‘(4) The constitution of an NHS foundation trust shall specify significant disposals of property as significant transactions. Significant disposals of property are disposals of property that—
(a) was designated as protected in the foundation trust’s authorisation, or
(b) the council of governors considers necessary for the foundation trust to fulfil its principal purpose.’.
The amendment is an alternative way of approaching the same issue, of protecting what the public will rightly view as a public asset—that is, their hospitals—rather than simply property to be bought and sold and used for private business, if economic actors so decide. This would take a different approach from the Bill’s very weak protection of significant assets and strengthen it.
Clause 152 allows foundation trusts to determine in their constitutions that certain types of transaction are significant. Those will then require a vote of the governors before going ahead. That might allow at least a minimum level of protection for assets, but as it stands leaves the decision to the foundation trusts themselves, much like the provisions on the conflicts of interest in consortia. It lets the regulated not only regulate themselves but write the regulation. There is a clear case to set up some minimum expectations as to what the significant transactions might be. The Minister might want to explain his own view on that, and how the Government intend to communicate to the foundation trusts and Monitor to take up the provision.
The amendment is unnecessary and would not achieve what it intends. Let me try to explain why. The purpose of the amendment appears to be to ensure that the public and staff of a foundation trust are involved in any decision to dispose of important property. As worded, it would not work. The first part refers to property protected in the authorisation. The Bill removes the term authorisation and introduces a system of economic licensing. Clause 144, which we have already debated, removes terms of authorisation and clause 148, also debated, repeals the power to use them to designate property as protected. The key elements behind the amendment would, therefore, no longer exist.
The second part of the amendment refers to property necessary for the foundation trust to fulfil its principal purpose. The property in that context refers not only to land and buildings, but other assets such as equipment and licences held by the trust. Governors would have to be consulted on which property they saw as necessary for the foundation trust to fulfil its purpose. That would mean that they would have to be involved in every decision about property. There is a danger that disposal of any equipment could require governor consideration. Such a heavy-handed statutory requirement is unnecessarily prescriptive and would impact adversely on the governors’ role, potentially even obscuring their responsibilities in other matters. That is why we think it would also have the effect of potentially obstructing day-to-day operations within the foundation trust. Foundation trusts need to be able to decide for themselves what is a significant transaction for that organisation. That will differ between trusts. Some trusts will have assets not used for services, for example. One size does not fit all. Some governors may decide that it is best for their trust to approve the disposal of major items of property. Others may decide that they need to approve smaller property disposals, or disposals of certain pieces of equipment. It will be far better to give foundation trusts the discretion over when governors become involved than to use legislation to put them in a straitjacket. Local discretion and flexibility are more appropriate and effective in such circumstances, particularly because of the changes that we have made to the governance arrangements, which strengthen them and make much clearer the role and responsibilities of governors and directors.
If the amendment is prompted by concerns about continuity of service—I am not certain that that was the main thrust—such concern is misplaced. The regulatory licensing regime would give Monitor powers to prevent the disposal of property essential for the provision of designated services. Clause 90(1)(j) would give Monitor the power to set licence conditions for the disposal
“of assets used in the provision of designated services”.
Furthermore, the taxpayer investment would also be protected. The investment management function, to which I referred earlier and that we intend to create, would be able to set the terms of Government investments in foundation trusts. Among its powers, it would be able to prevent the disposal of property where this would have a material detrimental impact on the value of taxpayers’ investments, as set out in the Bill.
For those reasons, the amendment is unnecessary and would not achieve its objective.
As the Minister says, the assets of foundation trusts will be under a new banking facility, as I think it is described in the explanatory notes, at arm’s length from the Department. We have not had any details about who will run it or who will be on it. Is it really at arm’s length from the Department? It is a vague notion at the moment. Will the Minister provide details about who will be running that facility, and how will it be at arm’s length from the Department? If the Government have not figured that out yet, it is interesting that we are being asked to agree it. Perhaps I have missed the proposals, in which case it would be lovely if the Minister could explain.
There are other clauses that provide the powers for that agency to be established. They are probably the better place to explore those questions. If we do not have time to discuss them, I will make sure that I write to the hon. Lady with the necessary information so that we have given that clarity. With that, I will resist the amendment.