Clause 34
Health Bill [Lords]

Stephen O'Brien (Shadow Minister, Health; Eddisbury, Conservative)

I beg to move amendment 152, in clause 34, page 32, line 38, leave out ‘may’ and insert ‘must’.

Robert Key (Salisbury, Conservative)

With this it will be convenient to discuss clause stand part.

Stephen O'Brien (Shadow Minister, Health; Eddisbury, Conservative)

It is good to be back under your chairmanship, Mr. Key. With amendment 152 and clause 34, we are dealing with the private patient income cap. Under the amendment, the Secretary of State must, rather than may, by regulations make provision. I shall happily withdraw it if the Minister withdraws his intent—signalled by the unselectable amendment 199—to remove the clause altogether, or if he promises to introduce an equivalent replacement on Report.

Let me be clear from the outset: the issue is not fundamentally about private health care or private patients; it is about better functioning of foundation trusts, better care for NHS patients and better value for UK taxpayers. The private patient income cap is iniquitous, limiting foundation trusts arbitrarily to the proportion of private to public income that they received in the base year—2002-03, the year before the first foundation trusts were authorised. For some, that means 30 per cent.; for others, it is 5 per cent. For all mental health trusts, it is 0 per cent. The cap also prevents specialist hospitals such as Great Ormond Street—I would be very surprised if any hon. Member had the guts to say that they thought that hospital should not be allowed to expand and to continue its services—from becoming a foundation trust.

The issue is very relevant to the Committee. Many members of the Committee have foundation trusts in their constituency. In fairness, the hon. Member for Stourbridge made a declaration near the beginning of our proceedings because she has in her area the Dudley Group of Hospitals NHS Foundation Trust, and I think she mentioned that her husband is a governor of that trust, so she has an interest in the issue, as does the hon. Member for Bristol, North-West in respect of the University Hospitals Bristol NHS Foundation Trust, and the Government Whip in respect of the South West Yorkshire Partnership NHS Foundation Trust, which she visited last September. I shall remind her when she comes back into the room. The hon. Member for Romsey has in her area the Salisbury NHS Foundation Trust, to which her constituents are often sent and which just happens to be in your constituency, Mr. Key.

Patrick Hall (Bedford, Labour)

Is the hon. Gentleman saying that if a Member of Parliament has in their area a foundation trust or an NHS trust seeking foundation status, that represents a pecuniary interest that should be declared?

Stephen O'Brien (Shadow Minister, Health; Eddisbury, Conservative)

I certainly am not saying that. When I say “interest”, I mean an interest on behalf of constituents—a political, representational interest—because foundation trusts are now widespread across the country, as is well known. I wanted to make it clear that this is not a theoretical issue. The private patient cap will make a real difference to the ability of foundation trusts to progress and to ensure that they deliver better care for patients. I also wanted to underscore this point. It is so easy, because it is called a “private patient” cap, to think that the issue is about private patients versus the NHS. On the contrary, it is not about private health care; it is about the better functioning of foundation trusts, better care for NHS patients and, above all, better value for UK taxpayers.

The Government Whip has come back into the Room. I was just covering those hon. Members who have foundation trusts in their constituency. The Government Whip, who is the hon. Member for Wakefield, has in her area the South West Yorkshire Partnership NHS Foundation Trust, which I know she visited last September. That, along with the others and, indeed, the Calderdale and Huddersfield NHS Foundation Trust, would potentially be adversely affected if the signal victory secured in the upper House was not maintained.

As I said, the cap is iniquitous, and I gave the example of Great Ormond Street, which will be injuriously denied the chance to grow and sustain itself if the clause that the upper House has handed to us is not maintained. The private patient income cap is ultimately political, rather than practical. On Report, Lord Warner, who was genuinely a Labour Minister and not just a GOAT—a member of the Government of all the talents—said that the cap was “a bit anachronistic” and that it was

“sops to parts of the Labour Party”.

He explicitly repented his “sins” over the issue.

More importantly, the cap’s stated purposes are achieved in other ways, including through Monitor, the terms of authorisation, the mandatory services schedule, contract variations with PCTs, boards of governors on significant decisions, the asset disposal locks and consultation.

Finally, and most importantly, the cap is detrimental to the NHS and patient care. On Report, Lord Warner said that

“it is potentially a source of income for trusts that they can use for the benefit of NHS patients”—[Official Report, House of Lords, 6 May 2009; Vol. 710, c. 656.]

On Third Reading, he said:

“We are moving into a financial climate where the NHS...will need every penny that it can get to meet public expectations”—[Official Report, House of Lords, 12 May 2009; Vol. 710, c. 936.]

As such, the cap also impacts adversely on UK plc, hampering our provision of health care to non-UK residents and our research base, which depends on funding.

As Baroness Thornton said, the Government have accepted

“that the issue needs attention”—[Official Report, House of Lords, 6 May 2009; Vol. 710, c. 659.]

On 12 May, at column 939, she also accepted that it needed “wider debate”. As Baroness Meacher said in the upper House, this is

“the direction that the Government want to go”—[Official Report, House of Lords, 12 May 2009; Vol. 710, c. 940.]

and the proposal would merely be an interim measure while they hold their review.

I am happy to let matters rest on that argument. I have more that I can develop, but it would probably be helpful to hear what the Minister has to say on this incredibly important clause. I fear that unselected amendment 199 signals that we are about to have the kind of debate that I had hoped the Government would not force on us. As I hope that I have made clear, the words “private patient” in the cap’s title seem to have excited people and given the wrong impression about the substance of the argument. The essence of what the upper House has handed down to us—even if it is regarded as an interim measure—is better for patients and better for the NHS, and it is not about supporting private health care over public, accessible health care in the NHS. I hope that members of the Committee will think about the issue in an independent way, rather than feel that they have to be led down a political route.

Sandra Gidley (Romsey, Liberal Democrat)

I support the hon. Member for Eddisbury. In my area, I have another foundation trust, the Hampshire Partnership NHS Foundation Trust, which covers a range of constituencies in southern Hampshire. It is a mental health trust and it has the kinds of problems that he alluded to. I met representatives of the trust on Monday, and they are keen to develop other services. They were keen to impress on me the fact that, as the legislation stands, they are quite shackled and unable to move forward with some of their ideas.

Michael Penning (Shadow Minister, Health; Hemel Hempstead, Conservative)

I also support my hon. Friend the Member for Eddisbury. I praise the comments by the hon. Member for Romsey, on the Liberal Democrat Front Bench, because mental health is a massive issue in this regard.

I was not aware of how much of an issue this was until I came on to the Front Bench and visited hospitals around the country. I was very moved when I visited Great Ormond Street hospital—no one could remain unmoved. If any members of the Committee have not been there, will they please go, not just because of the lovely little babies, but because the work that goes on there is fascinating. When the chair and the chief executive sat in front of me and said, “We could do much more, but we are held back by the fact that we cannot have a foundation trust because of the cap,” I thought, “Perhaps that is just Great Ormond Street.” Then, however, I went to the Royal Marsden, one of the great cancer hospitals in this country, and they said exactly the same—that they could do more, especially in the area of research.

What worries me, as I said a moment ago, is that this is not about private patients. This is about money coming into an NHS facility. I would like to put this on  the record. They say on a regular basis that that research, which is often privately funded, benefits our constituents. That is being held back because of the arbitrary cap. I understand, as the then Minister, Lord Warner, indicated, that the cap was put there so that the original legislation could get through. We do not need it now, however. We know that foundation trusts work. There are great hospitals like Great Ormond Street that would like to and need to become foundation trusts. There are others that need to move forward in the area of cancer research and other research. We have heard this morning about the limitations in treatment of cancer. Surely everybody that is represented on this Committee and in this House wants the very best for the constituents. That is being held back because of this arbitrary cap.

I hope that what the other place put into this Bill stays, so that these excellent facilities within the NHS can go forward and help our constituents.

Mike O'Brien (Minister of State (Health Services), Department of Health; North Warwickshire, Labour)

I agree with the hon. Member for Eddisbury in some respects and disagree with him in others. This is about the place of private health care in the NHS. It is not iniquitous to limit trusts and the amount of private funding they are able to access. The question is how that limit should be put in place and where it should be.

There are significant disagreements, therefore, between the Conservative Front Bench and this Front Bench on this issue. However, that being said, we accept that there is an issue here, and it is right that we should address it. This clause is not some kind of interim or quick-fix solution to the problem. An exemption-based system would not remove the cap’s underlying rule that an NHS foundation trust in private income should be restricted to levels set in 2002-03. Any regulations created using clause 34 would only provide for a simple exemption from the cap. That could not be used to such an extent that the underpinning primary legislation is nullified.

In short, it is the underlying rule itself that we need to look at. Clause 34 does not allow that to happen. Instead, allowing exemptions is likely to introduce a level of uncertainty for the NHS and increase claims of unfairness, as one hospital says, “I’ve got to change, so why doesn’t another hospital?” There will be lots of debates if such exemptions are allowed. It will create a degree of uncertainty in NHS financing. It will not resolve the problems identified by the hon. Member for Hemel Hempstead; it will potentially exacerbate some of those issues because there will be a level of uncertainty about what the rules are and how they should be applied. We need to avoid that.

I do not dispute, however, that the current situation is far from ideal. Rather than trying to create a uniform system of rules for all NHS foundation trusts, clause 34 would maintain a system based on historical activity that appears increasingly arbitrary. Any new system must therefore deliver two things. First, it must remain true to the intention behind the current cap. That is that all NHS providers must not be distracted from their core business providing health care to NHS patients. That is non-negotiable.

Secondly, any new system must be workable. The second point can only be addressed by developing a new system in partnership with those that will implement it in the NHS.

Reforming the rules so that they are clear and work well will not be straightforward. It is clear that opinion as to how the cap should be reformed is divided. There are very strong differences of opinion among those who work in the NHS. A lasting and fairer system for NHS foundation trusts can be achieved only by having a broader and public debate. That is why the Government have a clear commitment to conducting a comprehensive review of the cap, following the outcome of the current judicial review.

The review will enable the Government to develop fully the most appropriate policy solution before we legislate—which we will do at the first opportunity, once a clear approach has been determined—and will involve all those who are affected and who have a direct interest in the policy, namely, NHS foundation trusts, aspirant foundation trusts, the staff, the patients and other stakeholder organisations.

We will consult fully on the proposals and hope to be able to move from looking at that review to implementation. We do not disagree that a change is needed; this is the best way to achieve it. We do not think that it can be done here, certainly by this clause. The clause that we inherited from the other place cannot do it and needs to be removed. The issue needs to be examined thoroughly and fully; that is the appropriate way forward.

Stephen O'Brien (Shadow Minister, Health; Eddisbury, Conservative)

Let me take the Minister back to the point of picking up on the question of a broader and public debate; that is what he felt needs to happen now. I am thinking very much on Baroness Thornton’s words in the other place, when she said,

“I made clear the Government’s desire for a wider debate on the cap”—[Official Report, House of Lords, 6 May 2009; Vol. 710, c. 658.]

She did not say, as the Minister has, that that needs to take place after the current judicial review. Is the Minister indicating, by what he just said about that judicial review, that whatever emerges from it, the Government would not wish to take any implementing action or, indeed, respond to any injunctive relief, to the extent that they could resist that, rather than simply entering into a broader and public debate as a way of postponing the issue, which is clearly urgent? As he has already identified, there is a need to address this serious issue.

Mike O'Brien (Minister of State (Health Services), Department of Health; North Warwickshire, Labour)

The difficulty in trying to address this issue before the judicial review is completed is that anything a Minister says, including this one in this Committee, can be prayed in aid in relation to the judicial review. If we tried to carry out a broad-based consultation while a judicial review was in progress, discussion of the issues would play into an interpretation of the clause that is the subject of current judicial examination.

We need to get that completed—completion is due in the autumn—and we want to then look at its outcome, which may well give us some views from the courts about how this should be looked at and, after a full and thorough examination, which issues are in need of addressing from the courts’ point of view. We will then be in a position to be able to set out our strategy for a proper discussion and review.

We do not dispute that there is an issue that needs to be appropriately determined, but we are certainly not convinced that the approach being taken here by the Opposition is the right one, and we do not accept the amendment agreed in the other place as the better way forward. We need to look at this issue in the round. We need to examine it properly. We need to take a view on how the NHS should proceed with regard to private income, and we need to do so with the freedom to have a full and proper discussion about it, after the judicial review concludes.

Stephen O'Brien (Shadow Minister, Health; Eddisbury, Conservative)

In effect, in the position that he has taken, the Minister has accepted that a problem needs to be addressed, but he does not like the way that it is currently addressed in what the upper House has handed down to us, nor in any other measure at this stage. His position is, rather: let us go back to the existing unsatisfactory position where the amount of the cap is, in effect, arbitrarily set in stone from the amount of private patient income that happened to exist in 2002-03. That has an absolutely venal effect on the mental health partnership trusts, which are causing such a nightmare: the hon. Member for Romsey made that point.

It is interesting that to some degree, the Minister in the upper House also sought to pray that point in aid, as part of the way the Government were seeking to see the point off when the issue was debated there. Of course, the Government were defeated in the upper House when the issue was pressed. It was Baroness Meacher who said:

“I have been given assurances that there are people in the Government who do not have a problem with”

what was being proposed—we know who that was—which was eventually supported. She continued to say:

“When the Government are able to institute a review, we would all hope to be involved in it, contribute to it and support it. Then, if possible, a consensus can be found through a good consultation process...However, that is all for the future. There is no upcoming health Bill”—

we now have one, which has made it possible to insert this clause—

“and the issues are too important to leave for an unspecified opportunity in the future. NHS foundation trusts up and down the country are struggling with this. In my view, having the principle in the Bill will affect how people operate. We have boards of governors”—

the hon. Member for Stourbridge has made it clear that she understands this point—

“and members councils out there that will be watching this and will know that the principle is in the Bill—if we can get it in the Bill. Personally, as somebody who passionately believes in the NHS and NHS patients, I want—and we want—that principle in the Bill. Therefore, I wish to test the opinion of the House.”—[Official Report, House of Lords, 12 May 2009; Vol. 710, c.940-41.]

Sadly, we have not really moved any further. I think it is appropriate, in light of these discussions, to test the opinion of the House. I therefore wish to press the point, recognising that we are also having the clause stand part debate. We have, in the amendment, the opportunity both to be specific and to test the principle. If we are honest to ourselves, if the upper House means anything, it is because it is capable of reviewing and improving legislative proposals that come before us. In  this area, it has done a good job and deserves our support. I therefore urge all members of the Committee to back the amendment.