THE INTERNAL DOCUMENT Thank you for your regarding the Health and Social Care Bill and the concerns raised by 38 Degrees.

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1 INTRODUCTION We have received a Liberal Democrat document by Paul Burstow MP the Liberal Democrat Minister for Care Services. In the document Paul Burstow tells Liberal Democrat MPs how to respond to 38 Degrees s independent legal advice which was published earlier this week. Unfortunately this document a number of errors and misrepresentations of the independent legal advice obtained by 38 Degrees.We have published the full document along with some draft comments shown in red below. If you have comments or corrections do share them below in comments. It s worth pointing out that at many points the document says 38 Degrees when it appears it should say something like the independent legal advice paid for by 38 Degrees members. Some Lib Dem MPs are now sending Paul Burstow s document to their constituents. If you ve received a similar from your Lib Dem MP you can share this rebuttal by ing them here. THE INTERNAL DOCUMENT Thank you for your regarding the Health and Social Care Bill and the concerns raised by 38 Degrees. Altering the Secretary of State s duties 38 Degrees claim the Health Secretary will be able to "wash his hands" of the NHS because the Bill gives him the duty to "secure provision" of a comprehensive health service not "to provide". This is misleading. Our independent legal advice found that that the bill removes the duty to provide services from the Secretary of State and places it instead on the unaccountable clinical commissioning groups (and then only as a duty to arrange provision ). This shift has a further consequence which is to create severance between the duty to promote a comprehensive health service and the duty to provide services since, under the Bill, the former will be held by the Secretary of State and the latter by the groups. In addition, the Bill introduces a hands off clause that prevents the Secretary of State from stepping in unless it is essential. Each of the above issues was explained in detail in the legal advice obtained by 38 Degrees. This is how 38 Degrees believes the Secretary of State washes his hands of the NHS and is not a concern that has been addressed. The change is necessary to reflect the establishment of the NHS Commissioning Board, designed to protect the NHS from political tinkering. But it is wrong to suggest that this means the Secretary of State could wash his hands of the NHS. The establishment of the NHS Commissioning board as independent of the Secretary of State is not in the coalition programme. It is a Conservative policy (not Coalition policy). In contrast to the position of independence of commissioning groups and the Board in the Bill, the Liberal Democrat manifesto policy is to have commissioners directly accountable politically to local people by virtue of being elected. (You can see the manifesto here: ) The Coalition Agreement makes no mention of independence of the Board.

2 Many people feel that the best way for politicians to avoid tinkering is by showing restraint - not by removing duties. The Government has abolished any general power of the Secretary of State to issue directions or to delegate powers to commissioning groups, and has imposed a duty on itself and the Board to allow Commissioning Groups to be autonomous (the hands off clause). This is not in the Coalition programme, which instead proposed having councillors on the commissioning groups. The Bill is absolutely clear that the Secretary of State remains politically and legally accountable for health services. This contradicts our independent legal advice if this is true it would be useful for MPs to explain in detail how the legal advice is incorrect. The Secretary of State has duties to: Act to secure provision of a comprehensive health service designed to secure improvements in the physical and mental health of the population and in the prevention and diagnosis of illness Act to secure continuous improvement in the quality (effectiveness, safety and patient experience) of health services (new) Report annually on the performance of the health service (clause 49). (new) Ensure these services are provided free of charge (except where specified eg prescription charges) Tackle health inequalities (new) Promote research and the use of evidence learned from research Publish and lay before Parliament a mandate for the NHS Commissioning Board (new) It is worth noting that it is not mentioned here that the new plans would force the Secretary of State for Health to maximise the autonomy of new unaccountable quangos that will be set up (the clinical commissioning groups and the NHS Commissioning board). The Secretary of State also retains responsibility for securing the provision of services through his powers to set objectives for commissioners. This seems to be a mistake. The bill says that the Secretary of State must use the powers under this act so as health services are secured. This is categorically not an ideologically driven move to stop public provision of health services or even to reduce the proportion of publicly provided health services. In fact the Bill would make it illegal for the Secretary of State, Monitor or the NHS Commissioning Board to act deliberately to reduce the proportion of public sector provision. The Secretary of State has the power to intervene and take over the NHS in the event of significant failure, or if the Board fails to discharge its functions properly or at all. The Secretary of State also has the power to establish new NHS Trusts or Foundation Trusts which means that new public sector providers can be created if needed.

3 The Secretary of State will also continue to remain legally liable for the exercise of his functions. This means that he could be the subject of a claim for judicial review by an affected member of the public if he fails to carry out his statutory duty under the legislation. But his duty is only to do his best with limited powers under this Act, mainly involving exhortation. There is therefore no way a Secretary of State could meet these legal requirements while washing his hands of the NHS. The clause in the bill which removes the power of the Secretary of State to issue directions or to delegate functions to the NHS is a highly significant loss of accountability. The Government can not say the Commissioning Groups and the Board are independent of the Government and autonomous, but also claim that the Government remains responsible. Their own documents para 66 of the Explanatory Notes make this clear. EU Competition Law: 38 Degrees claim the Health Bill will extend the scope of EU competition law in the NHS. However this is a red herring. Government legal advice and position is crystal clear the Bill does not change EU competition law. This is an incorrect interpretation of the legal advice. In no place does it say that the bill changes EU competition law (that would be impossible anyway as EU competition laws are created at the European level not by the Department of Health). In fact the legal advice explicitly states that the bill does not and cannot change EU competition law. What the legal opinion does make clear is that the current position in terms of the application of competition law to the NHS has not been definitively determined. If it were tested, as a result of recent reforms, it is likely that competition law would already apply. Further, if the bill becomes law, it is even more likely that competition law will apply. By simply repeating the mantra that, there is no change to competition law, the Government has avoided any discussion of the potential far-reaching consequences if competition law is found to apply to the NHS. Instead we are maintaining the existing competition rules for the NHS introduced by the last Labour Government, described by the former Labour Health Minister, Ben Bradshaw, as the NHS's first ever competition policy, and giving them a clearer statutory underpinning. It is worth noting that according to our independent legal advice by giving a clearer statutory underpinning the new plans would make it more likely that EU competition law would apply. In addition, as noted above, it is impossible for the Government to change competition law in any way, therefore it is not clear what putting the competition policy on a statutory footing actually achieves. The body that Labour used to apply them, the Co-operation and Competition Panel will transfer to Monitor and retain its distinct identity. Monitor will be given concurrent powers with the Office of Fair Trading, to ensure that competition rules can be applied by a sector-specific regulator with expertise in healthcare, thus shielding the NHS from the worst excesses of competition.

4 This is incorrect and needs clarification. Our independent legal advice states that claimants (such as private health companies) could bypass Monitor and take a case straight to the courts: Nor can the Act preserve the enforcement of competition law to the sectoral regulator, Monitor, since a breach of the prohibitions on anti-competitive conduct gives rises to actionable claims in the High Court by any person affected. Furthermore if monitor is required to enforce a competitive market as the bill suggests, the fact that it is not the OFT is not much help. This was the recommendation made by the independent Future Forum as the best safeguard against competition being applied disproportionately. Following this recommendation has allowed us to put competition back in its box. Our independent legal advice confirms that the bill makes it highly likely that competition law will apply, The reforms introduced by the Bill however will serve to reinforce that conclusion and introduce elements which make it even more likely that domestic and European competition law applies to the NHS Further, counsel specifically addressed the idea that Monitor could offer any kind of safeguard in this respect, The fact that Monitor will be sectoral specific does nothing to limit or restrict the applicability of competition law. Simply because a particular sector is regulated does not exclude it from the scope of competition law. Crucially, we have also agreed to retain Monitor s role regulating Foundation Trusts, reducing the chances that they will be seen as undertakings under EU law. The above makes clear this is not in fact that case. In addition, the proposal in the bill to lift the limit on how much Foundation trusts can earn from competing for private paying patients, makes them more likely to be considered undertakings and thus falling within the remit of Competition Law for NHS work as well. It is worth noting that our independent legal advice states: In the light of the above, it is likely that Foundation Trusts, consortia and their constituent members will all fall within the definition of undertaking for the purposes of domestic and European competition law. Opening the NHS to private companies 38 Degrees claim that the Health Bill will lead to a system geared in favour of private companies. This is wrong, unlike the last Labour Government, we won t rig the market in favour of private providers by giving them gold-plated fixed contracts to entice them into the market, which resulted in over 250million of taxpayers money being handed over to private providers for operations they didn t even perform. As a result of changes that the Liberal Democrats have made to the Bill, no Government, present or

5 future, will be able to deliberately favour the private sector in the manner in which that the last Labour Government did. The new change only prevents NHS bodies or the Government from deliberately setting out to increase the amount of NHS work provided by the private sector. But it does not prevent this happening as a direct result of the bill, for example making more NHS work potentially open to competition. And due to the changes secured by the Liberal Democrats, private providers will now only be allowed to compete for a limited range amount of services covered by national or local tariff pricing, to ensure competition is based on quality; and not price. The limited range will soon be more than half (check) Clinical commissioning groups will not be able to delegate their statutory functions to private companies. This misses the point. 38 Degrees members are worried that private companies could profit from making decisions about what services constituents can, and can t receive. This could occur because clinical commissioning groups could outsource the commissioning work (designing care, evaluating the bids and making recommendations as to what healthcare services should be available and provided by whom) out to private companies. They could then rubber stamp the private companies work therefore allowing private companies to choose what health services are available. As a separate matter, the legal advice clearly set out the far-reaching impacts of the application of procurement law to increased numbers of commissioning bodies. The complex nature of the rules and the expense involved in litigating, make it likely that cash rich private companies are more likely to take advantage of the changed situation. It is my view that the recent amendments to the Bill which place an emphasis on quality rather than price and the transformed position of Monitor are reassuring. There are also still some ambiguities regarding competition and choice and I will continue to seek greater clarity on these points. Regards