Clause 23 - Failing NHS foundation trusts

Health and Social Care (Community Health and Standards) Bill – in a Public Bill Committee at 6:30 pm on 3rd June 2003.

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Photo of Simon Burns Simon Burns Shadow Spokesperson (Health) 6:30 pm, 3rd June 2003

I beg to move amendment No. 412, in

clause 23, page 9, line 30, leave out 'subsections (3) and' and insert 'subsection'.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss the following:

Amendment No. 407, in

clause 23, page 9, line 30, at end insert—

'(1A) Where a notice under subsection (1) has been issued to an NHS foundation trust by the regulator, the NHS foundation trust may make an appeal in writing to the regulator.'

Amendment No. 408, in

clause 23, page 9, line 34, leave out subsection (3).

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

If the Committee will forgive me, I will deal with amendments Nos. 407 and 408. Although amendment No. 412 comes before the others, it is incidental to amendment No. 407, which is a probing amendment in one respect but which raises an important issue.

Clause 23 refers to failing NHS foundation hospitals. Rightly, the Government recognise that this is not an ideal world and thus there may be circumstances in which a foundation trust fails and needs to be taken over. It would be irresponsible of the Government not to have a clause to deal with such an eventuality. However, I am slightly worried that clause 23(1) lays down the rules and procedures that the regulator should adopt if he is satisfied that an NHS foundation trust contravenes or fails to comply with any term of its authorisation, and so on. It states what the regulator can do by issuing a notice to the trust to take action as outlined in the Bill.

Although that is a logical and reasonable course of action, I am concerned that there does not seem to be any opportunity in the procedures—unless I am mistaken or it has been hidden later in the Bill—for the foundation trusts to explain their actions to the regulator if they feel that it is warranted, or to appeal against any findings or instructions by the regulator. I should have thought it reasonable for a foundation trust to have that power.

The regulator may not agree with a foundation trust, having heard its explanation and justification of why it believes that he was incorrect or unfairly using his powers. However, the trust should have the opportunity to make its case and to try to persuade the regulator that he is wrong; or that it may not yet be the appropriate moment for him to exercise his powers because it has seen the errors of its ways or understood that it must improve its compliance with the original authorisation. I will be interested to hear the Minister's response.

Amendment No. 408 is a probing amendment, because subsection (3) reads:

''The regulator may require the trust, the directors or the board of governors to do, or not to do, specified things or things of a specified description within a specified period.''

I am not a lawyer, but I suspect that that is correct legal terminology and a necessary catch-all expression; I was going to say that it covered a multitude of sins, but that is probably the wrong expression. However, as I do not fully appreciate what the provision is getting at, I should be grateful if the Minister said what are the

''specified things or things of a specified description'' and what is a ''specified period''? Who specifies those things? What restrictions or safeguards are put on the specification, and who checks that the specified things are in order? I am sure that there is a simple answer to those questions, and any lawyers on the Committee

will probably have guessed it before the Minister starts his explanation. However, us humble non-lawyers would appreciate the benefit of his legal training.

Photo of Gary Streeter Gary Streeter Shadow Minister (Foreign and Commonwealth Affairs)

This will be a brief point in an attempt to be helpful. When I first read the clause, I thought that I misread it, so I reread it several times. I thought that it was trying to say something that it is not trying to say; that when a regulator has the opportunity to serve a notice on a hospital trust, he should first serve a notice specifying the breach and giving a reasonable period in which the breach should be rectified. Only then could the regulator move on to use some of the more draconian and incisive powers in the clause.

However, the clause, as I now read it, says that if the regulator believed that a foundation trust was contravening some of its terms and conditions or trust authorisation, he could move straight to serving a notice to remove all board directors and impose interim directors. That might be the appropriate action, but it might also be heavy-handed and too precipitate. Would it not be better to build into the clause an obligation on the regulator to serve a notice to specify the breach and give the trust the opportunity, within a reasonable time frame, for that breach to be rectified before he can move on to the step of intervention as detailed in the clause?

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

Under normal circumstances, the independent regulator will have no reason to become directly involved in NHS foundation trust affairs. However, he clearly needs a range of powers at his disposal to ensure that, if an NHS foundation trust significantly breaches its terms of authorisation or statutory obligations, he can take appropriate action to rectify the situation to protect the interests of NHS patients. The words ''significantly breaches'' are important in this context. Simply removing governors or directors under clause 24(4) or dissolving the trust under clause 25(5)—which would broadly be the effect of the hon. Gentleman's amendment—would be more draconian, to use the term of the hon. Member for South-West Devon, than would be required; nor would it necessarily help to bring an NHS foundation trust back in line with its terms of agreement.

For that reason, the regulator of an NHS foundation trust should have a wider range of powers—these are contained in clause 23(3)—to require the foundation trust to take specific action to remedy the failure. That is also why amendments Nos. 408 and 412 should be rejected.

The hon. Member for West Chelmsford asked me to give an example. The independent regulator might require that, on the basis of a recommendation from CHAI, the NHS foundation trust meet, for example, certain quality standards within a set time period. He might also ask CHAI to carry out additional reviews or inspections. If the amendments have been tabled with a view to ensuring that the regulator does not interfere indiscriminately in the running of an NHS foundation trust, I can assure the hon. Gentleman that

the regulator will deal proportionately and objectively with such trusts. In broad terms, I would characterise the regulation of NHS foundation trusts as light touch. As I said, the regulator's powers to intervene under clause 23 will be limited to where failure is significant.

On amendment No. 407 and the appeal to the regulator, clearly he is under a general duty to act reasonably and proportionately. He will act independently and objectively in his dealings with NHS foundation trusts. Any action that he takes must be proportionate and must take account of all available evidence. Evidence from the NHS foundation trust itself would therefore always form a natural part of his decision whether to intervene. For example, if a CHAI report indicated a potential breach of the terms of authorisation, the NHS foundation trust would have an opportunity to prepare a response that the independent regulator would consider alongside the CHAI report in deciding whether any action was appropriate.

As with the Secretary of State for Health, there is no formal mechanism for appeal against the independent regulator's decisions, but as the hon. Member for South-West Devon knows, the independent regulator would clearly be subject to a judicial review in relation to his decisions.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health) 6:45 pm, 3rd June 2003

I am grateful to the Minister, because I thought he made a significant and helpful point about an adverse CHAI report. I also heard what he said about judicial review, which is the ultimate weapon that one would hope to be able to avoid almost at all costs. Could he have given other examples than CHAI, where the foundation trust would not have an opportunity to make representations to the regulator?

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

I very much hope not because I believe that the process that we envisage would involve the regulator discussing concerns with the NHS foundation trust, sharing the concerns that have arisen from whatever source and clarifying the action that needs to be taken to resolve them. I do not accept that the first port of call would be the serving of a statutory notice to deal with concerns about whether an NHS foundation trust was acting within the terms of its authorisation. That would be an inappropriate way for the regulator to proceed and I do not believe for a second that that is how he would want to act.

In all those cases, I do not want to be prescriptive and produce a list of situations. I am sure that the hon. Gentleman will understand that I am not trying to be coy. I do not believe that in these cases it is terribly helpful. Again, we are trying to give the regulator the tools that he needs to do his job. That is why he needs the general power in subsection (3). However, I want to reassure the hon. Gentleman that the regulator has an overarching duty to act fairly and reasonably: any decision or determination by him that affected an NHS foundation trust could be the subject matter of a judicial review.

Mr. Burns: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 23 ordered to stand part of the Bill.

Clause 24 ordered to stand part of the Bill.