Health Bill [HL]

I can understand why the noble Lord might not want me to carry on, but I do want to carry on and complete what I have to say. The logical outcome of the amendment is a two-tier system, in which normal National Health Service patients are seen as less important because they are not bringing in any extra income into the hospital. The stated purpose of foundation trusts, whether or not one agrees with the concept, is to allow those hospitals that have achieved foundation trust status extra flexibility in the way in which they run their affairs, not to allow them erode the founding principles of equality and universality that lie at the heart of the NHS. To quote the then Health Secretary from the debates around the foundation hospitals when they were set up: ""First and foremost, NHS foundation trusts will be NHS hospitals. They will treat NHS patients according to NHS principles".—[Official Report, Commons, 7/5/03; col. 709.]" That principle must always remain at the heart of our debates when we discuss these matters. There is more to this question than preserving the principles of the NHS, although that should be paramount in our thinking. There is also a pragmatic reason for us to reject the amendment, relating to the conduct of the foundation trusts’ regulator, Monitor, and an ongoing potential legal situation. Unison has repeatedly aired its concerns that Monitor has failed to produce accurate guidelines on what NHS foundation trusts need to declare on income derived from providing services to private patients. The union engaged with Monitor for more than a year to end the dispute, but with no success. This began in late 2007, when Unison challenged the legality of Monitor’s financial guidance to foundation trusts, which lets them avoid a cap on private patient income by setting up legal entities in the form of joint ventures or charitable organisations to do private patient work, creating a major loophole for foundations to exploit. The cap limits the percentage of total income that trusts can get from treating private patients to the level of 2002-03. While the 2003 Act defines private patient income as charges relating to the treatment of non-NHS patients, prior to 2008, Monitor’s financial reporting manual defined private income as that arising from activity provided directly to patients. In accountancy terms, this means that income received via special purpose vehicles—a very interesting phrase—does not count against the cap. In July 2008, the Health Service Journal used a freedom of information request to reveal a confidential analysis of foundation trust private patient income by consultants KPMG. Foundations declared private patients earnings of £165 million in 2008, but the widest definition of private patient income would increase this figure by 70 per cent to £281 million. That is the assessment on which Unison is making its case. Monitor consulted its members in 2008 on the interpretation of the law and amended its guidance on the private patient cap. It opted to retain its existing approach but to extend the definition of private patient income to include private patient charges for goods and services provided by associate and joint venture arrangements. However, Monitor claimed that it was unworkable for all income derived from private patients to be included in the cap, and the new definition stops short of including additional sources such as donations from charities, when the donation was funded by private patient charges made by the charity. Unison believes that the changes made still fail actively to reflect the intention and meaning of the law and, as a result, the union is continuing to seek a judicial review into the matter. As more hospitals and other NHS organisations take on foundation status, we need to ensure that there is no room for error. It would therefore be premature to change the law so drastically before the meaning and practical functioning of the current legislation has been clarified by the outcome of this potential legal process. Finally, I shall touch on one of the arguments being used to justify removing the cap—the fact that mental health foundation trusts are effectively unable to raise any private income as their 2002-03 level of private income was zero. When the trusts were originally mooted by Alan Milburn in January 2002, they were clearly part of an agenda to separate the highest achieving hospitals from the rest of the bunch. It was originally intended that the only hospitals eligible to apply for foundation status would be those scoring a three-star rating. To begin with, it was not envisaged that all hospitals and mental health trusts would eventually be expected to apply for and be granted foundation status. It was a last-minute compromise prior to the 2003 vote that conceded the possibility of trusts having a chance to achieve full foundation trust status, which in itself has created the problem. Finally, I offer a word on Anne Campbell and her particular problem, which she has outlined. It was an interesting letter. I have talked to her, and to the noble Baroness, Lady Meacher, about it. I do not close this whole route off completely. In mental health trusts, a refining of the law could provide for a little movement. I do not see the need for a national review, but I hope that someone can turn up with an amendment on Report that is far more refined that this blunt instrument—which, as we know, is a probing amendment—and which might deal to some extent with the problems in mental health trusts because they are on a zero cap. I would like to think that if an amendment surfaced, even if it were not acceptable on Report, Ministers would consider whether there was any scope for further movement in this area.