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Secondly, it will enable the voice of patients to have a real influence on the regulatory work of the CQC. Close working and communication between HealthWatch England and the CQC opens up the possibility of having the patient voice hardwired into the work of the commission. It is not just a matter of looking at HealthWatch England but seeking to ensure that it really has a positive effect.

Lord Warner: Can the Minister give the House any information that the department has on the name recognition of the Care Quality Commission which would deliver the kind of profile for HealthWatch that she is claiming for it?

Baroness Northover: The noble Lord, Lord Warner, is very concerned that HealthWatch itself is a name that is going to be far too easily recognised and obliterate his charity. This is HealthWatch. The fact that it is in that relationship with the CQC does not obviate that. I would turn it back to the noble Lord and ask him who might recognise any of those predecessor organisations over the past 10 years and whether there was ever wide recognition of those.

22 Nov 2011 : Column 985

Lord Warner: That was not my question. The noble Baroness is arguing that HealthWatch would actually benefit from being hosted by or being part of the Care Quality Commission because it would be a powerful national body. I was asking the noble Baroness what the name recognition of that powerful national body was that would produce benefits for HealthWatch.

Baroness Northover: At the moment the CQC is relatively well known because its reports are in the press fairly frequently. The reports of the investigations that it has been undertaking have caused considerable concern. I cannot give the noble Lord a scientific response based upon polling as to the recognition of the CQC, but I would guess that it is somewhat higher than some of the organisations representing the patient voice that have been there before. When patients went into hospital and had concerns about various things, did those organisations spring to the forefront of their minds? Possibly not.

Baroness Morgan of Drefelin: I too have listened to this extremely important debate with a great deal of interest. I am slightly losing the thread of the Minister's argument. When the Minister started, she was saying that the debate was about how we put patients at the centre of the NHS. However, I think that the debate has been about whether or not HealthWatch England should be independent. What the Minister is saying is very interesting, and I do not want to interrupt her for too long. I want to understand what the benefits to HealthWatch England are of being enclosed within or subordinate to another organisation. If we want to have a HealthWatch England that is out there punching above its weight and really taking patient interests to the Secretary of State and the Commissioning Board, it would seem to have a much better opportunity to be heard, recognised and understood as an independent organisation that is not subordinate. Why do the Government think it is better to wrap it up inside another organisation which is very different in character, and make it dependent and subordinate to that organisation? How will that help it to fulfil its objective?

Baroness Northover: I am sorry that I am not putting this clearly. One of the major points about this is for HealthWatch England to be in a place where it can have a direct effect upon organisations like the CQC. We know from history that even when you have a national organisation, it does not necessarily mean that it has the effect that one would wish; the noble Baroness will know that all too well. Various parts of this organisation have various obligations built in to listen to HealthWatch, which we hope will help, but because it is there as part of CQC there is an obvious relationship, because CQC is the organisation that goes in and regulates the institutions that deliver care. The CQC regulates; the various institutions and other bodies provide the care. HealthWatch England is trying to draw out the patient's voice in this, and make sure that it is heard loud and clear.

Fancy this; I have just been given a quote from the chief executive of National Voices, Jeremy Taylor, who says that he is,

22 Nov 2011 : Column 986

Baroness Emerton: My Lords, we have referred to "patients" all the time, and I understood that HealthWatch was going to be public and patients. The Care Quality Commission looks at complaints. There is a culture issue here. The independence of HealthWatch is vital, because we are talking about the future as well as the present. My experience over the years, when we have been looking at new services, is to have the public and patient representation coming forward with ideas-it should not be governed by a health authority or anyone else, but be independent-and reporting back to the body that asks the question. We are going a little off-beam in terms of the Care Quality Commission, which would be culturally oppressive to any organisation that is set up to look to the future.

Baroness Northover: The noble Baroness is quite right that this is patients and public. One of our concerns about some of these amendments which refer only to patients is because the whole of the public are potentially patients, or related to or caring for patients and so on. It therefore does have to be defined widely, and she is right that we are looking to the future. I am not sure that I would share her view as to the CQC, which indeed needs to help play its part in driving up quality, which underpins much in the Bill.

Maybe I can carry on and address some of the specific points raised by noble Lords. The Bill preserves a clear distinction between the CQC and HealthWatch England. Although HealthWatch England will be established as a statutory committee of the CQC, it will be solely responsible for setting the direction of its own work and exercising particular functions. This will ensure that HealthWatch England targets issues and gathers evidence from the public to base its national advice on service standards and improvements. HealthWatch England will maintain its independent role by presenting the collective patient and public voice to the Secretary of State and to the relevant bodies.

5.45 pm

After listening to the concerns raised about the importance of reinforcing the distinction between the roles of the CQC and HealthWatch England, the Government made an amendment to the Bill in the other place that requires the CQC to respond in writing to the advice it receives from HealthWatch England. Similarly, HealthWatch England must publish a report on the way it has exercised its functions during the year and lay a copy before Parliament. This will be a distinct report by-and the responsibility of- HealthWatch England, as opposed to the general CQC report.

The noble Lord, Lord Patel, suggested that local healthwatch would have no direct influence on CCGs. Let me see if I can answer some of those issues which have been raised in relation to local healthwatch. I cannot agree that this is a fair representation.

22 Nov 2011 : Column 987

Local healthwatch will have the function of making known the views of people and making reports and recommendations for service improvements to commissioners of local care services, among others. This is set out in Clause 180, which amends Section 221 of the Local Government and Public Involvement in Health Act 2007.

The noble Lord also suggested that HealthWatch England should have regional arms. I cannot agree with him that this would be a good course of action. We want to see resources, wherever possible, channelled to the front line. One of the criticisms of the short-lived Commission for Patient and Public Involvement, which I have referred to before, was that this was too bureaucratic and its regional arms soaked up too many resources. We feel that having both a local and a national tier is sufficient. The noble Lord, Lord Patel, also asked about research. Local healthwatch will gather and present the views and experiences of local people to make reports and recommendations, and as part of this it may need to carry out studies. However, we have to remember that it is not primarily a research organisation. We have to emphasise that it is a champion of patients at local level.

Lord Patel: I did not have in mind the scientific meaning of "research". This is research of what is going on in individual hospitals. I use the example of Mid Staffordshire, where it was the research following initial incidents that made everybody aware of the extent to which bad practices were going on. That is the kind of research that local healthwatch should be involved in.

Baroness Northover: I take on board what the noble Lord says, and indeed he is absolutely right. There are various ways in which such problems should be picked up, but it is exceedingly important that that happens, and we certainly hope that local healthwatch will be part of that.

The noble Baroness, Lady Wheeler, talked about engagement with stakeholders. I can assure her that there is ongoing engagement with stakeholders through a HealthWatch advisory group. The National Association of LINks Members and others are members of this group, and there are others. The noble Baroness also asked about the funding for transition. The Government continue to make funding available to LINks- £27 million during the transition-and as part of the HealthWatch development programme we will make £3.2 million available for start-up costs for local healthwatch organisations.

The noble Lord, Lord Harris, asked about conflicts between the CQC and HealthWatch England. We disagree that the Bill does not already provide sufficient safeguards to ensure the independence of HealthWatch England within the CQC. Obviously, in extreme cases, the Secretary of State has the ability to intervene if HealthWatch England is significantly failing. However, both the CQC and HealthWatch England have responsibilities that they must deliver.

The noble Lord also spoke about the relationship between LINks and local authorities, and expressed some concern about that. LINks have been funded by

22 Nov 2011 : Column 988

the local authorities and it is right that so too will the local healthwatch. The relationship of local health authorities and LINks overall has been a successful one-although I take the point that he makes-that has encouraged collaborative working between LINk and the local authority. The Government believe that if local healthwatch organisations are to play a full part in their local communities, it is appropriate for them to be accountable to directly elected local bodies that are better able to assess the needs of the local population. It would not be appropriate for them to be funded nationally, but I hear what the noble Lord said.

My noble friend Lady Cumberlege spoke strongly in support of many of these developments from her knowledge of the history of the past few years. She showed how we are trying to build on the experience of previous Governments to take this forward. However, she will not be surprised to know that I have some concerns about some of her amendments. Her Amendments 307A and 308A would prescribe certain aspects of the membership of the HealthWatch England committee. For example, Amendment 307A proposes that:

"The majority of the members of the Healthwatch England committee shall not be members of the Commission".

The debate that we have just had illustrates why this is important. Certainly, we have sympathy with that point of view. However, we do not think that it should be in the Bill. It is best to put these in regulations, which would enable flexibility. Clearly, rules about the membership and procedure need to be consulted on and that will be taken forward when we engage over those regulations.

I told myself that we would write to the noble Lord, Lord Walton, about his organisation. However, it turns out that I am aware of a number of other organisations that use the name HealthWatch. The Government's proposals mean that the HealthWatch we envisage will be unique as the champion of the patient and the public voice. I am not sure whether that totally answers the concern of the noble Lord, Lord Walton. Perhaps I had better write to him after all.

My noble friend Lady Jolly flagged up concerns about complaints. Perhaps I may reiterate that HealthWatch England's role is that of a national champion of the consumer voice. Its purpose will be to bring that voice to the attention of regulators and others. Giving HealthWatch England powers of investigation of complaints could compromise its primary role in that regard. One of the developments introduced by the previous Government was to bring in a statutory framework for an investigation of NHS and adult social care complaints. It remains the Government's view that complaints are best dealt with in the existing framework and initially at the local level. This provides a better opportunity for local organisations to learn from their mistakes and to improve services as a result. Where resolution is not possible locally a complainant is able to complain further to the Health Service Commissioner, the ombudsman or the local government ombudsman, as appropriate. The ombudsman's functions of investigation are statutory. Therefore, we see no reason to duplicate. The structure set in place by the previous Government will stay in place and acts in that way.

22 Nov 2011 : Column 989

As ever in this House there is a wide range of experience, particularly perhaps in this instance on what has not worked in the past. It is a great challenge to enlist patients and the public in making sure that standards are driven up. We believe that devolving to the local level with clinicians and patients more in the driving seat should help. I welcome the support of noble Lords who feel that these changes are a move forward, but I hear them when they say that there are areas that still need to be addressed. For that reason, we would certainly like to continue discussions with those who wish to feed in on this issue in order to make it as good as we can: namely, a system that more effectively brings to bear the voice of patients and the public, which has so far proved to be a difficult challenge not only to the previous Government but to Governments before that.

Lord Patel: My Lords, I was hoping that at the end the noble Baroness would be able to say more strongly how the Government intend to take forward today's debate, but I am afraid that she did not do that, which is a pity. There was strong support for HealthWatch England and local healthwatch to have more independence. Her argument about a synergy between the CQC and HealthWatch England is not absolutely correct. Yes, there is a degree of synergy, but not in all areas, including: commissioning, as mentioned by the Minister; community care, where the CQC is not involved; advice to the Secretary of State on the mandate; and social care as it develops to more home-based care where the CQC will not be involved. HealthWatch England has a much wider remit than the CQC.

I have a rule in life never to oppose anything that the noble Baroness, Lady Cumberlege, says or does and I will not break that rule now. She is always well researched and communicates her research well, but I have to say that her well researched argument supports the Government more and I am surprised that the noble Baroness, Lady Northover, did not feel able to accept some of her amendments. None the less, it is a halfway house that would give more independence to HealthWatch England within the CQC. If we are serious about giving HealthWatch England independence, it should be truly independent. It should have its own powerful voice for the public and patients. It should not be answerable to another body that will control it, fund it and employ its members. That is the great weakness.

The outside voice of the people involved in this work is strong. They would like to test their work in an independent way. Previously, they have failed because they have not been given that independence. Let us be serious about giving a strong voice to the public and patients. Let us give them independence and see whether they can stand up to the challenge.

There was a lot of support today but I am willing to continue talking, particularly with the outside organisations, if that commitment can be made by the Government. We will always have an opportunity to come back. I beg leave to withdraw the amendment.

Amendment 99 withdrawn.

Amendments 99A and 100 not moved.

22 Nov 2011 : Column 990

Amendment 100A

Moved by Lord Hunt of Kings Heath

100A: Clause 20, page 16, line 30, at end insert-

"( ) If, within 60 parliamentary days of the mandate having been laid-

(a) either House of Parliament makes a recommendation with regard to the proposal, or

(b) a committee of either House of Parliament makes recommendations with regard to the proposal,

the Secretary of State must lay before Parliament a statement setting out the Secretary of State's response to the resolution or recommendations."

Lord Hunt of Kings Heath: My Lords, the debate on the first group was instructive on the relationship between Parliament, the Secretary of State and the mandate that the Secretary of State sets for the NHS Commissioning Board. In our final exchange the noble Earl said that he was fearful of Parliament micromanaging the National Health Service. My fear is that that is shorthand for saying that Parliament may be told that it will no longer be able to ask detailed questions about the NHS because it is covered in the mandate. Whatever it may be, the mandate assumes critical importance since it lays out the objectives set for the NHS Commissioning Board by the Secretary of State. My amendment is not about micromanagement, it is about proper parliamentary scrutiny of what the Secretary of State has decided, and it sets out a well tried procedure. The final decision on the mandate will remain with the Secretary of State, but it will allow Parliament to undertake proper scrutiny. I beg to move.

6 pm

Division on Amendment 100A

Contents 201; Not-Contents 220.

Amendment 100A disagreed.

Division No. 2


Adebowale, L.
Ahmed, L.
Allenby of Megiddo, V.
Alton of Liverpool, L.
Anderson of Swansea, L.
Andrews, B.
Bach, L.
Bakewell, B.
Bassam of Brighton, L. [Teller]
Beecham, L.
Berkeley, L.
Best, L.
Bilston, L.
Blood, B.
Boateng, L.
Boothroyd, B.
Borrie, L.
Boyd of Duncansby, L.
Bradley, L.
Bragg, L.
Brooke of Alverthorpe, L.
Brookman, L.
Browne of Belmont, L.
Browne of Ladyton, L.
Campbell-Savours, L.
Carter of Coles, L.
Christopher, L.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Collins of Highbury, L.
Corston, B.
Crawley, B.
Crisp, L.
Cunningham of Felling, L.
Davies of Coity, L.
Davies of Oldham, L.
Davies of Stamford, L.
Deech, B.
Desai, L.
Dixon, L.
Drake, B.
Dubs, L.

22 Nov 2011 : Column 991

Elder, L.
Emerton, B.
Erroll, E.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Falconer of Thoroton, L.
Falkland, V.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Fellowes, L.
Finlay of Llandaff, B.
Ford, B.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Gale, B.
Gibson of Market Rasen, B.
Giddens, L.
Gilbert, L.
Golding, B.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Grantchester, L.
Grenfell, L.
Grey-Thompson, B.
Griffiths of Burry Port, L.
Grocott, L.
Hall of Birkenhead, L.
Hanworth, V.
Harries of Pentregarth, L.
Harris of Haringey, L.
Harrison, L.
Haskel, L.
Haskins, L.
Haworth, L.
Hayman, B.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Henig, B.
Hilton of Eggardon, B.
Hollick, L.
Hollins, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Howells of St Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Stretford, B.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Hutton of Furness, L.
James of Blackheath, L.
Jay of Paddington, B.
Jones, L.
Jones of Whitchurch, B.
Judd, L.
Kerr of Kinlochard, L.
Kestenbaum, L.
Kilclooney, L.
King of Bow, B.
King of West Bromwich, L.
Kirkhill, L.
Knight of Weymouth, L.
Laming, L.
Lea of Crondall, L.
Liddell of Coatdyke, B.
Liddle, L.
Lipsey, L.
Lofthouse of Pontefract, L.
McAvoy, L.
McConnell of Glenscorrodale, L.
McDonagh, B.
McFall of Alcluith, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Mallalieu, B.
Mar, C.
Masham of Ilton, B.
Maxton, L.
Meacher, B.
Monks, L.
Moonie, L.
Morgan, L.
Morgan of Drefelin, B.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Yardley, B.
Myners, L.
Nye, B.
O'Loan, B.
O'Neill of Clackmannan, L.
Owen, L.
Palmer, L.
Parekh, L.
Patel, L.
Patel of Blackburn, L.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Prashar, B.
Prescott, L.
Prosser, B.
Puttnam, L.
Quin, B.
Radice, L.
Ramsay of Cartvale, B.
Rea, L.
Reid of Cardowan, L.
Rendell of Babergh, B.
Robertson of Port Ellen, L.
Rogan, L.
Rooker, L.
Rosser, L.
Rowe-Beddoe, L.
Rowlands, L.
Royall of Blaisdon, B.
Scotland of Asthal, B.
Sewel, L.
Sherlock, B.
Simon, V.
Smith of Basildon, B.
Smith of Finsbury, L.
Soley, L.
Stern, B.
Stevenson of Balmacara, L.
Stoddart of Swindon, L.
Stone of Blackheath, L.
Taylor of Bolton, B.
Temple-Morris, L.
Tenby, V.
Thornton, B.
Tomlinson, L.
Touhig, L.
Tunnicliffe, L. [Teller]
Turnberg, L.
Turner of Camden, B.
Wall of New Barnet, B.
Walpole, L.
Warner, L.
Warnock, B.
Warwick of Undercliffe, B.
West of Spithead, L.
Wheeler, B.
Whitaker, B.
Whitty, L.
Wigley, L.
Williams of Elvel, L.
Williamson of Horton, L.
Wills, L.
Wood of Anfield, L.

22 Nov 2011 : Column 992

Woolmer of Leeds, L.
Worthington, B.
Young of Hornsey, B.
Young of Norwood Green, L.
Young of Old Scone, B.


Addington, L.
Ahmad of Wimbledon, L.
Alderdice, L.
Anelay of St Johns, B. [Teller]
Arran, E.
Ashdown of Norton-sub-Hamdon, L.
Ashton of Hyde, L.
Astor, V.
Astor of Hever, L.
Attlee, E.
Avebury, L.
Ballyedmond, L.
Barker, B.
Benjamin, B.
Berridge, B.
Black of Brentwood, L.
Bonham-Carter of Yarnbury, B.
Boswell of Aynho, L.
Bottomley of Nettlestone, B.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Brinton, B.
Brittan of Spennithorne, L.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Browning, B.
Burnett, L.
Buscombe, B.
Byford, B.
Caithness, E.
Cathcart, E.
Chalker of Wallasey, B.
Clement-Jones, L.
Colwyn, L.
Condon, L.
Cope of Berkeley, L.
Cormack, L.
Cotter, L.
Courtown, E.
Craigavon, V.
Cumberlege, B.
Dannatt, L.
De Mauley, L.
Dear, L.
Deben, L.
Denham, L.
Dholakia, L.
Dixon-Smith, L.
Dobbs, L.
Doocey, B.
Dykes, L.
Eaton, B.
Eden of Winton, L.
Edmiston, L.
Empey, L.
Falkner of Margravine, B.
Faulks, L.
Feldman of Elstree, L.
Fink, L.
Flight, L.
Fookes, B.
Forsyth of Drumlean, L.
Fowler, L.
Framlingham, L.
Freud, L.
Garden of Frognal, B.
Gardiner of Kimble, L.
Gardner of Parkes, B.
Geddes, L.
German, L.
Glenarthur, L.
Glentoran, L.
Gold, L.
Goodhart, L.
Goodlad, L.
Grade of Yarmouth, L.
Green of Hurstpierpoint, L.
Griffiths of Fforestfach, L.
Hamilton of Epsom, L.
Hamwee, B.
Hanham, B.
Harris of Peckham, L.
Harris of Richmond, B.
Henley, L.
Higgins, L.
Hill of Oareford, L.
Hodgson of Astley Abbotts, L.
Home, E.
Hooper, B.
Howard of Lympne, L.
Howe, E.
Howe of Aberavon, L.
Hussein-Ece, B.
Inglewood, L.
Jenkin of Kennington, B.
Jenkin of Roding, L.
Jolly, B.
Jones of Cheltenham, L.
Jopling, L.
Kakkar, L.
Kirkham, L.
Kirkwood of Kirkhope, L.
Knight of Collingtree, B.
Kramer, B.
Lamont of Lerwick, L.
Lawson of Blaby, L.
Lee of Trafford, L.
Lester of Herne Hill, L.
Lexden, L.
Lingfield, L.
Linklater of Butterstone, B.
Loomba, L.
Lucas, L.
Luce, L.
Luke, L.
Lyell, L.
Lytton, E.
McColl of Dulwich, L.
MacGregor of Pulham Market, L.
Maclennan of Rogart, L.
McNally, L.
Maddock, B.
Magan of Castletown, L.
Maginnis of Drumglass, L.
Mancroft, L.
Mar and Kellie, E.
Marlesford, L.
Mayhew of Twysden, L.
Miller of Chilthorne Domer, B.
Montrose, D.
Morris of Bolton, B.
Murphy, B.
Newlove, B.
Newton of Braintree, L.
Nicholson of Winterbourne, B.
Northover, B.

22 Nov 2011 : Column 993

Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
O'Cathain, B.
Palmer of Childs Hill, L.
Parminter, B.
Patten, L.
Perry of Southwark, B.
Phillips of Sudbury, L.
Plumb, L.
Popat, L.
Powell of Bayswater, L.
Randerson, B.
Rawlings, B.
Razzall, L.
Reay, L.
Renfrew of Kaimsthorn, L.
Rennard, L.
Ribeiro, L.
Risby, L.
Ritchie of Brompton, B.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Rodgers of Quarry Bank, L.
Rotherwick, L.
Ryder of Wensum, L.
St Edmundsbury and Ipswich, Bp.
Saltoun of Abernethy, Ly.
Sanderson of Bowden, L.
Sandwich, E.
Scott of Needham Market, B.
Seccombe, B.
Selborne, E.
Selkirk of Douglas, L.
Selsdon, L.
Shackleton of Belgravia, B.
Sharkey, L.
Sharples, B.
Shaw of Northstead, L.
Sheikh, L.
Shephard of Northwold, B.
Shipley, L.
Shutt of Greetland, L. [Teller]
Skelmersdale, L.
Smith of Clifton, L.
Spicer, L.
Stedman-Scott, B.
Steel of Aikwood, L.
Stephen, L.
Stewartby, L.
Stirrup, L.
Stoneham of Droxford, L.
Storey, L.
Stowell of Beeston, B.
Strasburger, L.
Strathclyde, L.
Taverne, L.
Taylor of Holbeach, L.
Teverson, L.
Thomas of Gresford, L.
Thomas of Winchester, B.
Tope, L.
Tordoff, L.
Trimble, L.
True, L.
Tyler, L.
Tyler of Enfield, B.
Ullswater, V.
Verma, B.
Wade of Chorlton, L.
Wakeham, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walmsley, B.
Walton of Detchant, L.
Warsi, B.
Wasserman, L.
Watson of Richmond, L.
Wei, L.
Wheatcroft, B.
Wilcox, B.
Williams of Crosby, B.
Willis of Knaresborough, L.
Younger of Leckie, V.
6.13 pm

Amendment 101 not moved.

Amendment 101A not moved.

Amendment 102

Moved by Lord Warner

102: Clause 20, page 17, line 14, at end insert-

"(2) In discharging its duty under this section the Board shall establish an independent panel to formulate minimum standards of-

(a) financial,

(b) performance, and

(c) asset,

management information to be included in the audited accounts for all bodies to which this subsection applies.

(3) Subsection (2) applies to all bodies commissioning or providing NHS services under annual contracts of at least £500,000.

(4) The independent panel shall be established-

(a) within 6 months of this Act receiving Royal Assent, and

(b) jointly with Monitor on a basis agreed by the National Audit Office.

(5) The standards formulated by the panel shall be kept under review by the Board and Monitor and, in doing so, they will pay particular regard to the extent to which the standards have ensured levels of public accountability similar to those required of bodies providing comparable services."

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Lord Warner: My Lords, I regard this amendment as one of the most important building blocks in the Bill, although I have to confess that I am not sure that it will attract the same enthusiasm from the Government or their Civil Service advisers. The amendment is based on my own experience as a Minister, especially when dealing with the financial meltdown of the NHS in 2005-06-which I have recorded for posterity in a book that I have written on the subject. Since I believe that the NHS is heading for another financial meltdown, Ministers, especially in the Treasury, might give some serious thought to the proposal in Amendment 102.

There is a very good book about the history of the Audit Commission called Follow the Money. I think that we should do a bit more following of the money so far as the NHS is concerned, and not simply rely on things like outcomes frameworks. At the core of this amendment is the rather simple idea that there should be a minimum set of standardised management accounts covering finance, performance and asset use, applying to all bodies providing NHS services that spend more than £500,000 a year. I have put that fairly arbitrary figure in the amendment so that bodies which are relatively modest spenders are not brought into these requirements. It is a matter for negotiation whether that amount is the right one to set. However, with the bigger, higher spending bodies, we need greater standardisation of management accounts because we need to know more than we know now. At present, we cannot easily compare the performance of similar bodies in terms of how they spend our money, how this expenditure relates to what they produce, the value for money they give and how well they use public assets.

It has often been forgotten, under successive Governments, that the NHS is, in effect, a major landowner and user of public buildings. The real estate footprint of the NHS is far too large for the buildings on it and the use that is made of them, and I will give a little data later in my remarks. There is, at present, little rigorous assessment of whether the NHS holds on to land unnecessarily, how much of its accommodation and equipment is used well or intensively, or how much of the buildings or land is left vacant. Work done in the London SHA, after my time as a Minister, shows how scandalously poorly the NHS uses land and buildings. There is no reason to believe that the situation is different in other parts of the country. I am happy to give the Minister and his boss chapter and verse outside this debate. However, in a nutshell, in non-foundation trust sites in London, only some 18 per cent of NHS land was built on; another 18 per cent was underutilised; and some 25 per cent of the buildings were functionally unsuitable for the purpose for which they were used. I have given you a snapshot of London two or three years ago, but it is probably not much different now.

Although we have a great deal of data on the performance of acute hospitals, much of it cannot be related to expenditure because service line accounting-in the jargon-is still not used in most hospitals, especially outside the foundation trust sector. However, acute hospitals are a positive treasure chest of performance data compared with community health services, mental health services and primary care, where any relationship

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between what they spend and what they deliver is more conspicuous by its absence. Any public company which tried to run its affairs with the same financial performance or asset data as the NHS does would be insolvent very quickly. We should take the opportunity of this Bill to do something about moving to some standardised management accounts for all but the smallest providers.

If this amendment is passed and this requirement is put into the Bill, it would improve commissioning, choice and competition. Without the data that would be produced by implementing the amendment, it is very difficult to secure effective commissioning, effective choice and effective competition. One simply would not have the data to compare on a standardised basis the performance of many of the bodies involved.

I recognise that some of your Lordships do not favour competition. It is certainly easy to resist competition in the NHS if it remains a largely data-free zone in terms of finance and performance. Good commissioning and patient choice become very difficult to deliver if one does not have that information on a standardised basis.

I hope that the Government are prepared to give proper consideration to this longstanding problem. I do not regard this as a party-political issue; this is all about good governance and running the NHS more effectively on behalf of those who are funding it. I beg to move.

Baroness Williams of Crosby: My Lords, it would be very helpful if the Minister could say something about the proposals with regard to the accounts and financial statements made by CCGs, which will obviously depend a great deal on the guidance from the board.

I am concerned that a number of clinical commissioning groups without any great knowledge of how to deal with audit and financial problems will emerge. You could quite quickly see a commissioning group getting into difficulties, not because it was not performing well but because it had very little awareness of requirements relating to information on its conduct in relation to assets and finances that was needed to establish its standing as a proper clinical commissioning group. I am concerned because there is already some evidence of clinical commissioning groups seeming rather unclear about the accounting standards that they have to live by. It is important that the board makes very clear indeed what its expectations are and that it involves, as the amendment would require, the National Audit Office, which will become-and in some ways is already-a fundamental arbiter on the quality and standards of accounting practices.

I hope that the Government will consider the amendment carefully and that the Minister will let us know what the Government's intentions are with regard to setting out the standards that they expect from clinical commissioning groups and that the board should lay down. The Bill is currently uncommunicative on the subject.

The whole process of procuring the pharmaceutical and other products that a commissioning group will need is always problematic. It is crucial that what is

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required is clearly set out, and that there is an indication under which we can compare one clinical commissioning group with another.

Baroness Cumberlege: My Lords, I should like to probe the amendment a little further because I think that it has a lot of merit, especially when one considers the PFI arrangements that have so destroyed the financial situation within the NHS.

I should like to ask the noble Lord, Lord Warner, about the accountability of the body. As I understand it, it is to be independent. I presume that he means independent in its membership as well as the way in which it works. I wonder where that accountability lies, whether there is a relationship with the business plan of the Commissioning Board and how the noble Lord sees the body working. Will the panel run for years and years, or will it exist just to set the standards at the beginning? Perhaps we could have a fuller picture.

Lord Warner: My Lords, I am seeking to set up something that would function in the early years of the national Commissioning Board. It would be independent in the sense that I did not want it to be dominated by NHS finance people. I want it to be a broader group of people than just those who have worked in the NHS. There is a tendency on the part of the NHS to think of itself as unique, special and different from other businesses, whereas it is a business which needs some business systems in it.

I am not someone who wants to keep bodies going in perpetuity. I am certainly open to negotiation on how long this one exists. I feel more strongly about the National Audit Office keeping an eye on this area. The national Commissioning Board needs some outside help to get this started, particularly in asset management, which is a long neglected area in the NHS, as I think the noble Baroness knows.

Some of the problems with PFI which she mentioned arise from the fact that the NHS has not had a track record of looking after its assets. It does not see them in the terms that a more commercial organisation would do. Many of the things that have gone wrong with PFI are not to do with there being anything inherently wrong with it, because it delivered a lot more hospitals more quickly and effectively than previous public procurement systems. What went wrong was the hubris in the NHS in many parts of the country about its ability to build a Taj Mahal district general hospital with some very dodgy income/revenue flows spread over time, most of the contracts being for 30 years. If one looks at the quality of some of the financial management in the NHS, it is not surprising that it could not do a very good job, even with some outside help, of getting a realistic idea of the revenue that it was likely to generate over 25 to 30 years to fund those projects.

Lord Owen: My Lords, I had not expected to intervene in this debate, but some of the things that I want to say may fit more naturally under this issue. The idea of having a standardised method of comparison right across the National Health Service is a very good one and it has merit if it comes initially from an independent group.

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The Government have a special responsibility here, because, very soon after taking office, they encouraged the noble Lord, Lord Green, to look at all these areas, of which land and asset management was a very important part. We all know that this has not been coherently done in the past and that there are substantial land assets throughout the NHS.

As we go to smaller and more fragmented units, it is even more important that there is some structure which looks at land management across the board; otherwise it will be seen in a very narrow context. There may be a sale of some land asset which might quite appropriately have been offered to a neighbouring organisation, whether it is a commissioning group or a foundation hospital. The proposed body would cover all aspects, not just commissioning groups but foundation hospitals as well, and so I am very attracted to it.

The report of the noble Lord, Lord Green, said that not only did government not utilise the efficiencies of having an overall look at land management but also that it had no coherent way of achieving its procurement gains. Any large organisation looks across these areas and maximises the advantages that are available. Procurement has not been done very well in the National Health Service, so there is room for improvement whatever structure is implemented. In the past, regional health authorities had procurement functions and were able to negotiate substantially improved contracts because of the size of the procurement agency. I do not quite know what is going to happen in the procurement field. I therefore put the matter to the Minister so that he can perhaps indicate where he thinks it would be appropriate to raise the issue of procurement in future. Again, I say that the work needs to be done by independent people. That was the advantage of the Green report: he got his people from many different fields and focused on government as a whole. He did not look very closely at the NHS, but there is merit on both these questions of land and procurement in seeing whether we can achieve some economies of scale and in taking a fresh and independent look, which we have not had for some time.

6.30 pm

Baroness Murphy: My Lords, I recognise the problem that has been described so ably by the noble Lord, Lord Warner, but I wonder whether he is not being a little pessimistic about the possibilities of the architecture providing the right framework to do what he wants to do. If we look at the role of the economic regulator, it must, as it has under the more restricted role of Monitor, include a very serious analysis of how financial management is happening in provider trusts, or foundation trusts, and has led to the growth of the service level management system, which for the first time has given people an idea about which services are making money, which are losing money, which are loss leaders and so on.

These are terrible terms when one is talking about human services and I do not like them. Nevertheless they are business terms and we understand what they mean in this context. They have also led to a much more fundamental understanding of the capital assets of each foundation trust. It has led to better use of capital assets at the moment, but that is largely because

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at a time of massive growth people do not look to make best use of their capital assets. At a time when money is shrinking or staying the same, as it will be over possibly the next 10 years or more, people will be looking to use their capital assets more effectively.

We must look to the economic regulator to encourage the sort of use of assets that we have so often wanted to encourage in the younger Monitor-to use those assets more effectively and to ensure that we can look across the totality of both community and acute hospital providers at how entrants into the system are using their assets. That would be possible under the new Monitor. I am not sure that we should set up another body to do that although I can see it might have a short term job to make sure that everybody is using the same monitoring mechanisms and is putting in the same sort of systems of financial accounting. With the new architecture we should be able to do that through Monitor.

Lord Warner: My Lords, I should like to respond briefly to the noble Baroness. There is nothing in the amendment that would stop this information being given to Monitor. If people want to amend the amendment in terms of Monitor as the customer for it, I do not feel strongly about that. I have put it under the national Commissioning Board because one of the things it will be doing is, I suspect, giving guidance to clinical commissioning groups on the nature of contracts. One of the requirements that can be used to drive change in this area is contractual requirements on people in terms of the standardisation of accounts. I saw the national Commissioning Board as likely to be able to deliver through this independent panel-which can be as short lived as one wants-the kind of changes that we need.

I want to emphasise to the House that the financial situation in the NHS is serious and will get really serious over the next few years. We need to improve very rapidly the quality of the financial management accounting systems in the NHS. That is a separate issue from the assets and procurement issue, to which the noble Lord, Lord Owen, has very ably drawn attention, because it is another long-standing problem. The standardisation of management accounts is an urgent issue for the NHS in the brave new world that it is going into, particularly with the large increase in the number of new organisations that are going to start for the first time to handle big sums of money without much clarity about how they are supposed to account for it.

Lord Walton of Detchant: My Lords, I believe it would be helpful to the Committee, even if one leaves aside the crucial role of Monitor with its new, major responsibilities, if the Minister could let us know what kind of administrative support, and in particular what kind of financial management support, Sir David Nicholson and his staff in the national Commissioning Board will have. Can he give us any information about that?

Baroness Morgan of Drefelin: My Lords, I am not sure whether my intervention will complicate the debate further but I very much support the sentiments behind the amendment of the noble Lord, Lord Warner. The

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idea of standardised management accounts could be very helpful. One of the questions I invite the Minister to address is connected to my concerns about how we ensure that the NHS as an environment for research and innovation and as an engine for our economy is properly promoted and understood. Can the Minister comment on what the role of the Office for Budget Responsibility might be in looking at the NHS spend-the billions of pounds that go into the NHS-and whether there is a role for the Office for Budget Responsibility in looking at how the economy is benefiting from the investment that we make as a country in the NHS.

Lord Hunt of Kings Heath: My Lords, I am grateful to my noble friend for moving the amendment. I should like to start with the question about the scale of the financial challenge. As my noble friend suggested, the amount of money that has got to be taken out of the NHS through efficiency in the next four years is considerable. The indications are that while in the current financial year there will be some parts of the NHS that really struggle, by and large the service is going to get through. However, years two, three and four are going to be much more fundamental challenges. The need for the NHS to use its assets as effectively as possible, to get on with reconfiguration of services, and for all groups involved in the NHS to buy into that kind of change, is going to be essential. The more comparative information that can be provided the better, which is where I hope the Minister will be responsive to my noble friend.

The noble Lord Lord, Lord Owen, mentioned procurement. I should wear a hat as president of the Health Care Supply Association, and say that he is right to identify procurement as a potential area of much greater efficiency in the future. However, the Minister will know that two recent reports from the Public Accounts Committee have raised concerns about procurement and really are inviting the Minister in particular and the department specifically to take on a much greater leadership role in ensuring-it is rather like the Green report suggested-that the NHS makes the most of its potential buying power. I ask the Minister how, in the devolved structure that the Government are enunciating, we can ensure that on issues such as the use of our assets and procurement we still act as one national service making the most of our buying power? Unless we do that, there are going to be continuous PAC reports looking at the problem of national direction.

Finally, I endorse the comments made by the noble Baroness, Lady Williams. What about clinical commissioning groups? The Bill is silent on how CCGs are to be accountable. One way would be the publication of comparative performance of how they use their resources-the more comparative performance, the better. I should also like to ask the Minister about primary medical services. As we know, this has always been a difficult area. We have had various efforts through the GP contract to have much more of a performance culture. I cannot say that has been uniformly successful. However, in these days of stringency, I do not think we can get away with that any longer. It would be good to hear how we can extend the whole concept of efficiency

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performance measurement into an area of the health service, such as GPs themselves, where I am sure there is much more efficiency to be gained.

Earl Howe: My Lords, this has been a useful debate. I should probably say straight away to the noble Lord, Lord Warner, that I am not convinced by the amendment. That is not because I do not believe that the issues that he has raised are important-I certainly do. Good governance is absolutely dependent on having good data and on the financial control that that data enable the board of directors to exercise. It is very much about ensuring throughout the health service that the QIPP agenda is pursued effectively. The QIPP agenda is all about ensuring the more efficient and effective use of money. This could not be a more salient topic at the moment.

However, Amendment 102, which the noble Lord has proposed, would in my view introduce a new layer of bureaucracy. I hope to show that it is not required. My main reason for saying that is that accounting and disclosure requirements for the Department of Health and all NHS bodies are ultimately set by the Treasury. These are already based on independent advice.

I am conscious that that is rather a condensed answer, so, if I may, I should like to go into a little detail as to how this will work. Paragraph 15 of the new Schedule A1 to the NHS Act, inserted by Schedule 1 to the Bill, enables the Secretary of State, with the agreement of the Treasury, to specify the form and content of the board's accounts and the methods and principles to be applied in their preparation. The Bill places an obligation on the board to produce annual accounts, as well as in-year accounts covering shorter periods if necessary.

In addition, the Bill provides powers for the Secretary of State to require such other information as is considered necessary for the purpose of exercising his functions in relation to the health service. This is what one might term management information-data required by those controlling funding or setting policy alongside the financial returns in order to provide an accurate picture of issues such as staffing levels.

For clinical commissioning groups, it is the NHS Commissioning Board that sets the accounting and reporting requirements. It will do so in a way that is consistent with requirements set by the Secretary of State, and approved by the Treasury for the purposes of consolidation.

My noble friend Lady Williams expressed the fear that CCGs may not be well equipped to handle that kind of reporting. The board will set the accounting and reporting requirements for CCGs, as I indicated. Paragraph 16 of Schedule 1A to the NHS Act 2006, inserted by Schedule 2 to the Bill, allows the board, with the approval of the Secretary of State, to give directions to CCGs as to the methods and principles of accounting which they must use and the form and content of their accounts. That will provide a means whereby much greater control can be had over the form, content and consistency of those accounts.

These provisions are mirrored in relation to NHS foundation trusts, with Monitor or the Secretary of State specifying the form and content of the trusts' accounts, again with Treasury agreement.

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6.45 pm

The noble Lord, Lord Owen, raised the extremely important issue of procurement. It is a separate issue to the one that we are discussing here, but it is allied to it. It is extremely relevant at the moment. He will be interested to know that a great deal of work is going on in the department on this. He asked where it might be best to discuss procurement issues. I suggest that we do so in Clause 71, which is within Chapter 2 of Part 3. Far be it for me to encourage any noble Lord to table further amendments, but if the noble Lord, Lord Owen, would care to do so, we could have a useful debate on that topic.

Together, these requirements will ensure a high degree of consistency and comparability across all NHS bodies. That is the key point. Amendment 102 sets its sights on that idea and I do not disagree with that. The trouble is that it appears to override the line of accountability that I have set out, and the powers of the Treasury and Secretary of State to determine the standards of financial reporting. I cannot agree with the noble Lord that it would be helpful to move this responsibility to an entirely separate panel.

Furthermore, the Treasury, the Department of Health and Monitor are under a specific duty under the Government Resources and Accounts Act to consult with the Financial Reporting Advisory Board in arriving at reporting requirements. That advisory board is independent and would seem already to fulfil the role that is proposed for the independent panel under this amendment.

Amendment 102 would also impose additional accounting requirements on non-statutory providers of NHS services. Statutory providers-for example NHS trusts and foundation trusts-are already subject to the type of accounting requirements set out in this amendment. However, for non-statutory providers operating in a competitive market, such requirements might be commercially prejudicial to their interests. I am afraid that I also think that the imposition of additional, centrally determined accounting and reporting requirements would be expensive and onerous for non-NHS providers or commissioners, many of which are subject to existing Companies Act and charities legislation disclosure requirements in any case.

The noble Lord, Lord Hunt, referred to primary medical services. That is where the amendment has another wrinkle, because it might also be deemed to apply to some GP practices; GPs being independent contractors providing NHS services. I have difficulty with the idea that it is equitable or indeed necessary to open up GP partnership accounts to wider public scrutiny in a situation where GP remuneration, fees and allowances are determined nationally.

The noble Baroness, Lady Morgan, asked-

Baroness Finlay of Llandaff: Before the Minister sits down, will he say why, if he feels that other accounts of public money should be open, general practitioners' accounts of public money should not be open within the practice? This is public money that they will be receiving.

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Earl Howe: Practices will be accountable for the money that they receive to commission services, as will CCGs. But it is another matter to say that independent private individuals should lay open what are effectively their tax returns to the general public. That is the sensitivity there.

Baroness Finlay of Llandaff: This is not about GPs' private incomes and tax returns. This is about the finances of the business, which is their practice partnership, and within that the way in which that money is being spent on business, just as other business accounts have to be open and filed.

Earl Howe: I understand the noble Baroness's point. Clearly, we want to see maximum accountability for public money. Does the noble Lord wish to intervene?

Lord Warner: I do not particularly want to intervene about GPs. I can understand to some extent what the noble Earl is saying about them. I am more concerned that the noble Earl has given us a lot of information about powers in the Bill for people to do things. I recognise only too well official defence in depth of the current status quo. I have had many a brief along those lines in my time, so I can see that.

What I am really interested in is how the Government are going to use those powers that they have taken in this Bill to deliver the kind of ideas that are actually in my amendment. I want to know what work is going on to produce the kind of comparative data that this amendment seeks to deliver to an unsuspecting world, from this variety of providers; not least because it is not just about accounting standards in financial terms, it is about the relationship of that expenditure to what is being delivered. That is why I have deliberately used the term "management accounts", not just financial accounts. The public, and many of us, want to see the NHS showing how it has spent the money and what it has produced for that, and to see that on a standardised basis. I remain very sceptical whether the QUIP accounts deliver that. That is the issue that the NHS has to face up to. Unless we tackle that and can use the powers that the noble Earl has referred to in the Bill-and I am happy to come back on Report with a new amendment that relates to those powers-to deliver the comparative management account data, I do not think we are progressing matters very far from where we are now. I would very much welcome a more detailed discussion on this issue with the noble Earl, and with any other noble Lords, before the next part of this Bill, so that we can get to the bottom of this and help the Government use the powers that they are taking in a more constructive way.

Earl Howe: My Lords, I would be delighted to have that conversation. I did not in the least mean to suggest that the ideas the noble Lord has put forward are in any way irrelevant. Indeed, quite the opposite, I am aware that there is a lot of work going on at the moment in the very areas that he has highlighted. I would be happy to write to him about that, if that would help as a precursor to a meeting.

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I will just cover a couple of the questions that have been asked. The noble Baroness, Lady Morgan, asked to what extent the Office for Budget Responsibility would be involved. The OBR has a very specific role in terms of producing economic information. We would not see a role for the OBR itself in analysing the impact of NHS spending, but this is an area that is always under close scrutiny across the Government, in the Department of Health and beyond. I am leaving the possibility slightly open, if I may.

The noble Lord, Lord Walton, asked whether Sir David Nicholson would have sufficient financial expertise alongside him on the board. Sir David Nicholsonhas said in Developing the NHS Commissioning Board, published earlier this year, that the board will have a finance director as part of its leadership team. That is all I can tell him at the moment. However, it is clear that the board will have a major task in ensuring that sufficient financial control is maintained over the health service as a whole. If it fails to do so-as the noble Lord, Lord Warner, rightly reminded us-we are all in trouble.

The noble Lord, Lord Hunt, asked how we can achieve comparable performance measurement of CCGs. The board will be required to publish an assessment of CCG performance annually, including their financial functions. It must also publish a summary report of the performance of all CCGs.

The amendment is well intended; I have no difficulty with that. However, in practice, as framed, it would be onerous and cut across established government responsibilities. I know the noble Lord, Lord Warner, thinks I am just defending the status quo, but I am trying to say that I am not sure his formula would add much value, particularly as the underlying purpose of the amendment is already achieved under existing arrangements. For those reasons, I hope he will feel comfortable-for the time being-in withdrawing it.

Lord Hunt of Kings Heath: My Lords, I am grateful for the Minister's response on clinical commissioning groups, but I come back to the question of GPs. Along with the noble Baroness, Lady Finlay, I do not think I was seeking to look at their business arrangements, but I am seeking to find out how their performance as primary medical providers is going to be measured in the future. When the Secretary of State announced his reforms, shortly after coming into government, he emphasised that he wanted to put responsibility for budgets alongside responsibility for expenditure, on the basis that GPs, either through referral or through prescribing, were responsible for most expenditure in the NHS. I assume the intention was, essentially, to encourage GPs to be much more effective in what they did in primary medicine, as it would impact on their budgetary situation; but, given that, how do we get to a situation where we can start to measure the performance of GPs? I do not pretend that it is easy-as I said earlier, I think our own experience with the GP contract shows some of the challenges. However, I would have thought that for the future, some comparative information about GP performance, in addition to the prescribing information that is now available, would help. For instance, one issue would be how good they are at

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demand management. How good are they at preventing their patients from inappropriately going to hospital? I would have thought this was a rich gold seam.

Earl Howe: I could not agree more with the noble Lord. We want to get closer to the question of what represents value for money in primary care. There are perhaps two principal ingredients of that equation. The first is the money we put into primary care, which we will know through the resource allocation formula, with which the noble Lord is familiar; the second is through highlighting the results achieved through primary care. Primary care clinicians will be accountable as never before by reference to the outcomes that they achieve for their patients. The other ingredient, overarching all that, is transparency. The more measures of performance that we can devise and place into the public domain the better in my view, and in the next few weeks, we will be announcing measures that I hope will be welcome in that regard. However, we are starting from a low base-not much information is currently published. We want to change that, and ensure not only that clinical commissioning groups and the NHS board are aware of all this but that patients and the public are aware of how well or badly a practice is performing. All these things such as prescribing rates and referral rates are key measures of performance, which we have to get closer to. If we can ensure that practices themselves are more able to compare their own performance with those of their peers, that too will be an advance. I am sure that this is a rich seam, as the noble Lord put it, and we very much hope to advance on that front over the coming months.

Baroness Young of Old Scone: Can I just press the noble Earl on that point? We have a situation at the moment that I think is not in patients' interests. If you want to find out about the quality of diabetes care by provider, hospital or trust in this country, you can find out about it perfectly well; if you want to find out about the quality of diabetes care commissioned by a PCT, you can find out about it perfectly well. The quality of care being delivered to people with diabetes by general practitioners is available and can be seen by general practitioners-who can compare their performance with each other-but it is not available for people with diabetes. Quite frankly, I think that is outrageous and I would urge the Minister to do something about that now.

7 pm

Earl Howe: The noble Baroness, with her passion for this important area of care, makes an extremely important point. I will take that point away and see what more I can tell her about the work that is going on in that area.

Lord Warner: My Lords, this has been a very interesting debate. It was never my intention to assume that the way in which this amendment was framed was the last word on the subject. It is helpful to know that there are provisions in the Bill that can be used or adapted for the purposes that I was seeking to produce. I still remain concerned that we need to use the powers that

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the Government are taking in a very speedy and effective way to link finance with performance data on a standardised basis. We need to get on with that. It needs to be in place by the time the SHAs disappear. The SHAs have been holding some of this stuff together. Once they go, we will need better systems than we have now to monitor performance and money. As the noble Baroness, Lady Young, has said, we need that matter to be in the public arena as well; it is not just for the closed world of the NHS. I hope that we can have some useful dialogue on this before Report to see whether we can secure amendments to the existing arrangements that will improve things.

Amendment 102 withdrawn.

Amendment 103

Moved by Lord Warner

103: Clause 20, page 17, line 14, at end insert-

"( ) In discharging this duty, the Board must annually agree with Monitor new currencies for pricing under the national tariff that incentivise more efficient integrated clinical care pathways for patients, especially those with long-term conditions, and that minimise the use of in-patient hospital services."

Lord Warner: My Lords, I apologise as I seem to have a series of amendments to this part of the Bill with my name on them. Amendment 103 is the first amendment in this group in my name and that of the noble Lord, Lord Patel, and the noble Baroness, Lady Murphy. It brings us to the first of what I suspect will be a number of debates on the complex and difficult issue of a national tariff and the need to use that tariff to ensure the most appropriate forms of care and care pathways for patients.

This is a time for confessions. The current tariff system, which I am afraid I was deeply involved in implementing to scale seven years ago, was designed for a different era when there was considerable financial growth and we were trying to drive acute hospitals to increase capacity to dramatically reduce waiting times for treatment. Those long waiting times, which had been a feature of the NHS for a long period, were the part of the NHS that led to the most complaints being made. They were the issue to which any Government needed to pay attention. The tariff was one of the ways of helping to progress that. The other was, of course, the much maligned targets, which we need not go into at this point.

In some ways, the current tariff has been too successful. It has helped to create overcapacity in in-patient hospital provision and has propped up poor and unsustainable hospital provision in some parts of the country. The current tariff does not promote well co-ordinated, integrated care for people with long-term conditions, which is the bulk of the NHS's workload, given our demographic profile and some of our lifestyle choices. A significant proportion of services, particularly mental health and community services, are simply not covered by the national tariff and are often still dealt with on the basis of block grants. In 2012-13, the plan is to focus mainly on developing currencies rather than mandatory tariffs. This means that the majority of non-acute services will remain outside the national

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tariff. What is more worrying is the fact that the continuation of an acute hospital-dominated tariff based on episodes of care without any counterbalance risks these hospital trusts sucking in a disproportionately large amount of our NHS budget, which is shrinking in real terms. This is not a jibe at the Government except to say that they should stop pretending that the NHS can continue with real-terms growth and deliver the Nicholson challenge, as should any political party, including my own.

Tariff-setting is a technically complex business. There are plans to expand it into fields such as mental health where there is no international track record of success in doing that. There are no quick fixes, particularly if there are insufficient people working on a new tariff system. Tariff-setting relies totally on a good understanding of costs, an area where the NHS does not have great strengths, as I think we have just discussed. The current reference cost system has considerable shortcomings and excludes independent sector providers. Most of the rhetoric on price competition is just that-rhetoric-because reliable data to make price competition work effectively within the NHS are usually absent, so we are having a row about something that we probably could not deliver anyway.

The best that this Bill can do is to try to set a direction for future tariff design. The elements of that design should be fourfold. First, it should enable integrated care, not just within the NHS but across the health/social care boundary. This almost certainly means moving away from the tariff based on episodes of care to a year-of-care approach for long-term conditions, or a bundling of the services across care pathways. Secondly, a future tariff system should not be based on average cost, as now, but on best practice for particular conditions. Thirdly, the currencies in a new national tariff should cover the full range of services, not just acute care, which needs to diminish its dominance of the tariff. Fourthly, it should cover unavoidable costs and avoid windfall profits to providers. Unless we start designing a tariff system around those ideas, we will not progress towards a new NHS.

It will take at least three or four years at best to complete a national tariff covering a full range of services. However, I believe that we should set a clear direction of travel for the national Commissioning Board in the Bill. Given the responsibility of commissioners for demand management, it is right that if we are to have a national Commissioning Board it should set the currencies for a new tariff system. That is why Amendment 103 seeks to place the duty on the board to progress this work and to create some momentum by securing annual increments of progress. We can discuss later whether the board should also price the currencies rather than Monitor, but that is a subject for a debate on another day.

In the mean time, I wish to speak in support of Amendment 290 in my name and others in this group of amendments. This amendment would enable whoever is setting the prices in the tariff-currently Monitor in the Bill-to pay incentives to providers to integrate the delivery of health and social care services to individuals. It seems to me that we use the word "integration" without realising that it probably requires someone to do a bit more work than they are doing now to

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integrate the services, and that has a cost. This should be recognised in setting the tariff for the future so that service providers can be encouraged to take on the difficult job of integration without losing money in doing so. I hope that the Minister will see merit in these amendments and, indeed, others in the group, which move in a similar direction to mine. We need to set the agenda for the board in taking this difficult area of tariff work forward. I beg to move.

Lord Patel: My Lords, my name is added to Amendment 103 and other amendments in the group. Amendment 197E, which is a new amendment relating to commissioning, also stands in my name. Some of the points that I will make are similar to those made by the noble Lord, Lord Warner, but I have a slightly different way of looking at tariffs. I see them more from a clinical or patient care pathway point of view than that of integrating services. It is true that tackling the financial physiology of the NHS is critical to enabling the more influential and focused commissioning of integrated care. The payment by results tariff was designed by the previous Government to support the introduction of choice and competition, and specifically to create incentives for providers to increase elective activity to bring down waiting times for treatment and reward them for work undertaken. As the noble Lord, Lord Warner, has just said, that has been a bonanza for some of the acute trusts.

The tariff has played its part in that process with the consequence that access to planned care has improved significantly. Progress in elective care has enabled-or should enable-attention to turn to other priorities, such as providing high-quality care for people with long-term conditions where continuity and co-ordination are key objectives alongside access. This includes shifting unplanned care from secondary to primary care settings, where this will help deliver improvements in efficiency.

As currently designed and operated, payment by results does not appear to be well suited to support the implementation of these priorities, and there is a need to develop incentives that will facilitate integrated care for people with long-term conditions and for other services where this approach is likely to bring benefits. Experience in the United States offers valuable learning in this regard, but it is not the only place, particularly in the development of new forms of payment that go beyond fee for service and case-based reimbursement.

The idea behind episode-based payments-something that my noble friend Lord Warner also referred to-is to remove incentives to deliver increasing volumes of care by bundling together payments for a range of services relating to a particular episode of treatment. One example from the United States is the ProvenCare programme of the Geisinger health system under which a global fee covers the entire cost of cardiac care from pre-admission and surgery to follow-up for up to 90 days after surgery. Episode-based payments are designed in part to improve the quality of care by placing the responsibility on providers for avoiding and correcting errors. You do not get paid if you make a mistake and it takes the patient longer to recover. This encourages care to be done right the first time, and hence offers a more co-ordinated and positive experience for patients.

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Capitation payments on the other hand go much further than episode-based payments in potentially covering all the costs of care for a defined population over a certain time period-a year, for example. Integrated healthcare systems such as Kaiser Permanente in California have pioneered the use of capitation funding-or pre-paid group practice as it was originally known-as a way of creating incentives to support prevention and primary care and to avoid the inappropriate use of specialist care. Kaiser Permanente sees acute care as a cost centre, but it sees community care and primary care, particularly for long-term conditions, as where the costs should be maintained and the quality driven. It monitors the performance of the providers of that care more intensively on a one-to-one basis than it does for acute care.

Although capitation funding has a long history, there has been renewed interest in it. In the NHS, various options could be pursued. These include combining payments to cover an episode of care or a care pathway, taking forward the idea of the year of care that has been tested in three national pilots for diabetes-I say this to the noble Baroness, Lady Young-and exploring how it might support integrated care; contracting with local clinical networks of primary and secondary care clinicians or foundation trusts to deliver integrated care for a specific population-some of the foundation trusts are experimenting with this and are quite innovative; and, lastly, accelerating work on personal health budgets to enable patients to commission care packages for themselves, with support from carers and families.

In practice, it is likely that all these options, and others, will have to play a part, and a period of active experimentation and evaluation is now needed to work through the consequences. All healthcare systems use a mix of payment systems related to the service that is provided, such as episodic or long-term, and where care is provided, such as primary or secondary care. The NHS is no exception and attention is needed for the way in which financial incentives can be developed to support integrated care where it will bring benefits to patients. The prospect of four years in which the NHS budget will only increase in line with inflation underlines the urgency associated with this work and the need to focus on improving the quality of care and not simply incentivising extra activity at a time when resources are not available to do this. As my noble friend Lord Warner said, it will require tariff flexibility, even tariff bonuses for providing care quicker and of a higher quality. What is needed is system leadership and innovation, which we expect the NHS Commission to deliver boldly, in tariffs for integrated care, with the explicit promotion of systems of integrated care.

7.15 pm

My Amendment 197E relates to clinical commissioning and clinical commissioning groups. We had a debate about the role of senates, which did not get us very far. One of the issues is that the creation of additional bodies after the listening exercise has confused the state as to the role of these bodies and how commissioning groups can be independent. I know that the Government have given the assurance that these bodies will not have the power to veto these commissioning plans. A

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recent letter to NHS chief executives from Dr Kathy McLean, chair of the Future Forum group on clinical advice and leadership, also sought to allay these fears when she said:

"They are not intended to be another layer of bureaucracy or be a structure to 'interfere' with or constrain clinical commissioning groups. Senates may provide part of the way for clinical commissioning groups to meet their proposed statutory duty to secure advice from a wide range of health professionals, but they will not have a right of veto for plans or proposals".

Although this is the case, there needs to be provision in the Bill that protects the ability of clinical commissioning groups to lead on commissioning.

The second reason is that appropriate advice for one CCG might be inappropriate for another. We hear there will be 15 senates, and these will have to provide advice to over 300 commissioning groups. It is unclear whether the advice for each will be different. If it is the same, how will this reflect the fact that clinical commissioning groups vary immensely? For example, the Redhouse Group pathfinder commissioning group in Hertfordshire has a population size of 18,000, whereas the Oxfordshire pathfinder group has a population of 672,000.

If the advice is given by region, there may well be commissioning groups within the regions that are atypical, meaning that any commissioning advice given on this basis is very likely to be given without reference to the local context. This regional commissioning advice may not pay regard to the fact that a commissioning group is in a particularly deprived urban area, for instance, or has a higher proportion of older people. Commissioning groups need the freedom to make the decisions for their own population. They must not be hamstrung by ever-increasing levels of complex bureaucracy that impede decision-making.

My amendment therefore seeks to clarify in the legislation what the Government have already said about where the ultimate commissioning responsibility lies so that clinical commissioning groups can truly lead in providing a service for their local population.

Baroness Thornton: My Lords, I wonder if I might speak to both of the amendments that are down in the name of my noble friend, but also to take a step back from the very competent and skilled amendments and presentations by my noble friend Lord Warner and the noble Lord, Lord Patel. All these amendments also reveal what might be called a profound lack of agreement about what "integration" actually is. It seemed to me that at this point it might be useful to go and scope what people think integration means, and then perhaps ask the Minister to say which of these meanings he prefers, or which he would like to use. For example, the Royal College of Nursing is extremely worried that the combination of a maximum tariff and any qualified provider means that delivering integrated services will become increasingly difficult.

The NHS Confederation confirmed that the definitions of "integration" and "integrated care" to be used by Monitor,

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However, it also goes on to say that:

"Though extending the tariff is the best way to ensure competition is on quality",

in some circumstances,

How will this deliver integrated care?

The King's Fund states that:

"Organisational integration appears to be neither necessary nor sufficient to deliver the benefits of integrated care, notwithstanding the achievements of integrated systems such as the Veterans Health Administration".

It goes on to talk about the Kaiser example mentioned by the noble Lord, Lord Patel. The fund also says that the Government's reforms being centred on extending patient choice and provider competition includes encouragement to any willing provider to deliver care to patients and to complete separation of commissioning and provision with the NHS. However, the results could be a system in which there is commissioning from and choice between an "increasingly fragmented array" of competing public, private and voluntary sector providers. As a consequence, integration would be difficult to achieve.

The Nuffield Foundation says, on the tariff and incentive integrated care, that the payment by results tariff was designed primarily, as my noble friend said in his initial remarks, to support choice in competition and bring down waiting lists for elective treatment. It does not appear to be well suited to supporting integrated care for people with long-term and complex conditions.

I am sure that the noble Baroness, Lady Young, will talk to us about diabetes, but briefing to us said that people with diabetes already need at least 14 different sorts of NHS services for them to lead long and healthy lives. That seems to be a challenge.

Arthritis Care's recent response to the Future Forum consultation on integrated services, published a couple of days ago, is very pertinent indeed. It says that:

"'Integration' should be broadly understood as providing patient-centred, joined-up care which meets the clinical and personal needs of the patient at every point of their pathway. Arthritis Care fully endorses and recommends National Voices' Principles for Integrated Care as a key reference point for all discussions on this issue ... There must, above all, be a firm focus on the patient. What 'integration' looks like is likely to vary geographically and by service, but the specific structures and arrangements matter less than whether services are successfully meeting patient needs and expectations. What it ultimately comes down to is better care for patients and smarter use of resources".

I think that is absolutely right.

The amendments that my noble friend and I have tabled are Amendments 104A and 178A. Like others in the group, they seek to place a duty on both board and CCGs to take account of the interdependence of services and the impact that the arrangements might have on sustainability, both financial and clinical, of other services. We are concerned that the regime that has been outlined in the Bill places a risk on the coherence of those services. I ask the Minister whether that is on the risk register and what it has to say about the risks that that places on those services.

My noble friend Lord Patel of Bradford, who is unable to be here this evening-I am happy to make these remarks partly on his behalf-is concerned about

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the disadvantaged people in the care system who are detained under the Mental Health Act. By definition, this is a group of service users who have very little ability to exercise choice or control. In a way, I think that this is a group of people against whom the test of integration and the test of this system should be used. If it can work for this group of people, it may work for others. As they are in a highly vulnerable position, there is an absolute need for integration among health and social care providers that starts at the point of hospital admission and goes right through to the end of their aftercare in the community. The effective provision of such a care pathway requires multiple agencies to work closely together. We know that from many inquiries into suicides and homicides involving people with mental illnesses, and it is highly challenging. There is a very real concern shared by patients, carers, doctors and nurses that encouraging competition in this complex area, without checks and balances to ensure that integration is a primary driver, is very damaging indeed. I know that the noble Baroness, Lady Hollins, will refer to her amendment, and we would support that; I could not have put it better myself.

This is a very complicated and complex issue. It is the first time that we have talked about it in Committee. One thing that the Minister needs to do at this stage is to focus on what the Government mean by different forms of integration and where they will apply and how the Bill will deliver them.

Lord Clement-Jones: My Lords, the noble Baroness, Lady Thornton, has given us a very wide range of views on what integration consists of. In putting forward Amendment 135A, perhaps I can add another perspective from the point of view of specialised commissioning.

On 14 November, the Minister lifted the veil, to some extent, on how specialised commissioning would work under the Bill. The Bill brings the budget and responsibility for commissioning specialised services together under the NHS Commissioning Board. That has been welcomed by many, including the Specialised Healthcare Alliance, and it gives a real opportunity to deliver the recommendations of the Carter report of 2006. However, the expected benefits of this new system will be fully realised only if there is effective and real co-ordination between the various parties involved in the commissioning, provision and use of specialised services. However, that increases the challenge of integration under this clause, given the gap that would open up between the board at national level and providers at local level, if no steps were taken to bridge it.

There is a danger that the board's work would become isolated from local commissioners, providers, clinicians and patients and that proper involvement, collaboration and dialogue with those key stakeholders may not occur. In particular, that could lead to pathways of care becoming disjointed, resulting in a poorer experience for patients, inefficient care and higher costs. In addition, it will be imperative to ensure that clinicians and patients are at the heart of all aspects of specialised services, including specialised commissioning. However, although the full subnational offices of the

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board which, as I understand it, are proposed would nominally give it a more local presence, they bear no real relationship to where the specialist providers are based and patient flows. The patient organisations within the Specialised Healthcare Alliance, therefore, see it as essential that there should be a more local presence; in their view, four clusters would be inadequate.

At col. 541 of Hansard on 14 November, the Minister was not able to be specific when he spoke about this, but as I understand it there will be around a dozen major hubs. An assurance on the parliamentary record would be very welcome. What form of substructure will there be for specialised commissioning if that is not to be the shape of it? Can he give further clarification today? Will this be delivered by the board or will it be delivered in other forms by way of senate, networks or in other forms?

Having heard from the NHS Alliance yesterday about the need for local variation, I am very attracted by Amendment 197E in the name of the noble Lord, Lord Patel, which to me seems to hit the spot in allowing that variation and giving the CCGs the final say in how they conduct themselves. That has been put to several of us by the NHS Alliance as being absolutely crucial in allowing the various innovations and initiatives to thrive at local level in the CCGs, which are already becoming an interesting and improved way of delivering healthcare.

7.30 pm

Lord Ribeiro: My Lords, I thank the noble Baroness, Lady Thornton, for her comments about integration, because I agree with her that we do not have a clear definition. On page 18 of the Bill, new Section 13M is headed:

"Duty as to promoting integration".

Although the words "integration" and "integrated" are used in the section, there is no clear definition. Yet, in new subsection 4, there is an attempt to define "health-related services" and "social care services", but not until new Section 13Z3 is there an interpretation which tries to define the "health service" and "health services". We do need some clear definition of what we mean by integration. Let me tell you what I thought integration meant, when I first took on an interest in the Bill, and I will illustrate it with some examples.

Integration, for me, was not being able to talk to my GP colleague about a patient without having to go through the PCT. I could not just pick up the telephone and say, "I'll see your patient next Friday". It had to go through a bureaucratic system before the patient got to me.

From a clinical point of view, when I was referred a patient with gallstones on a Monday morning clinic, after discussing and examining the patient, confirming that she did indeed have gallstones-and I used to have an ultrasound machine in my out-patient clinic, so it was easy to make the diagnosis-I said to her, "I think we can deal with this quite easily with a keyhole operation to remove your gallbladder, but I suspect you may also have an ulcer in your stomach, so before I put you on the list for surgery, it might be a good idea to exclude that". I went down the corridor to see my gastroenterology colleague, told him about

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the problem, and he said, "Not an issue, bring her along, and I'll see her". Before I knew it, I had had a phone call saying, "I will deal with her next Thursday and gastroscope her".

The net result of that was that within a week we had an answer for the lady, and I was able to put her on the waiting list for surgery. However, when choice and tariffs came in, it was essential, for the hospital to be paid, that when the patient came to see me in the outpatients' clinic and was diagnosed with gallstones, I would have to refer her back to her GP, who would then make another consultation with the clinician gastroenterologist in order for her to have the endoscopy to diagnose her ulcer. Those were two inconvenient visits for that patient, purely to fulfil the need to manage the tariff and the issues around choice.

For me, an integrated service gets rid of all those barriers. We should also remember that this is the Health and Social Care Bill; it is about integrating services from the beginning to the end. I have tremendous sympathy and support for Amendments 103 and 290, from the noble Lord, Lord Warner, because they are about getting rid of episodic care. It was precisely the episodic tariffs that required my patient to make two visits to the hospital when one would have done. I hope the Minister will take this into consideration when reviewing this. It is important that we find a formula, or a way to look at the care pathway, and find a way to cost that, rather than the episodic costing of care.

Lord Turnberg: My Lords, I will speak to Amendments 103, 104A, 106, 135A, and several of the others in this group. Clause 20, new Section 13M, highlights integration of services as something the Commissioning Board should "exercise its functions" to secure,

That is all well and good, but by itself it seems insufficient. Integration is of course difficult to pin down. We have heard quite a bit about that this evening, and I will not repeat those remarks. I know what I mean by integration, so I will give you my particular understanding, for the purposes I want to talk about, using the term to mean a seamless service for those patients, usually elderly and with multiple diseases, who need both hospital and community care, and flit between the two.

It is unfortunately the case that the integration that is needed between health and social services has seen so many failures and been so elusive, despite many wasted words. We have an opportunity here to correct these failures, so I was somewhat disappointed when the Minister said in the debate on 2 November, when we were discussing the role of the Secretary of State, that the Government were,

and that-

Surely if integrated care is a good thing-and I think few will deny that-then we must give a lead on how it might be achieved. We cannot ignore the process, and must at least try to see what conditions are necessary

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for successful integration. We should not go around simply saying it is a good thing, without showing how it might be achieved.

There are many examples out there that we can build upon. We are not entirely in uncharted territory. The noble Baroness, Lady Cumberlege, mentioned Assura Cambridge and services in Torbay in our last debate, and other noble Lords spoke of Kaiser Permanente, Northern Ireland, personal health budgets and information sharing, as valuable means to an end.

We also have the excellent report from the Nuffield Trust, Integration in Action, that analyses successful integration being carried out in four places across the world, including in Scotland. We are not working in a vacuum, and we could and should take advantage of all this information, and incorporate some of those ideas in the Bill without waiting for yet further work.

Of course, not everything can or should be put in the Bill, but we should see where we can strengthen it, by including more pointers to how we can improve the present, very unsatisfactory, position. Let me give some examples, leaning heavily on the Nuffield Trust report. First, the Commissioning Board should point the way by developing commissioning for bundled payments, and local tariffs for key conditions. I think that is possible. At the moment, fees for service for episodes of hospital care, as we have heard, work against integration with community service. That is something that the board should seek to redress quickly.

Secondly, we should design the national tariffs that we have heard about, which incorporate a full care pathway across the health and social service divide. Monitor and the board should work together to develop a pricing strategy that provides the incentives for integration. They should also develop ideas about how outcome measures, which are admittedly difficult to quantify when we are talking about a complex system like integrated care between hospital and social care, can be used to promote integration across the whole pathway of care. Contracts based on those measures can encourage providers to respond to the need to integrate. There is nothing here that obviates competition between providers, which I am sure will please my noble friend Lord Warner.

We will come later in the Bill to Monitor, but it too should link improvements in outcomes, including the patient's experience, to the way it regulates integration. Then, there are several measures that clinical commissioning groups and local authorities should be encouraged to develop by the Commissioning Board. One huge area is of the improvements we desperately need in the flow of information between hospitals and community. Too often we rely on phone calls on the day of discharge, which is inefficient and fails most of the time. We should have an IT system which allows information to be shared across the divide. It only requires a competent programmer to produce the programme, and a safe system for preserving patient confidentiality and data protection. I am sure that that is not beyond our capacity.

There is also the need for joint funding and integrated governance arrangements, which we have had some discussion about. This is much easier said than done, but it can be done. We have seen it in action here and there and we must spread the good practice.

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There is also the need for people to make the whole thing work on the ground: for example, liaison officers whose sole responsibility is to ensure that patients pass seamlessly across the divide, and nurses and doctors who move without constraint from one sphere to another. The example of specialist district nurses is a good one. They follow patients from hospital to the community and back, and are very much appreciated. Unfortunately, they are a threatened species and are disappearing, largely because neither the NHS nor local authorities will fund them. We must get around that problem.

Of course, much of what is needed depends on a change in the mindset of those working at the coalface in hospitals and the community. If through the Bill we can change the conditions from those that inhibit collaboration to those that encourage it, we can begin the process. The amendments bring a greater sense of the need to focus more strongly and urgently on the duties and responsibilities of the board in putting integration more firmly on the map as a way of improving outcomes. I support them strongly.

Baroness Hollins: My Lords, I will speak to Amendment 203A in my name and those of my noble friend Lady Finlay and the noble Lords, Lord Patel of Bradford and Lord Patel. I will speak also in support of Amendments 135C and 135D, tabled by my noble friend Lady Finlay.

The Bill seems to favour the commissioning of services through the any-qualified-provider model rather than being concerned primarily with commissioning an integrated model of care. Amendment 203A would introduce a duty on clinical commissioning groups to commission multiple providers of health services competing to deliver a section of the care pathway only where they can demonstrate to the NHS Commissioning Board that the approach is beneficial to patients. Integrated care pathways are particularly important in complex, long-term conditions such as serious mental illness or challenging behaviour, for example in someone with learning disabilities who is also on the autistic spectrum.

There have been attempts in the NHS to deliver integrated care pathways, with varying degrees of success. The introduction of a plurality of providers in mental health services in recent years is already showing signs of fragmenting complex care pathways in some instances. The disaster of Winterbourne View is just one example of how commissioning one provider to deliver part of a pathway without planning, commissioning and co-ordinating the whole of an integrated pathway can be an expensive and tragic mistake.

The further introduction of competition between providers has the aim of reducing the cost of provision while maintaining and improving the standard. This is a noble aim on which we may all be able to agree. However, commissioners must evaluate whether the aim is being achieved, recognising that care pathways vary hugely in different conditions and even for different patients. The variety of provision needed means that we cannot easily-if at all-prescribe a rule to cover all situations. Of course, the health service exists to serve patients, not providers. It is in this light that we

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must consider proposals to introduce competition between providers, and it is because of this that the burden of proof must be on those who favour increasing competition to show that doing so would benefit patients.

The risk is that many providers will compete to provide more profitable parts of a pathway, cherry-picking the parts they would like to offer, perhaps only to the least complex patients, thus leaving unmet the less easy to cost and define but still essential parts of the pathway. The importance of an integrated care pathway cannot be overestimated. The comfort patients take in knowing that their entire provision is being dealt with in a coherent, joined-up way may be put at risk under an any-qualified-provider system. As always, it is the most vulnerable patients whose needs may remain unmet.

7.45 pm

Rather than supporting one lead provider, we must create integrated pathways across primary, secondary and tertiary care, in partnership with social services and community support agencies as appropriate. The continuity of provider is important for people with complex needs who cannot cope with having their trusted provider changed for financial or other reasons on a regular basis. The only reason should be that the clinical outcomes are no longer satisfactory.

I suggest that we need a measure of whether any given change benefits patients. We need criteria against which we can judge success. The amendment has three suggested criteria. The first is to improve the quality of services, including the outcomes that are achieved from the provision. The second is to reduce inequalities between persons with respect to their ability to access services. The third is to reduce inequalities between persons with respect to the outcomes achieved for them by the provision of the services.

Each of these criteria would admirably test any proposal, but any change meeting all three would have a powerful endorsement to be carried through. To accept changes that meet some but not all the criteria could result in the desired objectives not being met. I suggest that, with the criteria, commissioners will be able to judge whether the providers of choice will be able to collaborate to deliver co-ordinated, integrated care pathways.

Baroness Tyler of Enfield: My Lords, I will speak to Amendment 135CA in my name. We have already had a very interesting debate about what we mean by integration. Obviously, different people mean different things. The sense in which I will talk about integration is how we can encourage integrated care pathways for people who experience some of the worst inequalities in terms of access to healthcare.

Clause 20 states that the NHS Commissioning Board will encourage integrated working between clinical commissioning groups and local authorities. This is clearly welcome. However, it needs to go further. Those with the worst health outcomes often have the most complex needs and can often benefit most from integrated care. However, as is so often the case, disadvantaged groups can easily be overlooked in the overall system. The fundamental aim here is to ensure that integrated care pathways can be set up that specifically target those with the poorest health.

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I will briefly explain why integrated care pathways are important for those with complex needs. A number of patient groups experience health inequalities. We all know about that, and heard about it in our previous debates. In their 2010 report, the Cabinet Office and the Department of Health identified a number of groups of people who have complex needs and as a result carry a disproportionate cost to the NHS. The report states that,

As we know, these groups include homeless people, people with mental health problems, people with drug and alcohol addictions and others.

I will give a specific example of why this is a very important issue. Homeless people have some of the poorest health outcomes in our communities. I will give noble Lords a couple of facts and figures. Eight in 10 homeless people have one or more physical health need. Seven in 10 have at least one mental health problem. Between 50 and 75 per cent of rough sleepers experience mental health disorders, including anxiety, depression, dementia and psychosis. Research by the Department of Health, again in 2010, estimated that the average age of death of a rough sleeper was between 40 and 44. I find that statistic shocking. Finally, the Department of Health estimated that this had a knock-on cost to the NHS that was four to eight times greater than that of a person in the general population.

As a result of these patients' complex needs, barriers often exist that prevent them getting the treatment they need. Some services simply exclude them because they are deemed too difficult to deal with-too chaotic or complex. Evidence was found that one in 10 homeless people is refused access at primary care level. Integrated care pathways are crucial to provide personalised and accessible services that treat multiple problems at the same time.

I shall give a very brief example of how this can really make a difference in practice. The average age of homeless people dying while living in a St Mungo's hostel is just over 40 years. Back in 2009 St Mungo's began an intermediate care pilot at one of its hostels in south London. It was run by a full-time senior nurse and a health support worker. Together they worked with residents to help improve their health and well-being and particularly to prevent unnecessary admission to hospital. They also arranged appropriate discharge from hospital. As a result of this pilot there has been a marked increase in attendance at HIV services, chest clinics, dental appointments and mental health services. Calls to the London Ambulance Service have gone down by 13 per cent and hospital admissions by 40 per cent, which I think is a very significant figure.

This fits very much with the Government's approach. Indeed, this amendment builds on the commitment to improve the health of the poorest the fastest, which has been part of these health reforms since the White Paper was published in 2010. It also builds on evidence presented by the NHS Future Forum, which stated:

"We need to move beyond arguing for integration to making it happen whilst also exploring the barriers. We would therefore expect to see the NHS Commissioning Board actively supporting the commissioning of integrated packages of care".

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In their response, the Government agreed that integration of commissioning health and social care should be the ambition for all local areas. The Government have made a number of welcome commitments to strengthen local development of pathways between health and social care providers, and we have heard about some of them this evening. They obviously see an important role for the NHS Commissioning Board working with senates and CCGs in taking this forward. Can the Minister explain how-in achieving better outcomes for those with the poorest health, as is required to reduce health inequalities-the aims of improving integrated working and the health of the poorest the fastest will be achieved in practice?

Baroness Finlay of Llandaff: My Lords, I have several amendments in this group. Amendment 203A has been spoken to fully by noble friend Lady Hollins, who has supported other amendments in this group. Amendment 135C would require a biannual report by the board to the Secretary of State on what has been done to promote integration. The other amendments are all designed to promote collaboration, decrease duplication and bring together primary and secondary care and public health and the diagnostic services to have better diagnosis and management of disease.

Integrated working allows patients and their carers to benefit from good primary care provided by GPs and others in the team, to have help and support provided by those working in social care, and to access early referral, appropriate investigation and treatment as required from specialist services. Good integrated care needs to see the patients and their experience in the context of their lives, social support, relationships, cultural experience, gender and a range of other factors. Bringing together an integrated social and clinical approach should include holistic plans for diagnosis, treatment, rehabilitation, support and long-term follow-up.

In their report Teams without Walls, the Royal College of Physicians, the Royal College of General Practitioners and the Royal College of Paediatrics and Child Health highlighted the recommended use of patient pathways as the building blocks for services, with the right balance between prevention, early identification, assessment, intervention and, where necessary, long-term support. They also pointed out that this had implications for commissioners, providers and regulators of services. Multi-professional working with the patient at the centre of everything provides the opportunity for a wide range of professionals, including those outside an organisation, to monitor care delivery and challenge standards. This will help prevent trusts and professionals from becoming insular. Insular practices can result in negative cultures developing and poor standards becoming tolerated.

The clinical commissioning groups have quite a challenge facing them if they are really to commission and develop integrated as opposed to fragmented care. Much has been said on this already, and I will not repeat the points made by previous speakers. However, patient needs will be better met if we move to a tariff structure that better reflects clinical complexity. The Government's response to the Future Forum report seems to recognise this, but the current tariff structure overcompensates for simpler conditions and consistently

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under-compensates for more complex and unpredictable areas of care. To encourage integrated working, consideration needs to be given to a system in which payments are received over a longer term and for the achievement of integration and good clinical outcomes. To do that, it will be crucial for Monitor and the Commissioning Board working closely with royal medical colleges and specialist societies to develop a tariff that will provide integrated care.

Baroness Murphy: My Lords, much has been said on this group of amendments and I will not delay the Committee too much. I have a great deal of sympathy with the plea of the noble Baroness, Lady Thornton, that we should know what integrated care is. We have had several descriptions around the House. We have within the Bill a duty to promote integrated care, so it is important that we have read into the account the Government's thinking on what "integrated care" means. I think that I echo the noble Lord, Lord Ribeiro, in saying that.

I am surprised that my noble friend Lord Walton, who is not in his place at the moment, did not mention Mrs Smith of 66 Acacia Avenue, or we might have said Mr Chowdry of 66 Mafeking Avenue. What does sitting at home feel like to those patients who are in receipt of community care? How does it work out for them? Integration of primary and secondary care with social care provision is what it really should be about. I look to the Government to reassure me that that is what we are talking about.

We have to be aware that some barriers in the NHS will require this financial manipulation. On the one hand, there is a profound mistrust by acute providers of the competence of community-based and primary care workers. Sometimes that has been justifiable in the light of the historical deskilling of clinical care that occurs in primary care settings. On the other hand, there is an attitude bordering on paranoia from community and primary services staff about the predatory nature of what Enoch Powell referred to as the "voracious" acute hospital sector, which is entirely justified by their experience of being sucked in to the acute hospital, and especially true since payment by results came in, which has had a really negative effect on this problem. Then there is the wild card of GPs who can suddenly bring to a halt community-based care out of hours, if they feel like it, without any impact on their budget at all. Noble Lords who, like me, have spent a great deal of time putting in packages of care will understand how frustrating it can be when it suddenly comes to a halt and nobody has budgetary responsibility for it.

8 pm

If acute and primary care staff and GPs do not trust each other, how will social care hope to get a look-in? We know from many studies around the world-and we have the highest hospital admission rate in Europe-that you can reduce hospital admissions by 60 per cent or so by providing more in cost effective solutions at home to episodes of illness in long-term care conditions. It is crucial that we find mechanisms to produce this integrated care. Normally, a package has to be laser pulses of medical intervention, minutes of special nursing care, and hours and hours of domestic

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and personal care, which is regarded as the ambit of social care services. That means shifting large amounts of money from the NHS to social care providers. We cannot get round that.

The balance of this investment in a care package is crucial for developing appropriate care services. How are we to achieve that without significant changes in the way that the tariff is constructed? It is not only a matter of unbundling the tariff; it is also about how you bundle in some areas but unbundle in others for particular pathways of specialist and non-specialist care. That is very difficult, and as the noble Lord, Lord Warner, said, there is no good history of anyone who has done it very effectively anywhere in the world. However, as he and the noble Lord, Lord Patel, mentioned, there are some good examples-indeed, there are even some small examples in mental health trusts in this country. They provide capitation funding for an individual's care which is then used to provide care across the whole spectrum of care. That has been used very effectively in mental health trusts which give the budget to community care workers to reduce hospital admissions for a particular client group. That can work very effectively, as it does in Kaiser Permanente. What encourages me about the Bill is that with the right design of capitation funding for clinical commissioning groups, we could quite readily move to that sort of funding as an incentive to provide packages of care that reduce hospital admissions.

It seems to me that the budget flat-line that we are predicting over the next few years creates an imperative to do this better. Changing demographics also tell us that we will need more health and social care packages, not fewer, so we had better have more cost-effective ones. In seeking a way forward we need to understand what integrated care means to the Government and how this duty will be given teeth, because we need it desperately. There ought to be financial arrangements that can support and develop it. I believe that we can work on this, but I would like to know how the Government currently envisage that we shall do it.

Baroness Williams of Crosby: I listened very carefully to what the noble Baroness, Lady Murphy, said, and I broadly agree with it, with one slight exception. She said that she did not think that there were many examples around the world of particularly good integrated practice and then she mentioned that there had been considerably activity of this kind in some mental health trusts in the UK. I want to throw a slightly more cheerful note into what has been a slightly gloomy debate. As it happens, this morning, a Canadian doctor friend of mine brought to me the latest report of the Commonwealth of Massachusetts study on relationships between doctors and patients. It is a comparative study of 11 medical systems throughout the world. I shall not keep the Committee for long, but I will read a couple of the findings that date from November 2011. It was a major study of thousands of patients-more than 1,000 in Britain, a couple of thousand in the United States and so on-at the time that the report was put together at the end of 2009. I shall be very quick, but I think it is quite remarkable. In patient engagement in care management for chronic conditions, which is something we have been talking

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about a great deal when talking about integration, the country that comes out the best of the 11 is the United Kingdom. In shared decision-making with specialists, the first is Switzerland, the second-

Baroness Murphy: I am very well aware of the wonderfully heartening Commonwealth of Massachusetts report, but the point I was trying to make is that we are marvellous at health and social care integration in this country compared with many others. Having spent my life doing it, I am quite proud that we can say that we do it better than most. But my point is that if you want cost-effective purchasing of care systems that promote it, we cannot point to anywhere in the world where there are very good, efficient systems. Kaiser Permanente is a very restricted system for its employed clients in California. We do not have the systems that financially promote a drive towards those systems. It is not that we do not do it, but that we do it in spite of, not because of. However, the report is most heartening.

Baroness Williams of Crosby: I would not disagree with the noble Baroness on that issue. I agree with her, but I am trying to make a different point, which is that I think we have been left with, by sheer good fortune, if you like, a much better starting point for serious integration than many other health systems. It relates also to Amendment 203A, which was tabled by the noble Baronesses, Lady Hollins and Lady Finlay, about the role of competition, about which I am rather less confident than some others.

I shall mention two other findings from the report because it is a remarkable and impressive story. On the doctor/patient relationship, there was a question about how far patients felt that they had close relations with their doctors and the ability to speak to them and to discuss their cases with them. Once again, quite remarkably, the United Kingdom comes out second to Switzerland in the 11. To take a final and very surprising finding in this study, on medical, medication or lab test errors in the past two years, the figure for the United States was 22 per cent, for the Netherlands it was 20 per cent and for the United Kingdom it was 8 per cent. It is extraordinary that we so rarely blow our own trumpet in this country, and very occasionally, we should.

Baroness Thornton: The noble Baroness, Lady Williams, is right. It is a great report, and I have read it. Would she care to join me in speculating about why the department has not made it its headline story?

Baroness Williams of Crosby: I think the answer to that had probably better come from the department rather than from me, but I am consistently surprised by the failure, not of this Government but of Governments of the United Kingdom for a long time, to say what the real achievements of the NHS have been and to recognise that outside this country it is widely regarded as perhaps one of the most outstanding health services in the world. It is worth saying that from time to time because we have 1.2 million people employed in the NHS and they deserve a great deal of the credit for having maintained a high standard in the face of very considerable financial pressures, even in the past. We

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have always had among the lowest expenditures per patient in the 11 highly industrialised countries, with only a couple of countries-Australia and New Zealand -spending less than we do.

There are two points to this argument. First, we are in a much better place to integrate care than we seem to think we are because we have already clearly established relations of trust between doctors and patients, and between hospitals and doctors, to an extent that other countries clearly regard as enviable. Secondly, one has to ask why we suppose that competition is a better way to deal with healthcare than are integration and collaboration. There is one area where competition is clearly crucial, and I accept that. It is in innovation and in trying out new ideas. None of us would in any way be opposed to that happening. However, I would like to put it on the record that if we are going to move in the direction of collaboration and integration, we have a very strong base on which to do it and we have the makings of something very impressive and important. The makings of that appear to be stronger in this country than in most others.

Lord Warner: I would not normally have interrupted the noble Baroness, but this canard that somehow integration is incompatible with competition has to be challenged. I refer the noble Baroness to the King's Fund's work on integration and its citing of Kaiser Permanente operating in a competitive market and doing very successful integration. I would also refer her to the peer-reviewed article by Zack Cooper of the LSE in a recent edition of the Economic Journal, which makes it absolutely clear that competition under the previous Government both improved patient outcomes and reduced deaths.

Baroness Williams of Crosby: I have actually gone in to the story of Kaiser Permanente very carefully. It is not surprising that if you choose the very best example in another country you can make a favourable comparison. I am talking about the outcomes for a whole population rather than a particular part of a population. I have said already that there are certainly areas where competition can play a very important part-I referred to innovation and new ideas-but I am simply putting on the record that if you look at the comparison between the health services of the 11 most advanced, richest and most industrialised countries in the world, the combination of integration and competition that we have here appears to have rather better outcomes than in those countries that rely much more heavily on competition such as the United States.

Baroness Wheeler: My Lords, I will speak briefly to my Amendment 135B. Since the Future Forum report, there is a renewed focus on integration in the Bill, and we welcome that. However, as a number of noble Lords pointed out at Second Reading, there is a need to define what we mean by integration. Government amendments largely reinforce the benefits of integration to the NHS rather than looking at the system from the perspective of health and social care, service users and using integration to develop person-centred services. My amendment and others in this group seek to begin to address this.

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Since most people with long-term and complex health needs also depend on social care services in order to maintain their health, well-being and independence, it is crucial that the Bill ensures that measures to increase integration also extend to social care. In the NHS, integration has primarily focused on integration of primary and secondary healthcare and to integrate back office support such as IT, human resources and estate management in order to make efficiency savings. While both of these aspects of integration are important, they will not lead to the system transformation hoped for in the Government's Liberating the NHS White Paper. We need to continue the now reasonably well established place-based approach to integration which brings health and social care together, in which the totality of public resources is directed to develop seamless services which support individuals. As such, they are far more likely to lead to system reform in which all public services focus on achieving better outcomes for individuals and communities.

Local councils have an established record of commissioning for people with complex and ongoing health and social care needs: in particular, homeless people; people with mental health problems, learning disabilities, AIDS/HIV and dementia; and children's health. It is vital that commissioners of services for people with complex health and social care needs understand the important contribution of housing, leisure and recreation, access to education and other mainstream local authority services to supporting vulnerable people to remain healthy, independent and productive members of the community. Noble Lords have pointed out that clinical commissioning groups will have little understanding or experience of commissioning the complex package of support required. I would therefore emphasise the importance of joint commissioning or delegating commissioning to local authorities and hope that the Minister will respond positively to this.

8.15 pm

Earl Howe: My Lords, the subject of the tariff may, to an outsider, seem rather dry but I will begin by saying to the noble Lord, Lord Warner, that I agree with him that it is fundamental to having an effective and efficient health service and better care for patients. Indeed, as noble Lords have articulated so well, this group of amendments takes us to the heart of one of our running themes in Committee; namely, the integration of NHS services, both within the NHS and more widely with social care services. I agree that this is a subject of profound importance. The NHS Future Forum highlighted this while also identifying that some people had real concerns that competition in the provision of NHS services could act against the development of integrated provision.

First, what do we mean by integration? A number of noble Lords have asked that question. The duties to promote integration would cover both integration between service types-for example, between health and social care-and integration between different types of health services. Whatever the combination and however they are integrated, the practical effect should be that services are co-ordinated around the needs of the individual.

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This duty would apply right the way through the system. It would certainly apply to the board when exercising its functions, not just its commissioning functions.

I agree with the noble Baroness, Lady Wheeler, who made a very important point about vulnerable people in particular. For example, CCGs could comply with their duty of integration by choosing to commission services jointly with local authorities. We have always envisaged that happening. The joining-up of services could, as I say, be between different organisations or between workers within an organisation or even with advice that is given to patients about self-care and the treatment that is delivered by providing organisations. What matters is that the service is based around those patients, not the other way round.

It might be helpful if I said something about the Government's approach to competition in the NHS. We are clear that in some circumstances competition is a force for good. Competition can create incentives for providers to innovate and improve effectiveness, as well as enabling greater choice for patients. My noble friend Lady Williams made that point very well. However, there is no single model of competition that will be right in all circumstances. Indeed, in some circumstances, competition will not be appropriate at all. Who should decide questions of this kind? Our view is that it should be for commissioners to decide whether-and if so, how-to use competition to further patients' interests. In doing so, commissioners must act transparently and would need to consider the type of service and the needs and preferences of patients who would receive it, and be able to demonstrate the rationale for their decisions.

The noble Lord, Lord Warner, made a helpful intervention on this issue. The NHS Future Forum report stated:

"We have also heard many people saying that competition and integration are opposing forces. We believe this is a false dichotomy. Integrated care is vital, and competition can and should be used by commissioners as a powerful tool to drive this for patients".

The Government agree. That is why the Bill set out duties for both the board and CCGs on promoting integration when commissioning services. The board, CCGs and health and well-being boards, as well as the regulators, Monitor and the CQC, will have duties to encourage integration and work across health and social care.

These changes should make it easier to deliver higher quality service pathways of patient-centred care. To help support commissioners, health and well-being boards will provide a forum to bring together people from across the health and social care sectors. Furthermore, the Bill gives the boards a specific duty to encourage health and care commissioners to work together to advance the health and well-being of the people in their areas. I might just mention that we have also asked the NHS Future Forum to consider in more detail how we can ensure that our reforms lead to better integrated services, and its conclusions on that topic will be with us shortly.

It is perfectly possible to have responsive, joined-up services working in patients' interests and competing for their choice. For example, commissioners could decide to run a tender for a whole pathway of integrated

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services to be delivered by a single provider. This could encourage providers to bring forward innovative, integrated care solutions that deliver greater patient benefits and greater efficiency. Only a few weeks ago, I visited in Oldham an example of exactly that: musculoskeletal services delivered in the community, specialists from a variety of disciplines situated in one building and accessible to patients directly, and with short lines of communication. It is very popular with the clinicians and patients involved, and is achieving great results.

Of course, as the noble Baroness, Lady Hollins, pointed out, the extent to which particular services will benefit from both integration and choice will vary. Diabetes networks provide high-quality services with a high degree of integration but limited choice for patients between providers. I am sorry not to have a contribution from the noble Baroness, Lady Young, on this point, but I am sure she would agree. Certain mental health services may be another example of this. For other services, more choice may deliver better outcomes. This is why the provision in the Bill enables services specified in a particular way in the national tariff to be unbundled and paid for separately. That should happen, however, only where this is demonstrably in patients' best interests. The comments made by the noble Baroness, Lady Hollins, in support of her Amendment 203A were very helpful in that context.

Monitor would have duties to support commissioners by enabling integration through the exercise of its functions. This reflects the fact that, as I have indicated, the driver for integration within the reformed healthcare system must come from clinical commissioners rather than from the regulator. Having said that, we are clear that, consistent with its duty to enable integration, Monitor will have an important role here. For example, the Commissioning Board would specify services for the purpose of tariff-setting, which may include bundling services together or specifying care pathways. Monitor's role would be to devise methodologies for pricing those services.

I would not want to go further than that and make it a statutory requirement that the tariff could specify services by reference to clinical pathways, as some amendments in this group imply. That would be overly prescriptive and unnecessary. While tariffs for whole pathways of care may be appropriate in some circumstances-and I have mentioned an example or two of this-that may not always be so. For example, it might be appropriate to give patients choice about which provider provided a particular element of their care along a pathway. If the tariff enabled only a single payment for a whole pathway of care, it could deny patients that choice. Hence, we need to retain flexibility within the tariff and remain focused on outcomes.

My noble friend Lord Clement-Jones spoke with great authority about specialised services. Sir David Nicholson, as chief executive designate of the Commissioning Board, published Developing the NHS Commissioning Board in July, which set out proposals for how the board will operate and how it will be organised. It is envisaged that the initial sub-national structure will reflect the arrangements that have been made for PCTs and SHA clusters. It is envisaged that

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the field force, as he describes it, will be responsible for commissioning specialised services, providing the flexibility for this to be organised at different levels according to what is most appropriate for that condition. My noble friend was absolutely right to draw attention to the need for integrated pathways of care in specialised services. We believe that we are setting up the structures to deliver just that.

The noble Lord, Lord Warner, helpfully indicated that the tariff should be based on four main principles: integrated care rather than episodes of care; best practice, not average costs; a full range of services; and particularly the need to avoid costs that did not need to be built in and windfall gains. Those factors form the basis for the new tariff structure provided for by the Bill. Provisions will allow currencies based on integrated services and pathways of care by specifying bundles.

Monitor will set the costs based on a fair level of pay for providers. The board will be required to work towards the standardisation of currencies, which will enable the extension of the tariff to a wider range of services. What the noble Baroness, Lady Finlay, said about tariffs reflecting clinical complexity was absolutely right. We tabled amendments in another place to prevent providers from benefiting from cherry-picking services, including providing for a fair level of pay and a requirement for transparency in patient eligibility and selection criteria.

My noble friend Lady Tyler spoke compellingly about addressing inequalities. The Bill does not lose sight of that. The board's duty under new Section 13M, to be inserted into the NHS Act under Clause 20, and that of clinical commissioning groups under new Section 14Y to promote integration-

Baroness Thornton: I am thinking about Monitor, what it is doing and its role as an economic regulator. Why is it the best body to decide on the price, cost and value of things?

Earl Howe: It needs to be a body that is separate from the NHS Commissioning Board. Determining what represents an appropriate price in the system is a very specialised discipline. We think that it will be helpful to have a sector-specific regulator doing that work. I would be happy to write to the noble Baroness setting out our rationale on this, but I make no pretence that this is a complex job. We do not think that it can be done very readily at the local level, although it would not be impossible. We think that local commissioners will need to be supported in this task.

Baroness Thornton: Perhaps when the Minister writes to me, he could explain why it is better that economists and regulators dictate those decisions rather than clinicians.

Earl Howe: Yes, I will. To address the point that I began just now, the board's duty to promote integration specifically requires it to exercise its functions to ensure that services are provided in an integrated way where it considers that this would reduce inequality in outcomes. Those words are very important. That is mirrored by Monitor's duty to enable integration.

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I completely understand the intentions behind the amendments in this group. We have had a very helpful debate. We believe that the duties in the Bill, coupled with the wider levers in the system to promote integration, address the points that have been made. In the light of what I have said, I hope that the noble Lord will withdraw his amendment, although I am sure that this is a theme to which we shall return.

Lord Warner: My Lords, this has been a very helpful debate. I do not wish to keep noble Lords from their supper. I just want to log with the noble Lord the thought that, ultimately, if we look at history, changing the tariff has been a long, arduous job. I ask him to think some more about whether we should give a little more of a push to the work of the board in setting currencies than we have so far. Monitor cannot get on with pricing until those currencies are settled. That is the potential blockage in the system. On that basis, I beg leave to withdraw my amendment.

Amendment 103 withdrawn.

House resumed. Committee to begin again not before 9.28 pm.

UN: Specialised Agencies

Question for Short Debate

8.30 pm

Asked By Lord Hunt of Chesterton

Lord Hunt of Chesterton: My Lords, in this short debate we are looking at the work of the UK with other nations of the world through the specialised agencies of the United Nations in order to deal with the most serious issues facing peoples and countries today and in the future. I declare a family interest in that my grandfather, Maxwell Garnett, was Secretary of the League of Nations Association in the 1930s. He often used to fly the United Nations flag. For five years in the 1990s I was privileged to be the UK representative at the World Meteorological Organisation, a UN specialised agency. I also declare an interest as a director of an environmental consulting company.

Many of the agencies-such as those for health, the environment, economics and human rights-originated in the 19th century, particularly those dealing with meteorology, health and communications. They were voluntary bodies then, and much less governmental than they are today, a point that I want to return to later. They were an important element in the formation of the League of Nations Union following the First World War and then became important bodies in the United Nations when that was formed after the Second World War. Indeed, the person who wrote many of the documents for both of them has a statue in Parliament Square-namely Jan Christiaan Smuts. One of the features of the United Nations compared with the League of Nations was that there was a much stronger

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element of the international body commenting on, helping, interfering with and almost intervening in nations in the interests of adhering to the principles of civilised society and for the benefit of populations. Governments were strongly pushed by regulations to avoid torture, not to starve their people and to respect human rights. The influence also extended into areas that are very important to science, such as requiring member states to provide their people with information important to their safety and well-being, and for economic development, an area which United Nations bodies still find extremely difficult.

However, I believe that these agencies have made many great achievements. Examples are the reduction of disease through the World Health Organisation, the provision of humanitarian assistance, and providing advance warning of disasters. A nice example of this was that in the 1990s the area of uncertainty about where a tropical storm in the form of a hurricane or cyclone would hit 24 hours ahead was around 220 kilometres. Within a few years, research brought that down to around 130 kilometres. The area of uncertainty was greatly reduced and that led all the countries of the world to use much more accurate methods. In the area of culture, we have all benefited from the World Heritage Sites listed by UNESCO, one of which we are in today, of course. Last year, the United Kingdom's nomination of Charles Darwin's Down House was accepted; and for the information of noble Lords, this year China is putting forward Kubla Khan's Xanadu, which is mainly a grass field, by the way.

One of the other very important features of the UN system is that it provides standards for business, science and medicine for the whole world. My aim in tabling this debate is to point out that, in my experience and that of many people who have both written and spoken to me, these agencies could achieve much more. The Foreign and Commonwealth Office takes the lead in our involvement with the United Nations. I am informed that the UN department at the FCO is staffed by around eight people, so it would be impossible for them to deal with the 50-odd agencies of the UN, and therefore the government departments take the lead on these issues. However, we could do much more to involve Parliament and interested organisations and to build our contribution. A number of suggestions have been made.

First, the United Kingdom should provide a report to Parliament about the key objectives of the United Nations agencies and how the UK is contributing to those. There are many important multiagency themes on which the UK has been pressing, such as climate change, food and water, as well as technical issues such as data. One of the frustrations for a scientist in the governmental world is occasionally hearing a civil servant asking, "What have data got to do with policy?". It is a slightly puzzling statement, but the attitude is quite widely held. The role of data is changing all the time and it is no longer just provided by government bodies, it is provided by all sorts of organisations. The United Nations' bodies are in fact being rather restrictive in the way that they handle and think about their involvement with data. The United States is introducing data exchange centres where you can bring data together

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from many different sources. It is important that UN bodies move in that more open direction. That is an example of themes which such an annual or biannual report could tell us about in future.

The reports should also tell us about where agencies need to change. The United Kingdom is always very good at telling UN agencies to be more efficient economically and to spend less money, but they are not very good at producing broader, non-financial goals which are, after all, why these bodies are there in the first place. It is important that such a report should describe the areas where there should be changes, though hopefully in a constructive spirit. I fear that there have been some reports by British government departments on UN agencies which widely displease our fellow nations in the UN because they are done in such an unconstructive spirit.

Even experts have no idea about the emerging issues that such reports could communicate. For example, you probably do not know that there is a UN agency just the other side of the river, the International Maritime Organisation, which regulates and defines the rules for dealing with geo-engineering, which is the study of how we can control climate change. The experiments being planned to put iron particles in the ocean to absorb carbon dioxide are, of course, a very radical idea which must be regulated. Even the Royal Society was unaware, when it was talking about geo-engineering, that this discussion was actually going on here. These big, new and important issues need to be publicised. These reports should also give information on the significant decisions and achievements of these agencies as well as their problems.

I also want to emphasise the importance of stakeholders being much more involved when there are significant meetings of these United Nations agencies. There is currently some circulation within Whitehall in advance of such meetings, and sometimes to the technical agencies, but there is very little real consultation. I read about how these United Nations agencies started in the 1920s, so when I was head of the Met Office I made sure that we had very wide consultation with many industries and stakeholders. However, this does not always happen. Nowadays, when IT allows these ideas to be circulated, there is much more possibility of that happening.

My second point is that UK delegates at meetings of these significant United Nations agencies-although they are very responsible and sometimes have other government departments present-hardly communicate back to London at all, unlike those from the United States. They certainly do not communicate with stakeholders online. This is now perfectly possible, because there are many public sessions of UN agencies which could be reported. They are in fact being reported online. I can see many meetings, such as a recent one on biodiversity, as they happen on my BlackBerry. This is not courtesy of the United Nations or any Government; it is courtesy of the International Institute for Sustainable Development in Canada. I can see what is happening in many parts of the United Nations on my BlackBerry, which is extremely helpful. I can then send e-mails to somebody to say, "Why don't you do this, that or the other?". This is clearly the new world that we are in. I am sorry to say, however, that

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when I spoke to a colleague in the Foreign Office, she said that she did not have a BlackBerry and therefore would not know what I was talking about.

I know from personal experience that reports are sent to the Foreign and Commonwealth after meetings. Most of these are not secret but they are nevertheless classified as such, so if you want to read what happened you have to wait 30 years. It would in fact be perfectly possible to have these reports done openly. I wrote a report after the WMO congress in 1995 at which we talked about developments in meteorology and how it should be applied to this, that and the other thing. It is now in a file somewhere and you can read it in 2025. This is not how we should be dealing, and it is moving on very slowly, I am afraid.

One of the puzzling features about the UK's involvement in these agencies is that it is not at all clear why certain government departments are in the lead and how they participate with the other lead departments. For example, I have had considerable concern expressed to me by scientific bodies about the fact that UNESCO, which has a wide range of interests-cultural, scientific, educational and so on-is responsible for important programmes in oceanography and hydrology, as well as culture. The government department in the lead for UNESCO is DfID, which is of course a very responsible and well known department. However, while it is pretty good on economics and development, it is not so hot on those other areas. It is not at all clear that communication on these matters is taking place.

There has to be more effective collaboration, not only between government departments but between industry, NGOs and scientific institutions. Some research councils, whose scientific work I admire, employ the United Kingdom technical representatives at certain UN agencies, but their significant role is poorly understood by the senior management-I shall not name names. Most of the senior management either do not know or do not meet the UK representatives and do not regard it as important. I believe that representing the United Kingdom at a United Nations agency is a very important and responsible role, and it is absolutely essential for senior managers to know who is doing it and to make sure that they report to them and that there is some dissemination afterwards.

This brings me to another of my points. I believe that the Foreign Office-

Baroness Verma: My Lords, I must remind the noble Lord that this is a timed debate. I am terribly sorry, but he has had 10 minutes.

Lord Hunt of Chesterton: Well, that is almost the end of my shopping list. I thank noble Lords very much indeed.

8.42 pm

Baroness Falkner of Margravine: My Lords, it is my pleasure to follow the noble Lord, Lord Hunt of Chesterton, in this wide-ranging review of the UN agencies and I congratulate him on securing this short debate.

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In the 60 years since the formation of the UN, we have come a long way, going much further than the original conception of forming an organisation for maintaining peace and security through mutual guarantees of political independence and territorial integrity to great and small states alike. The specialised agencies, numerous as they are, have come about as Governments have realised that some of the most pressing problems of the world are not capable of resolution through the exercise of bilateral co-operation alone.

Winston Churchill saw that in his advocacy of concentric circles, which included the countries of empire, the alliances of Europe and the strategic north Atlantic interest that the UK was dependent upon after the war. So pooling sovereignty to the extent that we have in multilateral organisations is not something new. Yet in the UK, a founding member of the UN, it is becoming increasingly fashionable to knock the UN and its agencies except when we need them. At that point, the same people lament their inability to do whatever we want them to do at that particular time.

I welcomed the Government's multilateral aid review earlier this year as an extremely useful exercise in evaluating our relationship with the UN specialised agencies and in taking forward a new approach. I want to make just three broad points in relation to these bodies.

The first is that while an individual member Government can do well to review the effectiveness of an international organisation-and I want to put it on the record that I think the multilateral aid review did an excellent job-it nevertheless brings to that exercise a narrow prism of sight, hence the review was commissioned to assess the value for money of UK aid funding for those organisations. I accept that the criteria related to strong behaviours which are capable of measurement-in this case, organisational strengths and contributions to UK development objectives-are entirely worth while. Any keen observer of UN agencies will not have been surprised to see that the list contained few surprises, and those that performed poorly or were merely adequate were those that had had a poor track record for some time. It was also not particularly surprising to see that they shared some similarities in weaknesses: a lack of a sharp focus on their mandate; an overly bureaucratic administration, which caused delays; inefficiencies built into the system; poor cost controls; and references to poor leadership and thereby, implicitly, to poor governance.

They are all areas which, were they to be found in corporate life or indeed in government, could be resolved through process and management change. However, the very essence of multilateralism-of being beholden to multiple stakeholders-makes consensus on change an extremely challenging task. Most countries can agree on what they think is wrong, but it is far more difficult to agree on what they think they want from that organisation going forward.

I refer back to my own experience at the Commonwealth Secretariat where we were constantly being pushed in one direction by a particular group of countries, and in another direction by another group. I think it is fair to say that when one thinks of the failure of the Commonwealth to resolve the political situation in Zimbabwe, it was not a failing on the part

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of the organisation but the lack of consensus on the part of its key members to be able to see a way forward which prevented effective action at the time. I use this example to suggest to our Government that achieving change in the direction we seek will be more easily delivered if we work across the other groups of stakeholders in a diplomatic and consensus-building fashion-sotto voce rather than megaphone diplomacy.

My second point is related and concerns the more practical aspects of cost controls and building efficient and transparent systems. There is a crying need for reorganisation of the governance of these bodies if they are to carry out their mandates. Some have overly cumbersome executive boards, overstaffed senior levels that have been in post too long, and a general risk aversion, which makes new learning more difficult. While we want lean and efficient structures, we the member countries do not accept that a quota system of recruitment actually works against the most high-calibre candidates.

If one is to take leadership changes at the IMF or World Bank, it is not an edifying spectacle in a global economic crisis to see a jockeying for position for the top job, not on the basis of merit but on the basis of whose turn it is. It also leaves the population of countries that do not "win" that post with the impression that the officeholder will from now on be partisan. This cannot possibly encourage confidence in those bodies. On the board, Buggins's turn results in compositions that may not be fit for purpose. At executive level, the need for geographical balance may well deliver a less than optimal workforce. I urge like-minded countries to work with the Secretary-General and director-general to streamline board and human resource practices to reflect a stronger emphasis on merit, to the exclusion, if need be, of the requirement for geographical balance if the case is strong enough.

A further point is about the location and mandate of UN agencies. A good example of a body stifled from birth is that of UNEP. By basing it in Nairobi, it was hampered from the outset by the fact that it was cut off from the rest of the UN system geographically, and it struggled to recruit the highest calibre staff. In keeping with a somewhat lower status as a UN programme, it has had one of the smallest budgets within the system. Given that it is expected to look after a range of environmental issues, from climate change to biodiversity, water and ozone depletion, it is overstretched and underresourced. Given those constraints, it does a remarkably good job.

Let me turn now to one of the priority areas identified by the MAR-that of programmes supporting the empowerment of women and girls. Last year saw the creation of UN Women. Its full title is the United Nations Entity for Gender Equality and the Empowerment of Women. The reason it is an entity, we are told, is because its mandate is cross-cutting across other UN bodies to cover all themes related to women. It has strong leadership in the appointment of its first head, Michelle Bachelet. Its mandate is wide-reaching, so it was a little surprising to see that Saudi Arabia, that leading example of gender equality and empowerment, was voted on to the executive board. It came in in an obscure category of,

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