Health and Social Care(Re-Committed) Bill

Public Bill Committee, 7 July 2011.

Clause 55 - Monitor

Owen Smith (Labour, Pontypridd)

It is a pleasure, Mr Hood, to serve again under your chairmanship.

Clause 55 is crucial. It is the first clause of part 3, and the Opposition have always said that it is the absolute heart of the Bill. Monitor, the body established under clause 55, is the beating heart of part 3. Our view is clear: even though the clause has come back to us in its re-committed form, the functions of Monitor are effectively unchanged. The pause and the Government’s response to the listening exercise were, as we said when the Bill was re-committed, a political fix—a smokescreen. I intend to demonstrate the extent to which it was a smokescreen, and to show that the clauses that we are considering today, beginning with the establishment of Monitor, are where the smoke is thickest.

The Opposition’s job is to blow away the smoke and wave it away for the public, to reveal to them and to the other place precisely what sits at the back of that wreath of smoke—[Interruption.]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. We have only just started the day. The Chair will not take heckling from Members on either Bench. I warn Members that there will be no chuckling and no whispering, and that the Committee should give the best of order to the person addressing the Committee.

Owen Smith (Labour, Pontypridd)

I am exceptionally grateful to you, Mr Hood; despite the fact that I enjoy the heckling, I appreciate your intervention.

In truth, and despite the extensive changes that we have seen from the Government, I contest that Monitor is essentially unchanged in form and function, in instinct and intent, and in power and purpose. Some of the words have been changed, or juggled about; some have been moved up and some have been moved down, but the core of Monitor’s role is completely unchanged.

That, as we all know—we in Committee and others outside the Committee have endlessly said so—introduces a much greater degree of competition into the NHS between the public, private and voluntary sector providers, yet despite the changes presented by the Government as the antecedents of the Bill, it is still overwhelmingly a publicly delivered, publicly owned and publicly funded service. In the Minister’s words, the Government want to create a genuine market in the NHS—and that desire remains intact, despite the changes.

John Pugh (Liberal Democrat, Southport)

On the hon. Gentleman’s central premise, why did the British Medical Association say in its submission to the Committee that the role of Monitor had been significantly diluted? Does the BMA know something that the hon. Gentleman does not?

Owen Smith (Labour, Pontypridd)

By “the BMA”, of course, the hon. Gentleman means Hamish Meldrum, the BMA chair—[Hon. Members: “Ah!”] I am being absolutely accurate; there is a slight distinction between the words that we heard from Hamish Meldrum and the feedback that Dr Meldrum got at the BMA conference.

Critically, when giving evidence to the Committee, Hamish Meldrum conceded that he had not had the chance to read the Bill all the way through. I intend to show today that the Bill is largely unchanged in respect of Monitor. I suspect that that will cause ears to prick up in the BMA, and that it may want to reassess its opinion of the changes. [Interruption.] Ultimately, of course, as my right hon. Friend the Member for Rother Valley says from the Back Benches, the BMA remains opposed to the Bill.

We are dealing with the heart of the Bill. The BMA has not suddenly come round to saying that the Bill is a good idea. The BMA says that there have been some changes. My point is that those changes are insubstantial and insufficient and do not change the Government’s core intention.

Steve Brine (Conservative, Winchester)

For the record, when I asked Dr Meldrum for his opinion in our evidence session, he said very clearly—the record will show this—that he had the benefit and privilege of leading a national organisation and that therefore his opinion was not relevant. I think that it is slightly cheeky to suggest that Dr Meldrum’s opinion is different from the BMA’s.

Owen Smith (Labour, Pontypridd)

I do not think that it is cheeky in any way, shape or form. I was merely pointing out that there was a difference of opinion, on the very day when we spoke to Dr Meldrum, between the expressed views of the delegates to the conference in lovely Cardiff and the opinion expressed by Dr Meldrum. More importantly, I am sure that once we have looked through the smoke and past the mirrors put up by this set of changes and these twiddles with the words—the gobbledegook that has been introduced both by the evidence that we heard from the Secretary of State and in the Bill through the amendments—I will be able to show that Monitor’s core responsibilities and core role are unchanged.

John Pugh (Liberal Democrat, Southport)

I certainly accept what the hon. Gentleman has said—there was a difference of opinion between Hamish Meldrum and the delegates. They had a slight variation of opinion, but who does the hon. Gentleman think had a longer time to survey what the Government had changed?

Owen Smith (Labour, Pontypridd)

I think that they both had precisely the same amount of time. As far as I am aware, the amendments to the Bill were not shared with Dr Meldrum before their publication, so he had as much time as anyone else to read them on the web once the Department of Health published them—unless the hon. Gentleman knows something that I do not and Dr Meldrum had advance sight of the amendments, to try to warm him up to them.

Of course, the key point is that Government Members do not really think that the Bill has been changed. In fact, I am sure that they have been privately assured that the Government’s core intention to introduce a more competitive market into the NHS remains. They want to see competition in the NHS because they believe that such competition will deliver a more efficient allocation of resources, drive economies and incentivise innovation. They believe that about markets across the piece and they believe that it can be applied in the NHS just as it can to

“the butcher, the brewer or the baker”.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. The hon. Gentleman does not have to give me the reference.

Owen Smith (Labour, Pontypridd)

Indeed. You, Mr Hood, know your Adam Smith, but perhaps the Liberals on the Front Bench do not. I am sure that the Tories will be working on them; the Minister probably has an Adam Smith primer sitting on his desk somewhere to bring him up to speed.

People do not have to take my word for it that the intention is unchanged. All we have to go on is what the Government have written down themselves. The impact assessment, in the section that deals with the establishment of Monitor, which relates specifically to clause 55, talks about what is wrong in the NHS as the Government see it and why change needs to be introduced. It asks at the beginning:

“What is the problem under consideration?”

It says that there is a need for

“a change to regulation to promote competition”.

That is on page 33 of the impact assessment. It goes on to say:

“There is very clear evidence from across services and countries that competition produces superior outcomes to centralised management and monopoly provision. Competition is more effective where markets are highly contestable and contestability requires that organisations are able to expand/enter the market and contract/exit particular markets in response to consumer preferences…Competition in health services would be a more effective lever for efficiency improvement if it were easier for good providers to expand their offer and enter new markets, forcing out inferior providers”—

hospitals, I presume, or other bits of the NHS. It says that we would end up with a better health service.

So what is the answer? The answer is given as

“Liberalisation of providers, an independent regulator, new rules and regulatory framework”.

That new regulatory system will

“better enable providers to respond to patient demand”

and allow

“good provision to force out poor provision.”

Simon Burns (Conservative, Chelmsford)

Can the hon. Gentleman explain how that differs from what the former leader of his party, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), said to the Liaison Committee only three years ago? He said:

“We have been asking in people from the private sector to review what we can do to give them a better chance to compete for contracts...so the independent sector increases its role, will continue to increase its role and, in a wider and broader range of areas, will have a bigger role in the years to come”.

Owen Smith (Labour, Pontypridd)

That statement was made—[ Interruption. ]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. I do not want to be jumping up and down to bring hon. Members to order in this sitting.

Owen Smith (Labour, Pontypridd)

Thank you, Mr Hood. The fundamental difference, of course, is that when the Labour Government were in office, we did not turn our face to competition overall. We introduced some competition, but within a regulated framework and prescribed parameters, and with specific targets for treating specific problems—usually elective care, and usually to reduce waiting times. What was the net impact of our changes at the end of our 13 years in government? Less than 5% of NHS services were delivered, paid for or dealt with by the private sector.

Simon Burns (Conservative, Chelmsford)

How is that relevant?

Owen Smith (Labour, Pontypridd)

It is relevant because we are not talking about competition alongside co-operation, in specific circumstances, tightly regulated and closely prescribed without subjecting the NHS to the full force of the market and the competition law pertaining at EU and UK level. The result of our changes was that just 5% of the NHS was affected. There is a radical difference between that and wholly opening up the market to a complete free-for-all and allowing free market provisions to apply.

Mr Burns indicated dissent.

Owen Smith (Labour, Pontypridd)

The Minister shakes his head, but am I alone in understanding the language of the impact assessment to be entirely in keeping with the sort of evidence that we heard from the Office of Fair Trading?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The hon. Gentleman is probably alone in his understanding of the impact assessment. As he knows, there is a new one to come, which will reflect the changes that the Government are making to the Bill.

Owen Smith (Labour, Pontypridd)

That is extremely interesting. I presume that the Minister will say that the Government have changed their mind completely about competition being the principal reason for driving efficiency in the NHS, which is detailed in hundreds of pages in the Bill and the impact assessment. Has he thrown all that out for integration of competition?

Grahame Morris (Labour, Easington)

I am grateful for the opportunity to make a point specifically on the clause. The impression has been given that the Government have somehow made a U-turn—but it is a feint, and my contention is borne out in evidence to the Bill Committee by Dr Meldrum. When asked about the role of Monitor, he said that

“there is still a concern that although there has been some improvement, the issues have not been totally addressed. Some of the comments that have been made by Ministers”—

that is, Ministers in the current Government, not in the Government three years ago—

“to the private sector for example, reassuring them that there is not too much change, have not helped with that.”––[Official Report, Health and Social Care (Re-committed) Bill Public Bill Committee, 28 June 2011; c. 53, Q124.]

Owen Smith (Labour, Pontypridd)

My hon. Friend is absolutely right, and that is reflective of the smoke and mirrors that I intend to blow past today.

Daniel Poulter (Conservative, Central Suffolk and North Ipswich)

A moment ago, the hon. Gentleman referred to 5% of care provision coming from the private sector, but that is a misleading statistic in many respects. I am not accusing him of misleading the House in any way, but that 5% refers to the whole NHS, and the proportion was much higher in secondary care. The hon. Gentleman’s Government were prepared to pay 11% more for private providers, and allowed those private providers to cherry-pick services. Does he agree with that?

Owen Smith (Labour, Pontypridd)

I challenge the hon. Gentleman to present to the Committee his evidence showing that the proportion was higher than 5%. The figure that I cited comes not from our side, but from David Bennett, chair of Monitor, who said in his lecture to Cass business school on 11 May that there is currently less than 5% of the NHS being delivered through the private sector. Those are his words, not mine, and he is the bloke who is in charge of Monitor.

Nick de Bois (Conservative, Enfield North)

I thank the hon. Gentleman for giving way. He is being generous with his time, and I welcome what I think is his first presentation from the Opposition Front Bench. I draw the Committee’s attention to my register of interests, which shows that I have built exhibition stands for some members of the industry.

I am confused. I am not sure whether the hon. Gentleman is arguing for or against a principle. He seems to be saying, “Some’s okay—5%’s okay.” Would 10%, 15% or 20% be okay? It seems a weak argument to say, “We’re not really sure, but 5%’ll do.”

Owen Smith (Labour, Pontypridd)

It is not confused or weak in any way, shape or form; it is very specific. I am saying that the Labour Government agreed that introducing some measure of competition was worth while in certain areas of the NHS, to deal with capacity issues, particularly in respect of elective surgical procedures. However, it was always tightly prescribed and carefully regulated, and we certainly never contemplated applying the Competition Act 1998 to the NHS to facilitate the opening-up of the market and the entry and exit of providers—that is, the closure of public services and the opening of private or other public services. We never considered any of those things, and we ended up with just less than 5%.

Dan Byles (Conservative, North Warwickshire)

Will the hon. Gentleman give way?

Owen Smith (Labour, Pontypridd)

I will make some progress, if I may.

Dan Byles (Conservative, North Warwickshire)

Oh, go on.

Owen Smith (Labour, Pontypridd)

I have been generous.

I want to return to what the Minister, the hon. Member for Sutton and Cheam, said a moment ago. I cannot wait to see this fabled impact assessment, which will, effectively, show us the new form of the Bill. It will set out the heart of the Bill; it will set out not just new facts and figures, but fundamental changes. Will we get a paragraph that fundamentally disagrees with paragraph B106 of the previous impact assessment, which specifically said that Monitor’s job was to

“promote competition and address the structural barriers to effective competition”?

To that end,

“it is proposed that the independent regulator will become the sole body responsible for…competition in the health sector”.

That is interesting, given that we have now heard about the Co-operation and Competition Panel’s powers to enforce key aspects of competition law, which will be concurrent with those of the Office of Fair Trading.

The principal point that I am making is that Monitor’s powers have not changed one jot. It has not been given new powers to enable integration. Its powers to promote competition have not changed one iota. Therefore, its core—what it is able and intended to do—is unchanged. We look forward to hearing from the Minister precisely how it has not changed.

Far more helpful than the impact assessment, and indeed Ministers, who have been noticeably unhelpful in clarifying their real intentions—it is unclear whether they have performed a U-turn, as my hon. Friend the Member for Easington said, or whether things have changed—has been Mr Bennett, Monitor’s chair-designate. Before, during and after the pause, he has been very explicit—slightly contradictory, but very explicit—about what he thinks.

Mr Bennett previously worked in energy and other areas as an adviser to industry for McKinsey. In February, he told The Times newspaper:

“We, in the UK, have done this in other sectors before. We did it in gas, we did it in power, we did it in telecoms…We’ve done it in rail, we’ve done it in water, so there’s actually 20 years of experience in taking monopolistic, monolithic markets”—

the NHS, I presume—

“and providers and exposing them to economic regulation.”

Dismissing suggestions that the NHS might not be exactly analogous to E.ON or ScottishPower, he went on to say:

“It is too easy to say, ‘How can you compare buying electricity with buying healthcare services?...I would say…there are important similarities and that’s what convinces me that choice and competition will work in the NHS as it did in…other sectors.”

At the time, I thought that was pretty revealing and that it cut through some of the obfuscation and spin coming from the Government.

During the pause, Mr Bennett went on to change his view; in fact, at one level, he seems to have undergone something of a damascene conversion. In the lecture to the Cass business school on 11 May, which I mentioned earlier, he said:

“much has been made about the extent to which regulation of healthcare can or should be based on the regulation of the utilities sector.”

Indeed, much had been made of that—by Mr Bennett, only a couple of weeks previously. I do not think that anybody else raised the issue before, other than a bit in our consideration of the Bill. However, Mr Bennett went on:

“To be very clear, healthcare is not the same as utilities.”

Right. Okay. We were pleased that he had spotted that health care was not like the utilities; we were quite chuffed about that, because that is what we had been saying. We did not think that we had been getting through, but clearly we had.

However, things got even better. Mr Bennett went on to say that Monitor would

“seek to achieve a healthy combination of competition and collaboration through the approach we take.”

At that point, I thought, “Well, this bloke’s been converted. He worked for Tony Blair. Perhaps he’s finally understood what we were trying to do with a bit of competition, but mainly allowing the NHS to collaborate and integrate.” I thought this was good stuff. We thought that competition can play a role and deliver results for patients, such as through ISTCs dealing with hips or cataracts, but only if it is properly regulated, with clinical targets strategically planned across services, strategically planned regionally, and strategically planned by Government, as opposed to the free-for-all that will open up when there is greater autonomy combined with a free market.

We thought we were getting through to Monitor and that Dr Bennett was really starting to listen to us. Then, when we read the report from the Future Forum, we were almost ecstatic because its key recommendation was to remove Monitor’s primary duty to “promote competition” and instead change it to “protect and promote” the interests of patients. At that point, I was delighted. I thought, “We’ve really struck home. They have listened to us.” We were thrilled. The Secretary of State said that he would do what the Future Forum wanted and strike out promoting competition as an end in itself—that was absolutely fine. We were thrilled. Imagine our disappointment when we saw the weasel words and the gobbledegook in the amendments.

Fiona O'Donnell (Labour, East Lothian)

I am sorry to interrupt my hon. Friend’s emotional rollercoaster, but I want to refer back to the evidence Professor Field gave to this Committee. When I asked him to give us examples of how the change in words would make a difference, he was unable to give a single example.

Owen Smith (Labour, Pontypridd)

With good reason—I presume that he had had sight of the Government’s proposed amendments. Clearly, they have not honoured precisely what I think they wanted. They have removed the words and twiddled with the language, but in essence the powers remain unchanged.

To illustrate that, I turn again to the evidence we received on the same day as we heard from Professor Field from Dr David Bennett, the man in charge of Monitor. When asked whether the powers conferred on him, concurrent with those granted to the OFT, had changed, he said they had not changed and that

“the proposals in the revisions are the same as they were originally.”

To clear myself of the charge of quoting selectively, which I am sure will be levelled at me, I will read out a bit more of his evidence. Dr Bennett continued:

“What has changed is that in addition to the Competition Act there are the sector-specific regimes.”

I think what he meant by that was the utilities regulators, such as Ofgem, Ofcom and perhaps the Co-operation and Competition Panel. He went on:

“There is one today, the principles and rules for co-operation and competition, as looked at by the Co-operation and Competition Panel. The proposal is that they continue to form the foundation of the new sector regime. The original intention was that there would be a sector regime”—

which gives the lie to the Government’s apparent suggestion that they were going to have an economic regulator and now they have a sector regulator; they were always one and the same, with no difference between them—

“and this makes it clearer that it is a continuation of the current regime.”

This is interesting stuff. Dr Bennett added

“But in the application of that regime now, we will be subject to tougher requirements in terms of burden of proof, for example, when we think that it might be appropriate to introduce further competition. Those are the changes, but the concurrency with the Competition Act remains as it was.”––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 28 June 2011; Q. 77.]

We heard, out of the mouth of the man in charge, that Monitor’s powers on competition would remain wholly unchanged by the amendment—I repeat, wholly unchanged.

Margot James (Conservative, Stourbridge)

I cannot understand where the hon. Gentleman is taking us with this damning indictment. The independent organisation that the hon. Members for Leicester West and for Islington South and Finsbury are fond of quoting, the King’s Fund, state in its written evidence to this Committee on the amendments to the Bill:

“We have consistently argued that competition should not be an end in itself, so we welcome the amendments to remove the duty on Monitor to promote competition and focus its primary duty on protecting and promoting patients’ interests.”

The fund goes on to make a number of more detailed supportive comments.

Owen Smith (Labour, Pontypridd)

Indeed it does, and although I hate to tell Chris Ham and others at the King’s Fund this, the wool has been pulled over their eyes. I am bold enough to say that at that point Chris Ham had breathed in a bit of the smoke and perhaps was not looking too clearly.

Let me be clear: what he was talking about there was the change in the wording to say that Monitor would no longer be promoting competition, but on the powers—Monitor’s ability to promote competition or inhibit anti-competitive practices, which is the other side of the same coin—there is not a scintilla of difference between them. Apart from the explanation that the Secretary of State gave us, which is yet more gobbledegook, there is no fundamental difference, and I suspect that the King’s Fund would now concede that Monitor’s core powers remain unchanged.

Simon Burns (Conservative, Chelmsford)

The hon. Gentleman seems to be slightly going around in circles. It comes as a tremendous surprise to my hon. Friends that he should now be extolling, in certain circumstances, the virtues of competition in the NHS; during the whole of the previous Committee session, he was trying to make the case that there was no competition before we came to power and that Labour did not agree with it. He also seemed to say—[Interruption.] The hon. Member for Islington South and Finsbury was not here when you made your ruling, Mr Hood.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. Let me remind the Minister that this is an intervention and he should be brief.

Simon Burns (Conservative, Chelmsford)

It is nice to see the way this is playing out. The hon. Gentleman said that the previous Labour Government did not consider applying the Competition Act to the NHS. I have to say to him that it was the previous Labour Government who introduced the Competition Act to the NHS.

Owen Smith (Labour, Pontypridd)

I will respond directly to that point. What the Minister says is fundamentally untrue—the Competition Act was not created to be applied to the NHS. The Government allege that the Act always might have applied to the NHS. We contest that legal definition of the extent to which the Competition Act has applied hitherto to the NHS.

The reality is that the British state has always been able to defend the NHS as largely a state-provided service without a real market or multiple providers, so it has not fallen within the remit of the Competition Act. That is our interpretation. We believe that it has been misleading of the Government to suggest, on repeated occasions, that the Competition Act always applied to the NHS. If the Minister can point to a single instance of a challenge to the NHS under the Competition Act during our 13 years in government, I would be impressed—because there was not one.

Daniel Poulter (Conservative, Central Suffolk and North Ipswich)

I am struggling to reconcile that with some of the other points that we have heard. We had a good debate in the Room next door with Professor Corrigan, who was Tony Blair’s special adviser on health. He said that we had to introduce competition to help drive down the waiting lists, which the hon. Gentleman was so concerned about the other day. Can he reconcile his position with that?

Owen Smith (Labour, Pontypridd)

I presume that the hon. Gentleman has been listening. Earlier on, I said that competition was introduced within prescribed areas, with targets, regional planning and a strategy, in order to tackle, in particular, waiting times for important elective surgery, such as hips and cataracts and other conditions where the Independent Sector Treatment Centre operates. There is a league of difference between that and what is proposed here.

Emily Thornberry (Labour, Islington South and Finsbury)

Let me remind hon. Members that we have asked the Government to disclose their legal advice in relation to competition. Indeed, when we attempted to call a lawyer with expertise on competition law as a witness, Government Members objected.

Owen Smith (Labour, Pontypridd)

I entirely agree.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

The point is that the NHS was subject to the Competition Act, as are all services in the UK. However, as the Minister should know, the NHS is covered under category B services in the European competition rules and is therefore exempt from the Act’s full requirements. The notion that the NHS was already subject to the Competition Act in the same way that this Bill is writing it in—forcing the NHS to be a player in the market rather than the market itself—is wholly untrue.

Owen Smith (Labour, Pontypridd)

Again, I entirely agree. As my hon. Friend has clearly pointed out, this area is contested. It is not a settled, legal view that competition law has always applied to the NHS. In fact, a significant body of legal opinion says that that is not the case because of the nature of the services provided. The extent to which there is state provision, with few entrants into the market, affords the Government the ability to argue that it is not a real market and therefore should not be subject to competition law. That has been the basis on which the NHS has defended itself when it has been challenged previously.

That will change because competition will be written into the script. The language has changed a little, but the powers in respect of competition remain unchanged. The other thing that we heard from Mr Bennett is that the burden of proof requiring Monitor to demonstrate where it should apply competition has apparently been increased. I shall come back to that in a moment.

A further thing that has changed with Monitor is the application of a contradictory and far weaker duty to enable health care services, which we will come on to in the debate under clause 56. At the moment, I do not think that that is entirely reconcilable or, more importantly, that it is of equal weight. The desire to prevent anti-competitive behaviour, with specific powers attached, and to enable integration where it is in patients’ interests implies that integration is often not in patients’ interests. I presume that we are talking about vertical integration or cartel behaviour, as it would probably be called in other legislation. There is a big difference between powers specifically designed to prevent and the desire to enable without any powers.

First, what about the change in language? In essence, the duty to promote competition has been taken out and replaced with a duty to prevent anti-competitive behaviour. That is described elsewhere in the Bill as behaviour that would

“prevent, restrict or distort competition”.

When I read that I thought, “This sounds very familiar to me.” I have worked with the Office of Fair Trading in the past, in industry and business, on market studies—and, indeed, in the health care sector. I turned to the Competition Act 1998 to look for the words

“prevent, restrict or distort competition”.

I did not have to go very far; in fact, I got to part I, section 2. Section 1 is simply entitled “Enactments replaced.” The title of the first principal section has the words:

“preventing, restricting or distorting competition”.

I thought, “My gosh that’s very familiar. That’s precisely what the Government have described as anti-competitive behaviour.” Section 2 goes on to describe such behaviour as being to

“directly or indirectly fix purchase or selling prices or any other trading conditions”.

Well, the NHS currently does that; it fixes prices in the tariff and fixes trading conditions through contracts. That is standard practice in the NHS between hospitals and doctors. The description goes on:

“limit or control production, markets, technical development or investment”.

Well, the NHS clearly does that lots. It limits and controls how many doctors it will need and precisely which services it will offer. That will clearly be subject to challenge. The Act mentions something else:

“share markets or sources of supply”.

I suggest that it is absolutely vital in the NHS to share markets and sources of supply. Apparently, that will potentially be ruled out when competition law applies. The Act gives a further definition:

“apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage”.

That might, for example, involve someone working with a local GP consortium and deciding that they are going to give the business for their cataract operations to the local hospital, as they have always done. In future, of course, that will be a problem because in deciding to go to their local hospital, someone is disapplying the ability of other providers elsewhere in the country, which they have never treated with previously, to apply. The Act also states:

“make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”

Again, that is a clear example of where the NHS does draw up contracts and does not get all the potential providers available in the country—the market, in other words—to tender and submit bids. It does not do that, and it would be hugely unwieldy if it did. The likely result would be that it might be undercut and have to “exit the market”, to use the language of the Bill.

Dan Byles (Conservative, North Warwickshire)

I thank the hon. Gentleman for giving way, and I welcome him to his position; I believe it is the first time he has spoken from the Front Bench.

Owen Smith (Labour, Pontypridd)

In this Bill.

Dan Byles (Conservative, North Warwickshire)

It is a pleasure.

I have two points. The hon. Gentleman clearly misunderstands things, even as he reads them out. His suggestion that a contract with doctors and nurses from a hospital or the use of preferred supplier lists are somehow uncompetitive demonstrates that he does not understand the words he reads from the document.

Both the King’s Fund and Monitor, when talking about the current situation, made it clear that there is no change in how European competition law or the Competition Act applies across the UK. Having Monitor as a sector-specific regulator protects the NHS, because there is a sector-specific regulator that understands the subtleties—

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. Owen Smith.

Owen Smith (Labour, Pontypridd)

There are two points that I would like to address. Clearly, the hon. Gentleman is drinking his Front-Bench Kool-Aid on the issue of whether things have changed. That is an Americanism; forgive me.

He gets two points fundamentally wrong. One is that, of course, Monitor was always going to be a sector-specific regulator. We keep hearing, “It is all right now. It is a sector-specific regulator.” As far as I was aware, it was not going to regulate gas or white goods in its spare time—it was always largely going to be looking at health care and the NHS.

As to the notion of a new sector-specific regulator that will know about health care, I would have been worried if it had not known about health care. I am still worried that essentially it involves a bunch of accountants who do not know about health care. Now it is meant to judge quality in the NHS and determine, on the basis of medical, clinical decisions, whether competition or integration are appropriate. That worries me.

My second point is that we cannot be certain that those things I read out will not apply in the NHS. We cannot be certain, because they have not been applied hitherto. I will again quote David Bennett. If the hon. Member for North Warwickshire listens for a moment, he will hear that even the man in charge of Monitor does not know whether competition law is going to bite harder in future. [Interruption.] He does, does he?

Dan Byles (Conservative, North Warwickshire)

That is not what I said.

Owen Smith (Labour, Pontypridd)

It will be interesting if David Bennett does, because he told us only a week last Tuesday, when some hon. Members were clearly not listening:

“If you were fearful that the Competition Act might be applied in an undesirable way to the health sector—we do not really know the extent to which it is applicable because it has not been tested; in the way these things work, until you have had cases in the courts to determine exactly what applies where, you cannot be sure.”––[Official Report, Health and Social Care (Re-Committed) Public Bill Committee, 28 June 2011; c. 35, Q79.]

The fact that there is a sector regulator means that it will all be okay, he went on to say.

Dan Byles (Conservative, North Warwickshire)

Can I come back on that?

Owen Smith (Labour, Pontypridd)

I do not need the hon. Gentleman to come back. David Bennett, damned out of his own mouth, said that we do not know how competition law is going to apply—[Interruption.]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order.

Simon Burns (Conservative, Chelmsford)

Calm down, dear.

Owen Smith (Labour, Pontypridd)

I am perfectly calm—merely enjoying myself, Minister.

Grahame Morris (Labour, Easington)

On competition policy, there is a point that arises in a later clause but is relevant to our current discussion. Given the reference to regular reviews by the Competition Commission, which will report back to the Minister, it seems that the health service is going to be subject to more reviews by the Competition Commission than the BSkyB bid.

Owen Smith (Labour, Pontypridd)

That is almost as funny as the Government’s squirming over that issue, but there we go.

Because the language had changed a bit, we wanted to know what the Secretary of State thought about that and Monitor now. On the same day as the Committee heard David Bennett say he did not have a clue how competition was going to apply in future, because it had not yet been tested in the courts, I asked the Secretary of State what he thought the change of language on Monitor’s duties meant, as language is very important. Before agreeing that

“language is very important”,

he said:

“The shift for Monitor is to continue to exercise the extent of competition law within the NHS but, as we have made clear, to do it through the Co-operation and Competition Panel”—

that was new; we had not heard that it would work through the Co-operation and Competition Panel—

“that was previously established using the same principles and rules.”

I thought that was quite interesting and new. We thought the Co-operation and Competition Panel would be scrapped—once there is a sector regulator in charge of competition, why would the Co-operation and Competition Panel be needed? I shall return to that in a minute.

The Secretary of State added:

“We are talking about shifting from an ex ante intervention to one that is, as it were, an ex post examination of where there might be clear evidence of damage to patients interests.”––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 28 June 2011; c. 90, Q185.]

That struck a chord with me, because having worked with the OFT, I know that it is very fond of the phrases, “ex post” and “ex ante”; in fact, they are used in most of its documentation to describe whether it intervenes through a market study, for example, to assess whether there is anti-competitive practice in a market, which is of course ex ante, or it investigates whether there is collusion, cartels or anti-competitive mergers, which is ex post. It is very interesting that Monitor, which we assumed would investigate ex ante—through market studies—will now only look ex post, and do so through something called “the Co-operation and Competition Panel”.

That raises several important questions. First, why do we need Monitor at all? If we have principles, rules and regulations called “the co-operation and competition regulations” operating already and Monitor is to operate through them, what do we need Monitor for? It does not make any sense at all. Secondly, how will it operate through the Co-operation and Competition Panel and what are the associated costs?

I looked up the Co-operation and Competition Panel because, I confess, I did not know much about it. It is a very interesting organisation. As far as I can tell, it has about 10 or 15 executive members—the great and the good of health care—and about 20 staff. Strangely, it did not produce a business plan for 2010-11. I do not know whether that was because it assumed that it would be done in once Monitor came into existence, but I would say it is a fair bet that that was the reason. Its business plan for 2009-10 clearly shows that it costs just £2.8 million, as opposed to £130 million a year—or £500 million, I do not know. The other thing we do not know, because we have not seen the impact assessment, is how by much the costs of Monitor will increase now that it needs, as David Bennett told us the other day, a whole bunch of new people that we do not have yet—that is, clinicians—to advise whether competition can be applied, or integration ought to be applied, because of the effect on the quality of patient care?

Kevin Barron (Labour, Rother Valley)

My hon. Friend’s is right on the mark in terms of what the recommitted Bill should and should not do. Earlier this week, we were given evidence from the Nuffield Trust that

“The Government’s Response to the NHS Future Forum Report also undertook to incorporate the existing Co-operation and Competition Panel into Monitor, giving them a ‘statutory underpinning’ in the process. It should be noted that this commitment is not immediately apparent in the re-committed Bill.”

Why that statutory underpinning of the Co-operation and Competition Panel is not apparent is the question that, hopefully, the Minister will answer at some stage in the debate.

Owen Smith (Labour, Pontypridd)

I was going to make that point myself, but I could not have made it anywhere near as well or as eloquently as my right hon. Friend, with his significant experience of legislating on health care.

We do not know why we need the Co-operation and Competition Panel employing a handful of people at a cost of £2.8 million, but apparently it is being kept on so that it can be worked through—to use the Secretary of State’s phrase—by the £150-million Monitor. That prompts the question: when was it decided that the Co-operation and Competition Panel would be retained? Has that been factored in? No reference has been made to it in the impact assessment. When was it decided that that additional cost would be placed on the public purse? Several of the Co-operation and Competition Panel’s documents make it clear that it expected to cease to operate in 2012, when the new competition regime was applied.

I want to know what the Health Secretary meant when he said that the principles and rules for co-operation and competition would be operated, so I looked them up. Interestingly, the introduction to the rules states that they

“have been reviewed to ensure they are consistent with the White Paper: Equity and Excellence: Liberating the NHS”.

That is a change from the rules that were set up by the Labour Government. The question is which set of rules will apply: the old rules or the new ones? If it is the new rules, will principle 7 apply? I would be grateful if the Minister would tell us, because the NHS will be operating under these rules. Principle 7 is about the conduct of individual organisations, and it states:

“Providers must not refuse to accept services or to supply essential services to commissioners where this restricts commissioner or patient choice against patients’ and taxpayers’ interests.”

The interesting thing is that that principle does not currently apply in the NHS, as specified in the explanatory note on principle 7, which states:

“In certain circumstances, individual providers may have the ability to restrict choice or competition by refusing to use services supplied by others or refusing to supply essential services to others. For example, an established provider with a powerful position in a local market might be able to prevent commissioners from transforming services and introducing new providers by refusing to supply essential services such as hospital consultants to them… While this type of co-operation is essential”—

blah blah blah—

“further work is needed before Principle 7 can be applied to the NHS. Principle 7 is therefore included as guidance only and will not be applied from October 2010”.

The principles under which the regulator will apparently be operating through do not apply the type of competition that is specified in the Bill. It cannot operate precisely through these principles; they will have to be re-amended if they are to be the spear through which Monitor will operate in future. I would be grateful if the Minister cleared that up for us.

Crucially, this all shows that the Government are making it up as they go along. They are like Wallace and Gromit laying the track as the train runs down it; they really do not know what they are doing.

Kevin Barron (Labour, Rother Valley)

Which one is which?

Owen Smith (Labour, Pontypridd)

I hesitate to say. It is quite hard to tell. I think Wallace is in charge.

This also demonstrates that the amendments to Monitor are merely a smokescreen. The Government are tacking things on, patching things up, throwing new mud in our eyes and trying to obscure the fact that the powers are unchanged.

Nick de Bois (Conservative, Enfield North)

I am grateful to the hon. Gentleman for his time. I know that he is trying to throw up smoke and mirrors, but would it not have a little more authenticity if the author of the Future Forum report, having no doubt read many of the amendments by now, had come out and backed his cause? That is clearly not the case.

Owen Smith (Labour, Pontypridd)

That individual’s job is done. He has presented his findings to Government, and he is probably disappointed that not all of them have been taken up. He ought to be disappointed about the fact that the Government have not taken on the crucial recommendation 16, which relates to a role for HealthWatch—something that we were meant to discuss the other evening—in overseeing conflicts of interest in the NHS. The Government have drifted away from that one.

Fiona O'Donnell (Labour, East Lothian)

There is another area on which the Government have yet respond. Professor Field acknowledged in his evidence that he had not made a recommendation on the cap on private patients in foundation trusts, where competition and privatisation could run riot to the detriment of NHS patients. Will there be an amendment on that?

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. Hon. Members should stick to clause stand part.

Owen Smith (Labour, Pontypridd)

I am grateful to you for that advice, Mr Hood.

Sticking to clause stand part and the Secretary of State’s explanation of the meaning of the changes relating to Monitor, I return to the cryptic gobbledegook about its work being ex post as opposed to ex ante. That struck me as significant and peculiar. We had understood from what we heard from Ministers and David Bennett that Monitor would range over the NHS and proactively look at where it thought there were problems and issues. David Bennett said, for example:

“We might look across the whole country and say, ‘There’s something odd here; all diabetes care is being provided by the local incumbent hospital’.”

Gosh, would not that be odd, if the local hospital were providing diabetes care? It would be truly terrible. I would be really worried if the hospital “or whoever”, as Mr Bennett put it, were providing diabetes care. He went on:

“yet it’s not at all obvious to us why this isn’t a more competitive market”—

why there are not, say, diabetes specialist clinics run by Assura Medical, which operates widely in the constituency of the Minister of State, the hon. Member for Sutton and Cheam, and why other players are not entering the market. I thought, when I read that, that the Government had clearly changed their view. Monitor will not be doing that any more, but will simply be looking, ex post, at what has happened. It will not be ranging over things, looking at the market and worrying about whether there should be more providers.

I assume, therefore, that in the revised impact assessment that Ministers keep telling us to watch out for—we are waiting with bated breath—paragraph B107 will be amended to cut out the fifth bullet point, which states that the fourth, I think, principal duty of Monitor is to

“Carry out market studies to investigate markets where competition is not functioning properly. It will have power to refer malfunctioning markets”—

such as those in which the incumbent hospital delivers the diabetes care to patients in the area—

“for investigation (for all publicly and privately funded healthcare and adult social care)”.

Fiona O'Donnell (Labour, East Lothian)

Does my hon. Friend think that sounds more like promoting competition or preventing anti-competition?

Owen Smith (Labour, Pontypridd)

I think I have made my view extremely clear: I do not think I could get a fag paper between the meaning of promoting competition and preventing, restricting or distorting anti-competitive behaviour. They are one and the same and the Government have been blowing smoke again, suggesting that there is a fundamental change. The reality is that the powers are unchanged, and so is the extent to which competition will run riot.

In conclusion—

Simon Burns (Conservative, Chelmsford)

Oh dear.

Owen Smith (Labour, Pontypridd)

I know, you were enjoying it, weren’t you?

Jimmy Hood (Labour, Lanark and Hamilton East)

Yes, I am enjoying it, but I ask the hon. Gentleman to carry on with his remarks.

Owen Smith (Labour, Pontypridd)

Apologies, Mr Hood. I am grateful to hear that you are enjoying it, though. I confess that I am, too.

The reason we are so worried is that, going by what David Bennett says, we just do not know the extent to which competition might be applied in the NHS, because it has not been tested yet in the courts. We do not know whether there is going to be wholesale, free market, let-it-rip competition. As we speak, Hanover Healthcare, which provides private mental health services, is challenging an NHS hospital through the Co-operation and Competition Panel by suggesting that it is effectively being frozen out of the local market by not being allowed to tender or bid for business.

Our fundamental concern is that the Co-operation and Competition Panel is not a statutory body. It does not have powers to intervene in the market and it is not enabled, through the Competition Act 1998 and the monopolies and mergers legislation, to intervene in the marketplace. The Co-operation and Competition Panel is a radically, fundamentally different body that provides advice to the Secretary of State, who is ultimately responsible for determining whether there ought to be more competition and whether there have been anti-competitive or cartel behaviours, or integration that is against the interests of patients. That determination will pass from the Secretary of State to an arm’s-length quango operating under legislation, like the Office of Fair Trading, and under a duty to afford a level playing field to public and private providers in the NHS.

The other key question is where does all that end up? How will the NHS look in 10 or 20 years’ time once the floodgates have been opened and the market has been allowed effectively to set prices and to determine which services should be introduced? Can we be sanguine that there will not be wholesale private entry into the market and that there will not be price competition? The Bill is not clear on that and, crucially, David Bennett, the bloke who will be in charge of the body, is not clear on that. Or, rather, he is clear that price competition ultimately, at some point down the line, is a good idea. To quote him again, he said that

“in the early stages, competition will be on quality not on price… in a world where we cannot easily measure quality, if you allow price competition there is a very real risk that quality will fall. And there is even evidence that happens. But you can see it being used for simpler procedures where you can measure quality well. It will be very limited at first, and it will appear only slowly… I would not want to see price competition ruled out… price competition is a way”

to drive

“productivity improvement.”

I will conclude with one final remark, which, again, is from David Bennett. Asked whether he worries that in future there will be “Tesco-style chains of hospitals” up and down the land, he said that it will be a matter for providers. He said that it will not happen quickly, but it might happen eventually. Effectively, once there are multiple providers in the marketplace, the law of supply and demand will apply. That is what Government Members want, because, as I said at the start, they believe that competition is always the most efficient means to deliver economies, drive innovation and achieve value for money, irrespective of the sector. They think it is true for telecoms and utilities, and they are right, but health care is fundamentally different. The NHS is fundamentally different, and creating Monitor using such economic forces, as Adam Smith understood in the case of the butcher, the brewer and the baker, will be wholly detrimental to the future of the NHS.

Jimmy Hood (Labour, Lanark and Hamilton East)

I have good news for the Committee. I inadvertently said at the beginning that today is the last day of the Bill, but I was a week early. I saw the Ministers panicking as they thought about all the speeches they have prepared for next week. Obviously, next Thursday morning I will announce, “Today is the last day.”

Kevin Barron (Labour, Rother Valley)

It is a pleasure to follow my hon. Friend the Member for Pontypridd, who excellently summarised one of the major conflicts remaining in the Bill, which, if it is not sorted out, will be a major problem both on Third Reading and in another place.

The hon. Member for Enfield North suggested to my hon. Friend that the author of the Future Forum’s response seems to be happy with the Bill as amended. I want to take Members back to last week’s evidence session, when I brought up something of an old chestnut in relation to the clause that says that mergers between NHS trusts and other bodies will be a matter for the Office of Fair Trading and the Competition Commission. I asked Professor Field:

“Really the question I should be posing to you is this: what is the difference, if any, between a sector regulator and an economic regulator? What does this mean?”

He replied:

“We had long discussions with people out there in the NHS, with Monitor, and with the people who wrote the original part of the Bill, and we discussed the issues of a sector regulator and how that sector regulator’s role should be just about health and not about a broad group of utilities.”

He went on to say that the wording suggested:

“It was about removing the initial promoting of competition. It was about inserting words about collaboration and choice. So we wanted to say that we felt Monitor should exist, but should not have promoting competition as its prime aim.”

I then asked him:

“So the Office of Fair Trading and the Competition Commission should have no role to play in terms of the merger of NHS trusts?”

He replied:

“That is a very good question.”

That is the same reply I got from the Minister when I asked him, in a previous sitting of the Committee, about the operation of clause 65, which remains unamended. I told Professor Field:

“I have asked it before in this Committee in a previous life and I still have not had an answer as to whether they should or should not.”

He replied that there had been discussions around that and I asked him:

“So should the OFT have a role in NHS trust mergers?”

He said:

“I personally believe that it should not and that the sector regulator should predominate”.––[Official Report, Health and Social Care (Re-Committed) Public Bill Committee, 28 June 2011; c. 12, Q17-19.]

I also put that question to the four witnesses from, effectively, the trade unions—Dr Meldrum and others. Replying to the question about the Office of Fair Trading and competition, and referring to the comments made by Mr Bennett in that morning;s evidence session, Dr Carter, from the Royal College of Nursing, said:

“I have not seen those comments but that concerns us.”

That was in relation to this provision staying in the Bill. Sir Richard Thompson replied to the same question:

“I understand that if there were mergers, it might be considered to be anti-competitive and that worries me.”

I mentioned clause 65 to Sir Neil Douglas. He said that he was, “Deeply concerned.” Dr Meldrum said:

“I never like to personalise things, but it is another comment from the head of Monitor that has not been exactly helpful in reassuring people that the real purpose behind Monitor has changed and that we are seeing a move much more to collaboration and appropriate choice, rather than focusing on competition as an end in itself and not just one of many means to an end.”––[Official Report, Health and Social Care (Re-Committed) Public Bill Committee, 28 June 2011; c. 52, Q117-119.]

Owen Smith (Labour, Pontypridd)

Will my right hon. Friend confirm my understanding that, at present, the body responsible for looking at mergers is the Co-operation and Competition Panel? That is why this question is vital and pertains wholly to the role of Monitor, because we understand that Monitor will be the relevant body in future, but with the same powers as the OFT, and that it will look at mergers.

Kevin Barron (Labour, Rother Valley)

That is exactly right. The evidence taken by the Future Forum—I have said it before, both in Committee and on the Floor of the House—was that the issue of introduction of competition, in this way and in these organisations, is beyond what has happened in the past. We have had managed competition—we accept that. There are 80 clauses in the Bill bringing in competition law, yet hon. Members on the Government Benches keep saying that there is no change from what happened under the previous Government, so why have we got these clauses in the Bill? [ Interruption. ]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. This is a Standing Committee, not a choir.

Kevin Barron (Labour, Rother Valley)

Let me return to clause 55. I intervened on my hon. Friend the Member for Pontypridd earlier on what the Nuffield Trust said in its memorandum to the Committee. Let me repeat that evidence:

“The Government’s Response to the NHS Future Forum Report also undertook to incorporate the existing Co-operation and Competition Panel into Monitor, giving them a ‘statutory underpinning’ in the process.”

That has not happened up to now, although I do not know whether there is an intention to do that at a later stage of the Bill, either on the Floor of the House or in another place. I assume that people outside, however, expect it to happen during proceedings on the re-committed Bill.

We took evidence from Monitor last Tuesday. Again, I brought up the issue of clause 65 and the Enterprise Act 2002, and the point about any mergers between NHS trusts or mergers with other businesses being referred to the Office of Fair Trading or the Competition Commission. Dr Bennett said:

“The NHS today is covered by competition rules in two fundamental ways. First, the UK Competition Act, which embodies EU competition law, applies across the whole of the UK economy.”

We have heard all that before, which I accept. That happens now regardless of any clauses in the Bill, as I understand it, which prompts the question: why are the clauses included? We have never really had an answer to that.

Dr Bennett continued:

“The second way in which there is already a competition regime in the NHS is through the principles and rules of co-operation and competition established by the previous Government. Those set out rules that determine, among other things, how competition should be applied in the health sector. The Co-operation and Competition Panel today looks at the application of those rules, hears complaints if people are concerned that they are not being followed, and will take a view. Today it advises either us, as the foundation trust regulator, or the Department of Health if it falls in its area, where it sees an infringement of the rules. Then we or the Department decide what to do about it. Those things are true today and, in principle, they do not change under the new proposals.”

There is still the issue of why the OFT and Monitor would play a part, as opposed to the Co-operation and Competition Panel, which has a role in this area.

I asked the second witness, Sonia Brown, whether she had a view on my question—you chaired this sitting, Mr Hood, if my memory serves me well. She said:

“On the mergers? The intention under the Bill is that foundation trusts will be subject to merger control by the Office of Fair Trading and, if necessary, by the Competition Commission. That is the idea that sits behind the Bill.”––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 28 June 2011; c. 37-38, Q84-85.]

That completely contradicts what the Nuffield Trust said about the Government’s response to the Future Forum, and that contradiction has been laid out in evidence by the people who would have statutory responsibility if clause 55 and the rest of the Bill are agreed.

Liz Kendall (Labour, Leicester West)

My right hon. Friend rightly points out that it would not be up to the Secretary of State or commissioners to decide whether hospitals merge; it would be up to the OFT and the Competition Commission. Is he aware of whether those bodies have any expertise whatever in health and health care?

Kevin Barron (Labour, Rother Valley)

I assumed that the Future Forum’s request to have a sector regulator that understands health, which has been granted, was fine. I think that the expectation, however, was that the Co-operation and Competition Panel would be statutorily underpinned and would be the body to look into such matters. As the Bill stands, clause 65 states that it is a matter for the OFT and the Competition Commission.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. I remind the right hon. Gentleman that the debate is on clause 55 stand part.

Kevin Barron (Labour, Rother Valley)

I have said nothing more than what my hon. Friend the Member for Pontypridd said. We are talking about a sector regulator, Monitor. The Minister might not like these concerns being put to him, as they were by the Future Forum’s members. It was suggested that competition, as the Bill originally sought to introduce it, would destabilise the NHS. That concern remains, because many of the clauses remain. Monitor needs to have what was offered to it; it was to have the power, and the Co-operation and Competition Panel was to have statutory underpinning, when the Bill came back into Committee. I do not believe that that is what has happened, and neither do people outside, witnesses included. I wait to see what the Minister has to say.

John Pugh (Liberal Democrat, Southport)

Perhaps I should not be drawn into this discussion, but the hon. Member for Pontypridd has prompted me to say things that I would prefer to have said later, when we dig down into the detail. He is a clever, amusing and articulate chap and, as has been said, he has treated us to an emotional rollercoaster, but he might have slightly misjudged the occasion. We are here to scrutinise legislation, and clear minds are probably a little better than emotional rollercoastering. That said, he has overused what I describe in most political debates as hyperbole. He said that the legislation had not changed one iota, and that there was no scintilla of difference. He has pleased his friends and cheered them up enormously on a grim Thursday morning, but he has not added a great deal to the character of the debate. When he reads his remarks in print tomorrow morning, he will find that he said in one place that we do not know whether there will be fully fledged competition, and in another that yes, there will be such competition. That is the problem with constructing a largely forensic argument.

Owen Smith (Labour, Pontypridd)

I enjoy the hon. Gentleman’s contributions, too, but with the greatest respect, I think that he is slightly misrepresenting what I said. I said that in respect of the powers granted in the Bill to Monitor, concurrent with those of the Office of Fair Trading, there is no change—not one jot or iota—and I fundamentally stand by that point.

John Pugh (Liberal Democrat, Southport)

I accept that the hon. Gentleman said that, but I just do not think that it is a plausible line to pursue. He is not supported by Monitor, Chris Ham, Hamish Meldrum—we could go on for some time. It must be a problem to him in constructing his argument that people who are obviously not stupid, motivated or political happen not to agree with him.

Owen Smith (Labour, Pontypridd)

Will the hon. Gentleman give way?

John Pugh (Liberal Democrat, Southport)

No, I will not give way at this point, because I want to press on. In a few minutes, I will read out the bit from Monitor that the hon. Gentleman did not mention and which does not help his cause, to prove that his argument is largely forensic, rather than a wholly plausible one that should satisfy him. He made the broad accusation that we want to see, on competition, references to Adam Smith. I do not believe that anyone actually reads Adam Smith. His is an extraordinarily boring book, a bit like “Das Kapital,” which was passed by the Prussian censors because no one could be bothered to read it. People quote from Adam Smith without having a real command of what he said.

Liz Kendall (Labour, Leicester West)

I have read him.

John Pugh (Liberal Democrat, Southport)

Someone has.

Emily Thornberry (Labour, Islington South and Finsbury)

I have read him, too.

John Pugh (Liberal Democrat, Southport)

I tried.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. This is a very interesting debate, but it is not helping us here.

John Pugh (Liberal Democrat, Southport)

I take it as highly plausible that the Bill is changed in at least two respects: competition is no longer placed as the main driver for improvement; and the phrase “promoting competition” is dropped. That might displease some Opposition Members, because they took steps when in government to encourage competition and therefore thought that it had some sort of basis. That is on record, and we will not go into that or say for the moment how that approach was different from the Government’s, but the hon. Member for Islington South and Finsbury, to whom I listen with almost as much attention as I do the hon. Member for Pontypridd, said in our first debate on these clause that KPMG established that with level-playing-field competition the NHS was cheaper, with its overall costs down by 14%. If someone is in favour of the public sector, they might see competition as having distinct advantages as long as, crucially, there is a level playing field.

Liz Kendall (Labour, Leicester West)

Can the hon. Gentleman explain why 85 clauses add competition to the Bill?

John Pugh (Liberal Democrat, Southport)

No. I was going to ask the hon. Lady to explain why everyone on the Opposition side of the Committee stood on a manifesto that explicitly gave patients the right to choose from any provider; they were all elected on that manifesto.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. I have generously tried to invite Members to keep better order. I hope I do not have to start naming Members for being unruly, but I will if we do not get better order.

John Pugh (Liberal Democrat, Southport)

I will be brief, because we have a great deal to talk about. I should like to deal with two specific points that will occur time and again in this debate, particularly if the hon. Member for Pontypridd prosecutes his case, as I assume he will. First, he tries to suggest that there is no difference between preventing competition and anti-competitive behaviour. In fact he made that suggestion to Dr Bennett, whom he quoted at some length, but the bit he did not quote was when Dr Bennett said that the change of wording

“significantly raises the burden of proof on us.”––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 28 June 2011; c. 32, Q68.]

Owen Smith (Labour, Pontypridd)

I did quote that.

John Pugh (Liberal Democrat, Southport)

I apologise to the hon. Gentleman. I did not hear those words, and I will scrutinise Hansard. Dr Bennett clearly sees a difference, and there is a conceptual difference. There is a distinction between allowing competition to occur and fostering it and between removing hindrances and making something happen.

Fiona O'Donnell (Labour, East Lothian)

The hon. Gentleman’s conceptual analysis and arguments are of interest, but as we have repeatedly requested, could he give us a practical example of something that could have happened before the amendment was brought forward?

John Pugh (Liberal Democrat, Southport)

I am not an expert in competition law, so I will not endeavour to do that at this stage; when we get to the clause, I am sure that the Minister will be more than capable of doing that.

I argue that there is a serious conceptual distinction here—so when the words are changed, the meaning is changed. Stamping out anti-competitive behaviour may be a necessary condition for having an unfettered competitive market, but it is not a sufficient condition. That applies in lots of other circumstances, when we talk about things other than competition. There is a huge difference between stopping conflict and promoting peace or stamping out gross aspects of racism and encouraging racial harmony. They are different.

Let me give an example of where the conceptual distinction works—when it is put into law and it makes a difference, or should make a difference, unless the law is much odder than I suppose. Socialism, for example, can be promoted, but many of those liberals and so on who went out to the Spanish civil war to stop the Falangists from exterminating people were not into promoting socialism at all; they were just stopping activity that was designed to stamp out socialism. So that is a real-time example of where this conceptual difference genuinely works.

Another matter that will come up time and again is EU competition law. The hon. Member for Pontypridd said on several occasions that there is gross uncertainty and that the Government are adding to it in some peculiar way. I have not done enough research on this, but I have a book from the Library on governance and health systems in Europe. It has an excellent section on EU competition law and public service. It is probably a definitive work, which I recommend to hon. Members. It makes a crucial point that affects all our deliberations:

“The treatment of health care by European competition law encapsulates more clearly than almost any other public service a key dilemma: to what extent are public services subject to the norms of competition law and the internal market…? As we shall see, neither the European courts nor the Commission has so far provided a completely clear set of answers to these questions”.

In other words, the legal environment at the very top is completely opaque, playing off laws about competition and various parts of legislation against other laws about solidarity.

Liz Kendall (Labour, Leicester West)

Would the hon. Gentleman agree that the point is that when we add 85 clauses on competition, have a policy of any willing provider and remove the private patient cap, that forces the issue? We are saying that this is a market. This has not been an issue before because it is clear that the NHS has been a social organisation, with social aims and objectives. The only reason why the Government have to set up Monitor to protect the NHS from competition law is that they are adding competition law to the Bill and turning the NHS into more of a market with their policies. Does the hon. Gentleman see that?

John Pugh (Liberal Democrat, Southport)

The hon. Lady is wise enough in such matters to know that the previous Government set up the Co-operation and Competition Panel, because they saw the exact problem of the framework of European law plus varied providers. [ Interruption. ] We can discuss the prevalence of one set of nouns over another, but the question is not how often nouns are used; it is for what purpose and to what effect they are used.

The Government have not published their advice, and that is perhaps a problem, but there are various precedents and legal and constitutional reasons as to why they may not. Even if they did, however, it would not make European law any less opaque than it currently is. I am totally convinced that if there is no sector regulator of some sort, whether it is the Co-operation and Competition Panel, Monitor or Monitor made in the shape or form of the Co-operation and Competition Panel, the situation is a whole lot worse.

Simon Burns (Conservative, Chelmsford)

I am stunned that no one else wants to speak, because I had seen other people standing; the eloquence of my hon. Friend the Member for Southport has obviously silenced them. We have had an interesting and particularly wide-ranging discussion. No doubt we will not have to debate the first group of amendments at such length, because we seem to have dealt with several issues within it. I will confine my remarks to clause 55.

Like most of my hon. Friends, I found the speech of the hon. Member for Pontypridd entertaining, witty and lengthy. He promised us that he was going to clear away the fog and smoke during his remarks. I fear that he has let the Committee down in that respect, however, because he has not kept his promise—he has actually thickened the smoke and confusion with his rhetoric.

As I listened to the hon. Gentleman, I thought of those movies that one saw when one was a child about the wild west, featuring cowboys and Indians and the snake oil salesman who tries to sell his quack remedies. Unfortunately, my hon. Friends will not have been convinced by his quackery.

Clause 55 is a remarkably short clause—but one would not have thought so listening to some of today’s contributions. It simply states that the

“body corporate known as the Independent Regulator of NHS Foundation Trusts—

(a) is to continue to exist, and

(b) is to be known as Monitor”,

and from that flows a diverse and wide-ranging debate. I will stick to the rules, however, and keep to the clause stand part debate, and I cannot imagine at this point that there is anything that I can take as an intervention.

The Government believe that, for providers to be able to exercise their functions and freedoms to improve services, the environment in which they operate must be fair, stable and transparent. The policy aims to liberate providers from hierarchical management and to create a consistent framework of regulation across all types of providers. The Future Forum stated in the “Choice and competition” report:

“It remains crucial there is a vigorous regulator that ensures fair play and tackles bad practice.”

Monitor’s key role is to protect and promote the interests of patients. It will regulate all providers of NHS-funded health care services, and support commissioners in ensuring the continuity of essential services. It will also, with the NHS commissioning board, set the prices to be paid for NHS services and address anti-competitive behaviour that acts against patients’ interests. I am surprised that some have come to the conclusion that competition and anti-competitive prices are exactly the same.

Roger Gale (Conservative, North Thanet)

Good afternoon, ladies and gentlemen. For ease and clarification, I inform hon. Members that as we have a fairly long sitting this afternoon, I shall, as I did last week, suspend the Committee for 15 minutes at 4 o’clock. I understand that the Minister is winding up the debate on clause 55.

Simon Burns (Conservative, Chelmsford)

Indeed I am winding up the debate, Mr Gale, and I do not intend to detain the Committee too long. I have just one or two points and will seek to keep my remarks relevant to clause 55.

One point that we debated this morning—the hon. Member for Pontypridd made a big deal about it—was about the private sector being involved in providing 5% of the health care in the NHS under the previous Government. The hon. Gentleman might like to know that the 2004 NHS improvement plan stated that

“by 2008, independent sector providers will provide up to 15%”—

I think that that is three times 5%, if my mathematics is right—

“of procedures on behalf of the NHS.”

That rather undermines the argument that the hon. Gentleman made this morning.

This, too, might be of interest, particularly to the hon. Member for Leicester West, because she may well have written it. In 2006, Patricia Hewitt said:

“I am not going to lay down from Richmond House how many hospitals, how many beds, how many staff of each grade and each qualification, what kind or how many different providers there should be.”

That suggests that Patricia Hewitt, too, was not fixated by the figure.

Owen Smith (Labour, Pontypridd)

The Minister refers to something that I said this morning. I take it that he would not contest the fact that, whatever the projections—whatever was written on a piece of paper somewhere—the reality, as David Bennett, whom I quoted this morning, stated, is that private sector involvement accounts for only about 5% of NHS spend at the moment, in 2011.

Simon Burns (Conservative, Chelmsford)

What I would not do is make the dogmatic assertions that the hon. Gentleman made this morning and the argument that he made in general about the 5% figure. It has been contradicted even by the improvement plan published by the Labour Government, and that contradiction has been reinforced by a subsequent Labour Secretary of State at the Department of Health.

I shall move on to another point that the hon. Gentleman mentioned. He was wondering about and questioning exactly how Monitor’s powers, duties and functions had been changed. It is obvious to Government Members that they have been changed fundamentally as a result of the listening exercise and the Future Forum’s recommendations. Although the hon. Gentleman and his right hon. and hon. Friends want to be in denial on that point, we have had considerable third party endorsement from organisations that have responded to the listening exercise and the Future Forum’s recommendations; they also seem to think that what we have accepted from those recommendations significantly changes the core functions of Monitor as they were proposed initially.

To help the hon. Member for Pontypridd, may I tell him this? Probably the most important thing is that Monitor’s main duty will be to protect and promote the interests of people who use health care services. It will seek to achieve that not by promoting competition, but by promoting the economic, efficient and effective provision of health care services that maintain or improve quality for patients. That is the crucial issue—improving quality for patients and enhancing and improving outcomes. That is ultimately the most important thing.

Liz Kendall (Labour, Leicester West)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

I am between comments on the functions of Monitor. The hon. Lady may wish to wait. [Interruption.] No? Then I shall give way now.

Liz Kendall (Labour, Leicester West)

I hope that it is in order, Mr Gale, to intervene between comments; I wish to double check on the procedure.

What are commissioners doing if not promoting equality and efficiency for patients? Why do we need Monitor to do that?

Simon Burns (Conservative, Chelmsford)

Commissioners are part of the jigsaw and the equation. They will obviously have a crucial role in improving the quality of care, promoting equality of care and improving and enhancing outcomes, but they will not be doing it on their own; many other aspects of the NHS will be working to that end. The core principle of these modernisation plans is to put patients at the centre of care, to involve them, give them choice and drive up improvements in quality of care, with the knock-on effect of improving and enhancing outcomes.

Monitor’s competition role will be clearly limited to addressing anti-competitive behaviour. The hon. Member for Pontypridd made what I consider to be the bizarre point—from their reaction, my hon. Friends seemed totally baffled—that there was no difference between promoting competition and anti-competitive responsibilities, as if they were one and the same thing. I have to tell him that they are fundamentally different. In a moment, I shall explain why.

Monitor will now have new duties to enable the integration of health care across health care services and between health care and other services, including social care services—something that we debated at considerable length on Tuesday. There will be a new duty on Monitor to involve those who use health care services and other members of the public in its work, and to ensure that it takes appropriate clinical advice in carrying out its functions—another matter that we have discussed at length on previous amendments. It will be explicit on Monitor that it should not exercise functions in order to increase or decrease the market share of any type of provider, whether public or private. Monitor will not, as originally proposed, have the power to allow one provider access to another provider’s facilities.

We have already debated most of these matters, and I suspect that we shall come back to them this afternoon, but I can tell my hon. Friends that these significant changes conform with the recommendations of the Future Forum. I find it odd that Opposition Members do not recognise that—or perhaps they do not want to recognise it. We have listened, and we have strengthened and improved the Bill.

The hon. Member for Pontypridd asked how Monitor’s role in addressing anti-competitive behaviour would be different from the role that it would have had in promoting competition.

Liz Kendall (Labour, Leicester West)

We are looking forward to this.

Simon Burns (Conservative, Chelmsford)

I am grateful to the hon. Lady, but she again interrupts me between comments.

Monitor will not be able to exercise functions with the aim of promoting competition. That is one of the core messages that we received from the listening exercise, and we have accepted and embraced it. Monitor could not, for example, choose to disapply a particular set of licence conditions in a certain group of providers to make it easier for them to enter the market. Similarly, when considering with the NHS commissioning board how services should be specified and bundled for the purposes of the national tariff, Monitor will not be able to take account of whether specifying the services in a particular way would encourage competition per se.

A number of matters were raised this morning by the right hon. Member for Rother Valley. I shall tread very carefully, however, because however interesting and relevant they were, they were not to do with clause 55. Mr Hood was more than happy for our debate to meander. With your tolerance, Mr Gale, I shall seek to answer the right hon. Gentleman’s questions, unless you think it more appropriate for me to do so as we make progress and reach the relevant clause.

Roger Gale (Conservative, North Thanet)

Order. It is quite straightforward. Hon. Members are either in order or not. If they are out of order, I shall rule so.

Simon Burns (Conservative, Chelmsford)

Right, I am grateful for that. I will press ahead and hope that I do not test your patience, Mr Gale.

One question started with the hon. Member for Pontypridd and opened up for the right hon. Member for Rother Valley: where are the amendments to put the principles and rules about co-operation and choice on to a stronger statutory footing? We do not need amendments to the Bill to give the Co-operation and Competition Panel and the Principles and Rules for Co-operation and Competition more bite. The CCP will no longer report to the Department of Health, which can choose whether to accept the panel’s recommendations. The fact that the rules will in future be set and enforced by an independent body will in itself put them on to a stronger footing.

We would expect the rules and principles to be embedded in the system by way of regulations, guidance and licence conditions under the Bill. The current rules would apply, including principle 7, which the right hon. Gentleman referred to. The aim is to provide as much continuity to the NHS as possible. We will ensure that the status of principle 7 is clarified when the principles are next updated. In anticipation of the right hon. Gentleman’s asking when that might be, I should say that we expect that to follow Royal Assent.

On the question of whether the CCP but not the Office of Fair Trading should continue to approve mergers, including foundation trusts, I am sure that we all agree that complex decisions on mergers should be taken by those with particular expertise. The current system is extremely cumbersome, with a very low threshold as to foundation trusts needing to seek CCP reviews. That disadvantages foundation trusts vis-à-vis the private sector, which I do not think the right hon. Gentleman would wish to continue.

In the new system, the OFT will review mergers but with a far higher threshold, meaning a streamlined process for foundation trusts. However, the OFT would always seek Monitor’s advice before making a decision on foundation trust mergers. Therefore, the expertise of the OFT on mergers will be combined with Monitor’s sector-specific knowledge.

Kevin Barron (Labour, Rother Valley)

Will the Co-operation and Competition Panel transfer to Monitor and retain its distinct identity?

Simon Burns (Conservative, Chelmsford)

Yes, it will.

Liz Kendall rose—

Simon Burns (Conservative, Chelmsford)

I want to conclude my comments, but I will first give way to the hon. Lady.

Liz Kendall (Labour, Leicester West)

If the Minister thinks that patients and clinicians should be in control and leading change, why are they not making those decisions? Why are the decisions to be made by Monitor and the OFT? With respect, there may be a clinician out there thinking that what the Minister has just described is almost incomprehensible. Why are clinicians not making decisions about the future of hospital services?

Simon Burns (Conservative, Chelmsford)

First, I hope what I said was not incomprehensible. The hon. Lady will have the opportunity to reflect when she sees the Official Report tomorrow, which I hope will clarify the almost ex cathedra statement that I have just made to help simplify and sort out the situation. Of course, clinicians and patients have a very important role to play across the NHS, but this is a highly complex issue. To address the specific point the hon. Lady makes, I should say that she must bear in mind that Monitor has to involve patients and clinicians—a requirement covered by amendments that we will discuss at some point in future. The hon. Lady will be able to elaborate on her concerns then.

On that point, I urge my hon. Friends to support clause 55 to stand part of the Bill.

Roger Gale (Conservative, North Thanet)

Before we proceed, I should say that the Minister has wound up a lengthy debate. I am prepared to take comments on the Minister’s remarks, but I do not expect the entire debate to be reopened.

Owen Smith (Labour, Pontypridd)

I will, of course, observe your ruling, Mr Gale. It is a pleasure to serve under your chairmanship.

I fear that the Minister has not cleared up the issues that we raised this morning, nor offered much substance in response to our direct questions. He has described me in this debate as both a snake oil salesman and a lawyer.

Simon Burns (Conservative, Chelmsford)

Not a lawyer.

Owen Smith (Labour, Pontypridd)

No, that was last week. With respect to my hon. and learned Friends, I do not know which is the bigger insult.

The two key issues I raised earlier, which the Minister failed to address, were about competition and how much has changed. If there is confusion among the Opposition and the public about whether competition will apply more under the Bill, the Minister has to bear a degree of blame because he has repeatedly added to that confusion. I will simply pick out two small quotations from his previous contributions. On 15 March, he said, patronising us as ever:

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

We understood that, but on many other occasions he has said, “The Bill does not extend the application of EU competition law.” Again with respect to my hon. and learned Friends, that is a lawyerly point that does not disapply what he first said—that because there are more providers in the market, competition will apply more.

The Minister went on to try to answer the questions about how much of the Bill has changed; again, if we are confused, it is with a degree of legitimacy. Paragraph 5.27 of the Government’s response to the NHS Future Forum, which addresses the extent of Monitor’s powers, states that

“these changes preserve the core tenet of the Health and Social Care Bill: that properly regulated competition… has the potential to improve the efficiency… of public services”.

The core tenet of the Bill is using competition to improve public services. Why are Ministers and Government Members so coy about fessing up to that being what you believe? Not you, of course, Mr Gale. The Government believe that competition writ large across the Bill has the capacity always to improve the provision of services. We suggest that health care is different from utilities and other sectors, so extra constraints are needed.

In his response a moment ago, the Minister chose to try to explain, as he put it, the difference between promoting competition and preventing, restricting or distorting competition, which I still contend are one and the same; all that I said about the Competition Act 1998 shows that to be so.

A moment ago, the Minister said that, under the provisions, Monitor could no longer “choose to disapply a particular set of licence conditions in a certain group of providers to make it easier for them to enter the market.” Monitor would never have been allowed to do that, because it would be anti-competitive to shift the terms of engagement and to unlevel the playing field.

If Monitor were actively to disallow conditions to allow private providers to enter the market, it would be an anti-competitive act in the eyes of any competition lawyer. I contend, therefore, that the Minister has placed another straw man before us. It is not an adequate description of the change.

On the Co-operation and Competition Panel, it is interesting that the Minister has confirmed for the first time that the OFT will now review mergers. David Bennett did not tell us that the other day; he said that it is an interesting question. We now know that the OFT will review mergers and that the CCP will continue to exist, which we did not know before. That still prompts the question: if it continues to exist, when was that decided and how much additional money will it cost?

Dan Byles (Conservative, North Warwickshire)

I am not sure that the hon. Gentleman is strictly correct in what he has just quoted Dr Bennett as saying, because he actually said:

“Today, if the private sector wanted to go to the OFT and make a complaint under the Competition Act, which embodies European competition law, it could, and the OFT is indeed dealing with a complaint today.”––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 28 June 2011; c. 35, Q79.]

Owen Smith (Labour, Pontypridd)

But in a previous question Dr Bennett was asked whether the OFT should have a role in assessing mergers, and he said that that was an interesting question. Up to now, the Co-operation and Competition Panel has been the principal body that looked at mergers. That is what it has done over the past year or so since it was created. It has looked at six, and it is still looking at them. In future, it will be the OFT—not even Monitor—that does so, which in itself is interesting. If we have a sector-specific regulator with the same powers as the OFT, why is the OFT looking at the issue? Why do we not simply let the OFT regulate the health care sector? It does not make any sense.

Roger Gale (Conservative, North Thanet)

Before we reach schedule 8, Mr Hood entirely properly allowed a fairly wide-ranging debate this morning, which was completely in order. The debate on the clause that we have just discussed applies in large part to schedule 8 as well. I am quite sure that the public who are listening to the broadcast of this Committee would not take kindly to the remarks being repeated all over again, in view of the considerable amount of work that we have to do later. I hope that hon. Members on both sides of the Committee will bear that in mind.

Schedule 8 - Monitor

Owen Smith (Labour, Pontypridd)

Thank you, Mr Gale. Mindful of your ruling, I will ask a series of specific questions about the schedule and I will not seek to rehearse the argument that we have just had. Schedule 8 establishes the rules and regulations governing how Monitor will be made up and set up, and the arrangements for remuneration and staff. It is an important schedule given the significance of Monitor, which, as we have said, is the key point in the Bill.

The first three paragraphs relate to the establishment of the board, and we welcome them. It is a shame that the Government did not recognise that such a board with a proper constitution ought to be extended right across the legislation and applied at an earlier juncture to the commissioning consortia or the commissioning groups, because this is an excellent description of how a board should work. The schedule provides for non-executive directors, chairmen and proper rules and procedures to govern the activities of the board. We are delighted to see that the Government have moved on from thinking that such arrangements ought to apply only to Monitor and are applying them to all the other commissioning groups. We congratulate them on doing so.

Paragraph 6 relates to the non-executives: the Government have properly decided that they should be part of the board of Monitor. The provision relates particularly to payment to non-executive members. Will the Minister provide some illustration of the cost of the non-executive members of the board, and the sort of individuals that the board will look for to fill those posts, given the fact that the nature of Monitor’s role is changing even as we speak, and that there is a shift from having to worry only about competition law to having to worry, now, about the clinical efficacy or otherwise of services, and the extent to which greater application of competition law might interfere with patient interest through derailing integration?

Paragraph 7 deals with staff. Amusingly, it states that the Secretary of State must be consulted before any agreements are reached between Monitor and staff about their levels of pay. That is interesting, given the points about micro-management. Will all Monitor’s staff members have their salaries run past the Secretary of State annually?

More important, what about the amendments on NHS pay, conditions, pay scales and agreements that we tabled previously? Will the Secretary of State be bound to have regard to existing NHS pay scales when allowing Monitor to set the remuneration and terms and conditions for its staff? Will that read-across through the Secretary of State take place?

Paragraph 9 is about Committees. It states that committees of Monitor can have members who are members of Monitor—staff members of Monitor or, I presume, non-executives or executives of Monitor—and non-staff, non-executive members of Monitor. I wonder whether the model that we should be thinking of, to understand how that might work, is the National Institute for Health and Clinical Excellence. There are technical appraisal and various other committees with members and non-members, to provide clinical and other expertise that does not sit within that special health authority. Is that the model that is being considered?

Is the model changing, in the Government’s view, given that Monitor’s responsibility will be extended to cover considering clinical matters, such as whether competition will impinge on valuable integration? How many such Committees does the Minister envisage Monitor will require, and what cost will they incur? Given that there may now be more of them, can we expect the cost of Monitor to be increased in the fabled revised impact assessment?

Grahame Morris (Labour, Easington)

Has my hon. Friend been able to extract from the Government any details of the number of people who will work for Monitor? Despite ministerial reluctance, we found through a leaked document that 3,500 will work for the new super-quango to be called NHS England. Given that the costs of Monitor are probably £140 million a year it must be a substantial quango.

Mr Burns indicated dissent.

Grahame Morris (Labour, Easington)

The upper level, in a figure given by the Minister himself, was between £90 million and £130 million a year. Over the lifetime of a Parliament that is of the order of £400 million or £500 million. It is a considerable sum of money.

Owen Smith (Labour, Pontypridd)

No, I do not think we know. I can only presume that somewhere in the Department of Health there is a document called “Design of Monitor” just as there was one on the design of the National Commissioning Board, which, apparently, we are not allowed to see, but which confirms, as my hon. Friend said, that 3,500 people are to be employed by the NCB—stripped out of the 8,000 currently employed in a similar role, I presume, in strategic health authorities and primary care trusts. That raises a further question: what happens to the other 4,500 people? Will they be made redundant at the end of the process? We do not know that; nor do we know how many people Monitor will employ, or how much money it will cost.

A final thing we do not know relates to paragraph 13 of the schedule, which states that “Monitor may…borrow money”. I do not think it is utterly unheard of for a body such as Monitor or NICE to be given the capacity to borrow money, but it is an interesting concept, especially given the Government’s views about profligacy and the need to be prudent in all borrowing. It would not be illegitimate to ask of a Government who are so keen on making sure they are prudent with borrowing in the public sector borrowing requirement, how much money Monitor will be allowed to borrow, on what sort of terms and, crucially, to what end.

Fiona O'Donnell (Labour, East Lothian)

As much as I enjoyed Mr Hood’s chairmanship this morning, it is good to have you back, Mr Gale. Despite the excellent scrutiny by my hon. Friend, could I press the Minister on a couple of further points?

What sort of targets is he setting for membership of the committees in terms of equality and diversity, people from different ethnic backgrounds, gender balance and people with disabilities? In terms of payments to non-members of Monitor who may be members of sub-committees, does he have a ceiling or limit on expenditure that will curtail the membership of those committees? In relation to acquiring information, will all the information that Monitor may gather and keep under review be public and will Monitor be the subject of freedom of information legislation?

Kevin Barron (Labour, Rother Valley)

Will the Minister explain in detail paragraph 22 of the schedule? It states:

“Monitor must respond in writing to any recommendation about its exercise of its functions that a Committee of either House of Parliament or a Committee of both Houses makes.”

I am interested to see that written in a Bill. It does not say that Monitor has to take notice of the recommendations but I am interested in the intention of the paragraph. The Minister looks quizzical, but it is in his Bill.

Simon Burns (Conservative, Chelmsford)

I was looking quizzical because what Monitor has to do seems so patently obvious that I was surprised that the right hon. Gentleman was asking about it. I will come to that when I answer a number of questions.

First, schedule 8 makes various provisions about Monitor, including on its membership, procedures, borrowing and accounts. The hon. Member for Pontypridd asked a number of questions about that and when I have given an overview of the schedule, I will address them.

The schedule details the membership and appointment of the chair, chief executive and other members of Monitor, including making provision about the suspension of non-executives or the chair from office. The provisions would ensure fair treatment in such cases. Paragraph 6 requires Monitor to pay non-executive members such remuneration and allowances as the Secretary of State decides. It also enables Monitor to arrange pensions, allowances and gratuities for non-executive or former non-executive members. The Secretary of State would have to approve any such arrangements.

Paragraph 7 enables Monitor to employ staff on such pay and terms and conditions as it decides. However, before making such decisions Monitor would have to secure the approval of the Secretary of State to its policies on those matters. This provision would enable Monitor to secure the staff it needs; and the Secretary of State to ensure that the general remuneration, allowances and terms and conditions that Monitor offered its staff were appropriate.

Paragraph 8 makes provision in relation to anyone who is appointed as chair of Monitor and who is already covered by a public sector pension scheme under section 1 of the Superannuation Act 1972. The Minister for the Civil Service would be able to determine whether that person’s service as chair of Monitor would count as years of service for the purposes of that pension scheme. The provision in this paragraph would address the possibility of someone with an existing public sector pension entitlement being deterred from applying for or taking the position of Monitor’s chair because the pension arrangements would be disadvantageous compared with other employment options.

Paragraph 9 gives Monitor the power to appoint committees and sub-committees and to pay remuneration and allowances to committee members who are not members or employees of Monitor. Paragraphs 10, 11 and 12 make provision about how Monitor will exercise its functions, including that it must, and can, act effectively, efficiently and economically. Paragraph 10 allows Monitor to regulate its own procedure. Those various provisions will ensure that Monitor can make effective arrangements to discharge its functions and duties.

Paragraph 13 gives Monitor the power to borrow money temporarily by overdraft. That is another issue that the hon. Gentleman raised.

Owen Smith rose—

Simon Burns (Conservative, Chelmsford)

I am going to answer the hon. Gentleman’s question. If he would like to intervene after that, I shall be more than happy to let him do so. Paragraph 13 creates a contingency provision that could be used to address any short-term cash flow problems that Monitor might encounter. Paragraph 14 allows Monitor to obtain and compile information to take informed decisions on exercising its functions. That could include commissioning or support for research. Paragraph 15 gives Monitor the power to do anything it needs to do in order to exercise its functions. Those provisions will enable Monitor to discharge its functions effectively.

Paragraph 17 concerns the accounts of NHS foundation trusts. It requires Monitor to prepare annual accounts that consolidate the annual accounts of all foundation trusts. The paragraph also enables the Secretary of State to direct Monitor to prepare a set of interim accounts consolidating the interim accounts of all foundation trusts. Paragraph 18 requires Monitor to prepare its own annual accounts in a form with the content and using methods and principles directed by the Secretary of State with the Treasury’s approval. That provision will ensure that Monitor’s accounts meet appropriate standards and are in line with those for other non-departmental public bodies.

Paragraph 21 ensures proper accountability by Monitor. It provides that Monitor must publish an annual report on how it has exercised it functions, particularly on how it has promoted economy, efficiency and effectiveness in the use of its resources. Monitor will need to lay a copy before Parliament and send a copy to the Secretary of State. The paragraph also provides that Monitor must furnish the Secretary of State with further information if he requires it. Paragraph 22 requires Monitor to respond to any recommendations about the exercise of its functions made by parliamentary Committees, as the right hon. Member for Rother Valley mentioned. Those are sensible provisions.

I would like to respond to a number of points before concluding. I will do so in no particular order. First, the hon. Member for East Lothian asked if Monitor would be covered by freedom of information law. The straightforward answer is yes.

The hon. Member for Pontypridd raised a number of issues that I will go through now. One question was about borrowing money. He asked how much money Monitor will be allowed to borrow and in what circumstances. Monitor will only be able to borrow temporarily by overdraft. That is to be done only with the specific consent of the Secretary of State, including regarding the amount to be borrowed. As the hon. Gentleman will know, Monitor can already do that. We are not talking about a new proposal to give Monitor permission to gain access to funding if it needs to by overdraft; it can already do so under the existing legislation.

The hon. Gentleman also raised a number of issues about pay. As he will appreciate from our detailed discussion of the matter in the earlier phases of the Committee, the Secretary of State will approve the policy for pay and remuneration, but not each individual’s pay and remuneration. That clearly would be nonsense. I suspect he knew that when he asked the question, because it is quite clear that the Secretary of State will need to do so.

The hon. Gentleman asked about the costs of Monitor. There have been considerable misunderstandings, to put it kindly, from the moment we first mentioned the figures, last time round.

Grahame Morris (Labour, Easington)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

I have not even given an answer to intervene on yet, but I am more than happy to give way in a minute when I have. What I am going to say might address the hon. Gentleman’s point.

At this stage, one cannot give a figure down to the last pound and penny, so if one gives a range of figures, the Opposition will inevitably—because they are the Opposition—latch on to the top figure as a fact. I can tell the hon. Member for Leicester West that we believe it will be in the range of £50 million to £80 million a year.

Liz Kendall (Labour, Leicester West)

With the very greatest respect, that is completely different from what the Minister told us last time:

“Future running costs are likely to be somewhere between £40 million and £130 million. It is currently £21 million.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 702.]

Has the Minister managed to do the impact assessment on this bit of the Bill and nothing else, or was he misleading us last time? I am sure he would not try to do so.

Simon Burns (Conservative, Chelmsford)

The answer to both questions is no. The hon. Lady is the last person I would seek to mislead, and frankly, I do not think I would be able to. She is a wily individual.

At that point, we gave an assessment—a range—of what the figures could be. We believe that the latest figures, not subject to the impact assessment that will be ready when the Bill leaves this place for another place, will be somewhere in the range of £50 million to £80 million a year. I hope that helps, because the estimate has been refined somewhat.

Grahame Morris (Labour, Easington)

I want to ask briefly about assessing costs. Will the Minister share any information about the salary range that will be applied to the chief executive, David Bennett, given the criticism that has been attached to salaries of chief executives in local government?

Simon Burns (Conservative, Chelmsford)

What I can tell the hon. Gentleman is that we are currently developing detailed plans on remuneration of all the staff Monitor employs, which includes assessing how many staff will be required. That partly answers a question asked by the hon. Member for Pontypridd.

The hon. Member for Easington asked specifically about Monitor. If it is helpful I can give him some idea of the process regarding non-executive members. The appointments will be competitive; this also relates to a point that was raised about equal opportunities in employment. The answer is, of course, yes, because we will naturally abide by existing employment law and plans, where there is no discrimination on race, gender and so on.

With non-executive board members, it will be a competitive, open recruitment exercise, where the Appointments Commission will administer and ensure that the appointment process follows guidelines from the Office of the Commissioner for Public Appointments. It applies not only to non-executive members of the board, but to everyone, when I say that people who take up employment at whatever level within Monitor—this is what will be looked for—should be suitable candidates for the positions. They should be of the highest calibre to be able to contribute positively to the operation of the organisation and the fulfilling of its functions.

That is a generalised answer, but it is no different from the way that people are employed in other professions. It is crucial that one has relevant, top-quality people with the expertise and experience to fulfil their organisation’s function.

Grahame Morris (Labour, Easington)

Will the Minister give way?

Simon Burns (Conservative, Chelmsford)

No. I am going to make some progress.

There was a question about whether we would be using the NICE model for the executive committees. We are looking at that model as the way to move forward, but it will be up to Monitor to determine how many committees it will need not only to secure clinical advice, but to be informed by best practice.

The hon. Member for Pontypridd asked, I think, whether there would be a limit on the amount that Monitor’s board members could be paid—

Owen Smith (Labour, Pontypridd)

How much.

Simon Burns (Conservative, Chelmsford)

Or on how much they would be paid, which is the same thing. As the hon. Gentleman knows, Will Hutton’s review is investigating pay scales across the entire public sector, and he will make recommendations on how to ensure that no public sector manager can earn more than 20 times the wage of the lowest-paid person in the organisation. We will have to wait for the final decision, but that will probably be the guide.

Fiona O'Donnell (Labour, East Lothian)

I intervene in the spirit of trying to be helpful. There is one question that has not been answered, and one that has not been answered fully. I welcomed the Minister’s support for equal opportunity legislation as it relates to employment law, but I actually asked whether he would go further and promote diversity by encouraging applications for membership of the board from groups that are often excluded. I also asked whether, given that the committees do not have to be approved by the Secretary of State, there will be a limit on how much Monitor can spend on them.

Simon Burns (Conservative, Chelmsford)

I hope that I can reassure the hon. Lady on her first point by saying that equalities duties will apply. On the second question about how much money Monitor can spend on the committees, the answer, off the top of my head—[ Interruption. ] I will be careful. The answer is that Monitor wants to provide an effective and efficient service at a cost-effective price without cutting corners. There will therefore not be a ceiling per se, but we would expect Monitor to have the taxpayer’s interests at heart and to ensure that it does not spend excessively to fulfil the functions that it wants to accomplish. As such, it would be inappropriate for me—apart from giving a broad overview of the principles that I would expect Monitor to embrace—to start trying to micro-manage down to the last detail how Monitor will organise that aspect of its committee system. The primary rule must be efficiency and effectiveness in carrying out its duties with due consideration of the interests of the taxpayer in getting value for money. I urge my hon. Friends and Opposition Members to agree to the schedule.

Owen Smith (Labour, Pontypridd)

I thank the Minister for his attempts to answer lots of our questions, but he raised as many as he answered—let me run through a few of them. I asked a specific question about the pay of Monitor staff. Given that it will be the Secretary of State, not David Bennett, who is ultimately responsible for agreeing the terms and conditions of the staff in Monitor—I mean collectively and not individually—would he have to pay due regard to the existing terms and conditions and payment scales of NHS workers, or even those in the civil service? The Minister said that the Will Hutton inquiry would be looking at pay scales and trying to set a metric on a maximum of 20 times the pay of the lowest-paid worker within an organisation. We will have a sector-specific economic regulator that employs a lot of people regulating the NHS, so the pay differential between the NHS and Monitor is as relevant as that between the individuals working within Monitor, many of whom I imagine will be paid much more than people within the NHS, especially its lowest-paid workers. That is why I ask whether the Secretary of State will need to look at the NHS pay scale when he approves Monitor’s.

My second point was about cost. The Minister gave us an interesting update on the cost of Monitor. Previously he told us that it would be between £40 million and £130 million, but we now learn that it is going to be between £50 million and £80 million, which again gives rise to several points. Even if it is the lowest amount— £50 million—it is still two and a half times Monitor’s current costs. If the figure is £80 million, that is four times the present cost. That is a lot of money.

If the Government are to be believed, they have changed the provisions of the Bill so that Monitor’s responsibilities are increased to mean that it takes account of quality, clinical and medical considerations, impact and integration. However, as David Bennett said in his evidence, Monitor does not have the staffing for those new duties, so it beggars belief that the Government have increased its responsibilities and yet reduced its costs from £130 million to £80 million.

Simon Burns (Conservative, Chelmsford)

May I help the hon. Gentleman? His hon. Friends made a big meal of this last time round and history is beginning to repeat itself. As he well knows—the hon. Member for Leicester West certainly knows this—the figure we used last time was a range. The £130 million figure was at the top of the range and was based on other sectoral regulators. We have been able to refine our figures since then and we have come up with a much lower range. I would have thought that Opposition Members would have welcomed the fact that the figure at the top of the new range is significantly lower than the previous top figure.

Let me clarify another thing. Although I answered the question about the Secretary of State and his involvement in pay, let me provide further clarification for the hon. Gentleman. The Secretary of State’s decisions on pay will, of course, be informed by both NHS and civil service pay scales.

Owen Smith (Labour, Pontypridd)

I am particularly grateful for that last clarification.

Grahame Morris (Labour, Easington)

This is a really important point. The Minister is trying to give the impression that we are not creating a vast new bureaucracy. Estimates of Monitor’s cost under the previous Government are put at about £21 million a year. Now, even taking the Minister’s very lowest revised estimate, it will cost 10 times more. Moreover, we are dealing with an unknown quantity. We do not know how many lawyers Monitor will have to engage for consultancy if, as we suspect, European competition law applies, so the higher limit might well be correct.

Owen Smith (Labour, Pontypridd)

As ever, my hon. Friend makes an excellent point that chimes with what I said earlier. We just do not know. We do not know how often Monitor will be in court, we do not know how often the OFT will be involved and we have no idea what the ultimate cost of this huge reorganisation will be. The Minister says that Labour Members ought to be encouraged that the cost has gone down to a mere £80 million—

Simon Burns (Conservative, Chelmsford)

It is £50 million.

Owen Smith (Labour, Pontypridd)

Between £50 million and £80 million. The low end has gone up by £10 million while the top end has come down by £50 million—go figure.

The key reason why we are not encouraged is that the new figures are further evidence that the Minister is making it up as he goes along. We have now heard from Wallace and Gromit that the cost last time—between £40 million to £130 million—was practically plucked out of thin air, because it was predicated on the cost of other regulators—what Ofcom or Ofgem cost. Why we should take on trust the suggestion that the new figure is any less flimsy is beyond me.

Kevin Barron (Labour, Rother Valley)

Is my hon. Friend as disappointed as I am? I asked only one question, which was about paragraph 22. The Minister read out what the provision says, but he did not tell us what it means. Does my hon. Friend have any idea?

Owen Smith (Labour, Pontypridd)

No, I have no idea. I was not going to raise that point, but I am slightly concerned that the paragraph might imply that Monitor will not have to give evidence in person to the House or to Committees of both Houses. Perhaps it implies that it will have to respond only in writing.

Simon Burns (Conservative, Chelmsford)

The right hon. Member for Rother Valley never struck me as an over-sensitive person. I said at the time that the paragraph was so self-evident that the question did not warrant a response, but if he feels aggrieved, I shall correct that now. The paragraph means exactly what it says. Monitor will need to reply in writing to any recommendation made by a Committee of either House. I would have thought that that was self-evident.

Owen Smith (Labour, Pontypridd)

So if a Committee of this House makes a recommendation, Monitor has to write back to say, “Thank you very much.” The Minister is basically telling us that Monitor will say, “We’ve got the letter. Cheers!”—[ Laughter. ]

Simon Burns (Conservative, Chelmsford)

It is not quite as simplistic as that, but I appreciate that at this time of the afternoon the hon. Gentleman wants to go for a cheap laugh. At the moment, as I am sure he knows—and as the right hon. Member for Rother Valley knows, as a distinguished former Chair of the Health Committee—if the Select Committee produces a report that recommends a number of things, that report goes to the Department of Health, and the Department will then respond to it in writing, usually within three months, unless the time period has changed. I cannot see any particular difference here. Given the right hon. Gentleman’s history, I would have thought that he would have seen the provision as self-evident.

Owen Smith (Labour, Pontypridd)

I think we have heard another suggestion about how Monitor could cut costs—clearly it will not need a very well staffed or robust correspondence unit to send back these responses.

The Minister helpfully told us that the Government are looking at the NICE model for how the proliferating committees of Monitor could be organised, as we suspected. That also gives rise to a few questions, so I have a number of recommendations for the Government. Again, what does he anticipate that the costs will be? NICE committees tend to be extensively populated with real experts—leaders in their clinical disciplines. They are standing committees that meet on an ad-hoc basis, and they are very costly. I suggest that he needs to consider the costs carefully.

Secondly—this is a recommendation—the Minister is considering NICE as a model, and of course, NICE has lay members on its committees. It has, in effect, members of the public, expert patients, serving on those committees and providing the patient perspective. If Monitor is now to consider clinical issues, the Minister may need at some point to amend the legislation to reflect the fact that it might be desirable to have, in addition to non-execs, lay members, or perhaps that can be captured in the regulations.

Lastly, NICE has, in order to ensure once more that it is accountable to the public, given that it makes decisions about the availability of medicines—at some level, Monitor will also be engaged in that type of discussion—a citizens panel. It meets annually—in fact, I think it might even meet twice a year. It is very extensive and, I would imagine, very expensive. The Minister might also want to consider that in the next iteration of the Bill.

Clause 56 - General duties

Simon Burns (Conservative, Chelmsford)

I beg to move amendment 148, in clause 56, page 74, line 37, leave out from ‘services’ to end of line 2 on page 75 and insert

‘by promoting provision of health care services which—

(a) is economic, efficient and effective, and

(b) maintains or improves the quality of the services.’.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following:

Amendment 40, in clause 56, page 75, line 1, leave out paragraphs (a) and (b) and insert

‘by promoting collaboration and integration within health services in England’.

Government amendments 149 to 152, 154 and 155.

Clause stand part.

Government amendment 158.

Amendment 43, in clause 67, page 82, line 7, leave out from ‘to)’ to end of line 9 and insert

‘prevent collaboration or integration in the provision of health care services for those purposes.’.

Amendment 44, in clause 67, page 82, line 16, leave out paragraph (a) and insert—

‘(a) promoting collaboration and integration within the provision of services, and’.

Government amendments 159 and 161.

Amendment 45, in clause 101, page 101, line 33, leave out ‘competition’ and insert ‘collaboration or integration’.

Government amendments 189 and 191.

Government new clause 5—General duties: supplementary.

Simon Burns (Conservative, Chelmsford)

This is the core of today’s debate because it deals with so many crucial issues that Opposition Members in particular have been referring to in the course of our debates. I shall therefore speak about the whole group of amendments, both Government and Opposition, and deal with them thematically, rather than consecutively by number.

I hope that Government amendments 148 and 149 will finally put to rest the misapprehension that has dogged much of the discussion about part 3 of the Bill. I reiterate what I said in Committee on 15 March:

“Many of the questions that arose in the debate are based on a fundamental misconception of the Government’s policy—that we are promoting competition for its own sake. That is not the case, as the clause makes abundantly clear. We are talking about competition only in the interests of patients. If competition does not promote or protect the interests of people who use health services, it will not be the role of Monitor to promote it. I hope that that clarifies the basic premise within the context of the debate.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 769.]

However, the Government accept the conclusion of the NHS Future Forum that we did not clarify the issue sufficiently first time round. The forum’s “Choice and Competition” report recommended

“Greater clarity on Monitor’s role on regulating competition, including…changes…to…remove Monitor’s primary duty ‘to promote competition’ and be clear that their primary duty should be to protect and promote the interests of the patient”

and

“clarify that Monitor’s role should support choice, competition and integrated care”.

These amendments respond to that recommendation.

Monitor’s overriding duty should continue to be

“to protect and promote the interests of people who use health care services”.

However, we propose removing the reference to Monitor achieving that

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

We agree with the Future Forum that competition is a means, not an end—a means of improving quality of care and increasing choice for patients. We acknowledge that the language of “promoting competition” has been misconstrued and has not communicated fully the Government’s intention that competition should be pursued only in the interests of patients, never as an end in itself.

Under amendment 148, Monitor’s amended duty will focus instead on the outcomes that we expect Monitor to secure: economy, efficiency and effectiveness in the provision of services. Monitor’s licensing and pricing functions and its roles addressing anti-competitive behaviour and supporting commissioners in securing continuity of services would be to that end. Monitor’s amended duty would also make it clear absolutely that efficiency improvements must not be at the expense of quality.

The removal of the words “promoting competition” from Monitor’s main duty creates a need for the Bill to set out in other terms what Monitor’s competition role will be. It would not be sensible to leave the position ambiguous, so amendment 149 introduces a duty for Monitor to act with a view to preventing anti-competitive behaviour where it is against the interests of NHS service users. Anti-competitive practices, such as restricting the supply of services to existing providers, might, for example, deny patients the choice of receiving treatment in their own home.

Amendment 151 is consequential on the reformulation of Monitor’s main duty. Clause 56(3) states:

“Monitor must…promote the economic, efficient and effective provision of…services”.

Amendment 148 will make that part of Monitor’s main duty, so subsection (3) will no longer be needed.

Opposition amendment 40 also seeks to remove “promoting competition” from Monitor’s main duties. The common ground between us is broader than that, because amendment 40 also seeks to create a duty for Monitor to promote

“collaboration and integration within health services in England”.

The Government fully support the principle of that amendment. We will not break up or hinder integrated care; we will extend and improve it. But to achieve that, we need to look across the system as a whole. We need to establish the appropriate role for each of the main players in developing integration and collaboration. The drive for more integrated services must come from commissioners.

The Future Forum’s “Choice and Competition” report says:

“If commissioners want to commission integrated care they will only succeed in doing this by creating a new market in integrated care services and stopping the current commissioning of episodic services from different NHS organisations.”

That is not to say that Monitor does not have a role in the NHS’s development of integrated services, far from it, but the role is to support and enable the commissioning of integrated services. It is not for Monitor to decide which services should be integrated, nor to promote integration at all costs, irrespective of what works for patients. That is why Government amendment 149 requires Monitor to act with a view to enabling integration of health care services where it would improve quality of care, access for patients or efficiency.

I want to draw the Committee’s attention to one particular point on the Government’s proposed integration duty on Monitor in amendment 149. The amendment relates not only to integration across health care services, but to integration between health care and other relevant services, including social care services. It might help the right hon. Member for Rother Valley, given his question on Tuesday, if I say now that those services could include pharmaceutical services and dentistry.

Amendment 40 does not cover integration between health care and other services, but I hope Opposition Members agree that it is an important aspect of what we are trying to achieve.

Finally, amendment 40 refers to collaboration, which is not provided for by the Government amendments. We have, however, separately proposed a further requirement for Monitor to have regard to the importance of providers co-operating with one another. We are due to debate that amendment, Government amendment 156, when we reach clause 58.

In the light of my comments, I hope Opposition Members will agree that Government amendments 148 and 149 and the Government amendment on co-operation between providers, which we will discuss when we reach clause 58, reflect the principle of amendment 40. On that basis, I ask Opposition Members not to press their amendment but to support amendments 148 and 149 and the minor and consequential amendment 151.

The removal of “promoting competition” from Monitor’s main duty needs to be reflected in other places in the Bill. As a result, we have both Government and Opposition amendments to clauses 67 and 101, and a Government amendment to clause 100. The difference between the Government and the Opposition amendments is what should replace the references to promoting competition. The Government’s view, which is supported by the Future Forum, is that if competition is properly managed, it supports the improvement of services for patients. The Future Forum report stated:

“we are clear that choice and competition, when tailored to circumstances, can drive better quality.”

Debbie Abrahams (Labour, Oldham East and Saddleworth)

The Minister has mentioned that a few times, but I was not quick enough on my feet to intervene. Will he publish—or perhaps he or one of his civil servants has this to hand—the evidence on which he bases his assertion that competition will lead to improved quality? In addition, on what evidence does he base his assertion that competition will reduce health inequalities?

While I am at it, will the long-awaited impact assessment contain a full bibliography? The initial impact assessment did not include one, so I do not know the evidence on which the analysis was made. If any change has been made to the assertions in the original impact assessment, I would be keen to know exactly the scientific evidence behind those changes.

Simon Burns (Conservative, Chelmsford)

I am grateful to the hon. Lady for that question, because throughout our deliberations on the Bill she has made plain her deep concern about, and interest in, reducing inequalities in health care. The evidence comes from a range of sources. First, it comes from practical experience of what is going on in the health service from those who work in the health service, the PCTs, the SHAs and the providers, where they seek to reduce inequalities and to improve and enhance patient care. On top of that, a range of academic studies are carried out by people who have a particular interest in the subject, to monitor what is going on and to ascertain not only where improvements have been made but how, they believe, such improvements should be achieved.

On the question of whether we will publish a bibliography, because one was not published with the original impact assessment, I will be quite frank; at this stage, I do not know. I assume that we will publish the impact assessment in the same way as we did last time. Given that the hon. Lady has raised that point, however, I will make sure that her views are fed in. As to whether it is possible to publish the bibliography, I give no commitments.

The hon. Lady also asked what the evidence was for the benefits of competition. She mentioned inequality, but I think she also said competition—

Debbie Abrahams (Labour, Oldham East and Saddleworth)

To quality.

Simon Burns (Conservative, Chelmsford)

Yes, to quality. Part of my answer about the evidence on inequalities applies to the effects of competition on quality; again, the evidence comes from what is happening on the ground in the NHS, and policy making from a range of organisations and individuals who are particularly concerned about, and interested in, this important area. From the introduction of choice-based competition with fixed pricing to elective care, evidence is also emerging about delivering improvements in quality.

Similarly, the hon. Lady may be familiar with a major study by researchers at the London School of Economics, which found that hospitals in areas where patients have more choice of provider achieve shorter lengths of stay and lower death rates than those in less competitive markets. A growing body of evidence is emerging to show that this is happening, as well as evidence of what is being seen on the ground.

Debbie Abrahams rose—

Simon Burns (Conservative, Chelmsford)

To be fair, I have answered the hon. Lady, and I said that I would give way to my hon. Friend before making progress.

Nicky Morgan (Conservative, Loughborough)

I thank my right hon. Friend for his answer to that intervention; it was a good question. He rightly said that what is happening on the ground is important. I refer him to an e-mail that I received earlier this week from a physiotherapist in my constituency. She speaks about collaborative working with GP surgeries and Loughborough hospital. She ends by saying:

“My own personal view is therefore that competition, at the level that I experienced it, was a very valuable and important part of helping all involved in the provision of Outpatient Physiotherapy services to focus on standards, and most importantly, patients had access to better services and expressed very high levels of satisfaction.”

The difficulty with today’s debate, which we have had all through the Committee, is that it is all very much in the ether and that we are losing sight of what is happening on the ground and what benefits patients.

Simon Burns (Conservative, Chelmsford)

I am extremely grateful to my hon. Friend for that very good intervention. It highlights the fact that research is important in driving the debate forward and finding new solutions to problems. However, one must not lose sight of the fact that what is happening on the ground and what is being delivered is just as important, if not more so. That is what most directly affect patients. Both sides of the equation are important, but what is happening and how the improvements are reflected in the care of patients is crucial. If that is not happening in some parts of the country or with some providers, they must learn from the experience of places that are improving health outcomes, reducing inequalities and increasing the quality of care, so that the all the NHS in England can benefit.

I return to the amendments. Government amendments 158, 159 and 161 replace references in clause 67, 100 and 101 to preventing or promoting competition, with formulations reflecting our view that Monitor could still have a role in addressing anti-competitive and potentially anti-competitive behaviour that acts against patients’ interests. Opposition amendments 43 and 45 remove the references in clauses 67 and 101 to either preventing or promoting competition, but they replace those references with requirements to ensure and promote “collaboration or integration”.

Opposition amendment 44 to clause 67 also removes the provision that the Secretary of State’s regulations on procurement by commissioners could cover competitive tendering. That provision should not be removed. We have rules governing competitive tendering to ensure that it achieves value and that patients’ interests are protected. We will need such protections in future, as Professor Ham noted when giving evidence:

“It is not as though we are starting from a position where there is one uniform set of prices for a certain range of services all over the country.”––[Official Report, Health and Social Care Public Bill Committee, 28 June 2011; c. 26, Q59.]

I have already said that we believe that the board and the clinical commissioning groups should drive integration. Indeed, Future Forum concluded that

“The NHS Commissioning Board needs to ensure commissioners and providers develop a mainstream of integrated care”.

Our view is therefore that it would be inappropriate to create, as amendment 45 would do, an explicit power for Monitor to require providers to do or not to do certain things to promote collaboration or integration. At best, it would create uncertainty about where the onus lay for driving integration, and at worst it would create confusing requirements for providers, with contracts requiring one thing and licence conditions another.

There has been much discussion, including by the Committee in March and by Future Forum, about whether, and if so how, competition and integration sit side by side. The Government have always been clear that they are not mutually exclusive. Future Forum took the same view, stating:

“We have also heard many people saying that competition and integration are opposing forces. We believe this is a false dichotomy. Integrated care is vital, and competition can and should be used by commissioners as a powerful tool to drive this for patients.”

I referred earlier to the fact that to achieve a focus on integration of health care services, we need to look across the system. We do not think that the Secretary of State’s regulations on procurement practice are the best mechanism for getting commissioners to develop integrated services. That is why the Government tabled amendments 73, 74 and 117, which we debated earlier, that create new and strengthened duties on integration directly on commissioners. Hence, we think it unnecessary to make explicit provision for the clause 67 regulations to be able to cover integration and collaboration.

I therefore ask Opposition Members to withdraw amendments 43, 44 and 45 and to support Government amendments 158, 159 and 161. I also ask them to support Government amendment 189, which is a consequential, minor amendment that ensures consistency by noting that the definition of “anti-competitive behaviour” to be applied in these clauses is the same as that set out in the amendments to Monitor’s main role and duties.

The group of amendments we are discussing includes Government amendments 150 and 152, both of which raise very important issues. Government amendment 150 relates to patient and public involvement. The NHS Future Forum has set out an ambition for achieving genuine patient and public involvement at all levels of the system. We share that ambition, and the purpose of the amendment is to strengthen those requirements in relation to Monitor.

As hon. Members will be aware, there are a number of requirements set out in the Bill for Monitor to consult a range of organisations and persons on the proposals. Those would include, for example, consulting each relevant licence holder, the NHS commissioning board, clinical commissioning groups, the Care Quality Commission and HealthWatch England on modifications to standard licence conditions; and clinical commissioning groups, licence holders and others it thinks appropriate on the national tariff.

We have also put in place, through clause 178(4), arrangements with HealthWatch England for it to provide Monitor with information and advice about the views of patients and the public, and about the views of local healthwatch organisations. That is an important provision, in that HealthWatch England can advise Monitor independently of both the Department and the CQC, and Monitor must respond in writing to HealthWatch England on its advice.

However, as the NHS Future Forum said, involvement of patients and the public needs to go further than that. The Government want to ensure that patient and public involvement is embedded at every level of the health care system. We want patients and the public to be involved in the development of proposals and in the wider work of Monitor, not just in responding to one-off consultation exercises. We want the dialogue between Monitor and patients and the public to be ongoing and meaningful. That is why we are proposing to make this clearer in the Bill by placing, in amendment 150, a specific duty on Monitor and strengthening its responsibilities in that regard.

We recognise the importance of the relationship between HealthWatch England and Monitor, and do not want to change that. However, we feel that this specific duty is needed for Monitor to be truly able to take account of the views of patients and the public in its work.

Government amendment 152 responds to another of the four key themes adopted by the NHS Future Forum: clinical advice and leadership. The Committee has already debated our proposals for strengthening clinical advice and leadership in relation to commissioning. However, as the Government noted in their response to the Future Forum’s report, Monitor will also need advice from a range of appropriate professionals. Government amendment 152 would place a new duty on Monitor to obtain appropriate clinical advice in the discharge of its functions. That duty would be consistent with those on the NHS commissioning board and on clinical commissioning groups. In exercising the duty, Monitor would be required to seek advice on clinical matters from a range of relevant health care professionals as appropriate. That could range from, for example, advice from expert medical committees or the Royal Colleges to develop the tariff, or an individual clinician on a specific disease or condition-related issue. I therefore commend amendment 152 to the Committee.

I will briefly mention Government amendments 154, 155, 191 and new clause 5. They are technical amendments, consequential on the changes proposed in the other amendments in this group, which provide necessary definitions and tidy up the drafting of this part of the Bill.

The Government’s listening exercise highlighted that there was misapprehension about the role that Monitor would have under our modernisation plans. The Future Forum recommended greater clarity about Monitor’s role. That is why we need clause 56 in the Bill. The clause sets out the main duties of Monitor. It provides that, in exercising its functions, Monitor must do so in a way consistent with the performance by the Secretary of State of his duty to promote a comprehensive health service. For clarity, the clause specifies that Monitor’s role is in relation to the provision of services. Where a provider of services buys goods in order to deliver services—for example, prostheses to be used in hip replacements—Monitor’s role would only be in relation to the service. It would not be required to do anything in relation to the supply of goods to the provider of that service.

On Monitor’s duties, the Government amendments propose that Monitor’s main duty would be to protect and promote the interests of NHS users. Monitor would achieve that by using its functions—including licensing and pricing—to promote economic, efficient and effective provision of NHS services. It would work alongside other organisations to secure sustained and improved quality of care. It would have the statutory powers needed to address anti-competitive and potentially anti-competitive practices that could act against the interests of NHS users. Last, but by no means least, it would also work with commissioners to promote integration of health care services and between health and health-related or social care services, where that was in the best interests of patients. That is a clear role for Monitor, in line with the recommendations of the Future Forum.

Roger Gale (Conservative, North Thanet)

While listening to that debate, I noticed that the Minister moved up into the 170s and a bit of clause 115 territory. That is all relevant and I do not mind that. However, I am sure that Mr Hancock will take that into account when we get to that on Tuesday.

Liz Kendall (Labour, Leicester West)

It is nice to have you back in the Chair, Mr Gale. We are sorry that you missed Tuesday’s special NHS 63rd birthday. We had some cakes from the TUC; I do not know how you would have felt about that. I am sure you are devastated. We all enjoyed those cakes.

Roger Gale (Conservative, North Thanet)

Order. I am sure I missed something really enjoyable, but I cannot help thinking that my health benefited from my not having been there.

Liz Kendall (Labour, Leicester West)

I do not think we should talk about what this Committee is doing for our health—or, indeed, the health of the NHS.

I shall start with an apology, in advance of what will be a relevant but long speech. As the Minister rightly said, this matter goes to the heart of what has happened over the past few months—the unprecedented pause and “listening exercise”. Like the Minister, I would like to proceed thematically, covering the Government’s core claim that they have fundamentally changed Monitor from last time round.

Hon. Members will not be surprised that I do not agree with that. In fact, I agree with my hon. Friend the Member for Pontypridd that this is a series of smoke and mirrors. By going through each set of amendments, which supposedly change promoting competition to anti-competition and supposedly promote integration and patient and public involvement, and by addressing the clause stand part debate, I hope to show why the amendments do not fundamentally change the Government’s true intention for Monitor.

I start with Government amendment 148, which is about the primary duty of Monitor, as set out in clause 56. Paragraph 5.14 of the Government’s response to Future Forum states:

“Monitor’s core duties should be re-orientated away from promoting competition as though it were an end in itself and focused instead on taking action in the interests of patients to tackle anti-competitive behaviour. We will amend the Bill accordingly. In carrying out its functions, Monitor’s core duty will be to protect and promote patients’ interests, by promoting value for money and quality in the provision of services.”

Amendment 148 deletes subsections (1)(a) and (b), which state that Monitor’s main duty is

“promoting competition where appropriate, and through regulation where necessary”,

and moves up subsection (3), which states that Monitor must

“promote the economic, efficient and effective provision of health care services”.

First, as I said to the Minister when I intervened on him earlier, is not that what commissioners should be doing? Is that not the primary purpose of what we now call NHS England, aka the NHS commissioning board, should be doing? If commissioners are not the ones responsible for leading the promotion of quality, and also value for money and services, what are they doing? The Minister replied that everybody is doing this and that we need all these people to be doing it.

Simon Burns (Conservative, Chelmsford)

To have a role.

Liz Kendall (Labour, Leicester West)

To have a role. The fundamental question that the Government have not answered is what Monitor is for. Why do we need Monitor? I suggest that this is a policy in search of a problem. It is not about identifying an issue and then establishing the best way to tackle it, but about changing the NHS and remodelling it. I will not go through this again, Mr Gale. You were lucky to miss out on my very long speech on why health is different from gas, electricity and the railways—that is, not just because it is a different type of good, but because it is more complex, there are far more varied providers and there are asymmetries of information.

Why do we need an economic regulator? There are two possible answers. The Government’s answer would be that they need Monitor to protect the NHS from the full force of competition law. But it is the Government’s own Bill that guarantees the full force of competition law on the NHS. We have never said that these 12 clauses change what competition law is out in the wider economy, but they enshrine it in primary legislation on the NHS for the first time.

As the hon. Member for Southport said, the NHS in this country and health services across Europe have tended to be protected from the force of competition law that is applied in other areas, because they are not seen as undertakings. Hospitals are seen not as undertakings, but as social bodies because they have social aims and objectives. The Bill and the Government’s policy make it more likely that providers, and possibly also commissioners, will be counted as economic undertakings.

One example is getting rid of the private patient cap so that hospitals can generate and make money. That is likely to mean that they will no longer be counted as social bodies and entities, but as economic undertakings because they are specifically going out to make money. On 15 March, the Minister, who was recorded by the fabulous Hansard, said that

“in a future where the majority of providers are likely to be classed as undertakings for the purposes of EU competition law, that law and the protections it offers against anti-competitive behaviour will apply.”—[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 718.]

The Government have probably convinced some people to think, “Gosh, we must have Monitor because otherwise the NHS will be subject to a new competition law.” Yet it is the Government’s policy and this Bill that is doing that.

Daniel Poulter (Conservative, Central Suffolk and North Ipswich)

I am interested that the hon. Lady asks why we need Monitor. It was a Labour Government who created Monitor in the first place. As she was a special adviser to that Government at the time, she can probably explain why Monitor was created.

Liz Kendall (Labour, Leicester West)

Monitor currently regulates foundation trusts; it is not an economic regulator. It ensures that the trusts are financially viable and that they have the right governance bodies and structures in place. Its functions are totally different from those of an economic regulator. Perhaps we can have another discussion in a different forum about that. The Government are setting up something to protect themselves from their own policy.

The other reason why the Government might set up Monitor is that they need some other body with all these powers to drive competition into parts of the NHS because they believe that it cannot reform itself. There are many different opinions about the role of competition and choice. As I have said in this Committee before, I support competition where there is evidence that it improves care for patients and value for money.

Why can clinical commissioning groups not decide where competition may or may not improve quality, value for money and efficiency? If the Government want that, why are they setting up this huge complicated body? They are doing it not for the reasons that they are now claiming, but because they believe that the NHS cannot reform itself. As my hon. Friend the Member for Pontypridd said, there are Government Members who believe that competition is the way to drive changes in public services.

However, a full market is not the way to do that. There are real consequences of competition that have to be managed. For example, when care is shifted out of hospitals, it has to be managed and it must be done following clear standards—we call them targets—to make sure that people do not suffer. If Government Members do not want such duties managed and they want a full market, which is what many of them do want, why not have the courage to argue for that? Instead, they are tying themselves in knots trying to pretend that they are not doing something when they really are.

John Pugh (Liberal Democrat, Southport)

Why does the hon. Lady think that the previous Government set up the Co-operation and Competition Panel with appreciable powers? What was the rationale for that? Was it completely redundant?

Liz Kendall (Labour, Leicester West)

No. In other countries, such as Spain, cases have gone to the courts to see whether competition law should apply, and it was decided that it should not. We decided that we would have a body that could look at such issues. However, Monitor is being set up in a context where it will be forced to act because of the Government’s legislation. I believe that amendment 148 would not fundamentally change Monitor’s role or the context in which it works.

Government amendments 149, 158, 159, 161 and 189—I think I have got those right—would, as the Minister said, purport to remove parts relating to promoting competition, instead substituting that “anti-competitive behaviour” would be prevented. New clause 5 attempts to define anti-competitive behaviour:

“Anti-competitive behaviour” means behaviour which would (or would be likely to) prevent, restrict or distort competition and a reference to preventing anti-competitive behaviour includes a reference to eliminating or reducing the effects (or potential effects) of the behaviour.”

To put it mildly, I am not convinced that there is a huge difference between promoting competition and preventing anti-competitive behaviour. I am aware that we have discussed this matter before, but I want to pick up on one phrase that the Secretary of State used in evidence to the Committee, which my hon. Friend the Member for Pontypridd has also mentioned. The Secretary of State said that we were moving from an “ex ante intervention” to an “ex post examination”. At that point, I wished that I had listened to my mother all those years ago and studied Latin—as opposed to attempting German, not being very good at it, then giving it up—because I would have known what he meant.

Essentially, as hon. Members know, he meant a change from “before the event” to “after the event”. However, what does “after the event” mean now? It may mean moving from looking out there, thinking, “We’re going to promote competition in advance”, to doing so after the event—but after what event? We have our services as they are now. Many services will be set up that could easily, under this legislation, be considered anti-competitive—for example, if one hospital serves people in an entire city, such as my own.

In future, many hospitals will look to develop vertical integration, which is a terrible piece of policy jargon. A hospital could have a lot of diabetes patients turning up in A and E having a severe episode, if that is the right phrase. The hospital might decide, “To deliver the best quality care for our diabetes patients, we want to run some community nurses who help patients manage their conditions better by helping them to take their drugs properly, encouraging them not to eat TUC birthday cakes and advising them to take exercise.”

The hospital might then decide, “Well, we should also run some diabetes testing in the pharmacy”—I do not know whether you have had such a test, Mr Gale, but after pricking your finger, they can tell whether you have diabetes. I am trying to describe this in a way that makes it real. The hospital, therefore, has decided, “We’re going to provide all those services in a certain area.”

However, a pharmacy—Lloyd’s Pharmacy, for example —could then say, “Hang on a minute. We don’t want you coming in here, sweeping up all the diabetes testing for the whole of Leicester”, or a private company that runs GP appointments might say, “We don’t want you running our diabetes nurses”. They would challenge what was happening.

Would that be an example of something anti-competitive? The problem is that the Government will not provide such examples, and they will not tell us whether they have received any legal advice. We had a long exchange during the previous Committee stage about whether the Government had taken any advice about competition. I asked the Minister:

“will he tell me whether he has taken legal advice on the compatibility of the Bill with EU competition law? Has he taken advice on what it would mean for commissioners and providers? If so, will he publish that evidence to the Committee?”

The Minister replied:

“The straightforward answer is yes.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 719.]

My hon. Friend the Member for Islington South and Finsbury said, “Publish it.” The Minister then wrote to me on 12 April confirming that he did not intend to publish the legal advice, because it was a privileged communication to Ministers.

My hon. Friend the Member for West Lancashire (Rosie Cooper) asked the Secretary of State in a written question whether he would reverse his decision not to publish the legal advice, but the Minister replied stating that

“no separate legal advice was commissioned by officials.”—[Official Report, 28 April 2011; Vol. 149, c. 602W.]

There are some lawyers on this Committee. We are debating whether the Bill changes everything; my hunch is that if it is as big as it is, with that many clauses introducing competition, it will. If the Minister has not asked for independent legal advice, he is being remiss in his duties. We need to see and understand that advice, including what the difference is between anti-competitive and competitive behaviour.

Owen Smith (Labour, Pontypridd)

My hon. Friend’s speech is clarifying the extent to which competition law may well apply. Further to the point that she just made, does she agree that it would be fundamentally remiss of the Government not to have sought legal advice in order to understand—I will take the example that she used—whether a vertically integrated set of services between hospitals and primary care might be viewed under competition law as collusive or cartel behaviour—which would, therefore, be anti-competitive?

Liz Kendall (Labour, Leicester West)

I absolutely agree with my hon. Friend. As we discussed in the previous Committee, it is interesting that many concerned providers are taking legal advice about what the Bill might mean. I again ask the Minister to clarify once and for all whether legal advice has been taken on the impact of the Bill on how competition law is applied within the NHS. More specifically, is it likely that both providers and commissioners will be more likely to be considered as economic undertakings? Has he asked for that advice?

I move on to Government amendment 149, which states that Monitor must act with a view to enabling health services to be provided in an integrated way and to enable health services to be integrated with social care services. During the previous Committee, Opposition amendment 481 would have required Monitor to enable collaboration and integration between health and social care. The Government voted against it. Our new amendments 40, 43, 44 and 45 would again seek to guarantee that Monitor promotes collaboration both within health services and between health and social care. I should state for the record that we do not agree with Monitor and how it is being set up. We will vote against it, but if it does go through, this is our way of trying to ensure that integration really happens.

As the Minister said, Opposition amendments 43 and 44 would amend clause 67, which addresses procurement. What the Minister said about that was interesting. Clause 67 will give the Secretary of State the power to issue regulations to impose any requirement on how the NHS commissioning board and clinical commissioning groups procure services. That is a huge power. But the Minister said that procurement is not the way to promote integration, which amazes me. If he argues that it is possible to promote both competition and integration, why would a body procuring services not want to promote integration? I find that astonishing.

The Minister is right that members of the Future Forum and other consultees say that integration and competition are not necessarily always mutually exclusive, but that is not to say that there are not tricky balances and trade-offs. It is not simple and straightforward to decide whether, as in my example of diabetes care, something represents integration, because others, possibly including the new head of Monitor, might see it as monopolistic and anti-competitive. The Government need to recognise that such issues are not simple and straightforward.

I move on to Government amendment 150, which addresses patient and public involvement. It is important that I read out the amendment, because the Minister made a big thing of how patient and public involvement is now at Monitor’s heart:

“Monitor must secure that people who use health care services, and other members of the public, are involved to an appropriate degree”—

I have underlined those words, because that is where the emphasis is—

“in decisions that Monitor makes about the exercise of its functions (other than decisions it makes about the exercise of its functions in a particular case).”

The amendment really says that it is up to Monitor to decide whether it is appropriate to involve patients and the public. Although Monitor will involve patients and the public in the exercise of its general functions, it will not involve them in specific cases, such as where a hospital or any other service might be behaving anti-competitively.

Patients and the public want to be involved in decisions about services that affect them, but that is not what the amendment says; it says that they will be involved only with discussions on Monitor’s functions. Many Members who have issues with hospital units, if not whole hospitals, community services or other services in their constituencies, will find that the issues end up being considered by Monitor without patients and the public having a say. That is a great concern.

In the original Committee, Opposition amendment 480 stated:

“Monitor must…involve and engage patients and the public.”

The amendment did not mention anything about “to an appropriate degree” or “only on its general functions, not in a specific case”. In the end, specific cases are the only things that matter to patients and the public. The Minister told me that

“amendment 480 is unnecessary. To deliver its general duties to protect and promote the interests of people who use health services, Monitor will be expected to take into account the views of patients and the public.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 696.]

One of my many questions to the Minister is what does “to an appropriate degree” mean? If patients and the public have to be involved “to an appropriate degree”, the Government must have a sense of what an “appropriate degree” is, otherwise the words would not be there. Do the Government decide what is appropriate, or is it Monitor?

Emily Thornberry (Labour, Islington South and Finsbury)

Perhaps another way of posing the question would be to ask the Minister to explain what involving the public to an inappropriate degree might look like.

Liz Kendall (Labour, Leicester West)

Indeed, it is a very woolly phrase. I am not convinced. I think this is a sop and a way to put a provision in the legislation without actually involving patients and the public in any significant decisions. That is why I am concerned.

As my hon. Friend the Member for Pontypridd mentioned, there are wider concerns about the accountability of Monitor itself. Amendment 488 to the original Bill provided that Monitor’s board should meet in public and hold public annual meetings, especially as it is spending up to £130 million of taxpayers’ money a year. The Minister has apparently revised that figure down to £80 million, but it remains to be seen whether that is accurate. It is worrying that we are still unclear about how a body with such power—Monitor—will be held to account, particularly if it is to make such important decisions about services.

Government amendment 152 is about Monitor obtaining

“advice appropriate for enabling it effectively to discharge its functions from”

people who have a broad range of expertise in

“the prevention, diagnosis or treatment of illness”

and

“the protection or improvement of public health.”

Does that mean that Monitor will have to include clinicians only in decisions about exercising its general functions, or will it involve them in specific cases? When Monitor looks and says, “This hospital or service is behaving anti-competitively,” will it involve clinicians in that individual decision, or will they simply be broadly involved on the board? That is an important question.

Finally, I want to make a broader comment on Monitor’s general duties as part of the clause stand part debate. A big concern that people have voiced is about Monitor’s role in designating services. I remember very long conversations about that in the first Committee proceedings, when the Minister made some interesting comments about which services would or would not be designated. The Opposition’s concern was that the process was wholly opaque. It should not be up to what appears to be an unaccountable body to make decisions about which services will and will not fail. In paragraph 5.45 of their response to the NHS Future Forum report, the Government say:

“We have heard concerns”—

I love the mild language of the civil service—

“about the practicality of our proposals for designating which services should be subject to additional regulation,”

In the next paragraph, they say that they will withdraw their

“proposal for commissioners to apply to Monitor to designate in advance which services would be subject to additional regulation.”

That means, which services will or will not be allowed to fail.

None of the clauses on designation, which is a key duty of Monitor, have been deleted. Clauses 76 to 84 all remain in the Bill. Have they been deleted or amended? [Interruption.] The Minister says, “Not yet”, and I know that because I asked him about that in the evidence session. He replied the Government were still figuring out the failure regime and it would be brought back on Report for MPs to consider, so the clauses remain in the Bill. Will they be deleted or just amended? Designation—deciding which services are and are not allowed to fail—is absolutely fundamental. [Interruption.] I wonder whether the Minister has just been passed the failure regime in that very large envelope.

I remind the Committee that Sue Slipman, director of the Foundation Trust Network, said that she had major concerns about this aspect of the Government’s plans and about

“how services will be protected, and the implications of that, particularly for foundation trusts, for access to affordable capital.”

Monitor’s David Bennett said that

“The biggest gap at the moment is the replacement for the original proposals on designation.”––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 28 June 2011; c. 31, Q66.]

This may sound dry and boring, but it is about a real and current issue, which is the trusts that are in severe financial difficulty. I have mentioned my local trust, which is already £6 million in the red only two months into the financial year, and other hospitals are facing huge problems. In their response to the Future Forum, the Government said that they would end

“the culture and practice of hidden bailouts”.

Does that mean that the Government will not bail out trusts any more, or simply that they will be open about doing so? There has been a lot of spinning about ending bail-outs, but if they do so, lots of hospitals will close. It would be good to get some clarity on that.

We know from what David Nicholson told the Public Accounts Committee that between 20 and 25 NHS trusts are in severe financial difficulty. I have asked the Minister to publish a list of those trusts, but he has said that he will not. When I asked David Bennett during the evidence session how many trusts were in that position, he replied:

“It is the Department’s role, of course, to get the non-FTs to FT status. We don’t have a direct insight into the challenges that those trusts face”.––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 28 June 2011; c. 39, Q88.]

David Bennett has said that it is the Department of Health’s responsibility to know which NHS trusts are going to have real difficulty getting to FT status, and I think that we should have a list of those trusts. I tabled a parliamentary question about that when I learned that the strategic health authorities were providing the Department with an assessment of which hospital trusts were likely to get foundation trust status. The Under-Secretary of State for Health, the hon. Member for Guildford (Anne Milton), replied on 3 December 2010:

“The returns from the strategic health authorities are being considered by officials in the Department in discussion with the local national health service and are therefore work in progress at this time. It is anticipated that by April 2011 the returns will have been validated and the agreed information will then be placed in the Library.”—[Official Report, 3 December 2010; Vol. 519, c. 1074W.]

We have no information about these trusts. The information is extremely important, because one of Monitor’s key functions is designating which services must continue to provide care for patients and the public in their local communities. We know that some trusts are in severe financial difficulty, and we need to know what the Government’s regime is for dealing with that.

I conclude by asking the Minister a series of questions about the so-called failure regime. He says that he will present his proposals on the failure regime in time for Report, or at least that any amendments will be tabled by then. Will the failure regime be ready for Report stage, which I assume will be in September? Will it include the failure of whole NHS trusts? Will it include how to deal with the failure of individual district hospitals which are part of those trusts? Will it include how to deal with the failure of individual units or individual wards? What criteria will be used to come up with a solution? Who will be involved in setting those criteria? Will there be independent verification of the criteria? Crucially, who will administer the failure regime? Will that Monitor do that? These are all difficult questions. They need to be answered.

We all feel strongly about services in our constituencies on which our constituents rely. The Government have said that got their proposals wrong. They have promised to withdraw them, but they have not yet done so. We are not going to get proper time to scrutinise them—

Mr Burns indicated dissent.

Liz Kendall (Labour, Leicester West)

We will not have time in the Committee to properly scrutinise the failure regime. It is hard enough scrutinising the legislation in a Committee, let alone on the Floor of the House.

May I say with the greatest respect to the Minister that this is an urgent matter for the NHS? Many hospitals are in trouble and they will be in even worse trouble because of the efficiency savings and the big reorganisation. People are totally distracted from that pressing problem because of the massive reorganisation. They do not know whether they will keep their jobs. They are not getting the GPs and the other people around the table to take the difficult decisions because the Government are going through with this crazy Bill and this huge reorganisation.

The Government should be getting on with this real job. It is a real problem that we do not know what that failure regime will be and we will not have time to scrutinise it. The Government have been spending so much time dealing with the cock-up they have created themselves in the Bill that they have not got on with their job, which would be to sort that out. They have been totally distracted by a problem of their own making. They would have done far better never to have gone through all of this and to have got on and grasped the difficult issue that we all face and that is ultimately what matters most to our constituents.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

I start by thanking the Minister for his remarks about my commitment to reducing inequalities and his response to my request for the evidence of the relationship between competition and improving quality and reducing health inequalities. I also thank the hon. Member for Loughborough.

First, the evidence that was supplied would generally be regarded weak, consisting of single studies and anecdotal evidence. It would generally be regarded as poor-quality evidence on which to base the massive changes that have been proposed in the Bill.

Nick de Bois (Conservative, Enfield North)

Perhaps I can help the hon. Lady. At a future date, she may wish to look out the study from the centre for economic performance at the LSE which examined whether hospital competition can improve efficiency. The answer was a resounding yes. I am happy to refer her to the details.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

I am grateful. If I remember correctly, that study was not a systematic review, it was not a review of a review, and it did not include international evidence. It is still generally regarded as poor evidence.

Secondly, in terms of our debate on what we have been calling ex ante and ex post, we are considering a new health system—developing a new health system and changing our national health system very dramatically. The Government did not look at that new system. It was looking at evidence from previous work. The transferability and the validity of what was being suggested are therefore in question. The evidence is weak and not generally transferable. We need to take a much broader view.

I challenge Minister, who is no longer in his seat, not only to publish the bibliography for the impact assessment, which should consider these points, but to subject it to peer review. If it has changed significantly with regard to the evidence used in the previous impact assessment, that would be of real interest. The challenge is to publish and subject to peer review. We do not want a policy, a Bill—a law, potentially—that is based on weak evidence; That is not evidence-based policy.

Grahame Morris (Labour, Easington)

I do not propose to rehearse all the arguments, but we need to consider and put in context a number of important issues. The Opposition’s real concern relates to part 3 of the Bill, in particular the transformation of Monitor from a fairly modest role overseeing the NHS foundation trusts into a driver for competition that would fundamentally alter the nature of the NHS.

Looking at the work undertaken during the exercise to pause, listen and reflect and the report of Future Forum, it seemed on the surface that substantial changes had been made. I thought that perhaps the many hours we had spent in Committee had not been completely wasted. Although the Government would not accept a single Opposition amendment or make a single concession during the course of the original Committee stage, perhaps they had had a chance to reflect on some of the excellent arguments made and had brought back a modified Bill. On closer inspection, though, the substantial changes we hoped for are not there.

On that basis, I have concerns and questions to put to the Minister, to which I hope for answers. Those concerns are shared by a range of organisations. I am sure that all Committee members have received representations; I met some representatives of the Royal College of Nurses yesterday. The written evidence from the eminent Nuffield Trust, numbered HSR 11, includes the following comment.

“We note that the original proposals to give Monitor concurrent powers with the OFT to implement competition law remain apparently unchanged.”

That is fundamentally our concern.

Despite Ministers’ assurances to the contrary, that the thrust of the Bill is not about introducing the rigours of competition into our treasured NHS, we have to ask why almost a third of the Bill—more than 80 clauses— is devoted to competition. The Bill changes the architecture of the NHS; in itself, it exposes the NHS to European competition law. In truth, as the chief executive of Monitor said in evidence, echoed by others, we do not know the precise implications. We do not know the effect of the private sector organisations that are going to use the mechanism and may feel aggrieved, having been heavily lobbied and advised of a potentially lucrative market. They are not philanthropic; their purpose is to make profit for shareholders. Our concern is that this element of the Bill—the clause setting out the functions of Monitor—is crucial.

I attended the Health Committee on Tuesday to hear the Secretary of State’s account of the Future Forum recommendations and his perspective on how they will be implemented. I was surprised by how sanguine he was, given that he has been preparing the Bill for seven years. He has consulted at length and is confident of the thrust of the Bill, and he made it clear that he thinks no red lines have been crossed by the Future Forum’s recommended changes and the Government’s response of 14 June. The implication was that there has been little fundamental change.

On 15 June, the Secretary of State told a conference of GPs that

“those of you concerned that the listening exercise represents a tearing up of our plans to modernise the NHS, don’t be. For those of you worried that in places the detail of the Bill was at odds with the principles of reform, be reassured.”

He was booed by that audience, but Opposition Members are not full of confidence that the Secretary of State is sincere and genuine about wishing to address our concerns. There is a body of similar opinion, not only among the trade unions, which Government Members sometimes dismiss, but among eminent specialists, not least Professor Sir Roger Boyle. He has had a chance to study the Government’s proposed changesarising from the Future Forum report, and he feels the changes are completely unjustified. Sadly, he has indicated that in protest he will stand down as heart tsar, which is an important position.

As the Minister and my colleagues have already mentioned, amendments 148 to 152, 154 and 155 will amend clause 56, which sets out Monitor’s general duties. Amendment 148 removes the phrase “promoting competition”. One of our key concerns, which was highlighted by the Future Forum and Professor Steve Field, is that the amendment will dilute Monitor’s role. The amendment goes on to set Monitor the task of

“promoting provision of health care services which is economic, efficient and effective, and maintains or improves the quality of the services.”

On the face of it, it is a positive change that I am sure everyone would support, but having thought about it and scrutinised it a little more closely, I believe the new duty is sufficiently vague as to prompt this question: if we remove Monitor’s function of driving competition, what is Monitor actually for?

What is going to change with David Bennett at the helm of that vast new bureaucracy—a monolithic monster and a very expensive new quango? In practice, it is not going to change very much. There is no reference to health inequalities, raised by my hon. Friend the Member for Oldham East and Saddleworth, or the NHS constitution, which protects the 18-week target. There are major inconsistencies, as well as duplication and overlapping of duties with, for example, the Care Quality Commission.

I took the trouble to look at the duties set out for the CQC, which is not without its critics. Its duties are set out in the Health and Social Care Act 2008. Its main objective is

“to protect and promote the health, safety and welfare of people who use health and social care services.”

Does that sound familiar? The CQC is to perform that duty by encouraging

“the improvement of health and social care services”

and

“the efficient and effective use of resources in the provision of health and social care services.”

That is very similar to the new duties for Monitor, so why create a quango that will cost—at the lower end of the Minister’s estimates—£240 million over the five-year life of a Parliament? Bearing in mind that the Government have cut funding for public health observatories by 30% this year and 30% again next year, that is a huge sum. The observatories are vital organisations that we desperately need to tackle health inequalities and to make the health and well-being boards function effectively by assessing a properly compiled evidence base on which to plan health interventions. To spend huge sums on a monolithic creation when there are questions about whether it duplicates functions seems quite ridiculous and a waste of money.

Kevin Barron (Labour, Rother Valley)

My hon. Friend has twice asked what Monitor is for. The Secretary of State said in evidence to the Committee last week:

“In so far as Monitor will have licensing responsibilities, it will be able to exercise ex ante licensing provisions, the purpose of which is to support the NHS. As a consequence, that will make less likely the intervention of any competition provisions, which tend to fragment and distort what would otherwise be the NHS’s approach.”––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 28 June 2011; c. 92, Q191.]

The simple answer is surely that Monitor is there to defend the NHS against competition.

Grahame Morris (Labour, Easington)

I agree with my right hon. Friend. It is a strange tale. There are so many contradictions in the arguments that were deployed when we started and the Government’s response. I have not even touched on why the functions that are being undertaken by Monitor cannot be transferred to the Co-operation and Competition Panel for a fraction of the cost. If memory serves me, the hon. Member for Southport raised that issue in the previous Committee stage, and it seems bizarre that we are creating this new bureaucracy.

Amendment 149 creates a new series of duties for Monitor starting with

“preventing anti-competitive behaviour in the provision of health care services”

where that is

“against the interests of people who use such services.”

I presume that that means patients. How great is the difference between promoting competition and preventing anti-competitive behaviour? That is not pure sophistry; it is an important question. According to the amendment, Monitor must also exercise its functions with a view to enabling NHS health care services to be provided in an integrated way where that would improve quality or reduce inequalities of access or outcomes; a similar duty applies to the integration of health with social care. The difference between the general duties set out in the clause to prevent anti-competitive behaviour and to promote integration needs to be clarified. We need further explanation from the Minister. The wording and context seem to imply that preventing anti-competitive behaviour is somehow more proactive, because that can be enforced, whereas integration needs only to be enabled, but even then it must be justified against tests of quality and inequalities.

Perhaps more interesting than what the clause and the amendments say is what they do not do. It is worth noting that there is no mention of a duty to reduce inequalities in the list in clause 58 of matters to which Monitor must have regard.

Jeremy Lefroy (Conservative, Stafford)

I am very interested in the contrast between promoting competition and preventing anti-competitive behaviour. I shall give a small example from my constituency. A social enterprise found it extremely difficult under existing competition regulations introduced by the previous Government to bid for a contract. Although it subsequently won the contract and has been very successful—it has cut waiting lists tremendously compared with the previous NHS provider—having a body that was able to prevent the sort of anti-competitive behaviour that, consciously or unconsciously, took place would have been of great benefit.

Grahame Morris (Labour, Easington)

It is an interesting example and I am sure all of this is relevant. I am not opposed to innovation where it improves the NHS. I am in favour of co-operative enterprises, such as the organisation the hon. Gentleman mentions, but I am against any form of privatisation that becomes a race to the bottom, where the terms and conditions of staff are threatened, where the benefits in terms of quality are dubious and where the private sector can cherry-pick and choose to exclude more complex cases, people with comorbidities and older patients.

Liz Kendall (Labour, Leicester West)

To respond to the hon. Member for Stafford’s question, why would commissioners not be able to prevent that behaviour, if they were really working in the best interests of patients? They could see who would provide a better service. Why set up a huge new body costing hundreds of millions of pounds over the next four years? Given that commissioners are supposed to be leading the NHS in the best interests of patients, why are they not able to do the job?

Grahame Morris (Labour, Easington)

On reflection, I think that is an excellent point. If the health and well-being boards and the commissioners are working effectively, can determine local need and have the proper evidence base, perhaps the CCGs can legitimately make that decision.

Owen Smith (Labour, Pontypridd)

Further to that point and the example given by the hon. Member for Stafford, is it not interesting that ultimately the social enterprise was successful in winning the contract and delivering the service? Even if doing so was difficult, that example proves that we do not need an enormous great new monolithic system.

Grahame Morris (Labour, Easington)

I am grateful for that very good point, which does not need further response.

I cannot recall if it was the hon. Member for Stafford or one of his colleagues, but questions were raised about the number of private patients or the role of the private sector. I took the trouble to look up the information, and I found that in 2003-04 the private sector treated less than 1%—0.7%—of NHS patients and in 2009-10, which is the last year for which figures are available, the figure had risen to only 2.14%. The number of patients treated is therefore not a huge or significant element in the NHS.

I am not arguing against private sector involvement where we do not have capacity—for example, for cataract and hip and knee replacement surgery. I am long enough in the tooth to remember very long waiting lists, when it was not uncommon for people to wait more than 12 or sometimes 18 months or longer for such operations. Capacity did not exist in the NHS despite our best efforts to go overseas. I worked in a hospital for some years and served on the management board of one in the north-east. We made strenuous efforts to recruit from countries that had surplus staff, particularly of skilled nursing staff. As a short-term measure, we recruited quite a number of staff in South Africa and the Philippines because it took several years for medics to come through the training schools and nurses to come through nursing school.

Margot James (Conservative, Stourbridge)

I feel that the hon. Gentleman accepted a little too readily the protestations of his hon. Friends about how easy it is for services to be commissioned in the interests of patients, as per the example of my hon. Friend the Member for Stafford. May I direct the hon. Gentleman to the website of the Co-operation and Competition Panel, where he will find numerous examples of PCTs throughout the country that have stood in the way of such ventures so that they could prop up uncompetitive loss-making units in their hospitals?

The rest of the debate is in Hansard.