Health and Social Care Bill

My Lords, this has been an excellent short debate on a large number of amendments, but focusing on a critical issue, which is what should happen to providers when they get into significant difficulty. While the debate has focused on the role of Monitor, it is the Government’s firm view that commissioners should lead the process of ensuring there are services available to meet the needs of local communities. The Government brought forward amendments in another place to improve our proposals for ensuring continuity of services. This included removing provisions to apply an insolvency-based approach to foundation trusts in the form of health special administration. If a provider of NHS services becomes unsustainable, there has to be a legal framework that provides effective safeguards to protect patients’ and taxpayers’ interests. We have therefore taken an evolutionary approach in developing proposals to ensure sustainable local services. The Bill sets out a clear framework to achieve this. We will maintain the existing regime for foundation trusts but we will improve it significantly. First, we have removed the need to de-authorise a foundation trust. This is because the Government are committed to all NHS trusts becoming foundation trusts, so that all NHS providers have the freedom to innovate and drive sustainable improvements in quality and efficiency, and are accountable locally. I am aware that the noble Baroness, Lady Thornton, has tabled amendments which relate to the issue of de-authorisation and we will discuss those when we reach the appropriate clause. Further, the Government will also ensure taxpayers’ interests would be protected, by securing solutions that make best use of available NHS resources. We do not want patients to use, or taxpayers to subsidise, poor-quality, inefficient services or providers. Instead we will ensure an end to the culture of hidden bailouts. That is why Clauses 131 to 143 set out provisions for a transparent financing mechanism to fund continuity of services during a period of administration. In addition, I reassure noble Lords that the existing regime for NHS trusts, as distinct from foundation trusts, set out in the 2009 Act, would remain in place. Through a separate health special administration regime, legislation for the first time will also extend equivalent protection to patients who use NHS services provided by a company. Provisions set out in Clauses 125 to 130 would achieve this. I turn to Amendment 282ZA. The Bill gives Monitor broad powers to collect financial information for the purposes of monitoring providers’ financial stability. Monitor will be gathering a range of information, including financial, to enable it to undertake an ongoing assessment of risk. Monitor would also be able to intervene in order to support a provider to recover and to prevent failure where possible. I understand that some noble Lords are concerned about the range of interventions available when a provider becomes distressed. Providers themselves can take a range of actions, including improving the management capability and expertise that they have. Commissioners are responsible for securing access to local services and they can use contractual levers to respond to poor performance and prevent provider failure. Monitor would intervene on a provider on the basis of a predefined distress test to prevent failure where possible. The CQC would monitor providers’ compliance against patient safety and quality requirements. This locally led approach is especially appropriate where there is a pressing need for services to be reconfigured to ensure sustainability. I am sure that noble Lords will agree that a reconfiguration is more likely to succeed if it is based on close partnership working between commissioners, providers, local authorities and their local communities. Turning to Amendment 303ZA, I strongly agree with the principle of taking proactive steps to address service configurations that may become unsustainable. Indeed, our proposals are specifically designed to strengthen incentives on commissioners and providers to do this. However, I would not support a centralised approach, as envisaged by this amendment, which would move decisions right away from local communities. Our vision is that any changes to services should begin and end with what patients and local communities need. The key to successful service change is ensuring engagement with local communities and stakeholders in order to secure as broad support as possible for what can obviously be difficult decisions. I believe that our proposals will provide an effective and efficient framework that will protect patients’ interests and place a clear responsibility on the provider to turn itself around, with access to support and regulatory interventions where they are needed most. The noble Baroness, Lady Thornton, questioned the need for a risk pool. In our opinion, the risk pool is an important feature of the continuity of the NHS services framework. It provides a transparent funding mechanism for providers in administration in order to secure essential NHS services. The pool will be funded from risk-based levies on providers and charges on commissioners, and this mechanism will create important incentives on both providers and commissioners of NHS services. Providers of NHS services would be placed under financial incentives to take action to reduce the risk of becoming unsustainable. For example, providers could look to deliver their services in a more efficient configuration. Commissioners would be incentivised to commission services in a way that would reduce the impact on patients of a particular provider becoming unsustainable. This could be achieved, for example, by developing the market to ensure that there were alternative providers of NHS services where possible, and obviously where this would provide value for money. In contrast, a centrally held fund would effectively be a tax on NHS allocations, and it would fail to strengthen incentives on providers and commissioners. Therefore, we believe that the benefits of a risk pool far outweigh any additional transaction costs. It is also worth stating that Monitor would be required to run a public consultation on the methodology for the provider levy and publish an impact assessment. This would ensure that Monitor’s proposals were effective and proportionate. I turn to the amendments of the noble Baroness, Lady Finlay, and shall deal first with Amendment 294N. I should like to clarify for her that health special administration will apply only to companies that are subject to certain licensing conditions. Separately, trust special administration applies to NHS trusts and NHS foundation trusts. Therefore, there are two regimes. When a provider becomes unsustainable, the first concern should be the protection of patients. The amendment risks creating a class of company outside the scope of health special administration which would also not be covered by the trust special administration regime. The noble Baroness also spoke to Amendment 295CA, and I listened with attention to her. I can now give a commitment that the department will run a full public consultation on the regulations that will provide commissioner charges. This consultation will allow all interested parties the opportunity to contribute to the policy development. Amendment 295CB is unnecessary, as the Bill already requires Monitor to have regard to the impact that the provider levy will have on providers’ financial sustainability through the duty on Monitor to undertake an impact assessment on anything that it proposes will be likely to have a significant impact on providers. As regards Amendment 304A, I have already committed to considering education and training, and we will return on Report to clarify this issue.