Clause 68 - Procurement relations

Health and Care Bill – in a Public Bill Committee at 2:30 pm on 23rd September 2021.

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Photo of Justin Madders Justin Madders Shadow Minister (Health and Social Care) 2:30 pm, 23rd September 2021

I beg to move amendment 95, in clause 68, page 61, line 32, leave out “health care services” and insert “services required”.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

With this it will be convenient to discuss the following:

Amendment 99, in clause 68, page 61, line 35, at end insert—

“(1A) The regulations must provide that no contract for the provision of the services specified in subsection (1)(a) and subsection (1)(b) may be awarded other than to a relevant authority unless a formal competitive tendering process provided for by the regulations has been followed.”

Amendment 96, in clause 68, page 62, line 1, at end insert—

“(3A) The regulations must—

(a) include the power for integrated care boards to continue to commission the services provided by an NHS trust or Foundation Trust without any requirement for any re-tendering process,

(b) require that, prior to commencing any formal procurement process for a service provided by an NHS provider, where the contract value exceeds a threshold set by the relevant integrated care partnership, the integrated care board must conduct a public consultation and publish the business case for opening the service to a competitive tender process,

(c) require an assessment to be made of alternative ways of providing a service using NHS providers before a contract with a non-NHS provider may be extended or renewed,

(d) be based on the assumption that the NHS is the preferred provider of services, and

(e) require providers to pay staff in line with NHS rates of pay and to provide terms and conditions of employment at least equivalent to NHS terms and conditions.

(3B) NHS England must publish a report each year on the proportion of contracts subject to the regulations which are awarded to each of NHS, third sector, local authority and independent sector providers.

(3C) NHS England and each integrated care board must publish a plan every three years on reducing the provision of NHS services by private providers and increasing the capacity of NHS providers to provide those services.

(3D) Integrated care boards must publish, in full and without any recourse to commercial confidentiality, all—

(a) bids received for contracts,

(b) contracts signed, and

(c) reports of routine contract management.”

New clause 12—NHS as the preferred provider of NHS contracts—

“(1) The NHS is the preferred provider of NHS contracts.

(2) NHS contracts must be provided by NHS suppliers unless the NHS supplier is unable to fulfil the terms of that contract.

(3) Where the NHS is unable to fulfil the terms of a contract, a competitive tender must be held to identify an alternative provider.

(4) For the purposes of this section—

(a) ‘alternative provider’ means private companies and independent sector treatment centres, and

(b) general practice and GP-led community services are NHS suppliers.”

This new clause would establish NHS suppliers of services as the preferred providers of NHS contracts. Independent sector providers could hold NHS contracts after winning a competitive tender.

Photo of Justin Madders Justin Madders Shadow Minister (Health and Social Care)

It is a pleasure to see you in the Chair this afternoon, Mr McCabe. We have arrived back at the start: the need to end the bureaucratic, expensive and ultimately corrosive requirement for compulsory competitive tendering for health services, which led the drive from NHS England and its former chief executive to first ignore the Lansley Act and ultimately push for its repeal. It turned out that trying to implement the requirements of that Act gave rise to all the problems the Opposition foresaw a decade ago.

Has the Minister seen any impact assessment of the benefits to the NHS of removing the requirements? Is he able to give us a total amount of the cost to the NHS of this folly over the past decade? Is he able to quantify exactly how much public money has been spent on lawyers and consultants going through all the hoops that were laid down by Lansley? I am not just talking about the extra work in putting the contracts out to tender in the first place, never mind the millions that will have been spent on defending and justifying decisions taken from disappointed bidders, which is a big part of it as well. Let us not forget that, as a result of that legislation, we had the obscene spectacle of the NHS being sued by Virgin Care. That certainly was not one of the benefits trailed by the Government of the time back in 2012.

This clause could be called the “we told you so” clause. It could be, putting it more charitably, the “benefit of experience” clause. It could also be called the “baby with the bathwater” clause, because although the end of competitive tendering is to be welcomed, what is now lacking are the necessary safeguards to ensure that what follows is done to high standards and does not replace one flawed approach with another. That is important because as things stand the Bill just says that regulations may be made on procurement. That is just not good enough. I am referring to the need for us to be clearer and firm on this, because of a string of dodgy contracts issued during the pandemic under emergency powers.

I want to draw the Committee’s attention to a few of the key findings of the National Audit Office report on this matter to highlight that this is not just some flight of fancy, but a consistent characteristic of how the Government have operated during the past 18 months. The NAO found

“examples where departments failed to document key decisions, such as why they chose a particular supplier or used emergency procurement,”

They then compounded that error by failing to

“document their consideration of risks, including how they had identified and managed any potential conflicts of interest.”

Those are not minor issues; they are fundamentals that go to the heart of what we want to see from the Government. We want higher standards of probity; we want the Government to be free of accusations of cronyism; we want to ensure transparency; and we want to ensure value for money. I would like to think that all Members would support such aims, which is why they ought to support our amendments.

Amendment 99 sets a very clear baseline that no contract under this clause can be awarded to anyone

“other than to a relevant authority unless a formal competitive tendering process provided for by the regulations has been followed.”

As so many said then and say now, there is no evidence that competition among providers of healthcare in the sense of a market has had any benefits. The requirements for a market function simply do not apply to healthcare. As was pointed out a decade ago, competition for services, as opposed to buying consumables such as tomato ketchup or cream pies, requires at least three things: an ability to specify in some kind of contractual way what exactly is being purchased; existing multiple providers of the service so described who are willing to sell it; and, crucially for healthcare, the service has to have high independence from other services, so that any failures have minimal impact.

There were some interesting contributions from witnesses in our evidence sessions on the benefits or otherwise of the 2012 regime. Saffron Cordery of NHS Providers said:

“one of the things that we really need to look at is the effectiveness of the current contracting regime, which for certain parts of the provider sector in particular is incredibly burdensome…If you sit in a mental health or a community trust, you are subject to a whole host of retendering, which can have a potentially far-reaching impact on your trust’s sustainability or the future operation of key services.”––[Official Report, Health and Care Public Bill Committee, 7 September 2021; c. 53, Q66.]

The attempt to drive a market into our NHS was perhaps the worst policy mistake of the current era, yet the warnings were all there. They were just brushed aside by a determined coalition Government. I am tempted to say that the Minister should listen to us this time, even if his predecessors did not a decade ago. The healthcare system with the highest level of market design is in the USA. It is also the worst-performing and the most expensive. The US may have some of the very best healthcare, but it is for a very, very tiny minority, and the price for that is paid by everyone else. Why would we want to emulate the worst?

We do not shed a tear for the end of this era. We welcome the new era of provider selection. The provider selection regime comes not from the Bill, but from an NHS England document that is mostly benign, but does give scope for improvement. We will, of course, need the Minister’s views, because the regime will be defined in regulations, and any guidance issued by NHS England will, as usual, require the Secretary of State’s approval.

The NHS provider selection regime proposal allowed for three scenarios, only one of which leads to a competitive procurement. One allows for the continuation of existing NHS arrangements, and the expectation is that that will be by far the most common route; we certainly hope that is the case. The second allows for a new or changed service to be placed with a provider, without any competitive tendering where there is only one possible viable supplier. The third scenario is the competitive tendering process. As ever, that is where the devil will be in the detail and where there is perhaps a requirement for the Minister to address some well-articulated fears.

Of interest is the proposal that the regime would be bespoke and would sit outside any formal Government procurement rules. Can the Minister confirm that my understanding of that is correct? If it is, perhaps we could call these the Argar accords. It is also contended that the NHS bespoke approach would make it impossible to include the NHS in any trade agreements; at least, that is what is claimed in the NHS document, which does not appear in this Bill. Again, if the Minister can confirm that, that would be welcome.

The old claim was that we could not protect our NHS because of the nasty EU being in the way. Now that we are no longer in the EU, we can have whatever procurement rules we want. If we want the NHS to be the preferred provider, that is fine. However, it is worth noting that Scotland rejected any suggestion that the EU was some kind of obstacle to a bespoke procurement regime a long time ago—the EU appeared to agree, or at least it did nothing to stop Scotland doing what it did. Like so many things that originated from the EU, the rules are quoted in support or against something only when that coincides with a Government position.

We hope that the brave new world that we are in means that the NHS can be protected from trade agreements and rules imposed from outside the country. It also needs to be protected from the Government themselves and the newly emerging fashion for cronyism and the awarding of contracts to friends and family, without proper process. If the NHS is going to award contracts for services funded from the NHS to non-NHS bodies, there will have to be a far more robust system than we the one have at the moment, not a weaker system. The best guarantee of that is enforceable rules, backed by full openness and transparency.

Our approach is straightforward and summarised in a few principles that need to be applied. We hope that this discussion and the amendments will assist the Minister and the Secretary of State in coming up with an eventual regime that works for the public and patients, and not for private interests.

We support the public NHS—an NHS where the services required are predominately provided by the NHS or other public bodies. We believe that any lack of capacity in the NHS to deliver should be addressed by investments, not by short-term cuts and contracts with private providers. There have been various pieces of analysis of the level of private provision in clinical services in the NHS, which some put at around 25%. A better analysis would be of value, and we ask the Minister to commit to undertaking some kind of impact assessment on the level of private provision two years, say, after this Bill becomes an Act—probably just in time for the next reorganisation.

Some think-tanks have urged caution, in that they would not like the NHS to be an monopoly supplier in a manner that curtailed innovation or the spread of best practice. That is a legitimate issue, and there needs to be some consideration, as with the introduction of the wonderful best-value regime 20 years ago, of how best to keep the service under review and to encourage innovation.

We dispute, as others did in 2011, that the private sector somehow has a magic that it brings to the table. Most of our private providers now get their income by supplying the NHS, using NHS staff and working to NHS standards—hopefully at NHS prices. That makes very little sense in terms of where the innovation and magic comes in. The only innovation would be an increase in private investors’ profits. So we do not think that is the route we should be going down in terms of provision. We would argue for an increase in NHS capacity, so that there is no need for reliance on the private sector.

Private providers should provide private health care. As we have seen in times of major need, they might also have to assist the NHS with additional capacity. I have sent the Minister many written questions about the private sector assistance provided during the pandemic, but I do not believe—he will correct me if I am wrong—we have ever got to the bottom of how many procedures were performed on NHS patients by the private sector in that time. As we know, very large contracts were handed out, and it is difficult to see exactly what has been received for them, so we do not know whether value for money was achieved and we cannot ascertain the average cost of each procedure. I am sure the Minister would like to be reassured that best value was achieved. Even if he is not interested in that, the Opposition certainly are. Will he update us on where the investigations are up to on that?

We suggest an approach rather like the preferred provider approach from 2010, where the NHS provides a service unless there is a good reason why that should not be the case. That appears to have caused no problems at all in Scotland or Wales, which went that way many years ago. However, all services should be reviewed so that poor service is not tolerated just because it is publicly provided. Good performance management and early intervention and support should still be the recourse when any public service is beginning to become unsatisfactory. The answer is not to find a private provider to take it over.

This is a simple enough idea. Core NHS services—clinical services and those associated with them—defined in clause 15 should be provided in every area by the NHS itself. They should not be outsourced or privatised. If a service is performing poorly, it should be supported and improved, not sold off to a for-profit alternative that promises the world and delivers very little.

It is important to note that new clause 12 does not provide for goods and services. The NHS does not have to do its own construction, but in-house maintenance and construction might be cheaper than paying someone £200 to change a lightbulb, as we have seen in some of the private finance initiative contracts. The NHS does not have to build its own servers or manufacture its own personal protective equipment, but Northumbria Healthcare NHS Foundation Trust used local businesses to produce PPE. The NHS does not produce drugs, but Colchester has its own production unit for some short-life products. However, we should not let those examples distract us from the core argument about what the NHS should do and what it might do.

Innovation, service redesign and new care pathways should come from within the NHS. The idea of putting out a tender for innovative solutions has failed totally on at least three procurements: cancer and end-of-life care in Staffordshire; the collapse of the £750 million Cambridgeshire older people’s services contract eight months into a five-year term, which was also the subject of a National Audit Office report; and, of course, Circle at Hinchingbrooke. That NHS hospital, which had struggled for many years, was run by Circle. It was claimed that that was a great step forward—up to the point when it all went wrong, Circle walked away and the NHS had to step back in. We have had numerous failure regimes that have tried to find ways to improve NHS performance, but none was based on the new logic of collaboration and competition across the patch.

We have also had competition for the whole market. We saw Virgin awarded a 10-year contract to deliver a whole range of community care services in a defined area, which turned supposed competition into another form of monopoly. That was the worst of all words, and that is where change is vital. If the NHS cannot outperform Virgin Care over any period of time—let alone 10 years—something is very wrong and needs fixing. That might be through investment, better management or more intelligent commissioning, but that must be the preferred approach.

We have also seen the wholesale outsourcing of services to the likes of Serco and Group 4 in areas such as ambulance patient transport and a lot of cleaning, catering and cooking. Again, the Health Service Journal has many stories about what goes wrong there, such as the Coperforma contract for an ambulance service based in a barn that failed to get its patients to critical appointments. We need to see an end to the dodgy subcontractors that undermine proper scrutiny and decent terms and conditions.

The preferred provider is therefore the right approach. It does not rule out alternative providers; it just says what our preferred solution is. That does not mean a free pass in all NHS trusts for all services—they should always be under appropriate performance management and review—but occasionally a provider may wish to exit from some service. Equally, commissioners who channel the money to the trusts have to monitor delivery against requirements and will flag up early any concerns.

Where a service cannot be provided by a public body because the capability or capacity is not there, or could not be available soon enough, there has to be an option to go beyond the NHS itself—it may also be that an existing NHS provider has been shown to be unable, despite support, to provide what is needed. That has always been the case and some services have been provided by the private sector, for well-established reasons.

We should give proper consideration here to the huge contribution made to the NHS by the many small, and a couple of larger, voluntary and social enterprise organisations. We would like to see in the new regime an explicit statement about the value of the third sector. There should be a specific process that allows not just for grant funding of the voluntary and social enterprise partnerships, below some sensible threshold, without any complex onerous requirements being applied.

If a contract was to be awarded to a third sector organisation—again, below a sensible threshold—that could be done without full competitive tendering. When we get to larger-value contracts, we are then dealing with large third sector bodies and they cannot be exempted from proper scrutiny and should not be treated differently from a private organisation, except in so far as social value can be part of the assessment of the bid. Does the Minister accept that there is an argument for some special consideration and possible encouragement for the third sector?

More generally, if a proposed service has some features that require a provider other than the NHS, it is possible that only one provider can meet the requirements and so a competitive process is pointless. If this route is decided uon, the commissioner involved has to publish the evidence that justifies the decision. But again, no competitive tendering would be required or indeed helpful, so some other form of rigour, perhaps with some external scrutiny, ought to be included. So the third way is the one where tendering comes in.

In such cases, there has to be a rigorous regime, at least as good as the public contract regulations—not only to protect the NHS, but to protect bidders from any unfair award. A level playing field should apply to all. Can the Minster confirm for the record that no contract above a reasonable threshold that is to be funded from the NHS will be awarded to any non-NHS body without a proper open and transparent process, which must include publishing the proposal to do this and allowing for representations about the intention?

What we absolutely cannot have is anything like the suggestion being made by, among others, the British Medical Association: that contracts will be awarded without process, as we seen in the past 18 months. In this case, a full competitive tendering process should be used that is at least as robust and fair as the public contracts regulations. The only thing that needs to go beyond that is more clarity about openness and transparency. We start from the principle that everything is in the public domain; if a provider does not like that requirement, it is free not to bid for the contract.

On the actual tender evaluation process, the rigour of the public contract regulations is invaluable. The criteria for awards that used to be the most economically advantageous had a lot going for them, so long as the economic value had the wider context and social values intertwined. Does the Minister agree that more thought needs to go into the provider selection regime to allow for better decision making?

All aspects of provider selection, as well as provider performance management, should be open and transparent and not subject to any commercially confidential opt-outs. Well-established rules about what could be disclosed and when in any contracting are usually ignored by secretive NHS organisations, as we have found on various occasions in the past few years. It is also noted that the proposals in the Bill only refer to “clinical” services; we wish to see various scope extensions. Sara Gorton of Unison talked in her evidence about

“how important the whole-team—the one-team—approach had been during the pandemic and how crucial that had been to tackling the spread of the virus and the work that the NHS had done. We think that principle should be extended and placed in the provider selection regime as well.” ––[Official Report, Health and Care Public Bill Committee, 9 September 2021; c. 89, Q113.]

That does leave us with the “any qualified provider” strand of procurement to consider, which has been applied to many out-of-hospital services. It is assumed that these are or could be in scope, but we hope the Minister will provide clarity when he responds. Will “any qualified provider” still apply and how does it fit into and sit alongside the new provider selection regime?

One major requirement from us is extending the scope further than the Bill to include those services such as cleaning, catering and portering, which are often referred to as soft facilities management and not classed as clinical, but which have a significant impact on patient experience. We often forget that without the porters, the cleaners and the caterers, none of the frontline patient experience is really possible. They are as much NHS heroes as the doctors, nurses and paramedics. Sadly, that is not always recognised. One of the less commendable NHS activities in recent years has been the attempt to outsource non-clinical services, usually for tax advantages. We support the one-team approach referred to by Unison, not the fragmentation and denigration of parts of the team. Will the Minister be positively inclined to include those services in regulations?

We should also be careful about packaging up services into a product that forces a tendering process because it is not clinical. Does the Minister agree that a service that includes any clinical elements must be regarded as in scope? As I understand it, there is a danger at the moment that a contract that was in fact 95% clinical could still be covered on the basis that only 5% of it was non-clinical. That certainly would not be in keeping with the spirit of what we think the Bill should try to achieve. If we cannot persuade the Minister to extend the scope to cover non-clinical services, there ought to be at least some protection for NHS staff.

We have seen numerous examples over the last decade of back office or other non-clinical services being outsourced. Trusts that do that sometimes refuse to disclose their business case and fail to honour the requirement for a level playing field by excluding the staff from making their own bids to deliver the services, and also by excluding solutions such as shared services. That is an abuse of the proper procurement process and is a loophole that should be closed, even if the basic problem is not addressed. Will the Minister agree that NHS procurements outside the scope of the bespoke provider selection regime ought to also be looked at? In any event, it begs the question of how services out of scope will be dealt with. It would be useful to hear from the Minister about what assessment he has made of how many services would be considered out of scope in the Bill.

Finally, the scope should be extended to cover any contracts procured by the Department itself. I do not want to add to the Minister’s workload. If he had accepted our arguments, that would have been achieved. The standards on procurement need to apply across the board. Because the Department’s recent record is poor, that needs tackling as well. I will not repeat the arguments about that, but does the Minister accept that a standard should apply to the Department, too? Can he tell us exactly what regime covers the Department and its procurement?

Our proposed new clause 12 makes it absolutely explicit that the NHS is the preferred provider. Amendment 96 also confirms that and sets what we consider to be an essential de minimis requirement for the process, as well as requiring NHS England and each ICB to report each year on the proportion of contracts issued to each different type of provider, together with a plan every three years on how they intend to reduce reliance on private providers and therefore increase NHS capacity. Finally, paragraph (d) of amendment 96 also requires ICBs to be totally transparent about the awarding of such contracts. We think those are the minimum requirements and essential ingredients moving forward.

I end with Dr Chaand Nagpaul’s evidence to the Committee on why this matter is important. He said:

“Just repealing section 75 without complementing it with the right tools to ensure collaboration will not work. In fact, the current arrangements repeal section 75 but do not provide any safeguards, or rather structural processes, that will, in our view, allow the NHS to work as a collaborative system.

“The example I will give is that we believe the NHS should be the preferred provider of care wherever it is capable and wherever it is available to do so. There is so much evidence. People say: ‘Does it matter who provides?’ Well, it does matter, and all the evidence in the last few years has shown repeated examples. Some of you will remember Circle taking over Hinchingbrooke Hospital. It is very easy for the private sector to say: ‘You know what? We will really run the NHS efficiently. We will use all the market skills we have.’ The NHS does not work like that.”

He also said:

“We forget at our peril the added value, the accountability, the loyalty and the good will that the NHS provides. We really do.

We only have to look back at the last year. Compare the vaccination programme run by the NHS and delivered by NHS staff to Test and Trace. Even with Test and Trace, compare the £400 million that Public Health England had to the billions that went to the private sector, and local public health teams reached 97% of contacts compared to 60% for the others. I am saying that it does matter. Your local acute trust is not there on a 10-year contract, willing to walk away after two years. It is there for your population; it cannot walk away. I think that given those things, we need to make sure the NHS is the preferred provider.”––[Official Report, Health and Care Public Bill Committee, 9 September 2021; c. 90, Q113.]

A little later, he added that

“the rules at the moment do not factor in that the NHS provides, in addition to the service, a complete, full body of care for patients. The same money would go on a hip replacement in the private sector. Secondly, there is the training element that I mentioned earlier. Thirdly, no acute NHS trust can walk away after two years—it is there to provide care to its population—but Serco was able to walk away after two years. We have many examples of private companies that have ended their GP contracts. Serco left an out-of-hours contract in Cornwall; that does not happen in the NHS. My local hospital has been there for as long as I can remember—it cannot walk away. The NHS provides accountability and duty, but more importantly, it is actually cost-effective. The staff have national terms and conditions; they provide huge amounts of good will and work above their contracts. It just makes sense to be resourcing our NHS. Every time you take a contract away from the NHS, it is defunding the local system.”––[Official Report, Health and Care Public Bill Committee, 9 September 2021; c. 98-9, Q136.]

That is quite a long quote, but it is an important one because it encapsulates perfectly what we are trying to achieve with these amendments and the new clause.

Photo of Karin Smyth Karin Smyth Labour, Bristol South 3:00 pm, 23rd September 2021

I thank my hon. Friend for a fantastically thorough, comprehensive and damming indictment on everything that has come before and for some warnings about what may face us. I rise because I do not want to let the moment go without saying goodbye to section 75. It is what brought me into Parliament, having worked collaboratively in the local system at that time developing clinical commissioning. There was broad agreement before the 2010 election on the direction of travel, which was completely upturned by the coalition Government and the fault lies at the doors of both parties.

The destruction is a warning, though. I am looking around the room, Mr McCabe; I think that nobody on this Bill Committee was a Member of Parliament at that time, apart from your good self. I may be wrong about that, but it might be the case. What I experienced working in that service was the horror that Parliament could produce something that had been so widely warned about and that would be so disastrous. There was not a single ounce of support beyond the political agreement that the coalition formed at that time, which got them into this terrible position, even with the pause, that could not be rowed back. That is something that has helped me as a parliamentarian: what we do here—how we are sometimes invited to vote by the Whips, the scrutiny we give to legislation and the judgment we have to use as individuals—is really important.

Every time we go into the voting Lobby or review legislation, we should all give serious thought to the processes in this place—I understand them now, but did not then—that led to that terrible legislation being passed. We should find better ways to climb off the perch when something has gone as far, and as disastrously, as that legislation did.

There is debate about political interference or accountability—whatever we call it—when it comes to the NHS; as I have said before, the huge amounts of money that parts of the public sector now consume means we should operationalise quite a lot of that. We have heard a lot of that from the Minister over the course of this Bill.

Ultimately, what we have been asked to do is get rid of something we can all agree to get rid of. However, as my hon. Friend the Member for Ellesmere Port and Neston said, we have little idea of what will replace it, and crucially—the theme we keep coming back to: how are the patient and public voice empowered in the new system and how is the local external scrutiny and accountability in the new system? Again, I refer the Minister to my helpful amendment about a good governance commission.

However, the situation does not bode well because, as the pandemic has shown us, when backs are against the wall contracts can be put forward, friends and family can be added to major bodies, and organisations that play by the rules and go through due process can be completely marginalised. That has tainted the Government and all of us as politicians, and we need to get away from it.

Finally, the disaster of the reforms—the Lansley Act—was not only about the public waste, time and opportunity devoted to them; the warnings about pandemics were there at the same time, in 2010 and 2011 reports. The system was not developed and not focused on to how to prepare for the pandemic that we have now endured. That is the cost of management time and focus that was put into this sort of outsourcing, regulations and procurement, and trying to understand them. It was not focused on patient outcomes as they presented or on futureproofing the system. That is why we were not prepared.

We can all dance on the grave of the Lansley reforms today, with this Bill, which is a good thing. However, I am afraid that there is deep concern about what follows. Those reforms should be a lesson to all of us about the consequences of the very grave decisions that we make in this place.

Photo of Jo Gideon Jo Gideon Conservative, Stoke-on-Trent Central 3:15 pm, 23rd September 2021

I have listened with great interest to the points made by the hon. Lady and by the shadow Minister, the hon. Member for Ellesmere Port and Neston, but I do not recognise my NHS as being a sort of binary choice between public and private sectors.

During the pandemic, we have seen the incredible work across sectors; I am glad that the shadow Minister mentioned the voluntary and community sector, and charities, because that sector has largely been left out of people’s comments. Possibly it was convenient to leave it out because it shows that the breadth of the NHS family is more than the NHS itself; it is very much about everybody working together. For me, that is what integrated care is all about. I welcome the mention of the voluntary and community sector.

When we look at NHS procurement, we also need to focus on prevention as well as on clinical treatments because the wording of new clause 12 seems to focus very much on clinical treatments. We all agree, I think, that the purpose of integrated care is to have a big focus on the prevention piece, and the NHS family must surely include the third sector and private sector providers that are specialists in that area. For me, there is no conflict.

Photo of Edward Argar Edward Argar Minister of State (Department of Health and Social Care)

I welcome the sentiments underpinning some of Opposition Members’ comments about our changes to section 75. I am nothing if not prepared to listen and be pragmatic, and I am glad that they at least welcome that aspect of the Bill.

I will address directly a number of Opposition Members’ points. My right hon. Friend—I mean my hon. Friend the Member for Stoke-on-Trent Central, but it is surely only a matter of time before she is right honourable—was absolutely right about the NHS family being wider than the NHS itself. All these organisations are involved; to be fair to the shadow Minister, the hon. Member for Ellesmere Port and Neston, he mentioned the voluntary sector and particular organisations that have done amazing work in the past year and a half. In fact, they do that work every year, and day in and day out, working hand in hand with the NHS. I put on the record my appreciation of the independent sector providers for what they have done during this pandemic to support the pandemic response.

The shadow Minister asked a very specific question about what activity had been undertaken, what money had been spent and what assessments had been made, including of value for money. I do not know whether I have written to him already, but a number of colleagues from across the House have written to me and I have set out, in broad terms, the number of patient episodes that have been provided by the independent sector. If he would like me to write to him in a similar vein, I am very happy to do so; my officials have heard that commitment and I will adhere to it. Regarding the broader point that he made about value for money, cost and how money has been spent, those details will be published later in the year in the usual way, when the accounts for the last year have been audited. They will be published; I make that commitment to him.

The shadow Minister raised a number of other specific issues and I will address one head-on before addressing the substance of the amendments. Essentially, he said that the NHS should be deemed the preferred provider by default almost, citing the words of Dr Chaand Nagpaul. Dr Nagpaul and I have our differences of opinion, shall I say, but he is an eminent clinician and performs a very important role, and I put on the record my respect for him and for the principles that he articulates on many occasions.

I believe that the key defining feature should be what delivers the best outcomes for patients, rather than simply having a default presumption. Now, that may well regularly be, as Dr Nagpaul asserted, the NHS. However, I think we should start from the presumption of what delivers the best services and the best outcomes for patients.

The shadow Minister asked—I think he asked this, but if it was the hon. Member for Bristol South I hope she can forgive me—what regime would apply to the Department. My understanding is that that would continue to be the Public Contract Regulations 2015 in the context of the Department itself. The hon. Member for Ellesmere Port and Neston suggested that in the next couple of years we would do the next reorganisation; I can reassure him that I am not necessarily sticking to the new Labour playbook of 1999, 2001, 2003—doing something almost every two years.

The hon. Gentleman’s broader point was about the involvement of private sector providers. He will be aware of this, because he knows his NHS and health history, but one of the key points came in 2004—the first time the then Government opened up clinical services to tendering by the private sector, in that case for out-of-hours services. Again, “any qualified provider” dates back to 2009, under the title “any willing provider”, as it then was. It was exactly the same scheme, and all that happened in 2012 was that the name was changed from “any willing” to “any qualified” provider; the scheme was brought in under the Government led by Prime Minister Brown.

Governments of all complexions have amended and changed the clinical regime to recognise that there is a role, as there always has been, for private and voluntary sector providers and, of course, for the NHS at the heart of it. None of that puts at risk a taxpayer-funded NHS that is free at the point of delivery. For the record, I reassure the hon. Gentleman, as he would expect me to, that in the context of trade deals the NHS is not for sale: it never has been, and it never will be.

Turning to the detail of the amendments, amendment 95 would change the scope of the regulation-making powers in this clause. Currently, these will govern the procurement of healthcare services for the purposes of the health service; this amendment would broaden the provision so that it extends to all services required by the health service.

The NHS procures many services, but has specifically asked us to introduce a new, tailored provider selection regime that would replace section 75 and enable it to arrange healthcare services in a more flexible manner and one that fosters integration and collaboration. The NHS has told us that the current competition and procurement rules, particularly the PCR 2015 rules, are not well suited to the way healthcare is arranged in the context of the services the NHS provides. They create barriers to integrating care, disrupt the development of stable collaborations and can cause protracted processes with wasteful legal and administration costs, while adding little value to patients or the taxpayer.

Regarding the hon. Gentleman’s specific question, I am afraid the individual costs over the years since 2012 would have been borne at a local systems level, so I suspect that they are not agglomerated together in a national figure. However, I understand his reasons for asking.

When NHS England consulted on the new provider selection regime earlier this year, it suggested specific key criteria to be used in decision making under the regime, tailored towards the effective arrangement and delivery of healthcare services. The proposed criteria include integration and collaboration, and that services should protect patient choice and focus on tackling inequalities. Having a power to introduce procurement measures specifically for healthcare services will enable procurement decisions to focus on such tailored criteria, and to create a regime that works best for the health service.

However, it is right that non-healthcare services—cleaning services, administrative services and others—should, and will, still fall under the PCR 2015 and, in future, the new Cabinet Office procurement regime, which is currently being considered. This will ensure that these services are still arranged in a way that continues to add the best value to the healthcare system.

We know there may be cases in which it is essential that a service is procured as part of a healthcare service contract—I think that was one of the hon. Gentleman’s points. It is for this reason that we have included the ability for regulations made under this power to include provision in relation to mixed procurements, where other goods and services are procured together with healthcare services.

We are working closely with the Cabinet Office and with stakeholders across the health service to ensure that the regulation of mixed procurements of healthcare and other services works effectively for the appropriate arrangement of healthcare services and for the arrangement of wider public services, with respect to their distinct characteristics. Should the hon. Gentleman wish to write to me and ask me to forward his letter to the Cabinet Office to ensure it is cognisant of his views, I am happy to do that.

Amendments 96 and 99 and new clause 12 in effect make statutory NHS providers and general practitioners the preferred provider of NHS-funded services, but our intention is not quite as rigid as what the hon. Gentleman would wish. As I have said, the vast majority of NHS care has and will continue to be provided by public sector organisations, but successive Governments of all political affiliations have allowed the NHS to commission services from the private and voluntary sector, to improve accessibility and experience for patients, to increase capacity swiftly or to introduce innovation.

It is the strong view not just of this Government but of the NHS that local commissioners are the best people to determine what services a local population needs. The best interests of patients, the taxpayer and the population, rather than dogma or ideology, should guide those decisions, and that is what this Bill aims to deliver. I know that the hon. Gentleman is certainly not dogmatic—he may be ideological, but he is certainly not dogmatic—so I hope he appreciates the sentiment behind that statement.

Amendment 99 would mean that a contract for the provision of healthcare services could not be awarded to a body other than a relevant body as defined in the clause unless a full formal competitive tendering process had been followed. This requirement would need to be set out in the regulations made under proposed new section 12ZB.

Amendment 96 would require that regulations include the power for ICBs to commission services provided by an NHS trust or foundation trust without retendering. Regulations would also need to require an ICB to conduct a public consultation and publish a business case where it wished to put out to competitive tender a service currently provided by an NHS provider for contracts over an agreed value. They would also need to require an assessment to be made of alternative ways of providing a service using NHS providers before a contract with a non-NHS provider were extended or renewed. It would require any procurement regulations to be based on the assumption that the NHS is the preferred provider. Regulations would also need to add a requirement on providers to pay and provide terms and conditions of employment to their staff that are at least in line with those of the NHS.

In addition, the amendment would require NHS England to publish a report on the proportion of contracts subject to the regulations made under the new power that are awarded to different types of providers, and would require both NHS England and ICBs to publish a plan for reducing private providers’ provision and increasing the capacity of NHS providers to provide those services. As the shadow Minister set out, it would require ICBs to publish in full bids received for contracts, contracts signed and reports of contract management.

By way of context, the NHS has told us that the current competition and procurement rules are not well suited to the way healthcare is arranged. That is why we are creating a new provider selection regime that provides greater flexibility, reduces bureaucracy on commissioners and providers alike, and reduces the need for competitive tendering where it adds limited or no value. I fear that the amendments would start reimposing a degree of that bureaucracy. The absence of competitive tender processes does not mean an absence of open, transparent and robust decision making. Our proposed new regime is designed to allow transparency, scrutiny and due diligence in decision making, but without all the barriers and limitations associated with running full tender exercises.

NHS England has laid out a series of reasons in its public consultation why competitive tendering may not be suitable in every case. We do recognise the value of competition in particular cases, but this is about introducing an element of greater flexibility, rather than rigidity. NHS England has proposed that, having considered a set of key criteria, the decision-making body may have reasonable grounds for choosing either to continue with the incumbent provider where it is doing a good job and the service is not changing, or alternatively, where the service is changing, of selecting one provider or group of providers or of course holding a competitive tendering process.

Structuring the new provider selection regime around such criteria will ensure that the factors taken into account by commissioners are those relevant to the health service, while still retaining flexibility in the types of provider from which commissioners can commission. Amendment 99 would mean that these regulations go further than the existing rules under the PCR 2015. Those regulations allow for an exception to competitive tendering where competition is absent for technical reasons, but this provision would not allow for that, nor for an exception in relation to a procurement for an extremely urgent case.

Transparency was a keen concern of the hon. Gentleman. Regulations and statutory guidance made under new clause 68 will set out rules to ensure transparency and scrutiny of decisions to award healthcare contracts under the new provider selection regime. The regulation-making powers specifically allow for the imposition of requirements for the purposes of ensuring transparency and fairness in arranging services, which will allow us to design a regime to ensure open, transparent and robust decision-making, including requiring decision-making bodies to keep records of the rationale for their decisions.

We do not consider it necessary to publish all bids received for contracts or the detailed content of all contracts. Doing so would have the potential to prejudice the commercial interests of the parties involved, including NHS commissioners and providers as well as those bidding.

We consider these amendments to be unnecessary. Indeed, we fear that they might actively undermine what the NHS is telling us it needs from the private selection regime to secure high-quality, safe and good-value services. Therefore, I hope that I might tempt the hon. Members not to press their amendment to a vote. I have a feeling, though, that we might face a Division on it in the near future.

Let me move briefly to the clause 68 stand part debate. The clause inserts a new section, 12ZB, into the National Health Service Act 2006.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

I think we want to stick with the amendments.

Photo of Edward Argar Edward Argar Minister of State (Department of Health and Social Care)

And then we will discuss clause 68 stand part separately?

Photo of Edward Argar Edward Argar Minister of State (Department of Health and Social Care)

In that case, I nudge the Opposition to consider withdrawing their amendment, but I may be unsuccessful.

Photo of Justin Madders Justin Madders Shadow Minister (Health and Social Care) 3:30 pm, 23rd September 2021

I picked up some interesting points. There was, I think, some common ground with the Minister about the mistakes of the past. From the contribution of my hon. Friend the Member for Bristol South, I think we have found one positive aspect of section 75, which is that it brought her to this place. At last, there is something positive to say, because we do not mourn its passing. As she said, at the time, not a single ounce of support existed for those rules outside of the coalition Government, but we will not go over all the old ground again.

In his response, the Minister talked about the “any qualified provider” regime that was introduced in 2009. My understanding is that, had we been successful at the 2010 election, we would have moved to “a preferred provider”, but, of course, when we look at the commitments made in 2010, we can forget David Cameron’s promise not to reorganise the NHS. We will see whether the Minister’s promises in respect of that are as robust.

The Minister says that what matters is the best outcome for patients, and we absolutely agree with that. We think that the best outcome for patients will be stability and a regime in which the NHS is the preferred provider, because all the evidence points to better outcomes for patients.

I am grateful to the Minister for not characterising me as dogmatic, because I do not wish to be. I wish to be pragmatic. The idea of putting into the Bill some requirements about what we expect from the regulations is a perfectly reasonable position to take, but until we see those regulations, we cannot be sure about what they will include. By supporting the amendment, what we hope to include is a base position that injects a degree of transparency, which is what has been lacking over the past 18 months, and the Bill clearly fails to refer to any particular issues in that regard. Our view is that the purpose of this Bill should be to reinforce the NHS—to bolster it—by using a preferred provider, which is why we wish to put our amendment to a vote.

Question put, That the amendment be made.

Division number 15 Health and Care Bill — Clause 68 - Procurement relations

Aye: 4 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

The Committee divided: Ayes 4, Noes 8.

Question accordingly negatived.

Amendment proposed: 99, in clause 68, page 61, line 35, at end insert—

“(1A) The regulations must provide that no contract for the provision of the services specified in subsection (1)(a) and subsection (1)(b) may be awarded other than to a relevant authority unless a formal competitive tendering process provided for by the regulations has been followed.”—

Division number 16 Health and Care Bill — Clause 68 - Procurement relations

Aye: 4 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

The Committee divided: Ayes 4, Noes 8.

Question accordingly negatived.

Amendment proposed: 96, in clause 68, page 62, line 1, at end insert—

“(3A) The regulations must—

(a) include the power for integrated care boards to continue to commission the services provided by an NHS trust or Foundation Trust without any requirement for any re-tendering process,

(b) require that, prior to commencing any formal procurement process for a service provided by an NHS provider, where the contract value exceeds a threshold set by the relevant integrated care partnership, the integrated care board must conduct a public consultation and publish the business case for opening the service to a competitive tender process,

(c) require an assessment to be made of alternative ways of providing a service using NHS providers before a contract with a non-NHS provider may be extended or renewed,

(d) be based on the assumption that the NHS is the preferred provider of services, and

(e) require providers to pay staff in line with NHS rates of pay and to provide terms and conditions of employment at least equivalent to NHS terms and conditions.

(3B) NHS England must publish a report each year on the proportion of contracts subject to the regulations which are awarded to each of NHS, third sector, local authority and independent sector providers.

(3C) NHS England and each integrated care board must publish a plan every three years on reducing the provision of NHS services by private providers and increasing the capacity of NHS providers to provide those services.

(3D) Integrated care boards must publish, in full and without any recourse to commercial confidentiality, all—

(a) bids received for contracts,

(b) contracts signed, and

(c) reports of routine contract management.”—

Division number 17 Health and Care Bill — Clause 68 - Procurement relations

Aye: 4 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

The Committee divided: Ayes 4, Noes 8.

Question accordingly negatived.

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

Photo of Edward Argar Edward Argar Minister of State (Department of Health and Social Care)

I will be brief because we covered key aspects of clause 68 in debates on the amendments. The clause inserts proposed new section 12ZB into the NHS Act 2006. Section 12ZB allows the Secretary of State to make regulations setting out the regulatory framework for the procurement of healthcare services, to better meet the needs of the NHS.

Section 12ZB provides further information about the content of those regulations. They may contain provision in relation to the objectives of procurement, and they may contain provisions ensuring transparency, fairness and effective management of conflicts of interest, as well as provision for the purpose of verifying compliance with the regime. The new section also allows for NHS England to publish guidance about compliance with the new procurement requirements to which relevant authorities, as defined in the section, must have regard.

The NHS has sent us a clear message that the current regime for arranging healthcare services is not working. It is confusing, overly bureaucratic and does not fully support the integration and efficient arrangement of services and collaboration in the best interest of patients, which, of course, run through the Bill like a golden thread. Through the clause, we will develop a new provider selection regime for the NHS and public health—a bespoke NHS regime that will give the NHS and local government more discretion over how they arrange healthcare services. Informed by the consultation run by NHS England earlier this year, it will aim to enable collaboration and collective decision-making—recognising that competition is not the only way of driving service improvement. It will aim to reduce bureaucracy on commissioners and providers alike, and to remove the need for competitive tendering where it adds limited or no value.

We recognise that in many cases competition can be beneficial for procurement. Where a competitive tender is the best way for an NHS commissioning body to secure value and quality in its healthcare provision, it will be used. However, it will no longer be the default that contracts in the NHS are automatically put out to tender. All decisions about provider selection will continue to be made in an open and transparent way, considering key criteria and applying them to decision making, in the best interests of patients and the taxpayer. I commend the clause to the Committee.

Photo of Justin Madders Justin Madders Shadow Minister (Health and Social Care)

I will not repeat all my comments from earlier, to save the Committee’s time. I have two remaining specific questions, which I hope the Minister can address. The clause says that regulations “may” be produced. Can he state for the record that there will be regulations? Can he also give us some indication of when they are likely to be made and when they are likely to take effect?

Photo of Edward Argar Edward Argar Minister of State (Department of Health and Social Care)

I can reassure the hon. Gentleman that “may” is the technical language used in drafting such legislation, but we intend that they will be made. I am afraid I will disappoint him on the second part of his question, because I would not presume to say exactly when; that will be down to the passage of this legislation and then the usual wait and the discussions through the usual channels on securing an appropriate slot for the regulations. I hope I have given the hon. Gentleman a modicum of reassurance.

Question put and agreed to.

Clause 68 accordingly ordered to stand part of the Bill.