Schedule 1 - Constitution of public benefit corporations

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

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Amendment proposed [this day]: No. 206, in

schedule 1, page 93, line 20, leave out paragraph 4.—[Dr. Harris.]

Question again proposed, That the amendment be made.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham 2:30 pm, 15th May 2003

I remind the Committee that with this we are taking the following:

Amendment No. 68, in

schedule 1, page 93, line 20, after first 'of', insert '50'.

Amendment No. 176, in

schedule 1, page 93, line 20, after first 'of', insert '500'.

Amendment No. 177, in

schedule 1, page 93, line 20, leave out 'each' and insert 'the public'.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I intend to deal specifically with amendment No. 206. It would remove the requirement to specify a minimum number of members in each constituency, and that would completely undermine the different arrangements for NHS foundation trusts. If no minimum is necessary, an NHS foundation trust could theoretically choose to have no membership at all. The election of a board of governors and a board of directors—a membership—is a fundamental requirement of the provision.

In recognition of the fact that the position of each NHS foundation trust will be different, we have not specified the number of members that ought to be in the constitution. That does not mean that specifying the minimum number of members is unnecessary. Every NHS foundation trust constitution must specify a minimum number of members in its public constituency and in its staff constituency. This is an important provision, and the minimum number of members in each constituency, together with other matters that must be included in the constitution—in particular the specification of the area of the foundation trust—will be an important guide for the Secretary of State for Health and the independent regulator in assessing whether an NHS foundation trust membership, and consequently its governance arrangements, is representative, fair and appropriate.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

I do not think from what the Under-Secretary says that there is any controversy about the need for a minimum number of members in each constituency. The question is whether that minimum number is set by statute, or left to the discretion of the Secretary of State.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

The minimum is actually left for the local community to decide and recommend. National health service foundation trusts will prepare draft constitutions when they make their second stage applications. The trusts must consult the local community, the primary care trusts, their partner organisations, and perhaps the local university and medical school, to assess whether they have judged the situation correctly. A trust then submits the constitution to the Secretary of State and the independent regulator. That early buy-in is more robust than the Government defining a minimum number of members in the Bill. The correct balance has been struck in the Bill to get maximum buy-in from the local community.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I am loth to give way. I should like to make some progress on these clauses; otherwise we will not have enough time to discuss the remainder of schedule 1. However, if the hon. Gentleman has a specific point to make, I shall give way.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

To what extent will the submission of the constitution to the independent regulator and the Secretary of State result in their overturning locally made decisions? If the answer is ''very rarely'', what is the point in making a submission?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

The hon. Gentleman is not only being hypothetical but he is anticipating events way down the line between now and next April, when the first wave of foundation trusts will be up and running. There is plenty of time for those trusts to consult locally, gain maximum support and get everything absolutely right. This is about building consensus; perhaps the hon. Gentleman does not have much experience of building consensus in local communities. We are trying to pull together as many partners as possible to sign up to the vision of a community-owned organisation, at the heart of a local neighbourhood, that everyone supports and wants to succeed. This is an important provision, and it is up to NHS foundation trusts to introduce it into their constitutions.

The purpose of amendments Nos. 68 and 176 is to specify a minimum number of members. Amendment No. 68 specifies a minimum of 50 members, which would not ensure a genuinely representative membership. The figure of 50 members is too low. The Secretary of State has expressed concern about the number of members for NHS trusts that become NHS foundation trusts. The figure of 50 may also be too low for NHS foundation trusts that are established as new organisations.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

The Under-Secretary will recall that I said that this is simply a probing amendment that seeks the Government's clarification on what they consider to be an appropriate number of members. The Committee would like to have some idea about the guidance that will be issued to trusts to ensure that the entryism that I spoke about this morning cannot take place.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

The hon. Gentleman has talked about entryism, as have a number of other hon. Members. Entryism is a legitimate cause for concern, and we

must ensure that it is guarded against in the constitution. On Tuesday, I explained that, in their constitution, the NHS foundation trusts will set out what they envisage will be the make-up of their boards of governors and how they intend to ensure that the membership of the boards is not dominated by one specific interest group. It is possible, within constitutional arrangements and frameworks, to ensure good and robust governance.

Some hon. Members, including my hon. Friend the Member for Ealing, North (Mr. Pound), have said that the trusts would be made up of a small number of committed individuals. I ask my hon. Friend and other hon. Members to have more faith in democracy in their local communities and to realise that there will be myriad opportunities for people to become members of trusts. I envisage that people will be invited to join a trust by their general practitioner when they go for appointments or receive an out-patients appointment. They will also be able to respond to advertisements in the local press or return their application forms.

We are also considering how the patient advice and liaison services that are being established in trusts, as well as the independent complaints and advocacy service set up to act for people in complaints processes, can encourage people to join the trust. People may also be able to join by using the techniques that we are exploring to increase people's participation in democracy in the local government elections. By that I mean new technology such as the internet and text messages.

I assure hon. Members that the trusts will not be made up of a small group of the sharp-elbowed bourgeoisie, as my right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) said. The trusts will not comprise a small group of committed people; we are looking for a mass membership for the organisation. That is why setting such a low minimum of 50 members is inappropriate. Equally, the amendment that would provide for 500 members would not necessarily guarantee a generally representative membership. That number may be too low for the public constituency of an NHS foundation trust that was previously an NHS trust. On the other hand, an NHS foundation trust established as a new organisation might initially have very few members. That should not be an impediment, provided that their application sets out their proposals for engaging an increasing number of people in their membership and staff membership.

The amendment tabled by the hon. Member for Oxford, West and Abingdon (Dr. Harris) states that there should be a minimum of 500 members in the organisation, and his subsequent amendments, particularly amendment No. 213, seek to do away with the public constituency. Perhaps that is another example of his wanting to have his cake and eat it—a phrase used by the hon. Member for Epsom and Ewell (Chris Grayling). The amendments suggest that local public constituencies should be abolished and replaced by local government, thus reducing the direct democracy that can be had by people joining the

trust as members of the public constituency. In a phrase that will stay with me for ever, the hon. Member for Cheadle (Mrs. Calton) said that the Liberal Democrats can tailor their principles to suit local circumstances. I am sure that many hon. Members will remember that phrase for a long time.

Photo of Steve Pound Steve Pound Labour, Ealing North

I am very grateful to the Minister for giving way, and I am glad that the opportunity for that extraordinary expression about the Liberal Democrats tailoring their principles to suit local circumstances was given another chance to resonate around the Room. I suspect that we may hear of it again. The Under-Secretary's presentation and preparation of her case and her enthusiasm are so intoxicating that it would seem caddish not to rush in behind her. However, some hon. Members have severe reservations about the issue, and that is in no way a criticism of the principle or the ideal, but a reflection of the bitter experience that many of us have had.

This could be the first time that a mass-membership participatory system has grown from the top down, and I should like to see it. My right hon. Friend the Member for Holborn and St Pancras cited Tawney when he said that, in his opinion, the sharp elbows of the middle classes would propel them to the head of the queue. I think that that was the exact expression used.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I am grateful to my hon. Friend. Perhaps in response I could refer to the Fabian, G.D.H. Cole, who said that the greatest diffusion of power was the best way of achieving the democratic aims of the Socialist party. I am sure that we will be able to return to debate that at some stage.

I am concerned about amendment No. 177. It would allow NHS foundation trusts to have no staff membership at all, if they so choose. That would completely undermine the intention of the legislation. It is right that both staff and public constituencies should have a minimum level of representation specified in the constitution of each NHS foundation trust. Amendment No. 177 would remove that requirement from the staff constituency. Staff must have the same right as the public to have their voices heard, and their fair representation should be guaranteed in the constitution. However, like other members, they have to opt in and say that they want to be part of the organisation, rather than be there passively, by virtue of the category that they occupy. This will be a democratic organisation with a different, opt-in approach. For that reason, we oppose amendment No. 177.

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

I should not need to be clear about why we have tabled a tier of amendments. Our preference is for direct democracy on a full scale in the commissioning side of the health service, whereby commissioners are elected not just by 50 or 500 people, but by an electorate of 50,000, and everyone has a vote on the policies put forward by elected commissioners who decide what services should be delivered where. That preference was set out in writing in our policy that was published and advertised last year. I have discussed it with the Secretary of State, so the Under-Secretary should be aware of it.

It is because of that preference that we propose that the public constituency should be removed in order for it to be a proper stakeholder mutual without a sham form of public democracy that would rival the true democracy on the commissioners' side. The Under-Secretary may not like the policy, but she needs to understand that it is a clear, published policy. It is incumbent on all parties to say, in the debate, what they would do differently.

I am not confident that amendment No. 213 will be successful. I do not think that the Government will accept it. It is therefore reasonable to have a second preference, given that we shall be forced to have a model with a public constituency. That electorate needs to be at least 500 for a typical organisation, but, as it is important to be flexible, it may be best to return with another amendment that mentions a proportion of the eligible people who might become members, rather than have a hard-and-fast figure. That approach deals with the issue that was raised about small hospitals in small communities versus large hospitals in large communities. It will be for the organisation to set that electorate by setting the boundary; the Minister has made that clear in earlier debates. It could be set at 1 per cent. or 10 per cent., just to show that there is public support.

I am sympathetic to the points made by the hon. Member for Epsom and Ewell, that to avoid entryism and the necessity for members of staff to go through the process, all members of staff should automatically be members. That is why we have an amendment that refers to a minimum number of members for the public constituency. I am trying to deal with the point that the Under-Secretary was making that implied that we would not have a staff constituency if we deleted ''each'' and replaced it with ''the public''. I am tempted to go down the line implied by amendment No. 69 in the next group, as set out, quite correctly, by the hon. Member for Epsom and Ewell.

In my rush to be brief in my four-minute introduction, I was wrong to imply that amendment No. 206 should be taken with amendments Nos. 176 and 177. I apologise to the Committee for that. Amendment No. 176 and amendment No. 177 should be taken together. Amendment No. 206 is part of a separate group of amendments, though selected with this one. We do not need to get into issues of constituency in the public if we adopt the proposals under amendment No. 206.

I apologise—as I have already done so privately—for being unreasonably grumpy with the hon. Member for Epsom and Ewell, who was pointing out that what I had said earlier was incorrect. It is amendments Nos. 176 and 177 that are grouped, and I certainly did not mean to criticise the person who drafted amendment No. 206, because that was me. It is part of another group of amendments, although it has been grouped with this one for debate.

We might wish to table an amendment proposing that a proportion of those eligible for membership become members in order for the Government to demonstrate that their proposals have public support. I can foresee a situation in which a hospital that is keen to get such freedoms will apply for NHS

foundation trust status, regardless of the views of the local authority, the overview and scrutiny committee or local people.

If there is no support for NHS foundation trust status in the local community, that could be got round by foundation trusts setting a very low minimum membership requirement. The Secretary of State is desperate to set up foundation trusts, and he will have little regard as to whether that is a realistic minimum number. I hope that the Minister will look kindly on the proposal to have a percentage minimum rather than a minimum number.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 2:45 pm, 15th May 2003

Welcome back to the Chair for this afternoon's sitting, Mr. Atkinson.

I shall not press amendment No. 68 to a Division, as it was intended as a probing amendment, but I am worried by some of the Under-Secretary's comments. As the hon. Member for Ealing, North said, her enthusiasm is noticeable, but in no part of our society is active participation in democracy, volunteering or working for charitable groups high and rising. We should all do everything that we can to encourage participation, but the Bill contains weaknesses that will permit entryism.

During the next few years, we will see the introduction of all kinds of new therapies, genetic treatments and treatments that we did not believe possible. They will be controversial, and they will provoke dispute in society. Unless the Government maintain a proper framework for this measure, vehicles will exist for groups that have a particular bone to pick with the health care system to take on membership, and ultimately governorship, of these hospitals and to turn those roles to their advantage. A failure to pay serious attention to that is something that the Under-Secretary and her successors will come to regret.

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

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I beg to move amendment No. 69, in

schedule 1, page 93, line 22, leave out subparagraph (1).

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

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

No. 70, in

schedule 1, page 93, line 24, leave out subparagraph (2).

No. 126, in

schedule 1, page 93, line 31, leave out subparagraph (3).

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

The three amendments have different purposes: one probing, one possibly probing and one definitely not probing.

Amendment No. 69 deals with schedule 1, paragraph 5(1), which states:

''A person may not be a member of a public benefit corporation unless he has agreed to pay a sum not exceeding £1 to the corporation.''

That is nonsensical for a variety of reasons. It is unnecessary, and it creates an additional barrier and

deterrent to someone's joining their local hospital. In no other part of society must one pay to join the electoral register. Why should one have to pay to join the electoral register of one's local hospital? Will not that be a deterrent?

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I am very interested in what my hon. Friend has said, and it has just occurred to me that that could be considered a poll tax.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

My hon. Friend is absolutely right. Those of us in this Room may not consider £1 to be a great deal of money, but the vast majority of people who use the national health service are pensioners, often in the latter years of their lives, who live on a fixed income and for whom money has become a problem. For them, to pay £1 to join the electoral roll would be a deterrent. It may appear to be only a small one, but it would not widen participation. There is no obvious reason for a £1 charge. I shall be grateful to hear the Under-Secretary's explanation.

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

Does the hon. Gentleman believe that a charge should be related to one's ability to pay?

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I do not want to see local hospitals drown in yet more bureaucracy. The process of administering a £1 charge, let alone establishing the ability to pay it, would be stretching matters.

How can it be rational to impose a £1 charge and expect it to be anything other than an additional bureaucratic burden, which will probably cost money to collect rather than be of any benefit to the system that the Government are trying to create? My hon. Friend the Member for West Chelmsford (Mr. Burns) asked from a sedentary position whether it would be a one-off charge. That is not clear from the Bill, and I am interested in what the Under-Secretary has to say about that. It is a deterrent.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

Has my hon. Friend considered the possibility that the charge has been included because, at an earlier stage in drafting the Bill, the Government contemplated—as we previously discussed—the possibility of establishing ''companies'', and, as my hon. Friend the Member for West Chelmsford made clear, they moved away from the word ''company''? However, they left behind a provision that is consistent with the structure of companies limited by guarantee.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

My hon. Friend makes an extremely important and insightful point. I suspect that he has put his finger right on the reason for the charge. It will not be self-financing; it will be an administrative burden for the hospitals concerned. It is completely unnecessary and will act as a deterrent to those who are among the ''don't knows'' or the ''can't be bothereds'', or who find financial matters a bit of a stretch. Why do it?

What happened to automatic re-entitlement, which the Government discussed not many weeks ago? In the House of Commons on 8 January 2003, the Secretary of State said:

''automatic entitlement on the basis of the electoral register is an option in terms of becoming a member of an NHS foundation trust.''

He went on to say:

''Since people need to demonstrate positive involvement with their national health service, my own preference is that they apply for membership.''—[Official Report, 8 January 2003; Vol. 397, c. 195.]

What is wrong with automatic entitlement? If we are to have genuine community ownership and these are to be real community mutuals, why must we wait for people to sign up to join them? Surely every citizen should have a right to vote, not simply those who self-select. We know that the people who will self-select will be those who are most actively involved in local society.

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

I am not a super fan of the £1 entry fee, but if we take into account the hon. Gentleman's concerns about entryism—which I share—this approach, rather than total, open membership, would be one way of tracking membership and of providing a safeguard to ensure that his concerns were taken into account.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

Given the issues that I raised, knowledge and understanding of the membership spreads may not be important. One hon. Member remarked from a sedentary position that that could be done through the register. I do not believe that a £1 charge will deter any group that has an agenda and which sees the hospital management as a vehicle to promote that agenda. It is much more likely that the apathy vote, which might counterbalance that group, will be deterred by the £1 charge. That could make it easier, rather than more difficult, for those with an entryist agenda to pursue it. The charge has no benefit. I hope that Ministers will think again and say that we do not need it; it is not necessary; it will be bureaucratic and costly to administer; and that there will be automatic entitlement.

I am uncomfortable with the principle of the self-selection of the electorate, because those who come forward will be the sharp-elbowed middle classes, those with a political agenda and those who are active in their communities. I have great doubts about such a model. However, if the Government insist on it, let them at least do it properly, rather than create a half-baked, halfway house that will not be fully democratically representative, will be a mess to administer and will not involve the whole community. The Bill's proposals for electorates contain huge flaws. I hope that Ministers will listen to suggestions for improvement from both sides of the House.

Amendment No. 69 seeks an explanation of the £1 charge. Amendment No.70 is anything but that; it addresses schedule 1, paragraph 5(2), which states:

''A person may not be a member of a public benefit corporation if—

(a) he has been adjudged bankrupt or has made a composition or arrangement with his creditors,

(b) he has within the preceding five years been convicted in the British Islands of any offence if a sentence of imprisonment (whether suspended or not) for a period of three months (without the option of a fine) was imposed on him.''

There is a very simple principle behind our objection to paragraph 5: those exceptions go far beyond the

exceptions set out in our electoral system. We will be imposing on our citizens conditions that are far greater than those that we impose for the right to elect a local councillor or a Member of Parliament, and that is fundamentally wrong.

Those who may not vote in a parliamentary election include Members of the House of Lords; offenders detained in mental hospitals; prisoners who have been sentenced to more than 12 months' imprisonment during the period they are detained or unlawfully at large—not a three-month period as set out in the Bill, but a 12-month period; people convicted within the previous five years of corrupt or illegal practices during elections; citizens of the European Union and other countries, other than those of the Commonwealth or the Republic of Ireland, even if they are taxpaying or long-term residents; and people who on polling days cannot make a reasoned judgement, that is, idiots and lunatics as legally defined. That comes from the House of Commons web site, although some of the last category clearly slip through the net.

There is no reason whatever for imposing conditions that are out of line with our basic electoral system. Why should somebody who has been jailed for six months, but who has been released, has returned to the community and is eligible to vote in a parliamentary election, not be entitled to vote for the management of their local hospital? There is no possible reason for that; it is absurd. I shall certainly be asking my hon. Friends and members of the Committee to reject this paragraph.

Photo of Jim Dowd Jim Dowd Labour, Lewisham West

Can the hon. Gentleman assure me that Lord Archer has not put him up to this?

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

That intervention was unoriginal, not amusing and unworthy of response.

There is no possible reason for imposing conditions that are out of line with those of our electoral system. I shall certainly be asking hon. Members to send the Government back to the drawing board, and I intend to press this amendment to a Division.

I have profound concerns about schedule 1, paragraph 5(3), which states:

''The constitution may make further provision as to the circumstances in which a person may not be a member.''

We either create an entitlement to vote or we do not. We do not want different parts of the country having different entitlements to vote, with different rules applying to people in different areas on whether they may or may not vote for their hospital trusts. If we are electing the same kind of bodies across England, surely the electoral system should be the same everywhere. That being the case, it makes no sense whatever to create different exclusions based on the decisions of governing bodies of different hospital trusts.

I am minded to oppose this measure as well. However, I should like to give the Under-Secretary a chance to explain it and say how she thinks a governing body of an NHS foundation trust might use this provision. What might such exceptions be?

Why should there be a difference between trusts on how people are permitted, or not, to be a member?

Before we endorse this paragraph, we need to understand whether there is a sound basis for it or whether it is one of those vague additions that are often included in Bills such as this. It is more likely to create difficulties and muddy waters than give clarity and coherence to the system that is being set up to govern foundation trusts. Will the Under-Secretary explain, justify and rationalise the £1 charge? Does she accept the nonsense that is set out in paragraph 5(2)? Will she explain why we need sub-paragraph (3) and for what it will be used?

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon 3:00 pm, 15th May 2003

We also look forward to the Under-Secretary's comments on amendments Nos. 69 and 126, for the reasons that the hon. Gentleman gave. We support entirely the hon. Gentleman's comments about amendment No. 70, and we will support him if he presses the amendment to a Division, unless the Under-Secretary gives a dramatic and satisfactory explanation.

Photo of Steve Pound Steve Pound Labour, Ealing North

We heard from the hon. Member for Epsom and Ewell, who said that he had come up with three new categories of amendment—probing, non-probing and somewhere in the middle. The Committee also heard about a new form of amendment—the boomerang amendment, the process of which begins by attempting to ridicule the Under-Secretary and ends by making the mover look silly. The idea that a £1 charge could be in any way a bar to participation is nonsensical.

The London borough of Ealing is, as ever, the trailblazer in many forms of participatory democracy. Indeed, we had the penny hospital, which later became the Perivale maternity hospital. For many years, when the value of a penny was considerably less than it was in 1926, the hospital was still valued.

The idea is that the person has an ownership in the state. That £1 will presumably be uprated annually in line with inflation and will be a tangible expression of the person's commitment.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am very surprised to hear the hon. Gentleman, of all people, falling into the trap that other politicians in the past have fallen into. A constituent of mine—a wonderful lady, who is active in her community—struggles financially. She has two disabled children and gets by on limited benefits. I have no doubt that she would wish to be a part of her local hospital, but the £1 is a great deal of money to her.

Photo of Steve Pound Steve Pound Labour, Ealing North

The hon. Gentleman makes an interesting point, but I would happily offer to pay his constituent's pound for the next few years if she is desperately keen to get involved. I believe that people could be assisted if the £1 each year causes real financial hardship. However, that sum is considerably less than the additional largesse that has been showered on many of our citizens for the past six years.

The idea of the £1 being a bar is silly. I am sorry, Mr. Atkinson, if that is unparliamentary, but I really

do not think that the bar is the issue—if that £1 gives a person a stake, so be it.

The hon. Gentleman argued for his other two amendments persuasively. It strikes me that those relate to the residue of the foundation companies phase of this legislation. Paragraphs 5(2)(a) and 5(2)(b) seem to be more redolent of company law than of a foundation hospital that has a group of citizens gathered together in the greater interest of the community. It is possible that those sub-paragraphs may be the detritus of an early test model, in which case we may well see the back of them. It may be that they are necessary for co-operative structures, in which case we will be told as much.

At present, I almost find myself in the uncomfortable position of feeling that the hon. Member for Epsom and Ewell has made some powerful points. Obviously, I shall go and lie down in a darkened room and take an aspirin until the moment passes, but at present I am almost persuaded. However, reality has returned, and may I say how ludicrous it is to suggest, as does the third of the grouped amendments, that the constitution

''may not make any further provisions to the circumstances in which a person may not be a member.''

Clearly, there must be such a paragraph. From my own involvement with patient and user groups in local hospitals, I remember that one user group decided that electroconvulsive therapy was an appalling form of therapy and should be banned. Other individuals proposed ayurvedic medicine and wished to have every form of pharmacological intervention banned and replaced with ayurvedic options, which largely consisted of drinking one's own urine. I was not prepared to take that. [Interruption.] My hon. Friend the Member for Lewisham, West (Jim Dowd) says that I would not want to drink someone else's. That is a good point.

The fact remains that there are people who may have specific agendas. They may also have been in physical conflict with officers and staff of the trust; they may have been excluded from the premises; or they may have been involved in theft or some of the appalling antisocial activities of which we are all aware. It clearly makes sound rational sense for the Government to include a proviso that the circumstances of entitlement may be reviewed at some future time. That may be a little conservative, but it is very sensible.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

I support my hon. Friend the Member for Epsom and Ewell in advancing this group of amendments. I can say with some certainty that these sub-paragraphs were left over from an earlier draft in relation to companies, because the wording in sub-paragraph (1) is precisely the wording one would use for the memorandum and articles of a company limited by guarantee. That is the whole point of the £1. No one will be asked to pay it up front, but they will be agreeing to limit their liability to £1 in the event of the company being wound up.

That brings me back to a point that I sought to make, probably inadequately, the other day. Are public benefit corporations limited liability organisations? The Under-Secretary's answer was no. Let us test that. If a hospital foundation trust should fail and become insolvent—I have read the provisions for dealing with that situation—the assets of that hospital trust will stay in the national health service and be used by another hospital in another way. That is fine. If money is owed to a creditor, from where is that money to come? It cannot come from members, because in paragraph 5(1) they agree to limit their liability to £1 only.

Where would that money come from? I suspect that the answer is that it would not come from any source. It seems that the Government are creating limited liability organisations. If so, they should be honest about it and tell us that. People need to know the legal status and identity of the organisations with which they are dealing. Unless the Government make that clear, many thousands of pounds will be spent on expensive lawyers over the next couple of years to try to sort out precisely whether there is limited liability. I would like a clear answer on that.

I certainly agree with my hon. Friend the Member for Epsom and Ewell as to how much further sub-paragraph (2) goes, particularly in relation to bankrupts. The wording is rather loose where it says:

''A person may not be a member of a public benefit corporation if—

(a) he has been adjudged bankrupt or has made a composition or arrangement with his creditors''.

That wording appears to exclude anyone adjudged bankrupt 10 or 15 years ago. Where is the usual wording about undischarged bankruptcy? This paragraph would prevent the late Walt Disney from involvement if he were a member of a hospital trust.

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

What did Walt Disney know about running a hospital?

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

Walt Disney was the sort of person who would make a contribution. He tried two businesses. He failed and went bankrupt twice, but the third time he got it right. Why should we exclude such people? The wording is a little sloppy.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

Before my hon. Friend was subject to sedentary interruptions from Labour Members, he was making a good point. The Government seem to have recognised that. During the past Session of Parliament, I participated in the discussion on the Enterprise Act 2002. One of the specific purposes of that Act was to make it possible for people to take risks—sometimes to fail—but not necessarily to be judged harshly on the grounds of failure in good faith.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

My hon. Friend makes a valuable point. However, paragraph 5(2) does not just judge people harshly; it writes them off for all time. Once bankrupt, a person cannot become a member of a foundation hospital trust. That is not right, and I do not think that that is what was intended. I hope that the Under-Secretary will consider that.

My third point is about something that increasingly concerns me. I accept that the Under-Secretary wants

to allow local trusts to have a fair measure of discretion in sorting out what kind of constitution might best suit that particular area. I have been taking soundings of hospitals throughout the west country, some of which are interested in going for foundation status, and it is clear that the existing unelected officers feel that they have no expertise whatever in shaping a constitution dealing with democratic institutions, boundaries, voting procedures and so on.

I can tell the Under-Secretary what will happen. I do not know whether she has ever sat in on a trust meeting when people are dealing with issues with which they feel they are out of their depth, but the first thing those people reach for is their lawyer, accountant or management consultant. The Under-Secretary is creating a lawyers' paradise and a management consultants' feeding frenzy. I do not know whether the Government really want to advance legislation to put much more money into the pockets of corporate lawyers and large management consultants. However, that is exactly what will happen.

Existing medical directors, chief executives and accounting officers of national health service hospital trusts have no expertise in that field. They will reach for such expertise and pay heavily for it. The more that guidance comes from on high, the more taxpayers' money can be saved. I hope that the Under-Secretary will listen to that point.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

Will the Under-Secretary clarify a point in her winding-up speech? I am not a lawyer; therefore I need help. I want to check that there is not a serious drafting problem in paragraph 5(2)(b), which states:

''A person may not be a member of a public benefit corporation if—

(b) he has within the preceding five years been convicted in the British Islands of any offence if a sentence of imprisonment (whether suspended or not) for a period of three months (without the option of a fine) was imposed on him.''

What happens if the sentence of imprisonment is six months, 12 months, two years, five years or 10 years? Is paragraph 5(2)(b) drafted so as to mean that people are excluded if they have only had a prison sentence of three months imposed on them, or is there some legal technicality that means that that sub-paragraph covers those who have had a sentence of three months or more imposed? Is the word ''minimum'' missing by mistake?

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

I should like the Under-Secretary to clarify why the £1 charge is included in the Bill. It seems curious to include it unless there is a good reason in law. My hon. Friend the Member for South Cambridgeshire might have hit the nail on the head. If he has, perhaps the Under-Secretary would be good enough to say so.

There are problems with charging any sum of money: it involves extra bureaucracy and certainly deters people who are wavering about becoming members. We do not want only zealots as members; we want members of the general public who have an interest in health, albeit perhaps a passing one at this stage of their lives. If one puts a form in front of them and says, ''Sign here—and by the way it's going to cost you £1'', that is another reason for them to say, ''No,

not on this occasion. Put it on the back burner. Address it at another time''. That time never comes.

Some people consider £1 to be a significant sum; it is wrong for hon. Members to refute that. It is a more significant sum for some than for others, and to impose any fee will deter some people. There is an additional physical difficulty in collecting the money. Will we be shaking a tin outside a hospital? Will we post forms to people for reply? We can hardly encourage them to put money into an envelope and send it. That would involve cheques, which means a bias in favour of those with bank accounts. The recent debate on post offices informed many of us who had not previously known it that many people in this country do not have bank accounts.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I am grateful to the hon. Member for sharing his passion for the pound. Would he be more willing to part with a euro?

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury 3:15 pm, 15th May 2003

I will pass on that. There have been several facile comments this afternoon, and that one takes the biscuit. On a more serious note, prisoners will be excluded from membership. Shame on the Under-Secretary, because she knows that those who are detained at Her Majesty's pleasure constitute the one group in society that needs the attention of the health service more than any other. Undoubtedly, prisoners suffer poorer health than just about any other sector of society. Surely they need to be engaged in the process. To exclude them specifically is shameful. In all candour, I hope that the Under-Secretary will think again.

The circumstances under which people may be excluded from membership are sinister. I return to my earlier point about the minimum number of people who might be allowed to be members, which according to the constitution of these public benefit organisations leaves that up to the independent regulator or the Secretary of State. I said that that was not good, and this provision is similar, because the circumstances will be left to the independent regulator or the Secretary of State. It is an important issue, and as it is inclined to be misconstrued or misinterpreted, the Bill should perhaps make clear the exact circumstances that could lead to individuals being excluded from membership. It is a serious matter to disfranchise individuals, and we need a little more clarity.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

I realise that the paragraph deals with the circumstances in which someone may not be a member of a public benefit organisation. Curiously, there is no provision parallel to sub-paragraph (3) for the constitution to make further provision for the circumstances in which a person may be a member. I want to be clear before we go further whether it is the Under-Secretary's view that sub-paragraph (3) comprises the sum total of the circumstances in which someone may be a member, or whether the constitution, as proposed, could go further. I have in mind issues relating to voluntary organisations and other stakeholders with specific connections. For example, to bring into membership people from across the country who have spinal injuries and from charities involved in that, would the Royal National

orthopaedic hospital have to extend its geographic franchise, or could it go beyond those who have specifically been patients and include those who have made contributions, voluntary or otherwise, to the charities that have contributed significantly to that hospital?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

It is right to say that membership of NHS foundation trusts is not about joining in order to have personal privileges and benefits. It is about people joining an organisation as a new form of social initiative, but on behalf of the community and not on behalf of themselves. Some of us choose to join organisations for personal benefit. This situation is different; people join to have a sense of ownership and stewardship of the organisation for the community as a whole.

With regard to the £1 membership provision, although hon. Members have different levels of experience, I have been a member of numerous organisations in which I have had to agree to pay £1, but not pay it. We do not envisage people having to send £1 or a penny as a cheque in an envelope, with all the bureaucracy that that would entail. Neither do we envisage uprating it annually as a result of inflation. However, it is a symbol of commitment. Many of us have been members of such organisations. I was a member of the management committee of my local law centre, which was a company limited by guarantee. I had to agree to pay £1, but I never paid it and was never called on to do so. I am also a member of the United Norwest co-operative society, which is now a member of the Co-op group, and my £1 membership entitles me to take part in the mutual governance of the society. For most of us, membership of organisations that require us to pay £1 as a symbolic commitment is fairly commonplace.

As has been said, the membership fee is also a way of tracking the membership. If we did not have the agreement to pay £1, we would have to have some other way for people to signal their intention to become a member. It is a manifestation and a symbol of the fact that they have agreed to become members. We do not see the agreement to pay £1 as a charge or a requirement. It is not about personal privileges. It is convenient and is accepted practice in many other organisations.

I do not know whether the hon. Gentlemen are members of management committees or voluntary organisations. Some may have that experience. I have had such experience over the past 25 years. This is not a big departure from the way in which much of the business of the voluntary sector, the not-for-profit sector or, certainly, the co-op and mutual sector is conducted. The practice has a very good pedigree, and that is the rationale for its inclusion.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

Will the Under-Secretary clarify whether this £1 membership is a vehicle rather than a transfer of money? Presumably, it attaches to it some form of legal responsibility, limitation of liability and so forth. Will she clarify the legal status of the payment in relation to corporate governance and the

legality that surrounds the new form of foundation trust?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

The hon. Gentleman is trying to pursue the issue raised by the hon. Member for South-West Devon (Mr. Streeter) about the legal nature of the corporation, and whether it is a limited liability organisation. I can give the categoric answer that it is not. It is a public benefit corporation, which is a unique, bespoke model set out in this legislation. Therefore, it is not a limited liability organisation. The proposals for distribution of funds for paying creditors and for insolvency are included in the failure regime, which is clearly set out in clauses 23, 24 and 25. Those proposals deal with the circumstances of the failure of a trust and what happens to the creditors. However, that is not connected to the agreement to pay £1, which is a symbol of commitment to a trust rather than a legal requirement to accept a limited liability. I hope that I have reassured the hon. Gentleman.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

May I clarify one point? Is the Under-Secretary saying that there is no limited liability attached to membership and therefore, theoretically, notwithstanding the clauses in the Bill, membership carries liability for failure?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I thought that I had been clear on that. This is not a limited liability organisation. Within the statutes, it is perfectly proper for us to set out a regime that will deal with creditors and insolvency but it does not have to mirror an existing form of corporate organisation, because this is a new form of corporate organisation.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

If the Under-Secretary is creating a new form of legal creature, it is no wonder that there is some confusion. Surely the correct legal interpretation is that if this public benefit corporation should fail, members could be called on to pay their £1, which is an expression of the maximum extent of their liability. That is the whole point of having that provision.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

If that were the case, it would look much more like a company limited by guarantee, as has been said by the hon. Member for South Cambridgeshire. On Tuesday, we debated the different legal forms that had been considered for this organisation. One reason why we did not adopt the company limited by guarantee form was that it is very difficult, within that legal structure, to have a permanent lock on the assets and to prevent the demutualisation of those assets.

In a company limited by guarantee, as the hon. Gentleman well knows, the members can decide to wind up that organisation. That is exactly where we do not want to be in relation to the NHS as a major public service. We do not want the members to be in a position to wind it up, and then for the assets to be distributed. That was one of the reasons why the company limited by guarantee option was not suitable for the legal framework that we want to set up.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

I did not return on this point when the Under-Secretary made it. I have been a member of a company limited by guarantee, and even in the circumstances in which the members would have to wind it up, the memorandum and articles of association would require that the assets not be

distributed, but instead used for the purpose for which the constitution had been set up. Therefore, it would have been perfectly possible to go down that route.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

It would have been more difficult to ensure that the distribution to an alternative organisation took place within the framework of the entire NHS, and that is what we wanted to assure. Being limited by guarantee provides more discretion over the transfer of assets that might take place. I genuinely believe that we have considered the options carefully, and that is why we have come up with the public benefit corporation, particularly for use in the circumstances of an NHS foundation trust. I assure the hon. Gentleman that there is a rationale for that.

I want to move on to the amendments on probity.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am sorry to press the Under-Secretary. She has given way a great deal, for which I am very grateful, but this issue is important. If a foundation trust were to build up a substantial deficit through malpractice or mismanagement, and there was a financial black hole, who would be liable for that black hole? Is it implicit in the legislation that the NHS, collectively with the Secretary of State, would always step in to take on those liabilities? If that is not implicit in the legislation, who would ultimately be liable for those debts?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

We will come to that issue when we examine amendments Nos. 23 and 24, which deal with the failure regime and the insolvency regime of the NHS foundation trusts. Our prime motive is to protect the services to be provided to NHS patients, rather than unnecessarily to protect the institution of the NHS foundation trusts. However, I am sure that those matters can be explored in detail during the debate on insolvency.

I want to move on to the amendments that deal with probity. Paragraph 5(2) sets out the standard exclusion criteria that are used in many different Acts. They are certainly used in section 80 of the Local Government Act 1972, which disqualifies certain individuals from becoming a local government councillor. I do not feel that membership of an NHS foundation trust should be different. Committee members have talked about the qualification for voting for Members of Parliament. I have tried to explain that we are trying to set up the NHS trusts as membership organisations. Therefore, the way in which the democratic element would work is significantly different from a simple all-out election of representatives.

People will choose to join a foundation trust. They will have a sense of community ownership of it; a sense that they direct its policy and shape the design of its services; and a sense that the board of governors and board of directors will be accountable to them. That is a different scenario to that of having basic eligibility to participate in the election. It is appropriate that membership of an NHS foundation trust carries with it rights. However, it also carries responsibilities. Therefore we want to ensure that those who join are people of probity and standing—people who are suitable to become members of the organisation.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

Is the Under-Secretary saying that someone who is made bankrupt at 20 years of age, is discharged at the age of 30, having paid off the debt, and at 40 is a respected member of society who donates a lot of money to good causes and is heavily involved in the local community would still be precluded from becoming a member of an NHS foundation trust?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

We are trying to create a wide membership with a board of governors and a board of directors so that, depending on who is elected, there are different levels of participation. The hon. Gentleman is correct to say that we could choose to have the probity clauses bite at board of governors and board of directors level. The clauses have been drafted to bite at the membership level, which is an indication of the way in which these organisations are significantly different. People must want to be members and they must join an organisation. Members will be expected to be active participants who will make decisions that affect the shape of the organisation. Therefore a foundation trust is a significantly different kind of organisation because it is based on mutual and co-operative principles and is a membership organisation.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

I am grateful to the Under-Secretary who is, as my hon. Friend said, being very generous with her time.

I ask the following question out of curiosity. Will the franchise be extended to Members of Parliament? I presume that Members of Parliament would be eligible to be members of the board of governors and of the board of directors of a foundation trust, given that there is nothing in schedule 4 that applies the House of Commons Disqualification Act 1975 to an NHS foundation trust.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health) 3:30 pm, 15th May 2003

We certainly envisage that Members of Parliament could be members of foundation trusts, but we do not envisage their being involved in the governance of trusts. They could be members of the constituency if they live in the area, but could not go forward to the governance of the organisation.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

We want to maximise the input of local residents into the organisations, rather than have a hierarchy of democracy involving people who already exercise a great deal of power and influence in various democratic organisations. We want to ensure that MPs could be members of an NHS foundation trust because they are local residents but could not be members of a board of governors.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

That may be the Under-Secretary's wish, but where does the Bill state that Members of Parliament cannot be members of a board of governors? Many MPs are local residents in communities in what could be foundation trust areas.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

The hon. Gentleman will have to wait a little while for an answer, as there will be a Government amendment on that matter.

I should like to deal briefly with the final amendment on whether an NHS foundation trust

should have the power in the constitution to make recommendations concerning people who ought not to be members of a trust. My hon. Friend the Member for Ealing, North gave an excellent example of someone who had been persistently harassing members of an organisation and whose behaviour was completely unacceptable. It is appropriate that an NHS foundation trust should have the opportunity and flexibility to set that out.

A safeguard exists in that the Secretary of State and the independent regulator must support those provisions in the constitution, so there will be checks and balances. It would be wrong not to allow a trust some flexibility to make provisions about who should be excluded from membership.

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

That raises an interesting issue. If a member is guilty of bad behaviour, will there be a mechanism whereby he or she could be expelled from the trust?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

An NHS foundation trust could include that in its constitution. As with the constitution of any organisation and in the interests of natural justice, people must be able to state their case to ensure that any judgments concerning them are fair and transparent. Decisions cannot be arbitrary, and an NHS foundation trust must be allowed flexibility.

I urge the Committee to reject the amendment.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I have already asked the Under-Secretary to clarify the legal interpretation of paragraph 5(2)(b). Will she please do that?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

Yes, and I apologise. The hon. Gentleman made some good points about the way in which paragraph 5(2)(b) reads. The intention of the paragraph is to stipulate a prison sentence of at least three months. I shall consider the issue to find out whether it is a matter of statutory interpretation. If the wording is standard and the paragraph can be read in the way in which we both interpret it, so be it. However, if further clarification is required, I shall make a case for it.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

The Under-Secretary's words have only served to muddy the waters rather than clear the air on the three paragraphs. Credit should be given to my colleagues on this side who have asked several questions about liability. I am not persuaded that the Under-Secretary fully knows the legal answers to the questions. I am not persuaded that the Government yet know what will happen if a trust accrues a substantial deficit, or whether the £1 payment limits the liability of members to £1 or whether their liability will be significantly greater.

I am aware that the Committee will come back to this issue on later clauses, so I do not intend to press this amendment to a Division. However, I hope that the Under-Secretary will give a clear and categorical explanation of the exact legal position that applies to trust members when the Committee reaches that issue. There are many organisations in which membership carries substantial financial liability. If, for example, a local political party goes into bankruptcy with

substantial debts, its members are liable for those debts. There is nothing in the Bill or in the Under-Secretary's comments to suggest that that will not be the case in this situation. The financial levels are such that a failed investment or an unexpected major hiccough could leave a substantial hole in the wallets of trust members. When the Committee reaches the Bill's clauses on insolvency, I hope that the Under-Secretary will provide detailed answers to those questions. If she does not, I am sure that that is something that we will wish to revisit on Report.

My hon. Friend the Member for West Chelmsford pointed out the drafting issue in 5(2)(a). The Under-Secretary was correct to take on board his comments on bankruptcy, and I welcome her willingness to look at that again. However, she has not addressed the most crucial issue of why we should set voting conditions on people that we do not set for elections? We are not talking about people who are standing for office, for council elections, or to be Members of Parliament; we are talking about the right to carry the franchise with one. Community ownership of the franchise should be expanded rather than contracted. Putting artificial barriers in the way of people casting a vote for the governorship of their local hospital—barriers that go far beyond anything that exists for local council elections, for general elections or for other elections to public bodies—is absurd and unnecessary. If the Under-Secretary persists in that course, I will ask my hon. Friends to support the amendment in a Division.

I cannot confess to having been greatly enlightened by what the Under-Secretary said about sub-paragraph (3), but the issues that relate to it are not as important as those that relate to sub-paragraph (2). Therefore I beg to ask leave to withdraw amendments Nos. 69 and 126, but I wish to press amendment No. 70 to a Division.

Amendment, by leave, withdrawn.

Amendment proposed: No. 70; in

schedule 1, page 93, line 24, leave out subparagraph (2).—[Chris Grayling.]

Question put, That the amendment be made:—

The Committee divided: Ayes 9, Noes 12

Division number 2 Adults Abused in Childhood — Schedule 1 - Constitution of public benefit corporations

Aye: 9 MPs

No: 12 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

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

I beg to move amendment No. 208, in

schedule 1, page 94, line 2, leave out 'members' and insert 'employees'.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss the following:

Amendment No. 209, in

schedule 1, page 94, line 5, leave out from 'board' to end of line 6 and insert

'shall be appointed by the stakeholders as provided for in paragraph 8A of this Schedule.'.

Government amendment No. 218.

Amendment No. 210, in

schedule 1, page 94, line 7, leave out subparagraph (4).

Amendment No. 127, in

schedule 1, page 94, line 7, at end insert

'and using the First Past the Post electoral system'.

Amendment No. 211, in

schedule 1, page 94, line 8, leave out paragraph 7.

Amendment No. 71, in

schedule 1, page 94, line 11, leave out 'a' and insert 'every'.

Amendment No. 120, in

schedule 1, page 94, line 13, at end insert

'and, where more than one primary care trust is provided with goods and services by the corporation, one or more members of the board may be appointed by the lead commissioning body for the primary care trusts.'.

Amendment No. 212, in

schedule 1, page 94, line 16, leave out paragraph 8.

Amendment No. 213, in

schedule 1, page 94, line 20, at end insert—

'8A (1) The stakeholders who may appoint members of the board for the purposes of paragraph 6 shall include—

(a) the employees of the Corporation,

(b) the Primary Care Trusts for which the corporation provides goods or services,

(c) the principal local authorities that cover, in whole or in part, the area specified for the purpose in the constitution.

(2) Each of the stakeholders shall appoint no more than thirty per cent.of the board's members.

(3) The members appointed by the stakeholders shall coopt at least one member to the board who is an individual who has attended any of the corporation's hospitals as a patient (including an individual attending as the carer of a patient).

(4) The members appointed by the stakeholders shall have power to coopt at least one, but no more than five, members of the board who are, in their view, representative of charitable, voluntary, community or private bodies that have an interest in the services provided by the corporation's hospitals.

(5) If any of the corporation's hospitals includes a medical or dental school provided by a university, at least one member of the board is to be appointed by that university.

(6) A member of the board of governors appointed by the stakeholders may hold office for a period of three years.

(7) A member of the board of governors coopted by the stakeholder members may hold office for a period of one year.

(8) The Secretary of State shall, by order, make regulations to specify the arrangements by which the stakeholders in subparagraph (1) shall appoint members to the board of governors.'.

Amendment No. 130, in

schedule 1, page 94, line 34, at end insert—

'12A The Secretary of State must report annually to Parliament on elections held in the previous 12 months and the cost of those elections.'.

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

This group of amendments contains some tabled by myself and by my hon. Friends, and I will set out our purpose in moving them. The Government will no doubt speak to the Government

amendment, so I shall comment only briefly on it. There are two rival Conservative amendments—amendments Nos. 71 and 120—dealing with primary care trusts, and there is an interesting Conservative amendment insisting on first past the post as the way to go. The hon. Member for West Chelmsford says that he is worried about entryism, but he has chosen the perfect means of ensuring it.

Amendments Nos. 208, 209, 210, 211, 212 and 213, which have been selected in this group, should be read with amendment No. 206. Amendment No. 206 distracted me earlier, but it is part of the package. I am not sure why amendment No. 207 was not selected, but it is obviously necessary for this package to be coherent, given that it would remove paragraph 5.

There is an alternative approach to the creation of a mutual, using a stakeholder model rather than one involving public election. As I have said five times during the various stages of the Bill, our preference for having proper local democracy is to ensure that the commissioning side of the health service—those who plan and buy NHS services—is directly elected by everyone in the community with a vote. That is where the power lies in the health service. It is right that the power should lie with those who spend taxpayers' money on planning, arranging and purchasing services for local people.

The problem with an alternative approach is that no matter how strongly people feel about the lack of a service locally, and no matter how many of those people start running local hospitals, it is difficult to see how they can provide a service that no one is willing to commission or for which priority has not been given locally. That is why we support the option.

Let it not be said, therefore, that we do not support the extension of the franchise in the health service. We support it in a far more radical way—to everyone, immediately, at a local level and not just to a handful of people who are self-selecting for a few trusts for the provider side. That is why we oppose the Government's approach.

The stakeholder model that we propose, in amendment No. 213 in particular, has been suggested by the Local Government Association, which is certainly not yet under Liberal Democrat control.

The LGA makes the point that local councillors are directly elected representatives of their local communities. The Government have given local councillors a responsibility to provide a strategic overview of local public service provision—including those services beyond the local councils' delivery roles—and to protect and promote the well-being of their local communities. In respect of overview and scrutiny Committees, specifically those on health, the Government have a responsibility.

The Government's arrangements, which this group of amendments seeks to strike out, confound any attempt to ensure that there is proper local democracy and accountability. The quasi-democratic, golf club-style membership arrangements that we have just debated, effectively attempt to duplicate the role of local councillors as directly elected community

representatives. Separate elections within one locality for different public services and different sides of the commissioning-providing divide obviously creates the problem of parallel mandates.

Who can be said to truly represent the people? Those elected by a system of one person, one vote? The Under-Secretary claims that democracy in its purest sense is old-fashioned. The Labour party has demonstrated that belief in its policy-making process at the very least. I put it on the record that the Under-Secretary holds that view. However, she must come up with something better than that to explain why commissioning decisions are to be made locally, with no local democratic input whatever, and without local commissioners having the ability to raise resources to meet the priorities of local people.

The Under-Secretary must address the problem of how new services can be provided easily by foundation trusts, if no one is prepared to commission those services because the commissioners can neither raise the funding, nor prioritise those needs. I look forward to hearing the Under-Secretary deal with that question before she claims that democracy in its purest sense—one person, one vote to an accountable body—is somehow too old-fashioned for new Labour to cope with.

The danger of the arrangement that the Government propose is that it will fragment the local public sector. Separate elections will tend to reinforce entrenched positions by creating parallel mandates and increased competition between services, making it more difficult to join up local services, and making governance arrangements for such joined-up services more difficult.

It is sad to note that, instead of taking the holistic approach to bring democracy to the spectrum of commissioning for health care services and social services—including primary care and social care—the Government are focusing again on acute hospital-based care. That is such a distraction from the main agenda of public health.

We had a brief debate on Second Reading about whether this arrangement would be extended at some point to PCTs, but that would not solve the problem. If PCTs had this golf club-style membership approach—this modernised democracy, where those who come forward for the franchise get it, and those who do not or cannot come forward do not get the franchise—matters would become even worse. On Second Reading, the question was whether social services and health could be merged in a single commissioning body. That is the approach taken in amendment No. 213, which proposes to insert a new paragraph into schedule 1 that corresponds to the sort of model that I suggested.

The other problem with the way in which the Government are approaching foundation trusts is that, as the LGA said, they will to some extent be

'' 'islands' within the local public service.''

At best, that approach cuts across the removal of local government from the governance of foundation trusts. It makes it much more difficult to bring together local authorities and NHS providers, which is something that the Government have previously said that they want to achieve. For example, in the case of the children's trust model, if local authorities were frozen out from these arrangements, it would be more difficult to work closely together to deal with the problem of delayed discharge, where the Government's approach is not one of joint working but of joint fining.

Nevertheless, the Government have, on occasion, recognised that the situation will be improved if there is more working together. When it comes to setting priorities for local public health, it is critical that there is less division and that there are fewer problems caused by dual mandates. The Under-Secretary's approach will make it appear that there is greater democratic support locally for a secondary care-based model of prioritisation, where everything that counts is in the hospital, and that it is not the public health-led commissioning agenda that is the most important. There are huge advantages to giving democratic legitimacy to the commissioning process.

Amendment No. 209 provides for the introduction of paragraph 8A, which is proposed in amendment No. 213. The other amendments remove the bits of the schedule that make up this sham, golf club-style of local democracy.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health) 3:45 pm, 15th May 2003

On a point of clarification, my reading of amendment No. 209 is that in talking about paragraph 8A it refers to schedule 1. Does paragraph 8A refer to an amendment of the hon. Gentleman's in the Bill? I assume that the answer is yes.

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

Yes, I think that I understand the hon. Gentleman's question. Amendments Nos. 213 and 209 taken together—they have been grouped together—provide the alternative structure that I suggested. Some hon. Members may not like it. Given what happened previously, in this case I shall be much more cautious and defensive in hoping that that alternative is coherent.

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

I assume that the non-selected amendment No. 207, which suggests leaving out paragraph 5, to which the hon. Gentleman referred earlier, is necessary to make coherent his amendment No. 213. Amendment No. 213 really is about its insertion in place of paragraph 5. Is that correct?

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

No. Amendment No. 207 is part of the package of amendments that seek to delete those parts of the schedule that talk about the public and, indeed, the staff constituency in order that those parts can be replaced effectively by amendments Nos. 209 and 213.

It is not for me to inquire why amendment No. 207 was not selected when it was tabled with all of those amendments as a coherent group. Therefore I realise that the group is probably no longer acceptable. If the Under-Secretary were moved to accept this group, she would have to reintroduce amendment No. 207 as a Government amendment. We can probably assume that the Under-Secretary will not accept them, and I will probably not even seek a Division at this point. I

feel much more strongly about the commissioning side than I do about the corollary to that, which is a proper stakeholder approach to the mutual.

I hope that the Under-Secretary will agree that, on this point, we accept the principle of mutuality. We accept that it is necessary to have a mixed model of providers, and our major criticism of the structure—rather than the process by which the Government are implementing it—is that it omits the commissioning side, which is a major requirement in any rational democratising of the health service. The structure substitutes and opposes that by adopting a wrong approach that creates a sham democracy on the providers' side.

We are always keen to ensure that we have an alternative solution when we criticise what the Government are doing. I accept that it will not be popular with some, and that it will be attacked and argued against, but at least there is an alternative from our point of view. I hope that the Under-Secretary will recognise that. The stakeholder model, in which employees of the corporation, representatives of PCTs and local authority representatives are included, is a good model to ensure that those stakeholders, which is a term that this Government have brought into greater use, are recognised.

Turning to the other matters in this group, I am pleased to see that Government amendment No. 218 is there for the sake of coherence. I was going to ask, when we got a chance to debate this issue, why was it not there, because it had not been made clear. We spent a few minutes scratching our heads trying to work out whether it was intended that members of the board of governors be non-executive members. The Government's approach seems to be sensible.

I come to amendment No. 127. I do not intend to get into a debate about first past the post and electoral reform, because that is not necessary. However, the key question is: what is the most appropriate form of election in each case? If one is to have a membership-type approach, most organisations—even if in other parts of their lives they support a first past the post form of election to the House of Commons and to local authorities, although not in Scotland—a single transferable vote system is the most appropriate way of ensuring that a few slateable candidates—that is, candidates on the slate—do not, by getting 11 per cent. of the vote, beat the other candidates who each get 9 per cent., even though they only had 11 per cent. support. The first past the post voting system is not designed to deal with this sort of election—if any—and that is why many organisations eschew first past the post at the earliest opportunity, as they should.

The hon. Gentleman may believe that the single transferable vote, which is usually used in those elections, is too complicated.

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

It is not too complicated; it is anathema. The hon. Gentleman will have to pick and choose his organisations carefully. The Conservative party, in selecting its leader, uses a single transferable vote, which is apparently—[Interruption.] I shall not comment on the result. The method that the

Conservatives choose to use is a form of alternative vote because they have a serial ballot, and they cancel out people until one candidate gets more than 50 per cent. The single transferable vote is a form of staged alternative voting, and it is only fair to point that out to the hon. Gentleman.

Amendments No. 71 and 120 are two different approaches to the issue of how primary care trusts' representation can be levered into the Government's model, and I look forward to hearing the debate between the two proponents.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I shall speak to amendment Nos. 127, 130 and 71.

Amendment No. 127, to which the hon. Member for Oxford, West and Abingdon has briefly referred, would ensure that members of the board of governors—other than those appointed members—are, as paragraph 6(3) says,

''to be chosen by election''.

Paragraph 6(4) states that

''the election must be by postal ballot.''

I do not disagree with the Government's suggestion. If a postal ballot is to take place, it should be by the first past the post system, because I strongly oppose the principle of proportional representation and other voting systems. The person who wins the most votes should be the winner and the person elected to the relevant position.

My noble Friend the Baroness Thatcher probably encapsulated it best when she said that when a running race—such as an Olympic race—is over, the first person over the line is the winner, the second person over the line comes second and the third person comes third. One does not have some poxy system whereby votes are redistributed—[Interruption.] One does not have some extraordinary procedure whereby the system redistributes votes to take account of the efforts of all the other runners, so that the person who went across the line first is not necessarily the winner. The election system that serves this House remarkable well—as it serves local elections well—is the system that we should have.

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

Does the hon. Gentleman recognise that, according to that analogy, the leader of the Conservative party would now be the right hon. Member for Kensington and Chelsea (Mr. Portillo) and not the current leader, the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), because ''first past the post'' means the person who receives the most votes?

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

The hon. Gentleman's analysis of what might have happened is wrong, but he should remember that it was the members of the Conservative party in the country who elected the current leader of the Conservative party under our system of one member, one vote.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. We are debating the method of election to foundation hospitals, not to the Conservative party.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

You are absolutely right, Mr. Atkinson. I hope that I have killed two birds with one stone by explaining to the hon. Gentleman that his understanding is slightly erroneous.

First past the post is the most sensible system. The provision would be a mistake, which is why we tabled the amendment.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon 4:00 pm, 15th May 2003

I should be grateful if the hon. Gentleman would answer one question about entryism: let us say that there are eight places on the governing body, that, for example, the Society for the Protection of the Unborn Child submits eight candidates, and that there are, say, 80 other candidates for those eight places. If everyone votes, it may only take perhaps 10 per cent. of the electorate to vote for that slate of candidates for all eight seats to be taken by a group of people organising on the basis of a very minority view. All those candidates may well receive, say, 11 per cent. of the vote, while the others each receive 9 per cent., 8 per cent., 7 per cent. and so on. Is not that a concern? I should grateful if he would address that point if we want a serious debate.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

That is a democratic system. If the hon. Gentleman's analysis were proved right, as a democrat, one would have to accept the result. However, I question that the system would ever produce such a position, as presumably the 88 people in his example who were standing for election would let it be known to the electorate what they believed in and how they believed the board should carry out its duties, and would invite people to vote for them. The electorate could then decide whom to vote for and who best reflected the representation that they wanted. One would hope that democracy would work perfectly and that one would get the people whom the electorate wanted. If one did not, however, that is democracy, whether or not one likes the result. The important thing is to ensure that that does not happen by ensuring that the electorate is aware of every policy and every way in which a candidate wants to perform his or her duties, if elected.

The system has worked extraordinarily well in West Chelmsford where we have ensured that there has never been a Liberal Democrat Member of Parliament, and where, two weeks ago, we overwhelmingly threw them out of the council. So the system in Chelmsford works very well, as I am confident the election system would for the board of governors if it were based on first past the post.

The other reason for tabling the amendment is to tease out of the Under-Secretary how she believes the electoral system will work, or, based on what she has said in the past, to anticipate that she may say, ''It is for them all to decide individually.'' If she is going to say that, I seriously caution her not to go down that road, because she may find significant differences of opinion throughout the country about the systems that will be adopted. That would be very dangerous, and in time the Government would rue the day that they had done so and had not for once exercised more control freakery and laid down the framework within which to operate.

Amendment No. 130 is related to that amendment because it states that the Secretary of State must report annually to Parliament on the elections that have taken place in England for the board of governors over the previous 12 months, and, as significantly, that they must report on how much each election cost. That is important because there should be transparency, and we should have an idea about what is going on throughout the country. It is also important in terms of finance. This is a probing amendment that is intended to tease more information out of the Minister: elections are not cheap, and I wish to know who will pay for them.

Will that money come out of the foundation trusts' budgets, and, if so, how? Will the Government give extra funds to take care of elections and other bureaucracy, or will the money come out of the general financial funding? I hope that the Minister agrees that we do not want the money that the Government give to foundation trusts for patient care to be diverted into paying for elections. I hope that the Government will provide the money for the elections out of Department of Health funds that are separate from the allocations that they make on patient care.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Shadow Minister of State (Home Office)

From reading the Bill, I find it hard to see how any control will be exercised over the cost of the elections, and where any limits might be drawn. Is there any mechanism in the Bill that limits the expenditure on the elections? If not, does that not mean that there is an enormous purse from which money can flow away from patient care and into this electoral system involving ballots?

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

My hon. Friend identifies an important issue. One does not want there to be costly elections. Would there be a system of by-elections during the 12 months, if someone—for any of a variety of reasons—ceased to be an elected member of the board of governors? There is a danger that costs could escalate, and I trust that the Minister will elaborate on that point.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I am more than happy to do so, but I was hoping not to speak for long. It is up to the hon. Gentleman whether he wishes to intervene. He has thought better of it. That is a wise decision.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

Will there be any ceiling on the cost of elections and where will the money come from. That is a powerful point. What about the money spent by candidates in elections? Does my hon. Friend have any information about whether there will be any limits on how much people can spend? If we are worried about entryism, people with deep pockets who spend a lot of money on putting themselves forward for a place on the board of governors could be a serious point.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

My hon. Friend again raises an important issue. Sadly, because of the vague way in which the Bill is drafted, I cannot answer his question, but I believe that it should be answered, because it is highly relevant and has important implications. I trust that the Minister will be able to reassure us on that.

Amendment No. 71 looks innocuous. It changes paragraph 7(3) of schedule 1, which states:

''At least one member of the board is to be appointed by a Primary Care Trust for which the corporation provides goods or services.''

I want it to state ''every'' PCT because I suspect that there will be more than one of them in every foundation hospital trust area. Whereas there might be co-operation between the PCTs, which will operate good practice and will agree on somebody, there might not be. If we are to draft good legislation, we have to be sure that there is no ambiguity and that we give clear guidance on the way in which the system is to work. If we were to change the wording to ''every Primary Care Trust'', we would ensure that we did not create problems for areas with more than one PCT, such as exclusion, ganging up or the strongest PCT having an advantage over others. I hope that the Minister will look sympathetically at the amendments.

I listened carefully to the hon. Member for Oxford, West and Abingdon, but he has not convinced me. I believe that I understood the sometimes tortuous way in which he explained how and why he sought to amend the legislation. Notwithstanding what he said, from the way in which his amendment is drafted, I assume that he was suggesting that there would be appointments rather than elections. That seemed to be a very odd way in which to proceed. I should have thought that that would totally undermine the Government's efforts to make the bodies more inclusive and of appeal to the maximum number of stakeholders in each area. It seemed a highly curious line for a Liberal Democrat to take. If I am misconstruing what he said, I hope that he will forgive me.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I could not agree more. I, too, have some comments to make on that subject. Would the hon. Gentleman agree that what the hon. Member for Oxford, West and Abingdon seemed to be describing was much closer to the golf club model than was the model that the Government are putting forward, but which he sought to tarnish with that description? There are, of course, many good golf clubs including some in my constituency. That is not what foundation hospitals will be like, but it sounded as though that was what he was proposing.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

It might come as a surprise to the hon. Gentleman that I am 100 per cent. in agreement with him. It seems that the golf club ethos has crept in to the thinking of the hon. Member for Oxford, West and Abingdon. For that reason, I shall certainly advise my right hon. and hon. Friends not to support the Liberal Democrat amendment if it is pressed to a Division. I look forward with interest to the Minister's answers to the points of concern that I have flagged up in speaking to my amendments.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I should like to make a few remarks, in particular to urge the Committee to reject the Liberal Democrat amendment and to support the Government amendments. We must encourage the Conservatives to go further down the route of championing local democracy—they are breaking into new territory—and we should try to allay their anxiety that every experiment in local democracy will

open up the door to different kinds of entryism. We are really opening the door to local people. We are allowing local residents, rather than powerful local interests, to make the key decisions that will shape their health services.

The bulk of my remarks concern what has been said by the hon. Member for Oxford, West and Abingdon. He has aligned himself closely with the LGA, which represents the powerful interests of local councils that, at the moment, have a kind of monopoly on directly elected local representation. One can understand why they might feel uncomfortable about new forms of organisation in the local community that involve direct elections.

However, I was rather disappointed, but not surprised, that the Liberal Democrat spokesman did not champion more strongly the cause of trying to extend the democratic principle as widely as possible. Speaking for myself and, I think, many in my party, I believe that it is right in principle to extend that to our communities as widely as we can. By doing so, we will find that we are better able to deliver public sector services. Engaging local communities in the delivery of their local services will not only improve those services, but be an important vehicle for the renewal of those communities and for civic renewal more generally. I was disappointed that the hon. Gentleman did not go down that line and champion direct democracy for foundation hospitals more strongly.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon 4:15 pm, 15th May 2003

I am following the hon. Gentleman's line of argument carefully. Does he think that judges should also be elected?

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I would be keen to have a long discussion with the hon. Gentleman on how we can democratise other public services, but I suspect that you will not feel that this is the right moment to go down that route, Mr. Atkinson.

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

Does the hon. Gentleman understand the problem of conflicting parallel mandates, where two people in the same area claim to have democratic legitimacy and want to do different things? That would be like an alternative House of Commons elected by Member subscription. Does he see that that is a problem in principle?

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I am delighted that the hon. Gentleman made that intervention because it allows me to rest my case where my interpretation is concerned—I must have it spot on. The hon. Gentleman is clearly uncomfortable with what the Bill represents: an extension of direct democracy to organisations other than local councils. That democracy will give a mandate to other organisations in the local community. I think that that is a good thing because it is right that we extend that principle to other public service organisations. Of course, we shall have to look at how that will work in practice, but we are right to do it in principle.

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

Does the hon. Gentleman understand the problem of conflicting parallel mandates, whereby local councillors may be elected, on our model, to make decisions about where hospital services should

be, but hospitals may claim that they have the democratic mandate to insist that they provide the services? Does he accept that there is a problem caused by having democracy in both arms of the commissioning and providing process?

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I understand that the hon. Gentleman sees that as a problem and, on that basis, wishes to oppose the idea. I see it as a challenge and as something extremely positive, so I am happy to support it. Local councillors will simply have to live with the fact that their monopoly as the only directly elected representatives running and managing local bodies will be challenged. We shall have to find a way to work together.

We all have that experience in our constituencies as directly elected Members of Parliament having to deal with local councils. Sometimes there are different points of view on the community interest, which have to be worked out through negotiation, but it is right to extend the democratic principle as far as possible.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

No. I want to make one or two brief remarks, then bring my comments to a close.

The problem is not extending the democratic principle; we should be seeking to do that. The problem is how best to deal with the issues of accountability that arise when we devolve power from the centre—when we decentralise and give greater power, freedom and flexibility to public sector organisations, such as foundation hospitals.

It is right that there are several competing models for addressing the accountability issue. The LGA put forward not just the stakeholder model that is presented in the Liberal Democrats' amendment but other ways of dealing with the matter. It referred to giving foundation hospitals the freedom to develop individual governance approaches on an ad hoc basis.

The problem with the stakeholder model is not that it does not deal with accountability but the fact that local communities are now to some extent saturated with such schemes. We must re-examine how far we can go with the partnership model. In my local community of Merton, members of the community are involved in more than 80 key partnerships. Who exactly will come to stakeholder-style meetings of foundation hospitals? Many people are already tied up in local strategic partnerships and other partnership work.

The accountability of foundation hospitals must be addressed, but the stakeholder model is not the best way to do that. I believe that if we get participation in the elections—that is a very important caveat—foundation hospitals will be able to deal with the accountability problem that arises with decentralisation to local hospitals.

I am very surprised that a Liberal Democrat tabled what is a wrecking amendment. [Interruption.]

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. Many conversations are taking place around the Committee Room, and I

find it difficult to concentrate on what the hon. Gentleman is saying.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

Thank you, Mr. Atkinson. I am sure that everyone is talking about what I am saying. The amendment is a wrecking amendment, and I hope that the Committee will reject it.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

I shall confine my remarks to amendment No. 120, which stands in my name. I confess that it approaches the matter in a way that is different from that of amendment No. 71 in the name of my hon. Friend the Member for West Chelmsford, but I suspect that both he and I were surprised by the implication of the Bill and wanted to establish what the Government intend. They should make clear in the Bill what their intentions are.

Paragraph 7(3) states:

''At least one member of the board is to be appointed by a Primary Care Trust for which the corporation provides goods or services.''

The question is whether that is to be interpreted as at least one member of the board for all the primary care trusts, because the text does not imply that. It implies that any PCT that has a contract with the foundation trust would have a right to appoint a member of the board.

We know from the evidence given to the Select Committee that the Moorfields eye hospital represents some 50 PCTs, so we begin to bid up the size of the board to more than 100. However, the problem is not confined to a specialist hospital of that nature. I believe that 27 PCTs have a commissioning relationship with Addenbrooke's hospital, which would find the provision more than a little difficult.

That is why I took a different approach, which does not set a limit of one member of the board but makes it clear that the constitution of the trust must be flexible enough to allow for several members of the board—one or more—according to the circumstances of the foundation trust. I took the view that it would be desirable for the appointments to be managed through the lead commissioning body for the PCTs, as if they had invested together in a co-operative relationship to establish the service level agreement with their hospital. That is what has been done at Addenbrooke's through the South Cambridgeshire PCT.

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

If this is simply a probing amendment, my comment may not be relevant. I actually agree with what the hon. Gentleman is saying, but is not the amendment in the wrong position? The wording attaches it to the paragraph about dental schools rather than to the one about PCTs.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

The hon. Gentleman is right. The amendment should refer to line 12. I hope that he will forgive me if I have counted wrongly. Amendment No. 120 should have been designed to include the provision that starts

''and, where more than one primary care trust is provided with goods and services''

at the end of line 12, which would make it run as a whole sentence. I hope the Committee will forgive me for any defective drafting, but with grateful thanks to

the hon. Gentleman, I hope that its purpose is clear. That mistake may make my amendment deficient, but if the Under-Secretary sees merit in it, she should be inclined to redraft it.

I hope that I have explained the amendment. It would mean that there would not necessarily be only one board member for the PCT, and the mechanism would work through the lead commissioning body.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

We are debating a group of amendments on the boards of governors. We had a brief exchange with the Under-Secretary on Tuesday about the military constituency, which I know that she is concerned about, but having failed to see a Government amendment, I must press her on how she sees the military constituency being represented on the boards of governors. She will know about the Centre for Defence Medicine in Selly Oak. That military constituency is geographically remote from Birmingham. It tends to come from Aldershot in Hampshire and from my constituency, and I am concerned about how those patients will be represented.

The Under-Secretary is focused on medical and dental schools and the representation that they might provide, but she should remember that some schools of physiotherapy and nursing also fall within the remit of universities. Will she consider the possibility of a Government amendment to enfranchise them and ensure that they are represented? It is not only teaching hospitals that have medical, dental, nursing and physiotherapy schools, but peripheral hospitals too, and she should consider those clinical schools' representation on the boards of governors of those hospitals. The NHS has moved a long way since I was at medical school, and schools of medicine in dentistry, nursing and physiotherapy are today dispersed throughout our NHS. They need representation on boards of governors, but I see no evidence of that in the Bill.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

We have had an interesting debate on a broad range of amendments, which deal with the electoral system and wider governance issues. I shall deal first with Government amendment No. 218 and amendments Nos. 127 and 130, because they are about the electoral system. I shall come to the amendments of the hon. Member for Oxford, West and Abingdon later.

The introduction of local accountability through the Government arrangements that will apply to NHS foundation trusts is a key part of our policy. All trusts will need to ensure that their governance arrangements provide for the full range of members' interests to be represented, with a proper balance between the different interest groups within the membership. It is important that the process for selecting the representatives of the local community, who will sit on the board of governors and help to shape policy, is fair and transparent, which is why the legislation ensures that the governors who represent patients, the public and staff must be chosen by election.

It is essential that the governors represent the interests of the constituency that elected them, so Government amendment No. 218 provides that

members may elect governors only from within their own constituency. That makes it clear that members of the public constituency elect public members of the governing body, who will be in the majority, and that members of the staff constituency elect the staff representatives. The amendment maintains the integrity of the two different sections of the constituency in the Government arrangements.

On amendment No. 127, the legislation as drafted deliberately allows the NHS foundation trusts the flexibility that they need to ensure that the membership and board of governors are genuinely representative. Some NHS foundation trusts might want to take steps to ensure that minority interests, particularly in areas of deprivation, are properly represented. I take issue with the hon. Member for Oxford, West and Abingdon describing the governance arrangements for NHS foundation trusts as golf club-style membership. Nothing could be further from the truth.

With the introduction of new arrangements for public and patient involvement in the health service, including the Commission for Patient and Public Involvement in Health, the advent of patient forums and the duty under section 11 of the Health and Social Care Act 2001, the thrust of Government policy for several years has been to widen the number and type of people who can take part in shaping the service. We have given a commitment in legislation and in practice to support all our institutions in going out into communities to find, and to put at the centre of the NHS, people whose voices have rarely been heard—they might be those in inner-city communities, homeless people, elderly people, young people or those with mental health problems.

I happily agree with Members that that is not easy to achieve. Creating mass-membership organisations is difficult, but I am tremendously disappointed by Opposition Members who seem to think that because it is difficult, we should not bother trying. I urge all Members to see that the attempt to get a better, more representative group of people involved in our public services is something we need to pursue.

I want to maintain the flexibility of the system to allow NHS foundation trusts to reflect their communities. Trusts might want to have weighted electoral colleges, particular geographical constituencies or constituencies of interest. We should leave it to them to make proposals, with the safeguard of having the support of the local community when they go out for consultation. There are three safeguards: community support, the support of the Secretary of State and the support of the independent regulator. The process will be robust. It is important that the electoral system is open and flexible enough to allow for different models.

I am sorry to say to the hon. Member for West Chelmsford that the amendment does not make a great deal of sense. Normally, under the first-past-the-post voting system, a single person is being elected from a group of candidates. The circumstances that we envisage are elections being vigorously contested by a wide range of candidates and people voting five, or

perhaps 10, members on to a board. In those circumstances, it would be difficult to use a simple first-past-the-post system to elect people who will properly reflect the health service. However, it is for NHS foundation trusts to deal with that in their constitutions.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 4:30 pm, 15th May 2003

I listened with mounting astonishment to the Minister. She does not appear to be living in the real world in her view of the participation that can be achieved. We all want to see participation, but she must understand its limitations and the risks to which the hon. Member for Birmingham, Hall Green (Mr. McCabe) referred. Can the Minister explain from where the effort to put together these different constitutions will come and the cost of drafting them? Hospital managers are there to look after patients, rather than to design multifarious constitutions for different areas.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I am not only disappointed but shocked at the hon. Gentleman's lack of ambition for the community that he is in purportedly in Parliament to represent. He seems to think that the idea that people in that community will bother to go out and vote is impossible. I do not know what kind of community he lives in, but in my community a range of people are beginning to be involved in running things. There is the new deal for communities, the single regeneration partnership board and sure start programmes, which are increasingly involving parents and families in running services and in having a direct say.

The Government are committed to widening the involvement of local people. If the hon. Gentleman seriously feels that this is a task too difficult to bother with, I am disappointed in his lack of commitment to the democratic principle of ensuring that public services are accountable to the people who use, pay for and work in them.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Shadow Minister of State (Home Office)

Can the Minister help me with one point? She said that it is up to foundation hospitals to make proposals for their constitutions. What role does she expect lawyers and legal advisers to play in foundation hospital trusts, and does she expect there to be large legal fees? If I were a lawyer, I would be rubbing my hands with glee at the thought of foundation hospitals having to draft a constitution, because, presumably, they will have to take some fairly heavy legal advice. Will she give me an undertaking that it is possible to arrive at these complex constitutions without spending a penny piece on lawyers?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I think that this is the third or fourth time that I have explained, including to the right hon. Member for North-West Hampshire (Sir George Young) and to the hon. Member for South-West Devon, how we envisage support being provided by the Department of Health and members of the external reference group. Those members represent organisations as diverse as the Institute of Directors, Co-operatives UK and the social enterprise sector, and they have a great deal of experience of constitutions.

I am sure that the hon. Member for Chesham and Amersham (Mrs. Gillan), being an active member of her community, as most Members of Parliament are, knows that a tremendous range of voluntary organisations—including Relate marriage guidance, the local law centre and the council's voluntary service—have experience of setting up constitutions and running systems similar to the one that we are discussing.

We are creating a new legal form through the public benefit corporation. However, there is a great deal of experience in creating constitutions on good governance to draw on. We are absolutely committed to not just the external reference group, but the implementation team in the Department of Health working side by side with the trusts that have been successful and will go through to the second stage of the application process. They will troubleshoot with them, talk them through the problems and draw on others' experience. We certainly do not envisage the process involving external consultants and the huge expenditure that can be incurred by using them.

We want to ensure that trusts learn from each other, so that they are not reinventing the wheel, as I have said to the hon. Member for South-West Devon. Once they have experience, the next wave, and the wave after that, can learn from them, until the system is embedded properly in our organisation. The hon. Member for Chesham and Amersham is perhaps guilty of overestimating the difficulties involved in drawing up such an organisation.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Shadow Minister of State (Home Office)

I hope that I am. Will the Minister now give a categorical undertaking that no legal costs will be incurred by any foundation hospital in setting up a constitution?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

With respect, that is a fairly ridiculous assurance to seek. If we are to deal with the amendments properly, seeking it does the hon. Lady no credit. We want to utilise the experience that is already around in the co-operative and mutual sector of governance. I am sure that she knows of many organisations in her area that have done something similar.

On amendment No. 130, we agree that, as a principle, the costs of the elections should be clear. That is the right way to go. The annual reports of each NHS foundation trust, which will be laid before Parliament, will clearly set out the costs of the elections, so the amendment is unnecessary and should be rejected.

Amendments Nos. 71 and 120 relate to the role of the primary care trusts with respect to the board of governors. I should tell the hon. Member for South Cambridgeshire (Mr. Lansley) that amendment No. 120 is unnecessary, as the words ''at least'' allow for more than one member of the board of governors to be appointed by one or more primary care trust. I can see how he might have misunderstood, but I think that the wording is quite clear on the fact that at least one member can be appointed by a PCT.

To involve every PCT in the election of the representative, as amendment No. 71 has it, would be impractical and unworkable. As the hon.

Gentleman said, the PCTs with which the prospective NHS foundation trust could have contracts might range from a district general hospital to a specialist trust, which could be involved with practically every PCT in the country.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

The Minister may misunderstand the nature of my concern. Sub-paragraph (3) should not be able to be read as giving each PCT with a commissioning contract with a foundation hospital trust a legal right to appoint a member of the board. Can she give that assurance?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

Yes. We are talking about at least one member, but not every member. The hon. Gentleman suggested that lead commissioners in an area might want to combine, so that a PCT could represent their view. That could be one option, if those were to be appointed. The provision would ensure that the PCT sector has representation within the board of governors, but it would not allow every PCT to be in that position.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

I may be missing something, but if 30 PCTs are bidding into a foundation hospital and each wanted to appoint someone to the board of governors, who would oversee that and prevent it from happening?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

The constitution. Under paragraph 7, that is the minimum requirement that we would expect in the constitution. Under paragraph 12(2):

''The constitution may make further provision about the board.''

Those are the minimum requirements.

The hon. Member for Westbury (Dr. Murrison) raised concerns about the military constituency that can be served by some medical defence units. I have already mentioned paragraph 12(2): that would allow partner organisations locally to take a place on the board to ensure that it fully represents the communities it serves. It would be possible for that to happen.

Some organisations have dealings with various PCTs. Whereas Walsall and York hospitals have service level agreements with only one PCT, Essex Rivers Healthcare NHS trust and City Hospitals Sunderland trust have from three to five service level agreements. The Queen Victoria hospital in East Grinstead and the Marsden have 30 and 34 service level agreements respectively. We have already discussed the Moorfields eye hospital, where more than 1 per cent. of activity is for nine PCTs and between 0.1 and 1 per cent. is for a further 50. Some services are provided to 133 PCTs. That is how varied the relationships can be. Nevertheless, it is correct to say that there should at least be one, and that, subsequently, that should be a matter for the constitution of the NHS foundation trust. There will be consultation with local partners and the local community before it is authorised. Again, that is subject to a general check: it must have support from local organisations before it can be advanced formally.

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

I do not think that the Minister has fully addressed the point made by the hon. Member for South Cambridgeshire, although both Members on this side of the Room may be wrong.

The Minister has clarified that this matter represents advice on the constitution, but is she saying that at least one member of the board should be appointed by one PCT and no more, and that the constitution will be restricted to one PCT, or that at least one member of the board should be appointed by at least one PCT, and that if the constitution wants such provision in areas where there are two PCTs, it might choose to have one or more member appointed by each of them, within reason? That is not clear. If it can confuse several Members in Committee, unless all of us are especially slow, it may be misunderstood.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I do not think that it is confusing. Paragraph 7(3) says that at least one member of the board is to be appointed by a PCT.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

There could be two members from two PCTs, or three members from three. That is a matter for the local constitution to decide. One is the minimum number, which provides that there will be a PCT presence on the board. If people want to go further, they may decide locally and make proposals in their constitution. There must, as part of the legal framework, be a staff presence on the board. There must also be a PCT presence. Where there is a university, there should also be a university presence on the board. That is the minimum framework.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon 4:45 pm, 15th May 2003

I am genuinely trying to be unhelpful—[Laughter] I am trying to be helpful. Some provisions of schedule 1 say that the constitution ''is to'' make, or ''is to'' provide for certain things, and so forth. Other parts of the schedule simply say what will happen, but paragraph 7(3) says what shall happen. It does not say that the constitution will provide for a specific number of people to be appointed by a given number of PCTs. That provision can be interpreted by PCTs as what the law is, which is one reason why every trust will engage expensive lawyers. I can guarantee that, as every trust will want the benefit of its own legal advice, so that if it is wrong, it can sue the lawyers. If a trust had relied on other people's legal advice, it would not have that opportunity, so I can guarantee that the process will be expensive. I think that the Minister is wrong to say that the constitution might provide differently. The provision does not say that.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

The hon. Gentleman has to read paragraph 6(2)(a) and (b) of schedule 1, which sets out the people who may be members of the board, who are:

''(a) members of the corporation, and

(b) individuals appointed under the following provisions''.

Those provisions relate to the staff constituency, the primary care trust constituency and any university constituency. The legislation refers to members of the corporation, and then those people who will be appointed, if they are not disqualified for probity reasons, from those areas.

Paragraph 12 is a further following provision. Paragraph 12(2) states:

''The constitution may make further provision about the board.''

People can be appointed under the provisions of the constitution under paragraph 12(2). They would fall within the definition of

''individuals appointed under the following provisions''

and would then be eligible to be members of the board. There is logic to the drafting.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

Surely the Minister can understand that anyone advising a PCT that wanted to have a member on the board of governors—the constitution subsequently provides that not everyone can—could easily bring a legal case, given what she has just said, under paragraph 7(3). They could say that that is how the law should be and that the following sweep-up general provisions do not supersede that specific provision. That is obvious.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I do not accept what the hon. Gentleman says. It is right that the constitution can make further provision, so that people can be appointed in accordance with the following provisions. When the constitution comes forward, it will have to have been discussed with the PCT, so there must be support for the form of the constitution for it to have come forward. That is an extra safeguard for the PCT provision.

Amendments Nos. 208 to 213 were moved by the hon. Member for Oxford, West and Abingdon. I shall make a few points about their meaning rather than their status. The amendments would remove the provisions setting out how the board of governors should be constituted and replace them with an entirely different system, with no role for members in the public constituency. This is a very important issue. Earlier, the hon. Gentleman moved amendments about having a minimum number of people in the public constituency; now he seeks to ensure that there is no public constituency.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

The hon. Gentleman explained why. There is an important distinction between the approach taken by Government Members and the hon. Gentleman's approach. We are determined that local people, as residents, will have a direct say in what happens to the hospital that serves them and their families in their community, and that their views should not be mediated through another organisation. The hon. Gentleman talks about direct democracy and pure democracy. It is extremely important that the direct experiences of local people are fed into the way in which the NHS foundation trusts function, and that they take notice of what local people tell them.

There is a fundamental divide between us. That the hon. Gentleman cannot cope with the concept of there being parallel mandates is disappointing and shows a lack of imagination and an inability to recognise that increasingly in our communities—including, I am sure, his community—a range of organisations are elected. There are boards, and people have a say. The organisation may be a housing association or a credit union. In a range of organisations, there are different centres of power and different centres of

democracy. That does not mean less democracy; instead, more people will have a say.

If the hon. Gentleman thinks that it is possible to have only one direct line of democracy, that will lead him rapidly to the dead hand of central control—a command and control system that will not accept the possibility of there being different centres of democracy in our communities. What does he say about school governing bodies? What does he say about the new deal for communities partnerships? What does he say about single regeneration board partnerships? Those are all subject to electoral systems, and that means that more people can be involved.

The hon. Gentleman has put forward a simplistic analysis in a number of recent discussions. He says that we cannot have national standards and local control. He says that we cannot have a balance between the acute and the primary sectors, or between a single democracy and a more pluralistic democracy. Yet again, the amendments would have us say that only one model will work, and that we should not be experimenting or looking at new forms of democracy that would enable more people to come into the system and have a say.

The amendments are particularly reactionary. The hon. Gentleman should acknowledge that power is not exclusive, and that it can be exercised in a number of ways.

Photo of Steve Pound Steve Pound Labour, Ealing North

I am reluctant to say this, because I admire the point that the Minister makes. I ask her to consider my constituency, which has no hospital. My constituents have to attend Northwick Park, Hillingdon, Ealing, Central Middlesex or West Middlesex University hospital; or they have to go to Moorfields Eye hospital, the Royal National Orthopaedic hospital or the National Hospital for Nervous Diseases. No one in my constituency of Ealing, North can identify with any one hospital. How on earth are we going to engender a feeling of democratic participation if no group of people, except those who would attend a specific hospital such as the Royal Marsden, can identify with a hospital? We cannot identify with a hospital, because we ain't got one.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I ask my hon. Friend to look through the other end of the telescope. He is looking at the situation as a parliamentary representative, and from within his constituency's boundary. The boundaries of the NHS are different; they are about patient flow rather than the position of the institutions. He said that no group, other than those who use the Royal Marsden, can have a sense of allegiance; but he has just identified a group of people who have allegiance to a hospital. That hospital might not fall within the neat boundaries of his constituency.

In my area, people in the north of Salford identify with North Manchester hospital, whereas those in the south of Salford identify with Hope hospital. They will be able to identify with the institution that provides them with services, and they will make that connection. I have no doubt that my hon. Friend will be encouraging his constituents to become

members of their foundation hospital and to take an active part.

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

Does the hon. Lady believe that having local people, patients and staff on the boards of foundation trust hospitals will encourage the commissioners to provide new services? Does she understand that making changes in the health service requires the agreement of those who have the funds on the purchasing side of the contractual arrangements? Does she therefore agree that making the commission side more democratic would be a good thing, because local people could then take part in that sort of decision-making?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

We are clearly on record as agreeing with that. The hon. Gentleman knows that we have only just set up primary care trusts. We want to give them time to bed in and get used to their powers; as innovative commissioners, they need to flex their muscles. We have no objection to that, but it is a matter of negotiation.

The hon. Gentleman does not seem to appreciate that things are not either/or. We do not have to have one or the other; if we want to provide new services, we have to convince the commissioners that it is the right thing to do. They have control of the budgets; they will have to sign up for it. It is not for one part of the system to dictate to the other what should happen. The majority of the power is with the commissioners. Unless the services that the foundation trust wants to provide are valued, meet the outcomes that the primary care trust wants to see happen, and also meet local people's priorities, they will not be purchased and there will not be the shift to the acute sector that some people have talked about. The power will remain clearly and firmly in the hands of the commissioners in the primary care trust.

Amendment No. 213 sets out new arrangements for appointing members of the board of governors. It includes staff, primary care trusts and local authorities. It does not include any direct residents, which is why we object to it. The removal of residents is totally unacceptable and cuts right across our proposals to devolve powers to people who use and pay for the services. The proposals for our constitution set out the new model of community ownership, which should benefit everyone. It is about active participation and making sure that people can play a proper role. Removal of the right of members of the public constituency to elect representatives to the board of governors would significantly reduce their role. Again, that is wholly inconsistent with our policy aims.

The provision in amendment No. 213 requiring the members of the board of governors appointed by staff, primary care trusts and local authorities to co-opt at least one patient as a member of the board is by no means an acceptable alternative, because it fundamentally shifts the balance of power in the board away from local people and patients. Patients and public representatives should be in the majority on the board of governors, as we have set out, to reflect the fact that they form by far the largest stakeholder group. There can be no guarantee that the views of

co-opted patient members will be representative of the wider group of patients.

Amendment No. 213 provides for up to one third of the members of the board of governors to be appointed by the primary care trusts that commission services. As I said in relation to the amendment tabled by the hon. Member for South Cambridgeshire, it is important that primary care trusts are players, but they certainly do not need to dominate the proceedings of trusts in such numbers. In addition to their place on the board of governors, they will also have their extensive commissioning powers, which will enable them to have influence.

Amendment No. 213 also provides for up to one third of the members to be appointed by local authorities. Again, that level of representation is disproportionate considering that the Bill already provides various mechanisms to involve local authorities. Local authorities are important players. They have all the duties and social care responsibilities. As we want to ensure that there is seamless care for patients, local authorities will be key players in the organisation.

The duty to work in partnership is set out in schedule 4, paragraph 23. The provisions on oversight and scrutiny committees, in schedule 4, paragraph 114, relate to local authorities influencing the activities of NHS foundation trusts. In addition, individual NHS foundation trusts are free to include a representative of local authorities on their board of governors as one of their partner organisations under paragraph 12(2), which allows them to make further provision, and as set out in our guide to foundation trusts in paragraph 2.17 on page 18. In setting out the governance arrangement, we clearly envisage that local authorities will be key partners in the work that we want to undertake. However, I absolutely reject the idea that local authorities can supplant the role of local residents in terms of having an input in the system.

I ask the Committee to reject amendments Nos. 208 to 213 and to support Government amendment No. 218. I also ask Members to reject amendments Nos. 71, 120, 127 and 130.

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

In the Under-Secretary's last contribution she said—we finally started to have a proper discussion about the matter—that the power lies with the commissioners. She is quite right. That is why we should ensure that there is more public influence over commissioners even when they do not have any revenue-raising powers, which is what they need to be responsive to patient need and which is where the power is. She has made a big concession. I am disappointed that she says that we will have to wait before we get more public and patient influence over commissioners because she has only just set up primary care trusts.

Primary care trusts are the wrong model. There ought to be elected commissioners, advised by professionals and people from public health. That is what my approach is about. It is not about less democracy; it is about more democracy. I am not saying that there should not be mutuals or others

forms of provider. However the real power to make changes lies on the commissioning side, as the Minister acknowledges. That would be especially true if commissioners could raise revenue to respond to local needs. That is where that power should be. I think that we have reached a landmark position where the Minister has accepted that real power lies with the commissioners and that her policy is not to give local people any more control.

The Minister then said that she does not see why local people have to have their view mediated by an intermediate body—certainly, a third party. She argued that is what will happen if people elect local councillors to make commissioning decisions. Of course, it is hard to carry out commissioning by plebiscite or referendum, and I am not suggesting direct commissioning in a democratic sense. The model that the Minister is considering would allow a few people—those who choose to take part under residents, patient and staff restrictions—to have a vote that will delegate some powers to a board of governors and an intermediate body, which will mean real power is vested in a board of directors. The Minister is asking for people's opinions to be mediated through two intermediate bodies.

I know that the Minister is concerned about what she said, but she did not see why I should be supported in my view, which she said meant that local people's views would be mediated by an intermediate body—a directly elected council. The Minister also claimed that creating mass-membership organisations was difficult, and that the amendment was a wrecking amendment because we could not cope with that difficulty. Our answer is to get people involved in commissioning, where the power lies, because they will be able to decide where service should be provided and how much of it to buy. Of course that will be done in consultation with providers, but they will have the budgets. One can do that by allowing those people to have revenue-raising powers and to be directly elected. It works for social services, where those involved are quite happy to see social care being carried out by directly elected people with limited revenue-raising powers, so I do not see why the Minister utterly rejects the idea for commissioning.

It is not that I do not accept that there are not other elected bodies, although I have never been to the local election polls with the rest of the electorate to elect school governors. Many school governors in my area are appointed, and some are elected by constituent bodies of parents and teachers, but they are not a rival to the local council, which is elected by everyone and sets out, where it is allowed to by Government diktat, policy for education.

The Minister claimed that I am saddled with a lack of imagination, but I am asking her to be more imaginative. She should recognise where the power is, devolve power from the centre to elected regional bodies, rather than appointed strategic health authorities, and devolve real revenue-raising power to elected commissioners. We may have different aims

and end points in this matter, but I think that the Minister's policy is imaginative. It is wrong, but she should not claim to have the monopoly on imagination. I am disappointed, but not surprised, by her rejection. I am disappointed in the Minister's view that the only way to reform is through her policy, that she is the only one with imagination, and that any other model is less democratic than her way, when the evidence suggests that the opposite is the case.

Given that amendment No. 207, for reasons that I am still dwelling on, has not been selected, I do not think that it would be appropriate to press the Committee to a vote. I am sorry that the hon. Member for West Chelmsford did not understand what first past the post in such situations—regardless of what we think about it in other areas—will mean with regard to entryism, but I support the Minister in calling on hon. Members to reject that amendment.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health) 5:00 pm, 15th May 2003

I understand the Minister's thinking on the proposals, and definitely understand her good intentions. I just think that she will find them a recipe for disaster. I do not want to press our amendment today in the light of the Minister's comments, but I want to reflect more on what is a potential shambles, and reserve our position to bring back amendments at a later stage.

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

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 218, in

schedule 1, page 94, line 6, at end insert—

'( ) Members of the public constituency or the staff constituency may elect any of their number to be a member of the board.'.—[Ms Blears.]

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham 12:00 pm, 15th May 2003

Order. As a vote is imminent, I will suspend the Committee for 30 minutes, regardless of whether there is one vote or two, in order that others can have a break.

Sitting suspended for a Division in the House.

On resuming—

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health) 5:35 pm, 15th May 2003

I beg to move amendment No. 128, in

schedule 1, page 94, line 28, leave out 'special reasons' and insert

'discussion of confidential and unpublished matters or confidential personal issues'.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

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

No. 197, in

schedule 1, page 94, line 32, at end insert—

'(cc) the election of the chairman of the board,'.

No. 129, in

schedule 1, page 94, line 34, leave out subparagraph (2).

No. 178, in

schedule 1, page 94, line 34, at end insert—

'12A The board of governors shall meet at least once every three months.'.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

Schedule 1 states that the constitution of the board of governors may provide for members of

the public to be excluded from a meeting for ''special reasons''. Amendment No. 128 would leave out ''special reasons'' and insert:

''discussion of confidential and unpublished matters or confidential personal issues''.

That is easy to comprehend. Perhaps there has simply been a drafting fault, or perhaps the Minister will tell us of a new policy by which anyone can do anything in any foundation trust area. It seems odd to have such a bald statement, which does not specify the special reasons that could lead to exclusion. That is a serious step. Furthermore, there is no way that someone who is excluded can appeal against that decision or complain about it. It is a far-reaching power.

I do not wish to get into trouble, but I am sure that everyone in this room is familiar with small select groups of people with whom we deal in our professional life, whom—at some point—we have to exclude from the benefit of our services.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

That would be too beautiful.

In certain circumstances, there will be genuine reasons why a group or an individual must be excluded from a meeting. However, I would like to have seen more on the face of the Bill on the reasons for that, rather than such an open-ended statement. I would also like to have seen a right of appeal or complaint. The decision to exclude is serious, and could, potentially, on rare occasions, be the wrong decision. Someone who is wrongly excluded has no right of redress, and no opportunity to rectify the situation. The schedule does not state for how long members of the public would be excluded from a meeting. Would it be for a single meeting or for meetings thereafter as well? I hope that the Minister will expand on that.

Amendment No. 129 would leave out paragraph 12(2), which states:

''The constitution may make further provision about the board.''

Again, this is a probing amendment to find out more about the Government's intentions. Paragraph 12(2) is a fairly bald statement.

Photo of Steve Pound Steve Pound Labour, Ealing North

I wish he would stop saying that.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I apologise to the hon. Gentleman. I now fully appreciate his sensitivities. I never saw him as a shrinking violet, but we have obviously discovered his sensitive spot.

Photo of Steve Pound Steve Pound Labour, Ealing North

If I may quote my right hon. Friend the Prime Minister, we are at our best when at our baldest. None the less, some of us are still quite sensitive about the matter.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

Actually, it is funny that the hon. Gentleman should say that. The Prime Minister actually said:

''We're at our best when at our boldest.''

I am glad that the hon. Gentleman reminded me of that, because one of my arguments against the Bill is that the Government are not at their best, because they are not at their boldest. They are not freeing the health service sufficiently or devolving powers sufficiently to

make it a good piece of legislation. However, that is by the by, and I would hate to cross you at this late hour, Mr. Atkinson.

To return to amendment No. 129, paragraph 12(2) is a poor piece of drafting. It is a very stark statement and does not give great detail about the Government's intentions. I should be grateful if the Under-Secretary would share with us what further provisions paragraph 12(2) might encompass. I hope that she will seek to convince of us of the justification for including it in the Bill.

Photo of Gary Streeter Gary Streeter Conservative, South West Devon

Does my hon. Friend think that the schedule is a little peculiar? Paragraph 12(2) states:

''The constitution may make further provision about the board'',

but similar wording appears nowhere else in the schedule. The constitution may, therefore, make further provision about the board but nothing else. That seems rather odd.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

My hon. Friend, with is legal experience and lawyer's eye, has picked out another potential problem with the drafting. That is why it is so important for the Under-Secretary to share more of her thinking on the reasoning behind the relevant parts of the schedule, although I hope that we will not be disappointed. When she shared her thinking on the constitution, democratic processes and governance, we saw an Under-Secretary who was continuing to dig, not one who had stopped digging. What may or may not have been a good intention has become deeply flawed because of the shambolic way in which the Government are instigating matters.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

My hon. Friend is right to table amendment No. 129. It would remove a line that gives far-reaching powers. Nevertheless, does he not agree that something would need to be put in its place? The Minister answered my query about the military constituency by referring to paragraph 12(2). She said that the military constituency could be represented under that provision, if that were the wish of the foundation hospital trust. Were the provision to go, there would clearly have to be clarifying amendments to allow the military constituency to be represented. There are also the university schools of medicine—I mentioned physiotherapy and nursing—

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. The hon. Gentleman should be making an intervention, not a speech.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

Thank you, Mr. Atkinson. I am grateful for that clarification. My point was that there would need to be a way of representing other constituencies if paragraph 12(2) were removed.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

My hon. Friend may be absolutely right. I use the words ''may be'' because until I hear from the Minister I am in the dark about what ''further provision'' means. However, having said that, and given my hon. Friend's long-standing interest in the issues that he raised in his intervention, I accept that if the words were taken out of the Bill, at least we would have an opportunity at a later stage to reinstate a replacement that would be more relevant and valid and would embrace the points made by my hon. Friend.

Mrs. Gillan rose—

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Shadow Minister of State (Home Office)

Does my hon. Friend agree that amendment No. 197, tabled by my hon. Friend the Member for South Cambridgeshire, would also make a valuable addition to this catch-all part of the Bill, which is poorly drafted and generalised in one respect, but tightened up in others. If all of paragraph 12(1) is to be tightened, the election of the chairman of the board would make a very valuable addition to the list.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

My hon. Friend and my hon. Friend the Member for South Cambridgeshire have valid points. Amendment No. 197 has considerable merit; if it is not accepted we will revisit the issue at a later stage. If we felt strongly about it and the Government were resistant, there is another place where the matter could be considered.

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

I rise briefly to support amendment No. 178, which would provide for the constitution to specify that the board of governors should meet at least once every three months. I confess that, unusually for a Member of the House, I am not an expert on constitutions, but if the minimum frequency of meetings is not prescribed there is a danger that management affairs, which will be important to the governance of the trusts, would drift, especially as the executive power, other than that of appointment, is vested in the board of directors and not in the board of governors. People will start by being not especially experienced, which I assume is one of the Minister's aims in wanting to bring in new people. What guidance will be available if the Minister resists the amendment, as I suspect that she will?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

The amendments unnecessarily restrict NHS foundation trusts with regard to their meetings and to including additional matters in their constitution. The hon. Member for West Chelmsford said that he does not see the need for freedom and flexibility in respect of the governance, although I am sure that he will welcome freedom and flexibility in the other powers of NHS foundation trusts.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I would hate the Minister to get the wrong end of the stick, as that is how rumours develop, followed by parrot-like responses from Labour Back-Benchers. What I meant is that I think that what the Government want to do with the ground rules for governance—giving great flexibility for each area to make up its own rules—will prove to be very confusing; it will be a shambles. I am not talking about freeing-up the health service in general, just the freedoms that the Under-Secretary is giving for individual trust areas to take their own decisions on how they are set up.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I understand the hon. Gentleman's case, but it illustrates a wish to pick and choose the freedoms and flexibilities that he wants to support. As I have said before, the freedoms and flexibility in management terms and in the powers and functions of the NHS foundation trusts are inextricably linked with the freedoms of local organisations to choose the form

of governance that is best for them. We have sought in this schedule to set out the most minimalist framework possible, away from the centre, so that local people can get together to build a consensus and support the form of constitution that emerges.

Amendment No. 128 specifies two reasons why board meetings could be held in private. There is no need to specify the particular issues in legislation, as ''special reasons'', the phrase that is used, encompasses all necessary circumstances. To highlight just two would be unnecessarily restrictive. The phrase ''special reasons'' has not been plucked out of the air, but is based on established precedent; it is the wording used in the Public Bodies (Admission to Meetings) Act 1960.

Some 43 years ago that Act set out the basis for special reasons. That meaning is well understood with regard to open meetings. The provision has stood the test of time over an extremely wide range of circumstances. It applies to meetings of a whole range of bodies, including trusts and health authorities, and clearly means that the organisation has to set out the special reasons stated in its resolution and arising from the nature of the business that it is considering at the time.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I am grateful to the Minister. I now can see why that terminology is used. She said that it is well understood what the special reasons are. Unfortunately I am not a lawyer and I obviously have not been to any of these meetings. Could she tell us what the special reasons usually are?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

Yes, the Secretary of State issued a health service circular in 1998 when we were beginning to open up the health service to public scrutiny—a situation that unfortunately did not obtain when the hon. Gentleman's party was in government, and meetings were closed to the public. Certainly representatives of community health councils were unable to make their views known at that time. We decided to extend the nature of public and patient involvement in the health service.

Paragraph 12 of the circular sets out the provision in the Public Bodies (Admission to Meetings) Act, which states that a board may,

''by resolution, exclude the public from a meeting . . . by reason of the confidential nature of the business . . . or for other special reasons''.

It concludes:

''The resolution should be taken in public and minuted. It should state in broad terms (which do not breach the confidentiality of the subject matter) the nature of the business to be discussed.''

Paragraph 13 states:

''The Secretary of State is concerned that this provision should not be abused. The following points should therefore be observed: closed session should be limited to those areas of broad business where real harm to individuals may result. This might include discussion about particular members of staff for disciplinary or other reasons, or relate to independent reviews on complaints. It should not be used however as a means of sparing board members from public criticism or proper public scrutiny.''

We wanted to ensure that members of the public could attend and could see what was being done in their name. We want this schedule to be interpreted in similar way.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

Will my hon. Friend confirm that one of the special reasons for excluding members of the public from board meetings, as is currently the case with NHS trusts, would be for the discussion of serious allegations? Such allegations can be made under the Public Interest Disclosure Act 1988, or whistleblowing legislation as it is sometimes known.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

My hon. Friend raises an important point. Those could well be the circumstances that would apply. It would depend on the nature of the allegations that were being made. Where they could result in significant harm and where they were confidential, clearly it should be properly minuted by the organisation that the matter was being taken in private for those reasons.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Shadow Minister of State (Home Office)

I appreciate what the Minister is doing, and I wholeheartedly agree with opening up the process to public scrutiny. How will the public find out about these meetings and where they are being held, and how will they get to see them? Does she envisage building into the legislation at some stage a provision to force the board to advertise meetings widely, perhaps throughout the entire constituency that elects it? I can see that she is thinking about this, but there is not that compulsion anywhere in the legislation, and if board meetings can be kept secret—as they probably will be—there would be little chance of the public having the desired access.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. This is another long intervention; I ask hon. Members to keep them short.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

In the new organisations, with their significant public constituency, it is likely that more people will know about the proceedings than is currently the case. I am sure that there will be a range of methods to keep in contact with members, such as newsletters, leaflets and advertisements. We envisage the organisations being exactly like that—that there will be a participatory democracy in which people want to know about things because they are members and they care about what is happening.

Amendment No. 129 would remove paragraph 12(2). It is important that NHS foundation trusts have the flexibility to make further provisions in their constitutions. To remove the sub-paragraph would be a retrograde step. The Bill is not intended to provide a complete framework that covers every requirement of every trust. Therefore, the boards will need that flexibility. Each of them needs to be able to reflect its unique circumstances through its constitution, so as to ensure genuine public involvement.

I have raised the possibility that where a trust covers a wide area, it might want to divide itself into geographical constituencies. It might want a sub-committee to look after a particular area. A trust might have responsibility for two or three hospitals, and it might want to organise its affairs in a way that reflected those different constituencies.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

That is interesting, but is it not covered by paragraph 12(1)(c)?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

That refers to

''the practice and procedure of the board''.

Sub-paragraph (2) states:

''The constitution may make further provision about the board.''

That covers the point that I dealt with previously in relation to the persons who can become members of the board as partners in the organisation; a constitution can make provision for partners, such as local authority members and even trade union members—or the defence medical constituency that was referred to by the hon. Member for Westbury (Dr. Murrison)—to become members of the board and play an active part. The hon. Member for South Cambridgeshire made a point about the role of voluntary organisations: it is possible that they could be put forward by the NHS foundation trust as partners in the organisation. That is why paragraph 12(2) is necessary: it is not only about practice and procedure; it is about membership, too.

I now turn to amendment No. 178. The Bill does not specify the number of times that the board of governors must meet. Arrangements for meetings have to be agreed locally. It would be wrong to dictate from the centre exactly how the boards should operate. They might want to operate in different ways.

Hon. Members must get this idea right: when these bodies come forward with their constitution they have to have local support. If one of them has a constitution that states that they will meet only once a year, I cannot envisage that the people who have elected their members to the board of governors will be content with that. It is right and proper that the constitution should specify how many times they will meet, how they will meet, and how they will conduct their affairs. I ask hon. Members to accept the principal of local devolution that we are trying to establish.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

To reverse the amendment tabled by the hon. Member for Oxford, West and Abingdon, I remind the Committee that there are legal requirements as to how often elected councillors must attend meetings; if they do not, their membership of and election to that local authority lapses. What happens if the public's participation and enthusiasm is not as great as the Minister anticipates? Will a requirement for people to turn up to a minimum number of meetings be laid down?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health) 6:00 pm, 15th May 2003

We do not intend to lay down a limit in the legislation, but it would be a proper issue to be considered in the constitution. It may be appropriate to consider the matter when the constitution is developed and goes forward to the Secretary of State for authorisation by the independent regulator. It is not appropriate to dictate such a limit on the face of the Bill.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

The Minister has frequently mentioned freeing local trusts to draw up their own plans. She has made a virtue of that freedom on numerous occasions. Why must the constitution have the support of the Secretary of State? What happens if he does not support it?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

There are two reasons why the constitution must have the support of the Secretary of State. First, the Secretary of State has overall

responsibility for the health service. He will continue to have that responsibility and is accountable to Parliament for it, which is important. Secondly, the national health service is a major public service, which is funded by taxation and paid for by citizens of this country. The public are entitled to know that there is a chain of accountability and responsibility.

We are balancing when it is right to dictate from centre, when it is right to set the framework and when it is right to say to local people that they have the responsibility to come forward with plans that suit the unique circumstances of their community. If Opposition Members have not yet got that point, we will be labouring it for a long time to come. The principle is that we want to dictate the minimum from the centre while making sure that those constitutions are robust, representative and fully supported by local communities.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

Does not the hon. Lady think it rather ironic that the Government are providing great freedom for foundation trusts to set up their own constitutions, which they can vary according to their local needs, and to vary the electorate and their electoral systems, yet on the clinical side, which is the purpose of foundation trusts, trusts cannot change their priorities because they would be stepping outside the strictures imposed by the Government's star rating system.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

No. The people who pay for the health service are entitled to know that it is a public service for which the Secretary of State is responsible. They are also entitled to know that they are part of a national health service, and will receive the same standards of service from every part of the NHS.

Amendment No. 197 is unnecessary because the Bill already requires the constitution of every NHS foundation trust to provide for electing the chairman. Paragraph 15(1) of schedule 1 states:

''It is for the board of governors at a general meeting to appoint or remove the''

chairman. Furthermore, clause 6 requires every NHS foundation trust to have a constitution that sets out how the board of directors and the board of governors should be elected.

Effective communication between the board of management and the board of governors will be essential. The chairman of the NHS foundation trust will provide a vital link between the two boards. We have clearly stated in paragraph 2.31 of the guide that we expect the board of governors to be responsible for electing the chairman of the NHS foundation trust. As with non-executive director appointments, the election of the chairman will normally follow open advertisement among the members of the NHS foundation trust. Eligibility will be based on assessment against specified criteria, which are for each NHS foundation trust to determine. Unlike the situation under the current one-size-fits-all model, NHS foundation trust governors will have sufficient flexibility in the appointments system to take into account local needs and circumstances, which will

enable them to specify particular skills and expertise that they might find useful in their organisation.

Applications for NHS foundation trust status must include constitutions that contain a process to ensure that appointees are suitable, appropriately qualified and vetted. The independent regulator is expected to issue guidance on the role of the chairman and non-executive directors similar to that currently issued by the Office of the Commissioner for Public Appointments.

Amendment No. 197 is unnecessary because there are ample provisions relating to the appointment of the chairman. Chairmen will be assessed and vetted to ensure that they have the necessary skills and expertise to lead such a complex and challenging organisation.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I beg to move amendment No. 196, in

schedule 1, page 94, line 38, at end insert

'; and may provide that the exercise of certain powers be subject to the affirmative resolution of the board, or the approval, in a referendum, of the public or staff constituencies.'.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss the following amendments: No. 131, in

schedule 1, page 95, line 2, leave out subparagraph (2).

No. 122, in

schedule 1, page 95, line 2, after 'constituency', insert

'or, in the case of a corporation which includes a hospital with a medical or dental school, a member of the Board appointed by that university.'.

No. 179, in

schedule 1, page 95, line 8, leave out 'nonexecutive directors' and insert 'board of governors'.

No. 121, in

schedule 1, page 95, line 9, after first 'the', insert 'Chairman and'.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I apologise for the absence of my hon. Friend the Member for South-East Cambridgeshire. He was called away to another engagement, and cannot be here because of the late hour at which the Committee is sitting tonight.

This is a probing amendment, through which we seek clarification from the Government. I am delighted to move it, and my hon. Friend will be able to study the Minister's responses in the record tomorrow and form his own judgments based on them.

We tabled this group of amendments to clarify what the powers of the membership are. The Select Committee concluded in its report that it had not received proper answers from the Department of Health, and my hon. Friend and I hope that the Minister will put some flesh on the bones of comments that have already been made and explain precisely what powers she envisages the membership holding. I refer her in particular to section 44 on page 19 of the report, and to the Secretary of State's reply to the Committee's question whether members of a foundation trust could overturn a trust's decision to reconfigure services:

''I think the simple answer to that is probably yes.''

That was not entirely the right thing to say.

Let me place that remark in context. The Minister will know that in February her Department published a document about the future configuration of hospital services. It focused especially on the role of community hospitals in the future NHS and the likelihood that services will be devolved from district general hospitals and major acute hospitals to smaller community service facilities. It is likely that such a step will lead to the closure of some district general hospitals—I speak as someone who represents an area that is very much affected by that.

The Epsom and St. Helier NHS trust is in the early stages of a review set against the background of an ambition to devolve services to community hospitals, and ultimately move from having two district general hospitals at Epsom and St. Helier to having one entirely new hospital or amalgamating acute services on one site. That will undoubtedly be an extremely emotive issue—indeed, it already is—in the area that I represent. It has already aroused strong feelings in the communities that surround both hospitals. For several years in Epsom, there have been local campaigns about the future of the hospital. A recent by-election in the London borough of Merton, close to St. Helier hospital, was fought mainly on the platform of saving that hospital.

One can therefore be certain that whatever decision the NHS ends up taking will be controversial. I know that the hon. Member for Wimbledon (Roger Casale) will be only too aware of the implications for controversy in local communities of decisions to reconfigure services.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

The hon. Gentleman is right. Just for the record, the Labour party won that by-election by 70 votes, and I was pleased to be able raise the matter with the Prime Minister on the Floor of the House, but it continues to be a very contentious issue.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am sure that the hon. Gentleman's decision to raise the matter at Prime Minister's questions made the difference with those 70 votes—but if I may place that matter in context, it was one of the Labour party's safest seats, and victory by 70 votes was certainly a pyrrhic one.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

Would my hon. Friend like to ask the hon. Member for Wimbledon if he could tell us what the majority was beforehand?

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. I would rather he did not.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

We will return to the matter in hand, Mr. Atkinson. When a foundation hospital trust operates over a number of sites, if the board takes a decision to reconfigure services, to move from two sites to one, or to move services out to an acute hospital or into the community, what powers will the membership have? Will they have the power to say to the board that they do not wish that to be done? If Epsom and St. Helier were to become a foundation hospital trust, would we in Epsom have the power to override such a decision?

The Minister wants democratic accountability and participation for the community. I assure her that if

the people of Epsom thought that by signing up as members of their hospital trust they could secure the future of their own hospital, they would do so in their tens of thousands, because that issue arouses a strength of feeling in our community like no other. It would therefore be valuable for the Minister to clarify the exact position. The Health Committee, in its recommendations, said:

''If it is the case that members of a Foundation Trust will have the right to veto trust proposals through a referendum, then this will invest patients and the public with significant power over the way their local services are run. However, nothing we have seen in the Guide to Foundation Trusts or in our other evidence suggests that this is the case, and we would welcome clarification on this point from the Department.''

This would be an appropriate moment for the Minister to provide that clarification.

Another point raised by the Health Committee was what would happen if the board of governors were divided. That could happen in a trust that was split between two communities with strong loyalties to two hospitals, where both communities were represented on the trust board. What would happen if there were an irrevocable split? The Health Committee commented that democracy and cosy consensus rarely go together hand in hand, and also noted that the Department has not answered the important question of how disputes will be resolved when a board of governors refuses to approve strategic plans related to meeting national priorities. That question was flagged up by several chief executives as crucial to the success of the policy.

The Government have not yet clarified exactly what their expectations are of trusts and the structures that can be put in place to resolve disputes. Do the Government expect every trust to deal with its own local disputes? Will there be some form of arbiter over future strategy? It may be that the decisions taken by local trusts will be entirely academic because the freedoms provided in the Bill appear to be all about constitutions and meetings and electoral structures. Precious few powers will be granted to hospitals to take distinctive clinical decisions so that they can reshape clinical priorities to meet the needs of their own local community. The Government are determined to maintain central control over targets—hence the framework of clinical services set up to meet those targets.

The last point that I will make on behalf of my hon. Friend the Member for South Cambridgeshire relates to his amendment No. 122, in which he seeks to insert into the clause the words:

''In the case of a corporation which includes a hospital with a medical or dental school, a member of the Board appointed by that university.''

The amendment, if accepted, would permit a senior member of a university attached to a hospital to be a non-executive director. One of our concerns about the provisions for non-executive directors in the Bill was that the structures set up by the Government appear to preclude the importation of genuine, added-value, professional skills on to a board of directors. Where there is a close link between a medical or dental school and a foundation hospital trust, the ability to bring high-level, high-quality medical expertise on to the

board of directors would be useful, even if that medical expertise did not naturally fit into the framework established by the constitution. It would be a valuable power, which boards in the commercial world have, and foundation hospitals should, if they deem it appropriate, have the freedom to bring on to their board professional expertise that they would not otherwise have.

I ask the Under-Secretary to answer those questions, and my hon. Friend will be able to read her responses tomorrow in the Official Report.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health) 6:15 pm, 15th May 2003

Amendment No. 131 is a probing amendment. I just want to find out more about the Government's intention in this part of the schedule, which deals with setting up the board of directors. Paragraph 14(2) states:

''Only a member of the public constituency is eligible for appointment as a non-executive director.''

The Under-Secretary knows full well from our earlier debates what I think of some aspects of the public constituency, so I shall not rehearse the arguments. However, I should like to know exactly why the Government have chosen to be prescriptive and have restricted non-executive directors to those from the public constituency. Presumably, that rules out anyone who works in the NHS or the trust.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Shadow Minister of State (Home Office)

I rise to speak mainly to amendment No. 122, which I understand is a probing amendment. It gives me an opportunity to discuss an issue that has been raised with me by the Royal College of Nursing. I am extremely grateful to Alexa Knight, the acting senior parliamentary officer of that organisation, for briefing me. I hope that the Under-Secretary will be able to address the RCN's points on this part of the Bill.

The RCN is particularly concerned about schedule 1 because it does not include a requirement for a clinician to be on the board of directors. It believes that nurses make up the largest single professional group in the NHS and that many current and future modernisation initiatives depend on nursing roles. I am sure that the Under-Secretary would acknowledge that. Nurses are also well positioned to act as advocates for patients, and it is difficult to understand how foundation trusts can successfully achieve their stated intentions without nursing representation on the board.

I believe that when my hon. Friend the Member for South Cambridgeshire tabled amendment No. 122 he was trying to find out from the Under-Secretary how wide a constituency the measure would cover. It seems apposite to ask these questions as part of the debate on the amendment.

The RCN believes that there must be nurse representation at executive level—I should like to hear what the Under-Secretary has to say about that—as well as staff representation at non-executive level. I appreciate that we covered that earlier in the debate, when nurses were alluded to in the context of the

Under-Secretary's comments about unions and union representation. The RCN is keen to have that representation and, in addition, nurses elected to the board of governors.

I welcome this opportunity to make the serious point that has been raised by the RCN, and I hope that the Under-Secretary will be able to comment and provide a response.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

I, too, should like to speak to amendment No. 122. Medical and dental schools get special treatment in the Bill. I echo the remarks of my hon. Friend the Member for Chesham and Amersham on the nursing profession and would expand the board to include physiotherapists, dieticians, occupational therapists—indeed, all the professions allied to medicine, which are, perhaps, neatly represented in the clinical schools that are associated with a university. It is a pity that the Minister has confined her attention to the medical and dental professions.

At every stage of the debate, first on the governing bodies and now on the board of directors, we have had little clarity about how the boards will be constituted. At present, the composition of trust boards is fairly clear-cut: a finance director, a medical director, often a nursing director, a personnel director and so on. We have seen none of that detail in the provisions and we need clarity.

I urge the Minister to focus on the professions allied to medicine and to determine how they will be represented at the senior level. It is not good enough to say that we will leave things up to the public benefit corporation, for the good reason that that corporation may have an interest in not having representatives from universities or clinical schools on their boards because training is expensive. It makes good economic sense to provide non-training grades in one's hospital to run clinical services. There would be some self-interest to public benefit corporations in not having the wise counsel of university representatives on their boards. One cannot leave it up to such people to establish a constitution. We need firmer direction if we are to continue to have training within the national health service in a seamless way, so that some hospitals do not decide to take advantage by not pursuing training as they should. I urge in all candour the Under-Secretary to think clearly about that.

My other point harks back to my military constituency. At the Centre for Defence Medicine, as well as at other hospitals where there are military district hospital units, there is a military representative on the board at a senior level. I see no reference to that in the Bill and I am concerned about that, especially in relation to Selly Oak, but also in relation to other hospitals where there are medical district hospital units. It would be sensible for the Surgeon-General to be committed to nominating at board level a representative from the military at hospitals where there are MDHUs.

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

In the sequence of amendments it falls to me to support formally amendment No. 179, or at least ask the Minister to consider the issues that it raises. The amendment asks for the board of governors to be given the power, which it can

delegate if it wishes, to appoint or remove the chief executive. It is strange that the Under-Secretary, who says that it is important that everything be left to those in the local situation to decide, is dictating from the centre that the board of governors should not have the right to make a decision about the appointment or removal of the chief executive. I should have thought that the board of governors would be well placed to do that, but instead the Minister is dictating that the non-executive directors do so. The board of governors may be able to delegate the function, but the decision in question should be up to that board in its constitution.

I try to learn the Under-Secretary's arguments, and I know that in response to many of the other amendments in the group she will say that we should not dictate and that it would be strange if there were no clinical people on the board of directors, so I shall not revisit that. However, in that respect she may have omitted to recognise that she is too deterministic in deciding that it is for the non-executive directors to appoint and remove the chief executive.

I put my name to amendment No. 121, tabled by the hon. Member for South Cambridgeshire. It seems reasonable that the chairman as well as the chief executive should be involved in the appointment or removal of executive directors. It is most unusual in public service for there to be no non-executive directorship role in the appointment or removal of executive directors. The provisions say that it is only the role of non-executive directors to remove the chief executive, but that clashes entirely with the passage that says that there is no such role for them. Executive directorships are often crucial posts. If clinicians occupy such posts, concerns might be expressed by whistle-blowing when continuing central diktat distorts clinical priorities, which may lead to unethical practice. It is therefore absolutely vital that the decision on appointment or removal is shared beyond the chief operating officer of the trust. I hope that the Minister will listen carefully to my representation.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I shall deal first with amendment No. 196. We are establishing NHS foundation trusts with a two-tier management structure—a board of governors and a board of directors. It is important for the Committee to understand their roles and the distinction between them. The amendment confuses the respective roles of the two boards and should be rejected.

Hon. Members have mentioned the need to ensure that the organisations can function, and the Government's structure has been designed to enable there to be a wide membership that will elect the board of governors. That body will consult about the forward planning of the organisation, receive its annual performance reports and oversee the appointment of the board of directors, which is to control the organisation from day to day. It is right for us to maintain the distinction between the roles and not to blur those responsibilities. That would make it difficult for the board of directors to carry out the important functions that will ensure the success of the organisation.

We have made it clear in paragraph 13(2) of the schedule that the management board is the body responsible for the daily running of the trust. The foundation trust management board will have a constitution similar to that widely accepted in other organisations. It will have non-executive directors, who are appointed to ensure prudence—

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

Prudence and probity are important concepts for the new organisations.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

May I correct the hon. Lady? I speak as somebody who has been a director, and a member of the management board of an organisation that had a split between the board of governors and the management board. It is not always the case that the non-executives serve on the management board. More customarily, the non-executives serve on the governing body, while the executives form the management board and take the day-to-day decisions.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

I am sure that the hon. Gentleman is also aware of other models of organisation, in which non-executive directors are members. The current structure of NHS trusts enables non-executive directors to bring their unique view to the proper exercise of the management roles of the executive directors. There is a range of organisational models, and we have configured this one as a public benefit corporation in order to ensure that we achieve the right blend of accountability to a public service with the freedoms, flexibilities, innovation and enterprise that we want to see exercised by those on the ground. Bringing the two roles together will create a combination that will drive forward the organisations and improve services.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

The Under-Secretary has touched on an important point. The organisations are likely to end up with three boards. Typically, a major organisation will have a management board made up of senior executives who meet weekly or monthly to review operational issues. It is likely, also, to have a governing board, comprising the chief executive representing the executives, the chairman and non-executive members. If the non-executives serve on the executive board, there could be a further tier lower down, because the executives will not always want to call in the non-executives to management meetings.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

The hon. Gentleman has an unduly restrictive view of the way in which public sector organisations operate. It is my experience that the non-executive directors of many of our trusts are closely involved. They do not simply turn up for formal board meetings. Many of them have substantial roles with specific responsibilities, such as considering complaints or advising on human resources or clinical services. It is not the case that they are merely called in to attend formal board meetings; non-executives have a range of important skills and will continue to act in that way. They do not exist to shadow the executives and second-guess their management decisions, but to be partners in the enterprise. The hon. Gentleman has an unduly restrictive view of the role of public sector non-executive directors that has developed in recent years.

The role of the board of governors is to provide a voice and influence for the stakeholders in the NHS foundation trust—the public and staff constituencies. The governors have rights to be consulted and to receive information so that they can represent those interests effectively and feed back the decisions that have been made to the people who elected them. They exercise influence in the day-to-day management through their powers to appoint the chair and non-executive directors of the NHS foundation trust and to approve the appointment of the chief executive and other executive directors. The structure is representative and democratic, with the members electing the governors, who in turn elect the directors. The amendments would blur that chain of accountability, but we need to maintain clear lines of management accountability and responsibility for each partner in the exercise.

Hon. Members asked whether members would be able to overturn a decision by the board of directors for a major reconfiguration of services, and they referred to the Secretary of State's evidence to the Health Select Committee. The way that the evidence is recorded in the Committee report does not reflect the context in which it was given. I have a transcript of the evidence, paragraph 373 of which contains the question put by my hon. Friend the Member for Leigh (Andy Burnham):

''If the people who own that hospital fundamentally disagree with a proposal put forward by that trust about reconfiguration . . . can those voting members overturn the decision of a trust to reconfigure services in such a way that the public, represented by the voting members, fundamentally disagree? Will they have the power to change policy back in that way?''

The Secretary of State replied:

''I think the simple answer to that is probably yes. The board of governors will have real powers. It is not a tokenistic thing.''

He was talking about the board of governors' ability to influence decisions on reconfiguration. The governors can do that through being consulted about the future direction of the trust, the process for which is set out in the schedule, and through receiving reports about the trust's performance.

I should also draw hon. Members' attention to clause 9, which we will have an opportunity to debate later. Under its provisions, if an NHS foundation trust wants to vary its NHS protected services, the independent regulator can take a view on it. The view of overview and scrutiny committee of the local authority, which can make reports to the independent regulator, must be taken into account. The regulator must also take into account any report from the Commission for Patient and Public Involvement in Health, which will say whether local people were consulted properly.

As I said, the duty in section 11 of the Health and Social Care Act 2001 to consult members of the public properly about reconfiguration will apply, so the system has a series of checks and balances to ensure that any proposals for reconfiguration have been

consulted on and that they include the merits of the services to be provided to the community.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 6:30 pm, 15th May 2003

I want to clarify a point on my previous example of the Exeter and St. Helier trust. If it was a foundation trust and a decision was taken to close one of the two acute hospitals and transfer all services to the other one, who would be the final decision maker? Would it be the board of directors, the governing body, or the membership through some form of referendum?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

If the proposal was from the board of directors, the board of governors would be consulted on it, as it would be in their forward plan. Major reconfiguration decisions do not come out of the blue, so governors would be consulted and able to take a view. The trust as a whole would make the proposal, and if the local authority overview and scrutiny committee decided that it was inappropriate, it could refer it to the independent regulator, who would then decide whether it was an appropriate variation of services under the terms of authorisation. As hon. Members can see clearly in the Bill, there is a series of checks and balances.

If the reconfiguration is not controversial and is agreed, it will proceed as it would under the current system. If the matter is controversial, the overview and scrutiny committee has the power to refer it to the Secretary of State. In future, if the matter is controversial, the overview and scrutiny committee will have the same power to refer to the independent regulator. That is a mirror image of what happens now, but the accountability lies with the regulator rather than the Secretary of State. We are providing for delegation and devolution, so that the organisation can make the decision. That situation is clear, and I will press on.

Amendment No. 131—[Interruption.] I am sorry if the hon. Member for Epsom and Ewell is incapable of reading the various provisions of the Bill, including clause 9. That clause sets out the right to refer a reconfiguration or a proposed variation in services to the independent regulator. That is done when the overview and scrutiny committee—a democratically elected body—is of the view that a reconfiguration is not the correct thing to do. If he is incapable of seeing that as a chain of events, and incapable of reading the Bill, I am afraid that that is his problem, not mine.

I will now move on to amendment No. 131. The Government's arrangements for NHS foundation trusts are designed to increase the involvement, power and responsibility of the community. To ensure accountability, it is important that non-executive directors are drawn from the membership of the trust. Local people would not want just anybody, regardless of whether they were eligible to be a member, to be able to be a non-executive director. Non-executive directors will have an extremely important, pivotal role, and members will, quite rightly, want to know that those people are at least eligible to be members of the organisation, and that they have the right sort of local connections. That is why we reject amendments Nos. 131 and 122, which would open up eligibility for appointment as a non-executive director.

The hon. Member for Westbury raised the issue of having a variety of medical schools on the board. At the moment, that is not specified in the legislation. Under paragraph 12(2), it would be possible for the constitution to provide that various organisations should have membership of the board of governors.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

I made an important point to do with training and the self-interest that corporations might have in not having representatives from clinical schools. I would be grateful if the Minister would address that specific point.

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

Training is dealt with extensively elsewhere in the Bill. Under clause 14(1) and (4), training will be set out in terms of the authorisation of the foundation trust. Under clause 3, the regulator has to take account of the Secretary of State's responsibilities in respect of training in setting up the terms of the authorisations. Training is not a matter simply for the board of governors. It is the very heart and essence of the services that the NHS foundation trusts will provide. It must therefore be regulated in the way that I have described.

Schedule 1, paragraph 7(4) states:

''If any of the corporation's hospitals includes a medical or dental school provided by a university, at least one member of the board is to be appointed by that university.''

That could include representation from other schools, but at least one has to come from the university. Under paragraph 12(2), others could be taken on. I do not think that it is right at this stage to stipulate that there must be a physiotherapist, an occupational therapist, a dietician, and so on. There are 92 professions operating within the NHS and it would be impractical and unworkable to have representatives of all 92. That is not to detract from the very important and vital role that those professions play in the NHS—[Interruption.]

I will come to the point that the hon. Member for Chesham and Amersham raised about the Royal College of Nursing. She is rightly concerned that nursing should be at the heart of the new organisations. This Government have done more than any to raise the profile and status of nursing within the NHS. The advent of nurse consultants and nurse practitioners is a development that we have encouraged. In the early work that is being done by some of the potential NHS foundation trusts, they are considering having on the board between two and four representatives of the various staff groups, from clinical staff and nursing staff to the range of other professions and vital support services that make up the organisation. Nursing is right at the heart of the developments that we wish to see in the NHS. We expect nurses to be well represented in the Government's arrangements for foundation trusts.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Shadow Minister of State (Home Office)

I am grateful for the Minister's response. Will she go further and say whether she will encourage them at executive or non-executive level, or at both, as the Royal College of Nursing has asked?

Photo of Hazel Blears Hazel Blears Parliamentary Under-Secretary (Department of Health)

It is right that nurses play an increasingly substantial role in the executive management of NHS trusts. That practice has

influenced a huge number of clinical developments and policy. We want to encourage the essential role of nursing at the heart of the NHS. It is right that the constitution is proposed at local level to reflect local priorities. I have made it clear that I believe nursing to be pivotal in raising the standard of the NHS and making it responsive to patients. It is often nurses who are closest to patients and who can drive the patient-centred agenda that has been the touchstone of every part of the Government's development policy for the past few years.

On amendments Nos. 179 and 121, the Bill already provides sufficient checks and balances in the appointment procedures. The board of governors will have an important role to play in ratifying the appointment of the chief executive and the executive directors, but it is right that the non-executive directors should appoint the chief executive. That is best practice in the public and private sectors. The joint appointment of the executive directors by the chairman and the chief executive is an unnecessary complication. Appointment of the executive directors by the chief executive is already subject to ratification by the governors of the NHS foundation trust. The amendments unnecessarily augment the system of checks and balances set out in the Bill, which provides a robust and rigorous framework.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

As I said, some of the Under-Secretary's responses are as clear as mud. I repeat my simple question: in a trust with two hospitals that is considering reconfiguration, which group of people is actually responsible for the final decision? Who will say, ''This trust will close Epsom hospital.''? It must go to consultation with local authorities and to the regulator, but which forum in the trust is actually responsible for saying, ''Our decision is to close that hospital.'' Is it the management board or the governing body? That is the crucial question, but the Under-Secretary did not answer it. I hope that she will answer it before the end of the debate. If she does not, that suggests either that she does not know, or that the decision has not been taken and we will end up with a vague system of accountability and decision making that will work against the interests of trusts.

Most of the amendments are probing, as I said. I fundamentally disagree with the Under-Secretary's last point, and am grateful to the hon. Member for Oxford, West and Abingdon, because when I moved the amendment I omitted to make the point that he made about the importance of not simply having a chief executive left to take decisions about personnel alone.

In every major commercial organisation, the role of the chairman and the chief executive together is crucial. The chairman and the chief executive will take key decisions together. Today, the chairman and the chief executive of a trust will take the decision together to appoint a medical director or a finance director, or to promote someone to the board. That is axiomatic: it happens as a matter of course. There can be no reason for the Bill to exclude explicitly the role of the chairman in that appointment. I cannot for the life of me see why Ministers would object to the

amendment, but if the Under-Secretary cannot accept it, I will press the issue to a vote.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. Could I clarify which amendment the hon. Gentleman wants to press to the vote? Is it amendment No. 196?

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

It is amendment No. 121, which refers to the insertion of ''Chairman'' in paragraph 15(3).

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Will the hon. Gentleman say what he proposes to do with amendment No. 196? Does he want to withdraw it?

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: No. 121, in

schedule 1, page 95, line 9, after first 'the', insert 'Chairman and'.—[Dr. Harris.]

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 9.

Division number 3 Adults Abused in Childhood — Schedule 1 - Constitution of public benefit corporations

Aye: 5 MPs

No: 9 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Further consideration adjourned.—[Mr. Fitzpatrick.]

Adjourned accordingly at fourteen minutes to Seven o'clock till Tuesday 20 May at five minutes to Nine o'clock.