Clause 59 - Conflicts between functions

Health and Social Care (Re-Committed) Bill – in a Public Bill Committee at 5:00 pm on 7 July 2011.

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

Photo of Owen Smith Owen Smith Shadow Minister (Wales)

The clause deals with conflicts of interest. We did not have an occasion last time to talk about conflicts of interest as they relate to CCGs. That was a shame, as that is an area where we see significant conflicts of interest. The conflicts of interests in respect of Monitor are perhaps less significant than those that we would have debated at some length, had we sufficient time to do so during the re-committed Bill’s passage. It is a crying shame that we have not had sufficient time to look at conflicts of interests between clinicians who might be commissioning care from themselves.

When the Government last amended the clause—there is no amendment to it today—they wanted to emphasise the need for Chinese walls, as the Minister put it, between the part of Monitor that will be responsible in the so-called interim period for dealing with foundation trusts, and the part that will be responsible for promoting competition. That prompts a number of questions. First, given that the Minister now seems to think that promoting competition is not really an issue, is the Chinese wall analogy still applicable? I suggest that it is, because I do not think that significant changes have  been made concerning competition. It is absolutely pertinent, therefore, for the Chinese walls to remain in place.

Secondly, the interim period before all the FTs are up and running has now been extended, so it is even more important that those Chinese walls are maintained. The Minister has helpfully confirmed that about 20 trusts are in difficulty of the sort that would currently prevent them from attaining foundation trust status. That only adds to the Opposition’s concerns about the huge weight that will be placed on Monitor in the interim period. It will have to prepare for promoting competition or preventing anti-competition; get all the trusts ready to assume FT status; and oversee their transition to management elsewhere in the NHS. Chinese walls are, therefore, still extremely important.

Mergers also provide clear potential for conflicts of interest. The Co-operation and Competition Panel has been responsible for assessing the importance and impact of mergers between different parts of the publicly funded, publicly owned NHS, and we assumed that Monitor would take a greater role in that. We now know, however, that the OFT will effectively do that, in collaboration and consultation with Monitor. After the transition period, that will be the area with the most acute potential for conflict of interest. In his remarks about this clause last time around, the Minister highlighted two areas that might give rise to conflicts of interest. One concerned Monitor’s main duty, which he described as:

“to protect and promote the interests of people who use health care services by promoting competition where appropriate, and through regulation where necessary. Monitor must also promote the economic, efficient and effective provision of NHS health care services and, among other things, have regard to the need for commissioners to ensure fair access.”––[Official Report, Health and Social Care Public Bill Committee, 17 March 2011; c. 806.]

He went on to say that the gap in fair access, or the potential conflict between ensuring fair access on the one hand and promoting competition or preventing anti-competition on the other, was the big issue. That has not gone away. The clause, in precluding conflict of interest, is relatively weak.

The second area in which the clause is relatively weak, and on which we would welcome greater clarity from the Minister, given his recognition of the significant need for Chinese walls, is how such walls will work when trusts fail. I will paraphrase, I hope accurately, the example given by the Minister: if a trust is failing, and Monitor has a role in engaging with that trust and putting in place the failure regime that we now know will be changed somehow, Monitor must stop itself thinking about its other role of overseeing and promoting competition, or preventing anti-competition.

Unamended, the clause poses real questions. Given that we do not know how the failure regime will work, but that there will be one, will that failure regime still allow Monitor to disapply its principal function on competition in future?

Photo of Owen Smith Owen Smith Shadow Minister (Wales)

The Minister says wait and see. We will, but the clause may need subsequent amendments to reflect the changes that the Minister says will be made  to the failure regime. The Minister highlighted this potential area on 17 March 2011, Official Report, column 806, and said that when the failure regime is being looked at Monitor needs to disapply its competition hat, which means that it must not judge whether a trust is acting anti-competitively or failing properly to promote competition when looking at why it is failing. We may need to return to the clause at a later stage, and I urge the Minister to think about that.

We of course would like to be able to trust the Government on all of the proposals, but had we had a chance to debate the clause relating to conflicts of interest and consortia we would have asked the Minister why the Government refused to accede to the Future Forum’s recommendation to give HealthWatch a job in identifying and dealing with conflicts of interest in consortia. The Government have not had a chance to tell us why they did not agree to that. Despite them apparently being so keen on the Future Forum’s recommendations, they chucked out recommendation 16. If he would like to, will the Minister try to answer that? If not, will he assure us that he will think carefully about conflicts of interest as they apply to Monitor and perhaps return to the clause if it needs to be changed on Report or at any other time?

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

The clause, as the hon. Member for Pontypridd has alluded to, makes various provisions about how Monitor should handle potential conflicts of interest in relation to its functions. Before going into the detail, it may be helpful if I say something about where such conflicts might arise. Clauses 56 and 58 create several general duties on Monitor. As we have already discussed, its main duty is to protect and promote the interests of people who use healthcare services by promoting the economic, efficient and effective provision of such services, and, among other things, to have regard to the need for commissioners to ensure fair access to services for those who need them. In many cases, those duties will be synergic, but, in theory at least, there could be a scenario where the most economic, efficient and effective provision did not deliver fair access. For example, that could be because that access was limited to certain days, times or locations. Hence, this clause creates a general duty on Monitor to make arrangements for resolving any conflicts of interest between any of its general duties. This provision makes it clear that, in cases where the general duties conflicted, there would be no external authority to which Monitor could or should turn to for resolution.

Subsection (2) is about how Monitor would achieve its main role as regulator of healthcare services alongside its continuing roles in relation to NHS foundation trusts. Once Monitor has taken on the role of sectoral regulator, its long-term function in relation to foundation trusts will be that of registrar, keeping basic information and enacting changes on the request of foundation trusts, as set out in chapter 5, part 2 of the NHS Act 2006, as amended by part 4 of this Bill, which we will come to later. That will include, in the short-term only, determining what foundation trusts must include in their annual reports.

During the transition, Monitor will also have functions in relation to authorising new foundation trusts arising from the time-limited intervention powers in clauses 112 and 113. The intervention powers will allow Monitor to  appoint and remove board members of foundation trusts, as is now the case, to allow time for the internal governance arrangements in foundation trusts to become fully effective. Monitor will need Chinese walls, as the hon. Gentleman pointed out during my speech the last time round, in relation to its role as sector regulator and its specific functions in relation to foundation trusts.

Similarly, subsection (3) provides that, when carrying out its competition, licensing and pricing functions, Monitor must ignore the functions that would enable it to intervene in NHS foundation trusts for a limited time period during the transition. That includes ignoring its power to impose additional licence conditions in cases where it considers that there is a significant risk of a foundation trust failing to meet its principal purpose. Therefore, under the subsection, Monitor could not take account of the fact that it was intervening in a foundation trust when considering whether there had been a breach of competition law involving the same foundation trust.

Subsections (4) to (7) cover conflicts between Monitor’s general duties under clauses 56 and 58 that are significant in the ways specified in those clauses. The provision also applies to any other conflicts of interest that Monitor considers are of unusual importance. In all such cases, Monitor must publish a statement setting out the nature of the conflict, the manner in which Monitor has decided to resolve it and the reasons for that decision. It is an important provision in relation to transparency and public accountability.

Taken as a whole, the clause makes provision for real-life conflicts of interest that Monitor might encounter in exercising its functions, and it will ensure that Monitor is clear about how it should deal with them. It will also ensure that there is transparency in cases where there might be significant public interest.

To respond to the comments of the hon. Gentleman, we have not seen the failure regime yet because the Government amendments have not been tabled. We will have to wait until they have been published for us to debate them later in our proceedings. He asked whether, if in that debate it becomes obvious and necessary to amend the Bill, we would be willing to do so. I will not give a 100% categorical assurance that we would amend the Bill, because that would be misconstrued, but if, in the debate on the failure regime, it becomes apparent to the Government that this or any other part of the Bill needs to be changed, I give him that commitment.

The hon. Gentleman asked whether the Chinese walls were still necessary. I hope, from what I have just said, that he will accept that I believe that they are still necessary, which is why we have kept them. He also said, and I want to reassure him on this, that getting trusts ready for foundation trust status would place a huge weight on Monitor. I have to tell him that that is a misunderstanding, because it is not Monitor’s job to prepare trusts for FT status. That will be the job of the NHS trust development authority, so the hon. Gentleman can rest assured that it will not be a huge weight on Monitor, which will be able to concentrate on the duties and functions given to it in the Bill. I hope that I have convinced Opposition Members that the clause should stand part.

Question put and agreed to.

Clause 59 accordingly ordered to stand part of the Bill.