Mr Andrew Lansley (South Cambridgeshire, Conservative)

I beg to move amendment No. 232, in

clause 3, page 2, line 2, at beginning insert—

'(1) The primary duty of the regulator is to facilitate the provision by NHS foundation trusts of health care services at a higher clinical standard and responsiveness to patients.

(2) '.

Mr Peter Atkinson (Hexham, Conservative)

With this it will be convenient to discuss the following amendments:

No. 107, in

clause 3, page 2, line 2, leave out from 'functions' to end of line and insert

'in order to secure that NHS foundation trusts have the freedom from external constraints needed to enable them to offer health care services which are enhanced in terms of their volume and quality, and in a manner not inconsistent with'.

No. 244, in

clause 3, page 2, line 2, leave out 'consistent with' and insert 'in pursuance of'.

No. 200, in

clause 3, page 2, line 5, at end add

'and shall have a duty to safeguard the best interests of the NHS as a whole'.

No. 245, in

clause 3, page 2, line 5, at end add

'and that is consistent with the principles of fairness and of universal coverage'.

No. 123, in

clause 3, page 2, line 5, at end add—

'(2) In performing his duties under this Act, the regulator must have regard to such of the following as appear to him to be relevant in the circumstances—

(a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases where action is needed,

(b) the different needs and interests of persons using NHS services and, in particular, of the different interests of children, and of those living in rural and urban areas; and

(c) the principles set out in the Compact between Government and the voluntary sector and the codes of practice set out under it.'.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I shall forbear to say that schedule 4 is not the right place to insert House of Commons disqualification. That relates to the previous debate. Schedule 4 is the schedule of amendments to the law in relation to the introduction of the term ''NHS foundation trust''. There we go; we have moved on.

Clause 3 is simple in its way, but therein lies a wealth of meaning. The purpose is to introduce the duties of the regulator. The manner in which the duties are defined says that they are, in effect, consistent with the duties of the Secretary of State as consolidated under the National Health Service Act 1977.

Before discussing those duties and where there might be enhancement and improvement of their definition, it might be helpful to recognise that in a whole series of Acts in recent years—and, perhaps more to the point, in the practice that has flowed from that legislation—it has become apparent that there is a significant difference in practice between the exercise of duties by a Secretary of State and by a regulator.

There was an exchange this morning about the nature of regulation as opposed to other ways of exercising functions. A Secretary of State is not a creature of statute, with limitations bounded by statute, as are regulators and local government. He is not precluded from having regard to issues beyond those set out in the statutes that he uses. A Secretary of State has to have regard to certain duties that are set out in statute, but is not circumscribed by those duties

as not to have any regard to other issues. In practice, we see Secretaries of State as policy-makers who expand the boundaries of their vision as they apply their duties according to changing circumstances.

Regulators are somewhat different beasts; they are creatures of statute. All recent experience tells us that if one does not tell regulators—as distinct from Secretaries of State—what their duties are, or what they should have regard to in the exercise of their duties, it is highly likely that they simply will not expand the boundaries of their thinking to embrace any additional duties or consider matters that are outside the boundaries that have been set in statute.

It is necessary when establishing the post to set out precisely the duties of the regulator and what he or she ought to have regard to. I hope that the Minister agrees. The difficulty is that the manner in which clause 3 is drafted suggests that the regulator is nothing other than a statutory counterpart to the Secretary of State and has no distinct function. The duties of the Secretary of State in relation to the NHS seem, in effect, to be carried through into the duties of the regulator, even though the regulator has specific functions to perform.

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

I am not sure that I follow the hon. Gentleman's point. If he is saying that the regulator is simply a replication of the Secretary of State, he has fundamentally misunderstood the nature of the Bill. The Secretary of State has a range of additional functions relating to, for example, resources and national standards that are not the responsibility of the regulator, whose statutory functions are set out clearly in part I of the Bill. There is no ambiguity about the respective roles of the regulator and the Secretary of State.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I accept that some functions relate to standards and the like, and we shall discuss those later. Those form part of the structure of the NHS as a whole and are not the functions of the regulator. Perhaps I should be more precise. With regard to the functioning of the trusts, it is clear from clause 3 that the regulator's objectives are simply a reiteration of the Secretary of State's duties.

Mr Stephen Pound (Ealing North, Labour)

The hon. Gentleman is aware that not every person in the room is wholly enamoured of every comma in the Bill. Will not he agree, however, that when the post of regulator was advertised widely in the newspapers last week, the role had inevitably to remain slightly elastic, as the person clearly would be interviewed, and perhaps even appointed, before the Bill became law?

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I was not aware that the post of regulator had been advertised.

Mr Stephen Pound (Ealing North, Labour)

I have a copy if the hon. Gentleman wants it.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I am grateful to the hon. Gentleman, but I am not sure that that bears upon the issue in clause 3. Let us say that the regulator will be in place by October, for the sake of argument. If I were proposing to have a regulator appointed and in place by then, I should certainly consider advertising now. I do not dispute the necessity of preparing for that

appointment, but that has no bearing on the duties of the regulator. Those are for the Committee to determine and cannot be pre-empted by the nature of an application and interview.

Whatever the existing statutory provisions regarding the duties of the Secretary of State in the matter of NHS trusts that become foundation trusts, we must ensure that the duties of the regulator are properly expressed so that, when in place, the regulator will have the statutory breadth to be able to fulfil his or her functions fully and adequately, without being constrained by clause 3.

Some of my amendments are probing, but I believe that the Government should accept the others. Amendment No. 232 is a probing amendment. At this stage, it might be helpful to recall the 1977 Act, although it would be tedious to quote it at length. Section 1—the Secretary of State's duty as to the health service—states:

(1) It is the Secretary of State's duty to continue the promotion in England and Wales of a comprehensive health service designed to secure improvement—

(a) in the physical and mental health of the people of those countries, and

(b) in the prevention, diagnosis and treatment of illness,

and for that purpose to provide or secure the effective provision of services in accordance with this Act.

(2) The services so provided shall be free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment, whenever passed.

That section of the 1977 Act appears to be wide-ranging, given that comprehensive objectives are set out. Secretaries of State can cope with wide-ranging duties, but regulators require detailed knowledge of their objectives. To what extent does the fact that the Secretary of State has a duty to secure improvement of people's physical and mental health and in the prevention of disease, diagnosis and treatment of illness imply that the regulator would already have a duty to promote ''higher clinical standards''? If the Minister says that the first part of amendment No. 232 is clearly embraced, that would be step one and a tick in the box.

The second part of the amendment deals with ''responsiveness to patients''. As far as I can see, section 1 of the 1977 Act does not give the Secretary of State a statutory duty to respond to patients directly, although some interpretations may imply that that is the case. That issue may be dealt with elsewhere in the Bill, but given that it is not included in that section of the 1977 Act, it is not the regulator's duty.

Section 3 of the 1977 Act—concerning services generally—states:

(1) It is the Secretary of State's duty to provide throughout England and Wales, to such extent as he considers necessary to meet all reasonable requirements—

(a) hospital accommodation;

(b) other accommodation for the purpose of any service provided under this Act;

(c) medical, dental, nursing and ambulance services;

(d) such other facilities for the care of expectant and nursing mothers and young children as he considers are appropriate as part of the health service;

(e) such facilities for the prevention of illness, the care of persons suffering from illness and the after-care of persons who have suffered from illness as he considers are appropriate as part of the health service

(f) such other services as are required for the diagnosis and treatment of illness.

That section does not suggest responsiveness to patients so much as responsiveness to NHS providers. A regulator must not only be responsive to applications from NHS trusts to become foundation trusts; he or she must have a duty to respond to patients' needs. Can we put a tick in the box to say that the regulator's duty is to respond to patients?

I am sure that the first part of amendment No. 107 is not embraced in the existing duties of the Secretary of State under the 1977 Act. The Bill should ensure that

''NHS foundation trusts have the freedom from external constraints needed to enable them to offer health care services which are enhanced in terms of their volume and quality''.

A clear duty already exists to enhance the volume and quality of NHS services, but there is no duty on the Secretary of State to free NHS foundation trusts or other NHS institutions from external constraints to enable them to do so. The concept of deregulation is not built into the Secretary of State's current duties.

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

The hon. Gentleman makes a good speech, but will he explain what he means by ''external constraints''? For example, external constraints could reasonably include the work of the medical royal colleges and outside regulatory bodies. If he believes that that type of constraint should be covered by this clause, there is clearly a problem with the wording of his amendment.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

The Minister is being uncharacteristically literal and narrow. If he reads the amendment, he will see that the freedom from external constraints that is spoken of enables the foundation trust to offer

''health care services which are enhanced in terms of their volume and quality''.

Clearly, if the work of the royal colleges forms part of the process by which NHS foundation trusts improve the volume and quality of their health care services, it would not be an external constraint from which they would need to be free.

I freely confess that the drafting of the amendment is not important here; it is the argument that is important. The point is that there is no deregulatory duty laid upon the independent regulator. The Minister may tell the Committee that it is not the intention of the Government to deregulate by the imposition of the independent regulator, but is that not the structure of the legislation? Is it not the intention to create freedom for NHS foundation trusts?

If the intention of the Bill is to create a new structure within which foundation trusts are given the freedom, through localisation of management and the removal of constraints upon managers, to deliver

effective services, is it not curious that the role of the regulator does not explicitly contain just such a deregulatory duty? It is not in the Bill. Other legislation in other contexts, which we have debated here, does lay a duty of a deregulatory character upon regulators. I have simply phrased it in terms of deregulation to the extent that is consistent with all their other duties to raise the volume and quality of health care services that are being offered. If the principle of the Bill is one of freedom for foundation trusts, why is that principle not included in the Bill as one of the duties?

The latter part of amendment No. 107 has another small but significant purpose, and that is to rephrase clause 3. As it stands, clause 3 states that functions must be exercised

''in a manner that is consistent with the performance by the Secretary of State''.

That now becomes a matter of interpretation. It was not part of my argument when we debated clause 2 that there was some conspiracy theory about the independent regulator's functions to be determined by the Secretary of State. That did not form part of my discussion of clause 2, nor was it part of my amendments.

Here, however, the question does arise. Is it, in fact, the case that, because of the structure of the wording of the clause, the independent regulator will be constrained to behave in a way that is consistent with the Secretary of State's past, present or future interpretation of his duties under sections 1, 3 and 51 of the National Health Service Act 1977?

In so far as those are wide-ranging duties, and many of the things that the Secretary of State does could be interpreted as being in accordance with that, it might well be that, by virtue of the statute, the independent regulator has no independence to interpret those duties in a way that is different from the Secretary of State. In practice, therefore, the independence is undermined. That is why I turn the wording around and say

''in a manner not inconsistent with''

so that at least we do not allow clear division inside the NHS about this, but do allow a degree of latitude as to how the independent regulator—as compared to the Secretary of State—interprets the duties into any particular set of circumstances.

That sums up amendments Nos. 232 and 107. I confess to you now, Mr. Atkinson, and to the Committee, that I do not intend to press those amendments. They are designed to get answers on the way in which the duty of the regulator ought to be structured, and on some matters that ought to be included but which I do not see. The Government should accept amendment No. 123 as it is. This is not so much about the duties of the regulator as about the manner in which the regulator should exercise those duties. There are three elements to this; the words

''as appear to him to be relevant in the circumstances''

do not refer to overriding considerations but to considerations according to the circumstances.

First, we are meeting regulators everywhere nowadays. Again, we get into the rigmarole of how regulators work, yet the principles of the Better Regulation Task Force, of blessed memory, are reflected in the principles that are applied to regulators. Those are the principles of transparency and accountability. Moreover, regulators must be proportionate, consistent, and target only cases in which action is needed. To an extent, of course, if those principles were included through amendment No. 123, some of the deregulatory duty implied in amendment No. 107 would not be needed.

The question is whether the regulatory principles—the best regulatory principles enunciated by the Government for regulators across Government as a whole—are to be reflected in the statutory obligations of this independent regulator. Will the different needs and interests of persons using NHS services be addressed? As far as I can tell, Mr. Atkinson, the duties that are included in the National Health Service Act 1977 do not differentiate. It may be that, although we are talking about localisation and, in theory, about responsiveness to the different needs of patients, the regulator has no statutory backing to require him to address responsiveness.

I have isolated two examples. The first, in practice, is the structure of foundation trusts and how they work and interact with other health service bodies and, indeed, other local authority bodies, which may well differ between rural and urban areas. I will not make a long argument about rural areas. Departments ought to take this as read because of the nature of rural-proofing of legislation. However, as the Bill has regard to the different interests of urban and rural areas, the independent regulator is obliged to rural-proof the way that he does his work.

Secondly, the different interests of children in the NHS must also be addressed. Again, the different interests of children in the NHS ought to be meat and drink to Ministers. As a consequence of a range of reports that were discussed in the House as recently as the publication of the Kennedy report on the outcome at Bristol royal infirmary, Ministers are trying to ensure that the NHS has a separate and distinct focus on the needs of children. That focus is enunciated in the first part of the national service framework for children, and has been made obvious by the Government's initial response to the Victoria Climbié inquiry and the promotion of the pilots for children's trusts.

Not only that, but within the structure of the NHS—linking together local authorities and other bodies with responsibilities for children—the presence of children's trusts will make it clear that the independent regulator must have regard for the ways in which services are configured for children. Those services must be distinct and different from those configured for the rest of the NHS's patients.

The third limb is the compact between Government and the voluntary sector. I am sure that the Minister will recall that the Department of Health has an obligation—the terms of which are available on one of the Department's web sites—by which it is

''determined to see all NHS organisations in England signed up to a geographically relevant Local Compact by 31 March 2004''.

I am sure that the Minister will be equipped to tell us today whether that will be the case, and whether it will apply to NHS foundations trusts. However, it does not completely answer the point, because ''geographically relevant local compacts'' are relevant from the point of view of trusts working with local authorities and local voluntary organisations.

The question is whether the independent regulator will be required to comply with the compact, which, at a national level, is an agreement between central Government and the National Council for Voluntary Organisations. That is important, because voluntary organisations may, in the fullness of time, become substantial clients of the independent regulator. If, for example, under clause 5, which deals with other applications, a body other than an existing NHS trust, such as a group of hospices, was to become an applicant for NHS foundation trust status, it would be a voluntary sector organisation seeking to receive authorisation from the independent regulator.

As I understand it, the compact is currently an agreement—without statutory backing—between central Government and the voluntary sector. It applies to Departments in central Government. By extension, it applies to Executive agencies and non-departmental public bodies that are answerable to those Departments. It does not apply to existing regulators. I know that to be a fact because the NCVO has been in touch with other regulators, who have said that they have been established by statute as non-ministerial Departments and that their responsibilities and requirements are laid down in statute. The compact is not part of those requirements and, therefore, cannot be applied to those independent regulators simply because Ministers have agreed with the NCVO.

If the good principles set out in the compact about the manner in which central Government deal with voluntary sector organisations are to be applied, including, for example, some of the principles of fairness and equity in applications for NHS funding—NHS authorisation of a foundation trust is a very good example—it is important that the compact be applied specifically to the independent regulator as a non-ministerial Department. Provision for that must be included in the Bill.

I hope that I have explained to Ministers, particularly on amendment No. 123, why these aspects of the independent regulator's work should be expressed at this point in the Bill. As far as I am aware, and unless I am told otherwise, the drafting is adequate for that purpose. I speak to amendment No. 232 for the purposes of our discussion today, but I reserve the possibility of pressing amendment No. 123 to a Division later.

Ms Patsy Calton (Cheadle, Liberal Democrat)

I shall speak to amendments Nos. 244 and 245.

On amendment No. 244, I follow some of the arguments made by the hon. Member for South Cambridgeshire, who referred to the difference

between ''consistent with'' and ''not inconsistent with.'' My party and I should like to explore the idea that the terminology of ''consistent with'' is less sharp than ''in pursuance of.'' Clause 3 states:

''The regulator must exercise his functions in a manner that is consistent with the performance by the Secretary of State of the duties under sections 1, 3 and 51 of the National Health Service Act 1977''.

There should be no room for muddying the water with terminology. The phrase ''consistent with'' is not as clear as ''in pursuance of''. I am keen to hear the Minister's response to our suggested wording.

Amendment No. 245 proposes that the regulator should have regard to

''the principles of fairness and of universal coverage''.

When foundation trusts are being established, there is a concern that initially there might be a two-tier system. Some new foundation trusts may cherry-pick some services over others; for example, they may choose to do away with emergency care.

Mr Simon Burns (West Chelmsford, Conservative)

The hon. Lady explained forcefully, in discussing amendment No. 244, why she thought that the words ''consistent with'' were inappropriate and why the words ''in pursuance of'' were better. Why, therefore, does amendment No. 245 not use the words ''in pursuance of'' rather than ''consistent with'', given that the words ''consistent with'' are so inappropriate in amendment No. 244?

Ms Patsy Calton (Cheadle, Liberal Democrat)

We could all split hairs. I wondered what amendment No. 232—

Mr Simon Burns (West Chelmsford, Conservative)

Will the hon. Lady give way?

Ms Patsy Calton (Cheadle, Liberal Democrat)

If I might finish what I was saying. Amendment No. 232 states that

''The primary duty of the regulator is to facilitate the provision by NHS foundation trusts of health care at a higher clinical standard''.

The amendment does not state what the standard is higher than. We are concerned that emergency care and other vital services such as mental health—[Interruption.]

Mr Andrew Lansley (South Cambridgeshire, Conservative)

My intervention is directly relevant to the point that the hon. Lady makes. I do not understand why she believes that the ''principles of universal coverage'' is a better expression of the need to maintain services than the duty under section 1(1) of the 1977 Act:

''to continue the promotion in England and Wales of a comprehensive health service''.

Is a ''comprehensive health service'' not, by definition, similar to the ''universal coverage'' that she seeks?

Ms Patsy Calton (Cheadle, Liberal Democrat)

I thank the hon. Gentleman for his intervention. There are distinct similarities between the expressions. However, as we move into a new system, it is important that the Minister answers the questions and confirms that the intention is to have the same universal coverage as that we expect now.

Mr Chris Grayling (Epsom & Ewell, Conservative)

I speak in support of the amendment that my hon. Friend the Member for South Cambridgeshire seeks to press to a Division. He will, of course, have the support of his

colleagues. His is a sound and well-articulated amendment.

The tone of clause 3 prompts once again the question as to where is the clinical element of the Bill. Too much of the Bill is about structures and constitutions, and there is little mention of the duty of care to deliver proper clinical improvements. My hon. Friend the Member for South Cambridgeshire, in his first amendment, makes an extremely important point about strengthening the role of the regulator in delivering higher quality health care.

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

The hon. Gentleman bemoans the fact that there is nothing in the Bill specifically about clinical quality and about promoting higher quality services. Does he not realise that it was the Labour Government that introduced a duty to improve the quality of clinical care in NHS trusts? His Government had a long time to do that and never managed to get round to it. The duty to improve the quality of care was imposed on the NHS by this Labour Government.

Mr Chris Grayling (Epsom & Ewell, Conservative)

There is a difference in philosophy on the two sides. On the Opposition Benches, we prefer to do things, whereas those on the Government Benches prefer to draw up, organise and restructure. The weakness in the Government's approach is that the national health service has spent far too much time reorganising and far too little time spending money on the front line of clinical services. To that effect, a duty that requires the regulator to focus on clinical improvements is entirely appropriate and is to be supported. I look forward with interest to hearing the Minister's responses to amendments that are well articulated and deserve a proper response.

Sir George Young (North West Hampshire, Conservative)

I want to add a short footnote to the powerful speech of my hon. Friend the Member for South Cambridgeshire. [Interruption.]

Mr Peter Atkinson (Hexham, Conservative)

Order. I am sorry to interrupt the right hon. Gentleman, but I am having difficulty in hearing his footnote because there is so much conversation going on in the Room.

Sir George Young (North West Hampshire, Conservative)

I am grateful for your protection, Mr. Atkinson. Clause 3, as it stands, is stark and does not do justice to the role of the independent regulator that the Secretary of State and the Committee would like to see. Clause 3, entitled ''General duty of regulator'', is basically saying, ''Don't get in the way of the Secretary of State; exercise your functions in a manner that is consistent with the performance of the Secretary of State''. I should prefer to see a more explicit statement on the general duties of the regulator. It is some time since I considered the Railways Act 1993, but the railway regulator had a positive duty to promote the welfare of rail travellers. In his negotiations he found it useful to point to the equivalent of clause 3 and to say that he had a duty to promote the interests of rail travellers.

It would be helpful if the regulator pointed to a provision in clause 3 of the Bill that gives him some clout, rather than the present wording, which puts him in the shadow of the Secretary of State. At the

moment, the clause reads as if the regulator is a planning inspector performing what I call ''the Dolcis function''; he stands in the shoes of the Secretary of State.

The regulator is more than just a shadow of the Secretary of State; he has a duty in his own right to promote the sort of functions that my hon. Friend has spoken about. Those views are not just mine; they are also the views of the Select Committee. My amendments replicate paragraph 137 of the Health Committee's second report on foundation trusts. The Committee said:

''We therefore urge the Government to overlay these plans with a mechanism to ensure that these potential problems do not materialise. This could include placing a legal duty on the Regulator to safeguard the best interests of the NHS as a whole.''

That is what amendment No. 200 seeks to do. It picks the recommendations of the Select Committee, which had the Bill before it when it made its recommendations. The paragraphs before paragraph 137 explain why the Select Committee felt that such a duty should be placed on the regulator.

The hon. Member for Cheadle mentioned some of the fears of non-foundation hospitals, including the fear that there might be an initial diversion of funds. Placing a legal duty on the regulator to safeguard the best interests of the NHS would reassure those hospitals. However, other amendments tabled by my hon. Friend the Member for South Cambridgeshire would give the regulator the necessary credibility and clout in his negotiations.

It would be better to state the regulator's duties clearly in the Bill rather than to leave the regulator to interpret clause 3. It is nebulous and replicating; it is all about not falling out with the Secretary of State. The Minister said that the regulator does have duties, which we will move on to shortly, on financial matters and on the processing of applications. Clause 3 is entitled ''General duty of regulator'', and unless the Government agree to some of these amendments, the Minister will miss a trick and the regulator will not be able to do the job that we want him to.

Mr Gary Streeter (South West Devon, Conservative)

I support my right hon. Friend the Member for North-West Hampshire and my hon. Friend the Member for South Cambridgeshire. I wish to read out clause 3, which, as my right hon. Friend says, is important. I am concerned about transparency and accessibility. Members of the public who become members of a foundation hospital trust, some of whom will sit on boards of governors, will want to know the legal framework within which they will operate. One of their first questions will be on the duty of the regulator. The Act, as it will then be, will read:

''The regulator must exercise his functions in a manner that is consistent with the performance by the Secretary of State of the duties under sections 1, 3 and 51 of the National Health Service Act 1977 (c. 49) (duty as to health service and services generally and as to university clinical teaching and research).''

The next question will be, ''What does that mean?'' Reference must then be made to the 1977 Act. Although I accept that it is not unknown in statute for the Government to refer to previous Acts, it would be better and would make accessibility cleaner and

clearer if the Bill did not refer to a former statute to identify the duties of the regulator, but had them fully set out in the Bill. Therefore everyone could read the duties of the regulator in what could be called a mission statement.

The Under-Secretary has been passionate about her wish for new people to experience ownership of the trusts and to sit on boards of governors. She wants to make foundation trust hospitals open to all; that is laudable. So why have such a barrier to accessibility in a completely imprecise clause setting out the duties of the regulator?

My right hon. and hon. Friends made some powerful points. Can it possibly be right that a section that was drafted in a different world from today's and refers to a Secretary of State for Health in 1977 can give the full and comprehensive framework for a regulator operating in 2003? We have already heard examples of how there must be differences and incompleteness in the provisions of the 1977 Act. I do not need to remind the Committee of how different the world was in 1977. I think that that was the year in which Harold Wilson handed over to the now Lord Callaghan.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

That was 1976.

Mr Gary Streeter (South West Devon, Conservative)

That is what I said. It was shortly after Harold Wilson handed over to Lord Callaghan.

It was the year in which Austin Allegros littered the sides of the motorway, because they could not go for more than 30 miles without breaking down. It was the year in which I left university—now my daughter is leaving university. The world has moved on since 1977.

Mr Simon Burns (West Chelmsford, Conservative)

Was not 1977 also the year in which the Chancellor had to return to London from the IMF humiliation?

Mr Gary Streeter (South West Devon, Conservative)

My hon. Friend makes a powerful political point. [Interruption.] It is certainly not irrelevant: every Labour Government fails in fiscal management.

Mr Peter Atkinson (Hexham, Conservative)

Order. We are discussing clause 3, not political history.

Mr Gary Streeter (South West Devon, Conservative)

My point, Mr. Atkinson, is a serious one. The provisions of the 1977 Act cannot possibly form a comprehensive framework for a regulator in 2003. I refer to my previous point: if we wish to make this process honest, open and transparent, why not set out the general duties in the Bill and make it the mission statement that the regulator can photocopy and pin up on his wall? That is the kind of simplicity at which we should be aiming.

My hon. Friend the Member for South Cambridgeshire made a point about creating links with the voluntary sector, and Governments have always talked about statutory bodies working in partnership with the voluntary sector. I have had many dealings with the voluntary sector over the past few years, including many discussions with the National Council for Voluntary Organisations and others, and I know for sure that the laudable aspirations set out in the compacts that the Government produce are not realised in practice. It

is very important that the regulator has a duty, in accordance with his wider duties, to make sure that professionals who are running services in foundation hospital trusts have a mind to partnerships with voluntary sector organisations. That should be expressly included in the Bill. It is to be hoped that the Minister will not just pay lip-service to these amendments, rather that he will dig down deep into his character, listen carefully to the points being made and improve the Bill. If he does that, he will go down in history as a new Labour Minister who does not just say that he will listen and take the Opposition's points seriously, but who means it.

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

I congratulate the hon. Member for South Cambridgeshire for another very effective contribution. I hope that that does not embarrass him too much. I shall not enter into a philosophical discussion about the nature of regulation vis-à-vis the powers of the Secretary of State. That would not be useful. There are substantive and important differences, but we can have that discussion at another time. He is right, as is his right hon. Friend the Member for North-West Hampshire, to focus on clause 3 as an important part of the Bill. The hon. Member for South-West Devon (Mr. Streeter) is right too in some of his comments about the centrality of the clause to the Bill.

However, I disagree with the hon. Gentleman's commentary on clause 3. With respect, it is not opaque or unclear about the duties of the regulator; they are set out clearly in the Bill, although there is a cross-reference to an earlier statute. Part of the problem with the debate is that sections 1, 3 and 51 of the 1977 Act are very clear about the general duties of the Secretary of the State, and those general duties have stood the test of time. No one can dispute that the legislation is 26 years old; that alone is no reason to say that it is no longer effective. It provides an effective guide for the regulator through his duties under the Bill.

I must disagree with the hon. Member for South Cambridgeshire on one fundamental point: the principle of greater operational freedom that both he and I want to see for NHS foundation trusts is not incompatible with the Secretary of State's general duties under the 1977 Act. Running through his presentation of the amendment and the comments of various Opposition Members was the fundamental flaw that the two things were not compatible. Therefore a need for an express duty in the Bill to defend the regulator's job to be a deregulator to preserve the freedoms of NHS foundation trusts is misplaced.

The duties of the Secretary of State, under sections 1, 3 and 51 of the 1977 Act are in no way incompatible with greater operational freedom for local NHS hospitals. I take issue with the hon. Gentleman's criticism of clause 3 and with his attempt to redress what he sees as shortcomings in that part of the Bill. He is wrong in that regard.

I shall develop that point briefly, although I do not wish to detain the Committee unnecessarily, as I do not think that the hon. Gentleman will press the

amendment to a Division. I wish to discuss how we perceive the role of the regulator.

The second tier of the hon. Gentleman's argument, about having an express deregulatory duty built into the legislation of the regulator, is unnecessary because the deregulatory aspects of the Bill, in the sense of the greater operational freedoms of NHS trusts, are clearly set out in part 1. It will be the duty of the regulator to give effect to those provisions, and the freedoms secured by clause 14 are clearly set out.

There is a crucial difference between this reform of the NHS and previous attempts at reform, including the then Conservative Government's attempts to set NHS trusts free from Whitehall control in the National Health Service and Community Care Act 1990. This legislation will not allow the Secretary of State to direct either the regulator or an NHS foundation trust in any aspect of their work. That is the key cultural division and the historical significance of this measure. It is a break with the past. I accept that. That is one of the provisions that will ensure the operational freedom that the hon. Member for South Cambridgeshire wants to see for NHS foundation trusts.

Sir George Young (North West Hampshire, Conservative)

The Minister said that there is nothing in the Bill that gives a Minister power to direct the regulator. However, if the Secretary of State, having consulted clause 3, came to the conclusion that the regulator was acting in a manner inconsistent with sections 1, 3 and 51 of the 1977 Act, presumably he would notify the regulator that, in his view, the regulator was acting outside those guidelines, and he would request the regulator to step back within the boundaries of the legislation. Therefore, in practice, does the Secretary of State not have the power to direct the regulator when he thinks that the regulator is wrong?

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

I shall come to that point, because it is important. To some extent, it takes us into the debate about the word ''consistent'' that the hon. Member for Cheadle was developing in her short contribution. I do not see that as a power of direction.

There is an important issue in clause 3 for the Committee to discuss, although I hope that it will not do so at length. NHS foundation trusts will play an important role in future and will make an important contribution to the delivery of NHS services for millions of people. Given that importance, it is right that there should be consistency between how the regulator develops his responsibilities and the responsibilities of the Secretary of State. The Secretary of State has the primary statutory duty to ensure the provision of comprehensive NHS services that are free at the point of delivery and that will improve the health and well-being of the people of this country. There is a need for consistency in how these responsibilities are discharged.

It cannot be in the best interests of the NHS to be pulled in two directions, one way being pursued by the regulator and his interpretation of the duties and the other way by the Secretary of State. Given the right

hon. Gentleman's extensive ministerial experience, I am sure that he will recognise that it would not be sensible for us to legislate for that.

There must be a way of resolving these matters. The Bill makes it clear that the regulator must discharge his duties in a way that is consistent with how the Secretary of State would perform his responsibilities under sections 1, 3 and 51 of the 1977 Act. That is the right, sensible and pragmatic view to take.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Even if it were not a power of direction, the manner in which the clause is drafted could imply an obligation being laid on the independent regulator. For example, if clause 3 said ''in a manner that is consistent with the duties laid on the Secretary of State'' instead of

''in a manner that is consistent with the performance by the Secretary of State of the duties'',

the question of how the Secretary of State interpreted and performed those duties would appear, according to the statute, to give a power of guidance in relation to the regulator, if not a power of direction. Is that how the Minister sees it?

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

Yes. That is closer to how the provisions will eventually operate. We must be clear about one important issue: we can will the means, which are methods of improving the national health service by providing more responsive, tailor-made services for patients, but we cannot deny the Secretary of State the means. The danger in the path that the hon. Gentleman wants to go down is that we would end up doing precisely that. With the greatest respect to the hon. Gentleman, I suggest that that would not be a sensible or prudent thing for us to do.

I know that I have been rather long-winded, but my argument comes down to this: it is the Government's view that the independent regulator should be required to exercise his functions in a manner that is consistent with the Secretary of State's general duties under the 1977 Act, including the duties to promote and provide a comprehensive health service in England and to provide adequate facilities to universities with medical or dental schools. The duties imposed by the provisions of the 1977 Act should be overriding ones because, fundamentally, they will help to ensure that the NHS remains an integrated, coherent and effective national service, and those are important objectives.

I think, with respect, that the hon. Gentleman is inviting the Committee to qualify or somehow to dilute those overarching statutory duties, because he is providing several riders or provisos to them. Qualifying or diluting them, which is essentially how the hon. Gentleman's amendments can be interpreted, would be unhelpful. Those general duties should be unencumbered. The hon. Gentleman's amendment would encumber them, and that is why I cannot support it.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I am not sure to which amendments the Minister was referring. I acknowledge that, in practice, amendments Nos. 232 and 107 would qualify the duties. However, I hope that he would not apply that argument to amendment No. 123, which is not intended to qualify the duties laid on the regulator but to give the regulator guidance on how he is to carry

out his duties. They are not in any sense inconsistent with the general duties.

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

That is right. I was talking primarily about amendment No. 107. With respect, I am sure that the hon. Gentleman will concede that it is an attempt to qualify the overarching statutory obligations; otherwise I would not be able to understand his amendment at all.

That is the Government's position on the work of the regulator, and the way in which we have expressed it in the Bill is clear for all hon. Members to see. For those reasons, I cannot support the hon. Gentleman's amendment.

The hon. Gentleman moved amendment No. 232, which requires a higher clinical standard and responsiveness to patients. Again, with respect, I hope that he is prepared to accept my assurances that the amendments are not strictly necessary for two reasons: they are already covered by section 1(1) of the 1977 Act, which is clear in that regard; and NHS foundation trusts, like other trusts, have a duty that is set out in clause 40. It 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.''

Amendment No. 107, which proposes ''freedom from external constraints'', has been dealt with, although perhaps not to the hon. Gentleman's satisfaction. However, I do not wish to replicate the arguments. The amendment may also be unnecessary as NHS foundation trusts' freedoms are properly and effectively guaranteed and they are set out in legislation, particularly in clause 14 and in Government amendments Nos. 148 and 149.

Mr Chris Grayling (Epsom & Ewell, Conservative)

Surely the point about amendment No. 232 is that it is, in effect, a reminder to the regulator. We have heard much about the work that the regulator will need to do with trusts in shaping constitutions and in identifying the best way of selecting members across geographical areas. Surely, it must be worthwhile to have a perpetual reminder to the regulator that his prime job is to look after patients and not allow other factors to intervene to prevent that.

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

No, I absolutely agree with the hon. Gentleman; that is precisely what the Bill does. He described this as a reminder—reminding the regulator of his clear and explicit existing functions. However, with great respect to the hon. Gentleman, I do not think that the Bill, having made those commitments clear and unambiguous, must contain a reminder designed to achieve that. That is not a good principle of drafting legislation in the House.

The hon. Member for South Cambridgeshire raised a concern in amendment No. 123 about the compact. The hon. Gentleman is a member of the NCVO, and he takes that work very seriously, on which I congratulate him. We strongly support the compact and the spirit of the provisions set out in paragraph (c). However, the amendment is not strictly needed. As the head of a non-ministerial department, and consistent with his common-law duty to behave reasonably and proportionately, the office of the

independent regulator would already be expected to work within the compact, as was agreed with the community and voluntary sector in 1998. However, the hon. Gentleman would accept that his amendment would take the compact into completely different legal territory by giving it some statutory backing and making it legally binding. It gets its authority from being jointly endorsed by the Government and by the community and voluntary sector. A trust and partnership working is about relationships, reaching goals and obtaining wider benefits, and I would not want to convert the compact into a statutory creation.

Amendment No. 200 is also unnecessary, as the matter has already been dealt under the 1977 Act as incorporated into clause 3. We should not debate that any further. I tried very hard to take notes during the contribution made by the hon. Member for Cheadle on amendment 244, but I completely failed because I did not understand the point of her argument. I do not intend to say anything about it, other than that, from what I can work out, it is an attempt to give the Secretary of State the power to direct the independent regulator, and we do not intend to go down that road.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I am grateful to the Minister for the almost comprehensive way in which he replied to the amendments. I accept, on the grounds of its being implied in section 1 of the 1977 Act, and under clause 40 of the Bill, that higher clinical standard does not need to be specified for the regulator.

I would accept that the reference to freedom from external constraints and so on—the deregulatory function—does not need to be specified as a duty of the regulator had the Minister gone on to accept that the better regulation principles enunciated in amendment No. 123, under proposed new subsection (2)(a), had been accepted. However, the Minister is not inclined to accept them. That would have delivered not only the deregulatory objective, in so far as regulatory action would be targeted only in cases in which action was needed, but some of the other principles of good regulation would also have been set out. It is wrong that the Minister did not deal with that point in detail, and it is wrong simply to gloss over them and say that they are implied in some way by the practice elsewhere—it has been specified in statute for other regulators.

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

I apologise to the hon. Gentleman. I have got so many sheets of paper that I overlooked a reference to proposed new paragraph (a). I should like to have said in my speech that the clauses in the Bill have been drafted with a view to establishing a light-touch regulatory approach. If the hon. Gentleman were to look at clause 23, he would notice that the regulator can intervene only where there is a contravention or failure of a significant nature. We do not envisage the regulator's intervening daily in the work of NHS foundation trusts. The office of the regulator has been constructed in accordance with the spirit of the best approach to regulations.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I find that astonishing. In other contexts, Ministers have said that they want to create light-touch regulators and then, as part of the process

of doing so, have made it clear that the regulator in question will be the subject of the best regulation principles as enunciated by the Better Regulation Task Force. Those principles are built into the Bill.

The Minister has not presented an argument for not accepting amendment No. 123; he has only said that it is not needed ''because, because'' and then found other examples. That is also true of proposed new paragraph (b).

I am sure that one could find places in the Bill in which the regulator might, in authorising services, consider the interests of children or of rural and urban areas; no doubt, the regulator might have regard to the principles set out in the compact. However, in none of those cases is that certain, nor is it likely to be applied across all the functions of the independent regulator unless we set it out in statute that the regulator must have regard to those matters. That is true of the compact itself.

Those in the voluntary sector would not think that the regulator's duty to have regard to the various groups' interests would be any more or any less adhered to simply because it was referred to in statute. The issue is whether the Minister is right in telling us that, as a non-ministerial department, the independent regulator is required to have regard to the compact if it is not referred to in statute. My understanding is that regulators who are covered by statutes in which there is no reference to the compact—that has not generally been the case so far—do not have to have regard to it. Perhaps the Minister will tell me that I am wrong, although if we study the matter we might find that he is wrong.

Mr Chris Grayling (Epsom & Ewell, Conservative)

In reinforcement of my hon. Friend's argument about the need to strengthen the guidance given to the regulator, is he aware that, as public corporations, foundation trusts can only have functions that are given to them by statute? It is clear from the drafting of the Bill that foundation trusts do not have the power to appeal against a decision made by the regulator. The Bill must be as precise as possible about the duties of the regulator to ensure that there is no breakdown between the regulator and the foundation trusts.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

My hon. Friend makes an interesting point that could take us into a completely different territory, which could be the subject of a debate in itself—should there be an appeal mechanism, and under what circumstances might an appeal be made? Presumably, foundation trusts would have scope for a judicial review if they felt that the regulator behaved unreasonably. We would have to wait to see whether an appeal was justified before we judged the merits of the decisions.

I have heard nothing to convince me that amendment No. 123 is not highly desirable for setting out the issues to which the independent regulator should have regard. Some of the explanations on consistency with duties were quite interesting, and I suspect that when we come to consider the matter later we may conclude that the

clause should read: ''He must exercise his functions in a manner consistent with the duties laid upon the Secretary of State as distinct from the performance by the Secretary of State of those duties.'' If we accept the point of my hon. Friend the Member for South-West Devon, there is technically nothing to prevent the legislation setting out the duties again in detail.

Given that that is the case, I find myself in the same position as when I began. I shall not seek to press amendments Nos. 232 or 107 to a Division, but I am wholly persuaded of the merits of amendment No. 123. I am surprised that the Government should resist their inclusion in the Bill, as they would help the regulator to do his job in the way that we all wish him to. Therefore I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: No. 123, in

clause 3, page 2, line 5, at end add—

'(2) In performing his duties under this Act, the regulator must have regard to such of the following as appear to him to be relevant in the circumstances—

(a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases where action is needed,

(b) the different needs and interests of persons using NHS services and, in particular, of the different interests of children, and of those living in rural and urban areas; and

(c) the principles set out in the Compact between Government and the voluntary sector and the codes of practice set out under it.'.—[Mr. Lansley.]

Question put, That the amendment be made:—

The Committee divided: Ayes 7, Noes 14