UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 119 - i i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Health Committee

implementation of the health and social care act 2012

Tuesday 11 June 2013

dr david bennett, matt tee and andrew webster

Evidence heard in Public Questions 108 - 233

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Oral Evidence

Taken before the Health Committee

on Tuesday 11 June 2013

Members present:

Mr Stephen Dorrell (Chair)

Rosie Cooper

Andrew George

Barbara Keeley

Grahame M. Morris

Valerie Vaz

Dr Sarah Wollaston

________________

Examination of Witnesses

Witnesses: Dr David Bennett, Chairman and Chief Executive, Monitor, Matt Tee, Chief Operating Officer, NHS Confederation, and Andrew Webster, Associate Director Integrated Care, Local Government Association, gave evidence.

Q108 Chair: Good morning, gentlemen, and thank you very much for coming. There are a couple of members of the Committee who are going to join us in the course of the session; I am sorry we are slightly light on numbers at the beginning.

I would like to ask you, if I may, to begin with very brief introductions from yourselves as to the roles you fulfil in your respective organisations.

Matt Tee: I am Matt Tee. I am the chief operating officer for the NHS Confederation, which represents all the organisations that commission and provide within the NHS.

Dr Bennett: I am David Bennett, here as chief executive of Monitor.

Andrew Webster: I am Andrew Webster. I am here for the Local Government Association.

Q109 Chair: Thank you very much. I would like to open the questions, please, against the background of what we want to talk about today, which is how the system is changing to deliver quality objectives, value for money and meeting the financial challenges we face. Then we want to go into discussion of competition policy and the competition regulations and so forth, but I would like to begin by referring to this week’s Health Service Journal, where Sir David Nicholson appears to tell us that it is an academic discussion because it is all moving on anyway. I quote: "NHS England will publish a ‘case for change’ in the coming weeks". Sir David says, "We’re very interested in thinking about integration of commissioning and provision and we can work with Monitor and others on how that could work". Then, "The strategy will examine ‘whether the foundation trust is the right model for all [provider] organisations in the NHS’". Those are some quite interesting fundamental observations on the future structure. I wondered whether any of you had any thoughts about them. David?

Dr Bennett: I suppose I should start by saying that I only know what it says in the Health Service Journal. I have not talked directly to David Nicholson about any of these things.

Q110 Rosie Cooper: What about indirectly?

Dr Bennett: No, not knowingly, anyway. Goodness, where do you start? Much of what I think David was saying I do fundamentally agree with. The health service-the NHS-needs to change a lot. When he talks about making a case for that change, I think part of what he has in mind is that it is not fully appreciated how much change is needed. We have done some work in Monitor that we have shared with the Commissioning Board and, for all I know, it informed part of David’s comments.

Looking at what we think needs to be done, if the NHS is to continue to maintain or improve the quality of its service, recognising the demographic change that is going on and assuming the sort of funding profile that, say, the King’s Fund has also looked at, if it cannot achieve further significant productivity improvements by something in a little less than 10 years from now, you are looking at gaps of potentially £40 billion or something of that magnitude-very large. We have looked at what it is that the NHS might or can do to fill that gap. We have said there is still a lot that needs to be done on basic productivity, doing what everybody does today but doing it better. You only have to look at the gaps between those who do things well and those who do not do things quite so well to see there is still opportunity there.

Secondly, there is an opportunity to look at where care is provided. We hear a lot of talk about providing care in the community, not in hospitals, for example-and done appropriately, certainly in some circumstances, that does look like a basis for improving the quality of the care from the patient’s point of view, but also doing it more efficiently.

However, we think it even has to go beyond that. We know there are some little pockets of radically different ways of providing health care out there, often in other countries. There is no other health system that clearly does it significantly better across the board. Some of those examples of dramatically better or higher-value care-getting more for the amount of money that is being spent-I think will need to be brought into the NHS if it is going to meet that sort of financial challenge, assuming that emerges.

I presume, when David talks about making the case for change, he is talking about spelling some of that stuff out, and I imagine he is also making the point that, frankly, not only does not everybody accept just how much change will be needed, but not everybody supports that change. He talked about, for example, the problem of the political cycle obstructing some of the change that is needed. I share the view that one of the benefits that ought to come out of the new system is that, by establishing independent bodies like the Commissioning Board and Monitor, you ought to be better able to do things without such direct concern about the political cycle. I think he was making the point that there should be-

Q111 Chair: Interrupting you, if I may, one of the questions that was in our minds before Sir David’s interview-and perhaps given added point by Sir David’s interview-is that in this new world that is created by the Health and Social Care Act, who is responsible for achieving the kind of fundamental change in the care model that you hint at and he hints at in his interview?

Dr Bennett: Fundamentally, the philosophy is that this has to be locally driven. On the provider side, the creation of foundation trusts assumes that having independent organisations that can respond to local circumstances is good and the creation now of local CCGs, with a reasonable degree of independence, is also based on the same premise.

Q112 Chair: Is that right? It is often said, is it not, that it is more difficult for those local organisations acting independently to have the kind of strategic view of the necessary fundamental change than it is for larger organisations?

Dr Bennett: I agree with that. I am describing what I think is the philosophy that underpins the reforms. Nevertheless, I personally believe that you will need a degree of strategic drive behind this. The two main places that will come from is the Commissioning Board working with the CCGs, and Monitor particularly working with the providers. We have a delicate balance to find here, not telling local commissioners or local providers exactly what to do, making sure there is an appropriate degree of coordination across whole health economies so that there is a proper strategic perspective-sometimes at a national level, indeed-and making sure that there is lots of guidance, suggestion and support for those who need to make the changes. We talk, for example, especially about the smaller district general hospital being a model whose survival people question. If that is true, we should not just leave it to lots of local decisions to see what emerges. An amount of thinking about what sorts of models might emerge and promoting some sort of national debate around that kind of issue is essential. Both the Commissioning Board and Monitor have an important role to play in that.

Q113 Chair: Can I ask what the local government view of all this is?

Andrew Webster: You would expect us to welcome the move towards localism and more local leadership, particularly the establishment of health and wellbeing boards as a place where there is a genuine meeting of equals, and an ability to look across the piece at the whole of health and social care, the whole of health and local government and public health. I do not think that has been done in one forum with one group of leaders before. You would also expect us to articulate a strong view that there should be more localism in the way that things are governed, funded and accountable, so that that partnership is more meaningful to local people, has more authority and can be held more strongly to account for the decisions that it takes.

I would also be optimistic that localities can work together on the strategic issues. Certainly, that is already happening in a number of places. Last week, I was at an event for 10 authorities in Greater Manchester with all of their CCGs, a range of health providers and foundation trusts, looking at how to remodel health care in Manchester in a sustainable way. There is every reason to think that greater local leadership and accountability, combined with a real ability to invest in the things that will prevent that excess pressure on the hospital system by proper investment in the community and public health, is something that everybody should welcome. The logic of that is that NHS England cannot launch alone a strategic review of where the NHS is going.

Q114 Chair: That is exactly what it is proposing to do.

Andrew Webster: There is a conversation to have between now and when that happens about how that can be cosponsored by all the people who have a legitimate interest and have a real local footing, so that those discussions reflect and take with them the interests and opinions of local people. I would be confident that that can happen, because I do not read into the remarks that Sir David made, or others that have been made about strategy, that there is a wish to divorce it from local discussion and local government; quite the opposite.

Q115 Chair: I know Rosie Cooper wants to come in on that, but before she does, I will go to the NHS Confederation.

Matt Tee: Thank you. One of the contexts in which these comments took place was around the NHS Confederation conference last week in Liverpool. I had the chance there to speak to a number of our members about David’s article and things coming out of his speech. I would echo very much David Bennett’s comments about the need for change to be driven locally. People welcomed David’s suggestion that it might be a chance to relook at some of the national architecture, if you want to call it that. From our members’ point of view, much of the prevailing architecture is recognisable from the health Bills of the early 2000s. One of the issues people will talk to is whether the tariff as currently structured incentivises the right behaviours and so on. There are a number of issues, such as that to which David alludes in his article, which our members would welcome a look at, and would see it as an opportunity to have an architecture that facilitated those local discussions between foundation trusts and CCGs and so on.

On the point about how this exercise might take place-and the very good point about NHS England doing it in isolation-it is very clear to the Confederation that health is not something that takes place in isolation any more. It is very clear to us that our members have a closer relationship with local government than probably they have ever done before, that the tensions between the different models of health and social care are very significant, and that anything that can be done to change that would be good. Our strong message to NHS England, which I think they would heed, is that this has to be a very wideranging exercise, not just in consultation but in real engagement and involvement.

Chair: Thank you very much. That is a good cue for Rosie.

Q116 Rosie Cooper: Thank you; it is. I am now beginning to think, when I hear the word "localism", that it is a cover for doing just exactly whatever you wish. Dr Bennett, you have said CCGs are good and FTs are good. Unless I am mistaken, in that article, Sir David Nicholson questions foundation trusts. I said last week that I think Mr Webster is enthusiastically missing what is really at the core here. Dr Bennett, you said that the political cycle will obstruct the change. Let me tell you that, if this system is going to be your good selves and NHS England and the political cycle is in your way, with you just doing what you like and dealing with people like Mr Webster, who are very enthusiastic, and we do not see the real inclusion and change, really dealing with local people-and there are questions later on about the London reorganisations, where hospitals that do not have any problems are just caught up in this "localism" where local people have just been set aside- people will speak at the ballot box and tell us what they want; how do they let you and the Commissioning Board know they would like you to leave the stage? How are you accountable? That is not just for Monitor but the national Commissioning Board. How do you really become accountable to the people? You are making all these decisions, saying it is all local, and the reality is, as we will show as we go through this, that with localism it is very hard for you to be in any position to hear any local voices in a meaningful way.

Dr Bennett: The local accountability comes from-for example, on the commissioning side-the role of the health and wellbeing boards and-

Q117 Rosie Cooper: Tell me this: if I am part of a health and wellbeing board, for example-this is part of my questions later-and the CCG representative does not turn up, which is happening in my patch, how does a health and wellbeing board make you accountable? You can say they can produce reports-you can ignore them-and they can do this, that and the other. How are you really accountable?

Dr Bennett: I am not going to defend health and wellbeing boards because neither are they my responsibility nor did I design them, but my understanding is the intention-

Q118 Rosie Cooper: No, but how are you accountable? You cannot just say, "We are accountable," and, "Oh, yes, this is what my leader says and we ignore you." What happens? How are you accountable?

Dr Bennett: I have to leave the commissioning accountability to others, because that is not my responsibility. On the provider side, the foundation trusts have the local governance arrangements through their governors and members.

Q119 Rosie Cooper: I used to be the chair of one, and they have all the bite of a dead sheep. Carry on. How does that make the hospital accountable?

Dr Bennett: That is one bit of local accountability. In the case of foundation trusts, they are also accountable to us, so you legitimately ask, "To whom are we accountable?" We are accountable to Parliament, particularly through this Committee, and we also have an effective accountability to the Secretary of State. The Secretary of State can remove me, for example, if he feels that Monitor is not doing its job well. Those are the fundamental accountabilities. I certainly was not wishing to suggest that it is inappropriate in any sense that those political accountabilities are still there; far from it, but I think there are certain types of change that, curiously, most people, including, I think-when I talk to them-most politicians, agree are desirable change, which nevertheless are very difficult to make because it is difficult to have a discussion at a local level that really reveals what is in the best interests of the local people.

Q120 Rosie Cooper: Can you hear the contradiction in what you are saying? "All these decisions are going to be wonderful because they are going to be made locally, but there are difficult decisions where we cannot trust local people to make them because they won’t make the strategic one that we agree with, even if it is right. Therefore, we’ll ignore them and do what we want anyway."

Dr Bennett: No. I did not say that local people could not or should not make the decisions. I said that I think the quality of the local debate is not always as good as it needs to be, but it does not mean to say at all that local people should not be involved in the decisions. I have also conceded that not all decisions can be made at a local level, that some of them do need coordination, some at a national and some at a regional level. I think that both the Commissioning Board on the commissioner side and Monitor-and, to an extent, the Trust Development Authority on the provider side-have a role to play in trying to make sure there is an appropriate amount of strategic coordination and input. Then we have our accountabilities, as I described.

Q121 Chair: Could we have an answer to the question on the health and wellbeing board? Rosie’s question, if I can encapsulate it, is: why are health and wellbeing boards different from all the rhetoric about collaboration we have had over countless years?

Andrew Webster: There is a formal and then a more cultural answer to that. The formal answer is that they are a committee of the local authority. Therefore, they have the power to convene, to hold to account and to report in public. They can be challenged in public for not so doing by the scrutiny committees of the council, so they are stronger than their predecessors in form. They have also been given a much more extensive remit, in that they look at the totality of commissioning across health and social care, and they have duties around public health and integration. They are a space in which the political and executive leaders of health and local government meet and look at the big issues facing that locality. I think Rosie Cooper is absolutely right that the wider public have good grounds to lack confidence in that, because their experience has been that local democratic accountability for decisions about the health service has been weaker than it has been about our public services. As the Local Government Association has argued for many years, the way to address that deficit is to have more local control of decisions about health. We continue to argue, in a positive way, that building the role and the confidence of the health and wellbeing boards would enable us to take further steps to make them accountable bodies for the funding, delivery, change and management of local health services.

Q122 Chair: Would you like to see the powers of the health and wellbeing boards changed from where they are now?

Andrew Webster: Yes. We would like to see their role extended, so that they had more power to control the spending, and the accountability for the spending in that locality.

Q123 Rosie Cooper: In essence, what I have always said is that you have got the power to talk about it, but you have not got the power to do anything about it. You cannot implement your decisions. You are not at the table with the commissioners making those decisions. Therefore, you are a talking shop. I am not against health and wellbeing boards. There should be a merger-you should be at the CCG table, because if you are not, you can talk all you like and the CCG and the Commissioning Board will do whatever they wish.

Andrew Webster: The question is the extent of that. Is that the totality of everything that the CCG does, or is that some part of what the CCG does? The more the current debate about the need to reshape the whole system develops, the greater the scope of the joint responsibility and accountability.

Q124 Rosie Cooper: I will move away from the power and go to the real core of the question and talk about my patch, for example. My local hospital has two health and wellbeing boards, both working away. You describe going to Manchester, where there were a number. I can see no sign that the health and wellbeing boards in my area are going to join up and have a strategy and pathways of care that are not different from each other, all affecting one local hospital. How can you make health and wellbeing boards cooperate, so that we can have a coherent message to the provider?

Andrew Webster: No one can "make them", because they are sovereign bodies. That is the essence of this, isn’t it-that political sovereignty rests somewhere in the system and has to rest at a level, and where people need to collaborate, then they have to do that by choice? They cannot be made to do it. I was articulating, as you observed, an optimism that the case for change is sufficiently compelling that people will be more inclined to work collaboratively than they have been at times when the case for change was much less compelling, because it was possible both to deliver adequate outcomes and remain within budget without making such significant changes as people are now having to make.

Q125 Chair: Could we hear the Confederation view of this?

Matt Tee: I absolutely recognise what Rosie Cooper says about the democratic accountability piece. We recently produced a report on "Changing care, improving quality" with the Academy of Medical Royal Colleges and National Voices. One of the things we say in there is that, where we try to do change in a crisis situation, a lot of what I think Rosie Cooper is talking about gets lost. Ideally, we would like to be in a position where the sort of players that come together in the health and wellbeing boards and local people are understanding why change needs to happen and discussing what change needs to take place in order to meet those circumstances. I am not saying that is a trivial conversation, because it is a conversation about quality-it is also a conversation about money, and other things play into that-but where you can reach a position where you get close to an agreement or a consensus locally that things need to change, you then get on to a second order of, "So what is the change that should happen?"

We have failed to establish, as a health system both not working well enough with local government and not looking to that accountability that you describe, to the public’s content, the necessity for change before moving on to consider what the options are that we might end up with in this position. That is not by any means a trivial exercise, and we know that where you impose very tight time lines on that-sometimes for extremely good reasons-you get to a position of dissatisfaction.

Q126 Barbara Keeley: I have a followup question for Andrew Webster. What is the scope in an area that works well as a combined authority, which Greater Manchester does on a number of issues, to do more, following the meeting that you talked about? I have to say that the suggestion that you could work across 10 authorities is a little bit too expansive. My local authority is Salford, and I know that in terms of health and social care we link across to Manchester to a certain extent, and to Bolton and Bury. It seems to me that it is little groupings of three or four authorities that may well work together. Is that something that the LGA will be promoting and that you will be doing more work on?

Andrew Webster: Yes, it is. Indeed, we are doing so by supporting-through assistance to councils, advice and working with the leaders of those organisations-ways that people can collaborate together to share services and work on common issues, not just in health but in other areas as well. It was not any suggestion of ours that it should be 10. That was Greater Manchester’s choice.

Q127 Barbara Keeley: That is the current unit.

Andrew Webster: There are other places where certainly groups of three or four authorities are working together. In the northeast, there is a group of seven authorities that work together. There is local government naturally being different in different places. There are different natural groupings that make sense to people and where alliances develop. The case I was making is that the health service should be more attuned and sensitive to that and be able to operate flexibly and develop its strategy in those localities so that it commands greater confidence of the local authorities and of the people those local authorities represent. Ultimately, the political cycle is very powerful but also different everywhere in local government. There is not one national political cycle to manage here; there are 150odd different local ones, and that is absolutely right, because they are locally accountable and we should expect the people who lead the health service to be capable and want to work in that kind of way.

Q128 Dr Wollaston: Can I keep on the theme of the tension between localism and the need for a strategic oversight? Dr Bennett, you referred to the obstructive effect of the political cycle at national political level, and indeed Andrew Webster referred to the same problem operating at local level. This Committee also heard at a previous meeting that there is a vacuum-that is a very strong word-in system leadership in the new structures. Of course, we all know that in an ideal world we would have a discussion locally about the need to change and implement it, but isn’t the reality on the ground going to be that both national and local politicians are going to step in and try to obstruct any change that affects their local hospital because of the political cycle? Realistically-we had it in strategic health authorities before-where do you see the real drive for that need to change being pushed through when you might have local political leaders who, even though they know it is necessary, cannot sign up to it for political reasons?

Dr Bennett: The first thing on this national versus local issue is that there is not a perfect answer. For certain, some big brain at the centre of everything working out what is the right answer and then telling everybody what to do is not going to work, but equally, something that is totally devolved, with every little democratic unit left to make its own decisions, is almost certainly not going to work either. Inevitably, whatever system you design-I did not design this one-is going to have these tensions. Andrew was really on to the point about how, in whatever system you have got, you try to get political support, whether that is local or national support. The starting point is to get public support. Quite honestly, the politicians in the main are responding to what the public think and believe. We collectively, all of us, have to do a better job of explaining why change is needed and why it is a change for the better. Often, for example, people get it into their heads that it is all about saving money. I think enormous amounts of this change are about improving quality. Actually, it probably does produce greater efficiency as well, but we have collectively done a bad job of explaining this.

Q129 Dr Wollaston: But don’t you think there is a problem, in that you can often try and explain things, with the best will in the world, but the local and indeed the national press will only want to run the story that this is about a closure, a loss of a service, rather than developing another one? That is the reality you are up against.

Dr Bennett: It is, and it is not confined to health. This is a huge challenge in public policy in general: how do you have an informed discussion with the public when the intermediaries of that discussion are only focused on the sensational bits of it that get them their headlines and help them sell their copy? However, they have, of course, a perfectly legitimate role. We have to find ways of having more direct conversations with the public. That is fundamentally what we need to do, some of which we can do at a national level to try and set the context for some of this, other parts of which need to happen at a local level.

Q130 Dr Wollaston: So you have that conversation at national and local level, you are absolutely convinced that a reconfiguration needs to happen or the whole system is going to fall over, the local press and the local politicians are against you and, therefore, the local population are saying they do not want it. What is going to happen then if it needs to happen? Is there still going to be a strategic decision to reconfigure, and who is going to lead it? Who is going to be the person that leads that change?

Dr Bennett: By the way, my argument is that you try and get the public on board first, and then the politics and even the media may follow, but, fair enough, you may not always get there. If you get to a point where you have serious failure, either in quality or financial terms at a provider organisation, then it may be identified, if it is a quality issue, by the CQC, but it becomes the job of either us or the Trust Development Authority to make sure it is sorted out. Of course, this is exactly what we are having to do at Mid Staffordshire right now. Even that process is one where the people working on it are doing their best to consult with the local communities-of course, the CCGs are very heavily involved-and there will be a formal consultation process as well, but at the end of the day, if you have an organisation that is either providing unacceptably poor care or is losing lots of money, the problem has to be fixed.

Q131 Dr Wollaston: Do you agree that there is a vacuum of leadership?

Dr Bennett: You were talking about a vacuum, I think, in terms of setting a strategic direction for the NHS overall.

Q132 Dr Wollaston: Or even in local area teams.

Dr Bennett: I think there is a difference between the local and the national. At the national level, that is something which the national bodies, particularly the Commissioning Board and Monitor, have to work on together. We have started, but I think we have more to do. At a local level, the local area teams orchestrating the CCGs and, on our side, getting the providers appropriately orchestrated is very important, and that is working better.

Q133 Dr Wollaston: So you are happy that there is good progress.

Dr Bennett: In terms of getting the commissioners and the providers locally all to cooperate in working out what is the right strategic solution, especially when you have a real problem, it is moderately encouraging, for example, from what I have seen at Mid Staffordshire.

Andrew Webster: If I may comment, the takeup and delivery of new local arrangements-so the establishment of the health and wellbeing boards, the transfer of public health into local government, the setting up of the new relationships between the CCGs and local government-has all gone very well. We have surveyed our members and over 90% of them are very happy and confident with the arrangements that they have put in place. This is not a very direct answer, but it may well be too soon to say whether a vacuum is a good or a bad thing because we have yet to see what the outcome of a system where there is much more scope for local leadership and discretion would be, because we have not had one for a very long time. If you are someone who enjoyed the certainties of the previous arrangements, then the new world must appear uncertain and fragmented. If you are someone who wanted to see greater flexibility and choice, then the new world is an opportunity that is there to be seized but has only just come into existence. It is a question that bears further consideration and careful analysis, but the evidence probably is not there for us quite yet.

Matt Tee: I would rather agree with that. We are quite early on into the new arrangements. Both on the provider side and on the commissioner side, people are looking to see whether this localism is real. Do the local area teams behave a bit like old strategic health authorities did? Will NHS England begin to fill that vacuum that you describe? I do not sense our members looking up and saying, "There is a vacuum. We are all in trouble," but I do sense there is a bit of uncertainty about how the arrangements play out so far. Where some of our members would have a concern is that in the areas where there are difficulties, either from a quality point of view or from a financial point of view and often both, it is very rare that the likely answer to that situation is isolated within one organisation. It is almost certain that it has impacts on other organisations, and it feels to me that, at the moment, we are in a time between an outside force saying to that area, "Something has to be done," and that area being confident enough to get together and say, "We need to do something about the situation in this patch and it is not just about this hospital in isolation." So it does not feel to me like a vacuum that is deliberate or that will continue, but more that there is some uncertainty about how the system works.

Q134 Grahame M. Morris: Very briefly, we are looking at the implementation of the Health and Social Care Act. Within the context of these discussions about the health and wellbeing boards-which the Local Government Association are supportive of, in terms of their development, and in terms of a driver for integrated services, health and social care in particular-should they have a role in recommending to commissioners that they should commission, say, preventative services in the community, particularly for workingage disabled people? Is that part of their evolving role and would that be a good thing?

Andrew Webster: Yes. I think it already is, in that they have a duty to do that, and in many areas they will have identified priority areas to prevent either ill health or disability, or to support people who have those longterm conditions and vulnerabilities. Indeed, the local targets that CCGs set for how they are going to improve quality of service are set and have to be signed off by the health and wellbeing board. That architecture is already there, is welcome and has been embraced enthusiastically by people in local government. The issue is now with its delivery, isn’t it, and ensuring that the decisions continue to be made in those spaces and to be supported, and then the people held to account for delivering them?

Q135 Barbara Keeley: Can we talk about the hospital failure regime that has clearly led to reconfigurations being proposed? I am particularly thinking about south London. The proposed south London reconfiguration has been heavily criticised, both locally and, I have to say, in this House. Maybe that is an example of where the public were not got on board. I do not think I have ever seen an example where the public came on board with any reconfiguration anywhere at any time. That might be the aim, but it never seems to get done. To what extent does the failure regime provide for cooperative, locally based solutions to the problems posed, which may be more successful? That may be one of the ways that you can get the public on board. That is the first question.

Dr Bennett: Could you say a little more about what sort of local cooperative approach you are thinking of?

Q136 Barbara Keeley: I have not seen approaches where what is being suggested in response to failure regimes is what local people actually want. Is there ever any attempt to work to put together a solution rather than impose one? Time after time, when we have debates or questions asked here, there is a succession of MPs complaining that this is not what local people and local commissioners want, and yet that is what tends to end up getting imposed on people. Surely people will always be angry and disappointed, and will feel let down, if there are imposed solutions. Why not work to try to come up with something that local people would accept?

Dr Bennett: Yes, I see your point. The first thing I should say is that south London is not my responsibility because that is about nonfoundation trusts. That was driven initially by the Department of Health and now it falls within the NHS Trust Development Authority.

Q137 Barbara Keeley: That is only an example. It is about the failure regime.

Dr Bennett: Your question is legitimate. The approach that we take in Monitor, and it picks up on what Matt Tee was saying as well, is this: in the first instance we want people to be proactive and prospective. We do not want these changes to be happening at times of crisis. We want them to be done in a planned and orderly way. We are strongly encouraging the foundation trusts to work with their local commissioners to really get an understanding of the challenges they face in their local health economy, and to start working with their communities to develop longterm approaches to dealing with those challenges. We would much prefer that. I am looking at ways in which we can try and encourage the FTs to do that strategic planning.

We are also talking to the Commissioning Board about what they can do to encourage the CCGs to do that. In some areas, that is happening. If we get to a trust that is starting to get into difficulty, we will proactively try and make that happen. In some areas, it is happening and, for the moment, we are leaving the process to take its course, with a lot of local involvement, I think typically. There is a lot of this happening in the Greater Manchester area, for example. Hopefully it will resolve the issues that that health economy faces before they become too severe, but it does not always happen. At the point at which it becomes clear to us that, in the case of a foundation trust at least, it is getting into difficulty and that difficulty will not be resolved through this process of discussion, debate and negotiation between the trust and its commissioners and other provider organisations in the area, what we have done-and we have done it twice now-is send in something we call a contingency planning team. It is a team that we send in with the full support of the Trust Development Authority and the Commissioning Board. The purpose is to make sure the national bodies that are represented at local level are supportive of what it is trying to do. It is then tasked with working across all the local bodies, all the different providers and the commissioners to try and develop a solution, and it absolutely does its best to work with local politicians and representatives of the local community and patients.

Q138 Barbara Keeley: Stop at that point. Why does it fail? We had a debate here on NHS A and E last week, and there was a succession of colleagues complaining about local hospital reconfigurations. It may be the aim to do that, but-

Dr Bennett: Do you mean why don’t they happen or why are they so difficult?

Q139 Barbara Keeley: No. It is never successful. You are saying they are trying to engage with politicians, so why-

Chair: It might be simpler if you got local people on board.

Barbara Keeley: You just mentioned politicians, but in fact I can think of so many examples of debates and question sessions here with constant complaints that local Members of Parliament, who are important in terms of carrying the public, feel let down, left out, not included and not part of the decision. It is not happening, is it?

Dr Bennett: I cannot speak for what has happened elsewhere, but while I do accept that not all the politicians in the Mid Staffordshire area-which is the first point at which we have applied our failure regime-will say that they are going to be happy with what comes out of it, I would be extraordinarily disappointed if any of them said they had not been substantially involved in the process. I hope that the local MPs in the one other area where we are at the early stage of sending in this contingency planning team-which is around Peterborough, with its big PFI problems-would say the same as well. We are working very hard to make sure that the MPs are involved. As I say, they may not always like what comes out of it, and may not even all agree with what should come out of it. We are trying to complete an impossible circle here, but nevertheless we are doing our very best to make sure they are involved, and I would be really surprised if they felt we were not doing that.

Q140 Barbara Keeley: Would you say it should be the aim? It certainly would be better if that failure regime were to be started to be used to improve and develop services, rather than just deal with financial issues. From listening to the complaints that colleagues are making, it seems that their perception is that things are made worse. South London is a good example of that. Because there is financial failure in one hospital, other hospitals that do not have those issues are getting dragged into issues that are not even theirs, and will be downgraded, and their services will not be improved.

Dr Bennett: I am very clear that, where we have a foundation trust that is in difficulty and we need to sort that out, the participation of any other provider organisations is on a voluntary basis. We do not go in with any remit. We have no legal remit to look beyond the boundaries of the trust, so it has to be a negotiation with the commissioners and with other provider organisations. To stick with my Mid Staffordshire example, it looks as though there may well be a way of providing better services for the people of Mid Staffordshire if we can get much better collaboration between, in particular, Stafford hospital and Stoke hospital. Stoke is part of UHNS, a troubled organisation in itself, it must be said, but nevertheless we are working with the local team, the special administrators, to try and get the best possible arrangement between them, which will be in the interests of the local community, but it is done on a voluntary basis. There is no issue of telling them, "You must do this." It is not a south London situation.

Q141 Rosie Cooper: You said just before that everyone is consulted-politicians and local people-and they may not all agree with each other, but the interesting thing you said was "and who may not agree with what should come out of it". Who decides what "should" come out of it?

Dr Bennett: Did I say "should"?

Q142 Rosie Cooper: You did say "should".

Dr Bennett: I suppose I should have said "would" or "will come out of it". Who decides?

Q143 Rosie Cooper: But I think that is a really Freudian positioning of that word.

Dr Bennett: No, I do not think it is.

Q144 Rosie Cooper: The record will show.

Dr Bennett: I am agreeing with your point anyway, which is that somebody has to decide at the end of the day.

Q145 Rosie Cooper: Who is that? Is it you?

Dr Bennett: Actually, legally, it is the special administrator, and then the Secretary of State has to agree or not with the special administrator’s recommendations.

Q146 Rosie Cooper: So we can hold the Secretary of State and the Tory party to account for every closure. That is what you have just said.

Dr Bennett: I said that the Secretary of State has to agree with the recommendations of the special administrator. However, the law-the Health and Social Care Act 2012-specifies exactly on what basis the Secretary of State can disagree. So there are specific criteria. He cannot just say, "I do not like it."

Rosie Cooper: That is an interesting academic debate to follow.

Q147 Chair: The requirement to try to create a local agreement, local support, for whatever outcome emerges from a special administrator situation is not discrete, is it, from the broader question of an understanding of the need for service reconfiguration across the service as a whole? We have discussed the need for systemwide service change, and then we discussed the requirement for special administrations, or the requirement for consultation in the context of special administrations. Special administrations typically arise when the broader need for service reconfiguration has not been addressed in time.

Dr Bennett: That is absolutely typically the case, which is why I am trying to get everybody to face up to these challenges at an earlier stage and do it in a much more planned way.

Q148 Barbara Keeley: I do not know if I am alone here, but I cannot think of an example anywhere in the country of a recent successful reconfiguration where local people and politicians have accepted it as the right way forward. I can only think of forced reconfigurations, done against the will of communities, leaving people with a very bad taste in their mouth and with a bad feeling about their own health services. It is not always because people do not want to lose their own local service. I know the feeling can be, "I do not want to lose my local maternity or my local A and E," but sometimes, I have to say, decisions that have been taken in my local health system have actually been wrong. I do not know what you take forward, being responsible for this failure regime, but it is littered with a history of people being so unhappy with decisions that are made. Your organisation cannot be happy that such a large proportion of the community has lost all faith in being consulted about any changes in the NHS because of these decisions in the past. People ought to feel better about it.

Dr Bennett: There are several things there. The Chairman’s point is that part of the solution here is to try and get a better understanding, in advance of the need to change things, about why things need to change and the sort of changes that are desirable, and I think getting more clinicians out there explaining that there are real benefits for patients in making these changes will help, but it is a huge challenge. I completely accept that the way to do this is whichever will get local support. We have not worked it out yet, so we are trying, and Mid Staffordshire is the first time we, Monitor, have become involved in this. We collectively have certainly not worked out how to do it. I do not think it is true to say that no reconfigurations have ever happened without the support of the local community; you do not hear about them because they are not the ones that have people marching in the streets.

Barbara Keeley: I would be interested if you could send me some examples, because I cannot think of one at all.

Chair: The one that is at risk of being the single example everybody quotes is London stroke care, a major reconfiguration which went through-hugely controversial-ultimately with support, but the fact that everybody quotes it in answer to that question is perhaps in itself symptomatic of the fact that that is comparatively rare.

Barbara Keeley: But that is not the other type of configurations-the ones that populations tend to end up worrying about-where hospitals, A and Es or maternity units are lost. A lot of money and time gets spent on these things and people are just not on board with it. The worst part of it is-Andrew Webster talked earlier about local democratic accountability in decisions on health-that people are losing faith in it. I would be amazed if people who have been through past reconfigurations want to bother coming to meetings about future ones because nobody believes that anybody listens to them or takes what they think on board. Anyway, it is a challenge. Let us leave it there.

Chair: Mr Morris would like to take us on to competition policy.

Q149 Grahame M. Morris: Yes, please, the choice and competition regulations. Mr Bennett, the new choice, competition and procurement rules have been very controversial, both in Parliament and outside. What is your take on where we are currently with them?

Dr Bennett: The socalled section 75 regulations, the procurement, patient choice and competition regulations, which were being debated a few weeks ago in Parliament, are, of course, now in place.

Valerie Vaz: They were not debated; it was an urgent question. They were just going to be slid through.

Grahame M. Morris: Yes. They would not allow us to debate them.

Valerie Vaz: They were not debated. That is the point.

Dr Bennett: I am not a parliamentary expert. It was the intention of the Government-and, as far as I am aware, it is the case-that those rules are almost exactly a match for the equivalent rules that were in something called the Principles and rules for cooperation and competition," the PRCC, which were established by the previous Government and, in the case of commissioners, applied to the PCTs. My understanding is-and, as far as I can see, this is correct-that the rules, with very minor changes, are just a continuation of the rules that were there before.

Q150 Grahame M. Morris: We saw the first case, I think, last week of a private hospital group, BMI, launching a case against NHS commissioners. Do you think we will see much more of that as a consequence of the new architecture and these rules, which you say are exactly the same as the old ones?

Dr Bennett: I think underlying your question is: what has changed?

Grahame M. Morris: Yes.

Dr Bennett: The rules have not changed; they are fundamentally the same. Indeed, the thing that lies at the back of all this is European law, and that has not changed. The rules are a translation of European law to apply them to the health sector. That is what the "Principles and rules for cooperation and competition" were, and that is what these new section 75 regulations are. They have not changed. The EU law has not changed and the regulations fundamentally have not changed. The people who enforce those regulations have not fundamentally changed either. The previous Government set up an advisory body called the Cooperation and Competition Panel. We have absorbed that into Monitor. Nearly all of the people who are doing this work inside Monitor were the same people who were doing it before under the PRCC, so that has not changed. The most significant change between where we are now and where we were a year ago is that the commissioners have changed. All the rules that used to be applied to PCTs in the past are now applied to CCGs, plus the Commissioning Board where appropriate.

The specific case you quote-the BMI complaint-was originally made under the old rules against the old commissioners. We are looking at whether the old commissioners broke the old rules and we are also looking at whether the new commissioners-

Q151 Grahame M. Morris: The CCGs?

Dr Bennett: It is the Commissioning Board in this case, because it is specialised commissioning. We are looking at whether they have broken the rules. There is nothing in any of that that suggests there should be any form of step change in all of this.

Q152 Grahame M. Morris: So any aggrieved qualified provider would not seize this opportunity, which was not presented before, in order to pursue their claim against the new commissioners?

Dr Bennett: Just to check, why do you think they might feel they can pursue it now where they felt they could not pursue it before?

Q153 Grahame M. Morris: This is part of the debate about whether we are going to be engrossed as an organisation-as the NHS-in spending resources in court, defending actions from aggrieved parties who say, as a qualified provider, that they should be allowed to tender or provide a service.

Dr Bennett: Yes. My point was that people could complain, but nothing has fundamentally changed. Unless there is some sudden change of behaviour of commissioners-because who is doing the commissioning is the only thing that has changed-there is no obvious reason why there would be a sudden change in people complaining, but yes, they can complain. We do not have to take all the complaints. The old CCP never did, and we will not be doing so. We will be looking informally to see whether there is real substance to the complaint and applying systematic prioritisation criteria, but, at the end of the day, our Cooperation and Competition Directorate is about the same size as the old CCP. It has limited resources. We are only going to look at those complaints that seem to have real substance to them.

Q154 Valerie Vaz: I want to take you back to something that you said and get this question out of the way before we move on to other things. You said that "where appropriate" you will be looking at NHS England. Could you elaborate on that? You will not be dealing with NHS England in their commissioning capacity in exactly the same way as CCGs.

Dr Bennett: We will be, yes.

Q155 Valerie Vaz: You said "where appropriate".

Dr Bennett: That is because they only commission certain types of services. If it is a specialised service, they are commissioning it and it is them that we look to. If it is a local service, it is the CCG we look to.

Q156 Valerie Vaz: Good. You mentioned there is not much difference between the previous regime and the current regime, so what was the point of new regulations then?

Dr Bennett: I think there are two things. Again, I did not design this thing, but I think-

Q157 Valerie Vaz: I was going to come on to that, because you are the key person. This is part of the same thing, but you are the key person and you keep saying you "think". So were you consulted?

Dr Bennett: Oh yes, extensively, but nevertheless-

Q158 Valerie Vaz: So you should know, then.

Dr Bennett: Being consulted is not the same as being responsible for designing it.

Q159 Valerie Vaz: I am talking about being consulted. Did you know about it?

Dr Bennett: Yes. We absolutely were consulted.

Q160 Valerie Vaz: Could you explain what the difference is, please?

Dr Bennett: Your question was, "Why did they make the change?" There are two things: one was to put it on a statutory footing-the old PRCC was not on a statutory footing-and two was to transfer it from an application to the PCTs to the new commissioning arrangements.

Q161 Valerie Vaz: Did you get any legal advice on these new regulations, given that there was a furore about it and the clinicians were against it as well as socalled politicians? Did you get any legal advice?

Dr Bennett: The regulations were written by the Department of Health, so they were the ones who took most of the legal advice.

Q162 Valerie Vaz: Did you see it and get it? You are responsible, ultimately, for the whole thing, aren’t you?

Dr Bennett: We have seen some of it. Where we need to understand the implications of the regulations, as proposed by the Government and not knocked down by Parliament, we may need to take legal advice in due course, but, on the whole, because they have not fundamentally changed-and, by the way, there are lots of lawyers in Monitor-for the moment we feel we understand what they mean.

Q163 Valerie Vaz: Could you drop us a note about how they have not fundamentally changed and perhaps get the legal people to post on your website exactly what it means for the general public so they know what it is?

Dr Bennett: To make sure I am clear, what is the question that you would like us to answer?

Q164 Valerie Vaz: It is about what the legal advice was on the section 75 regulations and how they have changed. You keep saying that they have not changed from the previous regime and yet we need new regulations and I am not quite sure what. Forgive me, but I have been in the civil service and I know when there is new legislation put through that lots of Departments have an input into it. I assumed, given that you would be the lead person on it, that you would have an input on it and you would be able to take your own advice.

Dr Bennett: We have had an input.

Q165 Valerie Vaz: Could we see that?

Dr Bennett: I rather suspect we cannot share our legal advice.

Q166 Valerie Vaz: Could you find out and let us know?

Dr Bennett: We can certainly tell you our understanding of whether or not the regulations have changed.

Q167 Valerie Vaz: Right. You mentioned the EU law. Which part of EU law applies to these regulations? What are you taking into account?

Dr Bennett: The core bit of EU law in this case is public procurement law, which is translated in the UK through the Public Contracts Regulations 2006, which apply to all public procurement.

Q168 Valerie Vaz: What does that mean?

Dr Bennett: That sets out rules about how public bodies procure goods and services. It divides those goods and services into two categories-part A and part B. People like Monitor itself, when we do procurement, are subject to the part A rules, which are prescriptive about what we have to do. Healthcare services are under part B, where there is a less prescriptive approach to how you do procurement. Nevertheless, there are requirements set out in the EU law.

Q169 Valerie Vaz: Which are what?

Dr Bennett: It talks about things like the requirement for open and transparent processes and the requirement to treat all providers fairly. It is those sorts of requirements.

Q170 Valerie Vaz: Anyone else can come in. You cannot exclude certain people from coming in.

Dr Bennett: That would be about treating all potential providers fairly.

Q171 Valerie Vaz: So it is open to competition-that is what you are saying.

Dr Bennett: Under certain circumstances, yes.

Q172 Valerie Vaz: Which are?

Dr Bennett: It is easier to answer the question "Under what circumstances would it not be open to competition?"

Q173 Valerie Vaz: Okay.

Dr Bennett: If a commissioner of services believes that there is only one capable provider of the services, they do not need to go through a competitive process. I should say that all of what I am saying now is in the guidance we have issued.

Q174 Valerie Vaz: I am going to take you to the guidance.

Dr Bennett: Very good. That is one thing. Secondly, if in the process of working out how they want to commission the services, looking at all the different providers available, they have reached the conclusion that there is one clearly best provider, they do not need then to go through a competitive process. We have also said that, if the costs of going through a competitive process clearly outweigh the benefits of going through that process, we will not expect them to go through it either.

Q175 Valerie Vaz: What do you look at when they are commissioning this kind of thing, when they are going through one provider? Are you going to wait for someone to complain, or are you more proactive than that?

Dr Bennett: Almost entirely, it will be complaints-driven, as it has been up to now. If I take the BMI example, BMI say, "A procurement process happened. We do not think we were treated fairly." We take an initial look and we say, "There does seem to be a case to answer here," and then we investigate more formally.

Q176 Valerie Vaz: I have just a couple more questions. It is clear that the regulations do not have the word "integration" in them do, do they?

Dr Bennett: They do.

Q177 Valerie Vaz: No, they do not in the title.

Dr Bennett: Not in the title. I said there was not much that changed. One of the main changes between the previous rules and the new regulations is that there is an explicit reference to the better integration of services as being a way of improving the quality and efficiency of service delivery in the new regulations. It was not in the old rules.

Q178 Valerie Vaz: Yes, after it was amended. Can I take you to your guidance? Could you explain page 18, where the heading is "Relationship between choice, competition and integrated care"? Could you explain that? You say they are not "mutually exclusive".

Dr Bennett: Why do we say they are not mutually exclusive?

Q179 Valerie Vaz: Yes, competition and integration; I am finding it difficult to work between the two.

Dr Bennett: The starting point would be that normally when you talk about the integration of services you are talking about coordination across service providers that are providing different types of service, whereas competition issues almost always apply between providers of the same service. The first reason the guidance gives as to why there is not a necessary conflict is that it is the difference between combining or coordinating different services versus similar ones.

Secondly, we acknowledge that the fundamental objective here is to deliver better quality services or better value-for-money services for patients, so even if there is a competition issue, it could still be outweighed by the benefits of better integration. That is another reason why there is not necessarily a problem. We would say that, if what a commissioner wants is to procure a better integrated service, it can use competition as a way of trying to get that, because it can say, "Here is what we want, and what we now want providers to do is offer how they would meet our needs." That is a competitive process and then they choose the best provider.

Q180 Valerie Vaz: Can I also take you to your consultation? You say, "Monitor is only able to make a declaration of ineffectiveness where a breach is sufficiently serious." What is the difference between the two-"a serious breach" and a "breach"? Is that defined anywhere?

Dr Bennett: I do not think we defined it in the guidance. This is a common approach in these matters. It is extremely difficult to define hard and fast lines that say, "This is significant and this is not," or "This is serious and this is not," so it is a mixture.

Q181 Valerie Vaz: People were confused before the guidelines came out and then the guidelines came out, which helped slightly, so there is even more uncertainty; it makes it more difficult for people to understand it. Do you think it would be helpful to define the two?

Dr Bennett: I do not think you can have an absolutely-

Q182 Valerie Vaz: So people do not know what a "serious breach" is and what a "breach" is.

Dr Bennett: To get a sort of "defensible in law" definition of what is serious is very difficult to do, which is why in this area a lot of the law is case law. People are waiting until you have a specific situation, and then the courts or the competition authorities reach a judgment about whether or not in this case it is serious.

Q183 Valerie Vaz: That is a huge problem because, as a lawyer, I tell people not to go to litigation because it costs money.

Dr Bennett: Yes. There are all sorts of reasons why, and it is worse than that-

Q184 Valerie Vaz: CCGs are going to expect to have to pay for the legal costs, are they, if someone takes action?

Dr Bennett: It is not just about the legal costs.

Q185 Valerie Vaz: Will the legal costs be coming out of their budgets?

Dr Bennett: If they incur legal costs, but I am hoping we do not get to that stage. We need to try and provide-

Q186 Valerie Vaz: What do you mean by "I am hoping we do not get to that stage"?

Dr Bennett: The first thing I hope we can do to help the situation is to provide case examples, so building on the guidance to say, "Here is a specific situation. This is the way we would think about it." Rather than wait for the case law to develop, and while we are waiting everybody is saying, "But what does this really mean?", we need to take some good examples-and I do not think we will have problems getting people to give us good examples-work them through and say, "Look, this is what it would mean in this case and this is what it would mean in that case," so we have a lot to do on that front and, in general, we are doing our best not just through issuing the guidance but by meeting with the commissioners and giving them informal advice. We handle hundreds of calls every year from people asking for informal advice on a situation. We need to do everything we can in advance to help people understand what all of this means.

When it comes to there being a complaint that we view as a serious situation, even in those circumstances, we need to explore with the commissioners what has happened. Whether or not we take the complaint will in part depend on the response of the commissioners. Our goal here is not to punish people for doing things wrong; it is to make sure that they are following the rules. If people are willing to change the way they have done things, and therefore move in line with the rules, we do not need to get into some huge process that involves lawyers and the like.

Q187 Valerie Vaz: What is the point of an enforcement regime then?

Dr Bennett: It is to get to a point where people are following the rules. If you do not have the backstop of-

Q188 Valerie Vaz: But you can still take enforcement action against them.

Dr Bennett: Yes, we can, but the nature of the enforcement action is to require a variation in, or declare void, either an invitation to tender or an existing contract. It is not to prosecute or to fine commissioners; it is just to get the situation changed so that they are following the rules.

Q189 Valerie Vaz: Have you done a cost analysis of how much this whole enforcement procedure will take to put in place?

Dr Bennett: There was an impact assessment done by the Department of Health as part of the overall assessment of the new regime.

Q190 Valerie Vaz: Do you mean of the enforcement process?

Dr Bennett: I do not think it was the enforcement process on its own. It is the whole package that is being looked at.

Q191 Valerie Vaz: It is quite helpful for commissioners to know how much it will cost them, isn’t it, if they have been taken through this process? I cannot quite see your point. You are saying on the one hand you want to chat with everybody and make it okay but on the other that you have this threat of enforcement proceedings.

Dr Bennett: Yes, but even then the enforcement is simply to say, "You cannot do it that way. You have to find a different way of doing it." It is not to prosecute or fine them. It is just to say, "I am sorry, but that is against the rules and you have to do it a different way."

Q192 Valerie Vaz: But your whole tenor is "breach" and "serious breach", so it seems to me that it is an enforcement process that you are going through.

Dr Bennett: In a legal document, inevitably, you are going to use the legal phrases like "breach of the regulations" and so forth. Our approach will be one where our objective is to make sure everyone is following the rules, not to punish people because they did not do so.

Valerie Vaz: Thank you very much.

Chair: Thank you very much. Andrew wants to come in briefly.

Andrew George: I thought it was Sarah before me.

Chair: In fact, virtually everybody wants to come in. Sarah is on the next question. Could we keep it fairly brief, Andrew?

Q193 Andrew George: Of course, yes. Given that Dr Bennett has said that nothing has changed as a result of the introduction of the section 75 regulations, rather than sitting as mute witnesses-and by the way my apologies for my late arrival-do you, Mr Tee and Mr Webster, want to comment on whether you perceive there to have been no change as a result of the introduction of the section 75 regulations from your perspectives?

Matt Tee: I will kick off first on that. Let me be clear about our membership. We have in our membership not only NHS organisations but also private companies through our Partners Network. Our private sector members are not generally of the view that the world has changed as a result of the section 75 regulations. I would also say that, unlike the way they are sometimes characterised, they are loth to go to law over this. They would much rather that these things were resolved without going to law. Going to law costs them a lot of money and they are working to quite tight margins.

If I take our NHS members, there are two things that concern them and they are both about uncertainty. One is about how they hear what David Bennett says but also hear the debates that happen in this place and elsewhere and are unsure how the regime will work going forward. That leads us to examples-at least anecdotally-where some things are being commissioned because the commissioners are worried that they may get in trouble if they do not compete those services and other circumstances where services that could possibly be competed are not competed, and I think the people who might provide those services are worried about it.

The second place of uncertainty, I would say, is a bigger one. People are uncertain about what the policy intent is. What is the intent of the competition policy of the Government? If you go back to a situation in the 2000s, when Alan Milburn or Patricia Hewitt was Secretary of State, it was pretty clear what the policy intention was. It was to create a market and quite a lot of public money was invested in ISTCs, for example, in order to create that market. It feels to our members a lot less certain as to what the policy intent is now. Why do we have the regulations? What are they trying to encourage? What is the desired behaviour that comes about? That is unclear to our members.

Andrew Webster: I would preface my remarks by saying the same regulations apply to the procurement of everything that local government does. They are very familiar in local government-more familiar than they have been in the NHS-and the infrastructure for ensuring compliance and good behaviour is very strong.

Broadly, we welcome very much what David Bennett has said about the purpose of competition being to improve quality and including the benefits of integration among the factors to take into account, because there has been, among local authorities working in partnership with their local NHS, a concern that the implementation of these regulations might impede the development of integrated and shared services. In fact, we are now in the position where we can work with Monitor to ensure that that does not happen and we are doing that. That is all very welcome.

The more underlying issue about competition is, "When will it be appropriate to use it to drive the improvements?" Absolutely, we would agree with David Bennett that competition is an important driver for quality and value in the system, so one of the things that the health and wellbeing boards should be doing is looking at what their strategy is for delivering improved quality and value, and at where in that they will use competition. Is it for the right to supply the whole service or is it for the supply of particular elements of the service? Both might be right in different circumstances and both should be possible within this regime.

Q194 Andrew George: Can I ask about the impact of these changes on the capacity? While you have acknowledged that integration is something that can be protected as appropriate within these regulations-that it need not be put at risk as a result of the requirement or the expectation that services be put out to tender-at the same time there is an issue, particularly I imagine among your members, Mr Tee, that some of those who provide a range of services, particularly at the unplanned or the emergency level, need also to have the capacity to be able to receive a wide range of unplanned emergencies. As a result of that, therefore, with any decisions taken by commissioners that might undermine the capacity of that service to operate safely, there is a knockon effect. Is that something that can be taken into account above and beyond that concern about integration? I wonder whether Dr Bennett could answer that.

Matt Tee: I am sure Dr Bennett would like to come back on that, but one of the concerns of our members would be that you need to consider the broader service. Your point is well made that, where you have an accident and emergency department, you need to have the appropriate services that support that. There is also a prevalent view, although perhaps not entirely proven, that many of our provider members, to put it in crude terms, make some money on elective or planned services and that emergency services, particularly where emergency services go over the limits, as it were, may be lossmaking services. If you were to tender out some of the elective services, you might be undermining the emergency services because the one at the moment is helping to pay for the other.

Q195 Andrew George: But at the same time patient choice may in fact drive patients away from those core services.

Matt Tee: Absolutely, yes.

Q196 Andrew George: Is this something that Monitor takes into account? Also, can I ask a supplementary question? You stand there, if you like, as a reactive organisation to Monitor, as it were, but do you also have a proactive service or one where commissioners can come to you and say, "We are seeking advice. This is the challenge, the conundrum we face, and what we would like to do. Can we get advice from you that this is how we configure our services without breaching the rules?"

Dr Bennett: Yes. To quickly address a number of points there, we recognise absolutely the interdependency point and it is explicitly referred to in our guidance because we thought it was important to acknowledge that. So, of course, when commissioners-and it is fundamentally their decision about where they do or do not use competition-are thinking about where to use competition, they need to think about, "Could this lead to a destabilisation of another important service?" We absolutely recognise that. Indeed, as to Matt’s point about the subsidies between emergency and elective care, we need to look at the pricing, which is another of our responsibilities, because there are issues there without a doubt. We are looking at the pricing.

You asked, "Is there an issue of integration being protected from competition?" The regulations specifically require integration to be proactively considered as one of the ways of delivering better care to patients, just as competition is another way that you might do so. It is not integration being protected; it is proactively being encouraged. That is important. There is an awful lot of mythology out there, I know, about what Monitor will or will not do and how we will or will not do it, and we have a huge task to try to deal with that, but yes, absolutely, if commissioners-I was talking about informal advice-want to come and talk to us about, "We are thinking of doing this or wondering how to do this," we will talk to them and help them. As I say, our goal is to help them follow the rules, not to let them break the rules and then say, "Aha, you are in trouble."

In fact I probably ought to mention this. I said that these are healthspecific rules but reflect economywide regulations, the public contracts regulations, which themselves reflect EU procurement law. If these health rules were not in place-if Monitor was not given the job of enforcing these rules-and you still had a BMI that was unhappy with the way it was being treated, its recourse would only be straight to the courts. If you are concerned about the legal implications, the costs of lawyers and so on, this regime is an attempt to avoid it becoming a highly legalistic lawyerdriven process. That is not to say it could not happen, but certainly our goal will be to avoid it becoming such.

Finally, you were asking, "Are we entirely complaints-driven, or might we be proactive?" At times we can be proactive, not on the procurement front-that is entirely about people making complaints and us responding to them-but on the competition front where we also have a requirement to make sure there is no anti-competitive behaviour. We could investigate an element of health care provision if we thought that something did not seem to be working across the board.

Chair: We have 35 minutes until the beginning of Health Questions and quite a lot of ground to cover. Rosie wants a very quick question and then I am going to go to Sarah.

Q197 Rosie Cooper: I have a very quick windup point. Dr Bennett, you talked about proactively encouraging, and, Mr Webster, you talked about competition bringing value and said that these very same rules apply to local government. Accepting all that, does local government actually manage its authorities and do all the management work-everything you do-on £25 a head? Can you do it? That is what you are asking CCGs to do: manage this thing, which you say applies to local government. Can you do everything on £25 a head?

Andrew Webster: I will have to come back to you on the figures for the management costs of authorities. "I don’t know" is the straight answer.

Rosie Cooper: You know and I know. I used to be chair of the general services committee and there is no way that can be done. Therefore, your analogy is spurious.

Q198 Dr Wollaston: At a previous meeting of the Committee, we were told that commissioners would tend to err on the side of caution and that we would see too many issues being put out to tender and raising the costs. I am pleased to see that you have reflected the fact that you are going to take a view on that and that the costs will be considered. Is that your experience so far-that too much is being put out to tender and that there is too much caution?

Dr Bennett: It is too early to say.

Q199 Dr Wollaston: It is too early to say.

Dr Bennett: From our point of view-and our lens on this at the moment is mostly that of the provider organisations that are having services commissioned from them-there is no significant change as yet, but it is very early.

Q200 Dr Wollaston: There is no significant change yet, so it is too early to say. Can I ask about a specific point? A complaint and fear I am often hearing if I visit small local charitybased providers-for example, organisations in my areas such as Dartmouth Caring and Brixham Does Care, which are very locally focused and often have great community buyin-is that they are not being allowed a foot in the door. If things go out to competitive tender, they do not have the resources to put in a tender and they fear that they may lose out to big countywide providers that do not have a local focus. We could end up losing that important resource, the really good service that they can provide on a very small amount of money. What is your view there? Will you be encouraging commissioners to engage directly with locally focused groups and make allowances for the fact they do not have the resources to put in fancy bids?

Dr Bennett: First, my overall view is that charitable organisations play an extraordinarily valuable role, both the very big ones and the small ones, across the whole country. Whatever we do, it should not be making that more difficult. Indeed, they will complain that it was already-under the old rules, the old behaviours-less easy than they would like. In fact, we have just published a big report looking at this very issue called "A fair playing field for the benefit of NHS patients," a review which identified that one of the biggest problems in terms of providers being treated fairly is the fact that many of them feel they could be providing a better service than the incumbent provider and do not get an opportunity to do that. That was a complaint we heard from charitable organisations from lots of foundation trusts that would like to be providing services outside their current area but are finding it very difficult. It is a complaint, too, that the independent sector will make. Our recommendations were basically to say that we must do more to help commissioners give everybody a fair opportunity to provide services, including the small charities. When you talk to the commissioners, it is not fundamentally a lack of willingness that is the problem. They just find it very difficult. They do not know how to do it. This tendency to go through very bureaucratic, costly competitive tendering processes is not necessary. They need some help to understand that there are other ways of doing it.

Q201 Dr Wollaston: But it is often because they are fearful that, if they don’t follow very rigid procedures, they cannot accept bids from organisations that do not have the resources maybe to do it strictly in the way that a bigger organisation could do it. Could you reassure me that where they are bringing in locally based-particularly charity-providers without those resources, they will not be expected to produce the kind of bids that you would expect from a commercial organisation?

Dr Bennett: I have to make the general statement that we need to work to make it possible for these small charities to continue to participate.

Q202 Dr Wollaston: What does that mean? Does that mean them having to federate with other charities to produce-

Dr Bennett: It might do.

Q203 Dr Wollaston: The reality is that this takes up a huge amount of time, and if you are a volunteer organisation, with the best will in the world, and you may be providing a fantastic service, you do not have the people on the ground that can put that kind of thing together.

Dr Bennett: I can only tell you that I am extremely sympathetic to that, but I should not let you draw me into making some blanket statement that may not always be right. There may be situations where it is not appropriate to give it to your local small charity and not consider other providers or not to run some sort of process to select the best provider.

Q204 Dr Wollaston: Could I perhaps ask that an organisation like Monitor directly goes and visits some local charities-for example, Dartmouth Care-to see what the issues are on the ground?

Dr Bennett: I would be very happy to. We did talk enormously to them during the course of this "A fair playing field" review and we absolutely recognise the problem. The starting point is to get commissioners to understand that, even where they want to choose between different providers, they do not have to go through this hugely bureaucratic process they often run. It is a general problem in the public sector and I do not understand it.

Q205 Dr Wollaston: It is a fear rather than a reality on the ground. Here you cannot provide them with any guidelines.

Dr Bennett: No, we are working with the Commissioning Board to give the commissioners better guidance about how to do these sorts of things.

Q206 Chair: You spoke earlier about informal case law-business school cases, effectively-to illustrate acceptable practice. Could this be an area of focus for that type of work?

Dr Bennett: It could certainly be one of the areas we look at, absolutely, yes.

Q207 Barbara Keeley: I can add to what Sarah said, as I think this has already happened with the transition to the current setup. Certainly, I have an example, in that my local Age UK used to run active case management for people with longterm conditions, and under the new regime they could not take it forward in the way they were doing it before. Carers’ organisations provide absolutely vital services, sometimes in conjunction with local hospital trusts, in that there is a key point of support to carers newly in that caring role-we are in carers week-and I think they are all desperately uncertain. The suggestion has been made that you should understand a bit more about those, but certainly the whole situation has gone backwards over the last number of months with the transition to the new setup. Be assured that there is a problem that has been caused by the restructuring.

I think colleagues have already asked the questions I was going to ask about your role, but you say that you think there is a mythology about Monitor and you keep asserting that you are not really in a policing role. What you are saying, it seems to me, with the best intentions, is that you are picturing CCGs coming to you for advice, but I would like to clarify your role and whether it is a policing role, and what you would do if they did not come to you for advice. If you find a situation where-it is not difficult to imagine, is it, with billions of pounds of private sector contracts out there?-a private sector provider starts to complain about the CCG, which is working well with its local community, trying to take integration on board, trying to do all the things we have just talked about, but is ignoring a private provider and finding reasons not to tender, in that case, do you say they are in breach of guidance if they are not coming to you for advice? Is that where we see the policing role, or do you still keep to this informal, rather laidback "We are just checking on whether they have processes" attitude? To be perfectly honest, I do not have a picture of what this is going to be, because you are depicting it as very informal, as not policing, as very distant and waiting for them to come to you. What do you do with a CCG that is not behaving in the way you want them to and not coming to you for advice?

Dr Bennett: The first point is that it is complaints-driven, so we are sitting back, in a sense, until someone complains.

Q208 Barbara Keeley: Yes, but you have billions of pounds of contracts out there.

Dr Bennett: If someone complains and they say-the BMI example is a perfect illustration of this-"There has been this procurement process that has gone on in our area and we think we have not been treated fairly in this process," the first thing we will do is have an informal gathering of evidence as part of our process of deciding whether or not this is-

Q209 Barbara Keeley: How will it be informal? If you are talking about a situation where you start to think there is a complaint where a CCG might be in breach, what is informal about it?

Dr Bennett: It is informal because we will not at that stage have opened a formal case. It is an absolutely formal decision to say, "We are going to take this case." We do not have to take the case.

Q210 Barbara Keeley: So it is not informal; it is just the first stage.

Dr Bennett: If you like, but it is gathering information to determine whether or not we think-

Q211 Barbara Keeley: For instance, it is not that the CCG does not have to provide you with the information; if you ask them for information, they have to provide it.

Dr Bennett: They will have to provide it.

Q212 Barbara Keeley: So it is not really informal.

Dr Bennett: If they are totally unco-operative, we are much more likely to say, "We had better open this case and make it formal." That is really the way it would work. We would do what we could to gather information to determine whether or not we felt we ought to take the case. Almost certainly we will have more complaints than we could possibly handle, so we have to prioritise. If we decide to take the case, we will go through a formal process of gathering information from the commissioners, from the provider and any other body that we feel we need information from. We will then look at the facts of the situation. If we determine that the rules have been broken, we can do, fundamentally, two things. If there is a contract in place, we can either say, "You need to change the contract," or, "The contract is declared void and you have to retender." If they are still in the tendering process, we say, "You either have to start again or modify the way you are doing the tendering process."

Q213 Barbara Keeley: Will you expect the CCG to justify its procurement process-perhaps each one? If you had a very difficult and litigious private sector contractor bearing down all the time on the CCG and saying, "They did not give us that one, that one or that one"-a whole host of them-would you go through each one? Would you require CCGs to justify each one?

Dr Bennett: Not necessarily. One of the first things we do, particularly if it gets to the formal stage, is say to the commissioners, "Explain to us how you reach your commissioning decisions." The regulations require them to look systematically across the needs of their population, to look systematically at the quality of provision from their current providers and then to consider how best to improve the quality and value for money of the care that they are procuring. That may lead them to put some contracts out to competitive tender, but it may not. They need to go through that process. The first thing we would do is say, "Show us the process. Give us the documentation that describes this process." If that process seems to have been done rigorously and properly, that will probably be the end of it. If we say, "Here is a provider that was not providing a particularly good service, but there is no evidence that you considered whether there could have been another provider and now we have another provider complaining that you did not talk to them," we would progress further to see whether or not they had broken the rules. As I say, at the end of the day, we might say, "Sorry, your contract or your tendering process is not valid. You are going to have to do it differently."

Barbara Keeley: I am still very fuzzy about this, but maybe we will leave it there.

Chair: Sarah, can we come on to the providerled initiatives?

Q214 Dr Wollaston: This is the issue about providerled initiatives to improve services. Very often quoted is the issue between Christchurch hospital and Poole hospital and integration. There is a similar issue affecting my own area in Torbay, where the foundation trusts would like to merge and where these might be deemed anti-competitive and are being referred to the OFT. This is hugely wasteful, surely.

Dr Bennett: The health sector is, in terms of mergers and acquisitions, subject to the same laws as the rest of the UK economy, and again they are underpinned by EU legislation. In principle, the OFT and the Competition Commission could, at any time in the recent past, have chosen to look at mergers within the health sector, particularly where, at least, foundation trusts are involved. They did not. The Health and Social Care Act last year explicitly gave them that job.

Q215 Dr Wollaston: So this has been a major change.

Dr Bennett: Yes. This is not about the section 75 regulations, which is where I said there had not been a major change. This is a change. The OFT was arguing before the Act that they had jurisdiction over mergers involving foundation trusts. The Act made it clear that they would have. So there has been that change, although, as I say, the OFT argue that they could have done this anyway, but they did not do it and they left it to the Cooperation and Competition Panel. What the Act said was that, specifically on merger and acquisition issues, that should be an issue for the OFT and, if they decide to refer it to the Competition Commission, the CC as well, but it did require that they take advice from us on the potential patient benefits of any merger or acquisition.

Q216 Dr Wollaston: Did you give advice in this case to say you thought they should?

Dr Bennett: We did.

Q217 Dr Wollaston: So you think it is in patients’ best interests that the OFT gets involved in this case.

Dr Bennett: No. The OFT involvement is a matter of law now. If there is a merger involving foundation trusts, the OFT gets involved. Our job is to help them understand the potential patient benefits. Their focus, given the nature of their responsibilities, will be on, "Is there a reduction or a significant lessening of competition as a result of this merger?" Our job is to say, "Offsetting that, here are the potential patient benefits arising from the merger."

Q218 Dr Wollaston: But there is a specific issue, isn’t there, in some cases where, if people are on the borderline of viability, this could tip them over the edge because there are significant delays involved as well? This may set back a merger by very many months and cause real problems. The whole point about this inquiry is to look at the implementation of the Act and if there are parts of the Act that are having unfortunate consequences that we would like to reverse.

Dr Bennett: Yes.

Q219 Dr Wollaston: Is this specifically an area, in your view, where this was the wrong thing to have done and we need, as a Committee, to recommend that it is undone?

Chair: Can I couple that with a supplementary? Is the advice you gave to the OFT public?

Dr Bennett: It is public, yes. I would be nervous to draw a firm conclusion from the first case. I do accept that this first case is taking longer than it would have done had it gone through the old process, which would have meant the Cooperation and Competition Panel in the past; now it is the CC directorate inside Monitor. It is taking longer because, unsurprisingly, the OFT and now the Competition Commission are having to learn about health, because they have not looked at these before. Yes, that is unfortunate, but we are where we are on that one. As to whether this is going to be a persistent problem, we have to see.

Q220 Chair: How could it not be a persistent problem if any trust merger, virtually by definition, falls within the scope of the OFT-the more than 25% competition issue?

Dr Bennett: Yes.

Q221 Chair: Any trust merger must raise, in conventional business terms, a competitive issue, must it not?

Dr Bennett: Not necessarily all of them. For example, as to the movement recently of neurosurgery services between the Royal Free and UCLH, the OFT looked at it and said, "There is not a significant competition issue here. We are not going to investigate."

Q222 Chair: Was that a merger?

Dr Bennett: That was a transfer of services, but it is still subject to the same rules. You were asking why it might not take so long in future. It is because the OFT are learning about the health sector. Hopefully, once they have learned, they will be able to handle it more quickly. The second reason is because they will also be establishing case law, which will enable others to see what they will and will not allow and enable them to make faster decisions.

Q223 Dr Wollaston: But if the trust goes bust in the meantime because of the delay, there will be even less competition.

Dr Bennett: This is not a good outcome, I completely agree. This is one of the absurdities of where we are in danger of finishing up, isn’t it-that you get a trust going out of business because it has insuperable problems, trying to fix the problem and not being allowed to fix it because it would reduce competition, which is the same result? I agree. This is something the OFT needs to look at. We have made the point to them.

Q224 Dr Wollaston: You have made the point. So your view is that it is up to the OFT to make it more streamlined and do it quicker.

Dr Bennett: In the first instance, you need to have the whole thing work faster, but I understand why, on their first case, they have not been able to do that.

Q225 Dr Wollaston: But overall you still think it is a good idea for the OFT.

Dr Bennett: I think we need to wait and see how it works.

Q226 Dr Wollaston: Wait and see. How long would-

Matt Tee: The point I want to make is that I think there is significant anxiety among our membership that the OFT and competition and commissioning process may not become that much quicker and smoother. A number of our members look at the Bournemouth and Poole merger and say, "Under almost all the criteria we would normally have looked at and have expected to be met, it does the business," so there is very widespread support locally and understanding for why that merger needs to take place. There has been good consultation with local representatives, local authorities and the MPs. The doctors are generally agreed that this is a good thing to do, and one of those hospitals is almost certainly unsustainable if this does not happen.

Q227 Dr Wollaston: Sometimes there is only a sole bidder.

Matt Tee: Indeed. Around the country there are a number of places-I am certainly not advocating that merger is the answer to every situation, and there is mixed evidence on it-where trusts are considering merger and are now in very much a "wait and see" situation about where the process goes to, because the Bournemouth and Poole situation is felt to have been very difficult.

Andrew Webster: Could I echo that? Having talked to the local authorities involved, they feel that there is risk and uncertainty around their plans to do quite an ambitious whole-system change involving those hospitals. I do not think it will deter them from pursuing that, because it is the right thing to do for local people and for the health service, but it is a factor that is beyond their control and unpredictable. It seems, from where I sit, that it is inconceivable that we can deliver the scale of change that is required, and which ambitious local authorities and their partners will want to take forward, without there being major changes in the provider landscape and configuration. If all of those have to go through a slow process that impedes that, then there will be a cost associated with the delivery.

Q228 Dr Wollaston: Would you disagree with Dr Bennett and say that we should not have OFT involvement?

Andrew Webster: No, I do not think I would say that. What I would say is that whatever process we have in place needs to both assure competition and act speedily in the interests of the system.

Q229 Dr Wollaston: So all three of you are agreed that it is about speed.

Dr Bennett: That is the critical thing.

Andrew Webster: And certainty.

Matt Tee: Speed is the critical thing. I do not think we would argue that there should not be an examination of competition issues, but it feels that the potential for a long delay is quite large. I would also say, for health organisations, the way that the OFT and the Competition Commission do their business feels different from what people have dealt with before. We have had quite a lot of conversation earlier in the hearing about Monitor and their willingness to give advice and to act a bit more informally. That is not, I think, the experience of working with the OFT and the Competition Commission. It is a much more arm’s length relationship, which, in commercial situations, may be entirely appropriate. It does not feel very natural to health organisations, I would say.

Q230 Chair: Does anybody know why this aspect of competition law was reserved for the Competition Commission rather than allocated to Monitor?

Dr Bennett: I think so. It was debated during the passage of the Bill. It is the case in all other sectors where there is a sector regulator that the sector has-I am getting a bit technical here-concurrent powers on competition. So we have concurrent powers with the OFT and the Competition Commission on competition issues, but mergers and acquisitions are left with the OFT and the Competition Commission. The reasoning is that it provides a bit of a check and balance. People worry that, if you have a single regulator doing all issues connected with competition, you can get regulatory capture and so on. This keeps them separate. I accepted the argument but did say at the time that I thought in health there was a case for leaving it with the healthspecific regulator.

Chair: Thank you.

Q231 Andrew George: Can I take you, under the banner of other aspects of competition regime, to the other end of the scale, from the large mergers down to the patient choice element of the competition regime, which I referred to, perhaps rather obliquely, earlier? I will paint very briefly the scenario and then ask for comments from you all. What appears to be happening, according to a number of anecdotal cases that I have heard-this is under the old regime, pre the section 75 regulations or any other changes under the Health and Social Care Act-is that there is a process of attrition going on with regard to the competition between those providers of acute emergency services that also provide elective and planned services and others that only provide the planned and elective services.

Under the guise of competition, particularly where the initial consultation is offered perhaps with some bells, whistles and a slightly shorter waiting time-because, of course, this is all in the public domain-and perhaps with other inducements, working with the GPs who are making the referrals or assisting in that process, what appears to be happening is that the critical mass that some of the tertiary providers require on their elective side is being significantly undermined, to the point that some orthopaedic, breast surgery and other aspects of elective work are now falling below what would be considered critical mass. These are all iterative processes where individual patient choice, perhaps driven by certain behaviour on the part of providers, is undermining the capacity of those services. I am painting you that scenario. It is going on at the moment. Mr Tee is in effect conflicted, because he can see both sides, or has members on both sides of that particular process. This is going on at the moment. Is this something about which you have no opinion, Dr Bennett? Is it something that we should concern ourselves about-all three of you-and, if it is something we should be concerning ourselves with, is there anything within the regulations that can be used to address this issue?

Dr Bennett: Choice does have a role to play in helping to improve the quality of the services provided. However, where you decide to use choice in competition, you do need to think about things like interdependency. We talked about that before. That is important. There is also the issue that Matt raised about the pricing not being right at the moment, with people having to subsidise the nonelective with the elective. That is not good. All of that said, do I think that it is always inappropriate to finish up in a situation where, as a result of legitimate and fair choice-not inducements being offered or whatever, but legitimate and fair choice by patients-a provider organisation that is losing patients comes under pressure? Do I think that is wrong? No. I think that is right, but then it is our job to work with that provider organisation to get the problem sorted out. If people are legitimately choosing to go to another hospital because they provide a better service, the solution is not to stop them making the choice. It is to get the service sorted out in the first organisation.

Q232 Andrew George: It may be better because it is quicker, but on that basis, you do not see there being an issue or a problem, even if the capacity of the emergency service that was provided in that locality is undermining the process?

Dr Bennett: We have to work out how to deal with that, absolutely. Again, to some extent, you have had this in Mid Staffordshire. The number of people going to Mid Staffordshire hospital has fallen over the years, not surprisingly, and that has contributed to the severe financial pressure it is under. Now we are having to sort out how to continue to provide appropriate accident and emergency services, recognising what has happened there. We will be able to find a solution to that.

Matt Tee: In a way, I suppose I would turn that the other way round and say it seems to me that we are in a position in which choice will inevitably play a greater part. What we are going to do with NHS England’s drive to greater transparency in publishing outcomes is expose variation, which was probably somewhat hidden before. It would be, I think, an odd place if you were saying to patients, "We are exposing this variation but saying that you have to get your elective procedure done in this place, which the variation says may not have as good outcomes as somewhere else." Of course, there is an issue about the sustainability of emergency services, but equally it seems to me that we would be in an odd place if we were saying that, because we need sustainable services here, it is therefore absolutely a given that this place has to have exactly these other services to go with it.

What we need is for that emergency situation to be sustainable. If the current model is that they sustain it with this amount of a certain elective procedure, they may need to shift their model. I am of a general view-and I think we are all of a general view-that choice can be an effect for good and that if you start saying to patients, "No, you may not choose to go to another hospital," then we are ending up in a place where we are depriving people of a choice that in many ways we would like them to make because it does drive up quality in other places.

Andrew Webster: The job of the public authority in this is to safeguard everybody and to provide the maximum choice and control for individuals. In social care, that is done by having a statutory safeguarding duty and a duty to offer people individual choice in their own budget with which to go and source the care and support that they need and want. The same model could apply to lots of health care, because many people have longterm conditions that they could manage themselves effectively with their own resources. I think those duties will fall on us, and it is up to us to deliver them in the most balanced way.

Chair: We are almost time-expired but Grahame wanted to come in.

Q233 Grahame M. Morris: In relation to the financial health of local economies-I think you are being very defensive as witnesses generally-in terms of the impact on NHS providers in particular, and we have not mentioned patient care, are the pressures that the providers are under in having to address commissioning in this new architecture having an impact on patient care, and what is your assessment of how the NHS providers are coping with the new systems?

Matt Tee: From the point of view of our members, if you are a public provider of health care in this country, there is no escaping that the money has got very tight. Is that affecting patient care? I would very much hope our members say it is not affecting patient care at the moment, but we are in a situation where the money is becoming so tight that the things that we have done to manage so far-which are to make the sort of efficiencies that everybody tells you to make-will no longer be enough in the future if we are not going to harm patient care, and that is where some of the earlier conversation we were hearing comes in. We need to start providing care in different ways. The 1960s model of a district general hospital in every town is probably not a sustainable model of care going forward. It may not be the way that we give patients the best care, and certainly I do not think it is the way we can afford to give patients care.

Chair: There were a number of questions we would have liked to have asked you, but we have run out of time. Thank you very much for your evidence this morning.

Prepared 13th June 2013