Health and Social Care Bill

Public Bill Committee, 17 March 2011.

Derek Twigg (Labour, Halton)

On a point of order, Mr Hancock. On Tuesday, we had an interesting debate about competition law and European competition law. For the Opposition, that debate is crucial—it is also in the interest of the House—because the Bill will change the nature of the application of competition law to the national health service. There was, therefore, a lot of debate, and the matter was also raised yesterday during the Opposition day debate.

On Tuesday, the Minister, for whom I have a great deal of respect—and who I believe is correct on this—said:

“May I just explain this first? As NHS providers develop and begin to compete actively with other NHS providers and with private and voluntary providers, UK and EU competition laws will increasingly become applicable.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 718.]

That seems pretty clear to me.

Yesterday, during the Opposition day debate on the health service, the Secretary of State intervened on the shadow Secretary of State to respond to the same points about European competition law:

“It is dead simple: the Health and Social Care Bill does not extend the application of EU competition law, or the application of domestic competition law.”—[Official Report, 16 March 2011; Vol. 525, c. 379.]

We need to know which is the case. I know the Minister is considering publishing legal advice on competition law, so he might want to say something about that, but, for the sake of our ability to scrutinise the Bill and make proper decisions about competition law, we need to know exactly what is the case in terms of EU competition law.

Mike Hancock (Liberal Democrat, Portsmouth South)

I do not think that that is a point of order, but it is a point that the Minister might choose to clarify at some time. I draw the Committee’s attention to Mr Burns’s statement in the paragraph preceding that quoted by Mr Twigg:

“The Bill does not introduce any new competition law or extend the applicability of current UK and EU competition legislation.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 718.]

So there is some confusion—but, to be fair, Mr Burns clarified the position.

Kevin Barron (Labour, Rother Valley)

Further to that point of order, Mr Hancock.

Mike Hancock (Liberal Democrat, Portsmouth South)

There is no point of order. If you want to raise a new point of order, please do so.

Kevin Barron (Labour, Rother Valley)

This is a completely new point of order. Sooner or later, this complete confusion needs to be addressed. I heard the Secretary of State on the Floor of the House last night, yet the White Paper—I brought this to the Committee’s attention on Tuesday afternoon—says—

Mike Hancock (Liberal Democrat, Portsmouth South)

I think you are going back over the supposed point of order that I have already ruled is not a point of order. I applaud your endeavour in trying to get it in—it was a good try. For clarity and to help the Committee, so that this does not fester, I will now give the Minister an opportunity to clarify the position. He will give a very short explanation, but there will be no debate.

Simon Burns (Conservative, Chelmsford)

I am grateful to you, Mr Hancock, because I think it would be helpful to give a very short explanation to clarify the misunderstanding among Opposition Members.

First, there is no inconsistency between the Secretary of State and me. [Interruption.] If hon. Members listen very carefully, the message will sink in and become clear. The Bill does not extend the application of EU competition law or the application of domestic competition law; you referred to that in passing, Mr Hancock. The powers given to Monitor as a sector regulator are the same as those now available to the Office of Fair Trading. The Bill does not change the scope of competition law at all, and neither of us said that it did.

As NHS providers develop and begin to compete actively with other NHS providers, and with private and voluntary providers, UK and EU competition laws may increasingly become applicable. I hope that that has clarified the situation.

Derek Twigg (Labour, Halton)

Further to that point of order, Mr Hancock.

Mike Hancock (Liberal Democrat, Portsmouth South)

Order. There is no point of order, Mr Twigg.

Derek Twigg (Labour, Halton)

On another point of order, Mr Hancock. The Minister has responded to a different issue. The issue is about how the law will become increasingly applicable to NHS services because of the Bill.

With respect, I understand that there is some difference between what the Secretary of State said yesterday and what the Minister said in Committee the other day. To be clear about the point of order, I should say that, as we have made clear, this legislation will become increasingly applicable to health services, over and above what pertains today, because of the Bill. We would welcome an answer from the Minister on that point.

Mike Hancock (Liberal Democrat, Portsmouth South)

I honestly think that ingenuity has no bounds when it comes to trying to get in points of order. That is not a point of order; it is a point of debate. We have two more weeks of Committee, and I am sure that there will be ample opportunity for hon. Members to seek clarification on that point. If that was the most exciting moment of today’s proceedings, we are all going to be pretty bored, so let us hope that we can move on to deal with the clause 54 stand part debate.

Grahame M. Morris (Easington) (Lab) rose—

Mike Hancock (Liberal Democrat, Portsmouth South)

The Opposition are eager to make a point. Is it another point of order, or does it relate to the clause stand part debate?

Grahame Morris (Labour, Easington)

On a point of order, Mr Hancock. On European competition law and whether it would apply, the Under-Secretary of State for Health, the hon. Member for Guildford (Anne Milton), in reply to a Westminster Hall debate, gave a response that was completely at odds with the assurance that the Minister has given.

Mike Hancock (Liberal Democrat, Portsmouth South)

You are eager to follow a position similar to Mr Barron’s in trying to make that point. However, that is a point for debate, and further clauses—and Report or Third Reading, if necessary—offer an opportunity for that issue to be explored. In today’s proceedings, we should put it to rest. The points have been made, and the Minister has given his response. No matter how hard we try, we will not get any more blood out of that stone this morning.

Clause 54

Liz Kendall (Labour, Leicester West)

Thank you, Mr Hancock. It is always a pleasure to serve under your chairmanship, particularly because of your kind regard for the sustenance of hon. Members.

Mike Hancock (Liberal Democrat, Portsmouth South)

I wish that you had not mentioned that, because I cannot see anything going on that should not be going on.

Liz Kendall (Labour, Leicester West)

The odd caffeine-infused—

Mike Hancock (Liberal Democrat, Portsmouth South)

I wish you would not keep talking about it.

Liz Kendall (Labour, Leicester West)

You are setting a bit of a precedent. I am sorry for my attempts to spread modernisation and reform throughout the parliamentary Committee system. I am sure, however, that hon. Members on both sides of the Committee would support it.

We have had a wide-ranging debate about Monitor’s role and function. For the record, I will be returning to the issue not of the scope of competition law, but of the applicability of competition law to the NHS, which is the key issue. No one has said that the scope of competition law will be extended, but rather that its applicability to the NHS will be extended, because of the fundamental changes in the Bill. I shall return to that point under clauses 60 to 70, which relate specifically to those issues.

Simon Burns (Conservative, Chelmsford)

Will the hon. Lady give way?

Liz Kendall (Labour, Leicester West)

If the Minister wants to say more about that point, I am more than willing to listen.

Simon Burns (Conservative, Chelmsford)

I have heard what the hon. Lady has said, and I just wanted to confirm that she will be happy if I respond to those points at that time, rather than now.

Liz Kendall (Labour, Leicester West)

I absolutely will. It is important that we have a full discussion about the matter, but that is not appropriate under clause 54.

I want to make two main points about the clause, which are directly relevant here, but they lead to an overall concern about the Bill. First, clause 54 sets out a whole range of issues that Monitor must have regard to in exercising its general duties. Those include a duty to promote the economic, efficient and effective provision of health care services. We have also talked about its function to promote competition.

However, under clause 54, Monitor must also have regard to the desirability of securing continuous improvement in quality and efficiency, ensure fair access to services, and ensure that commissioners make best use of resources. It has to have regard to the desirability of promoting investment and the need to promote research and high standards in education and training with respect to health care.

I am sure that hon. Members agree that balancing those different issues is no easy task. There are inherent conflicts between the need to balance fair access with competition. Sometimes the one improves the other, sometimes not, depending on how the system works. With regard to balancing quality with efficiency, there is a lot of evidence to show that the two are linked, but there are also difficult trade-offs that inevitably have to be made. That brings us to the fundamental point. There are always trade-offs between trying to improve the quality of, and meet demand for, services—demand that, if not infinite, is increasing in the NHS and health care services across the world—while making the best use of finite resources.

That is an extraordinarily difficult task for Monitor. However, not only Monitor is involved in those difficult conflicts, balances and trade-offs; GP commissioning consortia also have to seek to strike those difficult balances. They have been told that they cannot go over budget. I have already raised issues about how difficult that would be, although it is a desirable goal. The NHS commissioning board also has the goal of trying to make the best use overall out of taxpayers’ money for the NHS, while securing all sorts of different improvements in quality and outcomes.

First, this is a very difficult issue. Secondly, the problem is that there are a number of different bodies charged with achieving the goal. My real concern is about where the authority finally lies for making that difficult balance of decisions about what is the best use of taxpayers’ resources to get the best possible outcome for patients.

I refer hon. Members to the helpful and thoughtful briefing from the King’s Fund. I should mention at this point, as a declaration of interest on the record, that aeons ago I worked at the King’s Fund. The King’s Fund said about the measures in clauses 52 and 54 —[Interruption.] I hope the Minister will listen because this is a difficult issue. I am, as always, trying helpfully to alert him to issues and problems—not to misrepresent the Bill, as the Minister was reported as saying in TheGuardian.

The King’s Fund said:

“These provisions do not make it clear how the balance between these various duties and considerations should be struck and how conflicts between Monitor’s policies and those of the Care Quality Commission and NHS Commissioning Board, for example, should be resolved. The Bill does not adequately define the role of Monitor in relation to these bodies. For example, it does not make clear the circumstances determining whether the Secretary of State should turn to Monitor or the NHS Commissioning Board to deal with performance issues. Under the framework set out in the Bill, no single organisation is responsible for overseeing the NHS as a whole, in terms of both provision and commissioning.”

What it says next is interesting, as the Government are seeking to model the NHS along the same lines as the regulated utilities, railways and industry.

Mr Burns indicated dissent.

Liz Kendall (Labour, Leicester West)

I do not know why the Minister is shaking his head, because the Bill states that it is based on precedence in those sectors. That is why I made a probably overlong speech on Tuesday trying to explain why the two systems are so fundamentally different and that a different system should apply. Interestingly, the King’s Fund stated:

“In the case of the energy industry”

—and this is about who is ultimately responsible, or who has the overarching view of the system—

“this difficulty has been resolved in part by giving ministers powers to issue general directions relating to the policy framework within which the regulator should operate. However, these sectors have a much simpler governance structure and there are no equivalent bodies to the Care Quality Commission or the NHS Commissioning Board.”

In other words, with gas, electricity and telecoms, there is Ofgem and Ofcom, and that is it. There are no other bodies with responsibilities, as there are in the NHS. The King’s Fund also states:

“In relation to specific trade-offs such as cost or access versus quality, other regulators have commissioned research from service users to help define where the balance should be struck. In one case, the water regulator asked ministers for a decision as the cost implications of implementing higher standards were so considerable.”

It is very unclear who takes the ultimate decision on the appropriate balance between efficiency and costs, and quality. In the regulatory systems, there is one body that does that, which is the economic regulator. Under the Government’s plans, there will be Monitor, the Care Quality Commission, the NHS commissioning board and GP commissioning consortia. Will the Minister explain who is responsible for striking that trade-off, and how it will happen?

John Pugh (Liberal Democrat, Southport)

Mr Hancock, you missed the fun and games the other day, but I am sure you would have enjoyed them.

This is an opportunity for the Minister to be very helpful and clear up Members’ concerns. As I listen to the debate, it seems that there are not vast gulfs in terms of the objectives that people set themselves, via this set of clauses, but that there are vast differences in the policy outcomes that people foresee. This is a genuine attempt on my part, therefore, to get the Minister to convince those who are more sceptical than he is about how things will pan out.

We are in unknown territory, because there is no natural history for a regulator such as this. However, the natural history of existing regulators shows that when they have been created, they do not always have the effects that were anticipated. There has been criticism of regulators that Parliament has created and then regretted doing so. We are, in a sense, creating not a new feast—because Monitor is not a completely new feast—but a new mechanism.

The Minister was helpful in a previous sitting in pointing me to parallel examples of regulators in Germany and the Netherlands, and I have since researched that. I do not think, however, that those regulators have precisely the same role as the regulator we seek to put in place here. I could not find a regulator that has the job of promoting competition in Germany or the Netherlands, although I was unable to look at the situation in all parts of America, which he also specified.

In my initial remarks on this matter the other day, I did not ask whether the effect of creating Monitor would be good or bad. I questioned whether it was, in fact, necessary to have Monitor to achieve the effect that the Minister clearly wants, given that primary care trusts are already procuring a range of services in a relatively competitive health market. We have to accept, however, that the Minister and the Government are trying to avoid some of the crude effects that might be imposed by a pure economic regulator, and that is to be supported.

By and large, we know that regulators tend to regulate profit-driven industries, but we are creating an organisation that will regulate institutions that are presumably aimed at the public good. Most regulators that I have seen hitherto essentially accept the fact that there is a market out there driven by profit, and they seek to moderate that market to achieve a public good. We are, at any rate, doing something different, because we are trying to control a whole series of agencies—NHS agencies, in particular—that seem to be primarily motivated not by profit, but by public interest. Therefore there are problems.

What I am most interested in—the Minister can help me with this—is that the key thing about Monitor is that it can overrule commissioners or producers when they act anti-competitively. That is the fundamental thrust behind creating the body, but there is a series of mitigating factors in the clause to ensure that Monitor does not act in a crude or insensitive way.

During our discussions on a clause that we were debating the other day, the Labour party moved that Monitor should also be sensitive to integration and collaboration, and the Minister ingeniously, but not particularly convincingly, tried to distinguish outcomes and processes. I do not want the Minister to comment on the solution, but will he give examples of how the provision will work in practice and the kind of progress that there will be through the system?

It seems that Monitor will not do a lot about uncompetitive behaviour by producers, provider organisations, which are, by and large, encouraged by the legislation to compete against one another. It is not clear what anti-competitive behaviour by provider organisations towards the NHS looks like; I know what competitive behaviour in the NHS will look like, and perhaps some of the unfortunate consequences will stem from that.

The only example of uncompetitive provider behaviour that I can think of is if a company such as Tesco decided to price its pharmacy products in such a way as to put local pharmacies out of business. That strikes me as fairly uncompetitive, but I do not think that Monitor’s remit would extend to Tesco. It would help if the Minister gave some examples of uncompetitive behaviour by providers, for which Monitor would show the red card.

It is easier to understand what uncompetitive commissioning looks like, and the Minister helpfully provided examples of that. The hon. Member for Stafford mentioned doctors in their surgeries worrying about whether they were referring someone to a provider without giving them sufficient indication of their options, or persistently recommending the same provider. That would clearly be perceived as uncompetitive behaviour, particularly if the options were not adequately disclosed to the patient.

The hon. Gentleman also mentioned objections to block contracts—with which I am familiar—when they are against patients’ interests. There is also the refusal to fund any willing provider, which is what I am most interested in. If a willing provider arrives in town wishing to provide a service and the commissioners refuse to commission it, even though patients are keen on using it, Monitor will, I imagine, intervene and show the red card.

Members who have heard me speak in the past will probably think that I am biased in favour of primary care trusts, but I am not. Primary care trusts in my part of the world have behaved in a wholly anti-competitive way, in one sense. The biggest single health issue in my constituency of Southport, stretching back more than 10 years, is that we do not have an A and E department for children. The hospital is on a split site, so anyone in Southport who has a child with a minor ailment has to go to Ormskirk. That has been a huge issue, and I have even had the Secretary of State down campaigning for the Conservatives about it. It has gone on and on, as a festering sore, and two successive PCTs have tried to resolve it.

We got a pledge from the PCT that it would deliver a solution and give us what I thought we would have as a minimum: a walk-in centre for children in Southport. The plans were stopped at the last minute, however, after a report was produced with the help of the Department of Health—it indicated a useful person to do the report—and senior paediatric specialists. Essentially, the report was produced to do a job, which was to say that constituents could not have the facility that they wanted and were paying for. They had organised petitions about it, and I had been to Richmond House to see successive Secretaries of State.

The report said that my constituents could not have the facility because it would have a detrimental impact on the A and E department in Ormskirk, which happens to be part of the same trust; that is effectively saying that it cannot stand the competition. During a subsequent discussion with Assura Medical, I asked what would happen if it provided a service that people dearly wanted but that affected the A and E department in a nearby town. I was told that under the any willing provider rule, if it provided a service that people wanted to use, it would be funded for it. In a way, I should have said that that was good and applauded the advent of Monitor in that arrangement, because it would deliver a political objective that I have long had in mind and that the residents of Southport dearly want.

One can imagine what might happen, however. The A and E department, or the paediatric department, in Ormskirk might become no longer sustainable. A shortage of paediatricians was the key issue, because they need a certain flow of patients—the fewer they got, the less sustainable the department was. It would have a ripple effect. It would have an effect on Ormskirk hospital, which would have an effect on the local networks in the area, which would have an effect on Alder Hey. One could say, “Well, so be it. This is driven by consumer interests from the bottom.” But one wonders who is going to sort out all the pieces.

I am more comfortable with the idea of resolving the problem by explaining to a democratic body of decision makers the options, the effects—according to the best professional advice—and what will fall on their heads as a result of their decisions, because they have to live with those decisions. The problem is that Monitor does not have to live with the decisions. It is a long way away, and right across the country it can make all sorts of decisions that have consequential effects.

We can live with that environment and tolerate it, but it is the local health economy rather than Monitor that has to live with it. It is a genuine concern that, if Monitor operates as I expect it to, there will be these effects right across the country.

Emily Thornberry (Labour, Islington South and Finsbury)

I am listening with great interest to the hon. Gentleman’s experiences and how they apply to the proposed legislation. His party’s policy used to be to have elected primary care trusts, which would presumably give the sorts of outcomes that he is asking for. How did his party move so far from that policy to supporting the Bill instead?

Mike Hancock (Liberal Democrat, Portsmouth South)

I do not know whether that is relevant to the debate, and I urge Dr Pugh not to go down that route.

John Pugh (Liberal Democrat, Southport)

I always felt that a more modest proposal would be for whoever does the commissioning—the PCT or the commissioning consortium—to present a plan and let local people amend it, rather than for an elected body to construct a plan. That was always my favoured suggestion. We could move towards that situation in the Bill by letting the commissioning consortia answer in a more direct way to health and well-being boards, which presumably will stick around to represent the local community in some ways, and which have to live with the consequences. There is a tension between what might be democratically acceptable and what Monitor might want to do.

Liz Kendall (Labour, Leicester West)

This may sound like a philosophical point, but it is relevant to the debate. The hon. Gentleman is aware that David Bennett, the chairman of Monitor, has spoken about taking the politics out of the health service, and about decisions being based on fact and evidence rather than on politics. That presumes that politics is not based on fact and evidence, which I hope that it mostly—if not always—is.

Mike Hancock (Liberal Democrat, Portsmouth South)

Order. My co-Chairman made the point on Tuesday that interventions should be short and to the point. Members should remember that. I hope, Ms Kendall, that you will not go too far down the philosophical route—we could write a book on this—but will ask Dr Pugh whatever you were going to ask him and move on.

Liz Kendall (Labour, Leicester West)

My question was whether he believes that there should always be democratic accountability for decisions, or whether they can be moved to some kind of purely scientific or factual basis. Or is it more complicated?

John Pugh (Liberal Democrat, Southport)

I expect that it is more complicated. There is always tension between what people regard as clinically safe and what some of the population regard as desirable in terms of access. In my constituency, that has been the debate over this particular issue for the last 10 years. Committee members might be interested to know that the embryonic GP consortia asked about this outstanding democratic issue, which had people marching through the streets of Southport and has seen successive parliamentary campaigns. In 2005, a hospital campaigner stood against me on the failure to deliver this particular outcome. The GP consortia asked about it very recently, and they say not only that they are not offering a solution to it, but that it is not a problem.

The belief that GPs will somehow deliver something that is more democratically acceptable to the population is arguable. It does not seem evidenced in my own experience, which is what drives me here. The issue for the Minister, a genuine, serious concern—and I know that he is as anxious as I am to get this right—is how we can avoid Monitor’s making decisions on narrow grounds that ignore the overall effect on the health economy. Are these clauses sufficient to ensure that that is the outcome, given that Monitor does not have to live with outcomes?

I do not want to labour the point about European Commission directives and so on, because frankly I do not understand all the detail, but I am familiar with NHS procurement by provider organisations because my daughter works in that field. I know that it is governed by European competition law, as the Minister has said—OJEC regulations and so on. They are very laborious, bureaucratic and expensive to administer. To simplify it so that someone like me can understand, as I see it, the procurement of clinical services is not subject to that same set of rules.

I would like a very clear statement from the Minister that this legislation does not put in place the identical template system and set of rules in the commissioning of clinical services that currently applies to the procurement of bedpans, beds, taxis, and all the other things currently procured by NHS bodies as standard.

Owen Smith (Labour, Pontypridd)

I do not want to make a long speech about this.

Simon Burns (Conservative, Chelmsford)

Sure you don’t.

Owen Smith (Labour, Pontypridd)

No, I do not. However, there are a few things in clause 54 that I would like to point out. Picking up from the closing remarks made by the hon. Member for Southport, I think we do now have clarity in respect of competition. The Minister is right that there is no difference between what he said on Tuesday and what the Secretary of State for Health said yesterday.

The only difference was what the Secretary of State left out of his remarks, which is the crucial coda that the Minister gave us on Tuesday and repeated this morning: competition law is not changed by this Bill, but it will increasingly apply in and bite on the NHS as more entrants come into the market. In effect, as there is a more genuine open market, so too the safeguards or challenges that we see of competition legislation have to be applied to the NHS fairly and under the law, in a way that has not happened before.

Clinical services, hitherto insulated from competition law, will be increasingly affected by it in future. Increasingly, the same process as applies to bedpans—currently procured under competition law—will apply to clinical services.

Dan Byles (Conservative, North Warwickshire)

Does the hon. Gentleman think that under the plans that the Labour party put forward—for any willing provider and greater use of private care—the same would not have applied, had there been no change to the way the law applies to the NHS?

Owen Smith (Labour, Pontypridd)

Had what we intended to apply extended the volume of competition and the number of entrants, had we removed the crucial caveat that the NHS was the preferred provider and had we opened up competition to 95% of the NHS instead of the 5% where there was managed intervention, I imagine we would have seen competition law abiding. However, we did not do that. Only 5% of the NHS budget was ever in the hands of private providers.

Mike Hancock (Liberal Democrat, Portsmouth South)

I urge the hon. Gentleman to come back to clause 54. Competition is not specifically mentioned in clause 54, and there are other clauses on which it will be more appropriate to make that speech.

Owen Smith (Labour, Pontypridd)

I respect your intervention, Mr Hancock, but the point I am trying to make is that the extent to which competition law will bite on the NHS absolutely impacts on the functions that Monitor has both to perform and have regard to under clause 54. As the hon. Member for Southport was pointing out, it will impact on its ability to make holistic decisions—to think about the totality of the health care system and to try not to make decisions on narrow grounds. The sorts of forces that will dictate its making decisions on narrow grounds may well come about as a result of its having to have greater cognisance of competition law and the implications of competition law.

So I turn again to clause 54 and it is in that context that I challenge the notion about Monitor. The clause is interesting in that it is a list of “need to do” and “nice to do”, with desirability. Under the “need to do”—I assume this is really important; more important than the “nice to do” desirability provisions—there is the need to maintain patient safety. We would all accept that that is a crucial aspect of any duty in any facet of the NHS.

My concern here, which is an adjunct to the point that the hon. Member for Southport was making, is about how Monitor can be certain that it is making decisions in the best interests of patient safety if it is also having to have regard to value for money. Furthermore, and crucially, it is potentially being dictated to—over time, in the decisions that it has to take—by case law, competition law and the way in which it may become increasingly fearful of intervention in the courts by other actors in the health service who are looking to get a piece of the action of clinical service or pathway or local health economy x or y.

Derek Twigg (Labour, Halton)

My hon. Friend’s point has not been expanded on too much in this Committee, although no doubt it will be under competition law. It is important. He is saying that there is a likelihood of not just providers but commissioners possibly challenging decisions in the courts. That has a massive potential to grow.

Owen Smith (Labour, Pontypridd)

I offer a hypothetical example—I am not as wary as the Minister about hypotheticals—to try to illustrate what I mean. I extend the point into one that I will make in a minute about research, because it holds fast for both issues. Take a medicine such as Lucentis, which was being used for age-related macular degeneration and around which there was an enormous row a couple of years ago. Was it the right medicine? Was it effective? It was certainly expensive. Should it be used? NICE was in a quandary about it.

We ended up with a postcode lottery of Lucentis being allowed, often under exceptional case rulings, in certain parts of the NHS and not in others. We also ended up with Lucentis effectively being discounted enormously in certain parts of the NHS, where they were keen to use it, and not in others. Age-related macular degeneration is an area where this sort of behaviour has happened in the NHS over a long period. There was a cohort study that saw different bits of the NHS using earlier generations of drugs against AMD.

What would happen in a world where other companies provided those services to the NHS? Those services might not simply involve the product, but the product plus its administration and the excess treatment costs associated with using it. What would happen in a world where certain bits of the NHS were interested, perhaps through GP consortia, in the drug’s being delivered in primary care or secondary care, but other bits of the NHS were not?

Once competition law was applied, how would the NHS withstand a company or other actors through the courts insisting on all parts of the NHS using the medicine? How would NICE’s views on whether that medicine was safe and appropriate for all patients withstand a challenge in the courts? The Bill opens up all those questions if competition law bites, as we anticipate it might.

Any medicine that is controversial or being trialled in the NHS is interesting, because Monitor also has to have regard to the need to fund research in the NHS. I am sure that none of us would disagree with the fact that the NHS is potentially a hugely important global resource for research, as it has the largest total patient pool. For many years, Members on both sides of the House have wanted to realise fully the potential of the NHS as a vehicle for research.

One key problem we have with the Bill in terms of research—we heard about it in evidence—is that PCTs have in the past picked up the excess treatment costs associated with research, but there is no clarity in the Bill about who will pick up the bill for those costs. Will it be the GP consortia? We do not know. Will it be the ethereal regional presence of the NCB? We do not know. Will the drugs companies be forced to pick up those costs in future? It certainly will not be Monitor, so how can Monitor have regard to the desirability of promoting research? Is that not an entirely redundant duty to place on it?

Even if the duty is not redundant, it absolutely cannot be delivered by Monitor. There are many holes in the Bill in so many respects—and the more I look at it, the more I see vast chasms and worry about how on earth it can ever work.

John Pugh (Liberal Democrat, Southport)

I do not think the latter argument is a particularly good one—the rest of them are, of course, absolutely excellent. Presumably, in a commissioning decision, someone may commission something more expensive that has benefits for NHS research, so a viable case can be made for it, as opposed to commissioning something, perhaps in the private sector, that has no research element attached. In that way, the research imperative in the legislation could kick in and help make decisions.

Owen Smith (Labour, Pontypridd)

With respect, I think we are speaking at cross-purposes. Perhaps I did not explain myself carefully enough. The point I was trying to make is that there is always a cost associated with trialling a medicine in the NHS. Previously that cost was, essentially, met by PCTs. The NHS body that delivered and operationalised the trial with NHS patients did not have to bear extra costs as a result; they were picked up centrally. Nowhere in the Bill is it clear where that central cost will be met.

There is a further point about competition that is relevant here, and it is that dispensing doctors—

Mike Hancock (Liberal Democrat, Portsmouth South)

We are going back to competition.

Owen Smith (Labour, Pontypridd)

I shall sit down, but I will come back to it.

Mike Hancock (Liberal Democrat, Portsmouth South)

I am sure you will.

Simon Burns (Conservative, Chelmsford)

I am looking forward to it.

Mike Hancock (Liberal Democrat, Portsmouth South)

We are all looking forward to it.

Simon Burns (Conservative, Chelmsford)

May I begin my response to the stand part debate by reiterating, particularly to the hon. Member for Leicester West, that health care cannot be delivered in an unbridled free market? Health is different. Patients require protection, and such a market would not guarantee that essential services would be delivered.

We had a similar debate last Tuesday, in which I made it clear, as I see from reading my comments, that we do not regard, never have regarded and do not intend to regard the health service as a utility or as having a role like Ofgem’s, Ofcom’s or whatever. However, if I stood here and said to my hon. Friends and Opposition Members that we had not looked at their regulatory procedures to see whether there was anything relevant or useful, we would be criticised for not doing so. I suspect that Opposition Members will criticise us whether we do or do not do that in any area, because that is the nature of the beast with respect to their opposition to the Bill.

Mike Hancock (Liberal Democrat, Portsmouth South)

Order. May I ask hon. Members on both sides of the Committee to respect the fact that we are dealing with clause 54 stand part? We are coming back to the issue of competition. To be fair to Labour Members, you also, Mr Burns, have to limit your comments at this stage to what is relevant to clause 54 stand part and not widen the debate again. It would be unfair of me to stop some hon. Members doing that and then allow you to do so. I hope that we can all respect the fact that we are dealing with clause 54 alone at this stage.

Simon Burns (Conservative, Chelmsford)

In the context of what I just said and the fact that we do accept that health care cannot be delivered in a completely free market, that is the reason why the Government want to introduce an economic regulator for health. The key purpose of economic regulation is to protect the interests of patients and taxpayers by protecting essential services and promoting efficiency, transparency and fairness in the way in which taxpayer funds are used.

Robust economic regulation will create certainty about prices, offer incentives for providers to thrive, facilitate the introduction of innovative services and safeguard essential services, which a free market cannot necessarily do. That is fundamental in our vision for putting patients and quality first. Monitor cannot deliver that in isolation. It will be part of a health care system. It must work with the commissioning board on pricing and with the Care Quality Commission on the licensing regime. It must also work within an overall context and give consideration to how its regulatory functions will impact on the wider system.

Clause 54 sets out the key considerations to which Monitor must have regard in carrying out its functions. Those will provide key safeguards, as well as giving Monitor a strategic framework in which to operate. The first key consideration to which Monitor must have regard is

“the need to maintain the safety of people who use health care services”.

The second and third are the desirability of securing continuous improvement in the quality and efficiency of health care services provided for the NHS.

The clause goes on to provide that Monitor should have regard to certain considerations applying to commissioners: the need for commissioners to ensure that people who require NHS health care services have access to them; the need for commissioners to ensure that the provision of access operates fairly; and the need for commissioners to make the best use of resources.

The clause specifies that Monitor should have regard to the need to promote investment by providers of NHS health care services in those services. Monitor should also have regard to the need for those who provide health care services to the NHS to promote research into matters relevant to the NHS. The clause also provides for Monitor to take account of the need for high standards in the education and training of professionals who provide health care services to the NHS.

The final subsections of the clause are designed to help to ensure that Monitor works effectively with other parts of the system that will create the infrastructure for the provision of NHS health care services.

Derek Twigg (Labour, Halton)

I am intrigued by Monitor’s involvement in the “best use” of resources. We have read about that in the Bill and the Minister has just reiterated it. The Government are saying in the Bill that they are freeing GPs and giving consortia freedoms. Clearly, they will make the best clinical decisions. Does the Minister not see that there might be a contradiction between what Monitor sees as the best use of resources and what a GP consortium sees as the best use of resources, or does he see no problem whatever in that respect?

Simon Burns (Conservative, Chelmsford)

I do not think that there is any conflict at all in the way that the hon. Gentleman suggests. Everybody working in the NHS—now, in the past and in the future—will have regard to resources for the very simple fact that resources to the NHS are not unlimited, and we have to work within a budget.

Derek Twigg (Labour, Halton)

It is easy to say that, but the big difference is that they have got to promote competition. Is the right hon. Gentleman seriously saying that there will be no conflict of interest whatever, that the system will work perfectly, and that there will be no disputes between GP consortia and what Monitor wants?

Simon Burns (Conservative, Chelmsford)

I am not saying that per se, because of course we are operating on a slightly different premise for the simple reason—[ Interruption. ] I have not finished, so the hon. Gentleman does not know what I am going to say. He cannot get it fixed squarely in his mind that we are talking about competition based on quality. He will hark back to that old argument, but I am not going to go down that route, because I know that you, Mr Hancock, will rightly, on clause 54, haul me up.

Liz Kendall rose—

Simon Burns (Conservative, Chelmsford)

No, I am not going to be tempted by the hon. Lady either because, as she will appreciate, we are discussing clause 54 and—

Liz Kendall (Labour, Leicester West)

It is on clause 54 specifically.

Simon Burns (Conservative, Chelmsford)

Okay.

Liz Kendall (Labour, Leicester West)

It states specifically in clause 54 that Monitor has a duty

“in exercising its functions,”

to

“promote the economic, efficient…provision of health…services.”

So it is not just about quality—there are financial considerations coming into play. To say that Monitor is just acting on quality is simply not what it states in the legislation.

Simon Burns (Conservative, Chelmsford)

The hon. Lady slightly anticipates—

Mike Hancock (Liberal Democrat, Portsmouth South)

Order. I have to say that I cannot find those words in clause 54.

Liz Kendall (Labour, Leicester West)

Subsection (3).

Simon Burns (Conservative, Chelmsford)

The hon. Lady slightly anticipates me, because in the course of her remarks she asked me a number of questions that I will address when I have set the framework of the clause.

The clause goes on to make provision that Monitor should have regard to certain considerations that would apply to commissioners. The clause also specifies and provides for Monitor to take account of the need for high standards in education. The final subsections in the clause are to help ensure that Monitor works effectively with other parts of the system that will create the infrastructure for the provision of NHS health care services. Monitor would have to take account of the way in which the Secretary of State and the NHS commissioning board performed their relevant statutory duties. The clause is to ensure that, in its role as economic regulator, Monitor would work in a way that had regard to, and complemented, the roles and responsibilities of other key players in the system. I believe that it is right to leave it to Monitor to consider and balance those things. Independence will be key to Monitor’s role as an economic regulator, hence the requirement about “having regard to”, rather than them being absolutes. They are not in competition with one another. It is about balancing them in the best interests of patients.

The hon. Lady, in an interesting speech, raised a number of issues that I promised I would address. First of all, one thing that the hon. Lady seemed to be saying was that too many bodies are responsible for driving up quality. I have to say that quality is, as we keep mentioning during the course of these debates—

Liz Kendall (Labour, Leicester West)

On that point.

Simon Burns (Conservative, Chelmsford)

I have not actually started, but if it helps, I will give way.

Liz Kendall (Labour, Leicester West)

I am sure that the right hon. Gentleman will see, when he looks at Hansard, that I did not say that there were too many bodies responsible for driving up quality. I said that there were too many bodies who are tasked with both trying to improve quality and delivering the efficient and effective use of resources. Several bodies are trying to balance those difficult considerations. The question I raised was: who is ultimately responsible?

Simon Burns (Conservative, Chelmsford)

I know the hon. Lady is not a lawyer, but that did seem, in the nicest possible way, to be slightly splitting hairs. I will seek, however, to answer the bottom-line question, which was—unless I have misunderstood what the hon. Lady thinks—who exactly is responsible for driving up quality. Quality, as we keep mentioning during the course of these debates, is the guiding principle of the NHS, and we are, for the first time, making that a reality in primary legislation. That is why we have sought to ensure that all levels of the system have a role to play in driving up quality. That includes the need for Monitor to have regard to the need to secure continuous improvements and quality in the NHS.

Emily Thornberry (Labour, Islington South and Finsbury)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

No, may I just finish answering the hon. Member for Leicester West?

Ultimately, providers and clinicians are responsible for delivering high-quality care and are held to account, through contracts, by their commissioners. As now, the CQC’s role will be to safeguard essential levels of quality. It is the job of the commissioners to drive up quality and the job of providers to deliver care that is of much higher quality than set out in the essential standards. I hope that that answers the hon. Lady’s point.

Emily Thornberry (Labour, Islington South and Finsbury)

Given that Monitor has the ultimate responsibility for ensuring competition, many of us in the Committee would like to know who has the equivalent job of being the ultimate arbiter of quality. The CQC is sometimes quoted as being that body, but we all know that it will provide a basic safety net. I respectfully say to the right hon. Gentleman that it is simply not good enough for him to say, “Oh, it’s everybody’s responsibility to push up quality.” If we are talking about something as important as developing a market and competition, why is there not in this architecture one body that is ultimately responsible for defining and ensuring increases in quality?

Simon Burns (Conservative, Chelmsford)

Oh, Lord. I really do not want to keep going round in circles.

Emily Thornberry (Labour, Islington South and Finsbury)

Given me an answer.

Simon Burns (Conservative, Chelmsford)

If the hon. Lady will keep quiet, she might get the answer. In the context of answering the hon. Lady’s question, let me repeat once again for the record that we seek to ensure that all levels of the system have a role to play in driving up quality. As we have said in earlier debates, and I will say it again so that the hon. Lady will, I hope, finally twig, there is the commissioning board; there is the CQC; there is Monitor, which will carry out its duties as part of the jigsaw; there are the commissioners; there are patients, who can exercise patient choice; and there are the hospitals up and down this country. They will all work together to improve and enhance quality and to achieve the other aim of our modernisation: to improve outcomes, which is of most importance to patients.

Emily Thornberry rose—

Simon Burns (Conservative, Chelmsford)

I am not going to give way to the hon. Lady again, because I have now explained the issue.

Dan Byles rose—

Nick Smith (Labour, Blaenau Gwent)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

Certainly not. I will give way to my hon. Friend.

Dan Byles (Conservative, North Warwickshire)

Does my right hon. Friend agree that without a quality tsar or commissar dictating health outcomes, the Labour party do not seem to understand how quality can be embedded?

Simon Burns (Conservative, Chelmsford)

My hon. Friend is so right. New Labour the Opposition may have been, but they are, sadly, still in the straitjacket of the old Stalinist attitudes that drove the NHS through its early stages.

Emily Thornberry (Labour, Islington South and Finsbury)

Will the right hon. Gentleman give way?

Simon Burns (Conservative, Chelmsford)

No. I now turn to another issue raised by the hon. Member for Leicester West, who suggested that Monitor’s functions might be in conflict. It is true that Monitor will need to balance a number of objectives, which may sometimes come into tension—hon. Members should listen carefully, because I do not want my words misinterpreted. That is why clause 55—we will come to it next, so I will not go down that avenue—sets out a transparent process for managing conflicts between functions.

The hon. Member for Southport raised a number of issues, which I would like briefly to address. He mentioned accident and emergency departments, and they are already paid for the patients that they treat. Those services would not be subject to any willing provider as they need to be commissioned and planned to ensure that they are safe and clinically viable. The Bill allows local commissioners to designate services traditional protection, to ensure that the country is covered with the relevant number of services; for example, of A and E departments.

The hon. Gentleman also asked how one can avoid Monitor’s making decisions on narrow grounds. The answer is by requiring Monitor to have regard to exactly those broader issues that commissioners need to take into account. He also suggested that decisions should be made by a democratic body rather than Monitor. Monitor will not make decisions about which services are provided. It will ensure that the choices of patients and clinicians shape the development of services. Health and well-being boards give democratic oversight at a local level in a way that was not possible before.

The hon. Gentleman also asked what anti-competitive behaviour looks like. I hope that he will find these examples helpful. They include things such as colluding with a commissioner to keep out competitors; colluding to keep prices high when there is no national tariff; not offering patients the choice to which they are entitled; agreeing not to compete against each other; and sharing confidential cost information.

The hon. Member for Pontypridd raised a number of matters. I shall seek to answer him, although whether it is to his satisfaction remains to be seen. He spoke about competition law deciding what drugs are funded.

Owen Smith (Labour, Pontypridd)

That is not quite what I said.

Simon Burns (Conservative, Chelmsford)

Yes, the hon. Gentleman said it during the course of his remarks; he must remember, because he spoke only a few minutes ago. The answer to his question is that it would be for commissioners, advised by clinicians, to decide which drug treatments are funded, not Monitor. I hope that my answer reassures him.

On the commissioning of clinical services, he asked whether procurement rules apply. We already have rules that govern the procurement of clinical services. It is the PCT procurement guide. It recognises that procuring clinical services is very different from procuring goods such as bed pans and so on, and the Bill recognises that by restricting Monitor’s role to clinical services.

I shall deal next with two matters raised by the hon. Member for Leicester West. She asked where the overall authority lies for deciding on the use of resources.

Liz Kendall (Labour, Leicester West)

No, that is not what I asked.

Simon Burns (Conservative, Chelmsford)

That was certainly the impression given by the hon. Lady. I shall answer anyway, as I am sure that she would have liked to have asked the question. Commissioners decide on the best use of resources and priorities for patient care. Monitor simply ensures that the system works fairly and in the interests of the patient. Patients decide who they want to treat them.

I hesitate to say so, but I think that the hon. Lady wanted to know where the overall authority lies for deciding how best to use resources. [Interruption.] Given that the hon. Member for Islington South and Finsbury is acting as a kind of Greek chorus, it seems that the hon. Member for Leicester West did not ask that question. However, she will have the benefit of an answer so as to avoid confusion at a later stage. [Interruption.] God, that cackle!

The answer is simple. Commissioners secure the best quality services for patients in line with patient choices. The CQC ensures essential standards of safety and quality. Monitor ensures that services are efficient and fair. The Bill creates a much more coherent framework than the current confused mix of overlapping responsibilities.

In light of all that information, I hope that the Committee will agree that clause 54 should stand part of the Bill.

Liz Kendall (Labour, Leicester West)

The question that I asked. [Interruption.] It is important to clarify it. Fair dues to me—I want to clarify the question that I asked. It is not who has responsibility for quality or who has responsibility for resources. There are trade-offs and difficult decisions, and those issues need to come together. It is quite illuminating that in his reply, the Minister wished to separate the two and that, I am afraid, is the problem. That is the fundamental, difficult decision that needs to be taken in the NHS, both locally and nationally, whoever is in power. As for the difficult trade-off, it is not clear, under the Government’s proposals, whether the responsibility for the system as a whole lies with the NHS commissioning board nationally, GP commissioning consortia locally, the Care Quality Commission or Monitor. It is fair enough that the Minister does not take my word for it, but he should read the briefing from the King’s Fund. If he had been at the Westminster health forum, in which a number of eminent people, including David Bennett, spoke, he would have seen that such questions are being asked by the health policy world. How are those difficult trade-offs made and where does ultimate responsibility lie? I humbly ask the Minister to listen to what those organisations say because this is a difficult question.

Mr Burns rose—

Liz Kendall (Labour, Leicester West)

I am always happy to take interventions.

Simon Burns (Conservative, Chelmsford)

The hon. Lady is right. These trade-offs have always existed within the NHS. There is no way of legislating them out of existence.

Liz Kendall (Labour, Leicester West)

I am not seeking to do that.

Simon Burns (Conservative, Chelmsford)

This Bill allows the trade-offs—and this is the critical thing—to be managed fairly and, more importantly, transparently to minimise any tensions and problems.

Liz Kendall (Labour, Leicester West)

I do not believe that that is the case. This Bill could make it harder to balance these difficult trade-offs because of the responsibilities of the different bodies that are being set up. As I said, if the Minister will not listen to me—I understand that we sit on opposite sides of the Committee—I respectfully ask him to listen to the concerns of organisations such as the King’s Fund and the Nuffield Trust because this is a difficult issue.

Kevin Barron (Labour, Rother Valley)

In a previous life, my hon. Friend was an adviser to a Secretary of State for Health. Has she any evidence of the Competition Commission being used to sort out problems within clinical services?

Mike Hancock (Liberal Democrat, Portsmouth South)

Order. This is a debate on clause 54.

Liz Kendall (Labour, Leicester West)

We are indeed discussing clause 54. I always bow to the decision of the Chair. My right hon. Friend raises the question that we will turn to when we discuss a later clause. The question is whether we should give a body the same powers as the OFT and the Competition Commission, which are not required to make those trade-offs. It is legitimate for my right hon. Friend to ask that.

In discussions that I have had with a number of organisations, it was said that responsibility is not included in the Bill. My hon. Friend the Member for Pontypridd and the hon. Member for Southport made the important point that Monitor does not have to live with the consequences—financial or otherwise—of its decisions. My hon. Friend raised that point in relation to research costs and the costs of expensive patients.

As for democratic accountability—I beg the Chair’s forgiveness for my over-long contribution—Monitor may be able to make decisions, which have serious implications for local people, but it is not democratically elected and it does not have to live with the consequences of those decisions. My—not philosophical—point was that, although I absolutely believe that we need to base decisions on fact and evidence, we also need to bring people with us, because ultimately it is the people’s national health service, and who is to say that some independent body, even if it has all the science behind it, has democratic legitimacy? That is a hard issue, which we have struggled with for many years. I, like hon. Members in all parts of the Committee, think that there has always been a democratic deficit in the NHS. We need to ensure that it is more accountable, but I am not sure that we should put powers in the hands of Monitor without that democratic legitimacy.

I listened very carefully to the hon. Member for Southport, who said that he is not wedded to primary care trusts, but wants greater accountability and legitimacy for decisions. Under the clause, Monitor will take significant decisions, but it will not have to live with the consequences of those decisions. There is no other body that can have that legitimacy at the moment. GP consortia do not have elected representatives. We cannot just say that it will be up to health and well-being boards, because they will not be making decisions on all the difficult trade-offs. We have debated whether they will have a say in reconfigurations of services, but they will not be responsible for those difficult trade-offs. Health and well-being boards cannot direct GP consortia to do anything. At the moment, there will not be democratic accountability in the system. The clause, like many others, does not resolve that issue, and therefore my hon. Friends and I are not able to support it.

Clause 55

Simon Burns (Conservative, Chelmsford)

I beg to move amendment 376, in clause 55, page 64, line 32, after ‘period)’ insert—

I hope that we will move quickly on this extremely straightforward amendment. As hon. Members will be aware, the Bill proposes that Monitor will have two main roles—its main role of economic regulator, and its functions in relation to NHS foundation trusts, under chapter 5 of part 2 of the National Health Service Act 2006. Monitor will need to have Chinese walls between its role of economic regulator and its functions on foundation trusts. The Government amendment will provide clarity that Monitor’s duty is to ensure that no conflicts arise in the exercise of its main functions, including those related to foundation trusts. It refers to Monitor’s specific functions on foundation trust accounts, and makes it clear that they will be covered by the provision on the conflict of interest. I hope that hon. Members will agree that the amendment is necessary and will support it.

Liz Kendall (Labour, Leicester West)

I have one or two points. Hon. Members will be aware that the Labour party does not support Monitor’s new role as an economic regulator, but as it moves towards that position, there is obviously a transitional period in which it remains responsible for part of the move of trusts into foundation trusts. As hon. Members will know, that will be extremely difficult and many organisations have queried whether it will be possible for all NHS trusts to become foundation trusts by 2016, as in the Government’s timetable. This is not just about hospitals; as primary care trusts separate out their provider role, community services will also become foundation trusts. There is a huge amount of work for Monitor to do.

As Monitor proceeds in trying to make all trusts ready for foundation trust status, the Bill seeks to ensure that there will be no conflicts of interest. A body cannot be the regulator of a provider as well as of the market, and I understand what the Government are trying to do. I would like clarity from the Minister about the resources that Monitor will have to ensure that every trust becomes an NHS foundation trust by that period. Does he believe that some NHS trusts will never be ready to become foundation trusts? Unfortunately, the list of the 20 hospitals that will not reach foundation trust status has already been published, and the chief executive of the NHS mentioned that to the Public Accounts Committee.

I am concerned about the timetable and the resources that Monitor has to secure all trusts that move towards foundation trust status. I understand what a “Chinese wall” means, but will the Minister explain what that would look like within Monitor?

Simon Burns (Conservative, Chelmsford)

Clause 55 makes various provisions about how Monitor should handle potential conflicts of interest in relation to its functions. From listening to the hon. Lady, I get the impression that we agree that that is important and must happen. There is no conflict between us on that point.

It may be helpful if I say something about where such conflicts might arise. Clauses 52 and 54 create a number of general duties on Monitor. Its main duty, however, is to protect and promote the interests of people who use health care services by promoting competition where appropriate, and through regulation where necessary. Monitor must also promote the economic, efficient and effective provision of NHS health care services and, among other things, have regard to the need for commissioners to ensure fair access to services for those who need them.

In many cases, there will be a synergy between those duties, but at least in theory, there could be a scenario where the most economic, efficient and effective provision did not deliver fair access, for example because that access was limited to certain days and times, or locations. Hence, the clause creates a general duty on Monitor to make arrangements for resolving any conflicts of interest that it considers there are between any of its general duties. The provision makes it clear that, in cases where the general duties conflicted, there would be no external authority to which Monitor could or should turn for resolution. Subsection (2) is about how Monitor would achieve two of its functions: its main role of economic regulator and any of its continuing functions in relation to NHS foundation trusts under chapter 5, part 2 of the National Health Service Act 2006.

Once Monitor has taken on the role of the economic regulator, its main role in relation to foundation trusts will be that of registrar. That will include, in the short term only, determining what foundation trusts must include in their annual reports. Monitor will also have functions in relation to foundation trusts arising from its time-limited transitional powers over all new and some existing foundation trusts; and its ability to trigger the transitional failure regime in relation to foundation trusts. In the short term, Monitor will need Chinese walls in relation to its role as economic regulator and its functions in relation to foundation trusts.

Similarly, subsection (3) provides that, when carrying out its competition, licensing and pricing functions, Monitor must ignore those of its functions that would enable it to intervene in NHS foundation trusts for a time-limited period during the transitional period, while the new governance arrangements in new, and some existing, foundation trusts, become fully effective. That includes ignoring the power that it has to impose additional licence conditions in cases where it considers there is a significant risk of a newly designated foundation trust failing to meet its principal purpose. Under the subsection, Monitor could not take account of the fact that it was intervening in a foundation trust when considering whether there had been a breach of competition law involving the same trust.

Subsections (4), (5), (6) and (7) cover conflicts between Monitor’s general duties that are, in ways specified in the clauses, significant. The provision also applies to any other conflicts of interest that Monitor considers are of unusual importance. In all those cases, Monitor must publish a statement setting out the nature of the conflict, the manner in which Monitor has decided to resolve it and its reasons for the decision. That is an important provision in relation to transparency and public accountability.

Taken as a whole, the clause makes provision for real-life conflicts of interest that Monitor might encounter in exercising its functions, and ensures that Monitor is clear how it should deal with them. It also ensures there would be transparency in cases where there might be significant public interest.

The hon. Lady also asked: what are Chinese walls? Those would be a complete separation of functions, roles, people and information below the chairman in Monitor. Monitor could, for example, set up a separate committee to deal with its specific foundation trust functions to provide that protection. The hon. Lady also tried to tempt me on the foundation trust pipeline. That will not be Monitor’s job. We are setting up a separate time-limited authority to manage the FT pipeline. For those reasons, I urge that clause 55 stand part of the Bill.

Liz Kendall (Labour, Leicester West)

I thank the Minister for his reply. I am not necessarily convinced that a committee of Monitor, beneath the chair, with separate information streams—if that were possible in a big organisation—is a genuine Chinese wall. I am keen to see further information on that. Anyone who has run a big organisation knows that just having a committee does not mean that it is a separate function, or necessarily a safeguard. That is a serious issue, raised by the Foundation Trust Network and others, about how that conflict of interest can be safeguarded. I am not sure that the Minister’s response is sufficient, but I would be glad to hear more.

Mike Hancock (Liberal Democrat, Portsmouth South)

To give Liz Kendall time to get into the room, I call Jeremy Lefroy. I will then come back to you, Liz.

Jeremy Lefroy (Conservative, Stafford)

Thank you, Mr Hancock. I should like to make a few comments on clause 55 and in particular on the continuing function of Monitor in the approval of foundation trusts. I will refer to evidence given at the Francis inquiry on Monday this week during the questioning of Mr Gill, who was working for or on secondment to the Department of Health and the strategic health authority for some of the period with which the Mid Staffordshire NHS Foundation Trust independent inquiry is concerned. I am referring to page 49 of the evidence. The QC put it to Mr Gill that

“there appears to have been…a drive to get SHAs to put trusts forward for foundation trust status. Here, Warren Brown…is saying ‘SHAs may be putting trusts in waves that have no business being there’.”

—that is, pushing them forward for FT status inappropriately. Mr Gill answered:

“I think a number of SHAs gave the FT pipeline, as it was called, a different priority. So some really embraced it, wanted to work with the Department and get their organisations through to FT status. Other SHAs, perhaps, saw that as a dilution or diminution in power”.

Further on in the evidence is this statement:

“I think…the Department of Health wanted a nice, clean kind of throughput of organisations through to Monitor to meet the quarterly waves.”

Those were waves of foundation trusts going forward for approval—[Interruption.]

Mike Hancock (Liberal Democrat, Portsmouth South)

Sorry, I thought that the Minister was trying to catch your eye.

Jeremy Lefroy (Conservative, Stafford)

I think that he was just paying attention, Mr Hancock.

Mike Hancock (Liberal Democrat, Portsmouth South)

Others have said that that would make a change, but I do not believe that is true.

Jeremy Lefroy (Conservative, Stafford)

I am most grateful that the Minister always pays careful attention to what all hon. Members on both sides of the Committee say.

The evidence also refers to

“the ministerial or political view that all trusts would be ready to apply or”

have “the opportunity to apply” for foundation trust status “by December 2008”.

There is much more in the evidence, and I urge members of the Committee to look at it on the inquiry website. The point that I want to make and the question that I want to raise with the Minister is this. Clearly, how Monitor views the ongoing process of approval for foundation trust status is extremely important. I want an assurance from the Minister that that process will be rigorous and thorough and that those involved will consider carefully the mistakes made in the past and learn the lessons.

Simon Burns (Conservative, Chelmsford)

My hon. Friend makes an important point. I am happy to give him that assurance. I would also like to tell him, because I think that it will encourage him, that there is no question of NHS trusts being allowed to sacrifice quality while developing their application to become an FT. To achieve FT status, a trust must be able to demonstrate that it is delivering high-quality care and is well managed and financially strong. The FT process has improved considerably during the last two years to address some of the very failings that my hon. Friend highlighted with regard to the Mid Staffordshire NHS Foundation Trust. That trust achieved FT status despite very poor standards of care. The changes to the assessment process have ensured that quality is the key focus for trusts working towards FT status. I hope that that explanation provides some of the assurances that my hon. Friend seeks.

Jeremy Lefroy (Conservative, Stafford)

I thank the Minister for that explanation. I am glad because I would not want any trust to have to go through the problems that we have seen in the Mid Staffordshire trust.

My final point is that I am absolutely convinced that there should be no timetable for approval for foundation trust status, although there might be an indicative timetable saying, “We would like to get to this point by this date.” I am glad to hear the Minister’s reassurance on that. It is critical that no timetable should take precedence over the concern for quality and for rigour in the approval process.

Mike Hancock (Liberal Democrat, Portsmouth South)

I now call Liz Kendall.

Liz Kendall (Labour, Leicester West)

Thank you, Mr Hancock, for giving me some time to gather myself. My comments follow directly on from the, as always, wise words of the hon. Member for Stafford. I absolutely want to learn from the problems experienced at the Mid Staffordshire trust, as I am sure my hon. Friends do, so I am grateful to the hon. Gentleman for raising the issue.

The Minister responded to my opening comments in the clause stand part debate, but he did not respond to some of my specific questions about the work load that Monitor will have in getting all hospitals to foundation trust status or about the difficulties and the time scale involved, and we need to be clear about those issues.

In the past six years, 134 trusts have got foundation trust status. Monitor estimates that about another 120 NHS trusts will need to be authorised to get every trust to foundation trust status. Let us be clear, however, that Monitor is also looking at about 30 major transactions that foundation trusts are involved in, and it will look at any future transactions between trusts that are currently NHS trusts, but which will take on foundation trust status. Monitor has said that that means it will probably have to make 150 or so assessments of one sort or another over the next three years, compared with the 134 that it has looked at over the past six years. At the recent Westminster health forum, David Bennett said:

“that is going to be a very big step up in workload, although one that will come to, at least in principle, a rather abrupt end in April 2014 once the last Trusts are authorised.”

Does the Minister expect all the trusts to be authorised by then?

Interestingly, David Bennett then said:

“Having said that, the real challenge is not for us, it’s for the Department of Health, because it is for the Department of Health to get all of these NHS Trusts to a position where they can become Foundation Trusts, and that, undoubtedly in some cases at least, will be very challenging.”

How will the Government get twice the number of NHS trusts ready for foundation trust status, when those trusts involved are likely to be the ones with the biggest challenges, because they are not the ones that moved quickly to foundation trust status?

How will Monitor make sure—I asked this earlier—that the governors in every trust across the country have the skills and expertise necessary? As I have said, making sure that every hospital in the land has governors with sufficient experience and of sufficient quality to manage budgets of millions of pounds is a very real challenge. Monitor is supposed to help to train governors to do that, but it is a huge challenge. What steps is the Department taking to deal with that? The Minister said that a separate authority is being set up to do these things.

Simon Burns (Conservative, Chelmsford)

In an effort to help the hon. Lady, let me tell her that we recognise that some NHS trusts have significant problems or face significant challenges. That is why we are setting up a temporary special health authority, on a time-limited basis, that will provide dedicated support, including senior clinical expertise, to help those trusts to move forward and to deal with some of the situations that they face.

Liz Kendall (Labour, Leicester West)

The Minister says that he is setting up a “time-limited” special authority. It would be very useful to learn from him whether any plans, outlines or proposals for that special authority have been set out. I am sure that many MPs, not just those in this Committee, would like to know what this authority is. Who will it be run by? What is its budget? How can MPs relate to this special authority if they have a trust in their own area that is struggling to gain foundation trust status?

Simon Burns (Conservative, Chelmsford)

As the hon. Lady will understand from her knowledge of working in a previous Administration, it will be a special health authority.

Liz Kendall (Labour, Leicester West)

That could mean anything. I want the Minister to give some details. Have any details have been set out or published about the special authority? Who will be on it and how will it be run?

Simon Burns (Conservative, Chelmsford)

If the hon. Lady wants a specific answer to that question, it is quite simple: we set out details in our response to the consultations on the White Paper.

Mike Hancock (Liberal Democrat, Portsmouth South)

Order. We have to direct our minds to clause 55 and we must consider where we are going, given the present tone of the debate. I am not altogether sure that I understand where you are taking us on this one, Ms Kendall.

Liz Kendall (Labour, Leicester West)

Mr Hancock, as is often the case, you remind us that we must remain on the clause under debate. the clause sets out how Monitor will attempt to resolve conflicts of interest between its different roles: its current role of regulating foundation trusts, which it is going to lose, and its new role as an economic regulator; and what it will do in the transition period. I am focusing my comments on the transition period, which is one of the subjects of the clause. Having said that, Mr Hancock, I will of course abide by your ruling. If you prefer that I return to this subject when we debate the clauses on foundation trust clauses, I will be more than happy to do so.

Mike Hancock (Liberal Democrat, Portsmouth South)

I think that there is general agreement that that would be a more appropriate spot for that discussion.

Liz Kendall (Labour, Leicester West)

I will come back with more questions when we debate foundation trusts.

Clause 56

Grahame Morris (Labour, Easington)

The clause requires Monitor to review regulatory burdens as part of its functions as the regulatory body for the new health market. It must ensure that it does not either impose or maintain unnecessary burdens. According to the Bill, not only must Monitor impose only regulation that it deems necessary and proportionate but it must determine whether its own regulation is necessary and proportionate. I suggest that there is a tension between those two roles.

David Bennett, the chief executive of Monitor who has often been quoted in this Committee, said in his recent interview with The Timesthat Monitor’s aim will be to create a genuine market for fair competition between providers. However, that would require a fair plying field between competing providers, and as things stand, there cannot be a fair playing field, due to the differential costs that apply to different types of organisation. The Opposition are genuinely concerned that Monitor will decide to act against those differential costs, which it will justifiably view as regulatory burdens. The Bill certainly gives it the powers to do so, and David Bennett’s comments fit in with that scenario.

I have previously referred to the Government’s impact assessment of the Bill. On closer examination, it is most revealing in relation to what clause 56 could mean and what action Monitor may be obliged to take as a result of it. Paragraph B108 states:

“The regulator will also be tasked with publishing advice…on barriers to competition/fair playing field…and implement recommended solutions…Once the net distortion facing different provider types is better understood, the tariff methodology could be developed in such a way as to move towards a fairer playing field by setting”—

this is really important—

“different prices for different providers.”

That is a key point, to which Monitor’s chief executive, David Bennett, referred.

The Minister of State, the hon. Member for Sutton and Cheam, and I have had a number of exchanges on the matter. On 4 February, in a reply to a written question, the Minister said:

“The impact assessment for the Health and Social Care Bill…includes a partial assessment of factors affecting the costs incurred by national health service bodies and private providers, respectively, in delivering health services for NHS patients. The key conclusion is that some of these factors appear to increase costs for NHS bodies relative to private providers, whilst other factors appear to increase costs for private providers relative to NHS bodies. However, based on the information held centrally, it has not been possible to determine, on balance, whether NHS bodies or private providers of NHS services are systematically advantaged or disadvantaged relative to the other.”—[Official Report, 4 February 2011; Vol. 522, c. 1007W.]

I confess that I have struggled to reconcile that ministerial answer with the Government’s impact assessment. Paragraph B55 states unequivocally:

“The majority of the quantifiable distortions work in favour of NHS organisations”.

In layman’s terms, NHS providers are able to provide services at a cheaper cost base than private providers. The impact assessment also has an intriguing section on the cost of capital. In it, the Government admit that public investment is far more efficient than private borrowing. I do not want to deviate from the clause, but there is a credibility gap between the Government’s rhetoric on the private finance initiative and what is actually happening on the ground. There are issues around deeds of safeguard that need to be tackled elsewhere. Alarmingly, the point about the cost of capital is viewed as a problem rather than an argument for the publicly funded investment that we all want.

The impact assessment goes on to outline how to remove the distortion when creating private markets. Whether the Minister or the impact assessment is correct is irrelevant because we have to deal with the provisions in the Bill. It will be the duty of Monitor, not the Minister, to take action and resolve these problems. The impact assessment uses KPMG research into fair playing fields, which calculated additional costs for private providers at 14%. By and large, according to KPMG, NHS providers are 14% cheaper.

In the view of Opposition Members and some informed commentators, the spectre of European competition regulations and rules on state aid are quite important. Monitor will be under pressure to give either tax breaks or subsidies to private providers, or to put additional costs on to NHS providers. Unless the Minister is willing to reduce the scope of powers given to Monitor by this Bill, it will not be able to offer any guarantees on decisions that will be out of its hands.

The King’s Fund has described Monitor’s duty as

“strikingly similar to the original duty on Ofgem…in that the duty to promote competition is closely linked to the duty to protect and promote the interests of service users.”

My hon. Friend the Member for Leicester West has set out in a most comprehensive manner the key differences between utilities and health services. The public would find such a comparison objectionable.

Monitor’s power within the health service will dominate the provision of future services. The Bill suggests that it will take a prime position over the bodies responsible for quality, notably the Care Quality Commission. The clause gives Monitor unnecessary control over the market by giving it the power to fix costs and act against the naturally cheaper and better option, the NHS provider. I would argue that if the Government are sincere about rejecting price competition, Government Members should take this opportunity to vote against clause 56.

Simon Burns (Conservative, Chelmsford)

I hope the Committee will be satisfied if I deal with this clause relatively briefly, rather than having a long drawn out debate, because we have a considerable amount of work to get through this afternoon.

Clause 56, as we know from clause 52, ensures that Monitor’s main duties are to protect and promote the interests of people who use health care services by promoting competition where appropriate and by regulating where necessary to enhance quality. Clause 56, therefore, requires Monitor to keep those regulatory practices under review so it does not increase or retain unnecessary regulatory burdens, and, through that, it will ensure best regulatory practice.

Over time, as the health care markets change and competition becomes more embedded and efficient, Monitor will adapt the way it regulates those services, particularly where regulatory activity is no longer necessary. It will also be possible for it to reduce certain regulatory activities for certain types of providers, which would ensure that regulation is applied proportionately and only where necessary. That would ensure sufficient regulation while keeping burdens and costs to a reasonable minimum. Monitor, under this clause, will publish statements reporting its actions for every 12-month period and its plans for future regulatory changes.

Grahame Morris (Labour, Easington)

Will the Minister confirm that Monitor could invoke those powers when a private provider complains under competition law that a GP commissioner is favouring the incumbent provider, such as an NHS foundation trust?

Simon Burns (Conservative, Chelmsford)

The answer is, in theory, yes.

May I pick up another point raised by the hon. Gentleman, which was about Monitor giving higher prices to private providers? As the hon. Gentleman should be aware, we have tabled Government amendments to make our position on pricing completely clear. We will reach the relevant clause, which addresses pricing, in due course. I will tread very carefully so as not to go down a cul-de-sac and stray out of order, Mr Hancock. Amendment 192 to clause 104 will ensure that Monitor cannot vary prices according to whether a provider is public or private. We will debate that later, and I am sure the hon. Gentleman will have a considerable amount to say about it, although I hope he studies the amendment carefully so he fully understands it.

For those reasons, I urge my hon. Friends to ensure that clause 56 stands part of the Bill.

Clause 57

Liz Kendall (Labour, Leicester West)

I beg to move amendment 482, in clause 57, page 66, line 21, leave out subsection (2).

Mike Hancock (Liberal Democrat, Portsmouth South)

With this it will be convenient to discuss the following: Government amendments 377 and 378.

Amendment 489, in clause 62, page 68, line 40, leave out subsection (2).

Liz Kendall (Labour, Leicester West)

The clause deals with Monitor’s duty to carry out impact assessments. As we know, there are various duties on Government to produce different impact assessments on various Departments, and the clause sets out Monitor’s duties in that regard.

Amendment 482 would delete subsection (2), which states that any of Monitor’s duties to carry out impact assessments do not apply to those duties for which clauses 60 and 61 provide. Those clauses give Monitor similar powers to those of the Office of Fair Trading under the Competition Act 1998 and the Enterprise Act 2002. In other words, no impact assessment is required for anything that Monitor does in exercising its competition duties. It seems astonishing that Monitor does not have to produce an impact assessment when using such fundamental powers, which are the same as those of the OFT. What is the point of having a duty to produce impact assessments, if they do not relate to any of Monitor’s competition functions? I am stuttering, because I find it so astonishing.

The reason behind the amendment is clear enough, so I shall finish speaking on that point. Do I now move on to the other one, Mr Hancock?

Mike Hancock (Liberal Democrat, Portsmouth South)

You can do whatever you want—you normally do.

Liz Kendall (Labour, Leicester West)

I will, Mr Hancock, because amendment 489, I am reminded by my notes, relates to clause 62. It would delete subsection (2) of that clause, which states that Monitor’s general duties, as set out in clause 52, and matters to which it must have regard, which discussed under clause 54,

“do not apply in relation to anything done by Monitor in the carrying out of its functions by virtue of”

clauses 60 and 61. In other words, when Monitor is carrying out the same functions that the OFT has under the 1998 and 2002 Acts, it does not have to pay regard to its general duties or to other matters to which it must have regard. The kindest way of looking at this is that it is badly drafted and completely unclear. I apologise to any civil servants sitting here who might have been involved. What is the point of setting out duties and matters to which Monitor must pay regard, then saying that when it is exercising pretty much its main functions it does not have to bother with them? What is the point of having a duty to conduct impact assessments when they do not have to be done? That is entirely wrong.

Simon Burns (Conservative, Chelmsford)

If I may, Mr Hancock, I will address amendments 482 and 489 before moving on to amendments 377 and 378.

Clause 62 enables Monitor to act in a manner similar to the OFT for its concurrent functions as competition authority, which are granted under the Competition Act 1998 and the Enterprise Act 2002. There is significant overlap between the matters to which the OFT must have regard in protecting consumer interests, and Monitor’s duties in protecting patients’ interests.

In deciding whether to take a case under the 1998 Act, Monitor could consider how doing so fitted into the performance of its overall duties. That is to say that it must make the best use of its resources and it is legally permitted to apply administrative priorities when deciding whether to take cases; its administrative priorities would reflect its duties. We must avoid inconsistency in the legal framework, however, for concurrent competition authorities such as Monitor and the OFT. To do otherwise would undermine the UK’s competition regime and put Monitor at risk of legal challenge. Amendment 489 would create such an inconsistency.

Monitor must be subject to the established duties that apply to the OFT to allow it to perform its competition authority function effectively and in the best interests of patients and taxpayers. It is worth remembering that the OFT could currently take action under the 1998 Act against undertakings providing health care services. In so doing, it would have regard to the usual matters that a competition authority could take into account, such as the market share of the undertakings concerned and the impact on consumers.

The drafting in the Bill, therefore, maintains the legal powers as they already are but with the added benefit of establishing a sector-specific regulator for health and concurrent powers. The advantage of a sector-specific regulator is the potential for enhanced knowledge and understanding of the health care market. The amendment would, therefore, be extremely inappropriate.

I turn to impact assessments. When Monitor applies the 1998 Act, it needs to use reasoning that is in line with the law. A decision that is reached based on an impact assessment would be subject to legal challenge. An investigation under the 1998 Act would have an impact on the persons who are under investigation, and it would not be appropriate for such an impact to determine whether it was appropriate to pursue the case. I fully expect Monitor to consider the potential impact on patients before deciding whether to investigate a case under the 1998 Act. I think that amendment 482 might make us subject to legal challenge, and for the reasons that I have given I will resist amendments 482 and 489.

It is worth bearing in mind, however, that the 1998 Act involves consideration of factors other than the effects on competition. For example, agreements are permitted that contribute to the improvement of the production or distribution of goods or the promotion of technical or economic progress, while allowing consumers a fair share of the resulting benefit, provided that they do not impose unnecessary restrictions and they do not allow undertakings to eliminate competition entirely. We will undertake an impact assessment of the regulations that are permitted under clause 63 on GP consortia and the NHS commissioning board. That will ensure that all the impacts resulting from the requirements that are placed on commissioners are taken into consideration.

Finally, I would like my hon. Friends also to consider Government amendments 377 and 378, which clarify clause 57 and remove unnecessary duplication. Clause 57(2)(a) refers to clauses 60 and 61, and we propose to remove that paragraph. It is not necessary, because paragraph (c) refers to the entirety of chapter 2, which includes clauses 60 and 61. The addition of “by virtue of” clarifies that the duty to carry out impact assessments does not apply in relation to any of Monitor’s functions under chapter 2, irrespective of whether they are specified in primary legislation or, for example, in regulations made under that chapter.

Liz Kendall (Labour, Leicester West)

I do not think that the Minister has adequately explained what Government amendment 377 does. Clause 57(1)(a) says that Monitor has to carry out an impact assessment when it proposes to do something it considers would

“be likely to have a significant impact on persons who provide health care services for the purposes of the NHS”.

So Government amendment 377 says that Monitor does not have to do an impact assessment if it affects staff. I respectfully request that the Minister be clearer about the amendments that he tables, because this amendment says that when Monitor exercises its functions under competition law, it does not have to look at the impact on staff. That is how I read it, and I would appreciate more clarity on that. It is wrong; any impact assessment should look at the impact not only on the users of services, but on the staff, who the Government often say they very much want to involve in decisions.

To my mind, the Government either want Monitor to pay regard to patient safety, improving quality, fair access, better use of resources and promoting investment, research, and high standards in education and training, or they do not. If they do, they should not say in their legislation that these are not issues that Monitor must pay regard to when exercising its functions under the 1998 and 2002 Acts.

The Government either want to ensure that there are impact assessments that set out the impact of Monitor’s decisions on people who provide and use services, and the general public, or they do not—in which case, the Government should not say that Monitor does not have to do an impact assessment when exercising its competition functions. The Minister has not explained that. As I said earlier, the nicest interpretation is that it is a legal mess—clauses are being added here and there—because the different parts of legislation do not fit. Alternatively, the real reason for the subsections in clauses 57 and 62 is that the Government do not intend Monitor to deliver these laudable goals, but instead want it to promote competition in all parts of the NHS with no regard to the impact on the people or the providers of those services.

John Pugh (Liberal Democrat, Southport)

I want to make a few remarks to clear things up—in my own mind, if no one else’s. Some concerns have been raised that I have not previously had a chance to ask the Minister about.

It strikes me that the fundamental thrust of the legislation is to create a regulator who will stamp out anti-competitive practice and bring the benefits that people perceive competition to have. The Minister has explained that we are not talking about crude competition, that a series of other issues must be taken into account—we might call them mitigating factors—and that impact assessments are to be made. We have just argued about what they mean in effect, and we seem to be creating an entity that is slightly more than a simple regulator—almost a strategic body capable of making decisions that have major consequences. It will be an unaccountable body and, as I said this morning, it will not have to deal directly with the consequences of its decisions.

I shall give an analogy that helps me, although it might not help anyone else. We are perfectly happy for referees to decide matters such as the offside rule and to implement a set of bloodless rules, but if they must make judgments about how the game is going, and whether it is being played well or badly enough, we are less happy, and think, “What right does he have to decide such matters?” If we have a hard and fast set of rules, and we know clearly what they are and how they should be applied, we are comfortable. In other situations, we are less than happy.

The burden of my remarks is not only that Monitor could create a problem that it does not have to manage, but how it will meld—the hon. Member for Halton made this point—with the fact that it will sometimes overrule decisions on matters that consortia want. Sometimes, it will overrule decisions on matters that are welcome to the public, or decisions that the commissioners and the public want, but Monitor deems to be anti-competitive.

I gave an example this morning of an issue in my constituency. I am still not clear about it. I could ask Assura Medical to provide a Southport walk-in centre for children, and accept the risk because I know that the background is that the GPs do not want it, but that the public do—and I know that the Secretary of State does because there are photographs of him campaigning for some sort of children’s facility in Southport. The argument against that, which was put to me by the existing PCT—presumably, it will also be made by the GP consortia as they take over from the PCT—is that it will imperil not the A and E service, which I understand there to be no competition about, but the paediatric unit in another town.

That is not a stand-alone independent paediatric unit; it has no surgery and it is partly dependent on Alder Hey, but that was the rationale given to me for the non-provision of this facility. At some point, I would genuinely like to refer a case to Monitor and ask, “Is this anti-competitive or not?” Monitor, presumably, will make a judgment call. Whether that call is for or against, it will be highly controversial, and my constituents will not be any happier being frustrated by Monitor’s decision than they are being frustrated by persistent decisions from the PCT.

I do not see, therefore, where accountability comes into this. We have no health and well-being board to test Monitor’s decisions against. It can make what I consider to be major strategic decisions, but we are given no voice for rebutting or countermanding them. Such decisions can be important and controversial, but they do not seem to be subject to review by anybody other than the Secretary of State, who, at some point, can decide that Monitor are doing a bad job, and that it is making the wrong decisions.

This morning, however, the Secretary of State said something that alarmed me even more. He gave helpful examples of things that would count as anti-competitive practice, which I appreciate. He mentioned such issues as producer collusion, or decisions not to deliver certain services. To talk again about my local hospital in my own patch, a decision is being made to concentrate pathology services there, which affects the whole Mersey region. Why? Because it is part of a QIPP—quality, innovation, productivity and prevention—saving, and that pattern is repeated right across the piece.

All the hospitals, apart from some foundation trusts that do not want to play, are getting together to consider how they can meet the Nicholson challenge, how they can reduce over-costs, and how they need not provide a full range of services because they can decide among themselves which hospitals provide which services, using NHS manpower and resources more efficiently than they would otherwise. That strikes me, however, as something that would be snarled up by Monitor. It is a classic example of producer collusion, which the Minister mentioned this morning. Yet that strategy is being followed in the Merseyside area to get the budget under control and make the appreciable savings that are necessary.

I see all those problems generated by the creation of Monitor. I cannot help thinking that we are creating a bureaucratic monster, with a whole series of different ancillary roles that are not necessarily mutually consistent. It will cost a lot of money, and I do not understand why we are doing it. If the thrust is to have a system of competitive regulation for clinical services, analogous to the system we have for the procurement of other kinds of hospital services—the bedpans, the beds and so on—it must be observed that there is no regulator for such an activity. It does not exist.

Grahame Morris (Labour, Easington)

That is an excellent point, well made, and I want to amplify it, particularly in relation to the hon. Gentleman’s example of pathology services and the risk of charges of anti-competitive behaviour. It strikes me, as someone who worked in the pathology service for 12 years, that the service would be ripe for a private laboratory to come in and issue a claim to Monitor that it was not being allowed to compete, because the commissioners were using the preferred provider based at the local hospital. Even the threat of legal redress being resorted to, with the 10% fine for GP commissioners, may be enough to shift the existing NHS provision to a private provider.

John Pugh (Liberal Democrat, Southport)

It is not an academic point. In the north-west and Merseyside, we are trying to maintain access and facilities as best we can—and this is not something that this Government have done, because the £20 billion is a consequence of the Budget in which the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), said we would have to find that saving.

The way to maintain access and facilities is to ensure that the hospitals are colluding as to the activities they are engaging in. That is the least painful way of doing it. The other way is to beat one another to death and have facilities go down in different areas and to have access diminish. I do not see how we can run with the remit of Monitor and simultaneously make a quick saving. I would be grateful if the Minister explained how this would happen. I am making a serious point; I am not trying to get one over on the Government or whatever. I am making the point because I am worried. I am really worried.

My final point is that we are creating something that we have decided is going to grow in cost. It is going to be a big bureaucracy. We are giving it a lot of roles and a lot of different considerations. Not all of them seem to dovetail together, which is going to be more difficult and more legally complex. Why are we doing it? Local authorities manage to go through processes of using a variety of providers and they have guidelines. They have best value. The hospitals currently procure in an open way, subject to European rules. We can discuss them later on. We do not have a central provider. What is the point of the central provider when we get all the benefits and none of the problems without having it?

Jeremy Lefroy (Conservative, Stafford)

I shall follow on from what my hon. Friend the Member for Southport has said and raise one further question with the Minister. It is a genuine question about how this legislation would impact on a specific case. When I say “a specific case”, I do not mean specific to my constituency, but a specific general case across the country.

Many general practices have community pharmacies within them. Many of those practices reinvest the profits from the pharmacies into other services that they provide to the community—they do not take them out for partners; they put them back in. I can think of one particular practice in my constituency that does precisely that.

The question I raise with the Minister is about whether such a practice would be considered, or be at risk of being considered, anti-competitive. For instance, would another provider of, for instance, the home visits to cancer patients, which the practice provides out of the profits from its pharmacy, be considered anti-competitive by another provider that potentially wanted to offer that service to the local consortium?

Liz Kendall (Labour, Leicester West)

I am inspired by the hon. Member for Southport and I have been thinking about this for some time. It seems as if the Bill is developing two parallel universes in the NHS. One is from the NHS commissioning board driving GP commissioning consortia with—question mark—a degree of accountability, with some health and well-being boards and local authorities joining up. There is that world. Then there is the world of the economic regulator and competition law driving changes in the system. My question is about how on earth the two relate to one another.

I think that a battle is developing between the world run by David Nicholson and the NHS commissioning board and the world run by David Bennett at Monitor.

Mike Hancock (Liberal Democrat, Portsmouth South)

Order. I have to suggest that, interesting though this point is, it does not relate to clause 57.

Liz Kendall (Labour, Leicester West)

I bow to your view, Mr Hancock, but my point was inspired by and followed on from the hon. Member for Southport’s.

Mike Hancock (Liberal Democrat, Portsmouth South)

But we are not here to discuss his inspirational speeches. The debate is about the clause before us.

Liz Kendall (Labour, Leicester West)

I thought this was a place for thorough debate. I remain put in my place, but I am glad that my comments are on the record.

Simon Burns (Conservative, Chelmsford)

The clause requires Monitor to carry out impact assessments for particularly significant proposals, or to publish statements explaining why it is not necessary to do so. Significant proposals would include proposals that would have a significant impact on health care providers for the purposes of the NHS, NHS patients and the general public, or proposals that involved major change to Monitor’s activities or made changes to the standard licence conditions.

However, Monitor will not need to carry out impact assessments in relation to the exercise of its competition functions, or when the matter is too urgent for delay or intervention, as that would involve taking account of considerations not relevant to the enforcement of competition law. We want to ensure that Monitor considers only what is appropriate for a competition authority to consider, which includes the effect on patients.

The clause sets out how the impact assessment should be carried out. That includes why intervention by Monitor should be necessary rather than its using its powers under the competition function, and how the intervention fitted in with Monitor’s overarching duties. Monitor must consult on its impact assessments for at least 28 days, and give details on those that it has conducted in its annual report. The clause is needed to ensure that Monitor’s activities are appropriately justified and that it does not carry out activities outside its stated duties and functions.

Owen Smith (Labour, Pontypridd)

I was going to make this point earlier but as the Minister has repeated his remarks, I shall make it now. The Minister says that Monitor does not have to apply an impact assessment in areas where it exercises its principal function in respect of competition law, lest it effectively set a precedent for other regulators in respect of competition law. Does that not point out the deep inappropriateness of competition law being binding and biting on the NHS?

Simon Burns (Conservative, Chelmsford)

Before making that intervention, the hon. Gentleman will have anticipated that my answer is an emphatic no. I doubt whether there is a way to breach the gap between us in what we believe.

Owen Smith (Labour, Pontypridd)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

The answer is no. It is quite straightforward. There is not much that I can do about it; the hon. Gentleman is not going to be convinced by me, and I am not going to change the Bill to fit in with him.

The hon. Member for Southport asked a number of questions, and I shall deal with them briefly. He spoke about competition law preventing collaboration in general. I believe that competition law would not preclude collaboration—for example, shared pathology services would improve services and be in the interests of patients and taxpayers.

The hon. Gentleman also spoke about Monitor and QIPP. I believe that Monitor will help drive greater efficiency and productivity for the benefit of patients and taxpayers. There is growing evidence that well designed competition can improve efficiency as well as drive up clinical quality. Health and well-being boards cannot hold Monitor to account for decisions on anti-competitive behaviour. Although Monitor does not sit on a health and well-being board, commissioners do, and the board can challenge the commissioners directly about their commissioning decisions.

I hope that I have clarified matters for the hon. Gentleman. For that reason, and given my earlier comments, I urge that clause 57 stand part of the Bill.

Clause 59

Simon Burns (Conservative, Chelmsford)

I beg to move amendment 495, in clause 59, page 67, line 24, at end insert ‘and that the failure is significant’.

Mike Hancock (Liberal Democrat, Portsmouth South)

With this it will be convenient to discuss Government amendments 496 and 497.

Simon Burns (Conservative, Chelmsford)

The clause provides powers for the Secretary of State to direct Monitor when he considers that it is failing or has failed to perform a function. The Secretary of State may direct it to carry out the functions within a specified time frame or, when Monitor fails to comply with such a direction, to carry out the functions himself or arrange for other persons to do so. The clause does not set out how that power should be exercised, and I am recommending these amendments so that that is made clear.

Monitor will be the economic regulator of health care services. We do not intend to compromise Monitor’s independence or undermine the benefits of economic regulation by allowing for political interference in its decision making. However, we need to strike a balance. Monitor will continue to be a non-departmental body, and, as such, we need to ensure its political accountability. The Secretary of State will be able to direct Monitor only in respect of significant failings in the performance of its functions, and will not be able to intervene in individual cases. Where the Secretary of State does intervene, he or she will be required to publish a statement on his or her reasons for doing so.

The amendments are needed to make the accountabilities clear and to ensure that Monitor is, as far as possible, independent and protected from political interference. At the same time, they will ensure that steps can be taken should there be significant failings by Monitor in the performance of its functions as an economic regulator. The amendments will also bring Monitor into line with the Government’s proposed overarching principles for economic regulation, which the Department for Business, Innovation and Skills published in January.

Clause 39

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 222, in clause 39, page 54, line 44, leave out ‘an NHS body’ and insert ‘a body within subsection (1A)(a) to (c)’.

Mike Hancock (Liberal Democrat, Portsmouth South)

With this it will be convenient to discuss Government amendments 223 and 224.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The clause updates the Secretary of State’s powers of direction during an emergency to reflect the new framework for the health service provided by the Bill. That is done by amending section 253 of the National Health Service Act 2006. The Secretary of State will be able to use such powers of direction only when he considers it appropriate by reason of emergency.

Clause 39 inserts proposed new subsection (1A) into section 253 of the 2006 Act, which states:

“A direction under this section may be given to—

The purpose of amendments 222, 223 and 224, which are minor, is to ensure that the references to the bodies in new sections 253(2) and 253(2A) of the 2006 Act are correct. That is necessary, because, as a result of new section 253(1A) of the 2006 Act, a necessary consequential amendment should also have been made to new section 253(2), which is inserted by subsection (4) of the clause.

The cross-references to new section 253(1A), which are in new section 253(2A), as inserted by subsection (4) of the clause, should also have been updated. I am sure that that will be clear to hon. Members when they study their copy of Hansard in detail over the weekend. [Hon. Members: “Very clear.”]

The powers of direction will affect how NHS bodies, or other bodies to whom directions are issued, exercise their functions, and such powers will not only relate to an NHS body’s activities, but bolster co-ordination between bodies at times of emergency. The Bill maximises the autonomy of organisations at the local level. The Secretary of State will, however, retain a few specific and limited powers. Those will include sufficient powers of direction to ensure a command and control framework in an emergency. I am sure that the Committee will agree with me that, in an emergency, that is an appropriate and necessary step to take.

The Secretary of State would be able to direct an NHS body or a provider of NHS services on how they should act in the event of an emergency. He would be able to delegate his power of direction to the board, which would allow it to exercise a national command and control role where it considers that it is appropriate to do so in an emergency.

In summary, the amendments are minor, consequential and correcting. For that reason, I hope that the Committee will support them and that the clause, once amended, will stand part of the Bill.

Derek Twigg (Labour, Halton)

This is quite an interesting clause, which we want to explore. The Minister has made some consequential amendments, but he understands that we are opposed in principle to the changes that the Bill will bring about and to the comments that have been made in earlier discussions.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The hon. Gentleman says that he is “opposed in principle”. I want to be clear. The motion that he tabled and had his name added to yesterday listed a whole host of the principles on which the Bill is based. Is he sure that he is against the principle?

Derek Twigg (Labour, Halton)

Perhaps the Minister has misunderstood me. I said that we are opposed to the proposals in the Bill to change the Secretary of State’s powers. We can go back to the duties to promote health services and so on, and I will come to that in my speech.

We read the clause with great interest following the first debate that we had about the changes to the role of the Secretary of State on the first day of scrutiny. The Minister may recall that we particularly opposed the passing of some powers to unelected quangos relating to the NHS commissioning board, GP consortia and Monitor. We made some strong points, but the Minister did not take those on board, and we were disappointed with that.

The clause removes the current duty on the Secretary of State in section 1(2) of the National Health Service Act 2006 to

“provide or secure the provision of services”

for the purpose of the health service. So the Secretary of State is currently directly responsible for providing or securing the provision of health services, and I hope the Minister understands that that is my point.

Section 253 of the 2006 Act confers on the Secretary of State the power to give directions to any body or person exercising functions under the Act, other than the NHS foundation trusts, when he considers that

“by reason of an emergency it is necessary to do so in order to ensure that a service failing to be provided under or by virtue of this Act is provided.”

The explanatory notes say:

“This clause amends the section so as to extend the Secretary of State’s powers and make them consistent with the new framework for the health service provided for by the Bill.”

The opening phrase says that it extends the Secretary of State’s powers, and I will come back to that. The explanatory notes go on to say that

“unlike the existing position under section 8 of the NHS Act, the Secretary of State will not have a general power to give directions to NHS bodies about how they exercise their functions.

Subsection (2) amends section 253 so that the Secretary of State can give a direction under the section where he considers it is appropriate, not just necessary, to do so by reason of an emergency. In addition, the effect of the amendment is that the power is not limited to giving directions to ensure that a service is provided. Subsection (3) provides that the Secretary of State’s power to direct applies to all NHS bodies except Local Health Boards (which are Welsh NHS bodies)”.

Interestingly, and this is an important change, the provision includes NHS foundation trusts, according to the explanatory notes.

I remind the Minister that the White Paper says:

“The Government’s intention is to free foundation trusts from constraints they are under”.

I will not stray into next week’s debate on foundation trusts, but foundation trusts are important to this clause.

Clauses 158 to 163, which address the failure of foundation trusts and the transfer of powers to Monitor, are relevant. Clause 114, which details the health special administration orders, as outlined by explanatory note 745, is also relevant. As we read it—this is important—Monitor’s role in relation to foundation trusts is changing because, of course, there is no early intervention, as there is under our current procedure. I will come back to that in a minute.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I want to make sure I understand the flow of the argument being developed by the hon. Gentleman. This clause deals with the Secretary of State’s emergency powers. Is the hon. Gentleman suggesting that the Secretary of State should not have an emergency power to direct foundation trusts?

Derek Twigg (Labour, Halton)

I am making a point about the change in the Secretary of State’s powers compared with his powers under the previous regime. When the Minister answers my questions, perhaps he might be able to explore that a bit further. Under what circumstances might the Secretary of State’s powers be used in relation to the foundation trusts?

As the hon. Member for Stafford is here, the failure at Mid Staffordshire might be a useful example. Will the Minister explore how Mid Staffordshire has changed the provisions in this Bill?

I want to refresh the Minister’s memory of our previous debates on the Secretary of State’s powers. The explanatory notes say that this provision is extending the Secretary of State’s powers.

Jeremy Lefroy (Conservative, Stafford)

I rise to underline the hon. Gentleman’s point. One of the real problems that my constituents faced during that time was that they did not know who to go to in the case of an emergency, as it then was. That needs clarification.

Derek Twigg (Labour, Halton)

I am grateful for that intervention, which is why I raised the point. It is important to remind the Minister that my right hon. and hon. Friends and I have raised serious concerns about the proposed changes to accountability, particularly to the accountability of the Secretary of State’s Department. A point was made about the ability of Ministers to intervene in matters raised by MPs and whether MPs would be told to go to speak to the NHS board or consortia. It would be interesting to hear what the Minister has to say about the emergency powers, but he should not forget that some of the powers, as they currently stand, are being transferred elsewhere.

In his responses, the right hon. Member for Chelmsford, whom I congratulate on his elevation to the Privy Council, has kept telling us that the Bill is about freeing up the NHS from bureaucracy, reducing political interference and liberating providers. In the clause, however, we see that the Secretary of State’s powers, which have been described by some as draconian, have been extended. Will the Minister give us more information about the extent of the Secretary of State’s powers under the clause and what has changed from the previous situation?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I would probably be straying beyond the bounds of the clause if I were to describe the architecture in respect of accountability for the day-to-day running of the NHS. The clause relates to the exceptional circumstances of an emergency. That is the context in which the hon. Gentleman wants further information, and I will be more than happy to try to supply some of that.

Let me go through a few issues that will illuminate the position. There is concern about the circumstances in which the Secretary of State might use the powers. The Secretary of State would declare an emergency only where it was appropriate to do so—for example, to ensure that a service under the Act continued to be provided. In the event of a major flood affecting—

Derek Twigg (Labour, Halton)

Will the Minister give way?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Let me develop the thread of my speech a little further and then I will be more than happy to take an intervention. In the event of a major flood affecting an area, as happened in Cumbria, a hospital trust in a neighbouring area may be directed to treat patients transferred from hospitals in the affected area. The ongoing Exercise Watermark, which relates to flooding, would be a case in point.

I shall give another example to develop the point and then give way. A transient power failure in a hospital would initiate a local emergency plan on a site, but that would not require the emergency declaration by the Secretary of State. However, a longer-term cessation of power that rendered the local NHS unable to maintain essential NHS services for patients might require a direction from the Secretary of State for mutual assistance from other areas. Those are a few examples.

Derek Twigg (Labour, Halton)

I apologise for trying to jump in too early, because the Minister was developing his point. In the event of the failure of an NHS trust—we can go back to the Mid Staffordshire case—how would failure be determined under the Secretary of State’s powers? I apologise if the Minister was coming to that point, but it is important because failure might be subjective in some instances.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

If I may say so, that is not what the clause is about. It is not about describing or dealing with the failure of providers in the sense that we might in other contexts. It is about circumstances in which an emergency requires the marshalling of NHS resources in a particular way that requires clear command and control. Flooding is a good example. We are talking about circumstances in which, for one reason or another, there is a need to ensure that services are organised to deliver—where there has been a failure of the electricity supply or flooding, for example. If the hon. Gentleman wants to intervene again, I ask him to be clear about what he means by failure for this purpose, so that I can be as helpful as possible.

Derek Twigg (Labour, Halton)

I think that I was asking the Minister to explain that in more detail because we are not clear about it. Let me put it this way. Let us think of the clinical care of patients and take the example of an NHS trust where people may have died in greater numbers than one or two and nothing has been done by the board or by Monitor. What would the Secretary of State’s position be?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Let me try to deal with that by describing what would constitute a relevant emergency for the purposes of the clause. A relevant emergency, to which these duties apply, includes any emergency that might affect a body to which the duty to be properly prepared applies, whether by increasing the need for services that it commissions or provides or in any other way. The emergency preparedness provisions therefore apply in relation to an emergency in which the body in question may be asked to assist other NHS bodies or other public authorities responding to that emergency, as well as one that directly affects its local services.

I shall give some examples. An NHS trust would need to plan to protect its services in case of fire, flood or power failure—the examples that I have already given.

Grahame Morris (Labour, Easington)

In relation to that list of examples, in the event of the failure of a foundation trust, would the Secretary of State exercise emergency powers, for example to instruct the neighbouring trust to take on those responsibilities?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Let me be absolutely clear—that is not the purpose of the clause. There are other clauses in the Bill in which the issues around the failure regime and so on will be dealt with, but they are not dealt with in this clause. This clause is about dealing with civil emergencies of one sort or another, where there is a need to have clear command and control to ensure that public resources are directed appropriately through the NHS to address a civil emergency. I hope that that answers the question—I am answering it as clearly as I possibly can.

I am not sure that I have addressed the questions put by the hon. Member for Halton. If I have not done so, he should intervene again, because I am anxious to ensure that this clause, which is about ensuring that we have a robust set of arrangements in the event of an emergency—

Derek Twigg (Labour, Halton)

Just for the record, if a Mid Staffordshire trust situation occurred today the Secretary of State still could not intervene?

Mike Hancock (Liberal Democrat, Portsmouth South)

I would be appreciative, Mr Burstow, if you did not invite colleagues to intervene. [ Laughter. ]

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The reason that I did so, Mr Hancock, is that I want to ensure that, before we finish our debate on this clause, hon. Members are clear about the intention behind it. Through this clause, some hon. Members are trying to explore—quite understandably—what the failure regime might look like, how it would work and the role of the Secretary of State. What I am trying to say to them, as clearly as I can, is that this clause is not about the failure regime.

The hon. Gentleman was talking about the Mid Staffordshire trust. What happens in a case such as Mid Staffordshire is that the CQC is responsible for safeguarding essential levels of quality and safety. In the existing system today, that responsibility sits with the CQC and not with the Secretary of State. That is what the hon. Gentleman’s question was about—“What happens now?” And that responsibility would not sit with the Secretary of State in the future. However, this clause is not about those matters.

Derek Twigg (Labour, Halton)

I will intervene on the Minister one last time, just to get some clarity. So the Bill does not change the situation. We can go through all the various bodies that will have responsibility—Monitor, the CQC, whatever. The same is true of the bodies that are in place currently. However, if those bodies all miss a problem and do not deal with it, the Secretary of State still cannot come in and make a direction in a situation such as the one in the Mid Staffordshire trust. Is that right?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

That question does not apply to this clause. It is an important question and it is one of the reasons why, at earlier stages in the consideration of the Bill, I indicated the Government’s desire and intention to listen to and act on the recommendations of the Francis inquiry. It is also why I have made it very clear on the record today that we already have provisions, through the arrangements for the CQC, to safeguard essential standards of safety and quality. Those provisions were legislated for in the last Parliament by an Administration of which the hon. Gentleman was a member and they provide those safeguards to deal with situations such as the one in Mid Staffordshire. We are willing to consider other changes in the light of Mid Staffordshire, but this clause is not about that issue.

Having said that, I hope that this clause, as amended, can stand part of the Bill.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 225, schedule 4, page 238, line 3, at end insert—

Mike Hancock (Liberal Democrat, Portsmouth South)

With this, it will be convenient to discuss Government amendments 494 and 226 to 254.

I ask the Committee’s indulgence. When we come to vote on these Government amendments, members should decide whether we take the last group of amendments as a collective group or as individual amendments.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The amendments are all minor and technical changes to the National Health Service Act 2006, as a result of changes made elsewhere in the Bill. The vast majority are consequent on the abolition of primary care trusts and strategic health authorities, which is provided for in clauses 28 and 29 of part 1 of the Bill, which we have already considered.

As such, most of these amendments are concerned with removing references to and definitions containing “primary care trust”. For example, amendment 252 removes “primary care trust” from the definition of health service hospital. In addition, a number of these amendments remove references to strategic health authorities. For example, amendment 226 removes strategic health authorities from the list of bodies in section 78 that the Secretary of State is allowed to direct in the event of a failure. References to these bodies will no longer be needed once they are abolished by the Bill.

Some of these amendments insert references to the new bodies established by the Bill, including the NHS commissioning board and consortia where appropriate. For example, amendment 234 to section 123 transfers some ophthalmic functions previously held by PCTs to the NHS commissioning board, in line with changes in primary care elsewhere in the Bill.

Amendments 236 to 241 ensure that the amendments to the National Health Service Act 2006 currently in the Bill extend powers to request documents—for investigative purposes—from contractors providing services for the Secretary of State’s public health functions, as well as those of local authorities. They remove references to local authorities in the definition of the Secretary of State’s security management functions. The existing version of the Bill incorrectly suggests that those functions would be extended to local authorities.

Amendment 238 also ensures that amendments to the 2006 Act that are currently in the Bill are extended to require the production of documents for contractors providing services for the purpose of the Secretary of State’s health functions. While the amendments to this schedule and the next are numerous, they are of a minor and inconsequential nature, and I hope that hon. Members are reassured that they are essential to the functioning of the Bill and all related legislation. For those reasons, I ask the Committee to accept these amendments to schedule 4.

Derek Twigg (Labour, Halton)

Are we taking Government amendments 226 to 254?

Mike Hancock (Liberal Democrat, Portsmouth South)

We can speak to the whole group collectively. We will vote on them separately.

Derek Twigg (Labour, Halton)

I have a very simple question. The reference in amendment 236 is to “NHS services”. Will the Minister explain what is meant by “NHS services”? If he cannot answer now I am happy for him to write to me, but I would like an explanation. To make it clear, when I come to speak on the amendments to the next clause there will be a number of issues about the naming of services—whether they are NHS services or health service provisions—and I will ask the Minister some specific questions. Maybe he will be able to answer at that point.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I will make sure that I do.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Before we deal with the amendments to be made formally, may I very quickly answer the question that was asked? Any service funded by the NHS would be covered by the definition “NHS services”.

Nicky Morgan (Conservative, Loughborough)

I want to talk briefly about part 6 to schedule 4, which relates to ophthalmic services. I have two points, but first I should say that I am vice-chair of the all-party group on eye health and visual impairment. Perhaps I am being a pedantic lawyer, but in my copy of the Bill, part 6, “Ophthalmic services”, is listed as part 7 in the contents. We may want to correct that before it becomes law.

It is welcome that primary ophthalmic services, notably sight-testing services, are within the remit of the NHS commissioning board. That is strongly supported by the Optical Confederation, to which I am grateful for its help in pulling together my thoughts. It represents optometrists, opticians and optical businesses. It makes sense to utilise optometric practices to deliver primary eye care, as they are the logical partners of hospital-based ophthalmology. That has been demonstrated with great success in Wales and Scotland, where people with eye problems see their optometrist first, rather than going to their GPs or to hospital. In my constituency, GPs work closely with opticians and optometrists to secure decent treatment.

Enhanced eye care services, such as shared care arrangements with hospitals and GPs, for pre and post-operation cataract assessments and stable glaucoma management, are currently commissioned locally. My right hon. Friend the Minister has made it clear that the NHS commissioning board will devolve enhanced optometric services to GP commissioners, and, in the main, that also makes sense.

However, optometrists are concerned about glaucoma referrals under the NICE guidelines and community-based acute services. Managing red eye and minor eye problems are two small services that are national in character and, many believe, should be commissioned nationally on the same basis as the NHS sight test. That would ensure national coverage and appropriate protocols and accreditation within an agreed patient pathway, and would save money and transaction costs throughout the system.

Suspect glaucoma referrals became a significant capacity issue for hospitals when NICE laid down a very low threshold for referral into secondary care. In Stockport, a local scheme enables optometrists to carry out further tests to reduce unnecessary referrals to the hospital eye service by appropriately retaining patients within primary care. That scheme is deflecting 77% of low-risk patients with suspect high inter-ocular pressures who would otherwise be seen in a hospital setting.

Negotiating that simple yet effective scheme PCT by PCT has proved to be complex, and it has not been established in many areas despite NICE advice to do so. From a patient point of view, to reduce hospital capacity problems and make the service cost effective, the NHS commissioning board may be best placed to ensure provision across England. I hope that the Minister can comment on that.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I shall briefly respond now, and I undertake to write to my hon. Friend, and therefore the rest of the Committee. She has helpfully illustrated one of the great strengths and opportunities that the NHS commissioning board presents—the ability to have greater consistency in how commissioning of certain services is taken forward, to ensure that some past concerns about NICE quality standards not being properly taken into account in commissioning can be addressed. In this area in particular, she has highlighted why those strengths will make a big difference to many of her constituents and mine.

I will write to my hon. Friend and members of the Committee on the specific details. It will be a useful example to work through on how the new arrangements will strengthen commissioning, so I undertake to do that.

Schedule 5

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 255, in schedule 5, page 261, line 25, at end insert—

Mike Hancock (Liberal Democrat, Portsmouth South)

With this it will be convenient to discuss Government amendments 256 to 341 and Government new clause 2—Certification of death.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The amendments and the new clause add to the consequential amendments made to other enactments in schedule 5. The amendments are all consequential on the provisions of part 1, which we have discussed, and ensure that existing powers and duties in other legislation refer to the correct bodies in the new architecture.

Although the list of amendments is long, in the majority of cases they simply remove references to primary care trusts or strategic health authorities and insert references either to commissioning consortia and the commissioning board or to the Secretary of State or local authorities performing public health functions. In a few cases, we have removed references to PCTs and SHAs and not inserted any reference to the new bodies created by the Bill. That is usually because the new bodies will no longer be responsible for the activity. For example, unlike primary care trusts, the NHS commissioning board and commissioning consortia will be not providers of services but commissioners of services. That provides a split that has increasingly been established over the years.

Although I do not intend to speak in detail about each amendment, I would like to draw the Committee’s intention to amendment 260. I know that my hon. Friend the Member for Southport also wanted to speak to this amendment. He raised his concern about access under the access to public bodies provisions. Let me remind the Committee that during the discussions on the commissioning board, we promised that we would ensure that it was subject to the Public Bodies (Admissions to Meetings) Act 1960 and that is what this amendment does. I hope that we have reassured the Committee and that the amendments will be accepted.

Derek Twigg (Labour, Halton)

This matter goes back to the question that I asked about the previous schedules. Perhaps it was an oversight, but the Minister did not cover it in his speech. He will probably understand that we have a great suspicion that the Government want to take the word “national” out of the national health service. [Interruption.] If the Minister will listen, he may be able to reassure me.

Amendment 312 refers to a person who is receiving NHS treatment. That seems fair enough. However, under amendment 332, the phrase “NHS services” is substituted with “health services”. Amendment 333 changes NHS functions to “health service functions” and amendment 335 substitutes an NHS function with a “health service function”. Amendment 337 states:

“In subsection (1) for ‘NHS services’ (in each place where it occurs) substitute “relevant health services”.

We have touched on this matter before in our debates, but now we are seeing significant changes to the wording, yet under amendment 312, we talk about “NHS treatment.”

Kevin Barron (Labour, Rother Valley)

Does my hon. Friend think that the fact that 87 amendments have been tabled to this schedule is the sign of joined-up work in the Department prior to the publication of the Bill?

Derek Twigg (Labour, Halton)

My right hon. Friend makes a very important point. He might remember my point of order when most of these amendments were submitted. We had to change the programme motion to include a debate on these amendments, for which we are grateful.

Many provisions make changes to various other Acts of Parliament, and that is important. It underlines the rush that there is to get this legislation through Parliament, which means that this is not good legislation. I could speak to a number of other amendments, but I am conscious that the Whips want to move on with business. Will the Minister tell us why those changes have been made and why the reference to the NHS is different in an earlier clause?

The Local Government Group has expressed concern about new clause 2. It said that the Coroners and Justice Act 2009 requires primary care trusts in England to appoint medical examiners to introduce a unified system of death certification for all deaths that does not require coroners, post mortems or inquests. Part 1 of schedule 5 and clauses 77 and 78 of the Bill have the effect of transferring the PCTs’ duties in regard to medical examiners to single and upper-tier local authorities, in line with the planned abolition of PCTs in 2013.

The Local Government Group has concerns about the uncosted change to the 2009 Act, which, it feels, has not been adequately consulted on or had a thorough impact assessment. The question is about how this additional requirement on councils squares with the commitment for no new burdens. This will be a wholly new requirement for local authorities and, given that the system will not be up and running before the abolition of PCTs, councils will be faced with the introduction of a largely untested process.

The Department of Health has anticipated the need for around 1,000 medical examiners, appointed by local authorities on a part-time basis. The new service is expected to impact on the NHS through the requirement of PCTs to recruit and train support officers and to monitor and manage performance and service, while ensuring that medical examiners are independent in how they exercise their professional judgment as medical practitioners. The requirement of PCTs is to provision office facilities, resources and access to information systems, all of which will now impact on local authorities and all of which have a cost.

So what are the financial implications for councils? The initial impact assessment did not consider the cost implications for local authorities, other than for publicly held funerals, as the original intention was for the requirement of PCTs. They believe strongly that there should be a new impact assessment that considers the detailed implications for local authorities. The original impact assessment considered that the cost of introducing the medical examiners would be met in full from the fees paid by the public for death certificates.

In the proposed system, a flat fee would be payable irrespective of whether the body was buried or cremated, instead of the current situation in which those who choose to bury their relatives pay nothing and those who choose to cremate—some 70% of people—pay £160.50. It has been estimated that the cost of the new system will be less than the current one, so the total amount paid by the public should be less than at present. The flat fee should be less than the current fee for cremation. Currently, the total annual expenditure on cremation is estimated to be around £45 million.

The Local Government Group has consulted with several other member authorities who are sceptical about whether the introduction of the new role will really be cost-neutral, funded by fees from the public. Their concern is about funding and the additional cost burden, both in the short and long terms, and a potential unintended consequence may result from the fact that the public is asked to pay a much lower fee for deaths investigated by the coroners service and there may be increased pressure for coroners to investigate deaths. It is proposed that the fee for death certification will be set nationally. They are concerned that the national fee will not adequately reflect the differing costs of implementation at local level.

Local costs will be affected by issues such as rurality, demography and, for example, communities whose religious practice requires burial to take place as soon as possible after death. The concern is that in the current financial climate any new charge will be seen as a death tax imposed by councils.

Although local government does not oppose the idea in principle, as authorities already manage coroners and registrars, both of whom have had to work closely with medical examiners, it could make sense for them to be commissioned by local authorities and co-ordinated with the coroners and the registration service. They feel this issue needs to be addressed in a broader context, abrogating the totality of the new burdens associated with the health reforms. Furthermore, they seek agreement on planned consultation which will identify all the costs and implications for local authorities.

I will be interested to see what the Minister says about that. I had not realised the total impact on local authorities and wonder whether he would take the issues away and look at them again.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I thank the hon. Gentleman for his questions and I will try to address them in the order that he raised them. I will start with amendments 332 to 336 to provide the context in which the use of “health services” is appropriate. They amend provisions in schedule 5 that amend the Health Act 2009 and they relate to the NHS constitution. The amendments ensure that local authorities are added to the list of bodies who must have regard to the constitution.

The duty to have regard to the constitution covers the entire health service to reflect the fact that in the Bill we are transferring public health duties to local authorities, and we want to ensure that those aspects of health that are discharged by local authorities are covered, we are using the definition that we are. We are changing the reference to “health services” so we can ensure that we cover the comprehensive health service, which includes the NHS and public health. Both parts constitute the comprehensive health service, and we want to ensure that that is clear in terms of discharging duties under the NHS constitution. That is why the language is as it is.

The danger of retaining “NHS services” is that it would give the impression that health services provided and commissioned under the public health responsibility of local authorities were not part of that duty. I should have thought that hon. Members would want to ensure that the NHS constitution’s values, principles, and so on were being considered by local authorities when discharging their public health duties. That is the intent, and there is no sinister purpose behind it. It is about ensuring that we fulfil the ongoing obligation, which we believe we have, to a universal health service.

Amendments 337 to 339 amend provisions of the Health Act 2009 relating to quality. They ensure that quality accounts apply only to the provision of NHS services, not to public health services, and that Monitor, rather than strategic health authorities, will require providers to correct errors or omissions in their accounts.

Finally, the hon. Member for Halton raised a number of concerns about the examining service, on behalf of the Local Government Group. We have already embarked on a consultation about the public health responsibilities of local authorities and the resourcing of those, but to fulfil the hon. Gentleman’s request, I will write to him to ensure that we give him the best possible answer. I also want to make sure that we are properly consulting our colleagues in local government, so that we deal with any concerns that they have about a new burden that is not properly resourced. I can assure the hon. Gentleman that officials and Ministers in the Department for Communities and Local Government would be among the first to warn us of such a consequence, if it were there. I will, however, write to him on those points and with that, I hope the clauses can be amended in the way we recommend.

Schedule 6

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 342, in schedule 6, page 274, line 33, at end insert—

These minor technical changes are necessary to clarify two points that are not made explicitly in the Bill. The first would ensure that the Secretary of State retains his powers of delegation in relation to primary care trusts, until their abolition. The second change would ensure that directions made to special health authorities under existing legislation can continue to be in force once clause 17, which relates to functions of special health authorities, commences. The provisions are important to ensure that the period of transition is as smooth as possible, and that everything continues to function as it should. I recommend, therefore, that the amendment stands part of the Bill.

Clause 46

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 343, in clause 46, page 60, line 5, at end insert—

Mike Hancock (Liberal Democrat, Portsmouth South)

With this it will be convenient to discuss Government new schedule 1—Abolition of the Health Protection Agency: consequential amendments.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Clause 46 abolishes the Health Protection Agency and repeals the Health Protection Agency Act 2004. Amendment 343 and new schedule 1 are technical provisions that remove references to the Health Protection Agency from current enactments.

The abolition of the Health Protection Agency is an important step in the Government’s plan for unifying national health protection activity and creating a more transparent, responsive and accountable service under the Secretary of State. The Health Protection Agency is mentioned in primary legislation ranging from the Health and Safety Act Work etc. Act 1974 to the Employment Rights Act 1996, and in many cases the Secretary of State is already named in the relevant legislation and the reference to the Health Protection Agency simply needs to be omitted.

As discussed, clause 7 imposes on the Secretary of State a new general duty to protect the health of the people of England. The duty underpins a major component of the new public health service, Public Health England, by making the Secretary of State directly accountable for protecting the health of the people of England. In many ways, the Health Protection Agency has done an outstanding job and it has established an international reputation for excellence. The efforts of staff will continue to the same high standard through Public Health England. The agency’s scientific expertise and ability to provide expert advice will continue. There will now be a clear line of sight to the Secretary of State for Health, however, on vital health protection and emergency preparedness issues. New arrangements will be much stronger and more efficient. I hope that the Committee will support the amendment.

Emily Thornberry (Labour, Islington South and Finsbury)

Clause 46 abolishes the Health Protection Agency as a statutory organisation and make the Secretary of State responsible for its functions, and we need to pause and think about the sense of that. I know that a number of organisations are anxious about it. There is concern that the Health Protection Agency will lose its independence and its impartiality, not only in fact but in the perception of the Health Protection Agency’s alternative structures. As the Minister has said, the agency has done an outstanding job and has an international reputation. If it is not broken, why is any attempt being made to fix it? On one hand, the Minister has argued for the importance of changing it to ensure greater transparency and accountability in the new structures. On the other hand—I know that the Government have this at the forefront of their mind in a lot of this legislation—it is important to avoid political involvement and to free the NHS from political interference.

There is obviously the potential, as there has been in the past, for a breakdown in public trust; we know about the BSE crisis and we know about the MMR vaccine crisis. The Royal College of Nursing in particular has asked me to point out that the Health Protection Agency is very different from the Department of Health. The Health Protection Agency is public and customer facing—it provides advice and information to the general public, to health professionals such as doctors and nurses and to national and local government—but the Department of Health is not naturally a public-facing body. That is causing some concern, which is why I am raising it today. Has the Minister given consideration to that, and to how the Department will carry out these new responsibilities?

The Health Protection Agency has a number of UK-wide functions. Will the Minister explain how those will be transferred to the devolved Administrations? I would also be grateful if the Minister explained the motivation behind that change and, in particular, why the Health Protection Agency will not be made a special health authority, which would have given it greater independence?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

On the notion that the Department of Health is not a public-facing body, I must say, as a Minister in that Department, that it does not feel like that, both in terms of the amount of correspondence that the public quite rightly send in and the responses that Ministers give and that the hard-working team of correspondence officials discharge on our behalf.

Emily Thornberry (Labour, Islington South and Finsbury)

I understand the hon. Gentleman’s perspective, but, from the perspective of the public and patients, it is a different body. It is not one that is seen as warm and welcoming to the public and to patients in the way that I am sure that the hon. Gentleman would want it to.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

This is not necessarily an encouragement, but the Department of Health is the place that people write to when they have a concern about their experience in the health service. In some cases, that means that we will signpost it, but, in other cases, we will deal with it appropriately. In the case of reforms in public health, that further strengthens us.

The hon. Lady asked about the agency’s reputation for independence and how that might be affected. There is no reason why it should be. Public Health England will have all the functions of the Health Protection Agency along with its experts and scientists, many of whom, I am sure we all agree, are world class. There will continue to be expert advisory committees drawn from the scientific community through open recruitment, and the chief medical officer will continue to provide impartial and objective advice to Ministers and others.

The hon. Lady went on to ask about Health Protection Agency functions and how accountability will be improved. At a national level, there is a clear rationale for accountability for health protection resting with the Secretary of State and, through him, Parliament. That is the intention of the changes that the Bill makes. The nature of various threats to health range from infectious diseases to terrorist attacks, and they are not always amenable to individual or local action. They require a clear line of sight from the centre of Government down to local services, and we need a system that is more integrated and less dispersed than the present one. Abolishing the agency and conferring its responsibilities directly on to the Secretary of State will be a major step forward.

The Health Protection Agency does a good job, and its efforts will continue to the same high standards through Public Health England. Its scientific expertise and ability will continue to be available to provide independent expert advice. There will be a clear line of sight from the Secretary of State on vital health protection and emergency preparedness.

In essence, we want to the see the Secretary of State and the Department of Health having a much sharper and clearer focus on public health than has historically been the case. That is an important, and up until this point oft-overlooked, area of responsibility in a comprehensive health service. By having clear outcomes and frameworks for the NHS, for public health and, indeed, social care, too, and also having that responsibility close to the Secretary of State, will allow us to be in a much better place to drive a public health agenda, of the sort that is necessary to address so many of the public health challenges that the country faces, right across Government. It is for those reasons that we are proceeding in this way. While concerns have been raised around implementation and transition in the consultations that we have undertaken; there have been no concerns about the principle of the direction of travel. For those reasons, I hope that the hon. Lady is reassured and that the amendments are accepted.

Clause 60

Kevin Barron (Labour, Rother Valley)

I hope that I will not detain the Committee for too long, but I have been trying to get to the bottom of what “competition” means in relation to the Bill. We have been told on numerous occasions that the Bill is an extension of the legislation introduced in the past 10 years in which the previous Government introduced the independent sector to the national health service. That prompts the question—I see one or two Government Members nodding their head—why do we have to have all these clauses to introduce competition law if the Bill is just an extension of what has been happening over the past 10 years?

Earlier in our proceedings, I asked the Minister what he meant when he said on BBC television earlier this year, “It is going to be a genuine market. It is going to be a genuine competition.” His answer was that there is going to be competition in terms of quality. When we set off on this Bill, we looked at NICE’s role in quality standards, which I support. The spreading of best practice has been very poor inside the national health service, so, in that respect, I see where quality comes through from NICE’s laying down standards for patient pathways and having both commissioners and providers accept them. That seems to me to be a simple concept to accept.

Competition law is a little different. On Tuesday I asked a number of questions of the Minister on the Government’s intention for competition and the introduction of competition law. We see here that it is an introduction of competition law; it is not using the current framework, otherwise we would not have to have it in the Bill. I asked several questions. Our greatest problem, in a sense, is with the powers of Monitor. Those powers are described in the explanatory notes on clause 52, which say very little about how the shape of competition will work. The explanatory notes simply say that it will work

“by promoting competition where appropriate and through regulation where necessary.”

On Tuesday we debated competition law and some of its different aspects. I asked a number of questions of the Minister, some of which he answered, but he was not taking interventions at the time because he wanted to get through answering questions that other Members and I had asked. The questions I asked of him related not to what is in the explanatory notes, but to what is in the White Paper that was published last July and explains the scope and powers of Monitor. I want very briefly to describe those questions. One question was on the powers Monitor will have to protect

“essential assets; require monopoly providers to grant access to their facilities to third parties.”

The other question I asked him was on Monitor’s power to conduct

“market studies and refer potential structural problems to the Competition Commission for investigation.”

In health care terms, this is the first time I have heard talk of the Competition Commission.

The Minister answered those two questions, in a form, but I would like to try to bring out of him exactly what he meant. He said:

“First, Monitor may need powers to protect essential assets to ensure continuity of essential services.”

That is absolutely true and is written in the Bill, which is right and proper. He then said:

“Secondly, the powers to grant access by third parties to a monopoly provider’s facilities would be used only in limited circumstances, when it was in patients’ interests, which could in the form of extended hours, more flexible access or more innovative services; the provider giving access would receive payment for doing so.”

There is a whole debate, not only in this Committee or in this House—it was debated in the Chamber yesterday, but I did not participate in that debate—but in political parties and in the different organisations that represent different aspects, both clinical and non-clinical, of the national health service. What exactly does this mean? What does bringing competition law into the NHS mean? With all due respect, “in limited circumstances” means absolutely nothing. It means very little to me that the new power the Bill will allow Monitor to exercise will be used “in limited circumstances”.

The Minister went on to the potential to address abuses by monopoly providers:

“First, our proposals explicitly recognise the role of monopoly providers in the NHS, which, to my mind, are not always a bad thing.”

In that debate I pointed out the hospital we can see through the window, which is a monopoly provider. He went on to say that

“there are both natural monopolies, such as providers of specialist neurosurgery, and local hospitals that provide essential services where there are no alternative providers.”

Later, he spoke of taking action

“For example, where a provider refused to co-operate with GPs to provide integration of primary care within A and E”.––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 770.]

I have visited that type of establishment. We have had them for a number of years, and while it is true that they have, on occasion, been reluctant for GPs to endorse them because it would be a change away from the normal shape of general practice service in this country, why would we need these powers to bring in competition law if those are the examples? We are saying that they are an example of the potential abuse of a monopoly position.

Over many years we have been able to reshape the NHS at local level without ever having to bring competition law, or anything like it, into the equation. We are the Committee that should be looking in detail at the implications of this legislation for our constituents and the country. Going away from here on the basis of “in limited circumstances” does not satisfy me that, as a legislator, I can say to my constituents—or anybody else—that this legislation will not disrupt the NHS in the way that it has the potential to do.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Is there not an added complication in this part of the Bill? If European competition law is a part of Monitor’s remit, would a monopoly provider, such as the one my right hon. Friend mentioned on Tuesday evening, potentially be subject to state aid rules if we were applying competition law to its full extent?

Kevin Barron (Labour, Rother Valley)

Let me answer that very relevant question by explaining to the Committee. On Tuesday I said that we were all sent a brief on competition law by the NHS Confederation. An element I did not bring up then but will now is that

“Under the NHS reforms, Monitor will have the same powers as the OFT, in relation to competition in the provision of health services in England. Competition law regulates anti-competitive conduct, mergers and state aid. In relation to anti-competitive conduct, there are two main areas: [one is] (collusion) [and the other is] (monopoly)”.

I am not convinced that monopoly will only be threatened “in limited circumstances”. We had no examples as far as the law is concerned—I am not a lawyer, but bringing competition law into the health service could open up every provision.

As I said on Tuesday, I accept entirely the existing issues around procurement. Competition law should be used there because it is a major way of protecting the public purse. There are good examples of where NHS procurement has not been as efficient for the taxpayer as it should have. There are many, many examples of that over many years. However, clinical services are entirely different. I am unsure about the implications around the issue of state aid and competition law—perhaps the Minister could tell us whether there are any implications concerning state aid, given that our health service is pretty unique in how it is funded?

As I said earlier, I do not want to detain the Committee, but I must go back to the question I posed to the Minister, which was not answered on Tuesday. It related to the White Paper published in July, which said:

“Monitor’s powers to regulate prices and license providers will only cover publicly-funded health services. However, its powers to apply competition law will extend to both publicly and privately funded healthcare, and to social care.”

Again, I pose the question to the Minister: what are the implications of that? What does it tell the Committee about whether competition law will be involved in every aspect of health and social care in this country? I entirely accept the issue about procurement, but this is about monopoly providers, which in general terms are hospitals, and about having access to them. I do not pose the question to scare anybody, but this is relevant. Even if all we get back is limited in terms of how this arrangement can work, I pose it to the Committee.

There has been a great debate for 60 years about whether hospitals should have private wings. My local hospital does not have a private wing, but I have been into some that do. Some people who work in the NHS and many of our constituents would take strong exception to a current NHS hospital being told that it had to open a private wing because Monitor believed that that was a way to use the powers given to it by the Bill. I know that we are on competition law and not the powers of Monitor, but this is about the powers of Monitor. It has the power to look into the market and direct things if it feels that the market is being held up in any way. Competition law, quite frankly, does not reassure me about the decisions that will be taken.

As the hon. Member for Southport said in an earlier debate, much of our health care system is integrated, and has to be integrated at a regional or sub-regional level on occasion. That is how our NHS works. This is better left in the hands of people who know and not left in the hands of lawyers. I hope that the Minister can tell us exactly what the implications are for our NHS in years to come of bringing in competition law in this way in the Bill.

Grahame Morris (Labour, Easington)

My view echoes that of my right hon. Friend. This is another cornerstone of the Bill. The provisions clause 60 and some subsequent clauses on functions under the 1998 Act are causing considerable concern, not only to my party and the public, but to many Members of the governing parties, and certainly to the medical profession.

Clause 60 gives Monitor powers under competition law that it can use concurrently with the Office of Fair Trading, as my right hon. Friend said. My understanding is that Monitor will identify market distortions or anti-competitive practices, and the Competition Commission will take appropriate corrective action. The application of competition law to health care is a major departure in terms of the clinical provisions and is of considerable concern. If the full weight of EU competition law applied to the NHS, as if it were a standard service industry, the process of privatisation, which Opposition members are concerned about and the Government have indicated that they are opposed to, could not only be accelerated but might become entirely irreversible.

My right hon. Friend said that a quarter of the Bill is dedicated to clauses dealing with competition. This seems to be a difficult concept to explain, but my principle concern is that in changing the structure and architecture of the NHS we are exposing the clinical areas to EU competition law. It is not so much about the drivers in the Bill, but the structural changes, and that is the issue of concern to Opposition Members and those further afield. It is important to read the clauses in conjunction with the impact assessment, and to note that the competition powers can be invoked where a private provider complains that a commissioner, such as a GP commissioner, is favouring an incumbent provider, such as a local NHS hospital. We touched on this when the hon. Member for Southport gave particular examples in his area, so I do not want to rehearse those.

The implication is that, on receipt of such a complaint, Monitor would be able to investigate local GPs with the threat of full enforcement powers, and the possibility of levying a penalty of up to 10% of their turnover where it determines that there has been anti-competitive practice. I accept that Monitor would do the investigation and would make the recommendations and that the Competition Commission would want to carry out the sanction. However, in cases like this—and even in extreme cases—it is conceivable that, under European competition law, there could be criminal offences. I am not suggesting that that is going to happen; it would be an extreme situation. However, even if that scenario is unlikely, just the prospect of it may be a useful weapon for the private providers who are seeking to gain entry to the market by exerting influence over local GPs to commission their services instead of the preferred NHS providers. Indeed, such threats would counteract any political pressure from the local community to save local services and local NHS hospitals.

I do not wish to go any further, but in part 1 of clause 15 there are also concerns about opening services to EU competition law.

Liz Kendall (Labour, Leicester West)

My hon. Friends the Members for Rother Valley and for Easington both raised important issues about this clause. I would like to say some more about what the clause seeks to do and why I think that that is a huge problem, as do my hon. Friends. For the record, clause 60 gives Monitor concurrent functions with the Office of Fair Trading under part 1 of the Competition Act 1998. There has been much debate about this, both within this Committee and on the Floor of the House. The Act is applied and enforced by the OFT in a number of regulatory functions. I have found another one in the explanatory note with the Bill: it is not just telecoms, gas, electricity, water and railways but sewerage. So that is added to the mix.

Part 1 of the Act has two chapters. The first prohibits what are called undertakings from reaching certain agreements which prevent, restrict or distort competition, which include reaching agreements not only to fix prices but also to “share markets”.

Chapter 2 of part 1 of the Act prohibits undertakings from abusing a dominant position in the market, which include limiting production. Undertakings, as hon. Members will know, are defined in EU law as entities engaged in economic activity. I say EU law, because chapters 1 and 2 of part 1 of the Competition Act are modelled, as detailed in the explanatory notes, on articles 101 and 102 of the treaty on the functioning of the European Union. It is clear that these provisions are being generally applied to the NHS in primary legislation.

Monitor would have the same powers as the Office of Fair Trading to conduct investigations where it has reasonable grounds for suspecting that either of the prohibited areas that I have outlined have taken place in relation to health services in England. It would also have powers to impose remedies or penalties for those breaches. If I may clarify what some of my hon. Friends have said, the OFT’s powers include a power to fine businesses who are found to have broken the law up to 10% of their turnover. Third parties, including injured competitors, customers and consumer groups, can bring damages and claims against them. Individuals found to be involved in cartels can be fined and imprisoned for up to five years and directors of companies that breach prohibitions can be disqualified for up to 15 years. That is why it is important for us seriously to consider the implications for the NHS.

I want to get to the heart of the issue which Mr. Hancock rightly said should wait to be discussed until this clause. Members on this side of the Committee have not argued that this Bill extends the scope of competition law; we have argued that it extends the applicability of the law by extending it to the NHS. I say to the Minister that the national health service has explicitly become a market in which competition law has been added to primary legislation for the first time. The Minister is guaranteeing that it will be treated as a market and bodies will be treated as undertakings because that is enshrined in primary legislation for the first time. By introducing an economic regulator, the Government have made it clear that the NHS is being treated more as a market.

I would go further, however. As the private patient price cap is entirely removed from foundation trusts and they can make money from the private sector, they would be more likely to be considered undertakings. As there are no more primary care trusts or strategic health authorities as a management level of Government to cope with some of the results of patient choice, the Government’s policy is to move the NHS to be considered, as the Minister said in his “Newsnight” interview, more as a genuine market with genuine competition.

To be fair to the Minister, he recognised this in his comments to the Committee on Tuesday when he said:

“UK and EU competition laws will increasingly become applicable. …in a future where the majority of providers are likely to be classed as undertakings for the purposes of EU competition law, that law…will apply.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 718.]

I do not have my Hansard reference here, but it was interesting that in a reply to Lord Beecham or Jeremy Beecham, I am not sure how one refers to them—

Simon Burns (Conservative, Chelmsford)

The noble Lord, Lord Beecham.

Liz Kendall (Labour, Leicester West)

Lord Beecham asked a question about whether social enterprises would be counted as undertakings and the relevant Minister from—

The rest of the debate is in Hansard.