Health and Social Care Bill

My Lords, we have two diverse areas in this particular group. Clause 75 would consolidate the oversight of mergers involving NHS foundation trusts under the UK general merger control regime operated by the Office of Fair Trading’s Competition Commission. That is the area addressed by my noble friend Lord Clement-Jones. We argue that the approach that we are taking here would have a number of benefits. First, it would eliminate the risk of double jeopardy for NHS foundation trusts. Uncertainty currently exists as to when and where the Enterprise Act 2002 would apply to mergers of activities involving foundation trusts. As a result, under the current arrangements for review of mergers involving foundation trusts by the Co-operation and Competition Panel, there is always potential risk of duplication or double jeopardy by both the OFT and the Co-operation and Competition Panel. The Bill proposes to consolidate oversight of foundation trust mergers under the OFT. It would already seem likely that most mergers between foundation trusts would meet the relevant thresholds, eliminating the uncertainty with the current approach. We therefore sympathise with my noble friend Lord Clement-Jones’s amendment but feel that it would not be required as foundation trusts would be captured. Secondly, the OFT would provide effective, light-touch regulation regarding mergers. This gives confidence to providers that might be considering a merger and ensures that mergers go ahead where they are in patients’ best interests and that the process is not unduly delayed by bureaucratic approvals or the risk of political interference. The evidence demonstrates that this approach does not result in excessive intervention, as the Enterprise Act sets a high threshold for looking at the merging of activities. Thirdly, the approach would avoid the duplication of specialist resources between the OFT and Monitor, ensuring better value for money. Mergers are a specialist area. It therefore seems a far better use of resources to maintain the responsibility and expertise within the OFT and the Competition Commission rather than resource a further sector-specific body. However, we appreciate and sympathise with the argument put forward that Monitor, as the dedicated health regulator, will have a valuable contribution to make in the review of foundation trust mergers. As part of any merger investigation, the OFT and the Competition Commission would engage with Monitor as the sector regulator in order better to understand the services involved. They would obtain Monitor’s view on how a merger would affect services and whether it would bring benefits for patients. The OFT would need to consider whether the benefits of higher quality, a greater choice of goods or services and greater innovation outweighed the negative impacts of mergers. These views would then be considered in the analysis, along with other evidence. We want to work with noble Lords to see how we can ensure that Monitor’s role regarding mergers is adequately reflected in the Bill. My noble friend Lord Clement-Jones was asking about thresholds. The thresholds for merger reviews are set out in the Enterprise Act. On this basis, the OFT would not generally review mergers involving a turnover of less than £70 million. This contrasts with the approach of the Co-operation and Competition Panel, which operates at significantly lower thresholds. As my noble friend Lord Howe said in an earlier part of this debate, the operation or otherwise of EU competition law is something that he will take back and consider further in the light of what my noble friend Lord Clement-Jones said. At this stage, therefore, I will not go into that area further, but I refer the noble Lord, Lord Owen, to those discussions and the fruits of those discussions. We move on to a separate area raised by the noble Baroness, Lady Greengross, and supported by the noble Lord, Lord Low. The issue raised by Amendments 280 and 295G is one in which I know the Equality and Human Rights Commission is keenly interested, and the Government have carefully considered it in the preparation of the Bill. The issue has been raised with us not only by the EHRC but by the Joint Committee on Human Rights. Noble Lords are right: these are extremely important issues. The department has set out publicly and in detail the reasons for its firm view that private providers are now, and will be in future, exercising public functions when they provide NHS or public health services. The effect of this is that they are bound by the relevant duties in the Human Rights Act and the Equality Act when they provide those services. As the noble Lord, Lord Low, pointed out, these reasons can be found at paragraphs 1534 to 1537 of the Explanatory Notes and in our response to the letter from the Joint Committee on Human Rights to the Secretary of State, which is available on its website. In summary, our view is based on the following arguments. NHS and public health services will continue to be commissioned by statutory bodies subject to the framework in the 2006 Act. The nature of the services provided will be determined by those commissioning bodies in the exercise of their statutory functions, and is not affected by the status of the provider. The services provided pursuant to those arrangements will be funded by the Secretary of State, the NHS body or the local authority concerned. There will be no contract between the patient and the provider other than where direct payments are concerned. The relevant provisions of the 2006 Act will continue to make no distinction between private and NHS providers. However, the question is raised of why it is not explicit in the Bill that private providers are exercising public functions. There are three good reasons why not. First, as I explained, the Government consider that the existing legal position is sufficiently clear from the case law and that all providers are now, and will be in future, covered by the Human Rights Act and the Equality Act. This was a long-held public position of the last Government as well and we discussed this in relation to the Equality Act, which the noble Baroness, Lady Thornton, will no doubt remember. Our view is that recent court judgments further support that position. Secondly, we believe that this position is applied, or presumed to apply, in the NHS at present, and we would not wish to create doubt about the current legal system by introducing a specific provision. Our view was set out in the judicial review proceedings in relation to the transfer of NHS community health services to a social enterprise company, and was the basis for the withdrawal of the claim in those proceedings. Thirdly, the department would not wish to cast doubt on other areas beyond health where public services are provided by private bodies by making express reference in this area. Each time the outcome of a legal test is specified in the legislation it weakens the general applicability of that test. The duties that fall automatically on private providers of NHS services can be and are intended to be supported by mandatory standard terms in NHS commissioning contracts. These terms will assist private providers to meet the obligations imposed on them by legislation. The noble Baroness raised the issue of social care matters, and when something is funded out of public money, it seems to me that the Equality Act would bear upon that. However, I take very much what she said about exceptions to this. To clarify this further, I would like to write to noble Lords on those issues. In the light of that, perhaps noble Lords would be willing not to press their amendments.