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New Clause 3 — Duration of transitional period

Vat – in the House of Commons at 8:48 pm on 6th September 2011.

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‘(1) Section 117 ceases to have effect in relation to an NHS foundation trust on 1 April 2016 unless—

(a) before that date, the Secretary of State provides by order for that section to continue to have effect in relation to the trust, or

(b) the trust was authorised after 1 April 2014.

(2) An order under this section may provide that section 117 is to continue to have effect for such period as is specified—

(a) in relation to all NHS foundation trusts, or

(b) in relation only to such NHS foundation trusts as are specified.

(3) But an order under this section may not apply to a trust in relation to which section 117 has, by virtue of a previous order under this section, ceased to have effect.

(4) A period specified for the purposes of subsection (2)—

(a) must begin with the day on which section117 would, but for the order, cease to have effect in relation to the trusts to which the order applies, and

(b) must not exceed two years.

(5) In the case of a trust to which an order under this section applies, and which was authorised on or before 1 April 2014, section 117 ceases to have effect in relation to the trust in accordance with that order or any subsequent orders under this section which apply to the trust.

(6) In the case of a trust which was authorised after 1 April 2014 (including a trust authorised on or after 1 April 2016 if, at the time it is authorised, section 117 still has effect), section 117 ceases to have effect in relation to the trust—

(a) if no order under this section is made before the end of the initial two-year period, at the end of that period;

(b) if an order under this section is made in reliance on subsection (2)(a) before the end of the initial two-year period, on whichever is the later of—

(i) the end of that period, and

(ii) the day on which that order or a subsequent order under this section ceases to apply to the trust;

(c) if an order under this section is made in reliance on subsection (2)(b) before the end of the initial two-year period, in accordance with section [Orders under section [Duration of transitional period] that apply to only some trusts](8) to (11).

(7) In this section and section [Orders under section [Duration of transitional period] that apply to only some trusts]—

(a) “the initial two-year period”, in relation to an NHS foundation trust, is the period of two years beginning with the day on which the trust is authorised;

(b) a reference to being authorised is a reference to being given an authorisation under section 35 of the National Health Service Act 2006.

(8) Section 117 is repealed as soon as there are—

(a) no NHS foundation trusts in relation to which it has effect, and

(b) no NHS trusts in existence (whether because they had all ceased to exist without section182 having come into force or there are none continuing in existence by virtue of subsection (3) of that section).’.—(Paul Burstow.)

Brought up, and read the First time.

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

With this it will be convenient to discuss the following:

Government new clause 4—Orders under section [Duration of transitional period] that apply to only some trusts.

Government new clause 5—Repeal of sections [Duration of transitional period] and [Orders under section [Duration of transitional period] that apply to only some trusts].

Government amendments 88, 89 and 108 to 112.

Amendment 17, in clause 117, page 122, line 3, leave out subsection (12).

Government amendments 282 and 285.

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

These Government amendments will make important changes to extend Monitor’s intervention powers over all foundation trusts until 2016. This would give additional time for foundation trusts’ governors to build the capability that they need to be able to hold their boards to account.

As my right hon. Friend the Secretary of State has described, through part 3 of the Bill, Monitor as the sector regulator would have permanent intervention powers over all providers, including foundation trusts. These will allow it to fulfil its duty to protect and promote the patient’s interest and its functions include supporting commissioners in securing continuity of services. That is why we believe that Opposition amendment 17 is not only ineffective, based as it is on non-existent terms of authorisation, but also redundant.

My right hon. Friend the Secretary of State has already confirmed that we agree that it is essential that Monitor, as health sector regulator, can take action to secure patients’ continued access to NHS services, and our plans ensure this. Monitor would have powers under its licensing regime to require a provider to take specific actions if it gets into difficulties. These will be effective safeguards to protect patients’ and taxpayers’ interests, and will support commissioners in securing continued access to services that patients depend on for their care. I hope, therefore, that the hon. Members who tabled the amendment will not press it.

However, the NHS Future Forum raised concerns about the current readiness of foundation trust governors to take on the strengthened role that the Bill provides for them in holding foundation trusts to account as autonomous NHS providers. In response, the Government have agreed that Monitor’s intervention powers should apply to all foundation trusts until 2016, to allow time for their governance arrangements to become fully effective. The amendments provide for the transitional powers to continue until 2016. They also make corresponding amendments to clause 117 on licence conditions supporting use of the powers, and remove clause 116, about identifying which foundation trusts would be subject to the powers.

The amendments do not change the nature of the transitional intervention powers set out in clause 117. Monitor will continue to have the power to remove or suspend members of the board of directors or members of the council of governors. Monitor would also be able to direct a foundation trust to do or not to do specific things within a specified timetable. These powers are similar to those currently available to Monitor in its role as foundation trust regulator, and would allow Monitor to continue to protect the taxpayers’ interest in foundation trusts.

The powers go beyond those that Monitor would have over all providers, under part 3, as sector regulator. They will help to ensure a smooth transition from the current arrangements for NHS foundation trusts. The amendments would allow the Secretary of State to seek further parliamentary agreement to extend the powers beyond 2016 for all or some foundation trusts for up to two years at a time. That power could be used, for example, if there was a significant remaining concern about the governance of some foundation trusts.

If it were decided to extend the powers for some, but not all, foundation trusts, Monitor would be required to go through a process similar to that originally envisaged in clause 116. It would have to publish the criteria that it would use to decide which foundation trusts would remain subject to its intervention powers. Those criteria would be subject to consultation and would require approval from the Secretary of State. The amendments will ensure that the transitional regime proposed in the Bill provides a more secure safety net while foundation trust governors develop the skills and capabilities necessary to hold their boards to account.

The amendments would enable Monitor to rectify avoidable difficulties at a foundation trust while foundation trust governance arrangements developed, ahead of normal regulatory intervention through the licensing regime. They also provide for the extension of the powers, should that prove necessary. I commend them to the House.

Photo of Owen Smith Owen Smith Shadow Minister (Wales)

I do not intend to take long, because we must get on to the important next group of new clauses and amendments, which is on the private patient cap; there will be huge interest in that outside this place, and there is far too little time to discuss it. I shall say right at the outset that we will not press amendment 17, because we accept that, as the Minister said, it is effectively made redundant by other amendments that have been tabled.

In some respects, the amendments in the group before us tell the story of the Bill in microcosm. Throughout the progress of the Bill, the Government have responded in two ways. One has been to bolt endless obfuscation and compromise on to the Bill to obscure its true intentions. There was clarity at the outset, in the Bill’s first iteration; it clearly aimed to break up a publicly owned, collaborative NHS and replace it with a competitive, market-driven NHS. The Government have sought to obscure that throughout the Bill’s progress, and have done so relatively effectively. Certainly, more gullible Government Members, perhaps even including the Deputy Prime Minister, have bought into the double-speak about this now being a question of preventing anti-competition, as opposed to promoting competition, but we Labour Members still do not buy that.

Nor do we buy the idea that the other amendments that we have considered today add clarity. In truth, they add to the confusion—the chaos, indeed—that will follow the implementation of the Bill. As the Minister has outlined, the clauses that we are considering effectively extend Monitor’s existing compliance and regulatory roles over foundation trusts to all FTs through to 2016. That is what the Future Forum recommended to Ministers, but they did not do that last time, although they did get rid of the arbitrary 2014 deadline that they had introduced. They are now going a step further and extending Monitor’s compliance functions. That might not be such a bad thing, and perhaps many people will agree with the idea; certainly the Future Forum will. The trouble with it, of course, is that it extends the critical conflict of interest that is at the heart of Monitor’s role.

There is a conflict between what is clearly Monitor’s principal function—as an economic regulator, designed to prevent anti-competitive behaviour and facilitate the exit of providers, such as hospitals, from the marketplace—and its compliance role, which is ostensibly about allowing FTs to flourish, and making sure that they do not fail. How will the Government deal with that apparent contradiction? To use their own words as set out in the original explanatory notes, how will they

“mitigate and manage potential conflicts of interest” between the transitional functions and Monitor’s new functions? Well, rest easy, because the Government have made a very simple suggestion as to how Monitor should square that circle, which I am sure all Members will find satisfactory, as I do. Clause 62(3), subtly amended by Government amendment 89, explains that Monitor must simply

“ignore the functions it has under section…117 when exercising…its functions” relating to competition, price-setting, or the licensing of NHS services.

So there we go: in Monitor there are to be Chinese walls, as Ministers colourfully put it in Committee. Monitor retains its role in trying to keep FTs from failing, but it also takes on a role in exiting them from the market and helping other providers—Bupa, perhaps, or Helios, which we know are sniffing around the Department of Health right now—to step into the breach. Chinese walls, competition and confusion: those are the key words for this botched Bill.

Question put and agreed to.

New clause 3 accordingly read a Second time, and added to the Bill.