To ask Her Majesty’s Government why they are making the National Health Service the preferred provider of NHS care and restricting competition from service providers outside the NHS.

My Lords, the aim and purpose of the preferred provider policy is to set out the ground rules on which the provision of NHS services can be challenged. This approach should not be used either to allow underperformers to continue, or to freeze out partners in the independent and third sector, but where existing providers fail to improve services, or in the procurement of new service models, all providers should have a fair and equal opportunity to bid.

I thank the Minister for that Answer. Is she aware that in the east of England, 14 primary care trusts have been prevented from offering community services from PCTs, and put them out to tender? Is she further aware that this policy contradicts the 2005 manifesto, which sought to increase diversity of providers? That is on page 63, if she wants the reference. Can she confirm that the Department of Health lawyers have said that this policy is ultra vires under UK procurement law and is therefore illegal?

No, I cannot confirm that last point, and I am very sad and disappointed that my noble friend seems so out of sorts on this issue. I am sure we can agree that, where the NHS is providing excellent, high quality and cost-effective services, we would not wish to see tendering for the sake of tendering. I am aware that tendering for services in the east of England has been halted temporarily to ensure that those bodies that are discussing what to do with their community services have the most up-to-date guidance—that was published on 5 February—and that they are taking note of the fairness that we wish to have in the system. I think that it is as simple and straightforward as that.

Does the Minister agree that reversing a successful policy after approximately 10 years by an announcement at a party conference at the end of September looks very much like a sodden sop, pre-election, to the public sector unions? What impact do the Government feel that this reversal of policy will have on the co-operation and competition panel? In my view, it is clear that it will have a major impact.

I refute the suggestion of the noble Baroness about this policy. It seems to us that the preferred provider policy sets out the grounds on which NHS services can be challenged, so that staff know where they stand and so that they will have the opportunity to improve services before those services are put out to tender. There is no expectation or intention either to freeze out private or third sector providers, or to diminish their contribution to NHS services. The decisions of the co-operation and competition panel are based on our policy. I will go back and investigate whether there is a problem here, but I think the noble Baroness is mistaken.

Does my noble friend agree that the National Health Service is undoubtedly the best service to provide this care and that, if an alternative means was introduced, it would be an extension of private medicine?

I agree with my noble friend. Of course, we are proud of our National Health Service, but it is only fair to say that the NHS has depended on contributions of providers from the independent and third sectors since its inception in 1948. At the moment, we have a thriving third sector in the provision of NHS services. I might mention Macmillan Cancer Support, Marie Curie Cancer Care and Diabetes UK, as well as smaller groups who are providing innovative care, such as Turning Point and Whizz-Kidz. We also have a growing independent sector providing excellent services within our NHS framework.

My Lords—

My Lords—

My Lords, I think that it is the Conservatives’ turn.

My Lords, how do we know that the NHS is providing the best service possible if there is no competitive tendering?

I thought that I had made it clear to the House—I apologise if I did not—that we expect the best providers to provide the best quality service. We expect there to be diversity in the provision of services. The provider policy will not be used to freeze out partners in the independent and third sector. In fact, national guidance makes it clear that procurement must be transparent and non-discriminatory.

My Lords, does the Minister agree that the aborting of the whole commissioning process in the east of England, of which she has told us, is a highly damaging outcome for the provision of services to have resulted from the Secretary of State shooting from the hip at the party conference in giving his support to an NHS monopoly? Will she assure the House that there will be a level playing field in tendering between the NHS and other providers?

I think I have said that three times now. The answer to the noble Lord’s latter point is yes, that is exactly the point. The procurement process in the east of England has been halted only temporarily. We expect it to be back on track soon, and we expect it to be the fair and transparent process that I have outlined.

My Lords, services provided by the NHS need be put out to tender only when there has been a failure to meet standards twice, while services provided by the independent and voluntary sectors have to be put out to tender automatically even if they are very good. What is the rationale for that unequal treatment?

In my original Answer, I said that where excellent cost-effective services are being provided by the NHS, we would not seek to go out to tender for the sake of it. It is not only the replacement of services that we are looking at, though, it is the new and innovative services, many of which we have discussed in this House, connected with the amalgamation of social care and health. These new services will be open to the best provider of the best service at the best quality, be they NHS, private or third sector.

My Lords—

My Lords, I am sure that my noble friend will agree that her remarks about third sector providers will be welcome to the voluntary and charitable organisations that provide such services. Will she confirm that they are particularly important in the field of social care as well, especially if we consider what patients want when we talk about innovation and flexibility?

My noble friend is correct. We work with dozens of third sector organisations, particularly in the delivery of social care services. Our expenditure rose from £366 million in 2007 to £513 million in 2009. This is the NHS providing a diversity of services.