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Lord Warner: My Lords, we discussed the subject of pilots in Committee, and I gave many of the figures that I have just used. We have a groundswell of movement towards foundation trusts from people locally. As I have just said, we are talking about more than 25 per cent of the population in England moving to foundation trust status by the end of 2004. If we had pilots of the kind moved by the noble Lord, Lord Clement-Jones, we would have held up progress for many years. I hope that that will reassure my noble friend.

Of course, people will learn from the experience of the first wave. In a sense, there is an element of the pilot in that. People will learn from that experience; the trusts in the first wave will learn from that experience. We are not stopping that learning process in any way, but it is not right to stop people moving along that path when they are performing at the level that suggests they can earn greater local autonomies and they want to go in that direction.

With all the investment and help that we are providing to ensure that the less well performing trusts can raise their game, there is no reason why all NHS trusts should not achieve foundation trust status in five years. We are not promoting a two-tier NHS. Nor are we letting it become the mediocre service that the Conservatives would provide to justify promoting the private healthcare system. Those are the kinds of policies that emanate from their party.

6 Nov 2003 : Column 936

There is no doubt that NHS foundation trust status is seen by many local people and staff as offering real opportunities to improve services for NHS patients. It is clear that the Government are right to proceed with legislation and that those who have expressed doubts are out of step with what the service wants.

To reassure noble Lords that we believe foundation trusts will produce a better health service with more local autonomy, foundation trusts will remain fully a part of the NHS. But they will have greater management and financial freedoms, including freedoms to retain surpluses. The noble Lord, Lord Dubs, referred to the issue of surplus land and premises. They can use that much more under these arrangements for local development. They will be able to invest more easily in the delivery of new services, manage more flexibly, reward their staff in a way that is more appropriate to local circumstances and have access to a wider range of options for capital funding. As I said, given the large amounts of money that we are providing to the whole NHS, that will not damage the rest of the NHS.

Of course, their borrowing must be prudent, although some noble Lords opposite seem opposed to that, which I find slightly curious. NHS foundation trusts will not be subject to direction by the Secretary of State, but they will be overseen by an independent regulator. Incidentally, in response to the noble Lord, Lord Clement-Jones, I did not say just that the regulator was a referee; I was trying to give a simple differentiation between the regulator and CHAI. Under the proposals brought back today, the regulator will not be a single office holder. There will be a board structure, which is a good example of the discussions in this House producing change.

The regulator and the board have a similar relationship to the Secretary of State to that of other regulators. I do not think that his independence has been called into question by other noble Lords. We are not setting that person up in a different relationship with the Secretary of State. I think that noble Lords opposite know that, when they think quietly and soberly about the issues. They are all things that, at times, the Conservatives have said they support, but they persist in tabling amendments that would wreck the Bill.

The burden of the noble Earl's remarks seems to be that we have kept NHS foundation trusts in the NHS, working in co-operation with other parts of the NHS, and that we have not created the kind of healthcare market that he and his colleagues would like to see. He is right; we have not. They tried that once, and we think that it failed. The noble Baroness, Lady Cumberlege, rather poked fun at our attempts to help people with the transition to foundation trusts. I thought that the contributions of many other noble Lords suggested that that was the right approach. At least we are offering help in making the transition, which is more than can be said for one or two other previous reorganisations that have been attempted.

We have heard a great deal from the Benches opposite that the devil is in the detail of the governance arrangements. They imply that the Government have

6 Nov 2003 : Column 937

not listened to legitimate concerns. Perhaps I may remind your Lordships that there were more than 29 hours of consideration of Part 1 in Commons Committee. Before today, the Government had made at least 21 concessions on the Bill to meet concerns expressed here. On Report, we have responded to detailed concerns expressed in Committee by proposing 147 amendments on 26 substantive issues in the Bill. Of those concessionary amendments—I will use the words, "concessionary amendments" despite what the noble Baroness, Lady Noakes, said—110 relate to Part 1 and Schedule 1, covering at least 16 substantive issues. I am grateful to my noble friend Lord Hunt for pointing some of that out. Those on the Benches opposite do not have the patience to work their way through the detail. They just want to kick over the traces and wreck the Bill.

I assure the noble Lord, Lord Walton, that we recognise the need to get the governance arrangements right. That is why we listened carefully to the points raised and responded with the swathe of amendments in the Marshalled List today. Even with those changes, we are not so arrogant as to suggest that there should be no review of the governance arrangements once they are in place. In response to an amendment moved by the noble Earl, Lord Howe, in Committee, I agreed to take away that matter. I can now tell the House that the Joseph Rowntree Foundation is planning a major review of public service governance, including NHS trusts and NHS foundation trusts. The inquiry will be chaired by the very distinguished Sir Alan Langlands, former chief executive of the NHS. I suspect that, effectively, it will do for public services what the Higgs review did for private sector companies. I have discussed it with the noble Lord, Lord Best, who, unfortunately, is unable to be here today, but he said that I could mention that development.

The Government see no reason to establish a rival review, when such a respected body as the Joseph Rowntree Trust will be conducting one that is likely to report by the end of 2004. With more hope than expectation, I ask noble Lords opposite to think again before going down the path on which they are moving. Even if the Conservatives' radar is too wonky for them to find the centre ground, I hope that the Liberal Democrat Benches will not follow them along the path they seem to want to tread.

Earl Howe: My Lords, the House will have listened with great interest and appreciation to the Minister's extensive reply, but I may not be the only noble Lord who thinks that he has somewhat over-egged his arguments. It is clear that there is a divide between us, but the divide is not the one presupposed by the noble Lord, Lord Desai, or by the noble Lord, Lord Hunt. We do not argue with the principle of devolution in the health service; far from it. What we argue with is the form and detail of the devolution that is now proposed. The devil really is in the detail. I am genuinely disappointed that I feel compelled to oppose devolution in the NHS, but it is no good thinking that we can put a flawed set of provisions on to the statute book and sort out the problems later.

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The noble Lord, Lord Dubs, mentioned management. I am as keen as he and any other noble Lord is on sound and efficient management, but it is for that very reason that I am desperately worried about these proposals, because of what they will do to force and tie the hands of management in ways that could be profoundly counter-productive to people's healthcare.

It is no good the Minister talking about consultation with local people; I feel that he is being disingenuous. The one question local people are not being asked is whether they want a foundation trust. I think that that is a funny way to pay respect to local opinion, as the Government purport to do.

We can refer to these governance arrangements—as did some noble Lords in Committee—as a bold, democratic experiment, but that phrase obscures the huge dangers that this experiment poses to the competent and responsive management of hospitals. We can all be in favour of NHS devolution, but unless we get the governance arrangements right before we launch the ship, I believe that we will bitterly regret it. The fact is that, from the outset, the Government have remained wedded to the central blueprint that they devised for governance. I hope that the House will back the judgment of those of us who are urging the Government to resist the detail of these arrangements. In doing so, I ask noble Lords to reject both Clause 1 and Schedule 1 as a clear and firm exhortation to the Government to that end.

12.51 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 150; Not-Contents, 100.

Division No. 1

CONTENTS

Addington, L.
Alderdice, L.
Allenby of Megiddo, V.
Alton of Liverpool, L.
Ampthill, L.
Anelay of St Johns, B.
Arran, E.
Ashcroft, L.
Astor of Hever, L.
Attlee, E.
Avebury, L.
Barker, B. [Teller]
Biffen, L.
Boothroyd, B.
Bradshaw, L.
Bridgeman, V.
Brooke of Sutton Mandeville, L.
Byford, B.
Campbell of Alloway, L.
Carnegy of Lour, B.
Carrington, L.
Clement-Jones, L.
Cope of Berkeley, L. [Teller]
Cox, B.
Craig of Radley, L.
Crathorne, L.
Crickhowell, L.
Cumberlege, B.
Dahrendorf, L.
Dholakia, L.
Dixon, L.
Dixon-Smith, L.
Eccles of Moulton, B.
Elis-Thomas, L.
Elton, L.
Emerton, B.
Evans of Parkside, L.
Falkland, V.
Feldman, L.
Finlay of Llandaff, B.
Flather, B.
Fookes, B.
Forsyth of Drumlean, L.
Fowler, L.
Freeman, L.
Gardner of Parkes, B.
Glenarthur, L.
Goodhart, L.
Greenway, L.
Hamwee, B.
Hanham, B.
Hayhoe, L.
Higgins, L.
Hodgson of Astley Abbotts, L.
Holme of Cheltenham, L.
Howe, E.
Howe of Aberavon, L.
Howe of Idlicote, B.
Howell of Guildford, L.
Hunt of Wirral, L.
Jacobs, L.
Jenkin of Roding, L.
King of Bridgwater, L.
Kingsland, L.
Knight of Collingtree, B.
Laing of Dunphail, L.
Lester of Herne Hill, L.
Linklater of Butterstone, B.
Lipsey, L.
Liverpool, E.
Livsey of Talgarth, L.
Lofthouse of Pontefract, L.
Luke, L.
Lyell, L.
Mackay of Clashfern, L.
Mackie of Benshie, L.
McNally, L.
Maddock, B.
Mar and Kellie, E.
Marlesford, L.
Marsh, L.
Masham of Ilton, B.
Mayhew of Twysden, L.
Methuen, L.
Miller of Chilthorne Domer, B.
Miller of Hendon, B.
Montrose, D.
Mowbray and Stourton, L.
Moynihan, L.
Newby, L.
Newton of Braintree, L.
Noakes, B.
Northover, B.
Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
Ouseley, L.
Palmer, L.
Patten, L.
Peel, E.
Peyton of Yeovil, L.
Phillips of Sudbury, L.
Pilkington of Oxenford, L.
Plummer of St. Marylebone, L.
Quirk, L.
Reay, L.
Redesdale, L.
Rees, L.
Rennard, L.
Renton, L.
Renton of Mount Harry, L.
Roberts of Conwy, L.
Rodgers of Quarry Bank, L.
Rogan, L.
Roper, L.
Russell, E.
Ryder of Wensum, L.
Saatchi, L.
Saltoun of Abernethy, Ly.
Scott of Needham Market, B.
Seccombe, B.
Selborne, E.
Selsdon, L.
Sharp of Guildford, B.
Sharples, B.
Shaw of Northstead, L.
Shutt of Greetland, L.
Skelmersdale, L.
Smith of Clifton, L.
Soulsby of Swaffham Prior, L.
Strathclyde, L.
Swinfen, L.
Taverne, L.
Tenby, V.
Thomas of Gresford, L.
Thomas of Walliswood, B.
Thomson of Monifieth, L.
Tordoff, L.
Trefgarne, L.
Trumpington, B.
Ullswater, V.
Vivian, L.
Waddington, L.
Wakeham, L.
Walmsley, B.
Walpole, L.
Walton of Detchant, L.
Wigoder, L.
Williams of Crosby, B.
Williamson of Horton, L.
Wolfson, L.

NOT-CONTENTS

Acton, L.
Alli, L.
Amos, B. (Lord President)
Andrews, B.
Archer of Sandwell, L.
Ashton of Upholland, B.
Bach, L.
Bassam of Brighton, L.
Blackstone, B.
Borrie, L.
Boston of Faversham, L.
Bragg, L.
Brett, L.
Brooke of Alverthorpe, L.
Brooks of Tremorfa, L.
Burlison, L.
Campbell-Savours, L.
Carter, L.
Chandos, V.
Chorley, L.
Christopher, L.
Clinton-Davis, L.
Cohen of Pimlico, B.
Colville of Culross, V.
Crawley, B.
Davies of Oldham, L. [Teller]
Desai, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Evans of Temple Guiting, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Goldsmith, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grantchester, L.
Greengross, B.
Grocott, L. [Teller]
Harrison, L.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howells of St. Davids, B.
Howie of Troon, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Jay of Paddington, B.
Jones, L.
King of West Bromwich, L.
Kirkhill, L.
Lockwood, B.
Macdonald of Tradeston, L.
McIntosh of Haringey, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mason of Barnsley, L.
Massey of Darwen, B.
Merlyn-Rees, L.
Mitchell, L.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Manchester, L.
Oxford, Bp.
Patel of Blackburn, L.
Paul, L.
Pendry, L.
Pitkeathley, B.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Radice, L.
Randall of St. Budeaux, L.
Rendell of Babergh, B.
Richard, L.
Rooker, L.
Sainsbury of Turville, L.
Sawyer, L.
Scotland of Asthal, B.
Sewel, L.
Simon, V.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Temple-Morris, L.
Thomas of Macclesfield, L.
Thornton, B.
Tomlinson, L.
Turnberg, L.
Turner of Camden, B.
Warner, L.
Warwick of Undercliffe, B.
Whitaker, B.
Whitty, L.
Williams of Elvel, L.
Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.

6 Nov 2003 : Column 940

1.2 p.m.

Earl Howe moved Amendment No. 3:


    After Clause 1, insert the following new clause—


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