My Lords, before addressing the amendments in the name of my noble friend Lord Lansley and the noble Lords, Lord Hendy and Lord Warner, it may be helpful if I speak to the six government amendments in this group: Amendments 101 to 104, 106 and 107. The first five of these amendments would amend Clause 70, which inserts a new regulation-making power in relation to the procurement of healthcare services, Section 12ZB, into the NHS Act 2006. They amend the clause so that regulations, when they are made under this power, will have to include provision for procurement processes and objectives, for steps to be taken when competitively tendering and for transparency, fairness, verifying compliance and the management of conflicts of interest. Amendment 106 also requires NHS England to issue guidance on the regulations.
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It was always our intention for the regulations made under the power inserted by Clause 70 to include these vital aspects of the new provider selection regime. However, we have listened to the concerns of the House and hope that these amendments, alongside the information we have provided through the consultation we launched on 21 February, provide noble Lords with reassurance as to the intended contents of those regulations. Secondly, Amendment 107 makes the regulations subject to the affirmative procedure. We are grateful for the input of the Delegated Powers and Regulatory Reform Committee in advising us on this. In summary, these regulations will allow the NHS to procure healthcare services in a way that reflects the reality of those services without unnecessary bureaucracy and with the ultimate goal of providing value for patients, taxpayers and the population in the vital health services they need.
I respond to the noble Baroness, Lady Brinton, by saying that we intend to remove the procurement of healthcare services from the scope of the Public Contracts Regulations 2015. The future government procurement reforms will not overtake the provider selection regime made under powers in this Bill. Any amendments made as a result of the Cabinet Office regime will be minor ones to ensure alignment between the regimes. The PSR will not be replaced when the Cabinet Office regime come into force.
I turn now to my noble friend Lord Lansley’s Amendment 105, which is aimed at setting some general objectives for procurement. We agree that services should always strive to meet the needs of service users and it is our intention that the regulations made under Clause 70 will set out general objectives to ensure that procurements are carried out in a way which promotes the interests of patients, the taxpayer and the population, and supply the services that patients need.
NHS England consulted in 2021 on proposed key criteria for decision-makers, with agreement or strong agreement from around 80% of respondents that these key criteria were appropriate considerations. These include quality and innovation; value; integration; collaboration and service sustainability; social value; and opportunities to increase access to healthcare, reduce health inequalities and disparities, and promote patient choice. However, decision-makers should have flexibility to weight the criteria according to the needs of their population. I say to my noble friend that including four of these objectives in the Bill risks the appearance of prioritising them above all others, which I am sure is not his intention. He will know the trap that exists in legislation in having a list that is not exclusive.
I hope that my noble friend is also reassured by the government amendments in relation to fairness in procurements. It is intended that this will include applying the regime to different types of provider equally and being able to clearly justify procurement decisions by reference to the objectives and key criteria.
I turn next to Amendment 98. The NHS payment scheme will set rules about how commissioners pay providers for services and will apply to all providers of procurements: that means NHS trusts, foundation trusts, the voluntary sector and the independent sector.
NHS England and NHS Improvement, which set the current tariff, are moving away from payment by activity to a population-based payment model with a mix of fixed and variable payments. Individual prices may still be used for smaller contracts or as the basis for setting fixed or variable payments.
There may be scenarios where it is appropriate to have different pricing rules for individual providers, to take account of cost variations. But I can assure my noble friend that this would not be solely on the basis of whether they were an NHS or an independent provider. When setting any prices, as required in the Bill, NHS England will aim to ensure that the prices payable represent a fair level of pay for the providers of those services, as well as fair pay between providers of similar services.
Turning now to Amendment 98A, I want to restate that the department and NHS England remain committed to Agenda for Change. As part of the process of setting the rules for the payment scheme, NHS England will, of course, want commissioners to consider staff pay, pensions and terms and conditions. Similarly, NHS England will continue to take account of cost growth arising from uplifts to Agenda for Change. Independent providers will remain free to develop and adopt the terms and conditions of employment, including pay. However, we expect that good employers will set wage rates that reflect the skills and experience of their staff.
I turn next to the question of consultation, as mentioned in Amendments 98B and 98C. New Section 114C makes it clear that, before publishing the payment scheme, NHS England must consult any person it thinks appropriate. In practice, we expect this to include trade unions and staff representative bodies such as the Social Partnership Forum, NHS Providers, the Healthcare Financial Management Association and all the royal colleges. NHS England must also provide an impact assessment of the impact of the proposed scheme.
I now turn to Amendments 99 and 100, which are about patient choice. First, I begin with Amendment 100. As a point of principle, we believe in giving people choice, in terms of GPs, elective care and, where possible, personalisation. This Bill builds on and strengthens that principle. I can understand the desire of the noble Lord, Lord Warner, to ensure that patients are offered meaningful choices, but I hope I can reassure him that the mechanisms for this are already in place. NHS Digital already has a patient survey process in place to see whether patients were aware of the choices they could make and were offered those choices. The NHS e-Referral Service tracks referrals to secondary care, which are an indication of where choice has been offered. There is also a national e-RS pop-up survey for patients, which collects data on whether choice has been offered by primary care for elective referrals. Results of the patient survey are published by NHS Digital on a quarterly basis. So this amendment would require NHS England to duplicate functions of an existing process, and I suggest to the noble Lord that that would not be a profitable route to go down.
I move to Amendment 99. My noble friend Lord Lansley has highlighted a part of the standard contract which relates to patient choice. I hope that I
can give him some comfort. Yesterday, NHS England published its response to the consultation on the 2022-23 standard contract. It includes clarifications to ensure that current rules in relation to the legal right of choice of provider are properly applied in situations where the provider does not have a contract with the responsible commissioner of the patient being referred. Where providers are able to offer new, clinically appropriate elective services—or existing services from new locations —we want to see them properly and swiftly accredited by local commissioners. Where providers meet local criteria for those services—which must be transparent, proportionate and non-discriminatory—providers should be awarded NHS standard contracts for those services without delay. Patients would then be able to choose services through the NHS e-Referral Service.
I hope that my responses have served to reassure the noble Lords, Lord Hendy and Lord Warner, and my noble friend Lord Lansley, that the Government are very much in tune with their thinking on these matters and that the points they have sensibly raised through the amendments have been addressed in one way or another. I hope, too, that the Government’s amendments, to which I have spoken, will have allayed the specific concerns voiced at earlier stages about the regulation-making power in Clause 70. Accordingly, I would invite my noble friend to withdraw his Amendment 98.