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Baroness Noakes: My Lords, my Amendment No. 127 in this group has clearly been overtaken by the amendments to which the Minister has just spoken. I am pleased that the noble Lord has been converted to the idea of summarised accounts. We have always viewed them as an important element of the accountability of the foundation trust sector to Parliament.

I do not want to sound ungrateful but I hope that the Minister will be prepared to look again at the precise wording of his amendment. Amendment No. 123 states that the regulator should,

Therefore, if the regulator prepares his report for, say, the year ending 31st March 2005, the accounts that he receives during the year to 31st March 2005 will be those prepared for the year ending 31st March 2004. Thus, under the amendment tabled by the noble Lord, his summarised accounts will always be one year in arrears. That seems to me to go against proper accountability. I suggest to the Minister that the wording should refer to

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the accounts received by the regulator in respect of the financial year rather than those received in the year. I hope that the Minister will be prepared to take away and reconsider this matter before Third Reading.

Lord Warner: My Lords, I am not sure that I agree with the noble Baroness. However, as ever in a reasonable mood, I shall consult parliamentary counsel on the wording and write to her.

On Question, amendment agreed to.

Lord Warner moved Amendments Nos. 124 to 126:

    Page 116, line 16, leave out "the" and insert "each"

    Page 116, line 17, leave out "he" and insert "it"

    Page 116, line 17, leave out "it" and insert "them"

On Question, amendments agreed to.

[Amendment No. 127 not moved.]

Lord Warner moved Amendments Nos. 128 to 137:

    Page 116, line 20, at end insert—

"6A (1) The regulator must keep accounts in such form as the Secretary of State may direct.
(2) The regulator must prepare in respect of each financial year annual accounts in such form as the Secretary of State may direct.
(3) The regulator must send copies of the annual accounts to the Secretary of State and the Comptroller and Auditor General within such period after the end of the financial year to which the accounts relate as the Secretary of State may direct.
(3A) The Comptroller and Auditor General must examine, certify and report on the annual accounts and must lay copies of them and of his report before Parliament." Page 116, line 21, at beginning insert "In paragraph 6 and this paragraph"

    Page 116, line 22, leave out from second "the" to first "and" in line 23 and insert "establishment of the regulator"

    Page 116, line 28, leave out "his" and insert "its"

    Page 116, line 30, leave out "his signature" and insert "the signature of the chairman or deputy chairman or of any member of the staff who has been authorised by the regulator (whether generally or specifically) for that purpose"

    Page 116, line 32, leave out "his" and insert "its"

    Page 116, line 33, at end insert—


(1) The regulator is not to be regarded as the servant or agent of the Crown or as enjoying any status, immunity or privilege of the Crown.
(2) The regulator's property is not to be regarded as property of, or property held on behalf of, the Crown.
(3) The regulator must exercise its functions effectively, efficiently and economically." Page 116, line 38, leave out "office of the"

    Page 117, line 2, at beginning insert "Chairman or other member of the"

    Page 117, line 6, at beginning insert "Chairman or other member of the"

On Question, amendments agreed to.

6 Nov 2003 : Column 983

[Amendment No. 138 not moved.]

Clause 3 [General duty of regulator]:

Lord Warner moved Amendment No. 139:

    Page 2, line 4, leave out "his" and insert "its".

On Question, amendment agreed to.

Earl Howe moved Amendment No. 140:

    Page 2, line 5, leave out "performance by the Secretary of State of the"

The noble Earl said: My Lords, in moving Amendment No. 140, I shall speak also to Amendment No. 141. In Committee, I questioned why the independent regulator needs to be constrained under the terms of Clause 3 to behave in a way consistent with the performance by the Secretary of State of the duties laid down in the National Health Service Act 1977. I do not doubt that it is necessary for the regulator to behave in a way that is consistent with the duties laid down in that Act. However, I regret that he will apparently have to mimic the Secretary of State in the way in which those duties are performed. That seems to be the nearest that one could possibly get to a back-door power of direction.

The Minister disputed that interpretation and said that the duty was necessary to ensure that the regulator kept up to date with the changing times. I paraphrase his words but I do so, I hope, accurately. But, as my noble friend Lord Blackwell acutely pointed out, the duty might be taken to embrace any short-term targets set by the Secretary of State for the rest of the health service and, indeed, any kind of politically based shift of policy. To say that this clause is not to be interpreted as reflecting the political process, which is what the Minister said, is carrying credulity a little far. It is open to just that interpretation.

I hope the Minister will be able to reassure me better than he did last time that the way in which this clause is expressed could not be used as a means of reining in the operational freedoms of foundation trusts. The Minister may well protest that that is the opposite of what the Government are seeking to achieve in the Bill, but micro-management, albeit at one remove, will always be a temptation for Ministers at some point or another. I would like to see it ruled out absolutely. I beg to move.

Lord Warner: My Lords, as the noble Earl said, we discussed this issue in Committee. We went over the ground of the need for the general duties on the independent regulator to strike the right balance between ensuring consistency with the requirements of the NHS as a whole and retaining the independence of the regulator. That is what Clause 3, as drafted, achieves.

The independent regulator will be required to take account of the wider interests of the NHS by ensuring that he acts consistently with how the Secretary of State will achieve his duties under the NHS. But it is for the regulator to determine how to achieve this. There may be some areas where the regulator needs a steer on what he should use his powers to achieve. The duty in Clause 3 gives him that steer. For example, in deciding what services an NHS foundation trust must provide, the

6 Nov 2003 : Column 984

independent regulator must consider the need for comprehensive provision of services. The independent regulator might also include a requirement on NHS foundation trusts to take part in NHS-wide initiatives such as the integrity of information systems and clinical networks. We went over the ground of the integrity of information systems at an earlier stage.

To remove the reference to performance of the Secretary of State's duties, which these amendments would do, is, in our view, not acceptable. It would allow the independent regulator in effect to second-guess how the Secretary of State's policy on ensuring a comprehensive health service across the NHS as a whole was delivered. That is an important consideration, and we believe that this amendment is not appropriate.

I do not know whether I have reassured noble Lords. I should add that the regulator will be supported by a board structure, which was not the case before. Therefore, the idea that the Secretary of State can, so to speak, intimidate five people as well as the regulator is a little far-fetched.

Earl Howe: My Lords, I am grateful to the Minister. I was not thinking in terms of intimidation; I was thinking of the regulator looking at his duties and construing them in the way that I indicated. I am afraid that although the Minister has clarified the position very helpfully, he has not reassured me. He seemed to be describing the possibility of day-to-day interference by the regulator, which I was hoping he would say would not happen.

I know that the Government do not intend the regulator to intervene regularly in the affairs of foundation trusts. However, the way in which the clause could pan out does not give one cause for confidence that the Government's expectation will be realised.

I do not propose to take this further. However, I remain very concerned about these provisions and the way in which they are expressed. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 141 not moved.]

4.45 p.m.

Earl Howe moved Amendment No. 142:

    Page 2, line 7, at end insert—

"( ) In performing his duties under this Act, the regulator must have regard to such of the following as appear to him to be relevant in the circumstances—
(a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases where action is needed;
(b) the different needs and interests of persons using NHS services and in particular of the different interests of children, and of those living in rural and urban areas; and
(c) the principles set out in the compact between the Government and the voluntary sector and the codes of practice set out under it."

The noble Earl said: My Lords, I was very grateful for the support I received in Committee from my noble friends Lord Peyton, Lady Cumberlege and

6 Nov 2003 : Column 985

Lord Blackwell on this amendment. The primary issue that it covers is set out in proposed paragraph (a). Despite the reassurance that the Minister sought to give, there is nothing in the Bill which says that the regulator has to abide by good deregulatory principles. My question was: if there is nothing in the Bill, what is to stop the regulator ignoring those principles when it suits him?

If Clause 3 can be interpreted as giving a licence to the regulator not just to intervene by exception but to intervene in a quasi-management role in the shoes of the Secretary of State, I believe that a duty of this kind on the face of the Bill is essential. It is not enough to say that the regulator has a duty to act reasonably as a public office holder. Regulators, as I think my noble friend Lady Cumberlege remarked, like to win their spurs by being tough. They frequently do just that. In this Bill, there is no remedy if the regulator does not behave as he should.

Clause 23, which the Minister cited in his defence and which covers interventions by the regulator, is a matter for interpretation in itself. I believe that everyone needs to know that the regulator is legally bound to behave in a proportionate and consistent way. It is not something that should be open to argument. The way in which the regulator sets about his duties will have a direct effect on the operational freedoms and flexibilities of foundation trusts. I beg to move.

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