Clause 104

Health and Social Care Bill – in a Public Bill Committee at 7:00 pm on 22 March 2011.

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Amendments made: 551, in clause 104, page 94, line 40, after ‘determining’, insert ‘the national’.

Amendment 188, in clause 104, page 94, line 40, leave out ‘, or maximum prices,’.—(Mr Simon Burns.)

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

On a point of order, Dr McCrea, I thought that we were going to have a debate on clause 103 stand part. I did not hear the question on clause 103 being put.

Photo of William McCrea William McCrea Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs), Shadow DUP Leader of the House of Commons

The Committee has agreed to clause 103. It was called before Government amendments 551 and 188 were made. It was clearly put after the debate on Government amendment 187.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

None of my colleagues heard it being called. I thought that the clause stand part came at the end of the debate.

Photo of William McCrea William McCrea Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs), Shadow DUP Leader of the House of Commons

The question was clear that clause 103, as amended, stand part of the Bill, and that was after the debate and decision on Government amendment 187. I am sorry, but it certainly was called, but we have to move on to amendment 612 now.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

I accept your ruling, Dr McCrea, but I assume that, as clause 103 is affected by the rest of the clauses in this part, we can have some debate on it under clause 104. I have put it on the record that Opposition Members did not hear clause 103 stand part being called. I have to accept your ruling, Dr McCrea. [ Interruption. ] If hon. Members want to doubt what we did and did not hear that is fine, but we did not hear it. We heard amendments being moved, but we did not pick up that clause 103 was being dealt with and did not hear the question.

Photo of William McCrea William McCrea Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs), Shadow DUP Leader of the House of Commons

I have no doubt that the hon. Members are genuine when they make that statement. However, the record will show clearly that it was called. I am advised that we cannot go back on it, but the record will show that it was called.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

On a point of order, Dr McCrea. I wonder if you and the Committee might feel that this would be an appropriate moment for us to have a short break?

Sitting suspended.

On resuming—

Photo of William McCrea William McCrea Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs), Shadow DUP Leader of the House of Commons

When we suspended, we about to debate amendment 612. I would like to make a ruling at this time. I believe that Members genuinely did not hear the question on clause 103 stand part, so when we come to  clause 104 stand part, Mr Twigg, you will have an opportunity to raise issues relating to clause 103. It was my responsibility, so if you wish to raise those matters on clause 104 stand part, you are free to do so.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

Thank you, Dr McCrea. It was not just me—one or two of my colleagues also wanted to speak in that debate. That was why I was particularly concerned. I will, of course, take your advice, and I thank you for your ruling.

I beg to move amendment 612, in clause 104, page 94, line 40, at end insert

‘including how capital costs have been taken into account’.

This is a short amendment, but it deals with an issue that the Minister must address. At present, major investment projects are dealt with through regional planning, and normally require PCT and SHA approval. The funds come from either the private sector through private finance initiative schemes, or through the Department of Health granting public expenditure capital dividends under the market system. It is not clear how that will be achieved in future, so it needs to be allowed for in tariff rates. The amendment allows a debate on this important issue, but it is a probing amendment. Although we have to a certain extent already debated strategic responsibility for capital investments under the board clauses, it would be useful to get further information from the Minister.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

I hope that I can reassure the hon. Gentleman. The amendment makes explicit that Monitor will have to include how it has treated the cost of capital when publishing the pricing methodology. It is unnecessary. As the list of things the pricing methodology will cover can never be exhaustive, it is inappropriate to place in legislation, particularly primary legislation, some of the factors to be considered, as they may be seen as having precedent over those that are not included.

When developing a pricing methodology and agreeing it with the commissioning board, Monitor will have to take into account all factors that may affect the price of delivery; that will include how capital costs have been incorporated. I hope the hon. Gentleman finds that helpful and that he considers the matter has now been probed.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 552, in clause 104, page 94, line 41, leave out

‘for the provision of those services for those purposes’

and insert ‘of those services’.

Amendment 553, in clause 104, page 94, line 42, after first ‘the’, insert ‘national’.

Amendment 189, in clause 104, page 94, line 42, leave out ‘, or maximum price,’.

Amendment 554, in clause 104, page 94, line 42, leave out

‘payable for the provision of each of those services for those purposes’

and insert

‘of each of those services’.

Amendment 555, in clause 104, page 94, line 43, before ‘and’ insert—

‘(ca) provides for rules for the variation of the national price of a service according to such aspects of the provision of the service, and such other matters, as are specified in the national tariff,’.

Amendment 556, in clause 104, page 95, line 8, after ‘the’, insert ‘national’.

Amendment 190, in clause 104, page 95, line 8, leave out ‘or maximum price’.

Amendment 557, in clause 104, page 95, line 8, leave out ‘specified under subsection (1)(c)’ and insert ‘of the service’.—(Mr Simon Burns.)

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

I beg to move amendment 204, in clause 104, page 95, line 8, at end insert—

‘(3) Any agreement reached under subsection (2) must be approved by the Board in order to have effect.’.

Clause 104(2) deals with where a commissioner and provider may vary the price of a service. The measure was initially seen in the context of price competition, and our views differ on whether that context remains. However, having made strong arguments, I will not go over that ground again until we debate clause stand part.

Under the amendment commissioners and providers would be able to vary the price only where the national commissioning board allowed it. It would stop the harmful practice of price competition, which we feel has not been stopped by the Government proposals. Commissioners might have attempted to have competition for services based on price, which then hurt quality. Our idea is that the national commissioning board would be able to tell them that that was not allowed.

Under the Bill, it is for Monitor to specify where price variations will be allowed. However, we know that Monitor will be pro-competition and will not have as much expertise on services or on the wider NHS. We assume that the commissioning board will have such expertise and so will be in a better position to judge whether variations of price, if there are any, could harm quality. I would welcome the Minister’s comments on that.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

The amendment would ensure that the NHS commissioning board had to approve all agreements made under the rules for varying the service and/or price specified in the national tariff. It is not needed and would only serve to add levels of unnecessary bureaucracy to the system.

The rules set out in subsection (2) will be legally binding and enforceable by Monitor. If hon. Members feel that agreements might be made that are not in the interests of patients and taxpayers, I assure them that that is not the case. First, the NHS commissioning board will have the lead responsibility for developing the rules under clause 105(9) and agreeing them with Monitor. Those rules, unlike the current system, will be legally binding. The commissioning board will, therefore, not propose rules that may lead to unsatisfactory agreements, so the approval of the agreements made under their rules is unnecessary.

Secondly, Monitor will have the power to enforce the rules, as I have said previously. For those reasons, I do not support the amendment and urge the hon. Gentleman to withdraw it.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

I should like to press the amendment to a vote.

Question put, That the amendment be made.

The Committee divided: Ayes 9, Noes 12.

Division number 74 Decision Time — Clause 104

Aye: 9 MPs

No: 12 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

I beg to move amendment 558, in clause 104, page 95, line 8, at end insert—

‘(2A) The national tariff may also provide for rules relating to the making of payments to the provider of a health care service for the provision of that service.’.

I will be brief, so that the Committee can make progress. The amendment allows for the national tariff to include rules on payments for services. The rules will be transparent and legally binding, with enforcement by Monitor, and will ensure a smoother running of the tariff system. The rules on payments will be used to outline how and when payments for services in the national tariff should be made. For example, the rules might include whether the provider is paid in arrears for services delivered or up front for expected activity levels, with the opportunity to reclaim moneys when the patients treated are less than expected. The provision will enforce rules that must be followed by commissioners and providers with regard to services specified in the national tariff.

Amendment 558 agreed to.

Amendment made: 559, page 95, line 10, after ‘(1)’, insert ‘(ca) and’.—(Mr Simon Burns.)

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

I beg to move amendment 560, page 95, line 11, leave out subsection (4).

Photo of William McCrea William McCrea Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs), Shadow DUP Leader of the House of Commons

With this it will be convenient to discuss Government new clause 16—The national tariff: further provision.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

To help the Committee, I hope to be equally as brief. Amendment 560 offers clarity over how the services in the national tariff can be specified. It also ensures that commissioners and providers can vary the specification of the service and the price only within a transparent rules-based system. Subsection (1) of the new clause allows the NHS commissioning board the flexibility it needs when specifying the services, or currencies, to be covered by the national tariff.

The NHS commissioning board can, among other things, split a service into its components. It could split rehabilitation from a surgical procedure, for example. It  can bundle a service together along a patient pathway. An example of that is the combining of diagnostic testing and treatment to attach one price. The board can group services with similar costs to apply a single price for the group. Therefore, if the treatments for more than one condition are sufficiently similar in cost, they may be grouped and priced together. That is currently done using health resource groups under payment by results. That inclusion makes subsection (4) of clause 104 unnecessary, and amendment 560 removes it.

Subsections (2), (3) and (4) of the new clause state that a national price must be attached to each specification of the services, as laid out in subsection (1), for use in the national tariff. That is to avoid confusion over the national price that will be paid and over what Monitor will apply a price to.

Subsection (5) of the new clause confirms that the provider cannot vary delivery of a service from the specification in the national tariff unless the varied service is also specified, or is allowed under the rules set out in clause 104(2).

Photo of Liz Kendall Liz Kendall Shadow Minister (Health)

I am grateful to the Minister for giving way, as I know that he wants to make progress—as all hon. Members do. Will he say whether the new clause will enable a price to be set across a whole patient pathway?

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

The simple answer is yes.

Subsection (5) is necessary as it creates a transparent rules-based system of national pricing. At present, if a provider can vary the specification slightly from that outlined in the national tariff by only delivering some components of a bundled service, for example, it would be outside the national tariff and subject to local price-setting rules. Subsection (5) is necessary to stop that eventuality, while still providing the flexibilities that will improve the quality and/or the efficiency of care.

Amendment 560 agreed to.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

I beg to move amendment 205, page 95, leave out lines 15 to 19.

Photo of William McCrea William McCrea Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs), Shadow DUP Leader of the House of Commons

With this it will be convenient to discuss the following: Government amendment 192.

Amendment 613, page 95, line 19, at end insert—

‘(6A) A description for the purposes of subsection (6)(b) may not be framed by reference to—

(a) whether the provider is in public or private ownership,

(b) whether the provider is an incumbent or new entrant, or

(c) some other aspect of the status of the provider.’.

Amendment 614, page 95, line 19, at end insert—

‘(6A) A description for the purposes of subsection (6)(b) may not be framed by reference to the costs incurred by a provider in relation to—

(a) taxation, or

(b) access to the NHS pension scheme.’.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

Depending on what the Minister says, we may push the amendment to a vote, but it is initially a probing amendment. Will the Minister explain how the national tariff will be applied to designated and non-designated services? There may be no difference,  but we want to get a handle on that. Will there be a different rate or different conditions, or will prices be constant irrespective of designation? The Bill sets up a risk pool, and providers or commissioners must pay money into a central fund to deal with risk and problems with stability and perhaps even failure. We are worried that that will be an extra burden on NHS services, but not so much on private providers. Again, I would welcome the Minister’s explanation, because we are not clear about the matter. Does the risk pool apply only to NHS providers, or to providers across the piece? It is important to understand that, and I presume that the Minister wants it on the record.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health 7:45, 22 March 2011

If it helps the hon. Gentleman, I will put it on the record now. It is across the piece.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

The Minister may think we are suggesting that things might happen that will never happen, but because of the extra cost, commissioners may decide not to commission a particular service because they would have to find the money from their budget. I am not sure of the extent of that in terms of how often and how much—obviously, the Bill does not include the details—but it could be a disincentive to designating a service. Similarly, I do not know whether a provider might decide not to bid for or apply for a service. We would like more information, because the matter is not clear enough.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

I fully appreciate the hon. Gentleman’s comment that this might be a probing amendment, but I accept that in the light of what I say he might wish to press it to a vote.

These amendments are all related to Monitor’s ability to set differential prices for designated services and in relation to different types of provider. Amendment 205 would remove Monitor’s power to set differential prices for designated services and different providers. That would have a disastrous effect on the NHS system. First, Monitor’s ability to set differential prices for designated services is an important tool to enable prices to be adjusted to ensure the sustainability of designated services. Linked to that, the adjustments will be used to correct unavoidable differences in costs associated with delivery for some providers; for example, to account for geographical variations in wages and the cost of land. We have tabled amendments to make the provision’s use crystal clear.

Similar adjustments are made to tariffs in the current system through the market forces factor to reflect the additional, unavoidable costs that some providers face over others. The provision enables those vital adjustments to continue in the new system. Without that power, Monitor would have to set constant prices across all providers regardless of their cost base. That would lead to huge waste, or a reduction in quality or accessing services. If it is still felt that the power would be used to fund inefficiencies or promote entry among some provider types, I assure the Committee that that is not possible.

For the reasons that I have given, I urge my hon. Friends to resist the amendment if the hon. Gentleman decides to press it to a vote.

Photo of Liz Kendall Liz Kendall Shadow Minister (Health)

I want ask the Minister for clarification. In an area with only one provider—perhaps a rural area—there may be many designated services that cannot be allowed to fail. Monitor will be allowed to charge higher costs in those areas because it must have the extra money to keep services going so that they do not fail. There will be price competition under the system. Commissioners in areas where there are high levels of designated services will generally have to pay more, and that is not a fair and level playing field [ Interruption. ] The Minister looks quizzical in his characteristic manner, but that point was made by the King’s Fund whose briefing says that

“it may mean that commissioners in areas with a large number of designated services will have to pay levies to Monitor for designating services and higher tariffs. This seems unfair.”

“Seems” is their word, not mine.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

Yes, I was looking quizzical. I would like to try to reassure the hon. Lady, although I am not convinced that I will be successful, because it is not often that I can assure her. Regarding higher prices, the commissioning board will set budgets to reflect the circumstances mentioned by her. I hope that has satisfied her.

Photo of Liz Kendall Liz Kendall Shadow Minister (Health)

It was a specific question on that point. The Minister was generous in giving way; I know that is his nature. Will he confirm that budgets in areas with high numbers of designated services will, through the allocation formula, reflect the higher costs? That seems to be what he just said, and I would like to confirm that.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

As I have just said to the hon. Lady, yes. The commissioning board will set the budgets to reflect the points that she has just raised.

Government amendment 192 will make it clear that Monitor cannot set prices based on the ownership of the provider. That means that differential prices can be set based only on other criteria, such as the location of the provision and the complexity of patients’ needs. The amendment does not represent a change in policy intention, only a clarification of our position due to the many misrepresentations that have been made in the area. The amendment on differential prices was thought necessary due to the misconception that it may be used to promote entry by some providers. That is not true, and the amendment will make that clear. The Government have never considered paying certain providers more for delivering the same work under the same conditions, as that would not be a responsible use of NHS resources.

However, we recognise that a one-size-fits-all tariff is not appropriate because there are unavoidable cost differences for providers. The tariff needs the flexibility to pay a higher price for provision in higher-cost areas, such as central London, due to the cost of labour, land and buildings. As I have said, that is an adjustment made under the current system through the market forces factor.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

No, I want to make some progress.

The tariff also needs to be able to reflect the legitimate additional costs that specialist providers incur when treating the most complex patients, and it may also need to reflect the differential costs associated with delivery,  such as the need for some providers to train the future NHS work force. Providers should be compensated for those costs, and pricing may be the best way to do that. When prices are set differently, it will be supported by an evidence base and agreed by the NHS commissioning board under its duty to agree the pricing methodology. The amendment will make it clear that although differential prices may be based on evidence of unavoidable differential costs, it cannot be set arbitrarily for certain types of provider.

Amendment 613 would add an additional limitation to the national tariff’s opportunity to set differential prices. I take this opportunity to thank the hon. Member for Halton for his support on amendment 192, and I will concentrate on the difference between the two amendments, which relates to restricting Monitor’s ability to set differential prices for incumbents and new entrants.

First, in practice, it would be difficult to distinguish between a new entrant and an incumbent, so that part of the amendment would be difficult to enforce. However, we agree with the spirit of the amendment. Our intention has never been to set a differential price to entice new entry or to favour particular types of providers. Instead, it is to pay the same price to providers that deliver the same work under the same conditions.

I again reassure hon. Members that the differential prices will be developed by Monitor, but must be agreed by the commissioning board before taking effect. The organisations will have to ensure that the setting of a differential price helps in the delivery of their objectives and acts in the interests of patients and taxpayers. This ensures that the differential prices act in the interests of the system, and are used to reimburse providers that face genuine, unavoidable higher costs. It will not be used to promote new entry for the sake of it; that would be an irresponsible use of taxpayers’ money. For those reasons I am resisting the amendment.

Amendment 614 would remove Monitor’s ability to set differential prices to cover the costs incurred with differences in tax arrangements and access to the NHS pension scheme. The amendment is disproportionate and restrictive. It is not appropriate for the legislation to specify to this level of detail what Monitor and the commissioning board may wish to look at when considering setting differential prices to reimburse providers for unavoidable differences in costs.

Placing such a list in legislation would also be too restrictive. Even if Monitor did not want to set differential prices now, it might need the opportunity to address these issues in the future for the benefit of patients and taxpayers. As I said, the power to set differential prices is only to be used to reimburse providers appropriately for the work that they deliver to take into account differences in costs arising, for example, from location or the complexity of case that they treat.

We have already tabled amendments to ensure that this power cannot be used to set differential prices based on the ownership or status of the provider. To include a further list is unnecessary and disproportionate. There are sufficient checks in place to ensure this ability is used only as intended. The differential prices must be agreed between Monitor and the commissioning board, which ensures that these adjustments will act in the interests of patients and taxpayers. The price differentials will be transparent and evidence-based. They will also  be open to consultation as they are included in the national tariff document. For those reasons I am resisting the amendment.

For the record, Mr Chairman, as they relate to the amendments we are now debating, I would like to respond to the comments made by the hon. Member for Easington regarding the Government’s impact assessment, as I believe they misrepresent our position and must be clarified for the record. The hon. Gentleman said that the majority of quantifiable distortions work in the favour of NHS organisations, but he failed to set that in its proper context. It is right that the quantifiable distortions, tax, capital and pensions distortions, work in favour of NHS organisations. However, the impact assessment makes it clear that only some of the fair playing field distortions have proved quantifiable through analytical work, and that some of the distortions identified by stakeholders but not quantified are likely to work in favour of private providers. This reduces their costs relative to NHS providers—

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

Well, let me finish.

The impact assessment states in paragraph B56:

“There are some distortions that we suspect significantly penalise NHS organisations relative to other provider types, but are very difficult to quantify”.

For example, table B1 states under “Cross-subsidy in tariffs”:

“NHS hospitals treat more complex patients than private hospitals within any Healthcare Resource Group, as they have to accept all elective referrals regardless of cost/complexity whereas private providers can have referral criteria, choosing who they treat...Large multi-product hospitals must take emergency admissions 24/7, which is perceived to be systematically underfunded, so they use tariff for elective admissions to cross-subsidise the large overheads”.

In summary, the work undertaken to date on a fair playing field does not determine, on balance, whether NHS bodies or private providers are advantaged or disadvantaged, relative to the other, because some of the key factors could not be quantified using information held centrally. The Department of Health is now undertaking a wider piece of work to assess the landscape of NHS-funded providers, and to engage with providers and commissioners on how to support further development of the provider landscape across all sectors.

As I said, it has never been our intention to set a differential price to entice new entry or favour particular types of providers. Instead, we intend to pay the same price to providers who deliver the same work under the same conditions.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health) 8:00, 22 March 2011

I was disappointed that the Minister spoke to my amendments before I had the chance to move them formally.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

I am sorry. I thought they had been moved.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

No. Perhaps the Minister has a hearing problem. It is not a problem; I know that he would not have done it deliberately.

The Minister has covered part of amendment 613. Part of the argument concerns whether Monitor might pay a higher price for new entrants that, by definition, will not be NHS providers, as specified in the impact assessment. It could be argued that that is in line with the duty to promote competition, which is a stated primary objective when setting prices. Even more glaringly, an analysis of different cost bases could be performed, along the lines of the KPMG study in the impact assessment, and a description of the providers could be framed as those who do—or do not—have access to NHS pension schemes, pay tax and so on. Neither of those arguments would explicitly mean paying private providers more just because they are privately owned, but the result would be the same. The Government amendments do not prevent private providers from being paid more in the manner envisaged by the impact assessment; it would simply make what was going on less obvious.

Mr Burns indicated dissent.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

The Minister should not be hurt by that. It is important because he seems to have started to try and quote my hon. Friend the Member for Easington. He is deeply aggrieved by that, because he was making an important point. The impact assessment is an important document that the Minister often says we should read. We do, and we have found even more interesting things to debate on Thursday when we discuss foundation trusts and insolvency. Paragraph B108 states:

“Once the net distortion facing different provider types is better understood, the tariff methodology could be developed in such a way as to move towards a fairer playing field by setting different prices for different providers in order to recognise different levels of implicit subsidies.”

It notes that,

“to avoid compromising the fair playing field from a commissioner perspective, these charges need not be reflected in the charges faced by commissioners of care.”

Will the analysis behind that be published? It would be interesting to read.

Paragraph B55 on page 42 states:

“A recent study of fair playing field distortions was able to quantify the impact of some of the distortions identified. The majority of the quantifiable distortions work in favour of NHS organisations; tax, capital and pensions distortions result in a private sector acute provider facing costs about £14 higher for every £100 of cost relative to an NHS acute provider.”

Does the Minister intend to use that figure to subsidise the private sector? He effectively accused us of fixing the markets, and I would be interested to see whether the Government use that figure in terms of private sector providers. It is a simple question; the Minister can deny it or not.

Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford

Would the hon. Gentleman also expect training costs to be taken into account on the other side of the equation?

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

The hon. Gentleman pre-empts what I was going to say. That does not seem too transparent in the impact assessment, and it would be interesting to have more information about how the assessment and the data behind it were made. In the spirit of co-operation and transparency that the Minister talks about and that we want on this Committee, the hon. Gentleman’s point  is correct. We are concerned that there has been no commitment from the Government to look at the other side of the fence and at the costs of training and education, which are a vital part of the national health service. They are expensive and time-consuming, but essential to providing the service we have. I am interested to hear what the Minister has to say. Will he publish the data behind his assumption, as in the impact assessment? Will the Government rule out paying £14 or thereabouts to private sector providers? The Minister is not replying.

Question put, That the amendment be made.

The Committee divided: Ayes 8, Noes 13.

Division number 75 Decision Time — Clause 104

Aye: 8 MPs

No: 13 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

Amendments made: 561, in clause 104, page 95, line 16, after first ‘different’, insert ‘national’.

Amendment 562, in clause 104, page 95, line 16, after ‘prices’, insert

‘or provide for different rules under subsection (1)(ca)’.

Amendment 191, in clause 104, page 95, line 16, leave out ‘or different maximum prices’.

Amendment 192, in clause 104, page 95, line 19, at end insert—

‘( ) A description for the purposes of subsection (6)(b) may not be framed by reference to—

(a) whether the provider is in public or private ownership, or

(b) some other aspect of the status of the provider.’.—(Mr Burns.)

Amendment proposed: 613, in clause 104, page 95, line 19, at end insert—

‘(6A) A description for the purposes of subsection (6)(b) may not be framed by reference to—

(a) whether the provider is in public or private ownership,

(b) whether the provider is an incumbent or new entrant, or

(c) some other aspect of the status of the provider.’.—(Derek Twigg.)

Question put, That the amendment be made.

The Committee divided: Ayes 8, Noes 13.

Division number 76 Decision Time — Clause 104

Aye: 8 MPs

No: 13 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

Amendment proposed: 614, in clause 104, page 95, line 19, at end insert—

‘(6A) A description for the purposes of subsection (6)(b) may not be framed by reference to the costs incurred by a provider in relation to—

(a) taxation, or

(b) access to the NHS pension scheme.’.—(Derek Twigg.)

Question put, That the amendment be made.

The Committee divided: Ayes 8, Noes 13.

Division number 77 Decision Time — Clause 104

Aye: 8 MPs

No: 13 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

Amendments made: 563, in clause 104, page 95, line 20, after first ‘a’, insert ‘national’.

Amendment 193, in clause 104, page 95, line 20, leave out ‘, or a maximum price,’.

Amendment 564, in clause 104, page 95, line 20, leave out from ‘for’ to ‘pursuant’ in line 21 and insert

‘a health care service provided’.—(Mr Simon Burns.)

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

I beg to move amendment 400, in clause 104, page 95, line 21, leave out from first ‘the’ to end of line 23 and insert

‘public health functions of the Secretary of State, or of a local authority, under the National Health Service Act 2006.’.

The amendment makes it clear that the national tariff cannot cover public health services, which are the responsibility of the Secretary of State and local authorities, rather than of Monitor and the NHS commissioning board. Committee members will note that nothing in the Bill will stop the Department of Health from seeking advice from Monitor on public health pricing, but services commissioned by the Department and local authorities will not be subject to the national tariff.

Amendment 400 agreed to.

Question proposed, That the clause, as amended, stand part of the Bill.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

I will be brief, but I want to put a few points on the record. During the debate on pricing, we heard again how bureaucratic the system is. It needs arbitration, which requires discussion between various bodies in the health service. We talked about distortions in how the Government will try to help out the private sector, possibly even—the Minister did not deny this—by providing a £14 subsidy. The Minister can get up and deny it, but that difference is in the impact assessment. The Government have made a big thing during the Committee about the previous Labour Government fixing the market in terms of independent treatment centres, but while our figures on average were £11, they are talking about £14. They cannot have it both ways, so it would be interesting to know whether that is the case.

Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford

On page 42 of the impact assessment, which indeed states that the distortions add up to £14, no monetary value is placed on cross-subsidy in tariffs, for instance. For that distortion it states that

“non-NHS providers benefit because they do not offer emergency admittance or take especially complex patients”.

No value is in place for that. Does the hon. Gentleman accept that the value for that would reduce the £14 to which he has referred?

Photo of Derek Twigg Derek Twigg Shadow Minister (Health) 8:15, 22 March 2011

The problem is that we have not seen the rationale behind this. I asked the Minister before whether he would provide the analysis and data so that we could examine all this. An important point was made about training and education, and it seems that it is all going one way in the impact assessment. It is all about the private sector and not about NHS providers. I would like the Minister to agree to let us have this information, because it is important to our deliberations on the Bill.

Photo of Dan Byles Dan Byles Conservative, North Warwickshire

I seem to recall that during the evidence sessions Monitor made it clear that it considered this to be an initial, interim assessment, and that it believed that a lot more work was needed, so that was not the final figure. It stated that training and emergency services such as A and E were tipping the balance other way. It also agreed to publish the data when it had done that work.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

Why can the Government not do so?

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

For the same reason that the previous Government never did.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

I am not sure that that is entirely correct.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

It will be interesting to see what Monitor comes up with. The fact remains that there is a figure out there of £14. We would like to understand it better, because it would be very helpful when Monitor publishes its figures to see how its methodology compares with that used by the Government.

Photo of Grahame Morris Grahame Morris Labour, Easington

This is a really interesting point, and I would like the Minister to explain or elaborate on the status of the impact assessment. It seems that where the impact assessment—which I presume is independent—agrees with his arguments, he quotes it, but where it contradicts them he is dismissive of it. It is quite clear. The KPMG study on the fair playing field that was commissioned by the Department of Health was quite explicit about the issues that the hon. Member for Stafford raised a moment ago. I am aware of the Minister’s response about there being a mixed bag—

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

It sounds as though hon. Members do not want to listen to what my hon. Friend is saying. [ Interruption. ]

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

My hon. Friend always makes very valid points, and I am disappointed.

I am conscious of the time. I have mentioned before the issue that the Government never intended price competition. I have already quoted from one of the paragraphs in the explanatory notes, and I bring their attention to paragraph 699, which states:

“These clauses provide Monitor with powers to set prices for NHS services, subject to the agreement of the NHS Commissioning Board, in order to promote competition”.

It does not mention improving quality. I come back to the point that the Minister has raised a number of times that this is about a genuine market and it is about quality; they never said that. I will leave that one there. The evidence, as far as I am concerned—I have now read it on to the record—is that they were intending to do that. I am sure we will explore this with others on Report, but we are not clear on how we can ensure that there is no price competition. We look forward to getting the support of the Government on that, if they are so confident about price competition, although we have seen in the impact assessment that there is already price variation.

I will quote from comments made by the King’s Fund, because it is relevant to other points that we have made. It said:

“The Bill requires Monitor to consider future health care needs but it does not explicitly refer to the link between price and new investment.”

I wanted to touch on this before, but the issue of price and new investment has not been explored by the Government in the Bill. The King’s Fund said:

“In other industries,”— often utilities—

“the regulator has taken a view on future investment needs as part of tariff setting to ensure that revenue is sufficient to improve and expand the capital stock. It is not clear which organisation will be responsible for setting out what these investment needs might be. Within the NHS, the capital budget has been persistently underspent.”

One of the other points it makes is that the Bill does not address the use of tariffs to promote specific objectives. The current NHS tariff—this is an important point—embodies incentives set by the Department of Health to promote quality and reductions in emergency readmissions. Government Members would have it that we never, in any way, commented on quality.

Photo of Grahame Morris Grahame Morris Labour, Easington

This is a really good one, this one, because this is not an academic argument about the importance of distortions; this is a Department of Health document called “The Fair Playing Field Project”. It states:

“The existence of these distortions, whether they favour the NHS or non-NHS providers has serious implications for patient experience and patient safety. Distortions lead to inefficient decisions and practices which in turn inhibit the quality of the service provided.”

This is the good bit:

“They expose the government to risk of challenge under local and EU procurement laws”.

It is our old friend EU competition. It is not a moot point; it is absolutely germane to the issue.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

My hon. Friend makes a powerful point. I hate to repeat the Minister’s comments, but competition law will increasingly apply to the NHS— “increasingly apply” are the words of the Minister himself.

I want to briefly finish on a couple of points. I have not had the time to go through the explanatory notes and see how many references or comparisons there are to the utilities in what the Government are proposing. The Government, upsettingly, say that the NHS will become a utility. The number of references in the explanatory notes to a comparison with utilities is profound. We know which way the Government are going. No matter how the Government try to spin their story on the Bill, it is clear that as time progresses the NHS and its patients will be at the mercy of competition law and the market. There will be price competition and the Bill in no way stops that—it promotes it. It will lead to greater inequalities, a longer waiting list, greater rationing and more of a postcode lottery.

Photo of Simon Burns Simon Burns The Minister of State, Department of Health

I will not detain the Committee for long, but there are one or two things that I want to say. First, however much it may disappoint the hon. Gentleman, we do not want price competition and we have never intended it. It may be unpalatable to him, but he will have to live with it. He has also—I do not want to end on a sour note—played that typical game of an Opposition MP, which is to ask for information from a Government that no Government of any political party would be prepared to publish, because they are internal working documents for devising policy. [ Interruption. ] Oh, the hon. Member for Leicester West has woken up.

The Opposition have kept asking whether we will publish the analysis. We do not accept the £14 figure. Nor, because we do not want price distortions of a deliberate nature that benefit the private sector, do we accept a policy of giving more than the rate we pay for NHS services to independent sector treatment centres, and the Bill will very effectively stop that abuse. We therefore stand by the impact assessment. As I said in an earlier debate on the clause, a more extensive piece of work is ongoing on this issue.

Let me say one thing to hon. Members, because it tickles me. The hon. Member for Halton, no doubt followed by the Greek chorus, has been asking whether we will publish the data and analysis behind the impact assessment, and I have to tell my hon. Friends that that is breathtaking in its gall. The KPMG analysis referred to in the impact assessment was commissioned in 2009, under the previous Administration, which, I understand,  decided not to publish it. The hon. Gentleman shakes his head in disagreement, but to be frank with my hon. Friends, I do not believe he had a clue about that, and it has come as news to him, just as it has to me and my hon. Friends. In conclusion, I urge my hon. Friends to ensure that the clause stands part of the Bill.

Photo of Derek Twigg Derek Twigg Shadow Minister (Health)

It was a good try from the Minister, but the KPMG study informed the impact assessment. The Department has had its deliberations and discussions, and it has the data, so the Minister can publish that—it is up to him. [ Interruption. ] We are not in Government now.

Let me make one final point. On competition and prices, the chairman of Monitor said in a recent BBC interview:

“I wouldn’t go so far as to say that you can never have competition. I think over time it probably will emerge”.

Was he correct? He was also quoted on GPonline as saying:

“I understand why people are nervous about price competition…But over time there will be areas where it is useful.”

There is no doubt that there is a difference between what the chairman of Monitor is saying and the Government are saying in the House.

Question put, That the clause, as amended, stand part of the Bill.

The Committee divided: Ayes 13, Noes 9.

Division number 78 Decision Time — Clause 104

Aye: 13 MPs

No: 9 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly agreed to.

Clause 104, as amended, ordered to stand part of the Bill.