Clause 17 - Financial powers
Health and Social Care (Community Health and Standards) Bill
5:00 pm
Mr John Hutton (Minister of State, Department of Health; Barrow and Furness, Labour)
Amendment No. 20, tabled by the hon. Member for Epsom and Ewell, would mean that NHS foundation trusts could use any assets acquired through investments as security to make a further investment. If the hon. Gentleman's intention is to allow money to be so reinvested, I can tell him that the Bill already allows that to happen. Therefore, the amendment is unnecessary, provided, of course, that such borrowing is within the prudential borrowing limit.
However, if the hon. Gentleman's intention is to allow fiscal assets to be used as security for borrowing, it would be acceptable under the Bill as drafted—it is clearly within the terms of the Bill—provided that those assets were not classified as protected under clause 16. I shall not rehearse the argument about the need to protect assets under that clause as we have been over that territory extensively and I have expressed my views on the matter. It is important that NHS foundation trusts are not able to dispose of, or use as security for borrowing, assets that are required for the provision of essential NHS services, as it would jeopardise the continuity of the provision of such services.
Amendment No. 124, tabled by the hon. Member for South Cambridgeshire (Mr. Lansley), is interesting. It has two elements: the first would prevent NHS foundation trusts from using surpluses gained from the provision of NHS services in any other
activities, apart from NHS activities. In view of everything that the hon. Gentleman said, I would be surprised if that were his intention, given that the amendments are largely designed to free NHS foundation trusts. The amendment would have the opposite effect. As there was with the amendment tabled by my hon. Friend the Member for Ealing, there is also a problem about how this amendment would affect the wider income-generation opportunities available to the trust, for example. I imagine that it was therefore a probing amendment, as it would restrict the opportunities for the foundation trust to invest assets more widely in support of its activities.
The second element of amendment No. 124 is more substantive: it is about distributing surpluses to members. I can reassure the hon. Gentleman that he is right; there is no express provision to that effect in the Bill, but that is because it is not needed. The financial regime already prevents NHS foundation trusts from distributing surpluses to members. As statutory corporations, NHS foundation trusts have only the powers granted to them by statute. Clause 17 does not give them the power to distribute or invest money other than in connection with its statutory functions. The hon. Gentleman has made a good fist of it but in legal terms his amendment is not needed.
Amendment No. 265, tabled by my hon. Friend the Member for Ealing, North, would require every foundation trust to publish annually a list of all the companies and bodies in which it holds investments. In addition, it would prevent any employee or director of an NHS foundation trust from gaining any personal advantage from any investment made by that trust. For example, NHS foundation trust employees could not hold any stock or be employed in a company in which an NHS foundation trust had invested.
It is important that foundation trusts should be accountable for their investment policies and there is no doubt that the regulator will need that information in order to perform his functions, especially those under clauses 15(2) and 14(2). The trusty support mechanism in schedule 1(20) and clause 10(2) already means that NHS foundation trust accounts will be in a form prescribed by the regulator and open to public scrutiny, as they should be. Thus the first part of the amendment is unnecessary.
I have a more fundamental anxiety about the second part of the amendment. It is right that the policy for NHS foundation trusts should not become a vehicle for people on the governing boards, directors or employees, to derive significant pecuniary advantage. I agree absolutely with the hon. Gentleman on that point. However, it would not be in line with our aims of encouraging enterprise and innovation to require NHS foundation trusts to impose a total ban on the involvement of employees or directors in the ventures that such a trust may properly set up or invest in in pursuit of its functions. Imposing a ban would cut directly across our line and practice in other not-for-profit organisations such as charities and higher education institutions. It is seen as perfectly proper that academic staff in universities should have an interest in promoting research that has financial
benefits for the individual, and for the university as the investor. That is an obvious parallel, given the educational and research activity that occurs in many NHS trusts, and in those that want to become NHS foundation trusts.
I agree with the hon. Gentleman insofar as we are talking about transparency and openness. The regulator will certainly want to address those in his guidance to NHS foundation trusts on governance and corporate probity. I am sure that he will want also to draw on existing material published by bodies such as the Higher Education Funding Council and the charity commissioners. Again, I have a pleasant sense of deja vu about the amendments, but for the reasons that I have outlined, I would urge the Committee not to accept them.