Clause 1 — NHS Foundation Trusts

Health and Social Care (Community Health and Standards) Bill – in the House of Commons at 1:42 pm on 8th July 2003.

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Photo of Mr David Hinchliffe Mr David Hinchliffe Labour, Wakefield 1:42 pm, 8th July 2003

I beg to move amendment No. 164, in page 1, line 4, leave out clause 1.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

With this it will be convenient to discuss the following:

Amendment No. 60, in page 1, line 7, at end insert 'and Wales'.

Amendment No. 166, in page 1, line 10, leave out clause 2.

Amendment No. 96, in clause 2, page 1, line 12, after 'Foundation', insert 'and Community'.

Amendment No. 168, in page 2, line 3, leave out clause 3.

Amendment No. 169, in page 2, line 9, leave out clause 4.

Amendment No. 154, in clause 4, page 2, line 10, after 'trust', insert

'or combination of NHS trusts'.

Amendment No. 321, in page 2, line 10, after 'trust', insert

'or a Primary Care Trust'.

Amendment No. 65, in page 2, leave out line 12 and insert 'appropriate Minister'.

Amendment No. 322, in clause 4, page 2, line 12, at end insert—

'(1A) The Secretary of State may not support more than six applications make by NHS trusts and more than six applications made by Primary Care Trusts during the pilot test period.'.

Amendment No. 155, in page 2, line 14, after 'trust', insert 'or trusts'.

Amendment No. 323, in page 2, line 14, after 'trust', insert 'or Primary Care Trust'.

Amendment No. 156, in page 2, line 18, after 'trust', insert 'or trusts'.

Amendment No. 324, in page 2, line 18, after 'trust', insert 'or Primary Care Trust'.

Amendment No. 157, in page 2, line 19, after 'applicant', insert 'or applicants'.

Amendment No. 158, in page 2, line 21, after 'has', insert 'or NHS trusts have'.

Amendment No. 325, in page 2, line 21, after 'trust', insert

'or a Primary Care Trust'.

Amendment No. 159, in page 2, line 26, after 'trust', insert 'or trusts'.

Amendment No. 326, in page 2, line 26, after 'trust', insert 'or Primary Care Trust'.

Amendment No. 160, in page 2, line 28, at end insert 'or them'.

Amendment No. 161, in page 2, line 29, after 'it', insert 'or them'.

Amendment No. 170, in page 2, line 31, leave out clause 5.

Amendment No. 328, in clause 5, page 2, line 32, after 'trust', insert

'or a Primary Care Trust'.

Amendment No. 66, in page 2, leave out line 35 and insert 'appropriate Minister'.

Government amendment No. 245.

Amendment No. 171, in page 3, line 20, leave out clause 6.

Amendment No. 329, in clause 6, page 3, line 22, after 'trust', insert

'or a Primary Care Trust'.

Amendment No. 233, in page 3, line 27, at end insert—

'( ) taken as a whole the actual membership of the applicant's public constituency will be representative of those eligible for such membership,'.

Amendment No. 402, in page 3, line 37, leave out subsection (4) and insert—

'(4) In deciding whether or not to give an authorisation in response to an application under section 4 or 5, the regulator shall have regard to the outcome of a public consultation under section [public consultation relating to applications for foundation status].'.

Amendment No. 403, in page 3, line 39, at end insert—

'(4A) The regulator shall not give an authorisation under section 7(1)(a) or (b) unless and until the Secretary of State confirms support for the application to which such authorisation may relate after responding to—

(a) any recommendations made to him by virtue of section 21(2)(f) of the Local Government Act 2000 (Overview and Scrutiny Committees) in relation to the application, or

(b) any referrals or representations made to him by any Patients Forum by virtue of section 15(6) of the NHS Reform and Healthcare Professions Act 2002 in relation to the application.'.

Amendment No. 172, in page 4, line 1, leave out clause 7.

Amendment No. 330, in clause 7, page 4, line 2, after 'trust', insert

'or a Primary Care Trust'.

Amendment No. 331, in page 4, line 3 after 'trust', insert

'or a Primary Care Trust as the case may be'.

Amendment No. 100, in page 4, line 4, at end insert—

'(1A) On an authorisation being given to a Primary Care Trust—

(a) it ceases to be a Primary Care Trust and becomes an NHS community trust,

(b) the proposed constitution has effect.'.

Amendment No. 101, in page 4, line 10, at end insert

'or community trust as the case may be'.

Amendment No. 102, in page 4, line 13, after 'trust, insert 'or community trust'.

Amendment No. 173, in page 4, line 17, leave out clause 8.

Amendment No. 103, in clause 8, page 4, line 18, after 'trust', insert 'or community trust'.

Amendment No. 104, in page 4, line 20, after 'trust, insert 'or community trust'.

Amendment No. 174, in page 4, line 22, leave out clause 9.

Amendment No. 175, in page 4, line 35, leave out clause 10.

Amendment No. 105, in clause 10, page 4, line 37, at end insert 'and community trusts'.

Amendment No. 106, in page 4, line 38, at end insert 'and community trust'.

Amendment No. 107, in page 5, line 6, after 'trust', insert 'or community trust'.

Government amendment No. 355.

Amendment No. 67, in page 5, line 14, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 176, in page 5, line 17, leave out Clause 11.

Amendment No. 68, in clause 11, page 5, line 18, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 108, in page 5, line 19, after 'trust', insert 'or community trust'.

Government amendment No. 356.

Amendment No. 177, in page 5, line 22, leave out clause 12.

Amendment No. 109, in clause 12, page 5, line 24, at end insert 'or community trust'.

Government amendment No. 246.

Amendment No. 69, in page 5, line 29, at end insert—

'(aa) the Assembly,'.

Amendment No. 332, in page 5, line 30, after 'trust', insert 'and Primary Care Trust'.

Amendment No. 110, in page 5, line 31, at end insert—

'(bb) every Primary Care Trust intending to make an application to become an NHS community trust,'.

Amendment No. 70, in page 5, line 33, at end insert

'and send a copy to the Assembly'.

Amendment No. 111, in page 5, line 36, at end insert 'and community trust'.

Amendment No. 178, in page 5, line 37, leave out clause 13.

Amendment No. 333, in clause 13, page 5, line 38, after first 'trust', insert

'or a Primary Care Trust'.

Amendment No. 112, in page 5, line 38, after second 'trust', insert

'or a Primary Care Trust becomes an NHS community trust'.

Amendment No. 113, in page 5, line 40, at end insert 'or community trust'.

Amendment No. 114, in page 6, line 3, after 'trust', insert 'or community trust'.

Amendment No. 71, in page 6, line 6, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 72, in page 6, line 10, after 'England', insert

'or (as the case may be) in Wales'.

Amendment No. 73, in page 6, line 12, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 74, in page 6, line 14, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 115, in page 6, line 14, after 'trust', insert 'or community trust'.

Amendment No. 179, in page 6, line 18, leave out clause 14.

Amendment No. 75, in clause 14, page 6, line 23, at end insert 'and Wales'.

Amendment No. 76, in page 6, line 28, after 'England', insert 'and Wales'.

Amendment No. 77, in page 6, line 37, after 'England', insert 'and Wales'.

Amendment No. 180, in page 7, line 13, leave out clause 15.

Amendment No. 397, in clause 15, page 7, line 14, leave out 'may' and insert 'must'.

Amendment No. 78, in page 7, line 15, after 'England', insert 'and Wales'.

Government amendment No. 247.

Amendment No. 398, in page 7, line 17, leave out 'power' and insert 'duty'.

Government amendment No. 248.

Amendment No. 400, in page 7, line 23, at end insert—

'(3A) An authorisation must state that no services be provided to a patient, other than an NHS patient, by an NHS foundation trust, other than in circumstances prescribed by subsection (3B).

(3B) These circumstances are that a certificate issued by the lead clinician in that specialty states that the services so provided are not needed by an NHS patient with equal or greater clinical need.'.

Amendment No. 181, in page 7, line 28, leave out clause 16.

Amendment No. 116, in clause 16, page 7, line 29, after 'trust', insert 'or community trust'.

Amendment No. 79, in page 7, line 38, at end insert 'and Wales'.

Amendment No. 117, in page 7, line 41, after 'trust', insert 'or community trust'.

Amendment No. 182, in page 8, line 1, leave out clause 17.

Amendment No. 118, in clause 17, page 8, line 2, after 'trust', insert 'or community trust'.

Amendment No. 119, in page 8, line 7, after 'trust', insert 'or community trust'.

Amendment No. 120, in page 8, line 12, after 'trust', insert 'or community trust'.

Amendment No. 183, in page 8, line 15, leave out clause 18.

Amendment No. 121, in clause 18, page 8, line 16, after 'trust', insert 'or community trust'.

Amendment No. 122, in page 8, line 22, after 'trust', insert 'or community trust'.

Amendment No. 184, in page 8, line 29, leave out clause 19.

Amendment No. 123, in clause 19, page 8, line 31, after 'trust', insert 'or community trust'.

Amendment No. 80, in page 8, line 32, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 124, in page 8, line 33, after 'trust', insert 'or community trust'.

Amendment No. 185, in page 8, line 37, leave out clause 20.

Amendment No. 125, in clause 20, page 8, line 38, after 'trust', insert 'or community trust'.

Amendment No. 186, in page 9, line 1, leave out clause 21.

Amendment No. 126, in clause 21, page 9, line 2, after 'trust', insert 'or community trust'.

Amendment No. 187, in page 9, line 4, leave out clause 22.

Amendment No. 81, in clause 22, page 9, line 5, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 127, in page 9, line 6, after first 'trust', insert 'or community trust'.

Amendment No. 128, in page 9, line 7, after 'trust', insert 'or community trust'.

Amendment No. 82, in page 9, line 13, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 83, in page 9, line 17, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 129, in page 9, line 21, after 'trust', insert 'or community trust'.

Amendment No. 84, in page 9, line 22, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 130, in page 9, line 23, after 'trust', insert 'or community trust'.

Amendment No. 188, in page 9, line 28, leave out clause 23.

Amendment No. 131, in clause 23, page 9, line 30, after 'trust', insert 'or community trust'.

Amendment No. 132, in page 9, line 34, after 'trust', insert 'or community trust'.

Amendment No. 189, in page 10, line 7, leave out clause 24.

Amendment No. 133, in clause 24, page 10, line 9, after 'trust', insert 'or community trust'.

Amendment No. 134, in page 10, line 14, after 'trusts', insert 'or community trusts'.

Amendment No. 190, in page 10, line 17, leave out clause 25.

Amendment No. 135, in clause 25, page 10, line 19, after 'trust', insert 'or community trust'.

Amendment No. 136, in page 10, line 32, at end insert 'or community trust'.

Amendment No. 85, in page 10, line 33, at end insert—

'(bb) a Local Health Board,'.

Amendment No. 86, in page 10, line 35, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 137, in page 10, line 42, at end insert 'or organisation'.

Amendment No. 138, in page 11, line 1, after 'trust', insert 'or community trust'.

Amendment No. 139, in page 11, line 2, at end insert 'or organisation'.

Amendment No. 192, in page 11, line 3, leave out clause 26.

Amendment No. 87, in clause 26, page 11, line 5, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 193, in page 11, line 18, leave out clause 27.

Amendment No. 140, in clause 27, page 11, line 20, leave out 'and NHS foundation trusts' and insert

', NHS foundation trusts and NHS community trusts'.

Amendment No. 194, in page 11, line 23, leave out clause 28.

Amendment No. 141, in clause 28, page 11, line 26, at end insert—

'(e) NHS community trusts'.

Amendment No. 195, in page 11, line 27, leave out clause 29.

Amendment No. 142, in clause 29, page 11, line 36, at end insert—

'(fb) NHS community trusts;'.

Amendment No. 143, in page 12, line 3, after 'trust', insert 'or community trust'.

Amendment No. 196, in page 12, line 5, leave out clause 30.

Amendment No. 145, in clause 30, page 12, line 9, leave out 'and NHS foundation trusts' and insert

', NHS foundation trusts and NHS community trusts'.

Amendment No. 197, in page 12, line 11, leave out clause 31.

Amendment No. 146, in clause 31, page 12, line 15, at end insert—

'(bc) an NHS community trust;'.

Amendment No. 198, in page 12, line 21, leave out clause 32.

Amendment No. 200, in page 12, line 24, leave out clause 33.

Amendment No. 147, in clause 33, page 12, line 26, after 'trust', insert 'or community trust'.

Government amendments Nos. 249 to 251.

Amendment No. 201, in page 13, line 3, leave out clause 34.

Amendment No. 148, in clause 34, page 13, line 4, after 'trust', insert 'or community trust'.

Amendment No. 202, in page 13, line 7, leave out clause 35.

Amendment No. 91, in clause 35, page 13, line 10, at end insert—

'"the appropriate Minister" means—

(a) in relation to England, the Secretary of State; and

(b) in relation to Wales, the Assembly,

"the Assembly" means the National Assembly for Wales,'.

Government amendment No. 357.

Amendment No. 92, in page 13, line 13, leave out

'or a Primary Care Trust' and insert

', a Primary Care Trust or a Local Health Board'.

Amendment No. 320, in page 13, line 14, at end insert—

'"parliamentary constituency" has the meaning given in section 1 of the Parliamentary Constituencies Act 1986 (c.56) (parliamentary constituencies);

"the pilot test period" means the period that—

(a) begins with the day on which the first order is made under section 184 which brings into force a provision of this Part, and

(b) ends three years after the day referred to in paragraph (a);'.

Government new clause 25—Audit.

Government new clause 36—Mergers.

Government new clause 37—Section (Mergers): supplementary.

New clause 1—Review of democratically accountable governance—

'(1) It shall be the duty of the Secretary of State to establish an independent review body to carry out the functions specified in subsections (4) to (6).

(2) The Secretary of State shall appoint at least nine members to the independent review body.

(3) The independent review body shall elect a Chairman from amongst its members.

(4) The independent review body shall prepare reports containing proposals relating to the establishment of a local, democratically accountable system of governance for NHS foundation trusts and Primary Care Trusts.

(5) The independent review body may in particular make proposals in accordance with the provisions of subsection (4) relating to—

(a) methods of securing wider public participation in the governance of NHS foundation trusts and Primary Care Trusts;

(b) methods of increasing public awareness and access to information about the governance of NHS foundation trusts and Primary Care Trusts; and

(c) the membership of public benefit corporations.

(6) The independent review body must—

(a) lay a copy of any report prepared in accordance with the provisions of this section before Parliament, and

(b) once they have done so, send a copy of it to—

(i) the Secretary of State, and

(ii) the regulator.'.

New clause 9—Foundation patients' fora—

'(1) The Secretary of State shall establish a body to be known as a Foundation Patients' Forum—

(a) for each NHS Trust which has made an application under section 4(2);

(b) for each person who has been incorporated as a public benefit corporation under section 5(5).

(2) The members of the Foundation Patients' Forum are to be appointed by the Commission for Patient and Public Involvement in Health.

(3) Once the Foundation Patients' Forum has been established, it may do anything (including the things mentioned in subsection (4) below) which appears to it to be necessary or desirable for the purpose of preparing for effective patient and public involvement in the NHS Trust or public benefit corporation once it becomes a Foundation Trust.

(4) A Foundation Patients' Forum must—

(a) monitor and review the range and operation of services provided by, or under arrangements made by, the trust for which it is established,

(b) obtain the views of patients' and their carers about those matters and report on those views to the trust,

(c) provide advice, and make reports and recommendations, about matters relating to the range and operation of those services to the trust,

(d) make available to patients and their carers advice and information about those services,

(e) in prescribed circumstances, perform any prescribed function of the trust with respect to the provision of a service affording assistance to patients and their families and carers,

(f) carry out such other functions as may be prescribed.

(5) In providing advice or making recommendations under subsection (4)(c), a Foundation Patients' Forum must have regard to the views of patients and their carers.

(6) If, in the course of exercising its functions, a Foundation Patients' Forum becomes aware of any matter which in its view—

(a) should be considered by a relevant overview and scrutiny committee, the Forum may refer that matter to the committee,

(b) should be brought to the attention of the Commission for Patient and Public Involvement in Health, it may refer that matter to the Commission.

(7) Subsection (6) does not prejudice the power of a Foundation Patients' Forum to make such other representations or referrals as it thinks fit, to such persons or bodies as it thinks fit about matters arising in the course of its exercising its functions.

(8) An NHS Trust or public benefit corporation exercising its powers under sections 4(4)(b) or 5(7)(b) as the case may be shall be obliged to have regard to and take account of the reports and recommendations of the Foundation Patients' Forum.

(9) The governors and non-executive directors of the Foundation Trust shall be obliged to respond in writing to the reports and recommendations of the Foundation Patients' Forum.

(10) All the members, governors and directors of a Foundation Trust shall be obliged to have regard to and take account of the reports and recommendations of the Foundation Patients' Forum in exercising their functions within the Foundation Trust.

(11) The terms in this section shall be construed in accordance with the provisions of section 15(8) and (9) of the National Health Service Reform and Health Care Professions Act 2002 (c.17).'.

New clause 18—Community Health Councils and NHS foundation trusts in Wales—

'(1) Schedule 7A of the 1977 Act is amended as follows.

(2) In paragraph 2 (general provisions)—

(a) in subparagraph (f), for "and NHS trusts" there is substituted ", NHS trusts and NHS foundation trusts";

(b) in subparagraph (g), for "and NHS trusts" there is substituted ", NHS trusts and NHS foundation trusts";

(c) in subparagraph (j), for "and NHS trusts" there is substituted ", NHS trusts and NHS foundation trusts";

(d) in subparagraph (k), for "or NHS trusts" there is substituted ", NHS trusts or NHS foundation trusts".

(3) In paragraph 3 (entry and inspection of premises), in subparagraph (1), after sub-subparagraph (f) there is inserted—

"(fa) NHS foundation trusts;".

New clause 19—NHS community trusts—

'(1) An NHS community trust is a public benefit organisation which is authorised to commission goods and services for the purposes of the health service in England.

(2) A public benefit organisation is a body corporate which, in pursuance of an application, is constituted in accordance with Schedule [constitution of public benefit organisations].'.

New clause 20—Applications by Primary Care Trusts—

'(1) A Primary Care Trust may make an application to the regulator for authorisation to become an NHS community trust if the application is supported by the Secretary of State.

(2) The application must—

(a) describe the goods and services which the applicants propose should be commissioned by the NHS community trust,

(b) describe the goods and services which the applicants propose should be provided by the NHS community trust, and

(c) be accompanied by a copy of the proposed constitution of the trust; and must give any further information which the regulator requires the Primary Care Trust to give.

(3) The applicant may modify the application with the agreement of the regulator at any time before authorisation is given under section [authorisation of NHS community trusts].

(4) Once a Primary Care Trust has made the application—

(a) the provisions of the proposed constitution which give effect to paragraphs 3 to 16 of Schedule [constitution of public benefit organisations] have effect, but only for the purpose of electing a shadow board of governors and appointing a shadow board of directors,

(b) the Primary Care Trust may do anything (including the things mentioned in paragraph 16 of Schedule 2 to the National Health Service and Community Care Act 1990 (c.19) (general powers)) which appears to it to be necessary or desirable for the purpose of preparing it for NHS community trust status.'.

New clause 21—Authorisation of NHS community trusts—

'(1) The regulator may give an authorisation under this section to a Primary Care Trust which has applied under section [applications by Primary Care Trusts] if he is satisfied as to the matters specified in subsection (2).

(2) The matters are that—

(a) the applicant's constitution will be in accordance with Schedule [constitution of public benefit organisations] and will otherwise be appropriate,

(b) there will be a board of governors, and a board of directors, constituted in accordance with the constitution,

(c) the steps necessary to prepare for NHS community trust status have been taken,

(d) the applicant will be able to commission or the goods and services or to provide the goods and services which the authorisation is to require it to commission or to provide, and

(e) any other requirements which he considers appropriate are met.

(3) Subject to the provisions of subsection (4), the authorisation may be given on any terms the regulator considers appropriate.

(4) An authorisation must authorise the NHS community trust to commission goods and services for the purposes of the health service in England.

(5) If regulations require the applicant to consult prescribed persons about the application, the regulator may not give an authorisation unless he is satisfied that the applicant has complied with the regulations.'.

New clause 24—Representative membership—

'An authorisation may require an NHS foundation trust to take steps to secure that (taken as a whole) the actual membership of its public constituency is representative of those eligible for such membership.'.

New clause 34—Extension of provisions of Part 1 following pilot tests—

'(1) Within three months of the conclusion of the pilot test period—

(a) the Secretary of State,

(b) the regulator,

(c) the CHAI, and

(d) the Comptroller and Auditor General shall lay before each House of Parliament a report on the operation of the provisions of Part 1 of this Act during the pilot test period.

(2) After all of the reports under subsection (1) have been laid before Parliament, the Secretary of State may by order—

(a) amend the provisions of Part 1 so as to extend the application to other NHS trusts and Primary Care Trusts, and

(b) make such other amendments of Part 1 as arise from the reports.

(3) No order may be made under subsection (2) unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.'.

New clause 39—Public consultation relating to applications for foundation status—

'(1) The Secretary of State shall—

(a) by regulations require that an NHS Trust proposing to make an application under section 4(1) or any person proposing to apply under section 5(1) shall first consult prescribed persons, and

(b) by regulations prescribe persons to be consulted which shall include the Patients Forums for the NHS Trusts and Primary Care Trusts in the area in which are resident all or any of the persons to whom the applicant NHS Trust has provided goods or services for the purposes of healthcare or to whom the applicant or person (as the case may be) intends to provide such services if its application is successful.

(2) In section 7(3) of the Health and Social Care Act 2001 (functions of Overview and Scrutiny Committees)—

(a) at the beginning of subsection (3) (matters to be covered by regulations) for "may" there is substituted "shall";

(b) at the end of subsection (3)(b) there is inserted "which shall include all matters prescribed under subsection 7(3)(c) below,";

(c) at the end of subsection (3)(c) there is inserted "which shall include any application or proposed application under section 4 of the Health and Social Care (Community Health and Standards) Act 2003".'.

Government new schedule 2—Audit of accounts of NHS foundation trusts.

New schedule 1—Constitution of public benefit organisations—

Requirement for a constitution

1 (1) A public benefit organisation is to have a constitution.

(2) As well as any provision authorised or required to be made by this Schedule, the constitution may make further provision (other than provision as to the powers of the organisation) consistent with this Schedule.

2 The constitution is to name the organisation and, if the organisation is an NHS community trust, its name must include the words "NHS community trust".

Members

3 (1) The members of a public benefit organisation are to be individuals who—

(a) live in the area specified for the purpose in the constitution ("the public constituency"), or

(b) are employed by the organisation ("the staff constituency").

(2) The constitution may also provide for the public constituency to comprise individuals who have received goods or services commissioned or provided by the Primary Care Trust as patients (including individuals attending as the carer of a patient).

(3) The constitution may also provide for the staff constituency to comprise NHS professionals who provide services to the Primary Care Trust or who a self-employed contractor or in a self-employed contract with the Primary Care Trust.

(4) Subparagraph (1)(a) does not apply to a person who is eligible for membership of the staff constituency.

4 The constitution is to require a minimum number of members of each constituency.

5 (1) A person may not be a member of a public benefit organisation unless he has agreed to pay a sum not exceeding £1 to the organisation.

(2) A person may not be a member of a public benefit organisation if—

(a) he has been adjudged bankrupt or has made a composition or arrangement with his creditors,

(b) he has within the preceding five years been convicted in the British Islands of any offence if a sentence of imprisonment (whether suspended or not) for a period of three months or more (without the option of a fine) was imposed on him.

(3) The constitution may make further provision as to the circumstances in which a person may not be a member.

Board of Governors

6 (1) A public benefit organisation is to have a board of governors.

(2) Only the following may be members of the board—

(a) members of the organisation, and

(b) individuals appointed under the following provisions who do not fall within paragraph 5(2)(a) or (b).

(3) The members of the board other than the appointed members are to be chosen by election.

(4) Members of the public constituency or the staff constituency may elect any of their number to be a member of the board.

(5) If contested, the election must be by postal ballot.

7 (1) More than half of the members of the board of governors are to be elected by the public constituency.

(2) Not fewer than one third of the members of the board are to be elected by the staff constituency.

8 (1) A member of the board of governors elected by the public constituency or the staff constituency may hold office for a period of three years.

(2) Such a member is to be eligible for re-election at the end of that period.

(3) But a person elected to membership of the board ceases to hold office if he ceases to be a member of the relevant constituency.

9 The organisation may pay travelling and other expenses to members of the board of governors at rates decided by the organisation.

10 The constitution is to provide for the chairman of the organisation or (in his absence) another person to preside at meetings of the board of governors.

11 (1) The constitution is to provide for meetings of the board of governors to be open to members of the public.

(2) But the constitution may provide for members of the public to be excluded from a meeting for special reasons.

12 (1) The constitution is to make provision as to—

(a) the conduct of elections for membership of the board,

(b) the appointment of persons to membership,

(c) the practice and procedure of the board,

(d) the removal of a member from office.

(2) The constitution may make further provision about the board.

Directors

13 (1) A public benefit organisation is to have a board of directors.

(2) The constitution is to provide for all the powers of the organisation to be exercisable by the board of directors on its behalf.

(3) But the constitution may provide for any of those powers to be delegated to a committee of directors or to an executive director.

14 (1) The board is to consist of—

(a) executive directors, one of whom is to be the chief executive and another the finance director,

(b) non-executive directors, one of whom is to be the chairman.

(2) Only a member of the public constituency is eligible for appointment as a non-executive director.

15 (1) It is for the board of governors at a general meeting to appoint or remove the non-executive directors.

Removal of a non-executive director under this subparagraph requires the approval of three-quarters of the members of the board.

(2) It is for the non-executive directors to appoint or remove the chief executive.

(3) It is for the chief executive to appoint or remove the executive directors.

(4) An appointment or removal under subparagraph (2) or (3) requires the approval of a majority of the board of governors voting at a general meeting.

16 (1) It is for the board of governors at a general meeting to decide the remuneration and allowances, and the other terms and conditions of office, of the non-executive directors.

(2) The organisation is to establish a committee of non-executive directors to decide the remuneration and allowances, and the other terms and conditions of office, of the executive directors.

Register of members etc.

17 (1) A public benefit organisation is to have—

(a) a register of members showing, in respect of each member, the constituency to which he belongs,

(b) a register of members of the board of governors,

(c) a register of directors.

(2) The constitution may make further provision about the registers including, in particular, admission to, and removal from, the registers.

18 (1) The following documents of a public benefit organisation are to be available for inspection by members of the public free of charge at all reasonable times—

(a) a copy of the current constitution,

(b) a copy of the current authorisation,

(c) the register of members, the register of members of the board of governors and the register of directors,

(d) a copy of the latest annual accounts and of any report of the auditor on them,

(e) a copy of the latest annual report,

(f) a copy of the latest information as to its forward planning.

(2) Any person who requests it is to be provided with a copy of or extract from any of the above documents.

(3) If the person requesting the copy or extract is not a member of the organisation, the organisation may impose a reasonable charge for doing so.

Auditor

19 (1) A public benefit organisation is to have an auditor.

(2) It is for the board of governors to appoint or remove the auditor at a general meeting of the board.

(3) But a person may not be appointed as auditor unless he (or, in the case of a firm, each of its members) is a member of one or more of the following bodies—

(a) the bodies mentioned in section 3(7)(a) to (e) of the Audit Commission Act 1998 (c.18),

(b) any other body of accountants established in the United Kingdom and for the time being approved by the Secretary of State for the purposes of this paragraph.

(4) The organisation is to establish a committee of non-executive directors to monitor the exercise of the auditor's functions.

Accounts

20 (1) A public benefit organisation is to keep accounts in such form as the Secretary of State may with the approval of the Treasury direct.

(2) The accounts are to be audited by the organisation's auditor.

(3) But the Comptroller and Auditor General may examine—

(a) the accounts,

(b) any records relating to them, and

(c) any report of the auditor on them.

21 (1) A public benefit organisation is to prepare in respect of each financial year annual accounts in such form as the Secretary of State may with the approval of the Treasury direct.

(2) In preparing its annual accounts, the organisation is to comply with any directions given by the Secretary of State with the approval of the Treasury as to—

(a) the methods and principles according to which the accounts are to be prepared,

(b) the information to be given in the accounts.

(3) In determining the form and content of the annual accounts the Secretary of State is to aim to ensure that the accounts present a true and fair view.

(4) The organisation must—

(a) lay a copy of the annual accounts, and any report of the auditor on them, before Parliament, and

(b) once it has done so, send copies of those documents to the Secretary of State.

(5) In this paragraph and paragraph 23 "financial year" means—

(a) the period beginning with the date on which the organisation is authorised under section [authorisation of NHS community trusts] and ending with the next 31st March, and

(b) each successive period of twelve months beginning with 1st April.

Annual reports and forward plans

22 (1) A public benefit organisation is to prepare annual reports and send them to the Secretary of State.

(2) The reports are to give any information the Secretary of State requires.

(3) It is for the Secretary of State to decide—

(a) the form of the reports,

(b) when the reports are to be sent to him,

(c) the periods to which the reports are to relate.

23 (1) A public benefit organisation is to give information as to its forward planning in respect of each financial year to the Secretary of State.

(2) The information is to be prepared by the directors after consulting the board of governors.

Meeting of board of governors to consider annual accounts and reports

24 The following documents are to be presented to the board of governors of a public benefit organisation at a general meeting—

(a) the annual accounts,

(b) any report of the auditor on them,

(c) the annual report.

Instruments etc.

25 (1) The constitution is to make provision for the authentication of the fixing of the organisation's seal.

(2) A document purporting to be duly executed under the organisation's seal or to be signed on its behalf is to be received in evidence and, unless the contrary is proved, taken to be so executed or signed.'.

Amendment No. 165, in page 99, line 2, leave out schedule 1.

Government amendment No. 253.

Amendment No. 228, in schedule 1, page 99, line 18, at end insert

'other than those attending accident and emergency who have been treated and discharged within one hour of being medically examined'.

Government amendment No. 254.

Amendment No. 229, in page 99, line 25, at end insert—

'(2) The minimum number of members required in the public constituency shall not be less than 15 per cent. of those registered to vote in local government elections in the area specified for the purpose in the constitution.'.

Amendment No. 334, in page 99, line 26, leave out paragraph 5 and insert—

'5(1) All persons who are entitled to vote in parliamentary elections in parliamentary constituencies which fall (partly or wholly) within the area specified for the purposes of paragraph 3(1) in respect of a public benefit corporation shall be members of that corporation.

(2) For the purposes of this paragraph, entitlement to vote shall be determined in accordance with the provisions of section 1 of the Representation of the People Act 1983 (c.2) (parliamentary electors).'.

Government amendments Nos. 255 to 257.

Amendment No. 335, in page 100, line 2, at end insert

'comprising twelve members, eight of whom are to be elected and four of whom are to be co-opted'.

Amendment No. 404, in page 100, line 2, at end insert

'members of which are to be appointed from the constituencies set out in paragraph 7'.

Government amendment No. 258.

Amendment No. 336, in page 100, line 5, leave out 'appointed' and insert 'co-opted'.

Amendment No. 337, in page 100, line 5, leave out from 'provisions' to end of line 6.

Amendment No. 405, in page 100, line 7, leave out subparagraph (3).

Amendment No. 338, in page 100, line 7, leave out 'appointed' and insert 'co-opted'.

Amendment No. 339, in page 100, line 8, at end insert—

'(3A) Members of the public constituency may elect any of their number to be a member of the board.

(3B) To be eligible to stand for election a member must—

(a) have been nominated by at least 50 other members of the public constituency in accordance with the provisions of Schedule 1 of the Representation of the People Act 1983 (c.2), and

(b) have his main residence within the area specified for the purposes of paragraph 3(1) in respect of the public benefit corporation.

(3C) The provisions of Part 1 of the Representation of the People Act 1983 shall apply to elections under this paragraph in respect of the public constituency as they apply to parliamentary elections, subject to such modifications as the Secretary of State may by order specify.'.

Amendment No. 406, in page 100, line 9, leave out subparagraph (4).

Amendment No. 340, in page 100, line 9, leave out 'public constituency or the'.

Amendment No. 407, in page 100, line 11, leave out subparagraph (5).

Amendment No. 341, in page 100, line 11, after 'election', insert

'in respect of the staff constituency'.

Government amendment No. 259.

Amendment No. 230, in page 100, line 11, at end insert—

'(6) The board of governors shall not be properly constituted unless at least 20 per cent. of members of the relevant constituency have voted in the election.'.

Government amendment No. 260.

Amendment No. 408, in page 100, line 12, leave out subparagraph (1) and insert—

'(1) The trust will propose a scheme for approval by the Secretary of State for the constitution of the board of governors, which must include the following constituencies—

(a) elected members of the local authority;

(b) groups representing the local community;

(c) persons representing the staff of the trust;

(d) persons representing local Primary Care Trusts;

(e) a university, if the hospital includes a medical or dental school provided by the university; and

(f) any other groups the Board identifies as appropriate.

(1A) The balance of membership will be decided by individual boards.'.

Amendment No. 342, in page 100, line 12, leave out 'More than half' and insert 'Seven'.

Amendment No. 343, in page 100, line 14, leave out 'At least'.

Amendment No. 344, in page 100, line 15, leave out 'appointed by' and insert 'co-opted to represent'.

Amendment No. 61, in page 100, line 15, at end insert

'(in England) or a Local Health Board (in Wales)'.

Amendment No. 345, in page 100, line 15, at end insert

'in the case of a public benefit corporation primarily providing hospital services and an NHS hospital in the case of a public benefit corporation primarily providing primary care services'.

Amendment No. 354, in page 100, line 16, at end insert—

'( ) At least one member of the board is to be appointed by one or more qualifying local authorities.

A qualifying local authority is a local authority for an area which includes the whole or part of the area specified under paragraph 3(1)(a).'.

Amendment No. 346, in page 100, line 18, leave out 'appointed by' and insert 'co-opted to represent'.

Government amendment No. 261.

Amendment No. 347, in page 100, line 19, at end insert—

'(5) The co-opted members shall be so co-opted by a decision of the elected members of the board.

(6) The chairman may (with the agreement of the majority of the board) remove any of the co-opted members.'.

Amendment No. 348, in page 101, line 6, at end insert—

'(1A) The chairman shall be one of the members of the board of governors elected in respect of the public constituency.'.

Government amendments Nos. 262 and 263.

Amendment No. 242, in page 101, line 28, at end insert—

'(d) a register of interests of the directors.'.

Amendment No. 243, in page 101, line 30, at end insert—

'17A The constitution is to make provision for dealing with conflicts of interest of the directors.'.

Amendment No. 244, in page 101, line 36, leave out paragraph (c) and insert—

'(c) the registers mentioned in paragraph 17,'.

Amendment No. 349, in page 102, line 5, leave out subparagraphs (2) and (3) and insert—

'(2) The auditor is to be the Comptroller and Auditor General.'.

Amendment No. 350, in page 102, line 20, leave out 'corporation's auditor' and insert 'Comptroller and Auditor General'.

Amendment No. 351, in page 102, line 21, leave out subparagraphs (3) and (4).

Amendment No. 352, in page 102, line 39, leave out from 'and' to 'before' in line 40 and insert

'the report of the Comptroller and Auditor General thereon'.

Amendment No. 353, in page 103, line 6, at end insert—

'(1A) The report shall contain a breakdown of the costs incurred by the public benefit corporation running elections and managing the membership.'.

Amendment No. 234, in page 103, line 7, leave out 'any' and insert—

'(a) information on any steps taken by the corporation to secure that (taken as a whole) the actual membership of its public constituency is representative of those eligible for such membership,

(b) any other'.

Amendment No. 167, in page 103, line 28, leave out schedule 2.

Amendment No. 62, in schedule 2, page 104, line 13, at end insert—

'Consultation with the Assembly

2A The Secretary of State must consult the Assembly before exercising any of his functions under paragraphs 1 and 2 at any time after the day on which the Assembly notifies the Secretary of State of the Assembly's intention to make an order under section 184 in relation to Part 1.'.

Government amendments Nos. 264 and 265.

Amendment No. 63, in page 105, line 3, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 64, in page 105, line 4, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 97, in page 105, line 24, at end insert 'and Community'.

Amendment No. 98, in page 105, line 28, after 'Foundation', insert 'and Community'.

Amendment No. 99, in page 105, line 32, after 'Foundation', insert 'and Community'.

Amendment No. 191, in page 105, line 33, leave out schedule 3.

Amendment No. 199, in page 106, line 22, leave out schedule 4.

Amendment No. 88, in schedule 4, page 110, line 10, leave out 'Secretary of State' and insert 'appropriate Minister'.

Amendment No. 89, in page 110, line 15, leave out 'Secretary of State' and insert 'appropriate Minister'.

Government amendment No. 266.

Amendment No. 90, in page 113, line 38, leave out 'Secretary of State' and insert 'appropriate Minister'.

Government amendments Nos. 358 and 267.

Amendment No. 203, in clause 48, page 18, line 9, leave out subsections (6) and (7).

Government amendment No. 371.

Amendment No. 204, in page 19, line 1, leave out clause 50.

Amendment No. 205, in clause 54, page 20, line 10, leave out subsection (2).

Amendment No. 206, in page 21, line 1, leave out subsection (2).

Government amendment No. 378.

Amendment No. 207, in clause 116, page 51, line 32, leave out subsection (2).

Amendment No. 149, in clause 139, page 60, line 20, at end insert—

'(aa) an NHS community trust;'.

Amendment No. 208, in page 60, leave out line 24.

Amendment No. 93, in page 60, line 24, at end insert

'all or most of whose hospitals, establishments or facilities are situated in England'.

Amendment No. 209, in page 60, leave out line 47.

Amendment No. 94, in page 61, line 17, at end insert—

'(bb) an NHS foundation trust all or most of whose hospitals, establishments or facilities are situated in Wales;'.

Amendment No. 219, in schedule 10, page 135, line 30, leave out sub-subparagraph (a).

Amendment No. 220, in page 135, line 35, leave out 'an NHS foundation trust'.

Amendment No. 221, in page 143, line 29, leave out sub-subparagraph (a).

Amendment No. 222, in page 143, line 35, leave out 'NHS foundation trust or'.

Amendment No. 223, in page 144, line 2, leave out 'or NHS foundation trust'.

Amendment No. 224, in page 144, leave out line 20.

Amendment No. 210, in clause 141, page 62, line 36, leave out paragraph (b).

Government amendment No. 252.

Amendment No. 211, in clause 151, page 73, line 29, leave out subparagraph (ii).

Amendment No. 212, in clause 153, page 75, line 34, leave out subparagraph (ii).

Amendment No. 213, in clause 156, page 77, line 29, at end insert 'or'.

Amendment No. 214, in page 77, line 31, leave out from 'Act' to end of line 32.

Amendment No. 215, in clause 175, page 94, leave out line 6.

Amendment No. 216, in page 95 leave out line 31.

Amendment No. 217, in clause 184, page 96, line 13, leave out '1' and insert '2'.

Amendment No. 218, in page 96, line 18, leave out paragraph (a).

Amendment No. 95, in page 96, line 18, leave out from 'Part 1' to end of line 19 and insert—

'(i) for sections 2, 29 and 30, the Secretary of State;

(ii) for section [Community Health Councils and NHS foundation trusts in Wales], the Assembly; and

(iii) for the other provisions of the Part, and section 182 and Schedule 13 so far as relating to those provisions—

(a) in relation to England, the Secretary of State; and

(b) in relation to Wales, the Assembly;'.

Amendment No. 225, in schedule 13, page 151, leave out lines 3 to 26.

Photo of Mr David Hinchliffe Mr David Hinchliffe Labour, Wakefield

The purpose of the amendments tabled by my hon. Friends and I is to delete the foundation trust proposals from the Bill. I certainly support most of the remainder the Bill. It could be carried forward without part 1, which is the controversial element that many Labour Members oppose.

There are three key reasons why I am a member of the Labour party: my party has traditionally stood for redistribution of wealth and a fairer society; it has traditionally stood for comprehensive education and equal opportunities; and it introduced a national health service based on sound socialist principles. I emphasise the word "national" in national health service because the concept of the national health service is fundamental to the debate.

There was no national system before 1948. It was hit and miss as to whether local provision existed. There was a geographical lottery and people sometimes suffered as a direct consequence of that. Such a diversity of provision seems to be the aim now and I am worried that it will hit at the heart of much of what my party has achieved by bringing about the national health service.

The current Government have a proud record on health. I pay tribute to my right hon. Friend Mr. Dobson and the Health Ministers who are in the Chamber. I also pay tribute to my right hon. Friend Mr. Milburn, who is not in the Chamber, for his contribution to many of the Government's health achievements.

There is record investment in the national health service and record staff recruitment and training. We have a record capital programme to address hospitals that have been falling down for years and that suffered from gross under-investment. Pinderfields hospital, which is in my constituency, is such a hospital, and I am proud that we will soon have a new hospital. I am proud of the quality measures that the Government have introduced for our health care system. I am especially proud that we ended the Conservative internal market because my area experienced the two-tier system that was at the heart of our concerns about that. People living in the same street had different access to key health services, as I have said on many occasions in the House. I am proud that we set about getting rid of competition in a service that is essentially based on collectivism and co-operation.

Photo of Angela Eagle Angela Eagle Labour, Wallasey 1:45 pm, 8th July 2003

I am looking in astonishment at the Conservative Benches, which are completely devoid of any Back Benchers except for one high-quality Member. The Labour Benches are packed with people who will debate passionately the future of our health service. Is that not the most telling thing that we have seen today?

Photo of Mr David Hinchliffe Mr David Hinchliffe Labour, Wakefield

In defence of Mr. Lansley, who is sitting on the Conservative Benches, he probably knows more about the health service than the rest of his colleagues put together.

For the first time in the history of the health service, we have a Government who are committed to the empowerment of primary care. That is probably the most crucial policy development that they have achieved. The history of the health service has been dominated by the concerns of the acute hospital sector and by hospital consultants. We have never before exploited the potential of primary care, but primary care trusts are starting to achieve that. I strongly commend the steps that the Government have taken.

Photo of Howard Stoate Howard Stoate Labour, Dartford

Does my hon. Friend agree that the ballot of general practitioners in which 80 per cent. voted in favour of the new GP contract shows that primary care physicians are committed to leading the NHS toward the modernisation that we so richly deserve in this century?

Photo of Mr David Hinchliffe Mr David Hinchliffe Labour, Wakefield

I was delighted by the result of the GP ballot. It is also worth placing on record that the Royal College of General Practitioners, which represents GPs, including my hon. Friend, has come out strongly against foundation hospitals. No doubt he will take note of that point.

I shall outline the key concerns that many of us have. One lesson that I learned through my work on the Select Committee on Health is that the last thing that our health care system needs is further restructuring and change, especially ill-considered change that has not had its potential consequences worked through. As I said on Second Reading, there have been 18 significant restructurings of our health care system during the past 20 years. People ask me where all the money has gone—it has gone on many of those restructurings.

I have examined redundancy costs of staff who have gone down the road and early retirement costs. It is worth considering the possible salaries of the people who will be chief executives of the new foundation trusts. Some are campaigning enthusiastically for foundation status in the full knowledge that they are guaranteed to receive a huge salary hike. When we consider the use of scarce resources, we should be aware of how resources that should be used for patient care are being used—they are being used for ill-thought-out restructurings. I bet that there will be at least three more restructurings before the end of the proposed five-year roll-out of foundation hospitals. We should listen carefully to the many in the health service who say, "Enough is enough." We should let reforms bed down and let investment take effect so that we deliver on patient care.

I mentioned my pride that the Labour Government have moved away from the internal market that the Tories introduced. One of my central worries about the principles that underpin foundation status is that the policy will mark a return to a market-oriented approach to health care. It will undoubtedly restore a competitive ethos, putting hospital against hospital and doctor against doctor. I know from talking to managers that they are looking over their shoulders at their rivals in their localities and elsewhere in the regions in which they are based.

The policy is about winners and losers. It is clear from the Government's response to the Health Committee report on foundation trusts that capital spend by foundations will have an impact on the wider NHS. So when I talk to colleagues about their position on the issue and they say to me, "David, I'm going to have a foundation hospital in my constituency", I say, "That's all well and good, but have you thought about the impact on your neighbours?" There will be a foundation hospital near my constituency and I am aware of the serious impact that it will have on the health economy elsewhere in the west Yorkshire area. We have to consider that issue because it is fundamental to concerns about foundation status.

Photo of Louise Ellman Louise Ellman Labour/Co-operative, Liverpool, Riverside

Does my hon. Friend share my concerns that the new system could lead to fragmentation and competing trading organisations—some in the public sector, some in the private sector—without us fully debating the implications of that concept in the Chamber?

Photo of Mr David Hinchliffe Mr David Hinchliffe Labour, Wakefield

I do. In a sense, my hon. Friend takes me to my next point. A number of organisations that have lobbied against foundation status have said that it is a step towards privatisation. I have never said that. I did not make that claim on Second Reading and I do not think any of my hon. Friends who oppose foundation status made it either. However, a briefing document states:

"a series of amendments were put down" in Committee

"that open the doors to foundation hospitals actually being able to increase the amount of private work they undertake. Clause 15 of the Bill used to say that the regulator 'must' restrict the private work of the foundation hospitals; it now only says that the regulator 'may' restrict this work."

Before my hon. Friend Jim Dowd, who will probably be in the Chamber later, accuses me of reading from a Unison briefing, the document was issued by the Independent Healthcare Association. It is a briefing from the private sector. The association fears that foundation hospitals will lead to more privatisation—more private work in those hospitals—and the impact that that will have on private hospitals. We have to take serious note of that. I have not raised the issue before, but I think that it is relevant in view of the association's comments.

Photo of Mr Kevin Hughes Mr Kevin Hughes Labour, Doncaster North

Does my hon. Friend recall campaigning against trust status, in particular the self-appointed quangos introduced by the Tories? We pledged that, when we got into government, we would do away with those. The Bill does that and installs local democracy. Does he not think that that will act as a check on the problem that he raises? I think that it will.

Photo of Mr David Hinchliffe Mr David Hinchliffe Labour, Wakefield

If my hon. Friend looks at the Health Committee report, he will see that we calculated that, rather than getting rid of bureaucracy, the new system would increase it. I remember speaking in support of my hon. Friend's candidature when he stood in Doncaster and I argued against the Tory internal market. He was with me on that. He may not be with me at the moment, but the principles are the same. I hope that he understands that we are talking about the internal market, which he opposed before he became a Labour MP.

Photo of Mr David Hinchliffe Mr David Hinchliffe Labour, Wakefield

No. I want to make progress. My hon. Friend will have an opportunity to respond. I am conscious that other colleagues want to participate and I have some points to make before I conclude.

A key consideration, which relates to my pride in the way in which the Government moved towards a primary care NHS, is that the policy on foundation hospitals runs directly contrary to that. It is a return to the dominance of certain acute hospitals. It does not make sense to talk about the new GP contract enhancing the role of primary care if we are suddenly to return to the empowerment of a small number of acute hospitals. That will be to the detriment of primary care and community care.

I have argued many times in the Chamber for local governance of health. I have made all sorts of arguments over the years, including when I was on the Front Bench, about how we would achieve local governance, but it has been resisted up to now by the Labour party and its Front-Bench spokesmen. I welcome the commitment to move towards local governance, but I do not think that it has been properly thought through. We should consult on and think about some of the issues that it raises.

I was interested to read the Health Service Journal this week, which reported the discussions at the NHS Confederation conference last week. It publishes the comments of two chairs of trusts that hope to receive foundation trust status. John Charlton, the chair of University hospital Birmingham, said:

"We are only a matter of months away from foundation trusts and it doesn't seem to me that anybody has thought the governance through."

He went on to say:

"Yes, let's have autonomy, let's have accountability, but for goodness sake don't expect us to have a 5,000-strong membership. That would be an absolute nightmare."

Frankly, if that is what a chair of an applicant trust is saying, I wonder where we are coming from because I would have thought that 5,000 would be a minimum.

Photo of Mr David Hinchliffe Mr David Hinchliffe Labour, Wakefield

I want to carry on.

Peter Dixon, the chair of University college London, another foundation trust applicant, remained concerned that those with an interest in governance might not represent the wider needs of the public. He said:

"We will be choosing between the Hampstead Heath Conservation Society and the local Trotskyists. The Marsden"— the Royal Marsden in London—

"is worried about animal-rights protesters because of their research . . . There is a danger of disenfranchising those who don't have sharp elbows."

That sums up my concerns.

Several hon. Members:

rose—

Photo of Mr David Hinchliffe Mr David Hinchliffe Labour, Wakefield

With the greatest of respect, I want to conclude. I have given way several times and many hon. Members want to speak.

I am concerned that the policy is part of a growing trend of policy making on the hoof. I raised that with the Prime Minister in the Liaison Committee this morning. The policy has not been properly thought through and there has been no proper consultation. Where is our manifesto commitment on it? I was not elected on the basis of foundation trusts; I was elected to get rid of the ethos that is behind foundation trusts. Where is the policy formulation in the party? I discussed the matter with my general management committee and it has not come through for discussion in the policy forums or at conference. Where is the Green Paper? Where is the White Paper?

We are bouncing to policies that are not fully thought through. The number of Government amendments tabled gives the impression of a policy that has been made on the back of an envelope. I hope that the Government will remove the part of the Bill on foundation trusts and not force us to go against them. They should go back to the drawing board and leave the rest of the Bill to go through the House unchallenged.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

The debate is important. Quite how important depends on which Government view of it we take. The Prime Minister tells us that the reforms are of monumental, historic importance, but the new Secretary of State told Back Benchers this week that the reforms are of little importance so they need not be worried about the amount of change that is being introduced. Both those views cannot be true, unless one is part of the Prime Minister's closest coterie and lives in the Alice in Wonderland world where it is possible to believe two opposites at the same time.

We have never made a secret of the fact that we favour the principle of foundation hospitals, especially the way in which they have been established in Spain and Sweden. Early in the debate on the Bill, we laid out what we wanted: foundation hospitals that can borrow according to their own plans outwith the limits set by Government; that are free from political interference; that are free from central targets and bureaucracy; and that are free to set the pay and conditions that they think appropriate to attract staff in their locality and with different clinical specialties.

I realise that that puts me in a diametrically opposed position to Mr. Hinchliffe, but I have to admit that there is much truth in what he says. The policy is a move back towards an internal market-type system, which we support and would like extended. Indeed, the Government are not moving as far in that direction as we would like. Some people say that we could build on the Bill—were we to inherit it in its current form, we could use it as a prototype to take our plans much further. Indeed, we could and almost certainly would do that, but we believe that there are a number of practical reasons why the system as it has been set out in the Bill is so flawed that it will lead to a much worse system of health care than we have at present.

What are our major objections? First, there is freedom, but only for a few. Instead of a gradual roll-out for everybody, there is to be a total roll-out for some and none for others, which seems to maximise the potential for instability in the system. If one tried to design a system to give greater instability, it would be difficult to do.

There is borrowing, but only within the limitation of the NHS budget, which by definition means that if any foundation hospital gets more investment, there will be less investment in another hospital in the NHS. That is different from the case being advanced. The Government will tell us that at present hospitals must compete for a share of the budget, and the proportionate effect will occur anyway. Under the proposals, however, some will be dealt a stronger hand than others vying for the same budget. The whole point of foundation hospitals in other countries was to allow them the freedom not to have to borrow within the state budget, but to borrow from outside, therefore not affecting the total amount available in the public system. The Government seem to have missed the point of the system in Spain and Sweden.

Another issue is the independence of the system. Great play was made on Second Reading about the independence of the regulator. The term "independence" was not used in a sense that any of us would recognise. The regulator is appointed by the Secretary of State, he can be dismissed by the Secretary of State, his pay and conditions and pension are determined by the Secretary of State, he has to report to the Secretary of State on anything the Secretary of State deems fit, and he cannot grant foundation status except with the prior agreement of the Secretary of State. The system is to be run by the Secretary of State in all but name.

I have a number of questions that I would like the Minister to deal with when he speaks. The first is about pay. The previous Secretary of State said that managers should have

"freedom and flexibility within the new NHS pay systems to reward staff appropriately".

What does "appropriately" mean, in the context of foundation hospitals? Secondly, what does it mean in terms of the Chancellor's new plan, as laid out in the Budget, to introduce regional pay throughout the public services? How would that impact on the proposals for foundation hospitals, and how does it fit with the Prime Minister's pledge last week that all NHS staff will continue, as long as the Government are in office, to have above-inflation pay settlements? How does that relate to the independence of foundation hospitals?

Photo of Angela Eagle Angela Eagle Labour, Wallasey 2:00 pm, 8th July 2003

I am listening to the hon. Gentleman's comments with interest. Could he tell the House which way his party will vote on the amendment?

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

Unless we hear something quite unexpected from the Minister, we will almost certainly vote with the hon. Member for Wakefield in support of the amendment. As I said, there are strong reservations about this part of the Bill.

We have concerns about governance. Where is the logic in applying any democratic leverage in the system not to the commissioners of health care, but to the providers? If there is a place for local democracy to be involved in the determination of the spending of health funds, it would have been far more logical to bring in election at the level of primary care trusts, where decisions about the commissioning of services, and therefore the spending of funds, will be taken. What is the point of introducing a democratic element into the providers—the hospitals? At that point, they cannot determine what the balance of the provision of services will be, because those decisions will already have been taken by the PCTs in charge of the funding. I find the proposal utterly illogical. It seems to invert the Government's intention.

Photo of John Mann John Mann Labour, Bassetlaw

In my area, local people want a say about the future of accident and emergency services. The one hospital in Bassetlaw is part of a larger trust, Doncaster and Bassetlaw. When the decision was made to downgrade Bassetlaw hospital under the current rules, not only were people not allowed to have a formal say, but they were not even allowed to find out about it until decisions were being made. I called a ballot on that and 35,000 people voted—a 60 per cent. turnout. That was not within primary care. What is wrong with that principle?

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

That makes the point. The provision and maintenance of services is dependent on the funding of the services. It is the primary care trust that is responsible for the funding of accident and emergency services. There seems to be a dislocation between what the Government said they intended to do, and what they are doing through the Bill. There is no logic in the Government's approach.

I have a huge problem with the way in which the Government propose to take governance forward. Members of the foundation hospital board will be drawn from the public and the staff. The public members may be those who have attended an NHS foundation hospital as a patient or a carer. On the last two occasions on which we have had Health questions, Mr. Bradley asked about the Christie hospital. At a large hospital with regional and national status, where patients may come from all parts of the country, what will be the constituency if such a hospital became a foundation hospital? Twice Ministers failed to come up with an answer to one of the most fundamental questions about the practical application of the Bill.

Are we to have a foundation hospital which, because it can draw patients from anywhere in the country, can have hundreds of thousands, and possibly millions, of potential members, and what will the legal requirements be for the hospital trust to ask each of those members whether they want to be elected to the board? The system is supposed to reduce bureaucracy and red tape, according to the Government. It will create a nightmare of bureaucracy and red tape, without even considering the cost.

Let us consider a simple example—a foundation hospital with a patient catchment of 500,000 patients. Let us assume that one in 10 of the patients in the catchment area might want to be a member of the foundation hospital board at a servicing of between £4 and £5 a year, which is the cost estimated by trusts that have indicated that they might want foundation hospital status. If we add to that the cost of advertising and running the elections, we are speaking of a cost of £240,000 per year per trust simply to maintain and run the electoral arrangements and the foundation hospital board.

That cannot be what Ministers meant when they said that the public were willing to pay higher taxes to get better quality health care. The public will pay higher taxes, only to see the money diverted on a huge scale into an unnecessary bureaucracy that does not even exist yet. The hon. Member for Wakefield mentioned one of the trust chairmen, who also said that far too much of the time of his management would be taken up preparing and running the consultation process, rather than managing the hospital. All hon. Members must surely have deep reservations about the practical implications, if not the principle, of the proposal.

Photo of Gary Streeter Gary Streeter Shadow Minister (Foreign and Commonwealth Affairs)

My hon. Friend has spent a great deal of time in the past couple of years speaking to people who run hospitals. How many NHS trust chief executives, consultants, doctors and nurses have said that the real problem with the health service and with our acute hospitals is some kind of democratic deficit? Are not the Government introducing measures that will not improve the health service, and should they not think again?

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

Without going into the concept of the democratic deficit, I can say that as a doctor I have never had a patient and as an MP I have never had a constituent coming to complain that they had a real problem with the democratic deficit in the NHS. They usually complain about access to health care. There are arguments to be made about how a system of publicly financed health care is to be made accountable to those who use and pay for the system through their taxes, but the Government's proposals are not a reasonable solution, for the reasons that I have set out.

I want to mention just one or two other practical implications, as I know that many hon. Members wish to speak. The hon. Member for Wakefield referred to the problem in respect of private income. We believe that what Ministers are proposing has an enormous unintended consequence, as trusts will effectively be limited to the private income that they currently have and will not be allowed to increase it. I have raised the issue with the Minister before and we have still not received a proper answer. The provision will mean that when the new opportunities fund or a charity provides an MRI scanner for a national health service hospital, the foundation trust is prevented from selling to the private sector any spare time when that equipment is not being used to raise greater income. However, the private sector will be able to sell extra time on an MRI scanner to the NHS. Surely, that cannot be what the Government intended. Only a very badly thought out set of provisions would allow that to happen.

I have one other major reservation. Foundation hospitals are supposed to be set free from central regulation, yet they will be subjected to one of the forms of regulation that I find most ineffective and which is most resented in the health service—the star-rating system. In my constituency in north Somerset, we have five hospitals around us: the Weston hospital, the Royal United hospital in Bath and the three main Bristol hospitals. All those hospitals are officially no-star hospitals. In itself, that is deeply insulting and demoralising to staff, who would like to think that at least some of the services that they offer are high-class services and who resent hugely being rated across the board as having no stars. If there were one thing that might have attracted hospitals out of the current set-up and into the foundation hospital arrangement, it is that they would be freed from that deeply demoralising way of labelling our hospitals. Yet, that one opportunity is going to be denied. In almost every respect, the opportunities that the Government could have taken have been missed. Instead, they have misunderstood what could have been offered and introduced a new series of complexities, bureaucracies and costs that do not exist in the current system.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

I was interested in what the hon. Gentleman said about private income. I think that he has a good point. Does he agree that one approach in tackling the issue is not to set an artificial maximum, but to ensure that the only restriction is that no NHS patient with greater clinical need should wait for a slot that might be given to private, paying patients? Amendment No. 400 deals with that point.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

There are a number of ways of dealing with the practical problem; indeed, some were mentioned in Committee and raised in amendments. I was simply pointing out that there is a perverse consequence in what the Government propose. It cannot be what Ministers intended and such provision will be unworkable.

Finally, the Office for National Statistics has said:

"NHS Foundation Trusts are a new type of organisation called a 'public benefit corporation'. . . This set-up has similarities with the model adopted for Network Rail.

However, the trusts' ability to determine its general corporate policy will be restricted by government's involvement via legislation and regulation. These regulations are many and significant, leaving very little scope for changing the corporate policy of each hospital. The ONS has judged that this involvement is sufficient to determine that the trusts are government controlled."

It seems that the Government have managed to get the worst of both worlds. What we are going to get is the triumph of Network Rail, augmented by central Whitehall control. And this is progress.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I should like to begin by speaking to the amendment moved by my hon. Friend Mr. Hinchliffe and to set out one or two observations about other amendments.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

On a point of order, Mr. Deputy Speaker. As a large number of hon. Members intend to speak, may I ask whether it is normal for the Minister to speak before hon. Members have had a chance to make their voices heard?

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

The Minister will be speaking in support of amendments to a Government Bill and it is usual for the occupant of the Chair to call the Minister to speak at this stage if he seeks to rise. Under the Standing Orders, that will not preclude his making a short winding-up speech at the end of the debate.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health) 2:15 pm, 8th July 2003

Thank you, Mr. Deputy Speaker. I genuinely want to be helpful to the House, which is why I thought that it would be useful for me to speak now. If it is more helpful to hon. Members on both sides of the House, I shall confine my remarks to amendment No. 164 and the Government amendments. In the short winding-up speech that I might look forward, if that is the right phrase, to making if I catch your eye, I shall confine my comments to the other amendments.

I respect the sincerity of my hon. Friend the Member for Wakefield and the strongly held views that he and many other hon. Friends have expressed about NHS foundation trusts, but I believe profoundly that he is wrong in his analysis of the Government's policy and his description of the impact that the reforms will have on our national health service. I shall explain in a moment why I believe that he is wrong, but one thing needs to be made clear at the outset: the Government have listened to the concerns that have been expressed about that part of the Bill, and we have acted on those concerns. We tabled amendments in Committee, for example, to strengthen the accountability to this House of the new independent regulator of NHS foundation trusts. We are seeking to amend and improve the Government's arrangements in schedule 1 to make them fairer and more effective. Dr. Fox referred to his concerns, which I shall deal with in a moment. We have ensured that the new national health service pay arrangements will apply to NHS foundation trusts.

Photo of Judy Mallaber Judy Mallaber Labour, Amber Valley

I thank my right hon. Friend for giving way. He will know that the anxiety about the issue that he raises is that foundation hospitals could poach NHS staff from other hospitals by offering better pay and conditions. To avoid such an outcome, will he ensure that the newly negotiated "Agenda for Change" applies on the same timetable and basis for foundation hospitals as for non-foundation hospitals and consider further ways of locking in an assurance that hospitals will continue to abide by "Agenda for Change" and national pay rates in future?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I am grateful to my hon. Friend for her remarks. I shall make a few more comments about "Agenda for Change" in a moment, but I understand the point that she makes and have every sympathy with it. That is why I believe that it is important that all NHS foundation trust applicants agree to sign up to "Agenda for Change" as part of the approval process. My right hon. Friend the Secretary of State will not approve for submission to the independent regulator any application from an NHS trust that does not contain that clear and express provision.

We have made it very clear that the timetable that we envisage for implementation of "Agenda for Change" should be broadly coterminous with the arrangements in the other early implementer sites. I have also made that clear to the trade unions. We recently told trade unions that the NHS foundation trusts will start to apply the new "Agenda for Change" arrangements from this April, should they be set up at that time, but it will be done on the basis of a rolling programme between now and October, so that we can learn the lessons from what is happening in the early implementer sites. If any modifications are needed, they can be made in the NHS foundation trusts as well as other early implementer sites. I hope that my hon. Friend Judy Mallaber will take it from that that my answer to her question is broadly yes, which is what we have said to the trade unions.

We have also strengthened the audit rules to ensure greater financial transparency. The rules have been the subject of extensive comment both in Standing Committee and elsewhere. We have introduced a cap on the income that NHS foundation trusts can earn from private patients, so that NHS patients will always come first. We have also moved to ensure that the NHS in England will not become a two-tier service, as all trusts will have an opportunity to become NHS foundation trusts in the next few years.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

The Minister says that he insisted on a cap, but did he not table in Committee amendments that weakened the regulator's role in enforcing the cap by transforming it from a duty into a power? The changes also made it clear that the regulator need not enforce the cap in some cases. As far as any concessions were made in Committee, they were made in reverse on the important issue of pay beds and private income.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

No, that is completely not the case. In case any hon. Member is confused, let me just deal with that point, because my hon. Friend the Member for Wakefield and others have expressed concern to me about it. The amendments that we tabled in Committee were purely and simply designed to ensure that the ability of NHS foundation trusts to treat patients from Scotland, Wales and Northern Ireland was not compromised by the Bill. That is the sole extent of the changes. Let me make it clear that under clause 15(2) the regulator must impose such a restriction on the amount of private business that an NHS foundation trust can undertake. There is no question at all about that: he must exercise that provision.

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

As my right hon. Friend suggests, this is an extremely important matter. Clause 15(1) says that an authorisation "may" restrict. As I understand it, that "may" was inserted in place of "must". How does that strengthen regulation?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

As I have tried to explain, we changed the word from "must" to "may" to deal with the issue of whether the trust is treating patients from Scotland, Wales or Northern Ireland; it may not be. I give my hon. Friend this absolute assurance—

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I am sorry to interrupt the Minister, but it would be helpful if he addressed his remarks to the Chair, not behind him.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I am sorry, Mr. Deputy Speaker. It is always nice to look into the eyes of my hon. Friends when trying to be reassuring and tell them how it is. My only other choice is to look at that lot over there. [Interruption.] Well, one or two of them are not too bad, but some of them really do suck.

The point that I am trying to make to my hon. Friend Mr. Stevenson is that he, like others, has confused the amendments that were made to clause 15(1) with the requirement in clause 15(2) that the regulator shall exercise his powers to impose such a cap. I recognise that it looks on first reading as though there has been a change, but I give my hon. Friend an absolute assurance that the regulator must impose a cap on the volume of private patient activity that an NHS foundation trust is to undertake.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

With the greatest of respect, I am conscious that many other hon. Members want to speak, and I am trying to get through my points as quickly as I can.

These are all significant movements. We have tried to reach a sensible set of positions. The Tories say—we have heard it again from the hon. Member for Woodspring—that we have not gone far enough, and some of my hon. Friends say that we have gone too far. That probably means that we have got it about right.

In putting forward his arguments against part 1 of the Bill, my hon. Friend the Member for Wakefield made a number of claims. Let me deal with those. First, the claim that NHS foundation trusts will reintroduce the old internal market is not true. That system was based on two-tier commissioning and price competition. Primary care trusts will do all the commissioning in the NHS and, as my hon. Friend well knows, there will be a new national tariff for all hospital services as part of our reforms to NHS finances. NHS organisations will all be paid the same for the same procedures, whether they are NHS foundation trusts or not. Those reforms to NHS finances are all about ensuring that NHS assets are used to maximum effectiveness for the benefit of NHS patients. They are not designed to, nor will they have the effect of, reintroducing the damaging effects of the old internal market.

In the old internal market, there were no national standards and no independent inspection and audit arrangements. That has all changed. In the old internal market, there was no statutory duty of co-operation between NHS bodies. That has changed, too. The very same statutory duty of co-operation that is contained in the Health Act 1999, and which my right hon. Friend Mr. Dobson rightly said would bring the internal market to an end when he introduced the debate on that legislation on Second Reading, is now being extended to NHS foundation trusts. I profoundly believe that it is a myth that these proposals reintroduce the internal market: they do not.

Secondly, it is wrong to suggest that NHS foundation trusts can gain only at the expense of everyone else. As I have said, there will not be one set of rules on revenue for NHS foundation trusts and another set of rules for NHS trusts; there will be one set of rules for everyone. On capital, we have made several things repeatedly clear. First, there will be proper limits on how much NHS foundation trusts can borrow, which will be determined according to the terms of a prudential borrowing code and their ability to service debt.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I greatly respect the hon. Gentleman, but I really do want to make my points. Perhaps I will get round to him, although I suspect that he intends to make his own speech.

Secondly, the independent regulator must take into account the impact of NHS foundation trust borrowing on the wider NHS when he sets their individual borrowing limits. Thirdly, NHS capital budgets are sufficient over the next few years, until every trust becomes an NHS foundation trust, to provide the necessary capital requirements for both foundation trusts and NHS trusts; in fact, there will be a 144 per cent. increase in capital for the NHS in the next five years. So it is not the case that foundation trusts can borrow whatever they like and thereby ensure that every other trust has to go without. NHS foundation trusts will be able to take advantage of a new approach to lending, which means that they can borrow up to their limit without the need to obtain approval from the centre for each investment decision. The new arrangements will be less bureaucratic and less burdensome. It is true that foundation trusts will be able to access capital from public as well as private sources, but these are sensible and reasonable reforms—they are not about robbing Peter to pay Paul.

Thirdly, foundation trusts are not about a super elite. Over the next four to five years, all NHS trusts will have the opportunity to become foundation trusts. In the meantime, we are investing a further £200 million to improve performance in poorly performing trusts, so no one will be left behind.

Photo of Clive Efford Clive Efford Labour, Eltham

If NHS hospitals are allowed to borrow up to an overall envelope limit, will any additional spending by a foundation trust, whether it comes from the private sector or not, count against other NHS hospitals and therefore limit their scope? If so, foundation trusts will have an advantage over other NHS trusts.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

My hon. Friend must take into account one fundamental issue: namely, that foundation trusts are not at liberty to borrow whatever they would like to borrow irrespective of their ability to service the debt. They must be able to service the debt. That, in turn, must be related to the revenue that they have secured through primary care trust commissioning to provide services to NHS patients. As I said, the independent regulator of NHS foundation trusts must, in approving and setting the borrowing limit, take into account the impact of foundation trusts' borrowing on the wider NHS. As elsewhere, we have tried to balance those important new freedoms with some essential safeguards. That is essentially the point that I am trying to make to my hon. Friend the Member for Wakefield.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

No, I will not.

Fourthly, my hon. Friend suggested that the proposals will undermine primary care and its emerging role in the NHS. That, too, is simply not true. It is not the case that there is no need for further reforms in the acute secondary care sector of the NHS; and it is possible to implement those changes without compromising on the key role that primary care trusts will have in the NHS in future. The Bill does not change commissioning arrangements: primary care trusts will still lead the development of the NHS.

Finally, as I said to my hon. Friend Clive Efford, we have tried to balance operational and financial freedoms with the right safeguards, so that the NHS continues to operate as an effective, comprehensive and universal service. All trusts wishing to become foundation trusts will operate the new national pay system—we do not want any unfair poaching of staff—and foundation trusts' actions will be subject to the new arrangements on local public consultation.

NHS foundation trusts embody a new form of social ownership that provides a much stronger means whereby health services can become more responsive to local needs because local people will have more say over them, as will local staff. We have developed in this country a form of public ownership in which the public frequently feel that they own nothing at all, and in which public ownership has become synonymous with state control. Those are significant problems for all of us who believe in the public service; the Bill provides a solution to both those deficiencies.

Photo of Gordon Prentice Gordon Prentice Labour, Pendle

Will my right hon. Friend tell me whether individuals who want to become a voting member of a foundation trust will have to pay £1, as specified in the Bill, or merely pledge to do so?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health) 2:30 pm, 8th July 2003

They have to agree to pay up to £1. The provisions of individual constitutions of NHS trusts will be determined and agreed locally through consultation.

Photo of Mr Keith Bradley Mr Keith Bradley Labour, Manchester, Withington

I shall ask a question about which my right hon. Friend may have notice, since I have already asked it on several occasions. What will be the electorate for a specialist hospital such as Christie in my constituency? Who will be eligible to vote on the governance of that hospital?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I am happy to try to answer my right hon. Friend's concerns, because they are perfectly reasonable and many other hon. Members have raised them. The Christie hospital is a unique asset to the NHS. It is a regional—indeed, national—centre of expertise for cancer services. The Bill requires a public constituency for the NHS foundation trusts, and that must include representatives who are elected from the area in which the hospital provides services. However, in the case of NHS foundation trusts such as Christie's—if it became one—we assume that the majority of the public constituency, especially those elected to the board of governors, would be chosen from the patient constituency, for which the hospital predominantly provides services. That group comprises many people, and we want to work with local foundation trusts to develop the proper mechanism for reaching out to members of the patient constituency and inviting them to become members of the foundation trust.

Conservative Members today expressed their disdain for the democratic process. They do not want a democratic model of governance for NHS foundation trusts.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

No, I shall not.

The hon. Member for Woodspring tried to pooh-pooh suggestions that there was anything commendable in the proposal for patients to have a say in the governance of their local hospitals. He is wrong. It is a fundamental principle of democracy to extend patient choice and involvement in the NHS.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

Before the Minister leaves the subject, what is the answer to the question? What is the patient constituency for a hospital such as Christie? The Minister says that the Government would like to consult about that in future. That pinpoints the weakness of the Bill: it is being made up as we go along.

Hon. Members:

Hear, hear.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I note that some of my hon. Friends support the Conservative spokesman on that point.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

They are entitled to disagree with you.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

Of course they are all entitled to their views. I have made it clear that I respect my hon. Friends' views. However, the hon. Gentleman sits here day after day, berating the Government for being a command-and-control Administration. He claims that we dictate everything from the centre. In the Bill, we are trying to set a broad structure for local governance, which should be determined and agreed locally, but in a structure of basic guarantees.

In response to the point of my right hon. Friend Mr. Bradley about the governance at Christie hospital, I have made it clear that the majority of the board of governors will be elected from the patient constituency.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

No, I shall not.

For example, patients that the hospital treated in the past three years are eligible. The guide for applications to become an NHS foundation trust sets that out clearly.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I have great respect for my hon. Friend, but I have given way to him once and I must make progress.

Local consultation will take place and agreement will be reached on the governance issues for each applicant for foundation trust status. We have strengthened schedule 1 today as the result of points that my hon. Friends the Members for West Bromwich, West (Mr. Bailey) and for Ealing, North (Mr. Pound) made in Committee. It provides for an improved framework for local accountability and engagement, and the governance arrangements are clearer and more transparent. The Government have listened and acted on the concerns to which hon. Members rightly drew our attention. The Bill is therefore better and stronger. The Government will accept the relevant amendments that my hon. Friends tabled.

I believe that the aspects of the Bill that we are considering fully reflect the basic principles of the NHS, and are based on the values of public service. They are not about two tiers, markets, competition or privatisation. Nor are they about change for change's sake or simply another round of NHS reorganisation. The measure is fundamentally about how we can best improve local health services so that the patient benefits.

Photo of Howard Stoate Howard Stoate Labour, Dartford

The purpose of the Bill is to give patients more say, flexibility and control over local services. Surely foundation hospitals are merely one mechanism for doing that. We are making a huge amount of fuss about a relatively small reorganisation to allow more flexibility in the running and provision of services.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I agree with my hon. Friend in many respects. The reforms are important but basic, and I hoped that my hon. Friends could support them, especially since they apply to the democratic governance arrangements. Labour Members have always argued that there is a democratic deficit and the Bill tries to remedy that.

As my hon. Friend said, the measure gives patients a stronger say about what happens in their local NHS and allows local staff to get on with the job of sustaining improvements in the quality of local services. It will take Whitehall out of the daily management of NHS hospitals and help to deal with health inequalities more effectively than the current "one size fits all" model. Local needs and priorities can be better reflected. Giving foundation trusts greater freedom to do the job must be matched by new forms of local accountability, otherwise we could disfranchise rather than empower local people.

The measures on NHS foundation trusts are based firmly on Labour's traditional values and applying them to today's new world, where people rightly want more personally tailored health care, where their needs should always come first and where everything that we do is judged by one simple yardstick: how will matters be improved for patients? That is why we are introducing the Bill.

I simply say to all my hon. Friends: do not vote in the same Lobby as the Tories when the future of the NHS is at stake. The Tories want only one simple thing—they want the NHS to fail so that they can peddle their solutions of spending cuts, subsidised private medical insurance and top-up vouchers for those who can afford to go private. It is a policy for the few, not the many. Labour Members should be in the Government Lobby this afternoon, supporting NHS principles and values.

Let me briefly consider the Government amendments, especially No. 253. It would require NHS foundation trusts to use electoral wards to define their public constituencies. The amendment would provide further clarity in defining boundaries for public constituencies.

In Committee, concerns were raised that those whom the trust did not directly employ could not become staff members. Government amendment No. 254 would ensure that those people, who have an interest in the organisation because they work there and contribute to its services, could also be members of the staff constituency. That will include, for example, those who work for cleaning contractors when that work has been passed to a private, independent operator. The amendment would also affect our stated intention to ensure that staff on rolling contracts who are continuously employed by the trust for at least 12 months are eligible to become members of the staff constituency.

Government amendments Nos. 255, 256, 257, 258, 260 and 262 would remove the bankruptcy and criminal conviction exclusion criteria for members and apply them solely to governors and directors. As I said earlier, we shall accept new clause 24 and amendments Nos. 233 and 234, which my hon. Friend the Member for West Bromwich, West tabled. I pay tribute to him for his work to strengthen the Bill.

Clearly, the process for selecting the representatives of the local community who serve on the board of governors must be fair and transparent. The Bill therefore requires governors who represent patients, the public and staff to be chosen by election. Provided that there is a requirement for contested ballots to be secret, foundation trusts could be allowed to use different forms of voting, such as voting electronically or in person, as set out in Government amendment No. 259.

Government amendment No. 261 clarifies that representatives of local partner organisations can be appointed to the boards of governors of NHS foundation trusts, as set out in a guide to NHS foundation trusts. Government amendment No. 263 deals with the appointment of a chair, to put the matter beyond doubt.

The Government will also accept amendments Nos. 242 to 244, which my hon. Friend the Member for Ealing, North tabled. They deal with conflicts of interest. We shall also accept amendment No. 354 on local authority representation on the board of governors of NHS foundation trusts. I am grateful to my hon. Friend Brian White for tabling it.

Opposition Members and some of my hon. Friends intend to move other amendments later. I shall deal with those shortly. Government amendments Nos. 247 and 248 deal with the private patient cap. Earlier, we discussed private patient provisions. I should like hon. Members to accept amendments Nos. 247 and 248. The regulator has powers to set any terms that he considers appropriate to the terms of authorisation under clause 6(3). However, the amendments would make it explicit that the regulator can restrict the provision of non-NHS health care in all NHS foundation trusts, not only those that were previously NHS trusts.

New clauses 36 and 37 and amendments Nos. 355, 357 and 358 concern mergers. I shall be happy to deal with that issue in my winding-up speech. In Committee, Members drew attention to a deficiency in the Bill, and these technical amendments seek to close the gap.

In amendment No. 378, the Government propose a change in respect of Wales. Although the Bill provides for the Welsh Assembly to inspect care provided for Welsh patients by foundation trusts, it includes no requirement for it to report matters of concern to the independent regulator. The amendment will allow the Assembly, like the Commission for Healthcare Audit and Inspection, to report failings in trusts to the regulator.

Part 1 sets out a new direction for the national health service, but it is the right direction. Our proposals are based firmly on traditional NHS values. These reforms are sensible and reasonable. They will help to sustain improvements in the NHS that are now under way. They will give patients and local staff more say over what happens to their local NHS. They will result in a better and more responsive service, so NHS patients will be the winners.

For all those reasons, I ask my right hon. and hon. Friends to support the Government's proposals.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

When the Government first proposed the establishment of foundation trusts, we examined their plans carefully and compared them with our own policies for NHS reform before considering the likely consequences. For reasons that I will give, we believe that the foundation trust policy is deeply flawed, and, having failed to secure key amendments in Committee, my colleagues and I will vote against it. That contrasts with the position of the Conservatives, who will vote against foundation trusts although, as they themselves say, they support the principle. Some may consider that approach opportunistic—[Interruption.] I believe that it is opportunistic to vote against a proposal when one supports the principle behind it. We have always made clear where we stand, and what our principles are.

Because of the opportunistic nature of the Conservatives' support for the amendment, Labour Members need not be deterred from supporting it by a fear of being identified with their approach. We will certainly resist that.

I intend to identify the respects in which the Government's proposals fail to deal with our concerns, and the problems inherent in foundation trusts. I shall then say a little about pay beds. The key flaw in the Government's initiative is its failure to address the issue of NHS commissioning. NHS commissioners—largely primary care trusts—are charged with a duty to plan, organise and purchase NHS care for the populations that they serve by making contracts with those who provide services, mainly hospitals and clinics. There is a desperate need for decentralisation, democratisation and empowerment on the commissioning side of the health service, even more than on the providing side. Primary care trusts are run by doctors and other health care professionals, with a sprinkling of local people on the board. They are not democratically accountable, and have very little discretion because of excessive interference from Whitehall and from Ministers. They cannot raise extra resources from their local populations to expand or improve services, even when there is local consent.

The best way of protecting and promoting the interests of patients is to give more power to those who are responsible for planning and buying services on their behalf, rather than to those who provide care. We would prefer an approach that created reform by tackling restrictions on the power and freedom of health and social care commissioners.

We would have liked the Bill to free local commissioners from central political diktat. While retaining evidence-based clinical outcome national standards and tough quality inspections, we would abandon the politically based targets that distort resource allocation and clinical decision making, replacing them with clinical decisions driven by clinical needs. We would introduce light-touch performance monitoring and the auditing of performance against standards. The Government's proposals include no such provision.

We wanted the Government to replace strategic health authorities and primary care trust commissioning roles with democratically accountable elected commissioners of health and social care at regional and local level, advised by primary care trusts and with a reinvigorated public health function. They would have a legal duty in regard to equity, effectiveness, quality and cost-effectiveness, but would be able to make local decisions. The efficiency involved in electing the same people who are currently elected has already been noted indirectly by Dr. Fox.

The empowerment of commissioners would allow them to raise resources locally through a progressive taxation to meet the demands of the local population for a more responsive, comprehensive and high-capacity NHS.

Sadly, the Government propose no such changes for commissioners, who will consequently have little control over the services that they can develop, despite the rhetoric of "increased devolution to the front line". Indeed, the Bill actually bars commissioners from ever sharing in any of the reforms.

As for the possibility of a diversity of providers of NHS care, we are committed to a mixed market in provision including the private and voluntary sectors, NHS hospitals and other providers, as long as the care is free at the point of delivery and access is based on need rather than ability to pay. In the not-for-profit sector, we are keen to see the development of mutuals. Although aspects of foundation hospitals are similar to aspects of mutuals, we would allow them greater financial freedoms, and would not allow the freedoms that are given to be exercised at the direct expense of non-mutual NHS hospitals. We would not impose mutual status on a few hospitals, or "award" it to them; we would allow all hospitals to consider whether they wanted such status. We would consider it to be different from, not better than, the status of other NHS hospitals.

The way in which the Government propose to award foundation status to three-star hospitals is extremely divisive—especially given that the star rating system does not measure good clinical care, higher quality or meaningful patient outcomes. It measures performance, or statistical massage, against a series of political targets which, if anything, threaten good patient care by distorting resource allocation to areas that are outcome-measured and distorting clinical decision-making.

Photo of Gordon Prentice Gordon Prentice Labour, Pendle 2:45 pm, 8th July 2003

In what respect are foundation trusts mutual organisations? Having asked the Minister about that, I was told in a parliamentary answer yesterday that he would write to me as soon as possible.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

It is in the context of staff representation on governing boards that we consider the Government's proposals vaguely similar to our proposals for mutuals. I think there is merit in those proposals, regardless of what happens on the commissioning side. If that were all that the Government were proposing, without some of the other problems, we would be minded to support it—and in Committee we did not oppose such measures. When the Government announced amendments to extend the franchise of the staff side to people in ancillary roles, often low-paid, who have worked for a hospital all their lives but whose service has been contracted out, we tabled our own amendment in Committee and the Government accepted it. We have worked to make these hospitals more like the mutuals that we want to see, but unfortunately we are still not satisfied.

Photo of Mr Andy King Mr Andy King Labour, Rugby and Kenilworth

Surely it is possible to put staff representatives on the hospital boards without creating a huge two-tier economy.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

I agree. That would have been an alternative approach for the Government and for us. We still think that providers should be allowed to seek mutual status, but we do not think that it should be imposed or awarded, or that there should be electoral nonsenses.

I hope that the Secretary of State or the Minister will tell us why, despite our many attempts to establish the facts, the Government have still not provided a shred of proper evidence that the high-level targets or performance indicators—such as the numbers on waiting lists, or the two-week wait—on which they base their award, or reward, of three-star status have any basis in clinical outcomes. I ask the Minister to provide that answer, because he has never done so before. The "Panorama" programme that focused on my local hospital in Oxford identified exactly how patients are put at risk by the imposition on managers of the need to meet these targets. The trauma surgeon Keith Willett, who works at the John Radcliffe hospital, showed how the need to treat the least urgent patients within a maximum time limit often means that treatment of patients whose needs are more urgent is postponed, to their detriment. The Government have not responded to that point; indeed, they refused to address the questions raised in the "Panorama" programme. Until they ditch such politically based performance indicators, their approach will have no support from health care professionals or, even more important, from patients and those who represent them.

The Government propose a sham democracy for foundation hospital trusts, in which local members will elect a few people to the board of governors. This is clearly a far less effective method of ensuring proper democratic accountability than our proposal properly to democratise, through the electoral roll franchise, the commissioning side of the NHS. Although there is certainly merit in the public's having a stake in major local providers, this should not be seen as an alternative to, or rival to, proper, democratically accountable commissioning. A pseudo-democracy like that proposed in this measure creates the real problem of a parallel franchise, rivalling local, democratically elected councillors. The resulting confusion would actually damage accountability.

We would prefer—we proposed amendments in Committee to this effect—a stakeholder-type board for mutual hospitals, representing staff and the community. The interests of patients and the public are more powerfully represented by elected commissioners and by patients forums. The Government proposed to set up patients forums as a replacement for community health councils, but they now propose to ditch them in respect of foundation hospitals, and, in due course, in respect of all hospitals, because all hospitals will be foundation hospitals.

Photo of Patrick Hall Patrick Hall Labour, Bedford

Will the hon. Gentleman give way?

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

Yes, I will give way to the hon. Gentleman, who chairs the all-party group on community health councils and may well be keen to catch your eye, Mr. Deputy Speaker.

Photo of Patrick Hall Patrick Hall Labour, Bedford

I thank the hon. Gentleman for giving way. Does he not agree that not having a patients forum on a foundation hospital trust would remove that element of independence that is crucial to the new system of patient and public involvement in the NHS?

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

The hon. Gentleman is right, and given his experience of talking to the people involved in patient and public representation, the Government would do well to listen. I invite him and others to look at new clause 9, on page 2,489 of the amendment paper, which is tabled in my name. When this issue was debated in Committee, there was support for the proposal from both sides of the House, and the hon. Gentleman makes a very good point. It is impossible to secure the interests of patients simply through the efforts of those who run hospitals. That creates a conflict of interest, and with the best will in the world, those who try to exercise the dual roles of defending and supporting hospital management and representing the views of patients would find it impossible to juggle them.

I urge the Government, even at this late stage, to say that they will support new clause 9. After all, when they abolished CHCs—in itself a highly controversial measure—their defence was that patients forums would roam further than CHCs, not only examining the commissioning side but being active on the provider side. Now, the Government propose that there be no patients forums in any hospital. Mr. Hinchliffe strove hard with many of us to secure amendments to initial Government proposals during the previous Parliament, and to secure amendments to an earlier Bill in this Parliament under which the Government proposed to abolish CHCs. He must share my disappointment that the Government intend that if foundation hospital measures are adopted—I accept that he hopes they are not—there will no longer be patients forums in hospitals. That raises questions about the Government's good faith in making the concessions that they claim to make in abolishing CHCs.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

Are the hon. Gentleman's anxieties about the lack of patients forums diminished or heightened by the fact that the Government, through one of their own amendments, are moving away from the concept of postal votes and potentially towards electronic voting, which might further disfranchise patients?

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

That may well be a problem. The electoral arrangements are likely to be not only a parallel franchise, as I said, but a dog's breakfast. The Government's saying that they are simply going to leave the matter to the constitution of foundation trusts gives no comfort to those of us who think that it will be impossible to find a clear way out of this mess.

In terms of foundation trust status, it seems that the Government's motto is: "To those who have, more shall be given, and from those who have not, it shall be taken." In Committee, the Government effectively admitted that because any borrowing by foundation trusts, using their greater licence to do so from the private sector, would be set against the total amount of capital available to the NHS, any extra ability to borrow—and any extra borrowing achieved from the private sector for foundation trusts—will by definition reduce the pot of money available for non-foundation trusts. If the Minister looks at the record, he will see that the Government simply did not address that point, either in answer to me or to Mr. McCabe, who is no longer in his place.

I invite the Minister to explain this at the Dispatch Box today: if the total amount of NHS capital is limited and any borrowing by foundation trusts through their increased licence to do so will be taken from that total, how will that not by definition reduce the amount of capital available for the second wave of borrowers—those with less power than non-foundation NHS trusts? [Interruption.] The Dispatch Box remains empty, and as happened in Committee, no answer is given, for the reason that there is no answer to that problem. It is the inevitable consequence of the decision to ensure that such borrowing is against the pot available.

There was an alternative, which was not to go down this path at all, or even to allow such borrowing to be set against expenditure limits. Unfortunately, the Government chose not to do so, and the result is a policy that robs Peter to pay Paul. Our proposals for mutuals would have allowed additional private borrowing without its counting against Treasury limits for borrowing in the health service. In addition, we would not have proposed that the sale of assets by foundation trusts—those that are allowed because they are not necessary for core service—be available only to foundation trusts, rather than to the NHS as a whole. I suspect that other Members will make that point in more detail.

We are not opposed to foundation trusts because we think that everything has to be the same; there can be a mixed market in provision. In the Liberal Democrats' opinion, the NHS should be free at the point of delivery, as comprehensive and universal as possible, and based on need rather than the ability to pay. In that respect, who owns or runs hospitals is not important, so long as they guarantee equity, quality and other essential factors. We are not opposed to foundation trusts because we think that they amount to quasi-privatisation of the NHS. Such privatisation is far more likely to happen through a version of the patient passport policy proposed by the Conservatives. Although we do not consider foundation trusts to be a direct route to privatisation, private care issues do arise, particularly in relation to pay-beds.

As has been pointed out, in Committee the Government weakened the provision relating to the cap on private income. The Minister may say that it was not his intention to do that in changing "must" to "may" and "duty" to "power", but on an issue as important as this the phrasing should have put the matter beyond doubt. I invite him to do so, and if he is unable to give such reassurance, those of us who are concerned that that cap guarantee is not worth the paper that it is written on will not be reassured by his approach.

Amendments Nos. 397 and 398 seek to reverse the changes made in Committee, and amendment No. 400 makes it clear that there should not be arbitrary limits on pay-beds. People should not occupy pay-beds in the NHS if there are NHS patients with greater clinical need. We know that NHS waiting lists are far longer than private waiting lists, and that beds and precious capacity in the health service are given over to private patients. I urge hon. Members to consider amendment No. 400, which would ensure that, regardless of any arbitrary limit on private income, NHS patients are not badly treated.

New clause 39, also tabled by the Liberal Democrats, urges the Government to accept a proposal whereby overview and scrutiny committees and patients forums have to be consulted before approval is given.

Finally, the Government did not deal with Government amendment No. 356. As far as I know, the Minister did not mention it as he rattled through the list. That amendment proposes that the Government underwrite external loans taken on by foundation trusts. Will that not give even more power to foundation trusts to loan against the limit that is shared by non-foundation trusts? I invite the Minister to tackle that issue now.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health) 3:00 pm, 8th July 2003

I do not wish to detain the House, but the hon. Gentleman is barking up the wrong tree. [Hon. Members: "Barking?"] In line 1, page 1, before "up the wrong tree" leave out "barking". The amendment to which the hon. Gentleman refers deals with the private finance initiative. We need to find an appropriate mechanism to support PFI deals in NHS foundation trusts. That is all that the amendment does, and that PFI borrowing does not score against the prudential borrowing limit.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

This is the amendment that dare not speak its name—[Interruption.] The Minister conveniently forgot to mention an amendment that approves the ability of foundation trusts to close PFI deals.

In summary, for the reasons that I have given, we oppose the Government's proposals for foundation trusts. I hope that they fail today and I urge hon. Members to join me and my colleagues in opposing them. I also urge them to consider the need, if foundation trusts are approved, to secure adequate means of patient representation through patients forums. If I have the opportunity to move new clause 9, I hope to preserve patients forums on the provision side of the health service.

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras

Out of courtesy to anyone who wants to intervene on my speech, may I use a clinical expression that I picked up as Secretary of State for Health? I have done my back in, so if I give way and sit down, I may not be able to stand up again.

The Government's various concessions do not deal with most people's fundamental objections to the concept of foundation hospitals. Those hospitals will impose an unwelcome and unnecessary reorganisation of the NHS, which will consume much money and a great deal of senior management time. Advantages will be given to one group of hospitals at the expense of another. Foundation hospitals will be allowed to set their own strategy and priority, taking that role away from local primary care trusts. Competition and the spirit of competition will be reintroduced to the NHS. All that is being done, we are told, in the name of less Government interference.

We do not need to reorganise the NHS or change the law in order to reduce the amount of ministerial interference. All my right hon. Friends need do is stop interfering—[Hon. Members: "Hear, hear"]—and they should stop interfering in all hospitals, not just a limited number of them. I confess that I did some interfering myself as Secretary of State, but by the time I resigned, I believed that there was too much interference and too much earmarking of funds. I am afraid, however, that that development has continued rather than being reduced, and we need to reverse that.

It is also said that the proposals will give local people a sense of ownership of their local hospital because they will be able to vote for the governors. We have to recognise, first, that the NHS is the most popular institution in this country. If we ask people about their local hospital, local town hall or local MP, I know which is most popular with my electorate—let alone anyone else's. They have a higher opinion of the hospitals that serve them than they do of my excellent council, or even of me. The fact of election will not necessarily give local people a sense of ownership or increase the popularity of the health care that they receive.

I know that the Government would never be swayed by anything to do with opinion polls, but they may be aware of the work carried out for the Audit Commission, which asked people whether they would like a bigger say in the running of their local hospital. In that survey, 22 per cent. said yes, and more than 50 per cent. said no, so it is not even popular with the people who are going to be enfranchised.

We are told that hospitals will receive more money, more beds and more staff. That is right, but all hospitals are getting more money, most will increase the number of beds and most will increase the number of staff. That is the crucial change that the health service needs, because for decades we have expected the service to go on with too few doctors, nurses, midwives, therapists and everyone else. That is the fundamental problem. The Government's 40 per cent. increase in the intake of students to medical schools is a huge step in the right direction, but it will be a long time before it produces great benefits.

In the absence of sufficient staff, the NHS has been exposed to reorganisation after reorganisation until the people working in it are sick to death of reorganisation. They know that every process of reorganisation distracts the people working in the health service from their proper and chosen job of looking after patients. It takes up money and, above all, it takes up time. It is safe to say that as we debate this proposal, the 32 applicant foundation trusts will be having one of their innumerable and endless meetings about how to progress their application for foundation status. We know that every hour they spend on that aspect of reorganisation is one less hour spent on helping clinicians to help patients.

As my hon. Friend Mr. Hinchliffe said, we have had 18 reorganisations in the last 20 years. Some people are now saying that extra money, extra staff and extra beds are not delivering the improvements that we want. Well, I can tell them this: the 18 reorganisations certainly did not deliver the improvements that were wanted. Given some time and the opportunity to let the changes bed down and to make good use of the additional resources, the NHS will improve, as it is already improving.

It is suggested that those who are opposed to the structural reorganisation are opposed to change and improvement in the health service. I do not use the word reform. Reform is a word that gets up the nose of virtually everyone who works in the health service and it does not impress the public. People working in the health service want to improve it. They want to improve what is happening in their clinics, their operating theatres and their surgeries—and they are getting on with it. However, if we introduce foundation hospitals, some of them will find it easier to get on with it than others, because those hospitals will be given advantages over the others. That fact cannot be denied.

I think of my own constituency. University College hospital, a wonderful hospital in my constituency, is going for foundation status. If it gets that status, it will get more money. If it has more money, what is it going to spend its money on except improving the pay and working conditions of its staff? There is nothing else for it to spend the money on. If it improves the pay and working conditions—by working conditions, I include acquiring new equipment that does not go on the blink as the existing equipment does—it is bound to attract staff from the Royal Free, the Whittington, St. Bartholomew's or Great Ormond Street: other hospitals that also serve my constituency. They will be put at a disadvantage, so University College hospital will get better at the expense of the rest.

Nothing that Ministers have said will prevent that happening. They tell us that "Agenda for Change" will apply to all hospitals, but that needs money, and those with more money will be able to implement the agenda quicker. If they feel like it, they will be able to upgrade a post—they have the money to do it—and then attract someone to fill it. That is made clear—unless the Government were being misleading originally—in the Green Paper, which says that the extra funds would allow hospitals to offer new rewards and incentives to staff. That means more money and better working conditions.

I am also concerned about the registers of electors to the boards. Some of the big teaching hospitals will have more than 2.5 million people on their register of electors—if they can put one together. Who will qualify? We are told that it will be people living in the locality, and anyone else who has made use of the hospital. However, we know that the hospitals will get it wrong. Compiling a register is a very complex process and it is a safe bet that within a few months the hospitals will have 20 old ladies who regularly visit a clinic saying that they have been left off, and someone from Doncaster who went into A and E on a once-in-a-lifetime visit will be entitled to vote. We know that that is bound to happen.

In addition, compiling the register will be astonishingly expensive. Local authorities annually spend £50 million making the minor incremental changes to their existing registers, even though they employ staff who are familiar with the problem and know how to do it. It costs another £20 million to organise local elections. Do most people think that that is the best use of the next lot of money for the NHS? Or would it be better spent on patients?

Patient confidentiality is another issue. Most hospitals do not put their name on the envelope when they send people letters, because many people do not want anybody to know that they are going to hospital. They do not like their employer knowing and often do not even like another member of their family knowing. However, if someone is on the register, everyone will know. The British National party will have access to the register and know who has gone to hospital. How will Asian people—for example—fancy the idea of the BNP trying to exploit their hospital attendance in some racist way, such as claiming disproportionate use of hospital services?

What will happen to the primary care trusts? They were established, with the full agreement of the professions, to involve the GPs, community services, local nurses and social services in laying down the priorities and strategies for health care in their area, based on an analysis of their day-to-day experience. That would assist in placing proper demands on the local hospitals. However, that role will now be taken back by the foundation hospitals. All the documents say that the foundation hospital governors will establish the strategy and priorities for their hospital. So foundation hospitals will be the cuckoo in the nest, and that is why the Royal College of General Practitioners joins the BMA and virtually every other health service organisation—including the main health service unions—to oppose the proposition.

I cannot agree with my right hon. Friend the Minister of State, Department of Health—and he is my good friend—that this proposal does not reintroduce competition and will not set hospital against hospital. It will. Its whole philosophy is to get hospitals competing with other hospitals down the road. That was a disaster when the Tories introduced it, because co-operation came to an end. I remember going with my hon. Friends the Members for Hampstead and Highgate (Glenda Jackson) and for Islington, North (Jeremy Corbyn) and my right hon. Friend Mr. Smith to talk to the chief executives in our area when the internal market was at its height. We pleaded with them to co-operate on something—I cannot remember exactly what—but one of the chief executives said, "Oh, we can't co-operate now, Mr. Dobson. It's dog eat dog in the health service now." We do not want that atmosphere back.

We know that competition increased bureaucratic costs and that waiting lists went above 1 million for the first time. The only serious academic study of the impact of competition of the quality of care was done by Bristol university, which looked at figures from all over the country for recovery rates for people who had gone into hospital following a heart attack. The summary of their findings stated:

"Our central finding is that competition is associated with high death rates: in other words competition is associated with lower quality."

We do not want competition or lower quality.

I have addressed the damage that foundation hospitals are likely to do to the health service. I confess that, as a Labour party member, the damage that the policy will do to the Labour party bothers me just as much. Almost everybody in the labour movement is opposed to this proposition, and their instincts are right. It was suggested to me on the radio the other day that perhaps the leadership of our party did not want us to speak up against foundation hospitals because it looked as though we were the party of the producer. If the producers are the doctors, nurses, midwives and therapists—the people who actually provide the care for the patients—I would rather be on their side than on that of faceless think-tanks and advisers, who seem to think that the world can be transformed with the click of a laptop button. If I must choose between the laptoppers and the producers, I am with the producers.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health 3:15 pm, 8th July 2003

I have two groups of amendments in this gargantuan group, and I shall refer to them briefly and to the general proposition, as advanced by Mr. Hinchliffe. I am grateful to him for his kind comments. If I know anything about the NHS, it is in part due to serving under his chairmanship of the Health Committee, and in part to my father. On the day on which the NHS was created, my father was working for London county council, running a health service laboratory. He worked for the NHS for the next 35 years and became chairman of the Institute of Medical Laboratory Sciences.

There are Conservatives—including my hon. Friend Dr. Fox—who have worked for the NHS, and who would resent the way in which the Minister referred to our intentions. Our intentions are to try to create an NHS that delivers more and better quality health care for the people of this country. We may have different views on how to achieve that, but I hope that the Minister will not dispute that that is our intention.

Some of us will also join the hon. Member for Wakefield in resisting the structure of foundation hospital status, as the Government propose it, for different reasons, but with the same intentions. We will not have many opportunities in the next year or so to discuss the structure of the legislative framework for hospitals, so we have to get it right. Behind some of my amendments is the desire to get the structure right this time.

My first group of amendments runs from No. 154 to No. 161 and relates to the possibility that a combination of NHS trusts might wish to apply for NHS foundation status. The Minister mentioned Government amendment No. 357 and new clauses 36 and 37. I am grateful to the Government for tabling those provisions, because they will allow foundation trusts and NHS trusts to apply for authorisation as NHS foundation trusts by way of a merger. The previous structure of the legislation implied that one NHS trust equalled one NHS foundation trust. We discussed the issue on Second Reading and again in Committee, and Government amendment No. 357 and new clauses 36 and 37 remedy that deficiency, so I am happy that the Government have tabled them.

The other group of amendments that I wish to speak to begins with amendment No. 96, but its essence is contained in new clauses 19, 20 and 21, which would introduce the concept of NHS community trusts alongside the foundation trusts.

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden

Will the hon. Gentleman support the application of Addenbrooke's hospital in his constituency for foundation status? If so, why would he vote against them today?

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

The hon. Lady anticipates a subject that I was about to discuss. I have already said that I would support the applications by the Addenbrooke's NHS Trust and Papworth Hospital NHS Trust, both of which are in my constituency and both of which are applying for NHS foundation status. Whether there is a foundation trust status in the form proposed available for them to apply for will, of course, depend on the decisions of the House.

Photo of Claire Ward Claire Ward Labour, Watford

But the hon. Gentleman is voting against the Bill.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

I am answering Siobhain McDonagh. If Claire Ward wishes to intervene as well, I will gladly give way.

I will support Addenbrooke's because it is an excellent hospital at the leading edge of medical research, clinical practice and innovation in the NHS. The view of the trust, with which I agree, is that it wants to be at the leading edge of innovation within the NHS, wherever the NHS is going. If the Government tell Addenbrooke's that NHS foundation trust status is the way forward for the NHS, Addenbrooke's will go along with that, and I will support it. On each occasion that it has acted in a similar manner, resources have tended to flow from that decision. The word that we have not yet heard is "capacity". Addenbrooke's NHS Trust is running at about 95 per cent. bed occupancy now, and if it is to be able to increase capacity to serve my constituents, it will have to be at the leading edge of the NHS.

Papworth Hospital NHS Trust is a complementary case. It is a heart and lung hospital, and the fastest growing hospital in the country. It, too, needs to increase capacity. It did not succeed with a private finance initiative bid in 1998, shortly after the Government came to power. I want that trust to be able to undertake its necessary capital projects. As things stand, it could do that in one of two ways: through PFI or by borrowing the money from the Department's facility. This has not previously proved an easy bid to finance through PFI, but it might well be able to arrange that borrowing through the departmental financing facility as extended in the Bill. It might also be able to do so on better terms, given that it would be doing so at the national loan fund rate.

I am a practical person. If the legislation is in place, I will support my hospitals in using it to their best advantage. I would like to be able to persuade the Government to introduce legislation that offers genuine freedoms to NHS hospitals, providers and commissioners. My purpose in voting with my Front-Bench colleagues today will be to tell the Government that they need to introduce such legislation. I shall give way to Mr. Stevenson, who has previously been denied that opportunity by his Front-Bench colleagues.

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

The hon. Gentleman says that if foundation hospitals become a reality, he will support Addenbrooke's because the resources would flow from that decision, but will he have a care for my constituents, who will not benefit from the first wave of foundation hospitals and are likely to lose out as a result?

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

I am not sure that the hon. Gentleman's constituents will necessarily lose out in that way. The Minister would not give way to me earlier, but I wanted to make the point to him that he is trying to tell the House that NHS foundation trusts and NHS trusts are on all fours. They are not. For example, he has not yet told us what he is going to do about year-end surpluses in relation to NHS trusts. I want Addenbrooke's, which has resolved its deficit problems and which, with the national tariff, will be able to generate a surplus, to be able to carry over that surplus at the year end. As an NHS foundation trust, it would be able to do so. The hon. Gentleman's constituents would not necessarily lose out as a result of that flexibility, however. It is in the Minister's gift to get up now and tell us that he will offer year-end surplus transfers to all NHS trusts. If he does so, fine. We would then be nearer to the point at which every trust would be the same.

So far as borrowing is concerned, there could be a difference between NHS trusts and NHS foundation trusts. That will entirely depend on the Minister making an assertion that, during the years that foundation trust status is available only to some hospitals, the Department's ability to finance their borrowing will not constrain the availability of capital for the others.

I have departed from my main point, and want to return to the amendments. In the event that the House decides to proceed with NHS foundation trust status, and not to reject it at the instigation of the hon. Member for Wakefield, an important second question will arise. Should foundation status—the mutualisation and local ownership of decision making in the NHS—be confined to hospitals, or should it be provided to the commissioning bodies, the primary care trusts? My hon. Friend the Member for Woodspring and the hon. Member for Oxford, West and Abingdon (Dr. Harris) both said that the latter proposal was entirely desirable. The Select Committee report referred to the evidence of many witnesses who suggested that it was not only desirable but arguably the logical place to start with such measures.

The Government responded to the Select Committee report yesterday, and their attitude seems to be "Make us virtuous, O Lord, but not yet." They say:

"the Government is open minded about the possibility of a wider democratic option for Primary Care Trusts, but remains of the view that Primary Care Trusts must be given time to mature as organisations before this option is explored further."

We know what that means. It could be many years before new primary legislation is introduced to give primary care trusts, as commissioners, the opportunity to be locally owned.

The purpose of new clauses 19 to 21 is to introduce a community trust status that would apply to primary care trusts and enable them to become locally owned. I hope that the proposals are carefully drafted, and they incorporate certain safeguards. As with NHS foundation trusts, PCTs would not be able to apply for community trust status until the Secretary of State had given his approval for them to do so. He would, therefore, still have a block on the speed at which they could apply.

It is not possible simply to add PCTs into foundation trust status, because the form of the constitution is not precisely right for that. The way in which the community trusts are written into the amendments and new clauses would stress to a greater extent the proper role of the staff constituency and set a minimum of one third of the membership of the board of governors for the staff constituency. In making this transfer, we would be asking general practitioners and other primary care professionals to hand over a significant part of their current control over primary care trusts to the local public. We would therefore put in place a mechanism, which I hope the House will accept, to offer that choice. It is vital that we do so, otherwise it may be many years before PCTs have the chance of local ownership, and during that time the balance will shift dramatically in the NHS. It is important that that balance continues to be geared towards primary care, as we are seeking a primary care-led NHS. I shall use my locality as an example.

If there is a dominant hospital in Addenbrooke's NHS Trust with a multiplicity of primary care trusts acting as commissioners and if, at the same time, the NHS trust has a large local membership that believes that it owns Addenbrooke's hospital, not only does the PCT have less power in relation to the NHS trust than it used to, but it will be perceived locally as being less locally owned than Addenbrooke's hospital. When questions of priority come to the fore, people will expect the hospital, rather than the PCT, to be their voice which, to me, seems the wrong way round.

If amendment No. 164 is not accepted, I urge Members to support my amendment. I hope that my colleagues will do so, as well as Liberal Democrats, in the light of the speech of the hon. Member for Oxford, West and Abingdon. I believe that Mr. Field and John Cryer tabled amendments with a similar aim to mine. I hope that all hon. Members will regard amendment No. 96 and the linked amendments as a way of injecting such proposals into the legislation.

I answered the question of the hon. Member for Mitcham and Morden about the two hospitals in my constituency, but I wish to deal in more detail with the principle of NHS foundation trusts. Essentially, my objection to the Government's proposals is not about the principle of such trusts; as my hon. Friend the Member for Woodspring said, we support the principle of foundation trust status. We favour freedom for NHS providers to manage themselves and respond to local priorities, rather than being subject to central control. The problem is that the Bill simply does not offer that. We know that NHS trusts will be tied to the "Agenda for Change" on pay and conditions. Addenbrooke's is happy with that but, in principle, managers should be free to vary them. Trusts will be subject to a national tariff but, if they want to maximise the utilisation of capacity, they ought to be able to discount the cost of capacity so that they can use spare capacity.

Nobody has mentioned the NHS information technology strategy. Most providers, including hospitals, are clients of IT companies. NHS foundation trusts will be subject to the entire NHS IT strategy, but will not be direct clients of IT companies. Instead, regional bodies will be the clients of IT providers. Trusts will be subject to PFI. The Minister reminded us that Government amendment No. 356 reinforces the fact that PFI will operate in exactly the same way for foundation trusts as for NHS trusts. Foundation trusts will also be subject to the same overall departmental expenditure limit as other NHS trusts. The freedoms that I seek, including the freedom from bureaucracy, are simply not present in the Bill, so I cannot support the introduction of foundation trusts, because the rhetoric is simply not matched by the reality. I shall therefore press amendment No. 96 to a vote.

Photo of Adrian Bailey Adrian Bailey Labour/Co-operative, West Bromwich West 3:30 pm, 8th July 2003

I shall speak in support of new clause 24 and amendments Nos. 233 and 234, which I tabled. First, however, I should like to declare the fact that I am vice-chairman of the Co-operative group in Parliament, and a lifelong supporter of the principles of mutuality and co-operation in the delivery of our public services.

Before I discuss the substance of the amendments, I should like to pick up a couple of points. First, many Members have spoken about the running costs of any form of democratic involvement in foundation hospitals. Various mutual and co-operative organisations have developed low-cost, effective means of communicating with their members, and I know that the movement would be happy to make its expertise available to any prospective foundation trust. Secondly, there is nothing intrinsically socialist about the present Whitehall-driven NHS. The debate about local control and mutuality in the health service went on for many years before the NHS was founded in the 1940s. The current model was not arrived at because it was intrinsically egalitarian or socialist—it was the result of horse-trading between the Labour Government and health professionals in the 1940s.

I have tabled these amendments because I recognise that legitimate concerns were expressed on Second Reading and in Standing Committee about the commitment of foundation hospital trusts to democratic participation, and because the provisions in the Bill appear a little vague. New clause 24 would place a legal duty on foundation hospital trusts to take steps to secure a membership that is truly representative of the local community. Amendment No. 233 stipulates that, to obtain authorisation, a foundation hospital trust must be representative, and amendment No. 234 would place an obligation on trusts to report annually on the steps taken to achieve that.

My prime objective with the amendments is to ensure that the full potential offered by this new form of governance is realised. I believe that the democratic responsibilities of the trusts must not be subordinated to the other freedoms that foundation status will bring. The amendments define more clearly the obligations of applicant trusts to democratic ownership and control. To achieve foundation status, an applicant trust must demonstrate that it is as committed to local accountability as it is to gaining freedom from Whitehall.

In the debates on Second Reading and in Standing Committee, concern was expressed that the proposed membership arrangements could be open to abuse. One fear was that a highly organised religious group might hijack a governing body to demand that the clinical priorities of the hospital be changed in accordance with its religious beliefs, irrespective of the views or needs of the local community.

Another concern was that the governing body would be dominated by representatives of the so-called sharp-elbowed middle classes. It was feared that the professional, better educated and more self-confident members of the local community would be more skilled at using the democratic machinery, and that the views and principles that they expressed would take precedence over the interests of the less educated and more inarticulate members of the community.

The amendments are designed to stop that. However, they are not just defensive: they are also designed to promote social inclusion. My constituency is fairly representative of a large number of inner-city areas. It has a high percentage of elderly people on low incomes who do not have cars. They spent their lives in local industry and suffer from a range of conditions related to a hard working life. We also have a substantial ethnic minority population. Many of them are first-generation immigrants, with limited language skills but considerable health needs.

Such people could be excluded from participation by hidden barriers that are not directly or deliberately erected by a hospital trust. Those barriers could exist because the trust's governors are not sufficiently representative, or because their understanding of the measures that need to be taken to ensure full participation is incomplete. Ironically, it is the elderly and disabled—the ones with the most pressing health care needs—who could be the ones least able to play a part in a service on which their quality of life might crucially depend.

My amendments would ensure that the elderly, the disabled and the disadvantaged are heard. As a condition of the granting of foundation hospital status, credible steps must be taken to ensure that all views are incorporated into hospital governance.

The Bill's provisions represent a dramatic change from the centralised, Whitehall-driven control of local hospitals that has developed since the formation of the NHS. I accept that they pose an enormous challenge for management and represent a change in working culture.

The current management trusts appointed from local applicants are a recognition of the need for local input into hospital management. Many of the trusts are staffed by able and dedicated people, but they are not directly accountable to the local public. They amount to little more than a genuflection in the direction of local participation.

Currently, hospital management has no track record of democratic involvement. That lack of experience means that there is a danger that the mechanism of member involvement will not achieve its full potential. The last thing that we want is an incomplete and rudimentary form of member participation that enables a coalition of the great and the good in the local community to perpetuate its control of the trust by a form of mutated democracy. That would be no more than a sort of quango with votes on.

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden

Is my hon. Friend aware that my constituency is not represented on the board of either St. George's hospital or St. Helier hospital, both of which serve my community? It is not represented on the primary care trust and, so far, it has been excluded from all centres of power and the limited democracy in the health service. Does he agree that foundation hospitals will give some of my constituents a chance to be represented on those boards?

Photo of Adrian Bailey Adrian Bailey Labour/Co-operative, West Bromwich West

My hon. Friend raises a valuable point. Local membership would give the opportunity to elect people to the governing board, which would effectively represent their interests.

I believe that Ministers share with me the intention that foundation hospitals should be genuinely mutual. The amendments detail the obligations of the trust, and provide a mechanism by which the means and level of membership recruitment can be measured to ensure that the boards are truly democratic.

The amendments are positive; they are designed to extend and promote the principles already incorporated in the Bill. They will provide a record of best practice and achievement that can be shared by everyone and passed on to subsequent generations of applicants. Furthermore, as democracy develops and becomes more successful, the model could be transplanted to other NHS services.

I take the point that has been made about PCTs. However, if we are to pioneer a new form of democratic participation in the health service, it makes sense to do so where the local community has the strongest identity and interest, which is undoubtedly at the local hospital.

The proposals offer the opportunity for a whole new constituency to engage in the running of our most valued public service. Few institutions arouse more justifiable loyalty and regard than the local hospital. By giving local residents, patients and employees a say in the running of their hospital we are both pioneering new forms of public participation and providing a means of educating people about the structures, policies and priorities of the service. We shall also be educating administrators on the wishes and aspirations of the local communities, and making them accountable in a way that might lead to a refinement of established practices better to meet the needs of their constituents.

Developing the bond between the public and their local hospital opens new possibilities for voluntary support and recruitment to add value to the hospital's existing work. In his Second Reading speech, my right hon. Friend Mr. Field talked of the potential that could be unlocked. Once people feel that they own and control their local hospital, who knows what extra efforts they will make to support it? Above all—

Photo of Adrian Bailey Adrian Bailey Labour/Co-operative, West Bromwich West

I am about to conclude my speech; I am conscious that other Members want to speak.

Above all, that bond will make it much more difficult for enemies of the NHS to privatise our hospitals in the future.

The only alternative to the proposals is to continue to invest more money in a structure run by local quangos and regulated by Whitehall. Giving local people a say in how the vast sums of money invested in their local services should be used is infinitely preferable.

We should be radical. It is time that we matched our financial investment to our commitment to local democracy. My amendments are designed to do just that.

Photo of Richard Taylor Richard Taylor Independent, Wyre Forest

May I pay very sincere tribute to Mr. Dobson, who put the case in favour of his amendments so intensely clearly and has spoken up so strongly for all NHS staff, who do not want more interference?

I shall be very brief because time is short, but I want to ask the Minister to clarify new clauses 36 and 37, which, to my amazement, were welcomed by Mr. Lansley. As hon. Members will know I am extremely sensitive to mergers and closures, and those new clauses seem to provide draconian powers.

The trusts interested in merger have to apply to the regulator, who at least, I am relieved to hear, will be accountable to the House, but new clause 36(3) says:

"applicants may modify the application with the agreement of the regulator at any time before authorisation is given".

The only mention of public consultation is in subsection (6):

"If regulations require the applicants to consult prescribed persons about the application, the regulator" has to be satisfied that the applicants have complied. Which regulations may be relevant? Who are the prescribed persons who might be consulted? Are they just the management boards, the PCT patient forums, or the overview and scrutiny committees?

Without its own patient forum, a foundation trust has no one to refer matters to overview and scrutiny committees and, in turn, no one to refer to the independent reconfiguration panel, unless I have got that wrong, and I should be delighted to hear from the Minister about that. Mergers will inevitably become more likely because of the European working time directive. If those new clauses are accepted, proper open consultation will be bypassed and people will be unable to stop closures because of the unlimited powers in the Bill. I fear that MPs may find their seats at risk.

Photo of Mr Jon Owen Jones Mr Jon Owen Jones Labour/Co-operative, Cardiff Central 3:45 pm, 8th July 2003

I am pleased to be called to take part in the debate. Before I speak to amendment No. 60, which is in my name and the names of several of my hon. Friends, and a number of consequential amendments, I should like briefly to mention the right of Welsh MPs to speak in the debate, because my hon. Friend Mr. Hinchliffe has indicated that other hon. Members and I should keep our noses out. He may not have noticed, but this is an England and Wales Bill—that will become clear when I speak to amendment No. 60, which is about foundation hospitals. Moreover, other parts of the Bill will be voted on by hon. Members from England in overwhelming numbers compared with the number of Members from Wales.

I am not sure whether my hon. Friend is interested in those constitutional matters, but if he is, he will have noticed that on every England and Wales Bill in the past I have expressed my frustration that the time available to debate matters of extreme importance to Wales—primary legislation for Wales still rests with the House—is completely inadequate when we are also debating English matters, and I have suggested other routes so that we could have those debates. If we had other routes—if Welsh matters could be referred to a Grand Committee—I would be sympathetic to the argument that I should not participate in English affairs, but we do not, so I shall take part in the debate and I hope that my voice will be respected.

The problem emerges from the first sentence in the Bill:

"An NHS foundation trust is a public benefit corporation which is authorised under this Part to provide goods and services for the purposes of the health service in England."

Hon. Members may not know it, but there is a great deal of cross-border movement for treatment in Welsh hospitals and English hospitals. Overwhelmingly, however, it is for the treatment of Welsh patients in English hospitals. Last year, 43,000 Welsh patients were treated in English hospitals. Some of those hospitals—particularly the one that treats the greatest number of Welsh patients, Countess of Chester hospital—are in the first wave of applications for foundation hospital status. Therefore, whether they have foundation status and whether it works properly is clearly an issue of importance to Welsh Members.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

The hon. Gentleman is making extremely important points, and I hope that Ministers will listen. Is he aware that not only is there a cross-border flow of patients but, in the Welsh border areas, the hospital in Chester is the prime referral point for the majority of local GPs?

Photo of Mr Jon Owen Jones Mr Jon Owen Jones Labour/Co-operative, Cardiff Central

Yes. The issue is even more important for people from mid-Wales, where the only acute services available are on the other side of the border in Shrewsbury, Hereford and other hospitals. For many Welsh patients, therefore, English hospitals provide the only available acute services. How they are run is therefore extremely important.

This Bill provides a legal duty and responsibility to treat English patients, but does not provide such a duty and responsibility to treat Welsh patients.

Photo of Ian Lucas Ian Lucas Labour, Wrexham

Has my hon. Friend, like me, received a letter from the Secretary of State for Health, which talks about the fact that health care should be provided equally to those who need it, free at the point of need? Does he agree that this Bill runs directly contrary to that principle, in that it provides preferential treatment to patients from England over and above those from Wales?

Photo of Mr Jon Owen Jones Mr Jon Owen Jones Labour/Co-operative, Cardiff Central

It certainly does. A pattern already exists, even prior to foundation hospitals being established, of Welsh patients finding it difficult to get access to the hospitals to which they would traditionally be sent from their catchment. An article in the Shropshire Star only yesterday stated:

"A patient from Mid Wales has been refused a vital hip operation at a specialist orthopaedic hospital in Shropshire—because he is from Wales, a letter revealed . . . GP Dr Hywel Lloyd in Llanidloes received the . . . letter from a consultant orthopaedic surgeon at the Robert Jones and Agnes Hunt orthopaedic and district hospital in Gobowen."

I could cite a number of examples of Welsh patients who are already having difficulty getting into English hospitals, even though those English hospitals do not have the additional power that they would have under foundation trust status to restrict the growing demand for their services from Welsh patients.

I raised these matters at the Committee's first sitting and the answers given by the Minister, which were repeated by the Secretary of State for Wales, other Ministers and the Health Minister in the Welsh Assembly, were all to the effect that, to paraphrase, nothing in the Bill precluded or prevented Welsh patients from getting treatment. But that was never the question that I had asked. I asked why it was necessary to give Welsh and English patients a different legal status and to put Welsh patients in a disadvantageous position?

The Government claim that they have amended the Bill to answer that point. They amended clause 14(1) in Committee, and at first glance it appears that the amendment meets the purpose. The original Bill said:

"An authorisation must authorise the NHS foundation trust to provide goods and services for the purposes of the health service in England."

The amended Bill now says:

"An authorisation must authorise the NHS foundation trust to provide goods and services for purposes related to the provision of health care. "

All well and good—it appears to answer the problem. However, the very next subsection says:

"But the authorisation must secure that the principle purpose of the trust is the provision of goods and services for the purposes of the health service in England."

How can one read that and not conclude that the Bill and the establishment of foundation hospitals will put Welsh patients in an inferior position?

On Second Reading, I spoke in support of foundation hospitals, much to the annoyance of several of my hon. Friends, because I am in favour of reform in the health service. However, I must tell my hon. Friends on the Front Bench that the Government amendments tabled so far do not address the central point that I am making. I do not believe that they do not want to respond to the argument that I have made. Indeed, I am fairly convinced that privately they would like to agree to my amendments. They must stand up and make that point, because other hon. Members who support my proposals might think that if the Government cannot guarantee equal provision of services for people in Wales after the establishment of foundation hospitals, perhaps they should vote against establishing foundation hospitals. I do not hold that view because I support the principle of modernisation, but others might be less convinced.

Several hon. Members, especially Liberal Democrat and Plaid Cymru Members, have made a point about devolution. They are reluctant to support my amendments because they would empower the Welsh Assembly to create foundation hospitals if it wished. Provisions giving the Assembly the choice to do something exist in many other Bills. I do not understand—I have received no explanation—why the Welsh Assembly would want to put Welsh patients at a disadvantage in the way in which I described simply in order to make a gesture by saying that it would not create foundation hospitals or take up the power to introduce them at a later date. That puts ideology in front of any practical benefit and protection for Welsh patients.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health)

My party's standpoint is abundantly clear, as is that of the Scottish National party: we do not want foundation hospitals in Wales or Scotland and we are worried about cross-border effects. As was said earlier, the standpoint of the newly democratically elected Labour Government in the National Assembly for Wales is clear: they are against foundation hospitals.

As Mr. Jones said, clause 1 contains no reference to Wales, and he tabled amendment No. 60 to add such a reference. I take it from his remarks that he is in favour of establishing foundation hospitals throughout Wales, but that would be against the expressed wishes of my party and the Labour Government in Cardiff.

The hon. Gentleman says that adding a reference to Wales in clause 1 would address the problems of cross-border treatment. We are certainly worried about those problems. We are concerned that three tiers of treatment will be available in England: treatment available in foundation hospitals, treatment available in other hospitals and treatment available for Welsh patients. As my hon. Friend Mr. Weir said, there are potential consequences for the Barnett formula if hospitals in England lever in large amounts of private money. Will the Minister explain the consequences that that would have on the proportion of money available for Scotland and Wales?

We accept the force of some of the arguments made by the hon. Member for Cardiff, Central about cross-border treatments, but we note the Government's assurances that the issues are properly addressed. Presumably, the logical conclusion for the hon. Gentleman is that if his amendments are not adopted, the Bill is flawed. In that case, is he prepared to vote against it? I understand from his remarks that he will support it even if it is flawed. Should he undertake to vote against the Bill, Plaid Cymru will be prepared to consider our position on his amendments.

Photo of Frank Field Frank Field Labour, Birkenhead 4:00 pm, 8th July 2003

I want to speak to amendment No. 321, the 25 associated amendments and new clause 34, which stand in my name and those of my hon. Friends.

I begin where my right hon. Friend Mr. Dobson began, by reminding the House that we are debating the one institution about which this country cares. He was right to say that, but it was only a partial truth. If we look back over the past 20 years, the respect that the NHS has commanded among our voters has declined. Just because most of our constituents willingly vote for extra taxes to pay for improvements in the NHS, we cannot sit back and think that that state of affairs will continue. If any of my hon. Friends doubt me, they need only look at that other popular institution of 20 years ago—the monarchy—which was more popular than the NHS. The fact that something commands public favour at one point in time does not of itself mean that that favour will continue.

So the Government are right to take a twofold approach to NHS reform. The first approach is to commit record sums of taxpayers' money to improving services. The second is to consider institutional changes. I want to dwell on the size of the extra moneys that our constituents are willingly putting towards the NHS. We are approaching the mid-point of the Parliament. Even if our minds are not concentrated on the next election, our voters are increasingly thinking about it and the Government's record and performance. They will want improvement, over and above what they already expect, from the very large sums of money that they have willingly donated to improve the NHS. So my right hon. Friend was correct in saying that there are huge dangers in the Government playing around with the structure again at this time in the Parliament.

I am glad that my hon. Friend Mr. Hinchliffe is in the Chamber. No one was more favourable to the Bill's principles when we discussed it on Second Reading than I was. The direction that the Government wish to take—the ownership of the NHS—is right. I just question whether they have had sufficient time to listen enough or think enough about the structure that they will not only impose on many people, but roll out before the next election.

Before hon. Members vote, I beg them to acquaint themselves with what is in the Bill on the register of electors. My right hon. Friend the Member for Holborn and St. Pancras was rather gentle with the Government. He talked about the additional cost each year for local authorities to keep their register of electors up to date—some £50 million. But we will not be asking foundation hospitals to use an existing body of electors. They have to start from scratch, so mega resources will go into trying to understand the legislation which we may or may not pass today, and building up that body of electors.

The amendments and new clause in my name and that of my hon. Friends recognise that the Government are right to consider ways of changing from a producer-run to a consumer-run organisation. I do not accept that, as my right hon. Friend the Member for Holborn and St. Pancras said, there was a choice only between a producer-run body and a laptop. If that were the only choice, we would be with him. The Government are trying to feel a new way as they in effect denationalise the last nationalised industry in this country and the only nationalised industry about which people care.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

The amendments in my right hon. Friend's name, mine and that of several other hon. Members, all make the simple point that there is no use in planning for a roll-out of a major reorganisation that has not been pilot-tested first. The proposals embody some good and bold aspirations. Is not the answer to try them first, involve the new foundation hospitals together with primary care trusts on a limited geographical scale, and let them iron out the difficulties without another massive disruptive reorganisation?

Photo of Frank Field Frank Field Labour, Birkenhead

My speech can now be even briefer. That was the next point that I wanted to make, and I agree with every word my hon. Friend said. Our large group of amendments is intended to say to the Government, "Well done. We think you are moving in the right direction, but we are worried about any possible disruption in the delivery of services between now and the next election." The amendments therefore propose the establishment of six foundation hospitals and six primary care trusts. New clause 34 lists who would carry out the evaluation and how they would report back to the Secretary of State and to us before there was any further roll-out.

The simplest form of election would be to use the roll of electors who elect us. That would entail no extra administrative cost, and the people who act as returning officers in parliamentary elections would return the board members in the 12 pilots that the amendments propose. [Interruption.] My hon. Friend Mr. Prentice asks whether it would be a mutual organisation. No, of course not. I do not understand why the term "mutual" is being used. Most of my constituents think they own the health service. When one considers the difficulties that we place on our hospitals now, the idea of asking them to collect the quids or parts of quids and to deal with more administrative detail is a nightmare. My constituents are willingly paying to try and own the health services that they have. The Bill should be designed to give that effective form.

The amendments set out the procedure for nominations. When we want to stand for Parliament, we have to get, say, 50 members of our local electorate to support us, and the same should apply to the election of board members. The returning officer would be the same as for parliamentary elections, as I said, and the Comptroller and Auditor General would carefully examine the key pilot experiments.

We were told by the Minister of State, my right hon. Friend Mr. Hutton, that we must not go into the Lobby with the Tories on any of the amendments today. Our fear is that if we rush headlong into reforms that are almost open-ended, we will deliver the NHS up to their reforms. What we want to do more than anything is to make sure that the extra resources being put through the NHS are shown to be effective, and that our constituents are allowed to experiment. The NHS has survived for 60 years because everybody in the country knew that it had a cast-iron guarantee, a security, a fall-back position. We could all say to our electorates, "Don't worry, the NHS would perform better if only it had more money," but the Government have bravely stripped away that defence. We cannot go into the next election saying, "The service would be better if only you were prepared to cough up more taxes," as our constituents are already doing that. I beg the Government to draw back a little in their proposed pace of reform, to concede that we need an array of pilots to deal with PCTs and foundation hospitals and to ensure that the vast majority of hospitals do what they are meant to do—deliver improved services—particularly before we have to meet our paymasters, the electorate, at the next election.

Photo of Patsy Calton Patsy Calton Liberal Democrat, Cheadle

Time is short, so I shall be brief and confine my remarks to two areas about which I am especially concerned. They have been raised by other hon. Members and, to that extent, I shall seek to labour them, as I think they are important.

Amendments Nos. 397 and 398 seek to reverse the Government amendments made in Committee that changed the sense of clause 15 and, in particular, the severity of the cap on private treatment. My hon. Friends and I regard it as imperative that the clause should be made clearer. Unfortunately, the Government have tabled yet another amendment, Government amendment No. 248, which makes it even less clear. It has become a dog's breakfast of a clause and, as a provision that deals with privatisation and the supposed cap on privatisation, it needs to be reconsidered to ensure that there is a cap on the amount of private treatment that can be given in a foundation hospital.

The second area about which I am very concerned again relates to a Government proposal—Government new clause 36, relating to mergers. Dr. Taylor mentioned that issue, which goes beyond an attempt by the Government simply to ensure that there is not another hon. Member for Wyre Forest waiting out there. What is really important is that there should be transparency and honesty about the situation into which we are moving. If a foundation hospital can effectively become merged or closed and if its authorisation can be changed so that it can involve itself with more private treatment, and if all that can happen right up to the point at which authorisation is given, there will be no time whatever for public consultation. People will see their local hospital whipped away from them with no chance for them, their local politicians or anyone else to make any difference whatever.

I ask the Government to reconsider new clause 36 and especially proposed subsection (3), which allows changes to be made to the application right up to the point at which authorisation is given. That is not right. The public need to know whether their hospital can be changed, closed, merged or privatised. There has been a reduction in transparency as the Bill has passed through the House.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I should like briefly to respond to some of the points made in the debate after I made my initial speech.

I pay a very warm tribute to every hon. Member who has spoken in the past three hours or so. All debates about the national health service are high-quality debates. We in this place care about the national health service. I know that that is true of all my hon. Friends, but I ask them to recognise that it is true of Ministers too. We care about the national health service, which is why are making proposals to help improve and sustain the direction of travel that we have set in the NHS plan and beyond. Let us be clear about that.

It is deeply depressing to see some of the Lib Dem amendments to which Dr. Harris spoke tabled by someone occupying his space on the political spectrum. He wants to remove the provisions about direct elections to the boards of governors of NHS foundation trusts. I know that some of my hon. Friends would also like that to happen, but I have to say to him and to them that it would be entirely contrary to the spirit and intent of these proposals. A model of governance and representation that involves people being appointed to NHS trusts is no longer acceptable in the society in which we live. Let us have some democracy, but let us have some effective accountability as well.

New clause 9 deals with patients forums. I fully understand the concerns expressed by the hon. Member for Oxford, West and Abingdon and others—for example, by my hon. Friend Mr. Hall, who has played a distinguished role in this House in championing the cause of community health councils and the role of patients. However, the Government's arrangements for NHS foundation trusts extend beyond the current requirements for consultation and involvement. Primary care trust patients forums and the Commission for Patient and Public Involvement in Health will provide an additional means for independent patient involvement in the work of NHS foundation trusts. It is not the case that there will be no independent voice or opportunity for patients to be involved in the work of NHS foundation trusts. The patients forums established for primary care trusts will have that overview role. Nor is it the case, in relation to the comments of Dr. Taylor, that there is no role for the overview and scrutiny committees of local authorities, whose role is protected in the Bill. I am afraid that those arguments have little or no substance.

Let us also be clear about amendment No. 400, which would remove the cap on private charges altogether, replacing it with a system that would at best be a woolly attempt to give priority to the needs of NHS patients, but is clearly not a mechanism that is capable of being applied to any extent in the practical environment of the NHS. It is impractical, impossible to operate and riddled with contradictions—no change there as regards the Liberal Democrats.

On new clause 36, the points made by Mr. Lansley, which were picked up by Mrs. Calton and the hon. Member for Wyre Forest, suggest that there has been some misunderstanding of the Government's proposals. Under the new clause, an NHS foundation trust and another NHS foundation trust or an NHS trust may make a joint application to the regulator for authorisation as a new NHS foundation trust. In every other sense, we have simply mirrored the current provisions in the Bill on the principal application to become an NHS foundation trust. There is nothing different about the process at all.

On the group of amendments, including new clause 60, that were moved by my hon. Friend Mr. Jones, I am confident that nothing in the Bill changes or adversely affects the way in which Welsh patients are treated in NHS foundation trusts established in England. I say this to my hon. Friend, because I respect and value his counsel: my colleagues and I are prepared to have another look at the Bill to make absolutely sure that the assurances that we gave in Committee and on the Floor of the House are fully honoured. I hope that my hon. Friend will be satisfied with that.

We are reaching the conclusion of this debate—which by common consent represents an important and seminal moment in this Parliament—as regards how we take forward improvements in the national health service. We have set out a clear prospectus today. This is not about competition, privatisation or two tiers: it is about taking forward traditional NHS values and applying them in the new world and new society in which we live. No one who is treated at an NHS foundation trust will be charged for that treatment. The standards that are set will be national: my right hon. Friend the Secretary of State will ensure that that is so. These are sensible reforms that will take forward a better basis and a more solid foundation on which we can build genuine and strong public support for public services. I urge my hon. Friends to support the Government in the Lobby.

Question put, That the amendment be made:—

The House divided: Ayes 251, Noes 286.

Division number 280 Health and Social Care (Community Health and Standards) Bill — NHS Foundation Trusts

Aye: 251 MPs

No: 286 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 117 MPs

Absents: A-Z by last name

Question accordingly negatived.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

On a point of order, Madam Deputy Speaker. Could you use your offices to get a quick breakdown of the vote, so that the House can see how many Scottish Members were used to force through legislation that does not apply to their constituencies?

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. The normal procedures will apply to this vote as to any other vote in the Chamber.

It being more than three and a quarter hours after the commencement of proceedings on the programme motion, Madam Deputy Speaker proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour, pursuant to Order [this day].

Amendment proposed: No. 96, in clause 2, page 1, line 12, after 'Foundation', insert 'and Community'.—[Mr. Lansley.]

Question put, That the amendment be made:—

The House divided: Ayes 194, Noes 339.

Division number 281 Health and Social Care (Community Health and Standards) Bill — NHS Community Trusts

Aye: 194 MPs

No: 338 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 122 MPs

Absents: A-Z by last name

Question accordingly negatived.