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Lord Walton of Detchant: My Lords, I support the amendment. Not many of your Lordships will remember the time, under a previous Labour Administration, when as a result of pressure from the unions in the National Health Service there was a move to remove all private beds from all NHS hospitals. That was when Lady Castle—then Mrs Castle—was Secretary of State for Health. In Newcastle, where I was working as a professor of neurology, there were three private beds in the entire body of NHS hospitals—one in each of the major hospitals.

As everyone knows, under the National Health Service there is an appropriate rule that any patients coming to this country from abroad specifically for medical treatment must, if they are admitted to an NHS hospital, be admitted as private patients. At that time I was in the very curious position of having to refuse admission to two patients from the United States referred to my specialist department for investigation because there were no private beds to which they could be admitted. My problem with Clause 15 is that the restrictions that are likely to be imposed could, at the very worst, result in a similar situation where it might not be possible for patients from overseas referred to this country for specialised care to be admitted to an NHS hospital for private care. For that reason I warmly support the amendment.

One great advantage of having private beds in NHS hospitals is that consultants working in those hospitals, who undertake private work—not all consultants do—are geographically there the whole time. The decision made by that previous Labour Administration gave the single most powerful impetus to the development of private hospitals outside the NHS of any other governmental decision. The result was that quite a number of consultants found themselves occupied in travelling distances between the NHS hospital where they worked primarily and the private hospitals where they saw their private patients. The advantages of having private care in NHS hospitals are profound. For that reason I support the amendment.

4.15 p.m.

Lord Tebbit: My Lords, I support both amendments. On Amendment No. 5, if such information is not known already to any hospital, it should be. It would be wholly right to give a hospital that extra incentive by requiring it to report what are those income and costs. However, I am even more interested in the amendment proposed by my noble friend, particularly because of my association with a hospital that he mentioned, the Nuffield Orthopaedic Centre.

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Some 14 years ago, I was approached to see whether I would be willing to help raise money to build a new orthotics unit in the hospital. The existing building was literally falling down. Since then I have had the privilege of chairing a group of men and women who have done great things to help that hospital. Shortly, we will have completed putting into the hospital some 12 million or 13 million over the period. It has made an extraordinary difference to the hospital; 6 million will go into the PFI, currently being undertaken at the Nuffield Orthopaedic Centre. Without that 6 million of free, charitable money, the PFI would not have been possible.

I believe that PFIs are a disaster, but at the moment they are the only way in which so many such schemes can be taken forward. I prefer to refer to them as hire purchase agreements. They have all the evils of hire purchase agreements plus the fact that the hospital has to be serviced by those who sold it to the trust, which was not the case under a hire purchase agreement on a motor car.

In the base year proposed in the Bill, the Nuffield Orthopaedic Centre was making a great effort to reduce waiting lists. To that end, it reduced the amount of private work undertaken to ensure that it could undertake sufficient of the mainstream NHS work to reduce the waiting lists. As a result its income from private practice in the base year fell sharply below its normal level of income. So, in any event, that base year would be unfair to that hospital. It seems quite wrong that there is no discretion available to deal with matters of that kind.

In addition, the Nuffield has an extra problem. At the same time as the PFI building is being undertaken, and in association with it, the hospital is undertaking a substantial building programme to increase its private-sector capacity. That is a classic example of being hit two ways by this Bill. I do not know what the effect will be on the finances of the hospital were the Bill to be enacted in its present form, but they would be serious, not merely for its private practice, but also for the finances of the hospital as a whole. It is a quite arbitrary, a quite unjust, a quite unfair and an extremely wrong way in which to behave towards a hospital that has a fine reputation and which I believe would be a front-runner in achieving foundation hospital status were that to be available to it.

Baroness Masham of Ilton: My Lords, I too support the amendment, especially as I have seen private patients arrive for very specialised treatment, which is often not available in private hospitals. Not only do they bring income into this country, because they have their entourage with them—their friends and relations—but it is a service that we can give. If it is not available in this country, they will go elsewhere. They will go to France, Switzerland or Germany and we shall lose some of our specialties in these fields.

Lord Warner: My Lords, I remind noble Lords that NHS foundation trusts have a primary purpose under this legislation to provide NHS services to NHS patients, based on need and not on the ability to pay and free at the

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point of use. To ensure that foundation trusts continue to focus primarily on servicing the needs of NHS patients, the terms of authorisation of an NHS foundation trust will place strict limits on the extent that it can undertake private patient activity. Amendment No. 4, with which I deal first, would effectively remove a clear basis for placing a cap on private patient activity and is therefore unacceptable to the Government.

The Government believe that income derived from the provision of services to private patients needs to be capped as a percentage of total income from clinical activities. The percentage will be fixed as the percentage that applied for each NHS foundation trust in the financial year ending April 2003. That will prevent NHS foundation trusts from carrying out a higher proportion of private work than they do today.

I believe that the cap on private activity provides NHS foundation trusts with clear parameters within which to plan their services and decide what private healthcare to provide. The existence of a cap based on explicit rules means that NHS foundation trusts will not need to go to the independent regulator for approval each time they propose to vary the amount of private patient work they undertake. I have to remind your Lordships that relying on a permissive power could of course mean—this point is particularly addressed to the Liberal Democrat Benches—that the regulator would impose no limit on private practice at all. Amendment No. 4 has that effect. I am not sure whether, in giving support to the amendment, noble Lords are aware of that.

I say to the Conservative Benches that, having just moved the amendment to give the regulator the right to interfere with regard to the local health economy, the regulator might take the view, armed with Amendment No. 4, that he should be even more rigorous in the capping of private practice than is provided for under the Bill. Noble Lords might like to think about both those issues before they get too carried away with Amendment No. 4.

On Amendment No. 5, as I have said previously, I do of course support the principle that information about income—

Lord Tebbit: My Lords, I am most grateful to the noble Lord for the elegant way he has read his official brief, but will he deal with my point concerning the Nuffield Orthopaedic Centre?

Lord Warner: My Lords, I thought I had made it fairly clear that we believe that this provision, which sets a limit on capping private patients, should be in the Bill. I know the noble Lord does not agree with me on that, but that is the Government's position. It has been our position throughout the proceedings on the Bill and we are not resiling from it.

Lord Tebbit: My Lords, I am most grateful to the noble Lord. Does he agree that the cap should be fair?

Lord Warner: My Lords, yes, I do. We believe that the cap is particularly fair.

Baroness Masham of Ilton: My Lords, perhaps I may ask the Minister what the cap is.

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Lord Warner: My Lords, I shall repeat what I said earlier. The income derived from the provision of services to private patients will be capped as a percentage of total income from clinical activities. The percentage will be fixed as the percentage that applied for each NHS foundation trust in the financial year ending April 2003. So that is the base year for which one calculates one's percentage. The percentage is then fixed in accordance with that particular base year's income in relation to clinical activities.

I know that noble Lords do not agree with this policy, but that is the policy of the Government. We are not changing it at this stage of the proceedings on the Bill.

On Amendment No. 5, as I have previously explained, I do of course support the principle that information about income and expenditure from private healthcare must be available and publicly accessible. However, I say again that Amendment No. 5 is unnecessary. This information will be set out in each NHS foundation trust's annual accounts, which must be made publicly available.

I understand that noble Lords may be concerned that information about income and expenditure related to private healthcare may not be set out transparently within NHS foundation trusts' accounts. But I hope it will reassure them if I explain that under provisions in the late lamented Schedule 1, all NHS foundation trusts must keep and prepare their annual accounts in line with directions set out by the independent regulator.

We expect that the regulator will issue an accounting manual for NHS foundation trusts, setting out the form, content, methods and principles to be used in preparing the accounts. That is likely to include detailed provision relating to income and expenditure from private income because the regulator will need this information in order to operate the private patient cap under Clause 15.

There is, therefore, no question of NHS foundation trusts somehow concealing the financial information relating to private activity within their accounts. Furthermore, since this information will be freely available, there is simply no need to duplicate it in a separate report.

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