New tariff objection threshold faces Lords challenge

The Department of Health confirmed last month that it planned to raise the bar that objectors must clear in order to trigger arbitration over the tariff, despite its proposals being unpopular with most of those who responded to public consultation.

The DH proposes to raise the proportion of commissioners or providers that must object from 51 to 66 per cent. It also plans to drop current rules under which objectors can trigger arbitration if they control more than 51 per cent of total supply.

To implement the changes, the government must make changes to secondary legislation, which the Lords will be asked to approve today.

However, Labour’s health spokesman in the upper chamber, Lord Hunt of Kings Heath, has tabled an amendment that says the changes are “are fundamentally unfair; and do not achieve their policy objective because under their provisions, even if every NHS provider objected to the proposed tariff mechanism, the arbitration mechanism cannot be triggered; and are in direct contradiction to the assurance given by Lord Howe on 6 March 2012”.

Lord Hunt’s amendment echoes a concern raised by representative body NHS Providers. Earlier this month the organisation wrote to the health secretary to express concern that the changes were being pushed through against the wishes of most who responded to the consultation.

The organisation argues that of the 361 providers licensed to provide NHS services, only 223 – 62 per cent – are NHS trusts or foundation trusts. This means that although trusts and FTs provide 96 per cent of NHS secondary care, they would not be able to trigger arbitration even if all of them objected.

The “assurance” Lord Hunt refers to was made by Lord Howe, then a health minister, during a debate on the Health Act 2012.

Referring to a proposed mechanism for modifying provider licences, Lord Howe said: “I am clear that we must have a process for adjudicating on Monitor’s proposals if a sufficient number of those who will be affected by them object; otherwise, in these circumstances, either Monitor would have no way of proceeding with disputed proposals or those affected would have no other way of disputing proposals other than by judicial review.”

Labour’s challenge comes after the Lords’ secondary legislation scrutiny committee raised its own concerns about the amendments earlier this month.

In a report to the house, the committee said the DH had only consulted on its proposals for four weeks during the summer recess. It added that “the committee would consider that period too short to allow for the complexities of the proposed change to be easily analysed”.

Its report noted the DH’s view that “setting the trigger level at 66 per cent ensures that investment decisions at the national level are not put at risk unless it is truly warranted”. However, it added that NHS Providers felt “the changes to the objection mechanism would render it inoperative and the system unfair, and they seek reassurance whether any other avenue will be put in place to enable them to express legitimate concerns”.

It concluded: “The opposing views of the department and the major providers are a significant cause for concern and raise the question whether these regulations may imperfectly achieve their policy objective.”

NHS Providers chief executive Chris Hopson told HSJ: “It is significant that the Lords scrutiny committee has highlighted the problems with the government’s proposals to amend the NHS tariff objection mechanism.

“We hope the government will respond by agreeing to significantly improve the way NHS England and NHS Improvement engage with providers and commissioners in the tariff setting process.

“We have detailed proposals in this area that we will be looking for the government to adopt in the forthcoming Lords debate.”