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Lord Clement-Jones: The noble Earl, Lord Howe, has made an enlightening contribution. The more one thinks about the provision, the more difficult it gets, not only on the question of numbers. After all, we know that there are major hospitals from which many PCTs commission. Determining which PCT should be represented on the board of governors will be difficult, unless there is a proper mechanism for that.

The last part of the noble Earl's contribution was even more interesting. Should PCTs be represented in the first place? How will that work? Will it be a token representation? I would take it a step further: is there not a potential conflict of interest? After all, the PCT—especially if it is the major commissioning PCT—will have a conflict of interest with the trust. It must be in a position to commission without fear or favour. What happens if, suddenly, that PCT decides to withdraw a range of services that it had previously commissioned from a trust?

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The more I thought about it, as the noble Earl, Lord Howe, made his speech, the more conflicting the situation seemed to become. I am sure that it is being done for the right reasons, such as ensuring that there is broad representation, but the relationship between commissioner and provider is an important one. I wonder whether the PCT should be represented on the board of governors in the first place.

Baroness Carnegy of Lour: Will the Minister give us the Government's view on the conflict of interest issue? It is an important one.

1.15 p.m.

Lord Warner: I am not sure that there is a conflict of interest. I want to put the amendment and some of the remarks that have been made in their proper context.

If a PCT commissions a particular range of services from a foundation trust, it will have a relationship with the trust that is totally outside any involvement through the board of governors. If it is doing its job properly, it will want to ensure, through the normal processes of "contractual arrangements", that the foundation trust or any other NHS trust delivers the required services. That relationship will not be governed by membership of a board of governors. An individual PCT will not discuss its concerns about the delivery of particular services, which may be relatively small issues in comparison with the other things that are discussed by the board of governors. Such discussions will be held directly with the providing body, as part of the PCT's day-to-day relationship with that body.

We are trying to ensure that the commissioning perspective is taken account of in the activities and deliberations of the board of governors. I shall not repeat the debate that we had about the role of the board of governors. It must be seen in the context that the board of governors is not an executive, decision-making body as regards the contractual relationship between a PCT and a provider. We must start from that position.

The amendment raises the issue of who is best fitted to be the PCT representation on the board of governors. The noble Earl cited the case of Moorfields, but the range is enormous. Rotherham and Stockport each have service level agreements with a single PCT. I shall run through just a few first-wave trusts. City Hospitals Sunderland NHS Trust and Sheffield Teaching Hospitals NHS Trust, both of which provide district general hospital services, have in the range of three to five service agreements with PCTs. The Nuffield Orthopaedic Centre NHS Trust and the Marsden—specialist trusts—have, respectively, 25 and 34 service level agreements with PCTs. Services commissioned from Moorfields represent more than 1 per cent of activity for 9 PCTs and between 0.1 and 1 per cent of activity for a further 50. Some services are provided for 133 PCTs.

With that range and given that the value of the contracts—the service level agreements—is likely, if history is any indicator, to change over time, we should

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not lay down rules on the basis of value. It would put us into boxes that are inappropriate and for which many PCTs would not thank us.

Although there will be a need to have a discussion among the PCTs, they will want a manageable number of relationships with boards of governors. If they are working with a great number of foundation trusts, that will impose obligations on PCTs which must not be too onerous for them to discharge. Being prescriptive will not help. I urge the noble Earl to reconsider his amendment.

Earl Howe: I tabled the amendment because I felt that it was right to have the debate; I am glad that I did. I am grateful to the Minister for what he said, but this is yet another example of the Government's arrangements for foundation trusts being half-baked. Unless there is greater clarity for trusts and PCTs, there will be a good deal of frustration and also, probably, misunderstanding when these provisions come into force. The essential question is: what is the PCT representative there to do? What is his or her function? I am not sure that we are any closer to that.

The noble Lord, Lord Clement-Jones, put it well. Possibly there is not a conflict of interests, but there could be. I need to understand better the Government's thinking in inserting this provision. Nevertheless, we have some thinking time left. I am sure that we shall reflect carefully on what the Minister said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Noakes moved Amendment No. 39:

    Page 109, line 43, leave out sub-paragraph (6).

The noble Baroness said: Amendment No. 39, which deletes sub-paragraph (6) of paragraph 8 in Schedule 1, is a probing amendment. Sub-paragraph (6) provides that an organisation may be specified in a foundation trust constitution as,

    "a partnership organisation which may appoint a member of the board".

My amendment removes that. I invite the Minister to explain what is meant by this provision and to explain what types of organisation might be covered. As the Minister will be aware, this provision was introduced by the Government on Report in another place and was not debated. As with so much of this Bill, the Explanatory Notes explain nothing.

Will the Minister say what a partnership organisation is? How does one recognise a partnership organisation if one meets one in the street? The Minister will be aware that one of the most over-used words in the new Labour lexicon is partnership. It certainly does not mean partnership in any legal sense. As far as I am aware, there is no authoritative government definition. Will the Minister give a definition for the purposes of the Bill?

I have some further questions. Who will judge whether an organisation is a partnership organisation? What happens if the quality of partnership disappears

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from a relationship with an organisation? Who will decide that? Can these partnership organisations be from the private sector or must they be from the public or voluntary sector? Can trade unions be partnership organisations? If so, how will that affect the staff constituency? How many partnership organisations with a seat on the board of governors can a foundation hospital have?

This is another area that the Government are making up as they go along. As regards the governance of foundation trusts, David Hinchliffe, chairman of the Health Select Committee in another place, said:

    "The policy is part of a growing trend of policy making on the hoof". (Official Report, Commons, 8/7/03; col 937.)

I invite the Minister to prove him wrong and to give a coherent account of this piece of the jigsaw. I beg to move.

Lord Warner: As I recall, when I was a director of social services, partnership used to be in the lexicon of the Conservative Party too. It has been set out in the guide to NHS foundation trusts, published in December 2002, that foundation trusts may decide to extend representation of local partnership organisations on boards of governors beyond the minimum legislative requirements; that is, to PCTs, local authorities and universities, if relevant.

The noble Baroness asked me to give examples, which could include other NHS and social care bodies in a particular local health economy, such as an ambulance trust; or voluntary sector providers and charities, such as palliative care providers and patient support groups. As a former chairman of the National Council for Voluntary Organisations, I must declare a personal interest in ensuring that voluntary organisations, which may be important providers in a particular local area, should be able to participate in this way.

There could be other organisations that have a particularly important responsibility for the education and training of non-medical staff. This is a labour-intensive organisation and there are increasingly new and interesting models for training staff. These organisations have close links with health service providers because of their important role in ensuring a competent, trained workforce.

Those are the types of organisations that would be cut out of the jigsaw by this amendment. We are keen to give—with all due respect to the noble Lord, Lord Clement-Jones, to use the mantra again—flexibility to foundation trusts, when it is appropriate in their particular area, to bring these other bodies into the game. We would not want that flexibility to be lost. I hope that I have explained some of the thinking, which has not been made up on the hoof. These bodies are in the real world providing these services in all parts of the country. Now we want to ensure that they can participate as foundation trusts are set up.

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