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Lord Warner: I listened with great interest to the points made by the noble Baroness. She has a tendency

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to say that we have not thought matters through because she has in mind a totally different model for the public organisations under discussion. I shall not go over the ground that I rehearsed this morning, when I tried to help the Committee by setting out the Government's views on the board of governors and how it related to the board of directors.

The noble Baroness slightly let the cat out of the bag when she started using the analogy of the legal system, which is essentially adversarial. She talked about judges, juries, prosecuting counsels and so on. That is fundamentally not the model that we propose in the Bill for the running of National Health Service foundation trusts. We propose a model that is essentially co-operative, but with separate roles between the more advisory functions and the day-to-day executive functions. I do not want to go over that ground again, but that is clearly the model set out in the Bill, with certain checks and balances between those performing the different roles. That is fundamentally a different model from one in which there is a prosecuting counsel, a judge, a jury and an adversarial way of doing business.

I have no problem with the adversarial nature of the criminal justice system, but it is not what we are running in the Bill. We are trying to get people to work in partnership, and the Bill provides for that. We need to clear that out of the way, because a different world view is coming to me from the Opposition about what we are trying to achieve. That is leading to some of the confusion about how we approach the issues.

Before dealing with the amendments, I should tell the noble Baroness that I have far more sympathy with my noble friend's position than with hers. Amendment No. 41 goes for the idea of a separate chair for the board of governors. We have that tripartite structure in the foundation trusts. As I said, they are constituted deliberately with a membership base, a board of governors and a management board, with each having a distinct and complementary role. I agree that it is important that there are clear lines of management, accountability and responsibility for those three parts, but good communication links between them are equally important.

In the Government's view, it is important that the chair of the NHS foundation trust presides over both boards, because that will provide a key link between the governors and directors, who will need to work closely in the stewardship and governance of the trust. We discussed the point fully earlier and I do not want to go over the ground again.

The Government have also recognised that many people out there have the skills to provide the linkage between the board of governors and the board of directors. We pay a great deal of regard to the experience of the noble Baroness, Lady Hanham, in that area. She is an excellent example of why one believes that there are people who can bring together these two parts of the foundation trust co-operatively and sensibly. We do not therefore accept the arguments in Amendment No. 41 for a separate chair for the board of governors.

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Amendment No. 42 makes provision for the appointment of the board of governors. The intention of the Bill is to give freedom to NHS foundation trusts. I am sorry to repeat the mantra of freedom and flexibility, but that is what the Bill is all about. It is about getting away from Whitehall and Westminster over-control of local arrangements. The Bill gives the foundation trusts the ability to determine how they organise themselves best to meet local circumstances and needs. The principle is not "Whitehall and Westminster know best", but that arrangements should be agreed locally with patients, public and staff involvement. For that reason, Schedule 1 sets out only minimum requirements relating to the boards of governors.

Amendment No. 42 would require the constitution to include provision about the election of the chair and in our view that is unnecessary. The Bill already includes provision for the appointment of a person to chair both the board of governors and the board of directors under paragraph 16(1) of Schedule 1. It states:

    "It is for the board of governors at a general meeting to appoint or remove the chair".

In conjunction with that, Clause 6 requires every NHS foundation trust to have a constitution that sets out how the board of directors and the board of governors should be elected. We clearly stated in paragraph 2(3)(1) of the guide to NHS foundation trusts that we expect the board of governors will be responsible for appointing the chair of the NHS foundation trust. This is not a muddle. We have been clear about it for a considerable time.

The noble Baroness, Lady Noakes, asked about some of the processes and their adequacy. Appointment of the chair, as with non-executive director appointments, will normally follow open advertisement among the members of the NHS foundation trusts. Eligibility will be based on assessment against specified criteria, which will be for each NHS foundation trust to determine. As opposed to the current one-size-fits-all model, foundation trust governors will have flexibility in the appointments system to take account of local needs and circumstances; for example, in specifying certain skills of expertise.

Applications for NHS foundation trust status will need to include proposed constitutions, including processes and procedures, to ensure that the appointees are suitable and appropriately qualified and vetted. We are not just leaving this to chance. There is a process for ensuring that these things have been thought through. The independent regulator is expected to issue guidance on this and other issues related to the role of the chair and non-executive directors, similar to that issued by the Office of the Commissioner for Public Appointments. We believe that there is a thought-through process and we do not believe it is necessary to prescribe all this in primary legislation.

On Amendment No. 49, which proposes that governors cannot be non-executive directors, I have already explained the importance of having the chair

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presiding over both boards. The amendment would mean that the chair of the board of governors could not be the chair of the NHS foundation trust and it is unacceptable to the Government on that basis.

I have sympathy with the noble Baroness's point of view, but, other than the chair, we would not normally expect a governor also to be a non-executive director. Individual foundation trusts could make a provision for this if necessary; for example, if they felt a stronger link between the board of governors and the management board, provided that they have the appropriate skills. The key is whether the person has the skills for the job, and not being arbitrary about ruling people in and out in the way the amendment suggests. Their appointment, as for all appointments of non-executives, should follow best practice in terms of open and fair competition.

I have tried to explain the Government's position. We do not believe that these amendments are well-framed, appropriate or necessary.

3.45 p.m.

Baroness Greengross: I have a problem with this. If a group heavily represented on a board of governors is, for example, anxious that mental health should be a priority for the trust—the strategic direction of the trust—and if the executive board does not agree to that, how is that sorted out in terms of accountability? Which side will win? I am sorry if that is an obvious question, but I remain uncertain about where day-to-day management and strategic direction ends and where the boundaries lie.

Lord Warner: That example has overtones—not as bad as those expressed by the noble Baroness, Lady Noakes, which were adversarial—of competition and dispute. We are trying to produce a model which brings together partnership and co-operation.

We hope that the chair—who is the chair of the board of governors and the board of directors—will bring those bodies to a degree of harmony and dialogue to ensure that on the example the noble Baroness, Lady Greengross, gave there is a full and frank discussion; positions are explained and discussed; and there is an agreeable outcome to all sides. That is the kind of co-operative National Health Service we are trying to achieve through these changes.

I will not repeat the speech I made this morning about the roles of boards of governors and boards of directors, but it is clear from the Bill that the day-to-day administration of the foundation trusts will be in the hands of the boards of directors. Clearly, the boards of governors have an important role in shaping the future direction of the trust.

Baroness Noakes: I thank the Minister for his response. The noble Lord, Lord Hunt of Kings Heath, said that people elected governors would then have a belief in their legitimacy. He added that if we did not deal with that in the constitutional arrangements, there would be conflict. It is a great shame that such

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people may be elected with a misguided belief in what they are there to do. There is a danger that people will believe that being elected a governor of an NHS trust will give them powers. That is a fundamental problem with Schedule 1, and many more amendments than those we have before us today are required to correct that.

Secondly, I see no conflict between a supervisory or advisory body and an operational body. One should see it more in terms of there being constructive tension between the two because they have different roles. If the board of governors is there to advise, it should concentrate on doing so and leave the board of directors to do its job of running the trust. The more we try to mix the two, the more there will be a recipe for misunderstanding and confusion. Having individuals represented on both bodies will only make that worse.

It is all very well to have idealistic views of the co-operation that will be achieved by having cross membership, but experience in all kinds of organisations is that it is not necessarily achieved. I continue to believe that the arrangements for appointments are ill-thought-out. We have the circularity that the chairman of the board of directors will, hey presto, be the chairman of the board of governors without a requirement for any specific process.

I welcome the Minister's comment that there will be the kind of open processes to which we are accustomed in public-sector appointments generally, although I am not sure that local amendment to them sounded as robust as I had hoped.

I will not pursue these issues today but I will read carefully what the Minister has said. I continue to believe that this area of the Bill will not serve the interests of creating foundation trusts which are in any sense a successful part of the NHS. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 42 not moved.]

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