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My Lords, I shall speak to Amendments Nos. 2 and 97. I support the arguments of the noble Earl; we on these Benches agree with many of them. I also want to place further arguments on record.
I have been asked on a number of occasions whether the Liberal Democrats object to foundation trusts in principle or as a practical matter. The answer is both. When a concept is fundamentally flawed in so many ways and becomes beyond redemption, practical objections essentially become ones of principle. No one argues with the principle that more devolution is necessary. That is a view of the NHS nowadays held in common by all political parties, and particularly strongly on these Benches. The issue is whether foundation hospitals essentially deliver that. Our view is that foundation hospitals are completely flawed as a mechanism, in terms of both their impact on the health system and the governance system adopted.
On a number of occasions in Committee, the Minister rather stoically said that he did not accept that foundation hospital arrangements were a dog's breakfast. The conclusion all the way round the Committee after many days was that they were. As we discussed then, the basis for selection is subject to considerable criticism. Star ratings are a flawed mechanism. They are arbitrary in many cases, and there is evidence that the assessment process can be manipulated.
As the noble Earl said, the impact of foundation hospitals will be adverse. It is doubtful whether all NHS trusts can achieve foundation status within four to five years. During the course of the passage of the Bill through Parliament, the Government have increased the number that may be eligible to 63. Even if they stated that the number would be 200, that would still not be achievable in the period of time. In the mean time, foundation hospitals will affect the viability of other hospitals in their areas. Despite ministerial assurances in Committee, after an initial phase during which foundation hospitals need to adhere to Agenda for Change, they will be able to vary employment terms and conditions and draw staff away from non-foundation hospitals.
As regards borrowing, which we debated at length in Committee, foundation trusts will compete with other trusts for resources. The NHS budget for acute hospitals will remain unchanged and foundation trusts will be playing a zero-sum game with NHS resources in competition with other parts of the NHS. There is no duty on foundation trusts when borrowing to have regard to the impact on the rest of the NHS. That inevitably will lead to greater inequalities between hospitals.
Then we come to the extent to which foundation trusts can compete with the independent healthcare sector and the provisions of Clause 15. I am all in favour of strong finances for NHS trusts, but if we genuinely believe in achieving capacity for the NHS and in a mixed economy which allows the private sector to compete to deliver services to the NHS, it is important firmly to restrict the provision of private healthcare by NHS hospitals. We know from the recently announced NAO review that that body has considerable doubts about the provision of private healthcare in NHS hospitals as regards whether it is being delivered as a loss leader. That NAO review is long overdue.
At the end of the day, the key issue is whether there will be any resulting benefit for patients. The well respected Health Select Committee rightly questioned whether such competition between hospitals would benefit patients. There is also a great deal of uncertainty about the nature of the duty to consult before a foundation hospital is established. We are promised regulations and we know that guidance has been issued for the existing applicants. Indeed, throughout the Bill we are promised regulation at every turn. But there should be a minimum requirement on the face of the Bill.
There is the issue of patient and public consultation. Foundation hospitals, even under the Government's current proposals, will have no duty to maintain patients' forums. There is huge disappointment that patients' forums are not provided for in the Bill. Simply having a board of governors or a few non-executive directors is no substitute for a properly constituted patients' forum.
In Committee, much faith was placed on the regulator. But at that stage we established that the regulator will have limited powers and duties in regulating foundation trusts. Indeed, throughout the Committee stage the Minister said, rather bizarrely, that the regulator was a referee, not a regulator.
At the end of the day, rather than going down the foundation hospital route, the essence must be to free the providers of healthcare from bureaucracy and central control and to increase democratic accountability where it really matters—with the commissioners of NHS healthcare. They are the ones who hold the budgets; they are the ones charged with improving health outcomes; and they are the ones charged with improving public health and reducing health inequalities.
It would be much better to make the commissioning system democratic. On these Benches we say that the best way to achieve that is by integrating health and social care. But, ultimately, under these proposals, it is very likely that, despite all the rhetoric, foundation hospitals will be no more free than they were before the legislation.
Turning to Schedule 1, in Committee Members on all sides were in agreement that the "architecture" of the governance set out in the Bill as the Minister described it is of an unbelievably Gothic nature and quite unsuitable for delivering genuine devolution of power to acute hospitals. In the amendments tabled today, the Minister has tried to install a few flying buttresses, but, if anything, he has made the situation worse. No doubt we shall be debating those further.
The constitution of what are described in the Bill as "public benefit corporations" promises to be a nightmare of bureaucracy. Each trust will have two tiers, a board of governors and a board of directors, but the board of governors will have virtually no powers. A membership—the so-called "public" constituency, staff constituency and patients—will elect the majority of governors. But what constitutes a patient? Who will be eligible? The area to be covered for membership purposes will be entirely arbitrary.
The membership and governance system in each foundation hospital will be locally determined within an overall template. It will be cumbersome and complex. We hear that the average membership of a foundation hospital is likely to be 10,000. But that membership will be self-selecting, giving rise to the danger of take over, as the noble Earl, Lord Howe, mentioned, by sectional interests. What are the limits on how foundation hospitals define membership?
The cost of maintaining the register of members and communicating with members will be massive. This is not cutting red tape, but creating more; and it will not lead to better clinical governance. Something like £250,000 to £400,000 could be spent on the governance of some of the foundation hospitals to maintain and communicate with their membership. That is a staggering figure when we consider for what other purposes the money could be used. Until the Minister's amendment tabled today, there was no minimum requirement for clinicians to be members of the board of governors, so the Government are still tacking on additional bits to this incredibly gothic structure.
We believe that public benefit corporations could be quite adequately run as companies limited by guarantee, as are many of our major charities, with trustee directors nominated to represent the communities or stakeholders they serve. But the bottom line of all this is that none of it will lead to better clinical outcomes for patients. We have had too much tinkering already.
It may be that throughout these debates the Government will not listen to the Opposition parties. Obviously, we would prefer that they did, but if they will not at least they might listen to their own members and supporters. Virtually every organisation affiliated to the Labour Party representing staff in the NHS either has doubts about or opposes foundation hospitals. Look at the vote of the Government's own conference in October. Who will this Government listen to if they will not listen to their own members and supporters?
This is an opportunity for the Government to think long and hard about these proposals and take them away and rethink them. We on these Benches very much hope that they will take that opportunity.