Clause 18 - General powers

Health and Social Care (Community Health and Standards) Bill – in a Public Bill Committee at 5:15 pm on 3rd June 2003.

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Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 5:15 pm, 3rd June 2003

I beg to move amendment No. 474, in

clause 18, page 8, line 8, leave out

'which appears to it to be'

and insert 'that is'.

This amendment need not take up more than a couple of minutes of the Committee's time. It seeks to avoid offering opportunities to the Minister's past profession and his former colleagues. The phrase

''which appears to it to be'' seems extremely woolly for a piece of legislation that should be tightly and carefully worded. We cannot see why ''anything'' needs to be subject to interpretation; surely the phrase ''that is'' is an acceptable alternative. It is a minor improvement that we hope the Government can accept.

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

The hon. Gentleman said that the drafting was woolly and unacceptable. I can reassure him that it is taken from legislation that his party introduced.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

That does not mean it is good.

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

Indeed, but it has certainly stood the test of time. Paragraph 16 of schedule 2 to the National Health Service and Community Care Act 1990 states:

''an NHS trust shall have power to do anything which appears to it to be necessary or expedient for the purpose of or in connection with the discharge of its functions''.

It has not had any undesirable or outlandish consequences, and I have no reason to assume that it will on this occasion.

There is one other problem with the amendment. Clearly, someone must decide what is necessary or desirable for the purposes of a foundation trust discharging its functions. Generally, it is better for that to be the responsibility of the organisation's management and governors rather than, as the amendment would require, another body. In this case, that would be the independent regulator. The amendment could be interpreted as requiring every exercise of an NHS foundation trust's function to be subject to individual approval by the independent regulator. That would be ridiculous.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am not sure whether I agree with the Minister's interpretation, but I am grateful for his clarification of the reason for the wording. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Chris Grayling: I beg to move amendment No. 16, in

clause 18, page 8, line 9, at end insert—

'(1A) An NHS foundation trust shall have the power to pay remuneration and allowances to any person without reference to future national agreements on pay negotiated by the NHS.'.

We now go back to a significant point of principle and difference between the Conservatives and the Government. The amendment is designed to provide a foundation trust with the freedom to set its own pay rates. The Minister will undoubtedly talk about the freedom available in ''Agenda for Change'', but I dispute that and challenge the need for any straitjacket to be placed on NHS foundation trust managers who seek to take decisions aimed at enhancing and strengthening patient care.

It is extremely difficult for NHS trusts, particularly in the south of England where housing and other living costs are disproportionately high in comparison with other parts of the country, to secure the staff they need, whether ward nurses, surgical doctors, utility staff or laboratory technicians. There is a huge difference between the financial position of a young nurse on a salary of £18,000 to £20,000 a year in Surrey and that nurse's equivalent in Durham, Scotland, Wales or other parts of the country. The average house price in those areas means that a young couple—a teacher and nurse, for example—who are married or living together can easily afford to pool their salaries to buy a small starter home in the early stages of their career. That is simply not possible in other parts of the country, including my constituency, and too many of our public sector professionals are faced with the task of trying to get subsidised public sector housing.

As the Minister and all Members who represent constituencies in the south of England will know, there is no easy solution. However, trusts in areas of the country with either general or individual staffing issues—the inability to fill one post or the desire to recruit someone with specific expertise, for example—should be able to deploy their financial resources in a way that enables them to secure the skills they need to run their hospital and deliver the treatment their patients expect.

That is the purpose of amendment No. 16. It puts down a clear marker to say that if we are going to have foundation hospitals that are truly free and able to take decisions in the interests of their patients and the communities that they represent, they should not be straitjacketed by national pay agreements that do not reflect the realities of the local labour markets.

The Government are clearly wising up to that fact, and they should take credit for doing so. I do not think that they have gone far enough, but during the Budget debate the Chancellor of the Exchequer referred to the problem and talked about the need to create regional conditions in pay. He spoke about establishing regional retail prices indices to enable the public sector in particular to take more informed decisions about the pay and labour market realities in individual areas.

In response to a question from my hon. Friend the Member for Woodspring (Dr. Fox), the Secretary of State for Health said:

''It is right, as my right hon. Friend the Chancellor of the Exchequer said, that we need to recognise that there are different labour market conditions in different parts of the country.''—[Official Report, 29 April 2003; Vol. 404, c. 142-43.]

To that extent, there is common ground between the Government and us. The difference is in how we would address those problems. The steps that the Government have taken to deal with the situation, predominantly through ''Agenda for Change'' and by saying that there should be a 30 per cent. flexibility ceiling for local employers, are welcome as far as they go, but they do not go far enough. An artificial ceiling is being created that does not need to be there. The figure of 30 per cent. sounds huge, but it is not when one thinks of the salary level of, for example, a junior lab technician in the national health service. Thirty per cent. may be £4,000 a year.

Furthermore, in parts of the country, one can hire a lab technician on a relatively low wage, and in other parts one cannot. In one part of the country, employers may be able to get the people they need for £15,000 or £20,000 a year, but in another part of the country they may need to pay them £20,000, £25,000 or £30,000. That decision can and should be taken locally by managers considering the budgets available to them and saying, ''Look, we have a critical hole in our staffing. This laboratory lacks a key person. If we cannot fill the post, we cannot provide a service, so we need to go that bit further to fill the gap.''

I experienced that directly in my constituency recently. This is a very good example. A lady who was on a waiting list for a bone scan at St. George's hospital in south London had been waiting 11 months for her treatment. Her appointment date was after 12 months. About three weeks before she was due to go in for her treatment, she received a letter from the hospital, saying that owing to chaos in the department over the past few months, the hospital was unable to provide her with the treatment at that time, and offering a new appointment date 12 months further on. That lady will therefore have a two-year wait for that bone scan. The reason is that the hospital lacks key people in the department but, under current NHS pay structures, has no ability to say, ''This is an unacceptable situation. We have to deal with the problem. Let us pay someone more to come in and do the job.''

The Minister knows that any number of skilled professional medical practitioners have chosen to leave the NHS to go into commercial industry or entirely into the private sector, yet we are not giving our trusts the ability to say, ''We need that person back. We will go and get them.'' Currently, national pay and conditions structures preclude that from happening. I accept that the Minister is building in some flexibility through ''Agenda for Change'', although as my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) said in Health questions earlier, the first vote on ''Agenda for Change'', involving radiographers, has gone against

the package, and it is far from clear that the Government will be able to implement that new contract structure.

In reality, we do not need, and we should not need, to place these constraints on our health service managers. There are huge issues at individual locations, where individual posts need to be filled urgently and where patients will suffer quite badly even if only one post goes unfilled. That is why we must give hospitals the freedom and flexibility to say, ''This is important. This is the right use of our resource. We will go out and get that person.''

That is the purpose of the amendment. We want hospital managers to have those powers. An artificial 30 per cent. ceiling is not needed. With regard to the principle of foundation hospitals and managers having freedoms, we have heard how their freedoms to borrow are curtailed and we are now hearing how their freedom to employ staff on their own terms is curtailed. The only freedoms that they really have are to decide who can vote for the foundation hospital boards. We strongly believe that if foundation hospitals are to achieve what they should achieve, this is one of the fundamental freedoms that their management teams must have. We urge the Government even now to think again and give them that freedom.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon 5:30 pm, 3rd June 2003

This is an interesting debate and one that we have not had properly so far, certainly on the Floor of the House, because the Government's position seems to change regularly. However, there is no doubt that this is a difficult area, because a balance has to be struck between the wish to provide independence for this significant part of the trust's turnover and the need to ensure that there is not what the Government sometimes describe or used to describe as poaching, but now describe as a return to competition instead of collaboration. It is a difficult position. The Liberal Democrats are not opposed on principle to local pay, locally responsive pay and, for what it is worth, the resultant pay inflation that will allow the public sector to compete with the private sector in areas where it needs to.

There is not ideological opposition to local pay as there used to be—in the Labour party as well. To an extent we already have local pay in two ways: first, we have cost of living allowances that differ greatly from one area of the country to another. They are not sensitive enough; they are not adequate, but they are different, which means that take-home pay is different, although it is supposed to monitor living costs. Secondly, in the appointment, recruitment and pay of agency staff there is an unregulated local pay situation where nurses often leave the NHS to get a better deal from trust money through an agency.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

Does the hon. Gentleman agree that one of the problems with local allowance structures being set within national pay frameworks is that they can create major distortions within the locality that local management is unable to address? On one side of the London boundary compared with the other, staff

can be paid up to £6,000 a year more in different public services. Local managers do not have the ability to break out of those structures and to remove the distortions that that creates in the local labour market.

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

Clearly, if one were to have a system of local pay, in the ideal world it would be locally responsive for people who can respond to the local labour market conditions and do not have to accept an allowed regional imposition of pay flexibilities or cost of living allowances. In those areas I have some sympathy with the hon. Gentleman. But he did not mention the poaching of staff—although I am sure he recognises the issue—regardless of there being some trusts that can borrow more or keep more of a return from selling assets and other things.

Even within the same sort of provider model some trusts are blessed in inheriting a capacity that means that they do not have to spend over the odds buying in extra capacity through agency nurses or expensive contracts with the private sector. Such trusts will be in a better position and will be able to attract staff effectively because there is not an excess of staff at the moment and it will be some years before there is. They will attract their staff from other NHS hospitals that do not have either the flexibility on resources because the foundation trust has a different provider model, or which, even within the same model, are afflicted with historical capacity problems, whether they be in the acute sector as I have just described or in the social care sector.

If in one area there are not enough nursing homes and much of the capacity is taken up with delayed discharges, the trust will be spending greater resources to open up new beds to replace those that are blocked. That is not really a sign of bad management on its part, yet it will effectively be punished. So we need to find a way out of that dilemma. Its impact will be that struggling trusts will struggle even more because the only way they will be able to compete is to pay inflation that they cannot manage. Those that are already doing well will do better.

I hope that the hon. Member for Epsom and Ewell will recognise that as a threat, risk and problem and will address what he would do to deal with it.

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

I agree that this is an important discussion, to which I hope to contribute in a moment. Does the hon. Gentleman recall that the Minister sought to reassure us the other day that clause 27, entitled ''Co-operation between NHS bodies'', was the primary safeguard to prevent hospitals from bidding against each other and poaching? Is he reassured by that safeguard?

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

No, and I was coming to the Government's position. However, I thought that it would be wise to set out the problem and then to say briefly how we would tackle it. Identifying the problem is not just a matter of saying to the Government, ''Yah boo, your approach is not correct.'' There may be a different way and it may not surprise the Government that our model of local pay involves the ability of local

health service commissioners, who ultimately pay the bill, to be able to raise money through tax-varying powers locally. The hon. Member for West Chelmsford (Mr. Burns) is always surprised and shocked to hear a good idea, but he has heard this one before. [Interruption.] Well, what I would call a good idea and what he thinks and hopes would be a bad idea.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I am still waiting for the policy paper that the hon. Gentleman promised me.

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

I am guilty of assuming that the hon. Gentleman is able to go to a website.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

The hon. Gentleman promised me that he would personally make a policy paper available to me before the recess.

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

I said only if the hon. Gentleman was sufficiently abrasive and nasty and he has been too pleasant. If he carries on, I will give him a paper but he ought to pay as he has huge amounts of outside funding that we do not have. [Hon. Members: ''Withdraw.''] I will not follow that line. I am not withdrawing anything.

The key issue, if there is to be local pay, is that those who pay the bills locally must have the ability to respond to labour market pressures and a competitive environment. There is no denying that if there is flexibility in pay for NHS staff there will be competition in the labour market, especially when staff are in short supply. Local people must have the ability to say, ''We think that it is worth ensuring that we can compete in this area and pay what is necessary to have well-trained, well-motivated NHS staff, based locally, not indirectly employed through agencies, and we need to introduce that system. If we do not, those without resources will get poorer as they will be unable to compete in a more flexible labour market.''

The Conservative party needs to address that fundamental problem. It is not a fanciful suggestion; such things are already happening and we have not heard the Conservatives' proposal to tackle the matter. [Interruption.] The hon. Member for Chesham and Amersham (Mrs. Gillan) says that it is the Government's problem to sort out these matters. It is the Government's problem, but one has to come up with an alternative.

In the interim, we propose having realistic living cost allowances, which many parts of the country do not have at present. That is why many no-star trusts are made scapegoats. They perform badly because they have no capacity. They have the greatest difficulty in recruiting all hospital staff, especially nurses, and staff for the care home sector. The data is clear; the shortage of care workers is greatest in the south-east, in the social care sector and in the NHS. Until the trusts that are struggling have the ability, through the commissioners and their contracts, to increase resources locally, introducing the proposed flexibility will make matters worse.

I now come to the point made by the hon. Member for South-West Devon (Mr. Streeter). The Government say that there will be no poaching and

also that foundation trusts will have the ability to offer more than a neighbouring trust. I have never been able to understand their position on that. I make a genuine plea to the Minister to explain how the proposed flexibility can be used in the present tight labour market—that is a generous way of putting it—without it involving poaching and therefore a breach of the duty not to impact badly on other trusts.

The hon. Gentleman was right to draw attention to clause 27, amending the Health Act 1999, which states that there is a duty of co-operation between NHS trusts and NHS foundation trusts. There is a fundamental inconsistency between Ministers talking in the current pay climate and labour market climate about increased flexibilities to pay more and about a duty of co-operation. I know that the Minister is keen to address those key issues, but I am not sure that he always has the time to get round to doing so. I hope, however, that he will address the issue of how those two statements might match. That is a challenge for all parties, and the Conservative party needs to explain what it would do about non-foundation trusts or about NHS trusts that are simply unable to compete because they do not have the resource base to do so.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

Has the hon. Gentleman considered the fact that the labour market is not so flexible that people simply up sticks and move around ad nauseam? One does not move from one part of the country to another at the drop of a hat. If all NHS trusts were to become foundation trusts, which is what we would choose, surely he would accept that those trusts would be able to provide an attractive framework for all employees and would be more strongly and clearly placed to attract people into the health service, which is the real problem. Does he accept that we are not attracting back from the private sector people who gave up the health service, and we need to make it attractive for them so that they will come back?

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

I do not believe that the private sector will lose all its staff to foundation trusts, especially in the current climate. I have examined this carefully and have found that, generally speaking, if an employer advertises for nurses at a higher rate than the local NHS rate, it will be nurses working in other trusts who are looking to move on who respond. Some people working in these professions are reasonably young. They are mobile and will move for better pay, or better conditions—pay is not the only thing that is important, as has been pointed out several times.

It is not enough for the Conservative spokesman to say that everyone will be on a level playing field if all NHS trusts are foundation trusts, because some NHS foundation trusts would still spend much more than others when buying extra capacity because of capacity constraints outside their control, such as delayed discharges consequent on an inadequate supply of social care settings and domiciliary or residential care at the social services level. In those circumstances, the issue is not about foundation trusts versus non-foundation trusts, although that is relevant to the Bill, but about those people who are in a losing position having no option for raising extra revenue. The policy

that I propose is attractive because it allows commissioners to recognise the problem and to tell the electorate, ''We need the resources if we are to compete and have a well staffed, well motivated and well trained work force, and if you, the local consumers of the service, want such a work force, it must be paid for.''

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

We have had extensive debates during the Committee's deliberations about the role that tertiary centres would play and about the difficulty in defining their constituencies. Where a tertiary centre had sought to take the steps that he described, will the hon. Gentleman explain how it would go about raising taxation?

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

That is a fair question, which the Liberal Democrats have also addressed. We propose the earmarking of national insurance contributions, so there would be regional variations in our national health contribution. We would place strategic health authorities in a democratically elected regional tier with accountable health policies. It is tertiary centres that are planned with strategic health authorities.

I respond to the hon. Gentleman's point because it is important that policy recognises that the tertiary centres—the specialist centres—must also be looked after. He may not agree with the solution, but I hope that he will recognise that we have at least considered the problem.

The Opposition cannot support the amendment without a solution to the problems that I have mentioned. The Government's policy is a mess because it is neither one thing nor the other. With regard to clause 27 and those flexibilities, the Government are trying to have it both ways. When they are criticised by their Back Benchers for ''two tierism'', they point to the duty of co-operation, but when they are confronted by the Conservative party calling for more pay flexibility, they talk up the ''Agenda for Change'' and the 30 per cent. flexibilities as part of their proposal. They say different things to different groups of people, because they are in an impossible situation—[Interruption.] I have been consistent about this. The Minister does do that. It may be said that everyone does it, but with regard to this measure, the Government must outline a consistent approach to solving the problem.

Photo of Gary Streeter Gary Streeter Shadow Minister (Foreign and Commonwealth Affairs) 5:45 pm, 3rd June 2003

I hope to be brief in supporting the amendment, although the debate is an important one. The provision is a litmus test of the true measure of freedoms being granted to foundation hospitals. I can see no reason why a foundation hospital, having set up the safeguards required by the Bill, and having given ownership to local people, set up the board of governors and appointed the non-executive directors, cannot decide the pay levels necessary to recruit and retain staff, to make the organisation effective and excellent in the locality.

My primary motivation in speaking in support of the amendment is the knowledge that I have gleaned from tackling problems on a weekly basis in my constituency. The south-west has very low wage levels,

but very high house prices, and that precludes many people, especially young professionals, from buying their own houses, and means that many organisations in the west country struggle to recruit and retain sufficiently high quality people. If hospitals in the west country are to flourish and attract the right sort of skilled, medical clinicians, we must set those hospitals free to pay what is necessary in that locality to attract that quality of staff.

I appreciate that those issues may not be easily understood by all members of the Committee, and that there are parts of the country where, for example, house prices are still relatively low. I recently went to Manchester, and was stunned that there were streets of houses in central Manchester that were boarded up—they could not be given away. [Interruption.] It is absolutely true. It was in the centre of Manchester six months ago. I was taken around streets—I cannot remember the street names—where at least a third of the houses were unoccupied. People had handed the keys back to the building societies because those houses could not be sold—there were insufficient buyers.

Photo of Andy Burnham Andy Burnham Labour, Leigh

Will the hon. Gentleman give way?

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

I will give way to the hon. Gentleman, as he has more local knowledge, but I can confirm that that is what I saw.

Photo of Andy Burnham Andy Burnham Labour, Leigh

I should be grateful if the hon. Gentleman could tell us where in central Manchester that was. If he has been to Manchester recently, he will find that there has been more regeneration and investment, and that it is probably one of the most desirable places to live in the country.

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

I am grateful for the hon. Gentleman's intervention, but I said that I could not remember the names of the streets. I will consult my diary and get back to the hon. Gentleman if he is particularly interested. It was but six months ago, so perhaps he needs to spend a little more time in his own constituency, to find out what is going on there. My point, however, is—[Interruption.]

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. The Committee is getting rather excited and noisy.

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

In South Hams, where the average salary is £14,000, the average house price is £140,000. Clearly, those sums do not add up for young people seeking to get on to the housing ladder.

What prevents the Government from giving the foundation trusts the freedom to decide what salary levels to set? I know that there is a legitimate concern about poaching. We do not want a health service in which people are perpetually moving from one hospital to another, simply for an extra £500 a year. However, there is a solution other than clause 27, which I was not convinced was a complete safeguard   when I first heard of it. However, perhaps the Minister will persuade me in his response, as I know that he is listening carefully to every word that I say.

It is possible to determine whether salary levels set by a foundation trust are designed to poach staff from competing hospitals in that region or are fixed at the level necessary to recruit the right quality of staff. A trust could produce evidence to show that it cannot attract the right staff at level X, but can at level Y, to justify the salary settings. If foundation hospital trusts can meet that test and prove that they are setting the levels necessary to attract, recruit and retain those skilled workers, they should have the freedom to set salary levels.

It is no good to say that that will give us regional variations. I sit on the Select Committee on Housing, Planning, Local Government and the Regions, and there has been talk about regional variations, but there are variations within regions, too. Decisions on salary levels should be for local directors of the foundation trusts, and I see no reason why that cannot be the case. A lot of money is currently wasted in the health service by paying for agency nurses and stripping developing countries of some of their high quality nurses to bring them over here for high salaries. It would be far better, and much more moral, to allow each hospital trust to pay what it takes in its locality to attract and retain the right level of staff.

I do not see why the Government will not accept the amendment. I will listen carefully to the Minister's response, but I suspect that they will reject it simply because they do not want to devolve too much real power to the hospital trusts. They already have sufficient safeguards, and this is one point on which they should budge: let the hospitals decide how much to pay their staff.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

I rise in support of the amendments. I represent a constituency 35 miles north-east of Westminster, and we as a community are just too far away from London to benefit from the London weighting allowance, although other parts of Essex to the south do benefit. My local hospitals of Broomfield and St. John's, in the Mid-Essex Hospital Services NHS trust area, have some extremely dedicated and first-rate staff, not simply consultants and doctors, but nurses and ancillary staff who, although all-too-often forgotten, ensure the smooth and effective day-to-day running of the hospital for the clinical and nursing staff. There are also professional staff, such as the pathology workers.

One accepts that working in the health service is a vocation, but it is not exclusively a vocation and the levels of pay are far too low considering what has happened during the past eight years, particularly in the past four years, to house prices in the area. As my hon. Friend the Member for South-West Devon said, salary levels are so low compared with the average house prices that there is no possibility of a single person—a nurse, for example—being able to afford to buy their own home on a mortgage, however modest that home might be. Looking through the

advertisements for houses in the Chelmsford area, whether they are for a modest house or a flat, it is difficult to find anything under £100,000.

That is why it is important to introduce a power, as the amendment would, to allow foundation trusts to have some flexibility in deciding remuneration to take into account local circumstances. As the Minister has said, the Government's intention is that in the next four to five years all hospitals will be able to secure foundation trust status. We would have liked the policy to have been unveiled with one step, rather than several steps, to achieve that aim, but we welcome the fact that since announcing their original intentions, the Government have backtracked and agreed that all hospitals can seek foundation status within a relatively short time.

The Minister may say, with some justification, as my hon. Friend the Member for Epsom and Ewell said, that there is already flexibility in the system, but it is not flexible enough for some parts of the country where there has been an inexorable increase in house prices. Two years ago, the Government introduced the cost of living supplement for nurses. It was particularly perplexing to my constituents in Chelmsford that although the county of Essex borders London, Hertfordshire and Cambridgeshire, it was not among those that received the cost of living supplement for nursing staff in the first year, although, if I remember correctly, Dorset, Wiltshire and Bristol were included. The Government took the extraordinary decision to exclude a county close to London, where there had been large increases in house prices and relatively modest levels of remuneration, but fortunately the matter was rectified in the second year. That helped to alleviate the problem, but it was not radical enough.

The Government boast, rightly in some respects, that the concept of foundation hospitals is a way of freeing the health service as primary care trusts have been freed by receiving 75 per cent. of funding to commission care locally. But I wish that the Government would be bolder and take a further step, which is the logical conclusion of their rhetoric and the intention behind foundation hospital trusts. I therefore hope that the Minister will accept the amendment or at least think further about what lies behind it and return to the matter at a later stage or in another place. I hope that he will recognise that the proposal is a way of redressing a significant problem in some parts of the country where the flexibilities that are already in the system do not accurately and realistically reflect what is happening on the ground.

It is genuinely difficult in Essex and the other home counties for a single person working in the health service, especially if they are relatively young and new to their career but want to make progress in it, to find affordable housing, particularly if they want to buy a property on a mortgage rather than renting, and the system is not helping them. As one of my hon. Friends said, those who live in the parts of the country where house prices are much lower are not affected to the same degree as those in the home counties. I hope that the Minister will give the amendment some clear thought and not dismiss it in an instance.

Mr. Hutton: I want to make three brief points in response to the debate, which we have had before. As many hon. Members have said, there is a familiar feeling to it.

An obvious but important point to make about the amendment is that it is preposterous to suggest that NHS foundation trusts should or would even want to have a statutory right to ignore future national pay agreements when the vast majority of their staff will be employed on nationally negotiated terms and conditions of work.

Anyone who sat back and thought about that for a second would realise what an absurd proposition it was that NHS foundation trusts employed staff on those terms and conditions, but that the Bill, once enacted, would say that none the less the employer was specifically entitled to reject any issue arising under those national terms and conditions. That would be ridiculous and needs to be treated with complete derision. It is an absurd proposition.

Secondly, the hon. Member for Oxford, West and Abingdon rightly said that we needed to address this important issue. We have done so in the Bill. We have set out the freedoms that NHS foundation trusts will have. The proposal would not give NHS foundation trusts additional freedoms. They already have significant freedoms to be flexible about how they employ their staff. NHS foundation trusts have the power to employ staff.

The hon. Gentleman says it is right that we should set out our proposals. We have done so. We have our statutory duty of co-operation, which I would not dismiss quite as quickly as he did. We now have a proposition from the Conservative party about how we deal with the proposal: NHS foundation trusts can completely ignore national terms and conditions even though they employ staff on them and will do so under ''Agenda for Change''. That is one way of dealing with the problem, but it is an absurd way. However, we have not heard the hon. Gentleman's way of dealing with the problem. He has tabled no amendments to deal with what he rightly described as a genuinely difficult issue.

There is a certain mythology around the subject that rests on the fundamental misunderstanding that only the creation of NHS foundation trusts will somehow generate unfair competition and the poaching of staff. That is completely untrue. People need to get rid of their rose-coloured spectacles, which have dominated the debate on both sides to a very large extent. Far from being an artificial cap or arbitrary imposition on flexibility, ''Agenda for Change'' deals with the issues in a way that the Opposition have completely failed to understand. It is possible to go beyond the 30 per cent. premia if necessary.

The hon. Gentleman clearly has not read ''Agenda for Change''. I shall send him a copy, which he can peruse at his leisure. I believe that there is sufficient flexibility in it to deal with local problems of recruitment and retention. For the Committee's information, no applicant for foundation trust status

has told my right hon. Friend the Secretary of State that it wants nothing to do with ''Agenda for Change''. I do not anticipate that they will.

We should all get real about the issue. It is a hobby-horse, which has been used on this occasion as a rather crude instrument to attack the fundamentals of the policy. There is a fundamental misconception of the understanding of ''Agenda for Change'' and of the freedoms that the Bill gives to NHS foundation trusts to employ staff. There are no restrictions in the Bill on their ability to employ staff. The hon. Member for South-West Devon needs to have another look at the text of the proposed legislation.

The suggestion is completely misplaced on every count—in the amendment, in the lecture given by the hon. Member for Oxford, West and Abingdon, and in the Opposition's misunderstanding of ''Agenda for Change''. The amendment is not helpful: it was not designed to be. In the hon. Gentleman's correct analysis, it was designed to identify what he regarded as opposites. I do not believe that to be the case.

It is possible, as we have set out in the Bill, to encourage greater local flexibility, to have a better, more transparent national pay system, which we will have with ''Agenda for Change'', and to ensure as far as we can within the confines of the legislation that NHS foundation trusts have the proper approach to these freedoms. It is in no one's interest to have a ''beggar your neighbour'' approach to pay, with one part of the NHS robbing staff from another. That is completely ridiculous. There is a confined labour market; there are shortages in the recruitment of staff to the NHS, which is obvious to us all. However, when considering the proposal objectively or reasonably, one cannot say that the Bill contains anything that will exacerbate that difficulty.

Another canard that needs to be nailed is that NHS foundation trusts will somehow receive a secret bung of cash that they can use to top up pay and poach staff from elsewhere in the NHS. That is completely untrue. [Interruption.] I accept that it has not been suggested in this debate, but it has in others: that NHS foundation trusts will somehow have access to additional resources through the commissioning process. They will not, because of the national tariff and for the reasons that I set out earlier.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon 6:00 pm, 3rd June 2003

I will accept that point if the Minister will accept that in the first instance NHS foundation trusts will be three-star trusts, which generally do not have the capacity constraints or the cash constraints that lead them to fail in the star rating system. It is not the hospitals or trusts with the huge deficits that are the candidates for foundation hospitals. It is not those such as the Oxford Radcliffe, which have spent huge amounts on building capacity. Three-star trusts start with an advantage because of the way in which the selection is made. Will the Minister accept that at least?

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

No, I certainly will not. It is not the case that one NHS trust receives additional or somehow unfair funding or resources that other trusts do not

receive. They are funded on the same basis. It is interesting to consider three-star trusts, for example, and the range of communities that they serve. Some three-star performers are in very deprived areas, serving some of the poorest people in the country, and they do a brilliant job in terms of both clinical outcomes and financial management. The issue is financial management and probity. The way in which those organisations are run makes the difference. Three-star trusts are not given hidden bungs or unfair advantages.

We have been round and round the houses, but there is nothing new in the proposal. There is no reason in principle, and there is certainly no reason in terms of the drafting of the legislation, for the amendments to be acceptable to any of my hon. Friends. For that reason, I hope that they will give them a wide berth.

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

Will the Minister answer this question, which is the main one? How will clause 27 prevent a foundation trust that is short of, say, radiographers—I accept that this could happen already if there were freedom on pay; foundation trust status is not a requirement for it to occur—from advertising radiographer posts at significantly more than the going rate in the NHS in that region to capture a greater number? How will the provision work? If the Minister could explain that, perhaps he could satisfy the concerns expressed by hon. Members on both sides of the House.

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

I have attempted, clearly unsuccessfully, to do that on several occasions. Let me spell out the situation for the hon. Gentleman again. If the actions of an NHS foundation trust jeopardised the ability of neighbouring trusts to exercise their functions in delivering NHS care, it could be in breach of its statutory duty in respect of partnership. The independent regulator of NHS foundation trusts could intervene if that were so. The simple point is that there is a way to try to address the problems. We have tried to strike the right balance between freedoms and flexibilities and the overall integrity of the NHS. It is up to members of the Committee to decide whether that balance has been struck properly.

What is completely bogus about the amendment is the suggestion that NHS foundation trusts would welcome the so-called freedom that it would give them, given that all the bodies are more than content, in view of the progress in ''Agenda for Change'' and the structure of that deal, to accept moving to NHS foundation trust status on the basis of implementing ''Agenda for Change''. There is no desire for the amendment among the applicants or, I believe, in the NHS. It harks back to the old days of the Tory approach to regulating the NHS, which Government Members should not endorse for one second.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am not surprised by the Minister's response, and he will not be surprised to learn that I do not agree with him. I can see no possible benefit in not giving NHS management the proposed power. I am not in the slightest bit surprised that all the foundation trust management teams are not lining up in his office to say, ''Please get rid of 'Agenda for Change'''. That

seems to be a good way of ensuring that one is not on the shortlist to go forward for foundation trust status. I do not doubt for a moment that most management teams, most of the time, would prefer to operate within agreed pay limits, because that takes away work for them. However, that does not mean that they should not have the freedom to set pay rates to meet their local needs. If they decide that the framework that has been created for them is not right for their local needs, they should have the power to adapt what they do to local circumstances. The frameworks that the Government are putting in place to enable these bodies to achieve that are simply unnecessary. Ultimately, they should have the freedom to set pay rates if they need to do so at any future point. I gave the Minister a specific example of a situation in which, frankly, an NHS chief executive needs to go out and headhunt staff to fill a gap.

That said, time is moving on, and I shall not force the amendment to a vote at this time. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 256, in

clause 18, page 8, line 15, leave out 'in England'.—[Mr. Hutton.]

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

I beg to move amendment No. 416, in

clause 18, page 8, line 16, at end insert ', provided that the trust assumes vicarious liability for actions undertaken on their behalf by staff.'

I shall be brief, as I hope for an answer tonight. The amendment was suggested by the Royal College of Midwives in order to deal with a potential problem. The college obviously has an interest in the issue of vicarious liability. The amendment would put a rider on the ability to employ staff. It is a probing amendment.

The Minister will know of the problems in obstetrics and gynaecology and the resulting litigation bill. The question was raised whether foundation hospitals would take on vicarious liability. At present, NHS trusts assume liability for actions undertaken by staff on behalf of the trust. The trust takes out insurance to cover the cost of litigation, which means that the cost of claims does not have to be met by NHS employees. Indeed, the NHS litigation authority takes on responsibility. I checked that question with that authority, but the person to whom I spoke was not certain of the answer. I hope that the Minister will take the opportunity to clarify that there will be no difference for trusts; it would be a significant added burden for them if it was not done automatically, and that would be a risk for the NHS.

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

I hope that I can reassure the hon. Gentleman. The common law already provides that employers are liable for the actions of their employees when acting in their capacity as employees. NHS foundation trusts will not be in a different position to NHS trusts. The amendment is completely unnecessary. The general position is that common law principles are referred to in legislation only when it is

intended to modify them or disapply them. The amendment has no such intention, and is therefore likely to have the opposite effect to the one intended.

I give the hon. Gentleman the absolute assurance that employees of NHS foundation trusts will be covered by the common law duty for vicarious liability in exactly the same way as other NHS employees.

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

Will the relationship between the NHS foundation trust and the NHS litigation authority be the same as it is currently for NHS trusts?

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

Yes. NHS foundation trusts will be able to access schemes administered by the NHS litigation authority in exactly the same way as NHS trusts.

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

In the light of that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 18, as amended, ordered to stand part of the Bill.