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Earl Howe: My Lords, I am grateful to the Minister, especially for what she said about the flexibility inherent in the system and for what I understood her to say about tailoring the penalties to suit each situation. Her remarks merit careful study. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 66 not moved.]

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Baroness Hayman moved Amendment No. 67:


Page 23, line 11, at end insert--
("(4A) Provision may be made by regulations for conferring on manufacturers and suppliers a right of appeal against enforcement decisions taken in respect of them in pursuance of sections 26 to 29 and this section.
(4B) The provision which may be made by virtue of subsection (4A) includes any provision which may be made by model provisions with respect to appeals under section 6 of the Deregulation and Contracting Out Act 1994, reading--
(a) the references in subsections (4) and (5) of that section to enforcement action as references to action taken to implement an enforcement decision,
(b) the reference in subsection (5) of that section to interested persons as a reference to any persons.
(4C) In subsections (4A) and (4B), "enforcement decision" means a decision of the Secretary of State or any other person to--
(a) require a specific manufacturer or supplier to provide information to him,
(b) limit, in respect of any specific manufacturer or supplier, any price or profit,
(c) refuse to give his approval to a price increase made by a specific manufacturer or supplier,
(d) require a specific manufacturer or supplier to pay any amount (including an amount by way of penalty) to him;
and in this subsection "specific" means specified in the decision.
(4D) A requirement or prohibition, or a limit, under sections 26 to 29 may only be enforced under this section and may not be relied on in any proceedings other than proceedings under this section.").

[Amendment No. 67A, as an amendment to Amendment No. 67, not moved.]

On Question, Amendment No. 67 agreed to.

Baroness Hayman moved Amendments Nos. 68:


Page 23, line 13, at end insert ("and the Secretary of State must consult the industry body before making any regulations under this section").

On Question, amendment agreed to.

Clause 31 [Controls: supplementary]:

Baroness Hayman moved Amendments Nos. 69 to 72:


Page 23, line 19, leave out ("particular") and insert ("specific").
Page 23, line 21, leave out ("particular") and insert ("specific").
Page 23, line 21, at end insert ("and in this subsection "specific" means specified in the direction concerned").
Page 23, line 28, leave out from ("powers") to ("are") and insert ("to refuse approval under section 26(4)(a) or 28(6)(a) or to impose a limit under section 27(a) or 28(1)").

On Question, amendments agreed to.

Baroness Hayman moved Amendment No. 73:


Page 23, line 32, at end insert ("and in so exercising those powers (in the case of sections 27(a) and 28(1) and (6)(a)) the Secretary of State and any other person must bear in mind, in particular, the need for medicinal products to be available for the health service on reasonable terms and the costs of research and development").

[Amendment No. 73A, as an amendment to Amendment No. 73, not moved.]

On Question, Amendment No. 73 agreed to.

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Lord Lucas had given notice of his intention to move Amendment No. 74:


Page 23, line 32, at end insert--
("( ) The Secretary of State shall publish details of any payments made under sections 28(4) and (5) and of any directions given under this section, but such publication may not include information supplied to the Secretary of State by a manufacturer or supplier commercially in confidence.").

The noble Lord said: My Lords, I thank the noble Baroness for the answer she gave me when she replied to the amendment in the name of the noble Lord, Lord Desai, with which this amendment is grouped. I shall read that with great interest. I thank the noble Baroness again for that. I shall not move the amendment.

[Amendment No. 74 not moved.]

Baroness Hayman moved Amendments Nos. 75 and 76:


Page 23, line 41, leave out from ("product") to ("used") in line 42.
Page 24, line 2, at end insert--
(""medicinal product" has the meaning given by section 130 of the Medicines Act 1968,").

On Question, amendments agreed to.

Clause 32 [Evasion of charges etc.]:

Lord Hunt of Kings Heath moved Amendment No. 76A:


Page 24, leave out lines 9 to 15 and insert--
(""Recovery of other charges and payments.
122A.--(1) Where goods or services to which this section applies are provided and either--
(a) any charge payable by any person under this Act in respect of the provision of the goods or services is reduced, remitted or repaid, but that person is not entitled to the reduction, remission or repayment, or
(b) any payment under this Act is made to, or for the benefit of, any person in respect of the cost of obtaining the goods or services but that person is not entitled to, or to the benefit of, the payment,
the amount mentioned in subsection (2) below is recoverable summarily as a civil debt from the person in question by the responsible authority.
(2) That amount--
(a) in a case within subsection (1)(a) above, is the amount of the charge or (where it has been reduced) reduction,
(b) in a case within subsection (1)(b) above, is the amount of the payment.
(3) Where two or more persons are liable under section 122(1) above or this section to pay an amount in respect of the same charge or payment, those persons shall be jointly and severally liable.
(4) For the purposes of this section, the circumstances in which a person is to be treated as not entitled to a reduction, remission or repayment of a charge, or to (or to the benefit of) a payment, include in particular those in which it is received (wholly or partly)--

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(a) on the ground that he or another is a person of a particular description, where the person in question is not in fact of that description,
(b) on the ground that he or another holds a particular certificate, when the person in question does not in fact hold such a certificate or does hold such a certificate but is not entitled to it,
(c) on the ground that he or another has made a particular statement, when the person in question has not made such a statement or the statement made by him is false.
(5) In this section and section 122B below, "responsible authority" means--
(a) in relation to the recovery of any charge under section 122(1) above in respect of the provision of goods or services to which this section applies, the person by whom the charge is recoverable,
(b) in relation to the recovery by virtue of this section of the whole or part of the amount of any such charge, the person by whom the charge would have been recoverable,
(c) in a case within subsection (1)(b) above, the person who made the payment.
(6) But the Secretary of State may by directions provide for--
(a) the functions of any responsible authority of recovering any charges under this Act in respect of the provision of goods or services to which this section applies,
(b) the functions of any responsible authority under this section and section 122B below,
to be exercised on behalf of the authority by another health service body.
(7) This section applies to the following goods and services--
(a) dental treatment and appliances provided in pursuance of this Act,
(b) drugs and medicines provided in pursuance of this Act,
(c) the testing of sight,
(d) optical appliances,
(e) any other appliances provided in pursuance of this Act.
Penalties.
122B.--(1) Regulations may provide that, where a person fails to pay--
(a) any amount recoverable from him under section 122(1) above in respect of the provision of goods or services to which section 122A above applies, or
(b) any amount recoverable from him under section 122A above,
a notice (referred to in this section as a penalty notice) may be served on the person by the responsible authority requiring him to pay to the authority, within a prescribed period, that amount together with a charge (referred to in this section as a penalty charge) of an amount determined in accordance with the regulations.

18 Mar 1999 : Column 885


(2) The regulations may not provide for the amount of the penalty charge to exceed whichever is the smaller of--
(a) £100,
(b) the amount referred to in subsection (1)(a) or (b) above multiplied by 5.
(3) The Secretary of State may by order provide for subsection (2) above to have effect as if, for the sum specified in paragraph (a) or the multiplier specified in paragraph (b) (including that sum or multiplier as substituted by a previous order), there were substituted a sum or (as the case may be) multiplier specified in the order.
(4) Regulations may provide that, if a person fails to pay the amount he is required to pay under a penalty notice within the period in question, he must also pay to the responsible authority by way of penalty a further sum determined in accordance with the regulations.
(5) The further sum must not exceed 50 per cent. of the amount of the penalty charge.
(6) Any sum payable under the regulations (including the amount referred to in subsection (1)(a) or (b) above) may be recovered by the responsible authority summarily as a civil debt.
(7) But a person is not liable by virtue of a penalty notice--
(a) to pay at any time so much of any amount referred to in subsection (1)(a) or (b) above for which he is jointly and severally liable with another as at that time has been paid, or ordered by a court to be paid, by that other, or
(b) to a penalty charge, or a further sum by way of penalty, if he shows that he did not act wrongfully, or with any lack of care, in respect of the charge or payment in question.
(8) In spite of section 126(1) below, no order is to be made under subsection (3) above unless a draft has been laid before, and approved by resolution of, each House of Parliament.
Offences.
122C.--(1) A person is guilty of an offence if he does any act mentioned in subsection (2) below with a view to securing for himself or another--
(a) the evasion of the whole or part of any charge under this Act in respect of the provision of goods or services to which section 122A above applies,
(b) the reduction, remission or repayment of any such charge, where he or (as the case may be) the other is not entitled to the reduction, remission or repayment,
(c) a payment under this Act (whether to, or for the benefit of, himself or the other) in respect of the cost of obtaining such goods or services, where he or (as the case may be) the other is not entitled to, or to the benefit of, the payment.").

The noble Lord said: My Lords, this group of amendments introduces further sanctions to deal with incorrect claims to exemption from NHS charges. They amend and add to Clause 32 and introduce a new clause after Clause 46 in Part II of the Bill. These measures support the Government's comprehensive strategy to tackle fraud and charge evasion in the NHS.

In order to deter the evasion of NHS charges, it is important that there are sanctions available which are both appropriate to the scale of the offence and cost-effective to administer. Clause 32 already creates a new criminal offence of knowingly making a false claim for exemption from an NHS charge or knowingly making a false claim for payment towards the cost of an

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NHS charge or service. Due to the differences with Scottish law, there is no need to replicate this provision in Part II for Scotland.

As NHS charges involve relatively small sums, it would not be practicable to prosecute most individual cases. For this reason, the amendments introduce a new civil penalty charge in England and Wales and a similar penalty charge in Scotland. It would be the sanction normally imposed where a person fails to pay an NHS charge or claims a payment to which he is not entitled towards the cost of an NHS charge or service. The penalty charge, like the offence, would apply to charges for prescriptions, dental services and optical services, including those provided for hospital out-patients, as well as payments or benefits such as optical vouchers.

It may be helpful if I explain how it is intended to work. I will use the prescription system to illustrate this. Patients who do not have to pay prescription charges are required to indicate on the prescription form the reason for their exemption and to sign a declaration to that effect. Exemption is granted to patients for a number of reasons, including age, certain medical conditions or where the patient is claiming one of a number of benefits or is on a low income. Unfortunately, a large number of exemption claims are made falsely. We estimate that every year in England and Wales alone about £150 million is lost through people evading payment of the prescription charge when they have no right to exemption and should pay.

In this situation, and where checks show that a claim for exemption is incorrect, a penalty notice would be sent requiring the patient to pay the original charge and an additional penalty. The amount of the penalty and the period within which payment must be made will be stated in regulations setting out the detailed arrangements for each service. But the maximum amount of the penalty charge is clearly set out in the amendments at £100, or five times the unpaid charge, whichever is the less.

For evasion of the prescription charge--which currently stands at £5.80--this would mean that a penalty notice would be served requiring the payment of a £29.00 penalty plus the repayment of the £5.80 which should have been paid in the first place, making a total of £34.80. The amendments allow that the maxima of £100 for the penalty charge and the multiple of five may be changed by order. Such orders would be subject to affirmative resolution, which would allow the opportunity for appropriate scrutiny in your Lordships' House and in another place. This would allow the potential for revision of the penalty charge maxima and multiple from time to time, for example, to keep pace with inflation or to take account of our experience in operating this scheme.

Following the issuing of a penalty notice we would intend to allow 28 days for payment to be made. If the penalty charge is not paid within this period, a surcharge would be made of up to 50 per cent. of the penalty charge. If payment is still not forthcoming after a further 14 days, the total debt would be pursued through the civil courts. Liability for the penalty would normally be

18 Mar 1999 : Column 887

incurred simply by an incorrect claim to exemption. The amendment provides that a patient may offer a defence that he did not act,


    "wrongfully, or with any lack of care".
This would cover such cases as a patient acting on wrong official advice or a patient's representative acting on wrong information provided by the patient.

A patient may make representations as soon as he receives a penalty notice if he believes it is incorrect. There will be an internal process to reconsider the correctness of the penalty, making additional checks as necessary, for example with the DSS if the patient claims to be receiving a benefit. The whole procedure will be carefully monitored. Any patient who wishes to challenge liability for the penalty charge in England and Wales will be able to do so in the county court; or in Scotland in the sheriff court. This right of access to an independent hearing will satisfy the demands of natural justice and fulfil the requirements of the European Convention on Human Rights.

Where a patient has a representative--for example, where an individual goes to a pharmacist to have a prescription dispensed and signs for exemption on the back of the form on the patient's behalf--and a penalty notice is issued, they would, together, be held responsible for payment "jointly and severally". In practice, either the patient or the representative could be held liable to pay the penalty, according to the circumstances, but as only one incorrect claim had taken place, only one charge would be payable. The provision of this financial penalty charge would allow use of the criminal offence under this clause to be reserved for those more serious cases where intentional, fraudulent evasion of an NHS charge is clear. In practice, this will be where evasion has happened repeatedly or persistently. A clear safeguard is provided to ensure that a person cannot, in respect of the same incident, be both liable to pay a penalty charge and convicted of the new offence.

I should like to make clear that it is only a small minority of patients who abuse the National Health Service, but I believe we owe it to the vast majority of honest NHS patients to do all we can to stop abuse. This is money that should be going into patient care, not into people's pockets. The new measures in Clause 32, 33 and 46, and also the amendments, show our commitment to tackle all types of fraud and charge evasion in the National Health Service. The Government are investing in measures for the greater detection of those who evade charges. However, for maximum effective deterrence it is vital that detection is backed up by appropriate sanctions and redress. These amendments are essential to deal with those who deliberately set out to cheat the National Health Service. If we wish to tackle charge evasion against the NHS, we must provide the right tools to do this. I beg to move.


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