Clause 1 - NHS foundation trusts

Health and Social Care (Community Health and Standards) Bill – in a Public Bill Committee at 9:15 am on 13th May 2003.

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Photo of Simon Burns Simon Burns Shadow Spokesperson (Health) 9:15 am, 13th May 2003

I beg to move amendment No. 65, in

clause 1, page 1, line 5, leave out 'benefit corporation' and insert 'interest company'.

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

With this it will be convenient to discuss the following amendment:

No. 66, in

clause 1, page 1, line 8, leave out subsection (2) and insert—

'(2) A public interest company, in pursuance of an application under this Part, is constituted in accordance with prescribed regulations.'.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

These are probing amendments, as we simply wish to tease out from the Minister more information on the Government's thinking behind clause 1.

Paragraph 44 of the explanatory notes to the Bill explains quite straightforwardly that

''Clause 1 sets out that an NHS foundation trust is a public benefit corporation which is authorised under this Part to provide goods and services for the 'health service' in England.''

Paragraph 45 states:

''Under subsection (2), a public benefit corporation is defined as a body corporate.''

It will not escape the notice of Committee members that the language is businesslike and corporate. That may come as a surprise to some Government Members, who have always—rightly, I suspect—considered the national health service to be not so much a business as a national provider of services for the people of this country.

It is interesting to see how the Government's original intentions have changed. Ours is simply a probing amendment—I will not seek to press the matter to a Division—to reinstate, ironically, the status quo of Ministers' intentions. When the Secretary of State addressed the New Health Network early last year he outlined his vision of the future of the health service in several areas, and he spoke about his concerns on certain aspects where he felt the health service was failing at present. He went on to outline his views about foundation trusts and the way forward to free hospitals from political control at the centre and to devolve power to the people. I have no problem with those sentiments providing that the institutions remain within the NHS.

Unlike some of the Minister's hon. Friends, I take it at 100 per cent. face value that neither this clause nor the Bill are, in any shape or form, measures to seek either to begin, or aid, the process of privatising the health service. It is unadulterated claptrap to suggest that, and this clause reinforces that view. Equally, it is unadulterated claptrap to suggest that these provisions could be a springboard for the Conservative party to

begin that process when it returns to Government. That never has been, and will not be, its intention.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

As the hon. Gentleman is in such a generous mood at this early stage, will he tell us what method he will use to privatise the health service if he ever does get into power?

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

As I am in such a generous mood, I will not treat that ridiculous intervention with the contempt that it rightly deserves. In many ways, the hon. Gentleman has a justified reputation as a Member of this House but, on occasions, he misses the plot and gets waylaid by introducing cheap, party political jibes that are without foundation.

Let me reassure the hon. Gentleman that, as I said on Second Reading, I believe, as does my party, that this country should have a national health service that is free at the point of delivery for all who are entitled to use it. That has been the policy of the Conservative party since it returned to office in 1951. It was definitely the policy of the Conservative party from 3 May 1979 until 1 May 1997, and it will remain our policy.

I must warn the hon. Gentleman that it does his intellectual reputation no good whatever to peddle ludicrous smears and inaccuracies that have no foundation. In a generous spirit, I hope I have reassured him, and I hope that between now and the 19 June we will not have to listen to any more ludicrous interventions like that made by the hon. Gentleman.

In his important speech to the New Health Network last year about his big idea, which is before us today, the Secretary of State said:

''The middle ground between state-run public and shareholder-led private structures is where there has been growing interest in recent years.''

He went on to say that people have been

''examining the case for new forms of organisation such as mutuals or public interest companies within rather than outside the public services and particularly the NHS''

That was picked up in the Department of Health publication of December 2002, ''A Guide to NHS Foundation Trusts''. In the foreword and elsewhere, the Secretary of State said:

''We will shortly be bringing forward legislation to establish NHS Foundation Trusts as independent public interest organisations modelled on co-operative societies and mutual organisations''.

All of that is straightforward and plain sailing. I understand—the Minister may be able to enlighten or correct me—that the phrase ''independent public organisations'' had been used as well as ''public interest companies''. That caused concern because of the association of the word ''company'' with private sector business. Now that the Bill is finally published, instead of any reference either to independent public interest organisations or to public interest companies, why do we see the phrase ''public benefit corporation'' in clause 1(1)? Subsection (2) goes on to say that

''A public benefit corporation is a body corporate which, in pursuance of an application under this Part, is constituted in accordance with Schedule 1.''

In its entirety, the clause is straightforward, but I should like the Minister to elaborate on how the original phrase became the ''public benefit corporation''. Is it literally and solely a change in language, or is there any subtle difference between a public interest company-cum-organisation and a public benefit corporation? Will the Minister explain the Government's thinking and the evolution from their original ideas—as put forward in their guide to foundation hospitals and in the Secretary of State's speeches—to what is in the Bill?

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

I am privileged to have my first opportunity to participate in our Committee proceedings. I have not had the pleasure of serving under your chairmanship, Mr. Griffiths, although Mr. Atkinson is probably bored with the sound of my voice in this parliamentary year. I hope that his patience will not be strained in this first debate.

As my hon. Friend the Member for West Chelmsford made clear, the question of what kind of organisation we are discussing is important. Although we will examine how a ''public benefit corporation'' will subsequently be constituted and defined, the question of why there has been a move away from a ''public interest company'' as such is interesting. The use of public interest company status would bring with it all the tried and tested mechanisms of company organisation.

The hon. Member for Leigh (Andy Burnham) is present. In previous debates he has extolled the benefit of mutual status. He mentioned mutual organisations such as football clubs in which the supporters are the members; the Co-operative Society, which is well known to hon. Members opposite and even to Conservative Members, in a retail capacity; and the John Lewis Partnership. Such mutual organisations utilise company status and the normal arrangements of company law. That begs the question; why is it necessary to escape from the normal constraints and safeguards that have been established under company law in order to establish a different kind of corporate body?

Part of the answer to that question may have to do with the fact that the Bill deals with a body that does not bear direct comparison with those mutual organisations that have been prayed in aid by the Government as exemplars for NHS foundation trusts. The Bill deals with a body that is, at the same time, a mutual organisation for the consumers of a service and a mutual organisation for the producers of a service. That mixing of the two is unique.

The Government will wish to say that this is a unique organisation, but that uniqueness gives rise to many questions. Those who live in a locality that is close to a hospital, those who are patients and their families and those who work in hospitals will have differences of interest. Those differences cannot be waved away by the definition that ''public benefit'' somehow constitutes an overriding consideration to which everything else will be subordinated. That is not what happens. The purpose of making a constitution is not to deal with the happy circumstances in which

everybody agrees; its purpose is to deal with circumstances in which people do not agree and in which conflicting interests have to be reconciled. The establishment of a mutual organisation that consists of producers and consumers internalises the conflict. The constitution needs to be robust in order to deal with that. The constitution of companies is designed to be robust. Although it is not perfect and has its difficulties, it has been tested over time and is subject to constant amendment. The Trade and Industry Committee will shortly set out its ideas on the current review of company law.

In moving from the terminology of a public interest company, the Government have signalled their intention to establish a unique organisation. Before the Committee begins examining the detail of that, it might be helpful to understand why the Government have moved away from the idea of the public interest company. That move is not because a ''public interest company'' has a defined commercial meaning or because there is a requirement that a body be of a profit-distributing character. Companies limited by guarantee are perfectly capable of serving a public benefit. I worked for such a company in the voluntary sector. That company was similar to the organisation that we are to examine, in that it was a public benefit organisation, constituted from members who were drawn from across the country, each of whom subscribed £1. I find it difficult to understand why the Government have moved away from public interest companies. The purpose of the amendment is to try to find out the reasons why the Government have done that.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon 9:30 am, 13th May 2003

I note that the hon. Member for West Chelmsford, in moving the amendment, did not speak to amendment No. 66. I do not know whether that is because the amendment follows naturally. New issues are raised by amendment No. 66.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

Amendment No. 66 is consequential on amendment No. 65. If we were to have pressed it to a Division and won, there would have been consequential changes to schedule 1 of the Bill. We tabled the amendment for uniformity.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

In that respect, I understand why the amendment has been tabled. However, amendment No. 66 would remove the words ''is a body corporate'', presumably because the hon. Gentleman's idea of a public interest company would, by definition, not be a body corporate but something more than that. That is my understanding of the matter.

In our proposals for creating a diversity of providers or a mixed economy of providers in the health service—published in a document last year—we suggested that public benefit organisations be introduced. Our objection to the Government's proposals for NHS foundation trusts was not the status of the provider organisation. I do not want to rehash Second Reading arguments, but we believe that the Government's proposals for NHS foundation trusts are deeply flawed in several areas, but not in respect of their being public benefit organisations.

We prefer to use the more generic term ''public benefit organisation'', partly because—perhaps we share this belief with the Government—it will be very difficult, especially in the NHS, to interest staff and patients in something called an ''interest company'' rather than in something called a ''benefit organisation''. Perhaps that is a matter of appearance rather than law, but to gain support for necessary changes to the NHS—such as the introduction of different models of provider services—appearance is important.

If the legal definition of the foundation trust as contained in subsection (2) is that it is a body corporate, I want to go beyond the original question posed by this amendment and ask why the Government, in subsection (1), could not have used the term ''public benefit organisation'', and then defined it as a body corporate in subsection (2). It may be a minor issue, but if this is the basis for the Government's careful use of language—this is a Government who take great care to use language carefully—many people may not want to be part of a corporation when previously they saw themselves simply as a part of an NHS hospital.

The hon. Member for South Cambridgeshire (Mr.Lansley) made an interesting point about the difficulties and complexities of trying to create a public benefit organisation that mixes producer and consumer interests among the stakeholders. I agree with that. Our model for mutuals in the health service proposes that staff should be predominant in this mutual organisation and that the public interest should be served through massive decentralisation and democratisation of the commissioning side of the health service. If one ensures that the public interest is protected and that the public are able to participate democratically, playing an advisory role on the commissioning side—which provides almost all the work of even these public benefit organisations—it would not be necessary to try to shoehorn them into representation in the provider organisation in an untidy, clumsy and not particularly democratic way.

There will be a conflict, and although it may be considered appropriate to try to resolve conflict in the organisation rather than through the commissioning process, the whole argument for separating commissioning from provision is to separate clearly the consumers' or patients' interest from matters connected with the most efficient way to deliver to that commissioned service. In that respect, I share the view of the hon. Member for South Cambridgeshire, and we have published relatively detailed proposals on the issue.

I should be grateful to hear the Minister's response to the hon. Gentleman's question about whether there is a precedent for this type of mix. I should also like to know whether the mutuals that were referred to have generally been bottom-up and not imposed centrally. Do they look to ensure that innovation comes from staff, and that the commissioning side deals with the needs of patients and the way in which consumer interests can be represented in the process?

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

I am unclear about the legal standing of the new creations called public benefit corporations, but I am sure that the Minister will be able to tackle my specific questions. Can he give another example of a public benefit corporation created by statute? The question is not intended to trip him up; I simply do not know of one. Is there a precedent with a set of legal consequences that flow from it that we can study? I am not aware of one, but the Minister probably is.

To follow the comments of my hon. Friend the Member for South Cambridgeshire, do the Companies Acts apply to public benefit corporations? I suspect that they do not, and if that is the case, the point made earlier—that the law relating to the conduct of these companies will be a matter entirely for their constitutions and for general law; the law of contract and so on—is incredibly important.

I wonder whether the Minister has given due thought to the amount of legal time that will be spent creating constitutions for all of these organisations, and to what that will cost. Will there be central guidance? Schedule 1 sets out some of the requirements for a constitution, but I assure the Minister that the constitutions will turn out to be a great deal longer when expensive lawyers have finally drafted them.

Why did the Minister not allow units to be owned by companies limited by guarantee so that they could have the benefit of this country's well-established company law? If they are considered to be bodies corporate, why is the Minister insisting that the title in every constitution includes the words ''NHS foundation trust''? Trusts and bodies corporate are very different things under English law. I wonder whether it is not misleading to suggest that these are trusts, when in fact they are bodies corporate. Perhaps the Minister can explain what he thinks the difference is.

Do bodies corporate have limited liability? Presumably, at some stage, there will be a transfer of assets from whoever owns the hospitals now—regional health authorities, NHS trusts or the Government themselves—to these new bodies. Has the Minister given any thought to the kind of legal documents necessary for that transfer of assets? What plans has he made for that? Will it be a matter for the new units—the new bodies corporate and public benefit corporations—to arrange themselves? Will there be a set of legal documents that we can inspect to see what rights and liabilities flow with the transfer of these assets?

I hope that the Minister can answer some of these questions in his response. If he cannot, I suspect that it may take longer than expected to deal with this group of amendments because this goes to the heart of the matter. I also suspect that one of the reasons that a new form of body corporate appears to have been created is that the prospect of a Labour Government transferring the assets that make up the health service to companies limited by guarantee would have been a step too far for many Labour MPs.

I expect that exactly the same outcome will be determined by clause 1. It is important that we get to

the bottom of the precise legal nature of these new units and the consequences that flow from them. This must be done to satisfy our constituents as to where ownership lies and what legal consequences result from that, and in order to make an estimate of the kind of legal difficulties that may arise from creating a new species of body corporate with unknown legal consequences.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon 9:45 pm, 13th May 2003

I welcome you to the Chair, Mr. Griffiths. At this early stage of the proceedings, definitional points are important. We must use words that explain what we mean. Outside this place, the words that we use will be taken to mean certain things and used to interpret what we have said. On one level, this is a dry debate about semantics, but there are some important principles behind it that I am sure we will revisit many times during the proceedings. At this early stage, it is important that we send a clear message through the words that we use. I am sure that the Minister will do that when he responds to this part of the debate. We must get off on the right foot.

My support for this Bill is based on the premise that foundation hospitals represent a new form of public ownership. Much as Opposition Members might wish it to be, it is not a stepping stone towards privatisation of the health service. The hon. Member for West Chelmsford, who leads for the Opposition in this matter, said that there had been an evolution in the Government's thinking. In fact, there has been an evolution in the debate across the country as to how we think about these matters.

If one thinks about the nature of public ownership more generally and about what is in the public interest, one can see that, in the past, there were two opposed and stereotypical positions that perhaps did not correspond to the realities of the two parties. On the one hand, there were those who believed that in order to work for and serve the public interest, organisations had to be state-owned and state-controlled. I am not saying that that was ever the true position of the Labour party, but perhaps many people saw it that way. On the other hand, there were the more extreme elements in the Conservative Party in the 1980s who felt that in order for an organisation to serve the public interest, it had to be privately run and privately owned.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

The hon. Gentleman talked about the Government's thinking having evolved. Perhaps he will comment on the following statement:

''The PM has ordered Mr. Milburn to rename a draft Bill to enact his plans for new foundation hospitals . . . The Health Secretary has been told to rename the Health and Social Care (Foundation Companies) Bill amid fears it could derail the programme of reform. The word 'companies' will also be removed from the text of the Bill. A No 10 source said: 'These plans are controversial enough without calling hospitals companies. That was stupidity'''.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I understood from the hon. Gentleman's earlier comments that he was so lacking in confidence in his ability to pick holes in the Bill at this stage of the proceedings that he wanted to pick over the entrails of internal discussions and debates. He knows very well that this issue has engaged people

across the country, not just in our political parties. It is perfectly natural that there should be different views, especially over the nuance that one gives to particular words.

To return to my original point, Mr. Griffiths, it is important that we get off on the right foot and explain clearly what we are doing through the words that we use and the way in which we define them. My understanding is that we are sending a clear message—I should be grateful to the Minister for confirming this—that foundation trusts are a new form of public ownership and not a stepping stone towards privatisation.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

Will the hon. Gentleman tell the Committee in a simple, single word—yes or no—whether he agrees with the No. 10 spokesman who said:

''These plans are controversial enough without calling hospitals companies. That was stupidity''?

Yes or no?

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I want to help the Committee, Mr. Griffiths, by taking interventions and responding to them as best as I can. I do not want to be rude to the hon. Gentleman, but he was rude to my colleague earlier. If one is rude about people, it just shows that one is unable to respond to the points that they raise. I do not want to do that. I will not delay the Committee by trying to give some sort of answer to a comment that has been taken completely out of context. My understanding of why we are talking about ''public benefit corporations'' as opposed to ''companies'' is that we are looking at a new form of public ownership. That is what is at stake here.

Photo of Steve Pound Steve Pound Labour, Ealing North

Does my hon. Friend agree that it is a tad churlish for members of this distinguished Committee to produce unattributed comments, which are not in any way sourced or identified, without giving the Committee the benefit of their origin? The comment as read to us was along the lines of , ''It is suggested that a spokesman said''. Does he agree that if we are to hear comments that muddy the waters, we should at least know where the mud comes from?

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

As usual, my hon. Friend has put those points much more succinctly and clearly than I could have done. The point is interesting, as I am sure he agrees. It is interesting that, a short while ago, the Committee debated the programming motion. Of course, the Opposition are always very hot when it comes to procedural points. However, even at this early stage, the Opposition are going a little off the boil when it comes to substantial issues. They are trying to divert the Committee into a debate that I do not believe is necessary at this stage of the Bill's scrutiny; although I do not want to pre-empt your judgment, Mr. Griffiths. If the Committee is to make good progress, it must stick to the matters at hand and not speculate—as my hon. Friend the Member for Ealing, North (Mr. Pound) has rightly said—about the origin or otherwise of comments that remain unattributed.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I want to make a little more progress on this point. We are talking about a new form of public ownership. We have always talked about a mix of public and private sectors in the structure and delivery of public services. The question is what particular mix of public and private is in the public interest, and how public interest should be defined. We should move away from the stereotype, where one side of the debate—wrongly, I believe—says that everything that is publicly owned and run or state-owned and run is good and everything that is privately owned and run is bad, or vice versa. There must be criteria to judge whether an organisation that exists to deliver public services does so in the public interest.

One such criterion must be efficiency, and if the Opposition want to emphasise and put forward the model of a public interest company as one that can deliver services more efficiently, that must be considered. We must always look at how services can be delivered more efficiently. However, I also believe—this is why I support the model—that there must be strong democratic input and control from local communities. The model of a corporation, and the word ''corporation'', better expresses that role. At one level, these are issues of semantics, which arise especially at the early stage of a debate, but behind contrasting ideas about what things should be called are contrasting ideas about what those things are.

To return to my original point, I am a strong advocate of foundation hospitals because I believe that they represent a new form of public ownership, which is better expressed by ''public benefit corporation'' than through the term ''public interest company''.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I agree with my hon. Friend the Member for Wimbledon (Roger Casale) that this is far from being a dry, esoteric or semantic debate. It is an important debate because clause 1, by definition, is an important part of the Bill. It brings into legal existence NHS foundation trusts, which, as my hon. Friend rightly said, will provide a new platform for public ownership of this vital public service.

Where I start on this issue is, I suspect, where all my hon. Friends start. The problem with public ownership in Britain is that it has become synonymous with state control. That is a mistake; it should not be synonymous. There should be greater elements of localism and local community and social ownership of public assets. In every other European country, that proposition is regarded as uncontroversial, and it should be regarded as such in the United Kingdom.

The second problem with our ownership of public assets is that the public does not feel that it owns them. That is something of a disadvantage to everyone who believes in the values and principles of public service.

Clause 1 tries to address those two issues with a new form of public ownership, as my hon. Friend rightly said in his well-chosen words.

When considering clause 1, it is tempting to talk about everything in part 1, because it all flows from and hangs on the first clause. That was the dilemma that the hon. Member for South-West Devon faced. He asked what effect the authorisation of an independent regulator would have on the assets and

property of the trust and how those assets are to be transferred. Those issues are dealt with in clause 7.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

I did not mention the regulator specifically. I was talking about the transfer of assets from the Government to the new trusts.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

Yes. I do not think that the hon. Gentleman has had a chance to consider the other provisions of part 1. The consequence of an authorisation is that the assets are transferred automatically. The NHS foundation trust takes over the assets of the NHS trust. There is no need for any consequential orders or any other complex legal processes. [Interruption.] If the hon. Gentleman is not satisfied with that, we can have a more detailed debate about clause 7.

For obvious reasons, I do not want to go through every clause now. In a nutshell, we have chosen to create a new corporation to allow NHS foundation trusts to come into being. The hon. Gentleman is right that companies legislation will not apply to these public benefit corporations. The legal framework for NHS foundation trusts is self-contained; it is contained in part 1 of the Bill.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

This is important and I am sure it is relevant. Page 105 of the Bill refers to the Company Directors Disqualification Act 1986, which is amended in the schedule to this Bill to state that directors or officers of NHS foundation trusts must be treated as directors under that part of companies legislation. What excludes other companies from applying to these new bodies corporate?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

It is a simple point: the fact that they are not companies prevents the application of companies legislation. I would have thought that that was apparent from clause 1.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

What is the difference between a company limited by guarantee and the public benefit corporations that the Minister proposes to establish?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

As I said, the difference is that public benefit corporations are not companies, so companies legislation does not apply.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

Yes, they are bodies corporate, not companies. We could have a debate about that until the cows come home, and I sense from the look on the hon. Gentleman's face that that might be necessary at some point. However, they are not companies, and that is why companies legislation does not apply.

I want to go back to basics on this argument. I can tell from the faces of Opposition Members that that term may not be particularly welcome. However, this is a new form of public ownership, and it is right that we consider carefully what form the new bodies should take, and we have done that.

There are three important characteristics that we should keep in mind when we consider the new public benefit corporations. The public are looking for a new form of public ownership, and that is what these bodies represent. The corporate model that we choose should be capable of providing the right platform for the new democratic governance arrangements. As

many hon. Members have said, stakeholder involvement, through the new stakeholder councils, is a new form of public ownership.

The hon. Member for South Cambridgeshire thought that the interests represented on the boards of governors of foundation trusts would be irreconcilable between staff and patients. That might be placing it a little too highly. We are proposing a new form of governance for NHS trusts, which is not provided for in existing legislation, such as the National Health Service and Community Care Act 1990. Moreover, the arrangements for corporate governance are not contained in the main body of English company law.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire 10:00 am, 13th May 2003

I am grateful to the Minister. I do not think that I used the word ''irreconcilable''; it is merely that there would be differing interests. I suppose that the word that I should have used is ''unprecedented''. It is unprecedented that the Government looked to mutual status in other organisations as an example of how this organisation will work. However, other organisations do not seek to reconcile such a range of interests, and in theoretical terms they do not seek to incorporate into one mutual organisation the interests of both producers and consumers.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

The hon. Gentleman is right, and that makes the case for a specific new form of body corporate and corporate status for these types of organisation. That is what clause 1 seeks to do. The first matter about which we need to satisfy ourselves when we consider the corporate form of NHS foundation trusts is whether we are creating the right platform for the new extension of the democratic franchise—the new democratic governance arrangements that we want to see extended to this part of the public sector. The current governance arrangements in companies legislation or, in fact, the existing governance arrangements that apply in NHS trusts, for example, would not provide us with that type of governance arrangement.

Secondly, it is important that the body supports the new operational and financial freedoms that we want NHS foundation trusts to enjoy. Thirdly, it is equally important that it should ensure proper accountability for the use of public assets that must accompany those new freedoms. All three characteristics that I look for in the shape and form of those new entities suggest the need for a specific and distinctive corporate form. That is precisely what clause 1 seeks to achieve.

The debate has focused largely on the use of the term ''company''. The hon. Member for West Chelmsford talked through some recent history on the use of that word, and that was an interesting lesson for all of us. However, NHS foundation trusts will not be companies as that term is used in English law. To apply that term in the way proposed by the hon. Gentleman's probing amendment would create serious difficulties, and that is precisely why we chose not to create foundation trusts as companies.

The term ''company'' has a distinctive meaning in English law. The hon. Gentleman's amendment would clearly raise some substantial questions—perhaps

more than it would answer. In particular, how much of the companies legislation we would want to apply or disapply to foundation trusts would clearly have to be considered. That is not at all clear in the hon. Gentleman's amendment. I know that it is a probing amendment, and I am not trying to deal with it in the manner of some smartypants lawyer. I am merely explaining to him, in a shorthand answer to his question and that of others, why we have chosen not to create NHS foundation trusts as companies. It is because the legal complexity of doing so would be enormous. There has already been some noise about how large the Bill is. I can assure the hon. Gentleman that the Bill would be substantially larger and more complex if we took his advice and established NHS foundation trusts as companies.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I certainly accept what the Minister has said, particularly with regard to our amendment. However, given what he has said about the word ''companies'', why did the Secretary of State use the word last year and thus bring it into the frame?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

We were considering that earlier. It is clear. We were right to consider all the options available to us. That was the context in which my right hon. Friend made his remarks. However, we have to convert that into workable legislation, and we have chosen to go down this particular route in clause 1, simply because it is the most coherent and least technically difficult option.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

Is the Minister seriously suggesting that it would be more expensive to create these new corporations—I am not for one minute suggesting that we should—rather than create the companies that were originally talked about by his hon. Friends?

With regard to schedule 4, which enumerates the Acts of Parliament that will have to be tweaked and amended to allow the legislation to pass, will the Minister assure the Committee that he has considered the cost of constituting foundation hospitals as corporations rather than as companies?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

The provisions in schedule 4 would have been necessary whatever route we took. I assure the hon. Gentleman that substantial changes would have had to be made to the companies legislation had we chosen to establish NHS foundation trusts as companies. I will give one important example, which throws some light on the issue of the correct corporate form for a foundation trust, and it relates to section 35 of the Companies Act. In the context of NHS foundation trusts, we consider it to be important that there should be a legal lock on the assets. The public should be confident that the assets necessary to deliver NHS services are preserved from being dissipated, distributed or lost.

A difficulty in making NHS foundation trusts companies is that we would come up against section 35 of the Companies Act, which gives companies a vires to distribute assets. We have been been asked why we did not set those up as community interest companies, but that would have presented a similar difficulty. We want a legal lock on assets. For example, if we set NHS foundation trusts up as companies, and

assets were inappropriately divided, distributed or lost, under the Companies Act they could not be recovered. It might be possible to withdraw the community interest company status from those organisations, but that would be retrospective—it would not provide an effective lock on the assets because such companies are deemed to have the vires to distribute those assets. That is the fundamental difficulty in choosing the form of a company for NHS foundation trusts, and if we had chosen that platform, we would have so tortured the meaning of ''company'' that it would cease to have any realistic application in that context. It would have been a label, but it would also have been an empty shell. Generally, it is wrong to torture data until they confess. One would get the result and the label that one wanted, but the meaning behind ''company'' would be lost in the process.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

As we are breaking new ground in creating a completely new legal creature, I am sure the Minister understands why we want to probe the matter a little further. Do these new bodies corporate have limited liability, and do they have a legal entity that is capable of entering into contracts themselves rather than through the identity of their members?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

The legal entity is that NHS foundation trusts will enter into the contracts. No limited liability applies to the trusts in the way in which the hon. Gentleman suggests—they are not limited liability companies. The hon. Gentleman asked a number of other questions, which I will address in my response because he is concerned about the cost of establishing NHS foundation trusts.

Photo of Adrian Bailey Adrian Bailey Labour/Co-operative, West Bromwich West

Does the Minister agree that the other advantage of the phraseology that we have used to describe the company or corporation is that it is more consistent with the private Member's legislation introduced by my hon. Friend the Member for South Derbyshire (Mr. Todd)? That included the capacity for a corporation to have an asset lock.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

My hon. Friend is absolutely correct. That is what we are trying to do, and it is precisely for that reason that none of the other alternatives, such as companies or industrial provident societies, held out the prospect of our being able to deliver what we want.

It is important that public assets are defended, and that should be built into the legal framework in which foundation trusts operate, and the Bill does that. Part 1 provides a legal lock on assets and on their use and disposal, and it is important that that should be clearly stated at the beginning. Therefore, in part 1 we provided the legal framework in which the new bodies corporate will operate, and we have done that effectively. I realise that there will be opportunities to discuss the other clauses, and I look forward to those debates.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

I take the opportunity to apologise for the earlier beeping of my pager. I should be grateful if the Minister would repeat whether these new bodies have employers' insurance liability or are exempt from that.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I shall have to get back to the hon. Gentleman on that. I think that there is no requirement to have compulsory insurance, but that is also the position for NHS trusts. However, if I stand on my feet long enough, some advice will be given to me.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

As foundation trusts are permitted under the Bill to make an investment, will the Minister clarify whether the organisations that a trust buys or in which it invests will also be exempt?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

The exemption applies to NHS foundation trusts. I will have to return to that point and explain it in further detail. I am currently equipped to deal with clause 1, but these issues relate to schedule 4. The hon. Gentleman may at some point get to experience the difficulty that I am currently in.

Photo of Patsy Calton Patsy Calton Liberal Democrat, Cheadle

I wish to explore further the public benefit corporation. The Minister said that that is a new body, and I wonder whether there are parallels with earlier bodies. Hospitals have been bodies corporate before; for example, the Manchester Royal infirmary was a corporation in the 1850s and beyond. Given the aftermath of the disposal of some of their assets, I wonder whether the locks that the Minister envisages being imposed will be sufficient to prevent some of the subsequent disposals from being a little difficult to follow. I am not concerned about the next five years when the legislation will be fresh in people's minds, but I am worried about the next 50 or 100 years and possibly even the next 200 years.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I very much doubt that this legislation will last for 200 years—I am not sure that that is likely. The National Health Service Act 1977 must have been amended 20 or 30 times during the past 25 years. That is a fairly regular event, and we are making further amendments today.

The point that I am trying to make about a legal lock on assets is simple; I do not want to make a technical, lawyer's argument. We have put together provisions on NHS foundation trusts in part 1 of the Bill, and I have great confidence that we have constructed a framework that will guarantee for the public those critical NHS assets that are necessary to be used in that way. When we reach the later parts of the Bill, the hon. Lady may want to table some amendments that would further strengthen the use and effect of those legal locks. We may even be able to support some of those amendments.

This has not been a dry or esoteric debate. It has been an important opportunity for us to set out some of the basic characteristics and features that we expect NHS foundation trusts, as bodies corporate, to demonstrate. It is worth reminding ourselves that NHS trusts are bodies corporate, as is almost every statutory corporation. However, the governance arrangements, the lock on assets and the accountability that needs to accompany NHS foundation trusts are new features. It is true that part 1 provides a unique legal framework. However, there is nothing particularly unique about the idea of a body corporate, because almost every statutory corporation is a body corporate. I make the point

again to the hon. Member for South-West Devon that they are not companies.

The hon. Gentleman also referred to the use of the words ''NHS foundation trusts'' in the title and constitution of NHS trusts, implying that that was somehow inconsistent with the concept of the trusts as bodies corporate. However, those words had to be used in the title and constitution, because NHS trusts are already bodies corporate. The hon. Gentleman is not right. He might have been referring to the concept that a trust other than an NHS trust is not a body corporate. That is obviously true. However, we are dealing with NHS organisations.

The hon. Member for West Chelmsford made quite a meal of the clause. He read more into it than was warranted by recent events or by the detail of the legislation. He was dancing on a pinhead, which is very unlike him, when he suggested that NHS foundation trusts will not be public interest organisations. However, I assure him that they will be public interest organisations: that is precisely what clause 1 delivers. They are public benefit organisations. [Interruption.] The hon. Gentleman says that those were not his words: he was quoting from the guide to NHS foundation trusts. My right hon. Friend made it clear that the trusts would be established as public interest organisations, and he questioned why they had not yet been established. However, clause 1 covers that.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health) 10:15 am, 13th May 2003

I listened carefully to the Minister, who was quite illuminating, but he has misunderstood the nature of my probing amendment. I sought to find out how the Government's thinking evolved from the Secretary of State's original statements for a public company as set out in the guide to the drafting of the Bill in which the definition changed to a public benefit corporation. I was not disputing what was meant—I was asking why and how that evolution had taken place. Was it merely a tidying-up and closing of loopholes in case of doubt and controversy, or was there a move away from the Secretary of State's original idea of how those bodies would be set up?

I am not sure that the Minister fully appreciated what I was saying, but that is by the by. I suspect that the language that the Secretary of State used was the problem and not the concept behind the language. The concept has changed little from January 2002 until the publication of the Bill, but the language has changed dramatically from the use of the word ''companies'' in the first instance to ''public benefit corporation.'' I think that that is what happened, but only the Minister can confirm that. However, he will wisely not even attempt to do that. I think that there was an unholy row behind the scenes because of the unfortunate use of the ''C'' word. Given that there was controversy in the ranks of the Labour party over the concept as outlined in clause 1, I believe that the Government wanted, for the sake of party management, to neutralise any chance of discord. That was part of the reason for this probing amendment, and I also believe that because of the following statement:

''Tony Blair has slapped down Health Secretary Alan Milburn over his plans to rebrand NHS hospitals as 'companies.' The PM has

ordered Mr. Milburn to rename a draft Bill to enact his plans for new foundation hospitals.''

That ironically falls in with the points that my hon. Friend the Member for South-West Devon made. The Prime Minister's order could be termed a diktat:

''The Health Secretary has been told''

—not asked or requested—

''to rename the Health and Social Care (Foundation Companies) Bill amid fears that it could derail the programme of reform. The word 'companies' will also be removed from the text of the Bill.''

The hon. Member for Wimbledon should listen carefully to the next bit because his hon. Friend the Member for Ealing, North, as he was digging deeper, tried to save him from his fate by putting words into my mouth that I never uttered. The hon. Member for Ealing, North said that I had read out: ''It was suggested that a No. 10 source''.

I did not say that at all. I said as a definitive fact:

''A No. 10 source said: 'These plans are controversial enough without calling hospitals companies. That was stupidity.'''

The No. 10 source was absolutely right—it was stupid, particularly in the context of the Labour party. Many Labour party members are new Labour. There may be fewer than six years ago—I do not want to intrude on private grief—but many are still new Labour. However, for those who are not new Labour, the word ''companies'' is anathema. It seems to be an unusual news management slip-up by the Secretary of State to have made that mistake. I suspect he had been lulled into the false sense of security of new Labour that companies are a good thing, forgetting that there are still dinosaurs roaming the Back Benches who might cut up rough with such language.

Photo of Steve Pound Steve Pound Labour, Ealing North

I am grateful to the hon. Member for giving way with his customary generosity. As one who styles himself as old new Labour, I recognise the dinosaur description. In the interests of transparency, honesty, decency and openness—all those characteristics with which he is inevitably and perpetually associated—will he identify which scurrilous rag printed those appalling statements? Who is the source? It is not good enough to purvey such tittle-tattle in a serious Committee.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I am more than happy to do so. It was, as the hon. Gentleman calls it, a rag. I am surprised that he used that terminology, as he says he is partly old Labour. It was the broadsheet and the mouthpiece for the Chancellor of the Exchequer—the Daily Mirror. It is not a newspaper that is closely allied to the Conservative Party, but it is certainly allied to the Chancellor of the Exchequer.

To answer the hon. Member's second question in an air of openness and transparency, the source was Paul Gilfeather, whom I suspect is far better known to the hon. Member for Ealing, North than he is to me. It was not Paul Routledge, so presumably the report has greater credibility.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

As the hon. Gentleman has revealed that it was the Daily Mirror, and is now using that newspaper as an authoritative source, may I take him back to my earlier comments and point out that the Daily Mirror is also the respectable journal that

revealed Conservative plans to privatise the health service. It provided a revealing insight into the shadow Secretary of State's intentions. Does the hon. Gentleman support the newspaper's authoritative view on that subject?

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

Order. This is a very interesting point of political debate, but it is not essential to the consideration of the amendment. We will not go down that path any longer.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

We certainly will not, Mr. Griffiths. So that I cannot be accused of being a coward, I hope that you will allow me to say to the hon. Member for Birmingham, Hall Green (Mr. McCabe) that the allegation he recounts is unadultered claptrap, as shown by the record of successive Conservative Governments since the second world war.

Returning to the purpose of the probing amendments, I am grateful to the Minister, because I accept that he is not prepared, however fascinating it would be to us, to share what went on behind the scenes that caused significant delays in the publication of the Bill. As the Minister knows, the guide was published in December 2002, about a week to 10 days before Christmas. It was expected that the Bill would be published in mid to late January. It was not. It became more and more apparent, probably because of the concept contained in clause 1, that there were serious problems and misgivings, not merely among Back Benchers. We did not get the Bill until the middle of March. Bills normally receive their Second Reading within two weeks of publication and First Reading. Easter was late this year, so that was not an excuse for any delays.

The argument escalated on the concept in clause 1—

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

Order. We are straying too far from the purpose of the amendment.

Mr. Burns rose—

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

The point about whether the original intention was that the organisations became companies is significant. As limited liability companies, there would have been a massive delay in drafting legislation that was originally designed to flow from the Companies Act, as we discussed earlier. That is one thing. An altogether new form of legal identity—public benefit corporations—is a legal creation without precedent. I imagine that there has been an extremely difficult and extensive legal operation behind the scenes.

Did my hon. Friend notice that the Minister did not answer my questions about the constitutions of these new creations, who was going to draft them and whether there would be guidance on the cost? If those organisations do not receive specific powers—either in statute or in those constitutions—no other body of law will give them the authority or the power to do anything, and many of their actions would, therefore, be ultra vires.

Photo of Mr Win Griffiths Mr Win Griffiths Labour, Bridgend

Order. That was an intervention, not a speech.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I did notice the points that my hon. Friend highlighted. On the first point about the delays for legal advice and drafting, I agree with him. However, my view is slightly different, because I believe that never in a month of Sundays would the Government conceive of setting up companies, with all the legal paraphernalia of the Companies Act, as mentioned by the Secretary of State. The Secretary of State used that as a shorthand term for a new concept, as outlined in clause 1; others—some of whom may be looking for a fight—misinterpreted it. It is a cock-up rather than a conspiracy.

The debate has been useful, and we have teased out much information from the Minister. Question marks, however, still hang over some of his statements. As the Bill progresses, we will have an opportunity to tease out further information. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of George Young George Young Chair, Standards and Privileges Committee

I beg to move amendment No. 100, in

clause 1, page 1, line 7, at end insert

'and, subject to appropriate payment, for the purposes of the Health Services in Wales, Northern Ireland and Scotland'.

I share the euphoria that greeted the appointment of you, Mr. Griffiths, and Mr. Atkinson as Committee Chairmen. I hope that there is no disagreement among the Committee on what we are trying to do and that the debate on the amendment will not, therefore, take as long as the previous one. The difficulty with subsection (1), as I read it, is that it is somewhat restricted. It states that the

''NHS foundation trust is a public benefit corporation which is authorised under Part 1 to provide goods and services for the purposes of the health service in England.''

I think that the Government meant to say that the NHS foundation trust is a public benefit corporation in England that is authorised under part 1 to provide goods and services for the purposes of the national health service. Had the Government said that, I would have had no difficulty with it. As drafted, however, the final two words—''in England''—are an unnecessary geographical restriction.

I can foresee several difficulties. My constituency is not near the Welsh or Scottish borders, but there may be members of the Committee who are in that position. An NHS foundation trust could be in England, but close to Wales or Scotland. If a Welsh or Scottish person arrived as an out-patient at that trust, the administrators could say that, since the trust had been set up to provide goods and services for the purposes of the health service in England, the out-patient required a trust that had been set up to serve the health service in Wales or Scotland. It is quite wrong that there should be any uncertainty about the scope of the foundation trust.

If an English person who has been treated in an NHS foundation trust hospital is discharged and convalesces in Wales or Scotland, problems will arise

if the trust wants to continue to provide services for that patient. The goods and services would no longer be provided in England because the patient would be in Wales or Scotland. It is wrong that there should be a lack of clarity about that.

The Government have made it clear that they expect primary care trusts and ambulance trusts to apply for foundation trust status. It would be wrong for an ambulance trust that became a foundation trust not to be able to provide a health service in Scotland or Wales.

Patients are treated outside this country because of the waiting lists in various hospitals, so, clearly, certain goods and services are not provided in England. I hope that the Minister will accept the amendment, or provide one of his own, or explain that the geographical restriction that is manifest in the last two words, ''in England'', could not be deemed to have the impact that I have described. If I can obtain those reassurances, I am sure that the Committee will be able to make swift progress.

Photo of Mr Jon Owen Jones Mr Jon Owen Jones Labour/Co-operative, Cardiff Central 10:30 am, 13th May 2003

I am surprised to find myself in agreement with a Tory amendment so early in the proceedings of the Committee. Perhaps my hon. Friend the Minister will explain how clause 1 allows foundation hospitals in England to treat patients from other parts of the UK. If the Minister does not have an explanation, I hope that he will either table an amendment of his own or agree to support the amendment tabled by the right hon. Member for North-West Hampshire (Sir George Young).

To illustrate that point, I refer the Committee to some geographical facts concerning the distribution of health care. The population of Wales is concentrated in the south and, to a smaller extent, on the northern coastline. The centre of Wales is the most sparsely populated area of the UK after northern Scotland. It is not possible—either through medical or financial efficiency—to locate acute hospital services in the mid-Wales region. Some services are located in Aberystwyth, but the rest of mid-Wales has no acute hospital facilities. The people of the Welsh border areas, such as Powys and Montgomeryshire, overwhelmingly access their acute services in English hospitals. If those hospitals become foundation hospitals and this part of the clause stands as it does, I do not see how those people will be able to gain access to those acute services.

In many parts of the UK, particularly in London, hospitals specialise in tertiary facilities. Those are facilities that are not distributed around the country because they are only needed by a small percentage of the population. Nevertheless, a Scottish or Welsh person with a rare disease should have access to those specialised facilities. If hospitals in London or elsewhere become foundation hospitals, apparently the clause will preclude the treatment of those diseases. I hope that the Minister has an explanation that will alleviate my concerns. However, the right hon. Gentleman has raised an important issue.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

This is a concern of mine. We had extensive debates about border issues during the

passage of the Health (Wales) Act 2003, including the implications for those on both sides of the border. I commend my right hon. Friend the Member for North-West Hampshire for successfully tabling the amendment. He was more successful than me in finding words that would allow the Bill to be amended. I share his anxieties, and those of the hon. Member for Cardiff, Central (Mr. Jones), about the implications of the wording of the clause, which contains no cross-border provision.

We are still a United Kingdom. As the hon. Member for Cardiff, Central said, in areas close to a border, people depend on acute services across that border. The Bill contains no obligation to provide those services. There are certainly areas in which specific health priorities cannot be addressed as a result of the Bill's measures. There is no duty. As my right hon. Friend said, it is not simply a question of a duty to provide, but a duty to plan. Under the terms of the clause, a foundation trust that wishes to invest in and expand its services, based on its catchment area, cannot, strictly speaking, take into account the population on the other side of the boundary.

Let me go one step further than the hon. Member for Cardiff, Central, and give a specific example of an anomaly that may arise. Ministers will know of the Countess of Chester hospital trust, one of those that have applied, or sought to apply, for foundation status. Ministers will also know that the geography of Chester is such that almost immediately one leaves the city, heading west, one is in Wales. A significant part of the catchment area of that trust is in Wales. Indeed, most of the hospital's patients come from Chester, Ellesmere Port, rural west Cheshire and the Deeside part of Flintshire. The trust provides just over 600 acute hospital beds, which serve that area. The trust describes itself as one of the leading providers of acute services in the area. A substantial number of people depend on the hospital for their health care.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

An even better example is the orthopaedic hospital at Oswestry, which is even closer to the Welsh border than Chester. The difference is that its tertiary centre provides highly specialised services to a wide area, which, I suspect, includes most of Wales.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

Absolutely. That is a tremendously important and topical point. Committee members may have seen references at the weekend to a new arrival to the country's population; a young lady called Gemma. The Committee sends Gemma's parents our warmest congratulations on the arrival of their new child. Gemma's parents are the England football striker, Michael Owen, and his girlfriend. What makes Mr. Owen, his girl friend and their new daughter distinctive? The baby was born in the Countess of Chester hospital. However, the family lives in the small north Wales border village of Ewloe. Are we saying that one of England's leading footballers, who chooses to live across the border in Wales, should not be part of any future planning for his local hospital? Are we saying that the national health service should not encourage Mr. Owen to attend his local hospital?

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

I hesitate to speak, as I may be anticipating something that my hon. Friend intends to

say. However, I may be more aggressive than he is about such matters. With regard to the Countess of Chester hospital, I had assumed that, rather than my hon. Friend, the hon. Member for City of Chester (Ms Russell), who is a member of this Committee, would be making these points. After the hon. Lady spoke in the House the other week—an almost unprecedented event—I thought that she might have made a contribution to the Committee on behalf of her constituents; but no, she is not to be found at this moment.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am grateful to my hon. Friend for that insightful comment. We are graced with occasional appearances by the hon. Member for City of Chester. The House is enriched by those occasional contributions, and it is a shame that they cannot be more frequent.

The implications of the Bill are more significant than its impact on the provision of treatment. We must consider the constitutional provisions of the Bill, and the establishment, constitutions, and membership of the trusts. If the Bill makes it the responsibility of foundation trusts in England to provide services for England only, how will the membership of a border trust be determined? Are we denying people in Wales who live just across the border from the Countess of Chester hospital NHS trust the right to be members of that trust?

If we are not denying people that right, are we creating a situation in which a person who lives in north Wales could become a member of the board of the trust of the local hospital, but would have a duty not to provide health care planning and health care provision for the community in which he or she lives? If that were the case, the situation would be nonsensical and absurd.

Fundamentally, if the Government's aspirations were achieved and foundation hospitals were to offer a first-rate service, would that in itself not cause distortions in the provision of health care, as people would flood across the borders to hospitals in England to seek treatment? The amendment would allow the hospitals to provide that service, and to be paid for doing so. Without it, would there not be a nonsensical situation in which hospitals would be unable to do the job that is normally asked of them, which is to provide a universal, high-quality service to all patients who can get to the hospitals?

This element of the Bill—inadvertently, I am sure—will create anomalies in border regions. It will create difficulties for the people who live in those areas, and it will create constitutional contradictions. I hope that Members will recognise that, and concede that the amendment tabled by my right hon. Friend the Member for North-West Hampshire is a simple way of rectifying that situation.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

The debate brings new meaning to the phrase ''médecins sans frontières''. It seems that many of the Bill's provisions would establish artificial boundaries, so I am surprised that there are several items in the Bill that cut across some laudable actions

that the Government are trying to bring forward, particularly in relation to primary care and clinical networks.

With regard to medicine, geographic boundaries are becoming almost an irrelevance. I am happy to say that the Government are encouraging clinical networking so that specialists, whether they be in Scotland, Wales, Northern Ireland or England, can collaborate at a highly specialised tertiary level. Amendment No. 100 would encourage trusts to operate in a collaborative way. It would dissolve a barrier that the Bill appears to be setting up. Several hospitals that operate in this way have been mentioned. The classic tertiary centre is probably the Royal Brompton hospital, which provides highly specialised services of a pioneering nature to patients throughout the United Kingdom.

It makes no sense for legislation to be drafted in such a way as to make it inward looking, focusing purely on England. That would go against the grain of some of the good and laudable action that the Government are trying to encourage with regard to clinical networking and the dissolution of some of the barriers that have traditionally existed in the NHS. In all candour, I encourage Members to study the amendment closely. It would be a positive step that would work with, not against, the grain of what the Government are trying to achieve.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

I support amendment No. 100. It seems necessary, and my right hon. Friend the Member for North-West Hampshire set out the argument very clearly, as did my other hon. Friends.

At the risk of antagonising Labour Members, when the Committee was constituted I considered the extent to which its members represented the hospitals that had to consider applying for NHS foundation trusts in order to resolve issues in practical terms. That is a practical example of the way in which a hospital would deliberate matters according to its own circumstances, as the Countess of Chester hospital would do, and reach a conclusion.

I approach the matter from that point of view. Two hospitals in my constituency, the Addenbrooke's NHS trust and the Papworth Hospital NHS trust, have applied for NHS foundation trust status. On the Government's side, I think that only the hon. Member for City of Chester has an applicant trust in her constituency. It seems to me desirable that the hon. Lady should be here to represent that applicant's point of view as we begin the discussion.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green 10:45 am, 13th May 2003

I can offer the hon. Gentleman some reassurance, because I have here the preliminary application to the Department of Health for NHS foundation trust status from the University Hospital Birmingham NHS trust, which is my local hospital. There are people there with whom I have a great deal of contact and whose interests are deeply involved with the Bill.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

That may be so. I understood that that hospital is not physically located in the hon. Gentleman's constituency, but is in the constituency

of the hon. Member for Birmingham, Selly Oak (Lynne Jones). We could engage in a debate about geography, but perhaps the hon. Gentleman will correct me if I am wrong.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

The trust serves south Birmingham, which incorporates more than one constituency. I should have thought that the hon. Gentleman would have experience of such a situation, in common with several others.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

I agree entirely with the hon. Gentleman's point that the area served by any individual NHS trust is very wide. That is precisely the point that we are discussing. The hon. Member for Cardiff, Central talked about the amendment in terms of the geographical area that is to be served by hospitals. As a specialist hospital, Papworth Hospital NHS trust serves patients from throughout the country. Tertiary hospitals are not located in London only. More heart transplants are done at Papworth hospital than in any other cardiothoracic institute in the country. I take the point that it has a wider range and I hope that we will bring those experiences to bear. However, as the Member of Parliament in whose constituency the Addenbrooke's and Papworth hospitals are situated, I regard myself as having a special responsibility towards them.

Photo of Jim Dowd Jim Dowd Labour, Lewisham West

I am somewhat startled by the hon. Gentleman's ludicrous parochialism. Two hospitals in south London, King's College hospital and Guy's and St. Thomas' hospital, have indicated their intention to apply for foundation trust status. They serve large numbers of people across south London and beyond. Most people in the west of my constituency go to King's rather than to Lewisham hospital. Lewisham hospital is itself a three-star hospital. It will be watching keenly to see how events unfold in order to decide whether to apply for foundation trust status. The hon. Gentleman is being far too narrow in his definition of who has an interest in their local hospitals.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

I am sorry to be chided by the hon. Gentleman, whose opinion I always value, because I was seeking not to exclude the interests of hon. Members whose constituents are served by those hospitals, but to emphasize the responsibility of those of us who have such important institutions in our constituencies. In that context, I am sure that he will not dispute the responsibility that, for example, the hon. Member for Vauxhall (Kate Hoey) has towards Guy's, St Thomas' and King's College hospitals. On Second Reading, I noticed how anxiously she sought to speak in the debate but did not have the opportunity to do so. On reflection, that was a pity.

I have been chided from the Labour Benches, but I hope that we can agree about the breadth of service offered by NHS trusts that are applying to be NHS foundation trusts. That service spreads across something so ephemeral as a constituency boundary to something so substantial as a boundary between England and Wales, or between England and Scotland. There is everything to be said for our agreeing that the amendment entirely captures that

point and gives effect to it, and I hope that the Minister will agree to it.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

I will make a very brief point, harking back to some of the points that I sought, rather inadequately, to make in the previous debate. The first thing that smart new governing bodies of the new corporations will do as they assemble for the first time is to take legal advice on the extent of their powers and responsibilities as public benefit corporations. They will ask their lawyers what services they will be permitted to offer. The lawyers will say that, pursuant to clause 1 of the Bill—or Act as it will then be—they will be authorised to provide goods and services for the purposes of the health service in England. Any lawyer will ask whether there is a health service in Wales. There is a separate health service with hospitals, GPs and primary care trusts. It cannot therefore be legally possible—indeed, it is inconceivable—that a lawyer would not advise the Government body that it is not authorised under clause 1 to provide services for patients from primary care trusts in Wales.

There is a simple remedy for that. Even if part of the confusion that I fear might arise does occur, and given that we are trying to create a new class of legal corporations, the wording of this statute and the constitutions are critical to guide the activities of those new bodies. Accountants will advise governing bodies that, if they provide services to patients from primary care trusts in Wales and are not paid, they probably will not have the right under clause 1 to collect payment through legal channels as they would if they were acting within the scope of their legal powers. That is the seriousness of the situation. It should not be forgotten that new bodies corporate and hospital trusts often look for ways to save money as the year-end approaches. When offering services outside the scope of one's powers, that is the first thing that one must do.

I know that the Minister will be reluctant to concede ground this early in the process, but this is a serious issue. It is possible that trusts throughout the country will be legally advised that they cannot offer services to people outside England. The solution to that is to support the amendment now.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I am grateful to the right hon. Member for North-West Hampshire for tabling the amendment and for the way in which he has brought the issue to the attention of the Committee. I examined the amendment carefully when it was tabled. In introducing these proposals, it is not our intention to make it impossible for an NHS foundation trust based in England—where they will all be based, as the right hon. Gentleman understands—to provide NHS services to patients referred from Wales, Scotland or Northern Ireland. If that was the effect of clause 1, I would accept the amendment, but that is not its effect.

Clause 1 must be read in conjunction with clause 14, particularly clause 14(2), which sets out the purposes for which a trust can be authorised to provide services. The right hon. Gentleman must consider the two together. Clause 1 makes it clear that the purpose of the NHS foundation trust is to provide goods and services for the purpose of the health service in

England. It does not say that it cannot treat patients referred to it from Wales, for example. The services are provided in England irrespective of where the patient comes from.

To put the point beyond any doubt, we have tabled Government amendment No. 148, which will be discussed later. That amendment will make it clear and put it beyond any reasonable doubt that an NHS foundation trust is empowered to provide services to patients from other parts of the United Kingdom.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

Surely the issue is about the duty, responsibility and the costs of making provision. If there are competing interests or priorities, do the clauses not place a duty on an NHS foundation trust to put the interests of the English population ahead of the interests of the Welsh population—for example, if there are two competing needs, one more related to Wales and the other more related to England?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

The clause makes it clear that the primary purpose of the NHS foundation trust is to provide services for the purpose of the health service in England. They are all trusts based in England.

That is the starting point. However, as his right hon. Friend the Member for North-West Hampshire and other hon. Members were trying to argue, the Bill does not preclude as a matter of law any NHS foundation trusts in England from treating patients referred to them from Wales, Scotland or Northern Ireland.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I will in a minute.

I stress that that is not the effect of clause 1, and if there is any reasonable doubt about that, it is dealt with in amendment No. 148.

Photo of Mr Jon Owen Jones Mr Jon Owen Jones Labour/Co-operative, Cardiff Central

The Minister is explaining why it is possible for foundation hospitals to continue to provide services. However, he has not yet explained why accepting amendment No. 148 would make that any less likely. In fact, given that it would reword the beginning of the Bill, accepting the amendment would make that much more likely.

Earlier, I referred to the mid-Wales population in the borders, a region that can also be referred to as the marshes. Those people rely on acute hospital facilities in the large towns in Herefordshire and Shropshire and in Chester. Of course, the large towns exist because of the castles in those areas. The population depends on those services equally, regardless of whether the hospitals are to the west or the east of the towns. I would prefer to see some reference to that at the beginning of the Bill, rather than in later Government amendments.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I understand the point that my hon. Friend is making. However, although the provision appears later in the Bill, clause 1 and clause 14 are connected intimately, and it is simply a fact that, when preparing a Bill, not everything can be included in clause 1. That the provision is contained in clause 14 does not in any way affect my argument.

We have worded the Bill carefully to make it clear that NHS foundation trusts based in England—and we all know the history and argument behind that—can still treat patients from Wales. The extent to which that happens will be determined by the commissioning arrangements entered into with Welsh NHS bodies and, in the case of the border between England and Scotland, the arrangements between English NHS foundation trusts and Scottish commissioning bodies. Nothing in the Bill would preclude the hospitals to which my hon. Friend the Member for Cardiff, Central referred from treating Welsh patients, as they do at present.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

If it is in order, will the Minister clarify why he thinks that amendment No. 148 to clause 14 deals with, and clears up, the problems contained in the amendments tabled by my right hon. Friend the Member for North-West Hampshire? Is it because of the phrase ''principal purpose'' that is contained in that amendment?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

Yes, I think it is. We will have an opportunity to debate amendment No. 148 when we get to clause 14. I could go on making the point until the cows come home. My hon. Friend the Member for Cardiff, Central has asked me to accept the amendment from the right hon. Member for North-West Hampshire. I hope that he does not take this the wrong way, but I prefer my own amendments to those proposed by Conservative Members.

If I felt genuinely that the right hon. Member for North-West Hampshire had hit on something that we had not spotted, or that there was a loophole, we would take action. If the right hon. Gentleman's amendment were the best way forward, I would have no difficulty in urging the Committee to accept it. That is not the case. The Bill is absolutely clear. What I say today can help the lawyers to determine any ambiguity, and the hon. Member for South-West Devon knows that that is the case.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 11:00 am, 13th May 2003

When we debated the Health (Wales) Bill and public health issues relating to cross-border areas, I put it to Welsh MPs that surely all illnesses apply across the United Kingdom, and the hon. Member for Cardiff, Central and some of his colleagues made the point that there are illnesses that relate to the limestone industry in north Wales that are peculiar to north Wales. Surely the effects of this provision would be that a tertiary centre in England, which might provide an important service for patients in Wales with particular local conditions, would not be able to make those patients a clinical priority ahead of those involved in a comparable situation in England. Therefore, the English patients would always be the number one priority. That must be the case.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I do not think that that is the case. Those issues will, to a large extent, be determined by the commissioning arrangements into which the NHS foundation trust has entered. It will be about agreeing with, for example, a Welsh NHS commissioning body to treat a certain volume of patients within a certain time.

I understand that the hon. Gentleman's intention is to be helpful and to ensure that we do not lose a very important characteristic of the NHS—that it is a comprehensive national service. We do not want to lose that either, and there is nothing in the Bill that calls that into question. Conservative Members have read too much into the expression ''in England'' by thinking that it refers only to patients who live in England. That is not how the clause has been constructed.

We should not lose sight of the fact that both the Welsh Assembly and the Scottish Executive, given that responsibility for the NHS is a devolved matter, have decided that they do not want NHS foundation trusts to be established in Wales or Scotland. That is their decision, and that is fine. We have no difficulty with that. However, in establishing NHS foundation trusts in England, we are not precluding cross-border referrals. That is a matter for the commissioning process. There is nothing in the Bill that excludes or takes away from an NHS foundation trust the power to enter into such an agreement.

Photo of Mr Jon Owen Jones Mr Jon Owen Jones Labour/Co-operative, Cardiff Central

Surely the problem would not exist, at least with regard to Wales, if, instead of the Bill specifying that foundation hospitals would apply in England, it specified that foundation hospitals could apply in England or Wales, and, as other Bills have done, allowed the Welsh Assembly to enable or not enable that provision.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I agree that that is a possibility, but it is not what the Welsh Assembly has asked us to do in this Bill, and we intend to respect its judgement. Responsibility for the NHS is a devolved matter. It is a matter for the Welsh Assembly to decide the scope of the provisions on NHS foundation trusts and whether they apply to Wales.

However, the point that has been raised in this debate is a simple but different one: it is about whether, in the Bill, an NHS foundation trust has the legal authority or powers to treat NHS patients referred to it from any other nation of the United Kingdom. For the avoidance of doubt, I make it clear for the fourth time that there is nothing in the Bill to preclude an NHS foundation trust from treating a patient from Wales, Scotland or Northern Ireland at any of its hospitals in England.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

I have been listening carefully to the arguments from both sides of the Committee on precisely that point. I agree with the Minister's view that the power lies with the commissioners, and that is why we have previously debated the fact that the democratisation of providers rather misses the point. However, I wish to draw his attention to the problem of his using expressions such as ''patients from Wales in England'', which I understand. What about the problem of people bidding in Wales for outreach services to be provided in Wales? Is there not a danger that the trust, if faced with competing priorities for the provision of services, may feel bound by the legislation to prioritise the provision of services in England to English and Welsh patients, rather than the provision of outreach services in Wales to Welsh patients?

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I shall take advice, because I am not sure whether any NHS trust in England provides facilities in Wales, Scotland or Northern Ireland. I do not think that that is currently the case. If I am wrong, I will come back to the Committee and advise it about that.

With great respect to the hon. Gentleman, we are not dealing with that matter. We are dealing with the direct and simple point raised by the right hon. Member for North-West Hampshire that, under the provisions of clause 1, an NHS foundation trust would not be allowed to treat a patient from Wales, Scotland or Northern Ireland at any of its facilities in England. I cannot make it any clearer than I have done already. For the fifth time, I can tell the Committee that that is not how the Bill is constructed, and it is not how it should be interpreted. Government amendment No. 148 puts that beyond any reasonable doubt. Just to show the Committee my friendly, caring face, I am more than happy, particularly in relation to the points that my hon. Friend the Member for Cardiff, Central has raised, to consider the issue again, and I shall do that. However, for the sixth time—I am enjoying this—I do not believe that such an amendment is necessary, for the reasons that I have explained. If I can put that even further beyond any doubt, I shall be happy to do so.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

I do not wish to prolong the discussion, but I want to make a very important point. We are talking about whether or not something is authorised, and the Minister keeps saying that there is nothing in the Bill to preclude it. Those two things are, of course, very different. We are talking about whether there is authorisation in the Bill for foundation hospital trusts to service people from, for example, Wales. Of course they are not precluded from doing that, but that is not the same as being authorised. I believe that amendment No. 148 introduces a new ambiguity. It does not clarify the matter at all.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I have now lost patience with the hon. Gentleman, because he knows absolutely nothing about the Bill. It is clear from his intervention that he does not understand the importance of authorisation for legitimising the activities of an NHS foundation trust. We will listen to the hon. Gentleman when he has done his homework more thoroughly and is familiar with the terms of the Bill. The authorisation in clause 14 is critical, and the authorisation in clause 14(2) would allow an NHS foundation trust to treat patients from other parts of the national health service.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

The Minister is being dismissive, but I think it is an important point. I wish to pick up the points that the hon. Member for Oxford, West and Abingdon (Dr. Harris) raised when he mentioned outreach services. I suspect that when the Minister does his homework, he will find that there are outreach services from the hospital in Oswestry, which I mentioned earlier—I would be surprised if there are not. However, that is not the point. When the Minister looks into this issue again—I sincerely hope that he does—he should consider possible future provision, because the people who will be governing the hospitals

might refer to the Bill when they are designing future service. It would be a great pity if they felt constrained by the tenets of the Bill, so I hope that the Minister will bear in mind the future as well as the present.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I respect very much the hon. Gentleman's views. Perhaps I am wrong; perhaps there are such outreach services—it is nice to be corrected on that. However, there is nothing in the Bill that would legally preclude or prevent an NHS foundation trust from operating outreach services in Wales, Scotland or Northern Ireland. The point made by the hon. Gentleman for South-West Devon about the difference between precluding and authorisation is not true. If the NHS trust is not authorised to provide the service, it is precluded from doing so. The important point is to be clear about the general parameters that are being set. There is nothing in the Bill that would preclude an NHS foundation trust established in England from providing outreach services in Wales, Scotland or Northern Ireland. There is nothing in the Bill designed to have that effect, and if there is, I will remove it. I do not think that I can be clearer than that.

The hon. Member for West Chelmsford did not hear all the debate, as I understand he nipped out for a fag. Let me remind him of the NHS smoking helpline—0800 169 0169—which he should call straight away.

Photo of George Young George Young Chair, Standards and Privileges Committee

I think that we caught a bigger fish with the amendment than I first thought. I hope that those who live in Wales and Scotland will note the magnanimity of English Conservative Members who are seeking to ensure that the services based in our hospitals are made available to those who live in Wales and Scotland. I did not think I would have to tell the Minister that this is a ''national'' health service. We should not be having an argument about whether people from one part of the country can have access to a hospital in another part of the country. There should be no scope for doubt at all.

The Minister said that if I had hit on something that he had not thought of, he would take steps. However, there was some lack of clarity in the Bill that was originally approved by the House. I tabled an amendment and the Government then tabled theirs, and they have used their amendment as an excuse for not going for mine, so it seems that I did hit on something in the Bill that was less than clear.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I do not want to sound petty, but I prepared and tabled my amendment before the right hon. Gentleman did.

Photo of George Young George Young Chair, Standards and Privileges Committee

I invite the Minister to withdraw what he said. As the Division result was read out, I was sitting at the Clerk's Table. My amendment was tabled a few seconds after my hon. Friend the Member for Epsom and Ewell tabled his. He had not been sitting there as long as I had, but in deference to the Front Bench I allowed him to table his amendment before mine. On reflection, the Minister might like to withdraw his assertion that he tabled his amendment before I tabled mine.

Photo of John Hutton John Hutton Minister of State, Department of Health, Minister of State (Department of Health) (Health)

I got a bit excited, and I certainly do withdraw that comment. However, our amendment was prepared early because, as he would know from being an experienced Minister, we had been through the Bill several times to make sure that we had got it right. We had alighted on the problem, and we thought that we were addressing it with our amendment. I am prepared to accept that he tabled his amendment first, but we had been preparing ours for some time.

Photo of George Young George Young Chair, Standards and Privileges Committee

I would hope that the Government had been preparing the Bill for some time, far longer than Conservative Members who saw it only when it was published.

I want to make a suggestion that gets around the problem. I have looked at the Government's proposed amendments to clause 14. The difficulty is that that clause refers to what the authorisation may say. Of course, here we are in the hands of the regulator. Clause 14(1) says that an authorisation ''must'' authorise the provision of goods and services in England. Clause 14(2) goes on to say that it ''may'' also authorise the trust to provide other goods and services. There is some ambiguity. If the word ''must'' were used in clause 14(2), there might be less cause for doubt. The way around that is for the Minister to reflect on what I said earlier. The words ''in England'' should be removed from the end of subsection (1) and put after ''public benefit corporation''. That makes it clear that the foundation trust is a public benefit corporation in England, which is the only place in which public benefit corporations are allowed under the Bill. The trusts are authorised to buy goods and services for the purposes of the health service. If the Minister were to say that he would smile on that and table a Government amendment to that effect at a later stage, I would regard that as a moral victory and would not pursue the matter any further.

However, I do not see a smile on the Minister's face. We might be able to make progress if he were to say that he would consider such a solution.

Photo of George Young George Young Chair, Standards and Privileges Committee

Against the background of what the Minister has said, it would be churlish to push the matter any further. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill.

Question agreed to.

Clause 1 ordered to stand part of the Bill.