The government has added key details to its plans for wholesale reform of the NHS, while committing to pressing ahead with the changes.

The Department of Health published Liberating the NHS: Legislative Framework and Next Steps on Wednesday in response to the consultation on its July white paper.

NHS commissioning board

The NHS Commissioning Board, due to be launched in shadow form next April, is to be given apparently extensive powers to subsidise commissioning consortia to make sure they break even. The move follows concern about financial stability under the future system.

The consultation response says the board is likely to run a form of insurance system where poorly performing consortia would pay more into a risk pool fund than the better performing.

The pool would be used by the board to “intervene where there is a significant risk of financial failure”. It would also be able to, “establish a contingency fund to make payments where necessary for the board or consortia to discharge functions”.

The commissioning board will begin to “establish consortia” from April 2012 and have “a duty to ensure a comprehensive system of consortia [is] in place from April 2013”.

There are few details of how this authorisation process will work, although the board must be, “satisfied certain legislative requirements have been met”.

Commissioning consortia

Consortia will be statutory bodies, the document confirms, but it sets few other requirements for their makeup or governance. There will be no minimum or maximum size, and they are to be given significant flexibility to shrink or grow, and to collaborate closely. They will be able to pass some commissioning responsibility to the NHS board.

There is no requirement for Consortia to be made up of practices that are all next to each other, however the response says: “We do not consider it viable for a consortium to be made up of practices drawn from a multiplicity of disparate places.”

The proposals say the government will set its “requirements and expectations for the NHS” in an annual “mandate”, which will first be consulted on. It will only be able to alter these outside that cycle in “exceptional circumstances”.

The document says consortia will have a duty to help the board improve primary care quality, although GPs will be contracted by the board. Consortia will be able to decide the distribution of the quality premium among constituent practices as reward for good performance. However, the DH clarified that only a sub set of the new Commissioning Outcomes Framework would be used to drive these premiums in order to avoid stifling “innovation” through taking an overly rigid approach to financial incentives.

It says consortia will not necessarily be led by a clinician, although it is likely in most cases.


The consultation response says the DH will set up an “operationally independent banking function” to manage taxpayers’ investment stake in foundation trusts.

The health secretary will no longer have the power to give grants and subsidies to foundations, with loans only allowed on commercial terms through the banking function.

It confirms Monitors’ compliance regime will cease for most foundations two years after their authorisation date and, for those at high risk, slightly longer, as previously revealed by HSJ (news, 9 December, page 6). This allows a “longer and more phased transition period” than a provided by a fixed end to Monitor’s powers, the document says.

The foundation authorisation process will be changed to a one off test in April 2013.

The document confirms Monitor will have power to create a risk pool to fund providers in special administration.

It says that, in order to ensure “price subsidies [are] justified and transparent”, where commissioners deem services are essential and therefore want them to be “subject to additional regulatory control by Monitor”, those services will be given a “higher maximum price”.

Consortia would also have to consult with local authorities on which services should be deemed essential.

Foundations will no longer have to have Monitor approval to merge or acquire other trusts. They will, however, have to report on their finances directly to the DH.

Health and wellbeing boards

Statutory Health and Wellbeing Boards will be established with members drawn from GP consortia and local councillors. The local directors of children’s services and public health, as well as a representative from Health Watch, will be also join the boards.

Members will not be able to veto local commissioning plans, but can write formally to the commissioning board if consortia do not have “adequate regard to the joint health and wellbeing strategy”.

Councils will be able to refer significant changes to services proposed by commissioners to the health secretary.

Other plans

  • DH to publish regulations to ensure commissioners protect choice and competition, and Monitor given power to investigate and remedy anti-competitive commissioning.
  • Monitor will lead price setting, and plans to allow the commissioning board to appeal against it have been dropped. It will “have regard” to the “overall financial envelope” set by the government.
  • Maternity services will be commissioned by GP consortia, rather than the NHS commissioning board.
  • The outcomes framework will have about 50 indicators, with a “sub set” used to consortia performance related funds.
  • New duty of quality improvement on consortia, covering safety, effectiveness, and patient experience.
  • ”Important” duty on consortia to reduce inequalities.
  • The government has decided staff-only membership foundation trusts would “not be compatible with the foundation trust model”.
  • However, there may be new encouragement for NHS staff to set up their own provider, under a “right to provide”.