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Lord Dubs: My Lords, when I first heard about the idea of foundation trusts, I was sceptical. I have listened to the arguments over many months—perhaps even years—and I have been persuaded that I agree fully with my noble friend Lord Hunt.

I can develop my arguments briefly. Before I do so, perhaps I may say that my experience of the health service, other than as a patient, is based upon having served as a local councillor on an area health authority and then, more recently, on an NHS trust. I agree with the noble Baroness, Lady Cumberlege: I believe NHS trusts were a sensible development. Indeed, I was enthusiastic to be a member of an NHS trust. That stopped at the 1997 election, when I was transferred to Northern Ireland.

Let me draw on some of my experiences when serving on those bodies because they are directly relevant to the proposals before us today. I do so on the assurance—I have heard the Secretary of State on a number of occasions give this assurance—that the fundamental basis of the National Health Service will be maintained; that is to say, that the service will be free to people who need hospital care. Provided that that principle is accepted and continued and the assurance is there, the way is open for us to see what kind of improvements will come to patients through the adoption of foundation trusts.

Some people say that there will be two classes of hospital—foundation trusts and others. But of course we have had two classes of hospital ever since the beginning of the NHS. Teaching hospitals have dominated. They have dominated because they have attracted the lion's share of the money; and they have dominated because they have been, in my experience, a bit less accountable than others. Certainly when I served on the area health authority, such hospitals were powerful bodies and were less susceptible to accountability. Maybe, that has changed more recently. Teaching hospitals have dominated because they have attracted the best staff. Doctors, nurses and so on want to be in teaching hospitals. That dominance will be lessened through the foundation trusts because it will be open to other hospitals, not just teaching hospitals, to get that status.

My main argument is about management. I am actually surprised that the party opposite—which prided itself for a long time on its adherence to management principles and said that the economy should be run on the basis of sound management at every level, including in the public sector—has taken the argument the other way. I have listened over the years to the noble Earl, Lord Howe. I have found him to be a moderate and persuasive speaker, but today he

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reminds me of the days when we were in opposition. We got a line from the other end—"Never mind what you think, stick by the line".

Noble Lords: Oh!

Lord Dubs: It happened. Those of us who still remember will know what it was like. One has to put the arguments as well as one can. I do not want to make this in any way personal, but I have to say that the noble Earl, Lord Howe—who is reasonable, balanced and measured—had to use arguments that came to a conclusion with which, I do not think, he fully agreed. I am surprised at that. He could well have reached a different conclusion and supported the idea. Anyway, I do not want to make it a personal point.

The local management argument is crucial. When I served on an NHS trust, the welcome change from the old AHAs was precisely that we, as non-executive directors, got nearer to where management was. Those of us who remember the AHAs will remember that we did not have a chief executive. We had an administrator, a chief medical officer and a chief finance officer. Occasionally, as members, we asked questions. Those three would look at each other, and it was difficult to pin down accountability. Yet, they were all excellent high-calibre individuals. With hospital trusts, we, as non-execs, got nearer to the management issues. I certainly felt that we unearthed a history of not much management before the trusts. Management matters had been neglected. Yet, when we wanted to make key decisions, we were stymied because we had to go through the region and the department.

I give an example. The mental health hospital trust of which I was a non-executive director had a great deal of land which we did not need any more. We wanted to dispose of it. We could dispose of it, but the money would go to the region or the department. We would not get the money, even though there was a cost to us in selling the land and transferring services from that land further into the community. We were stymied. I thought, "I hope that the day will come when we can make local decisions and benefit from them ourselves, not do so with no benefit—in fact, as a burden—to us".

When I heard about foundation trusts, I thought, "If that brings management to the level at which it can be effectively exercised, that must be a good thing". That is why the Government's proposals are right and I am unhappy with the amendments. Yes, of course there are concerns about governance. There have been ever since the NHS began; we have always been unhappy about it. This is a move in the right direction. We may later discuss points of detail that the Government must consider, but essentially, it is right.

I say that because when I was a member of an area health authority, I was a local councillor. I felt that I was local; my ward was within the health authority area; I was confident that I spoke for the needs and concerns of local people. That gave me a strength that I did not have when I was on the board of an NHS

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trust, where I did not have quite that sense of local accountability. If we can get more accountability into governance, that must be a good thing.

In conclusion, for all the difficulties that have been described about foundation trusts, they will give us a good chance to make the NHS better for the people that matter: the patients.


The Lord Bishop of Oxford: My Lords, like many in your Lordships' House, I felt ambivalent about foundation trusts from the beginning. A niggle that has been in my mind from the first is: if the proposals are passed, will they really make the kind of difference that we would all love to see in our NHS? What characterises a good regiment, a good business, a good school, a good hospital or even a good church? It is what goes under the name of the ethos, the milieu. People feel proud to belong to it; they give not only their best but more than their best. They feel valued to be part of that organisation or business.

We know that good political decisions can help to create the kind of ethos in which people feel proud to belong to the organisation. We know that bad political decisions can certainly help to undermine that kind of ethos. That kind of ethos is dependent on more than good political decisions—good political decisions are vital; but, in the end, it has something to do with certain intangibles about local leadership. Local democracy can help to create that kind of ethos, with a greater sense of participation and local belonging. As I try to make up my mind which way to vote, I especially want to hear from the Minister how he thinks that these arrangements for local democracy will help to create the kind of the ethos in which people connected with the hospital give of their best and more than their best and feel valued as part of it.

Lord Blackwell: My Lords, like the right reverend Prelate—and, I suspect, many others in the House—I face a real dilemma over the Bill and the clause, a dilemma that was not helped by our discussion in Committee. I am not one of those who opposes the concept of foundation hospitals in principle; to the contrary, in concept it is a welcome first step in dismantling what, it is generally recognised, has become an inefficient state-managed monopoly. I welcome the fact that the Government have crossed the Rubicon by recognising that such command and control state management cannot deliver the health service that we want and that it must, sooner or later, be dismantled.

Indeed, I look forward to the day when all hospitals and other parts of the health service become independent. I am not too bothered by the argument that that will create a two-tier structure, because it should be possible to move all hospitals to independent status sooner rather than later. I should welcome an assurance from the Government that that is their goal.

As so many noble Lords have said, the trouble is that the proposals are flawed. The notion of a foundation hospital as an independent institution able to run and manage itself to serve the local community with medical

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practices at the forefront has been hobbled by the level of regulation proposed under the Bill, the financial restrictions to be imposed and the layers of government and the political interference to which the noble Lord, Lord Lipsey, referred so well.

So the proposals are highly flawed. The question in my mind is whether, nevertheless, they are a useful step in accepting the principle of independent provision of healthcare on which a future government can build.

I have a second point. As other noble Lords have said, hospitals are only part of the equation. The far more important part of reforming the health service is freeing up the purchasing of healthcare.

In Committee, I and others tabled amendments to test whether the Government were willing to accept that PCTs—commissioning units—should also be able to apply for foundation status. Those amendments were unacceptable to the Government, but I was encouraged by the response of the noble Baroness, Lady Andrews, to the noble Lord, Lord Clement-Jones—on Clause 5, I think—that the Bill does not restrict PCTs from applying for foundation status although, in fairness, she made it clear that the Secretary of State would not look favourably on that at present. I hope that I was right about that and that the Minister can confirm it when he comes to reply.

So, if one feels that a fundamental shift of the NHS provision structure from being a state-managed monopoly is the way to go, there are reasons to believe that the concept behind the Bill is worth supporting. As I said, the dilemma is that the current measures are deeply flawed. Like others, I shall listen carefully to hear whether, even at this late stage, the Minister suggests that the Government are sufficiently flexible and responsive to listen to those voices from all sides of the Chamber who say that there is a better way to do this, while maintaining the principle embodied in the Bill.

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