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The noble Baroness said: I vividly recall that, when the noble Lord, Lord Hunt, first came to this House to present the NHS Plan in the early part of 2002, he used in his speech Nye Bevan's phrase about bedpans, Tredegar and Whitehall beloved of health Ministers throughout the ages. I mention that now because the amendments relate to one of the famous things done by Nye Bevan. Perhaps the longest-running sore in the NHS is the issue of pay-beds. I do not propose to lecture a gathering such as this at this time of night on the subject of pay-beds. I shall assume that everybody knows what they are.
The reason for the amendments is simple. It has never been demonstrated that pay-beds in NHS hospitals make a profit. They earn income for the NHS, which receives about #360 million a year for the private work that it undertakes. However, that is income, not profit. The basis on which private work is done in the NHS has never been transparent. There is good reason to think that, if that work were properly and fully costednot just on the basis of surgeon time or consultant timewe might find that it cost the NHS money to provide that service.
It is reasonable to expect that foundation trusts should be able to carry out private work; it is not reasonable or acceptable to believe that they should do so at a cost to NHS patients. It is an even greater cause for concern when one considers the shortage of beds in the NHS and the extent to which patients are being treated abroad to make up for deficits in capacity in the NHS, at considerable expense. In addition, one should consider the amount of money spent by the Department of Health on capacity-building operations of one kind or another.
The intent behind the amendments is not to say that private work should not be carried out in the NHS but that, if it is, it should be done on a transparent basis. Independent units within the NHS should be separate and should be transparent about what they do. Private work should not be done at a cost to be paid by the NHS. It is right, therefore, that there should be a cap on the amount of private work that can be done and that that cap should be unambiguous.
The matter was discussed during the Bill's passage through another place. Extraordinarily, there was a move to water down the previous version of this part of the Bill to make it less forceful. That was a strange
Lord Warner: Amendments Nos. 167 and 170 would reverse the amendments introduced by the Government in another place. Those changes were necessary to ensure that the independent regulator had discretion over whether he could restrict goods and services that were not provided to the NHS in England. Without that amendment, the regulator would be required to restrict the provision of all services that were not English NHS services, including the provision of services to the NHS in Wales, Scotland and Northern Ireland. That would be the effect of the amendment proposed by the noble Baroness, on which she may wish to reflect before pursuing this particular wording.
I understand the concern that changes introduced in the other place would give the regulator discretion not to apply the private patient cap. That is not the case; to suggest otherwise is misrepresenting the legal position. Under Clause 15(2), the regulator must impose a fixed limit on the amount of private health care which NHS foundation trusts that were formerly NHS trusts can provide. Our position has not changed in any way, shape or form. Therefore, Amendments Nos. 167 and 170 are not appropriate; nor do they achieve the objective described by the noble Baroness. They would cause concerns in Wales, which has already exercised a number of Members of the Committee.
As regards Amendments Nos. 167 and 171, our priority is NHS patients. Clause 15(2) of the Bill mandates the independent regulator to cap the amount of income that an NHS foundation trust can derive from the provision of services to private patients. It will prevent those NHS foundation trusts which were previously NHS trusts from doing a higher proportion of private work than they do today.
The independent regulator needs to have the powers necessary to ensure that foundation trust activities and income are consistent with its primary purpose of providing NHS services. The amendment would seem to provide a loophole for circumvention of the private patient cap. As I understand it, according to the amendment, a foundation trust could set up a subsidiary which resulted in competition for a limited local pool of staff or affected the NHS foundation trust's ability to provide NHS services in other ways. I do not think that it is the noble Baroness's intention to allow this circumvention. Certainly, it is not what the Government would find acceptable.
Baroness Noakes: The noble Baroness, Lady Barker, made a number of suggestions; for example, while private patient income can be seen going into the accounts, there is no public information on its financial effect. Can the noble Lord assist the
Baroness Noakes: My question concerned NHS trusts. This has been going on for a long time. It is a question of what information is available on the type of financial returns that are achieved currently by NHS trusts. That is what will be carried forward into foundation trusts. I am trying to tease out what is available.
Lord Warner: I am not sure what information is currently available in the public arena. Certainly, that is an area where information must be provided to the regulator so that he can make a decision. By implication, that figure is capped at the present level. Therefore, in the first annual report of the new foundation trust, it will show a figure within the existing level of private patient income. That is the way the scheme is being set up.
Baroness Barker: I thank the Minister for his reply. I return to my first point: the matter is not income, it is profit; namely, income against cost. I am not sure that the Minister covered that in his reply.
Lord Hunt of Kings Heath: I thank the noble Baroness for giving way. Why would an NHS trust engage in private sector activity if it was not producing a return? Surely, it must be in the interests of the trust and the future foundation trust to ensure that a return was produced. Why would it not want that to happen?
Baroness Noakes: I thank the noble Baroness for giving way. Private patient income was expanded massively as a result of the 1998 legislation which effectively authorised significantly greater income-generation powers. I understand that the position since then is that it is necessary for each trust to keep a form of memorandum trading account of every single income-generation activity to show that such activity does achieve a net result.
Baroness Barker: I thank my noble friend for his comment. A further point I want to put to the Minister is that I do not see why, in view of debates on every other health Bill in which I have taken part, on this occasion changing the words "may" and "must" signifies in some way a strengthening of the provision. I hesitate to pray in aid the noble Lord, Lord of Kings Heath, in this regard, but I can recall several of his speeches on precisely this point. So I do not accept the argument put by the Minister.
Finally, in his reply the noble Lord raised the question of patients from Wales. I believe that it is the clear intention that NHS foundation trusts should and would treat patients from the four nations of the United Kingdom. Clearly, we hold completely contrary views of the effects of these amendments.