Extension of Powers of Secretary of State for Financing the Health Service

Orders of the Day — Health and Medicines Bill – in the House of Commons at 4:58 pm on 1st November 1988.

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Lords amendment: No. 5, in page 5, line 18, leave out "powers" and insert the powers specified in subsection (1A) below; but for the avoidance of doubt it is hereby declared that nothing in this section authorises him or any body to which he gives directions under subsection (1B) below to disregard any enactment or rule of law or to override any person's contractual or proprietary rights.(1A) The powers mentioned in subsection (1) above are powers—

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

I beg to move, That this House doth agree with the Lords in the said amendment.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

With this it will be convenient to consider Lords amendments Nos. 6 to 8 and 10 to 17.

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

Lords amendment No. 5 refers to clause 7, which is about income generation. It might be helpful if I were to give a summary of what we are trying to achieve in clause 7. I am sure that it will help the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) as the amendment covers different parts of the clause and it is important that the hon. Gentleman understands exactly what this group of Lords amendments would do.

In general terms, the clause gives health authorities wider powers to generate income for improving the Health Service. That is what the preamble to the clause says. From debates about the clause since the Bill was introduced to the House almost one year ago, I sometimes wonder what some people have read into those words. The clause allows health authorities to charge at commercial rates in the case of private patients and overseas visitors. I remember that, when the hon. Member for Strathkelvin and Bearsden, who is now on the Opposition Front Bench, was a mere stripling of a Back Bencher, he called on us on Second Reading to do precisely what I have described. I cannot see that there is much for the Opposition to quarrel with, but they managed to spend a good few hours in Committee airing their arguments before eventually admitting how sensible the changes are.

The clause contains a strong safeguard to ensure that none of this new activity should be to the detriment of the NHS and its patients. Indeed, the purpose of the clause is to enhance the NHS, not to detract from it.

Existing legislation did not foresee health authorities wanting to use facilities other than for purposes directly concerned with the treatment of patients. I suspect that, by accident rather than by design, existing legislation can be read to permit authorities to pursue some income generation ideas, whereas others such as advertising, catering for outside bodies or running health clubs are clearly ultra vires. There is another group of activity about which the law is unclear. We have responded to the call from our own Health Service managers that we should clear up the matter. We agree that there is a clear need for legal provision which puts it beyond doubt that authorities can make full use of their facilities for income generation.

5.15 pm

The clause deals with three strands—income generation per se, private patient income and income from charges on overseas visitors. There is, however, a common theme—the provision of additional income for the Health Service. This is a good housekeeping measure intended to encourage health authorities to realise to the full the financial potential of resources at their disposal. It will provide health authorities with a valuable source of income while remaining no more than a marginal activity in the totality of Health Service funding. We have never claimed that income generation is any more than that. It never can account for more than a tiny fraction of total Health Service funding, and we have never suggested otherwise.

Clause 7(1) contains the meat of the income generation powers—the basic powers to acquire, produce and provide, for a charge, goods, land, accommodation and services, including training. It allows commercial exploitation of suitable Health Service innovations and developments. The powers were deliberately drawn wide, which I suspect is the reason for some of the fears that have been expressed at various stages of parliamentary consideration of the Bill, so that we would not be faced with the need to enact further legislation to permit activities which were inadvertently omitted from the Bill. The powers are permissive and are qualified by safeguards. They are not mandatory obligations. We shall not require all health authorities to set about manufacturing and selling all manner of things indiscriminately. The final part of subsection (1) provides for the issue, by the Secretary of State, of directions to health authorities about the use of these new powers.

Clause 7(2) and (3) provide that the powers may be restricted by directions issued by the Secretary of State. We have already issued guidance on income generation to health authorities. More will follow if it is the House's will that the Bill should become law. We have no reason to suppose that health authorities will act irresponsibly in their use of these new powers.

Subsection (4) provides that the wide powers introduced in subsection (1) do not apply to provision for private patients. Such provision is dealt with in the original legislation and in clause 7(7) and (8), which ensure that the rather tighter conditions surrounding the provision of services for private patients shall apply, particularly with regard to the authorisation of pay beds, in respect of which we have retained central control.

Perhaps I may be permitted to go a little more deeply into the safeguards against the misuse of these powers as it was a matter of some concern in the other place and it has given rise to some of the amendments before us.

Subsection (5) stipulates that none of the powers provided by clause 7 shall interfere with the duty to provide services under the NHS, nor be used to the disadvantage of NHS patients. I am sure that the House agrees that that is important. Income generation is to be a marginal activity, and I hope that hon. Members will not propose the notion that we seek these powers to make the NHS a monolithic trading organisation. We are not doing that.

The Secretary of State's duty to provide a comprehensive Health Service is not affected in any way by clause 7, and subsection (5) makes that clear. Subsection (5) also limits the charging powers in subsection (1)(h) to non-NHS matters. That is important and worth dwelling on as Opposition Members argued, especially in Committee, that the clause would open the door to new charges for NHS treatment or services. That is simply not true.

Subsection (7) concerns private patients. We decided that health authorities should be permitted to set their pay bed charges to make a profit. The hon. Member for Strathkelvin and Bearsden felt that that was wise and sensible, so I believe that he will support us tonight. The number of authorised pay beds and their location will remain a matter for central approval. We believe that market forces should apply to the pricing of private treatment in NHS hospitals, and subsection (7) permits that by consolidating and simplifying previous legislation on private patients and enabling charges to be set on a commercial basis. The NHS should benefit considerably from that. As hon. Members will be aware, we did rather oversimplify some of the private patient provisions, as the British Medical Association and others on its behalf told us. The amendments which we brought forward in another place are intended to remedy that excess of zeal.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

I have been following with great interest the excellent case which my hon. Friend has put up. In the private sector, it is possible to make arrangements whereby employees or managers who produce new ideas for generating revenue for the firm can have a percentage of the profits in the first year. It is right that the provisions which my hon. Friend recommends should enable the profits made to be kept by the Health Service rather than go into the consolidated fund. Does this permit a local health authority, or the Minister, to make an arrangement whereby new ideas for income generation can benefit the NHS employee who suggests them?

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

The key NHS employee in most district health authorities is the district general manager. Managers are now all on short-term contracts with performance-related pay.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

The system could work all the way through.

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

We would be interested in extending that proposition to other members of staff, but for the time being this applies only to senior managers. We would expect that an NHS manager who was able to generate in wise and sensible ways considerable income for his health authority would have that ability and success recognised when he was next reviewed. We would expect that, if an NHS manager were totally incapable of undertaking that kind of activity, that would be taken into account. I take my hon. Friend's point—many businesses have reward schemes. We would not want to pronounce on that matter from the Dispatch Box. We would want to leave it to the common sense of the local people. My feeling, for what it is worth, is that knowing that the money generated is being put into even better health care in that district is normally, for the people who work for us, reward enough.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

My hon. Friend said that we can leave it to the local district. Do we take it that it would not be illegal if the authority chose to do that?

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

As long as the money which is generated continues to be used in the NHS

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

To reward an employee?

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

I am a little reluctant again to set out what I have said. The main opportunity to reward an employee lies in the grading of the district general manager and one or two other key staff.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

It could work right through.

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

I take the point entirely. I would not be antagonistic to a suggestion that saw some kind of a reward, as long as the main benefit from such activity and improvement went straight into the Health Service, and therefore was seen to improve the health care of the neighbourhood.

As my hon. Friends know, most of the pay of the people concerned is either negotiated through the Whitley bodies or is offered to us through the review bodies. We do not at this time have the opportunity to vary the pay of individuals in quite the way that my hon. Friends suggest. I commend what they say to my right hon. and learned Friend the Secretary of State for Health. We shall take on board those excellent suggestions.

Photo of Mr Irvine Patnick Mr Irvine Patnick , Sheffield, Hallam

Do the additional powers for financing the Health Service include the powers of leasing, placing money on the overnight money market and borrowing? If this is not readily clear, could consideration be given to this approach to generate income?

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

The money voted to us for the NHS is to run NHS activity. About 70 per cent. of that money goes in pay. We would therefore expect that the money which we have voted for next year will be allocated in much the same way. How money is held before it is spent is a matter not just for the NHS but for all Government Departments. My hon. Friend the Member for Sheffield, Hallam (Mr. Patnick) may like to refer that question in more detail to my right hon. Friend the Chancellor. The way in which my right hon. Friend handles our money has been entirely beneficial, and we have all heard the results in the Autumn Statement.

Mainly our money is spent. We can spend every penny which is allocated. The purpose of clause 7 is to ensure that those opportunities which occur to a considerable extent in most health authorities can be used to generate income, bring in more money and make a profit where no profit is legal. Money is then available to that health authority to extend and develop its services as it thinks fit and to provide all the services that we would like in health care.

Photo of Mr Ronnie Fearn Mr Ronnie Fearn , Southport

Would the voluntary bodies which are already raising quite a lot of cash for the district health authorities be taken into consideration as well? Would that money be utilised in the melting pot?

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

We are about to discuss in detail one of the amendments which refers to voluntary bodies and, if I may, I shall take on that point then.

Subsections (9), (10) and (11) provide that charges for NHS treatment of patients from overseas may be set by health authorities on a commercial basis in the same way as charges for private patients. These subsections were added during our earlier consideration of the Bill, largely, again I must confess, because of pressure from the hon. Member for Strathkelvin and Bearsden. Perhaps we should have had him as one of the Bill's sponsors. This is an excellent Bill, as the hon. Gentleman has said a number of times. He even told us that he thought that the White Paper was very good, but whether that will help his career on the Opposition Front Bench is another matter. We welcome the hon. Gentleman's intelligent and sensible comments.

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

Such charges apply only to a small minority of foreign visitors. Most foreign visitors are covered by European Community arrangements—the E111—or are citizens of countries with which we have reciprocal agreements, such as the Eastern bloc countries. Nevertheless, we felt it right and proper that health authorities should be free to set their charges in the same way as they set their private patient pay bed charges.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

Surely a large proportion of our overseas visitors are from the United States, with which we do not have such an arrangement.

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

I think that that is right. Generally, we try to come to agreements with countries, where possible. It is worth bearing in mind that a large number of our people go abroad. In fact, we have one of the highest proportions of people who go abroad on holiday and then get care and treatment overseas. We try to make arrangements between Governments so that there are offsetting arrangements wherever possible. I am not aware that we have a huge influx of visitors from the United States coming here for treatment. Generally, they get very good treatment in their own country, and I am sure that they are pleased about that.

I turn to the detailed changes made in another place which we must now consider. The key point is that all the Lords amendments to clause 7 now under consideration were welcomed or accepted by Lord Ennals, the Opposition health spokesman in the other place, and we hope that the same will be true tonight. The 12 amendments before us include three different issues. The first, which is dealt with in amendments Nos. 5, 6 and 10, relates to the general rights of the Secretary of State under clause 7, which is why I gave the House rather a long preamble to them. The second, amendment No. 7, is concerned with the role of the voluntary bodies. The third group, amendments Nos. 8 and 11 to 17, deals with private patients.

Amendments Nos. 5, 6 and 10 were introduced by the Government in another place to meet the concerns expressed there and earlier in the House that the powers which the Government sought in clause 7(1) were too wide. Particular concern was expressed that clause 7(1)(f), and to a degree paragraphs (g) and (h), would affect adversely the rights of academic researchers and others directly employed by the Health Service in respect of exploitation of their ideas and inventions. The opportunity was taken to have a debate, which was extremely valuable, about the revision in February 1987 of the standard Department of Health research contract. At that stage, the fundamental issue was the removal of the automatic right for researchers to publish. The hon. Members for Strathkelvin and Bearsden and for Peckham will recall that we had a long and useful debate about this in-Committee. In the other place, however, there is a strong interest in academia and in the rights of inventors and I took the opportunity to listen to the debate there. The concept embodied in the amendments was offered to those leading the debate and became part of a package including amendment No. 9, which will be moved later by my hon. and learned Friend the Minister of State.

5.30 pm

In the light of the concerns expressed, we decided to introduce these amendments in another place. They make it absolutely clear on the face of the Bill that in using these powers the Secretary of State and health authorities acting under delegated authority cannot do anything which would take away anyone else's legal rights or property, and so on. We did not incorporate the provisions in the Bill at the outset because we did not consider it necessary, but we have bowed to the advice of their Lordships who regard it as necessary and we are prepared to accept the amendments.

Amendment No. 7 deals with voluntary bodies and inserts in page 5, line 32, the words (having regard to the existing work of voluntary bodies)". When I have said a few words about this, I will give the hon. Member for Southport (Mr. Fearn) the opportunity to make his point again so that it comes in the right place.

The purpose of clause 7 is to make more money available for improving the Health Service. Clearly, there might sometimes be a potential clash of interests with the voluntary bodies which work so selflessly in support of the Health Service. Organisations such as the League of Friends and the Women's Royal Voluntary Service, help by running shops, cafeterias and so on in our hospitals. Their help is invaluable and allows the provision of a really useful service which otherwise might be difficult to provide, especially in isolated areas. Some Health Service managers, however, have ambitions beyond the services that such bodies can provide and believe that, with the right encouragement, private companies with expertise in areas such as mass catering or retailing might be willing to rent space in hospitals to run major shops or commercially viable cafeterias. A lot of money could be made by the health authority in terms of rent and additional facilities would be available for patients, visitors and staff.

One major London hospital has calculated that in a typical year the total number of people passing through its front door is about1¼ million. That includes patients, staff and a very large number of visitors. If we can tap some of their activities and offer them opportunities to spend money with us, there is scope for considerable income generation, but we must ensure that in their zeal to set up such arrangements—arrangements which, broadly speaking, we would encourage—Health Service managers do not ride roughshod over the League of Friends, the WRVS and other organisations which might already be working in the area.

Account should be taken, for example, of any existing tea bar and there should be discussion with volunteers about the implementation of new policies. Those running the tea bar might agree that their efforts could be directed to a different form of help—for example, sitting with patients who do not have many visitors or who may feel lonely and depressed and distressed. In the future, as in the past and the present, for many volunteers this may represent a better use of their efforts in terms of making the patients' time in hospital more pleasant or at least less unpleasant rather than restricting voluntary effort to raising money when in many cases more could be raised through commercial activity.

We do not wish to alienate the marvellous people who work with us through the League of Friends and other voluntary organisations. We are ever grateful to the large band of dedicated voluntary helpers who support the Health Service in such a variety of ways. That consideration was foremost in our minds in bringing forward this important amendment, which insists that we have regard to the existing work of voluntary organisations. We hold that work in the highest regard and we commend it to the House. We therefore also ask the House to agree with the Lords in the said amendment.

With regard to amendments Nos 8 and 11 to 17, the Opposition tabled an amendment in Committee at the behest of the British Medical Association which sought to reinstate both the definition of a private patient and the right in statute for consultants to admit their own private patients. To this day I remain certain, and I always shall, that the hon Members for Strathkelvin and Bearsden and for Peckham did not realise the basic purpose and meaning of the amendments suggested by the BMA, but that is certainly what they meant.

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

If the hon. Gentleman does not believe me, he may care to ask his advisers at the BMA, but that is exactly what those amendments meant.

At the same time, on a completely different point, our lawyers advised us that the revision contained in subsection (7) could well render certain collaborative schemes that we would wish to welcome ultra vires or at least fail to provide a definition of a National Health Service private patient. We were therefore sympathetic to the Opposition amendment, which would have resolved our difficulties as well as theirs had it not been defective, and I undertook to bring forward a suitable Government amendment on Report. Our amendment was virtually identical but at the eleventh hour it, too, turned out to be defective and thus was not moved. I am therefore forced today, as it were, to do a Whitelaw—to apologise yet again to the House for not having got this right in the first place and for having had to withdraw our proposal on the last occasion. With the assistance of their Lordships, however, we think that we have now got it right.

The eight Government amendments tabled in Committee in the Lords reinstate the requirement for the giving of undertakings by private patients and thus provide a convenient definition of a National Health Service private patient. They also reinstate the discretion to make accommodation and services available to consultants for the treatment of their private patients in England, Wales and Scotland. They were accepted in the other House unopposed and it is my privilege today to move, That this House doth agree with the Lords in the said amendments.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. I will call the hon. Lady in due course, but not until I have reminded the House that we have a lot of work to get through. I hope that hon. Members and Ministers will put their arguments succinctly.

Photo of Harriet Harman Harriet Harman Shadow Spokesperson (Health)

I shall keep my remarks as brief and as crisp as possible. Unlike the Minister, who is clearly attempting a filibuster so that important items such as charges for eye tests and dental checks will not be discussed until the small hours of the morning, I shall keep my remarks to a minimum.

On amendment No. 5, the Minister was right to mention that DHSS contracts for research were debated at length in Committee in this House and in another place. The concern was that the Government might refuse consent for publication of research merely because the findings did not fit their dogma. In a written answer on 8 March this year, the Minister went some way towards clarifying the situation. I should be grateful if she would go a little further today. Will she confirm that the only reasonable ground for refusal to allow publication would be if the research breaches confidentiality, commits libel or contains factual error? Will the researcher be told which of those is alleged so that he will know why publication is not allowed? Will the researcher or the organisation sponsoring the research have a right of appeal?

We very much welcome amendment No. 7, which deals with voluntary organisations. Such bodies as the League of Friends provide not only services to patients but an important opportunity for the local community, on a voluntary basis, to be involved in the work of their hospitals. Links between a hospital and its community should not be trampled upon in the rush to commercialise the Health Service. We shall monitor whether the income generation unit abides by the caveat in the amendment. We hope that the Minister will report on how it is being observed and on how the interests of the voluntary organisations in hospitals and in the Health Service at local level are being respected.

I wish to clarify the position on private patients. The Bill originally left out the actual definition of a private patient, so without amendment there would be no definition. My hon. Friends and I felt that to be unsatisfactory and tabled an amendment in Committee to restore the original definition. Being of suspicious mind, we did not believe that the definition had disappeared by accident. We felt that it was more likely intended to clear the way for a further blurring of the distinction between health provision in the public and private sectors. We are satisfied that the definition will now be reinstated.

I hope that the Minister will deal with my points on amendments Nos. 5 and 7.

Photo of Mr Ronnie Fearn Mr Ronnie Fearn , Southport

As I said earlier, the voluntary organisations raise a great deal of cash, which is then used to provide a specific item for a hospital. I would not want that to be interfered with. I hope that, in future, that money will not simply go into the melting pot.

The WRVS is concerned that under the income generation scheme catering firms will take over and the making of profit will mean more than the kindness being offered by the voluntary services. I hope that that will be carefully monitored.

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

With the leave of the House, Mr. Deputy Speaker, I shall reply. The hon. Member for Peckham (Ms. Harman) mentioned three grounds on which there might be some dispute between the Secretary of State and the researcher, for whose material we had paid, about whether material should be published in a certain form. Indeed, she mentioned three very good grounds on which there might be some difficulty—

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

That is right. There might be other grounds—for example, if there was an error of fact we would want an opportunity to discuss that with the researcher. There might be a question of someone being defamed in some way and that, too, would be appropriate for discussion. Although we think that there are unlikely to be any grounds other than those that we have set out, we want to ensure that the Secretary of State has the right to deal with them should they arise. It also brings his powers more into line with the sort of contracts available in other Government Departments.

We would always discus such matters, through our officials, with the researchers concerned. It would never be our wish simply to take an arbitrary approach. We would want to know how the money we had allocated had been spent, because we have to account for that money. We do not have plans for a formal system of appeal, but I assure the hon. Lady that we would have full discussions with the researchers. Indeed, having commissioned the work we would be interested to know how the researcher was progressing.

We are attempting to tidy up the legislation on private patients and get it correct. We want to ensure that it will hold and bite in the way that we want. We agreed at the outset that some of the definitions being offered were not adequate and would not stand up to scrutiny. We are, therefore, grateful to the other place for its work on that matter. We believe the new wording to be better than the original.

I welcome what the hon. Lady said about the leagues of friends. It is nice to hear that the Labour party is now all in favour of the volunteers who work so hard in the NHS.I hope that it will continue that stance. I am, however, bound to observe that on past occasions volunteers have been criticised by some of the hon. Lady's colleagues, who believe that volunteers and amateurs should not be involved in activities that they think would be better done by paid members of NUPE. I welcome the Labour party's conversion. All such conversions should be welcomed.

5.45 pm

The hon. Member for Southport (Mr. Fearn) made an important point. He may recall that before I came to the House I was chairman of the health authority in Birmingham. I am on record as expressing exasperation because, at that time, voluntary organisations often raised money and bought pieces of equipment without consulting the health authorities, which put the authorities in some difficulty. Recently we have encouraged the health authorities and the fund raisers to sit down and discuss appropriate activities and campaigns. The result is flat the fund raisers are providing far more useful pieces of equipment. Although that brings the criticism that fund raisers should not have to buy useful pieces of equipment, I prefer them to do that than to buy something that is quietly left in a box and not used. I am sure that the hon. Gentleman would regard that as progress. We hope that the cash raised is used for appropriate purchases. To that end, we expect the health authorities to discuss with the voluntary bodies their exact plans for the use of any money raised.

I hope that with those explanations I have outlined the important changes that the amendments make to the clause, which we hope will generate a great deal of money for the NHS.

Question put and agreed to.

Lords amendments Nos. 6 to 8 agreed to.

Lords amendment: No. 9, in page 5, line 46, at end insert— (4A) The Secretary of State shall exercise the powers specified in subsection (1)(f) above only after consulting (to the extent that it appears to him to be practical) any person who appears to him to have an interest through his own previous research in the ideas or intellectual property in question as to whether he should exercise them and, if so, as to any financial arrangements.

Hon. Members:

Hear, hear.

Photo of Mr David Mellor Mr David Mellor , Putney

I am grateful for my hon. Friends' touching sign of support, which I hope will subsist throughout the evening.

I beg to move, That this House doth agree with the Lords in the said amendment.

The amendment was incorporated into the Bill with the acquiescence of the Government to address the concerns expressed in another place that there were occasions when patent law did not give adequate protection to inventors over, for instance, whether the invention—and I use that expression illustratively—should be exploited at all, or whether, for example, its worth was now much more than could reasonably have been expected when an original contract was signed.

Although we felt unable to go the whole way towards meeting the wishes of those who wanted a requirement to obtain the specific agreement of the inventor, we accepted that it would be fair to all parties if the Secretary of State had to take into consideration the views of the inventor over exploitation. That would give the inventor the opportunity to state his case if he had views about the appropriateness of exploitation, and would also give him the opportunity to seek further financial reward if that was an issue.

As I said, this was not a Government amendment in another place, but it was moved with our full support. I hope that it goes a long way to allaying any fears in the research community.

Question put and agreed to.

Lords amendments Nos. 10 to 17 agreed to.