Clause 113

Health and Social Care Bill – in a Public Bill Committee at 1:00 pm on 24 March 2011.

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Question (this day) again proposed, That the clause, as amended, stand part of the Bill.

Photo of Owen Smith Owen Smith Shadow Minister (Wales)

This morning, I was explaining that the purpose of clause 113 is clearly to introduce insolvency and company law into the NHS, to allow a more efficient entry and exit from the marketplace for NHS providers. I suggested that a legitimate interpretation of that was that it would allow—albeit as the last resort, after all the appropriate interventions had been followed—hospitals to close more efficiently.

I was going to say that the second critical piece of evidence—of information—required to interpret the clause in that manner is in paragraph B114 in the Government’s impact assessment for the Bill. It says that to address the weaknesses in the current system, this insolvency-based regime will be introduced so that

“The taxpayer will be protected from political pressure to rescue providers—public funds will not be used to support unviable providers”.

That is extremely clear. The Government are being very open and transparent about the issue, and it is because they have been so open and transparent and the clause is so clear that we are very worried. That worry has been compounded by the Minister’s remarks to the Committee on Tuesday, because it is clear not only that under the clause and the new regime it will be easier to close hospitals, but that the Minister believes that in the past too many hospitals have been propped up when they were unviable.

The Minister of State, Department of Health (Mr Simon Burns) rose—

Photo of Owen Smith Owen Smith Shadow Minister (Wales)

Before I allow the Minister to intervene, I would like to quote the words from his own mouth on Tuesday. He said:

“In contrast, too often under the current system have inefficient and poor quality providers”—

I presume that we mean hospitals—

“been bailed out wholesale and at too great a cost. We want regulation to protect services for patients, not…the institutions that provide them.”––[Official Report, Health and Social Care Public Bill Committee, 22 March 2011; c. 916.]

If I am wrong and the Minister does not feel that too many institutions in the past have been unviable but propped up, and if I am wrong and the future provisions will not mean that hospitals are able to close, he should please put me right. However, I suggest that I am right  and I ask the Minister to reassure us by telling us which institutions in the past he thinks have been unviable and propped up.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

Absolutely, Mr Hancock. I will not drift on to other subjects. I just want to reassure the hon. Member for Pontypridd because he does not understand, or does not want to understand, that the whole purpose of the Bill and the clause is to protect, not close, essential services. I say to him, in the nicest possible way, that if he persists with that student debating style, he might end up, at 65, still travelling on his student bus pass.

Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South

It would not be in order to discuss that, so stick to where we are on clause stand part and try not to go back over the closures or the unviability of things in the past. The Bill is looking to the future.

Photo of Owen Smith Owen Smith Shadow Minister (Wales)

I am grateful to you, Mr Hancock. Of course I would not dream of going back over the issue. I have made my position clear. I will merely say in response that it does not do the Minister great service to offer such a cheap jibe. I have come to expect better of him.

Opposition Members are worried. I fully accept the position of the Minister and other hon. Members that it is not their intention to close hospitals. I fully accept that it is their view that safeguards are being placed in the system that will militate against the closure of hospitals. All I am suggesting is that closure becomes more possible with competition, because some hospitals and providers will be deemed unviable. Under the clause, the insolvency regime makes it physically easier for such hospitals to be closed and such providers to exit the market.

Paragraph B149 of the impact assessment makes it crystal clear that that is precisely what is under consideration. It simply says:

“In the new regulated market, providers will succeed or fail based on their ability to offer high quality, efficient services. Successful providers will be able to expand as they attract new patients to their services or win new contracts. However, some providers will struggle to attract patients to their services or win contracts. These providers will need to restructure their services and those who are unable to improve the quality and efficiency of their services may fail.”

Therein lies the issue at the heart of this morning’s debates and, in many respects, the issue at the heart of the Bill. The Minister believes that competition, in effect, allows resources to be allocated more efficiently in the NHS, as in other markets; that is the Bill’s underpinning ethos. The flip side of that is that in a market where some bits see resources efficiently allocated, other bits fail, and the option for those inefficient bits is exit. That is what will happen, and this insolvency clause makes it easier.

Photo of John Pugh John Pugh Liberal Democrat, Southport

I have three brief points. The first is on consultation. The Minister legitimately said that, after the previous Government, consultation has a poor name; the fact that there is consultation gives nobody any reassurance, given its political history. The consultation on the White Paper did not necessarily improve the name of consultation, because it was a consultation about how to do things, not whether to do them. However, we will pass over that.

Secondly, when the hon. Member for Halton discussed the clauses, his key point was that they offer a shell that will be followed by secondary legislation. The Minister adroitly replied that such provisions were exactly what the previous Government had. That is like the argument that we have when an Opposition Member tables a rational amendment, and we say that we are doing exactly what the previous Government did. However, repeatedly doing what the previous Government did is not necessarily a good basis for forward-looking policy. I might be ploughing a fairly lonely furrow, but I think we can do just a wee bit better.

There is quite a good example of that. In the Committee that considered a previous, very contentious bit of legislation—the Mental Health Act 2007—it was clear that a lot of clauses would lead to secondary legislation, which would clarify what those clauses were all about. In Committee, Members pressed for some kind of draft regulation by Report to clarify where the legislation was taking us. That does not strike me as a bad precedent to follow, and the Minister might comment on whether such an arrangement is a distinct possibility, because it would be helpful.

Thirdly, I was grateful to the Minister for setting out the errors in the explanatory notes, because we could all have gone down a sidetrack talking about level playing fields and the intention of the clause being to put Bupa hospitals on the same footing as other hospitals. Clearly, that is obviously nonsense, and the Minister has revealed it as such. There never can be a level playing field, because the Government or some state agency—Monitor or whoever—will, presumably, interfere when a foundation trust starts to get into trouble. We will not do that at all with a Bupa hospital.

In any case, there should not be a level playing field, because a Bupa hospital and an acute hospital are different entities; one is paid for by taxpayers, and we have a public interest and investment in it, while the other is purely a private venture. In any case, the Bill will not treat the two sorts of hospital evenly.

Photo of Paul Burstow Paul Burstow The Minister of State, Department of Health

I am listening closely to my hon. Friend’s argument and I want to make sure that he is clear about the designation regime, which we have discussed. Designation does not apply simply to state-funded and state-based organisations; it also applies to any provider providing a designated service, and a Bupa hospital could have a designated service.

Photo of John Pugh John Pugh Liberal Democrat, Southport

I am indebted to the Minister. I did not realise that; I thought that designation was only for traditional A and E departments. It seems that, for example, private-sector establishments can also be designated for whatever purpose. That is an interesting addition to my understanding.

Photo of Kevin Barron Kevin Barron Chair, Standards and Privileges Committee, Chair, Standards and Privileges Committee

I cannot remember when it was, but I have spoken before about mergers. Mergers are made not only with foundation trusts, but with other organisations. It would be interesting to discover what those other organisations are.

Photo of John Pugh John Pugh Liberal Democrat, Southport

I clearly need to listen more carefully to the right hon. Gentleman and the Minister in order to put the various pieces together. I would have been enormously assisted if the explanatory notes had been of some help, but sadly they were not.

Photo of Owen Smith Owen Smith Shadow Minister (Wales)

Is the hon. Gentleman as surprised as I am at what the Minister said? Was he saying that a private hospital could have part or all of its services designated—that it will be protected from further competition?

Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South

Order. Dr Pugh, may I draw your attention to the fact that you are taking the Committee to matters not covered by the clause? The question of private hospitals is not relevant. I hope that you will speedily return to our debate.

Photo of John Pugh John Pugh Liberal Democrat, Southport

Indeed, Mr Hancock. I was talking about the Minister’s clarification of the explanatory notes about the clause, so I think that I am in order.

Photo of John Pugh John Pugh Liberal Democrat, Southport

I bow to your superior judgment, Mr Hancock, but if I am out of order, so are many other members of the Committee—possibly including the Minister. If the same regime for decommissioning hospital foundation trusts is to apply to Bupa hospitals, there will be knock-on consequences in further legislation. However, I do not to want extend the argument, because in addition to having independent hospitals we are now going to have independent state schools, and presumably similar rules will apply to those at some point.

I return to the key point. The Minister sensibly explained that the Bill will give us a serviceable and manageable regime for closing hospitals in place of an outdated, inapplicable and almost unworkable regime. One does not need to be terribly bright to draw the logical conclusion that it will be easier to close hospitals as a result. That is the inevitable conclusion. In supporting the clause, one has to go with the inference, and I see no point in pretending different. However, that is not necessarily the intention; the intention is to put in place a regime.

The Minister is on record as saying that the present scheme is unworkable and outdated, and that it cannot be applied when closing foundation hospitals. The Government are putting in place a model that can be used. Moving from a model that cannot to a model that can will make the process easier, and the fact should be acknowledged.

Question put, That the clause, as amended, stand part of the Bill.

The Committee divided: Ayes 13, Noes 9.

Division number 81 Decision Time — Clause 113

Aye: 13 MPs

No: 9 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly agreed to.

Clause 113, as amended, ordered to stand part of the Bill.