Mr Chris Grayling (Epsom & Ewell, Conservative)

I beg to move amendment No. 238, in

schedule 2, page 98, line 25, leave out 'As soon as possible' and insert

'No more than twelve weeks'.

Mr Win Griffiths (Bridgend, Labour)

With this it will be convenient to discuss the following:

Government amendment No. 158.

Amendment No. 74, in

schedule 2, page 98, line 28, leave out from 'must' to end of line 29 and insert

'lay a copy of the report before Parliament'.

Amendment No. 243, in

schedule 2, page 98, line 29, leave out 'who must lay it' and insert

'and must lay a copy'.

Government amendment No. 159.

Mr Chris Grayling (Epsom & Ewell, Conservative)

This is a simple set of amendments. Amendment No. 238 would amend paragraph 6(1) to schedule 2, which states that:

''As soon as possible after the end of each financial year, the regulator must prepare an annual report on how he has exercised his functions during the year.''

The purpose of the amendment is to set a time guide for the regulator to prepare his report. However, if the Government suggested a period other than 12 weeks, we would be receptive to it. We do not believe that the regulator's obligation should be left open-ended; ''as soon as possible'' is a very loose phrase. We hope that Ministers will be slightly tighter in drafting the Bill and will set out a specific time. This is a probing amendment to explore whether Ministers are willing to place such a time stipulation in the Bill. If they are not, perhaps they will tell the Committee what time guidance they are prepared to give to the regulator on the delivery of his report.

Amendment No. 74 is designed—I am glad to see that the Government have accepted the principle in their amendment No. 158—to ensure that the report is laid before Parliament before it goes to the Secretary of State. The duty of the regulator is not solely to the Secretary of State; it is also to Parliament. That is tremendously important. My hon. Friend the Member for West Chelmsford set out clearly why we believe the regulator should not be subject to undue control from the Secretary of State. The amendment would provide a small, but symbolic, statement that the regulator should be accountable to Parliament above the Secretary of State.

Having read Government amendment No. 158 carefully, we are happy to accept it, as it achieves what we want to do. It allows the Secretary of State to receive a copy of the report, and I have no desire to deprive him or her of that right. I welcome the change and am happy to accept the Government amendment.

Are Ministers prepared to put a time limit in the Bill? I applaud their responsiveness on the matter of submitting the regulator's report to Parliament, but I await their response.

Mr John Hutton (Minister of State, Department of Health; Barrow & Furness, Labour)

I wish to say a few words about the Conservative amendments. First, Government amendments Nos. 158 and 159 will ensure that the independent regulator will be more directly accountable to Parliament for his actions, rather than, as the hon. Member for Epsom and Ewell said, being solely accountable to the Secretary of State. That is appropriate, and it emphasises the proper role of Parliament in those matters. The Government amendments emphasise the independence of the regulator, and I hope that the Committee will

support them, as they broadly cover the issues dealt with in amendments Nos. 74 and 243.

However, I cannot advise my hon. Friends to agree to amendment No. 238. The regulator may wish to include in his report to Parliament information that has been taken from financial and annual reports of NHS foundation trusts. As NHS foundation trusts are likely to require some weeks to prepare their reports, it is unlikely that the 12 weeks proposed in amendment No. 238 would give the regulator enough time to study and interpret them and to report fully on them to Parliament. That is, I am afraid, a pragmatic judgment. ''As soon as possible'' has a sense of urgency and immediacy; it means that we wish something to be done as quickly as possible. That is what we wish the regulator to do. However, putting an arbitrary time limit in the Bill could be counter-productive and could undermine the purpose and value of the regulator's report in Parliament.

I urge the Committee not to agree to the amendment. I understand that the hon. Member for Epsom and Ewell is trying to elicit from us some understanding of our thought processes on the matter. However, I hope he will understand that rejecting his amendment does not mean that I wish the independent regulator to be unduly delayed. I, too, wish the report to be available to Parliament as quickly as possible.

I want the report to be available to Parliament as quickly as possible, but the Committee should take into account the variety of information sources on which the regulator will need to draw to prepare an effective and meaningful report. For that reason, we should give the independent regulator a strong steer that we want the report to arrive as soon as possible after the end of the year.

However, we should leave it to the regulator to put together the relevant information that will add to the scrutiny of his role and provide an opportunity for Parliament to judge the effectiveness of the regulatory arrangements, rather than shooting him in the foot by requiring him to produce his report within a specific time. If the Committee insists on that, we may end up with a less than useful report, and that would not be in anyone's interests.

Ms Patsy Calton (Cheadle, Liberal Democrat)

In bringing to the attention of the Committee the two amendments tabled by the Liberal Democrats, I must explain that there is no longer a need for amendment No. 243, given that Government amendment No. 158 answers our concerns. My party sought to clarify that amendment by specifying a copy. It was an interesting amendment but, I shall not press it.

Amendment No. 215 still has—

Mr Win Griffiths (Bridgend, Labour)

Order. Amendment No. 215 belongs to a different group and will be debated separately.

Ms Patsy Calton (Cheadle, Liberal Democrat)

Thank you, Mr. Griffiths.

Mr Chris Grayling (Epsom & Ewell, Conservative)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 158, in

schedule 2, page 98, line 28, leave out from 'must' to end of line 29 and insert

'lay a copy of the report before Parliament, and

(b) once he has done so, send a copy of it to the Secretary of State.'.

No. 159, in

schedule 2, page 98, line 36, at end insert—

'6A The regulator must respond in writing to any recommendation which—

(a) is made by a Committee of either House of Parliament, or a Committee of both Houses, and

(b) relates to the exercise by the regulator of his functions.'.—[Mr. Hutton.]

Ms Patsy Calton (Cheadle, Liberal Democrat)

I beg to move amendment No. 215, in

schedule 2, page 98, line 36, at end insert—

'Right to Appeal to Regulator

6A Employers of health service staff in nonfoundation trusts affected by decisions made by foundation trusts in respect of their terms and conditions of employment, may ask the regulator to judge if these are a breach of section 26 of the Health Act 1999, as amended by this Act.'.

I apologise for my somewhat premature attempt to introduce this amendment—I had not noticed the omission of a plus sign between the lines on the Selection List. Owing to the phased implementation of the Bill introducing foundation hospitals, we are concerned that staff may be poached from employers and non-foundation trust hospitals. Amendment No. 215 seeks to deal with cases in which employers find that NHS staff in non-foundation trusts are affected by decisions made in foundation trusts about terms and conditions of employment. The amendment proposes that the regulator judge whether the foundation trusts are in breach of section 26 of the Health Act 1999, as amended by this Bill when it becomes an Act, which will state:

''It is the duty of Strategic Health Authorities, Health Authorities, Special Health Authorities, Primary Care Trusts and NHS trusts to co-operate with each other in exercising their functions.''

The Minister should consider the amendment from the point of view of ensuring that section 26 is observed.

Mr John Hutton (Minister of State, Department of Health; Barrow & Furness, Labour)

I appreciate the motive and intention behind the amendment. I understand that the hon. Lady is simply trying to elicit from me some appreciation of the importance of the issue that she is dealing with, and an explanation of how the Bill tackles it. We all accept that she has raised an important issue. We all want the NHS to work effectively and to co-operate to provide a better health care service for the people of our country.

However, we must be clear about one thing. We must dispel the myth that there is no competition for staff now. There is competition, and the hon. Lady has raised the difficulties that that causes. That competition will continue, because there is a labour market shortage right across the health care sector for key front-line staff, particularly doctors and other medics. We must address that problem. Unfair competition is taking place, but we do not like to talk about it, and it is often swept under the carpet.

I should say two things to the hon. Lady. The new pay deal for the national health service, ''Agenda for Change'', will make those issues much more transparent. NHS employers will no longer have to torture the existing pay system to get the result that they want when they have difficulties recruiting staff. Within that pay deal, all NHS organisations covered by ''Agenda for Change'', whether they are foundation trusts, NHS trusts or primary care trusts, will have significant local flexibility to increase pay when that is needed to deal with recruitment and retention difficulties.

As the hon. Lady knows, all applicants for NHS foundation trust status must be early implementers of ''Agenda for Change''. The Secretary of State will not approve an application if that does not happen. We are locking in the benefits and the flexibilities that the new national pay system will give to national health service staff and patients alike.

We are alert to the difficulty that the hon. Lady has brought to the Committee's attention, but the question for the Committee is how we deal with it. I say that we should deal with it as we have envisaged in the Bill, which is to give the regulator the powers to ensure that the NHS foundation trusts and the NHS trusts work effectively together. Clause 3 also says that the Secretary of State's responsibilities under sections 1 and 3 of the National Health Service Act 1977 are the overarching obligations of the regulator himself.

Clause 27 amends the 1999 Act so that the statutory duty of co-operation and partnership also applies to NHS foundation trusts. I hope that that will bring them into a virtuous circle, and that we shall not retreat into the misjudged and ill-executed internal market of the previous Conservative Administration, which created enormous bureaucracy and a two-tier system. The traditional NHS value of co-operation can continue to influence how the system develops in future, in the new world of more NHS foundation trusts.

Mr Gary Streeter (South West Devon, Conservative)

The Minister is right to say that the hon. Lady has raised an important point, and he is trying to deal with it maturely. Once the Bill is passed, will the NHS foundation trusts have any more flexibility than non-foundation hospitals over what they pay, or over their employees' terms and conditions?

Mr John Hutton (Minister of State, Department of Health; Barrow & Furness, Labour)

No. The flexibilities and freedom under ''Agenda for Change'' will apply to all NHS organisations. The flexibilities that the hon. Gentleman is huffing and puffing about are significant. For example, they allow NHS employers to increase national salary rates by up to 30 per cent. if there are recruitment and retention difficulties. That is a transparent and obvious attempt to deal with those issues. That flexibility to go up to 30 per cent. above basic rates will be the same for NHS foundation trusts as for NHS trusts.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Addenbrooke's NHS trust, which will be in the first wave of foundation trusts, recognises

that it would not seek any greater flexibility than is available under ''Agenda for Change''. However, I am afraid that the Minister has not really answered the question asked by my hon. Friend the Member for South-West Devon. Where in the Bill does it say that the regulator is required to apply ''Agenda for Change'' as a maximum degree of pay flexibility, and that he cannot authorise greater flexibility for foundation trusts?

Mr John Hutton (Minister of State, Department of Health; Barrow & Furness, Labour)

The Bill deliberately does not provide for that; I will come to that point in a minute. The hon. Gentleman has made another useful contribution to the debate. The other myth that surrounds the debate about NHS foundation trusts leading to unfair poaching of staff is the assumption that everyone who wants to be in an NHS foundation trusts wants to do that. There is an assumption that NHS foundation trusts want to be able to undermine local NHS employers, take their best staff and recruit them into the service of the foundation trust. I generally do not believe that to be true. I do not believe that NHS foundation trusts are seeking operational freedoms. During the past few months' discussions they have not argued that to operate more effectively they would need such freedoms.

However, the hon. Gentleman is correct to say that the regulator will not have the direct power to set the terms and conditions of NHS foundation trust staff—nor should he. Employment contracts are a matter for staff, unions and employers. The role of the regulator, as we envisage it, is not to become involved in the day-to-day issues surrounding the operation of an NHS foundation trust. One could not become more involved in the nitty-gritty of operational issues than by telling the regulator that, regardless of what had been agreed locally, he could decide the terms and conditions of NHS foundation trust staff. Of course we could go down that road, but that would be to put the regulator in a different position from the one that we envisaged. Such an approach would involve regulators in day-to-day managerial and operational decisions, and we should not go down that path.

The issue raised by the hon. Member for Cheadle is about how we tackle the potential problem of NHS foundation trusts using their freedoms to undermine the ability of local NHS providers to provide the required level of service for local communities. That can be achieved through the duty of co-operation in clause 27 and the overall obligation of the regulator to ensure that when discharging their functions, NHS foundation trusts continue to keep in mind the overarching principles of sections 1 and 3 of the National Health Service Act 1977—that is the regulator's job. In a nutshell—I apologise to the hon. Member for South-West Devon if I am cutting too many corners in my summary of sections 1 and 3 of the 1977 Act—the aim is to provide a health care service that is comprehensive, and free at the point of use.

A neighbouring or adjacent trust could put the argument to the independent regulator that the human resources, freedoms or policies being implemented by a particular NHS foundation trust, if they went beyond ''Agenda for Change'', would so undermine the ability of a local NHS provider to deliver its services

effectively—for example, because it was losing its key staff—that the NHS foundation trust could be seen not to be complying with the statutory duty of co-operation in the Bill. That is how that argument could be resolved under the provisions of the Bill, and that is the approach that we have taken, rather than give the regulator an inappropriate power to intervene directly in setting the terms and conditions for NHS staff.

Mr Chris Grayling (Epsom & Ewell, Conservative)

Elements of the Minister's argument are odd. He has said, as was reinforced by the comments of my hon. Friend the Member for South Cambridgeshire, that there is an issue. He then says that ''Agenda for Change'' will do the job. If that is the case, why is it necessary to constrain the ability of an NHS foundation trust to set pay and conditions? One imagines that he will accept individual cases in which, for example, a specialist hospital wants to upgrade the pay significantly for a particular type of staff to encourage people to train for that role, as there might be a shortage in future. Surely if the broad problem, as described, does not exist, there is no need to prevent a trust from doing that.

Mr John Hutton (Minister of State, Department of Health; Barrow & Furness, Labour)

I am not sure that the hon. Gentleman followed my point. Under ''Agenda for Change'', there is a significant latitude and an area of flexibility in the national pay system that did not exist previously, and that will deal with the issue that the hon. Gentleman raised. For the reasons that I have outlined to the hon. Member for South Cambridgeshire, we do not want to give the regulator the role, which was suggested by some, of indirectly setting the terms and conditions of staff.

Mr Chris Grayling (Epsom & Ewell, Conservative)

The Minister misunderstands; I was talking about the powers of the trusts, not those of the regulator. Why do trusts need to be constrained in their ability to set pay and conditions? If the Minister is correct, and ''Agenda for Change'' delivers the flexibility that they need, why handcuff the trusts and remove their ability to take detailed decisions about individual clinical issues and staffing problems that might help to solve a local issue in a specialist hospital?

Mr John Hutton (Minister of State, Department of Health; Barrow & Furness, Labour)

We are going around in circles, and I would rather not do that. However, the hon. Gentleman raised the valid point that we should give freedom and flexibility to deal with local recruitment and retention problems to all NHS employing organisations, whether or not they are foundations trusts. That is what ''Agenda for Change'' does, and that is the benefit of the national pay agreement for NHS foundation trusts. That is why all potential applicants for NHS foundation trust status have agreed to proceed as early implementers of the ''Agenda for Change'' package. There is much in it for NHS employers, whether or not they are foundation trusts.

The point raised by the hon. Lady is fair and reasonable, and we are alert to the problem that she mentioned. It is in no one's interest, across the NHS, for that type of unfair competition for staff to go unchecked.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.