Central grip tightens under 'independence' bill

Analysis by HSJ and NHS specialist lawyers Beachcroft suggests the bill contains considerably less decentralisation of power than the rhetoric around the Liberating the NHS white paper had promised.

If the bill is passed in its current form Andrew Lansley and future health secretaries will have powers including the ability to direct the economic regulator Monitor and the NHS Commissioning Board and to decide what services should be commissioned by whom.

And while Mr Lansley has preserved substantial powers over the Commissioning Board, the board itself has what lawyers called “draconian” powers over consortia.

Beachcroft solicitor Emma Teale told HSJ it was “surprising” that bodies created under a “banner of independence” were subject to so much oversight from the health secretary.

She said: “If we take that to mean independence from the Department of Health, it may be surprising that the exercise of such bodies’ functions are subject to myriad regulations and directions.”

NHS Confederation acting chief executive Nigel Edwards said: “It looks like there is a surprising amount of power [in the secretary of state’s hands]. The powers are reserve powers; the minute he starts using them a lot he’s lost.

“The drafting of the bill is much less important than how it’s used in practice.”

The health secretary will be able to step in to the day to day running of the commissioning board if he considers it “is failing or has failed” to discharge any of its functions.

The minister will be able to direct the board to carry out the functions in a manner and a timescale he believes appropriate. If the board does not comply the health secretary can take over the discharge of the functions or make arrangements for someone else to discharge them on his behalf.

Clause 59 of the bill gives the health secretary the power to “direct” the regulator Monitor. Notes with the bill state that this power would be used in “cases of serious failure by Monitor to carry out its functions,” and argues it is similar to the powers the health secretary already has over the Care Quality Commission.

Senior sources said the future role of Monitor as an economic regulator made it inappropriate for the health secretary to have such control and that an arm’s length relationship similar to those between government and other economic regulators such as the energy sector’s Ofgem were more appropriate models.

In those cases the relevant minister can only intervene in tightly defined circumstances. By contrast Beachcroft partner Jeremy Roper told HSJ the bill “left open” the circumstances in which the health secretary could intervene in Monitor’s decisions.

The new power would not only give Mr Lansley the ability to direct Monitor, but also any organisation subject to Monitor, were he to believe the regulator was failing to properly discharge a “function” in relation to that organisation.

That could include licensing providers, policing competition and setting prices.

Mr Roper said knowledge of the power could undermine the authority of the regulator, even without its explicit invocation.

He said: “If Monitor is having a disagreement with the health secretary and Monitor knows he can just get his own way, does that affect Monitor? Monitor will always say ‘oh no, no’ but that doubt will always be there.”

Foundation Trust Network director Sue Slipman said criteria for intervention needed to be set out. “It must not be a subjective judgement but one based on transparent criteria that make it open to challenge,” she said.

In addition to the health secretary’s power over the reformed Monitor, the bill confirms plans to move responsibility for the regulator’s current compliance regime over foundations to an arm of the DH.

The move follows a decision that it would not be appropriate for Monitor to have such a role once it becomes the general economic regulator for all providers of health services.

Instead the bill outlines plans to move the role to “an operationally independent banking function which would be established by the department”.

The DH’s foundation trust financing facility would behave like a bank with respect to the £24bn taxpayer investment in foundation trusts and exert control through the use of regulations similar to bank covenants on commercial debt.

Ms Slipman said foundation trusts would only be satisfied with the arrangement if the health secretary gave a “clear commitment” to the bank’s operational independence. The sector would prefer the function to be moved to a wholly independent arm’s length body.