Health and Social Care Bill

My Lords, I would like to make a few remarks about tariff and price setting and echo the words of the noble Lord, Lord Warner, who reminded us that there are two equally important mechanisms: tariff development, which is the responsibility of the national Commissioning Board; and price setting, which is the responsibility of Monitor. It is critical that Monitor retains the responsibility to set prices. That enables it to uphold its responsibilities for sustainability and balance the interests of commissioners and providers in the patients’ best interest. Independence in price setting is utterly critical. We have seen previously that not having independence from the executive arm in the NHS has been a disadvantage in getting the right prices which reflect the complexity of the issue concerned. I take the point made by the noble Baroness, Lady Thornton, that the development of tariffs is a very complex matter. It is work in progress but the work never stops. That has been the case in all countries that have developed tariffs and will be for the foreseeable future. We need flexibility when designing tariffs. I say to the noble Lord, Lord Davies, that we have seen how catastrophic simple price competition has been internationally in driving down quality of service. Indeed, we have seen that in this country, too. Price competition was not helpful. In order to drive down prices and get better value, you need to start designing the tariff around best practice. This was mentioned by the noble Lord, Lord Warner. You need to design a pathway of care based on what should ideally happen to a patient, deliver the clinical pathway, cost that out and get the best practice in place. If that amounts to less than the set price, which it often does, that is the way that you can start to drive down costs while improving quality. A tremendous amount of superb work has been done in a group of mental health trusts looking at best practice tariffs for episodes of care. If we can get that work ongoing in a group of people who are dedicated to designing better tariffs, we will be able to improve price competition by designing the tariff correctly while not striving to be competitive on price alone.