Health and Social Care (Community Health and Standards) Bill

Part of the debate – in the House of Lords at 9:30 pm on 13th October 2003.

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Photo of Lord Warner Lord Warner Parliamentary Under-Secretary, Department of Health, Parliamentary Under-Secretary (Department of Health) 9:30 pm, 13th October 2003

I shall try to respond to as many as possible of the questions raised by the noble Baroness. However, I should like to do that in a form in which I set out the Government's position on the specific amendments. Given the remarks by the noble Baroness on the last amendment, I assure her that I am in an extremely affable mood, so I shall be as helpful as I possibly can be.

The position on Amendment No. 152 is that as independent organisations, NHS foundation trusts will fall outside current arrangements for the allocation of capital in the NHS. Instead, they will have access to a wider range of financing options than is currently available to NHS trusts. Capital made available to NHS foundation trusts by the Department of Health will be on a loan basis and they will be expected to pay off both the principal and the interest of any loan, rather like a mortgage.

However, to the extent that any public funds are made available for any central initiative—for example, implementation of national service framework initiatives—NHS foundation trusts should have access to an equitable proportion of those funds, whatever the actual source. Such funding might be paid to NHS foundation trusts by way of a grant or injection of public dividend capital from the Secretary of State.

That is why we are taking those powers to ensure that the Secretary of State is able to make loans or issue public dividend capital or grants when providing financial assistance to NHS foundation trusts. Those powers mirror the equivalent legislative provisions applying to existing NHS trusts.

That power is not intended for bailing out failing NHS foundation trusts. It is an essential aspect of the new disciplines being placed on management, as the quid pro quo for the additional freedoms that come with foundation status, that the Secretary of State will not guarantee debt. In the event of failure, the Government will of course stand behind NHS patients and essential NHS services—that is, protected services. We will not stand behind or bail out poor management. Instead of bailing out NHS foundation trusts, the Bill includes specific powers in Clause 24 for the independent regulator to intervene in the operation of an NHS foundation trust if it cannot meet its financial commitments. We have made our intentions quite clear on that. The amendment is wholly inconsistent with our policy aims and therefore ought not to be pursued.

On Amendment No. 152, which concerns private finance initiatives, our position is as follows. PFI schemes are and will continue to be an essential part of the building programme for the NHS. We intend to ensure that sponsors and funders of PFI schemes are left in no worse a position as a result of the introduction of the Bill and the establishment of NHS foundation trusts. Foundation trusts will continue to be able to access the PFI process to finance major capital investments, subject to similar terms and oversight as apply under the current arrangements.

To achieve that, we propose that in future the Department of Health-approved NHS foundation trust PFI schemes can, if necessary, be guaranteed by the Secretary of State. The Secretary of State would be able to undertake a "deed of safeguard", accepting the obligation to pay sums due under the PFI contract if they were not paid by the NHS foundation trust. He could also enter into an agreement with the NHS foundation trust. Such an agreement would give the Secretary of State the ability to reclaim from the foundation trust any moneys that he had had to pay as a result of the non-performance by the foundation trust of its contractual obligations. The same agreement would also make clear that performance of the PFI contract on a day-to-day basis was a matter for the NHS foundation trust.

The Secretary of State already has the legal powers necessary to allow him to guarantee PFI deals entered into by foundation trusts. However, parliamentary convention requires that any ongoing government expenditure should have express legislative cover. The Bill was therefore amended in the other place to provide the required legal cover, should it be needed. The amendment would remove that provision and is therefore inappropriate.

Amendment No. 153 concerns the Secretary of State providing foundation trust information to Parliament. We have always made clear that the additional freedoms that come with NHS foundation trust status will be balanced by appropriate safeguards to ensure the public benefit and protect NHS services. That is why we have provided for each NHS foundation trust to make its accounts available to the public and the National Audit Office and to lay the accounts before Parliament.

The Bill therefore already provides more than adequate provision for public and parliamentary scrutiny of the financial arrangements for foundation trusts. The requirement for the Secretary of State to prepare additional financial accounts for presentation to Parliament is an unnecessary burden. Any necessary information will be provided through individual foundation trust accounts presented to Parliament.

I have tried to deal with the points in a policy context. The noble Baroness asked many detailed questions. I shall read Hansard very carefully and I promise to write to her if I have failed to deal with any aspects or details in my response.