Mr Peter Atkinson (Hexham, Conservative)

I understand that a document has not yet arrived, so I propose a 10-minute suspension of the Committee until we sort that out.

Mr Chris Grayling (Epsom & Ewell, Conservative)

On a point of order, Mr. Atkinson. You were not here this morning to witness the chaos over the set of amendments. The Minister has clearly not been prepared for them. Opposition Members have not had a chance to see the documentation that was due to be prepared. Frankly, it should have been here this morning; has not been delivered for the afternoon sitting, so I should like to propose that the Committee adjourn until Tuesday to give the Minister time to get his act together, and Opposition Members a chance to see the documentation from the Department.

Mr Peter Atkinson (Hexham, Conservative)

I hear what the hon. Gentleman says, but I have said that I am prepared to suspend the Committee for 10 minutes, and that is what I intend to do at the moment.

Sitting suspended.

On resuming—

Mr Peter Atkinson (Hexham, Conservative)

It has been requested that the Committee remain suspended for a further five minutes to allow hon. Members to read the documents.

Sitting suspended.

On resuming—

Mr Peter Atkinson (Hexham, Conservative)

Again at the request of the Committee, I suspend the sitting for a further 15 minutes.

Sitting suspended.

On resuming—

Sir George Young (North West Hampshire, Conservative)

On a point of order, Mr. Atkinson. Might I might make a suggestion that would enable the Committee to catch up on some of the time that it has lost. The group of Government amendments that we are debating deals with the relationship between the regime for foundation trusts and other NHS bodies, as confirmed by the document helpfully provided by the Department of Health. Nearly all the amendments apply the clause to foundation trusts. The section of the Bill on

foundation trusts was dealt with almost exclusively by the Minister of State, who is now with us. Would it enable us to make faster progress if he were to handle this group of amendments?

Mr Peter Atkinson (Hexham, Conservative)

Order. Which Minister deals with which clauses is a matter for the Ministers and not for the Chair.

Mr Simon Burns (West Chelmsford, Conservative)

On a point of order, Mr. Atkinson. Are you are aware, the Government rightly place on any Standing Committee Parliamentary Private Secretaries from the Department responsible for the business. They are, by tradition, non-speaking members of Committees on the subject for which they are Parliamentary Private Secretaries. You were not here this morning, but part of our problem has been that the Minister moved formally a group of highly important Government amendments. When the Committee expressed its surprise and concern, the Minister made a statement that I hope, on reflection, he would consider to have been unfair, in that he said that he had made a mistake in moving them formally and that he had received bad advice from his Parliamentary Private Secretary. The Parliamentary Private Secretary is unable to defend himself in Committee. It seems unfair for him to be put in that awkward position. Can the Minister, through the Chair, withdraw that—

Mr Mike Hall (Weaver Vale, Labour)

Further to that point of order, Mr. Atkinson. What the hon. Gentleman has said is correct. I gave my hon. Friend the Under-Secretary bad advice and I acknowledge that. No apology is necessary.

Mr Peter Atkinson (Hexham, Conservative)

Order. Once again, that is not an issue for the Chair. The Committee has heard what has been said on both sides.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

On a point of order, Mr. Atkinson.

Mr Peter Atkinson (Hexham, Conservative)

Can there be another point of order?

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Yes, indeed, there is a separate point of order that might be a matter for you, Mr. Atkinson. We have lost some 40 minutes from the intended allocation of time for the discussion of these matters between now and Tuesday evening. In protecting the ability of the Committee to discuss matters fully and fairly, can you advise how we might recover that time?

Mr Peter Atkinson (Hexham, Conservative)

I hear what the hon. Gentleman says. I am reluctant to advise him because, as he knows, the Committee is open ended and can sit for as long as it likes tonight, although I was hoping that it would not.

Mrs Cheryl Gillan (Chesham & Amersham, Conservative)

On a point of order, Mr. Atkinson. I put on record my thanks for the way in which the Chair has granted us time to study the documentation. Opposition Members—I hope that I speak for the Liberal Democrats as well—are grateful for the amount of time for which you suspended the Committee while we considered the three-page document that was produced at 2.32 this afternoon for the Committee to peruse. I would also like to place on record that, while not unprecedented, it is unusual and fairly shambolic

for 23 Government amendments to be clarified at such a late stage in the Committee's proceedings. The Government have told us that this is a piece of flagship legislation that has been well thought through, yet we are already privy to Government amendments that run into the hundreds.

Mr Peter Atkinson (Hexham, Conservative)

Order. The hon. Lady is making a speech, not a point of order. That is not a matter for the Chair. What Ministers bring to the Committee and when they bring it is a matter for Ministers. No doubt, the Ministers have heard what the hon. Lady has said.

Mrs Cheryl Gillan (Chesham & Amersham, Conservative)

Further to that point of order, Mr. Atkinson, can you advise me whether you would be willing to grant further suspensions should the situation arise again, and would you express an opinion as to whether the Government should conduct the business of the Committee in that fashion? Is it not fair that we should have time to consider such important and fundamental changes to the Bill?

Mr Peter Atkinson (Hexham, Conservative)

Order. I take the hon. Lady's point. As Chairman, I want to ensure that all hon. Members have an opportunity to read all documents, and I shall continue to do that. Once again, when and how documents are produced is a matter for Ministers.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

Further to that point of order, Mr. Atkinson, I associate myself with the thanks of the hon. Member for Chesham and Amersham (Mrs. Gillan) for the suspension. It gave us time to read the documents that arrived at such short notice.

Mr Peter Atkinson (Hexham, Conservative)

Perhaps we can now get on with the business of the Committee. As I was, fortunately, not here this morning, I understand that we are dealing with clause 43.

Amendment proposed [this day]: No. 274,

That Clause 43 be transferred to the end of line 14 on page 20.—[Mr. Lammy.]

Question again proposed, That the amendment be made.

Mr Peter Atkinson (Hexham, Conservative)

I remind the Committee that with this we are discussing the following:

Government amendments Nos. 275 to 278.

Amendment No. 514, in

clause 46, page 16, line 9, leave out from 'trust' to end of line 9.

Amendment No. 513, in

clause 46, page 16, line 11, leave out from 'it' to 'and' in line 12.

Amendment No. 517, in

clause 47, page 16, line 30, leave out paragraph (b).

Amendment No. 516, in

clause 47, page 16, line 24, leave out paragraph (a).

Amendment No. 512, in

clause 47, page 16, line 41, leave out 'if regulations so provide'.

Amendment No. 480, in

clause 47, page 17, line 4, at end add—

'(9) In exercising its functions under this section in relation to any health care the CHAI must take into account the standards set out in statements published under section 41.'.

Government amendments Nos. 282 and 283.

Amendment No. 481, in

clause 49, page 17, line 23, leave out 'other than' and insert 'including'.

Amendment No. 397, in

clause 49, page 17, line 24, after 'sections', insert '45 and'.

Government amendments Nos. 173, 287, 289 to 291, 294 to 297, 30, 298, 300, 303, 452, 306 and 307.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

You have heard much of what happened this morning, Mr. Atkinson. In providing the Committee with an explanatory note, I was seeking to be as helpful as possible with what I accept is a complex group of amendments. However, I should put on record that nearly all the amendments in the group were tabled on 21 May, according to parliamentary counsel, so they were available to members of the Committee a fortnight ago.

Mrs Cheryl Gillan (Chesham & Amersham, Conservative)

Could the Under-Secretary tell the Committee when the explanatory note was prepared?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

As this morning's Hansard will show, the explanatory note was prepared at lunchtime to assist the Committee in its deliberations. However, the amendments have been available for two weeks.

As I said this morning, each of the Government amendments is designed to ensure that CHAI should be able to consider the quality of services in foundation trusts as in other NHS bodies. I assure hon. Members that the changes that we are making are designed simply for that purpose. There is no hidden side to what we are doing. To make the legislation simpler and clearer, we have to make several technical amendments, to which I began speaking this morning.

Mr Chris Grayling (Epsom & Ewell, Conservative)

The Minister refers to technical amendments. May I take issue with him on whether they are technical and ask him a question? Clause 54 as it will be reconstituted permits CHAI to investigate the financial side of any NHS trust. We know that the star-rating system in part reflects the ability of a trust management to maintain or pay off a deficit, yet the explanatory note states:

''Nor would we expect CHAI to routinely inspect or review NHS Foundation Trusts against requirements in its terms of authorisation'',

and uses the example of compliance with the prudential borrowing code. Why would a deficit be treated differently from the prudential borrowing code, and why is the code excluded?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

The hon. Gentleman knows the answer, because my right hon. Friend the Minister of State has discussed it at length during the eight or 10 sittings of the Committee so far. There is a very clear demarcation between the role of CHAI and the role of the independent regulator. Indeed, that is partly what the group of amendments is about.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Perhaps I might explain why I believe that there is a real problem with the Under-Secretary's explanation. The intention of the group of amendments is to make CHAI's activities in respect of NHS foundation trusts much the same as for other NHS bodies, leaving aside certain regulatory activities.

The difficulty is that until now I had thought that the exclusion

''other than NHS foundation trusts''

in clause 49, which will be removed by the group of amendments, meant that none of CHAI's activities would apply to NHS foundation trusts, other than expressly provided for, but now NHS foundation trusts are being brought in as if they were all one thing.

Clause 99 transfers the functions of the old National Care Standards Commission in respect of independent hospitals to CHAI. I hope that you will forgive me, Mr. Atkinson, for a rather long intervention, but this is an important point. I have not really worked this out. On the one hand, there are NHS foundation trusts, and, on the other hand, there are independent hospitals, but there are actually three bodies. There are NHS foundation trusts that are also independent hospitals. By virtue of clause 99, they will be brought under CHAI for the purposes of registration. How will the Under-Secretary be able to manage them in exactly the same way as other foundation trusts, if he goes down that path?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

The hon. Gentleman is confused. He is talking about independent trusts, but I do not see what relationship they have with NHS foundations trusts.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

If I might—

Mr Peter Atkinson (Hexham, Conservative)

Order. The hon. Gentleman has already made a long intervention. What he wishes to say may be better put in a contribution to the debate than an intervention.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

As I said, independent hospitals are not NHS foundation trusts. The hon. Gentleman is confused.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

On a point of order, Mr. Atkinson. I seek your protection. If I have to wait to make a further contribution, the Minister might at least wait to hear it before attempting inaccurately to refute it.

Mr Peter Atkinson (Hexham, Conservative)

That is not a point of order for the Chair.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

As I was saying, CHAI should be able to consider the quality of services in NHS foundation trusts as it does in other bodies. There is no hidden side to the amendments. That is what they seek to achieve.

The hon. Member for Epsom and Ewell (Chris Grayling) raised some specific issues this morning. He asked whether CHAI will relate to the terms of authorisation. It does not. As my right hon. Friend explained previously, that is the job of the independent regulator, who sets the terms and judges whether they continue to be met. However, as the hon. Gentleman would expect, the regulator will use information—

Mr Paul Burstow (Sutton & Cheam, Liberal Democrat)

I seek clarification about the relationship between a foundation hospital is to be regulated by CHAI and a co-located private hospital. Who will register the private hospital? If services are being purchased by the foundation trust, will CHAI be doing two different things? I want to understand how the relationship works between the private hospital that provides

services to a foundation trust; I presume that the services will be accredited and then audited by CHAI.

The provisions seem still in some ways to give CHAI separate responsibility for foundation trusts, but there seems to be quite a confusion, which I hope the Under-Secretary can clarify, between its registration and auditing responsibilities when NHS money is being used to purchase services from the private sector.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I am happy to clarify that. The independent hospital now has a relationship with CHAI for the purposes of inspection and registration. I am also trying to explain that CHAI will be inspecting foundation trusts. However, another important proximate relationship to foundations trusts, as pertains to their authorisation and finances, is with the independent regulator; it has been discussed at length, and I am surprised that the hon. Gentleman is still confused. There is no confusion between the relationship that the regulator has with the independent hospital trust and that with foundation trusts or other NHS bodies. CHAI is the organisation that we have charged with the job of inspecting the NHS, and the Bill allows us the chance to include another group of institutions within that arrangement.

Mr Chris Grayling (Epsom & Ewell, Conservative)

The Under-Secretary will be aware that the original explanatory notes said that CHAI had separate functions because it is to review them against the terms of its authorisation in relation to foundation trusts. If CHAI is assessing the range and quality of services provided by a hospital, and if its conclusions could have a material impact on the authorisation, can he explain the process that CHAI would go through with the regulator to change that authorisation?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

No, I cannot. Under the Bill, CHAI, as an independent body, and the regulator, being independent of Government, have a duty to work together and co-ordinate. The independent regulator will take an interest in what CHAI has to say about specific hospitals. That must be plain. However, it cannot be for me to prescribe here the nature, definition and detail of that arrangement. The relationship is clearly important as regards the terms of authorisation.

Mr Chris Grayling (Epsom & Ewell, Conservative)

Let us suppose that a CHAI review says that a hospital's maternity department is no longer viable and should close—a perfectly reasonable scenario, given the pressures and changes in the maternity arena. Let us suppose also that the regulator's authorisation says that that hospital must provide maternity services. What process does the Minister envisage for a resolution of those conflicting aspirations?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

There will not be conflicting aspirations. I think that the hon. Gentleman misunderstands the terms of authorisation. The independent regulator will use information from CHAI reviews and inspections in deciding how it might take action if the terms of authorisation are being failed. That is where it becomes important in relation to the amendments.

Mr Chris Grayling (Epsom & Ewell, Conservative)

The explanatory notes to the Bill state:

''CHAI has separate functions in relation to these bodies because it is to review them against the terms of their authorisation''.

That is exactly what the Minister has just said. However, the changes to the Bill mean that CHAI will no longer assess foundation hospitals against the terms of their authorisation, so how can that happen?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

CHAI was never intended to assess the terms of authorisation. That was always in the domain of the independent regulator. But clearly CHAI is aware of the terms of authorisation. That is why it has a relationship with the independent regulator.

Mr Chris Grayling (Epsom & Ewell, Conservative)

On a point of order, Mr. Atkinson. I wonder, if the Minister does not have a spare copy of the notes to hand, whether the Badge Messengers can give him a copy so that he can take a look at the text that appears on page 21, of which he appears to be unaware.

Mr Peter Atkinson (Hexham, Conservative)

That is a debating point, not a point of order.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I see no dichotomy or difference. The hon. Gentleman may be deliberately getting into semantics. I have explained the position clearly and I think that he knows the position. It is clearly not for CHAI to decide whether a maternity unit is an NHS trust or an NHS foundation trust, and how that pertains to it being open or whatever. He knows that that is the case. Changes such as the closure of a maternity ward would have to undergo the usual processes of consultation, oversight, scrutiny and so on. I know, because I have discussed this with the hon. Gentleman before, the arrangements for merger, closure or change in the nature of NHS functions relating to, for instance, a maternity unit.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

The statement is not just on page 21 of the explanatory notes. The hon. Member for Epsom and Ewell will be aware that page 23 also states that, under clause 47,

''CHAI may carry out reviews . . . on the extent to which an NHS foundation trust complies with the terms of its authorisation''.

That is restated there. Is it not a change of policy by the Government, which they have denied in their note and in words this morning, to have only the regulator dealing with authorisation and the terms of and compliance with authorisation? I am not saying that that is necessarily a bad thing, but the Minister should concede that it is a change of policy, because it may well be welcomed on the Opposition Benches.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I want to clarify that that is not a change of policy; that was never the intention. We do not expect CHAI routinely to inspect or review NHS foundation trusts against requirements in the terms of authorisation that CHAI would not normally address in inspection or review of other health care bodies.

Mr Simon Burns (West Chelmsford, Conservative)

I am getting rather confused by the Minister's responses. Will he explain the statement in paragraph 158 on page 23 of the explanatory notes?

It reads:

''Clause 47 provides that the CHAI may carry out reviews and publish reports on the extent to which an NHS foundation trust complies with the terms of its authorisation''.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

That is what I just said.

Mr Simon Burns (West Chelmsford, Conservative)

Yes, I am trying to get a reply.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

As I said, we expect CHAI to have a key relationship with the independent regulator, and there is a duty to co-ordinate. The reference to

''the extent to which an NHS foundation trust complies with the terms of its authorisation''

is not incompatible with the fact that the terms of the authorisation rest firmly with the independent regulator. There is a relationship, and CHAI will clearly be aware of those terms. I want to help the Committee, however, and to make it clear that that is not a change in policy—it is simply a matter of the way in which things are expressed in the explanatory notes.

Mr Chris Grayling (Epsom & Ewell, Conservative)

Will the Under-Secretary explain the difference between the original background notes and the new notes? The original notes say:

''CHAI has separate functions in relation to these bodies because it is to review them against the terms of their authorisation''.

Today's notes say:

''Nor would we expect CHAI to routinely inspect or review an NHS Foundation Trust against requirements in its terms of authorisation''.

They are clearly different, and the simple question is why.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

Let me answer that very simply—they are explanatory notes. What we are really concerned with is the Bill. The hon. Gentleman knows that we could spend a lot of time talking about the semantics of explanatory notes.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Let us get off the explanatory notes for a minute and examine what is going on. Perhaps I can help the Under-Secretary. Clause 47, which has gone, gave CHAI the power to undertake reviews of foundation trusts in relation to their terms of authorisation, in pursuance of the regulator's power in clause 23 to consider whether a trust is failing in any respect. Does amendment No. 298 not recreate exactly that power? It states:

''CHAI must also make a report to the regulator where it''—

that is CHAI in this case, so things are not being done at the regulator's behest—

''is of the view that . . . there are significant failings in relation to the provision of health care by or for an NHS foundation trust''.

On its own initiative, therefore, CHAI will look into the activities of foundation trusts.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

CHAI's functions—

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I am trying to be helpful.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I am grateful if the hon. Gentleman is, indeed, trying to be helpful. As I have said, CHAI's functions relate to health care inspection and review, not to the wider issues there may be in the terms of authorisation. The hon. Member for Epsom and Ewell gave the example of the closure of maternity services, and I told him that that would be a subject for overview, scrutiny and consultation. CHCs would look into it under the present arrangements, while patient forums would do so under the new arrangements. Of course, a whole range of issues will be important as regards a foundation trust's terms of

authorisation, and one would expect CHAI to have a relationship.

Let us not, however, stray from the purpose of the amendments, which is to clarify and simplify the position. It is interesting that hon. Members have largely referred to explanatory notes that they had in the past—at least, the hon. Member for Epsom and Ewell did so. I am seeking to make progress and to indicate the direction of travel.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

As it happens, I agree with the shift of emphasis in the amendments and with the direction of travel—it is correct to treat hospitals in the same way. To move off the point, however, the Under-Secretary must accept that there has been a change of policy and/or that the information in the explanatory notes was wrong and misleading. It is important that he does that from his seat, because if this is challenged, what he says from that seat can be taken into account in the absence of any other clear direction under the Pepper v. Hart ruling. I invite him to say that the Government have changed the policy and that they were wrong in relation to current policy. We would welcome that change, and move on.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

As I said, I do not want to be misunderstood. The purpose of the amendments is to clarify the situation. As I said this morning, the terms of reference in clause 46 were too wide and we are seeking to clarify them. The independent regulator must be responsible for the terms of authorisation.

I now want to move on. It remains the case that CHAI and the independent regulator have distinct roles. CHAI is responsible for reviews and investigations of NHS care, including that provided by NHS foundation trusts. The independent regulator is responsible for granting authorisation to applicants for NHS foundation trust status and for setting the terms of the authorisation under which they will operate. The regulator is also responsible for monitoring NHS foundation trusts' compliance with their operating conditions, with powers to intervene where necessary to bring an NHS foundation trust that is failing to meet its obligations back into line. CHAI and the independent regulator will need to work closely together without duplication or over-regulation, which is why the Bill places a duty of co-operation on them.

There is one area in which we have made a change, which I hope hon. Members will welcome. We are making it clear that CHAI's general duty of improvement in clause 49 applies to NHS foundation trusts. The amendments make the relationship between CHAI and NHS foundation trusts clearer. I went through the amendments this morning, but shall continue where I left off.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

The Under-Secretary did not get very far through them at speed without the explanatory notes. It may be helpful if he starts again on that section, because it was brief; he may repeat part of the notes that he has now given. That would enable us to make interventions on the relevant parts, which would help the debate. Some questions that are relatively

minor are best asked on intervention rather than in speeches.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

As I said, amendment No. 283 applies to the provisions of clause 49. The explanatory note would say that. Amendment No. 173 applies to the provision of clause 50. Amendments Nos. 287 and 289 apply to the provisions of clause 51. Amendments Nos. 290, 291 and 294 apply to the provisions of clause 52. Amendments Nos. 30, 295 and 297 apply to the provisions of clause 53. Amendments Nos. 306 and 307 apply to the provisions of clause 66. These are a series of technical amendments that establish in a clear section in the Bill the relationship between CHAI and foundation trusts.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

This is a useful point at which to intervene to ask a general question. In our discussions this morning, the Under-Secretary was asked why clause 49(2) apparently applied only to sections 50 to 54 on exercising the function of encouraging improvement and being concerned with a list of things. To help the Committee, he said that he would clarify what CHAI should have regard to.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I shall make it clear to the hon. Gentleman; I have served on several Committees with him and know that he takes these things very seriously. As I said, this is a series of technical amendments, and I have provided an explanatory note for them. I shall take advice if he raises technical issues of that nature, and I may be able to answer him during the course of the debate. However, I shall have to write to the Committee if hon. Members choose to unpick in detail some of those issues. I am seeking to assist the Committee.

Mr Simon Burns (West Chelmsford, Conservative)

Can I assist the Under-Secretary? I understand what he says, but I would be surprised if he did not know that the whole point of the Committee is to examine the legislation line by line. The point made this morning by my right hon. Friend the Member for North-West Hampshire (Sir George Young)—referred to just now by the hon. Member for Oxford, West and Abingdon—is not a technical issue in the narrow terms that the Under-Secretary uses. It is an important part of our study of the Bill.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

We have now been sitting for a number of hours, so I am aware of the Committee's purpose; or have the last 12 hours been a dream? [Hon. Members: ''A nightmare.''] Or a nightmare. I shall go far as I can, but I think that we all accept that it is important for me to give our reasons for making these technical amendments and to provide the context.

Ms Patsy Calton (Cheadle, Liberal Democrat)

I think this is a technical point, and I would be happy to accept a written note. When clauses 43, 45 and 45 are moved one at a time to line 14, page 20, the provisions will be in reverse order. Will the Under-Secretary reassure the Committee that that will have no effect on the meaning of those provisions; or is it the intention that they should remain in the same order as now?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I wish to clarify the position with regard to the duty of quality. Am I right about what the hon. Lady wants to know?

Ms Patsy Calton (Cheadle, Liberal Democrat)

I am simply asking a technical question. All that I want to know—it will be helpful to the Committee—is whether, when clauses 43, 44 and 45 are moved one at a time to the same point, they will be in reverse order? If they are reversed, I wonder whether the headings will move with them. On page 15, above clause 45, the following words appear in italics:

''Functions relating to NHS foundation trusts''.

The amendments do not mention that title. Does it move with clause 45, or is left behind, hanging in the air? It would be helpful to know where those various headings will be found, so that we shall know in what order to read it.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I am advised that the simple answer is no.

Mr Simon Burns (West Chelmsford, Conservative)

What does that mean?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

It means that they do not.

Ms Patsy Calton (Cheadle, Liberal Democrat)

It would be helpful to know to what the ''no'' referred.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I hoped that I had dealt with that. I explained this morning what the amendments are about; I did it again this afternoon. I accept that there are a large number of amendments, and that they are technical. They are attempting to make clearer the relationship between CHAI, the independent regulator and foundation trusts. The amendments are proposed for those reasons.

Mr Chris Grayling (Epsom & Ewell, Conservative)

Well, this has been an enlightening experience; I say that without much conviction. Actually, the picture painted by the Under-Secretary is confused and chaotic.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

I am sorry to interrupt the hon. Gentleman, but I thought that the Under-Secretary was running through an on-the-record explanation of the amendments. I was following the explanation carefully because, as I had asked him to do, he was discussing amendments Nos. 306 and 307, which cover the first bullet point. However, he did not discuss amendments Nos. 279, 280, 281, 277, 276, 282, 274, 275, 278, 300, 303 and 452. It is probably too late, but the hon. Gentleman might consider whether that is satisfactory.

Mr Chris Grayling (Epsom & Ewell, Conservative)

Perhaps the hon. Gentleman hopes that I will sit down and that the Under-Secretary will restart his speech. I must say that I was confused by the Under-Secretary's speech and cannot face another half an hour of it.

I feel plenty of personal good will towards the Under-Secretary, but he is not taking full advantage of the substantial briefing resources in his Department. Opposition Members have long since lost his thread and have been confused by his mixed bag of explanations on a relatively simple set of amendments; a couple of simple answers to the question ''Why?'' would have sufficed.

The answers to a couple of simple questions are unclear. First, what is the reason for the change? I quoted two documents to the Under-Secretary; the background notes, which state that CHAI will review foundation trusts against the terms of the authorisation, and the new notes, which state that

CHAI will not do so. The Government's policy decision slightly to modify their direction throws up some questions to which a simple explanation of what prompted them to change what they said at the start of the Bill would have sufficed. The reason for the change is still unclear.

The change throws up another question; how will CHAI's reviews reflect the terms of foundation trusts' authorisation? May I take the Committee back to our discussion of clause 14? Clause 14(6) and (7) contain a wide-ranging collection of requirements on the authorisation of the trust. They cover what the trust basically does—

''the need for the provision of goods or services in the area in question''—

the relationship with other health bodies and the provision of other goods and services.

The authorisation sets out the range of clinical and related services provided by the trust. That is its business plan, which is in its contract with the regulator. The contract covers the things that the trust is required to do both by statute and under the terms of the authorisation given to it by regulator. How will CHAI's reviews reflect the terms of the authorisation? It is not necessarily illogical for the NHS to tell the trust to do those things, but the Under-Secretary should explain why the authorisation will not be one of the reference points used by CHAI in assessing the trust's performance. I happen to believe that that may be for a good reason, to which I shall return in a moment, but I am disappointed that he was unable to give us an explanation.

How will CHAI work with the regulator to ensure that its review reflects the demands set out in the authorisation? I shall give the Under-Secretary an example; when I gave him the example of maternity services, I was not sure whether he fully grasped it. Clause 14 allows the regulator to mandate a foundation trust to carry out research for the national health service, and to provide support for education and training. Let us suppose that CHAI comes in, inspects the hospital and believes that, in some way, the research does not meet clinical standards and requirements. If it is not happy about the way in which the research is working in the hospital, it may recommend a change that means that the regulator's research requirements must be modified. How would that happen? What process would take place? How would CHAI go to the regulators and say, ''You know you have asked these guys to do this. We don't think it's working any more. We think you should change the authorisation so that they don't have to do it any more or do it differently.'' How would that work?

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

I am not sure that CHAI has a responsibility to look at the quality of research, because research ethics committees tend to do that. Unless I am wrong, I do not believe that that comes into the provision of healthcare. There are good reasons why there should be complete separation in respect of such duties. I do not disagree with the thrust

of the hon. Gentleman's argument, but I am not sure that that is the best example.

Mr Chris Grayling (Epsom & Ewell, Conservative)

That may be a fair point, but the examples that I am thinking of, which would be covered by this part of clause 14 in relation to research, would be affected by my comments—for example, work carried out in hospital laboratories, in relation to where one draws the line and what is academic research and clinical research. Let us suppose that CHAI recommends a change to the configuration of a hospital's laboratories in a way that makes it more difficult to meet the exact terms of its authorisation. What would happen then? What is the process whereby CHAI says to the regulator, ''We think that needs to change. Can you please rewrite the authorisation?''

I referred to maternity services, which are a good example of the tensions between geography and clinical excellence that exist in the NHS today. The royal colleges believe that there should be a minimum level of births in a maternity unit each year if it is to have full training accreditation. If my memory serves me correctly, the figure is 2,500 births per year. A number of maternity units in district general hospitals are struggling at present because they have 1,800, 2,000 or 2,200 births, so, technically speaking, they do not meet the royal colleges' criterion. There is a school of thought in the NHS that such units will either disappear or end up being scaled down to midwife-only units.

That pressure is clearly taking maternity services in the direction of centralisation, with small satellite units that are midwife-led. However, clause 14(6) says that one key part of the authorisation is

''the need for the provision of goods or services in the area in question''.

Therefore, the regulator must consider not only the academic dimension—the royal college or clinical excellence perspective—but whether a service is available in the area, so those tensions will undoubtedly exist. However, in the middle of that, the inspectors will come in and look at the quality of the units. Therefore, clinical activity in maternity services has a number of different pressures on it: the regulator has a view, CHAI may have a view and the royal colleges and others who take an interest in clinical excellence in the health service will have a view.

What is the process that relates CHAI and the inspections that it carries out? I see the hon. Member for Oxford, West and Abingdon sitting with furrowed brow. If the royal colleges make it clear that they do not approve of the size of smaller maternity units and the number of births, and questions arise about future accreditation, those units may not be able to attract good new consulting staff.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

If the Under-Secretary were taking part in this part of the debate, I suspect that he would say that if the royal colleges removed the junior doctors and it was impossible to staff the unit with sufficient doctors, the only safe practice would be a midwife-led service. That should not cause a problem for the regulator, given its general duties under clause 3 to have regard to safety and co-operate with CHAI,

because CHAI would step in if the unit tried to continue to run the service when it was not safe. I hope that it would step in. He is right that there are tensions with regard to geography, and I thought that his summary of that was excellent. However, I suspect that the answer would be that there is not really a clash—one must go for safety and quality.

Mr Chris Grayling (Epsom & Ewell, Conservative)

Wherever one decides to go, clinical safety must be paramount. However, one can imagine a situation in which CHAI came to a hospital and examined its maternity unit, which was perhaps struggling without the level of staffing that it might have enjoyed had it been a more substantial unit, and decided that that unit no longer met the standards expected by the health service, although the authorisation of the hospital still required it to provide a maternity service. A dialogue would therefore have to take place between CHAI and the regulator, and that is the point of my third question—how will CHAI work with the regulator to ensure that its review reflects the demands set out in the authorisation, and vice versa? What will be the process for that discussion, and how will those two organisations work together? I seek an explanation from the Under-Secretary. If we remove the authorisation as an element of CHAI's discussions, what will the process be if CHAI needs to discuss with the regulator an issue related to that authorisation?

Moreover, if CHAI is not inspecting foundation trusts in relation to their authorisation, will that mean that two inspections will be needed? Will the regulator have to expand his remit and mount a more proactive inspection of foundation trusts because CHAI is not supplying him with an annual assessment benchmarked against the authorisation that he has given to those trusts?

I would also like to ask the Minister some specific questions about the clauses. Why is clause 45 still needed? In the cases in which clauses have been removed, clauses 46, 47 and 48 are all subsequently replicated in the section headed

''Healthcare provided by and for other NHS bodies.''

However, clauses 43 and 45, which are both headed ''Information and advice''—have survived. Why are both those clauses necessary—could they not be wrapped together into one under the heading ''Information and advice''?

I mentioned the prudential code in an intervention, and I am still not sure that I understand that aspect. A trust management will be judged by CHAI on its financial performance, and on the deficits that it does or does not run up, and those assessments will be reflected in its star ratings. The prudential code, and therefore whether a hospital is high or low geared will be a factor in determining the good governance of the hospital. However, if a hospital manages to run excellent services and maintain low borrowing, it is doing a better job than one that runs similarly excellent services with high borrowing. Why is it therefore the case that a trust chief executive, outside foundation status, who runs a high deficit, will be penalised by the star-rating system, whereas one who runs a low deficit or no deficit will not be? According

to the new explanatory notes, borrowing more without demonstrating performance in relation to that borrowing, compared with borrowing less and not demonstrating performance one way or the other, appears not to be a factor in the star rating. I should be grateful if the Minister could explain that to me.

Finally—this seems a bit of a sideshow now—there are several Opposition amendments in this rather gargantuan group of amendments. Although they have been superseded to a significant extent by the merger, there are several important points that I should like to make about them.

First, I am glad to see that Government amendment No. 30 has leapfrogged our two amendments, and I will return to the rationale behind that in a moment. Our amendment No. 514 would scrap performance ratings for foundation hospitals. The purpose behind that amendment is that, in our view, to continue to tie foundation hospitals to national performance ratings—the star-rating system, which is already discredited—would remove yet another pillar of the independence that foundation hospitals should have. The equation is simple: if hospitals are to be given freedom, they cannot be subjected to the straitjacket of Government targets. How can one say, ''You can be free as long as you do all the things we tell you to do''? That is the reality of Government targets, which set out a specific programme of activities for hospitals, such as reducing waiting times in A and E, reducing waiting lists, delivering treatment in a certain area at a certain time, and so on. Those targets leave local management little freedom to say, ''Actually, we've got a particular problem in our area that isn't part of the target culture.''

People who represent interest groups of patients who are suffering from certain illnesses come in to see me all the time and say, ''Because we don't represent an illness that is a Government target we are a low priority in the health service.'' There are any number of such people. A good example of that is rheumatoid arthritis, which is an illness that affects large numbers of people. The groups that represent rheumatoid arthritis sufferers say that because the illness is not a target area in the NHS they end up short-changed in the attention that they receive.

A foundation trust, with an unduly high incidence of rheumatoid arthritis in its area, might target that group. However, if the trust is straitjacketed by Government targets that require it to do things that it believes are not the critical priorities for its area, the clinical benefits will not be delivered to such groups, which might otherwise feel that a trust management has identified it as being under-served by the current system. We strongly believe that performance ratings are not working across the board through the star-rating system.

Dr Andrew Murrison (Westbury, Conservative)

I am grateful to my hon. Friend. He makes a good case against star ratings, with which I wholly agree. However, what I think is neither here nor there. Has my hon. Friend read the comments by James Strachan, who head the Audit Commission? This very morning he said that

four of those with three stars that are being considered for foundation trust status have weak financial management systems. Is that not hook, line and sinker for the star-rating system and the basis on which foundation hospitals are being chosen?

Mr Chris Grayling (Epsom & Ewell, Conservative)

My hon. Friend is absolutely right. I do not have that report immediately to hand, but we shall discuss performance ratings that may apply to non-foundation trusts in later clauses. In the appendices of that report, my hon. Friend can find a number of case studies of hospitals and their star ratings, two of which stand our clearly. One is criticised for non-delivery of NHS planned targets and under-performance in a number of areas. Another one is praised for achievement, shrewd financial management and good clinical services; and guess what—they both got two stars. That proves to me clearly that there is something amiss with the current system. Eventually the Government will have to take on board the priority of looking at the current system and asking, ''How can we make it better?'' That should probably be sooner rather than later, for the Government's sake, because it is by now clear that the star system is discredited and not working.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

I am delighted to hear the hon. Gentleman say what he has just said. I agree with him entirely that the star-rating system is nonsense—it is a scapegoating system because there must always be someone at the bottom of any league table and the Government can then blame the failures in the health service. However, there is a problem with the hon. Gentleman's argument, given that he wishes all trusts to be foundation trusts, which implies even less selection. Would the hon. Gentleman propose the sieving of trusts before trusts with weak financial systems get a status that gives them greater, although perhaps not enough, financial freedom?

Mr Chris Grayling (Epsom & Ewell, Conservative)

One of the perversities for which the Government are responsible is saying, ''Foundation status can make a real difference to clinical care, so we'll only give it to those hospitals that are doing fine at the moment. If you're not doing fine, you can't have that.'' However, given both that foundation status is a vehicle to improve clinical care and that local management freedoms can make a difference to patients, those hospitals that are not performing that well at the moment will surely benefit from the greater freedoms that foundation status offers.

Mr Peter Atkinson (Hexham, Conservative)

Order. We seem to be in danger of repeating the debates that we had on earlier parts of the Bill. We should be talking only about the relationship between the hospitals and CHAI.

Mr Chris Grayling (Epsom & Ewell, Conservative)

I am grateful to you for bringing us back on to the straight and narrow, Mr. Atkinson.

I shall turn my attention to amendments Nos. 516 and 517, which would remove the Secretary of State as a reference point for CHAI and its work. Once again, they are designed to depoliticise the process. Clause 46(2) says:

''The CHAI is to exercise its function under this section by reference to . . . criteria from time to time devised by it''—

that bit is fine—

''and approved by the Secretary of State.''

That means that the Secretary of State has the right to intervene and overrule the independent inspectorate in assessing the criteria against which it believes that NHS hospitals should be judged. We believe that that is a mistake and that provision should be removed.

The Secretary of State has far too many powers, and we would like to remove some. As we have made clear, the politicisation of the health service is one reason why so much of its money is wasted—Members will see that the front page of today's edition of The Sun talks about NHS billions being wasted. Too much of the taxpayer's hard-earned money is being wasted on unnecessary bureaucracy by a Department of Health that has gone red tape crazy. The amendments would be one small step in taking the Secretary of State out of the loop and reducing bureaucracy.

Amendment No. 512 would delete the words ''if regulations so provide'' from clause 47(6), and it will be interesting to see how the Under-Secretary responds to this probing amendment. Clause 47(6) says:

''An NHS foundation trust must, if regulations so provide, publish a statement as to the action it proposes to take as a result of any review or investigation conducted under this section in relation to it.''

It is entirely reasonable for an NHS foundation to have to publish a statement in such circumstances. If it has been hauled up for bad performance, it should make public what it will do about that. Will the Under-Secretary explain why we need regulations to make that possible? It would be easy to delete the words in question and ensure that a statement is published as a matter of course.

Neither those nor the Government amendments are complicated. I hope that the Under-Secretary will provide a greater degree of clarity about the issues that I have raised.

Mr Stephen Pound (Ealing North, Labour)

Amid the smoke and swirl of battle, it may have escaped the Committee's notice that two modest amendments stand in my name in this great phalanx that we are considering. Before I speak to them, I should like to say how much it depresses me, as a democrat and lover of parliamentary traditions, that we have sunk to the level where the front page of The Sun is prayed in aid as the intellectual wellspring of Her Majesty's Opposition.

Amendment No. 480 may have been superseded by the Minister's earlier comments, and I respect a Government who have the intellectual strength and moral courage to recalibrate their legislation at this stage. After all, this is the place to do that. If amendment No. 481 has not been superseded, it has been taken out and shot by a Government amendment, to which I will refer in a moment.

I will refer to old-style dates on this occasion, bearing in mind that some of them have changed. Amendment No. 480 would simply add a new subsection (9) to the end of clause 47 to provide that:

''In exercising its functions under this section in relation to any health care the CHAI must take into account the standards set out in

statements published under section 41.''

The reason behind that is apparent to most, except those who read The Sun. In clauses 52 and 53, CHAI—Chay, Ch-hai or however one pronounces it—I think that those members of the Committee who were educated at Eton and experienced Greek would call it Kay—

Mr Chris Grayling (Epsom & Ewell, Conservative)

It might be helpful if the Minister could finally confirm what these acronyms mean. We have about 14 different versions of each one so far.

Mr Stephen Pound (Ealing North, Labour)

I think that we all know what this one stands for. We are here today to talk about what it does. I think that it should be called ''Che'', out of respect for the former distinguished doctor and revolutionary.

Under clauses 52 and 53, CHAI is required to take into account national standards when assessing the health care provided by all NHS bodies, excluding foundation trusts. I appreciate that we have been slightly overtaken here. Under clause 46(2), CHAI must take account of those standards when undertaking annual reviews of NHS foundation trusts. In my humble opinion it would be appropriate for all other reviews and investigations of foundation trusts to include a reference to the same national standards. This modest and humble amendment would simply impose a level playing field for assessing the performance of foundation trusts and NHS bodies.

Amendment No. 481 has been superseded by Government amendment No. 283. It would leave out the phrase ''other than'' and insert ''including'' in clause 49(1). The Government amendment would leave out the phrase

''other than NHS foundation trusts''.

I could explain the reasons for this to the Committee but, judging by the look of agony that has just passed across the normally rather distinguished features of the hon. Member for West Chelmsford (Mr. Burns), it would be superfluous. I simply say that I greatly respect the Government's actions in tabling amendment No. 281. It makes my amendment, if not me personally, wholly redundant.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

I shall first address amendment No. 397. It inserts ''45 and'' after ''sections'' in line clause 49(2). This comes back to the point that was first made by the right hon. Member for North-West Hampshire. He asked why the list of issues with which CHAI should be concerned in exercising its functions under clauses 50 to 54, which would also include subsection (1) if Government amendment No. 284 were accepted and clause 45 if this amendment were accepted, does not apply to other clauses in the Bill. That is a reasonable question. I must have thought that some time ago because I tabled an amendment to add an extra clause to that provision.

The Minister has had several hours' notice that that question needs to be answered. When the Minister did not respond to the right hon. Gentleman's point, I asked whether he could have an answer ready for this afternoon. I hope that by the end of my contribution

he will have an answer to my amendment No. 397 and the more general question raised by the right hon. Gentleman about why the provision does not apply to other clauses, most notably to clause 43. That is not included in my amendment for reasons that are not clear at the moment, but it could easily be included.

I should be grateful for an assurance that that point will be addressed. If it is not people will wonder why, when CHAI is keeping the regulator informed about the provision of health care by and for NHS foundation trusts and giving any other advice to the regulator on any matter connected with the provision of health care by or for an NHS foundation trust, the criteria that CHAI should be concerned with should not apply. The same should apply to clause 43, although there is no amendment to that effect. That relates to the general function of giving information and advice to the appropriate authority. I think that that is rather curious.

We have had an interesting, one-way debate about the authorisations and why they are not covered by the Government's new policy. The Government are right to have changed tack. It was never sensible if the establishment of quality was to be an overriding function regardless of whether such trusts are considered to be fully part of the NHS—I accept that they are, although some people fear that they are not—for there to be any difference other than unavoidable ones because of the interposition of the regulator, or different treatment in terms of annual reviews or anything else.

That point has been made from these Benches on preliminary debates on the matter, and I was pleased that the Government accepted the point made by myself and others on the Labour Benches. The fact that the Government ended up adding their signature to our amendment No. 173—proposed for different reasons than the Conservatives' amendment No. 30—suggests that there was a change in position.

A couple of problems have been raised that have not been addressed by the Under-Secretary. This is the third area that I would like him to clarify. In earlier interventions I invited him to admit that the explanatory notes are now wrong: there is no role for CHAI directly to inspect the terms of authorisation because of the Government's amendments. The third question is why there should be a provision whereby CHAI reports to the regulator on issues of quality.

If CHAI carries out an inspection of a foundation trust and finds a big problem, the same approach should be taken to alert simultaneously the public and those in authority as would be taken for an NHS body that is not a foundation trust. The fact that there is a regulator dealing with issues of authorisation, which is understandable if one accepts the Government's model, does not mean that it should be involved in responding to serious failures of the trust.

The regulator may have to pass the matter up to the Secretary of State for urgent action to be taken. One can imagine the circumstances, but I do not think that that extra step needs to be taken. I would be grateful if

the Under-Secretary could justify whether it is necessary to legislate for issues of quality, not authorisation or variations of authorisation, and if he could say whether he accepts that there may be drawbacks regarding the delay.

The other issue that I want to raise with Ministers relates to Government amendment No. 298, which is on page 1717 of the amendment book and amends clause 54. New subsection 5A requires CHAI to report to the regulator. I have already made the point that CHAI could make that report to the Secretary of State and the Health Select Committee. Also in respect of that amendment, CHAI is making a report to the regulator where it is of the view that

''there are significant failings in relation to the provision of health care by or for''—

those are the words I am concerned about—''an NHS foundation trust.''

If a non-NHS foundation trust or private hospital provides services to an NHS foundation trust, and it is inspected regarding the quality of its care by CHAI—as it should be—and if that care is being provided for NHS patients in that trust, CHAI must report to the regulator. The regulator would suddenly have to consider another hospital on which it had not done any authorisation work and had not reviewed the authorisation. The regulator would be faced with the responsibility of receiving a report on what might be serious issues of quality for a hospital for which he was not intended to have responsibility under the proposed legislation. In making the point, I recognise that it was alluded to by the hon. Member for South Cambridgeshire (Mr. Lansley), who also raised matters around independent hospitals in relation to the Care Standards Act 2000.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I will explain what I was talking about shortly, but it was not that.

It is difficult to see how an NHS foundation trust could purchase capacity from a private independent hospital and not be under the terms of its authorisation—as we have discovered, as a statutory corporation, a foundation trust could only act under the terms of its authorisation.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

I am not arguing that in buying, purchasing or commissioning a service from a private hospital, or anyone else, a trust would not be acting under the terms of its authorisation. I am going one step further—the record will show that I am clear on this. There may be problems with the quality of the service for an NHS trust that is not a foundation trust, or an independent hospital, during a CHAI inspection. Let us say that those problems related only to that service. CHAI should make that report not to the regulator—a third party with no relationship to the independent hospital or non-foundation trust—but to those to whom it would make the report if it were not an NHS foundation trust. I accept that that is a technical point, but it is important. I am probing the Government, who may wish to consider the matter carefully, given that the amendment is relatively new. Perhaps they could consider whether there is a better way of proceeding.

There are other amendments in the group to which the Under-Secretary did not refer; he sat down prematurely. We support most of the amendments, but I have some further questions for the hon. Gentleman. I suppose that I must press on and ask him those questions, even if he is engaging in another conversation.

My questions relate to amendment No. 282. The notes that we received today say that it is another technical drafting amendment that seeks to make it clear that CHAI's function of encouraging improvement in the provision of heath care is intended to be a general one. It does that by adding the word ''general'' to the phrase ''function of encouraging improvement'' in clause 49. Perhaps the Under-Secretary will explain why that is necessary. What is the significance of the distinction between a function and a general function, and what are the implications of that? If the hon. Gentleman feels that it is worth amending the Bill, we ought to know why.

My next question is on the next bullet point in the briefing on amendments Nos. 274, 275 and 278, which reorganise the order of clauses. I should like to echo the question asked by my hon. Friend the Member for Cheadle (Mrs. Calton): if the amendments are agreed in order, would that reverse the order in which they appear? That may or may not be significant, but all the Under-Secretary has said so far is ''no''. For the answer to be no, there must be a yes or no question. I shall ask him a question that can be answered with a yes or a no; in fact, I shall ask two such questions.

First, these are Government amendments about which we must decide. If the amendments are passed in the order listed in the group, will they insert clause 44 before clause 43 and clause 45 before clause 44? Yes or no? Secondly, if they do that—this is contingent on a ''no''—will that have implications, and are those implications sufficiently important for the Government to look at that small matter again?

I turn to my substantive point. It has been decided that the clauses being moved by amendments Nos. 274, 275 and 278 are ancillary functions. They are being moved from the beginning of this chapter towards the end. That is curious, however, because clauses 43, 44 and 45 were not considered to be ancillary before the Government changed their policy; they were considered to be general functions and deserving of a place at the beginning of the chapter, in contrast to other functions—in clauses 55, 56 and 57—which were considered to be ancillary.

The Government's decision—which may or may not be important—that the functions are ancillary is separate; it is not contingent on the changes that they have made in respect of separate clauses for foundation trusts and non-foundation trusts. In the architecture of the Bill, clauses 43, 44 and 45 contain significant functions that belong at the beginning of the chapter that sets out on what basis information and advice will be given.

Amendment. No. 303 changes the requirement for the Secretary of State to ''obtain the consent of'' the regulator before prescribing CHAI any additional functions under clause 57. The Under-Secretary has

not explained what that change is predicated on, and an explanation is the minimum that the Committee deserves. I hope that we will be offered one; I am sure that it is in the hon. Gentleman's notes.

Amendment No. 452 is described in the explanatory notes as a technical drafting amendment which always—

Mr Stephen Pound (Ealing North, Labour)

Worries me.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

It worries me and, clearly, the hon. Member for Ealing, North (Mr. Pound). We tabled an earlier amendment based on our belief that the Audit Commission should be entitled to appoint the auditors for NHS foundation trusts, and I would be grateful if the Under-Secretary could explain this amendment, relatively slowly if the matter is complex.

I turn to amendment No. 512, to which the hon. Member for Epsom and Ewell spoke. Its purpose—in a clause that is to be deleted—is to provide for regulations not to be necessary for an NHS foundation trust to

''publish a statement as to the action it proposes to take as a result of any review or investigation conducted under this section in relation to it.''

I agree with the hon. Gentleman that there is a question mark as to why regulations should have to provide that. However, the same question still applies to clause 53(7), where the same provision and wording exist. That requires amendment.

Mr Chris Grayling (Epsom & Ewell, Conservative)

We will get that next week.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

As I understand it, no amendment has been tabled that will do that. I may have got that wrong, but I have looked into the matter—although I think that we may have tabled one in the interim.

Mr Chris Grayling (Epsom & Ewell, Conservative)

I take a realistic view of the likelihood of the Chairman allowing us to debate the same issue twice.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

That is a pragmatic approach—although it is perhaps overly pessimistic, particularly given the fact that the clause that the hon. Gentleman is seeking to amend is to be deleted. If the Under-Secretary chooses not to engage with us because the clause is being deleted, the matter can be debated only in our discussions on clause 53.

Mr Chris Grayling (Epsom & Ewell, Conservative)

There is time for another amendment.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

As the hon. Gentleman says, there is time for another amendment, although he may find that it has already been tabled.

I have limited my contribution to asking a series of specific questions, which I think it is within the Under-Secretary's capability to answer. In doing so, I say once again that we welcome the change in policy indicated, on the whole, by these amendments.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I wish to express my appreciation to you, Mr. Atkinson, for suggesting that I make a contribution to explain what I was on about. I may find that easier than trying to compress the explanation into a few seconds in an intervention, which may take some doing while people are looking at bits of the Bill.

I want to put my point in context. I had understood—the Under-Secretary, in what he said to us this afternoon, seemed to be making the same presumption—that the purpose of these Government amendments was to restructure this part of the Bill so that, instead of there being two separate requirements on CHAI to undertake inspection and audit review of hospitals, those could be done alongside one another and be complementary. In theory, and the Under-Secretary will tell me if I am wrong, that was no change of policy. The hon. Member for Oxford, West and Abingdon keeps talking about the supposed policy change that the amendments represent, but as far as I can see that was not intended.

My problem is that, starting with that presumption, and looking at the provision carefully, I think that in three significant respects it is a change of policy and it changes substantially the way that the Bill works. It might be helpful to go through those three areas. The first relates to the discussion that we had earlier about amendment No. 298, which the hon. Member for Oxford, West and Abingdon was talking about.

I refer to the explanatory notes. I shall not rehearse the argument again, but I understood that it was the Government's intention under clauses 47 and 48 that CHAI would undertake reviews, and that would be linked directly to the process by which the regulator might determine that there had been a failure by an NHS foundation trust and seek remedies. In transferring that, in amendment No. 298, into the same power that CHAI has to undertake reviews based on its general power under clause 49, we are introducing a change in the scope of what CHAI can review.

The Government say that that is not a problem, because—the briefing note tells us—we would not routinely expect CHAI to consider additional matters that are not applied to NHS trusts as a whole, such as the prudential borrowing code. However, we can turn that round and ask whether it is possible and whether it was intended that the authorisation from a regulator might impose fewer requirements, obligations and specific activities that have to be checked than those that apply to an NHS trust that is not a foundation trust.

Let us say for the sake of argument that the authorisation that the regulator pursues over time becomes more limited in its specific requirements on a foundation trust than would be the case for another NHS body. That is when the problem arises, because the new architecture means that CHAI can look at whatever it wants to look at, if the matter is one of the concerns in clause 49(1) and (2), which are to do with quality of health care, effectiveness, financial management, economy and efficiency. That may spread beyond the terms of authorisation of an NHS foundation trust but still give rise to recommendations to the regulator on the part of CHAI. That seems to be a change in policy—and one that is inherently undesirable. I thought that we were moving to a position where the regulator, through the authorisation, would limit the extent to which an

NHS foundation trust was under the intrusive scrutiny of NHS bodies, including CHAI.

That is problem No. 1, and I think that there has been a change. The second matter, which even the hon. Member for Oxford, West and Abingdon did not reach—he explored almost every other aspect of the amendments—is amendment No. 300. The Under-Secretary will be familiar with that amendment, which would delete from clause 56 wording that would enable CHAI to undertake comparative studies on the ''economy, efficiency and effectiveness'' of primary care trusts, strategic health authorities and NHS trusts, but not NHS foundation trusts.

If we consider the previous clauses on the functions of CHAI in respect of NHS foundation trusts, there is not a value-for-money audit, as such. We are discussing that type of audit being undertaken by CHAI for NHS foundation trusts. CHAI's purpose is to look at health care and to see whether there are significant failings in NHS foundation trusts. A value-for-money audit is a significantly different beast.

By virtue of amendment No. 300, something different would happen. In my view, CHAI seems, on its own initiative, to be able to undertake efficiency, effectiveness and economic studies, including comparative studies between foundation trusts or between foundation trusts and other NHS bodies to examine value for money. That would be a change of policy. Why were we not told that? The briefing note boldly says it, but it does not tell us that what is being replaced is additional to the powers of CHAI that were in the original Bill. That is another reason why I consider that the Government's approach has been unsatisfactory.

All that was relatively simple. The Official Report may record the smile on my face.

Mr Mike Hall (Weaver Vale, Labour)

It will now.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I come to the hard bit. When I was considering the provisions, I thought that there would not be a problem, but the change in architecture will create a problem. I know that the Under-Secretary disagreed with me earlier, so she might think carefully about what I am about to say. I tried to explain earlier that, under clause 99, CHAI inherits functions of the National Care Standards Commission in relation to independent hospitals and other matters. What is an independent hospital? It is a hospital that is not a health service hospital. The hon. Member for Sutton and Cheam (Mr. Burstow) is with me on this one; I hope that others will be.

What is a health service hospital? Unless I am told otherwise, it is a hospital vested in the Secretary of State as defined under the National Health Service Act 1977. A health service hospital is not the same as an NHS foundation trust that happens to be a hospital. It is possible that there is an NHS foundation trust that is not a health service hospital. Indeed, I suspect that all NHS foundation trusts are not health service hospitals because they are not vested in the Secretary of State, but in their members. There is no new definition of health service hospitals under the Bill.

That means that CHAI has registration responsibilities for independent hospitals—foundation trusts.

The Minister said that the amendment was tabled two weeks ago, but we are operating on a just-in-time principle and I read it only hours ago. It seemed that there was not a problem because, in the structure under the Bill, CHAI's functions are excluded in respect of NHS foundation trusts. Clause 49 and so on were designed to take NHS foundation trusts out of the responsibilities of CHAI in relation to the general improvement in the quality of health care. It would have been arguable, but I assumed that that was what the architecture was intended to do. However, the Government have taken that protection out of the Bill. I do not now see anything that excludes NHS foundation trusts from the usual scrutiny of CHAI, as created under the Bill or previous statutes. Under the Care Standards Act 2000, which is carried forward by the Bill from the NCSC into CHAI, is a registration responsibility.

I am not criticising Ministers for some malign Intention; I am criticising because there has been a mistake. If we consider this group now, we should do so only on the strict understanding that Ministers think hard about the matter, and decide whether the definition of independent hospitals needs to change; otherwise, we shall end up with a route to registration by CHAI because the hospital is independent, alongside authorisation by the independent regulator because the hospital is also an NHS foundation trust. All that could be solved, if the Under-Secretary said that there would be a change to the definition of an independent hospital, so that it is not described as not a health service hospital but is described as neither a health service hospital nor an NHS foundation trust. NHS foundation trusts should be regulated by the independent regulator, not through CHAI.

That leaves me with a final thought that does not relate to technicalities: why are the Government doing this? The Under-Secretary can give me a yes or no answer. The one reason for doing this is because Ministers are losing faith in the independent regulator. The independent regulator is their creation; they wanted to have two routes, and they wanted the independent regulator to scrutinise NHS foundation trusts and for CHAI to be subordinate to that and distinct within the terms of the authorisation. Ministers want to make CHAI's role in this respect the same as for any other NHS trust. I suspect that they also want to make the differences between NHS trusts and NHS foundation trusts become distinctions without differences. The next step would be to say, ''Why bother having the independent regulator at all? Why not route everything back to the Secretary of State?'' I am sure that many of the Ministers' hon. Friends think that that would be an altogether better route because they want to remove the regulator whom they regard as less accountable than a route back to the Secretary of State.

The Under-Secretary can tell me if I am wrong. He can say that the Government have absolutely no intention, now or at any time during the Bill's passage, to abandon the independent regulator as part of the architecture and substitute the Secretary of State as the

person who gives authorisation to NHS foundation trusts. He has the opportunity to tell me now.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I begin by clarifying our position on an issue that came up earlier, but which pertains to the point that was raised by the hon. Member for Oxford, West and Abingdon. I am talking about the application of the duty relating to quality under clauses 43 to 45, about which some confusion arose this morning.

The intention of the Government was that in exercising its functions under clauses 43 to 45, one of the matters with which CHAI should be concerned was the quality of NHS health care. The provisions relating to CSCI—the new social services inspectorate—illustrate how that is intended to work. Clause 72(2) explicitly states that in exercising its functions under specific clauses of the Bill relating to the provision of local authority social services

''the CSCI shall be concerned in particular with''

a number of matters, one of which is quality. The particular issues listed include those relating to information, advice and annual reviews. The Bill is clear therefore that the CSCI shall be concerned with quality in exercising its functions.

The Government's intention for CHAI was the same. Unfortunately, because of a drafting oversight, which I think was raised this morning, the appropriate cross-references do not appear in clause 49. I am grateful to hon. Members for bringing that to our attention. We shall consult with parliamentary counsel with a view to proposing amendments on Report to make it clear that there is a duty in regard to quality and that it should be specified in the Bill.

Dr Evan Harris (Oxford West & Abingdon, Liberal Democrat)

I share whatever glory there is with the right hon. Member for North-West Hampshire, who raised the matter this morning. Is the Under-Secretary saying that it would be his plan, subject to advice, to ensure that clauses 43 to 45, wherever they go, are covered as well as 50 to 54, as set out at the moment?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I am, in so far as it is important that I get the advice from parliamentary counsel to ensure that the duty with regard to quality is patently stated in the Bill. I am grateful to hon. Members for pointing out that there was an oversight in that area.

Amendment No. 514 would remove foundation trusts from the performance rating system. We have heard a lot about that today. Amendment No. 517, which should refer to clause 47 rather than clause 46, is similar in that it would remove CHAI's power to award performance ratings, if it thinks appropriate, from the other reviews and investigation that it carries out. I need to understand why that is proposed, when such a change is not proposed to clause 51, under which performance ratings are carried out. I have made it clear that we intend foundation trusts to be subject to the common inspection regime alongside other NHS bodies. Amendment No. 513 would remove the Secretary of State's role in setting standards. We have already debated at length why the Secretary of State should be involved in setting standards for foundation trusts, and I have nothing to add.

The effect of amendment No. 516 would be to remove CHAI's explicit requirement to consider whether a foundation trust is complying with its terms of authorisation. The Government's amendments also remove that explicit reference.

Amendment No. 512 would require a foundation trust to publish a statement of action in relation to a review or investigation carried out under clause 47 by removing the Secretary of State's power to make regulations to force it to do so. We do not believe that any high-performing organisation would not do that. We therefore seek the power to put it right, should it ever become necessary to do so. I hope that hon. Members will see fit to withdraw amendments Nos. 397, 480, 481, 512, 514, 516 and 517.

CHAI will review NHS foundation trusts and other NHS bodies against standards criteria devised by the Secretary of State. The regulator does not inspect; it will draw its important conclusions from information from the CHAI reviews. There is a duty, which has not been mentioned, to co-operate to ensure that that happens. The relationship between CHAI and the regulator is simple. The hon. Member for Epsom and Ewell asks how that will work and what the definition of it is. As I have said, we do not want to put that in the Bill. CHAI and the regulator will talk to each other and arrange it, which must be right. CHAI, as an inspector, reports to the regulator on issues of health care quality and gives advice and recommendations to the regulator, and the regulator makes decisions. The position is the same as with the Secretary of State, who makes the final decisions as regards NHS trusts.

Mr Chris Grayling (Epsom & Ewell, Conservative)

I am grateful for that clarification. However, I am slightly disappointed, because I suspected—obviously, I was wrong to do so—that one reason for taking that approach and removing the link between CHAI and the authorisation was to provide greater freedom for foundation trusts from some of the criteria that the Government use to measure performance. That is not the case. The Under-Secretary envisages an informal vetting against authorisation, rather than a formal vetting against authorisation.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I was at pains to explain, if I remember correctly, that clause 46 as previously configured was too wide. That is why we are engaged in a tidying-up exercise.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

This issue relates to the first of the three points that I was raising. If the Under-Secretary cares to look at the existing clause 47(1), he will see that it sets out what was originally intended to be the boundary of CHAI's reviews of NHS foundation trusts. Can he say that that remains the boundary, or can CHAI go beyond the terms of the authorisations, requirements under enactments, or arrangements with other NHS bodies to comment on NHS foundation trusts in other respects?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

The terms are clear. I am not clear on what the hon. Gentleman means by ''in other respects''. As I have said, there is clearly a key

relationship with CHAI as regards performance and the authorisation. The delivery mechanism is through the independent regulator, so when the hon. Gentleman says ''in other respects''—

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Let me give the Under-Secretary an example. This may be quite difficult, because they are hypothetical examples, but let us say that CHAI, in its examination of an NHS foundation trust and other trusts in an area, came to a conclusion about access to health care. It could make recommendations about access to health care that would impact on an NHS foundation trust, but which might reflect on health care issues beyond the terms of that NHS foundation trust's authorisation. For example, its authorisation might have specific requirements laid down, as we have seen under clause 14, about the extent to which it has to provide access to health care. Can CHAI go beyond the terms of the authorisation?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

Part of what I said previously about quality pertains to this issue. CHAI can look generally at quality, not just at the terms of authorisation, but it has always been the case that the regulator can ask CHAI to consider specific issues; the regulator, in that sense, is the key body, if that is helpful.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

The Under-Secretary has been generous in giving way, but this is an important point. The point that he is making—that the regulator can seek inspection and review of foundation trusts—is by definition limited to the terms of the authorisation. It cannot really be possible to go beyond that. My point is that bringing the review of foundation trusts under CHAI in connection with clause 49 and so on means that CHAI can go further. CHAI can relate its review of foundation trusts to issues that are beyond the terms of the authorisation. That is what the legislation now seems to say. The Under-Secretary will not tell me whether that is right or wrong.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

Partly because the hon. Gentleman is being too prescriptive. I said that CHAI looked at the duty of quality, under the auspices of the independent regulator.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

No, it does not.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

It does. The duty of quality is within the terms of authorisation that I outlined. CHAI will be concerned with the general duty of quality, and we talked about performance and other issues. I think that I have answered hon. Members' points.

Mr. Lansley rose—

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I shall give way, but I am not sure that I have anything to add.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Let me be absolutely clear. As far as I can see, nothing in the Under-Secretary's proposed changes restricts CHAI's reviews of NHS foundation trusts to the terms of their authorisation; it can go wider. The report goes to the regulator, who may be unable to do anything about it. The scope of CHAI's review is not limited.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

CHAI looks at health care generally, and the regulator can ask it to look at specific issues. I think that meets the points that have been raised.

The main reason for changing the Bill was that people misinterpreted it to mean that CHAI would not review NHS foundation trusts against the same standards as other NHS trusts. That is what we have sought to remedy in the amendments.

Mr Chris Grayling (Epsom & Ewell, Conservative)

This is an important point. The Under-Secretary makes it clear that CHAI will judge foundation hospitals to the same standards as all NHS hospitals. If the standards are to be the same right across the NHS, however, what is the point of having foundation hospitals in the first place? By definition, they are surely meant to be different, and the standards against which they are judged will also have to be slightly different.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

We have a different philosophical position. The Government and the Labour party take the view that foundation trusts are well within the NHS family. I know that many hon. Members referred to a two-tier NHS during a debate on foundation trusts. I am not sure which hon. Member first raised the issue, although it may have been the former Secretary of State for Transport, my right hon. Friend the Member for Tyneside, North (Mr. Byers). However, the response was that we have a multi-tiered NHS. That is why we are seeking to drive up standards across the board. The hon. Gentleman will know that the Secretary of State announced an extra £1 billion for improvements to ensure that trusts got to a place where they could accept foundation status. None the less, they remain within the NHS family of hospitals.

This is not, therefore, about differing standards; we have an inspectorate to co-ordinate standards and to ensure that we drive them forward across the board for everyone who receives care in an NHS hospital and outside the NHS. Foundation trusts are, however, firmly within the NHS family of hospitals.

Mr Chris Grayling (Epsom & Ewell, Conservative)

I accept that NHS foundation trusts are within the NHS family, but a key part of the inspection process must surely be the evaluation of whether the additional freedoms that the managements of NHS foundation trusts will enjoy help them to improve clinical care. That will introduce a new dimension into the inspection process, which will differ from that for non-foundation trusts.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I am not sure that I entirely understand the point. We have already indicated that all NHS trusts will be able to become foundation trusts over time. In a sense, therefore, that is the direction of travel. I hope that that answers the hon. Gentleman's point.

CHAI will review the quality of care in NHS foundation trusts in the same way as any others. The difference is who will then act on quality in foundation trusts. That must include the independent regulator deciding how the review's conclusions will indicate whether the terms of authorisation are being met. I hope that that deals with many of the points that have been raised.

I was asked whether CHAI would have a role in reviewing the quality of research. It could do that as a secondary service to the extent that it offers patient care, and there was some discussion about the role of

the royal colleges and the Postgraduate Medical Education and Training Board, which has a key role in its relationship with the royal colleges on training.

There was also some discussion about performance rating of standards. I have said a lot about the difference between targets and standards, which are equated within the same sentence, but there are differences. Performance ratings provide useful information for patients and the public and it is right that such information is available also for foundation trusts, particularly as that is the direction of travel for NHS secondary care institutions. To omit that would cause great damage.

Mr Chris Grayling (Epsom & Ewell, Conservative)

The Under-Secretary referred to the difference between standards and targets. Surely he understands that the star rating system is founded on targets and that NHS foundation trusts will not enjoy the freedom to take their own approach and to benefit from local autonomy if they are subject to a nationally imposed straitjacket of the star rating system.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

It is about how the targets are delivered, not about the targets per se. That is the difference and the fundamental divide between the hon. Gentleman and I.

NHS foundation trusts will have a statutory duty to provide quality under clause 40 and it is a statutory obligation that the regulator will ensure compliance. That is the relationship that the hon. Member for Oxford, West and Abingdon (Dr. Harris) raised in his comments on Government amendment No. 298. In a sense, there is an overriding duty to provide quality. It is a statutory obligation and the independent regulator will want to ensure compliance as the key inspectorate in relation to foundation trusts. Reports will be made public as well as and going to the regulator and CHAI will simply gather the evidence. The decisions will be made by the regulator, not by the Secretary of State.

Mr Paul Burstow (Sutton & Cheam, Liberal Democrat)

Just to make it absolutely clear, the Under-Secretary is telling us that the regulator will discharge the responsibility of determining whether a foundation trust is failing to comply with its duty of quality. What resources will the regulator have to second-guess CHAI in that respect, given that, under the amendment, it is being given responsibility for assessing and reporting on quality?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I am not sure that the regulator will want to second-guess. He will have a duty of co-operation and I do not foresee a competing relationship.

Mr Paul Burstow (Sutton & Cheam, Liberal Democrat)

It is not so much a competing relationship that I am querying. I am merely querying whether, in the situation described by the Under-Secretary, the regulator will exercise a role that he has not been given the power to exercise. The amendments give that responsibility to CHAI.

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

Much of this will have been discussed under part 1. The matter pertains to the failings of a foundation trust and the relationship that the regulator has in that regard. CHAI reports to the regulator in relation to the failings of NHS trusts. If a foundation trust is failing, the independent regulator's

proximity will, in a sense, be no different from the current role of the Secretary of State, in terms of his measures for NHS bodies. The point is simply to allow whoever is best placed to take appropriate action in the event.

The hon. Member for Oxford, West and Abingdon asked why the word ''general'' is necessary in clause 49, as proposed in amendment No. 282. The change ensures that the function of encouraging improvement in health care is overarching. Other functions are read in that context. Clause 72 uses the same drafting advice.

On amendments Nos. 274, 275 and 278, the Government think that they will stay in the same order, to answer the point that the hon. Gentleman raises. We will consult parliamentary counsel on the implications of the query and undertake to write to him and his colleagues if there is a change to that order once we have received clarification.

On the issue of a change of definition, foundation trusts are health service hospitals by virtue of paragraph 40 of schedule 4. I emphasise that. They are not independent hospitals. It is important to make that point because it pertains to some of the issues raised by the hon. Member for South Cambridgeshire. Given that NHS foundation trusts are within the NHS family, they are under a statutory duty to be economic, efficient and effective in exercising their functions. It is in that regard that the value-for-money relationship that CHAI must rightly have with them is exercised. CHAI will consider value for money in foundation trusts, as it does in its reviews of all trusts. That must be important given that public money funds NHS hospitals. Value for money must be a key factor in a way that it would not be, were the hospitals independent.

Mr Paul Burstow (Sutton & Cheam, Liberal Democrat)

Perhaps the Under-Secretary will take the opportunity to explain to the Committee the thinking that led the Government to include in the explanatory notes an indication that the intention was that foundation trusts would be dealt with by the National Audit Office when it came to value for money. That is set out in relation to clause 56. Now the intention is obviously that such issues will be dealt with by CHAI. What is the change in thinking that has

led the Government to decide that CHAI, rather than the NAO, should deal with the matter?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

That is not a change in thinking. We discussed yesterday how CHAI, the new inspectorate, incorporates the audit office and the old CHI. The progression of that relationship must be a key factor.

Mr Paul Burstow (Sutton & Cheam, Liberal Democrat)

I understand entirely that the functions of the Audit Commission are to be incorporated into CHAI. However, paragraph 167 on page 25 of the explanatory notes states that the National Audit Office will be the body that will have responsibility for carrying out studies on the economy and efficiency of foundation trusts. Clearly, given what the Under-Secretary is saying and the amendments, that is no longer the Government's policy intention. A policy intention was stated, but it has changed. Could the Under-Secretary confirm that?

Mr David Lammy (Parliamentary Secretary, Department of Health; Tottenham, Labour)

I thought that I had done that. I said that we were changing our direction of travel, very much because of what was said yesterday. The simple answer to the hon. Gentleman's question is yes. The debate that we had yesterday about the new beefed-up inspectorate and the services that it will provide pertains to his point.

To the final accusation that Ministers are losing faith in the independent regulator I reply, not at all. CHAI is an independent inspectorate. It should review health care in the same way for all NHS organisations. The regulator remains responsible for setting and monitoring the terms of authorisation and ensuring compliance with them and with statute. CHAI is just one source of advice and information, which includes the overview and scrutiny committees and the views of the Commission for Patient and Public Involvement in Health, commissioners and patients, as well as the NHS foundation trusts. The independent regulator will be able to draw on that breadth of opinion, as the Secretary of State does, in respect of NHS foundation hospitals. We have had a lengthy debate on the amendments.

Amendment agreed to.

Further consideration adjourned.—[Jim Fitzpatrick.]

Adjourned accordingly at seven minutes past Five o'clock till Tuesday 10 June at five minutes to Nine o'clock.