I have listened carefully to the points made by my noble friend and to the comments of the noble Baronesses. I shall consider what they have said. They raise important issues in regard to governance arrangements if there are mergers. I shall write to my noble friend as quickly as possible and copy the letter to other noble Lords.
The discussions in another place highlighted a gap in the Bill in that it did not provide adequately for mergers of NHS foundation trusts after establishment. We recognise the importance of ensuring that such mergers should occur in a way that balances the need to minimise bureaucracy with the need to safeguard the interests of the NHS and NHS patients. That is why we have brought forward these provisions. That is the context in which we are discussing the amendments.
Amendment No. 196 would remove the veto of the Secretary of State over mergers involving NHS trusts. We believe that it is entirely appropriate that the support of the Secretary of State should be required before an NHS trust applies for NHS foundation trust status through a merger with an NHS foundation trust, just as his support would be required if the NHS trust was making an individual application for NHS foundation trust status.
If the Secretary of State did not have this power, there would be effectively a backdoor route for NHS trusts to become NHS foundation trusts without obtaining his support. In effect, there would be a short cut into foundation trust status without going through the processes that other applicants now have to go through. NHS trusts are ultimately subject to performance management by the Secretary of State, and he will be well placed to judge whether they are in a fit and ready state to move forward to an application to the regulator. It is important to preserve those arrangements in order that we do not create loopholes.
Amendment No. 197 requires the regulator to consult the Independent Reconfiguration Panel. I remind your Lordships that the Independent Reconfiguration Panel is not a statutory body and so we are up against the issue, upon which we keep touching, of whether it is right to refer in primary legislation to a body or concept that is not statutorily established. On those grounds, it should not be referred to in legislation.
However, the regulator can take advice from any person he thinks appropriate. This could include the Independent Reconfiguration Panel. I am certainly happy to give the assurance that it is not the Government's intention to exclude it. I shall not outline the details of the arrangements for consultation, but they are fairly extensive and contain many safeguards.
As regards Amendment No. 198, which relates to consultation on mergers, we will require applicants for mergers to carry out the kind of comprehensive public consultation that would need to occur for any major reorganisation in the NHS. Clause 27(6) provides for the Secretary of State to make regulations setting out the consultation requirements. Compliance with these regulations would be a condition of authorisation.
We have included this power—believe it or not—because we intend to use it. We expect to introduce the regulations under Clause 27(6) before any applications are made for mergers involving foundation trusts. These are likely to require consultation with the local public and patients— including patients forums, once established—staff, other local NHS bodies and local authorities, including overview and scrutiny committees.
This important measure is designed to ensure that the views of local communities and stakeholders are sought, listened to and taken into account. However, we do not believe it would be appropriate to remove the Secretary of State's discretion on whether to make regulations and what they should contain, particularly as the requirements may themselves change over time. That, effectively, is what this amendment would do.
The requirement that a consultation should be "adequate" is simply not necessary. As a matter of law, consultation must be adequate. If it is not, it is open to challenge in the courts.