My Lords, I was prepared to disagree with a substantial proportion of the speech by the noble Lord, Lord Hunt of Kings Heath, but I was certainly not prepared to find myself disagreeing with 100% of it, which is the position I find myself in.
It is of course regrettable that the original regulations were published late and have had to be revised. As the Secondary Legislation Scrutiny Committee has pointed out, the draft guidance is not yet available and I am sure that this would have allayed many of the fears expressed about the impact of the new regulations. However it is clearly important that it is subject to extensive consultation and, in the circumstances, it is entirely understandable that it is not yet available.
Especially as I was heavily involved in seeking assurances from my noble friend Lord Howe on the competition aspects of the Health and Social Care Act this time last year, I want to explain some of the background to the revised regulations and why we on these Benches firmly support them. Some weeks ago, I read the original form of these regulations, and we took the clear view that they would need to be changed. In perfectly good faith, they had been too restrictively drafted and did not appear to fulfil the commitment given to noble Lords during the passage of the Health and Social Care Act last March that local GP commissioners would not be forced to put services out to tender.
As a result of our concerns, my noble friends Lady Jolly, Lady Williams of Crosby and I met health Ministers on the first day that the House returned after the February half-term recess to discuss the issue. It became clear that some of the problems with the regulations were due to the difficulties of ensuring that the UK abides by European law on competition and tendering; but that the language used in the regulations was, in some cases, inaccurate and in others did not properly reflect the provisions of Section 75 of the Act. Health Ministers agreed with our view that the regulations’ wording at the time could lead CCGs and others to the incorrect belief that they were required to tender for all services. They therefore agreed to work with some of us to redraft the regulations. The new regulations that have been published are a result of those discussions.
The most important change to the regulations clarifies the role of Monitor in regulating and policing contracts entered into by CCGs. The new Regulation 15(2) states very clearly that:
“Monitor may not direct a relevant body”—
that is, a CCG of the NHS commissioning body—
“to hold a competitive tender for the provision of health care services for the purposes of the NHS”.
That makes it absolutely clear that CCGs cannot be forced by Monitor to go out to competitive tender. A number of other changes have been made to clarify how CCGs should decide whether to go out to tender. In particular, there are changes to paragraph 2 of the regulations. This sets the overriding objectives of the CCGs when commissioning. The first and foremost objective states:
“securing the needs of the people who use the services”.
As a result of the changes agreed, paragraph 2 now makes it absolutely clear that CCGs should consider the benefits that providing services in an integrated way can have on their quality and efficiency. Bundling of services is clearly envisaged, indeed encouraged, and the BMA should be entirely reassured on this
point. These objectives in paragraph 2 determine how CCGs exercise their powers, including those under the much disputed paragraph 5, which sets out the circumstances in which a contract can be awarded without a competition. Under paragraph 5, it is expressly provided that there may be only one provider capable of delivering the kind of integrated service that the CCG wants to secure for its patients, in which case commissioners would not be forced to put services out to tender.
Many people have expressed their concern that this paragraph of the regulations would make commissioners tender more services than they do now, and this is due to the reference to commissioners having to tender services unless they feel they can be provided by only “one capable provider”. However, there are many proper and valid reasons why commissioners might feel services can be provided by only “one capable provider”. They are, for example, if the commissioner is satisfied that the local hospital needs to maintain a certain number and mix of patients to provide a safe and effective service; if only one provider is able to meet the clinical quality and safety standards required; where only one provider is capable of giving access 24 hours a day, seven days a week; where highly specialised care is involved; and, crucially, where a range of integrated services needs to be delivered. Similarly, nothing under the regulations could force commissioners to fragment services against the interests of their patients.
Moreover, the rules in the regulations simply and accurately reflect the rules that are already imposed by EU law on the NHS. These rules were put in place long before the coalition came to power in May 2010. Procurement guidance for PCTs issued in March 2010 under the previous Labour Government—here is the cover of that PCT procurement guidance—had to conform with it and as result stated, inter alia, in paragraph 2.24 that:
“PCT boards must act transparently and without discrimination and be able to demonstrate rationale for decisions on whether or not to competitively tender. In particular”—
and these are the salient words—
“where the commissioner decides to procure through single tender the rationale must demonstrate that there is only one capable provider to deliver the services and, therefore, that could provide better value for money”.
Incidentally that wording was repeated word for word in subsequent guidance in July 2010. I urge your Lordships to compare that wording with the current paragraph 5 of the regulations. The fact is that the criticism and concern directed at paragraph 5 could equally well have been directed towards the Labour Government's guidance, which, I must emphasise, was the guidance on the procedure and law applicable to PCTs when tendering. In fact the changes to the original regulations ensure that the new rules allow as much discretion as possible within existing EU law. Indeed, CCGs are now in a stronger position than PCTs were under the 2010 Labour Government guidance. The chief executive of the Association of Chief Executives of Voluntary Organisations, Sir Stephen Bubb, has said:
“These regulations will enable charities to do more in partnership with the NHS, not less, and the result will be better services for NHS patients. The regulations should be passed, without falling
victim to another political slanging match, so that NHS commissioners and charities can get on with the job of improving the health services made available to the public”.
I also urge your Lordships to read Department of Health legal opinion, which makes the position absolutely clear.
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In contrast, the QC who had been relied on by 38 Degrees to give objective legal advice is quoted as saying:
“These Regulations play fast and loose with the NHS by turning it into a giant experiment for those committed to a certain right wing ideology”.
By no stretch of the imagination is that true, and it casts significant doubt on the quality of his opinion. Is it not highly significant that that same QC in all his legal advice, chose not to compare these regulations with Labour’s guidance? That casts doubt on the whole of the 38 Degrees campaign.
The noble Lord, Lord Hunt, claims that the regulations do not honour my noble friend Lord Howe’s assurance that CCGs would not be obliged to create new markets in the health service. Subject to the continuing realities of EU procurement law, it is clear that they do, for the reasons I have explained. They place a strong emphasis on integration across a range of paragraphs—entirely as discussed during the passage of the Bill and as recommended by Future Forum—which mean that CCGs will have considerable flexibility. Does the noble Lord claim that somehow EU procurement law no longer needs apply to these regulations or can simply not be implemented?
It was not possible legally for PCTs to have total commissioning freedom, as the noble Lord knows only too well, and it is not for CCGs either. Or does he resile from the guidance to PCTs issued by his own Government in March 2010? The noble Lord is quoted as saying of the new regulations:
“They will promote and permit privatisation and extend competition into every quarter of the NHS regardless of patients interests”.
So he has clearly joined in promoting conspiracy theories about NHS privatisation and the motivation of Ministers and the coalition Government.
We pride ourselves on rational argument in this House, and I hope that that will prevail today. A great many misconceptions are around indeed. The fact is that it was the Labour Government under the 2006 Act who introduced price competition and intensified the purchaser/provider split. The NHS is no more subject to competition than it was prior to the passing of the 2012 Act. It is the coalition’s legislation and regulation, informed very much by the concerns raised on these Benches, which has ensured that safeguards against unrestricted competition will apply.
I recommend that the noble Lord reads the words of the noble Lord, Lord Warner in the Health Service Journal this week. I very much hope that the noble Lord, Lord Warner, will be contributing tonight. The article is entitled:
“Why I will be voting for NHS competition regulations”.
It goes on to say:
“This week the House of Lords will debate again new regulations to be made under the 2012 Health and Social Care Act. These draft regulations have attracted another wave of criticism that
they will force commissioners to put a swathe of NHS services out to competitive tender, thereby benefiting the private sector. My reading of them is that they do little more than put on a statutory footing the competition and procurement rules produced under the previous government, with the addition of some sensible provisions on the integration of health and social care”.
The noble Lord, Lord Warner, continues:
“The new regulations will help the commissioning groups tackle some of their problems with clearer rules. They should be passed by Parliament forthwith”.
Those are telling words.
The fact is that these revised regulations are as good as it gets within the constraints of EU procurement law. Commissioners will not be forced to tender and will not be forced to create a market where none exists. Within the confines of EU law, which we have to follow, they are entirely consistent with the assurances given by my noble friend Lord Howe last year. I commend the regulations to the House and urge noble Lords to vote against the Motion.