the same standards of audit and inspection. One is almost tempted to say better late than never. But on closer examination of the Bill it becomes apparent that the Commission for Healthcare Audit and Inspection and CSCI will enjoy considerably less independence than their forerunners, so our delight is somewhat tempered.

We also give a partial welcome to the proposals to give PCTs and local health boards responsibility for commissioning NHS dentistry, including general dental services. The arguments on that were most eloquently put by the noble Lord, Lord Colwyn, and I do not wish to repeat them. I simply say that the case of two weeks ago in which a PCT could not release the name of a new NHS dentist in an area should be evidence enough to us all that the noble Lord, Lord Colwyn, did not overstate the crisis at all.

We on these Benches have two major concerns about the Bill. First, the Bill as a whole does not concentrate sufficiently on primary care, prevention and health promotion; and, secondly, the proposals for governance, performance management and accountability are so inconsistent that they give very real cause for concern about the extent to which strategic planning and fair access can be assured across the NHS.

The noble Lord, Lord Adebowale, was absolutely right. So far the discussion has focused almost exclusively on foundation hospitals. I say to the noble Lord, Lord Sawyer, that the Bill is the Government's response principally to the Wanless report. The response was outlined 18 months ago in the NHS Plan and in Delivering the NHS Plan. At that time we debated those documents in your Lordships' House. All the way through we have noted one particular recommendation which is absolutely fundamental. The Wanless commission looked at the future demand on healthcare services over the next 20 years and one of the key recommendations was that there should be a similar investigation into social care because health and social care are two sides of the same coin. Since then the Government have studiously ignored that recommendation. Until that advice is heeded, I am afraid that all Bills which come before this House will be about tinkering with the NHS rather than dealing with fundamental planning.

I share some of the more interesting points made by the noble Lord, Lord Adebowale. As the Bill passes through your Lordships' House we need to be thinking not only about elective surgery but also about the management of chronic conditions. I think that much that is in the Bill is based on predictable healthcare conditions and not on the management of long-term conditions.

There is a key flaw in the Bill, which was pointed out by the former Minister for Health, John Denham, during the debate at Second Reading in another place. He said that, we need to do more on strategic planning. At the moment, no one is entirely responsible when things go wrong. It is not quite the hospital management, the trust board, the PCT, the strategic health authority or the Secretary of State. If we are not careful, we will still have a system in which PCTs plan from the bottom up. and strategic health authorities sort out problems from the top down".—[Official Report, Commons, 7/5/03; col. 746.] I have spent the summer watching the preparations for the implementation of the Community Care (Delayed Discharges etc) Bill. I think that this Bill threatens something much worse. PCTs will commission services on the basis of targets set by the Secretary of State, which are arbitrary and unrelated to health outcomes, while acute trusts will work to a weakened system of accountability.

I was very interested in what the noble Lord. Lord Turnberg, had to say. I think that he was almost the first person to use the words "clinical governance" in the debate. As the noble Lord said, the star rating system that has been used so far has been seriously inadequate in the way in which it relates performance to health outcomes.

I should also make the observation that many people have talked about the star rating system as being a limiting factor in that if one has only one star one is not in a position to come forward for further resources and status. I have to say that, certainly in the field of social care, the three-star status has become a significant problem. Those of us who work not in the statutory sector but in the voluntary sector have considerable problems in going to, in particular, social services departments where we can see serious inadequacies of services for individuals only to be told, "We are a three-star service". It has become a barrier to improvement that we cannot get through. That is dangerous.

A number of noble Lords have mentioned the governance arrangements in the Bill. I want to say that I am simply not convinced by the argument put forward by the Minister in another place that the specific format for incorporation is necessary because it makes dissolution in cases of insolvency less difficult if one does not use the standard charitable legal framework. I think that that calls into question the extent to which foundation trusts will be independent and accountable in practice to the people whom they seek to serve.

I have a further concern about accountability. It is possible to see how a general hospital within a defined locality—for example, a county or a major conurbation—could draw upon the population of a defined geographical area to develop an electoral constituency, which not only has an obvious relevance to the life of the people within the locality but is of a sufficient size and diversity to ensure that there is strategic governance. However, it is far from obvious how specialist providers such as Moorfields, Great Ormond Street or Addenbrooke's will be able to develop such a robust system of membership. Furthermore, the issue of the governance of tertiary units within acute hospitals is simply not addressed within the Bill.

I would go further and echo the concerns of one or two of the speakers in today's debate about what happens under that system of governance to the needs of minority populations and people with minority conditions. That leads me to one further point—that of strategic planning of commissioning and provision of specialist services within the NHS. Noble Lords will know that over the past couple of years in this House we have considered, in particular, neurological conditions and the lack of compatibility between centres of excellence in acute trusts for the diagnosis and immediate treatment of those conditions and community practitioners in the long-term management of neurological conditions. One suspects that that is likely to be subject to further fragmentation under the new system.

I believe we shall have to consider one or two other measures in the Bill particularly closely in order to decide whether or not we wish to pursue them. The proposal to extend the powers to recover costs in road traffic accidents seems to be a measure that we should support only in so far as it will act to prevent and discourage the increasing recourse to the compensation culture making its way into the NHS. If it does that, we should support it; if it does not, we should stamp on it heavily.

The proposals to reform welfare foods are, on the face of it, a welcome modernisation. However, I want to ask the Minister whether the overall level of provision is likely to rise or fall and who will monitor the effectiveness of the new system.

As I said, the Bill has within it an inconsistency and an incoherence which are of concern to those who want to see the decentralisation and democratisation of excellence and not the shifting of blame within the NHS.

8.36 p.m.

Baroness Noakes

My Lords, this has been an interesting debate with extraordinarily high-quality contributions. My noble friend Lord Howe set the scene for the debate on foundation trusts with his devastating critique of the part of the Bill that deals with foundation trusts. My noble friend Lady Hanham raised powerful concerns about the governance arrangements, as echoed by many other noble Lords, including the noble Lord, Lord Harris of Haringey. My noble friend Lord Blackwell set out a more radical vision, removing both monopoly and monopsony. He, too, offered significant challenges to the Government's policies on foundation trusts.

I listened very carefully to the contributions from the Benches opposite on this subject and I do not believe that I heard overwhelming support for foundation trusts from the Minister's noble friends. Even the loyal support from the noble Lord, Lord Hunt of Kings Heath, was hedged about. The noble Lord, Lord Hunt, finished by asking whether Ministers will refrain from interference. Perhaps I may offer my answer to that question: no, they will not because too many strings have been left in place to be pulled and tweaked by Ministers.

Perhaps I may restate our position on foundation trusts. We believe in real freedoms for hospitals and we do not support intrusive, government-dominated interference by a so-called independent regulator. We do not support the chaos and expense of the pseudo-democracy of the governance structures. We oppose Gordon Brown's zero-sum game whereby the borrowing of foundation hospitals will displace investment in the rest of the NHS. What unites these Benches with the Liberal Democrat Benches is wide and deep opposition to Part 1 of the Bill, which I am sure we shall explore in Committee.

Moving on from the subject of foundation trusts, my noble friend Lady Cumberlege made a thoughtful speech. She highlighted the incompatibility between local decision-making and Labour's notion of equity, and she pressed again the desirability of taking politicians out of the NHS. Those thoughts were supported by many on all sides of the House. Separating politics from the NHS is now an urgent matter. It is not dealt with properly in the Bill and, again, that is something that we shall need to explore further in Committee.

I am very glad that my noble friend Lord Colwyn reminded us of the importance of the dental aspects of Part 4 of the Bill. He raised serious questions which deserve comprehensive answers from the Minister. Several noble Lords made important points about the operation of CHAI and CSCI. My noble friend Lord Bridgeman raised questions about timescale and division of responsibilities. I hope that the Minister will reply to them.

My noble friend Lord Howe outlined our determination that CHAI and CSCI shall be properly independent bodies. But before discussing independence, let me first signal our opposition to the limitless powers of CHAI to gather and use personal data. Anybody who heard the representative from CHI on the "Today" programme this morning will have been chilled at the apparent disregard for the principles of patients' anonymity and informed consent. Clause 66 is not acceptable in its current form.

Perhaps the most interesting insight into the Government's thinking on independence for CHAI and CSCI is the language that they use. The regulator being created for foundation trusts is called an independent regulator. Of course, the regulator is not independent, but that is how he is described. When we come to the creation of CHAI and CSCI, the word "independent" is nowhere to be found. In another place the Government rejected amendments tabled by Conservative Members to include the word "independent".

The reason is simple: the Government do not intend to allow those bodies to be independent. The mantra that they use is "more independent". We do not see independence as a relative concept but as an absolute one. If a body is beholden to the Secretary of State in any way it is not independent.

The Bill is full of ways in which the independence of CHAI and CSCI are compromised. The chairmen and members are appointed by the Secretary of State. The Minister can say what he likes about the Government's intention to use the NHS Appointments Commission, but the fact remains that the Government have kept the power to appoint in the Bill.

The Secretary of State can remove the chairmen and members. He just has to satisfy himself that they are not carrying out their duties. There are no rights of appeal or preliminary processes. The Secretary of State will hold a loaded gun at all times. Who can remain independent in those circumstances?

For good measure, the Secretary of State will determine pay and pensions. Modern corporate governance involves remuneration committees for pay and conditions, but the Secretary of State is a control freak and will not relinquish any powers.

There are three aspects to independence: appointment independence, operational independence and financial independence. The Bill fails the appointment independence test. It also fails the other two tests.

There is no operational independence because the Government have retained the right to direct CHAI and CSCI. Even though the power to direct CHAI to follow government policy is limited, there are the sinister Clauses 130 and 131, which allow the Secretary of State to issue any direction whenever he considers that either body is failing to discharge its functions "to a significant extent".

Do not believe any assurances that those are necessary back-up powers to deal with extreme circumstances. Powers of direction do not have to be used in practice to have a profound impact on how a body behaves. When everyone knows that the Secretary of State can ultimately get his own way., it is entirely rational for people who work in that environment to behave just as the Secretary of State wishes. Civil servants are trained to ensure that their political master's wishes are well understood.

Lastly, the bodies do not have financial independence—that means being able to decide what resources you need to carry out your functions and then being able to raise the income to cover that. Neither CHAI nor CSCI is in that position. The Secretary of State may let them raise income by charging fees, but there is no guarantee that the fees received will cover their expenses. There is no obligation on the Secretary of State to meet any net expenses of CHAI or CSCI and the bodies have no power to borrow money. To use a wrestling analogy, that amounts to a financial full nelson, with CHAI and CSCI helpless on the mat while the Secretary of State extracts his submission.

We believe that the new bodies must be properly independent of the Government which is why we shall be bringing forward amendments in Committee to ensure that that the hand of the Secretary of State is removed as far as possible from the affairs of CHAI and CSCI.

I turn to the rest of this Bill. Despite its length, the Bill can be properly understood only when the various regulations are published. It will doubtless come as no surprise to noble Lords to find that not a single one of the regulation-making powers that litter this Bill will be subject to the affirmative procedure. I give just two problem areas: the new system for the recovery of NHS charges under Part 3 and the welfare foods scheme in Part 5 could both be introduced without adequate parliamentary scrutiny. That is not satisfactory.

I hope that we will not be asked to approve these extensive regulation-making powers without quite detailed knowledge of the likely content of the regulations and their timing. I invite the Minister to outline the Government's plans for draft regulations and to commit to having drafts available before the start of the Committee stage of the Bill.

Much of the Bill received little scrutiny in another place. The important clauses in Part 4 dealing with the new contract for GPs were introduced on Report with only a few minutes of debate. The welfare foods scheme in Part 5 was not debated at all. The Committee proceedings in another place were guillotined before the Committee had considered the provisions relating to the CSCI. We on these Benches are committed to every part of this Bill receiving the most thorough scrutiny, however long that takes us in Committee.

The Government have a relentless desire to re-shape the NHS. As one policy fails, they invent a new one. They fail, however, to see that what is wrong with their policies is their inability to trust the NHS and the consequent desire to hang on to every power possible over every corner of the NHS. We can see that particularly in their policies towards foundation trusts and CHAI and CSCI. As my noble friend Lady Cumberlege reminded us, what the NHS needs is less Government, not more. That is what will drive our contribution to this Bill as it proceeds through your Lordships' House.

8.48 p.m.

Lord Warner

My Lords, we have had an extremely thoughtful debate, although perhaps we went a little downhill towards the end. I do not necessarily agree with all the points raised and I cannot cover all of them. If I cannot do them justice, I will write to noble Lords after studying Hansard.

I assure the noble Baroness, Lady Noakes, that I did not feel too devastated by the analysis offered by the noble Earl, Lord Howe. I recognise that there is deep opposition to Part 1 of the Bill on the Benches opposite. I wonder whether that is because we on these Benches do not favour the type of market solutions implicit in some of the remarks made from Benches opposite. In his contribution, the noble Lord, Lord Blackwell, occasionally let the cat out of the bag.

It is a bit strong to make remarks about the Secretary of State as though he were some kind of WWF participant. That was a bit fanciful, given that the provisions on powers of direction and to allow the removal of people from office are fairly standard among bodies in the public sector, as we will find when we consider the provisions relating to the Audit Commission. They are the kind of provisions that the party opposite put into many Bills passed by the House when it was in office.

The noble Earl, Lord Howe, said that he welcomed our conversion to devolution, but then went on, I thought, to quibble about the speed at which we were doing it. There has been widespread debate and consultation, given that it is over a year since the proposal on foundation trusts was published. If we are going in the direction that the noble Earl favours, I hope that we will be able to produce solutions that help to get local freedoms to as many NHS trusts as possible as quickly as possible. That seemed to be the thrust of many of the contributions.

Some of the arguments about a financial zero-sum game were a bit unconvincing. As I said, we are engaged, unlike previous administrations, in a 7.5 per cent year-on-year real terms increase in the NHS, which will be sustained for some time, with an increase of give or take approximately 25 per cent in public capital. The context in which we are introducing the changes is rather different from that of the past. In addition, all trusts will be paid on a fair basis under a nationally set tariff that will encourage efficiency gains under the same clinical standards. There will be a good deal more financial provision in the system while it undertakes the changes.

I do not believe that the independent regulator can be bossed around by the Secretary of State, as was suggested. He is not subject to direction by the Secretary of State, and Clause 3 ensures that he or she acts in the best interests of the NHS. It is just not true that foundation trusts will exacerbate health inequalities. They will have the freedom to reshape services to fit their population's needs. Amendments made on Report in the other place provide protection against entryism, but if noble Lords have ideas for improving protection, we will be happy to discuss them.

I was puzzled by the approach taken by the noble Lord, Lord Clement-Jones, to the governance provisions in the Bill. He seemed to want effective governance but was a bit reluctant to meet the cost. We recognise that good governance costs money, which is why we are providing resources for consultation and for the transition to foundation trust status, so that they do not come out of clinical care budgets. We do not think that the costs will break the NHS bank. First-wave applicants have been issued with guidance setting out the things that consultation should cover. After the passage of the Bill, all applicants will be required to carry out a full standard public consultation.

The Bill reflects what has always been clear: trust status is for providers of NHS services. It does not provide for commissioners to make that transition. PCTs are new organisations, and we do not think that the time is right to propose further change.

The noble Lord, Lord Clement-Jones, expressed concern about a private patient cap. It is provided for in Clause 15(2), which requires the independent regulator to cap private patient income. I assure Members that star ratings are not the sole basis for giving NHS foundation trust status; it will depend on wider considerations.

I am grateful to my noble friend Lady Gould of Potternewton for her contribution and for her support in fighting the problem of sexually transmitted diseases. Such diseases are a serious problem, which is why the Government's sexual health and HIV strategy is in place and more money is being put into that area. It is not for us to instruct CHAI on how it does its job. I am sure that it will have heard my noble friend's concerns and will review how the NHS tackles this important area and acts on NICE guidance. That will be an important part of CHAI's review functions.

I am grateful to the noble Baroness, Lady Cumberlege, for her good wishes. I shall try to stay upright throughout most of the proceedings of this House. Just to reassure her, as we understand it, under the European Convention on Human Rights, there is no basis for challenging the validity of votes in Parliament. Coming from her contribution, there seems to be a wish to remove the NHS from the grasp of politicians. We must bear in mind that taxpayers put huge sums of money into the NHS. I think that they expect elected politicians to account for that money to Parliament.

The noble Lord, Lord Alderdice, seemed depressed about staff morale. I was pleased to hear the more reassuring experiences of my noble friend Lord Turnberg. His picture of staff morale seems to accord more with mine on visits to NHS facilities. Certainly, we are not involving ourselves in micromanagement—quite the reverse. I hope that the noble Lord will accept our reassurances on that.

The noble Baroness, Lady Masham, was concerned about a number of issues. It is worth bearing in mind that CHAI will be concerned—as are star ratings at present—with cleanliness in hospitals and hospital-spread infections. I am sure that CHAI will include those kinds of issues in future performance assessments. As regards the noble Baroness's question on specialised commissioning, the powers for that are set out under the NHS Act 1977. I shall write to her in more detail.

I am grateful to my noble friend Lord Hunt for his perceptive and thoughtful speech. I want to compliment him on his work as a Minister when starting the work of changing NHS dentistry. I commend the Opposition Front Bench to study it carefully. I do not think that it always brought out the kind of points suggested. The noble Lord may have said that we overdosed on targets, but it is worth bearing in mind that it is these targets on access which give people what they want. Survey after survey of the public shows that they want shorter waiting times for access to services. Targets have played an important part in delivering that particular change.

I reassure hint and other noble Lords who raised the issue that there is no bar in this legislation to mental health trusts obtaining foundation trust status. Discussions are in hand with approximately 70 trusts in that particular area. It was just that acute and specialist trusts were further down the track in terms of first-wave applicants. A number of noble Lords, including my noble friend Lord Hunt, raised concerns about continuity. That is a concern and we are looking at how best to ensure that organisational stability during transition is maintained. We shall welcome the views of Members on strengthening those provisions if they have ideas in this area.

A number of noble Lords, including my noble friend, spoke about Ministers keeping their sticky hands off and not interfering when matters start to go a little awry. I can reassure them that it is not my style to rush in to recalibrate the system when there is a little twitching at local level or in the media.

The noble Viscount, Lord Bridgeman, raised a number of issues. I assure him that CHAI will inspect all diagnostic and treatment centres. My noble friend Lady Pitkeathley raised concerns about whether enough is being done on social care and the bridge with health care. As she said, the primary care features of the Bill are very important: 75 per cent of NHS budgets are now in the hands of PCTs.

I understand too the concerns expressed by my noble friend and other noble Lords about patients' forums. We shall come back to this matter at a later stage. It is for foundation trusts to judge for themselves how best to involve public and patient interests, but no doubt many of them will consider building on some of the experiences of patients' forums.

I welcome the contribution made by the noble Baroness, Lady Greengross, which will help us in the further work that we shall be undertaking. I can assure her that clinical governance and other areas of the kind she mentioned will be reviewed by CHAI in its inspection work.

I shall not rush to secure my noble friend Lord Desai's vote for radical changes in the NHS, or I shall find myself quickly joining the club of former Ministers about which he seemed rather enthusiastic.

I am grateful to the noble Baroness, Lady Hanham, for sharing with the House her experience as someone working at the local level and wrestling with the changes. These practical issues will help to inform some of our more detailed consideration.

I listened attentively to the contribution of my noble friend Lord Harris. I am pleased that he said that he supports the Government and does not disagree with us too strongly.

I can reassure the noble Baroness, Lady Finlay, that all NICE guidance will come within the ambit of CHAI. I should also like to assure her that this Bill is all about improving the lot of patients rather than providing a management distraction.

I thank the noble Lord, Lord Colwyn, for his contribution and for his support for the changes to dental services. He has huge knowledge of this area and I shall write to him on some of the detailed points that he raised.

The noble Lord, Lord Adebowale, has great experience of drug treatment and mental health. As pointed out earlier, there will be no bar in the legislation on either mental health trusts or care trusts to achieving NHS foundation trust status. I think that it is simply a little further down the road.

I have mentioned the contribution of the noble Lord, Lord Blackwell. I do not think that we are seeking to go down the path he thinks we ought to follow, rather we seek measured change and a loosening up of the NHS. I am extremely conscious of the effects of radicalism in some privatisation measures—transport comes to mind—where a little caution might have done us all good.

Along with her colleague, Ann Parker, the noble Baroness, Lady Howarth of Breckland, has made a major contribution in setting up the National Care Standards Commission. We are all grateful for their work. I can assure her that none of that work will be lost, rather it will be built on. I should also like to assure her that the Bill retains the position of children's rights directors set up by the commission.

I too enjoyed the perceptive contribution of my noble friend Lord Sawyer. I am glad that he is joining with us in breaking up the monolith. I thought that he was the only Member of the House to make the link with mutualism that runs through the ideas behind this Bill.

My noble friend Lord Turnberg wants us to move swiftly on extending foundation trust status to as many trusts as possible. I hope that he can convince Members on the Benches opposite to help us in that regard, because it is what we want to do. I am sure that CHAI will take note of his thoughtful remarks on performance ratings. I can reassure him on teaching and research. Under Clause 14 an NHS foundation trust authorisation must authorise it and may require the trust to provide education and training and to carry out health-related research. I shall study his remarks in more detail and perhaps discuss them further.

I am grateful for the helpful contribution of the noble Baroness, Lady Barker. I understand her concerns and I shall deal with them in more detail at a later stage. Following a thoughtful debate, I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.