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Care Quality Commission (Fees) (Reviews and Performance Assessments) Regulations 2016

Volume 771: debated on Tuesday 10 May 2016

Motion to Take Note

Moved by

That the Grand Committee takes note of the Care Quality Commission (Fees) (Reviews and Performance Assessments) Regulations 2016 (2016/249).

Relevant document: 30th Report from the Secondary Legislation Scrutiny Committee

My Lords, this is rather like the previous debate in the sense that it is important that this matter is at least discussed and given some form of parliamentary scrutiny, given that the CQC is going to impose very large increases on NHS and private care providers at a time of great financial challenge. I am someone who is impressed with the way that the CQC has developed, and I pay tribute to the work of the noble Lord, Lord Prior, who was the chair of the CQC. It clearly performs a vital role.

At the same time as Ministers have increased the responsibilities of the CQC, they have squeezed its budget and my understanding is that, over the next four years, its overall budget will be reduced by £32 million. The proportion of its budget as grant in aid from the department will reduce and the proportion charged to providers will increase. I understand that its budget next year will be £236 million, which is a sharp reduction of £13 million from that of 2015-16. Like all public bodies with fee-setting powers, CQC expects to follow government policy by levying fees that will, over time, fully cover the cost of its chargeable activities. Previously, CQC was able to charge for some but not all of its activities, so these regulations are a prerequisite to enable it to meet the Government-set target of full cost recovery through a dramatic increase in fees.

Given the budgetary pressure it faces, the CQC undertook a consultation—I will come back to this consultation process—that recommended to the Secretary of State that the CQC should move to full cost recovery in just two years. I understand that there was a good deal of toing and froing between the CQC and the Government on this and that the CQC reluctantly asked for a two-year full cost recovery. The Government have really refused to help out or to give greater flexibility in relation to the number of years that it should take to meet full cost recovery.

I want to raise three issues. First, there is no doubt that this will have a financial impact of some significance on struggling providers by diverting resources away from front-line patient care. Secondly, there is the timing, given that the CQC is about to implement a new strategy in which it will evolve its approach to regulation considerably. Thirdly, there is the illogical series of consultations which took place with regard to these regulations, resulting in a lack of meaningful engagement by the Department of Health with the front line.

If the Government proceed, CQC fees will increase by a massive amount for individual secondary care providers. The estimate from NHS providers is the equivalent to every NHS provider losing two senior nurses. As the Minister knows, providers of NHS ambulance, acute, mental health and community services are already facing unprecedented financial challenges. I would have thought that the last thing the Government would want to do is put extra pressure on those providers at this time.

It is noticeable that, in the care sector, the care providers are facing huge financial acute pressure. Work in the past two weeks shows that up to a quarter of care homes fear financial catastrophe over the next 12 months. Again, I question the Government’s approach to regulation and the sustainability of these homes following such a large increase in fees.

The Government talk about a light-touch regulatory approach, and I suspect that in our next debate we might discuss that in detail. However, providers of health and care services had only two days’ notice of the fee increases before they came into effect. As no provision for this extra expense has been made through the national tariff, providers have to pay for it from money that would otherwise fund patient care.

We could debate the CQC as a whole, but I do not want to do that. I actually think that the CQC has been going in the right direction and I am keen to see its new strategic five-year plan, which is due for publication in the next week or so. David Behan, the chief inspector, commands a great deal of confidence in his mature, sensible approach. Certainly, my experience of large CQC inspections is that they can offer many insights and are getting better in quality as greater experience is gained. Therefore, this is not a criticism of CQC; it is about the impact on the NHS of a sudden increase in fees which, in relation to large NHS trusts, can amount to thousands and thousands of pounds.

On the consultation process, the decision to raise fees over two years has been made amidst a convoluted array of consultations, all of which have a bearing on the issues to be debated today. First, the CQC consulted on the timescale for moving on to full cost recovery. The Department of Health then consulted on a proposal that was a prerequisite for enabling the CQC to adopt full cost recovery for its current inspection model, amending legislation through the regulations debated today to allow full cost recovery of its comprehensive inspection regime through fees. Previously, the CQC had the power to charge health and care providers only for activities related to its core remit of ensuring minimum quality standards. So respondents to the CQC’s consultation were therefore obliged to opt for a trajectory to full year cost recovery of either two or four years before being invited to express views on whether such a move to full cost recovery was appropriate.

Further, the CQC was required to consult on the pace to full cost recovery before the final discussions regarding the spending review and the CQC’s budget for 2016-17 and before it consulted on its new strategy for the next five years. This did not allow for appropriate engagement on the proposals. Clearly, in the logical order of things, the CQC would have been allowed to finalise its strategy before making decisions about future fees. That was wholly unsatisfactory.

The consultation produced an almost unanimous conclusion that full cost recovery should be undertaken over four years rather than two. We need to remember that what this is doing is transferring money back from the Department of Health to the Treasury—we are talking about public money and it is about the way it goes through the system. But at a time of critical financial challenge in health and social care, the Government have bizarrely chosen to take money out of front-line services in order to give the Treasury more money. That essentially is what is happening at the core of this discussion.

At some point in the future, we are going to debate the NHS mandate—I think that it will finally reach us in the new Session—but, at the same time as this financial squeeze is being made, we have the extra CQC fees while another arm of government, in the form of NHS PropCo, is now charging market rates for accommodation rented by the NHS. That is another transfer of money, a paper transfer, presumably to the DH’s central budget. However, it is coming from front-line services. We know that there are other examples, such as in relation to pension costs, which again is essentially a Treasury decision to take money out of front-line services, so it is not as if the CQC decision is isolated. A number of peculiar decisions are being made to take money out of funds going to the NHS.

Those of us who have picked up on the evidence given yesterday by the Secretary of State to the Health Select Committee can see that he made that abundantly clear. Let us go back to the £30 billion for five years estimated by NHS England. The Government claim that they have given £10 billion—which of course is £8 billion because they added an extra year in order to get up to £10 billion—but the Secretary of State made it clear yesterday that about half of that money has been taken away from central department resources. So the reality is that in fact very little extra money is being put into the NHS.

I know that we are not going to debate the overall finances of the health service today, but it is important that decisions about the CQC are seen in the context of a very stretched service. I hope that, at the very least, the Government will reconsider this because it is a bit much to say to health services and care providers that they are facing a huge financial challenge that is going to be made worse by insisting that they pay full cost recovery over two years. I beg to move.

My Lords, it strikes me that this situation is rather like sending out the lifeboat to a swimmer in trouble in the sea and, instead of pulling him on board, pushing him further under the waves.

The issue raises a number of questions in my mind. First, is it right that providers should be expected to pay fully for the regulator, resulting in a dramatic increase of 75% in a single year and, I have been told, of 176% over the very short period of two years? If the Government believe that the CQC inspection is the “single definition of success”, they should be expected to pay for some of that quality assurance on behalf of the taxpayer, at least in the short term, in order to achieve the sustainability that we need not just for the CQC but for individual providers.

Over what time period should this new demand on the finances of providers be implemented? How much notice is being given? There were two days for implementation. That does not strike me as sensible, because it allows absolutely no time for proper budget planning.

The other question is whether providers can afford it. In particular, small GP practices in rural areas, I have been told, will be paying 1.75% of their turnover for the CQC. No wonder GPs are charging care homes for attending their residents, even though they already receive a per capita payment for them. What about the care homes, many of which are unprofitable even now? Let us face it: they are businesses—60% of patients are in private care—and we are heading for mass closure, which will be a disaster for all the old and vulnerable who need care.

As the noble Lord, Lord Hunt, said, what else will have to be cut from the front line in order for providers to pay for this at a time of unprecedented financial pressure? It will cost £28.7 million over four years, which has to come from a sector which already has a projected deficit of £2.8 billion. It seems that the Government are simply moving around the deficit deck-chairs on the “Titanic”. This is being done while the demand for efficiencies on the part of the CQC are marginal. It therefore follows that we should ask whether the regulator is giving good value for money and whether it is moving fast enough.

I wonder why the Government have chosen to ignore the overwhelming view of providers in the consultation, as the noble Lord, Lord Hunt, mentioned—the so-called consultation, perhaps I should say—given that the consultation on the proposed action was done before the CQC had completed and published its five-year strategy. As the strategy is expected to include significant changes to the inspection model, and therefore the costs, surely it should have been done the other way round.

Has any consideration been given to the idea of a risk-based approach to regulation, such as the one used by Ofsted, where schools that are consistently showing excellent results have a more light-touch inspection regime? Obviously, there would have to be safeguards and triggers for snap inspections, but it seems to work reasonably well in education so why not in health? It saves a lot of time and money.

There are a lot of questions there for the Minister.

My Lords, I want to address some of the issues raised by the noble Lord, Lord Hunt, and the noble Baroness, Lady Walmsley, especially in respect of the need for the Care Quality Commission to minimise the burdens on those it is regulating, including the financial burdens of these proposed regulatory fees, going forward.

I recognise that the CQC cannot be readily excluded from the Government’s full cost recovery policy for the setting of regulatory fees in all sectors. However, I believe that there are opportunities for the CQC’s regulatory inspections to be less burdensome and less costly without compromising robust and effective oversight. This particularly applies in the care sector, where care home providers currently face significant challenges, as we have heard, and the CQC faces significant budgetary pressures.

I am speaking in my capacity as chair of the United Kingdom Accreditation Service, or UKAS, which is the sole national body recognised by government for the accreditation of organisations providing inspection services, as well as certification, testing and calibration. We welcome the active encouragement by this and previous Governments of UKAS accreditation as an alternative to regulation as an intelligent, efficient and effective approach to inspection.

UKAS stands ready to assist all regulators in all sectors which wish to develop a more risk-based approach. This includes the CQC, which has indicated particularly that it plans to inspect adult social care services less often and to concentrate its efforts on providers perceived to pose the greatest risks to their residents, such as those homes that have been inspected by the CQC and given summary ratings for their quality of care of “Inadequate” or “Requires improvement”.

UKAS has been developing expertise and experience in the social care sector, having launched a pilot programme in 2014 for the accreditation of independent inspection companies in the care home sector. It has accredited one organisation, RDB Star Rating, which provides comprehensive ratings of the quality of care homes on the basis of wide-ranging inspections. We expect to accredit a number of similar inspection organisations over the coming months. These organisations all believe that there is an important role in the care home sector for independent quality assurance underpinned by UKAS accreditation. In turn, the part played by UKAS as the national accreditation body is key to this role—I am reminded here of the reference of the noble Baroness, Lady Walmsley, to safeguards and triggers.

To ensure reliability, UKAS will verify that any organisation that it accredits as an inspection body in the social care sector has proven its competence, impartiality, operational capabilities and consistency, and the equivalence of its assessments. Importantly, UKAS also ensures that accredited inspection bodies use standards that map on to those used by the CQC, so that their findings can be drawn on by the CQC in support of its regulatory responsibilities. If the CQC were to take account of the findings from UKAS-accredited inspection bodies as part of its risk-based assessment of services—as it so easily could—that would enable it to have a credible, up-to-date and holistic view of homes, and one in which it could have trust and confidence.

To date, the footprint of independent inspection and quality-rating bodies in the care sector is relatively small when one considers that the sector comprises over 17,000 care homes. However, if the CQC were to take greater account of the findings from UKAS-accredited inspection bodies, it would both encourage their development and the take-up of their assessments and ratings by care homes. More importantly, and of specific relevance to the issues raised by the noble Lord, Lord Hunt, it would provide opportunities for the CQC to reduce the scale, frequency and cost of its own inspections of care homes, enabling it to focus only on those deemed to be most at risk in terms of quality of care. This would help to address general concerns about increasing budgetary pressures being felt by the CQC and the rising fees being felt by the healthcare providers and care homes that it regulates.

Furthermore, in the interests of reducing the red tape experienced by providers of social care services—the need for which was emphasised in a recent report from the Government’s Better Regulation Executive—the findings from UKAS-accredited inspection bodies could be used not only by the CQC but also by local authority commissioners and local clinical commissioning groups to avoid duplication and reduce burdens placed on providers through unnecessary data requests and inspections.

Comparable opportunities have been developed by regulators in other sectors. For example, in support of delivering the Control of Asbestos at Work Regulations 2002, UKAS accredits testing laboratories and inspectors. The confidence that this engenders has enabled the Health and Safety Executive to reduce its regulatory inspection and monitoring activities. Similarly, the Environment Agency recognises the value of UKAS-accredited certification of environmental systems to ISO 14001. This has resulted in reduced inspection requirements for the Environment Agency and reduced environmental levies on businesses. Likewise, in the NHS the Human Fertilisation and Embryology Authority, the Human Tissue Authority and the NHS newborn screening programme increasingly rely on UKAS assessments of clinical services. The HTA, for instance, is undertaking joint inspections of mortuaries with UKAS.

The opportunity that I have outlined for the CQC in response to this Motion is timely for other reasons as well. In its recently published business plan, the CQC makes a commitment to:

“Delivering an intelligence-driven approach to regulation”.

This includes working with providers,

“to develop appropriate methods for them to share their own information and assessments of their quality with CQC, to inform ongoing, transparent conversations about quality”.

The CQC already recognises the established UKAS accreditation regimes for pathology, imaging and physiological services as useful and credible sources of information that contribute to “intelligent monitoring” when planning and carrying out inspections. This recognition can reduce the necessity for the time-consuming duplication of assessments by the CQC of pressurised clinical services.

I believe that this approach can be developed further to increase the efficiency and effectiveness of the regulation and inspection in health and social care. It can also demonstrate the CQC’s commitment to an “intelligence-driven approach to regulation” that is at the same time robust and credible. Such an approach would offer the very real prospect of easing both budgetary pressures and regulatory fees in the future.

My Lords, I first acknowledge the fact that any increase in fees, at a time when providers of adult social care, the NHS and elsewhere are going through a very tough time, is clearly very unwelcome. So perhaps it was not surprising, in a sense, that in the consultation when given the choice of spreading the increase over four years or two years, everyone voted for four years rather than two. I think everyone knows that, over time, it was the intention of the previous Government, as well as this one, to have full cost recovery. In the end, that must be right, but it is a question of how long it takes to get from where we are to where we need to be.

Most people will understand why the scope of the CQC’s work has developed over the past three or four years. The origins of the new CQC lay in what happened in Mid Staffordshire, Morecambe Bay and Winterbourne View, and a feeling that those tragedies could not be allowed to happen again. A much more comprehensive, expert-led inspection regime was the right way to try to unearth those awful things.

I totally understand what has been said by my noble friend Lord Lindsay and the noble Baroness, Lady Walmsley, about moving towards a more risk-based form of inspection. In the CQC’s strategy, which will be announced in a week or so, I hope there will be some reference to it having a more risk-based inspection regime. Of course, that has to be based, as my noble friend Lord Lindsay mentioned, on good intelligence. Over the past three years, the CQC has been able to collect intelligence, particularly on NHS trusts, where there are much better data—we are also using soft data as well as hard data—and that does enable one to put in place a more risk-based system of inspection. It has already said that it will re-inspect institutions that have a “Good” or “Outstanding” rating after a longer period of time than the ones with “Requires improvement” or “Inadequate”. But we will see when it produces its strategy next week exactly what it is planning to do.

On the comments of my noble friend Lord Lindsay, we did have some discussions when I was at the CQC, but I have to accept that they did not get very far. However, I would encourage him to meet the new chairman of the CQC, Peter Wyman, as well as David Behan, whom he already knows, to see whether or not there is any way that UKAS accreditation can help not just in adult social care but in aspects of clinical care as well.

On the points made by the noble Lord, Lord Hunt, about the consultation, the consultation period did go from 21 December 2015 to 1 February 2016. There was a reasonable period of consultation, but I accept that the implementation of the increase was much quicker. I also know that, although it did not sound very much in the context of the whole, for individual trusts this was just another cost increase that they had to bear. It is worth noting that the total cost of the CQC as a proportion of the whole that is expected for adult social care and the NHS is around 0.19%—very similar to the cost of Ofsted in education. So it is not as though it is expensive; it is just that the level of cost recovery has been ordained to be over a shorter time.

It is also worth noting that, for domiciliary care, the period of time is over four years and not two years. For GPs, where it was felt that the cost increase was the straw that might break the camel’s back, the baseline funding has been increased to allow for the extra increase.

I believe that it has gone into the baseline funding of the GP contract, but if I am wrong about that I shall write to the noble Baroness.

More generally, the CQC’s scope and the way that it does its inspections is just much broader than it used to be. They are done in more depth and detail. This statutory instrument was introduced to Parliament so that it would reflect what the CQC is now doing and recognise its enlarged scope. The regulations do not extend the remit of the CQC’s activity or the scope of reviews or performance assessments to additional providers or services; neither does it change the fees actually charged.

The CQC, like every other aspect of the NHS, is going to have to save a considerable amount of money over the next five years, which the noble Lord, Lord Hunt, referred to in his speech. This means that the kind of inspections which we have seen in some NHS trusts, where a large number of very expensive people descend upon a trust, will have to be scaled back to some extent. As the noble Baroness intimated, I think that we will see a more risk-based inspection model—a bit more like the Ofsted model. I suspect that we will see more unannounced inspections as well, because a large part of the cost of the CQC is not just its direct cost but the indirect costs on the trusts preparing for the inspections. Sometimes the degree of preparation undermines the validity and insightfulness of the actual inspection.

I take on board entirely the strictures of the noble Lord, Lord Hunt. This is another expense when times are extremely hard, but it reflects the fact that the scope of the CQC is now broader than it was three years ago, and the need to have full cost recovery over a fairly limited time.

My Lords, again, I am grateful to all noble Lords who have spoken in this debate and to the Minister. I have no problems whatever with the wider scope of the CQC’s responsibility, which inevitably has an impact on its cost base. Nor do I object to full cost recovery as a principle, because that has obviously been accepted by Governments over many years.

My complaint is that it is hugely insensitive for the Government to insist, which is essentially what has happened, that the NHS and parts of the care sector had to move to two-year full cost recovery. I note the alleviation given to GPs and domiciliary care, but I am puzzled that residential care was not given the same amelioration, given that, as we know, the care sector is in such a parlous state at the moment. We obviously look forward to the CQC strategy; I am sure it is right that it should be more risk based.

I very much welcomed the intervention of the noble Earl, Lord Lindsay. The United Kingdom Accreditation Service does its role very well. I also recently met RDB Star Rating, which is based in Sussex although it covers a number of institutions nationwide. It also made the point to me that, if you have a strong accreditation system, not only is there greater ownership by the bodies being accredited—because they have volunteered for it—but it ought to tie into the CQC process. The Minister has encouraged the noble Earl to meet the CQC; I hope that he might encourage the CQC to meet the noble Earl to see whether further progress can be made, because we clearly ought to take up the offer in relation to accreditation, if at all possible.

This has been a good debate. It is not at all a criticism of the CQC but of the Government and their approach, and it has been useful to raise those issues.

Motion agreed.