Select Committee on Delegated Powers and Deregulation Seventh Report



SCHEDULE 1: PRIMARY CARE TRUSTS

61.  Clause 2(2) gives effect to Schedule 1, which inserts a new Schedule 5A in the 1977 Act, and makes additional detailed provisions about Primary Care Trusts.

62.  Paragraph 5 provides that the Secretary of State may make regulations about Primary Care Trust membership. These will be subject to negative procedure, as is the case with comparable Health Authority and NHS trust membership regulations made in Schedule 5 of the 1977 Act and section 5(7) of the 1990 Act respectively. The regulations will cover matters such as the number of members, their appointment and tenure of office, any particular requirements for membership, committees of the body, and the procedure to be followed by the body. They are necessary to avoid placing large amounts of detail on the face of the Bill (for example, provisions as to the variety of factors which may disqualify an individual for appointment, or detailed provisions as to the conduct of meetings), which may then require frequent amendment to meet changing circumstances. The Department's experience has been that rules about membership and procedure develop over time to reflect changing circumstances. If these matters were detailed on the face of the Bill, changes could only be made by way of primary legislation.

63.  Paragraph 9 provides that the Secretary of State may direct a Primary Care Trust to loan its staff to other Primary Care trusts, or to employ former employees of other Primary Care Trusts. The directions will be specific in nature and will be given by an instrument in writing. Similar provisions exist for Health Authority staff under paragraphs 10(3) and 11 of Schedule 5 to the 1977 Act.

64.  The power could be used, for example, in the event of a problem in a Primary Care Trust, where there is a short-term need for staff with particular expertise. The power is therefore concerned with operational matters in relation to particular Primary Care Trusts, and is not, in the Department's opinion, a matter which requires Parliamentary scrutiny. The provision contains safeguards for the employees concerned in the form of a consultation requirement. Exercise of the power is subject to consultation by the Secretary of State, with the staff involved, or with their representative body. Exceptions to this include cases of temporary emergency, for example if specialist public health skills of a Primary Care Trust employee are needed by a Primary Care trust elsewhere to deal with an epidemic. The power does not detract from an employer's duty to consult staff under other mechanisms, eg TUPE Regulations or General Whitley Council Regulations.

65.  Paragraph 10 does not provide for any new regulation-making power, but it brings Primary Care Trusts within the scope of the current regulation-making power in paragraph 10(2) of Schedule 5 to the 1977 Act, which concerns the transfer of staff and making staff available to other Health Authorities or local authorities. The regulations are subject to negative procedure.

66.  Paragraph 17 enables the Secretary of State to regulate how Primary Care Trusts publicise their accounts, annual report, any auditor's report or other documents specified in the regulations. For example the regulations may require that a Primary Care Trust holds a public meeting at which it must present such documents. Regulations will set out the circumstances in which and the time or times at which such public meetings shall be held. This puts Primary Care Trusts on a similar footing to other NHS bodies. Regulations provide flexibility for change and avoid the need to put a large amount of detail on the face of the Bill. Comparable powers exist in relation to Health Authorities and NHS trusts, and these are also subject to negative procedure. These are largely matters of detail. It would clutter the legislation unnecessarily to include the detail of these matters on the face of the Bill. In addition, there is a need for flexibility, for example, to extend the list of documents that must be publicised by a Primary Care Trust.

67.  Paragraph 19 provides that a Primary Care Trust may be authorised to purchase land compulsorily for the purposes of its functions by means of an order made by the trust. The order will be subject to the usual procedures set out in the Acquisition of Land Act 1981 and to confirmation by the Secretary of State. Primary Care Trusts will therefore have the same powers to acquire land as other NHS bodies.

68.  Paragraph 20 provides that where a Primary Care Trust is dissolved the Secretary of State may by order transfer the property, rights and liabilities of the Primary Care Trust to himself or another NHS body. The order will be specific to individual bodies and not be a statutory instrument. Similar arrangements apply for Health Authorities (see section 8(6) of the 1977 Act, as substituted by section 1 of the Health Authorities Act 1995) and NHS trusts (paragraph 30 of Schedule 2 to the 1990 Act). Any necessary consultation arrangements will be set out in regulations subject to negative procedure. The Department does not consider it appropriate to set out the details of the consultation requirements on the face of the Bill.

69.  Whenever a Primary Care Trust is dissolved, section 1 of the National Health Service (Residual Liabilities) Act 1996 (as amended by paragraph 64 of Schedule 4 to the Bill) will require the Secretary of State to exercise his powers so as to secure that all of the Primary Care Trust's liabilities are dealt with.

70.  Paragraph 21(1) provides that the Secretary of State may by order transfer the property, rights and liabilities of a health service body, to a Primary Care Trust. This power is comparable to that in section 8 of the 1990 Act in respect of transfers to NHS trusts. The property that Primary Care Trusts will require in order to exercise their functions will often be under the ownership or management of the Secretary of State, Health Authorities or NHS trusts. Paragraph 21(1) enables the Secretary of State to transfer such property to a Primary Care Trust, either on establishment, or when a change in the functions of a Trust means that it will require additional property. The orders will be specific in nature; each order will only apply to the particular bodies and particular property specified in the order. Having regard to the nature of these instruments, the Department considers that such orders need not be statutory instruments.

71.  Paragraph 23(1) provides that the Secretary of State may by order transfer staff to a Primary Care Trust from a Health Authority, NHS trust or another Primary Care Trust. This will frequently occur when a Primary Care Trust is established. Paragraph 24 provides for safeguarding the terms and conditions of service of staff being transferred. The power is comparable to provisions in relations to NHS trusts (sections 6 and 7 of the 1990 Act), and similar provisions were made in Schedule 2 to the Health Authorities Act 1995. It will be used in individual cases and will not be a statutory instrument.

CLAUSE 3: PRIMARY CARE TRUST FINANCE

72.  This clause inserts sections 97C and 97D into the 1977 Act, which mirror existing arrangements for funding Health Authorities (see sections 97 and 97A of the 1977 Act). Under section 97C(5), the Secretary of State may give directions to a Primary Care Trust regarding the payment of capital charges, and this enables Primary Care Trusts to be brought within the capital charging system. The system involves the payment by NHS bodies of charges calculated by reference to the value of the assets that they hold. The system ensures that capital costs are included as an overhead when a Primary Care Trust or other NHS body is calculating the cost of any services it provides. The directions must be given by an instrument in writing.

73.  This power is modelled on the existing section 97(6)(b), and avoids placing a large amount of technical financial detail on the face of the Bill. In addition it provides flexibility for amendment, which is necessary given that the capital charging system has changed over time and may continue to do so. For example, the level of charges and the assets to which they apply may change over time, in accordance with future requirements set by the Treasury.

74.  Section 97C(6) requires a Health Authority to direct a Primary Care Trust to apply part of its allotted sum for a particular purpose, where a direction to that effect has been issued to the Health Authority by the Secretary of State under section 97(6)(a) of the 1977 Act. Sometimes the Secretary of State gives Health Authorities earmarked allocations, and in future these sums will often be passed to Primary Care Trusts. This power will enable the Secretary of State to require Primary Care Trusts to apply some of their allocation for a particular purpose. In the past this power has been used to protect, for example, funding for HIV and AIDS treatment and care. The directions must be given by an instrument in writing, as is currently the case for directions under section 97(6)(a). A flexible power is required to enable the Secretary of State to ring-fence different amounts of money, at different times, depending on the existing circumstances and priorities. The Department considers that it would be unnecessarily restrictive to list exhaustively in primary legislation or regulations the situations in which the Secretary of State is able to ring-fence.

75.  Section 97D(2) enables the Secretary of State to give directions to Primary Care Trusts to ensure they comply with their financial duty. These directions mirror those for Health Authorities in section 97A, and must be given by an instrument in writing. Again these directions would contain matters of technical detail which the Department consider would be inappropriate for primary legislation or regulations.

76.  Section 97D(7) enables the Secretary of State to give directions defining the categories of expenditure and receipts which are to be counted for the purposes of ascertaining whether a Primary Care Trust has complied with its financial duty under section 97D(1). It mirrors the provisions in section 97A(6) to (9) regarding Health Authorities. The directions must be given by an instrument in writing. Again these directions would deal with matters of technical and financial detail. In addition, the Secretary of State will need the flexibility to change the categories that are to count for the purposes of section 97D, depending on the particular financial circumstances applying at any time. For example, the Secretary of State may need to use these powers to ensure that Health Authorities retain and spend receipts that Parliament and Treasury have agreed can be appropriated in aid by the Secretary of State.

CLAUSE 4: FURTHER FUNCTIONS OF PRIMARY CARE TRUSTS

77.  Clause 4 contains no delegated powers. The Committee may wish to note that under section 18A(6), the Secretary of State may give directions under section 17 specifying the circumstances under which a Primary Care Trust will need to obtain Secretary of State consent before exercising its charging or income generation powers. The directions could, for example, specify an amount or percentage of income above which the Secretary of State's consent is required. Such figures are likely to require amendment in future, and directions provide the flexibility necessary to enable the provisions to be amended.

CLAUSE 5: PRIMARY CARE TRUST TRUST-FUNDS AND TRUSTEES

78.  This inserts section 96B into the 1977 Act. Section 96B(1) enables the Secretary of State by order to provide for the appointment of trustees for any Primary Care Trust. The orders under this subsection will be statutory instruments, subject to negative procedure. Section 96B(4) provides that the Secretary of State may provide for the transfer of trust property to such trustees, also by order. These arrangements echo those for Health Authorities under section 96A of the 1977 Act and NHS trusts under section 11 of the 1990 Act. As such arrangements concern the administration of property held on trust, it is thought appropriate to adopt the approach of the 1977 and 1990 Acts and provide that such orders should be subject to Parliamentary scrutiny.

CLAUSE 6: PAYMENTS RELATING TO PAST PERFORMANCE

79.  Clause 6 does not provide for any new powers to make delegated legislation.

CLAUSE 7: DIRECTIONS

80.  This clause restates sections 13, 17 and 18 of the 1977, which confer powers of direction on the Secretary of State and set out the procedures by which they are exercisable. It also expands section 17 to cover NHS trusts, and provides for a scheme of delegation under which Primary Care Trusts have their functions conferred upon them.

81.  The power of direction is a particularly important feature of the Part I system. Sections 2 to 5 of the 1977 Act set out the services that it is the responsibility of the Secretary of State to provide (ie. Part I services). The Secretary of State may delegate these functions to Health Authorities by directions under section 13 and then control the exercise of these functions under section 17. Otherwise, there is very little prescription as to what the Secretary of State must do or how he must do it. At present the Secretary of State delegates most of his functions to Health Authorities, and he will continue to do so. Schedule 1 to the National Health Service (Functions of Health Authorities and Administration Arrangements) Regulations 1996 (S.I. 1996/708) lists most of the functions that the Secretary of State has delegated to Health Authorities. For example, the Secretary of State currently delegates to Health Authorities the responsibility for securing the provision of hospital and community health services in their area (see section 3(1) of the 1977 Act).

82.  In addition to the Part I system, the Secretary of State may issue directions to Health Authorities under section 17 as to how they should exercise any of their other functions, for example their functions in relation to Part II services.

83.  Directions under these provisions are essentially instructions issued to individual NHS bodies or classes of such bodies, either directing them to exercise a function of the person or body issuing the direction, or giving instructions as to how the body should carry out its functions. As indicated in the introductory section, these powers enable the Secretary of State to organise the way services under the 1977 Act are delivered.

84.  In practice, the Secretary of State uses his power under section 17 fairly sparingly; in relation to Part I services, matters of operational detail are generally left to Health Authorities. As well as avoiding unnecessary detail in primary legislation, the system of directions allows a flexible approach, enabling the Secretary of State and individual Health Authorities to adapt to meet changing circumstances and priorities, both local and national.

85.  Subject to certain exceptions, directions under sections 13 to 17 may be given by regulations, subject to the negative resolution procedure, or by an instrument in writing (see section 18(1)). For the most part, the choice of procedure is a matter for the Secretary of State. In certain cases however, the primary legislation provides (and is to provide) for exceptions in cases where it is appropriate for the directions to be given by regulations and thereby subjected to Parliamentary scrutiny.

86.  Primary Care Trusts are to exercise many of the functions currently exercised by Health Authorities. Primarily, they will arrange for the provision of Part I services, and in some cases provide such services. They are to be accountable to Health Authorities, but also subject to the control of the Secretary of State. The Department considers that the most appropriate way to deal with Primary Care Trusts is to integrate them within the existing structure of the 1977 Act, in essence creating a new tier of NHS body below the Health Authority. As with Health Authorities, the distribution of functions to, and exercise of functions by, Primary Care Trusts will be dealt with in directions.

87.  Section 16C restates section 13 of the 1977 Act, which enables the Secretary of State to delegate his functions in relation to the health service to Health Authorities.

88.  In a similar way, the new section 17A(1) enables Health Authorities to delegate their functions to Primary Care Trusts, subject to certain exceptions in subsection (3). A Health Authority may delegate its Part I functions by directing a Primary Care Trust to exercise those functions. Such directions may encompass both functions delegated by the Secretary of State, and those conferred directly on Health Authorities by statute. A Health Authority will only be able to direct a Primary Care Trust within its area. Section 17A(1) directions will be given by an instrument in writing. Such directions will of course be subject to directions given by the Secretary of State; the Secretary of State will therefore retain overall control.

89.  Section 17(A)4 provides a new power for the Secretary of State to require the Health Authority to delegate functions to PCTs. This scheme is comparable to that which governed distribution of functions amongst the Secretary of State, Regional Health Authorities and District Health Authorities, before their abolition under the Health Authorities Act 1995. The directions enable the Secretary of State to create a national model for Primary Care Trusts, within which local flexibility may be exercised. The directions will be given by an instrument in writing or in regulations; this mirrors the procedure for directions under section 16C and 17 of the 1977 Act. It is envisaged that as with directions to Health Authorities under section 13, the Secretary of State will give directions setting out in general terms the functions which are to be delegated to Primary Care Trusts, and those which are not, by regulations. Directions in writing will then provide any necessary additional detail.

90.  The new section 17 replaces the existing section 17 of the 1977 Act, which applies to Health Authorities and Special Health Authorities. The new section 17 extends the power of direction to include Primary Care Trusts and NHS trusts and allows the Secretary of State to give instructions to any of the NHS bodies listed in subsection (2) about how they are to exercise their functions. It enables the Secretary of State to set national parameters within which Health Authorities, Special Health Authorities, Primary Care Trusts and NHS trusts must exercise their functions, and it also enables the Secretary of State to direct individual bodies, should particular circumstances require it. The 1977 Act required such directions to be given by an instrument in writing or by regulations and this is not changed by the Bill.

91.  The power is essential for Secretary of State to maintain control over the exercise of his functions under Part I of the 1977 Act by Health Authorities and Primary Care Trusts; and to ensure that health service bodies operate within the context of a national health service. Under the 1990 Act, the Secretary of State had only limited powers of direction over NHS trusts. The new section 17(1) confers on the Secretary of State similar powers in respect of NHS trusts as he has in respect of Health Authorities.

92.  Particular examples of where the direction-giving power might be used initially for NHS trusts include ensuring that major investment decisions of NHS trusts are consistent with their strategy for improving local health and health care; requiring that laboratories in all NHS trusts report certain test results to strengthen communicable disease control; and limiting the borrowing and investments of NHS trusts (see clause 12 and paragraph 58 of Schedule 4).

93.  Section 17B(1) provides that Health Authorities will also be able to direct Primary Care Trusts about the exercise of functions they have delegated to them. This reflects the fact that Primary Care Trusts will be accountable to Health Authorities. Any Secretary of State directions under section 17 will take precedence. It is not intended that Health Authorities should use their powers to seek to control the detailed day-to-day operation of Primary Care Trusts. Such directions will be specific to the bodies directed and will therefore be made in an instrument in writing.

94.  The new sections 18(1) to (1B) replace section 18(1) of the 1977 Act in the light of the revised sections 16C, 17 and 17A. They specify how directions under the Act are to be given: either by regulations or an instrument in writing. Any directions given by regulations are subject to negative resolution procedure. As indicated above section 18(1) sets out the exceptional cases in which directions must be given by regulations. The existing section 18 provides that regulations must be used to give directions delegating the Secretary of State's functions relating to special hospitals (see clause 34 for a further discussion of special hospitals), and any directions about the Secretary of State's functions regarding the establishment of Community Health Councils (section 20(1) and (2) of the 1977 Act).

95.  The new section 18(1A) adds to this list directions under the new section 17A(4) requiring Health Authorities to delegate functions in relation to general medical services (ie. the Part II services provided by GPs under arrangements made under section 29 of the Act). This reflects the general approach in the 1977 Act that the details of the arrangements under which Part II services are provided are dealt with in regulations rather than by directions given by instruments in writing, and ensures that the system remains transparent.

CLAUSE 8: NHS TRUST ESTABLISHMENT ORDERS

96.  This clause does not create any new delegated powers. It does, however, amend the provisions in section 5 of the 1990 Act which provide for the Secretary of State to establish NHS trusts by Order.

97.  Most NHS trusts are established under section 5(1)(a) of the 1990 Act to assume responsibility for owning and managing hospitals or other establishments or facilities which were previously managed or provided by Health Authorities. There has been some doubt as to whether such a function encompasses all property arrangements entered into by NHS trusts to date. In particular, there is some doubt as to whether NHS trusts established under section 5(1)(a) have the power to own property not formerly managed by a Health Authority, or to enter into leasehold arrangements in respect of their property.

98.  This issue has only recently come to light and, as the parties concerned entered into the arrangements in good faith, the Government wishes to put their validity beyond doubt. The provisions in clause 8 will therefore have retrospective effect. Subclauses (3) and (4) will serve to regularise most of the arrangements entered into by NHS trusts over which there is some doubt.

99.  However, some NHS trusts have establishment orders so narrowly drawn that they have very little room for flexibility. Individual orders may be needed to remedy this, on a case-by-case basis. Subclauses (5) enables such changes to be made to individual NHS trust's establishment orders with retrospective effect. The Government wants to reassure trusts and those who have dealt with them in good faith that their actions have been beyond doubt within their powers.

CLAUSE 9: EXERCISE OF NHS TRUST POWERS

100.  This clause does not create any new delegated powers. It amends section 5(9) of the 1990 Act, however, to enable the Secretary of State to issue directions under section 17 of the 1977 Act (as inserted by clause 7) regarding the exercise by NHS trusts of their charging and income generation powers.

101.  At present section 5(9) provides that NHS trusts may only exercise these powers if they are satisfied that this will not to a significant extent interfere with the functions set out in their Establishment Orders or their obligations under NHS contracts. Clause 9 extends this protection to all functions of NHS trusts and their obligations under NHS contracts. Furthermore, it allows the Secretary of State to specify in directions circumstances in which NHS trusts will also require his consent to exercise these powers.

102.  The use of directions avoids placing detailed provisions on the face of the Bill. The directions could, for example, specify an amount or percentage of income above which the Secretary of State's consent is required. Such figures are likely to require amendment in future, and directions provide the flexibility necessary to enable the provisions to be amended. Comparable provision is made for Primary Care Trusts and this is described in paragraph 48 of this memorandum.

CLAUSES 10 AND 11: PUBLIC DIVIDEND CAPITAL

103.  These clauses do not create any new delegated powers.

CLAUSE 12: NHS TRUST BORROWING

104.  This clause does not create any new delegated powers. Subclause (2) does, however, provide that the ability of NHS trusts to borrow shall be subject to the Secretary of State's power of direction under section 17 of the 1977 Act (as inserted by clause 7).

105.  The intention is that for the most part NHS trust borrowing will be from the Secretary of State. However, there are certain circumstances in which NHS trusts will be able to borrow from the private sector - for example, they may have "step-in rights" to take over a loan to a private contractor in a PFI scheme. Directions will be used to set parameters on the ability of NHS trusts to borrow from the private sector. The use of directions avoid places a large amount of administrative detail on the face of the Bill, and provides the flexibility for amendments to be made to meet the needs of changing financial circumstances.

CLAUSE 13: DUTY OF QUALITY

106.  Clause 13(3) provides that the Secretary of State may extend the duty of quality to specific Special Health Authorities. It is the intention that the duty of quality will apply to certain but not all Special Health Authorities. The delegated power, therefore, gives the Secretary of State the flexibility to determine which SHAs will be subject to the duty. At present, it is envisaged that these will be the SHAs responsible for the three high security special hospitals. It is possible, however, that the management of these special hospitals may be transferred in the future from the SHAs to NHS trusts (see clause 34). The use of delegated legislation to extend the duty of quality removes the risk that a reference to SHAs may become obsolete on the face of the Bill.

CLAUSE 14: THE COMMISSION FOR HEALTH IMPROVEMENT

107.  Although this clause does not directly contain any delegated powers, it gives effect to Schedule 2.


 
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