Health and Social Care Bill

Public Bill Committee, 22 March 2011.

Clause 69

Derek Twigg (Labour, Halton)

I beg to move amendment 474, in clause 69, page 73, line 21, leave out from first ‘the’ to end of line 21 and insert ‘non-designation of the service for the purposes of this Part.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following: amendment 476, in clause 69, page 73, leave out line 23.

Amendment 475, in clause 69, page 73, line 24, after second ‘is,’ insert ‘not’.

Derek Twigg (Labour, Halton)

I welcome you to the Chair, Mr Gale. Having previously served under you, I know that you are very fair and a very good Chair. I am sure that you will put us right if we step out of line in any way. I look forward to serving under your chairmanship.

I want to start with a bit of good news from this morning because there is not much in this Bill. As I was walking in, it struck me that it was light; when the Bill started, it was dark. Now that there is a lot of light on the Bill, we have seen the real dangers of it, which have become more and more apparent.

Interestingly, in the context of these changes—the principle of designation—I noticed in The Daily Telegraph this morning that John Appleby from the King’s Fund has highlighted figures

“showing that two-thirds of people are now either very or quite happy with the state-run health care, the largest proportion since the in-depth British Social Attitudes study began in 1983.”

The article goes on to say that, in an article in the British Medical Journal, Professor Appleby wrote:

“The NHS must have been doing something right to earn this extra satisfaction—something even Conservative supporters have noticed, and something probably not unadjacent to the large rise in funding since 2000.”

I raise that because back in 1983, only 55% of people were happy with the NHS. Why are we having such an upheaval, and why is there this major clause? We have had a lot of debate about Monitor, pricing, accountability and competition, but there has not been much focus outside on the issue of designation, which has just as great an impact on the future of the national health service in terms of competition and the greater involvement of private providers.

We would be grateful if the Minister explained designation to us as part of his response, as I am sure he is about to. Funnily enough, some people who are much more knowledgeable about the national health service than I are having difficulty completely understanding what designation means. We will explore that in our debate this morning, but, fundamentally, we disagree with the clause’s provisions.

The amendments seek to express our opposition to the notion of designated services. As we will no doubt discuss the wider concerns in the stand part debate, amendments 474 and 475 are specifically targeted to remove the most damaging principle of this clause: the principle that, unless an application is made otherwise, services are assumed to be non-designated. In effect, the amendments seek to mitigate the damage that such a designation regime will cause.

Amendment 474 would alter the Bill so that all services were classed as designated in the first instance. The onus would then be on the commissioners to apply to undesignate a service. We believe that it should be for commissioners to prove that competition will be of benefit to a service, not the other way round. Manufacturing competition for a service should not be the default position. I will repeat that point time and again during this debate.

People have been commissioning services for years on the basis that they are essential, so why should that suddenly change as a result of this provision? That represents an important structural difference between us and the Government. I stress that we are opposed, although we are trying to help the Government. Our approach in government was to give targeted support for limited competition in specific areas where there was clear evidence that it could bring demonstrable benefits to patients within a managed system. Strategic decisions were taken based on merit and patient need. I am struggling to find any sign of how strategic decisions will be made—not only under this clause, but throughout the Bill.

We are interested to hear what the Minister has to say. We will explore the issue further in the clause stand part debate. In contrast, I would also be interested to hear how the Minister believes allowing a range of non-designated services to be shut down by providers, or stopped as a result of a provider’s failing without being helped, could be presented as having a specific or demonstrable benefit to patients. Again, the issue is about promoting competition, not promoting the interests of patients. That is a theme that we will continue to come back to during the debate on designation.

There are many services that, if removed, would have a significant adverse impact on the health of patients. It is clear from the conversations that all Members regularly have with their constituents that the vast majority of services are important to the local population; as I said before, if they were not, the commissioners would not commission them in the first instance. That all comes back to the point that we will debate later, which is that the provision’s purpose is to allow failure to become easier, to cut services and to open them up to competition; it is not to promote the best interests of patients.

As it stands, the clause will ensure that the smallest possible number of services will be designated. Does the Minister have any idea about that number?

The Minister of State, Department of Health (Mr Simon Burns) indicated dissent.

Derek Twigg (Labour, Halton)

I am sure that the Minister does not want to get into how regional and consortia boundaries will impact on such decisions. That is the problem. There is so much detail that is not in Bill, but we are being asked to make an important decision today, which is a great worry.

A commitment to competition is put before patient care and choice. I remind the Minister that it is simply not enough to say that competition will provide a better service and better health outcomes for patients, and we will explore that further. The measure will lead to mass fragmentation and volatility in the provision of services, and, of course, it wagers too much on the success of under-regulated market forces. Every service that a patient uses is important to them, and, as such, there should be no system of first or second-class services. This group of amendments aims to ensure that if such a regime of designation is implemented, it is done with the intention of undesignating services only in exceptional circumstances where there is a clear body of clinical evidence to show that it is not detrimental to patient service.

We would be interested in what patients’ views would be in such instances and what consultation would take place. The Government have made a great play of stating that this is about putting the patient first and about consultation with local populations and providers, such as healthwatch and local authority scrutiny, but we have seen little of that in this particular proposal. It would be interesting to hear from the Minister how important patients’ views will be.

The Government believe that decisions should be made locally by those who know best, because they are clinical professionals, local authority members or even a member of the public or a patient. However, Monitor is the king in that respect—not the local clinicians or GP consortia, and not the local population or patients. It is, again, about Monitor.

As my hon. Friend the Member for Leicester West exposed last week, putting patients first is not at the centre of the Bill; Monitor, regulation and promoting competition are at the centre. It is not surprising that we want to explore that further in the clause stand part debate. Our view is that patients, not competition, should remain at the heart of the Bill, and I hope that my hon. Friends will join me in supporting the amendments.

Roger Gale (Conservative, North Thanet)

Before we embark, let me set down the ground rules for those who perhaps do not understand the process. I am relaxed; I do not mind if we have a stand part debate at the beginning or at the end, but we cannot do both. The shadow Minister has indicated that he wants to have a stand part debate. That being so, I intend to glue this debate down to the amendments, and I do not expect a ramble round the shires in between.

Simon Burns (Conservative, Chelmsford)

Mr Gale, may I surprise you by saying that I would like to begin on a consensual note? I am in total agreement with the hon. Member for Halton about it being a pleasure to have you temporarily chairing our proceedings. I know that your wisdom will prevail, as it already has done with your announcement of the ground rules on the stand part debate. I had assumed, because the hon. Gentleman asked me to explain designation, that that would take place at the beginning of my comments on the amendments.

Roger Gale (Conservative, North Thanet)

Order. That is fine, because designation is referred to in amendment 474, but we must not have a broad Second Reading-style debate on the whole clause now.

Simon Burns (Conservative, Chelmsford)

If it is in order, Mr Gale, I will help the Committee and the hon. Member for Halton by starting with some introductory comments about the overall, overarching system of designation, because the hon. Gentleman has a number of misconceptions about it. I will then go on to the specifics of the amendments, if that finds favour with you.

Roger Gale (Conservative, North Thanet)

That is fine.

Simon Burns (Conservative, Chelmsford)

Thank you; I would not say that too often.

Before going into the detail of the amendments, I thought that it would be helpful to remind the Committee of the purpose of designated services. Our aim is to give providers the freedom to thrive and succeed, and to develop high-quality services for NHS patients, but in doing so we must recognise the possibility of failure.

Failure is not new; it happens in all sectors and all health care systems, as a result of factors such as overcapacity, poor management or inefficient service delivery. Failure has always existed at times in the NHS, but rather than being acknowledged and dealt with openly it has too often been covered up. Poor-quality, inefficient providers have been propped up through covert subsidies at the expense of patients and taxpayers. Our aim is to create a robust and credible failure regime that will deal with failure fairly if it happens, and will act as a deterrent to make failure far less likely in the first place.

Under our proposals, commissioners will have the primary duty to ensure the continuity of an NHS-funded health service to all patients in England through effective contracting and oversight of their providers. However, as we set out in “Equity and Excellence: Liberating the NHS”, Monitor will have an additional role in supporting commissioners by ensuring the continuity of designated services, which are essential local health services where there is no alternative provider. Monitor can do so through additional regulation and intervention and, in extreme circumstances—where a provider becomes insolvent or is at risk of becoming so—by triggering a special administration regime.

Due to the variety of the health care needs of different communities and to significant differences in the provider landscape between communities, it is likely that the services that need additional regulation will vary across the country. As a result, we feel that it is essential for local commissioners, rather than a national body such as Monitor, to lead the process of defining which services would be designated. Knowledge of local health needs and the local provider landscape will be critical in determining whether additional protection from Monitor would be required.

Derek Twigg (Labour, Halton)

If the Minister is coming on to this, I apologise, but can he explain how Monitor will have any local knowledge?

Simon Burns (Conservative, Chelmsford)

I will be coming to that point, if the hon. Gentleman will bear with me.

The Bill sets out high-level criteria for commissioners to follow when considering whether a service should be designated. Those criteria will require commissioners to demonstrate that the services are necessary to meet the health needs of their populations, and that no alternative providers of those services exist. The default position will be that a service should not be designated unless commissioners can demonstrate that the principles set out in the Bill have been met.

It is important at this stage to make it clear that just because a service is not designated, that does not—I repeat does not—mean that commissioners plan to close that service. I hope that that blocks off any scare stories emanating particularly from the hon. Member for Leicester West, who is very good at them.

Derek Twigg (Labour, Halton)

Again, if the Minister is about to answer this I apologise, but can he tell us how Monitor will do that?

Simon Burns (Conservative, Chelmsford)

The hon. Gentleman anticipates me. I will be coming to that point.

I repeat that just because a service is not designated, that does not mean that commissioners plan to close that service. Rather, it means that the commissioner is confident that a range of other services exist in the locality, and that it has contracts in place with other providers to provide the same service. Should one of the providers fail due to inefficiency or low demand, those other providers could be scaled up to replace the lost capacity. Additional regulation would, therefore, not be required to protect patient services. Commissioners would have a duty to consult providers, local authorities, HealthWatch England and other key stakeholders, in determining which services should be designated.

When they could demonstrate that the criteria were met, commissioners could apply to Monitor for designation of services. Monitor would be obliged to approve the designation when, in turn, it was satisfied that the criteria were met and consultation had taken place. Monitor would also be under the obligation to maintain guidance on the process for designation and de-designation of services, in accordance with criteria to be set out in legislation. That would include guidance on the evidence that commissioners would need to put forward, to demonstrate that the criteria were met. It would also include guidance on the timetable for periodic review of designated services against the criteria.

In the new regime, Monitor will have a number of tools to minimise provider failure in three stages: first, in advance of a failure; secondly, in the event of provider distress; and thirdly, if an organisation reached the point of failure.

Owen Smith (Labour, Pontypridd)

I thank the Minister for giving way, because he is moving beyond the point at which I wanted to intervene.

If I understand the Minister, he is saying that the principal criterion against which designation will be judged is whether there are alternative providers in the local health care economy. If those alternative providers exist, the service might not be designated, might not need to be protected through designation. Does the Minister imagine that, as we have more entrants into the health care market, just as with competition applied to a great degree, there will be greater pressure to de-designate services? If so, how often does he imagine we will see services being reviewed and de-designated, as more entrants come into the market?

Simon Burns (Conservative, Chelmsford)

First, as I just said, there will be guidance for criteria, which will be published in due course. When published, that will provide greater detail. Secondly, I am not going to fall into the trap of answering the question about numbers; as I said earlier, with Opposition Members what might seem an innocent question at the time gets misinterpreted and sometimes misrepresented. However, I will say very broadly that it might happen in some circumstances. The crucial point is that with non-designated services—by definition, they are not designated—there is a plurality of the supply of that service. However, I do not wish to go further than that and interpret precisely how it might look on the ground, to avoid a repetition of a rather unfortunate incident during our second or third sitting.

I return to the new regime. Monitor will have a number of tools to minimise provider failure at three stages. In the first stage, in advance of a failure, Monitor’s licence for providers will contain a number of continuity of service conditions that will seek to restrict risky behaviour among providers of designated services. For example, those could include restrictions on the disposal of assets or financial requirements, such as a ban on cross-subsidies between regulated and unregulated services.

At the same time, providers of designated services will be required to contribute to a provider risk pool, which will create incentives for providers to reduce their financial exposure. In comparable schemes, such as the Pension Protection Fund, those mechanisms have proved to be effective in reducing the overall risk of failure of organisations.

Secondly, if a designated service provider became distressed, Monitor would have the ability, through a combination of licence conditions and the threat of special administration, to increase the basic level of surveillance and advice and to require action from providers to address particular issues. It is only likely to be in exceptional circumstances, therefore, that a provider would reach the third stage and need to be placed into special administration. Nevertheless, it is crucial that special administration should exist as a possibility. The more credible the failure regime, the stronger the incentive will be for providers to take action to tackle their problems, and the less likely failure will be.

Grahame Morris (Labour, Easington)

I have pursued this issue on a number of occasions to try to determine what the estimated failure rate is likely to be under the new arrangements. I can give a couple of examples—not least the west Cumbria practice-based commissioning model, which is being held up as an exemplar. As I understand it, that is about £11 million in debt, and it is being bailed out by the strategic health authority, which, of course, will not exist under the new arrangements. If that is typical of what we can expect, my anticipation is that the failure rate will be very high. Does the Minister share that view?

Simon Burns (Conservative, Chelmsford)

Most certainly I do not. Given the three steps that I have outlined, I think that it will be exceptional and unusual for that to happen. I can appreciate, however, that because the hon. Gentleman is a pessimist, he always wants to look at the downside. I am a realist, so I want to look at the range of a situation. [ Interruption. ] The hon. Gentleman is trying to derail the Bill.

Roger Gale (Conservative, North Thanet)

Order. If the hon. Member for Easington wishes to intervene, he may, but he may not do so from a sedentary position.

Simon Burns (Conservative, Chelmsford)

Thank you, Mr Gale. I do not think that we shall pursue that any further. We got the message from the hon. Member for Easington.

Amendments 474 and 475 amend the clause to change fundamentally the policy of designated services, from being one where commissioners have to opt in services for designation and additional regulation, to one where commissioners have to opt out services from such measures. Where no application is received to opt out, the assumption would be that all services would be designated, as per the amendments.

I understand why the hon. Member for Halton tabled the amendments; I think that they are an attempt to protect NHS services from closure, due to a misconception of designated services policy that has been repeated in recent reports beyond the Committee. That is why I tried to help by providing a general overview of the whole designation system at the beginning of my remarks.

Just because a service is not designated does not mean that commissioners plan to close that service. In fact, it means that the commissioner wants the service to continue and is also confident that it is not the only provider of that service for the locality. Therefore, the service will continue. I repeat that from my earlier remarks, so that there can be no misconception among Labour Members. The commissioner would have to be confident that the service had contracts in place with other providers of that same service, and should one of the providers fail due to inefficiency or low demand, the other providers could be scaled up to replace the lost capacity. That means that additional regulation is not required to protect patient services.

Grahame Morris (Labour, Easington)

Will the Minister explain the evidence base for that assertion? Evidence about the failure regime presented to the Committee by Dr Jennifer Dixon from the Nuffield Trust suggested that it was expected to be very high. Based on modelling in north America, it might be as high as 90%.

Simon Burns (Conservative, Chelmsford)

The hon. Gentleman has asked for evidence, to which I simply say that it is self-evident. It is all right for the hon. Gentleman to pray in aid a witness at the beginning of the Committee, who referred to the United States, but as I have mentioned before, it is most unwise to compare the American system with the British national health service. The fundamentals of the two systems are poles apart, and they are totally different. Personally, I think that such comparisons are a non sequitur.

I return to my original comments. The amendment would mean that the vast majority of services would be designated, and therefore additionally regulated. It is important that I explain the impact of a high level of designated services, because significant negative implications to patient care will arise as a result of designating services that do not require it. If a commissioner designates a service, they effectively lock that service provision into one provider. That means that the benefits of competition—greater quality, innovation, reduced inequalities, efficiency—are missed, and renders any willing provider policy and increased patient choice ineffective.

Preventing competition would also run counter to Monitor’s duty to promote competition where appropriate, and might lead to market investigation references for the Competition Commission about anti-competitive features of the market. As a result, the opposition amendments would subject almost all providers of NHS care to a high level of regulatory burden, giving Monitor additional powers to intervene where it is not necessary—for example, in physiotherapy or podiatry services.

Providers and commissioners would have to pay for the protection that designation offers by paying into the financial mechanisms that cover the cost of ensuring continuity of service in the event of failure. The amendments would lead to a higher amount of designated services than necessary, and therefore higher costs than necessary for commissioners and providers. Patients would not receive the best quality of care if we missed out on these benefits. If there is less cash for commissioners to spend on services, that is clearly not in the best interests of patients.

Amendments 474 and 475 would also degrade commissioners’ responsibilities by removing their responsibility for the continuity of services. The Government believe that commissioners, as those closest to patients and the needs of their populations, should have the primary duty of ensuring continuity of services. Ironically, the amendments would move that responsibility to Monitor. I therefore ask Opposition Members to withdraw the amendments.

I move on to amendment 476, which seems to remove the requirement of commissioners to consult while designating services. I am unsure why the hon. Member for Halton has tabled the amendment, as it would remove the ability of the local population, local authorities, the Care Quality Commission, healthwatch and other local stakeholders to contribute to the designation process. From the Government perspective, that would remove local accountability from the process and disfranchise patients and the public. I think we all agree that that would be a retrograde step, so I ask the hon. Gentleman to withdraw his amendment.

The hon. Member for Halton asked how Monitor would have local knowledge. Local commissioners would determine which services should be designated, based on local knowledge and consultation with the local partners that I mentioned. Monitor’s role is to approve applications where the criteria set out in the legislation are met—in other words, to ensure that due process is followed and that the legislation is applied properly. It is right that commissioners, armed with extensive local knowledge, should lead on the application of services for designation.

Liz Kendall (Labour, Leicester West)

The Minister keeps referring to the fact that commissioners must consider whether there are any alternative providers to deliver local services, and that that is the key criterion. What counts as “local”?

Simon Burns (Conservative, Chelmsford)

I am slightly surprised by that question. “Local” is the local health economy covered by the GP consortium, or consortia if they are providing the same service for a local population. The local area will meet the needs of local consortia.

The hon. Member for Pontypridd asked how often services will be reviewed for de-designation. I hesitate to go into detail at this stage, for the simple reason that we will go into the matter in great detail during our discussions about future amendments. If the hon. Gentleman will bear with me, it would probably be wiser to wait until then.

In conclusion, the amendments tabled by the hon. Member for Halton have some unintended consequences, as I have explained. I assume that the hon. Gentleman will seek to withdraw them.

Kevin Barron (Labour, Rother Valley)

It is a pleasure to serve under you, Mr Gale. The Minister suggested that Opposition Members have a misconception about the Bill.

Simon Burns (Conservative, Chelmsford)

No, about this point.

Kevin Barron (Labour, Rother Valley)

I do not have any misconception about the Bill; I just want to know what it means. [Interruption.] Again, the Minister is shaking his head. Responsibilities given to Monitor in the Bill involve three key functions. One is to promote competition. It was initially to be competition full stop, but now it is to be competition on quality, though we are not sure what that means at this stage. Monitor is also to set prices, and we will move on to that later today, I hope. The third function is to ensure continuity of essential services.

The Minister has just described what that means. However, “designation” is confusing to me. I took notes as he spoke; he talked about a service not being designated. To take the example of a GP surgery would be a bit harsh, but there could be a local health service provider that was not designated by an economic regulator. The Minister said that that would not mean that it would close, but he went on to say that that the service it provided would be provided by others. What does that mean? A provider will not close, but the service it had provided will be provided by somebody else.

What does that provider do? Does it just hang around in the ether? What does that mean? I have just conveyed what the Minister said, although I will crawl over it when we get Hansard. I do not know what it means. I have looked through the explanatory notes for clause 69, which explain what the economic regulator has to do, but frankly I am confused.

With regard to how an economic regulator would make the clinical judgment, the Minister outlined three areas. The licence for providers would apply if someone were involved in risky behaviour, which would obviously have to be put right. Financial exposure would have to be reduced. Secondly, if the designated provider became distressed, Monitor would have to make it improve, or it would have to go into special administration if necessary. What does that all mean?

When talking about licence for providers, risky behaviour and reducing financial exposure, where does quality come in? The Minister keeps throwing in the issue of quality now and again. Where is quality in what Monitor has to do? It is an economic regulator that, we assume, is going to designate parts of the private and public health service and social care. It is going to designate whether that can provide or not for local commissioners to commission from.

We ought to ask which criteria will be applied. The Minister mentioned local knowledge and local commissioners, and the need for the people designated to maintain, improve and meet criteria where necessary. Which criteria will they have to meet? All we have in clause 69 are criteria laid down by an economic regulator, not by a body that includes clinicians looking at standards and quality. That is what I want to come round to.

Liz Kendall (Labour, Leicester West)

Does my right hon. Friend recall that, in the evidence given to the Committee, David Bennett, the new chairman of Monitor, said that it had not figured out the process or the guidance for designation and that it did not know how often it would happen and who would do it? We are being asked to agree to a big change without seeing any real details.

Kevin Barron (Labour, Rother Valley)

My hon. Friend is absolutely right. We are on clause 69 this morning, but we could go through the Bill and say that it is ill thought out on many occasions. The very people who have responsibility, such as David Bennett, do not know what the Bill means either. It all right for the Government to put down amendments to take out competition on prices and put in competition on quality, but I do not know what that means—and I do not think that members of the Committee know either.

The Government have been explaining to us how a service could not be designated, and the Minister has mentioned reducing financial exposure, but I want to know about reducing risk to patients. If we are going to designate services, we should ensure that those services are of the quality and have the skills to be able to look after patients in an appropriate way. Financial risk is not something that will impact on a patient if they have a need.

Derek Twigg (Labour, Halton)

On exactly that point, did my right hon. Friend notice the Minister use the phrase “keeping more services than is necessary”? Is that not really what this is about?

Kevin Barron (Labour, Rother Valley)

I do not want to return to last week’s debate; there was a situation where, if Monitor wanted it, any merger in a local health authority would have to be agreed by the Office of Fair Trading and the Competition Commission. Quite frankly, that is alien to our national health service.

Simon Burns (Conservative, Chelmsford)

The right hon. Gentleman talks about Monitor and its general duties, and, yet again, I draw his attention to clause 52. He mentioned guidance, and he is right. As I said, guidance will be published, which will then be consulted on to move forward.

Given that the right hon. Gentleman supported the creation of foundation trusts and the Health and Social Care (Community Health and Standards) Act 2003, I thought that it was a little rich for him to refer to a lack of detail in the Bill. The modus operandi of the previous Government was to provide primary legislation that was a skeleton. All the powers flowed from that skeleton through secondary legislation.

When I opposed the 2003 Act in Committee, we did not have any draft statutory instruments or draft guidance—we were left to buy a pig in a poke. Opposition Members have complained about the length of the Bill, but we have sought to redress the lack of detail, where feasible, by putting far more detail in the Bill. Inevitably, however, some of it will flow from secondary legislation.

Kevin Barron (Labour, Rother Valley)

So the criteria on whether a service will be designated are something that we will see a few months down the road. As has been said all along in the Committee, the Minister says that this is a seamless move from what the previous Government were doing; the Minister’s defence is always about what the previous Government did or what a previous Minister said six years ago. I want to know why the Bill has nearly 100 clauses that introduce competition, so that the OFT or the Competition Commission can designate what services will potentially be like for my constituents.

It is all right to say that the criteria will be published further down the road, but when I asked the Minister last week about the issue of monopolies having to open their doors for third-party access, he used one example to say that that would be in a limited way only. How are we to know that? Those are just words that he keeps coming out with. It seems ill thought through.

We know that the Bill was put together after the coalition agreement was published, but it is at odds with much of what that contained. There seems to be a running dialogue in the media about changes that might come in the future, because people on the other side seem to be dissatisfied with some aspects of the Bill. The country, never mind the House, deserves to know what the criteria will be.

We ought to know what is going to happen to the NHS as a result of the changes proposed in the Bill. On that basis, I will keep coming back to these issues and asking what criteria an economic regulator will use to say whether a service—it might be a GP practice or a local clinic; it could be anything—is a designated service that serves people such as those in my constituency.

Simon Burns (Conservative, Chelmsford)

Why does not the right hon. Gentleman look at clause 69(3)?

Kevin Barron (Labour, Rother Valley)

I understand that that is about cause of failure, and I accept that entirely. I am looking at clause 69(3)(b) now, but I will not sound off on the hoof.

Simon Burns (Conservative, Chelmsford)

It is clause 69(3)(a).

Kevin Barron (Labour, Rother Valley)

I say to the Minister that this is a leap into the dark in terms of the future of the NHS. As I said to the Secretary of State for Health when he first gave evidence to the Committee, I believe that the proposals were hastily put together. We have changed competition to competition on quality, but I do not know who within Monitor will be able to determine the quality of a local service or how it will be designated. I would like to see those criteria.

I would like to know that my local health service, which serves the people in my constituency, is all right and that it is protected as far as it should be. It should improve—absolutely; I do not have any problem with that whatever. It has been improving over many years now. Health care has improved not only during the past 10 years, but during the years before that.

I want to know where this leap in the dark takes us. Quite frankly, every time the Minister gets up and speaks about a clause, more questions are raised than he actually answers.

John Pugh (Liberal Democrat, Southport)

The Government have made clear something that is going on, which Labour Members may not be aware of. They protest too much about this clause because there is a body called the co-operation and competition panel, which the previous Labour Government set up. It has a similar remit to Monitor’s, in so far as it is supposed to take into account the securing of the best provider, regardless of the status of that provider.

Grahame Morris (Labour, Easington)

Does the hon. Gentleman recognise that under the Bill, structures such as the strategic health authorities, which have traditionally brokered the co-operation part of competition and co-operation, will disappear? The new approach is fundamentally different from the one that the previous Government envisaged.

John Pugh (Liberal Democrat, Southport)

The whole trick with getting this legislation right is achieving the right balance between integration, collaboration and competition. I have not seen anybody row back totally from all those objectives.

It might be interesting for Committee members to consult the website of the co-operation and competition panel, because it says things similar to what we are putting in the legislation now, but in a vague, airy-fairy way. The panel makes real-time decisions about our local services. I imagine that few Committee members know that the panel exists or can name anybody on it, but it makes crucial decisions. Its current cases include a claim from Midlands Psychology that south Staffordshire and Shropshire NHS foundation trust

“has acted inconsistently with the Principles and Rules for Cooperation and Competition.”

Circle Health Ltd is currently applying to the panel to ask whether NHS Wiltshire has acted inconsistently with the principles and rules for co-operation and competition.

The co-operation and competition panel is, in a sense, free to make up its mind about how it interprets the rules; very little is explicit. It is, none the less, perfectly possible for any private organisation currently to apply to the panel and say that competition has not been fairly embodied in the decisions that have been made. I admit that that must be balanced against integration and collaboration—and the Bill to some extent also tries to square that circle. We ought not to run away from the fact that all this is currently being done, and that these are real-time cases.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

Will the hon. Gentleman comment on the scope of the work that the co-operation and competition panel is involved in? Is it not primarily to do with elective care? It does not cover the whole range of services that will be covered by the proposals, such as maternity services, emergency care and cancer care.

John Pugh (Liberal Democrat, Southport)

There is genuinely a substantive issue about what the scope of a regulator should be. In part, the legislation endeavours to address that through the concept of designated services, which we are debating now. It also looks into issues, such as financial risk and stability, that are not currently taken on board when decisions are made, but which ought to be.

In some ways, the Government are trying to flesh out something that is already there and currently running. Although there is a clear distinction between elective and non-elective care, the Government are working towards a distinction between designated and undesignated services. Fundamentally, we are all trying to carry out the very similar task of ensuring that lazy providers do not continue to provide poor services and that there is collaboration and integration. The real issue is not the objective, but whether the legislation actually captures it.

Owen Smith (Labour, Pontypridd)

Does the hon. Gentleman not see that the difference between the context in which the CCP currently operates and how the new system will operate is the extent to which EU competition law will pertain in the NHS after these changes? None of the cases that the current panel deals with end up in the courts, which is why we need designation and why there is a link between designation and competition.

John Pugh (Liberal Democrat, Southport)

The hon. Gentleman has raised an interesting point, and we will have a very long debate to reach absolute clarity on that issue. I am simply making the point that what the Labour party protests against is something that their legislation in part set up, in some form or other. We can say that the provision is a variant of that; it is not wholly dissimilar and it can be argued that this model does it better.

Just as I have concerns about who the people at Monitor are and whether they have the capacity to do the task, I do not know who the people on this panel are or what interests they take into account—but they can certainly affect services in my locality. I am as concerned about them as I am about some aspects of Monitor.

Kevin Barron (Labour, Rother Valley)

The panel was set up to look at services that were felt to be deficient and to improve them. My hon. Friend the Member for Pontypridd is absolutely right that it was not as wide as what the Bill proposes. That is what the panel was there for and it has a role to play, but nobody argued five or 10 years ago that it should be put into statute and that lawyers could come rolling in. That is down in the Bill, which will become an Act of Parliament if it is not altered. That is entirely different to my understanding of how things operate currently.

John Pugh (Liberal Democrat, Southport)

I should correct the right hon. Gentleman, because I do not think that his understanding is right. The co-operation and competition panel does not look solely at deficient services—if he looks at the cases on its website, he will find that it is looking at services that are up and running. Many hospitals are trying to reconfigure, amalgamate and merge to achieve quick savings. They are referring the related issues to the co-operation and competition panel, not because they are deficient services, but, for example, because they are mergers that seem anti-competitive.

In a sense, the Labour party is saying that the CCP is fine and this system is wrong, but it must drill down on what divides the two systems, which both try to achieve an element of integration and an element of competitive challenge. The real skill is getting the balance right.

Margot James (Conservative, Stourbridge)

Does my hon. Friend agree that the CCP has investigated PCTs and found substantial evidence of anti-competitive practice throughout the NHS? Is that not why the Bill seeks not just to create a level playing field for competition, but to improve the competitiveness of services around quality?

John Pugh (Liberal Democrat, Southport)

I thank the hon. Lady for that point, but I think we need to define very clearly what we mean by anti-competitive behaviour. My concern about the CCP is that, in a sense, it is left to make up its own mind about that. There is a case—particularly where the issue of cherry-picking emerges—for defining anti-competitive behaviour in a very precise way, and not leaving it open.

Roger Gale (Conservative, North Thanet)

For the clarification of all Members, particularly those who might not have sat on a Committee before, I should say that one or two people have indicated that they want to take part in the clause stand part debate. We will work through all the amendments. When they are out of the way, we will have the clause stand part debate. At that point, it will be proper for any Member to seek to catch my eye in order to take part in that debate. I have let things run just a little, but we have started to stray into stand part territory; I must ask hon. Members to concentrate on the amendments under discussion if we are to have that debate.

Derek Twigg (Labour, Halton)

Thank you, Mr Gale. We do want that stand part debate, so I will try to be as brief as possible. However, the Minister did raise a number of interesting issues. The first thing that must go on the record is that we are obviously discussing a system different from the current one. Let us look at how commissioning will be done.

There is a view, which I do not think is unreasonable, that if commissioners are commissioning services today, they are doing so because those services are needed. The Bill is about markets and about having to go through the Monitor process. Why do we have to have such upheaval in the health service as a result of designation?

The proposed system is different from the current system—no matter what the hon. Member for Southport says, it is different. The Bill’s proposals might relate to parts of the current system, but it is actually about having open competition in the health service, not the limited competition that we introduced. It is about designating only certain services—in other words, protecting them—and leaving lots of services undesignated and, therefore, unprotected. That will make it easier for those services to be closed, changed or reconfigured.

I know that the Minister will not go into boundaries, integration and how the system fits in with other services, but designation is an important part of the Bill. The Minister has not addressed those issues in any way. The key thing is that he said that there is no need to keep services that are not necessary. That suggests that today we have lots of unnecessary services. I do not know how many, because the Minister has not said. Perhaps he would like to intervene and give me an example of such a service.

The Minister has not intervened. That goes back to the real issue, which we will explore in the clause stand part debate. This is a recipe—an agenda—for cuts in the health service, underlined by the Minister’s comment about keeping more services than are necessary. That is what designation is really about. [Interruption.] The Minister—I wrote this down—did mention keeping more services than necessary. That is the key issue.

We will explore the issue again in much more detail, but I have lost count of the number of times the Minister mentioned failure. The phrase was, “This will make failure easier”. Because the criteria will make failure easier, it will be easier to close services or hospitals. As I have said, this is an agenda for closing hospitals. We will explore that later.

The Minister did not mention the pressure on those who are commissioning services and who have to make recommendations to Monitor about those services. To some extent, amendment 476 is about the bureaucratic nature of the provision. We can consult if someone wants to designate a service, but I suspect that not many people would be opposed to designating a service. They have to go through the same bureaucratic procedure to do that. People will feel pressure; perhaps sometimes they will think, “Oh well, it’s not worth it.” We do not know the pressures of their day-to-day work and it is quite a bureaucratic system that does not exist today. Failure, failure, failure is continually mentioned by Ministers—and, of course, by the Bill.

The Minister talks about local knowledge, but the commissioners use that today. What we do not have today is Monitor sitting on their shoulders making the final decision. The Minister is trying to dress it up as if all Monitor will do is ensure that commissioners follow the rules. Unfortunately, as we have heard from the Minister, the Government are not prepared to give us the details of the criteria. We have no details. That runs through the whole Bill. We are being asked to make decisions about the future of the national health service without knowing the details of how things will apply. That is appalling.

John Pugh (Liberal Democrat, Southport)

This is not a picky point, but, presumably, co-operation and competition panels are also devoid of local knowledge. If the hon. Gentleman supports such panels, talking about local knowledge seems almost to be engineering an issue.

Derek Twigg (Labour, Halton)

I am surprised at the hon. Gentleman.

Simon Burns (Conservative, Chelmsford)

Yes, because it does not fit your agenda.

Derek Twigg (Labour, Halton)

It does, actually. The Bill is changing what we have in the sense of control, involvement of the private sector and competition. It is basically implementing a competitive system—I am conscious of your ruling, Mr Gale, and I do not want to stray—to which, as the Minister has said, European and UK competition law will become increasingly applicable. That is the big difference.

There are lots of issues that we need to explore, and we will explore them later. The clause and the Bill will enable NHS services that seem essential under the current criteria to be dropped because the new system will be profit driven. That is the situation that we face. Commissioners will have to think carefully about whether they put a service in a certain place, because they may not be able to make as much money out of it. “Should I not do that?”, they may think. That is what the issue is about. I would like, however, to hear more evidence from the Minister to suggest that my view is wrong.

Roger Gale (Conservative, North Thanet)

Does the hon. Gentleman wish to press the amendment to a vote?

Derek Twigg (Labour, Halton)

Yes, Mr Gale.

Roger Gale (Conservative, North Thanet)

I am looking straight ahead of me, so that I do not embarrass any particular Member. The Procedure Committee is conducting an inquiry at present into the use of electronic devices in Committee Rooms. The current ruling by the Chairman of Ways and Means is that electronic devices should not be used. Until and unless that situation is changed, I advise all Members that such devices are not permitted in the Committee Room.

Emily Thornberry (Labour, Islington South and Finsbury)

On a point of order, Mr Gale. I gave evidence to the Modernisation Committee in 2006 about the use of mobile telephones. I thought that the rules had now changed and that as long as such devices are on silent and are used only by screen, we are allowed to use them in the Chamber and in Committee. It may well be that that has not been extended to electronic devices in general.

Roger Gale (Conservative, North Thanet)

The hon. Lady is partly right. The use of hand-held devices—the term was intended to allow such devices as radio pagers—was, and still is, permitted. What is under consideration is what constitutes a hand-held device—in other words, whether hon. Members are allowed to use tablets or laptops. As things stand, that is not the case. The situation may well change, but that is a matter for the House. For the moment, I must enforce the ruling by the Chairman of Ways and Means, which is that only hand-held devices may be used.

Simon Burns (Conservative, Chelmsford)

Further to that point of order, Mr Gale. Does your ruling mean that hon. Members are not allowed to tweet during the proceedings?

Roger Gale (Conservative, North Thanet)

That, again, is the subject of investigation. I do not want to get drawn too far down this road, because it will be the subject of a very comprehensive report to Members, and the House will have the opportunity to vote on it. The specific intention has been—and I understand that this is Mr Speaker’s view—that machines should not be used for communication with the outside world.

The reason is that there is a grave concern that Members, both in the Chamber and in Committee, might seek to receive advice, instructions and comments from people outside the Committee Room, or outside the body of the Committee. I am not prepared to discuss this matter any further. I have ruled on the subject. As long as I am in the Chair, I must enforce the ruling by the Chairman of Ways and Means.

Derek Twigg (Labour, Halton)

Thank you for that helpful advice, Mr Gale. I shall refrain from tweeting, of course.

I beg to move amendment 477, in clause 69, page 73, line 31, at end insert—

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss amendment 478, in clause 69, page 73, line 39, at end insert—

Derek Twigg (Labour, Halton)

Amendments 477 and 478 seek to ensure that proper consideration is given to the wider effects that designation of a service may have on the services received by patients and to the important issue of the inter-dependency of services, which we have briefly touched on; we will do so in more detail later.

A key area of concern generally is a lack of strategic leadership in the Bill. The Government propose to remove strategic health authorities and primary care trusts. SHAs have had a strategic, regional and inter-boundary view and involvement on a range of services and configurations. We have not heard from the Government how that strategic leadership will be provided, other than on a local basis, for those areas where consortia and inter-regional and inter-hospital services come into play.

The amendments seek to strengthen and clarify the strategic aspect of the criteria for designation and explore how the Government envisage them being applied. Amendment 477 would put in place a statutory requirement for commissioners to consider health inequalities among the criteria for applying for designation of service. As it stands, clause 69 does not include such a requirement, as we believe it should. As the process of designation would be local, the effects of the clause may vary on a geographical basis. As such, it is vital to include a provision that refers to a duty to tackle inequalities across the whole of England, not just within the commissioning area.

The consequences of commissioning decisions on different areas will be an important part of the Government’s proposals, which we are still trying to clarify as part of the designation issue. The amendment would help ensure equality between regional services offered to and received by patients in Devon, for example, and those offered in my constituency of Halton. At an earlier stage of the Bill, the Minister made a big play of a commitment to reducing inequalities across the country. He commented on the postcode lottery. [Interruption.] The Minister is looking quizzical. Does he not oppose a postcode lottery?

Simon Burns (Conservative, Chelmsford)

No, I was being cautious and listening carefully, in case I was about to be misrepresented again.

Derek Twigg (Labour, Halton)

I am not sure where the Minister feels he was misrepresented. [ Interruption. ] He is pointing at my colleagues. I cannot believe that happened. I will not stray down that path. It is never our intention to misrepresent what hon. Members say. We listen exceptionally carefully to the right hon. Gentleman and his colleagues.

The Government have made much of a notional desire to reduce health inequalities. In one of our first sittings—I hope I am not misquoting the Minister—he claimed that the Conservative-Liberal Democrat coalition Government are doing something about inequalities, and instead of just “talking the talk” are “walking the walk”. That is an interesting phrase, given the context of the decision on services and designation, and I am sure we will explore it.

Clause 69(4)(b) states that commissioners must have regard to

“whether ceasing to provide the service…would significantly reduce equality between those for whom the commissioner arranges for the provision of services”.

That is a key provision. If a service is designated, it is designated; but if it is not designated, we are not clear how that will be applied. Maybe the Minister can enlighten us.

Although we welcome the inclusion of at least a nod to ensuring that health inequalities are not created within a commissioning area, that commitment is not sufficient to meet the Government’s and Secretary of State’s commitment outlined in clause 3. Equality must refer to equality for all people, across all regions, not simply equality within one commissioning area, depending on how good that commissioning service is, or how good it is at co-operation. The hon. Member for Southport, who is not in his place at the moment, made an important point about integration and co-operation.

Amendment 478 would require a commissioner to have due regard to the impact applications for designation may have on the other services in the organisation or region. That comes back to strategic need and oversight, which is very important. We are waiting to see whether the national commissioning board will have regional offices, or even regional input, or whether it will all be run from London. That applies equally to Monitor. I mean no disrespect to my hon. Friends with London constituencies, but we have a slight problem with that back in the regions.

The amendment is brief, but it recognises the interdependent nature of services in a region. It highlights regional factors that will have an impact on the designation of services and explores how the Government envisage the application of designation. The Minister should give careful consideration to that point, because genuine concern has been raised by several people.

The amendment is designed to remedy the lack of strategic planning in the clause. Some services are highly interdependent—in hospitals, for example, one service often relies on several others to function safely. The Minister and the Government have said that patient safety is a primary concern in the Bill. Our argument, and a source of increasing concern to us, is that the proposals in the Bill will lead to greater fragmentation, to a lack of co-operation between providers and to misunderstandings. We are worried about safety: if one service is designated, several others may require designation for it to remain at a full and safe working capacity. It will be interesting to hear the Minister explain that, because, as he explained before, a service will designated because it is essential and it needs support, but other services will not be designated because there are many players out there that can provide the service. How would that work in a hospital where one service was designated but others, because of competition, were not? How would that work in practice to ensure continuity and support for designated services? We do not know the answer because the Minister has not given us any idea about the details of the system.

Simon Burns (Conservative, Chelmsford)

The reason why the service in that example would not be designated is that there would be no need for designation, because there were other providers providing the same service in the local health economy.

Derek Twigg (Labour, Halton)

Of course, they may never get to the point of failure. That is the issue. The process could be complicated and could prove hugely bureaucratic and expensive to administer. Cost is a big issue. It would be interesting to find out how many management consultants will be brought in to ensure that the process gets under way; I am not sure where the expertise will come from otherwise.

Splitting services between designated and non-designated also leads to problems with the staff and equipment used in the provision of multiple services. [Interruption.] The Minister shakes his head, but we are trying to find out how the Bill will operate on the ground. That might be obvious to him, but it is not obvious to us, and we are not the only ones; there are people out there with much more NHS experience who are having difficulty getting to grips with the details. As he has said, much of the detail will be published at a later date, and that is part of the problem. I am sorry if he thinks that we should not be asking these questions, but we need to ask them to hold the Government to account.

Returning to the splitting of services, if a piece of equipment or a member of staff is used in part for designated and in part for non-designated services, are there any issues about how those services will be provided? What is to be the process if the provider of both services becomes insolvent? We need to understand that. It is all very well for the Minister to say that non-designated services will have several providers, but they could go out of business. The Minister has talked a lot about failure. The cost of administering that complicated eventuality on a wide scale could be vast.

During Prime Minister’s questions last Wednesday, the Prime Minister claimed that his and the Health Secretary’s reforms were

“about cutting bureaucracy and improving patient care”.—[Official Report, 16 March 2011; Vol. 525, c. 292.]

Will the Minister tell us which part of the clause will achieve that? The whole idea of designation is formed on the basis that it would be easy to break up a provider, such as a hospital, into individual services. That is something that the Minister may want to look at. Has he any idea how many services in a hospital would be designated—an accident and emergency unit for instance? I am interested to hear what he says. In many cases this is neither possible nor desirable. At some level there should be significant strategic leadership within the designation of service.

My final point is that there is so much detail missing from the Bill in an area that will have a profound impact on the future delivery of services in the NHS. We need answers, because we have been asked to make decisions without the knowledge that we should have.

Simon Burns (Conservative, Chelmsford)

I am afraid that I will have to disappoint the hon. Gentleman and say that I believe the amendments are unnecessary, and I will not be advising my hon. Friends to vote for them to be made.

Amendment 477 would require commissioners to designate a service if the outcome of that service failing would mean an increase in, or failure to decrease, inequalities. I understand precisely why the Opposition have tabled the amendment: they seek to place a requirement on commissioners to consider inequalities when designating services, and in many ways the amendment flows with their previous proposals on tackling inequality. As I did when dealing with earlier parts of the Bill, I agree that issues of equality and inequality should be considered as part of the designation process. That is why subsection (4)(b) of the clause already requires commissioners to have regard to

“whether ceasing to provide the services for those purposes would significantly reduce equality”.

The divide between us is on whether equality should be in subsection (3) as one of the main criteria, or in subsection (4) as a matter that the commissioner should have regard to. I feel that the appropriate place is subsection (4).

Debbie Abrahams (Labour, Oldham East and Saddleworth)

Are this Government serious about reducing inequalities or not? By suggesting that that cannot be included in the criteria, the Minister is implying that it is not a priority for the Government.

Simon Burns (Conservative, Chelmsford)

The answer to the hon. Lady’s straightforward question is yes, of course we are passionately determined to seek to reduce inequalities. As I have just said, we believe that it is more effective and appropriate to have the measure in subsection (4). If the hon. Lady’s question had been “Why do the Government not refer to inequalities at all?” I would have a greater understanding of why she intervened. Our earlier debates showed that we are determined to reduce inequalities, and I hope we will demonstrate that during this debate. Reducing inequalities is not an issue that divides the Committee, and I am saddened that the hon. Lady does not accept that we are as determined to reduce inequalities as she and her hon. Friends are.

Liz Kendall (Labour, Leicester West)

The Minister said in the discussion on the previous amendment—as do the explanatory notes to the Bill—that Monitor will publish guidance on the criteria it will use to judge whether commissioners have looked at all of the necessary issues concerning designation of services. Why should tackling health inequalities not be part of that?

Simon Burns (Conservative, Chelmsford)

Let me explain to the hon. Lady, and I hope she will not only accept this but appreciate it. In the previous debates and this one, Opposition Members quite rightly called for more action against inequalities. There we are united: we all want to reduce inequalities. However, it is this Government who through the Bill are putting in place the first ever legal duties to tackle health inequalities. During the 13 years of the previous Labour Government, no legislation was introduced that would reduce health inequalities.

In this atmosphere of co-operation and consensus, what I find rather churlish is that rather than giving the Government the credit for doing this innovative thing, we are being criticised. Opposition Members are suggesting that we are not doing anything about inequalities. I say to them: by all means, oppose, probe and question, but I advise them not simply to oppose and be contradictory in their approach for the sake of it, because I am afraid to say that that diminishes credibility. The shadow Minister looks hurt. He is an intelligent man and I think he knows what I am getting at.

That very welcome intervention from the hon. Member for Oldham East and Saddleworth has allowed me to put on the record that it is this Government—the Conservative-Liberal Democrat coalition Government—who, for the first time in our history, have put a requirement to reduce health inequalities into primary legislation.

Liz Kendall (Labour, Leicester West)

We have heard this before.

Simon Burns (Conservative, Chelmsford)

The hon. Member for Leicester West has been rather quiet today, but I welcome that sedentary intervention. She says that I have already said that and yes, I have, but our experience is that with this Committee, one has to—

Roger Gale (Conservative, North Thanet)

Order. The Minister is standing with his back to the Chair. He knows very well that if he were in the main Chamber, he would be in serious trouble about that.

Simon Burns (Conservative, Chelmsford)

As well I know, Mr Gale. The advice I got to rectify that problem was slightly confusing, but we will not go there.

Margot James (Conservative, Stourbridge)

In addition to enshrining the health equality duty in the legislation up front, does my right hon. Friend agree that the other two fundamental changes we are making—the transition of responsibility for public health to local authorities and increasing the accountability of the health care service through local authorities—will enable a far greater commitment to public health through the integration of health and social care, local authority involvement and the uprating of public health? All those things will improve health equality.

Simon Burns (Conservative, Chelmsford)

My hon. Friend is absolutely right and I am extremely grateful to her for reiterating that point, so that it has been made in our proceedings. We are determined to tackle inequalities in health meaningfully. I do not want to detain the Committee, so I shall make progress.

As I said before the intervention, it would not be appropriate to include the provision in subsection (3) because doing so would reduce the benefits of competition, quality and so on to patients. That takes us back to the purpose of designation and the benefits to patients that are brought about by having providers that are not subject to the additional regulation that being designated requires. The greater the proportion of services that are not subject to additional regulation and that are undesignated, the greater the benefits to patients that competition can bring—namely, greater quality, innovation and efficiency.

Under the Bill, only health services for which there are no alternative providers will be subject to additional regulation to secure continued access to those services in the event of insolvency. Non-essential services—in other words, those services that would have less of an impact on the health outcomes and equality of patients—will not be subject to additional regulation, rather it will be the responsibility of commissioners to have plans in place to ensure the continuity of those services through using alternative providers.

Derek Twigg (Labour, Halton)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

For the last time.

Derek Twigg (Labour, Halton)

I am deeply hurt that the Minister will accept only one more intervention from me—he is usually quite generous. Could he give us some examples of non-essential services?

Simon Burns (Conservative, Chelmsford)

The straightforward answer is, no. I will tell the hon. Gentleman why not—

Liz Kendall indicated dissent.

Simon Burns (Conservative, Chelmsford)

The hon. Member for Leicester West shakes her head, but I am afraid she is the author of my reluctance to go down that road. Mr Gale, you did not have the pleasure of chairing our Committee at the time. I thought we were having a grown-up discussion on designation earlier in the Bill, and was trying to be helpful—

Liz Kendall (Labour, Leicester West)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

How can the hon. Lady intervene when I have not finished the sentence? I was trying to be helpful by using an illustration to make the point, when suddenly I heard the hon. Lady saying that I was confirming the closure of a number of A and E departments, which I certainly was not. In the light of that experience, I am being cautious and careful, so that I cannot be misrepresented when I am trying to be helpful.

Liz Kendall rose—

Roger Gale (Conservative, North Thanet)

Order. Before we go too far down that route, I would like a grown-up discussion on the amendments under consideration at the moment. If the hon. Lady wishes to refer directly to the amendments under discussion, that is fine. If not, we should progress.

Simon Burns (Conservative, Chelmsford)

Thank you, Mr Gale. I think that the hon. Lady’s not rising again might suggest that the intervention was not going to be grown-up. [ Interruption. ]

Roger Gale (Conservative, North Thanet)

Order. The Chairman is seeking to drive the business forward. I expect all Members of the Committee to be grown-up.

Liz Kendall (Labour, Leicester West)

You may rule me out of order, Mr Gale, but in his comments the Minister questioned what I said before. We are asking for clarification of non-essential services because that is what patients, the public, our constituents want to know. There cannot be a Bill that does not describe what that will mean for people and patients on the ground. That is what scrutiny is about; that is why I was elected as a Member of Parliament, to stand up for my constituents; and that is why we are asking for an example of a non-essential service.

Simon Burns (Conservative, Chelmsford)

The principle of what the hon. Lady says is absolutely right. I will get round to a number of answers to a number of questions. The point I am making is that in certain areas, the nature of the question invites me to speculate on something prematurely, and I am reluctant to go there—

Emily Thornberry (Labour, Islington South and Finsbury)

On a point of order, Mr Gale. I understand that your ruling was that we should move on with the business. I have unfortunately heard a great deal of this train of thought from the Minister over the past few weeks, and I fear he may be about to go off on a frolic of his own, rather than move on with the clause.

Roger Gale (Conservative, North Thanet)

With respect to the hon. Lady, it is up to the Chairman to decide whether something is in order. Having ruled that her hon. Friend was in order, I have to allow the Minister to respond. The alternative would have been to rule her hon. Friend out of order and I did not think that was what the Committee desired. I would, however, like to return to the normal courtesy and good humour and see if we can take matters forward.

Simon Burns (Conservative, Chelmsford)

Absolutely, Mr Gale, I will make progress.

I agree that amendment 478 is important with regard to inequalities, but it is unnecessary, as subsection (4)(a) already provides for a very similar effect, in that commissioners would have to consider

“the current and future need for the provision of the service for the purposes of the NHS”.

The hon. Member for Halton asked what would happen if one service within a hospital is designated and others are not? That would be an important question for commissioners generally in securing high-quality, efficient and sustainable services. Equally, it would be an important question for commissioners to consider when consulting on applications for designated services, because it is integral to consideration of whether the withdrawal of a particular service would impact on the health of the population in the absence of alternative providers. Designation of some services but not of others provided by the same provider would mean that some services would be subject to additional regulation while the others would not. That would mean that the provider would have greater freedom as to how it delivered its non-designated services than it would in relation to designated services.

The hon. Gentleman also asked how the equality consideration would work. When designating a service, commissioners would have regard to the equality of access in terms of distance travelled or the impact on particular sections of the population—patients with anaemia, for example. That would be part of the commissioner’s considerations when applying for designation.

The hon. Gentleman also made a possibly dubious suggestion that designation will be bureaucratic. He is worried about that, and I will seek to convince him that he need not be. On past practice, given his mindset, it might be an uphill battle, but it is worth the try.

If used appropriately, designation is a targeted and proportionate system that focuses regulation where it is needed. It ensures that the extra cost of protecting a particular service is paid only where necessary. In contrast, too often under the current system have inefficient and poor quality providers been bailed out wholesale and at too great a cost. We want regulation to protect services for patients, not for the institutions that provide them.

Owen Smith (Labour, Pontypridd)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

No. I want to deal with a number of questions because we want to make some progress today.

The hon. Member for Halton also raised the question of equality across the country. As the Prime Minister has made clear, our proposals would put key decisions in the hands of family doctors. GP consortia would decide how best to improve the quality of services for their patients and how to make best use of NHS resources. That is the very opposite of a postcode lottery.

The hon. Members for Leicester West and for Halton both asked which services will be designated. At this stage it is simply not possible to answer that question. The whole point of our Bill is to ensure that decisions are made locally, not by Ministers in Whitehall. It will be more appropriate at the local level when the system—[Interruption.] The right hon. Member for Rother Valley keeps saying that Monitor will do it. Tomorrow morning, the Hansard for this sitting will have been published. I do not usually recommend that people read my addresses to the nation in this House, but I certainly recommend that he reads it tomorrow. I think he will then get it.

Daniel Poulter (Conservative, Central Suffolk and North Ipswich)

On the postcode lottery point, does my right hon. Friend agree that individual GPs and health care professionals will be making decisions on a case-by-base basis for the benefit of patients, rather than, as at the moment, applying blanket rules that are arbitrary and inconsistent across the country?

Simon Burns (Conservative, Chelmsford)

My hon. Friend is absolutely spot on. He has hit the nail on the head with the hammer. I hope that Opposition Members will benefit from that.

Finally, a number of Opposition Members asked what is a non-essential service. As I said earlier, I am not going down the route of specifying different services against others, because it is a recipe for misrepresentation or, if I am being generous, misunderstanding. Designation is not about what is essential; it is about where additional regulation is necessary to secure continuity of NHS services. I would have thought that Opposition Members would warmly welcome it for that alone. It is for those reasons that I urge my hon. Friends to reject the amendment, if it is pressed to a Division.

Derek Twigg (Labour, Halton)

It will not come as a surprise that we will be pressing the amendment to a Division.

I am not sure how to put this, but, in some ways, the Minister seems to underestimate the importance of his speeches. I assure him that we follow what he says word for word in Hansard, and what is said by his right hon. Friend, the Secretary of State for Health. In particular, we look at times where their views might not be compatible, so the Minister should not underestimate the importance of his words.

It is as though the Government do not want to accept any Opposition amendment in this Committee, full stop. There seems to be a mantra, “Under any circumstances, do not accept an Opposition amendment.” The Minister did not advance a logical argument for rejecting our amendment on reducing inequalities and making that an important part of the commissioner’s role. What was telling, and the reason why we will be reading the Minister’s comments, was his point that it would reduce the benefits of competition. That was his argument for not accepting our proposals. Again, that comes back to our main point, which is that the Bill is driven by competition and not by what is in the best interests of patients, or promotes the interests of patients first. As I have said, we will look at Hansard tomorrow, but I repeat that the Minister said that it would reduce the benefits of competition. That comment is quite telling.

Simon Burns (Conservative, Chelmsford)

Can I help the hon. Gentleman, because I do not think he quite gets it? If there are two providers of a service in a local community, competition will work because patients have choice, and they will be the driving force in choosing which of the two providers they use. That will drive up quality, because both providers will want the patient to choose them to provide their health care. It is simple, if only the hon. Gentleman would get it.

Derek Twigg (Labour, Halton)

That is a nice little theory, but the Minister seems to forget that the service will have to take account of the massive pressures on the NHS, the underfunding that the Government are putting into it, and the demand. What we will see is cost being even more of a driver.

Simon Burns (Conservative, Chelmsford)

Will the hon. Gentleman give way?

Derek Twigg (Labour, Halton)

I will, but if the Minister is going to intervene, may I ask him a question? He keeps saying that because my hon. Friend the Member for Leicester West was so terrible to him in misquoting what he said, he will not give another example in his arguments. I have been around the House for a while and I have served on a number of Committees, but I have not seen a situation where the Minister will not give an example to back up his arguments. Will he therefore give some examples of the services in question?

Simon Burns (Conservative, Chelmsford)

The hon. Gentleman has slightly moved on. I want to correct this before it becomes a fact, because he keeps repeating the point about underfunding. We are the only party that is giving a real-terms increase—however modest—to the NHS, which will ensure that we move forward with all these services being provided. The Labour party policy is not to give a real-terms increase, and the Institute for Fiscal Studies has suggested that over the lifetime of this Parliament such a policy would result in a £5 billion funding cut for the health service, rather than the £10.7 billion increase that we are giving it.

Derek Twigg (Labour, Halton)

I know that you do not want us to get into a funding argument, Mr Gale, but funding is an important aspect of the debate. I refer the Minister again to The Daily Telegraph today and the impact that Labour’s massively increased funding for the health service had in terms of massive patient satisfaction. When we talk about funding, that is what we did, and we are waiting to see what happens with this Government’s funding.

Dan Byles (Conservative, North Warwickshire)

That is very interesting. My understanding was that a memo came out from the shadow Chancellor forbidding Opposition Front Benchers from making funding commitments. Is it now a Labour funding commitment to real-terms NHS increases for the lifetime of this Parliament?

Derek Twigg (Labour, Halton)

Nice try—

Roger Gale (Conservative, North Thanet)

Order.

Derek Twigg (Labour, Halton)

We can talk about what Labour has achieved for the health service. If the Minister wants to guarantee that waiting lists will not increase under his Government, or that there will be no closures of hospitals and reconfigurations because of funding problems, I am happy to give way to allow him to do so. He will not do so, however, because the Government will not give that guarantee. That is the issue that we are discussing today.

The Minister has talked about not bailing out failing services, which is what will change as a result of the Bill. Our argument is that the Bill makes cuts and closures easier. The Government are trying to say that failure is happening all around us and that the proposals will deal with it, but will the Minister give us some examples of failure that we did not deal with? Can he give us more than one example? Can he give us three, five or six? He refuses to give examples.

Simon Burns (Conservative, Chelmsford)

May I give the hon. Gentleman one example, which may surprise him and put the matter in perspective? Lord Reid, who was Secretary of State for health before the former right hon. Member for Leicester West, was asked if he thought that politicians—that meant Labour politicians, because they were in Government—would be prepared to see their local hospital close. Lord Reid said, “This politician is.” He added,

“The patients will decide. I am not going to force people to take a third rate service. Patients will get the choice because for 60 years the only choice they have had is to like it or lump it.”

Derek Twigg (Labour, Halton)

That is not an example. The Minister is trying to suggest that there is wholesale failure that has not been dealt with in the system. We still cannot get examples out of the Minister. We look forward to the clause stand part debate, during which these issues will be explored in much greater detail.

Simon Burns (Conservative, Chelmsford)

I beg to move amendment 504, in clause 69, page 74, line 1, leave out ‘must grant an application under this section’ and insert ‘may grant an application under this section only’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following: Government amendments 505 to 508.

Government new clause 10—Complaint about grant of application for designation.

Government new clause 11—Complaint about refusal of application for designation.

Government new clause 14—Complaints: general provisions.

Simon Burns (Conservative, Chelmsford)

I hope that Opposition Members will agree that the amendments deal with a fairly straightforward and relatively narrow issue. In the hope of making progress I will be brief.

The amendments make a series of changes that will ensure that the process of designating services operates efficiently and will ensure greater transparency in how Monitor makes decisions about the designation of services. Amendment 504 is a minor, technical amendment that clarifies the drafting of clause 69 to make it clear that Monitor is able to refuse or accept an application. The current drafting might suggest that Monitor must accept an application. The amendment also makes it clear that Monitor must approve the designation of services only where the criteria for designation are met. It must also agree to the removal of a designation only when the criteria are no longer met.

Amendments 505 to 508 would make changes to what Monitor would be required to do when it issues a notice of its decision on an application to designate a service. If Monitor grants an application, then amendment 507 would require that notice to contain details of the right to complain against its decision. If Monitor refuses an application, amendment 508 sets out what the notice of refusal must contain. It must contain the reasons for the refusal and explain the right to appeal against the decision.

The new clauses will deal with how complaints would be made against Monitor’s decisions in this chapter, starting with new clause 10. That would govern how complaints could be made in relation to Monitor’s decision to grant an application under clause 69 for designation. The new clause will allow the provider of the designated service, or a potential provider of NHS services, to complain against a designation of a particular service if they believe that the criterion, as set out in subsection (3), for designating a service is not made. The new clause would then require Monitor to re-examine its original decision and decide whether the designation should be removed or not.

The new clause will also allow the commissioner for the provider or potential provider to appeal to the first-tier tribunal should they believe Monitor’s decision on the complaint was based on an error of fact, or wrong in law, or unreasonable. By allowing complaints against a designation of services by the provider, or potential provider, in question, new clause 10 provides an important check to ensure that services are not unnecessarily designated, which would prevent market entry and would mean that the benefits of competition—greater quality, innovation and efficiency—would be missed out on. Unnecessary designation would also mean unnecessary additional cost to providing services, as providers and commissioners would have to pay for the protection that designation offers, by paying into the financial mechanisms that will cover the cost of insuring the continuity of services in the event of failure.

At this point, I would like to clarify a misconception that has appeared in recent reporting of designated services. As I have said before—I believe it is important, so I will say it again—just because a service is not designated does not mean that commissioners plan to close that service. Rather, that means that the commissioner has contracts in place with other providers locally to provide that same service and, should one of the providers fail, then those other providers could be called up to replace the lost capacity.

Kevin Barron (Labour, Rother Valley)

What happens to the service that is not being used anymore?

Simon Burns (Conservative, Chelmsford)

It will be used, because, if a service is not designated, there could be more than one provider of the service. That is what any willing provider is about, so there will be no problem.

New clause 11 introduces measures that will govern how complaints can be made in relation to Monitor’s decision to refuse an application for designation under clause 69. The new clause will allow the commissioner, or the provider of the service, to complain against the decision not to designate if they believe that the criterion, as set out in subsection (3), for designating a service is met. The new clause would then require Monitor to re-examine its original decision and decide whether the designation should be applied or not. The new clause would also allow the commissioner, or the provider, to appeal to the first-tier tribunal should they believe that Monitor’s decision on the complaint was based on an error of fact, or wrong in law, or unreasonable. New clause 11 would also provide an important check to ensure that services that actually need the protection of designation are able to obtain protection.

Finally, new clause 14 introduces general rules to which all complaints under this chapter must follow. The new clause would mean that complaints would only be accepted if they are received no later than 28 days after the decision to which the complaint relates was notified. The new clause would restrict individuals at Monitor, who were involved in the original decision, from being involved in the reconsideration of the original decision. The new clause would also restrict the grounds of appeal to the first-tier tribunal, only if the complainant believed that Monitor’s decision on the reconfiguration was based on an error of fact, or wrong in law, or unreasonable. The new clause provides that the first-tier tribunal may confirm Monitor’s decision, or direct that it is not to have effect. On that basis, I move the amendments and new clauses, and urge my hon. Friends to support them.

Derek Twigg (Labour, Halton)

I will cut short what I was going to say to save time, because I know that members of the Committee want to move on to the clause stand part debate. We have made clear our position on the Government’s proposals.

I have a few questions about new clause 10. It notes that a provider of a designated service could be one who has a significant interest in the application, but who will judge what qualifies as a significant interest? Benefit providers with significant resources will be able to challenge a decision legally, so we are concerned, again, about the process of opening it up to legal challenge and it becoming a lawyers’ charter for the private sector. We are also not satisfied about bureaucracy continuing to be a problem. If any interested health care provider challenges a decision, Monitor must consult the commissioner who made the original application and, whatever the outcome, an appeal can be made and it will be dealt with by a first-tier tribunal. That might not happen—I accept that it is a matter of judgment—but it might happen repeatedly, which would increase the amount of time spent on challenges.

We believe that new clause 11 will also lead to more bureaucracy. It covers an important area, but the entire process of designation, challenge and appeal could lead to countless lengthy disputes over designation of services in relation to providers, commissioners, Monitor and tribunals.

Simon Burns (Conservative, Chelmsford)

The hon. Gentleman asks a specific question about who has a significant interest, so it would be helpful if I give him the answer. Initially, it will be Monitor, on a complaint, but the first-tier tribunal on a subsequent appeal.

Derek Twigg (Labour, Halton)

Finally, on amendment 505 and new clause 12, what is significantly different under the new clause from subsections (8) to (10) of clause 71, which are of such concern to the Government? I understand that the Government tried to table an amendment to delete that part of the clause, but I assume that the Clerks did not accept it. Will the Minister say more about what is different? Clearly, the Government did not like what they put in the Bill originally, so it would be useful to know why they now propose this new way.

Simon Burns (Conservative, Chelmsford)

Again, it might be helpful if I clear up this point. The reason why we are adding the new clauses and seeking to remove, in due course, clause 71 is that we want the Bill to be as transparent as possible. The new clauses give greater transparency on an important issue. I would have thought that, rather than giggling, Opposition members of the Committee would find that extremely helpful and a possible way forward.

Roger Gale (Conservative, North Thanet)

Order. I do not wish to intervene, but, for the benefit of the record, I think that the right hon. Gentleman might find that he means clause 70.

Simon Burns (Conservative, Chelmsford)

Sorry—clause 70.

Derek Twigg (Labour, Halton)

Can we assume that clause 70 is transparent as well?

Simon Burns (Conservative, Chelmsford)

Yes. The replacement expands and improves it.

Derek Twigg (Labour, Halton)

We will explore transparency to a greater extent during the clause stand part debate, but I have concluded my comments about this group of amendments.

Grahame Morris (Labour, Easington)

On the question of designated services and how difficult it is when they are linked to other services, I know that the Minister does not like examples, but it is well publicised that the West Cumberland hospital and its NHS foundation trust are in financial difficulties. It was widely reported in the media that it is running a deficit of £20 million. In such circumstances, under the new arrangements, presumably, Monitor would use its powers to encourage another provider, either an existing foundation trust or a private sector provider, to take it over. If, as the Minister suggests, there are certain key services, and those are essential for the people of west Cumbria, such as A and E, how could A and E possibly be designated without designating all the other integrated services that relate to it?

Derek Twigg (Labour, Halton)

My hon. Friend, as usual, makes an important and well thought out point that undermines the idea that we can easily break up hospitals into individual services. In keeping with what he said, we need to look at organisations and groups of services as a whole when making decisions about them.

The Minister might want to correct this, but I get the impression that there will be a determination to break hospital services into different parts and not, for instance, designate a whole service in terms of its inter-reaction. We will be interested to hear what he says. What about the impact of this on the integration of services? Fitting in with regional services will be an important element, as I mentioned before. The King’s Fund makes some important points:

“The Bill does not acknowledge that people (and professionals) outside the immediate local area may be affected by a loss of service. For example, tertiary and specialist services often serve wide catchment areas. It is not clear what happens if no local consortium chooses to designate…a service.”

That is an interesting point. What happens in a case where a population, and perhaps some clinical professionals, feel that a service should be designated? Is it really just down to the local consortia? What impact will others’ views have? The King’s Fund goes on to say:

“There is provision for NHS Commissioning Board to step in and ‘facilitate agreement between commissioning consortia’ to decide whether to designate and who should apply, but it is not clear what should happen if that does not work.”

We have been asked to make a decision on the clauses when greater clarification is needed, and that returns us to an important point that we have all made. The King’s Fund says that there is a need for greater

“clarification about the regime for designating services.”

We have been asked to make decisions, and the fundamental point that we are trying to make today is that the detail is missing. We are being asked to make fundamental decisions on fundamental changes to the health service and people’s lives, and even the King’s Fund is raising the issue. It goes on to say that the process is inflexible. What if a mistake is made in the initial designation? What if there is a need to designate a service later on because circumstances have changed? Is it necessary to wait for a year? Under Amendment 511, a review

“must not begin before the expiry of the period of one year”.

We will discuss that when we come to clause 71.

I asked earlier what account the regime will take of travel times for patients. Will the Minister give a clear commitment today that the designation process will not increase the travel times for NHS treatment? That is a key consideration for people and patients.

Both the Prime Minister and the Secretary of State have said that they are ending the top-down driven closures of hospitals and A and E departments, except from Monitor. The hon. Member for Enfield North made a particular point about the situation at Chase Farm hospital in his constituency. It is one of a number of proposed closures that the Opposition latched on to before and during the general election, giving a nod and a wink that things would be okay because there would be no top-down driven closures. However, we have not seen that, and it would be helpful if the Minister gave a guarantee today that there will be no closures of A and E departments, wards or hospitals in London.

Nick de Bois (Conservative, Enfield North)

If there was a nod and a wink, I must have missed it in the heat of the pre-election campaigning. I do not want to debate all the issues, but I want to set the record straight. We made it very clear that there would be a moratorium after the election, when there would be a review based on four tests. That process has gone ahead, and the issue, as I believe the hon. Member for Halton knows very well, has moved on to another stage. I do not want people who read the record to be drawn to any other conclusions about what is happening at Chase Farm hospital.

Derek Twigg (Labour, Halton)

It is an important example, because under the Bill the Secretary of State will not be able to do what he has done to Chase Farm and other hospitals. He will not be able to interfere, and I will come to local examples later. It would be helpful if the Government indicated their intentions and if the Minister told us whether he expects London A and E departments and maternity units to be designated. That would be interesting.

The Prime Minister promised to protect the NHS. Will the Minister confirm that Monitor’s decision as to which services will be designated will not be financially driven—or will we see more broken promises on funding, real-terms cuts to the health service and no top-down reorganisation? Another promise was for 3,000 extra midwives, but that has now been dropped.

The issue is about driving competition and cuts in the health service. The Government think that the regime is a failure, and they want to introduce regulation because they believe that there will be more failure. There will be failure not because of poor quality, but because of what is being driven by the Bill—Monitor and its plans.

It is clear that removing the Secretary of State’s ability to intervene in reconfiguration will pass responsibility to Monitor, which is unelected. That will make it easier to allow plans to make unpopular cuts and to close down services. Ministers will then try to wash their hands of that by saying, “Not me, guv; it was Monitor, and that is what Parliament voted for.” I still think that there will be a lot of pressure in Parliament, through Adjournment and other debates, on the Secretary of State and other Ministers, but one has the impression that they are trying to wash their hands of the matter and blame everything on Monitor.

The comments of David Bennett, the new chair of Monitor, in The Guardian last Thursday were telling. He said that

“the problem in healthcare was that there was such a strong emotional attachment to a local provider of services.”

He was probably referring mainly to hospitals and hospital services. He went on to say:

“MPs will still be allowed to make representations but closures will be possible if ‘done in a fact-based transparent way [which] has established what is in the best interests of the patients.’”

Liz Kendall (Labour, Leicester West)

Unbelievable.

Derek Twigg (Labour, Halton)

As my hon. Friend says, that is an unbelievable comment. It sort of says that things were not done in a “fact-based transparent way.” Again, we would be very grateful if the Minister gave us some examples of where that has happened. I may be misreading comments about MPs. The article states:

“MPs will still be allowed to make representations”.

We are very grateful. We are most grateful that the chair of Monitor says that we can continue to make representations on the closure of services. We will be doing so.

The fact is that the Secretary of State and Ministers have been taken out of the equation. May I give a couple of examples that might be useful in showing how important the switch from the Secretary of State to Monitor is? There was a review of burns services in the country as a whole. In the north, that review recommended that the most serious burns cases should be centred in Manchester and taken away from the Liverpool designated hospital, which was Whiston and St Helens—one of my local hospitals. There was a great deal of debate and massive public opposition, which ran into the thousands, to the review. There were petitions and much lobbying of MPs took place.

It came to light that the person who had a significant say in transferring that part of the service to Manchester was Manchester based. Through a lot of ground work, done by MPs, we found out that many of the data responsible for the decision’s being proposed were not adding up. That came about because we could ask the Minister questions. She could make representations on our behalf and intervene on the issue.

At the end of the day, the decision was changed. That was fact-based and pretty transparent. The Secretary of State was able to express a view on the matter, which was translated to the service in the north-west. That intervention meant that there was such an outcome. Monitor does not have to take account of such things. The fact is that we will lose that.

The second example relates to my local trust—Warrington and Halton Hospitals NHS Foundation Trust. Again, there was a great debate and campaign because the trust wanted to transfer its critical care in some medical wards from the Halton site to the Warrington site. There were good arguments for doing that. We listened to those. After meeting the Minister, we asked Professor Sir George Alberti to come along and look at the services, and he did that. Based on his recommendations, the service was transferred, but we managed to campaign to have other services delivered at our hospital in Halton—more operations, day surgery and so on. That was a very important part of the process of seeing the Minister. The Minister got involved and expressed a view on the matter. Again, that was done in a fact-based, transparent way. I take it as a bit of a slight for the chair of Monitor to be saying that we do not do things in a fact-based, transparent way.

The two examples I gave involved massive public involvement—demonstrations, marches and petitions. If the patients are at the centre of the Government’s proposals, how much weight will be given to them in the reconfiguration of decisions, particularly if the chair of Monitor believes that a “strong emotional attachment” is the problem? How is a strong, emotional attachment to NHS services a problem? Is that not a good thing and a very important part of the process? I can see what he is getting at. He is trying to say that emotion overrides facts and that Ministers are susceptible to that type of influence. I have given two examples where the facts were transparent, the emotion was strong and decisions were taken on that basis. Whose views will win most in these reforms? Will it be patients or will it be others? We keep hearing that patients will be involved, but they will not have the decision. I could go on to give further examples, but I will leave it there.

On the issue of reconfiguration, which is an important part of the process, the King’s Fund has raised some important concerns. It has stated:

“It will also be difficult for GP commissioners to drive major reconfigurations within secondary care. The importance of the system leadership role currently provided principally by strategic health authorities”—

the Minister may remember that I made this point in the debate on the amendment—

“is underlined by a new report published by The King’s Fund on the reconfiguration of hospital services. The report shows that essential changes to improve quality and tackle financial deficits in some hospitals are unlikely to happen if left to market forces alone.”

That is a very important point, which the Minister needs to consider. The King’s Fund goes on to state:

“The Bill enables GP consortia to collaborate to address issues across consortia boundaries. However, they may not have the appetite or the skills to tackle large, complex and contentious service changes, with the result that the pressing need to reconfigure hospital provision in some areas may not be addressed quickly enough”.

A classic example is the burns unit issue that I just mentioned, which went across regions. The King’s Fund goes on to state:

“A strong, strategic commissioning function able to look across large geographical areas is needed for these purposes. In a recent radio interview, the Secretary of State indicated that the NHS Commissioning Board may have a role in this, although he did not explain how this might work.”

In light of designation, and other changes, could the Minister tell us how major service reconfigurations will be overseen in future? What about the regional perspective? That is particularly important—and I am glad that the King’s Fund agree with us—because, given the loss of the strategic health authorities, there is a real issue concerning leadership, making or driving forward proposals, and ensuring that there is strategic vision. I would like to hear the Minister’s thoughts.

Designation is time consuming, bureaucratic and costly at best. The Opposition believe that it is a mechanism to allow wholesale cuts in the NHS so as to bring in more competition, with lip service paid to local clinical and professional views and those of patients. There is a complete lack of scrutiny here, and a lack of the detail needed for us to make an important decision. Monitor believes public attachment is a problem, which we find unbelievable. It will be fertile ground for lawyers, legal challenge and bureaucracy. It is a terrible proposal and we will vote against it.

Grahame Morris (Labour, Easington)

The clause, as we have heard, provides for commissioners—commissioning consortia, the NHS commissioning board, or the Secretary of State if exercising his powers—to apply to Monitor for services to be designated and put into a special administration regime where there has been a provider failure. Additional regulation will exist to ensure that there is continued provision where a failure regime is initiated. There is an acknowledgement of the need for this regulation to protect vital health services where they fail in the new health market.

We have discussed the importance of Monitor to the new health market, and, in the view of Opposition Members, the over-reliance on this superquango. Monitor’s key concluding function will be to act when patients’ local services are forced to close. A commissioner can apply for a service to be designated only if there is an absence of alternative provision, and when ceasing to provide the service would have a significant adverse impact on the health of patients. The commissioner must also have regard to the current and future need for the provision, and whether losing the service would significantly reduce equality of access.

However, it will be for Monitor—which, we should not forget, is the economic regulator—to decide whether the commissioner has satisfied the criteria to carry out a consultation and demonstrate that clinical need will not be met. That raises the fundamental question of why the economic regular of health services should make that judgment of clinical need. My hon. Friend the Member for Halton referred to that earlier, and other colleagues have discussed the considerable administrative burden of proof that this will place on commissioners to show that a service is defined as vital.

In the current financial climate, with pressures for efficiency savings, Monitor can be expected to challenge applications and to require commissioners to jump through hoops. Even with the kind of budget that we have discussed—up to £140 million a year—there are questions about whether Monitor will have sufficient funds to meet its obligations to areas with failing services, because Ministers have not been capable of making any estimation of service failures. That is despite my repeated questions, parliamentary questions, letters and the matter being raised in Committee. There has been no robust or meaningful response about service failures, either commissioner or provider failures, which will be a really big issue for the reorganised NHS.

The Opposition are concerned that Monitor will be given the latitude to decide upon its own guidance under clause 73, which it will then publish and require commissioners to follow. The guidance will cover applying for designation of a service under clause 69, and reviewing of designation and applying for the removal of designation, where it has been granted, under clause 71. The Government are being coy about the necessity of provider failure in the market that the Bill creates, and they have not spoken clearly about it in their vision for the future of the NHS.

Liz Kendall (Labour, Leicester West)

Does my hon. Friend recall the Minister’s opening comments today? He said that there has always been failure in the system, because of “overcapacity” and “poor management”, and that it has been “covered up” and “propped up through covert subsidies”. Would my hon. Friend find it useful to discover how many services have received such subsidies and have been, as the Minister said, “propped up”, when they have actually been helped to continue, so that we can know how many services might be at risk of failure?

Grahame Morris (Labour, Easington)

I am grateful for that intervention. If the Minister were to give such examples and figures, it would be very instructive, but there seems to be reluctance and perhaps there is a reason for that.

The coalition agreement recently promised:

“We will stop the centrally dictated closure of A&E and maternity wards, so that people have better access to local services.”

Anyone with a grasp of what is proposed in the Bill will be surprised by what Ministers actually meant when they signed up to that commitment. Rather than decisions about closures being made on clinical grounds or as part of the strategic planning at PCT or SHA level, under the new arrangements, the market will decide. [Interruption.] Let me continue. If a nearby service is failed by the market, the Bill will prevent any centrally dictated rescue of that service, no matter what public opinion or, indeed, local representatives might think. If I am wrong and if there are provisions in the Bill that allow Ministers to intervene to prevent the market from reaching that conclusion through the vehicle of Monitor, I will gladly give way, but I see that the Minister does not want to speak. That point was also made by the hon. Member for Southport last week when we were dealing with clauses 56 to 60. Despite Government Front-Bench rhetoric, the Bill will ultimately prevent democratic pressures from affecting decisions on health care provision, replacing them with market forces and unaccountable superquangos.

I have referred frequently to the impact assessment. It is important, and it is illuminating to read. It makes it clear that local hospitals will have to close, and that local MPs, councils and campaigners must not be allowed any influence in that regard. The sweeping powers being given to Monitor to dictate the failure regime are also mentioned in supporting documents to the Bill. The consultation document “Regulating healthcare providers” states:

“These criteria are likely to focus on identifying where a provider is the only provider or one of very few providers in a local area.”

The only justification for additional regulation is the need to maintain patient safety in the absence of other providers.

As the Minister said, it is clear that the failure regime is not there to mitigate significant service failures; in his view, the mechanism will be used only in extreme circumstances. I suspect that the Minister has significantly underestimated the failure rate. At the risk of repeating myself, I believe that the theoretical basis for the Bill is contained in paragraph B4 of the impact assessment. It is important to listen to this, because it gives the guiding principles of the Bill. It states:

“Choice-based competition works best where good providers can expand their service offer and enter new markets, and poor providers are forced to contract or exit markets.”

That will send shock waves through existing NHS providers if it is given the force of law. The document goes on to explain that unless providers are allowed to access the market, the changes made under the Bill will not produce the anticipated benefits—in other words, the Bill anticipates a failure regime, and Government Front Benchers consider that that failure may be a good thing as it could bring about innovation.

Dan Byles (Conservative, North Warwickshire)

I am curious. Is the hon. Gentleman saying that what he called poor providers should be protected and allowed to continue providing a poor service to patients, who at the end of the day are what the Bill is about?

Grahame Morris (Labour, Easington)

I am suggesting that Monitor is being given this primary role as economic regulator, and that the existing structure of strategic health authorities and PCTs that is meant to support providers and identify areas of weakness will be lost. That is genuinely a bad thing.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

In response to that intervention, we understand that Monitor judges by quality and is an economic assessor, so if we are talking about poor providers, what is the context? Is it poor economically or poor in quality?

Grahame Morris (Labour, Easington)

In that regard, Monitor’s fundamental role is as an economic regulator. It is a good point and well made, but I wish to move on.

Paragraph B149 of the impact assessment is entitled “The proposals for competition jeopardise access to essential services”. It states:

“There is a risk that this could lead to inequalities in access to services or disruption to the continuity of essential services. The Government’s proposals will give Monitor substantial powers to protect access to essential services where they are ‘designated services’. These include the ability to require providers to continue delivering particular services for local populations, the power to require providers to contribute to a risk pool so that funds are available to protect the continuity of these services”.

In the light of that assurance, will the Minister say how it will work in relation to European competition law as it applies to the market in health care? [Interruption.] The Minister groans, but it is an important question, and those involved in health care want to know the answer, as do Opposition Members.

Will the Minister and Government Members say explicitly that the failure of local health services would be a good thing? Is that their contention? If so, will they undertake not to speak out in future against any clause that affects their local hospital services?

Liz Kendall (Labour, Leicester West)

Does my hon. Friend agree that is important that Members on both sides should be aware that it is not only poor quality—

Grahame Morris (Labour, Easington)

It is a pleasure to serve under your chairmanship, Dr McCrea.

At the last election, my experience was that members of the governing coalition parties made great play and political capital of campaigning against any hospital or acute service closure, or even possible closure. Does the Minister have anything to say to the experienced and dedicated staff who will face the full impact of his plans for upheaval and disruption? Will he describe market failure to them? There seems to be a reluctance to describe it to the Committee.

Many questions on the future of the bureaucracy in the NHS still need to be answered. Great play has been made of the fact that the Secretary of State has promised that this is not a top-down reorganisation of bureaucracy, but the abolition of it, and the Prime Minister said last Wednesday at Prime Minister’s questions:

“We are not reorganising the bureaucracy of the NHS… We are abolishing the bureaucracy of the NHS.”—[Official Report, 16 March 2011; Vol. 525, c. 292.]

In that case, how would the Minister describe the two thirds of the Bill that set out the rules for competition? Will he venture a guess or an estimate now of the cost to the NHS of the proposals both for failure regimes and for designation?

If Committee members are not minded to support my arguments, perhaps they might want to listen to the arguments being made by the hon. Member for Totnes (Dr Wollaston), a former GP who serves on the Select Committee on Health and who I understand wished to serve on this Committee. She said that the plans would result in the NHS going “belly-up”, not “top-down”. She went on to say that

“if Monitor, the new economic regulator, is filled with competition economists with a zeal for imposing competition at every opportunity, then the NHS could be changed beyond recognition. It is no use ‘liberating’ the NHS from top-down political control only to shackle it to an unelected economic regulator.”

We have not seen anything in the Bill that would rein in Monitor, and I hope that the Minister will look again at making significant changes to the current approach, which will result in service failures, a bureaucratic nightmare and an over-powerful economic regulator dictating local service closures—not based on quality or local needs, but on economics and competition.

John Pugh (Liberal Democrat, Southport)

It is a pleasure to serve under your chairmanship, Dr McCrea.

I was not able to pick out from fairly wide-ranging contribution of the hon. Member for Halton whether he opposes the principle of designation or whether he objects to the lack of apparent clarity in the designation process.

Derek Twigg (Labour, Halton)

Both.

John Pugh (Liberal Democrat, Southport)

Okay. May I take him up on the first issue of the principle of designation? Presumably, if he is against the principle of designation, he is in favour of a system whereby all services, regardless of their value to the community or their indispensability, are judged by, broadly speaking, the same criteria when people make decisions on whether to use those services or not. I thought that we were all genuinely uncomfortable with that, and the legislation seems to indicate that most of us on this side of the Committee would be uncomfortable with that because we feel that some services in a special category ought not to fall due to any sort of market failure or commercial competition, and that other services are in a rather different category. I think the general public feel like that.

One has to visualise what the situation would look like if we were to take away designation per se. I think it would look similar to what it is now. As I understand it, there is no process of designation at the moment. If we compare, for example, the Co-operation and Competition Panel with Monitor, we see what Monitor would look like without designation.

Derek Twigg (Labour, Halton)

If I have misunderstood the hon. Gentleman, I apologise, but I understand that the Liberal Democrats were opposed to the proposals for competition in the Bill. [ Interruption. ] Will he let me finish? As we are opposed to the proposals in terms of competition, pricing and Monitor, why would we support the proposal for designation, which all fits into that mantra for the Bill, which I understand that his party is opposed to?

John Pugh (Liberal Democrat, Southport)

Basically, my argument is that if the hon. Member for Halton is opposed to competition, why in the previous Parliament did he support so many of those requirements that were put into health legislation and demanded competition? We have an organisation somewhat similar to Monitor, existing today, called the Co-operation and Competition Panel, which does similar sorts of things. It has to balance collaboration and competition. As far as I know, it was not tasked by the previous Government to do anything about health inequalities. It has similar functions to Monitor, although Labour wants Monitor to do something about health inequalities. It has to consider the impact and availability of choice and competition, which Monitor has as a parallel function.

Owen Smith (Labour, Pontypridd)

I go back to the point I made this morning. Are there not fundamental differences between the Co-operation and Competition Panel and Monitor, such as the extent to which competition law will apply and how the Co-operation and Competition Panel is not charged with promoting competition? It is charged with striking a balance between collaboration and competition, rather than promoting one at the expense of the other.

John Pugh (Liberal Democrat, Southport)

That is a fair point about stress. I acknowledge that European competition law and how competition law will apply is unfinished business, but if the hon. Gentleman will allow me to park that issue, I will develop my argument.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

There is one other distinction of which the Committee should be aware. When the Co-operation and Competition Panel was established, it was not subject to any form of parliamentary scrutiny.

John Pugh (Liberal Democrat, Southport)

We will accept that there has been a degree of mission creep in what it does. We are debating what Monitor can and cannot do. I am not aware that there was any parallel debate with regard to the creation of the Co-operation and Competition Panel, although it impacts in all our constituencies. Apparently, we cannot even abolish it, because officially it is not a statutory body. It is something that has emerged and been implemented by the previous Government; presumably it was implemented because the Secretary of State at the time thought that there was a purpose to it.

Most of the criticisms that the hon. Member for Halton has made of Monitor in this debate—there are others to be made, which I might share with him—are also criticisms that could be made of the Co-operation and Competition Panel. It is unaccountable. There is a huge issue about accountability, particularly of these organisations that are making important judgments with a balance of considerations, which have a strategic impact. There is a question mark over whether an organisation such as that is strictly speaking just a regulator, or whether it is more of a strategic body. None the less, I think he would accept that both bodies are unaccountable. I have never written to the Co-operation and Competition Panel, nor have I found a way of doing so, but it has impacted in my constituency. My hospital, to make ends meet, because it has a fairly substantial deficit, has had to work with other hospitals in a collaborative way and share pathology services throughout Merseyside. Before it could do that, however, it had to go to the Co-operation and Competition Panel to satisfy it that there was sufficient competition around.

Derek Twigg (Labour, Halton)

I want to clear up one point, so that I have no confusion in my mind. I am listening to what the hon. Gentleman is saying and I understand his arguments, but can he explain whether he is in favour of the proposals in the Bill for Monitor and the extension of competition?

John Pugh (Liberal Democrat, Southport)

I am not in favour in the totality of the proposals for Monitor. That is right, but that is not to say that the amendments that the hon. Gentleman has tabled have any relevance to why I am not in favour of it. He made the point that Monitor would be a local body. Well, I do not know where the Co-operation and Competition Panel lives, but it is certainly not local to me. It would be bureaucratic and top down. All those things could be said about the pre-existing institutions.

Derek Twigg (Labour, Halton)

I did not say that Monitor would be a local body.

John Pugh (Liberal Democrat, Southport)

I know that. If the hon. Gentleman looks back through Hansard, part of his critique of Monitor doing its designation process was that it cannot do that properly because it is not in touch with the local scene. I do not know how far the Co-operation and Competition Panel is in touch with what goes on in the Southport and Merseyside health economy, but I doubt that it is not more in touch than Monitor would be.

If hon. Members look at the provisions of the Bill dealing with what Monitor will do, they will see that the additional clauses in the Bill make it fairly explicit that although the panel does not have to take on board financial aspects and consequences, Monitor will have to do so. In a sense, it is an attempt to finesse a model that already exists. That said, however, I take the point that if Monitor is to perform a series of complex processes—balancing considerations and working out what is designated and what is not—there is a genuine issue about accountability.

I accept the point made by the hon. Member for Oldham East and Saddleworth that the remit of the two organisations is not exactly identical, but the functions that they will perform within the health system have similar consequences. Members should not content themselves with the belief that there is a bad world ahead, and that the sort of things that they complain about are not happening now. In the past 24 hours, I have discovered that the dermatological unit at the local hospital in my constituency will be deprived of a contract, because Assura Medical has bid for and got it—presumably on price competition. It has got the unit although it does not have a consultant urologist, or a base to work from. That is what is happening.

There is a case for defining more clearly in legislation than we have done so far what fair competition is, because appalling things have happened. To cite another example from my constituency—I am not shy of citing examples, unlike the Minister—the urologists in my local hospital are working partly in a private hospital that also gets patients who are referred from the local community. In effect, they are using their talents and abilities to worsen the budget of the local hospital and create a financial problem. Simultaneously, they are paid by the NHS and getting NHS pensions. One hospital picks up their pension bill, and the other picks up the reward for their services, through the commissioning that the PCT gives it. That does not strike me as fair competition.

Both of my examples are current today; they are live at the moment. We have to recognise that, if we accept that there has to be a degree of competition, it has to be framed so that the competition is fair. The Bill must do that; simply leaving things alone is not an option. The Bill will not get rid of cherry-picking, because that is happening today in Southport.

Liz Kendall (Labour, Leicester West)

Does the hon. Gentleman think that one key issue is to manage the consequences of competition? There is a debate about whether the evidence suggests that competition improves health outcomes, and the Committee has discussed that to some extent. There is also a debate about whether, in any system with competition, there are real consequences as patients and money move. One of the arguments that we have so far is that there will be no ability to manage those consequences under the new systems proposed in the Bill. Does the hon. Gentleman think that that is more important than having a more “pure” market?

John Pugh (Liberal Democrat, Southport)

I have heard the arguments made by the hon. Lady several times. It is a perfectly valid point—

William McCrea (DUP, South Antrim)

Order. May I say to hon. Members that, as you know, I am new in the Chair? Nevertheless, I am led to believe that you have already debated the subject of competition, so we have to stick strictly to the clause that we are dealing with at the moment.

John Pugh (Liberal Democrat, Southport)

I will conclude very briefly, Dr McCrea. I accept the point that the hon. Lady has made about a managed environment. It is a perfectly valid point that demands and requires further investigation. All I have to say is that, when times are hard and PCTs and acute hospitals are trying to cut their budgets, it does not look like a managed environment. It looks like dog eat dog.

Owen Smith (Labour, Pontypridd)

It is lovely to serve under your chairmanship today, Dr McCrea. Designation is another of the Orwellian phrases in the Bill.

Simon Burns (Conservative, Chelmsford)

Orwellian?

Owen Smith (Labour, Pontypridd)

Designation does not feature anywhere else in health legislation, as far as I can tell. We have not seen it previously used, although it has been used in the context of energy regulation and some other such aspects—much of the regulation framework in the Bill comes from the energy sector, and so too does “designation”. It is a crucial term in the Bill and it is intimately connected to competition, because the reason we have that Orwellian term, “designation”, is precisely the degree of competition to which we are about to open the NHS.

Unlike my extremely experienced right hon. Friend the Member for Rother Valley, I understand absolutely what designation means. The Minister has told us on several occasions, effectively, what it means: it is about protectionism—a permissive protectionism within the NHS. It is identifying those areas of NHS services that are not too big to fail, but that are too important to fail, and therefore need to be protected from competition.

Mr Burns indicated dissent.

Owen Smith (Labour, Pontypridd)

The Minister is shrugging his shoulders, rolling his eyes and looking exasperated, but that is precisely what he has said on a couple of occasions today: that designation is about affording protection—[ Interruption. ] With respect, I am precisely mirroring the context. He said that it was about affording protection to vital services which need to be protected. The question therefore is: protected from what? Clearly, the answer is: protected from the impact of being competed with and competed out of the market; the impact on patients of a service either not having competition at all, and therefore needing to be preserved because it is the only service available to patients in that locale, or having other competitors coming into the market and potentially eroding and undercutting that service. [ Interruption. ] I am not going to go into price competition, no. We know precisely what the measure is about: competition, the interrelationship between designation and competition, and allowing protectionism within the NHS and ring-fencing certain services so that they are not undermined by competition. That is clear, and I think the public will understand it as well.

What is much less clear is how designation will work. We have already heard a lot of questions about how designation will work. We read in the Bill and the explanatory notes that local knowledge will be the key driver of designation. I assume that local clinicians who are commissioners, and the commissioners they employ, whether private sector or transferees from the primary care trusts and strategic health authorities, will be the people with the local knowledge to determine which services ought to be protected—in other words, designated.

The problem with such a system is that, as far as Monitor is concerned, the key criterion for allowing designation is whether there is competition—alternative providers. I understand how a commissioner and a clinician locally can judge whether his service is so intrinsically valuable to his patients that it absolutely ought to be designated, but I cannot understand—I ask the Minister to explain—how those local commissioners in their local hospital or GP consortium will have sufficient knowledge of the nature, type and availability of alternative providers out in their local marketplaces such that they can deem that their service need to be protected. I cannot see how that could be the case.

Also, in the Minister’s comments to date, I cannot see an answer to what he means by “local”. In a world where there are multiple entrants into the health care market, how are we to determine whether a service—radiotherapy or pathology services, or technical assays, which are vital to determining whether a patient ought to be given medicine x or y—that is being provided by a multinational corporation, or one operating on a pan-UK basis, but at a local level, constitutes the competition that means a service cannot be designated? If so, local knowledge will seriously be called into question, because it will not have sufficient insight into pan-UK issues.

Secondly, we have heard repeatedly from the Minister that quality will be the key arbiter or determinant of decisions—not price, but quality. How on earth can we expect local commissioners, who are the people who have to determine whether a service ought to be designated, to understand and to have sufficient insight into the quality of the alternative providers’ offers such that they can determine that the provision will not be sufficiently robust, safe or worth while for their patients, and therefore ought not to be allowed to compete for the delivery of that service? I cannot see how they would have any insight into the quality of the alternative providers’ services. Monitor, too, from its lofty heights in London, will likewise have very little insight into the relative qualities of the local provider and the new competitive entrant into the marketplace.

Thirdly, why are all of the changes happening? The language is absolutely clear. Most of the phrases in the Bill and in the mouth of the Minister today, including about inefficient providers being bailed out wholesale, market mechanisms not working properly and poor providers being subsidised, would be more familiar in the mouth of the Chancellor or the Secretary of State for Business, Innovation and Skills in the context of economic regulation than they are in the mouth of a Health Minister. They reveal the economic drive behind all the changes—the financial drive and the drive to see competition delivering quality and improvements in the NHS. The Minister has not persuaded us that quality is the key driver. He has not persuaded anyone that the Bill is well thought through, because in this instance as in so many others, there are more holes in it than a Swiss cheese.

Jeremy Lefroy (Conservative, Stafford)

It is a pleasure to serve under your chairmanship, Dr McCrea.

I have two brief points about the definition of words in the clause, and I would appreciate the Minister’s help. First, it is extremely important to have clarity on what constitutes a service. Services can be salami-sliced down to very small items or, as others have said, they can be an agglomeration. One could say that, in an acute hospital, a service is not only the accident and emergency, but some—not necessarily all—of the other wards associated with it. That might constitute a block of service or, under other definitions, several services. How will Monitor interpret that word?

Liz Kendall (Labour, Leicester West)

As a first step, does the hon. Gentleman agree that not only is it the GP commissioners who need to say whether a service is essential and cannot be allowed to fail, but that, to determine that, they need to understand what the knock-on effect of the failure of one service would be on other services? Not only Monitor, but GPs must have that understanding. Does he believe that GP commissioners fully understand the integrated nature of all the available services?

Jeremy Lefroy (Conservative, Stafford)

That is a good point. In most cases, GP commissioners probably do, and clause 69(1) states that the

“commissioner of a health care service for the purposes of the NHS may apply to Monitor”.

The ball is therefore very much in the GPs’ court and I expect them, particularly as they grow used to the idea of commissioning services, to pick that up quickly. Certainly, in my experience, local GPs have a very good understanding of the need for a core block of services. What that block constitutes might differ from a district general hospital to a major teaching hospital, but it is extremely important that Monitor appreciates that and does not take a nit-picking approach to what constitutes a service. I would welcome the Minister’s comments.

My second question—apologies for being tedious about this—is on the definition of “alternative providers”. To take an example from my own area, stroke services used to be provided by what is now the University hospital of North Staffordshire, by New Cross hospital in Wolverhampton and by Stafford hospital. Stroke services are no longer provided by Stafford hospital for various reasons—not only economic but quality reasons, I understand—although I hope those services will return at some point.

As all Members will know, what is vital in providing a stroke service is how quickly the patient can be got to where the service is provided. The location, the road network, the density of traffic and whether there are constant traffic jams—as there are in certain parts of the west midlands, so that it can take half an hour to travel two miles—are all extremely important in defining who is a willing provider. A hospital 10 miles down the road may be a willing provider, and on the map it may look to Monitor as though it is an extremely good provider, but in realistic terms a patient would not have a hope of surviving a stroke if it was the local provider because all those road transport factors would mean that the ambulance service, as the hon. Member for Leicester West will know, would not be able to guarantee to get the patient to that hospital in time.

I am looking for some assurance from the Minister on both those points. Can he assure me that Monitor will not take a desiccated accountant’s—I am an accountant myself—approach to what constitutes a service, but will take a realistic approach, informed by local commissioners, to what a local alternative provider is and what constitutes a block of services that makes sense for an area?

Simon Burns (Conservative, Chelmsford)

It is a pleasure to serve under your chairmanship this afternoon, Dr McCrea. You will not be aware of it, but this is probably the longest debate we have had on a clause; it certainly seems to have been the longest. I will speak swiftly and deal with the questions that have been raised. I fully understand that we need to make progress because there are some other important clauses that need to be discussed tonight.

Derek Twigg (Labour, Halton)

As long as you answer our questions.

Simon Burns (Conservative, Chelmsford)

I will do that, too.

Clause 69 provides for commissioners to make an application to Monitor for services to be designated. Commissioners can be GP commissioning consortia, the NHS commissioning board or the Secretary of State exercising his powers under new section 13V of new chapter A1 of the National Health Service Act 2006. The provision is intended to be similar to other engagement processes run by other regulators in other sectors, such as the energy sector, and has been modified for the health sector to effect the role of commissioners.

The clause provides that commissioners may apply for a service to be designated only if, first, the commissioners can demonstrate that the service is necessary to meet the health needs of their populations and that there is no alternative provider of that service. [Interruption.] The hon. Member for Leicester West looks at me in that smiling way, but the reason I am saying this is because I think there has been a misunderstanding—the word I originally used was “misconception”—of what the clause will do, and I think it would be helpful to the Committee if I reiterate it.

Derek Twigg rose—

Simon Burns (Conservative, Chelmsford)

May I make a little progress? All I am doing at this stage, before I reach the hon. Gentleman’s questions, which he is anxious to hear me answer, is explaining exactly what the clause will do. Hopefully that will clear up some of the misunderstandings.

Secondly, commissioners must have consulted providers, local authorities, healthwatch and other key stakeholders before determining which services should be designated. In practice, that will mean the commissioners have to show that they have made an assessment of patient needs and local provision. Commissioners will be expected to share that evidence with Monitor when applying for a service to be designated and will be required to provide copies of consultation responses they have received on the question whether to designate a service.

In addition to commissioners’ overarching duties on effectiveness, efficiency and continuous quality improvement, the clause requires commissioners, in deciding whether the criteria for designation are met, to have regard also to the current and future need for the provision of the service; whether the removal of the service would significantly reduce equality of access to the service; and any other matter that may be specified in Monitor’s guidance.

The clause requires Monitor to grant an application for designation if it is satisfied that the criterion in subsection (3) is met, and if the commissioner has consulted as required under subsection (2). The clause then requires Monitor to give notice of the designation of the service to the commissioner and every person who has been consulted on the application, and to explain the right of appeal.

Derek Twigg (Labour, Halton)

What does “future needs” mean in that context? Does it mean future need over a year? There are time scales of one year and 10 years in the Bill. Is that over a year, over 10 years or more?

Simon Burns (Conservative, Chelmsford)

The future needs of the local health economy are just that—one cannot set a time scale on that. The hon. Gentleman refers to time scales of “not until after the first year of designation” and “within 10 years of designation”, but that relates to the requirements to review the designation decision taken. What he was talking about just now is future needs in a generality of what should be designated, which is slightly different. I do not think there is much further we can go on that.

Derek Twigg (Labour, Halton)

There is actually. It is a very important point. I do not know whether the Minister has been given any inspiration yet, but he said that a lot of the detail will be drawn up by Monitor—

Simon Burns (Conservative, Chelmsford)

Guidance.

Derek Twigg (Labour, Halton)

Is the Department giving no advice or guidance to Monitor about the time scale on future needs? Is that entirely left to Monitor?

Simon Burns (Conservative, Chelmsford)

The requirement on the reviewing of designation after the first year and within 10 years is in the Bill, as the hon. Gentleman knows, but if we are talking about what services specifically are to be designated where, by definition there has to be the flexibility for Monitor, and particularly the commissioners who will be driving the process, to be able to do that as and when relevant. I do not understand the difficulty with that; it seems common sense. No doubt, he disagrees.

Let me try another tack and start answering some of the hon. Gentleman’s questions, starting with a series of questions on the designation process: how it would happen, how much it would cost and how long it would last.

Derek Twigg (Labour, Halton)

And when it will start.

Simon Burns (Conservative, Chelmsford)

I will take the hon. Gentleman’s word for that. My response will reflect what I have already said. It will not be for Ministers to define how and when the designation processes will be run. It will be for Monitor to give guidance on the process, based on the clear criteria in the Bill and building on best practice in other sectors. Monitor will be required to run a full consultation on its guidance, on the designation process and on the methodology to define how much designated services providers will pay into the risk pool. In that, as in other functions, Monitor will be under a duty to promote the economic, efficient and effective provision of health care services and to avoid imposing unnecessary burdens.

The hon. Gentleman asked whether GP consortia will have the skills required to run a designation process. Anything that is relatively new to some GPs will of course offer some challenges, although they will be aided by Monitor’s guidance. However, we believe that GPs are ideally placed to make decisions on which services need additional regulation, as they have the hands-on clinical knowledge and expertise regarding the needs of their patients. The designation process will be a key part of the commissioners’ role, which they should be gearing up from the start to deliver effectively.

Derek Twigg (Labour, Halton)

Again, that differs from what the hon. Member for Southport has said. Monitor is in charge of the whole process, not the Government—the Minister says it will be up to Monitor to decide. Will he put on the record that the Government, who are putting the Bill through Parliament, have no idea when the process of designation will start, how long it will take, or how much it will cost? [ Interruption. ]

Simon Burns (Conservative, Chelmsford)

The right hon. Member for Rother Valley laughs, but it is out of frustration, I think, because I have dealt with the hon. Gentleman’s questions. When we started answering his questions we said, in effect, how much the process would cost, how long it would last and how it would happen. I do not want to sound like a record going round and round, but it will not be for Ministers to define how and when the designation process is run; again, it will be for Monitor to give the guidance based on the clear criteria in the Bill and building on best practice in other sectors. Monitor will be required to run a full consultation on its guidance on the designation process.

Liz Kendall (Labour, Leicester West)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

No. I want to deal with these matters or we will be here all night. I do not see the problem, unless it is that the shadow Minister does not want to understand.

Derek Twigg (Labour, Halton)

You still have not answered the question.

Simon Burns (Conservative, Chelmsford)

I think I have answered it twice, consistently. He may not like my answer, but that is a different matter.

Let me try the next lot of questions. The hon. Gentleman has asked whether GP consortia have the required skills to run the designation process. As I have said, that will be challenging, but aided by Monitor’s guidance and that of existing PCTs in the run-up to the changeover, GPs will have the relevant expertise or will develop it. I do not share the hon. Gentleman’s doubts. As he will appreciate, the designation process will be a key part of commissioners’ roles, which they should gear up to from the start to deliver effectively. Help from the PCTs, guidance and some GPs’ experience of commissioning will enable an effective and efficient system of commissioning for patients.

The hon. Gentleman suggested that designation would lead to some kind of free-for-all for management consultants. On the contrary, Monitor will learn how best to design the process from the experience of other regulated industries. I would be happy to get into a debate on management consultants with him, given the previous Government’s record of using them and the fact that this Government have introduced a moratorium on public sector use of management consultants; however, I would not like to fall foul of you, Dr McCrea, by straying beyond the remit of the clause.

The hon. Gentleman asked about separating designated and non-designated services in a provider, as the same equipment could be used. There is no reason why equipment cannot be used by both designated and non-designated services, as designation is not about closing services but about deciding which ones require additional regulation. It will be for providers to decide how best to use their staff and equipment. In doing so, they can build on the experience of other sectors: health services are different from other services, but there is valuable experience to draw on in other areas. I get the feeling that if we had not looked at the strengths, weaknesses and relevance of other areas from which to draw best practice, or anything that would help to make the proposals far more effective and efficient, we would be criticised for not having done so, so in that respect, where the hon. Gentleman is concerned, it is a lose-lose situation, because he will not accept anything that does not fit into his criteria.

The hon. Gentleman asked why some essential services may not be designated. I shall repeat a point I made earlier, as it is at the heart of this debate. Whether a service is designated is not the same as whether it is essential. Non-designation simply indicates that alternative providers are available. Where services are not designated, the mechanism for securing service continuity will be led by commissioners through legally binding contracts.

The hon. Members for Halton and for Easington raised concerns about how others will be involved in commissioners’ decisions on designation. Commissioners will be required to run a full consultation on what services they wish to designate, as set out in clause 69(9) to (11). Those subsections require commissioners to consult service users, local authorities and healthwatch, so there is significant scope for local involvement in the designation process.

The hon. Member for Halton suggested that service designation would be a top-down exercise imposed by Monitor. On the contrary, the decisions will be made locally by commissioners in consultation with local patients and communities. Monitor’s role— I hope the hon. Gentleman listens to this—is simply to ensure that the criterion for designated services is met and that there have been proper consultations.

It is, to my mind, somewhat ridiculous to suggest that Monitor would somehow become omnipresent, as the hon. Gentleman implied. The Bill opens up decisions about services to an unprecedented degree of transparency and democratic scrutiny, and it ensures that those decisions are made locally. I have to tell the hon. Gentleman that that is a huge improvement on the current situation in which an unaccountable, hierarchical bureaucracy is free to intervene in local decisions with very little transparency at all. Let me be clear: our proposals will put an end to the hidden subsidies that have been used in the past to prop up failing and inefficient providers taking money out of the budgets of successful providers or forcing commissioners to pay artificially high prices to reward poor management elsewhere.

Derek Twigg (Labour, Halton)

Just for the record, so that I am absolutely clear—who will draw up the guidance?

Simon Burns (Conservative, Chelmsford)

Monitor will issue guidance. I also have to tell the hon. Gentleman that we will not force patients to use or taxpayers to subsidise poor-quality, inefficient services or providers.

Liz Kendall (Labour, Leicester West)

On that point, will the Minister give way?

Simon Burns (Conservative, Chelmsford)

May I make some progress, please? Rather than propping up failing providers, there will be a transparent mechanism for managing provider failure that protects essential services and allows commissioners to replace services with higher-quality or better-value options.

The hon. Gentleman asked how major reconfigurations would be handled in future. My fellow Minister, the hon. Member for Sutton and Cheam explained that to the Committee in detail when we debated clause 175, and I do not propose to re-open that debate, Dr McCrea. I will simply add that I entirely agree with the point made that reconfiguration will not happen if left to market forces alone, as I think the King’s Fund recently argued. The Government have never suggested that approach. Consortia will be able to work together and with the commissioning board to make strategic decisions about services across large areas where that is necessary. Where there are interdependencies between services or a need for integrated care pathways, that is something that commissioners will be able to plan for.

The hon. Member for Easington asked why we have not estimated the likely failure rates of providers. As I said earlier, to give accurate failure rates is not possible. International comparisons are not suitable, as there are no international health systems that are the same as our NHS system.

Liz Kendall On that point, will the hon. Gentleman give way?

Simon Burns (Conservative, Chelmsford)

I will give way in one minute. Let me finish the point raised by the hon. Gentleman. Bandying about failure rates in America is, as I said to him previously, misleading and likely to be highly inaccurate because of the huge difference between the two systems.

Liz Kendall (Labour, Leicester West)

I am delighted that the Minister has given way. He says that services will not be propped up any longer. There is not a single member of this Committee who does not have a service in their constituency that at some point has been in debt or deficit or—not my words—“bailed out” by primary care trusts. Is he saying that that will no longer happen?

Simon Burns (Conservative, Chelmsford)

Let me repeat what I said, so that there will be no misunderstanding. The hon. Lady is a serial offender in that respect. What I said was that we will not force patients to use, or taxpayers to subsidise, poor quality, inefficient services or providers. Rather than propping up failing providers, there will be a transparent mechanism for managing provider failure that protects essential services and allows commissioners to replace services with higher quality or better value options.

Grahame Morris (Labour, Easington)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

No, I will not.

Put in context, that is somewhat different from the abridged intervention from the hon. Member for Leicester West. I will now move on to the number of other questions that were asked, starting with the hon. Member for Pontypridd, who will have to wait a minute.

Derek Twigg (Labour, Halton)

I am sorry if I missed what the Minister said, but one of my questions was on whether GP services would come under the designation.

Simon Burns (Conservative, Chelmsford)

I will provide the answer to that as I get through the pile of questions.

The hon. Member for Pontypridd asked a number of questions. One was on how often services would be reviewed for redesignation. We will deal with that in later amendments, as I said earlier. It would be sensible to wait until we get to that part of the Bill, which will be soon. The hon. Gentleman raised the perfectly valid point of what counts as local. It is simple. The local population is that which a commissioner is responsible for. Local services are those available to the local population to meet their needs. In that way, commissioners would review the availability of services to meet the needs of their population and would apply to Monitor where additional regulation was needed to secure continued access to services in the absence of alternative providers. The hon. Gentleman also said that designation is the protectionism of services that are too important to fail. I would not altogether agree with that. Designation is about the protection of services that are provided by a sole provider in that locality. If such a service should fail, and the impact of that failure would cause significant harm to patients, that service needs additional regulation to ensure the continuity of that service.

My hon. Friend the Member for Stafford asked what the definition of services was for the purposes of designation. I hope I can reassure him on that point. It would be for the responsible commissioner to determine what constitutes a service, or block of services, for those purposes. As I said this morning, commissioners would need to have regard to any interlinkages between services, as well as the availability of alternative providers of those services. Those considerations would be different for emergency stroke care, compared with elective specialities such as orthopaedics or dermatology.

Kevin Barron (Labour, Rother Valley)

This is on the same point, because this is about designating a service as opposed to an institution. Can the Minister see a situation where a department in a local hospital—for example, radiography—was not designated, so the commissioners ask for it to be designated and Monitor says no, because it does not think that it is up to standard and because radiography is available elsewhere in the area? I say that because I represent an urban seat and there are plenty of hospitals with radiography services within travelling distance of my house. Can he envisage a situation where a service was not designated and so would not be offered by that department?

Simon Burns (Conservative, Chelmsford)

With regard to the right hon. Gentleman’s specifics about radiography, I will resist the temptation, because the experience with A and E has taught me that it is most unwise. I am going to be consistent. However much Opposition Members try to tease it out, they are not going to get it, because I have learnt.

My hon. Friend the Member for Stafford also asked me to state what an alternative to the NHS provider could be. It could be the private sector, the voluntary sector or, in certain circumstances and depending on the service required, the charitable sector. I hope that that helps him.

The hon. Member for Pontypridd asked how quality will be built into the designation process. Monitor’s guidance will be key in explaining to commissioners how quality should be built in. Monitor will run a full consultation on its guidance, and it will seek responses from the Care Quality Commission to ensure that quality is built into that guidance.

The hon. Member for Easington asked how many organisations will fail. I suspect that the hon. Gentleman can anticipate from past experience what my answer will be. I will most certainly not speculate on what may or may not happen in the future. However, it is beyond doubt that the previous Administration presided over a system in which successful organisations were forced to bail the same failed management out year after year. The evidence is for all to see in the published NHS accounts. Apart from not being transparent, the problem with the old system was that it maintained the wrong incentives. Successful organisations were penalised, failing organisations could duck difficult decisions, and patients and taxpayers ultimately lost out.

Grahame M. Morris rose—

Simon Burns (Conservative, Chelmsford)

May I just finish giving the hon. Gentleman the answer?

Our proposals would put that right by strengthening incentives for improvement and removing the bail-outs for failed management, while protecting patients’ interests and securing continuity of essential services. I will give way to the hon. Gentleman, but I will then make some progress, because otherwise we will be here all night.

Grahame Morris (Labour, Easington)

If that is the assessment, why is it that the west Cumbria practice-based commissioning model, which has been wheeled out numerous times by the Government Front Bench, is in fact running at an £11 million deficit and had to be bailed out by the SHA? If that is a model of good practice and a harbinger of what is going to happen as other practice-based commissioning units come on stream, it is a recipe for disaster.

Simon Burns (Conservative, Chelmsford)

To all intents and purposes, the hon. Gentleman is actually describing the previous Government’s system. Through the Bill, we are trying to bring in a system that will avoid the problems that I have just mentioned, so that we can move forward and ensure that good quality commissioning leads to enhanced health care and outcomes for patients. That is the purpose of the Bill, and, as I said, I will now make some progress.

The hon. Member for Southport mentioned that there should be greater control over Monitor’s competition duties to safeguard patients’ interests. The Bill provides the legal framework within which Monitor must operate. It must promote competition only where appropriate in exercising its functions. It must have regard to the need to maintain the safety of people who use the NHS. Importantly, Monitor may promote competition only when it is in patients’ interests.

Finally, one hon. Member asked if bail-outs would stop under the new system. Forgive me, because I cannot remember which hon. Gentleman it was.

Liz Kendall (Labour, Leicester West)

Or Lady.

Simon Burns (Conservative, Chelmsford)

Was it the hon. Lady?

The rest of the debate is in Hansard.