Hansard have got the transcript online for the schedule debate of today's Third Reading of the Health And Social Care Bill, and the debate itself is here.

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Click here for details of 'PM Cameron: “whole health profession on board for what’s now being done”. Why do they call August the silly season?’, the new issue of subscription-based Health Policy Intelligence.

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Some key extracts:

Grahame M. Morris: Will the Secretary of State clarify an issue to do with the Secretary of State’s powers to intervene in the event of failure? I am thinking in particular of the reports about freedom of information requests that appeared in The Guardian newspaper earlier in the week, which said that Department of Health officials had been in discussions with Helios about a potential transfer of between 10 and 20 NHS hospitals to the private sector. Is that a scenario in which the Secretary of State would use his powers?

Mr Andrew Lansley: I do not recognise such a scenario and in any case there will be no transfer of NHS-owned organisations and the estate and property of such to the private sector. We are not engaging in privatisation, so to that extent the question does not arise.

Owen Smith: Let me clarify a remark that the Secretary of State just made to my hon. Friend the Member for Easington (Grahame M. Morris). The Secretary of State said that there would be no instances where NHS properties might be transferred to private companies, but he will know that under schedule 23 there is provision for precisely that. Such companies are described there as a “qualifying company”. A licence holder could be a private company to which NHS material—even staff—and other liabilities might be transferred. Is that not right?

Mr Lansley: The point I am making is that we are not transferring foundation trusts or NHS trusts into the private sector. We are not planning to do that. The particular case to which the hon. Member for Easington (Grahame M. Morris) referred was misrepresented as a proposal to transfer the ownership of NHS organisations. There is no such proposal; we are not planning to do that.

As I have described, the Bill would establish a comprehensive system of regulation focused on protecting and promoting patients’ interests and applicable to all providers of NHS services. The purpose of part 3 is to protect our health services from the unrestrained operation of market forces—otherwise, why would we want this structure of regulation? That is why it is there. The provisions will ensure that services are not destabilised or undermined and will protect the public and patients’ interests.

Let us consider the implications of the Labour party’s amendment 10, which would remove part 3 of the Bill. The impact of removing part 3 would be to expose the NHS to the full force of competition law, as I described earlier, without the safeguard of a health sector regulator and without any sensitivity to the needs of patients, health services and our NHS.

... Labour’s amendment 10 would potentially expose the NHS to practices that we do not wish to see. That would include paying over the odds for private sector services, as the previous Government did when they paid £250 million extra to the independent sector for operations that were never carried out; the cherry-picking of easier operations by the private sector, which is an issue in the NHS because the previous Labour Government let it happen; unreformed payment by results, losing the focus on outcomes and integration; and the retention of a system of payment based on price. We are not introducing payment by results; we are reforming it. Payment by results, as implemented by the Labour party, was simply payment for price and volume, not for quality.

Amendment 10 would leave independent sector providers of NHS-funded services, which serve hundreds of thousands of patients a year, unregulated by Monitor and unprotected if the service in which they are being treated gets into financial difficulty.

...

Mr Stephen Dorrell: I welcome the amendments that the Government have tabled for consideration. I also welcome the very detailed way in which my right hon. Friend the Secretary of State introduced what is, as I am sure he will acknowledge, a substantial group of amendments. He emphasised that their purpose is to give effect to the undertaking that the Government gave when they set up the NHS Future Forum to ensure that the findings of that forum are reflected in the legislation, and that the legislation, when it reaches the statute book, is built on the work of Professor Field and his colleagues.

One purpose of the amendments is to respond to many of the points that have been made, throughout the passage of the Bill, about the role of Monitor. I completely agree with my right hon. Friend that many of those observations about the supposed role of Monitor have been based on a misunderstanding, whether deliberate or otherwise, of the intention behind the Bill when it was first introduced. Whether the misunderstanding was deliberate or accidental, the Government are responding to virtually all those points in order to make it clear that, in the context of the Bill, the central purpose of Monitor is not to be a blind economic regulator based on the assumption that the health service is simply another utility. Various loose words have been used that bear that construction—but never by Ministers, and the implications of those observations have never been accepted by Ministers. As I have understood it—this is why I have supported the Bill throughout its passage—the Government’s intention has always been to ensure that the new NHS envisaged by the Bill gives effect to the basic commitment on which the Government were elected to ensure that the health service secures equitable access to high-quality health care for all patients regardless of their ability to pay.

In considering these amendments, it is important to refer to the individual functions of Monitor envisaged in the amended Bill and test them against the assertions that have been made, throughout the passage of the Bill, about what Monitor is there for. We must also test them against the Future Forum’s recommendations about how the role of Monitor should be clarified in order to remove these misunderstandings.

First—I warmly welcome this—it is made clear in the Bill as amended and the supporting documentation from the Department that although the Government intend to continue, as did their predecessor, to encourage the conversion of NHS trusts to foundation trusts, there will be no reduction in the standards required to qualify for the status of foundation trust. The registration principles established by Monitor, which are broadly welcomed throughout the health service, are intended to justify the independence that comes with foundation trust status. Those standards will continue as a gold standard under the new NHS, and achieving them, rather than meeting some artificial deadline, is the key determinant of whether a trust achieves foundation trust status. I welcome the fact that the Government have made that clear. It responds to a specific recommendation by the Future Forum, and it is exactly right.

Secondly, the Future Forum also envisaged that the role of Monitor should not come to an end on the day that a trust achieves foundation trust status. There should continue to be, on behalf of the taxpayer and of patients, an oversight role to ensure that organisations that have achieved foundation trust status continue to meet those standards and to deliver the quality of care required by patients and commissioners. That is now set out clearly in the Government’s supporting paperwork. It is part of the role of Monitor, and I welcome the fact that—having established that there will be no diminution of standards in the achievement of foundation trust status—it will have continuing oversight to ensure that those standards continue to be met.

The third point that was highlighted by the Future Forum—once again, it was accepted by the Government in these amendments—is the need to ensure that not only will there be continuing oversight of the achievement of those standards by foundation trusts, but Monitor will have the power to intervene if a threat emerges to the achievement of those standards by a foundation trust. Patients can be confident not only that there will be oversight, but that Monitor—on behalf of the taxpayer and of patients—has the capacity to intervene to ensure that action is taken if management in post at a foundation trust is not delivering the standards required.

... The health service has not always provided services from a public sector provider. Until this Bill and the powers it gives to Monitor, regulatory bodies in the public sector had not had the opportunity to inquire into the sustainability of services provided by private sector providers. My right hon. Friend the Secretary of State made the point from the Front Bench that the role of Monitor under the Bill is to ensure first—if I may repeat myself—that foundation trusts are of a high quality when they are launched; secondly, that they are accountable for retaining their high standards; thirdly, that we intervene early if they start to go off the rails; and fourthly, that if they get into serious difficulty, we have the capacity, through Monitor, to continue to deliver continuity of service to those who rely on public health provision, whether from an NHS foundation trust or, as a result of the Bill, for the first time from the private sector. I regard that as a significant step forward in the delivery of continuity of care for NHS patients, whether provided, as the vast majority still will be, by public sector institutions or by some of the independent sector treatment centres introduced by the previous Government.

Rosie Cooper: Does the right hon. Gentleman think that standards can be maintained, and be seen to be maintained, in foundation hospitals if they are allowed to do what they are currently doing, which is not to disclose all information relating to, for instance, complaints procedures or whatever? Furthermore, does he not think that board meetings should be held in public?

Mr Dorrell: My understanding is that the Government have clarified that foundation trust board meetings should be held in public and that, in future, it will be a requirement of licensing by Monitor. On the much broader point, I absolutely agree—the hon. Lady, who is another member of the Select Committee, knows that I agree—that providers of care to NHS patients, whether public or private, ought to have an obligation to provide information on the outcomes that they achieve and certainly on any complaints and other processes initiated by patients about the care they receive. That was one of the strong recommendations that the Select Committee made following its work on complaints. I think that that obligation ought to rest on all providers of care to NHS patients, whether they are foundation trusts or any other form of provider.

... I want to make one final point and it is a direct response to the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), who spoke before me. Of all the misrepresentations about the intentions of this Bill that we have listened to since the White Paper was published over a year ago, the most persistent is that this is somehow a Bill—a ramp—for the privatisation of the health service.

I was first a Health Minister more than 21 years ago. Throughout that period I have listened to speeches directed first at my right hon. and learned Friend the current Justice Secretary, when he was Health Secretary, and subsequently at all his Labour and Tory successors, including myself, although probably excluding the right hon. Member for Holborn and St Pancras (Frank Dobson). All their legislative and other proposals to introduce more flexible and patient and standards-oriented structures in the health service were opposed by somebody or other on the grounds that they were going to privatise the health service. If that was the purpose of those policy initiatives, the one thing that they all have in common is that they have been singularly unsuccessful. If it is the policy purpose of this Bill to privatise the health service—which I do not for one moment believe it is—it will, I am sure, be as unsuccessful as all the other measures that went before it.

Frank Dobson: To ask the essentially collaborative health care system in this country to turn over to being competitive is a bit like asking the Meat and Livestock Commission to promote vegetarianism: it is simply not what people want to do; it is not their approach and nor should it be. It remains the case that Monitor is still rigged in favour of promoting competition. Let me point out—hopefully without putting my glasses on—that clause 58(3) states: “Monitor must exercise its functions with a view to preventing anti-competitive behaviour in the provision of health care services for the purposes of the NHS which is against the interests of people who use such services.”

However, it does not say that “Monitor must exercise its functions with a view to preventing competitive behaviour in the provision of health care services which may be against the interests of the people who use such services”. Apparently, then, there is a basic, intrinsic and fundamental assumption that competition must be beneficial and non-competition must be harmful. If the Government say that Monitor is neutral, it should be given a neutrality in respect of competition and non-competition. As I think the hon. Member for Peterborough (Mr Jackson) would agree, the unfair competition of some of the independent treatment centres was harmful to and threatened the services provided by neighbouring NHS hospitals. There is clear evidence here of problems within the private sector.

I recall that, a few years ago, United Health—a subsidiary of the US United Health—took over three GP services in my constituency. It bid that it could provide the range of services for less than the local GPs, so it got the contracts. It has not complied with all the conditions that were set, but in the end, the primary care trust decided that it could not take it to court because it would be such a lengthy and expensive exercise and it feared that the PCT might not win. Not content with that, United Health recently announced that it was selling the franchise to another private outfit. It did not consult the staff. It did not consult any elected local representatives—neither myself nor councillors. Above all, it never consulted the patients. These private sector outfits regard patients as part of the chattels that they can dispose of to maximum benefit and maximum profit.

That illustrates the fact that if we are to have contract-based provision of services, a huge amount of lawyer effort will be put into trying to draw up watertight contracts. What one lawyer thinks is a watertight contract, another lawyer will make a leaky contract by puncturing a hole in it, and we will go over to the system in the United States, where zillions of dollars are spent on court challenges or settlements with the providers of health care.

Furthermore, there is virtually no major American supplier of health care that has not been indicted for defrauding federal taxpayers, city taxpayers, state taxpayers, doctors or patients—and sometimes all five. I thus asked the Secretary of State whether he would rule out giving any NHS contracts to any organisation that had been indicted for defrauding people in another country. He gave me about a page-long answer, which could be summarised as, “No, he would not rule them out.”

We are thus talking about the possibility of European competition law being used to force our Secretary of State to allow people to give contracts to American companies whose greatest claim to fame is that they have defrauded innumerable Americans. I think that that is intolerable. I would have thought that all these anti-EU Conservatives would have found it rather embarrassing to think that European law was going to be used to allow fraudulent Americans to get contracts working in our national health service. All those things, however, will be possible under the system proposed by the Secretary of State.

... I think that nowadays those who call themselves members of the Conservative party only purport to be Conservatives. The basic Conservative approach in this world is, broadly speaking, not to make great changes without being absolutely certain that substantial benefits will result from them. A proper Conservative recognises the problems that arise during the process of change, and the unpredictability of things in human life. What we have now, certainly in relation in health and possibly in other spheres, is a Government who are going ahead with something which—good God!—cannot be regarded as well thought out, given that they have tabled 1,000 amendments on Report.

... In fairness, I think that given the accuracy of the present Government’s aim, if they tried to rubber-stamp something they would probably miss.

Dan Byles: In view of the speech that the right hon. Gentleman is making and his definition of a “proper Conservative”, I wonder whether he has just come out of the closet as a proper Conservative himself.

Frank Dobson: People have described me as old Labour, but I have moved on from that. I am now heritage Labour. Part of our heritage, however, is the national health service, and it is not the Tories’ heritage either. Those who play with the national health service—which is what I think the Government are doing, purely for ideological reasons—do us a disservice in two ways. They threaten the likely performance of the national health service and the people working in it, and they threaten the relationship between the British people and the national health service.

I believe that the national health service is popular for two reasons: because, in most parts of the country and for most of the time, it does a good job for people; and because people value the thought that it not only looks after them but looks after their families, looks after their neighbours, and looks after all of us. I believe that, in many ways, that is its most important function.

We live at a time when everyone is filled with growing concern about the divisive elements in our society, and the national health service, along with the feeling that people have for it as a collaborative organisation, is one of the few exceptions to that. The health service does not just bind the wounds of people in this country, but helps to bind us together. That, I believe, is why it is so dangerous that the Government are going against its the basic principles, thus risking not only its performance, but its relationship with us and its binding function in our increasingly divided society.

John Pugh (Southport) (LD): The House is right to be sceptical about the blessings of the internal market in health. It is right to be worried about price competition, which everyone thinks is a race to the bottom. It is right to be concerned about the reckless extension of “any willing provider”, and it is correct in fearing that health services will be increasingly exposed to competition law, including EU competition law. It should fear the huge transactional costs that will be incurred in the hardening of the commissioner-provider split. It should fear the threat to integration, and it should fear cherry-picking, particularly in a narrow tariff system based on payment by results. It should also fear the blurring of the difference between public and private hospitals, and the financial incentives given to the private sector under the banner of choice.

That is why I dislike the greater part of what Tony Blair did to the NHS. Those who are now Opposition Members voted for all that, and that is where we are now: it is the default position. As one Opposition Member said, Labour has put all the bricks in place. A few moments ago we witnessed the strange anomaly of the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) complaining about a feature of foundation trusts—their ability to borrow on the private market—which I consider to be a direct consequence of Labour legislation.

The choice for the House is not between Aneurin Bevan’s NHS and the Bill, but between Blair’s NHS and Secretary of State’s version. If I were to sum it up neatly, I would say that the Secretary of State’s version most closely resembled Blairism with clearer and more equitable rules. First, there is an overt sector regulator instead of the powerful covert regulating body, the Co-operation and Competition Panel, which has been making all the decisions that Monitor will make in a more overt way. Secondly, there is the outlawing of subsidy to the private sector, which is perfectly possible: the Secretary of State is not minded to take such action at present, but current legislation does not prohibit him from doing so. Thirdly, as Members must acknowledge, the Bill makes a clear attempt to forfend cherry-picking and protect clinical networks by safeguarding integrated provision. It is possible to have an argument about how well that is done, but there is certainly an explicit intention to do it—as, to be fair, there was in some of the activities of the CCP, although in that instance the constraints were somewhat weaker.

Fourthly, since the pause a clear attempt has been made to ensure that Monitor merely regulates, without performing a strategic role in promoting much except the interests of patients. It functions as a regulator and adjudicator on what it is intended to do, rather than occupying an unaccountable strategic role in promoting competition. Clearly much will depend on the mandate that it continues to be given and on its personnel: that will vary over time, and we should be watchful in that regard.

Grahame Morris"The Secretary of State said that it was a question of communication, but I suspect that part of the problem with the Bill is that, far from there being additional clarity, the more that Members of Parliament, the medical profession, health care workers, members of the public and informed commentators have examined the proposals in detail, the greater the number of concerns that have arisen.

If the Secretary of State had been open and honest about the direction of travel and the motivation for these health reforms, perhaps we could have avoided some of the confusions that have arisen. There is no electoral mandate for a huge structural review and reorganisation.

... Lord Tebbit of Chingford, an outspoken man who could hardly be described as a left-wing agitator, raised real concerns about what he described as these privatising reforms. He said that there is something seriously wrong, and that “What worries me about the reforms…is the difficulty of organising fair competition between the state-owned hospitals and those in the private sector. In my time I have seen many efforts to create competition between state-owned airlines, car factories and steel makers. They all came unstuck. The unfairnesses were not all one way and they spring from the fact that state-owned and financed businesses and private sector ones are different animals”.

I have rarely found myself in agreement with Lord Tebbit, but on this occasion his analysis is extraordinarily insightful.

Mr Simon Burns: May I say to the hon. Gentleman that that report is unadulterated claptrap? The trouble is that it was a misunderstanding of the contents of the e-mails. [Laughter.] The right hon. Member for Holborn and St Pancras (Frank Dobson) may think that that is funny, but the e-mails were not there to discuss these bodies taking over NHS hospitals; the e-mails were about discussing what their views are on hospitals that are struggling. The e-mails were part of an information-gathering mechanism to find out how policy in the NHS could be improved to deal, within the NHS, with hospitals that might be struggling as part of the foundation trust pipeline.

Grahame Morris: I do not find this at all funny. I would find it really worrying if this report is an indication of what is in store. It is rather ironic that the Secretary of State quoted from the Labour party manifesto. Perhaps it might be instructive if I were to quote from the Conservative party manifesto. It said that the Conservatives would “defend the NHS from Labour’s cuts and reorganisations”.

If this Bill is not the biggest reorganisation that we have ever seen—[Interruption.] Well, it is, even though the Conservatives said that they would not proceed with any such huge reorganisation.

Mr Kevan Jones (North Durham) (Lab): Would not the Secretary of State be able to clear that up tonight by giving a categorical assurance that no hospital will be transferred to or run by a foreign entity?

Grahame Morris: I am happy to give way to the Minister, if he wishes to give that assurance from the Dispatch Box. It would reassure staff and members of the public. Ah well. Perhaps we can read something into the Minister’s reluctance to give such an assurance.

...

Mark Simmonds: Let me summarise the Government’s motivation in five areas. The first is to improve patient care; the second is to drive up the quality of services; the third is to improve patient outcomes; the fourth is to ensure better value for taxpayers’ money; and the fifth, and perhaps most important, is to ensure that our much-loved national health service has a successful future as a service that is free at the point of need, and a service that is based on requirement, not ability to pay. There should be continued equity of access and, even more importantly, excellence for all.

Valerie Vaz (Walsall South) (Lab): Does the hon. Gentleman recall these words—“NHS” and “no top-down reorganisation”, said by one David Cameron, leader of the Conservative party?

Mark Simmonds: I do remember that. The changes outlined in both the original Bill and the amendments that have been tabled as a result of the considered and very professional work of Professor Field and his team demonstrate the desire of the coalition Government to make sure that the national health service survives for future generations as a taxpayer-funded service free at the point of need. All the changes set out in the Bill are determined by that.

The hon. Member for Leicester West (Liz Kendall), who spoke for Labour in the programme motion debate, should be wary of praying in aid the BMA. Not only did it object back in the 1940s to the setting up of the national health service, but just prior to the last election, it said that the Labour party was the enemy of the national health service. We need to engage with all the clinical groups within the national health service to ensure that we deliver the best possible patient outcomes for the amount of resources that we can put in.

Grahame Morris: Can we agree on one thing—that opinions should be evidence-based? I was amazed that when Professor Steve Field was asked whether the Future Forum had taken independent legal advice on the contentious issue of whether European competition law would apply as a result of the reforms—the matter was raised in the Bill Committee or the Select Committee—he said no, he had not taken independent legal advice. That was a major omission.

...

Mark Simmonds: Among the major failures of the last decade in which Labour was in charge of the national health service was not only the decline in productivity, but the fact that there was insufficient decommissioning of poor services and insufficient replacement and improvement of poor-quality service provision. Nowhere is that more marked than in Tunbridge Wells and Stafford.

The primary purpose is to enable Monitor to support commissioners to access services and place conditions on a licence holder. Some of those conditions are set out in the Bill. All hon. Members know that there is considerable variation in performance of organisations within the national health service. Providers who are providing excellent services should be allowed to thrive, innovate and drive the quality of clinical care. Those that are under-performing will require challenging, and support where necessary. Ultimately, if they cannot respond to that support and that challenge, they should be replaced by an alternative provider. That should apply both to the independent sector and to state sector provision. It is not acceptable that, purely because a service is provided by the state, it should be allowed to continue as a substandard service.

Some of the key changes in the new clauses and amendments allow that to happen. They make sure that funding is much more transparent. The existing framework has allowed hidden bail-outs to take place, which all too often have hidden poor management, poor service provision, and the need for clinically appropriate and evidence-driven reorganisation. All too often that has not happened, to the detriment of patient care.

I was pleased to see that the Secretary of State had allowed a safety valve in this part of the Bill, which would enable tariffs to be topped up, particularly for the provision of services in rural areas, such as my constituency in Lincolnshire. This must not be seen as an opportunity for the Department of Health to support and subsidise inefficient management and service provision. All too often there are inefficient cost bases and money could be transferred instead to front-line patient care.

... What will happen if Monitor has to step in to provide advice, shore up a service or provide an alternative service provider, but the commissioners cannot agree on who should be the subsequent service provider? Who will resolve disputes between two commissioning consortia? Will it be the NHS commissioning board, Monitor or the Department of Health? Where a provider delivers a service to more than one commissioner, and one of the commissioning groups has access to an alternative provider already in existence but not another, who decides who will provide the service that has failed?

Rosie Cooper: Members of the public listening to Government Members this afternoon might wonder whether we were having this debate in a parallel universe, because they have heard the Prime Minister promise that there would be no top-down reorganisation of the NHS, and what did we get? We got the biggest reorganisation in the history of the NHS. The Prime Minister said only recently that everyone was on board and behind the Bill, and yet we find that clinicians, professionals and the public are far from being on board. The Government talk about the protection of services, but the public will have read only yesterday that the Government are meeting McKinsey about the possible transfer, albeit a slow transfer, of up to 20 hospitals.

Mr Simon Burns indicated dissent .

Rosie Cooper: The Minister keeps saying no, but the reality is that, as I told the Secretary of State, you may very well be fooling yourselves, but you are not fooling the public, and the Bill was wrong.

... The Conservatives expect the public to believe that the party that promised no top-down reorganisation and then broke that promise can be trusted when it says that there will be no privatisation of the NHS, yet evidence comes to light via freedom of information requests that that is not the case.

Let us look at what is currently happening in the NHS. There are two different processes at work: financial efficiency gains and structural reform. The idea was to ask the system to make efficiency gains of 4% each year for four years. On top of that there is the reorganisation, which a Conservative Member has likened to tossing a grenade into the system. We have had muddle, pause, fog and are now effectively back to where we were some time ago.

The reforms do not address the financial challenges, especially the Nicholson challenge. This is costly—making people redundant, throwing organisations into disarray and telling people, “You don’t have a future, you might have a future,” “Let’s have a cluster, let’s not have a cluster,” “Where are you going to work?”, “It’s all going to disappear by 2013,” “There are no PCTs—well, they’re there really, but clusters will do the work,” “No, we don’t have strategic health authorities—well, okay, we’ll keep four of them.” The Marx brothers would be proud of the stops, turns, U-turns, pauses and muddle that there have been. But the bottom line is that the great British public have to watch those antics and are worried about their health service.

... In all such situations I always say, “Follow the money.” What is actually going to happen? If this is costing a lot of money—there is a lot of muddle—it has to be really clear that the driver of the reforms cannot be, as the Secretary of State has previously said, the idea that the NHS is unaffordable; we seem to be able to afford a lot of other things. If the reason is not financial efficiency, it has to be purely ideological.

I understand that 85% of respondents to the NHS Confederation survey were very clear: the hardest job that they could have is to deliver both NHS changes and savings simultaneously. That makes it harder for them to deliver objectives for improving efficiency and quality—but that is what I am told that Government Members are all about; the Bill is supposed to improve efficiency and quality.

Monitor makes decisions about the future sustainability of individual services and the patterns of local health services under the failure regime. It is unclear how those decisions would be made, and how and to whom Monitor is accountable. Technically it is an independent body and it should be responsible to Parliament and the Secretary of State, but perhaps the Secretary of State will clarify that.

As the economic regulator, Monitor is given a whole series of powers that ultimately focus on enforcing competition in the NHS. There are still fundamental gaps in how that organisation will be held to account. There is a lack of clarity about how health services can engage with and influence the work of Monitor. Having been chair of a foundation trust hospital, albeit only for a month—because I stood for Parliament and had to resign—I can say that Monitor was a law unto itself. And before the Health Committee, Monitor likened the NHS to utility companies, which does not give me any confidence whatever.

I want to talk about Monitor not consulting commissioners on changes to enhance tariff. Private providers can apply to Monitor for an enhanced tariff to preserve the services that they, as private businesses, are providing to the NHS.

Tom Blenkinsop: One essential point that we have to raise about Monitor is that it is a replica of an economic regulator of the utilities. The four to six companies in the energy sector have just raised gas prices by 18% and electricity by 11%. How does my hon. Friend think Monitor will be able to cope with private companies and health?

Rosie Cooper: I would suggest that it is a failing model, and not one that we should be looking at.

I should like to look at the idea of risk pooling, in which Monitor will have a role. Monitor will be required to top-slice the budgets of foundation trust hospitals to obtain that pool of money. The problem is that if the trust is already in financial difficulty, the fact that Monitor needs to top-slice the FT hospital’s budget could tip it into being unsustainable, and then Monitor would have to act. Does that not seem back to front? It needs looking at. If the foundation trust is unsustainable, Monitor has a duty to take action, yet Monitor may well have precipitated the situation; there seems to be a conflict at the core of that relationship. There is no clarity about how top-slicing will be calculated, or what it will involve. Will the Secretary of State please comment on that?

I shall bring my comments to a close with a quotation that I used in a speech I gave a while ago. In “This Week”, Michael Portillo was asked by Andrew Neil why the Government had not told us before the general election about their plans for the NHS. He replied: “Because they didn’t believe they could win the election if they told you (the public) what they were going to do. People are so wedded to the NHS. It’s the nearest thing we have to a national religion—a sacred cow.”

He could not have been more clear. The Government intended to misrepresent their position and mislead voters. I believe that this is the latest stage of that misrepresentation, and the Government must be held to account if they force the Bill through in its current form.

Dr Daniel Poulter: We do have problems in the NHS. Far too much money—about £5 billion a year—is wasted on bureaucracy and could be much better spent on front-line patient care. Over the past 10 years, the number of managers in the NHS has doubled, going up six times as fast as the number of front-line nurses; the hon. Lady is very concerned about that. A lot of things need to change in the NHS so that the service can become more patient-focused and patient-centred. That is why we are making these changes and why the reforms in this Bill have to go through the House.

Liz Kendall (Leicester West) (Lab): This is a crucial part of the debate that we will have over the next couple of days. Parts 3 and 4 of the Bill are at the heart of the Government’s proposals for the NHS and of the concerns that professional bodies, patient groups, members of the public and Members—at least on this side of the House—have about those proposals. These parts will introduce a new economic regulator for the NHS, modelled on the same lines as those for gas, electricity and railways. They also enshrine UK and EU competition law into primary legislation on the NHS for the first time.

We have also been discussing crucial new amendments which, despite what the Secretary of State says, have not been scrutinised by the Future Forum, about the Government’s new failure regime. That essentially addresses which local services and hospitals—such as we all have in our constituencies—will be allowed to fail.

Each of these subjects should be subject to separate and far longer debates, because they are of such importance to our constituents, our local NHS staff and our local services. However, because the House has been given so little time and the Government have tabled so many amendments, we have been forced to take these huge issues together—[ Interruption. ] As always, the Minister of State groans from a sedentary position, but Members have a right to question the Government on their proposals for local hospitals and services, and three or four hours is not sufficient. I hope that the other place will take that into account.

The Bill establishes Monitor as an economic regulator, modelled on the same lines as those for gas, electricity and railways. The explanatory notes make this explicit. Page 85 states that clauses in part 3 are based “upon precedents from the utilities, rail and telecoms industries”.

Indeed, in an interview with The Times earlier this year, David Bennett, the new chairman of Monitor, confirmed that that was the Government’s plan, saying that Monitor’s role would be comparable with the regulators of the gas, electricity and telecoms markets.

Labour Members have consistently argued that such a model is entirely wrong for our NHS. People’s need for health care is not the same as their need for gas, water or telecoms. There is a fundamental difference between needs, ability to benefit, the complexity of services and the fact that they are far more interlinked. The NHS is not a normal market. It is not like a supermarket, or like gas or the railways. There are much more important issues at stake.

The Government have made some minor amendments to Monitor’s duties, but they will not ensure the integration and collaboration that many hon. Members recognise is vital to improving health, especially for patients with long-term and chronic conditions. As my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) said, the duties still rig Monitor in favour of competition. It is not only Monitor’s duties that do that. Chapter 2 of part 3 contains 12 clauses that explicitly introduce competition law into primary legislation on the NHS for the first time. The clauses give Monitor sweeping powers to conduct investigations into NHS services; to disqualify senior staff in hospitals and other NHS services; and to impose penalties for breaches of competition law, including the power to fine services that are found to have broken the law up to 10% of their turnover. Not only that, but third parties, including competitors, can bring damage claims against those services.

The Government claim, as the Secretary of State did earlier, that somehow those provisions will not change anything. In that case, why bother to have the clauses in the Bill? As the hon. Member for Southport (John Pugh) said, Labour Members have argued not that the Bill extends the scope of competition law, but that it extends the applicability of competition law to the NHS. It is not just the clauses on Monitor and competition law that do this, but others such as those that abolish the private patient cap on foundation trusts, and other Government policies, such as that of “any qualified provider”.

Andrew George: I hope that the hon. Lady shares my disappointment that, despite the fact that we have debated this issue for four hours and that I have tabled nine selected amendments, I have not had the opportunity to explain the purpose of those amendments—even though the Secretary of State referred to them in his opening remarks. Does she accept, for example, that amendment 1207 relates to clause 58(3) and balancing competition versus anti-competitive behaviour? The other amendments seek to give integration a greater priority for the regulator to enforce.

Liz Kendall: I understand why the hon. Gentleman tabled those amendments and I understand his concerns. Opposition Members have consistently argued that the Bill threatens to pit doctor against doctor and service against service when they should be working together in the best interests of patients. Our view is that a far better approach than seeking to amend the Bill would be to delete part 3, because it is a fundamentally wrong way to treat our NHS. A few small changes to Monitor’s duties would not alter what the Bill seeks to do, and that is why amendment 10 proposes deletion of part 3.

The Bill will guarantee that the NHS will be treated as a full market, and the providers of services will, for the first time, be treated as undertakings for the purpose of competition law. The Secretary of State said that the Bill would not increase the applicability of competition law, but the Minister of State confirmed it when he told the Committee: “UK and EU competition laws will increasingly become applicable…in a future where the majority of providers are likely to be classed as undertakings for the purposes of EU competition law, that law…will apply.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 718.]

If the Government wish to claim that that would not be the effect of the Bill, they should publish any legal advice they have taken. Again, we have two different stories. The Minister of State says that the Government have taken legal advice, but in answers to parliamentary questions we hear that the Government have not taken legal advice. Members deserve to know what the advice is about the implications of this Bill.

NHS staff, patient groups and members of the public have very real fears about the consequences of the Government’s proposals and the full market that is envisaged in the Bill. The previous Government saw that giving patients more choice and a greater say in their treatment, and bringing different providers into the system—including from the private and voluntary sectors—can bring real benefits, including improving outcomes and efficiency, especially in elective care. But we always did that using clear national standards that this Government are abolishing and with the ability to manage the consequences that choice and competition bring.

One of the problems with this part of the Bill is that it does not recognise what some hon. Members have talked about—the interdependency of services. If we remove one service from a hospital, it has a knock-on effect on others. The ability to get the benefits of diversity and competition without destabilising services is a tricky balance, but the Bill does not acknowledge that balance. I am not just talking about the clauses we are discussing now. The Government are also abolishing key organisations, including primary care trusts and, in particular, strategic health authorities, which have an important role in managing the consequences of choice and competition in the system. The two biggest challenges facing the NHS are to specialise and centralise some services in specialist hospitals and to shift other services from district general hospitals out into the community. These changes will have consequences for hospitals. The Bill will make the changes harder to make, and the clauses that we are discussing will prevent the kind of close working and involvement of patients, the public and elected representatives that we need in order to make these changes happen.

The clauses also have consequences and implications for taxpayers. We come to the issue of Monitor’s costs. Chris Ham, the head of the King’s Fund, the well-respected health think tank, wrote in a British Medical Journal article in February that

“the government’s proposals run the risk of replacing the bureaucracy of performance management with the red tape of economic regulation. Monitor will need to employ large numbers of economists, lawyers, accountants, and managers to deal with competition issues, providers who fail, price setting, licensing providers, and other work.”

That is not just a risk; it is a reality. The Minister of State kept changing his position in Committee. Initially he told us that the costs of Monitor would rise from £21 million a year at present to £130 million a year, but he then revised that figure down to £80 million. Of course, however, because the Government have not bothered to publish their impact assessment for the Bill, we have no idea what the costs of setting up this huge new regulatory body will be. It is not just Monitor that will end up having to employ lawyers, accountants and managers; clinical commissioning groups in hospitals will probably need to do it too. They could even be forced to take out expensive insurance in case they are fined, taken to court or even sued because they have fallen foul of competition law.

It is for all those reasons that we are so concerned about the Bill: because we do not think that the NHS should be remodelled along the same lines as the privatised utilities; because we think that competition is not the panacea that the Government think; and because we think that there are very real risks that the legislation will stop hospitals working together and developing their own community services because it could be seen as anti-competitive behaviour.

I turn to Government new clauses 2 and 6 and the series of Government amendments on their new failure regime. It is important that we are clear from the start about the purpose of these amendments, even though we have had only a very brief time to look at them—none of the professional bodies, health experts or managers have had a chance to scrutinise them properly. The Government claim that they are about securing continued access to services for NHS patients. That is an admirable attempt to spin what this is about. In fact, it is a fundamental part of the Government’s plan to create a market in which more services will be likely to fail because that it is a way of getting new people into the system. That is the reality of what is happening. The future of local services and whether they will be allowed to fail will be determined not by local clinicians, not by local patients and the public and not by locally elected representatives—I shall explain to the Secretary of State in a moment why his own policies will not do that—but by the new economic regulator, Monitor. I do not believe that this is what people want for their NHS, and it is not supported by Labour Members.

We have heard a lot from some Government Members about how bail-outs and bungs to NHS services have to end. I would just say that many services have received money because we want those services to continue. In my own constituency, Leicester hospitals are facing challenges and problems, and it would be useful to know whether, if their current £11 million deficit was covered by money found within the local health economy, it would be considered a bail-out or bung that would not be allowed under this system. I would be interested to hear from the Secretary of State whether that would be the case. Some Members will have an entire hospital in their constituency at risk of failing financially. We know this because Sir David Nicholson, the chief executive of the NHS, told the Public Accounts Committee on 25 January that there were 20 failing trusts—trusts that cannot become foundation trusts. I have asked the Minister repeatedly for a list of these trusts so that hon. Members who have patients who use those hospitals will know which ones they are and what the Government’s plans for them are. Once again, however, the Government have failed to be open about that, which is a mistake because difficult changes can be made only if the Government genuinely engage with patients, the public and Members of the House on the decisions being taken.

The Bill also proposes removing the ability for foundation trusts to revert to NHS status and the ability to transfer assets and staff from the NHS, including to the private sector. Far from ending cherry-picking, as Government Members claim, it allows Monitor to vary prices for NHS services, including to private providers. That is what these new amendments state. The Government have made much of their claims to the Future Forum that cherry-picking will be ended. We did not get to discuss the cherry-picking amendments, and the new amendments now allow Monitor to do just that, which is a matter of great concern. These issues have not been scrutinised by doctors, nurses, managers, other NHS staff or local councils—and not even by the economic regulator, Monitor, which is running the process, or the Future Forum. It will therefore fall to Members of the other place to ensure that they hear the views and concerns of those bodies when they are scrutinising the Bill.

The situation is even more concerning because of the Government’s poor track record—that is a polite way of putting it—on this issue. They got it badly wrong the first time round with their proposals for Monitor to designate which services are essential for patients and which would be allowed to fail. In the first Bill Committee, we argued against designation because it failed to ensure proper local democratic accountability; because it failed to understand that allowing one NHS service to fail would have a knock-on effect; because it failed to recognise the in-depth local knowledge required to make these decisions; and because it was a cumbersome and bureaucratic process. Above all, we argued that the process was wrong because it should be driven not by the economic regulator, Monitor, which is unelected and unaccountable, but by local people, patients and staff. The Government refused to listen, denying that any of our concerns were valid. I am glad that when the Future Forum made the same arguments as Labour Members, the Government put aside political prejudice and agreed to delete their designation clauses. However, they are making the same mistakes again. The new failure regime will be driven not by clinicians but by the economic regulator, Monitor. It will not give patients and the public a strong voice and it will not ensure effective local democratic accountability.

In reality, Monitor will take the lead in deciding which services are essential for local people and therefore whether they should continue in any form; whether and how it should intervene to try to prevent services from failing; and, if a service cannot improve and needs to close, what will be put in its place.

The NHS Confederation says in its briefing for this debate: “under these proposals Monitor will make fundamental decisions affecting the sustainability and future of individual services…the pattern of local NHS provision and we are concerned that it is unclear how Monitor will take decisions and how it will be held accountable.”

John Pugh: Is there not a big difference between making fundamental decisions, as we accept Monitor will sometimes have to do, and what the hon. Lady has just described, which is about taking the lead in the integration and sourcing out of services, which presumably is what the commissioners do? If she has read the other bits of the legislation, as I am sure she has thoroughly, she will be aware that the commissioners have a pivotal role in determining the shape, structure and character of local services.

Liz Kendall: I should add that, as the hon. Gentleman will see, page 6 of the briefing notes that the Government published on the Bill says that clause 104 would “give Monitor discretion in determining where it is appropriate to include standard licence conditions for the purposes of securing continuity of services”.

As the NHS Confederation asks, how will Monitor have the local information and intelligence to make such complex judgments? How should patients and the public be involved? Monitor then has to keep the level of risk of the service under review, as well as taking decisions about whether and how to set differential prices for providers, to ensure the continuity of the process. How it is supposed to do that and how Members of this House, patients, the public or local councils are meant to hold it to account for that process is far from clear.

My biggest concern about the proposals is that they leave Monitor to intervene proactively to prevent services from reaching the point of failure. None of us wants such an outcome, but it is completely unclear when or how Monitor would do that. Page 10 of the technical annexe to the proposals said that the Government would “expect Monitor to establish transparent and objective tests to determine when intervention is necessary and what level of support a provider would require”, and claims that “This would provide certainty to patients and providers”.

However, we have seen none of those details, and nor do we have any way of changing or influencing what Monitor does about the process, which is a real issue for hon. Members. Even under this Government’s flawed approach, it is astonishing that they say that they would only “expect” Monitor to publish criteria for early intervention. Why is that not in the legislation? Why is Monitor not required to publish and widely consult?

I want briefly to set out a couple of other concerns about the process. If it ends up not being possible to prevent a service from failing, what happens next? A trust special administrator will be appointed to take control of the hospital and report to Monitor and then to the Secretary of State. However, there is nothing in the legislation to say that local clinicians, let alone locally elected representatives, have to agree or sign off such proposals. Indeed, page 15 of the technical annexe says that “where possible”, the trust special administrator should “secure agreement from clinical senates and clinical advisers”.

The idea is that clinicians would not be required to sign off the decision—the trust special administrator might also consult the health and well-being board, for example—about which I know many Government and Opposition Members have been concerned. There is nothing in the proposals to say that Monitor has to look at the impact of decisions in one part of a hospital or service on either the rest of the hospital or the wider health community. With the abolition of strategic health authorities, which take that regional view, that becomes a real concern.

The reason these proposals are so important is that there is a risk that there will be more failing services in future, and not only because of the financial squeeze that the NHS is facing—many hon. Members have talked about the real issue out there, which is that services are struggling to keep going, experiencing problems in balancing books and keeping on NHS staff—but as a direct result of Government policy to drive a full market into every part of the service, albeit without any ability to manage the consequences. In fact, the Government’s own documents make it clear that that is the point of competition. Paragraph B112 of the explanatory notes to the Bill states: “For competition to work effectively, less effective providers must be able to…exit the market entirely”.

The Secretary of State likes to try to explain his way out of this system, but he cannot have it both ways. Either he wants that—for services to fail and new providers to be brought into the system—or he does not.

I want briefly to talk about two of our key sets of amendments in this group. Amendment 30 seeks to remove the provisions allowing NHS staff and property to be transferred outside the NHS in the insolvency process for failing providers, while our amendments 8, 9, 19, 20 and 116 would maintain the existing regime, by not removing the NHS trust safety net.

The challenge for the Secretary of State is that he likes to argue two different things to two different audiences. On the one hand, he likes to say that he is the champion of competition, diversity, not bailing out failing services and allowing services that are ineffective—however that is defined—to fail. On the other hand, he wants to convince staff, members of the public, constituents and some Members of this House that what he really wants is integration and collaboration—that he wants to give clinicians, patients, the public and locally elected democratic representatives the final say over services, not the market. He cannot have it both ways, and Opposition Members know what the truth is. He wants to see a system in our NHS that would pit doctor against doctor, and service against service—one that would let the market rip without any ability to manage the consequences that choice and competition bring. Opposition Members do not believe that to be the right approach for our NHS or the people we represent. That is why we have tabled our amendments to this part of the Bill, and why we will be opposing it.

Mr Andrew Lansley: On securing continuing access to essential services, ... if a service is essential, it will be the responsibility—and, indeed, the objective—of the commissioners of that service to make it clear that they expect the regulator, or the administrator on the regulator’s behalf, to secure access to those services.

That was one of the three points that the hon. Member for Leicester West (Liz Kendall) mentioned. I thought that she made rather a good speech, but its basic premises were flawed. She also said that Monitor would be responsible for making decisions on what happened to services in the event of a failing or failed provider, but that is simply not true. The whole point of this group of amendments, including new clause 6 and amendments 198 and 199, is to make it clear that commissioners will lead in those circumstances. The proposed structure in the event of failure, through the administrator and the regulator, must be led and approved by the commissioners, who will be clinically led. The fact that the hon. Lady can look at the consultation with, for example, clinical advisors and clinical senates, does not preclude the fact that it will be local clinicians leading the process. Nor does it preclude the fact that local authorities will have an opportunity to intervene, through the scrutiny powers that the amendments will bring in. Indeed, even the Secretary of State will have the opportunity to intervene. It will not simply be a matter of Monitor doing this; the process will be led by commissioners and clinicians, and local people will have the opportunity to intervene.

The hon. Lady also mentioned competition. The Labour party seems somehow to have turned against competition, in a complete shift from where it was in 2006. My hon. Friend the Member for Southport (John Pugh) said that we were bringing in Blairite health reforms-plus, but I think that we are doing something altogether more coherent, purposeful and positive. I would far rather that the comparison involved the focus on quality that the noble Lord Darzi brought in when he was a Health Minister. In so far as Mr Blair pursued these objectives when he was Prime Minister, I think that we are doing it much better.

The amendments, and the Bill, will not allow discrimination in favour of the private sector in the way that the last Labour Government did. We are going to stop that. We are going to stop cherry-picking, because variation in price could not be by virtue of the specific characteristics of the provider. Clause 58(10) makes it clear that Monitor cannot discriminate in favour of the private sector. When the hon. Lady’s predecessor as Member for Leicester West, a previous Secretary of State, set a target for the private sector’s proportion of activity in the NHS, she was wrong. We are not going to do that. The only objective is to secure providers that deliver the best quality for patients. That is what we are all about.

I am grateful to other colleagues for their contributions to the debate, to which I cannot do justice. My hon. Friend the Member for Boston and Skegness (Mark Simmonds) asked whether commissioners would lead improvements in quality. The commissioning board will sort out disagreements, monitoring the commissioners, and together they must draw up plans to deal with providers that have failed.

My hon. Friend the Member for Southport asked whether Monitor or the Office of Fair Trading would deal with mergers. If we were to decide that it should be Monitor, the OFT would still have jurisdiction through its merger regime, so we would be duplicating that regime. I can assure my hon. Friend that, when the OFT is involved in any FT mergers, it will seek sectoral advice from Monitor, and that patient’s interests will always be central to the considerations during the merger.

The hon. Member for Easington (Grahame M. Morris) and other Labour Members were going on about the takeover of failing hospitals by foreign companies. Let me make it clear to them that the last Government, in the National Health Service Act 2006, enabled the franchising of an NHS trust to a private company. That is the legislation under which the last Government initiated the franchising of management at Hinchingbrooke hospital. The last Labour Government then passed legislation in the form of the Health Act 2009, which would have enabled exactly the same thing to be done for foundation trusts, following de-authorisation. Our proposals would specifically prevent that, because we prevent de-authorisation in that way and we are withdrawing the 2006 legal framework for NHS trusts, which, in the long run, of course, will cease to exist.

This group of amendments is part of ensuring that the NHS is and always will be there when we need it. Through this Bill, we will strengthen our confidence in continued access to the services patients need. By contrast, the Opposition would leave the NHS stranded; they would take it back; they are by turns reactionary and opportunist. I invite the Opposition to withdraw their amendments and, if not, I invite the House to reject them. I understand the positive intentions of my hon. Friends who have tabled amendments, but I also ask them to withdraw them. Strengthened by our continuing commitment to listen and to respond, I invite the House to agree to the Government new clauses and amendments.