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Health Bill [HL]

Volume 714: debated on Monday 9 November 2009

Commons Amendments

Motion to Commit to Committee of the Whole House

Moved by

That the Commons Amendments 1 to 10, together with any amendments relating thereto, be considered in a Committee of the Whole House.

I seek clarification from the noble Baroness. An unusual procedure is being followed. I am not entirely clear what happens to these amendments after they have gone into Committee and at what point they link up with the Bill which, I understand, we were hoping dispose of this evening.

We will go into Committee to discuss a new matter. The usual channels have agreed to that procedure. Then any amendments to the Commons amendments will be put before the House and decided on, and then the Commons amendments, as amended or not, will be put and decided on. The House will then revert back to the discussion of Commons amendments.

Motion agreed.

House in Committee.

Motion on Amendment 1

Moved by

1: Insert the following new Clause-

“De-authorisation of NHS foundation trusts(1) In the National Health Service Act 2006 after section 52 insert-

Application of sections to (1) Sections to apply to-

(a) an NHS foundation trust authorised under section 35 on an application under section 33;(b) an NHS foundation trust established under section 56 to which subsection applies.(2) This subsection applies to an NHS foundation trust if-

(a) at least one of the trusts on whose application the NHS foundation trust was established was an NHS foundation trust within subsection , or was an NHS trust all or most of whose hospitals, establishments and facilities were in England, or(b) the NHS foundation trust is the result of a succession of mergers under section 56, any of which involved an NHS foundation trust within subsection or an NHS trust all or most of whose hospitals, establishments and facilities were in England.52B De-authorisation: regulator's notice(1) The regulator may give the Secretary of State a notice under this section if it is satisfied that-

(a) an NHS foundation trust to which this section applies is contravening or failing to comply with, or has contravened or failed to comply with, any term of its authorisation or any requirement imposed on it under any enactment, and(b) the seriousness of the contravention or failure, or, if there has been more than one, of any of them taken together, is such that it would justify the Secretary of State making an order under section .(2) The notice must be in writing.

(3) With the notice the regulator must give the Secretary of State a report stating the reasons why it is satisfied as mentioned in subsection .

(4) Before giving a notice under this section, the regulator must consult first the Secretary of State (unless the notice follows a request by the Secretary of State under section ) and then-

(a) the trust,(b) any Strategic Health Authority in whose area the trust has hospitals, establishments or facilities, and(c) any other person to which the trust provides goods or services under this Act and which the regulator considers it appropriate to consult.52C Grounds for de-authorisation notice(1) In determining under section whether the making of an order would be justified, and in determining whether to give a notice under that section, the regulator must consider these matters (among others)-

(a) the health and safety of patients;(b) the quality of the provision by the trust of goods and services;(c) the financial position of the trust;(d) the way it is being run.(2) The regulator must publish guidance as to the matters (including those mentioned in subsection ) that it proposes to consider in making those determinations.

(3) Before publishing any guidance under this section, including any revised guidance, the regulator must consult-

(a) the Secretary of State,(b) each NHS foundation trust to which this section applies,(c) each NHS trust intending to make an application to become an NHS foundation trust, and(d) such other persons as the regulator considers appropriate.52D De-authorisation(1) If the regulator gives notice under section in relation to a trust, the Secretary of State must make an order for it to cease to be an NHS foundation trust.

(2) An order made under subsection must specify the date when it is to take effect, which must be within the period of 5 working days beginning with the day on which it is made.

(3) On an order under subsection taking effect in relation to a body, it ceases to be an NHS foundation trust and a public benefit corporation and becomes a National Health Service trust.

(4) The order must specify, in relation to the trust, the matters mentioned in paragraph 5(1)(a) to (c) of Schedule 4 and, where the trust has a significant teaching commitment, the matters mentioned in paragraph 5(1)(d).

(5) The order may provide for any provision under subsection specifying the number of executive directors and non-executive directors to take effect at the end of a period specified in the order.

(6) Schedule 8A makes further provision about trusts in respect of which an order is made under subsection .

(7) If it appears to the Secretary of State to be necessary in order to comply with provision made under subsection , or made by regulations under paragraph 4 of Schedule 4, the Secretary of State may by order-

(a) terminate the office of any executive or non-executive director of the trust;(b) appoint a person to be an executive or non-executive director of the trust.(8) Within seven days after the day on which the Secretary of State makes an order under subsection the regulator must publish its report under section .

(9) In this section “working day” means any day which is not Saturday, Sunday, Christmas Day, Good Friday or a day which is a bank holiday in England and Wales under the Banking and Financial Dealings Act 1971.

52E Secretary of State's request(1) If it appears to the Secretary of State that there are grounds for the regulator to be satisfied as mentioned in section , the Secretary of State may request the regulator in writing to consider exercising its power to give a notice under that section.

(2) A request under this section must-

(a) specify the NHS foundation trust to which it relates, and(b) state the grounds relied on by the Secretary of State.(3) The Secretary of State must lay before Parliament any request under this section.

(4) If within the required period the regulator does not give a notice under section in response to a request under this section, it must, within that period, publish its reasons for not doing so with a statement as to how it has complied with section.

(5) The required period is-

(a) 14 days beginning with the day after the regulator receives the request, or(b) any longer period specified in the request.(6) The Secretary of State may by order extend or further extend the required period.”

(2) Schedule 2 (which inserts Schedule 8A to the National Health Service Act 2006, which makes provision about de-authorised NHS foundation trusts) has effect.”

My Lords, these amendments address a fundamental omission in the foundation trust regulatory regime. The omission recently came to light following the events at Mid-Staffordshire NHS Foundation Trust. The amendments were introduced to the Bill on Report in another place. Given this late introduction I am pleased that the debate on these amendments will take place under Committee rules, allowing your Lordships’ House the chance to debate them.

NHS foundation trusts are a key part of the Government’s health reform programme and are proving to be a success. The autonomy afforded to a foundation trust offers the best model for improving the provision of healthcare, allowing greater freedoms and autonomy to those who can demonstrate high performance. However, the events at Mid-Staffordshire Foundation Trust demonstrated clear failings to its patients, the public and the NHS. The Government are committed to learning the lessons of these events to ensure such events cannot happen again.

My honourable friend the Minister of State for Health, on introducing these amendments in another place, said that they acted on two of the many lessons we have to learn. First, Monitor, the independent regulator of foundation trusts, should have the power to remove foundation trust status where a foundation trust fails to live up to the high standards. Secondly, transparent democratic accountability is vital when a foundation trusts fails.

The amendments need to be viewed in the context of the existing powers of intervention. The National Health Service Act 2006 provides the independent regulator, Monitor, with a range of powers of intervention in foundation trusts. These can be used in the event of a significant breach of the terms of authorisation or requirements in legislation. Monitor’s powers include the removal of any or all of the directors of the board or requiring the board of a foundation trust to do, or not do, specific things.

As noble Lords will be aware, the Bill also contains clauses relating to trust special administrators, which would enable Monitor to trigger deauthorisation of a foundation trust that is no longer sustainable in its current form. This is as a preliminary to the deauthorised trust coming under the control of a trust special administrator as part of a prescribed six-month process.

The proposal presented for consideration today is the final missing option between those extremes. It would enable Monitor to trigger deauthorisation for a sustainable foundation trust. Foundation trusts are authorised on the basis of being high-performing organisations. It is logical that, should they fail to live up to the required standards and lose public confidence, powers should exist to remove their foundation trust status. A power to deauthorise provides a clear message that foundation trusts must maintain the high standards that are expected of them, and provides the public with the confidence that organisations must continue to earn the right to continue as foundation trusts.

The new Section 52B provides that triggering deauthorisation will be a decision for Monitor. Under the proposals, when a foundation trust has breached any term of its authorisation, or requirements in legislation, and the breach is so serious that it justifies deauthorisation, Monitor may trigger deauthorisation. Triggering deauthorisation will be a complex decision. The new Section 52C establishes a framework requiring that Monitor considers four factors: the health and safety of patients; the quality of services that are provided; the financial position of the trust; and the way it is being run.

To ensure transparency, new Section 52C also requires Monitor to consult on and publish guidance setting out the detail of the factors that it will take into account. Before triggering deauthorisation, Monitor must consult with key stakeholders to get their views. Accordingly, Monitor will be required to consult, as a minimum, the Secretary of State, the trust itself, the appropriate strategic health authority and relevant commissioners of the trust’s services. This mirrors the clauses relating to trust special administrators.

Having done this, if Monitor gives a deauthorisation notice, the Secretary of State must make an order deauthorising the foundation trust, which will take effect within five working days of the order being made. The new Section 52D provides that the deauthorised foundation trust would then become an NHS trust under Secretary of State powers of direction. In common with the clauses relating to trust special administrators, Schedule 2 to the Bill means transitional arrangements will be put in place to allow the continuation of commercial arrangements entered into using foundation trust freedoms and to ensure continuity of services for local people.

Along with this new process, the amendments will also strengthen democratic accountability. While Monitor is responsible for the regulation of foundation trusts, the Secretary of State is ultimately accountable to Parliament for the overall provision of NHS services.

Monitor’s operational independence is a vital part of the regulatory framework, and one that we should seek to maintain. Only Monitor can trigger the deauthorisation of a foundation trust, reinforcing Monitor’s independence, and ensuring that its authority is not undermined, but when considering the most serious risks to patients, the Secretary of State should be able to formally express his view.

To enable this, the amendments propose that the Secretary of State should be able to formally request that Monitor consider deauthorising a foundation trust. In any such situation, it will be vital that the Secretary of State and Monitor are able to act quickly and transparently. We therefore propose that if Monitor believes that a differing course of action is preferable, it will be required to publicly explain its decision, either within a default of 14 days, or within such further time as the Secretary of State deems appropriate to the particulars of the case.

Finally, I turn to Amendment 6. It corrects a minor drafting error in Clause 18(8)(b), which lists orders that are not subject to any statutory procedure. The other orders made in connection with trust special administrators are not subject to any statutory procedure and an order made under new Clause 65L(5) should also have been included in this list. This makes the drafting consistent with the Government’s original intention, which was approved by the House of Lords Committee on Delegated Powers and Regulatory Reform.

The Government believe in strong, independent regulation of foundation trusts, and that foundation trust status should continue to be earned. I hope that noble Lords will agree that these proposals give Monitor a useful further regulatory power, while formalising a method for the Secretary of State to have a transparent dialogue with Monitor concerning the most serious of foundation trust failures.

I am glad that we will now have the opportunity for a full debate on this issue, and I beg to move.

Amendment to the Motion

Moved by

1A: Leave out lines 99 to 118

My Lords, I beg to move Amendment 1A, as an amendment to Commons Amendment 1.

It is perhaps understandable that the Government should have seized the opportunity afforded by the Bill to slot into it a raft of provisions by which they clearly set a lot of store, but it is nevertheless unfortunate that we should be considering these important matters for the first time only at the very last stage of the Bill's passage through the House. Nevertheless, we are where we are, and it is, I hope, helpful that we can debate the amendment under the rules of Committee, because it certainly begs a number of fundamental questions.

The first question is: why is the amendment thought to be necessary? We are here dealing with the situation in which a foundation hospital such as Mid-Staffordshire NHS Trust is found to be delivering patient care to a seriously inferior standard—an unacceptable standard. We can no doubt conjure up all sorts of imaginary examples of how that might come about. Interestingly, we are not here talking about a foundation trust whose viability is under threat only because of financial failure. We already have provisions in the Bill to deal with that situation.

The amendment deals with management failure and what should be done when patients are exposed, for example, to serious clinical risk or serious health and safety shortcomings sufficient to constitute a breach of trust authorisation. Ministers are saying that in such a situation, Monitor should have the option of deciding that the trust should be deauthorised—in other words, that it should lose its foundation status and move back into the jurisdiction of the Secretary of State.

What might be the point of that? The only point that would resonate with me is the likely benefit to patients, but where is the evidence that bringing a hospital back under the aegis of a strategic health authority would be more likely to solve its management difficulties than if it were kept under the regulatory eye of Monitor? All the evidence points in the other direction. Take the example of Maidstone and Tunbridge Wells. The fact that Maidstone and Tunbridge Wells was in the direct line of sight of the Secretary of State made no difference to the catastrophe that occurred there. The very serious management problems that emerged in Mid-Staffordshire Hospital were ones that began long before it achieved foundation status. They were there when it was still an NHS trust under the direct scrutiny of the strategic health authority and, by extension, the Secretary of State.

By contrast, it is a matter of common agreement that Monitor has an extraordinarily successful record as a regulator. It has extensive powers of intervention, as the Minister mentioned. It has used those powers on a number of occasions to great effect. Where trusts have breached the standards set out in their terms of authorisation, Monitor has, in every case, taken action that has brought them back into compliance. Sometimes, this kind of action need only be informal, but if we look at the provisions contained in Section 52 of the 2006 Act, we are rapidly reminded that there is no shortage of weapons at Monitor’s disposal, should it chose to deploy them. I find it difficult to imagine a situation where to resolve a failure of management, it would be thought better to move a trust out of Monitor’s jurisdiction and into that of Ministers. Therefore, my first question to the Minister is about the evidence that has led the Government to believe that there really is a regulatory gap here. The gap identified by Dr David Colin-Thomé was much more about better co-ordination and communication between the various regulators than it was about deficiencies in legislation.

My next question relates to some of the wording in the amendment. New Section 52B covers the conditions governing the serving of a notice by the regulator. To paraphrase this section, it says that the regulator may give the Secretary of State a notice if it is satisfied that a foundation trust is contravening any term of its authorisation or any of its legal obligations and that the breach, whatever it is, is serious enough to justify deauthorisation. If we compare the wording of this section with new Section 65D(1), which deals with the process leading up to the appointment of a trust special administrator, we find a clear difference. New Section 65D states—again, I paraphrase—that the regulator may give the Secretary of State a notice if it is satisfied that a trust has already failed to comply with a notice served under Section 52 and that further exercise of Monitor’s powers under Section 52 is not likely to rectify the problem. In other words, a notice under new Section 65D is there very much as a final resort when all else has failed. There is no flavour of that idea in new Section 52B. There is nothing there that suggests that a notice to deauthorise is appropriate only after Monitor has exhausted its intervention powers. Why is that?

For example, it is quite possible to imagine Monitor being satisfied that a trust was committing a serious contravention of its terms of authorisation, while at same time believing that the contravention was capable of being remedied without deauthorisation being necessary. The absence of any provision making clear that Monitor may and, indeed, should treat its powers in new Section 52B as a measure of last resort is slightly worrying. Can the Minister confirm that it does not lay Monitor open to the possibility of judicial review?

Let us imagine that at a certain foundation hospital, there was a serious failure of care and the course of action taken by Monitor to remedy it stopped short of going down the deauthorisation route. Let us further imagine that someone thought that that decision was quite wrong and that deauthorisation was the only appropriate course to take. Could Monitor be open to legal challenge? In other words, does new Section 52B send a signal that deauthorisation should be treated as just an alternative to the normal remedial measures that Monitor has at its disposal? I very much hope that the Minister will say that this is not so, but it is not obvious from a straight reading of the text.

I turn now to the subject of my amendment. To add greater clarity—as I noticed that the Marshalled List does not print line numbers, whereas the amendment does refer to line numbers— the amendment seeks to leave out proposed new Section 52E in the government amendment. As the Minister has explained, we see at the end of the government amendment proposed new Section 52E, which would give the Secretary of State a statutory power to request Monitor to consider exercising its power to commence the deauthorisation of a foundation trust. I heard what the Minister had to say about this provision. She said that it amounts to a request and no more than that. Monitor is at liberty to decide not to commence the deauthorisation process and all it has to do is publish its reasons for not doing so. All this sounds innocuous, but is it? I think we should consider very carefully whether this is a step we wish to take.

When we debated what became the 2003 Act—the Act which established foundation trusts—the one cardinal feature of the new regime, as the Government were keen to emphasise, was that Ministers should not be involved in operational decisions about the delivery of healthcare by foundation trusts. That principle was the very reason why Monitor was created as an independent regulator—accountable directly to Parliament, not to Ministers—and why foundation trusts were made accountable to their governors and members, as well as to Monitor. It was explicitly recognised that, however tempted Ministers might be to weigh in if something ever went wrong in a foundation trust, it would not serve anyone’s interests if they actually did so. Other mechanisms would instead kick in. The independence of foundation trusts, and their freedom from political manipulation, were the key features that would underpin their ability to raise standards and to be responsive to the needs of their patients.

I maintain that the power contained in proposed new Section 52E, innocuous as it may look, oversteps the line of political interference to which I have just referred. It is one thing for a Minister to make an informal request to Monitor: nobody can have an objection to that and legislation is not required for it. Here, however, we have not only a statutory power given to Ministers, but also a bit of sleight of hand. If we read the wording carefully, we see that what is termed a “request” is in fact akin to an instruction. Upon receipt of a request from the Secretary of State, the regulator has no choice but to take certain action. It has to go through the process of deciding whether it is satisfied that there is a serious contravention or failure in the trust concerned, and it has to give formal consideration to the matters listed in proposed new Section 52C. It must, then, either serve a notice to deauthorise, or publish its reasons for not doing so. In other words, Monitor cannot just say “no”: it cannot just decline to take any action at all. What we see here, therefore—albeit in a disguised form—is a power of direction over Monitor. That, for me, is one step too far.

If one thinks of the kind of situation which might give rise to a request from the Secretary of State to Monitor, it is highly likely to be characterised externally by intense media interest and intense pressure on the Government to do something about a reported problem in the hospital concerned. Ministers will find it difficult to protest, in the midst of a media feeding frenzy, that they are not accountable for what may or may not be going on. So their safety valve, politically speaking, is to put public pressure on Monitor.

Looked at in the cool light of day, the statutory power contained in proposed new Section 52E is simply a means of allowing Ministers to grandstand on an operational issue for which, as a matter of law, they are not responsible. The proper course is not for Ministers to be given a statutory power to order Monitor about, but rather for us to remind ourselves what we agreed in 2003, which is to let Monitor do its job in the way it was set up to do and which it has proved it can do, free of political second-guessing. I should like to hear the Minister’s reply to this. It will not be lost on her that I think that this entire government amendment has been rushed into the Bill with undue haste and that new Section 52E has been inserted as a result of misplaced ministerial backsliding on a key point of principle. For myself, I do not think that that is the direction of travel we should be taking. I therefore beg to move.

My Lords, I rise to speak Commons Amendment 1 and Amendment 1A tabled by the noble Earl, Lord Howe. I should say straightaway that I have sort of jettisoned my speech after counting lines 99 to 153 of the government amendment again and thinking further about the noble Earl’s amendment. For the benefit of one or two noble Lords, I ought to remind the House about Monitor and what it does. I should also declare an interest as a member of the board. As such, I should say straightaway that I have been party to the negotiations held outside this Chamber with the Government about the amendment, and after many weeks the board declared itself to be content because we felt that we had pushed it as far as we could. But, as the code of conduct reminds us, none of us sits in this House as the representative of an organisation, and I am wholly won over by the amendment of the noble Earl, Lord Howe.

A Member of this House who is in the Chamber today asked me who on earth Monitor is as if its members were a small group of aliens parachuted in from outer space. We were created by the Government in 2003 to regulate independently foundation trust hospitals and the mental health services that come under that grouping. The organisation is accountable to Parliament and does not float in administrative space. We produce an annual report on which questions can be raised. Its membership is appointed by the Appointments Commission in exactly the same way as are the boards of NHS trusts, so we are not a peculiar bunch of independent-minded folk who do not think carefully about the impact of our decisions on public sector organisations; we are of the public sector.

I can think of several good reasons why a trust may be returned to the Secretary of State. We already have provisions in the Bill for those which fail financially, and I can see that there could be times when quality issues require powers of intervention beyond those held by Monitor. It has draconian powers in terms of appointments to and removals from boards, for example, and together with the Care Quality Commission, can intervene and prevent services from running if they are failing dramatically. But what strategic health authorities as links in the Department of Health’s chain of command, and through them the primary care trusts, can do is occasionally recontract a service or change a sector economy to ensure that a service is acting effectively in concert with other services. They can do some of the restructuring that might enable a service to reinvigorate the quality of its care. These are very rare occurrences, but I can see that it could happen. It has not happened yet, I might say, but I can see that it might.

As we go into a time when money is going to be very tight and the temptations at the centre will be to implement mechanisms of restraint—which it has been tempted to implement before and they have usually been disastrous in the NHS—it will be very tempting for the department and for Ministers, under certain circumstances, to try to intervene more than would probably be in the best interests of local services.

It is also important to remember that there is a group of people at the back of these foundation trusts called governors and members—a million of them—who have a part to play and local powers to intervene. We do not wish to do anything which cuts across those powers of influence. That is why the governors and members were created and why this Government were so keen that there should be some local accountability which would enable powers to be given to local people to intervene under these circumstances. I can see that there could be occasions when it would be necessary for Monitor to request the Secretary of State to rethink the system of accountability and that it should go back to NHS trusts. This is not because we believe that the Department of Health has any greater history of improving services than Monitor; as we have said, the history is worse.

I think that, on balance, the powers in the Commons amendment go too far. They enable the Secretary of State to push when under pressure from the media and elsewhere to do so. I am entirely won over by the amendment of the noble Earl, Lord Howe, which still leaves the basic requirements for the deauthorisation of trusts in place but allows for a more sensible provision.

There is one point which remains unsatisfactory in the Commons amendment and that relates to the period of time which Monitor is given to respond to the Secretary of State’s request to deauthorise a foundation trust. The proposals require a response from Monitor within 14 days, with flexibility for the Secretary of State to set longer deadlines if appropriate. I seek reassurance from the Minister that, if Amendment 1 is adopted, an appropriate timetable for consideration of any request will be agreed with Monitor on a case-by-case basis. It is clear from our dealings with hospitals that it is likely to require more than 14 days, and a timetable should be set accordingly. I seek reassurance on that. Overall, I am very attracted to the amendment of the noble Earl, Lord Howe, and will give it my support.

My Lords, it might help the House if I say a few words as the Minister who took the 2003 Bill through this House. The noble Earl, Lord Howe, has reminded us of some of our exchanges. It is certainly true that I swore undying support for the independence of the regulator on the basis that Ministers would resist the temptation to interfere in the workings of foundation trusts when things did not go quite as everyone would want them to go.

In the case of mid-Staffordshire, neither the Healthcare Commission nor Monitor covered themselves in communications glory over the way that some aspects were handled. There are some issues on which I have some sympathy with Ministers for intervening. However, proposed new Section 52E crosses the line with regard to the assurances that government Ministers, including myself, gave in good faith about the independence of Monitor.

I have not heard the arguments for why we need the proposed new Section 52E. Indeed, the noble Earl, Lord Howe, made some good arguments for why we do not and it is incumbent on Ministers to explain why the amendment is now necessary. What circumstances have changed since the 2003 Act to make that kind of amendment necessary?

To add to that, the way that Monitor has behaved for five to six years is, for the most part, overwhelmingly a triumph of successful early interventions when things were going wrong in particular foundation trusts. Admittedly, many of those issues were financial but, even then, Monitor intervened with trusts whose financial circumstances were going off the rails much more rapidly than strategic health authorities, either in their current or previous form, have ever done.

In answer to a Question that I put down a couple of months ago, the noble Lord, Lord Darzi, replied that there are still 40-odd existing trusts, not foundation trusts, that have historical deficits. That situation simply would not have happened with Monitor; those sorts of issues would have been tackled earlier. This comes back to the question raised by the noble Earl, Lord Howe: if we return a failing trust to an SHA, what guarantee do we have that the responses in putting things right for local people will be faster than they would have been if left with Monitor? I have some sympathy with the points that the noble Earl has raised.

My Lords, I shall follow on from the last point made by the noble Baroness, Lady Murphy, about timescales. The noble Earl, Lord Howe, was right to remind us that these decisions are often made in the glare of publicity when something has gone seriously wrong. We are not talking simply about financial mismanagement; as the Minister said in her introductory remarks, we are talking about the deauthorisation of a trust on grounds that include health and safety and quality of service as well as finance and other managerial matters. Those are complex and difficult matters to question and establish.

Why are the periods of time mentioned in proposed new Section 52D, which is about the process of deauthorisation as it would be taken under proposed new Section 52B, so short? An order must take effect within five working days of when it is issued. Proposed new Section 52D(8) specifies a period of seven days after the Secretary of State makes an order for the regulator to publish its report. That is a very short time to report on potentially deep and complex matters. I would welcome some clarification from the Minister.

My Lords, I speak in favour of the Commons amendments; I believe that they will provide more reassurance to patients and the public. However, I ask for some clarification from my noble friend on a couple of points about regulation. I declare an interest as chair of the Council for Healthcare Regulatory Excellence. It is important that patients know who they can expect to be regulating services when trusts are deauthorised or identified as unsustainable and come under the Secretary of State’s powers of direction. Is it going to be Monitor or the Care Quality Commission? Are they going to fight over it? We need to be very clear about that. If the purpose of regulation is to guarantee patient safety, it is important that patients are informed and have clear directions about where to take their concerns. I would welcome clarification about that.

I also have some concerns about the potential impact on revalidation, especially for doctors, of the trusts which enter these proposed arrangements. Medical revalidation at the local level relies on the responsible officers—who are likely to be medical directors—to maintain the process of revalidation. We need to be assured that the function of responsible officer could still be discharged in such circumstances. If not, what other measures could be put in place to avoid what might be unintended consequences for the revalidation of doctors?

My Lords, I require clarification about the current provisions for Monitor’s authority to deauthorise a trust and pass it back to the Secretary of State. We have heard several noble Lords and the noble Baroness, Lady Murphy, a member of the board of Monitor, say specific things about the powers that Monitor has in regard to financial controls. The issue with mid-Staffordshire was not as much about financial control as about patients’ health and safety. If we can be reassured that Monitor has the powers currently to act on issues related to patient health and safety, to bring the trust into order and maybe even deauthorise it, then I would be content that these amendments are not necessary. I am persuaded by much of the argument made by the noble Earl, Lord Howe—it is difficult not to agree with his arguments as they are often so well studied—but one issue that concerns me is whether Monitor has the provisions currently to act solely on patient health and safety issues and not only financial issues.

My Lords, I support the comments of the noble Earl, Lord Howe. I have been involved in the National Health Service off and on over the past 30 years and Monitor has been the first body to really transform trusts as I have been aware of them. Inefficiencies in the NHS, I am afraid, are a commonplace; they have been there over the years. In their preparations to become foundation trusts, the trusts have to work extremely hard to sort out their governance, to sort out their boards, to appoint new people and to improve their professionalism. Certainly our board—it is quite typical—is now completely different because we had to be different in order to justify our existence as a foundation trust. Therefore I find it difficult to think that somehow it would be a step forward for a trust to be moved from regulation by Monitor to some sort of regulation by the Secretary of State.

I agree with the comments that have been made by my noble friend about the fact that Monitor has been required to focus on finance until very recently. My understanding now is that Monitor will have a very good look at the quality accounts of every foundation trust in order to judge us on our quality of service as well as our financial probity. On that basis, the government amendment will be unhelpful and I add my support to the words of the noble Earl, Lord Howe.

My Lords, I also speak with sympathy for the position that the noble Earl, Lord Howe, is advocating. I was chief executive of the NHS when Monitor was created and therefore I have some background in it. There are two points to make. First, there are times when it would be sensible to deauthorise a foundation trust, and that is when the problem is not resident within the trust but within the wider local health economy. That may be solved by sorting out issues on a slightly wider scale than only within the individual organisation.

I agree with the point about the separation of government and DH from Monitor. The point of Monitor was that it would be independent, objective and ultimately accountable to Parliament. However, this amendment seems to suggest that when government, for whatever reason, decides that it wants Monitor to answer to it, it is expected to do so on a fortnightly basis. That seems a very short period of time and takes away the basic point. We wanted to see these sorts of decisions taken in an objective fashion and as far away as possible from any political considerations. It is on that basis that I have a great deal of sympathy with the noble Earl’s position.

My Lords, there is no doubt that the noble Earl is right and that this is not the most satisfactory way in which to proceed with legislation. However, as he also said, we are where we are.

The amendments strengthen the foundation trusts regulatory regime and reaffirm the Government’s commitment to the foundation trust ideal and the independence of Monitor. They fill a gap identified in the wake of the events of mid-Staffordshire by showing that foundation trust status must continue to be earned and by providing further democratic transparency to foundation trust regulation.

The noble Earl’s amendment would remove new Section 54E from Commons Amendment 1, which allows the Secretary of State to formally request that Monitor consider deauthorising a foundation trust. I think that the noble Earl would agree that the independence of Monitor is vital and that maintaining this independence is an extremely important part of the foundation trust model. The Government’s proposals are based on that very principle. They will preserve Monitor’s independence, as the decision to deauthorise rests solely with Monitor.

Section 54E does not limit Monitor’s independence when making decisions. However, it reflects that the Secretary of State is ultimately accountable to Parliament for the overall provision of NHS services. In extreme cases, Parliament and the public might legitimately expect that there should be an enhanced level of transparency. Indeed, in another place, Conservative Members representing constituencies served by the mid-Staffordshire trust pushed us to go further, insisting that the Secretary of State should be able to force deauthorisation. The amendments make it clear that the Secretary of State could only make requests, not force any action. This is because, while we recognise the concerns raised by honourable Members in another place, we believe in and are committed to the benefits of independent regulation.

The circumstances in which such requests may be made are also constrained by the proposals. They do not appear from the ether, as the noble Lord, Lord Crisp, suggested, to be dealt with in two weeks. Section 54E provides that a request could be made only when it appeared to the Secretary of State that there were grounds for Monitor to consider deauthorisation; that is, it must be satisfied that there has been a breach that is sufficiently serious to justify deauthorisation. As we have heard, it will be for Monitor to set out the detailed matters to be considered, using the framework in the amendment. I am sure that we can all agree that transparent decision-making in difficult times is vital. This is a valuable lesson following the events of mid-Staffordshire.

I turn to some of the points made by noble Lords in this debate. The noble Earl and the noble Lord, Lord Patel, referred to the evidence of a regulatory gap. We think that mid-Staffordshire is a wake-up call that shows the necessity for the option to deauthorise, because it became an issue of public confidence. That should not be underrated here.

On patient safety and public confidence, it is important to send a message that foundation trust status is not a one-way ticket. Ministers need to have a way in which to make their views known on such an issue of public confidence. However, this is not about correcting the past; it is about driving behaviour in the future. It is only one of a number of things that we have done in relation to mid-Staffordshire and this issue. Monitor does an excellent job and this power will strengthen its hand, as well as the Government’s.

The noble Earl and others asked how this measure will benefit patients. The power to deauthorise makes it clear that foundation trusts must maintain the high standards that are expected of them and that foundation status is not something that can be taken for granted. We believe that it will act as a further incentive to foundation trusts to maintain the highest standards of care for patients. We believe that this, linked to the regulatory regime that my noble friend referred to and to which I will return in a moment, is the best way forward.

The noble Earl also asked why the Secretary of State would have any better skills than Monitor to deal with issues such as those in Maidstone and Tunbridge Wells. The new performance framework relating to NHS trusts, which has been rolling out across the NHS since April this year, will improve the transparency and consistency of the process of identifying and addressing underperformance in NHS trusts. The performance framework clearly emphasises the roles and responsibilities of PCTs as commissioners and strategic health authorities as system and performance managers in driving up improvements, alongside the transparent role for the Department of Health. We believe that world-class commissioning and the strategic health authority assurance programme will complement the framework by holding PCT commissioners and SHAs to account for the roles that they play in tackling underperformance and failure. Consistently poor performers will either be supported to recover or their exit will be managed through a time-limited process.

The noble Earl asked why there was no requirement in new Sections 52B and 65D to exhaust other intervention powers. He asked whether that lays Monitor open to judicial review. Of course, Monitor is always potentially at risk of judicial review when exercising its powers and has to exercise its powers in accordance with the principles of public law. In deciding whether to deauthorise, Monitor will need to consider whether it is dealing with this in an orderly fashion by steps that cannot be used against it. That will be a relevant factor in considering whether it should exercise its powers in this manner. If Monitor can show that its decision whether to deauthorise or not is reasonable in the circumstances, that decision will be lawful.

I was not completely clear whether the noble Baroness, Lady Murphy, was speaking in favour of Monitor or not, but I was surprised by her intervention. Monitor has declared itself content with these proposals. Indeed, the amendments give Monitor an important new power. The Government are fundamentally committed, as I have said on many occasions, to the independence of Monitor. Surely we can all agree that, when patients’ lives are at risk, action needs to be taken. Both the Secretary of State and Monitor should be able to defend their actions publicly. Given the amount of consultation with Monitor that led to this amendment being tabled, I was surprised at the noble Baroness’s intervention, although I accept that the noble Earl is very persuasive in these matters. In addition, Monitor’s guidance will deal with the matters that it considers when deciding whether to deauthorise. That will include consideration of whether lesser steps of intervention would be appropriate.

Again on the issue of Monitor’s consultation process, I quote from the consultation document, which states:

“In such circumstances, we … accept that it would appropriate for the Secretary of State to request that Monitor consider proposing de-authorisation and that Monitor’s response should be published”.

That is what Monitor had to say on this matter.

The noble Baroness, Lady Barker, raised the issue of 14 days and the timescale. The proposal is for 14 days or longer. In extreme circumstances, speed is of the essence, but so is due process. If the Secretary of State sets an unreasonably short timescale, he will be subject to judicial review. The Secretary of State will have to work closely with Monitor to ensure that the appropriate timescales are met.

My noble friend Lady Pitkeathley and the noble Baroness, Lady Meacher, raised the issue of the CQC and Monitor. As noble Lords may remember from earlier discussion of the Bill, Monitor and the CQC are bound by law to work together. In September 2009 they signed a Memorandum of Understanding. This takes account of the relationship and details the way in which they will work together and alongside each other in delivering their respective statutory functions. The CQC is an independent corporate body established under the 2008 Act. It is responsible for the regulation of the quality of health and social care services. Monitor is an independent corporate body established under the 2006 Act. It is responsible for authorising, monitoring and regulating NHS foundation trusts. They have to collaborate and co-operate together to ensure the effective discharge of their statutory functions and efficient and effective regulatory frameworks for NHS foundation trusts.

My noble friend Lady Pitkeathley asked about the responsible officer for medical revalidation. The amendment will have no impact on this. I am sure that we can agree that transparent decision-making is vital in these difficult times. I hope that the noble Earl will feel reassured that the proposals ensure that decision-making remains, rightly, with Monitor. I hope that he will also support the Government’s view that transparency is vital in these difficult circumstances and feel able to withdraw his amendment.

Before the Minister sits down, I want to say a word of clarification and ask a further question. I can clarify that I was indeed speaking on my own behalf, as I believe everybody in the House should. We are all members of organisations; we do not always speak on their behalf. I was expressing a personal view. Much of the amendment is good and Monitor has been supportive of those parts of it.

As a point of clarification, I would like to ensure that the Minister and other Members of the House are aware that the quality standards by which Monitor assesses, and has formerly assessed, foundation trusts are exactly the same as those used by ordinary National Health Service trusts. Information from the Healthcare Commission until last week, information that is gathered by local organisations and from the governors and members, and information from achievement-against-performance targets form the basis on which foundation trusts are monitored, so they are just the same.

Monitor is now involved with the Care Quality Commission and the Department of Health. The chairman sits on the National Quality Board and is working closely with other organisations to see how we can all monitor quality better in a prospective fashion, to complement the way in which the CQC monitors it retrospectively so that our systems dovetail and work together. I hope that that is clear. When talking about mid-Staffs, it is important to understand that it was being monitored in exactly the same way as every other NHS trust.

Finally, I raise the issue of new Section 52E. All it does is enable the Secretary of State to make a request. Why is it necessary for the Secretary of State to have such a power in a Bill? There is no reason not to exclude that section, which sounds pretty heavy and interventionist and requires a response within 10 days. Nothing in normal day-to-day non-departmental government body business would preclude the Secretary of State from making a request. Most months now, expressions of anxiety are passed between various organisations in the health field. I cannot imagine a situation where this measure would be necessary. On that basis, I do not understand why it needed to be included in the first place. The rest of the amendment is very helpful to the process of regulation without it.

Further to that question, was it not the case that in the first instance patients and their families showed concern about the care and safety of patients who were being treated in mid-Staffordshire? In that circumstance, who would patients approach? Would it be the Secretary of State, the Minister, their Member of Parliament, Monitor or the Care Quality Commission? Who would they approach?

The only reason why I expressed surprise at the intervention of the noble Baroness, Lady Murphy, is that she opened her remarks by saying that she had been involved in the lengthy discussions between Monitor and the Government, and Monitor has said that it was very satisfied with this process. Obviously the Secretary of State can request information and can request Monitor to consider matters at any point, and does so, but the measure that we are proposing would mean that Monitor was bound to explain its answer. That is the key point. That is why new Section 52E is framed as it is. Of course, we know that Monitor applies the same standards to foundation trusts as are set out in the legislation for all CQC registration. I say to the noble Lord, Lord Patel, that, were a trust to be deauthorised, it would then go back into the NHS system and the same framework for the patient voice to be heard would kick in.

My Lords, is new Section 52E premised on the idea that the Secretary of State may have information coming to him that will have escaped Monitor? If that is not the case, I do not understand why he should take it on himself to tell Monitor about something that it is already investigating. I should have thought that one’s basic confidence in a foundation trust was based on the independence, skill and competence of Monitor. If you have a system that allows the Secretary of State to say to Monitor, “You are not doing this very well”, that will tend to reduce confidence in Monitor and reduce public confidence in the system, as it would suggest that public confidence could be bolstered only by the fact that the Secretary of State had power to intervene.

The Secretary of State will not intervene; he will ask Monitor to consider deauthorisation. The key point is that Monitor then has to explain its decision. It can say no, as it is an independent regulator. It has every power to say no but, if it chooses to say no, it has to do so publicly. This is about transparency and having to say no on the public record. The measure also gives Monitor a new power to deauthorise, which it did not have previously and which it has said that it wishes to have.

My Lords, I thank all noble Lords who have taken part in this debate, not least those who have supported the position that I have taken. I am particularly grateful to the noble Baroness, Lady Murphy. Having listened to her, I accept that there could be rare circumstances in which the power that the Government are seeking might be warranted and might be appropriately used.

However, the main issue that I raised relates to new Section 52E. Essentially, the Government have looked at mid-Staffordshire, acknowledged that there has been a failure of management and decided that the way to solve that management problem is by legislating. That is a classic piece of wrong-headedness, although, for the reasons that I gave earlier, it could be even worse.

New Section 52E is all about putting Monitor under political pressure and, as my noble and learned friend said, could serve to do the very opposite from what the Government are intending; namely, it could undermine confidence in the system. If people do not think that Monitor is doing its job properly, that is an even worse situation. Not only does Monitor have to act when instructed or requested to act, but it may have only 14 days in which to do so because, as the noble Baroness, Lady Barker, pointed out, the Secretary of State could insist on 14 days. If it then delivers what seems to the Secretary of State to be the wrong answer, there seems to be nothing to prevent the Secretary of State from repeating the request straightaway, thereby redoubling the political pressure. To me, none of that is a very appealing prospect.

We then come back to whether deauthorisation is a measure of last resort. From the Minister’s answer, I was not entirely clear about that. The fact remains that Monitor could be trapped by the wording of the amendment. Having taken a detailed look at the facts of the particular case, it might well find that the trust was in breach of its authorisation terms. It might well find that that breach was serious enough to justify the Secretary of State making an order to deauthorise a trust yet, despite that, conclude that it was inappropriate to go down the deauthorisation route. How easy will it be for Monitor to hold fast to that conclusion in the face of intense political pressure? Without wording in the new section to make it clear that deauthorisation should be considered only when other measures have failed, that will not be easy at all.

The way to secure improvements in the performance of foundation trusts is much more straightforward than any of this, and noble Lords have referred to it. It is to make sure that there is close liaison between the Department of Health, Monitor and the Care Quality Commission. We do not need legislation to do that. I am sufficiently encouraged by the support that I have received from other noble Lords that I should like to test the opinion of the House.

Motion agreed.

Motion on Amendments 2 to 10

Moved by

Motion agreed.

House resumed.

Motion on Amendment 11

Moved by

That this House do agree with the Commons in their Amendment 11 and do propose Amendments 11A to 11G as consequential amendments to the Bill.

11: Page 26, line 4, leave out “or imposing requirements in relation to”

11A: Page 26, leave out lines 6 to 10

11B: Page 26, line 12, leave out “or requirement”

11C: Page 26, line 13, leave out “or requirement”

11D: Page 27, line 12, leave out “or imposing requirements in relation to”

11E: Page 27, leave out lines 15 to 19

11F: Page 27, line 21, leave out “or requirement”

11G: Page 27, line 22, leave out “or requirement”

My Lords, I beg to move that the House do agree with the Commons in their Amendment 11. I shall also speak to government Amendments 11A to 11G.

Amendment 11 was one of a series tabled by my right honourable friend the Member for Makerfield, Ian McCartney, and the honourable Member for Colchester, Bob Russell, in the other place. Their amendments sought to remove the power to impose restrictions on sales of tobacco from vending machines, so that the national authorities in England, Wales and Northern Ireland would only be able to make regulations to ban tobacco sales from vending machines completely.

As I have previously made clear, the Government recognise that there is a serious problem with young people accessing tobacco from vending machines and that action needs to be taken. Vending machines are currently the usual source of cigarettes for 10 per cent of 11 to 15 year-olds who say they smoke. In 2008, the Local Authorities Co-ordinators of Regulatory Services reported that 40 per cent of test purchases carried out by trading standards across England resulted in underage sales from vending machines.

I do not intend to rehearse the many arguments we have had about nicotine being highly addictive, or that some 200,000 children aged between 11 and 15 are regular smokers. It is clear why the Government are so concerned.

As we debated in your Lordships’ House, the issue of tobacco-vending machines continues to raise strong views across all parties. On Report in the other place, all parties were offered a free vote and Amendment 11 was accepted. As it was the result of a free vote, the Secretary of State for Health made clear in his Third Reading speech in the other place that the will of that House would be respected and the Government would not seek to overturn the amendment.

This amendment requires that we do what 16 other European states have done—ban the sale of tobacco from vending machines. The UK leads the world on many tobacco-control policies and yet in this aspect we are behind. The tobacco-vending machine industry has had at least 10 years to get the operating companies to adhere to their voluntary code to stop underage sales from vending machines and this has not been successful.

The consequential government Amendments 11A to 11G give Amendment 11, agreed in the other place, its full effect. These consequential amendments remove all remaining references to restrictions from the vending-machine clauses and omit wording in the Bill which is not required in the context of a ban. They replicate the other amendments that were tabled by the right honourable Member for Makerfield on Commons Report but which were not reached. They ensure that Clause 22 would be workable and also align Clause 23 on Northern Ireland with England and Wales. We can confirm that Ministers in both Wales and Northern Ireland are also committed to prohibiting the sale of tobacco from vending machines in accordance with these amendments.

The Government are committed to protecting our children from the harms of smoking and the prohibition of sales of tobacco from vending machines represents a step forward to achieving this aim. I beg to move.

Amendment to the Motion

Moved by

As an amendment to the Motion, leave out from “House” to end and insert “do disagree with the Commons in their Amendment 11”.

My Lords, in considering the amendments before us, we find ourselves in another somewhat unusual situation. Noble Lords will remember that when the Bill underwent scrutiny in this House during the early part of this year there was an outbreak of harmony between these Benches and those of the Government when we debated the provisions for cigarette-vending machines.

I do not want to misrepresent the views of anyone in this Chamber but no noble Lord felt it was defensible that children and young people under the age of 18 should continue to have access to cigarette-vending machines.

I am absolutely clear that Ministers were right to seek powers in the Bill to restrict access to such machines with that thought in mind. The exercise of the power would force vending-machine operators to come up with credible and workable systems that would have the effect of denying underage would-be smokers the means of buying cigarettes in that way. Furthermore, there was a wide measure of agreement that if, after a period of time, those measures were shown not to be effective—in other words, that children were still habitually gaining access to cigarettes from vending machines—Ministers should consider exercising the additional power set out in the Bill to ban the machines altogether.

That two-step approach was, I believe, proportionate and sensible. I say that for two main reasons. The first is that vending-machine operators have not been slow off the mark in responding to the challenge that they have been set. A number of technologies exist which are designed to prevent underage persons gaining access to vending machines. Not all of them give one confidence that they will deliver in the way that they are supposed to, but at least one technology that I have personally seen demonstrated, the radio frequency control system, not only convinced me that it would work efficiently and well but is successfully in use in a number of locations. The Department of Health recommended the use of that system in its recent consultation document. I am personally as sure as I can be that the Government were right to believe that there exists a workable means of delivering the policy objective that they have set themselves.

The second reason why I support the Government's first approach is that to proceed immediately to an outright ban on vending machines would bring about disproportionate harm and damage. The damage would be felt by pubs, which stand to lose trade from people who, from time to time, wish to access their vending machines but, more seriously, it would have an instant and devastating effect on those who depend for a living on supplying and operating such machines. There are roughly 650 people in this country whose livelihoods are earned in that way, and several hundred more in the supply chain. I do not believe that any sort of case has been made for bankrupting those individuals and putting them on to the dole queue without giving the regulatory route a chance to work.

Parliament should contemplate taking that drastic step only when all else has failed. It is not a step that should be taken lightly. The problem is that, unless we are very careful, that step will indeed be taken lightly. The Government have allowed themselves to get into the position of acquiescing in the result of a debate in another place that was arrived at not after a free vote, nor even after a whipped vote, but after no vote at all. The amendment in the name of the right honourable Member Mr Ian McCartney was agreed to by default after the Government Whips failed to produce tellers. That fact puts this House into a rather different situation from the one we normally face at Lords’ consideration stage. In moving that the House do disagree with a Commons amendment, we are usually saying we believe that the judgment taken by another place was wrong. In this case, however, the other place did not have a chance to exercise its judgment at all. We simply do not know what the collective will of the House of Commons would have been.

For that reason alone, it is surely right that we ask the other place at least to go through the Lobby before we put 650 people out of work. Of course, we know one thing. We know that the Government have not changed their minds on the merits of the Bill as it originally stood. How do we know that? When the Division was called in another place on the McCartney amendment, Ministers were queuing up to vote against it. The Government had not given way at that stage. Indeed, I am sure that the Minister still believes in her Government’s policy. She has simply allowed herself to be persuaded that, constitutionally, it would be improper for her to carry that policy through. In moving this amendment, I am suggesting to her in the strongest terms that that view is misconceived and, indeed, that she owes it to the other place to send this matter back for further consideration. She certainly owes it to those whose jobs depend on the way that this matter is finally determined.

I have no wish to be impertinent to the Minister or to overegg the case I am making, but if she does not give way on this, and if she were to carry a vote in her own Lobby, she and her colleagues will bear personal responsibility for the consequences that will ensue. There is still time for this matter to be sorted out before Parliament prorogues. If the other place is given another chance to determine the issue properly, and if it decides on a free vote that the McCartney amendment should stand, I will be in no position to argue. As it is, I argue very strongly indeed that the parliamentary process is in danger of being grossly subverted, which is why I beg to move.

My Lords, the noble Earl is, as always, immensely persuasive, and there are very few occasions on which I can claim to find myself in total disagreement with what he has said. There is no doubt whatever, as every Member of this House must accept, that tobacco is a potentially lethal product. It is also highly addictive, and there is clear epidemiological evidence that once children begin to smoke, they have great difficulty in giving up the habit, although many succeed. When this issue was debated fully and extensively in Committee in your Lordships' House, many of us, including me, strongly supported an amendment to abolish the sale of cigarettes from vending machines,. However, the Government did not accept that amendment and claimed that, as an interim measure and pending further consideration, they wished to impose stricter age-verification restrictions and supervision as regards vending machines.

They did that despite the fact that I presented evidence that in the north-east of England, from where I come, a series of trading standards officers embarked upon an exercise in which they recruited significant numbers of volunteer young people below the age of 16 and took them round a series of establishments in which vending machines were installed to see whether they would succeed in buying cigarettes. In the majority of cases—60 per cent and sometimes 70 per cent—the children had not the slightest difficulty in purchasing cigarettes from vending machines, contrary to the existing law. In one establishment, the landlord gave the child change to put in the machine to purchase cigarettes.

The British Heart Foundation has recently conducted a number of surveys. It found that test purchases consistently show that young people regularly purchase cigarettes from vending machines. In 2008, 12 per cent of children and young people who were regular smokers usually bought their cigarettes from vending machines. The British Heart Foundation estimates that 23,000 11 to 15 year-old regular smokers access their cigarettes in this way. It has also conducted a more detailed survey of landlords in establishments where vending machines are available. It found that the age-verification restrictions that the Government initially proposed were viewed as unworkable and as a burden by a large number of landlords. The survey showed that nearly two-thirds—63 per cent—of landlords said that, during busy times, it would be impossible to check IDs and operate a machine within their line of sight. More than two-thirds—68 per cent—of pub landlords said that current proposals would be a significant extra burden on their business. Eighty-two per cent of landlords describe the revenue they receive from vending machines as “unimportant”. Three-quarters of landlords would rather remove the machine than risk prosecution for underage sales. Despite the potential deficiencies in another place to which the noble Earl referred, I think Ian McCartney did us a very good service by proposing the amendment that was accepted in your Lordships’ House. I trust that your Lordships will accept that amendment as tabled now by the Government and reject the amendment of the noble Earl, Lord Howe.

My Lords, I have a little dilemma. I was present in Committee when the noble Lord, Lord Walton, was speaking to these matters and produced the very substantial evidence for the case he has just made again today. Since then, however, something has happened. In the Bishops’ Bar today, I was approached by my noble friend Lady Golding, who showed me a document describing a showing in the House last week of a particular piece of equipment, which I am not as yet satisfied that MPs were aware of when they took their decision.

I dissent from the view of the noble Earl that, where a vote has not taken place, it is not necessarily an advised opinion of the House of Commons. The fact is that, where a vote was not taken, it was because the House did not object to the measure being put before the House. It could be argued that it has considered it, and there was shown a position of unanimity, even though it was the view of the noble Earl that there were some Ministers who wanted to vote against the McCartney amendment.

The document shown to me by my noble friend Lady Golding should be brought to the attention of this House, because the noble Earl, Lord Howe, has alluded to it. It shows that there is available in the United Kingdom, in 600 public houses in the country, a piece of equipment that is managed and operated by a person standing behind the bar. I want to go through the sequence of events, because I believe that it actually deals with all the concerns that my noble friend has alluded to, and which Ian McCartney must have had in mind when he was moving his amendment.

“Step 1: customer requests for the machine to be enabled”—

in other words, to be made operational.

“Eye contact is made by the member of staff”—

that is, the person behind the bar, to the customer who wishes to buy the cigarettes—

“and if necessary identification is requested”—

in other words, if the person looks underage, then obviously the bartender would not respond in the way the customer would wish.

“Step 2: Once age verification has taken place, and the staff are certain that the person is over 18 years of age, the machine is enabled”.

In other words, it is made operational.

“Step 3: The member of staff observes the sale, to make sure it is the person whose age they have verified making the purchase.

Step 4: The machine is then ready for use to vend one packet to the customer.

Step 5: After vending one packet of cigarettes, the machine reverts to standby”.

In other words, it switches off automatically. Therefore, throughout the whole process of the cigarette packet being purchased from that machine, the person behind the bar is responsible for what has happened by having control over the button which enables the machine. I presume, therefore, in those conditions, that a person under 18 would not be able to purchase cigarettes.

I am not against what Mr Ian McCartney has suggested, but what I want to know is whether the Commons knew about this equipment when the decision was taken. They should have been aware of a system that the Government would have tested in the event that the legislation in its proposed form prior to the Ian McCartney amendment would have been passed. Were Members of Parliament aware of this equipment, of which I suspect most noble Lords were completely unaware until the noble Earl, Lord Howe, referred to it in his contribution and I outlined it in greater detail in mine?

My Lords, I, too, should like to support the noble Earl in his impassioned speech, and particularly with his reference to the farce at the other end of the building. As I have said many times during the course of this Health Bill and indeed during the passage of previous health legislation, it is the hypocrisy of Her Majesty’s Government that many of us find difficult to understand. I have called twice for a complete ban on the sale of all tobacco products, the logic being that if we are not meant to smoke, we should not be able to buy them. One of the most awful things about trying to ban these vending machines is that it will serve only to increase the illicit sale of tobacco in this country.

I should like to remind the noble Baroness that at the moment it is estimated that the Treasury loses £8.5 million a day as a result of the illicit tobacco trade. To save the noble Lord, Lord Faulkner, having to go to the Box, that works out at £3.1 billion a year. It is for these reasons that I wholeheartedly support the noble Earl.

My Lords, having listened to a number of noble Lords speak on this amendment, I should like to say that my noble friend Lord Howe is absolutely correct. As colleagues know, I have had the privilege of serving as Deputy Speaker and Chairman of Ways and Means and I have checked on what happened that evening. To be frank, the House was in a fair degree of turmoil. It was not a considered decision made on evidence. Indeed, some of the evidence was wrong because Ian McCartney said that no product considered dangerous other than cigarettes may be vended, but alcohol can still be vended today. That was an inaccuracy in his speech.

However, that is not the point, rather it is the one made by my noble friend Lord Howe, which is that the House did not give a view one way or the other. Further to that, my friend the noble Lord, Lord Campbell-Savours—I call him that because for many years we served on the Public Accounts Committee together—is right, and indeed I have been aware of the report for a while. It is based on completely new technology, and what I find confusing is that this has been done in consultation with the Department of Health. The department has been consulted and encouraged the tobacco industry, following our Committee stage, to go for this sort of development. Trading standards, referred to by the noble Lord, Lord Walton, has been consulted and is in favour of this. To my knowledge, there are no trading standards officials who are not saying that this is a major development that will restrict almost entirely the underage procurement of cigarettes from vending machines. The technology is based on radio frequencies, and I am willing to lend my copy of the report to colleagues who wish to read it.

If the Department of Health, following our Committee stage and encouraged by the Minister, is co-operating on this work, and if the vending machine companies which now have not far off 1,000 of these units out in the trade, and the trade is not 80 per cent against it—they are almost 100 per cent in favour, based on a much bigger sample than the 200 involved in the British Heart Foundation research before this was even mentioned—then this is a changed situation.

My noble friend Lord Howe is correct; the other place does need at least to consider these developments and the Minister needs to make matters clear to us, because when I made an intervention the other afternoon—I think it was on 2 November—she said that the Government has allowed operators more than 10 years to,

“tighten up their operations to prevent underage sales of tobacco to children and young people. That is the context in which the decision was taken in another place”.—[Official Report, 2/11/09; col. 3.]

It was not. It was chaos. The Minister is wrong, because she told us in Committee, and I believed her, that there was now to be a two-year period during which the Government would observe what was happening. They have joined in producing some amendments and new technical developments which are very encouraging. I hope the Minister will answer this because it seems to me that there is a terrible danger of the Department of Health having totally misled this industry, if it is not going to pay any attention to a major technical improvement of the situation.

It is not just a few people that we are talking about. We are in the middle of a recession and we are putting at risk 200 companies. Yes, they are small companies, SMEs, but nevertheless directly employing 650 people and indirectly, nobody knows exactly how many, but there will be a couple of thousand. What is the point of slavishly saying, the Commons voted, they did not know what they were voting about and we will put at risk all these people? The Minister has a responsibility, frankly, not to play with people’s lives, at least to weigh up what her own department—and she, I had thought—was encouraging. You cannot, in this day and age, kill off people’s livelihoods because an amendment is inadvertently voted on in another place. I plead with the Minister to recognise this situation.

My noble friend Lord Howe has put forward what I think is a very reasonable suggestion and one that I think the industry would understand. It is for the Commons, in the end, to make the decision. It is not for this House to make it when we know from the facts that it was not properly considered in another place.

My Lords, if I may just comment briefly and not delay the House too long, the reason that we had this debate on the Bill when it was with us was precisely because we did not want to play with other people’s lives. We were aware of the dangers of tobacco. It is not only children; those who are trying to stop smoking find it much more difficult when they are tempted by having vending machines there. It is part of an overall tobacco control strategy. On vending machines, I find it difficult to think that there is not another solution and that these machine manufacturers will go out of business, but I do not dispute what has been said.

As for new technology being in place, I find it difficult to believe that it has emerged since we had the debate here and that it was not in existence previously and could not have been known to the other place. Many of us in this House were very keen to see this go in and many of us were very glad to see the importance recognised of the impact on people’s lives in terms of life expectancy, morbidity and the chronic disease states that we see in smokers. Anything that decreases that enormous burden on the individual, undermining their quality of life, as well as the burden to the state of the cost of their care, would have been welcomed when this amendment came from the Commons.

My Lords, I see three issues that have come under consideration in this debate. I would not want to protract it greatly, but one has not been addressed. The argument of the noble Lord, Lord Walton, on the harm that can be caused by tobacco commends itself to most people in this House, whatever view they take about this amendment. Therefore, like a lot of others, I favour restricting the sale of tobacco as extensively as possible—that is a personal view. However, as to the proposed exception, which has been supported by the noble Lord, Lord Campbell-Savours, and the noble Earl, Lord Howe, which might be made because of a technology which has been found to make it more possible to restrict the sale of tobacco to young people, it appears to me that there is some unnecessary impracticality in that. No doubt it is technically possible, and they have explained how, but the problem appears to be that it requires the full co-operation of the vendor to be effective, and it is highly probable that the vendor will make his or her own assessment of whether the sale is likely to be uncovered. That raises a policing point. The elaboration of the enforcement of that law and the unnecessary creation of a new offence would also weigh against our rejecting the McCartney amendments.

My third point is that it is not for this House, although we can observe and comment on the procedures of another place, to act as a policeman. For that constitutional reason, we should be silent on this point.

My Lords, I support the Motion moved by the noble Earl, Lord Howe, for three good reasons. The first is that it would restore the situation to what the Government consistently declared for month after month they wanted, and almost certainly privately still would want but are reluctant to admit for fear of irritating their Back-Benchers in the other place, so many of whom are infuriated by the Government’s response to the Clegg and Kelly proposals. Let us remember that only six months ago, on 6 May, the noble Baroness, Lady Thornton, said:

“We are … looking … to new mechanisms being trialled here in the UK to ensure that the most effective approach is taken to tackle this problem. Should it become necessary”—

those are the critical, operative words—

“we are committed to using the power in this Bill to prohibit cigarette vending machines altogether. We intend to introduce requirements on vending machines from October 2011 and to measure their efficacy over a period of two years. Should underage sales from vending machines remain a problem after that period we will move to ban them”.—[Official Report, 6/5/09; col. 600.]

That is a fair, balanced and responsible approach.

The second reason is that a blanket ban, as the noble Earl, Lord Howe, and the noble Lord, Lord Naseby, pointed out, would cause much dislocation and hardship, with a number of long-established businesses going bankrupt and many hundreds of people losing their jobs at a time when unemployment is forecast to get progressively worse. I have to tell my noble friend Lady Finlay that unfortunately these machines cannot be converted to selling anything else.

The third reason is perhaps the most important, whether we happen to be on the libertarian or the restrictive side of the general smoking debate. Although we all, whichever side we are on, want to discourage under-18s from taking up smoking, the Commons amendment could be counterproductive and result in more underage people smoking than would have been the case if the clause had been left alone. The new machines referred to by the noble Lord, Lord Campbell-Savours—incidentally, they stock only legal, duty-paid cigarettes, apparently quite a rarity in certain northern cities—will be tightly controlled and monitored. If they are banned, the cigarettes that pubs and similar places have to stock will have to be kept under the counter, loose. At busy times, hard-pressed bar staff will find it difficult to keep tabs on them. This will almost certainly be taken advantage of by wily teenagers.

Let us revert to the sensible compromise put forward by the Government six months ago and retained until quite recently, to give the new machines a trial, see if they actually work and cut down teenage smoking, and then—but only then—move to ban them altogether if necessary.

My Lords, I am pleased that we have an opportunity to accept this government amendment, which will ban cigarette vending machines. We have plenty of evidence that cigarette vending machines are the main source of cigarettes for children. Evidence from the British Heart Foundation puts the figure at 23,000 children in England and Wales. Earlier this year, a test purchase exercise in south-west England found that 73 per cent of attempts by 15 year-olds to buy cigarettes resulted in a sale. Three-quarters of a million children under 16 take up smoking. Any attempt to reduce that is beneficial. Arguments are made about the technology that can be used; methods involving radio frequency, for example, are being promoted by the National Association of Cigarette Machine Operators. However, all technologies fail; all technologies can be got round in an attempt to get cigarettes from vending machines.

But does the noble Lord accept that, in the event that members of the public took the decision to enable a machine to allow a child to make a purchase, that would be an offence and they could be prosecuted?

It is an offence now not to use available technology such as tokens and infrared signals, but it is proven that children are able to get cigarettes from vending machines.

The other argument used is about the jobs that will be lost and the damage that this will do to the economy. They are the same arguments that we have heard in other debates. We were told that thousands of jobs would be lost and that all Patels would close down their corner shops because tobacco would not be displayed at the point of sale. I do not think that that has happened, so I do not buy the argument that loss of jobs will ensue. The only argument that I buy is that vending machines promote the taking-up of cigarette smoking among children. I find it very persuasive.

My Lords, as one of those who proposed the original amendment with the noble Lord, Lord Walton, I am delighted to support the Government’s amendment. Most Members of the House seem to agree that the unsupervised use of vending machines makes it easier for children to purchase cigarettes. The issue then is whether the use of vending machines can be supervised, which seems to be one purely of practicality. The survey to which the noble Lord, Lord Walton, referred stated that a majority of pub landlords said that they believed that it was an unworkable solution during busy hours within the pub.

I am sure that there could be more than one sample; I believe that the noble Lord has referred to another survey, which may have produced a different result. Nevertheless, there is some evidence of pub landlords believing it to be impractical. Moreover, it feels very impractical on a common-sense level, as other noble Lords have said. The noble Lord, Lord Campbell-Savours, described something like five steps. It did not seem to me that the steps that he was describing were any shorter than those that it would have taken for somebody to sell somebody a packet of cigarettes without having to operate machinery across the room. On the basis of the impracticality of that solution for what is a significant problem for children, we should support the Government’s amendment.

My Lords, I wish that the Government and other people would make up their mind. We have heard this afternoon that tobacco is an addictive and dangerous drug, not only to children but to everybody else. Of course, many people accept that; I accept it myself. But the Home Secretary does not. When Professor Nutt suggested that tobacco was more dangerous than cannabis, the Home Secretary sacked him. So it is quite obvious that the Home Secretary takes a different point of view from that taken by the right honourable Mr McCartney and the Secretary of State for Health.

So where are we on tobacco? Is it so dangerous that, as Professor Nutt says, it should be made a class B or class A drug? Or is it not as dangerous as those drugs and therefore should it remain a completely unregulated substance? It is about time that we had clarity on this, although obviously we are not going to get clarity on it this afternoon. I was regularly in Grand Committee when we discussed this matter, where one decision was made virtually by unanimity, with no change in the situation made at Report. Now, however, the Government have decided to accept an amendment to their own Bill. Let us also not forget that this is a House of Lords Bill; it is not a House of Commons Bill. The House of Lords is quite entitled to insist that the Bill should be as it was when it left here. Indeed, the Government should be insisting that the Bill should be as it was then.

If we were discussing something that involved losing 650 jobs, the closure of 200 factories, making some people bankrupt and making it difficult for 70,000 public houses at a time of rising unemployment, we would all be outraged. Yet we are proposing to do this with impunity. Of course we are being told, “That’s rubbish”. In every debate that we have had about tobacco—and by God I have taken part in some of those debates during my period in this House and, indeed, in the other House—we have been told, “It won’t really affect businesses in the way you say it will”. For example, when we were debating the ban on smoking in public places, we warned, because we had information from the industry, that many public houses throughout the country would close. Again, we were told that we were talking nonsense. Yet thousands upon thousands of pubs have closed up and down the country. If the prevention of smoking in public places did not have the whole effect, it certainly had a partial effect on an industry that was going through a difficult time.

We have heard about an alternative this afternoon—the noble Lord, Lord Campbell-Savours, first raised it—which could possibly solve the problem for everyone. Indeed, he quite rightly said that perhaps the House of Commons was not aware of this new system that has been produced at some cost to the vending machine industry. Why would we not do this?

I go back to the ban on smoking in public places. We spent a lot of time on it in Grand Committee, with a lot of expertise from various people. We could have prevented a complete ban by providing instead for the separation of smokers from non-smokers. The Government would not listen. They would not even consult the people who could provide the air-conditioning equipment that would have allowed the separation of smokers from non-smokers and helped the pubs industry through a difficult time.

I go back to where I started. For heaven’s sake let the Government make up their mind about where they are going on smoking. I fear that the reason why they do not want to have a complete ban on smoking—that is really what they are advocating; that is what they are after, to make it completely illegal for anybody to smoke—is that they are afraid of the electoral consequences and do not want to lose the £10 billion of revenue that they get from people still daring to smoke. Please let us have some honesty about this matter and not have the Government say on the one hand that smoking is bad for you but on the other hand that it is not as bad for you as cocaine or cannabis.

My Lords, throughout the deliberations on this Bill, as noble Lords who took part in all of them may recall, I have at times been equally uncompelled by the campaign run by ASH as by the one run by the manufacturers. At times I have found both to be somewhat overstated. I have therefore spent all the time we have deliberated on this Bill coming at every issue and briefing with considerable care and an open mind. I have been helped in that by the fact that now, as all the way through this Bill, our Benches have free votes on this matter.

With some considerable relief I heard the noble Earl, Lord Howe, clarify precisely what the issue is today. The one of most concern is what happened in the Commons and the matter of Commons procedure. I do not wish to be flip at all, but if this House set itself the task of addressing every piece of legislation that had a defective passage through another place we would never go into recess. But I take the point that there was not a vote, because it is important. That is why I made it my business to talk to colleagues in another place to see whether Members there had been frustrated over it. My understanding is that they were not. My honourable friends in another place are usually pretty quick to tell me about something like that. The fact that there was no vote may, as the noble Lord, Lord Campbell-Savours, said, suggest a frustration of the will of that House, but that is the most important point on that.

I have listened with great care this afternoon to arguments on vending machines, some of which have been new and many of which have been rehearsed before. Throughout this debate we have missed one important point. Vending machines predate a whole load of other changes in society; they were there in “Brief Encounter”, on station platforms, when everything else for miles around was closed. These days it is extremely hard to live anywhere where there is not a shop open 24 hours a day within a manageable distance, although I accept that in some country areas that may be an overstatement. Vending machines are an anachronism—a point that has been missed—so why have they continued to exist? They continue to exist for the convenience of people who smoke and because the vendors of tobacco find them an effective way in which to find the new markets that they need among young people.

I did not agree with the display ban that was agreed in the Health Bill. I share the deep concerns of noble Lords that such a ban will lead to an increase in smuggling. I did not agree with some of the other measures that your Lordships’ House agreed to. But banning vending machines, given all the arguments put before us, is the right thing to do. It is in the interests of young people and it should happen as quickly as possible. That would be my view; whether my colleagues choose to support me is a matter for them.

My Lords, I did not intend to speak in this debate, but I am afraid that I am torn between two opposites. I speak as a self-confessed one-time tobacco addict. I hope that after 10 years of abstention, I have now kicked the habit, but I am not guaranteeing it. I accept that tobacco is addictive. I accept, in some respects, Professor Nutt, who says that it is more dangerous than cannabis or cocaine. The dilemma is, however, what we should do about it. I regret to say that some of the arguments in this House this afternoon have been, “We know tobacco’s bad. We know we can't stop it, but we have to be seen to do something”. The instant reaction nowadays is ban it or stop it. “Whether it works or not, who cares? Our conscience is clear. We have made our position quite clear that we want to stop it”.

If tobacco is so serious, why do the Government not have the courage of their own convictions and ban it entirely? I would accept that. I cannot accept the argument that we should not take a course of action because of the loss of jobs. Nobody says that we should allow heroin to be continually sold on our streets or for cocaine constantly to be trafficked. There would be a loss of jobs. They may be illegal jobs, but they are still jobs. To lay all that aside, in the absence of a total ban, it is not necessary simply to do a little here or there and say that it will work.

The difficulty in this is entirely to do what is right. What is not right is for the Government to change their mind within six months and suddenly, almost by diktat, to apply a whip. If a free vote were to be allowed in the Commons, it ought to be allowed here. It is not often that I vote against the Government, but I certainly shall do this evening.

My Lords, my noble friend says that tobacco should be banned, but he is mistaken if he thinks that that will reduce consumption of tobacco because it would produce a whole new class of criminal as well as probably not making any difference to the consumption of tobacco.

Precisely the same argument can be applied to the banning of vending machines—it will produce a new class of criminal.

That is a point that other people will probably not agree with, as I do not.

One thing that we have not emphasised in this debate is that although this tobacco legislation is aimed at discouraging children from smoking, the people who will benefit most from children not smoking are the adults that they will become. It takes a generation or so for the pathological effects of smoking to appear. When a child starts early, he or she will not suffer very much at the time, but the addictive effects of smoking will last. As my noble friend Lord Walton said, 80 per cent of adult smokers start before the age of 19. That is the real point of this legislation. I confess an interest in that I voted for the full banning of vending machines in Committee. I feel that my right honourable friend Ian McCartney is absolutely right. The feeling of the House of Commons was very much on his side even though there was no vote.

My Lords, it is clear from today’s debate that protecting young people from harm caused by tobacco is a serious issue which needs to be addressed. It is one that many feel passionately about. As the noble Earl said, we do not disagree about the importance of this issue. Amendment 11 will be a major step towards tackling the serious problem of young people accessing tobacco from vending machines. I will respond to a number of the points raised during this debate.

First, the Government’s position on tobacco vending machines has indeed changed in light of the debate at Report stage of the Health Bill in another place. We admit that we have changed our minds, notwithstanding the quotes raised by the noble Lord, Lord Monson, when we considered the Bill earlier this year. It was an impassioned debate in another place, and it resulted in a key amendment being accepted. The intention of the amendment made in the other place was to remove the power to impose requirements on tobacco vending machines, thus allowing the Government only to prohibit cigarette sales from such machines or not. As the Secretary of State for Health said in another place, the will of the House will be respected when the Government consider how best to put it into effect. That is why the Government do not seek to overturn the amendment now.

I will discuss the will of the Commons not being clear, and there not having been a Division. The noble Baroness, Lady Barker, checked with her colleagues in another place; this was indeed helpful and exactly accords with my view. The noble Lords, Lord Monson and Lord Naseby, raised this issue. As noble Lords well know, the other place determines its own rules. I thank the noble Lord, Lord Maclennan, for his comments on this. The Speaker presides over the Chamber to ensure that those rules are followed. It is not normally the Government’s job to put tellers in on a free vote. The Speaker ruled on that day and Hansard records that decision. Yes, a Division was called off and the amendment was accepted on a shout. I can recall times when this House has had such procedures. Under similar circumstances, noble Lords have accepted that decision; it is considered a proper and valid decision of this House. I suspect that honourable Members in another place may take exception to their procedure being questioned in the way that it has been by noble Lords—as, indeed, we would.

We were asked: why not allow the vending machine companies to implement restrictions on a voluntary basis before banning them? As long ago as 1998, the Smoking Kills White Paper referred to the voluntary code of practice issued by the National Association of Cigarette Machine Operators to its members. This code has been revised so that the primary consideration when siting a machine is the need to prevent sales to children. Despite the NACMO code of practice, vending machines remain a significant source of tobacco for children and young people. That is why we included vending machines in the Health Bill in the first place, and why Ministers have made it clear that action will be taken.

The tobacco vending machine industry has had ample opportunity voluntarily to solve the problem of youngsters getting tobacco from its machines; it has been unsuccessful. Young people are still getting tobacco from vending machines. I met representatives of NACMO this morning because I wanted fully to understand the issues. I listened carefully to what they had to say. We are committed to making the regulations on the tobacco provisions of the Health Bill as soon as possible. There is nothing to be gained from undue delay. As I pointed out to the gentlemen I met this morning, the date would still be October 2011, which is nearly two years away. It would not be immediate. There is scaremongering among the people who run these companies that this is an immediate ban. This is not the case. The Government are taking the powers—

I am grateful to my noble friend, but if the matter is so serious, and if so much damage is being done to many thousands of people, as described by the noble Lords, Lord Patel and Lord Walton, why wait two years before doing something about it?

My Lords, we are giving businesses time to deal with the fact that these regulations will be in place, as we promised them that we would, and as I explained to the representatives this morning.

This is an important point. The Minister knows as well as I do that the Department of Health’s recently published consultation on the proposed tobacco control regulations in England recommends the use of the RF system. Does the department accept that this is a good system and that it must move forward, or are Ministers totally blind to what their own department is finding?

My Lords, we have consulted consistently with the National Association of Cigarette Machine Operators and have taken its views into account. Of course we discussed that matter with it when we were drafting the regulations that were to be considered before the other place took its decision. We are sympathetic to small businesses that will be affected by the legislation to prohibit tobacco vending machines, but we are also concerned about how easily young people can get tobacco from vending machines. When another place considered the proposals for vending machines the competing interests were debated.

Since the industry believes that a lot of people will go out of business, is it the Government’s intention to give them compensation?

I do not know the answer to that question and I will certainly let the noble Lord know, but in considering the proposals on vending machines, the competing interests were debated and the effects on the vending industry were discussed. The noble Lords, Lord Palmer and Lord Monson, suggested that removing vending machines would mean that more illicit tobacco would be sold in pubs and clubs. That is speculative. There is no evidence that removing vending machines will result in more illicit tobacco being sold in pubs and other venues where vending machines are commonly located. Indeed, laws are already in place to prevent premises being used for the sale of illicit tobacco and significant punishment can be imposed should that happen.

Can I make some progress? My noble friend Lord Campbell-Savours referred to the technology and the equipment. The use of equipment to prevent vending machines selling cigarettes to children was an option included in the Department of Health’s 2008 consultation. This is not new technology. I know that the tobacco vending industry has been active in making both your Lordships and Members of another place aware of the different options that we have. Unless Members of another place were not reading their e-mails or their post, I suspect that they would have known what options were available when they had their debate. The noble Lord, Lord Stoddart—

On that matter—I want to press this—the issue is whether during the course of the debate—my noble friend recognised that it was comprehensive and detailed—consideration was given to radio-frequency-controlled cigarette vending machines. It is very simple: if it was, then we should vote for the McCartney amendment; if it was not, it seems to me that the Commons were unaware of this technology, which seems to me to deal with all the issues about which my noble friend is concerned.

I can see why my noble friend is pushing that point but, as I said, it would be very difficult for any of us, both at this end of the building and the other, not to know what technology was available to control vending machines. I do not have the relevant Hansard in front of me but I have looked through it and I know that there was a passionate debate on both sides of the issue. I would be extremely surprised if honourable Members were not aware of the technology and equipment available to solve this problem. However, as far as I can tell from the debate, they were not convinced that this would solve the problem of tobacco being available to young people from vending machines.

Would the people in the other House, or people in general, be aware that trading standards have endorsed machines with this radio frequency control mechanism? That has been developed recently and so has only just been put in the machines; not all machines have it yet, but most machines do. Are people aware that trading standards have endorsed it?

I have no idea whether people are aware of that. I certainly was aware that this technology had been discussed with trading standards officers, but it does not actually change the point. We are committed to making regulations relating to tobacco under the new powers provided by this Bill. Of course, careful consideration will be given to the responses to the consultation and to complying with our EU obligations to notify draft regulations. Amendment 11 was accepted in the other place and all parties were offered a free vote. This amendment represents the will of that House. Therefore, I beg that Amendment 11 and the consequential amendments be agreed to and I ask the noble Earl, Lord Howe, to withdraw his amendment.

Might I draw my noble friend’s attention to a procedural matter, to which she referred earlier? She will be unaware of the fact that I was, for a number of years, a Whip in another place—admittedly, that was some considerable time ago—and I can assure her that the Whips will always put in Tellers in order to protect the Government’s business, whether there is a free vote or not. The one exception is if the vote is on a Private Member’s Bill, where a free vote would cover the entire Bill and not an amendment.

My Lords, this has been a good debate and I am grateful to all noble Lords who have taken part. We have heard in particular from the noble Lords, Lord Walton and Lord Patel, about the damage that is caused to young people who are given access to cigarettes. That is not a case that I wish to argue against; I accept it, but it is not central to the matter at issue.

It is necessary to re-emphasise only two points. There is a proportionate and workable course of action open to Parliament in pursuing its wish to bear down on underage access to vending machines. That is to allow the Government to lay regulations designed to ensure that such access does not occur, while at the same time allowing legitimate adult smokers to purchase cigarettes from vending machines as they wish. I do not show the pessimism of the noble Lord, Lord Crisp, about this. We know that there is technology available and in use that would enable that to happen. The Government believe that, too. The Minister in another place, Gillian Merron, said during the debate on the McCartney amendment:

“The Government believe that we can place requirements on vending machines that will be effective, proportionate and deliverable in preventing under-age sales and balance the views of all concerned”.—[Official Report, Commons, 12/10/09; col. 109.]

Those of us who share that belief argue that, if government policy is to be overturned, the very least that is needed is a vote in the House of Commons. Indeed, I would argue that a vote there should be seen as necessary, irrespective of one’s view on the banning of vending machines. My clear understanding is that, as the noble Lord, Lord Howie, has outlined, the other place was denied the opportunity to go through the Lobbies. I refer the noble Baroness, Lady Barker, to col. 123 of Commons Hansard on 12 October, which makes the position abundantly clear. I am sorry if the sensibilities of Members of another place may be troubled by our rejecting the McCartney amendment, but in my view the matter is too important for that.

It is certainly true that the competing interests were debated in the other place, but from reading the debate one can see that they were barely alluded to. The main thrust of the debate focused on tobacco displays, which are not the subject of our debate. To approve the Commons amendment today, in the absence of a Commons vote, would be to betray the 650 or so people whose livelihoods depend on being able to operate vending machines. They are men and women with families and mortgages who, in many cases, stand to lose everything if cigarette vending machines are summarily banned. If that were to happen on the back of what was, essentially, a mess-up in the House of Commons, it would—

It is not a summary ban, because it is always recognised by those of us who support the ban, first, that the Government have to produce regulations, which have to go out to consultation, and, secondly, that the process is quite lengthy. That will give the people involved in the industry time to deal with matters accordingly. As the noble Baroness has said, the ban would certainly not come into effect for about two years.

I am not arguing about that. I am arguing that the two-stage approach, which the Government originally favoured, was the proportionate one. If we are left with the McCartney amendment and nothing else, it will be a summary ban because it is an all-or-nothing position. That is my point. I maintain that, unless we ask the other place to think again, we will have on our hands a travesty of the parliamentary process. Without apology, I therefore beg to move.

Motion agreed.

Amendment 12

Moved by

12: Insert the following new Clause-

“Private patient income of mental health foundation trusts (1) Section 44 of the National Health Service Act 2006 (c. 41) (private health care) is amended as follows.

(2) In subsection (2)-

(a) after “not greater than” insert “- (a)”;(b) at the end insert “, or(b) in the case of a mental health foundation trust designated under subsection (2A), that proportion or 1.5% if greater.”(3) After subsection (2) insert-

(2A) An authorisation of an NHS foundation trust which was an NHS trust must designate it as a mental health foundation trust for the purposes of this section if it appears to the regulator that it provides goods or services only or mainly for the prevention, diagnosis or treatment of any disorder or disability of the mind or for the benefit in any other way of people suffering from a disorder or disability of the mind.””

My Lords, I beg to move that the House do agree with the Commons in their Amendment 12. In doing so, I shall also speak to Commons Amendment 14.

We had a full debate in the course of the Bill’s passage about the private patient cap and its impacts on the National Health Service and I thank all noble Lords for their valuable and informed contributions to our discussion. I am pleased to say that Commons Amendment 12 responds to these debates and enables a designated mental health foundation trust to earn up to 1.5 per cent of its total income from income that it derives from private charges. The new clause also contains the definition of mental health foundation trusts for this purpose.

NHS foundation trusts are a growing part of the NHS. The Government are committed to ensuring that the foundation trust model becomes a dominant form of healthcare provision. We want these trusts to use their freedoms, local accountability and financial independence to innovate and improve NHS services. As noble Lords know, the intention behind the cap was to manage a potential risk that the freedoms given to foundation trusts might allow them to change their fundamental nature as NHS organisations. As the foundation trust model has evolved, it has become clear that we need to examine new ways of ensuring that the foundation trust best serves the interests of NHS patients; we absolutely accept this.

At Third Reading, I announced that the Government would embark on a policy review following the outcome of the judicial review of the current legislation. However, we have brought forward that commitment and last week commenced our review by launching a call for evidence to stakeholders both inside and outside the NHS. This is due to close by the end of the year. The Government would like to see NHS patients deriving even greater benefits from NHS foundation trusts. That is the basis of our review. This is a complex and controversial issue and only by having a fundamental and inclusive review can we ensure that consensus is reached on the solution for the long term. It will also ensure that any future solution for the long term is pragmatic, workable and achieves our fundamental purpose.

Our call for evidence sets out the key principles towards which we are working. NHS foundation trusts must: first and above all, prioritise and protect the interests of NHS patients; secondly, ensure income from private patient work is used for the overall benefit of the NHS; thirdly, preserve and promote the principles and values of the NHS, as now enshrined in the NHS Constitution, and achieve national standards and government policy objectives; fourthly, not undertake private patient work in such a way as to result in a detriment to services for NHS patients; and, fifthly, ensure that mechanisms are put in place to secure and demonstrate that there is no cross-subsidy of private care with public money.

This is the first stage of a broader process to review the cap. The evidence that we receive will help to shape the direction that our policy review takes next year, which we expect to complete in the spring. We intend to follow this with a public consultation on proposals for reform, which would mean that legislation could be possible early in the new Parliament.

Pending the outcome of the review, a compelling case has been made for one narrowly defined interim measure to address the genuine anomaly of mental health foundation trusts, all of which have caps set at zero. Mental health foundation trusts were not envisaged in 2003. This amendment addresses an unintended consequence of the legislation and one of the most commonly reported complaints about the cap. Many noble Lords and honourable Members in another place have raised this issue as a particular concern. The Government have received representations from mental health foundation trusts that say that they are unable to move forward with ideas for service development. One, for example, has said that it cannot develop novel services such as those for children with autistic spectrum disorders and acquired brain injury. This type of service provision, it says, could have national application.

As the noble Baroness, Lady Meacher, observed in Grand Committee, these trusts have told their representative body that they are also prevented from supporting the Government’s well-being agenda. Some have written to us saying that they cannot enter into government-sponsored return-to-work activities with external contractors or provide specialist help for employees at risk of mental ill health, unlike non-foundation mental health trusts. Given the current climate, it has never been a more important time to invest in mental health. Mental health foundation trusts themselves have said that, for their service users, the ability to promote and deliver the well-being agenda would be very beneficial.

We have listened and we are acting. By enabling the application of a cap of 1.5 per cent, Amendment 12 will give our highest-performing providers of NHS mental health provision more room to innovate and support the development of further high-quality services for the NHS. The calculation of 1.5 per cent does not purport to be an exact science; it is an acknowledgement that mental health foundation trusts need some freedom. The figure is based on the average cap for acute foundation trusts in 2008-09. I stress that this is an interim solution, which will not prejudice the review’s aim of a lasting solution for all foundation trusts. We believe that we should only do something now that is clearly defined and around which consensus can be built. As such, the focus of the interim solution should be about only mental health foundation trusts.

The Government’s amendment offers a pragmatic solution to the immediate anomaly of mental health foundation trusts. Combined with the policy review that is under way, our approach will ensure a better, fairer, lasting system for all foundation trusts. I beg to move.

Amendment to the Motion

Moved by Baroness Meacher

As an amendment to the motion that this House do agree with the Commons in their Amendment 12, to leave out “agree” and insert “disagree”.”

Baroness Meacher: I shall speak also to Amendment 14A, which seeks to build upon Amendment 14, moved in the other place by the Government. Amendment 14A will provide for a 1.5 per cent private patient cap for all foundation trusts with a cap below that level. As the Minister eloquently explained, the Government have accepted the need for a 1.5 per cent cap for mental health trusts. It is very difficult to see any logic in not extending that cap to all other foundation trusts.

I should draw your Lordships’ attention to misprints in the amendment on the Marshalled List. A correction slip has been issued to clarify these points and we shall debate the amendment as on the amendment slip.

As the Minister explained, the Government accepted the principle implied by our amendment, moved during the passage of the Bill, that there should be more rationality in the system of private patient caps and that it should be possible for foundation trusts to raise at least a little more revenue for the pressing needs of NHS patients. The significance of these matters is increasingly apparent as the results of the credit crunch and the pressure on resources in the public sector, particularly the NHS, become apparent.

I applaud the Government’s decision to institute a review of the private patient cap structure, and I particularly like the principles that the Minister set out to guide that review. The aim of the review, which is taking place immediately, is to inform a policy review that will start in the new year. The only problem with this, which the Government accept, is that they will be unable to do anything about the results of the review or introduce legislation before a general election. Therefore, foundation trusts will have to stagger on with this rather ludicrous structure of private patient caps—some with 0.3 per cent, one with 30 per cent and others with 5 per cent—for the indefinite future. It is difficult to argue that that makes any sense.

I welcome, of course, the Government’s amendment agreed in the other place to give mental health trusts a private patient cap of 1.5 per cent. That amendment means that mental health foundation trusts will be able to deliver additional services and, as the Minister said, employment support to benefit NHS patients. It is a good example that the cap enables positive things to be done by trusts, not only the straightforward provision of beds for private patients one might imagine. It is not like that; this issue covers all sorts of eventualities.

However, I should emphasise that my purpose in moving amendments on the private patient cap has never been motivated by the needs of mental health trusts, particularly, and certainly not by the needs of the East London NHS Foundation Trust, which I chair. I put on record that that trust has no plans at present to undertake private patient work, although that would now be possible.

The Foundation Trust Network has asked foundation trusts to indicate what a 1.5 per cent patient cap would mean in terms of additional revenue. It is interesting that an additional £132 million would be brought into the 55 trusts which responded for the benefit of NHS patients. It is useful to think about that funding in terms of saving jobs in the NHS. If we assume a cost of £40,000 per job, a 1.5 per cent cap for all foundation trusts could save about 7,000 jobs. It may be that a few mental health trusts will not take up the cap—in which case 7,000 would be a slight overestimate—but that would not make a huge difference. I raise the employment point because it relates to UNISON’s concerns about any change to the private patient cap, and it may be particularly interested in the idea of saving 7,000 jobs per year in the NHS in the coming period.

The other benefit of the amendment is that, for the first time, there would be a level playing field for some 75 per cent of foundation trusts. The remaining 25 per cent would have a cap above that level going back to 2002-03. That will have to be settled after the general election, when and if a new Government get round to dealing with these issues.

During the passage of the Bill, we discussed a number of the disadvantages of the uneven and very restrictive private patient cap. I do not wish to repeat those debates except to briefly summarise a few of these problems. The Government’s top-up policy is unworkable in foundation trusts without reform. The private patient cap makes it hard for some leading NHS providers to become foundation trusts. A mental health foundation wanted to buy out a private-sector competitor that was going out of business and whose services were, presumably, needed and could have been taken into the NHS. However, because there was no cap—although 1.5 per cent would not have covered it—that sort of initiative was simply not viable.

Private patient income was the means by which one foundation trust bought leading-edge technology and equipment for the benefit of NHS as well as private patients. More trusts need that option, and that is going to be more and more pressing. The private patient income cap is threatening the development of cancer services to both NHS and other patients. Investment in laser dermatology for the benefit of NHS and private patients is being prevented by the current private patient cap.

In the tight financial climate of the coming years, these restrictions on NHS services for NHS patients will only worsen. I hope the Minister will agree that this modest amendment would assist trusts to some extent while the nation waits for the results of the review and new legislation. I hope she will agree that it deserves the Government’s support. I beg to move.

My Lords, the world has moved on considerably since we last debated these matters in your Lordships’ House in May. When the Lords amendment was passed at Third Reading, the Government were not prepared to countenance a variation of the current rules on the private patient income cap because a judicial review about the operation of the cap was underway in the courts. Not only have the Government now changed their mind on that point and decided that there is no issue of principle at stake here, they have also felt able, of their own volition, to make a concession in respect of mental health trusts, as we now see in the Commons amendment before us—a concession I naturally welcome.

It is instructive to read the remarks of the Minister in another place, Mr Mike O’Brien, who said on Report on 12 October:

“We take the view that the way the system operates now is not the way we want to see it operate. It is not fair. We concede that argument immediately”.—[Official Report, Commons, 12/10/09; col. 70.]

Referring to the honourable Member for Eddisbury, he said:

“He asks whether we have changed our mind: yes, we have. Have we considered the matter again? Yes. Have we taken the view that we can go ahead with the change now? Yes, we have”.—[Official Report, Commons, 12/10/09; col. 77.]

We are now in a strange situation. There is no issue of principle at stake any more. The Government agree that the system is not fair and needs revision; they admit they have changed their minds and accept that the system can be changed now. If all that is true, there is absolutely no argument for resisting the amendment of the noble Baroness, Lady Meacher.

The amendment does its level best to defer to the Government by not asking for too much. In all honesty, the figure of 1.5 per cent which the Government have alighted upon as a concession to mental health trusts is completely arbitrary. One could argue that it simply perpetuates the arbitrary nature of the entire private patient income cap regime. There is absolutely no logic to the figure of 1.5 per cent, but it is the percentage that the Government now feel comfortable with. As an interim measure, this is certainly better than nothing. The noble Baroness, Lady Meacher, is to be commended for advancing a proposal which is both moderate and reasonable. I find it difficult to imagine what rational argument the Minister can put up against it.

At Third Reading, the noble Lord, Lord Warner, focused on one aspect of this issue which we would all do well to bear in mind:

“We are moving into a financial climate where the NHS …will need every penny that it can get to meet public expectations”.—[Official Report, 12/5/09; col. 936.]

The noble Lord was absolutely right. The problem with doing things as the Minister suggests is that if we let this Bill go without inserting this amendment into it, it is likely to be a long time before another legislative opportunity comes before us. As the noble Baroness said, it is likely to be 2011 at the earliest before Parliament is able to revisit this matter. That is not acceptable. More to the point, the Government should not regard it as acceptable given that they now agree that the current rules cannot remain in place.

The Government have announced a rapid review of the private patient income cap and have issued a paper calling for evidence about it from the NHS. This review is unlikely to bring much to the table because the Government already know the system needs to change pretty radically. A key point is the need to provide foundation trusts with a breathing space, which is just what this amendment would do. Some 75 per cent of existing foundation trusts have a private patient income cap of less than 1.5 per cent. A lot of trusts are not being permitted to meet the needs of their NHS patients as fully as they would like to do by investing in new services, trusts whose NHS budgets are stretched to breaking point because they are barred from generating any additional private patient income whatever.

The perversity of the situation is well exemplified by Great Ormond Street children’s hospital, which cannot apply for foundation status because if it did so it would be instantly in breach of its cap. It carries on as it is, with no restriction whatever on the amount of private patient income it can generate. Is that really what we all want?

Even at this late stage, it is not too late for the Government to change their mind yet again. I hope they will do so by accepting the amendment of the noble Baroness. I shall not hesitate to follow her should she choose to test the opinion of the House.

My Lords, I rise to support the amendment of the noble Baroness, Lady Meacher, to the Commons amendment. I do so as the Minister who took through this House the 2003 legislation setting up foundation trusts and imposing what I can only describe as the arbitrary private patient cap. Later I was also the Minister responsible for policy on foundation trusts but have no current public or private interest to declare in speaking to this amendment.

I recognised at an earlier stage of this Bill that we had got the 2003 Act wrong on the private patient cap. I am pleased that my colleague, Mike O’Brien, in the other place appears to have had a Pauline conversion since our discussions at Third Reading here. We also know that lurking in the background is the attitude toward private patient income and the private patient cap of UNISON and other public sector unions. They have rather forgotten that the patron saint of the NHS, St Nye of Ebbw Vale, himself wrote into the NHS founding legislation provision for trusts to obtain private patient income and indeed for NHS patients to secure more privacy by buying a space in amenity beds. There is a long tradition of using private patient income in the NHS for the benefit of NHS patients and the development of services.

We now have a situation where some FTs have a cap of 30 per cent, some of five per cent and some zero per cent. I welcome the fact that in the other place the Government have improved the situation in relation to mental health trusts. However, this still leaves some 75 per cent of foundation trusts below that cap, according to the excellent piece of work circulated to Members of this House by the Foundation Trust Network. I find it extremely disappointing that, for reasons of their own, the Government are unwilling to apply the 1.5 per cent ceiling consistently across foundation trusts.

The Foundation Trust Network’s excellent briefing sets out some of the missed opportunities presented by these new, equally arbitrary, arrangements from the Government, both for foundation trusts and for NHS patients. As that briefing paper illustrates, the Government’s position is a bit of an own goal in that it thwarts their own policies on well-being and top-up of NHS services.

The amendment of the noble Baroness, Lady Meacher, is a moderate attempt to introduce greater coherence into the capping of FT private patient income while also protecting the interests of NHS patients. It also gives foundation trusts a good slug of additional income. I would suggest, on the Foundation Trust Network’s calculations, something of the order of £200 million a year in extra income, which buys quite a lot of extra services for people. As the noble Baroness, Lady Meacher, mentioned, it creates extra jobs at a time of difficulty in and around public finances.

I would be a bit more convinced about the Government's review if the Department of Health had supported Monitor rather more vigorously over the judicial review sought by UNISON. I was concerned to find that recently, the Department of Health, acting as an “interested” party in that judicial review, is giving evidence to the High Court supporting an even more restricted position than Monitor is in now. I do not think that that bodes terribly well for an objective review of our private patient income cap. I am sorry to be sceptical but I operate on the basis of the evidence in front of me, and I do not find that terribly convincing.

If they had wanted to, the Government could have dealt with this legal challenge differently by acknowledging that there were problems and by setting out their plans to deal with the arbitrary and inconsistent nature of the 2003 cap. This rather last-minute call for evidence does not totally convince me. It could have been done a long time ago and the case could have been made in plenty of time for an amendment to this Bill or earlier legislation. The amendment moved by the noble Baroness, Lady Meacher, is a practical way to improve matters while the Government make up their mind about what they want to do. I am not at all clear from the call for evidence what they want to do in this area, apart from setting out some principles with which most people would find it difficult to disagree. The amendment moved by the noble Baroness, Lady Meacher, does good for NHS patients and FTs alike and, in a modest way, helps implementation of government policy. If she wishes to press her amendment to a Division, I shall certainly join her in the Lobby, and I encourage my noble friends to do likewise.

My Lords, I shall be brief, because I think that this is an excellent amendment which is well worthy of support. I could not resist intervening when I heard the noble Lord, Lord Warner, say that there is a long history of the NHS taking private patients and deriving from them income that has supported the National Health Service. When I became a consultant in neurology in 1958, that was perfectly true. For a time, I did part-time private practice and was able to admit private patients to the ward in my hospital. The income derived from them was substantial. Subsequently, however, I became a whole-time academic and could no longer have private patients in my ward.

I think that the memory of the noble Lord, Lord Warner, is rather short. He may not remember that when Mrs Castle, as she was before she became Baroness Castle, was Secretary of State for Health, under pressure from the unions, a major campaign was undertaken to remove, as far as possible, all private beds from NHS hospitals. It reached a stage when there were three major hospitals in Newcastle-upon-Tyne and only one private bed was available in each hospital. I, as an academic, used to receive patients referred to me from countries across the globe—even from the United States and Australia—but I had to refuse to take them because there was not a private bed to which they could be admitted. That policy of the then Labour Government, under pressure from the trade unions, gave the biggest impetus to the development of private hospitals outside the NHS of any policy adopted by any Government.

I strongly favour the public-private mix. I strongly favour the proposal that private patient income should be used to the benefit of the National Health Service. I believe that the amendment tabled by my noble friend Lady Meacher goes a long way in that direction. Personally, I would have loved to see the cap greatly increased, but I know full well that Unison would not accept it at the moment. However, I hope that the consultation on which the Minister is now engaged, and in which the Government seek to take advice, will lead to a substantial modification of the cap in the long-term.

In the mean time, as my noble friend Lady Meacher has made clear, the income derived from private patients is at the moment of benefit to foundation trusts. For that reason, her amendment, modest although it is, is a crucial development. Whatever the consultation shows, no legislation further to amend the cap is likely to come about for several years to come. I strongly support the amendment.

I am sorry, in 2003. I am sorry to take issue with my noble friend, but the Government got it right. The reason they got it right was that it was on that basis—the undertakings given to Parliament on this matter—that the Government got foundation status through the House of Commons. Without those undertakings on this matter, there would be no foundation trusts in the United Kingdom today. What happened then should be clearly in the minds of those who want to amend the legislation in the way suggested .

I have to say delicately that in tabling her amendment, the noble Baroness astonished me. I well recall her comments at Third Reading. Perhaps I may read them out to refresh her memory. She had been pressing for further consideration to be given to these matters. She spoke at length—as did we all—and gave a memorable speech, which we all recall with great interest. In response to that speech, my noble friend said:

“it is our intention to begin a review to address precisely how to strike the right balance between protecting NHS services for NHS patients and allowing NHS foundation trusts the flexibility they need to operate effectively in the best interests of patients. This would mean a review of the cap and appropriate action to follow … I repeat our commitment to take forward a review following the outcome of the current judicial review. This is the most sensible way of making sure that any new approach reflects the views of those affected and enables us to test those practical solutions”.

So the Government were conceding to the noble Baroness, Lady Meacher. In response to that generous offer from the Government, she said:

“When the Government are able to institute a review, we would all hope to be involved in it, contribute to it and support it. Then, if possible, a consensus can be found through a good consultation process in which all the issues can be resolved, and a set of principles wider than we are able to deal with today can be put into a future Bill”.—[Official Report, 12/5/09; col. 939-40.]

In other words, she fully supported the review that my noble friend was offering at Third Reading. It is no longer a question of the review being in the future, it is now in the past. The decision has been taken and the review is in place.

My Lords, I intervene only to say that I still agree with every word that I said at the time. On all sides of the House, we recognise that this is an interim measure. We still have 25 per cent of foundation trusts with variegated private patient caps. Clearly, that is not sensible or useful. Ultimately, 1.5 per cent may not be the right figure, but I think that there is a general understanding across the country that the present completely illogical and inconsistent private patient cap is unhelpful for all concerned. This modest amendment is an attempt to improve matters in the interim, pending the result of the review and, no doubt, ultimate legislation in a few years’ time.

The noble Baroness says that this is an interim measure. I argue that the interim measure is the concession on mental health trusts. My noble friend is breaching the wider principle of extending the amendment to the cap right across all National Health Service foundation trusts in the United Kingdom. I choose my words delicately, but she is making a mockery of her acceptance of the very generous offer that my noble friend made at Third Reading. I have argued repeatedly in the past that this is a sensitive matter for the Commons. In the event that these matters are to be dealt with, they should be dealt with in primary legislation in the House of Commons in a Bill that goes through all its stages in the House of Commons, not be dropped in at the last moment at the fag end of a Bill, which effectively gives the House of Commons only one opportunity to debate it. The House of Commons is being denied the right comprehensively to consider this very sensitive issue. I reject this amendment, and I hope the House does too.

My Lords, I remember the tremendous struggle six years ago to get the principles of foundation trusts through in the legislation. There is nothing that so warms the heart than the sinner who repents, and I think we give the noble Lord, Lord Warner, absolute absolution because so much has happened in six years. We now have Monitor, terms of authorisation, the mandatory services schedule, contract variations with PCTs, boards of governors on significant decisions, asset disposal locks and consultation. There is now a framework to ensure that the NHS acts appropriately. I can understand the feelings of the noble Lord, Lord Campbell-Savours, but, with a very strong socialist philosophy, one wants to be careful to retain the fairness, the equity and all the things that the NHS stands for. I want to persuade him that in the six years that have elapsed since foundation trusts were established, we have enabled the NHS to do that through the measures I mentioned.

I find the logic of this very hard to grasp. Perhaps I am being cynical, but I remember from when I was on the Front Bench that when you are in a hole, you instigate a review. If you have a general election coming up, it is an even better thing to do if you have a policy that is unpopular with your colleagues, your Back Benchers and the trade unions. What is being proposed by the noble Baroness, Lady Meacher, is sensible, logical and fair. It is interim in that 1.5 per cent is arbitrary, but at least we are getting to a greater degree of parity, which the NHS needs. I am working with the NHS a lot at the moment, and there is real concern about the financial situation it is facing. If this brings more money into the National Health Service, we should welcome it.

One thing that has not changed in the past six years is that the best children's hospital in Europe, if not the world, is not a foundation trust. That is not insignificant because part of the problem with this debate is that it is wholly out of context. The noble Lord, Lord Campbell-Savours, tried to allude to the complex discussions around the establishment of foundation trusts. What he did not say, although it is right, is that at that time the ability to do private patient work was one of many inducements to make trusts become foundation trusts. In totality, people began to baulk at the extent to which the Government’s policy of foundation trusts was being introduced.

The noble Baroness, Lady Meacher, is to be commended for taking something that is arbitrary and inconsistent and replacing it with something that is arbitrary but consistent. That provides the answer as to why this can be only a temporary measure. It is not principled—I do not think the noble Baroness makes any claim that it is principled—nor is it worked out on the basis of any kind of sustainability. It is just an interim fix to enable some foundation trusts to generate more income. Are we prepared to put up with that in the context? With some reluctance, I think I am.

I am not persuaded by some of the arguments that have been made about foundation trusts and their need to generate income. I would be more compelled by them if that argument applied to all NHS trusts. The key part of this amendment is subsection (2A) which states that any powers to raise money from private patient income,

“must be exercised subject to the principle that the provision of goods and services in return for private charges must in all circumstances be in the interests of the National Health Service”.

That is what is important. Whether this amendment will achieve what in practice has been difficult to achieve, and sometimes impossible to achieve, since 1948, I am not sure. That is why there is a case for having a thoroughgoing review of this matter. I have no doubt that an incoming Government of whatever hue will not leave this one alone. I am not given to betting, but if I were, I would suggest that in three years’ time, there will be a completely different proposal before your Lordships' House. However, as a very interim measure, I am prepared to accept, albeit with some reluctance, the argument put by the noble Baroness, Lady Meacher.

My Lords, the debate today has shown that this area remains complex. There are a multitude of valuable views and principles that must be balanced. Amendment 14A, tabled by the noble Baroness, Lady Meacher, seeks to raise the level of cap for all foundation trusts to at least 1.5 per cent and introduces a safeguard that private patient activity must in all circumstances be in the interests of the health service. The noble Baroness and I agree that there is a clear case for reform, and I admire the fervour with which she has put her case throughout several debates on this issue. We differ on the means of achieving that aim.

The government amendment seeks to provide an interim flexibility for a tightly defined class of foundation trusts that find themselves in a unique position. They as a class are unable to undertake any innovative work or private work or provide any additional private drugs and are prevented from supporting the Government’s well-being agenda. This temporary measure will provide flexibility for these trusts while a full review of the cap is undertaken for all foundation trusts. We have already begun this process with a call for evidence to the NHS and other stakeholders, and we expect to complete the review process by spring. The noble Baroness illustrated the need for a thoroughgoing review. The reason we have not gone further in our amendment is that the risk of unintended consequences is significant and the advantages of developing a solution using the expertise within the NHS are compelling. We do not want to end up once again in our current position with a judicial review on the interpretation of rules ongoing at the same time as the rules are in need of reform.

I also regret to say that this amendment presents serious technical difficulties that we would not want to see in law. The noble Baroness’s amendment attempts to introduce a safeguard that, on the face of it, we could all agree with. However, the safeguard also serves to show how difficult this area is. It requires that the private patient activity must in all circumstances be in the interests of the National Health Service. Wording of this type currently exists in legislation and could be a useful guiding principle when considering reform of the cap. However, in this instance, it is legally problematic for three reasons.

First, a foundation trust is already required by its authorisation to abide by its principal purpose of providing goods and services for the purpose of the health service in England. This is a different test from that proposed by the noble Baroness, Lady Meacher, and it is not clear what Monitor would be expected to do to give effect to the principle as expressed in the noble Baroness’s amendment in addition to the existing requirement.

Secondly, the phrase “in the interests of the health service” is currently used only where legislation needs to be deliberately vague. The issue we are debating here is not one of those cases, and the lack of clarity means that the amendment fails to achieve the protection that the noble Baroness desires. The “interests of the National Health Service” is open to several interpretations. Noble Lords can conceive of an argument that it is in the interests of the National Health Service to prioritise private patients to attract talent for a wider benefit, whereas another interpretation might be that prioritising private patients to the detriment of NHS patients is not ever in the interests of the National Health Service.

Thirdly, the use of the phrase “National Health Service,” rather than the established legal term “health service”, introduces uncertainty as to whether the amendment is aimed at the interests of the health service in England and Wales, just England, or those of the National Health Service in Scotland or health services in Northern Ireland. The amendment would create legal uncertainty in an area that has already attracted litigation. It is precisely what the Government’s review process aims to avoid. By conducting a thorough review, the Government hope to avoid such complications and present to Parliament a solution that could secure a sensible future for our foundation trusts once and for all—a future that gives them freedom to innovate for the benefit of NHS patients within clearly defined rules that ensure that their fundamental public service nature remains unchanged.

Perhaps I may turn to some of the questions asked by noble Lords. The noble Earl, Lord Howe, said that the 5.1 per cent is arbitrary. That number is based on the average cap—

I did mean a 1.5 per cent average cap on all acute foundation trusts in 2008-2009. There is a difference between giving mental health foundation trusts some flexibility where they have none, and changing the basis of the cap for all foundation trusts. There would need to be a proper review before making any wholesale change. This needs to be worked out with the NHS.

The noble Earl said there was no issue of principle at stake any more. The principle of this is that wide-ranging change should take place with full consultation and consideration of the complex details, particularly given the divergence of strong views on this matter.

My noble friend Lord Warner said that the concession did not deal with the arbitrary caps for acute foundation trusts. When MPs and Peers voted through the proposals in 2003, they knew that the cap would vary in an arbitrary way among acute foundation trusts. Mental Health foundation trusts were not conceived of in 2003, and are a clear exception. Change more widely than this should be based on wide consultation and debate.

My noble friend also raised the Government’s position on judicial review. The Government’s position has to be founded on the formulation of the current law. We cannot advocate a flexible interpretation if it is not consistent with the legislation that exists at the moment. The issue under discussion today is how best to fix this for the future.

In conducting our review of the cap, we are already seeking evidence widely from the NHS and others. We are committed to involving stakeholders at every step of our policy development, and the development of this concession was no different. It was developed through consultation with the parties concerned, including the trade unions.

The noble Baroness, Lady Cumberlege, raised the issue of new developments such as Monitor and things being different now from the way they were in 2003. The same legislation that established foundation trusts also established Monitor, governors, terms of authorisation and all the other developments that the noble Baroness cites and supports so well.

Does the noble Baroness agree that they had not actually been put into practice, so we did not know the results that would come from that legislation?

The noble Baroness makes a very good point. It is exactly why we need a thoroughgoing review.

The Government have already begun their review of this policy and are committed to reform. The amendment seeks to address a genuine anomaly while recognising that the risk of unintended consequences is such that further change must be made only on the most informed of bases and be developed with the NHS. It is important to repeat that this is a technically flawed amendment. The noble Baroness, Lady Meacher, and I share the same goal, and indeed it is shared by many noble Lords. I hope that the House will agree that the Government’s way forward presents the best opportunity to secure a viable, long-term solution for foundation trusts. On that basis, I respectfully ask the noble Baroness to withdraw her amendment.

My Lords, I thank the Minister for her reply. She is in a difficult position in arguing the case for a 1.5 per cent cap for a certain category of trust but not for anyone else, but she made a noble effort to do so. However, I take issue with the technical matter she raised. I am assured that a small technical point of that kind can be rectified perfectly well. As the Minister knows, I strongly agree with her that the review is important and I have already welcomed it. I hope that it will lead, in some years’ time, to a fully worked through reform of the private patient cap.

In the mean time, I thank noble Lords for their contributions to the debate, in particular the noble Lord, Lord Walton, and the noble Baroness Cumberlege, and of course I thank the noble Earl, Lord Howe, for his eloquent words. I thank the noble Lord, Lord Warner, for his straight talking, and the noble Baroness, Lady Barker, for her reasoned arguments. I thank the noble Baroness in particular because I know that this is a tricky issue for her, so her words were warmly received.

Motion agreed.

Before I call the next amendment, I have to inform the House that in the Division on Amendment 11, there voted Contents 83, and not 82, as announced.

My Lords, I am very conscious that when I spoke in the previous debate, I did not fully declare my interest. I said that I work for the NHS, but I believe that I should have said that I run my company, which is called Cumberlege Connections.

Motion on Amendment 13

Moved by

My Lords, I beg to move that the House do agree with the Commons in their Amendments 13, 15 and 25. The proposed amendments seek to correct a mistake that has recently come to light and which was made in the Health Act 2006 and which has been consolidated into the National Health Service Act 2006. Commons Amendments 13 and 25 repeal Section 180(2)(c) of the National Health Service Act 2006 while Commons Amendment 15 provides for the new clause set out in Amendment 13 to come into force at the end of a period of two months beginning on the day that this Bill receives Royal Assent and becomes an Act.

Since the introduction of the optical voucher scheme in 1986, government policy relating to the vouchers has been consistent across Administrations. The policy has been that eligibility for NHS optical vouchers should be targeted at children and those in receipt of qualifying income-related benefits or who need a complex appliance. People aged 60 or over are currently included among those who may be eligible for help on low-income grounds or who may need a complex appliance. However, the change introduced by the National Health Service Act 2006 extended eligibility for optical vouchers by mistake to all people aged 60 or over regardless of income. The records show that it was not referred to in the Explanatory Notes, was not discussed during the passage of the Bill through Parliament, and was not the subject of impact assessment or consultation. It was quite simply a mistake made during the process of preparing the draft Bill. Ministers have apologised to the Commons for this mistake and I apologise to noble Lords also. The proposed amendments seek to correct the mistake and reinstate the legislation to reflect what has been a longstanding policy of the Government and what was our intention at the time; namely, that the entitlement should remain unchanged.

We remain of the view that help with the cost of optical appliances through the NHS voucher scheme should be targeted on those most in need, as this represents the best use of NHS funds. We recognise that people aged 60 or over have an increased risk of eye disease, and because of this, those aged 60 or over are eligible for NHS-funded sight tests. This entitlement continues and is unaffected by the proposed amendment. I beg to move.

Motion agreed.

Motion on Amendment 14

Moved by

Tabled by

14A: Insert the following new Clause-

“Private health care(1) Section 44 (private health care) of the National Health Service Act 2006 (c. 41) is amendment as follows.

(2) In subsection (2)-

(a) after “is not greater than” insert “- (a)”;(b) at end insert “or(b) 1.5% of the total income of the NHS foundation trust,whichever is the greater.”(3) After subsection (2) insert-

(2A) The power conferred by subsection (1) must be exercised subject to the principle that the provision of goods and services in return for private charges must in all circumstances be in the interests of the National Health Service.”

Not moved.

Motion agreed.

Motion on Amendment 15

Moved by

Motion agreed.

Motion on Amendment 16

Moved by

Motion agreed.

Motion on Amendments 17 to 25.

Moved by

Motion agreed.