Mr Desmond Swayne (New Forest West, Conservative)

I have some questions for the Minister on clause 5 which essentially gives the Secretary of State the same powers with respect to income generation. Will the hon. Gentleman spell out precisely the ways in which he sees that taking place? I should be interested in his analysis of the extent to which he expects the NHS to be able to export its management skills, certainly in the short term and in ways that he believes will be attractive to the private sector.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

The hon. Gentleman asked about management skills. The primary intention of the clause is to enable the NHS and Department of Health bodies to exploit intellectual property in innovation generated by staff, essentially through the development of so-called spin-out companies, in the development of new pharmaceuticals, medical procedures or devices and so on. At the moment, we can achieve that only by licensing. In some situations it cannot be achieved, for example, where there is no obvious licensee or further development is necessary. In such cases, the spin-out company route is needed so that the new treatment can be brought in for the benefit of patients. A spin-out company will be formed by bringing in outside funding without further investment by the NHS or the Department of Health. The previous work done to develop innovation gives the NHS or the Department of Health body its shareholding.

Without going into detail, we must recognise that we need clear procedures for managing risk with spin-out companies. We intend that, in all proposals, approval of a business case by officials acting on behalf of the Secretary of State will be required. The proposal is very much in line with wider Government policies for the successful development and exploitation of intellectual property rights.

Mr Desmond Swayne (New Forest West, Conservative)

Would the remarks made by the right hon. Friend the Secretary of State about the possibilities of marketing occupational health schemes to the private sector come under the aegis of the clause?

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

My understanding is that the development of NHS Plus, the organisation envisaged in the NHS plan to market occupational health services, would not require use of the powers, but I acknowledge that the provision goes wider than our specific aim of developing the exploitation of intellectual property rights. It might be used in several other ways to provide a flexible or different means of income generation.

Question put and agreed to.

Clause 5 ordered to stand part of the Bill.