Health and Social Care (Re-Committed) Bill

Public Bill Committee, 14 July 2011.

Clause 149 - Directors

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 192, in clause 149, page 138, line 3, at end insert—

‘( ) After paragraph 18D of that Schedule insert—

18E (1) The constitution must provide for meetings of the board of directors to be open to members of the public.

(2) But the constitution may provide for members of the public to be excluded from a meeting for special reasons.”’.

Good morning, Mr Hood, it is good to serve under your chairmanship, especially on our last day of deliberations.

Amendment 192 is intended to strengthen transparency in NHS foundation trusts by requiring boards of directors to hold their meetings in public. The Bill already proposes legislative changes that will establish a stronger, more transparent and more accountable governance regime for foundation trusts. In particular, the roles of governors and directors are clarified: governors can already remove the chair and non-executive directors, but we are giving them more explicit practical powers to help them to hold the board to account, for example, by questioning directors at special general meetings.

We have always encouraged the holding of public board meetings in foundation trusts. Our concern was about forcing change through legislation, as it is argued that that can be counter-productive. As we discussed in March, holding open board meetings is really about cultural change within an organisation. Genuine accountability for decision making in foundation trusts is best achieved by governors and directors agreeing locally the arrangements that work best for them, the foundation trust and the public it serves.

NHS Future Forum recommended that there must be transparency about how public money is spent, how and why decisions are made and the outcomes being achieved at every level of the system, including a requirement on foundation trusts to hold their corporate board meetings in public. All other NHS organisations are required to hold public board meetings, although that requirement has never applied to foundation trusts and is a matter for each to decide. Although many foundation trusts do hold their board of directors meetings in public, others do not. The Foundation Trust Governors’ Association says that open board meetings help governors to hold the board of directors to account more effectively and would like that to be made compulsory.

The amendment would ensure that all foundation trusts hold open board meetings, so that the membership and wider public can understand the internal arguments, tensions and restrictions that lead to a decision, and better scrutinise and contribute to decisions on the delivery of local health care provision. As I said, NHS trusts must hold public board meetings, and because our clear expectation is that the majority of NHS trusts will become foundation trusts by 2014, the amendment would address the risk of some trust boards choosing to become less open at the point of foundation trust authorisation.

Like all other public bodies that are required to hold open board meetings and as NHS trust boards do now, foundation trusts would be able to have a closed part of their meetings to discuss confidential and sensitive matters. Requiring public board meetings in foundation trusts is a response to our listening exercise and mirrors the existing requirement on other public bodies and boards of governors of foundation trusts. It demonstrates our commitment to make the NHS more accountable and transparent.

Owen Smith (Labour, Pontypridd)

Mr Hood, it is absolutely lovely to serve under your direction, and terrific that it is the last day of the Committee. On that we absolutely agree. Another matter on which we completely agree with Ministers is that this is an excellent amendment —a first-rate amendment. In truth, it bears remarkable similarity to Opposition amendment 641, tabled in the previous iteration of this fine Committee, which suggested that the board of directors should meet in public.

At the time, we thought that would be a pretty straightforward and good admission to the statute book, but apparently the Government did not agree. We thought the amendment was a good idea for all the reasons the Minister has just enunciated. Boards of directors make crucial decisions about changes in services, staffing levels, a trust’s priorities and budgets, and whether they want to merge with another trust or change the number of patients being treated privately in that trust, as opposed to publicly, for example. At the time, the Minister of State, the hon. Member for Sutton and Cheam, said that he was stunned at our suggesting such a requirement. He thought it quite extraordinary that my hon. Friend the Member for Islington South and Finsbury was suggesting such a thing. He went on to say:

“My concern about the amendment is that its approach is to add to the Bill a provision about”—

the board—

“having meetings in public.”

What an outrageous thing for us to suggest He continued:

“We have to find other ways really to ensure that governors have the ability to scrutinise, call to account and do everything we discussed under clause 136.”

And he went on to say

“we do not think the amendment is necessary. We believe the changes”—

Steve Brine (Conservative, Winchester)

Will the hon. Gentleman give way?

Owen Smith (Labour, Pontypridd)

I will when I have finished this lovely quotation:

“We believe the changes we are making to the governance arrangements of foundation trusts are a significant step in the direction that all Members want to see. We should not be attempting to fetter the organisations that we want to be more autonomous, as we would by making the amendment.”––[Official Report, Health and Social Care Public Bill Committee, 24 March 2011; c. 1058-60.]

The Government have clearly decided that they are going to fetter the discretion of those bodies and make them less autonomous. In my view they will not be less autonomous, but simply more transparent—something of which the Government are ostensibly very much in favour.

Steve Brine (Conservative, Winchester)

I suspect that the hon. Gentleman knows what I am going to say, but I have two points to put to him. First, when his party’s Government set up foundation trusts, they did not mandate that the boards met in public. Secondly, when the knife falls at 7 o’clock this evening, I dare say Opposition Members will complain that we have not had enough time. As they agree wholeheartedly with the amendment, shall we just agree it and move on?

Owen Smith (Labour, Pontypridd)

I think that the public expect us to scrutinise all aspects of the Bill, so I have some other questions for the Minister. Given that we suggested that this was a good idea last time and he did not agree— [ Interruption. ]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. This is the last day, I know.

Owen Smith (Labour, Pontypridd)

I am grateful, Mr Hood. I shall move on to a few further questions for the Minister, because I do not think that he has explained clearly why he changed his mind. He did not explain what happened in the intervening period to persuade him that he was fundamentally wrong last time and is absolutely right this time. I would be grateful if he did so.

The substantive point is that, under the amendment, new paragraph 18E(2) of schedule 7 to the National Health Service Act 2006 still states that the

“constitution may provide for members of the public to be excluded from a meeting for special reasons.”

The crucial question is: what sort of special reasons? Non-FTs may or may not meet in public, just like FTs, and when we tabled amendment 641 I think we conceded that FTs in particular ought to be obligated to meet in public. That was clearly an omission from earlier legislation, because it is a good idea that they do so. Will the Minister spell out the special reasons for which a board of directors might decide to meet in camera? Can he provide some examples of when it might want to meet in camera? I do not think that is too much to ask.

Dan Byles (Conservative, North Warwickshire)

Obviously, I am not speaking for the Ministers, so if I give a hypothetical example, the hon. Gentleman must not pin it on those guys. This is such a waste of time. Can the hon. Gentleman not think of reasons? Suppose a board has to meet to discuss dismissing the clinical director for gross incompetence; something like that might well be discussed in private, not in public, if the board if had to talk about specific clinical cases. There are many possible reasons.

Owen Smith (Labour, Pontypridd)

I concede that there might be a reason why the board wanted to meet in private to discuss, for example, dismissing a medical director. However, in that example, should the public not know if the board decided to dismiss a medical director? [ Interruption. ]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. The hon. Member for North Warwickshire cannot ask the hon. Gentleman a question and then heckle him while he is answering.

Simon Burns (Conservative, Chelmsford)

Why not?

Jimmy Hood (Labour, Lanark and Hamilton East)

Why not? Because it is against order, and it is not going to happen. The Minister should know better.

Owen Smith rose—

Kevin Barron (Labour, Rother Valley)

Will my hon. Friend give way?

Owen Smith (Labour, Pontypridd)

Certainly.

Kevin Barron (Labour, Rother Valley)

We have made a very interesting start this morning. It is a great pity that, for the last few weeks, Government Back Benchers have not been asking Ministers about this atrocious Bill and the way that they are trying to ram it through Parliament without proper debate.

Owen Smith (Labour, Pontypridd)

What has got into the Conservative Back Benchers this morning? They have been pretty somnolent throughout most of our proceedings. To be honest I thought they had been slipped a mickey for most of it, so little did they have to say, but this morning, for some reason—with an audience, perhaps—they have all decided they need to show off. Let me make it clear: he is my boss, not yours. Do not worry about it.

Although there may be certain circumstances in which it is entirely proper for a board of directors to meet in camera, will the Minister let us know whether such circumstances include, for example, the board of directors, under the new dispensation the Bill provides, deciding whether to treat more private patients and fewer public patients in a hospital? Is that one of the clear areas where the board of directors might, for commercially sensitive reasons, meet in camera?

Grahame Morris (Labour, Easington)

I wish to place on the record my thanks to you, Mr Hood, and to say what a pleasure it is to serve under your chairmanship.

I have a couple of brief points and a question I would like to pose to the Minister. As my hon. Friend the Member for Pontypridd has outlined, we support the amendment and the strengthening of the Bill by placing a general duty on FT boards to be more open about their meetings. Clause 165 sets out that the directors of an FT must avoid conflicts of interest—not just declare conflicts of interest, but avoid them—and not accept benefits from third parties which relate in any way to their role in the foundation trust. That is very significant, and I would like some clarification from the Minister, such as an example—

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. I am finding it difficult to tell whether the hon. Gentleman is speaking to the amendment. I suspect he is speaking to clause stand part and not the amendment.

Grahame Morris (Labour, Easington)

I will come back on clause stand part, Mr Hood.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I anticipate the clause stand part debate even more keenly.

The hon. Member for Pontypridd asked why the Government tabled the amendment, which he powerfully welcomed as a sensible measure. The answer is simple: we as a Government decided to pause, listen and reflect; and having done all those things and respected the representations we received from outside the Committee, we have changed our mind. Given that he claimed ownership of the amendment, I hoped that he would already be assured that foundation trusts exercising their responsibility as public bodies that choose in certain circumstances to meet in private would do so properly in accordance with the provisions set out in the Public Bodies (Admission to Meetings) Act 1960. In the amendment, we are attempting to give effect in this Bill to those provisions, which give a clear guide to what is and is not a matter that can be dealt with in camera.

Let me give a couple of examples. A discussion in the board might involve a breach of data protection legislation if it were held in public, so it would be necessary for that discussion to take place in private. If there was a concern that the common law duty of confidentiality might be breached by discussing a matter in public, the board would have to consider discussing it in private. Similarly, if a commercially sensitive matter was being discussed, such as the sale of intellectual property rights and so on, the board might well decide that it needed to meet in private. The hon. Gentleman asked about discussions on whether a trust would take on a larger case load of private paying patients. We can see absolutely no circumstances that would allow a board to decide to meet in private to discuss and make decisions on a matter that is fundamental to the purpose of foundation trusts, which is to provide services to the NHS.

With all those reassurances, and anticipating further questions on clause stand part, I hope that the hon. Gentleman has been reassured and that the Committee will accept the amendment.

Owen Smith (Labour, Pontypridd)

Will the Minister clarify his final remarks? I think he said that were the board to consider shifting the proportions of patients being treated privately and publicly, they could do that in private.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

No.

Owen Smith (Labour, Pontypridd)

That is not what he said?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

If the hon. Gentleman reads Hansard , it will be clear that I have made clear that they could not do that in private.

Owen Smith (Labour, Pontypridd)

My hon. Friend the Member for Easington has already touched on new paragraph 18B(1), which inserts a duty on directors

“to avoid a situation in which the director has (or can have) a direct or indirect interest that conflicts (or possibly may conflict) with the interests of the corporation.”

The Future Forum made recommendations to the Government on other provisions. Notably, recommendation 16 suggested that health and well-being boards ought to have a role in identifying and addressing conflicts of interest in commissioning consortia, but the Government have rejected that. The clause talks about conflicts of interest only in relation to trusts, which gives rise to a couple of questions.

All FT trusts have on their board a medical director, who is normally also a consultant or senior clinician in the trust. My simple question is: would that individual be obliged to declare an interest or to absent himself from a meeting of the board of directors if the board was considering increasing the proportion of private patients to be treated in the FT, because of the clear risk that that consultant, certainly if he practised in a mainstream area of medicine, would be among those who treated those patients privately in that hospital and would thereby benefit financially from it.

The reason why we are particularly worried about abolishing the private patient cap is that, in our view, it is another area where the Government did not listen adequately during the pause. They did not listen what to the Future Forum was telling them. I am not talking about its report—the Future Forum has conceded that it did not raise the private patient cap vigorously enough in its report—however, it has raised it subsequently.

I will finish with a quote. In his evidence to the Committee, Steve Field said of the private patient cap:

“If you wanted a gut feeling for what was happening in the listening, the feeling was that the private cap should actually stay, because people felt that that would provide a protection.”

He also said that

“we did not put as much in our report as perhaps we could have done. In fact, it was one area, having re-read the paper at the end, that we might have been stronger on”.

He went on to say that—and this is something I hope to raise later—

“if you opened the cap, it made you more likely to be under…EU law, competition and Monitor”.––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 28 June 2011; c. 14, Q24.]

I think Professor Field means that this is one of the key areas in which changing the nature of what have hitherto been social providers, by shifting them in the eyes of the law to a more commercial setting, risks destructively subjecting them to EU competition law in the courts. That is what we have been saying all along. I would be grateful if the Minister cleared up whether medical directors should absent themselves from decisions on shifting the proportion of patients. What does he have to say on the decision to raise the private patient cap?

Grahame Morris (Labour, Easington)

I rise to reinforce my hon. Friend’s point. Proposed new paragraph 18B(1)(a) of schedule 7 to the National Health Service Act 2006 sets out a duty that foundation trust directors must avoid conflicts of interest, rather than simply declaring them; and proposed new paragraph 18B(1)(b) specifies that directors must not accept benefits from third parties that are related in any way to their role within the foundation trust.

Will the Minister elaborate on that duty to avoid conflicts of interest? I am particularly thinking of foundation trust directors who come from private sector health care companies and who might seek some advantage. The board as a whole might see some advantage in having outside expertise, but my concern is that it may be used as a Trojan horse to bring a private sector interest into a foundation trust. I would welcome the Minister’s views on that and any reassurances that he can give.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I will start by elaborating a little further on conflicts of interest, but perhaps I will come back with a bit more detail in a minute.

When it comes to directors avoiding conflicts of interest with third-party benefits and so on, foundation trusts have always been able to participate in joint ventures. Principles of public law mean that foundation trust directors are already subject to the same duties as directors of other organisations. The clause specifically clarifies the duty on all conflicts of interest.

The hon. Member for Pontypridd has raised some broader points on the cap and what has and has not been said by Steve Field and the NHS Future Forum. When Professor Field spoke to the Committee on 28 June, he said that the Future Forum had talked “a little bit” about the private patient cap, but that

“we did not put as much in our report as perhaps we could have done. In fact, it was one area, having re-read the paper at the end, that we might have been stronger on, but, because the feedback was so mixed, I did not feel that we could actually make a strong recommendation.”––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 28 June 2011; c. 14, Q24.]

It is important to have the whole quote because there were many different and conflicting opinions. Opposition Members have a strong and clear opinion that is not reflected by all of the many opinions that were gathered during the listening exercise.

The Government’s response to the NHS Future Forum report said:

“We have heard concerns about our proposal to lift the cap on the amount of income foundation trusts can earn from treating private patients. Some fear that this could lead to NHS resources being used to cross-subsidise private care. Any cross-subsidy of this kind would breach the fundamental principles of the NHS, as set out in the NHS Constitution, which makes clear that ‘public funds for healthcare will be devoted solely to the benefit of the people that the NHS serves’. To provide assurance and transparency, we will require foundation trusts to produce separate accounts for NHS and private-funded services.”

That sets out the Government’s approach clearly. We want transparency and separate accounting for any resources generated through private activity, and, because these are public benefit organisations that have a legal, statutory duty to provide services to the NHS, we are clear that the safeguards are sufficient. I will say more about those in a moment, because it is important to have the issue on the record.

The other intriguing aspect of the debate about the cap is that, even towards the end of the previous Administration, there was recognition that the current arrangement was inconsistent and unfair. It was unfair because it resulted in a situation where NHS trusts have no restriction whatever on the level of private activity that they can engage in.

It may interest the Committee to hear about the top 10 NHS organisations—FTs and non-FTs—when it comes to their income from private activities. Those activities are not just about treating patients; they can be joint ventures, the realisation of value from intellectual property through research and so on. We find that Great Ormond Street hospital, which is an NHS trust, earns 7.8% of its total income from private patients. The figure for Imperial College Healthcare NHS Trust is 4.6%. The Robert Jones and Agnes Hunt orthopaedic and district hospital earns 4%. Royal Free Hampstead NHS Trust, which is number 11 on the list, has a figure of 4%.

The reality is that those organisations are not in any way eroding the fundamental principles of the NHS as a service—to provide support, care and treatment for people that is free at the point of use and based on people’s needs. If they had been, the Labour Government would surely have taken the opportunity over the past 13 years to impose a cap on them as well. They chose not to.

Daniel Poulter (Conservative, Central Suffolk and North Ipswich)

The Minister just made an important point. Does he agree that, under the current system, a medical director may well be involved in performing some operations that are run by the private sector elsewhere in the hospital, as he has just outlined? Does he also agree that there would be no concerns that I am aware of—I wonder whether he is aware of any—about medical directors having conflicts of interest between the NHS and a private provider that also provides services to the hospital?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The hon. Gentleman again draws on his own expertise and experience, but the issue returns to the specific question of the hon. Member for Pontypridd as well. The clause specifically says that directors of any sort must avoid situations in which they would have a conflict of interest. If there is such a conflict, they must take the necessary steps that would apply in any corporate body.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

We need to consider the collection of clauses and measures in the Bill—not just the private bed cap—and what the Government’s intentions are. Those are the arguments that we have made. It is not just the private patient cap; it is also the ability of NHS trusts to dispose of their assets and raise loans. Those abilities shift the agenda considerably.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

And they were part of the agenda set out by Alan Milburn when he first announced the policy of foundation trusts and part of the direction of travel under the previous Government. It is extraordinary that the hon. Lady would suggest some sort of new agenda was being promoted by the current Administration. The idea of autonomous organisations accountable to their local populations and to NHS staff was—

Liz Kendall (Labour, Leicester West)

Will the Minister give way?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

No, I will not at the moment, because I want to talk about the safeguards.

Liz Kendall (Labour, Leicester West)

He is making a point about—

Jimmy Hood (Labour, Lanark and Hamilton East)

Order.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I am not giving way, Mr Hood. I want to make some progress.

There are the following safeguards: first, the NHS commissioning board and clinical commissioning groups would be responsible for ensuring that NHS patients are offered prompt and high quality care. Secondly, the principal lead and purpose of FTs is, and would continue to be, the provision of goods and services to the NHS in England, as I have said. Thirdly, FTs cannot distribute surpluses externally. Fourthly, the Bill would strengthen FT governance arrangements in a way that currently does not exist. Fifthly, there would be greater transparency, not least in regard to the accounting for separate incomes.

That is the Government’s approach, and those safeguards are measured and reflective of the direction of travel under the previous Administration.

Margot James (Conservative, Stourbridge)

It is important that we are not defensive about the removal of the private patient cap. In the early sittings of the re-committed Bill, we heard evidence from Sue Slipman, the director of the Foundation Trust Network, who talked about the benefits of bringing more private money in to the NHS, and that it would benefit NHS patients. She also made the point that it would not only be about bringing new money in, which I am sure we would all applaud, because it would be about intellectual property and the development of new services from which NHS patients could benefit, too.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

My hon. Friend is absolutely right. That bit tends to get lost, which is why it is important to rehearse the fact that we are talking about opportunities that arise from joint ventures, and from exploiting the intellectual property rights of organisations, in a way that would benefit NHS patients, because capacity would be increased.

Emily Thornberry (Labour, Islington South and Finsbury)

Will the Minister give way?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

No, I am developing a point. I will consider giving way as I progress, but I am equally keen for us to make progress in the seven and a quarter hours that we have to consider the Bill today—[ Interruption. ]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. Members are aware that they are misbehaving and that they are out of order. I ask them to be more considerate about the procedures of the Committee. It may be the last day, but there are still important issues to be aired, and it is important that the Member who is addressing the Committee is given order. That goes for both sides.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I am grateful for that ruling, Mr Hood.

I want to end my remarks by referring to an instructive debate from 2009, in which the Minister of State at the time, Mike O’Brien, then the Member for North Warwickshire, said:

“We take the view that the way the system operates now”

—we are talking about the system of private caps—

“is not the way we want to see it operate. It is not fair.”—[Official Report, 12 October 2009; Vol. 497, c. 70.]

It was very clear, and remains clear, that the previous Government recognise the legitimate case that foundation trusts were making about the lifting of the caps not being a threat to the fundamental values of the NHS, because those organisations are required to adhere to the NHS constitution and they are clearly there for the benefit of the public they serve. For those reasons, I hope that the clause will stand part and that my hon. Friends will support it.

Emily Thornberry (Labour, Islington South and Finsbury)

The question I would have loved to ask the Minister—I believe it would be good if Liberal Democrats attending his conference were to hear the answer—is whether he really believes that it is in the interests of the national health service for the cap on private patients not to be altered, amended or improved, but to be lifted. Is that his position? If so, there are many people who would be very interested to hear it and does he speak on behalf of the Liberal Democrats in Parliament when saying so?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I shall respond briefly, because my Liberal Democrat colleagues are somewhat less gullible than the hon. Lady might want to suggest. What they know, and what they were very interested to know, is that there are many organisations that are not foundation trusts, are not subject to a cap, never have been, and, as a result, generate significant earnings from their private patient incomes. I have mentioned them already and I will not rehearse them again. Given that the Opposition now seem to be so obsessed with this, it surprises me that in 13 years in government they did not take the opportunity to deal with it.

Fiona O'Donnell (Labour, East Lothian)

I join colleagues across the Committee in welcoming you back, Mr Hood. At what stage did the Minister realise that Professor Field’s report did not contain advice on the cap on private patients in foundation trusts? Did he go back to Professor Field and seek any explanation or advice? Now that the Minister has the benefit of that advice, how does he respond?

Owen Smith (Labour, Pontypridd)

We have discussed the lifting of the private patient cap at some length. The Minister listed a number of FTs and trusts—

Paul Burstow (Liberal Democrat, Sutton and Cheam)

They were all trusts.

Owen Smith (Labour, Pontypridd)

Fine. The Minister listed the percentages, which prompts me to ask whether he thinks there is an upper limit to which trusts or foundation trusts should adhere. Or is it the Minister’s view that there is absolutely no limit, and that FTs can raise as much income as they want from private operations such as research, treating private patients or any of the other things that he listed? If he thinks that there is absolutely no limit, it is hard to see how the stipulation in the Bill that the principal role of FTs is to provide public NHS goods and services—to provide health care on the NHS—can be met. A particularly entrepreneurial trust might seek to ratchet up such activities over the years to levels that impinged on its ability to deliver its prime duty. Does the Minister think that that is wholly unforeseeable and that the Government will not have to legislate in future to redress that balance?

Jimmy Hood (Labour, Lanark and Hamilton East)

Do you want to respond, Mr Burstow?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

No.

Clause 156 - Authorisation

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 193, in clause 156, page 141, line 34, at end insert—

‘( ) After section 35(3) of that Act (things the regulator must consider before deciding whether it is satisfied as to the matters in subsection (2)) insert—

(3A) The regulator must not give an authorisation unless it is notified by the Care Quality Commission that it is satisfied that the applicant is complying with (so far as applicable) the requirements mentioned in section 12(2) of the Health and Social Care Act 2008 in relation to the regulated activity or activities the applicant carries on.

(3B) In subsection (3A), “regulated activity” has the same meaning as in section 8 of the Health and Social Care Act 2008.”’.

We remain committed to patients being able to expect high-quality health care from the best providers available. Our aim in updating the national health service is that the best provider should flourish and that patients should have real choice about their care. The previous Government created foundation trusts, recognising that top-down management of all NHS providers would never achieve the best care for patients.

Liz Kendall (Labour, Leicester West)

Will the Minister give way?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I will give way in a moment, but I would like to make a little progress on introducing the proposition behind the amendment. Like the previous Government, we are committed to supporting the pipeline of all NHS trusts becoming foundation trusts in their own right, or becoming part of a foundation trust, so that all patients and staff can benefit from providers that are autonomous and locally accountable. Foundation trust status shows that the trust has demonstrated its sustainability, clinically and financially, and quality is at the heart of this.

Liz Kendall (Labour, Leicester West)

The Minister referred just now and earlier to the fact that the previous Labour Government established foundation trusts. I would like him to confirm to the Committee that on 7 March 2003—[ Interruption. ]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. A conversation is taking place in the middle of the Committee, which is not allowed. Please keep to order.

Liz Kendall (Labour, Leicester West)

Thank you, Mr Hood. I would like the Minister to confirm that on 7 March 2003 both he and his right hon. Friend the Member for Chelmsford—who appears to be popping out—voted against the establishment of foundation trusts.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

A stunning revelation, which adds nothing to our debate today.

Liz Kendall (Labour, Leicester West)

Yes, it does.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Over the last six years—

Liz Kendall (Labour, Leicester West)

You changed your mind.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The Opposition seem to have changed their mind dramatically in the last 12 months on so many issues that they cherished and stood on in their manifesto last year. For example, progressive—[ Interruption. ]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. The hon. Lady must stop heckling. I must insist that hon. Members do not ask questions and then heckle when they are getting an answer.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I am getting used to it now, Mr Hood. When Opposition Members do not like what they are hearing, they shout from a sedentary position.

Simon Burns (Conservative, Chelmsford)

I remind my hon. Friend that the reason that I, as a shadow Health Minister, and my colleagues voted against foundation trusts in the original legislation had nothing to do with the fact that we opposed the principle. We did not. We voted against them because the wishes of Alan Milburn and Tony Blair had been so watered down by the Neanderthal tendency of the Labour party that we felt that they would fail to achieve the potential that was designed for them.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I will leave that on the record as it was clearly set out to be.

We are making a number of the changes to the Bill in the amendments because during the listening exercise particular concerns were expressed about quality and patient care. People felt that that might be compromised if NHS trusts were pushed to apply for foundation trust status before they were ready. Although the NHS Future Forum did not specifically suggest this, we have decided that we should go further. Alongside our commitment for all NHS trusts to achieve foundation trust status, we have already given assurances that there will be no lowering of the bar in Monitor’s stringent tests, including in the way in which the quality of services is considered during the application process. We maintain that undertaking.

Applicants will need to have strong boards, be clinically and financially robust in order to succeed, and quality will be at the heart of the assessment process. We now need to go further, building on the work that has been done in response to the first Mid Staffordshire inquiry findings. Monitor, as foundation trust regulator, and the Care Quality Commission, as quality regulator, have improved the authorisation process for new foundation trusts. They have already signed, and work to, a memorandum of understanding governing their co-operation and collaboration to assure the quality of services provided by NHS trusts in advance of their authorisation by Monitor as foundation trusts. However—and it is an important loophole at the moment—this is only a voluntary agreement and it is not legally enforceable.

The amendment therefore creates a statutory basis for these improvements, made after the tragic failings at Mid Staffordshire, ensuring that the new arrangements remain an essential part of the authorisation process. It does that by placing a statutory requirement on Monitor to gain assurance from the CQC that the quality of services provided by a trust meets the requirements necessary to remain registered. The amendment is needed to ensure that quality is not compromised in any way and remains paramount in a successful foundation trust application. The amendment underscores the Government’s commitment to quality as a vital organising principle of the NHS.

Owen Smith (Labour, Pontypridd)

This is a technical and slightly curious amendment. I take the Minister’s word that it places on a statutory footing the need for Monitor to consult the CQC before authorising foundation trusts. I also heard what he said about there being no lowering of the bar in respect of the authorisation of trusts as FT trusts. I am not sure that that is correct or exactly what will be achieved, so I want to explore precisely what the clause does and how it builds on previous legislation, because it is very complicated.

As the Minister said, the clause effectively places a duty on Monitor to consult the CQC to determine that it is happy that the trust is up to scratch in quality terms before granting it FT status. According to the clause, the sorts of thing that the CQC must consider are established in statute under sections 12(2) and 20 of the Health and Social Care Act 2008. Those provisions broadly provide a list of the sorts of activity in which the trust is engaged. It is not a detailed list of precisely what a trust does. That additional safeguard, as the Minister put it, is required because clause 156 changes the nature of authorisation from an ongoing process to a one-off process. Hitherto, when FTs have been authorised, the authorisation was an ongoing set of riding orders for the trust, with the implication that if the trust resiled from carrying out some of the things it agreed to do when authorised, thus shifting the nature of what it offered, that authorisation could be called into question.

As this is pretty complicated I shall quote the explanatory notes, because they make the position clear:

“Under current legislation, Monitor sets terms of authorisation when authorising an NHS Trust to become a foundation trust, and these terms form the basis of Monitor’s foundation trust-specific regulatory regime...Monitor would in future issue licences to providers with conditions attached, and all providers would be regulated on the basis of such conditions.”

We discussed licensing conditions last week and exposed a flaw, as the conditions are not mandatory. Monitor does not have to insist that specific conditions will be set or placed on a trust; it may insist on them, and the constitution of the trust may stipulate the conditions. A licensing process will take place, rather than the trust

“receiving ongoing terms of authorisation”.

Instead there will be

“a one-off test to gain authorisation.”

Crucially, the clause goes further and repeals the duty placed on FTs by section 33(2)(a) of the National Health Service Act 2006 to

“describe the goods and services”

to be provided. That is important, because the duty imposes a transparent benchmark for the services that the trust will offer. It stipulates what the trust offers at the point of seeking and gaining authorisation. I will cite an example of such an application in a moment.

The explanatory notes explain that the clause

“repeals the requirement in section 33(2)(a) of the NHS Act to describe the goods and services…This information is currently required to set the terms of authorisation. In future, Monitor as the economic regulator”—

Strangely, they do not say that it is sector specific—

“would be able to use its licensing regime to require a provider to provide a particular service.”

As I said, the licensing regime does not specifically mandate or force the trust to provide, every time, all the services that it offers at the point at which it is authorised. The explanatory notes state:

“The existing powers under which Monitor can use terms of authorisation to ensure the provision of a particular service would therefore no longer be required.”

Previously, that authorisation was ongoing and contingent on the trust providing a specific set of services. The latest application I could find was from Southampton University Hospitals. That trust lists cardiac surgery, vascular services, haematology, radiotherapy, children’s oncology and so on—all of the services that are provided. That is a useful benchmark, laid down in the procedures, that allows the public to look at what the hospital provides, and to see if it chooses in future not to provide some free services that it was thought it would provide. Opposition Members believe that is important. We assume that the NHS will provide comprehensive services, certainly in large hospitals.

We fear that when hospitals have greater autonomy they may start to shift the nature of the services they provide, for example, choosing to do more elective work with private patients, or less expensive work in areas that are less lucrative. That is a serious concern. The Minister said that the measure did not lower the bar, but I believe that there is a risk that it will do so. It is a lesser duty offering fewer guarantees that services and goods—spelled out previously as provided by a trust—will not be changed or reduced, either when the trust shifts to become a foundation trust, or later. It is clear that it could be done at a later stage. That prompts the question of why the Government want to do this. Why would they want to set a lower bar? Why would they want less public insight into what the trust provides? The answer is clear: they are interested in providing greater autonomy and less oversight of the trusts. As the Minister said, top-down management is to be eschewed at all points.

Paul Burstow indicated dissent.

Owen Smith (Labour, Pontypridd)

The Minister said that the previous Government thought that top-down management was not the best way to deliver NHS services, which is why they shifted to NHS foundation trusts. The Government have said on myriad occasions that they are not in favour of top-down management. One man’s top-down management is another man’s oversight and surety for the public that the hospital will provide in future all the services it has in the past, and will not, in exercising increased commercial freedom, decide to drop some services, or increase provision where it may be more lucrative, for example, in respect of private patients. That is a simple test for the Minister. Can he guarantee that the stringency of the test will not be reduced, and that the measure will not lower the bar or have unforeseen consequences?

Jeremy Lefroy (Conservative, Stafford)

It is a pleasure to have you back in the Chair, Mr Hood. May I speak to the clause stand part, because the comments made by the hon. Member for Pontypridd concerns clause stand part? I listened carefully and he made an interesting point.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. Having looked at the amendment, it may be appropriate to take clause stand part along with it.

Jeremy Lefroy (Conservative, Stafford)

Thank you, Mr Hood. I welcome the amendment. My hon. Friend the Minister made it clear that its introduction was partly motivated by the experience at the Mid Staffordshire foundation trust. What has emerged from the initial Francis report and the ongoing public inquiry is that the interaction between Monitor and the then Healthcare Commission, now the Care Quality Commission, was not sufficient. Monitor relied on the Healthcare Commission’s work, which was not adequate for those purposes. I therefore welcome two things in the Bill: the amendment and the duty on both Monitor and the Care Quality Commission to work together more closely. The amendment will make it clear to the CQC that it has to produce an in-depth report on any trust that is going for foundation-trust status and that Monitor has to take that seriously. Indeed, if the CQC has any concerns, Monitor should listen to them.

Owen Smith (Labour, Pontypridd)

As ever, the hon. Gentleman makes a thoughtful contribution. A moment ago, he said that he thought that this amendment would place a duty on the CQC to provide a detailed report. It does not actually say that. It simply says that it needs to be satisfied before it offers its imprimatur to the foundation trust. I assume that that involves some sort of paper assessment. If the hon. Gentleman looks at sections 12 and 20 of the Health and Social Care Act 2008, he will see that they are very vague about what it needs to do. Those provisions are not detailed enough for us to be certain that the CQC will do a detailed analysis.

Jeremy Lefroy (Conservative, Stafford)

I can see the point that the hon. Gentleman is making. If we go into too much detail in primary legislation about what the CQC is supposed to do, we will end up with reams and reams of paper, just as we saw when we were asked about the Secretary of State’s responsibilities—in that instance, the detail came to 250 pages.

Some of us have expressed concerns about how the CQC will operate in future and the volume of work that it will be required to do. If the CQC is to fulfil the requirements that we all want it to fulfil, it will have to adopt a very strict view about what it means here about being satisfied. It will not be satisfied with poor or even mediocre standards of care. It has to be satisfied with very high standards of care. To some extent, we have to say that if the CQC is not going to set those very high standards of care and be satisfied with them, we must look very carefully at what it is doing. I believe that the leadership of the CQC will do that, and that is the standard against which it will be judged.

Liz Kendall (Labour, Leicester West)

I always listen carefully to what the hon. Gentleman says. Does he share the growing concern over whether the CQC will be able to do all the jobs that are now being required of it? It should be doing a huge job of work in ensuring that no one in a Southern Cross home is left with poor-quality care. It has already delayed the registering of primary care practices and it is supposed to be dealing with dentistry as well. Does he think that we need to look at the CQC’s work load again?

Jeremy Lefroy (Conservative, Stafford)

The short answer is yes, I am concerned about the CQC’s work load. I am convinced that Ministers are considering that at the moment. Across the House, there is concern that the CQC has extremely onerous responsibilities and that is something that we must look at very carefully, as I am sure Ministers are doing at the moment.

Margot James (Conservative, Stourbridge)

I thank my hon. Friend for giving way. [Interruption.]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. The hon. Lady is being interrupted by a conversation across the Front Benches. I ask hon. Members to stop because it is just not acceptable.

Margot James (Conservative, Stourbridge)

Thank you, Mr Hood. I am reassured that Ministers are considering the work load of the CQC, because it is an issue that concerns us all. I would like to put it on record that I have a slight concern about the leadership of the CQC. Should we extend ministerial inquiries beyond the current scope?

Jeremy Lefroy (Conservative, Stafford)

I do not want to continue too much on the CQC, because I want to address the point made by the hon. Member for Pontypridd—I hope I have the pronunciation right.

Owen Smith (Labour, Pontypridd)

Excellent.

Jeremy Lefroy (Conservative, Stafford)

The hon. Gentleman made a valid point in referring to the change to section 33(2) of the 2006 Act. Under the Act as it stands—this point relates to the whole clause rather than the specific amendment—foundation trusts will be able to extend their remit into areas that they were not originally authorised for or to withdraw from them without, as I see it, going back for re-authorisation. I stand to be corrected on that. I will explain the relevance of the amendment. If what I have referred to happened—I am thinking not so much about the withdrawal from areas of service, but about the addition of further areas of service by a foundation trust—what responsibility would the CQC have in investigating whether that foundation trust was capable and up to engaging in those new areas of activity, which might be substantial? That is a genuine question, because the amendment does not deal precisely with that point. Bearing in mind the shortage of time today, I will now conclude my remarks.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

It is lovely to see you in the Chair, Mr Hood. My remarks will focus on what the Secretary of State has said about employees being given the option of a management buy-out of a foundation trust. Underpinning that proposal is the need for funds, so I want to know where those funds will come from. Usually, the source would be venture capital or private equity companies, so an employee buy-out would create not what the Government described as akin to a social enterprise, but a private equity-owned hospital.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

My hon. Friend poses an interesting question to the Minister about where the equity will come from for any social enterprise model, mutual or co-operative that employees wish to take on. Is there any suggestion that the Department for Business, Innovation and Skills will give grants to those organisations to engage, via the back door, with a potential localised privatisation and co-opting the co-operative model for other purposes?

Debbie Abrahams (Labour, Oldham East and Saddleworth)

That is a good question. Those are the sorts of things that we still do not know about. If there is a need to obtain funding from private equity companies, the majority shareholder will have the right to dictate how the organisation is run. Even if the employees can structure funding as debt secured on the assets, the lender is still likely to dictate the terms to ensure that the interest is paid. Can the Minister answer that question? Will he also explain how the views of the community, who are ultimately the users of the services, will be taken into account in that process?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I will start with that question because it is important to give a slightly broader context. Foundation trusts are already required to have governors and members. They are required to have a governance structure that is outward looking to their local communities. With the Bill, the Government are further strengthening the role of governors in holding to account the boards of directors of foundation trusts, further to increase transparency in the way in which they operate. In fact, that partly answers the question asked by the hon. Member for Pontypridd about how the public and the public interest would be protected if a foundation trust decided to change the mix of services that it provided. It also in some ways answers the question asked by the hon. Member for Stafford. However, it is not the only answer to those questions, and I will rehearse some of the others.

As the hon. Member for Oldham East and Saddleworth has said at earlier stages, to understand a clause in the Bill, one often needs to look at several clauses to see the context. In that regard, we need to take into account the role of commissioners in maintaining continuity of service, in assuring themselves of the quality of service and in ensuring that identified population needs are translated into commissioning plans that in turn are delivered by providers that are commissioned to deliver the services. Other clauses provide for the role of overview and scrutiny, which ensures that providers can also be called to account in that way. A number of other provisions, over and above those in this part of the Bill about FTs’ governance, answer the questions that the hon. Gentleman and my hon. Friend asked about transparency.

Owen Smith (Labour, Pontypridd)

I take the point about commissioners having a role in determining whether the mix of services is satisfactory, but the clause changes the nature of authorisation from an ongoing process to a one-off process. Does that mean that we have less control over the subsequent changes post-authorisation—post-licensing? If a comprehensive list of services will no longer be required up front, as it is under existing legislation, will the commissioners not consequently have less insight when it comes to judging any subsequent changes?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The answer to both questions is no, and I will explain why. The hon. Gentleman has talked a lot about our emphasis on autonomy, which seemed to me to be an area of agreement between us, because the previous Administration decided to pursue the same direction in their FT policy. Of course, with autonomy must come greater accountability, which is why we have set out in the Bill the enhancements on which I have elaborated.

We need to bear in mind the CQC’s history. It was established in legislation in 2008 and it adopted its current role as a body that licenses against essential standards in October last year. The business planning and the work to determine the level of resources that it would require were done under the previous Administration. It is a matter that deserves proper scrutiny and it will probably get such scrutiny in due course. We need to be careful what we say about CQC delivering its responsibilities, which is why we are undertaking reviews of cases such as Winterbourne View and will bring the findings back to the House. We also expect the Select Committee on Health to do its work in that regard.

Let me deal with the questions about authorisation moving from an ongoing to a one-off process. At the heart of the Opposition’s misunderstanding of this part of the Bill—one of many misunderstandings—is the question whether the licensing regime forces providers to do things. Monitor will have the power to enforce licensing conditions. The hon. Gentleman seemed to suggest that it would not, so I draw the Committee’s attention to clauses 105 to 111. His misunderstanding about the licensing regime is worrying, so let me say a little about the enforcement powers that the Bill provides.

Monitor will have the power to enforce licence conditions; it will be able to take actions including fining, requiring providers to take action or requiring them to undo actions that they have already taken. A clear range of powers is available to Monitor. As for the suggestion that somehow the Government are interested in lowering the bar and reducing accountability, nothing could be further from the truth. We want more oversight of FTs and, as I have explained, we are strengthening local accountability. We want organisations to become foundation trusts only when they are clinically and financially sustainable, which is what the tests that I have already outlined are all about. We are not lowering the bar; with this amendment and this clause we are making it clear on a statutory basis that Monitor needs to engage with the CQC in discharging its ongoing legal duties concerning essential standards of safety and quality.

I end with a brief reference to the questions from the hon. Member for Oldham East and Saddleworth about changing the status of organisations, although I am not sure that that is directly related to the clause and the matters before the Committee. If on reflection and after rereading her comments in Hansard I see that it is, I will write to her.

Liz Kendall (Labour, Leicester West)

Autonomy has been mentioned frequently by the Minister and by his fellow Minister of State, the right hon. Member for Chelmsford, who told the Committee why he opposed the creation of foundation trusts when they were initially established. I want to remind Members that the Secretary of State criticised foundation trusts when they were first introduced. He said:

“NHS trusts will not be able to vary their price”.

He questioned whether they would ever be able to help improve the capacity of the NHS because of

“the limitations of the Government’s proposals on commissioning and the price mechanism in health care transactions.”—[Official Report, 7 May 2003; Vol. 404, c. 766.]

That is not the kind of autonomy and liberty that the Opposition want. I wanted to put on the record the reason why Conservative Members voted against foundation trusts the last time.

Owen Smith (Labour, Pontypridd)

I confess that I am not wholly convinced by the remarks of the Minister, the hon. Member for Sutton and Cheam. He suggested that the reason why I argued that this was a lowering of the bar—shifting from the ongoing process with an up-front listing to a one-off process at the beginning of the authorisation through the licence conditions—was that I had misunderstood what was in the Bill in respect of Monitor’s ability to enforce conditions. I do not think I misunderstood that for one second. I will read the relevant clause, as the Minister clearly is not sufficiently familiar with it to understand it himself.

The Minister said that Monitor will have the powers to enforce conditions. Absolutely. However, clause 98, on standard conditions, states:

“licences may in particular be framed wholly or partly by reference to… the services provided under the licence”

So they may; it does not say that there must be a listing of what those goods and services are. Under clause 99, on special conditions,

“Monitor may… with the consent of the applicant”—

for trust status in this instance, “include a special condition”. So the trust now has the ability to object to Monitor suggesting—not insisting—that a special condition, such as the listing of the comprehensive services provided, ought or ought not to be included in its initial licence.

Clause 101 states:

“The standard or special conditions of a licence under this Chapter may in particular include conditions”.

It then lists some of those conditions. At no point does the Bill say that Monitor will list what those services are. At no point does it say that they will be included in the licences, or that they ought to be included as standard in the licences. At no point does the Bill make it clear that that is a fundamental shift in the nature of the authorisation. The points made by the hon. Member for Stafford still hold absolutely. I contend that this is still a lowering of the bar. The Minister might want to consider that before Report. I offer that in a spirit of helpfulness.

Clause 165 - Mergers

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 194, in clause 165, page 147, line 29, after ‘applicant’, insert ‘(that is an NHS foundation trust)’.

Jimmy Hood (Labour, Lanark and Hamilton East)

With this it will be convenient to discuss Government amendment 196.

Owen Smith (Labour, Pontypridd)

On a point of order, Mr Hood. This is merely a point of clarification. In my naivety I may be misunderstanding something, but I thought that amendments 196 and 197 were to clause 166, not to clause 165, as on the selection list.

Jimmy Hood (Labour, Lanark and Hamilton East)

The hon. Gentleman’s observation is accurate. The amendments, although to a different clause, have been grouped for debate. We will debate the amendments and then we will deal with them as we proceed through the Bill.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

It is helpful to have further illumination on the mysteries of amendment grouping. Thank you very much, Mr Hood.

Amendments 194 and 196 are minor technical amendments. They do not change policy, but together they will remove any ambiguity on the approval requirements for organisational mergers and acquisitions involving foundation trusts and NHS trusts. Clauses 165 and 166 apply to organisational mergers and acquisitions where two whole trusts merge or one trust acquires another.

Clause 165 addresses mergers between a foundation trust and another foundation trust or an NHS trust; and clause 166 addresses a foundation trust’s acquisition of another foundation trust or an NHS trust. The current wording of clauses 165(2) and 166(2) requires each applicant to attain the approval of the majority of its governors before a merger or acquisition can take place. The amendments are needed to clarify that the requirements for governor support apply only to foundation trusts. I beg to move that the clause, as amended, stand part of the Bill.

Jimmy Hood (Labour, Lanark and Hamilton East)

We will do clause stand part when we get there.

Owen Smith (Labour, Pontypridd)

On a point of order, Mr Hood. I may stray into clause stand part territory.

Jimmy Hood (Labour, Lanark and Hamilton East)

For the convenience of the Committee, we will take clause stand part with this group of amendments.

Owen Smith (Labour, Pontypridd)

That makes sense because these are not straightforward technical amendments, as the Minister says—not least in light of the Committee’s utter confusion earlier this week on mergers.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

On the Opposition side.

Owen Smith (Labour, Pontypridd)

No, I do not think the confusion has been caused by Opposition Members. We have been entirely clear.

As my right hon. Friend the Member for Rother Valley has said, we have exposed the Government’s confusion on which regulator will look at mergers at which juncture. The amendments seek to address which sorts of mergers between which sorts of bodies ought to be looked at by the regulator, and clause 165 provides that any foundation trusts wishing to merge must apply to the regulator under section 56 of the 2006 Act.

That prompts this straightforward question: which regulator? The 2006 Act does not specify which regulator foundation trusts are to look to. We heard last week that the OFT will look at some mergers and that Monitor will look at some mergers via, or in conjunction with, the Co-operation and Competition Panel. I would be grateful if the Minister could clear that up, because last week he clearly said that the threshold that will be applied—

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Tuesday.

Owen Smith (Labour, Pontypridd)

The Minister is right, but it feels like a week ago.

The threshold that will be applied is that set out in the Enterprise Act 2002. The Minister told us for the first time that the cut-off at which the OFT, rather than Monitor, will be employed to review a merger is where turnover is more than £70 million or where more than 25% of the market would be supplied.

The Minister also said that mergers between foundation trusts would always be looked at by Monitor. Having already been asked which regulator is meant in section 56 of the 2006 Act, the Minister also said that FT to FT mergers would be subject to Monitor. Is it not right, however, that the Co-operation and Competition Panel will look at NHS trust to FT mergers in future? I think that is the case. FT to FT mergers will be the preserve of the OFT, but FT to non-FT NHS trust mergers will be the preserve of Monitor, which is what I understand to be the case from information from the CCP.

If that is the case, how can it be right that the £70 million turnover threshold applies, because that is the arbiter as to where it is the responsibility of Monitor or the OFT? Some NHS trusts, and certainly the FTs with whom they are potentially merging, will have a turnover of more than £70 million. I will be grateful if the Minister looks at that.

The Minister prompted me to go back and look at the Enterprise Act 2002, because he was absolutely right—I apologise—that it is in the Act, not in regulations, that the £70 million figure is cited; it appears in section 23. Section 28 of the 2002 Act refers to the turnover test. As I said on Tuesday, I am slightly surprised that the revenues expended by an NHS trust should be considered as turnover. That is peculiar, because turnover usually suggests a commercial entity, which of course is what is meant in the Act. The explanatory notes state:

“The test will apply to turnover in the UK, and will be set initially at £70 million, but this figure will be alterable by statutory instrument.”

I therefore presume that that has not been altered since the 2002 Act and that the figure of £70 million is still in place. The explanatory notes continue at point 119:

“The test will be determined by reference to the turnover of the enterprise being taken over”—

this is the good bit—

“(i.e. if the turnover of the target company exceeds £70 million, the merger qualifies for investigation).”

That underlines the point that we made about mergers on Tuesday. The application of that sort of language and legislation to mergers between NHS trusts makes it all the more likely that the courts will, subsequently to the Bill, interpret them as being increasingly commercial ventures and therefore subject to far more stringent review from competition law. I ask the Minister to comment on that again in the light of what I have just read out. Does he think that we are wholly wrong about it and that it is not possible that the courts may take a more hard-line view in future on whether NHS trusts engage in commercial or NHS activities?

On mergers, the Minister said that

“the OFT has a discretion not to refer where patient benefits outweigh the adverse effects on competition. Patient benefits would include consideration of availability of patient choice and greater innovation and provision of high quality services.”––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 12 July 2011; c. 456.]

That again prompts a key question that my right hon. Friend the Member for Rother Valley raised on Tuesday. What on earth is the expertise that the OFT has to determine what constitutes the quality of services in the NHS? The point that the Ministers and the Secretary of State have been keen to make in response to the Future Forum is that a sectoral regulator—Monitor—with specific expertise in the NHS is needed because the NHS is different. It is not like determining whether Kellogg’s ought to be able to merge with Nestlé.

Roger Gale (Conservative, North Thanet)

Good afternoon, ladies and gentlemen. For the convenience of the Committee, I announce now that I intend to suspend the Committee at least once during this afternoon’s proceedings, to allow people to stretch their legs. Depending on how far into the night it appears we are likely to sit, I might find it necessary to suspend a second time towards 7 o’clock. There will certainly be one break—not that any members of the Committee smoke. The Chairman certainly does not.

Roger Gale (Conservative, North Thanet)

I remind the Committee that with this we are discussing Government amendment 196 and clause stand part.

Owen Smith (Labour, Pontypridd)

It is a pleasure to serve under your chairmanship, Mr Gale. When I was speaking earlier, I was asking a few questions of the Minister. I will briefly refresh his memory with a quick run-through of those questions. When we were last talking, I could not bring to hand the National Health Service Act 2006, which is relevant to the clause, but I now have it.

The clause effectively compels foundation trusts seeking to merge to apply to and alert the regulator. My first question was: which regulator? As we learned on Tuesday, there are to be several regulators, or arms of regulators, involved in mergers: the Office of Fair Trading, Monitor and Monitor through or with the Co-operation and Competition Panel.

The relevant section in the 2006 Act is section 56, “Mergers”, which says simply:

“An application may be made jointly by—

(a) an NHS foundation trust, and

(b) another NHS foundation trust or an NHS trust, to the regulator”.

Again, which regulator? Will the Minister clarify how it will be distinguished?

When the Minister spoke to us on Tuesday, there was some confusion. He suggested that it was on our part, but I suggest that it was not entirely clear what he was saying about who will do what. I will not quote him at length, but the key question is this: is it the case that the OFT will be responsible for considering only mergers between a foundation trust and a foundation trust, and/or where the turnover of one or both of the trusts is above the £70 million threshold?

Will Monitor consider mergers between foundation trusts and non-foundation NHS trusts? I think that that was what the Minister implied on Tuesday, and the CCP thinks that that is the case. If so, what will happen to the £70 million threshold where a non-foundation trust and a foundation trust merge? Will it disapply at that point? If so, where does it say so in the Bill? That is not clear to me at all.

My third question concerned expertise; I was only halfway through it when we broke. Does the OFT have the expertise to engage in such analysis? The key point is that the Minister said on Tuesday that the OFT has discretion not to refer where patient benefit outweighs the adverse effects on competition. Patient benefit includes patient choice, innovation and high-quality service provision. What expertise does the OFT have in respect of health care? As the hon. Member for Southport pointed out, if one rings the OFT and asks to be put through to its health division, one will be told that it does not have one. I therefore contend that its evident expertise in health care is extremely limited, to say the least.

The other point that I wish to make about expertise concerns Monitor and the Co-operation and Competition Panel. On Tuesday, the Minister said that it might be suggested that Monitor could consider all mergers—NHS and private. However, there are several complications with that approach, not least that mergers is a specialist area. I agree that the Office of Fair Trading is the expert in respect of mergers in a commercial setting.

The Minister went on to say that with the lower number of mergers that will be caught under the higher £70 million threshold—it is not clear whether that applies to NHS trusts as well as foundation trusts—Monitor would struggle to build up the expertise to consider those appropriately. I thought that that seemed an odd thing to say given that Monitor is ostensibly the sector-specific expert and, as we have now learned, it will be operating through the CCP.

I spoke to people at the CCP and was told that the CCP has so far dealt with 160 mergers. When I said to the Minister on Tuesday that the CCP principally dealt with mergers, he said that it does lots of other things apart from mergers. There are some other things that it does, but so far—and this is its information—it has dealt with 160 merger cases, five to 10 conduct cases, around five procurement disputes and two market studies. Therefore, it has dealt with 160 merger cases compared with about 20 other things. I will come back to the question on market studies in a moment.

Surely the Minister will concede that if Monitor is going to operate through the CCP, there can be no question of its not having expertise to deal with mergers, because the CCP has dealt with 160 of them. What is this issue about its not having sufficient expertise? Crucially, the question of cost then raises its head. If the CCP has successfully dealt with 160 merger cases in its short period of office, at a cost of £2.8 million per annum, can it really be necessary to create Monitor, which apparently will not have the expertise to deal with mergers, at a cost of £130 million per annum?

It would be simple if we just used the expertise of the CCP. We could even put it on a statutory footing. Apparently, the fact that it is not on a statutory footing is a problem because there is a danger that its words will not be heeded when it protests about the conditions of a merger. It is simple—put the CCP on a statutory footing and save £127.5 million.

Kevin Barron (Labour, Rother Valley)

My hon. Friend will have read, as I am sure all members of the Committee have, that the Government’s response to the Future Forum said exactly that. It said:

“We will maintain the existing competition rules for the NHS introduced by the last Government”—

who did this without all this statutory regulation that we are going through now—

“(the Principles and Rules for Co-operation and Competition), and give them a clearer statutory underpinning.”

That is not the case in this Bill, and we have not been told why.

Owen Smith (Labour, Pontypridd)

I am grateful to my right hon. Friend. I am not so sure that that is the case. Perhaps they are getting a statutory underpinning, but only through being folded into Monitor. That seems to be what is happening.

Kevin Barron (Labour, Rother Valley)

It is not clear in the Bill.

Owen Smith (Labour, Pontypridd)

Absolutely, it is not. It is not clear at all. My right hon. Friend is absolutely correct to say that it is not clear, and that applies to so many other things in this Bill.

What is equally unclear is how this body, which is evidently expert—it has dealt with 160 mergers at a cost of just under £3 million per year—will be configured now that it has to sit within Monitor. If Monitor will be operating through it, what happens to the way in which it is structured right now? At the moment, it has a panel of very eminent and expert people, including Lord Carter of Coles, Andrew Taylor, Guy Beringer QC, John Wooton, John Swift QC, Professor Peter C Smith, one of the world’s leading health economists, and Professor Dame Janet Husband. They are all eminent people who are expert in health care and competition law.

Are all those people being kept on in addition to the non-executive directors who will sit at the top of Monitor? Are we going to have a set of non-executive directors at the top, and then a separate panel of non-executive directors advising an arm of Monitor—“the CCP division”, or whatever it is going to be called—that will apparently have around 15 staff and is the front end in dealing with competition? It all seems a bit confused to me, so I would be grateful if the Minister cleared up what will happen with respect to the panel and how exactly the CCP will work.

The final point that I would like to raise about this merger clause is about consultation, and the nature of the consultation that FTs will have to engage in before they consider a merger. The clause completely cuts from the 2006 Act subsections (5) to (10) of section 56, which is entitled “Mergers”. Crucially, section 56(8) says:

“In the course of the consultation the applicants must seek the views of—

(a) any Patients’ Forum for an applicant,

(b) the staff employed by the applicants,

(c) individuals who live in any area specified in the proposed constitution as the area for a public constituency,

(d) any local authority”—

and so on.

That is an important clause, which essentially compels potential mergers, or mergees, to consult with the wider constituency. I would be grateful if the Minister pointed out where, under the new legislation, a similar duty is placed on them, or whether that might be specified in the licence conditions, as other things might be. Can he offer us a guarantee that that consultation will be specified in the licence conditions? I think that patients and the public around trusts that might be merged or might take up FT status would be extremely keen to hear that reassurance from the Minister.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Thank you, Mr Gale; it is a pleasure to serve under your chairmanship for this last home stretch of our Committee deliberations.

To inform this debate on clauses 165 and 166—and, I hope, to avoid the confusion that exists around these issues—I would like to clarify what we are proposing on three related issues. I mean, first, the types of mergers that NHS trusts and foundation trusts will be able to participate in; secondly, the requirements for NHS trusts and foundation trusts to secure approval for such transactions; and, thirdly, the arrangements for reviewing the potential impact on competition of such transactions.

I should say, however, that so far much of this debate has centred on clause 71, which we debated on Tuesday. Clause 71 was about mergers in relation to activities. The clauses before us today are about organisational mergers. They are distinct things, and the opportunity to explore mergers around activities, which is what the Enterprise Act 2002 provides for, came when we were scrutinising clause 71. However, we have already raised some of these issues in this stage, so I want to ensure that there is clarity about both by the end of the scrutiny of this set of clauses. There are clear distinctions, which is, I think, why there is some confusion on the part of the hon. Member for Pontypridd and some of his hon. Friends.

For context, it is also important that this debate should recognise as a first-order issue the legal difference between the status of NHS trusts and foundation trusts. Unlike foundation trusts, NHS trusts remain subject to the Secretary of State’s powers of direction. As a consequence, all mergers involving NHS trusts, whether these are around activities or organisational issues, continue to require the Secretary of State’s approval. Autonomous, accountable foundation trusts, however, would not be subject to the Secretary of State’s direction, as established in legislation brought forward by the previous Government in 2003, and then in 2006.

I hope that hon. Members will forgive me if I refuse to take interventions at this stage; I want to make sure that this is clearly on the record, so that hon. Members have a chance to be clear about where this all takes us.

The first issue is about what types of mergers NHS trusts and foundation trusts would be able to participate in. Legislation would permit organisational mergers between foundation trusts, between NHS trusts, and between foundation trusts and NHS trusts. An organisational merger would involve both organisations ceasing to exist and a new one being established by statutory order. Legislation would not permit an organisational merger between an NHS trust or a foundation trust and a private entity.

An acquisition by an NHS trust or foundation trust would be a different form of transaction, where the acquiring trust would continue to exist. The legislation would permit a foundation trust to acquire all or part of another foundation trust or NHS trust, and will permit an NHS trust to acquire all or part of another NHS trust. However, legislation would not allow an NHS trust to acquire an NHS foundation trust, nor for either an NHS or foundation trust to be acquired by a private entity.

Joint ventures involving an NHS or foundation trust would be different again. These transactions would involve the merger of activities between two or more organisations—for example, providing pathology services, but the organisations each continuing to exist separately.

I will deal with some of the hon. Gentleman’s other specific questions, then come on to the second issue of approval requirements for mergers involving NHS or foundation trusts.

The hon. Gentleman asked about the Co-operation and Competition Panel continuing to review trust-to-trust and trust-FT mergers. The Secretary of State, as I have said, will continue to have the ability to seek the CCP’s advice on these specific mergers where it relates to an NHS trust merging or a trust and an FT merging. The OFT will not review mergers involving NHS trusts. As we discussed while debating clause 71 on Tuesday, the CCP will transfer to Monitor. My right hon. Friend the other Minister set out last week the basis on which that would be given effect in regulations and elsewhere.

A question was also asked about the expertise of the OFT—again, we debated that at some length on Tuesday in clause 71. The OFT has experience and expertise in regard to mergers and will always seek the views of Monitor, and through it, the CCP, on FT-to-FT mergers.

I move on to the second area, the approval requirement for mergers involving NHS trusts or foundation trusts. Any form of merger involving an NHS trust would remain subject to the Secretary of State’s approval, as now. That is not the case for foundation trusts, and clauses 165 and 166 apply to organisational mergers and acquisitions where two whole trusts merge, or a trust acquires another trust.

Clause 165 deals with a merger between a foundation trust and another foundation trust or an NHS trust, and clause 166 deals with a foundation trust acquisition of another foundation trust or an NHS trust. The current wording of clause 165(2), which deals with mergers, and clause 166(2), which deals with acquisitions, requires that foundation trusts obtain the approval of the majority of their governors before a merger or acquisition can take place. That is an important safeguard and assurance for the local community, from which those governors come, and an essential part of the increased accountability that the Government want to see in this model.

The purpose of our amendments 194 and 196 is to clarify that the requirements for governor support apply only to foundation trusts. When it comes to reviewing mergers involving NHS trusts and foundation trusts—this is the third strand—as to their impact on competition, we agree with the previous Government’s principles and rules of co-operation and competition. Those require that mergers involving NHS trusts or foundation trusts should be permitted only

“where there remains sufficient choice and competition or where they are otherwise in patients’ and taxpayers’ interests”.

That was in the principles and rules for co-operation and competition that were in place in March 2010; they have not changed since the election one iota in that regard. That is consistent with the principles of the UK’s general merger control regime, as set out in the legislation introduced by the previous Government under the Enterprise Act 2002, and is reflected in the approach to merger reviews currently operated by the Co-operation and Competition Panel.

However, there is currently legal uncertainty as to when and where the 2002 Act would apply to mergers of activities involving foundation trusts. As a result, under the current arrangements for review of mergers involving foundation trusts by the Co-operation and Competition Panel, there is always potential risk of duplication or—worse still—double jeopardy.

That is why we have proposed under clause 71 that mergers involving foundation trusts should be referred to the OFT for review. That would establish a single merger control regime for foundation trusts and reflect the models of sector regulation and concurrency that the NHS Future Forum supported, and it would minimise duplication of specialist skills and expertise by doing so. We would always expect the OFT to take advice from Monitor and secure objective evidence of the costs and benefits of proposed mergers, including the likely impact on access to the quality of care.

For NHS trusts, we do not face legal uncertainty, in so far as we would not expect an NHS trust under the Secretary of State’s direction to be subject to UK merger controls of activities merging under the 2002 Act. Given that, it would not be appropriate for mergers involving NHS trusts to be referred to the OFT. In any event, we are committed to supporting all NHS trusts to achieve foundation trust status, or become part of a foundation trust in due course. However, during the transition, we would still wish to consider the potential impact on patients and patient choice, and competition of mergers involving NHS trusts, in line with the principles set out by the previous Government, as I have just reported. That is why the Secretary of State would retain the ability to request advice from Monitor through the Co-operation and Competition Panel, as I have set out.

I hope that I have been able to address the concerns that still seem to stem from our debate on Tuesday and the amendments discussed today.

Fiona O'Donnell (East Lothian) (Lab) rose—

Roger Gale (Conservative, North Thanet)

Order. I do not regard it as good practice to call hon. Members once the Minister has wound up. The Opposition spokesman has indicated that he wishes to intervene.

Owen Smith (Labour, Pontypridd)

I do not think there is any confusion among the Opposition about the extent to which the Enterprise Act differentiates activities. The Act is clear about activities that lead to two bodies no longer remaining distinct entities and, in effect, merging. The issue is the traditional non-applicability of that to NHS bodies. That is where legal doubt enters.

I am grateful that the Minister has confirmed that the OFT will not review mergers involving NHS trusts. That prompts the question I asked earlier: does the £70 million threshold not apply to that?

Fiona O'Donnell (Labour, East Lothian)

I apologise, Mr Gale. Over the lunch break I lost track of where we were. My hon. Friend will be aware that the Minister of State, the right hon. Member for Chelmsford, has questioned a Scottish MP taking such an interest in the Bill, but on Tuesday the other Minister, in answer to my hon. Friend the Member for Leicester West, said,

“The OFT would therefore be required to address mergers between providers of health care services, social care services or health care products…There would also need to be special arrangements for mergers involving organisations in Scotland, Wales, Northern Ireland or overseas.”––[Official Report, Health and Social Care (Re-committed) Public Bill Committee, 12 July 2011; c. 457.]

Has my hon. Friend the Member for Pontypridd received any clarity? Are we going to see mergers between English and Scottish, French and English, English and Welsh organisations? Is he able to enlighten me?

Owen Smith (Labour, Pontypridd)

I am grateful to my hon. Friend for those important observations. [ Interruption. ] The Minister says from a sedentary position that he was quoted out of context. I challenge him to find the reference and look back at it, because I do not think he was. That comment about Scotland, Wales and foreign mergers was dropped out of a wide blue sky by the Minister, in the midst of a discussion about clause 71. At the time it raised a question in my mind: is it possible for a merger to take place between an NHS trust or a foundation trust in England and one in Scotland or Wales? I think that is wholly impossible, unless the Minister is rewriting the rules of devolution as we go along, but if it is possible to do it, that is news to us and we should be grateful if he enlightened us.

Kevin Barron (Labour, Rother Valley)

Does my hon. Friend think that the Government’s response to Future Forum which talked about giving the Co-operation and Competition Panel a “statutory underpinning” to ensure it retained its “distinct identity” looks a bit thin when no changes are being proposed to statute to make good that promise?

Owen Smith (Labour, Pontypridd)

On many occasions during this long Committee, my right hon. Friend has pointed out gaping holes in the Bill and he has just identified yet another.

A gaping hole that I raised with the Minister during my last set of remarks was the rationale for excising section 56(5) to (10) of the 2006 Act, which relates to consultation. I think the Minister was trying to indicate that the fact that more than half the governors of an FT would have to agree to seek a merger made it okay. I agree that that is a good provision, but I think he was implying that that was somehow sufficient safeguard for the local populace, and I am not sure that that is correct. Can he point to where else in the Bill it states, as it did in legislation introduced by the previous Government, that when seeking to merge trusts would need to go out to consultation with staff, the local populace and the local authorities. That is a crucial question and I should be grateful for an answer on that, as well as elucidation on the possibility of mergers with bodies in Wales and Scotland.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

On the point that is at the heart of the hon. Gentleman’s confusion, which was rehearsed again just now, we are debating under these clauses organisational mergers—where two organisations come together and cease to exist and are succeeded by a new organisation. On Tuesday we debated mergers of activities, where two organisations—

Owen Smith (Labour, Pontypridd)

Will the Minister give way?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I am trying to deal with the hon. Gentleman’s confusion. On Tuesday we were dealing with mergers of activities and the way they are regulated now and will be in future, in relation to the Enterprise Act 2002. That was clear in the way I set it out again today. I am surprised that the hon. Gentleman found it so surprising that clause 71, which is explicit about the application of the Enterprise Act, would not therefore apply the thresholds, which I shared and which he today has acknowledged are in that Act. He only discovered that afterwards, not having done his homework beforehand.

We have set out matters very clearly. I am still puzzled by the fact that on the one hand the Opposition have deployed arguments that suggest they are wholly opposed to the notion of concurrency and having a sector-specific regulator, while on the other they seem to be in favour of it. It is not clear whether they are for or against that, which is a great pity for those outside the Committee who are trying to understand the Labour party’s position. I urge that the amendment be made and that the clause stand part of the Bill.

Roger Gale (Conservative, North Thanet)

Before we proceed, let me clarify the procedure. There is no rule, but custom and practice suggest that once the Minister has been called to wind up the debate, and given that I allow, as I did, a fair amount of time for hon. Members on either side of the Committee to leap to their feet if they wished to intervene, I would not normally expect to call anyone from the Back Benches. It is up to the Minister to decide to what extent he wishes to answer points that have been raised; that is not the duty of the Chair to determine. Where the Minister indicates that he would prefer not to give way, but is prepared to take further interventions once he has sat down, that is a different matter. That is what happened in this case. I trust that clarifies it.

Mr Hood has already indicated that he does not anticipate a stand part debate on this clause and I will now shock the Committee further by indicating that I do not propose to have a clause stand part debate on clause 166 either, because the two amendments that we are debating, with the ones that have been called, deal with acquisitions. What I am saying to the Committee is that if there are matters relating to acquisitions that Members wish to raise, they may take the opportunity to do so as and when they catch my eye, if they catch my eye.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 195, in clause 165, page 147, line 31, leave out paragraph (a).

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss Government amendment 197.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The amendments would require an NHS trust to obtain the Secretary of State’s support for an application either to merge with or to be acquired by a foundation trust. The two changes together would align the requirements for Secretary of State approval for mergers and acquisitions in an organisational sense. Achieving foundation trust status is a significant step for an NHS trust: it moves from being subject to the Secretary of State’s direction to being an operationally autonomous organisation that is accountable to the patients and the community that it serves.

Section 33(1) of the National Health Service Act 2006 requires an NHS trust to obtain the support of the Secretary of State for an application to Monitor to be authorised as a foundation trust. These two amendments would extend the requirement for the Secretary of State’s support to an application from an NHS trust to achieve foundation trust status by merging with or being acquired by a foundation trust. That would ensure that an NHS trust must have the Secretary of State’s support for an application to Monitor in this regard.

Amendment 195 would therefore retain the current requirement under section 56 of the 2006 Act for an NHS trust to obtain the support of the Secretary of State in an application to merge with an FT. Clause 166 creates a new specific power for a foundation trust to acquire another foundation trust or an NHS trust. Amendment 196 would add to that by requiring that where an NHS trust is to be acquired, the NHS trust must first obtain the support of the Secretary of State in the same way as they would for a merger. The amendments, therefore, bring the requirements for the Secretary of State to support an NHS trust application to be acquired by a foundation trust into line with requirements for the Secretary of State to support an NHS trust in regard to mergers.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

It is lovely to see you again, Mr Gale. This group of clauses relates to what is at the heart of the Bill: maximising competition. The Secretary of State has said that he wants to maximise competition and create a health system in which the number of purchasers and providers is maximised, and in which a citizen-consumer competitive market drives forward the forces of “creative destruction” in the NHS. Hon. Members may remember that from earlier discussions and it does relate to the different parts of the Bill.

I can hear people ask, “Won’t constant entry and exit from the market be prohibitively expensive? After all, you can’t just set up a hospital at the drop of a hat.” That is true, unless there is a system in which the barriers to market entry and exit are low or non-existent, and that is what these clauses do. In effect, they set up a new insolvency regime for foundation trusts. The Bill allows FTs to fail and the clauses enable them to be bought out by new market entrants. We are already seeing that. My hon. Friend the Member for St Helens North (Mr Watts) has seen documents to that effect in relation to Whiston hospital; there is also evidence from Trafford health care trust as well. What about the patients in all this? The Bill pays scant regard to patients. There are no protections for them, as we are seeing with Southern Cross. The first duty of such companies is to maximise the money that the company generates for their shareholders, as enshrined in company law.

I am sure that the Government will say that I am scaremongering, but there are direct parallels between the Bill’s effect—opening up the NHS to wholesale competition, removing the private bed cap to generate income, replacing the social purpose of NHS trusts with an economic focus and allowing foundation NHS trusts to dispose of their assets as well as raise loans—and the events at Southern Cross.

The conditions that led to the failure of Southern Cross will be repeated under the Bill. In effect, it allows foundation trusts to fail and private equity companies to buy NHS facilities and equipment. That may not be confined to foundation trusts. In an article in Primary Care Today, a law firm questions what will happen to primary care estates. I urge the Government to think again, and I appeal for the support of Members who are concerned about the measures.

Owen Smith (Labour, Pontypridd)

In some respects, this is another amendment that we welcome. It clarifies that the Secretary of State must be consulted before an NHS trust, not a foundation trust, is acquired or seeks to make an acquisition. That was clear in the National Health Service Act 2006. It was also clear that the trust would have to consult its local patients, local populace and local authority, but that is no longer clear—it has been wiped from the Bill, unless I have misread it. I have twice asked the Minister about that, and he has singularly failed to comment, so I assume that I have not misread the Bill, the Minister just does not want to talk about it.

The Minister has told the Committee on a few occasions, and he repeated it today, that an NHS trust or foundation trust cannot merge with a private company, which is a good thing, but such mergers would be a bad idea. However, NHS trusts and especially foundation trusts can acquire a private company. There is no provision in the Bill, as far as I can see, that dictates the possible size of such private companies.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Is my hon. Friend concerned, as I am, that the interaction between clauses 71 and 165 might result in there being no stopgap to prevent NHS trusts from ending up in the private sector?

Owen Smith (Labour, Pontypridd)

I will be explicit. I do not know about the Minister, but I have come across things known in the market vernacular as “reverse takeovers”, which describes what happens when a small company acquires a large company at a knock-down price. We all know that is effectively a merger because, although it has been acquired, the larger company effectively runs the smaller company. It would be interesting to know whether there are any provisions in the Bill that would stop an FT from acquiring part or all of Bupa or Assura Medical, which is part of Virgin and is active in the consortium in the Minister’s constituency, in what would effectively be a reverse takeover.

Dan Byles (Conservative, North Warwickshire)

Might an FT’s taking over of a private company be considered nationalisation, of which the hon. Gentleman may well approve?

Simon Burns (Conservative, Chelmsford)

Good point.

Owen Smith (Labour, Pontypridd)

It is a slightly bizarre point. If a small company were being taken over by an FT, what I have said would clearly be irrelevant; it would be relevant only if it were a very large company, or a subsidiary of a very large company, being taken over. Let us say that a big pharmaceutical firm decides that one of its arms that provides services to the NHS—an arm’s-length, stand-alone, separately listed company—can be acquired by an FT. What certainty can there be that that is not in effect a reverse takeover, in which the larger parent company exercises some degree of control over the public foundation trust?

Simon Burns (Conservative, Chelmsford)

Presumably the hon. Gentleman supported the Labour Government’s measures when they allowed the University College London Hospitals Trust to take over the privately owned London Heart hospital about three years ago. The problems that he is speculating about did not occur.

Owen Smith (Labour, Pontypridd)

I do not mind admitting when I do not know something, so I confess that I did not know about that. I will look into it and find out whether the London Heart hospital is, as I suspect, a very small company. I am intrigued to know about that.

Mr Burns rose—

Owen Smith (Labour, Pontypridd)

No; I will finish the point, because it is not a silly point or a ludicrous one. There could well be reverse takeovers. They happen in the business world all the time, as the Minister would know if he had worked in business, and it is perfectly possible to imagine that large companies might seek to exercise greater control over foundation trusts through their subsidiaries or through some sort of financial engagement. In fact, I would be flabbergasted if that did not happen at some point.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

The Minister has just clarified that mechanisms for allowing trusts to take over private businesses already exist, so the Bill is redundant. In addition, we are ignoring the arguments that we established in clause 71, on which we had a tied vote. The clause states that a trust can merge with other bodies, but it does not define whether the most prominent position in that relationship would be occupied by the trust or by the other bodies, other businesses or other enterprises.

Owen Smith (Labour, Pontypridd)

That is very relevant. It is also relevant that the £70 million threshold will not apply in respect of non-FTs that get involved. What would happen if a non-FT sought to acquire a private company of some scale or description? What if that private company’s turnover is greater than £70 million?

I would like touch on the concept of Chinese walls within Monitor. As the architecture in the Bill concerning takeovers, mergers and acquisitions becomes more and more labyrinthine—[Interruption.] With respect, the Minister, the hon. Member for Sutton and Cheam, can read back over his extraordinarily labyrinthine description of the architecture in Tuesday’s Committee, including the stuff about Scotland, Wales and overseas territories, which he has again failed to explain to us. It is labyrinthine and confused, and I suspect that those in another place will agree with me.

Given the confusion, I would also like to address how on earth Monitor is going to operate the Chinese walls that we have heard about. There will apparently need to be Chinese walls between the parts of Monitor that deal with competition, mergers and the regulation of the FTs. How on earth can that occur within one building? Each aspect will undoubtedly have a bearing on the others. The decision about whether an FT is allowed to merge or acquire another company is clearly relevant to competition and to regulation. All three are interlinked, and it is extraordinary that we are asking Monitor to be poacher and gamekeeper—regulator and preventer of anti-competitive behaviour, or promoter of competition, depending on what time of the year we are talking to the Government about it. That is an untidy and unsatisfactory scenario. If the Minister could spell out again—because he has failed to do so in the past—how the Chinese walls will work in practice, we would be grateful.

Roger Gale (Conservative, North Thanet)

I caution the Minister not to seek to reopen matters that have already been debated.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Thank you, Mr Gale. The hon. Gentleman is trying to kick some mud up, because part of the function of an Opposition in scrutinising a Bill is to create a sense of confusion where there is none. When those who follow our proceedings read how we have set out clearly the differences between mergers in respect of activities and mergers in respect of organisations, it will be clear—

Owen Smith (Labour, Pontypridd)

Will the Minister give way?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

No, because the hon. Gentleman will be neither helpful nor informative.

Owen Smith (Labour, Pontypridd)

Will the Minister explain the difference between activities and organisations?

Roger Gale (Conservative, North Thanet)

Order.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I want to help the Committee and I want to make progress, so that we adequately scrutinise the remaining clauses.

The hon. Member for Oldham East and Saddleworth started the debate by repeating a set of arguments that those who follow our proceedings will have noted that she has turned to on several occasions. They are truly fantastical. She wants people to accept a conspiracy theory about the Government’s intentions. The idea that the plans drive at solely competition, quite regardless of patients’ interests, is manifest nonsense. The way that the clauses are now amended makes that absolutely clear. Monitor’s role is not about promoting competition; it is about protecting and promoting the interests of patients and enabling integration.

At the heart of the reforms is the essential concept and belief that we want to hardwire into the NHS: that no decision about a patient or carer should be made without their involvement. That means in both how the NHS is run and how an individual’s health care is provided. That is an essential part of a modern, high-quality national health service. I suggest that if the hon. Lady’s rhetoric is endorsed by her colleagues, it would be fair to describe the Labour party as having emerged from the general election and abandoned its manifesto commitments to become anti-choice, pro-poor standards and in favour of propping up failing organisations. One might reasonably draw that characterisation from the gross distortions that have been cast on the Government.

Let me deal with one or two of the issues raised by the hon. Member for Pontypridd. First, foundation trusts do not have shares. They cannot be traded on the stock market and, as a consequence of that, they cannot be acquired. We have made it clear that they are public benefit organisations.

Owen Smith (Labour, Pontypridd)

I know that.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

That knowledge did not come across in the way the hon. Gentleman made his arguments. To repeat: the Bill makes it clear that the guiding principle of the legislation is that foundation trusts continue to be public benefit organisations that are there to provide services to the NHS. Along with their duties to have regard to the NHS constitution, that is the ultimate safeguard. FTs cannot be taken over by private entities. We have already discussed that at length, but I want to make it clear again. FTs can, however, as they do under the existing arrangements, have joint ventures. That was fine under the previous Government and it is a good way for capacity to be extended and for services to be improved.

The hon. Member for Oldham East and Saddleworth asked whether there could be staff buy-outs of FTs. I undertook to write to her, but if I deal with that question now, that might save the correspondence. The answer is absolutely not. FTs have no equity, as I have just said, so they cannot be bought or sold. We want to encourage staff-led organisations. Indeed, the previous Government, of whom she was not part, supported the idea of the right to request for staff, and they provided public money to support NHS staff to acquire and set up social enterprises. Many of them were trumpeted by the Labour party when it was in government. we think that the idea of social enterprise is of the time, and it is something that we want to continue to support.

The hon. Member for East Lothian asked about mergers between FTs and Scottish and Welsh trusts. That probably strays back to clause 71, but it is possible that an English NHS trust could combine activities—I stress activities—with those of an NHS organisation over the border in Wales or Scotland. It is not possible, however, for the English NHS trust to merge with an organisation such as a Scottish health board. I hope that finally puts that particular concern to rest.

There was a general question about the continuing assertion that the proposals mean privatisation by the back door.

Emily Thornberry (Labour, Islington South and Finsbury)

Will the Minister give way?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

On that specific point?

Emily Thornberry (Labour, Islington South and Finsbury)

Yes.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I will answer a question on that specific point.

Emily Thornberry (Labour, Islington South and Finsbury)

I genuinely do not know the answer to this question, and I wonder if the Minister can help me. Will foundation trusts be able to sell off their property so that they have an operating company separate from a property-owning company, in the same way as Southern Cross did? That would be privatisation through the back door.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

That was not the question that I was expecting. We had that question on Tuesday, and I gave the hon. Lady an answer then. It might have been one of those occasions when I was giving her lots of examples and there was an exchange going on across the Committee. I urge her to read Hansard, because I have specifically talked about leaseback arrangements.

The final thing I wish to say is that the hon. Member for Pontypridd has asked several times about the obligations on organisations to consult and involve the public, and I am happy to make it clear for him and other members of the Committee and beyond that we expect the licences to reflect legal requirements, including requirements for local involvement and consultation in relation to organisational change.

Owen Smith (Labour, Pontypridd)

Labour Members absolutely believe in patient choice. We introduced it. We absolutely believe in standards. We raised the standards in the NHS, as the OECD and lots of other international bodies—[ Interruption. ]

Roger Gale (Conservative, North Thanet)

Order. I am having some difficulty differentiating heckling and private conversations. I would prefer to hear neither.

Owen Smith (Labour, Pontypridd)

I am grateful to you, Mr Gale. I do not think that anyone could contend that Labour did not adequately support the NHS. We tripled its budget, I think, and built more hospitals in our period in government, which resulted in the highest standards and the highest level of patient satisfaction ever known in the NHS. We created the NHS and we will continue to support it, and people will continue to trust us to do so. Again, however, the Minister did not adequately answer the questions about acquisition, nor did he address at all—for the third time now—the question about consultation.

Paul Burstow indicated dissent.

Owen Smith (Labour, Pontypridd)

He did not, and nor did he properly address the issue of Chinese walls.

Clause 166 - Acquisitions

Clause 176 - Abolition of NHS trusts in England

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 198, in clause 176, page 155, line 10, leave out subsections (3) and (4).

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss Government amendments 224 and 226.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

As I have said, the previous Government first created foundation trusts because they recognised that top-down management of all NHS providers was never going to achieve the best care for patients. Indeed, many speeches in which previous Government Ministers say just that are littered across the past six years of Hansard. Like them, we remain committed to supporting the pipeline for all NHS trusts to become foundation trusts in their own right, or part of one, so that all patients and staff can benefit from providers that are autonomous and locally accountable. Foundation trust status shows that a trust has demonstrated its clinical and financial stability and sustainability.

Our approach of setting a clear deadline for the repeal of the NHS trust legislation has already had an impact in countering the relative inertia that existed under the previous Government. That deadline has been a key determinant in the change in mindset needed to support all NHS trusts in achieving foundation trust status. We have backed up the deadline with local focus and national co-ordination and support, and are looking at areas where specific help might be needed. We have already seen a change in the mindset, and most NHS trusts have agreed good plans for achieving foundation trust status. We must ensure that that momentum is not lost.

We have listened, however, and have heard the concern that quality and patient care could be damaged if NHS trusts are pushed to apply for FT status before they are ready. We discussed that concern only this morning. We can see that some NHS trusts may benefit from more time, rather than a change in plan or management. We acknowledge that the challenges of transition to an all foundation trust sector will be considerable, but just as it would be wrong to move too quickly it would not be in the interests of patients or the public to abandon the goal altogether.

Together, the amendments remove the 2014 deadline from the Bill, as well as the related reserve power for the Secretary of State to change the date and the current commencement provisions; they do not change the proposal to repeal NHS trust legislation, or Monitor’s authorisation powers. It remains the case that it will no longer be an option to stay as an NHS trust. We continue to expect the vast majority of remaining NHS providers to meet the high standards needed to become foundation trusts by 2014 and for them to benefit from the freedom that foundation trust status brings. To do this, we recognise that some NHS trusts may need to come together, merge with existing foundation trusts, or enter into franchise arrangements. However, if a small number of NHS trusts cannot meet Monitor’s test we will not arbitrarily abolish them in their current legal form in 2014. All NHS trusts are expected to become foundation trusts as soon as clinically feasible, with an agreed deadline for every trust.

NHS trusts applying for foundation trust status will continue to be subject to stringent tests set by Monitor and there will be no lowering of the bar. In order to succeed, applicants will need to have strong boards and be financially and clinically robust. We are all agreed that it is in neither the patient nor public interest for organisations that provide poor care or are not well run to become foundation trusts.

Jeremy Lefroy (Conservative, Stafford)

I fully understand the reason behind the amendment. I am probably not being very clever and I am no lawyer, but if we propose to remove subsection (3) of clause 176 and the Bill becomes law, does that not mean that NHS trusts will be abolished immediately?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

No, because we are making changes to the arrangements in the commencement clause which mean that we will have the ability to commence that part of the Act—when it becomes one—at a time that can be specified later. I think that is how it will be dealt with—[ Interruption. ] I got a reassuring nod, which is always gratifying.

In conclusion, I have set out the purpose of the amendments and beg that the Committee approves.

Roger Gale (Conservative, North Thanet)

Amendment 49 has not been called because it is otiose; one cannot effectively negative a negative on stand part. Given, however, that the Opposition have indicated that they wish to oppose the whole clause I am proposing to take the stand part debate now as well.

Owen Smith (Labour, Pontypridd)

I think we could call this the “shambles clause”—or the “shambles amendment”—because it is one of the clauses in the Bill that shows very clearly what an utter mess the Government have made of this legislation. It is an absolute, complete and utter shambles. Only a couple of months ago they were proposing to set the hard date of 1 April 2014. That was going to be the point at which trust status would fall, with everybody ready to be a foundation trust by then. We said at the time that that was a very bold and foolhardy commitment from the Government and so it is proven, because they have had to remove it from the Bill. In excising subsection (3) from clause 176—the date, 1 April 2014—they are clearly acknowledging that trusts will not be ready. In particular, the 20 trusts that we understand are in financial difficulty will not be ready to move to foundation trust status. This shambles is important because the Government, in creating an unholy mess and such chaos in the NHS, have made it far harder for those 20 trusts, and for other trusts that are not foundation trusts, to get ready to take on foundation trust status.

It is absolutely not true to say that the previous Government did not push as hard as they could to get the trusts ready to adopt foundation trust status, if they so chose. The uncertainty that this Government have sown with the Bill—on top of the stringent, unprecedented savings that both this Government and the previous Government asked the NHS to make over the comprehensive spending review period—makes taking on that status far harder. The chaos makes it much more difficult to imagine that those trusts will be ready, which is why the Government have had to change the clause; it is their acknowledgement that it is extremely unlikely that all those trusts will be ready to assume foundation trust status. In proposing the amendment, the Government recognise that they are making a mess of the NHS, and they should be decent enough to say so explicitly.

John Pugh (Liberal Democrat, Southport)

I may be in a minority of one, but I was never seriously convinced that turning every NHS trust into a foundation trust was a good idea. I was never convinced, actually, that foundation trusts were a good idea, which is why I voted against them and why I am relatively unrepentant now. They offer strong autonomy to the organisation with a very weak model of accountability, but this afternoon, the Government have strengthened that accountability.

The advantages that I can see of foundation trusts are primarily that they put behind us the sad history of brokerage in the NHS, whereby inefficient hospitals are bailed out by a bond from a strategic health authority at the end of the financial year, and certain financial freedoms are offered. I will not rehearse those arguments, but I want to make the point that the hon. Member for Pontypridd has said that it will be very difficult for the Government to stick to their original remit of trusts becoming foundation trusts by a particular date, which is entirely true. I do not want to pre-empt my Adjournment debate next week, but one reason why that is true—and this was stated by the hon. Gentleman—is that the previous Government insisted on a £20 billion efficiency target. That is one express reason why the deadline would be tight.

What the hon. Gentleman has not said, and our views may differ on this, is whether he thinks it is a wholly good idea for all trusts to become foundation trusts. Although I assume that that is Labour Members’ point of view, it is not mine, and it is clearly not the Government’s, so we have that in common.

Kevin Barron (Labour, Rother Valley)

I want to echo some thoughts of my hon. Friend the Member for Pontypridd. This group of amendments distinctly reveals the shambles of a Bill—not this re-committed Bill—that was introduced a few months ago. The deadlines that were laid down were impractical. The fact that the Minister says that he has been listening makes me wonder why the Government did not listen before.

Subsection (4) of clause 176 gives the Secretary of State the power to bring in an order to use a date beyond what was originally laid in the Bill, which prompts the question of why it was not just left out. Perhaps the Minister did not want to propose an order with, potentially, dozens of hospitals included that could not make the deadline, and therefore, the Government did not want to expose problems in the original Bill by getting rid of the deadline altogether. That is no way to legislate.

It is clear in everybody’s mind that the original Bill—now re-committed—was more driven by ideology than common sense, and the clause and amendments show exactly that. What faith can people have in the Bill? In particular, there are areas that lie dormant, unamended, which we have asked questions about in the re-committed Bill proceedings. I hope, given the tight time scale—which was not altered—we have been given to scrutinise the rest of the Bill, that if changes cannot happen on the Floor of the House, they happen in another place. Somebody needs to pick up on the defects in the Bill, because some remain, in my view. It would be wrong to let this clause go, and particularly these amendments, which show what hasty legislation this is, and how different it is to what was said in manifestos, or even coalition agreements. That just shows how bad it is.

Here we are, with only a few minutes and hours left, looking at a Bill that has all these other amendments. It is wholly unsatisfactory, Mr Gale. I know it is not your problem, but as a legislator, I think it is wholly unsatisfactory that an institution like the NHS has been thrown to the wolves. We have had competition clauses and everything else thrown into this Bill; and here we see people who cannot and dare not even keep the legislation as it was, because it would expose what a tight and unrealistic timetable the original Bill gave us.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

The right hon. Gentleman has made that speech several times during our consideration of the Bill. Can he or any other Opposition Member name a single non-hybrid Bill introduced between 1997 and 2010 that received more scrutiny over as many sittings as this one? I can tell them the answer: none. We have had 40 sittings, 28 in the original Bill Committee and a further 12 on the recommitted Bill. The reality is no number of sittings would be enough to satisfy him. Fundamentally, the Opposition are not here to scrutinise and improve; as we heard in the original Bill Committee, they are here to delay and confuse. I thought it would be worth getting that on the record.

Emily Thornberry (Labour, Islington South and Finsbury)

Will the hon. Gentleman give way?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

No, I am making progress. [ Interruption. ]

Roger Gale (Conservative, North Thanet)

Order. The Minister has made it plain that he is not giving way.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I am responding in kind to the points that have been made by Opposition Members.

Kevin Barron (Labour, Rother Valley)

The Minister says that the Opposition are not taking the Bill seriously. This morning and in previous sittings, Ministers have resubmitted amendments that they turned down when Opposition Front Benchers tabled them in the original Bill Committee.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I am sure—

Nick de Bois (Conservative, Enfield North)

Will the Minister give way?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Of course.

Nick de Bois (Conservative, Enfield North)

Opposition Members may not like to be reminded that we had a lot of clarity from the Member for Islington South and Finsbury, who regularly highlighted what she considered her wrecking clauses. We would do well to remember that.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I remember. The essence of the arguments—

Emily Thornberry (Labour, Islington South and Finsbury)

Will the hon. Gentleman give way?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Because the hon. Lady was named, I will do so.

Emily Thornberry (Labour, Islington South and Finsbury)

The Minister asked—not rhetorically, I am sure—whether another Bill between 1997 and now has had the same amount of scrutiny as this one. I ask him: has there been a Bill that has been more controversial up and down the country than this one, which is undermining our greatly loved national health service? In those circumstances, the amount of scrutiny that we have been allowed to give it is pathetic. Yes, we are against this Bill, but we also want to scrutinise and improve it, as we have done, and we have been entirely honest with him: we voted against it on Second Reading and we continue to be against it.

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I was not clear what was pathetic—the scrutiny or something else. To respond to the hon. Lady’s question whether any other Bill in the last 13 years has been controversial, in a way, the Bill that introduced foundation trusts was controversial at the time, particularly on the Labour Benches, which is interesting. She asked the question, there was the answer.

Daniel Poulter (Conservative, Central Suffolk and North Ipswich)

I am struggling to perceive the coherence in what the Opposition are doing. The hon. Member for Islington South and Finsbury said earlier in the Committee’s proceedings that she was actively trying to put in, as one my colleagues described, wrecking clauses. Now we are hearing complaints about not making quick enough progress. That does not add up. The hon. Member for Pontypridd has, quite rightly, been advocating in favour of patient choice, but in our previous proceedings, the hon. Member for Islington South and Finsbury questioned the basis of patient choice, which her party’s Government introduced. Does the Minister not agree that that is incredibly intellectually incoherent, and it is difficult for us to follow where the Opposition are coming from?

Roger Gale (Conservative, North Thanet)

Order. True or not, that is nothing to do with clause 176. We have had our fun. Can we now get back to the matter in hand, please?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

Thank you, Mr Gale. My hon. Friend’s points stand on the record, and would bear repetition, but I will not repeat them.

The essence of the critique offered by the hon. Member for Pontypridd seems to be that we are to be condemned when we do not listen, we are to be condemned when we do listen, and we are to be condemned when we listen at a time that the Opposition think is inappropriate. The reality is that the Government have listened and reflected, and we have tabled amendments to the Bill as a consequence. I urge the Committee to accept them.

Clause 178 - Healthwatch England

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I beg to move amendment 199, in clause 178, page 157, line 36, at end insert

‘; and the Commission must inform the committee in writing of its response or proposed response to the advice.’.

We tabled the amendment in response to concerns raised about strengthening the status and influence of HealthWatch England. The views of patients and other service users should be, as I said earlier, central to the role of the Care Quality Commission in regulating health and social care services, and informing the action that the CQC takes in circumstances where services do not meet essential levels of safety and quality. The Bill establishes HealthWatch England as a committee of the CQC, and with that purpose in mind, we want to go further in clarifying its role. The CQC’s new HealthWatch England committee will place the views and experiences of patients and other service users at the heart of the regulator. It will provide a direct channel for the concerns of patients and other service users to the regulator, and HealthWatch England’s committee will therefore provide the CQC with advice and information that it needs to take action where the views of patients and other service users highlight substandard service provision.

New section 45A of the Health and Social Care Act 2008, as inserted by clause 178, sets out the functions to be exercised by HealthWatch England operating as a committee of the CQC. They include giving information and advice to a range of persons, including the CQC, on the views of patients, other service users, the public and local healthwatches. Most of those persons are required, by new section 45A(5), to provide HealthWatch England with a written response to such advice. Currently, however, the CQC is not. The amendment creates that duty for the CQC.

Let me deal directly with the criticism that I am sure will be made: that the amendment is identical to one moved by the Opposition, in particular the hon. Member for Islington South and Finsbury, who made some of these points in the Committee before. I freely acknowledge that that is the case. What we have here is an excellent example of what our decision to pause, listen and reflect was all about, and how it enables us to improve the Bill—a tendency that, I have to say, I never saw Labour exhibit during my time in opposition and that party’s in government.

The Government’s original thinking was that it would have been unusual and unnecessary to require the CQC to make formal written responses to one of its own statutory committees; moreover, we wanted to avoid creating the perception that there was a highly formal relationship between the CQC and HealthWatch England. We believe a clear distinction between the two bodies is needed, and we want and expect communications to be formal but also collaborative, with a continual two-way flow of information between them. Those views have not changed: we still need a collegial approach, as well as one that is formalised by such reporting requirements. However, we have listened, heeded and reflected upon the points that have been made, both in this Committee and since. As the NHS Future Forum put it in its remarks on HealthWatch England,

“Although it is technically part of CQC, it needs to be allowed the independence to discharge its functions freely.”

The Government unreservedly agree with that view and we believe the arrangements set out in the Bill will achieve that. Nevertheless, we heard the point about changing the basis on which it should operate. That is why we have tabled the amendment.

Emily Thornberry (Labour, Islington South and Finsbury)

In view of the exchange immediately before we moved on to this clause, will the Minister graciously accept that some of the amendments tabled by the Opposition were not wrecking amendments?

Paul Burstow (Liberal Democrat, Sutton and Cheam)

I am sure that some of them had a good-spirited aspect to them and were about probing the Bill; but some were undoubtedly and clearly intended, in the hon. Lady’s own words, to wreck the Bill. She made no secret of that. We have seen from the large numbers of votes against clauses that delay is part of what is taking place in the Committee.

I urge the Committee to support the amendment, which reflects the views of the NHS Future Forum.

Roger Gale (Conservative, North Thanet)

Order. I have looked through the amendments and it is apparent that, by the time we get to the end of this free-standing one and the next group, we shall, in effect, have debated the clause. I therefore say to the Committee that we shall not have a clause stand part debate. Hon. Members from all parties may wish to take cognisance of that when contributing to debate on the amendments.

Liz Kendall (Labour, Leicester West)

It is a pleasure to serve under your chairmanship, Mr Gale. You are firm but fair, and I am grateful to you for explaining some of the labyrinthine traditions of Bill Committees.

I am glad that the Minister acknowledged that Opposition Members were right. I want to make three points—

Simon Burns (Conservative, Chelmsford)

Briefly.

Liz Kendall (Labour, Leicester West)

It is funny the Minister says that, because my first overall concern about the establishment of HealthWatch England is that the Government are being unambitious about putting patients and the public at the heart of the NHS and giving them a stronger and more powerful voice. As ever, Opposition Members are the real modernisers and reformers. We are the ones on the side of patients and the public. If we were in government, we would have had a far stronger and more independent HealthWatch England.

That reminds me that during the previous Committee scrutiny, the Minister of State, the right hon. Member for Chelmsford and discussed several times whether HealthWatch England was independent. I questioned him on whether it was right that HealthWatch England should be a sub-committee of the Care Quality Commission.

Simon Burns (Conservative, Chelmsford)

It is not a sub-committee.

Liz Kendall (Labour, Leicester West)

He says, from a sedentary position, that it is not a sub-committee. On 15 March, as recorded in fabulous Hansard, he says,

“I must tell the hon. Lady that I think it is a little unfair to refer to HealthWatch in a derogatory way as a sub-committee of the CQC.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 696.]

However, on page 38 of the Government’s response to the Future Forum, paragraph 4.39 states:

“We will…introduce a new requirement for the Care Quality Commission to respond to advice from its HealthWatch England sub-committee.”

Simon Burns (Conservative, Chelmsford)

The hon. Lady still does not get it. What we object to is the derogatory way in which she classifies it as a sub-committee. That is our argument with her.

Liz Kendall (Labour, Leicester West)

The Minister sounds as though he could be a member of the Labour party, with his knowledge of sub-committees. I am criticising the lack of independence for HealthWatch England. That is my first point.

Secondly, the proof that HealthWatch England is not strong or powerful enough comes when we assess the stature, power and resources it will get, compared with other bodies that are being set up, such as the new economic regulator, Monitor. The right hon. Gentleman confirmed to the re-committed Bill Committee that the cost of new Monitor, which is currently £20 million a year, will increase to between £50 million and £80 million a year, so Monitor will get each year an additional sum of between £30 million and £60 million. The impact assessment for the original Bill—nothing in the amendments would change the core functions of HealthWatch England—states that HealthWatch England will receive £3.5 million a year. HealthWatch England, the new, supposedly powerful voice will get three and a half million quid to do its job, whereas Monitor gets up to £60 million extra resources a year to do the job. As Bernstein and Woodward said, “Follow the money”. We have followed the money and we can see that the power—

Simon Burns (Conservative, Chelmsford)

Woodward and Bernstein, actually.

Liz Kendall (Labour, Leicester West)

It does not really matter in which order I refer to them.

Simon Burns (Conservative, Chelmsford)

It does to them.

Liz Kendall (Labour, Leicester West)

Journalists worrying about their status—let’s not go there.

My third point is a question for the Minister and a practical and constructive suggestion of help for the Government. I may have got this wrong; if I have, I hope I will be forgiven. As I understand it, both HealthWatch England and local healthwatch will come into being by October 2012. The National Association of LINks Members submitted evidence to the Committee on 2 July saying:

“HealthWatch England is to be established at the same time as Local HealthWatch. This makes no sense. It is needed in October 2011 to pave the way, in collaboration with LINks, the NHS and local authorities for local Healthwatch which start in October 2012.”

Will the Minister consider bringing forward the timetable for HealthWatch England’s establishment, so it can be there to get things going? Will he also explain why the Government have had so little ambition about putting patients and the public at the heart of the NHS? Will he give serious consideration to giving HealthWatch England a stronger voice and greater independence, so it can do what it says on the tin?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Fundamentally, HealthWatch England is a good idea and welcome, because it will provide patients with a greater opportunity for engagement. The real issue is that to be truly effective HealthWatch England must be an entirely independent advisory body, but in its current conceptual form, it is not quite there yet. The Government have missed an opportunity to act upon their own listening exercise and the Future Forum recommendations.

Nothing is more evident of that than the fact that HealthWatch England will still sit entirely within the CQC. In the Government’s new architecture for the NHS, there will be three big players: the NHS commissioning board, run by Sir David Nicholson; the CQC, which will ensure that basic standards of care are met, run by Cynthia Bower; and Monitor, which will promote competition as a means of improving quality, as the Government claim, run by David Bennett—for now, apparently. However, there will be a fourth crucial arm, which is a much stronger voice for patients and the public. I do not agree with the Government’s approach. I firmly believe that, if patients and the public are to have a far greater say, the body to achieve that should be more important than the other three bodies. HealthWatch England should be independent.

HealthWatch England will lack independence because it will sit within the CQC, which creates two problems. It will have to work closely with the CQC, as it will with the other bodies, including the NHS commissioning board, so that it can ensure that information is passed up through the CQC to allow it to conduct inspections and investigations. However, what if HealthWatch England thought that the CQC had failed to do its job or work as effectively as it should?

The other problem is resources. By the end of 2012, the CQC has to register 30,000 new providers, including 9,000 providers of primary medical services, which have never before been registered, and 12,500 new providers of social care. In addition to those providers, the CQC also has to inspect and register individual sites, which, as the hon. Member for Stourbridge mentioned, is a huge task. The Ministers know about those concerns, which are being looked into, but the CQC’s resources are, like those of other arm’s-length bodies, being reduced, despite its huge tasks, and there is a real concern that HealthWatch England might not receive sufficient resources. My colleagues and I will be grateful if the Minister guarantees a ring-fenced budget.

How can HealthWatch act as the Minister envisages when it is situated within the CQC? How can it function independently when it will effectively be line managed by the CQC and, simultaneously, its chair will be line managed by the Secretary of State? The chair of HealthWatch England might have been appointed by the Appointments Commission, as mentioned in the original Committee by my hon. Friend the Member for Leicester West, but that is no longer possible because the Government have abolished the Appointments Commission, too. I cannot see how HealthWatch can behave freely, independently or robustly enough to hold its line manger, the CQC, to account. Is not the real danger that HealthWatch will be created with all the negative aspects of a quango, but without any of the benefits of being an independent body?

The Government had not acted to fulfil their promises to the Future Forum until Monday, when, fortunately, a few new amendments were tabled. Having looked at the their promises to the Future Forum, we expected the Government to introduce an explicit requirement that local healthwatch memberships be representative of different users, including carers. Fortunately that has now been done. The Government also agreed to introduce a new duty on health and well-being boards to involve users and the public, but, until Monday, that had not been done. My colleagues and I are predisposed, both politically and on an everyday level, to optimism, so I endeavour to be as positive as humanly possible about the Government’s amendments. Amendment 200—

Roger Gale (Conservative, North Thanet)

That is in the next group.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Sorry, Mr Gale. We welcome amendment 199 as a positive amendment, because it places a statutory duty on the CQC to inform HealthWatch of its response or proposed response to HealthWatch’s advice. The amendment also fully delivers on the Government’s promise, on page 38 of their response to the NHS Future Forum report, to

“introduce a new requirement for the Care Quality Commission to respond to advice from its HealthWatch England subcommittee”.

I would go so far as to say that I wish the Opposition had written the amendment—that is how upbeat I am. I have good reason to be upbeat, because when reading the Hansard of the original Bill Committee, I came across our debate on Opposition amendment 348, which bears an amazing resemblance to Government amendment 199, even after the expensive listening exercise.

I assume that the Minister’s attitude is as positive as mine, so I shall read out his response to amendment 348 to check whether he still agrees with what he said then:

“Opposition amendment 348 would require the CQC to respond in writing to advice and information that it receives from HealthWatch England committee. I sympathise with the point the Opposition are trying to make on behalf the Patients Association, with the intention of ensuring that HealthWatch England is able to have its own distinct identity within the CQC. However, the amendment could work against the building of effective working relationships between HealthWatch England and the CQC. Staff working for the committee and the wider commission should be having an open and ongoing dialogue about their work. Formalising that as the amendment proposes would give the impression that communication between the committee, with its independent role, and the CQC should be conducted by means of correspondence rather than open and ongoing dialogue. For that reason, we do not support that approach to prescribing the nature of that relationship.”––[Official Report, Health and Social Care Bill Public Bill Committee, 10 March 2011; c. 610.]

After an excruciatingly expensive listening exercise, the Government have finally been able to recognise that the measure makes good sense.

Given that the number of quangos in the NHS is set to explode as a result of the Bill, is it not entirely possible that HealthWatch could be swamped by the sheer number of bodies that it needs to check on and deal with? What guaranteed, recognised time would HealthWatch have to raise its concerns? Does the Minister feel that HealthWatch’s impact will need to be increased or diminished, when the board will have to listen to an ever-increasing number of clinical networks? Will he comment on whether HealthWatch’s day-to-day influence will not be marginalised?

Essentially, for the average patient to be satisfied in the environment that the Bill creates, the Government must be clear about where HealthWatch’s advice will sit. Where will I, as a patient, take my case locally? What opportunities will I, as a patient, have for input? What will the general structure be? Will there be different structures at local level, or similar structures? Will those local structures be constitutionally different or similar? The proposals have obvious implications for transient populations and could lead to inequalities of opportunity for those who wish to seek redress in different localities. Furthermore, varying structures lead to varying levels of remuneration.

How will I as a patient know where to go? What is the budget for local, regional and national advertising to spread knowledge of HealthWatch and how will patients be consistently consulted?

Karl Turner (Labour, Kingston upon Hull East)

For the benefit of the Minister, I also have speaking notes. However, I can assure you, Mr Gale, that I, unlike the Minister, prepared the notes that I am speaking from. Opposition Members have seen time and again that Ministers do not seem to have a clue about what they are saying. They seem to make it up as they go along, looking occasionally to the civil servants for support.

This is not a particularly controversial part of the Bill—

The rest of the debate is in Hansard.