Health Bill [HL]

We move to Part 2 and the clauses relating to trust special administrators. I am moving Amendment 72 and speaking to Amendment 76, and it will be apparent from these amendments that I am not happy with the provisions in this part of the Bill as they relate to foundation trusts. When foundation trusts were established, it was made clear by the Government that they would be a completely different sort of entity from a standard NHS trust. Although remaining part of the National Health Service, they would cease to be subject to performance management by strategic health authorities; they would be granted considerable operating and commercial freedoms; their governance would be totally different from that of an NHS trust; they would not be subject to the Secretary of State’s powers of direction; their fixed assets would be transferred to independent trustees; and they would be regulated by a dedicated new body quite separate from the Department of Health. The regulator we now know as Monitor would be responsible for authorising foundation trusts in the first instance, and would remain responsible for the oversight of their finances and performance from then onwards. The whole raison d’être of foundation trusts was therefore to distance the management of health services from Ministers and devolve decision-making to a local level, to transfer risk and to set NHS management free from top-down political diktat. The Bill which passed these provisions into law became the Health and Social Care (Community Health and Standards Act) 2003. At that time, Ministers were quite open about the fact that the failure regime for foundation trusts represented unfinished business and that further legislation would be needed once the mechanisms for a suitable regime had been devised. It was expected that these mechanisms would dovetail with the arrangements set out in the 2003 Act; in other words, that the responsibility for implementing the failure regime for foundation trusts would rest with Monitor. It has taken the Government the best part of six years to come forward with their final proposals, and what they have come up with is, frankly, a cop-out. The proposals in the Bill overlook the fact that within a very few years the vast majority, if not all, NHS providers will be foundation trusts. Once this happens, as night follows day, there will be no role for the NHS chief executive as regards running hospitals and no role for strategic health authorities as the performance managers of hospitals. Almost the entire provider arm of the NHS will consist of autonomous enterprises subject to independent regulation under Monitor. Yet what do we find in the Bill? It is as if none of this is even recognised; the tape is being wound back to the beginning. Monitor is being told to surrender its authority back to the Secretary of State, who will then take over. The message that this gives is that Monitor, as the economic regulator for foundation trusts, cannot be trusted to manage the failure regime, nor can it be trusted to fulfil its statutory duty to secure the assets of foundation trusts to maintain services for the NHS. That is a dismal state of affairs. The essential feature of a failure regime should be that the assets that are required for the maintenance of NHS services should continue to be available after insolvency has been declared. Therefore the regime should enable the regulator to step in and control those assets and services. It would do this while ensuring that the rights of creditors were recognised. That broad procedure is consistent with a good deal of public service regulation in other sectors and other countries. It does not risk hospitals being closed because of financial failure but, crucially, it preserves the transfer of risk from the Department of Health, which these proposals seem to nullify, by offering what amounts to a government guarantee for all debts of all foundation trusts. If the Government now underwrite all the debts of foundation trusts, we need to consider what effect this will have. It is bound to affect, however subtly, the quality of decision-making on the part of management and governors of trusts simply by virtue of the way that they view business risk. Tight and prudent management and the disciplines that go with it, I contend, will be compromised by the existence of this failure regime. If we want to see foundation trusts using their freedoms ever more effectively and creatively, this is definitely not the way to do that. I said that these proposals were a cop-out. They are also a far cry from what we were being told in 2002. The document published by the department in December of that year called A Guide to Foundation Trusts strongly implied that it would be the independent regulator who would be given powers to intervene in failing foundation trusts, and that in extremis a special administrator would be appointed to wind up the trust. At the Second Reading of what became the Health and Social Care (Community Health and Standards) Act 2003, John Hutton said: ""The new financial and operational freedoms for NHS foundation trusts will not be gained at the expense of other parts of the NHS because that would not be fair or equitable. There will therefore be no unfair advantages for some for which others pay. Peter will not be robbed to pay Paul".—[Official Report, Commons, 7/5/03; col. 794.]" That is precisely what is happening with this Bill. Unfair advantages are being granted for which others will pay. Peter is being robbed to pay Paul. That is because the freedoms and independence which foundation trusts enjoy are now to be underwritten by the taxpayer. If the taxpayer were ever to end up settling the totality of the bill, it would be other arms of the health budget that would suffer. I do not expect to get any change from the Minister on this. I very much hope I am wrong, because I view this as a seriously bad wrong turning on the part of the Government. I should make it clear that in making this case, I have not been prompted in any way by Monitor which—the noble Baroness, Lady Murphy, will I am sure be able to confirm—has stood back from the issue. It is not really a matter for Monitor; it is a matter for Parliament, and therefore I beg to move.