There are two areas for analysis of the extraordinary claims that have very recently been made by LibDems.  First it is necessary to examine the extent to which amendments to the NHS Reform Bill have delivered the changes that are being claimed; in part this rests on a difference between published expert opinion and assertions made by senior LibDems (they have published no evidence at all).  The second is to examine the factual accuracy of claims being made about changes during the period when Labour was in power – an example being a claim that Labour’s 2006 NHS Act set up ISTC’s which in fact started in 2003 – similar errors of fact are many and serious.

To deal with the 4 biggest misrepresentations.

ISTCs

Lord Clement Jones has written about the introduction of ISTCs through the NHS Act 2006.  This is nonsense as the first ISTC opened in 2003.  It is claimed this implemented a policy of favouring private providers.  In fact ISTCs had nothing to do with legislation; they were brought in through centrally negotiated contracts not via commissioning.  The intention was to increase capacity and the Health Committee was given assurances that ISTCs would only be permitted where there was insufficient NHS capacity to allow waiting time targets to be met – so they did not compete with NHS providers.  The contracts offered were favourable to non NHS providers but many argued the price was worth paying to enable waits to be brought down.  By 2010 this type of national contracting had been discontinued as capacity had increased.  It is wholly untrue to pretend this was some kind of general policy it was very specific and centrally negotiated.  The contracting may have been questionable but that is not a policy issue.

Over the years there have been other examples of local deals which went outside a strictly tariff arrangements and effectively allowed for a “premium”.  These are also permitted under the Bill if sanctioned by the regulator and do not need the consent of the commissioners.  And not all services have a tariff so deals can be done.

It is also likely that this kind of central contract might still be permitted under the Bill if the circumstances were again such that additional capacity was required beyond what NHS providers could deliver; in order to stimulate the market.

Private Patient Cap

Baroness Williams has stated that under Labour there was no cap on private patients’ income, and again reference was made to the NHS Act 2006.

Whilst the 2006 Act sets out the definition of the PP Cap this is copied from the 2003 Act and was not new policy at all.  It is beyond doubt that every FT on authorisation was set a cap based on the level of its private income in 2003 (the year the first FTs came into being).  The 2009 Act revised this slightly to allow mental health FTs a minimum cap of 1.5%.  The regulator (Monitor) enforced the cap as part of the terms of authorisation.

Also in all three acts (and in the Bill) was the “principal purpose” provision which effectively limited FT private income by stating the principal purpose was the provision of service for NHS patients.

The Bill deleted the cap – so we go from all having an explicit individual cap to not having a cap.  The 49% nonsense is simply an explanation of how the “principal purpose” test should be applied and effectively adds nothing.  A late amendment to the Bill now sets out a process for governors to be involved in consideration of the level of pp income but this is not the same as having a cap.  It is arguable that the provision of consulting governors over private income in considering annual plans was already in place.

Those trusts which are not FTs obviously have no cap.  But they are not independent or autonomous and every aspect of their service provision is performance managed through the SHAs and DH – so their private patient income could be limited at any time.  They have an even stronger principal purpose requirement. When they become FTs they are set a cap based on their 2003 income level not on the level at the time of authorisation.  But the Bill removes the cap.

The NHS Act 2006

For the past few weeks there have been repeated claims by senior LibDems that the Bill was necessary to correct problems around procurement and competition that had been introduced into the NHS in 2006.  This is not a subject that was heard from Tories and has only recently emerged as an assertion. It is nonsense.  No paper of any kind has ever explained these extraordinary claims.

Even the most basic examination of the NHS Act 2006 shows that it was a consolidation act which introduces little if any new policy.  It makes no reference to competition to procurement or to contracts.  The Health Act 2006 concerned smoking, fraud prevention, audit and the appointments commission but also had no relevance to competition.

As readily acknowledged EU competition and procurement law have applied to the NHS since we joined the EU – it is how it is applied that is relevant.  It is abundantly clear that the Bill even as amended ensures greater scope and scale for intervention by the Courts; indeed a Bill based around regulation, competition and legal frameworks would have that impact.

The 2006 Act did not make any changes to the law around FTs either – another myth. Nothing that happened during 2006, (including the publication of regulations around Public Contracting) made the slightest difference to private provision, competition or procurement in the NHS.

We did see in 2006 more emphasis on choice as the choose and book system came in to offer choice of provider for some simple elective care.  This combined with a developing tariff system and payment by results did develop the internal market but this was nothing to do with legislation.

In late 2007 the government published the Principles and Rules for Cooperation and Competition which embody the requirements of EU law as well as establishing the policy for the NHS – it is still in force with only one minor amendment.  It explains very clearly how EU procurement rules apply.  Again nothing to do with 2006 Act.

It has been suggested (but not by LibDems who clearly do not understand the position) that the creation of FTs did change the application of competition law as the status of FTs is less clear than when they were clearly NHS Bodies under direct management.  The 2003 Act also brought in the idea of legally enforceable contracts between NHS commissioners and FTs – although to date there has never been a case under these contracts.  Relationships between NHS bodies (not FTs) are through NHS Contracts which are not enforceable in law.  These NHS contracts are being ended by the Bill so if the 2003 Act did make intervention more likely the Bill makes it certain.

Labour tabled an amendment to reintroduce the option for NHS contracts if the commissioners and NHS provider agreed.  This would ensure the agreement was outside the scope of contract law and so beyond the reach of both competition and procurement law.  The LibDems voted against this.

It is simply not possible in a system based entirely of legally enforceable contracts to ever be sure that legal challenges to those contracts cannot be made.

Claims by LibDems that the “warm words” from Lord Howe around the applicability of competition law and around procurement (two entirely different matters) have been tested by formal legal advice and shown to be false.

Commissioning Freedom

Repeated claims have been made that the Bill is necessary to ensure that commissioners (CCGs) have freedom to undertake commissioning without fear of legal intervention especially under procurement law.

In reality as competent legal advice has shown the situation for CCGs is almost identical to that experienced by PCTs under the current framework.  There are limitation set by law, by regulations which will be made under the Bill and through guidance issued by the regulator.  It has also been acknowledged that the current Principles and Rules for Cooperation and Competition will be continued as the overarching framework.

The Bill does not give CCGs any greater protection from the fear of intervention than PCTs enjoyed.

LibDem Claims about the Bill

The original Bill had a degree of coherence and created the legislative architecture to move the NHS from a managed system to a regulated market with price competition and with a powerful economic regulator with an expressed duty to promote competition.  The Bill removed the cap on private patient income, removed the Secretary of State’s  political and legal responsibility for the comprehensive NHS, gave autonomy for GP led commissioners to restrict access to services and offered limited protection from closure only to “designated” services.

That Bill was signed by Clegg, Alexander, Cable and Burstow.  It is a myth that the LibDems have not supported the Bill, indeed it is possible to identify 5 occasions on which Clegg could have brought about major changes to the Bill or indeed blocked its progress.

• In July 2010 he signed the White Paper. He could have refused.
• In December 2010 he agreed the detail of the Bill, and it was published, signed by him and 3 senior colleagues. If he had refused the Bill would not have started to limp its way through Parliament.
• In April 2011 he agreed that there should be a policy pause for the Bill. He could have ensured that the pause was replaced by the demise of the Bill.
• In June 2011, at the end of the pause, he personally relaunched the amended Bill and endorsed the reforms of the reforms that he had endorsed 11 months earlier.
• On the afternoon of February 7th when the Prime Minister was wondering whether to press ahead or drop the Bill he could have advised his colleague to drop it.

It is simply untrue to portray the Bill as a Tory Bill opposed by LibDems.

It is equally untrue to claim LibDems have been responsible le for the amendments made to the Bill and disrespectful to a very wide coalition of experts, professional bodies and staff groups who have bombarded the legislative process with analysis and proposals for change.  The LibDems have contributed little or nothing to the analysis of the issues within the Bill. Many amendments have had to be made by the government not LibDems, and have been to correct problems in the Bill – not to change direction or policy.  It is a matter of record that at every single step of the way it has been LibDem votes which ensured passage of the Bill.

The LibDems have at various stages indicated their concerns and they now claim all these concerns have been addressed.

Commissioning will now be more democratically accountable.

Commissioning is not democratically accountable in the Bill.  Health and Wellbeing Boards have a very limited element of democratic accountability but commissioning is not accountable to them in any sense.  Labour put amendments to ensure CCGs and the local decisions of the NCB were brought into an accountability regime through HWBB but the LibDems did not support it.

Greater degree of co-terminosity

Is simply untrue – the Bill has not been changed.

No decision about the spending of NHS funds to be made in private and without proper consultation.

Under the current structures PCTs as commissioners are publicly accountable bodies with strong governance, which meet in public and give access to all relevant papers, are subject to FoI and which have decision making Boards where independent NEDs are the majority.  There is no sense at all in which the Bill’s commissioning arrangements are more open and transparent.  There is no provision in the Bill for public consultation over spending decisions only in respect of service changes.

The complete ruling out of competition based on price.

Is not delivered by the Bill since 40% of services are not subject to tariff and have to be commissioned through forms of tendering in which price can play a part.  There is also power for the regulator to change the tariff in some circumstances without the consent of the commissioner.

New private providers to be allowed only where there is no risk of cherry picking.

Is simply untrue – there is nothing in the Bill to define what cherry picking is and so it cannot prevent market entry.  The claim that the Bill prevents a blanket roll out of AQP is also not based on anything that is in the Bill and is anyway the opposite of what the government has said which is that AQP will be encouraged and supported.

NHs commissioning being retained using the skills and experience of existing NHS staff rather than subcontracting.

This will come as a surprise to NHS staff under notice of redundancy and is simply untrue.  Nothing in the Bill prevents sub-contracting of commissioning and it is abundantly clear that commissioning support will NOT be by NHS staff and the plans to shift these staff into the private sector have actually been published.  This is serious dishonesty.

An NHS based on cooperation rather than competition.

This claim rests on the fact that Monitor (in its role as economic regulator) will have the primary duty to promote patient interests.  This is obviously inadequate since the whole point of the Bill and the role of an economic regulator is that competition is in the best interest of patients and Ministers are fond of saying this.  Whilst competition is defined and so can be protected through licensing neither integration nor cooperation have proper definitions in the Bill.

The duty of NHS bodies, both commissioners and providers, to cooperate already existed and the Bill removes that absolute duty.

Uphold the NHS Constitution.

Was already in place it was only challenged by the Bill.

Ensure full scrutiny by elected local authorities

Whilst this has largely been continued under the Bill such changes as have been made have weakened the scrutiny function, for example by making it harder for a reference to the Secretary of State, rather than strengthening it.

Ensure HWBB are a strong voice for accountable local people in setting the strategic direction and coordination of health and social care services.

There is nothing in the Bill about the accountability of members of HWBBs this is simply made up.  There have been no significant changes in this part of the Bill at all.  The key issue of ensuring CCGs have to abide by the agreed strategy was not supported by LibDems.  It is not clear how HWBB will be a “strong” voice as they have no powers.

Ensure accountability by requiring about half of the members of the board of commissioning groups to be local councillors appointed as NEDs.

Wholly untrue to say this has been achieved, there is nothing about this in the Bill.  The aspiration of democratic oversight of commissioning which was in LibDem manifesto has been lost.  LibDems refused to support Labour amendments to ensure NEDs on CCGs.

Offer additional freedoms ONLY to foundation trusts that successfully engage substantial proportions of their local populations as active members.

Nothing at all bout this in the Bill – simply ignored.

We have guaranteed that FTs must demonstrate how any profits from private patients will be used to improve services for NHS patients.

Nothing in the Bill changes the current fact that FTs are unable to distribute profits.  Nothing in the bill prevents a surplus made from treating private patients being used to expand services for private patients.  This is again simply untrue.

We have made sure that the majority of FT income must come from public funds.

The Bill has not changed this; the principal purpose of a FT remains the provision of services to NHS patients.  If a majority of income came from private patients then this would fail the existing test – this has always been the case.

We have introduced safeguards to prevent conflict of interests amongst commissioners.

The Bill always had such provisions and the LibDems would not support strengthening the treatment of CoIs so that there was adequate protection as with local authorities.

We will require commissioners to follow “best value” principles when tendering for non tariff services.

This obviously negates their own claim that price competition has been prevented altogether!  There is strong legal evidence and legal precedent to show that “best value” does not apply – and a Labour amendment to bring in a form of “best value” regime within commissioning was not supported.

Providers will have to publish criteria they will use to select patients for treatment effectively outlawing “cherry picking”.

Clearly this cannot be true as it could equally well be claimed this was the method for defining how cherry picking could take place so long as it is explicit.

We will outlaw any policy to increase the market share of any particular sector of provider.

This was in the Bill anyway.  It is argued this is to prevent intrusion by private providers but it can also act against the interests of existing NHS providers or the third sector.

We will continue to extend patients choice of Any Qualified Provider but will do so in a much more phased way.

This is not in the Bill.  How the system develops depends not on policy but on the NCB and the regulator issuing guidance and regulations.

Irwin Brown

March 2012