Mr Simon Burns (West Chelmsford, Conservative)

I want to raise a brief technical point with the Minister because, as he will be aware, clause 7 gives authorisation to the bodies corporate, which are NHS trusts. Its subsections describe the legal authorisation for foundation trusts. If the need arose, is there a mechanism in the Bill, or in legislation generally—I suspect that it would need to be in the Bill—to reverse that process? Such a provision would be required in exceptional circumstances only, but there might conceivably be the odd instance when, for a variety of reasons, a foundation trust might no longer wish to continue as a foundation trust after a time or might become incapable of providing the services and health care that are required for it to remain as a foundation trust. The trust may, therefore, wish to revert to NHS trust status.

My understanding is that that process is irreversible—there is no reversal mechanism. Will the Minister confirm that and state whether it is wise not to provide such a mechanism for the few and, I suspect, exceptional circumstances in which a foundation trust would wish to revert to its former status?

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Before the Minister responds, it seems perfectly clear in clause 7 that all of the obligations and rights of an NHS trust or a public benefit corporation are continued after the point of authorisation, and that is fine. However, I do not understand—perhaps the Minister will enlighten me—what happens if, before the point of authorisation, the NHS trust or public benefit corporation has taken on contractual obligations that are inconsistent with the terms of its authorisation? What happens subsequently with such rights or obligations?

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

I will deal quickly with the point made by the hon. Member for West Chelmsford (Mr. Burns). Later parts of part 1, especially clauses 23 to 26, provide for the dissolution of NHS foundation trusts. It is not, therefore, a once-and-for-all process. We have envisaged circumstances in which it might be right to dissolve the NHS trusts, and clause 25 in particular sets out the procedures for doing that.

The hon. Member for South Cambridgeshire (Mr. Lansley) asked a characteristically intriguing question. I will need to take proper legal advice on that point. Therefore, because I do not want to detain the Committee unnecessarily, I shall write to the hon. Gentleman and copy my response to other members of the Committee. In general terms, the hon. Gentleman is right. The architecture that is proposed in clause 7 assumes the organisations' seamless transfer from NHS trust to NHS foundation trust status—there is no need for the dissolution of the NHS trusts, and there is no need for a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 1981 because there is no transfer of an entity. It is a seamless process.

We have also extended that principle to the contractual liabilities of the trusts as they exist at the moment of authorisation. It is conceivable that the issue that the hon. Member for South Cambridgeshire highlighted could arise in, for example, the treatment of private patients. Providing such treatment would take applicants for NHS foundation trust status above the private cap below which they must operate under the provisions of clause 15. In those circumstances, the clause 15 cap would have to take precedence.

The hon. Gentleman raised a genuinely serious point, and I am happy to take further advice from legal sources in the Department and across Government, after which I shall write to the hon. Gentleman with a properly thought-out answer.

Question put and agreed to.

Clause 7 ordered to stand part of the Bill.