Clause 6 - Authorisation of NHS foundation trusts
Health and Social Care (Community Health and Standards) Bill
12:00 pm
Mr Andrew Lansley (South Cambridgeshire, Conservative)
I beg to move amendment No. 225, in
clause 6, page 3, line 32, at end insert
', but shall not impose restrictions on the financial terms and conditions under which an NHS foundation trust shall contract to provide goods and services to Primary Care Trusts'.
The purpose of the amendment is to insert into clause 6 a limitation on the independent regulator being given the power to authorise an application on any terms he considers appropriate. That is a sweeping generalisation.
If circumstances had been otherwise, I might have taken the opportunity to have a rather fuller discussion of the subject. The amendment would introduce the concept that the freedoms that are available to an NHS foundation trust in financial terms should not be confined to the freedoms relating to borrowing and capital that are set out later in detail. If one is trying to manage effectively a business organisation, among the financial considerations is the question of price. I know, of course, that an NHS foundation trust is not strictly a business organisation. It is transparent from the Government's management of the commissioning process that price will not be a consideration. Commissioning will be conducted on a cost and volume basis. I have a problem with that. If commissioning is based simply on cost and volume, there will be some misallocation of resources, because the point of a price system is to align the cost to commissioners—the primary care trusts—with the costs generated within the trusts.
At the moment, a primary care trust pays a certain amount to Addenbrooke's hospital for various
treatments. Under the introduction of the new national standard tariffs, the amount that the primary care trust will pay Addenbrooke's will be slightly increased. There will therefore be a surplus generated within Addenbrooke's. I have no problem about that, because I know that in practice its management will devote that towards the generation of additional capacity.
We are designing a system that is not just for the present, where there is a deficiency of capacity. The purpose of our efforts is always to increase capacity, and those surpluses will be given to capacity. We are designing a system where the providers—who may be NHS foundation trusts—are not confined to existing NHS trusts, but may include others. We are in a situation where NHS foundation trusts may be offering competing volumes to the same commissioners. Under those circumstances, there should be a price adjusting mechanism. Otherwise, what can a higher quality trust like Addenbrooke's do to reflect the quality that it offers to its commissioners?
If the commissioners want to buy quality services, how do they go about that other than by adjusting price, thus securing additional quality over and above the specifications of national standards? That is moving away from the idea of operational freedom inside an NHS foundation trust. It is creating a high degree of standardisation inside the NHS. The Government admit that in their document that reflects the new structural reforming NHS financial flows. In the discussion about service level agreements it is stated that there should be ''greater standardisation'' of service level agreements. Tariffs will be standardised. There will be nationally determined regional cost adjustments which may, or may not, reflect the costs as they arise in places such as Cambridge.
At some point, the Government will determine issues relating to the tariff, such as critical care costs or the extent to which critical units are going to have that reflected in their prices. Time does not allow me to look at all of those, but they all have a significant impact on the long-term financial status of NHS foundation trusts. All of those will be determined on the basis of the decisions taken by central NHS bureaucracy rather than foundation trusts and PCTs in negotiation. They will be effectively imposed on the primary care trusts, and by extension imposed on the foundation trusts.
The financial freedoms that are offered to NHS foundation trusts are not all-encompassing. The most important financial freedoms that apply in general economic activity are not going to be available to NHS foundation trusts, unless there is some mechanism. I confess that the amendment explores that issue, but it is designed to disapply the standard tariff, which will otherwise be imposed by central NHS bureaucracy through primary care trusts on an NHS foundation trust. I am disappointed that, if we are in the business of creating freedom, we are not in the business of creating sufficient freedoms for NHS foundation trusts
to manage volume, quality and price in order to allocate resources more effectively in the longer term.