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Report (6th Day)

Part of Health and Social Care Bill – in the House of Lords at 12:15 pm on 8th March 2012.

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Photo of Earl Howe Earl Howe The Parliamentary Under-Secretary of State for Health 12:15 pm, 8th March 2012

My only frustration was that I was getting to what my noble friend wanted me to cover but she did not give me the chance to do it. Otherwise, I am more than happy to take questions from noble Lords on points of clarification.

I was explaining that governors, as representatives of local communities, will hold directors to account for ensuring that non-NHS activity does not significantly interfere with the foundation trust's principal legal purpose, which is to provide NHS services. Our proposals strike the right balance between the powers of the directors and the responsibility of the governors.

The answer to my noble friend's point, and that of my noble friend Lady Williams, is that Monitor will publish guidance for NHS providers on the requirements it sets for them to maintain the continuity of NHS services. We fully expect this guidance to cover conditions for foundation trusts relating to the need to ensure that the continued provision of NHS services is not put at risk by non-NHS activity. As the House will know, foundation trusts will be required to demonstrate how non-NHS income contributes to the foundation trust's delivery of improved NHS services. In particular, if a foundation trust is increasing its non-NHS income by more than 5 per cent of its total income in a year, we will expect Monitor in every instance to review whether there is any cause to intervene in order to safeguard the ongoing provision of NHS services. This will be in addition to the required scrutiny and approval by the foundation trust's governors. I hope that fully reassures my noble friends that this matter is not just a question that will be looked at within the confines of a foundation trust. It will have wider exposure than that.

I am afraid I am going to disappoint the noble Baroness, Lady Finlay, not as regards her amendment, which she did not speak to, but as regards Amendment 220C. The problem with it is that it would give Monitor the discretion to agree private income caps for foundation trusts. It would also retain the current cap and, as I have indicated, we think that the cap is unfair and has definitional complexities. That is an undesirable road to go down. It would burden foundation trusts with a governance regime that would be bureaucratic, costly and at odds with a foundation trust's ability to manage itself.

Requiring governors to vote on any increase to their trust's private patient cap, and therefore any increase to non-NHS income, would unreasonably inhibit the board of directors' ability to manage its organisation. We surely do not want foundation trusts being run by boards that are constantly requiring votes by governors. The proposal in Amendment 220C would also require a majority vote by the members of a foundation trust for any increase to the trust's private patient cap. That is a completely misguided approach. It would undermine the authority of the governors. Governors represent the members, the majority are elected by the members, and they should be allowed to get on and fulfil their responsibilities.

Securing a majority vote by members would also be very expensive. Many foundation trusts have several thousand members. Do we really want scarce NHS resources being spent on polling members about any increases to non-NHS income? I gently ask noble Lords opposite to think again about that.

Finally, Amendment 220C proposes that Monitor should be required to approve any increases to private patient caps beyond 5 per cent. My objection to that is that it would undermine foundation trusts' autonomy to manage themselves. Directors and governors are better placed than Monitor to decide what is best for their organisation. Monitor's involvement could also dissuade foundation trusts from pursuing innovative approaches if they are required to go through an external assessment and, in effect, a second approval process.

The central point is this: Part 4 has been built on the experience of what foundation trusts know will work. It represents the opportunity to realise what value foundation trusts can bring to the NHS. It will enable them to develop as responsive, transparent, autonomous and accountable bodies. Removal of the private patient income cap is about foundation trusts making the most of the opportunities they have to earn additional income for investment in the NHS. It is precisely why many NHS leaders and clinicians wrote an open letter to this House urging support to remove the cap. I hope that what I have said will reassure noble Lords that we have the right checks and balances in place while also giving foundation trusts the freedom that they need and have asked for. I also hope that the noble Baroness will feel able to withdraw her amendment.