Mr. Denham: I have been in the House long enough to be nostalgic for the days when explanatory notes were every bit as obscure as the clause that they sought to explain. There were never any such difficulties then. Clearly the attempt to express matters in more colloquial terms introduces a wider debate. I will try to reassure the right hon. Gentleman.
The reference here is to what in the legislation are referred to as the contracts entered into between NHS bodiesfor example, a commissioning arrangement between a primary care trust and an NHS trustrather than the whole panoply of NHS contracts. I apologise if the explanatory note is not as clear and comprehensive as it might have been.
I can reassure the hon. Member for Runnymede and Weybridge that it is entirely a voluntary option for potential LPS providers to apply for health service body status. There is no question of anybody being required to go for health service body status in order to take part in LPS. If a provider did not wish to enjoy the health service body status, he or she would not need to do so in order to take part. Clearly, though, there will be circumstancesthe hon. Gentleman identified onewhere the ability to be treated as an NHS contract holder will be a more convenient way of arranging services and remuneration than a formal legal contract. There is a mechanism for the resolution of disputes and that, ultimately, is enforceable in the county court. It is a voluntary option and a significant number of LPS providers will probably wish to take advantage of it, but it is not a compulsory option. Therefore, the situation that the hon. Gentleman was concerned aboutsomeone being forced to go down such a route, and the viability of the scheme being called into questionshould not arise.
Mr. Hammond: Does the Minister not recognise that there could be a problem in relation to termination?
Mr. Denham: The common sense answer is that the parties to the agreement and the provider would have to consider what would happen in the event of a termination before applying for the health service status. As it is a voluntary option, it only arises if somebody chooses to go down that particular route.
Mr. Hammond: I think that the Minister slightly misunderstood what I said. Someone who chooses not to go down that route will still not have the assurance of an enforceable contract, because of the possibility of the contract being terminated by a direction of the relevant authority. The only practical route for a private sector party would be to build in to the contract cancellation provisions that recompensed that body for its investment. The health authority would then be exposed, because it must follow a direction given by the Secretary of State to terminate a scheme. However, it is not conceivable that a private sector investor would invest substantial sums unless the contract were phrased in such a way that the investor would be compensated in such an event.
Mr. Denham: That is an issue in relation to clause 33, which we discussed briefly, rather than clause 34. The reality is that we cannot disapply clause 34. The Secretary of State must have the power to terminate a pilot in circumstances, which I am sure will be rare, in which a scheme proves to be totally unsatisfactory. The various parties will need to consider the consequences of that before deciding to enter into the scheme.
Question put and agreed to.
Clause 34 ordered to stand part of the Bill.
Clause 35 ordered to stand part of the Bill.
Charges, recovery of payments and penalties
Mr. Denham: I beg to move amendment No. 209, in page 32, line 29, leave out 'piloted' and insert 'local pharmaceutical'.
The Chairman: With this it will be convenient to take Government amendments Nos. 210, 211 and 223.
Mr. Denham: The clause has a simple policy intentionthat there should be no difference whatever between existing services and LPS pilot schemes in terms of prescription charges. The consequences should be the same for a patient who pays the prescription charge, or who makes a declaration to say that they do not need to do so, in all pharmacies, whether or not they are LPS pilots. Equally, the consequences should be the same for not paying a charge, which is why the clause provides the power to make regulations to apply penalty charges when exemption from payment is wrongly claimed. In serious cases, prosecution will be possible under section 122C of the Health Act 1997.
Government amendments Nos. 209 to 211 ensure that the status quo on prescription charges is maintained. The amendments alter subsections (1), (2) and (3) to make sure that the powers apply only to pharmaceutical services. The original drafting would have given schemes the power to charge for all services provided under pilot schemes, which was not our intention. By adding a further paragraph to schedule 3, Government amendment No. 223 provides the same regulation-making powers for substantive LPS schemes once they are introduced.
Amendment agreed to.
Amendments made: No. 210, in page 32, line 35, leave out `piloted' and insert `local pharmaceutical'.
No. 211, in page 23, line 38, leave out `piloted' and insert `local pharmaceutical'.[Mr. Denham.]
Clause 36, as amended, ordered to stand part of the Bill.
Clause 37 ordered to stand part of the Bill.
Control of entry regulations
Question proposed, That the clause stand part of the Bill.
Mr. Desmond Swayne (New Forest, West): In many respects, my constituency is patchy with respect to the coverage that can be had from pharmacistswe are certainly talking about many more than the three miles that were mentioned this morning by the hon. Member for Isle of Wight (Dr. Brand). That position would be much worse if one or two strategically placed independent pharmacists were to find themselves in greater difficulty because of current trading conditions.
My constituency is served by independent pharmacists. Although the total number of chemist shops in the United Kingdom has remained stable at approximately 10,000, the composition of those shops has changed significantly. Over the past 10 years, the proportion of chemist shops that are part of a chain of more than five shops has risen from approximately 25 per cent. to 40 per cent. There has been quite a concentration in the market with the growth of chains at the expense of independents.
The smaller independents inevitably face various disadvantages, such as the fact that a flat fee is paid as part of the system, whereas in the past, fees took account of the low volumes used by smaller independent outlets. The national health service expects pharmacies to negotiate discounts with wholesalers, and reimbursement is based on that. It does not take account of the differential ability of small independents to negotiate significant discounts with wholesalers. There is the additional question of the high-cost item for which the fee fails to reimburse the small independent for the cost of his borrowing while he waits 90 days to be reimbursed for the cost of the item.
It is for those reasons that many independent chemist shops have disappeared. I believe that the change in the structure of the market because of the disappearance of the independent can profoundly alter the relationship with the pharmacist. It is precisely because of the informal circumstances in which people meet their independent local pharmacist that they are able to obtain more information from the pharmacist than from their doctor. I would argue that local pharmacists provide a different quality and level of service.
The provisions in the Bill offer greater opportunities for independents. There is every prospect that the LPS arrangements will play to the strengths of the independents in the quality of the service that they offer. It would be tragic if at the same time, the control of entry criteria were changed to the extent that competition knocked many of those independent suppliers over the edge and drove them out of business. I am essentially seeking reassurance from the Minister. Will he describe the circumstances in which the control of entry criteria will be changed or removed in their entirety so as not to bring about a faster change in the structure of the market, with the disappearance of independents, than has already been the case, most regrettably, over the past 10 years?
Mr. Denham: I think that I can give the hon. Gentleman the reassurance that he seeks. We have already discussed the relationship between proposed LPS pilots and existing contractors. Clause 38 seeks to deal with the relationship between LPS pilot schemes that are already in operation and new applications under the national arrangements. If a pharmacy moves from national arrangements to an LPS pilot scheme it will typically still remain in competition with other pharmacies, and it would be odd if such pharmacies were afforded less protection than they had before.
Clause 38 is designed for the circumstances that the hon. Gentleman described. If a pharmacy takes advantage of LPS and believes that it has particular strengths to move in that direction, it should not lose the protection that it would have had under the national arrangements. Clause 38 will ensure that pilot scheme pharmacies are taken into account when health authorities decide whether existing services in the neighbourhood are adequate.
Sir George Young: Can the Minister give a similar assurance in respect of the circumstances that we discussed this morning where pilot schemes are provided not under LPS but under PMS? Will they be similarly safeguarded?
Mr. Denham: We discussed the role of PMS in providing innovative services. There is conceptually a difference between a PMS pilot or any other service that is restricted to dispensing to the patients of a particular practice and a LPS scheme or general national contract pharmaceutical service scheme that provides dispensing services to all the patients in the area who hold an NHS prescription. We are doing nothing to change the existing provisions, but the right hon. Gentleman's example is not analogous to the provision for local pharmaceutical service schemes, which is particularly to ensure that a pharmacy that enters into a pilot scheme is afforded the same protection that it would have had under the national contract.