Health and Social Care Bill

My Lords, I speak to Amendments 1 to 6 in respect of Clause 8 of the Bill. As noble Lords will no doubt have realised, Amendment 1 is slightly different from the one that was debated on Report and I will explain why my noble friend Lord Noon and I have tabled it. VAT recovery for charities is an important issue and one that has received considerable support. Indeed, my previous amendment to the Bill was passed. I will not repeat all the arguments made on Report but given the changed nature of the amendment I feel I should explain some of the differences. I am very indebted to Sue Ryder Care for its support and invaluable information in preparing this amendment. It stems directly from its campaign, which started in 2011, to raise awareness about the problem of irrecoverable VAT for charities providing healthcare services. For example, the NHS is able to recover VAT on certain non-business supplies that charities cannot. This may hinder them from taking full advantage of the Government's agenda, which will see more services outsourced from the NHS to other providers. It can be seen as a significant barrier to entry for charities which may be forced to use their charitable funds to pay the VAT. Of course, each service has a different VAT bill and recovery rate based on their expenditure on a range of non-business supplies. However, last year Deloitte estimates, produced for Sue Ryder, suggested that in future every £10 million spent by PCTs or the NHS in outsourcing to the charitable sector could result in an additional VAT burden on these charities of £400,000. However, while the VAT question remains paramount, since that amendment was passed, two additional issues have become increasingly clear to me. First, it is not just charities that see VAT as a barrier to entry in this instance. Other providers, such as social enterprises, co-operatives and mutuals, are also disadvantaged in the same way. Secondly, VAT is not the only barrier that exists for these organisations. Wider issues, such as TUPE liabilities, the ability to access or repay capital and contractual arrangements are just a few other examples. For this reason, I have chosen to broaden the scope of this amendment, and I am extremely grateful for the Minister's support in this. This amendment now calls for the production of a report with recommendations to be laid before Parliament by the Secretary of State within a year on any matters that may affect the ability of charities, social enterprises, co-operatives and mutuals to provide healthcare services for the NHS. There are clearly significant barriers for charities and other not-for-profit agencies seeking to take on the provision of health services, most notably the kind of end-of-life care services that are provided by organisations such as Sue Ryder. I shall briefly just remind noble Lords why these services are so valuable. A recent survey for Sue Ryder shows that 40 per cent of people in Britain would turn to a charity for support if they were diagnosed with a life-changing illness. Part of the reason for that is the high-quality personal care they would receive. Sue Ryder hospices support people to continue to be able to do the things they want to do when they are facing the most difficult times of their life. This includes a wide range of activities from facilitating weddings and christenings to working to fulfil an individual's last wishes. One example I heard of, which struck me particularly, is of an inpatient who loved playing in the snow and wanted to build a snowman. She was too ill to do so herself, so two nurses went out and built it for her. They built it right outside her room so she could see it from her window. Three years later, it is still this additional touch that her husband remembers. Another example is an 18 year-old man who was admitted to the hospice as an inpatient. His main interest was flying model helicopters, and the nursing staff helped him to make a helipad and placed it on one of the desks in the hallway outside the bedrooms. At night, he was able to fly his helicopter around the unit with much amusement and without disrupting anyone else. The nurses even turned the lights out at night to make it more of a challenge for him. I could give many more examples of extraordinary care and imagination in what must be among the most difficult times of people's lives. Clearly, we want to see more of this kind of care and to remove any or all barriers that may exist to prevent this across the not-for-profit sector. The growing not-for-profit sector is an important part of our social fabric. The desire for service users to exercise more choice and control over the services they receive will result in the inevitable diversification of this sector. It has also become increasingly clear that the general population see a role for charities in the delivery of health services. This will bring about profound changes in the shape of the sector as more small providers start to take on the delivery of services. However, it is important that we not only encourage charities and other not-for-profit agencies but that we ensure the full playing field they enter into is fair. Since our previous debate, the Minister and officials in the department have been extremely co-operative and are as keen as I am to see the barriers broken down for the full range of providers. There are indeed a number of additional barriers. I shall highlight a handful by way of example that I believe the report laid by the Secretary of State should address. The barriers include, for example, burdensome liabilities and delays in taking on TUPE responsibilities. The Government clearly recognise that TUPE does not work as smoothly as intended, and in November issued a consultation on the effectiveness of its regulations. TUPE liabilities can be unpredictable and overly bureaucratic with room for interpretation. In fact, a recent response to the BIS consultation on TUPE regulations from the Voluntary Organisations Disability Group stated: "““Many social care organisations will now take the decision not to proceed with tenders due to the specific requirements of the TUPE transfer involved, or the lack of clarity surrounding it””." Current TUPE regulations require information on transferring liabilities under TUPE to be provided just 14 days before the transfer. This can leave little time to consider the information, examine its impact and plan to mitigate any problems that can arise. In addition, the Voluntary Organisations Disability Group report highlights that this can make it difficult to negotiate the right price paid or the contract fee negotiated for the takeover of the service. Access to, and use of, capital can also act as a barrier. Clearly, capital investments should be used for service innovations rather than the day-to-day running of a service, and while access to capital for the not-for-profit sector has undoubtedly been improved in recent years, it still experiences problems due to the time afforded for charities to raise this capital. For example, Sue Ryder has a capital appeal underway for the building of a new state-of-the-art hospice in Peterborough that will increase patient choice and the quality of care provided. This appeal needs to raise £6 million over a number of years. It would not be possible for any sector other than the charity sector to raise funds in this way, and there is no doubt that it brings hospices an extra boost for this sort of work. However, unlike in the private sector, this sort of money raising can take time. This can act as a disadvantage to smaller organisations' ability to engage in the delivery of services, as they may be discounted by commissioners on the grounds that they do not have sufficient capital reserves. This is another issue that could be and should be examined by the review undertaken by the Secretary of State, with commissioners encouraged to look at the long-term picture in terms of service delivery. The capacity and ability of the sector to take on certain risks is also problematic. I heard of one charity that wanted to take on a residential service but was given only a three-year contract, despite the risk liability on the lease of the building being for 25 years. I am not suggesting that charities should be given a 25-year contract, but there should be a fair consideration of this kind of risk attached with service transfers if the playing field is to be level. It is also the case that too many smaller charities and social enterprises are still being given only one-year contracts, despite this being against the Voluntary Sector Compact. I have highlighted some of the wide range of issues that a report into matters which may affect the sector's ability to provide healthcare services should cover. I have no doubt there will be many others. All of these issues need to be considered and that is the purpose of this revised amendment. My intention is clear: that the report that the Secretary of State should lay before Parliament will look at the issues of entry into the healthcare market in relation to charities, social enterprises, co-operatives and mutuals. It is not my intention that the amendment will look at the issues which may affect the private sector, although I would welcome consideration of those issues where the private sector may be far more favourably treated and thus disadvantage charitable and voluntary sector providers. I should be grateful if the Minister would confirm that this is also the Government's intention. I realise that this will be dependent on the terms of reference for the Secretary of State's report and I would be more than happy to offer any assistance in drawing up these terms if the Minister feels that that would be helpful. I would also like the Minister to ease any anxiety from the sector and confirm that the recommendations from this report will not in any way financially disadvantage charities, social enterprises, mutuals and co-operatives. The intention is to look at how we bring down existing barriers and not to create new ones. I beg to move.