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

With this it will be convenient to discuss clauses 41 and 42 stand part.

We know that robust finances are an essential part of the health service. The financial accounts related to the NHS are of keen interest to His Majesty’s Treasury and indeed to Parliament. The Government are especially mindful of the keen interest of the Public Accounts Committee in this area. Under current arrangements, NHS England prepares a set of financial accounts for all NHS trusts and foundation trusts, and that is audited by the National Audit Office. That is the point at which the National Audit Office conducts its oversight of NHS providers, with that feeding into the National Audit Office’s assurance over the Department of Health and Social Care group.

The financial accounts for integrated care boards are currently included in the NHS England group accounts, which are presented separately and audited by the National Audit Office. With the abolition of NHS England, the Government intend to reduce central administration costs, so financial reporting needs to be proportionate while balancing stakeholders’ keen interest in financial information related specifically to the NHS. Clause 40 therefore replaces the current consolidated accounts of NHS providers with a single set of consolidated accounts for the NHS covering its trusts, foundation trusts and integrated care boards. That consolidated account will continue to be audited by the National Audit Office.

We believe that bringing the accounts together in this way will assist the public, Parliament and the National Audit Office in scrutinising NHS expenditure. Although it is not covered by the clause, it is important for the Committee to be aware that there will be no change to the current requirement for the Department to publish a Department of Health and Social Care group annual report and accounts that will consolidate the NHS accounts with the core Department and other group bodies—for example, its arm’s length bodies.

However, the Government recognise that only reporting figures for the NHS in the overall Department group would reduce transparency compared with the current structure of NHS financial accounts. The clause therefore seeks to prioritise high quality audited financial accounts information being made available while balancing against administrative costs, both of which are important to the Government.

Clause 41 amends the Secretary of State’s existing power to create a scheme allowing NHS bodies to pool funds to cover property losses and legal claims arising from their healthcare activities. They ensure that when liabilities arise, whether from damage to property, negligence or other claims, there is a clear and consistent mechanism through which those liabilities can be managed and resolved. In doing so, they protect the financial stability of the NHS. The clause updates the legislation for the new landscape by removing NHS England from the arrangements and ensuring that responsibility for administrating the schemes rests appropriately with the Secretary of State.

Although the clause is targeted and technical, its effect is essential in that it ensures continuity and legal clarity and continued effective operation of arrangements that underpin confidence and functionality across the health service. Clause 42 is a necessary technical and structural change that supports the new statutory framework following the abolition of NHS England. It removes provisions in the NHS Act 2006 and the Health and Care Act 2022 that relate specifically to NHS England’s funding and financial responsibilities, which will no longer be required once NHS England ceases to exist. The clause avoids duplication and confusion and ensures that financial accountability is clearly defined in the post NHS England system. Under the reformed framework, the Department is responsible for the overall funding of the NHS and for national financial assurance, while integrated care boards and providers continue to operate within defined statutory financial duties and controls.

Clause 42 plays an important housekeeping role, providing legal clarity and underpinning a more transparent and coherent financial framework that is fit for the NHS future operating model. I therefore commend the clause to the Committee.

Clause 40 prepares for the preparation of the annual accounts of NHS trusts and integrated care boards. Existing legislation in section 65Z4 of the NHS Act 2006, “Consolidated accounts for NHS trusts and NHS foundation trusts”, requires NHS England to prepare a set of accounts every financial year and consolidate the accounts of all the trusts and NHS foundation trusts. The Secretary of State can give directions about the content for methods and principles, and the accounts must be accompanied by reports or other information as directed by the Secretary of State. A copy may be sent by NHS England to the Secretary of State and the Comptroller and Auditor General. The latter must then examine and certify those accounts before sending a copy to the Secretary of State and NHS England, and NHS England must then lay a copy of the consolidated accounts and the Comptroller and Auditor General’s report before Parliament. That is how it works at the moment.

Clause 40 rewrites section 65Z4 and the duty to prepare the consolidated accounts every financial year moves to the Secretary of State, and the list of what gets consolidated now includes the ICB accounts. The power to give directions to NHS England about accounts is removed, which is fair enough because there would be no need for it, as the Secretary of State is now preparing them and NHS England will cease to exist. The requirement for the accounts to be accompanied by such reports or other information as the Secretary of State may direct has been removed. The accounts go straight to the Comptroller and Auditor General, who reports back only to the Secretary of State. At the end, the Secretary of State lays the accounts before Parliament. The changes are necessary owing to the abolition of NHS England.

I want to ask about the consolidation, including the ICB accounts, which was not there before, and what impact that will have. Will the accounts be sufficiently detailed so that it is possible to disaggregate that information if people are interested in doing so?

Clause 41 changes which NHS companies can be covered by the scheme that meets certain losses, legal claims and liabilities. Currently, section 71, “Schemes for meeting losses and liabilities etc of certain health service bodies”, of the NHS Act 2006 enables the Secretary of State to establish schemes to meet the losses of NHS England, ICBs, trusts, the National Institute for Health and Care Excellence, the CQC and several other bodies. The list of bodies includes

“(ha) a company formed under section 223 and wholly or partly owned by the Secretary of State or NHS England”.

In the new legislation, clause 41 rewrites paragraph (ha) so that it is

“a company formed under section 223 other than by an integrated care board by virtue of section 223A”.

That narrows the scope of the liability scheme by preventing ICB-created companies from automatically gaining protection, presumably to encourage ICBs to manage risk responsibly.

I have just a couple of questions for the Minister. Could that make ICBs less willing to set up companies for business services or joint ventures, potentially hampering innovation? If an ICB company generates liabilities that an ICB cannot meet, who becomes liable? If it is the ICB, is that not essentially the Government, in any case? If the ICBs need to purchase commercial insurance or hold contingency, which is the Government’s preference and what sort of cost will that entail?

Clause 42 changes parts of the NHS Act 2006 and the Health and Care Act 2022 concerning NHS England’s funding and financial responsibilities. Currently, the NHS Act 2006 contains sections relating to NHS England’s finances, including section 223B, “Funding of NHS England”; section 223C, “Financial duties of NHS England: expenditure”; section 223CA, “NHS England: banking facilities”; section 223D, “Financial duties of NHS England: controls on total resource use”; section 223E, “Financial duties of NHS England: additional controls on resource use”; and section 223F, “Power to establish contingency fund”. There are sections in the Health and Care Act 2022 concerning NHS England’s financial responsibilities and the expansion of its duties in respect of expenditure. Essentially, they are all deleted by clause 42.

I will be relatively brief, turning just to Clause 40. I hope the Minister may be able to clarify something for me. I take the opportunity to thank the Minister for the letter that I received this morning, which was a very prompt response to her promise to write to me last week.

In respect of clause 40 and subsequent clauses, I can see the logic of updating the legislation to reflect the abolition of NHS England and the changes that come with that. I can also see the logic of a consolidated set of accounts so that one can see the national, or overall, picture. In the interests of transparency, I would be grateful if the Minister could confirm that that will be in addition to, and in no way replace, every individual trust having to produce granular public accounts that anyone can inspect, so that we can see not only the overall operation and financial health of the system but that of each of its individual component parts sitting beneath.

I wish to carry on the point that my right hon. Friend the Member for Melton and Syston has just raised. He rightly says that there is a transparency element to this, so that the public and any other interested party can look at the individual accounts of an ICB or a trust. Going further than that on the technical elements, my understanding is that NHS England’s own guidance notes suggest that consolidation does not just bring accounting under one set of accounts, one umbrella or one document. Within that accounting, however, adjustments and eliminations of transactions between NHS bodies can happen. Therefore, the aggregated figures do not necessarily reflect the financial reality of individual organisations.

I understand why that might be entirely appropriate from an accounting point of view, but it can make it harder for external observers to understand exactly where the pressures are coming from, where they are concentrated and, in a world where we want accountability, who should be held responsible for addressing them. That is all I need to say on that point.

I am pleased that, in an outbreak of cross-party agreement at 3.20 pm on a Tuesday, I completely agree with the comments made by the hon. Member for Farnham and Bordon and the right hon. Member for Melton and Syston. It is a point that I made myself: the ability of Members of Parliament and the public to understand the granularity relating to their local providers and ICBs is very important for transparency and accountability. I hope Committee members recognise that I have tried to drive much more transparency in that system. They are absolutely right that that is separate from this Clause, and we will continue to expect providers and ICBs to do that; I hope that addresses that point.

To add further clarity on the wider point the clause deals with, the consolidated accounts we prepare include some analysis by different types of body. That will mean separate information about NHS providers being included in the document, such as a summary of income and expenditure. Separately, providers and ICBs will continue to publish accounts so that people can look at those. The Government will listen to any feedback from users to adapt the nature of this content in future years after the initial publication, recognising that this is a new development following the abolition of NHS England. We are also mindful that too many separate publications add to administrative costs and risk losing focus. The intention is to have transparency at the local level, building that up to do something more sensible and cost-effective that is also transparent at national level. I commend the clauses to the Committee.

Question put and agreed to.

Clause 40 accordingly ordered to stand part of the Bill.

Clauses 41 and 42 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Emma Foody.)

Adjourned till Thursday 2 July at half-past Eleven o’clock.

HB85 Alder Hey Children’s Charity

HB86 Graham Lake

HB87 Royal College of Speech and Language Therapists

HB88 Association of British HealthTech Industries (ABHI)

HB89 Health Connect Global

HB90 Alexion, AstraZeneca Rare Disease

HB91 The King’s Fund

HB92 Cleft Lip and Palate Action (CLAPA)

HB93 Royal College of Nursing

HB94 Vitanium Healthcare

HB95 The Health Tech Alliance

HB96 Marie Curie

HB97 Association of the British Pharmaceutical Industry (ABPI)

HB98 Rainbow Hospitality

HB99 Together for Short Lives (supplementary)

HB100 Council of Governors of University Hospitals of Morecambe Bay NHS Foundation Trust