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[Part II]

Health and Social Care (Community Health and Standards) Bill – in a Public Bill Committee on 20th May 2003.

Alert me about debates like this

[Mr. Peter Atkinson in the Chair]

[Continuation from column 276]

On resuming—

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

If amendment No. 75 is accepted, amendment No. 105 would also be desirable as a consequential amendment to provide the Secretary of State with the opportunity at least to object to an application if he had reasonable grounds for doing so, although that is not integral to whether an application can be made. It should be written into the clause that the regulator must have regard to that.

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

The hon. Gentleman proposes that at least the Secretary of State should have a veto. Does he think—I am interested in his views—that the local community in the form of a PCT patient forum or the overview of the scrutiny committee should be given at least the same right of veto over the proposal as the Secretary of State?

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

I confess that I am not fond of vetoes and do not subscribe to them. I note that the hon. Gentleman's amendment No. 246 reflects the same groups of people that paragraph 7.11 of the guide to NHS foundation trusts foresees as having to show that they had undertaken a consultation. I am sure that if the consultation uncovered strongly held objections of substance, the independent regulator would have to have regard to them and could not ignore them.

I am not fond of the concept of vetoes, but I accept the case for a veto for the Secretary of State. It is difficult to contemplate substantial institutions in the NHS no longer being under the control of the Secretary of State, as that would be directly contrary to his valid objections. The objections must be valid, but under the clause, the Secretary of State would control and choke off applications in the first instance.

Who decides who will become an NHS foundation trust? [Interruption.] The hon. Member for Oxford, West and Abingdon gives the correct answer from a sedentary position: the Secretary of State decides. Ministers may have us believe that it is the independent regulator, but I do not believe that. The Bill sets out that the independent regulator determines the nature of the authorisation for who becomes an NHS foundation trust.

My evidence for that proposition is not merely an interpretation of the Bill: the Government have given us the evidence because only the other week on 14 May the Secretary of State for Health unveiled the foundation trust shortlist. He told us which trusts would be permitted to become first-wave applicants. That is fine. I had understood that and it is consistent

with the Bill that the Secretary of State waves people through. In this instance, he waved through 29 trusts. However, I then read the extract on the No. 10 Downing street website. The second paragraph says,

''The trusts will submit their applications by autumn 2003.''

The timetable in paragraph 7.5 of the guide is presumably the September 2003 closing date for second stage applications. I note that the shortlisted applicants were supposed to have been announced in March 2003, but were announced in May. The closing date for second stage applications seems to have been foreshortened by two months to make life easier for the applicant trusts.

The second paragraph of the website says,

''The trusts will submit their applications by autumn 2003. Ministers will then decide which applicants will become NHS Foundation Trusts in April 2004.''

It does not say anything about a regulator. I searched to the end of the column, but it did not appear to say anything about a regulator at all. So, who knows? One finds a reference in the guide to the independent regulator after the second stage applications—the establishment phase—but so far as I can tell the decision is the Secretary of State's, which the Government acknowledge. Ministers will decide who becomes an NHS foundation trust and all the details of how that will be implemented will be left to the independent regulator. That does not seem to be what we are setting out to do, which is one reason why I support amendment No. 75, as others do. My hon. Friend the Member for Epsom and Ewell (Chris Grayling) was right to move it.

Let us get things into proportion. If we are making this a trust-led operation, the trusts should be able to apply. If their applications are being independently scrutinised, let us take the Secretary of State out of the process and make the regulator the person who takes those decisions.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

We are obviously discussing who decides which hospitals will become a foundation trust. As the Minister knows, I have a particular interest in the Royal United hospital, Bath. It does not take a star rating to be able to say that that hospital will not be at the top of the Minister's list of hospitals that will become NHS trusts when it applies for that status. The Minister will rely on what is an inherently flawed system. In an answer to me last Wednesday, his right hon. Friend the Prime Minister demonstrated a lamentable ignorance, if I may say so in all candour, of what the star-rating system was about. The right hon. Gentleman claimed in the House that it was something to do with clinical outcomes. It is not, but if it were, perhaps one would be more inclined to accept the star system as a basis for determining which hospitals will apply for foundation trust status. It is clinical outcomes, not the star-rating system, that matter to patients. Star-ratings manifestly do not reflect clinical outcomes.

I would be interested to hear from the Minister on what basis he will exercise the powers under the Bill. Perhaps he might like to reflect on whether an independent regulator, who would hopefully be divorced from the star-rating system and would

depend on more reliable evidence to determine which are to become foundation hospitals, would be a better arbiter than the Secretary of State.

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

The four amendments are broadly designed to do the same thing: remove the Secretary of State from having any locus whatsoever in the process in which an NHS trust becomes established as an NHS foundation hospital. Amendment No. 246, which was tabled by the hon. Member for Oxford, West and Abingdon, would require the local agreement of a range of parties identified in his amendment before the location can be considered by the regulator.

The issue is simple: does the Secretary of State have a legitimate role to play in establishing NHS foundation trusts? It is crystal clear to me that he does and that he should have the role that we set out in the Bill. I could partly understand the concerns of the hon. Member for South Cambridgeshire about the role of the Secretary of State, if it were Government policy for just a handful of NHS trusts to have the opportunity to become foundation trusts. He might then legitimately argue that to require the approval of the Secretary of State would somehow act as a barrier to the many taking advantage of the things he thinks might be offered to the few. He knows well and true that that is not the Government's intention.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I remind the Minister that his argument is somewhat flawed; that policy is, I suspect, being made up as the Government go along. The original intention, before the Government had a rebellion on their hands, was that only three-star hospitals would be able to apply and seek NHS foundation trust status. It was not intended that all hospitals would be able to do that within five years—that was a concession.

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

I do not want to go down that road today. We have more important and pressing issues to discuss. The provisions in the Bill that require the Secretary of State's approval are not predicated on the assumption that the freedoms are for the few only and not the many. The hon. Member for South Cambridgeshire did not put his argument in those terms, but they are fundamental to his concern that the requirement for approval will act as a stranglehold and an unfair, unnecessary and unreasonable brake on the transition in status from NHS trust to NHS foundation trust. I do not believe that to be true.

Any fair-minded, objective, reasonable observer would say that it is entirely reasonable for the Secretary of State to have the role that we envisage. The primary purpose of NHS foundation trusts is the delivery of NHS services. Under the 1977 Act, the Secretary of State retains ultimate responsibility for the national health service—he is, of course, principally responsible for its funding. The Secretary of State will need to be able to advise on the development and number of NHS foundation trusts. It would be to suspend one's understanding of the real world to say that having given the Secretary of State the statutory responsibility under the 1977 Act of providing a comprehensive, free and effective national health service we should decide now that he should

have no say in the process of delivering those important hospital-based services.

I have the greatest regard for the hon. Gentleman—I keep banging on about that and I promise that that is the last time I say it. Perhaps I ought to bring to an end this elegant courtship developing between he and I. [Interruption.] I was inadvertently wooing the hon. Member for South Cambridgeshire, but I have now stopped doing that—I am all right now, thank you, Mr. Atkinson.

Given the Secretary of State's statutory responsibilities and his responsibility to this House for how NHS resources are used, it is ridiculous to argue that we should not give him any role whatsoever in deciding which NHS trusts should become NHS foundation trusts.

Photo of Andrew Lansley Andrew Lansley Conservative, South Cambridgeshire

That was the point that I made. If the Minister cares to look at amendment No. 105, he will recognise that, in my view, the role of the Secretary of State should be retained—because of his statutory duties, if he has a valid reason he should be able to object to a trust becoming an NHS foundation trust, rather than being the gatekeeper to an applicant in the first place.

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

I apologise to the hon. Gentleman. I thought that he was saying that he supported the amendments that were moved by his hon. Friends. I thought that he said that he supported amendment No. 75.

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

The amendment that the hon. Gentleman tabled—amendment No. 105—makes a slightly different point. He at least acknowledges that the Secretary of State should have some role, which is progress. However, I think that the Secretary of State should be involved at the beginning of that process, whereas the hon. Gentleman thinks that he should be involved at the end of it. A trust will go through all of the expense and consultation that will be required, but the Secretary of State may then say, ''Actually, I object.'' I can no longer say that I have respect for the hon. Gentleman: I have taken a Trappist vow not to repeat that. However, that proposal is absurd and ridiculous. It puts the Secretary of State into the process at the wrong point. He should enter it at the beginning. He has clear statutory responsibilities under the 1977 Act. He has clear financial responsibilities to account to hon. Members in this House on how NHS resources are used. It is absurd that, notwithstanding all those statutory responsibilities, in this place we should say that he should have no involvement whatsoever in the biggest transformation that the NHS will undergo for 50 years.

I say to my hon. Friends who have any concerns about this policy that they should have nothing to do with that amendment. This provision provides the essential balance that needs to be in the legislation. Significant operational freedoms are being created for NHS foundation trusts, but we must have a gatekeeping function and it is located in the right place.

My concern about amendment No. 105 is that it parachutes the Secretary of State into the process at the wrong point. He should be involved in it at the beginning.

My concern with amendment No. 75 is that it is preposterous to say that the Secretary of State should have no interest whatsoever in the process of NHS trusts becoming NHS foundation trusts. Committee members should look carefully at the argument that underlies that proposition and agree with me that the amendment is absurd.

Amendment No. 246 on consultation was tabled by the hon. Member for Oxford, West and Abingdon. We have set out in the guide to becoming an NHS foundation trust a detailed process that we require applicants to go through to attract the support of the Secretary of State. The hon. Member for Epsom and Ewell asked 17 questions about the application process: rather than give him 17 answers, which I would be happy to do, I will simply send him a copy of that guide. Paragraph 7 gives him the answers that he wants. For good measure, I will also send him a photocopy of page 11 of the explanatory memorandum, where the other questions are dealt with. I hope that that will give him some reassurance.

We have made it clear in the guide—particularly in paragraphs 7.10, 7.11 and 7.4—and in everything that we have subsequently said that we will examine whether NHS trusts have the widest possible local support for their applications to establish themselves as NHS foundation trusts. Both the Secretary of State and the regulator would carefully examine the situation if there was significant local opposition: that would be right.

I have one obvious problem with the hon. Gentleman's amendment. I am tempted to leave to one side the way it has been drafted. I do not want to get into that, as he will not press it to a Division; I am grateful because that will save the Committee a lot of time. There is an issue of substance about whether one consultee alone should be able to call a halt to the whole process if they have an objection. Under the hon. Gentleman's proposal, that is precisely what would happen. That is not what we suggest should happen. Clearly we need to look at the results of the consultation exercise. The Secretary of State will make regulations under clause 6 to specify who must be consulted. I have no hesitation in saying that all of the groups that the hon. Gentleman has mentioned will be covered by the regulations.

We have to step back from that and ask whether one local voice, such as a patients' forum or someone else, could say no to the process. That would bring it all crashing to a halt even though everyone else had agreed. I am sure that that is not what the hon. Gentleman intends his amendment to do, but it would certainly have that result. We should not go down that path. We need some flexibility, and the regulations will set out the process of consultation. That will accord with the spirit and the letter of our publications so far.

The hon. Member for South Cambridgeshire asked a rhetorical question. Who decides whether a trust

becomes a foundation trust? Of course it is the independent regulator who makes that decision. Without going into a long lecture on constitutional theory and practice, I should make it clear that what it says on a No. 10 website does not change the Bill. The Bill is quite clear about that. If any amendments were needed I would table them. No such amendments have been or will be tabled.

It is clear that the Secretary of State must approve the application. It then goes to the independent regulator. He will decide, on the basis of the strength of the application, whether to grant an authorisation. He may decline to do so, even though the Secretary of State has supported that application. That is obvious from the Bill. With great respect to the staff at No. 10, I had better row back a little—[Interruption.] Yes indeed, everyone one at No. 10. What appears on a No. 10 website does not constitute an amendment to the Bill. The Bill stands in its present form. We do not intend to change that.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 6:15 pm, 20th May 2003

I am grateful to the Minister for directing me to section 7 of the guide. It has answered some of my questions but it also justifies our amendment. It makes it clear that the regulator plays only a peripheral role in the decision-making process and that right up to the point of the creation of a shadow NHS foundation trusts, he has no involvement and no say whatsoever. The regulator's only participation in this may be to take a proposal that has come apart in the late stages and say that it will not do.

The guide states:

''Success in the second stage will lead to shadow NHS Foundation Trust status. The Department of Health and the Independent Regulator will work with shadow NHS Foundation Trusts to prepare for formal establishment.''

It is clear from that that the regulator will not have a truly independent say about which trusts are suitable for foundation status and which are not. The balance of decision-making clearly lies with the Department of Health. The Minister can read that again, but the guide is quite clear. It states:

''Second stage applications will be assessed by a panel of experts drawn from inside and outside the Department of Health.''

Where is the regulator's role? According to the guide, the regulator cannot input into the process until the decision to create a shadow NHS foundation trust has been established. That is clearly a political decision. The Secretary of State is controlling the decision.

Mr. Hutton indicated dissent.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I shall happily take an intervention from the Minister if he can tell me where in section 7 the guide explains how the regulator is brought into the process at either the preliminary or the secondary stage.

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

The hon. Gentleman must read the guide alongside the Bill. We are considering the Bill. If he reads the Bill it will be quite clear that the regulator determines the success of an application. He is describing the Secretary of State's role in approving and supporting the application to the regulator. The regulator then determines the application.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am sorry to dissent from the Minister's view.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I do not accept that the regulator has freedom to do that. The purpose of the amendment is to remove the phrase

''if the application is supported by the Secretary of State.''

Reading the guide and the Bill together makes it clear that the regulator has a peripheral role in the decision-making process, and that decisions will largely have been taken by the time the issue reaches the regulator's desk. I therefore intend to press the amendment to a Division. I do not support the scale of the Secretary of State's involvement. It is counterproductive, and the Government will live to regret it.

Question put, That the amendment be made:—

The Committee divided: Ayes 7, Noes 11.

Division number 8 Adults Abused in Childhood — [Part II]

Aye: 7 MPs

No: 11 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I beg to move amendment No. 134, in

clause 4, page 2, line 20, leave out paragraph (a) and insert—

'(a) the proposed constitution has effect, but the applicant may exercise the functions of the corporation on its behalf until a board of governors has been elected and a board of directors has been appointed,'.

The amendment would address what we believe is an anomaly in the Bill. I seek clarification from the Minister before deciding whether to press the matter. Clause 4(4)(a) would appear to establish the full constitutional mechanism of the foundation trust, but before the trust is fully established and while the regulator is still considering the application. The administrative implications are significant, and will affect the robustness of the process in relation to the local community.

The provisions of the proposed constitution would give effect to those elements of the constitution that involve the election of the shadow board of governors and the shadow board of directors. It seems that once the application has been put to the regulator, the would-be NHS foundation trust has to set up its membership registers, invite people to become members and go through a recruitment process in the local community. It would seem that they must go through the process of electing a governing body, establishing registers, including a register of interests, and all without knowing whether ultimately they will receive the consent of the regulator to establish trust status.

If the regulator decided that that was not appropriate, the sums did not add up or there was a flaw in the constitution—whatever rationale was given for sending the plan back to the drawing board—considerable expense would have been incurred in establishing the constitutional structures that would be needed without having achieved foundation trust status.

There could be a serious impact on the local community if we were to see mass advertising inviting people to become members of the local hospital, only to discover that an anonymous regulator in Whitehall had said that there could not be a foundation trust in the area. It certainly might preclude the subsequent democratic involvement that would have been the case had the initial proposal been more robust. The implication of the measure is to accelerate the process too fast. By contrast, clause 5(7)(a) says that

''Once the certificate has been issued the proposed constitution has effect, but the applicants may exercise the functions of the corporation on its behalf until a board of directors is appointed in accordance with the constitution.''

It seems eminently sensible that a similar provision should apply to an NHS trust going through the application process. The management board of that trust should have the powers to fulfil the functions of the corporation up to the point at which the application is granted by the regulator. Only then should they start to set in place the full democratic procedures to elect a governing body. That would be a much smoother way of doing things and would remove some of the risks that would be incurred if an application were rejected at the last point. I hope that the Minister, if he cannot accept the specific amendment, will agree to look again at what seems to be an anomaly.

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

The amendment led me to look again at the provisions to ensure that they were operating in the way that we intended. They do, and I shall explain why. The hon. Gentleman has misunderstood the distinction between an NHS trust that is applying to be established as a foundation trust and an application from a non-NHS trust. He is right in that once an NHS trust has made an application to the regulator for foundation trust status under clause 4(4), it is given powers to set up shadow governance arrangements and to do anything necessary to prepare for NHS foundation trust status. However, that is all that it is allowed to do.

The regime for non-NHS trusts applying for foundation trust status is necessarily different. Clause 5(7)(a), to which the hon. Gentleman referred, allows an exception to the constitution in relation to a public benefit corporation. That is necessary, as the new organisation—the application from the non-NHS body to be established as a public benefit corporation—would not be able to exercise any function at all until its new governance arrangements were in place, unless it had the dispensation in clause 5(7)(a). That would be inappropriate. It would mean paralysis for the organisation and it would not be able to take any further steps in preparing for foundation trust status.

We do not need that exception in relation to NHS trust applicants. They already have statutory functions; they are statutory bodies. All that they require are powers to set up shadow governance arrangements. It is not appropriate that an NHS trust should have all the functions of a public benefit corporation before it has been approved and authorised by the regulator and before the constitutional and governance arrangements are in place.

I am sure that the amendment is well intentioned. The hon. Gentleman felt that he had spotted a gap or lacuna in the Bill. However, the exception in clause 5(7)(a) is strictly necessary because, without it, the non-NHS application would be in limbo. It would have been approved as a public benefit corporation, but it would not be authorised to take any action or decisions. That would not be advisable.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am grateful to the Minister for that clarification. It may be that the wording of clause 5(7)(a) is not appropriate for what we are trying to achieve. However, will he accept that clause 4(4)(a), as currently worded, would mean that on the date on which the Secretary of State stuck a stamp on the document and said, ''Go ahead,'' an NHS foundation trust, or would-be NHS foundation trust, would have to advertise for members in order to elect a shadow governing body? If, subsequently, the regulator turned round and said, ''Sorry, you ain't got it right. You are not up to the job, go back to the drawing board,'' the whole process would be fundamentally undermined.

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

If the process was fundamentally undermined and the independent regulator did not approve the application, it would have to come to a stop. However, how do we want things to proceed? It makes sense for there to be a shadow period ahead of the final organisation during which the NHS trust can get on with establishing its constitution and membership base, and choosing its board of governors. If and when the authorisation comes through from the regulator, the trust can immediately begin to function. If things were done any other way, there would be a delay at the end of the process.

The hon. Gentleman is right that there is a theoretical risk that even though the shadow governance arrangements have been established and the exercise has been completed, the foundation trust application might fail at the end of the day. However, that is almost inevitable if the process is to be as smooth as it can be. The governance arrangements for a trust must at some point be established and it is better that that be done at the beginning rather than at the end. Otherwise, there will be another period during which the foundation trusts will not be able to operate in which we envisage. Let us get that arrangement over with at the beginning of the process by establishing the shadow governance arrangements.

The only reason for the exception to that principle in clause 5(7)(a) is because unless we allow an application from a non-NHS body to function effectively as a public benefit corporation ahead of the establishment of governance arrangements it would not be able to take any decisions at all. There

would then be the ludicrous situation whereby there that body would have been approved, but unable to take any decisions. Having had its establishment authorised by the regulator, that public benefit corporation would not be able to make progress and would be stuck in a legal minefield. That is the explanation for the difference between subsection (4)(a) and clause 5(7)(a). I hope that the hon. Gentleman appreciates that. I am happy to write to him further if he has a particular concern, but I also hope that we can make progress.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 6:30 pm, 20th May 2003

I accept the Minister's explanation, but the provisions create an anomalous situation. Let the Minister think through what he said in the context of the Epsom and St. Helier NHS trust, which is my local trust. If that trust decides to become a foundation hospital, it will put forward an application to the Secretary of State and there will be various stages of deliberation in the Department as to whether it is eligible. Let us suppose that the Secretary of State then says, ''Fine, it can go forward.'' The trust then has to advertise in the community for members. There will be a big recruitment push, quite a lot of expenditure on advertising and a lot community-based, because that will be when the real drive for recruitment and involvement in that local hospital will take place. There will be a big push to secure members, who will then be invited to vote in an election for the shadow governing body of the hospital. That will again require considerable expense, a high profile campaign and a lot of visibility in the local community, especially in the earlier stages if that trust is one of the first to apply. There will be an election for positions on the governing body of the trust. That election will be completed and those people will take office on the shadow governing body. Theoretically, the regulator can then turn round and say, ''We don't accept your application. It's not up to scratch and the financial side doesn't add up. Other aspects of the proposals don't add up either, so we don't accept your application. Go back to being a normal NHS trust.'' What message would that send to the community in my area or any other area affected by such a situation?

The proposals are absurd. I understand the Minister's rationale, but the risks are enormous. The process of setting up foundation hospitals would be undermined in an entire region of the country because such a failure as I have described would undoubtedly be enormously newsworthy. The existing, appointed board takes the strategic decision to apply for foundation status and does much of the work to push forward to foundation status. Why is it not then possible for that board to see through the process of establishing foundation status and then have a window in which to complete a full election to the governing body of the trust? Surely that would be more sensible than for there to be the possibility of holding a high-profile local election with lots of candidates and lots people signed up to be participants in their local hospital yet then seeing the whole thing collapse like a pack of cards. Surely the Minister can see that our proposals are a smarter way of doing things and would

remove of a major embarrassment to the Government's programme.

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

Even if we did accept that that would be a major risk and embarrassment to the programme, the hon. Gentleman's amendment would not have the effect he describes. If he wants to do what he has suggested, he needs another amendment to give effect to that.

There is another element to the hon. Gentleman's argument that he has not thought through. He needs to take a look at clause 4(3), because he has misunderstood the process of application. He sees it as a series of big bang moments, but clause 4(3) is an iterative process. Having got the Secretary of State's approval, it is envisaged in the Bill—this rather undermines the hon. Gentleman's case for other amendments—that the application by the applicant can be varied. If the regulator has concerns about the application, it can be varied where there is disagreement. In other words, problems can be overcome by a process of discussion. The scenarios that the hon. Gentleman painted are extremely unlikely.

At the end of the day, a balance must be struck, and a judgment made. We should like the process to begin where it is stated in the Bill it should start—the point at which the application has gone through—so that arrangements can be put in place for the shadow board to be chosen. It is unlikely that the hon. Gentleman's scenario would ever come to pass, first because of the robustness of the process, and secondly because of the way that we have considered and put together the process. There is no once-and-for-all judgment at the beginning. The regulator has ample opportunity in discussions with the applicant to resolve difficulties.

The hon. Gentleman made a good point but spoilt it with exaggeration towards the end of his remarks. We have considered the process very carefully in light of his amendment, but I am satisfied that the process under the Bill is sensible. It is not, as the hon. Gentleman has effectively described it, a Mickey Mouse process.

Photo of Andrew Murrison Andrew Murrison Conservative, Westbury

For my clarity of mind, is the Minister saying that a hospital, having been approved by the Secretary of State, will invariably or almost always be approved by the independent regulator? If that is the case, why have the two authorities?

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

I cannot stand here today and say yes or no to that question. That would put me in a ridiculous position. It is for the independent regulator to decide the outcome of applications—his judgment is what matters. However, the process by which the regulator makes a decision is set out in the Bill. It is an iterative process, which includes a series of discussions before a decision is made.

We do not want a re-run of our previous debate, but it is the regulator's decision—not the Secretary of State's—that counts, and which constitutes the body as a foundation trust. For sake of argument, the Secretary of State has a justifiable interest in the

process—of course he does. The hon. Gentleman will not accept that—he has just voted to remove the Secretary of State from that process—but we won the argument; perhaps we will return to it on the Floor of the House where I have every confidence that we can win it again. I cannot give the hon. Gentleman the answer that he wants—no Minister could—but it is clear in the Bill that it is ultimately the responsibility of the regulator to make decisions. We have constructed a process in which difficulties in the application can be addressed; they can be raised by the regulator and considered by the applicant. That is the best way to avoid the admittedly unacceptable outcome that the hon. Gentleman presented.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

The last few minutes have served to confirm the impression I had from the first moment I read the Bill: much of it is a complete mess. If the problems that I have highlighted today are not to arise, it can only be because the debate that we had previously was well founded: the regulator will not usually intervene to decide one way or the other, and the word of the Secretary of State will be final. If the regulator does have the final say, this potential mess will be made real. I shall not push the matter to a vote, but I place on record that that the Government are creating a problem for themselves. It is no doubt an issue to which we shall return, but I am deeply surprised that Minister cannot recognise the pitfalls. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

I beg to move amendment No. 170, in

clause 4, page 2, line 28, at end add

'subject to the approval of the Commission for Healthcare Audit and Inspection'.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss amendment No. 172, in

clause 5, page 3, line 15, at end add

'subject to the approval of the Commission for Healthcare Audit and Inspection'.

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

The amendments are consistent with our view that there should be less of a role for the Secretary of State and the centre generally, even during the transition period, and more of a role for the Commission for Healthcare Audit and Inspection, wherever that is possible. That is the reason why we are proposing the measures outlined in amendments Nos. 170 and 172, in which we ask that the rights of an NHS trust, effectively in transition, to do what it needs to do should be subject to some sort of oversight and that would best be done by the commission. I do not believe for one moment that the Minister will accept the amendment and it is not my intention to press it to a Division, but I should be grateful if the Minister could explain what safeguards exist for the appropriate conduct of business in the interim period and ensure that there is some oversight for the actions taken at that time.

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

The hon. Gentleman rightly foresees how I shall respond to the amendment, so I will put him out of his misery. He asked about the robustness of the application process. We have discussed that issue and I have nothing further to add to debates that we have already had. He has seen the guide, and the

proposals that we have put forward. He knows that the application process is not just based on the performance, star rating and assessment framework to which he continually alludes, and that the performance assessment framework is not devoid of any reference to clinical outcomes. As the hon. Gentleman knows, 10 clinical indicators are contained in the performance assessment framework—contrary to what he and other hon. Members have claimed today.

The process is robust. We have set it out and debated it extensively in Committee. It would not be sensible to involve CHAI in the process in the way that the hon. Gentleman has envisaged. It is also clear from part 2 of the Bill that CHAI will have an important and continuing role in assessing the performance of NHS foundation trusts. It will be able to bring matters relating to the performance or inadequacy of performance of foundation trusts properly to the attention of the independent regulator. That is its role. That is where it should focus its effort, not at this stage of the process.

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

The Minister is right that none of what he said was a surprise and now is not the time to have the debate that he wants about the clinical nature and the evidence base for the clinical nature of the performance indicators. I am still in doubt about what restraints act in the interim period, either on NHS trusts, which is the main concern, or indeed under clause 5, for any NHS body other than an NHS trust—in the words of clause 4—to do

''anything (including the things mentioned in paragraph 16 of Schedule 2 to the National Health Service and Community Care Act 1990''.

If one looks at the National Health Service and Community Care Act 1990, there is a lot that seems to be necessary or desirable for the purpose of preparing for NHS foundation trust status. I am sorry that the Minister did not take the opportunity to set out the restraints and oversights, and say what actions might be taken by an NHS trust that were claimed necessary or reasonable in order to prepare itself for NHS foundation status.

My argument is that throughout the process, however flawed many people may feel that it is, the priority must be good clinical care of patients and an equitable and ethical approach. What concerns me is the fact that there is an additional licence to an NHS trust to act for the purpose of becoming a foundation trust, which, if there were no additional oversight, would mean that everything would go out of the window in a desperate attempt to gain the supposed freedoms and apparent extra funding that will go along with the status. Clearly, given that the Minister did not address that matter in a way that satisfies me, we may need to come back to this later. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 6:45 pm, 20th May 2003

I beg to move amendment No. 199, in

clause 4, page 2, line 28, at end add

'as long as it does not affect the trust's ability to deliver the goods and services described in its application'.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss amendment No. 198, in

clause 4, page 2, line 28, at end add—

'(5) The applicant trust must not use money allocated for clinical purposes to finance the cost of the application.'.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

The amendments are designed to deal with a simple matter that has already been raised in the debate. I shall not speak at length about them, but I require the Minister's answer. It is clearly important that, whatever happens as part of the process, the loser is not the patient, money is not taken away from clinical services and services are not reduced as a result of the time that will need to be invested in applying for foundation status. However, from where will the money come? Who will pay the bill? Which budgets will foundation hospital applicants use to pay for the cost of application, and how will they ensure that that does not impact on patients and the services that they provide?

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

It is certainly not our intention that the application process should have any negative impact on the provision of clinical services by NHS trusts that wish to become foundation trusts. That would be guaranteed in a number of different, but related, ways. At all times, the Commission for Health Improvement will have a responsibility to look at the performance of the trust; so will the strategic health authority. It will have a continuing role in relation to the performance management of the trust until it is established as an NHS foundation trust, at which point it will cease to have a direct performance management role.

Ultimately, the Secretary of State must ensure that the performance of the applicant for NHS foundation status does not throw the baby out with the bathwater. The answer to the hon. Gentleman's question lies in the common-sense approach that we now take to performance management in the NHS. He is inviting the Committee to agree with the amendment. I imagine that it is a probing amendment designed to ensure that we discuss that matter. I do not think it is a sensible amendment, given its wording.

We have made it clear that we want to provide additional financial support from Department of Health funding to support the application process, which we obviously need to discuss with the applicants. I want to make it clear that that is not a process of reducing the quality of clinical care provided by applicants for NHS foundation status, but of giving them the means and the tools to raise the quality of clinical care. The operational and other freedoms in the Bill will help in that process.

I can give the hon. Gentleman the assurance that he is looking for in that we will be looking carefully at all stages of the application process to ensure that what he has described will not happen. We have the tools that are at present available to the Department of Health because, until the authorisation comes through, matters are still centrally managed. We will have command of the control system. Neither the hon. Gentleman nor I likes that, but the tools will be there to make sure that the mischief that he has identified as

a potential hazard does not occur. I accept that that is a clumsy instrument. The command and control mechanisms of the NHS are clumsy. That is why we need to move away from them. However, they will remain in place throughout the application process, and it is our intention that we shall use whatever instruments and tools exist—together with additional financial support that we will be providing for applicants to help them through the process—to make sure that what both the hon. Gentleman and I want to avoid happening does not happen.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am grateful to the Minister for his assurances. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.