Public Bill Committees

The Committee consisted of the following Members:

Chairs: Sir Roger Gale, Dr Rupa Huq, Emma Lewell, † Sir Jeremy Wright

† Argar, Edward (Melton and Syston) (Con)

† Brackenridge, Sureena (Wolverhampton North East) (Lab)

† Chambers, Dr Danny (Winchester) (LD)

Daby, Janet (Lewisham East) (Lab)

† Foody, Emma (Cramlington and Killingworth) (Lab/Co op)

Irons, Natasha (Croydon East) (Lab)

† Johnson, Dr Caroline (Sleaford and North Hykeham) (Con)

† Joseph, Sojan (Ashford) (Lab)

† Kyrke Smith, Laura (Aylesbury) (Lab)

† Morgan, Helen (North Shropshire) (LD)

† Prinsley, Dr Peter (Bury St Edmunds and Stowmarket) (Lab)

† Robertson, Dave (Lichfield) (Lab)

† Robertson, Joe (Isle of Wight East) (Con)

† Smyth, Karin (Minister for Secondary Care)

† Stafford, Gregory (Farnham and Bordon) (Con)

† Twist, Liz (Blaydon and Consett) (Lab)

† White, Jo (Bassetlaw) (Lab)

Sanjana Balakrishnan, Rob Cope, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 30 June 2026

(Morning)

[Sir Jeremy Wright in the Chair]

Health Bill

Clause 22

Joint planning by integrated care boards and their partners

Question proposed, That the clause stand part of the Bill.

The clause updates the National Health Service Act 2006 to abolish the requirement for integrated care boards and their partner NHS trusts to prepare and publish a joint forward plan and a joint capital resource use plan. The 10-year health plan aims to simplify local healthcare planning, and the Bill delivers that objective by removing legal requirements for integrated care partnerships, integrated care strategies, joint forward plans and joint capital resource use plans. Planning will now begin with the joint strategic needs assessment, developed by health and wellbeing boards. The assessment will inform a new neighbourhood health plan, replacing the joint local health and wellbeing strategy. ICBs will produce population health improvement plans, aligning multiple joint strategic needs assessments, neighbourhood health plans and local priorities across their wider populations. As a result, the planning process will be streamlined and less bureaucratic, and will deliver healthcare for local people based on local planning and strategy. I commend the clause to the Committee.

As the Minister said, the clause removes the need for ICBs and their partner trusts to produce a joint forward plan. The existing legislation requires ICBs and their partner trusts to prepare a plan setting out how they propose to exercise their functions over five years, which is reviewed and/or revised each financial year.

Joint forward plans address objectives in the Government mandate regarding the ambitions in the NHS long term plan and planning guidance. Section 14Z52 of the 2006 Act sets out that an ICB and its partner trusts have to prepare such a plan before the start of each financial year and specifies what the plan must give regard to, including the ICB’s discharge of its duties—general duties and financial duties—under other sections of the Act. The plan must also cover steps that will be taken to implement the local health and wellbeing strategy, the particular needs of young people, and the particular needs of victims of abuse. ICBs and their partner trusts must publish the plan and give it to a set of specified authorities, and NHS England may give directions for that. Section 14Z54 sets out that an ICB and its partner trusts must consult people when developing such plans and that health and wellbeing boards must be involved. Section 14Z55 sets out that the relevant health and wellbeing board may give an opinion, and that when it does so, it must provide it to the ICB and its partner trusts.

Section 14Z56 sets out that an ICB and its partner trusts must prepare a joint capital resource use plan before the start of each financial year, and that the period may be determined by direction from the Secretary of State. Section 14Z57 sets out that an ICB and its partner trusts may revise the joint capital resource use plan, but if it is revised significantly, it must be published and given to the list of specified authorities.

Section 14Z58 sets out that an ICB must produce an annual report on how it has discharged its functions. It must explain how it has discharged its duties under other specified sections of the Act, review the extent to which it has exercised its functions in accordance with the forward plan and its capital resource use plan, review the extent to which it has exercised its functions consistently with NHS England’s views, and review steps it has taken to implement any joint local health and wellbeing strategy. The report must include details of expenditure and be given to NHS England by a specified date and then published.

In essence, the clause deletes sections 14Z52 to 14Z57. In some respects, it is legislative plumbing, to remove plans that are no longer necessary. The Government’s impact assessment notes that “there is some duplication across planning documents. For example, the Joint Forward Plan covered the integration of services, which the Better Care Fund plan also considers, as does the Joint Local Health and Wellbeing Strategy.”

It goes on to note that duplication delivers an administrative burden, as staff “complete parallel planning returns and fulfil competing data requests,”

so that is a positive aspect of the clause.

Will the Minister please address the following points? Section 14Z52 contains specific requirements to address the particular needs of young people and of victims of abuse. Where do they fall now? The NHS has a large maintenance backlog. What is the new mechanism for transparency of capital prioritisation decisions between the ICBs and the trusts? Can the Minister remind me and the Committee of other areas in which local democracy will be able to input into ICB planning once these planning documents are no longer required?

Under the Government’s strategic commissioning framework, ICBs have to develop population health improvement plans. Essex ICB published a document that is 148 pages long, with a particular focus on inequality. Is the Minister concerned about the length of some of the plans, the time it takes to produce them and the amount of bureaucracy involved, or does she think this is an improvement? What is the key objective in delivering these plans? Do the Government plan to introduce population health improvement plans through legislation? If they do not, Parliament will have scrutiny of the bureaucracy being removed but not of the bureaucracy that the Government replace it with. As the Minister once said: “Local taxpayers deserve to know how their money is being spent.”—[Official Report, 13 June 2023; Vol. 734, c. 122WH.]

I thank the shadow Minister for her comments. I largely agree about legislative plumbing—that is a nice phrase. As she rightly highlights, and as is clear in the explanatory notes and so on, the duplication and administrative burden on all these bodies is considerable. On her question about objectives, we certainly want to streamline that so that ultimately, as well as organisations knowing the objectives they are pursuing, the local population—importantly to her concluding point—can readily see and address that, follow it through and hold people to account. I do think that 150-page documents are not always the easiest to see.

Young people will obviously be part of the joint strategic needs assessment, and ICBs will be mindful of the Government’s wider policy objectives, as we have discussed previously. With regard to maintenance and prioritisation of capital schemes, since coming into office we have already done a huge amount of work to streamline the relationship between NHS England and the Department of Health and Social Care—and, indeed, our friends over at His Majesty’s Treasury—in respect of the approvals process, making better use of capital and making that more transparent at local level so that individual organisations are involved in the prioritisation that comes forward to the ICBs.

Question put and agreed to. Clause 22 accordingly ordered to stand part of the Bill. Clause 23 Abolition of integrated care partnerships and strategies Question proposed, That the clause stand part of the Bill.

The clause abolishes the requirement for ICBs and their partner local authorities to form an integrated care partnership. It also abolishes the related requirement for that partnership to prepare and publish an integrated care strategy.

These abolitions address the policy objectives of the 10-year health plan by streamlining the number of plans that must be created by local health systems and supporting key local stakeholders to work together more flexibly and effectively. The changes recognise that in many areas, integrated care partnerships have not had a positive impact on local health outcomes and have come with significant opportunity costs. Alternative planning approaches proposed elsewhere in the Bill and more broadly will enable local health bodies to plan for their patients in a way that is tailored to their strengths. However, I can reassure the Committee that where existing arrangements are working well, nothing in the Bill will prevent local areas from coming together to consider how best to integrate services and plan their approach to tackling the challenges they face. I commend the clause to the Committee.

In essence, the clause abolishes integrated care partnerships and strategies, which are where ICBs come together with local authorities to discuss how they can make their services more integrated. We know that many of the challenges facing the NHS are caused by difficulties in social care provision and some of the difficulties in social care provision are caused by issues with health provision, and that if those commissioning services in those two areas work together, we can see an improvement in both.

The Local Government and Public Involvement in Health Act 2007 made changes to local government structures and enhanced public involvement in health services. Section 116 requires local authorities to produce joint strategic needs assessments for the local authority and its partner ICB. When preparing the assessment, the local authority and its partner ICB must “co operate with one another…have regard to any guidance issued by the Secretary of State…involve the Local Healthwatch organisation”, and involve local people and the relevant district councils. I note that later in the Bill we will also come to the abolition of Healthwatch.

Section 116 of the 2007 Act has been modified by the Health and Social Care Act 2012 and the Health and Care Act 2022 to ensure that references match the current NHS structure. For instance, in 2008 there were primary care trusts, rather than ICBs. Section 116ZA of the 2007 Act requires ICBs and local authorities whose areas coincide or overlap to create integrated care partnerships, which consist of a member appointed by the ICB, one from each responsible local authority and any other members that they choose to add; to some extent, they can determine their own procedures.

Section 116ZB of the 2007 Act requires ICBs to prepare an integrated care strategy “setting out how the assessed needs in relation to its area are to be met by the exercise of functions of…the integrated care board…NHS England, or…the responsible local authorities”.

When developing that integrated care strategy, the integrated care partnerships must have regard to NHS England’s mandate and any guidance issued by the Secretary of State. Clearly, that would now apply only to guidance issued by the Secretary of the State, because NHS England is also being abolished. An integrated care partnership must publish its integrated care strategy and give it to each local authority and partner ICB. Integrated care partnerships must reconsider and, where necessary, revise the strategy each time they receive a new needs assessment.

Clause 23 deletes section 116(5A) of the Local Government and Public Involvement in Health Act 2007. That subsection required the local authorities to give a copy of the needs assessments to the ICBs, which is of course no longer necessary because they are being abolished. Clause 23 also deletes sections 116ZA and 116ZB of the same Act, which established ICBs and defined integrated care strategies respectively.

As Conservatives, we believe that streamlining bureaucracy is sensible, and I am sure that this is a well intentioned reform. However, a survey conducted by the NHS Alliance in November indicated that a quarter of integrated care system leaders are likely to keep the integrated care partnerships anyway on a non statutory basis, and 40% plan to fold them into health and wellbeing boards and working partnerships with the authorities. It is not really a ringing endorsement of the policy if a sizeable number of people intend to keep it anyway.

Like many other elements of the Bill, these changes are uncosted—if we read the impact assessment, it says “N/A” for the cost. Clearly, there will be a cost incurred by the abolition of the process, but there will also be an opportunity cost to services if ICBs and commissioners are not working together in the provision of social care as effectively as they were before. That will cost people in social care, and it will cost people in healthcare.

As recognised by the impact assessment that the Government have produced themselves, there is a risk of reduced focus on the wider determinants of health at system level. Committee members on both sides of the House have already stressed the impact that other health determinants can have on the health service and social care, and we have previously considered amendments to that effect.

Overall, it is regrettable that local government does not have the direct feed into ICBs that the design of those integrated care partnerships provided. Whether or not I agree, I can follow the theory or principle behind making the area covered more local, in line with the strategic authority. However, if the Government wanted to do that, I do not understand why they did not decide the mayoral areas first. At the moment, we do not know where the mayors will be, and where they are now is not where the ICBs are. The Government have decided to cut ICB budgets and force mergers before they have decided where the mayoral authorities will be in some cases. Even where there are mayoral authorities already, the Government have not mandated that the ICBs be coherent with them, and, therefore, in many cases, they are not. We have a very confusing pattern emerging, which may require further reorganisation of ICBs to line them up, with a further cost down the line.

Will my hon. Friend reflect on the fact that, even if the Government get through the combined mayoral authorities they are trying to in this Parliament, there are still great swathes of England where there are no active plans for a mayoral authority at all. Even if the Government get their own way, some areas will not have a mayor for many years—if they get one at all.

My hon. Friend is, as ever, correct. The mayors are also not all responsible for health and social care—the local authorities are, in most cases. There could therefore be a mayor directing proceedings with the ICB who is a political opponent of those actually democratically elected to look after social care. ICBs are supposed to be apolitical commissioners accountable to the Secretary of State, but now, instead of working with social care directors, they will work with an elected mayor instead.

I can see a positive to that in terms of democratic accountability, but what happens if they all disagree? There is some incoherence about who is in charge. We have the local authority tasked with delivering social care, which may be led by one political party; the mayor directing the ICB, who may be of a different political party; and the Secretary of State who can also direct the ICB, who may again be of a different political persuasion. How does it work if they disagree? Does the mayor actually have authority, given that the Secretary of State can override them anyway? How does the Minister see that working in practice? It feels like some people will be in power without responsibility and others will have responsibility without the power to exercise it.

I will raise some similar concerns about the abolition of integrated care partnerships and integrated care strategies, which clause 23 brings about. Before I do, I should declare my interest as a vice president of the Local Government Association.

The removal of integrated care partnerships, as well as the extension of ICBs to cover multiple local authorities, raises unanswered questions about the future of social care planning, which is very important to the Liberal Democrats, as the Minister knows. We feel that it removes the voice of charities and others in the voluntary sector who are crucial to meeting the range of needs in health and social care.

Throughout the Bill there is a theme of separating social care and the NHS, at a time when greater integration and closer working are clearly needed. We heard Sir Andrew Dilnot say in evidence that we cannot deal with some of the challenges that arise in the NHS—particularly around flow through hospitals and long waits in corridor care in accident and emergency—without improving the discharge of patients into social care. Separating the organisations that deliver those things is clearly problematic. If we think about it, as the shadow Minister just outlined, we have lost the local authority representative on ICBs. The Bill also changes the way the better care fund is administered. With those changes, we are really concerned about the separation of these two responsibilities.

I want to draw the Minister’s attention to an example in Shropshire. Shropshire council spends almost 80% of its budget on social care. It is an extremely challenged council because of those funding pressures. Shropshire, Telford and Wrekin ICB has also been one of the most financially challenged ICBs. That is partly because of its small scale and its merging with Staffordshire—which, for the record, is unlikely to be the combined mayoral authority that Shropshire ends up in, as is my current understanding, although we are a long way off resolving that problem.

The impact of those two organisations having challenged budgets is that the delivery of continuing care causes real conflict; both of those organisations are trying to manage demand downwards because it affects their budgets so profoundly. The conflicts between the two organisations are only going to get worse if they do not have a mechanism for working closely together and resolving them.

I am concerned about this clause and the general move in the Bill to separate the two organisations. I hope the Minister will be able to describe to us how she will ensure that social care is not lost from ICB planning. Local authorities do not have a big enough say, and the decision to split Healthwatch’s local functions between ICBs and local authorities continues that theme. A lot of people who report concerns to Healthwatch are stuck in the hand off between the NHS and social care provision from the local authority, and as the Bill envisages it, they will not even have one body to report those concerns back to. That separation of social care planning is a theme of the Bill.

Does the hon. Member share my concern that what often gets billed as simply streamlining or efficiencies is in fact slimming down, decoupling and weakening?

We cannot see the resources allocated, so we cannot confirm that, but it is clearly a concern. We are not yet discussing the part of the Bill that deals with Healthwatch, so I should keep my powder dry, but we know that local authorities will get some additional funding to deal with their elements of Healthwatch, while ICBs will not. There is a concern that that streamlining is, in fact, slimming down.

It is a pleasure to serve under your chairmanship, Sir Jeremy. I want to pick up where the shadow Minister left off. Essentially, she said that the cart is being put before the horse in terms of mayoral authorities.

As my hon. Friend the Member for Isle of Wight East outlined, many areas have no plans for a mayoral authority; our area of Hampshire and the Isle of Wight is some way down the track. As I expressed last week in Committee, we have a strange anomaly in the new Surrey and Sussex ICB, because Sussex will get a mayor and Surrey will not, so Sussex residents will have representation on the ICB whereas Surrey residents will not. I hope that the Minister has had a chance to reflect on that strange paradox over the weekend and that she will now be able to answer specifically, as she did not last week, how that lack of representation for Surrey residents will work locally.

The abolition of the integrated care partnerships and their allied strategies continues a theme whereby the Government, under the veneer of slimming down, are actually decoupling—or weakening or whatever terminology Members wish to use—health and social care. For many years, all parties have regarded the bringing together of health and social care as essential, but the Bill not only looks like it is not trying to encourage that bringing together, but in fact is doing the opposite of that—it seems to be looking to pull them apart and decouple them. That is strange, because it does not appear to be the expressed policy of the Government, but it is the only logical explanation for many parts of the Bill, including the abolition in clause 23.

The shadow Minister pointed out that a number of areas will keep the ICPs in some form or other. I ask the Minister, does the Government support that feature? Was it the Government’s intention to remove the statutory footing of the ICPs and strategies in the hope and expectation that they would continue on a non statutory footing? If so, we come to the paradox: if the Government support local authorities and health services continuing to work together in informal ICPs, why is the Minister trying to get rid of them? If they do not support that, is it now stated Government policy to separate social care and health services?

It is a pleasure to serve under your chairmanship, Sir Jeremy. There is a consensus—not just in this room, but within Parliament and going back several decades—that we want more integration and partnership working, particularly to bring together health and social care services, but this clause drives a coach and horses through that, and does so in a way that weakens rather than strengthens the Government’s plans to replace the system.

Local authorities bear responsibility for social care and public health in their areas, but they will no longer have a direct voice when it comes to integrated care boards. What we have seen to date is not an ideal system, or even a system that works particularly well, so I understand that the Government want to strengthen it, but we should not do that by removing the local government voice or making it indirect via a mayor who does not have the direct responsibility for delivering social care locally. Mayors may have some strategic oversight, but that is different.

Just last week, the Minister of State for Care appeared before the Health and Social Care Committee and was questioned on this very issue by me and others. His view was that the mayoral strategic partnership would be more than sufficient to make up for the local authorities losing their seat, but he faced particular scrutiny from the hon. Member for Chelsea and Fulham (Ben Coleman), who made some excellent points, which I will not repeat or paraphrase as they are on public record.

The gist of his argument was that local authorities have been ignored for too long when it comes to joining up health and social care services. This measure puts local authorities in an even weaker position and threatens what the Government are trying to achieve with social care, particularly for areas such as mine that have an older population and a relatively small unitary authority with so much responsibility to deliver on.

As my hon. Friend the Member for Farnham and Bordon has already said, the combined area of Hampshire and the Isle of Wight—or the Solent, as the Government like to call the Isle of Wight, despite the fact that fish cannot vote—is not set to get a mayor for a couple of years, but it will be at the vanguard of the Government’s plans. What about those areas for which there is no date, or even no plan for a mayor at all? It seems extraordinary that the Government would do away with the current set up, imperfect as it is, and replace it with something that does not yet exist.

The Government have time deal with this problem. I am sure they quietly understand that there could be a problem. It is now on their shoulders to deal with it. I welcome the Minister’s reflections.

There has been a wide ranging discussion on this clause. I remind Members that the abolition of ICPs is about reducing that complex legal framework, allowing for local decisions and putting partnership work in place in the most effective way. That is what the measure seeks to do. I do not think anyone has disagreed with the notion that the landscape is complex, and that people are producing a lot of reports. In future, health and wellbeing boards will be the focal point for the collaboration between ICBs and local authorities. They are statutory committees that bring together the NHS, local government and relevant community partners; set the strategic direction for health and care services; and oversee joint working in their area, which we are of course committed to making work in local areas. I do not think many people will disagree with that; I hope that is clear.

There is also an enhanced role, not only for the health and wellbeing boards—as I said last week, I think they have been underutilised in most areas; again, I do not think people generally disagree with that point—but for health scrutiny. Again, across the country, that has not been pursued to the greatest extent to create links with elected councillors in local areas.

We are clear that the role of local authorities is crucial at a local level—as the name describes—and particularly in working on our commitment for neighbourhood partnerships and developing the neighbourhood plan; most of that was covered in our sittings last week. I accept that there are a number of concerns about how that will work in different geographies. I think the Opposition said last week that a survey suggested a quarter of areas will keep those partnerships, which is absolutely fine. That is up to them.

On the one hand, the Opposition say that there is centralisation and a power grab in this Bill; on the other, they complain—I should not say complain, because it is their right and their job to do so—about the move to devolution and the freedom to allow, or indeed encourage, local leaders to work together across authorities on behalf of the populations they serve, even where some of them are politically divided, because the populations they serve voted for different people. It is incumbent on all of us as individual elected politicians to work with people—whoever the population around us voted for. These provisions provide for that.

Can the Minister set out how she envisages health scrutiny committees having genuine teeth? Our cross party health scrutiny committee in Leicestershire universally condemned a decision by the ICB—totally disagreed with it—and the ICB basically said, “Thank you; noted,” and carried on anyway.

We all have examples of decisions that are made in our constituencies that we do not like. Again, that is part of the democratic process, but I go back to my earlier point: either there is a centralised unaccountable body like NHS England making decisions, or the Secretary of State devolves those responsibilities.

It is incumbent on people and elected leaders locally, and the ICB, which is not elected, to work with local leaders on these decisions. ICBs will be held accountable through mechanisms in the Department of Health and Social Care. There will be decisions that people do not like—that is a consequence of some of these things—but the clause simplifies the landscape.

Will the Minister give way?

I will not; we need to move on from this point. Of course, if people want to keep the partnerships, they are totally able to do so. That will be up to local leaders to decide.

Question put, That the clause stand part of the Bill.

12|0|9|6|The Committee divided:|Question accordingly agreed to.||0|0

Clause 23 ordered to stand part of the Bill.

Clause 24

Neighbourhood health plan

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss new clause 70—Duty to engage primary care providers in integrated care boards— “(1) An integrated care board must take all reasonable steps to secure the meaningful involvement of primary care providers in the exercise of its functions relating to— (a) service redesign, (b) integration of health services, (c) development of neighbourhood health services, and (d) population health planning.

(2) In this section, ‘primary care providers’ includes— (a) providers of primary medical services, (b) community pharmacy contractors, (c) providers of primary dental services, and (d) providers of ophthalmic services.

(3) Under subsection (1), ‘meaningful involvement’ includes— (a) involvement at an early stage in the development of ICB proposals, (b) provision of sufficient information to enable informed participation of primary care providers in ICB functions, (c) opportunities for primary care providers to influence ICB decision making, and (d) opportunities for primary care providers to deliver feedback on how their views have been taken into account in the delivery of ICB functions.

(4) An integrated care board must publish an annual statement describing— (a) how it has complied with this section, and (b) the impact of primary care providers’ involvement on decisions taken by the ICB.

(5) The Secretary of State may issue guidance about the application of this section to which integrated care boards must have regard.”

This new clause ensures a certain range of primary care providers are consulted by integrated care boards in the development of their healthcare plans.

Clause 24 abolishes the requirement for health and wellbeing boards to prepare and publish a joint local health and wellbeing strategy. Instead ICBs, local authorities and their partners must work together through the health and wellbeing board to develop a neighbourhood health plan, in line with this Government’s commitment in the 10-year health plan. The neighbourhood health plan should be updated regularly to reflect the needs of the local population, unless all partners consider the existing plan is sufficient.

In developing their neighbourhood health plans, responsible local authorities and partner ICBs must involve the people who live or work in the area of the responsible local authority. The neighbourhood health plan will cover most of the topics previously considered by joint local health and wellbeing strategies, but will also encourage a deep focus on tackling the challenges facing individual neighbourhoods. That may mean applying different geographical focuses to different elements of the plan, to ensure that planners are addressing the real and different needs of the diverse communities they serve.

These plans will outline how the NHS, local government and local partners intend to improve the health of people in their locality and reduce health inequalities through a joined up neighbourhood health approach. The plans will consider how local services can help realise national NHS priorities, further public service reforms, and improve performance against the adult social care outcomes framework and the local outcomes framework metrics. To support this work, the Government also intend to provide local areas with guidance and we will work with systems to ensure this addresses the needs of local planners and local communities.

Clause 24 puts neighbourhood health plans on a statutory basis. Currently, section 116A of the Local Government and Public Involvement in Health Act 2007 requires local authorities and partner ICBs to prepare a joint local health and wellbeing strategy once they have received their integrated care strategy. Essentially, that means that the ICBs and local authorities produce their overall strategy, then it devolves down, and then the joint health and wellbeing strategy looks at how it will be delivered. The local authority and its partners must give regard to the integrated care strategy, the NHS England mandate and any guidance issued by the Secretary of State. The strategy must be published and local people and the local Healthwatch must be involved in its development.

Section 116B of the 2007 Act places a duty on local authorities and partner ICBs to have regard to various strategies when exercising their function, specifically, a joint strategic needs assessment, an integrated care strategy and a joint local health and wellbeing strategy. NHS England also has regard to these when providing healthcare for a specific area.

Clause 24 changes the JLHWS to a neighbourhood health plan. In many ways, that aligns with the shift in the Government’s 10-year health plan from hospital to community. As they have described it, more care in the neighbourhood will allow hospitals to focus on the more specialist care that may be needed, so more people can be cared for closer to home, which seems a reasonable aim.

However, if local authorities and partner ICBs have to give regard to what the centre is doing when developing neighbourhood health plans, to what extent does the Minister envisage that being directed? Local authorities and partner ICBs giving regard to the centre could mean there being a very loose requirement from the centre to provide for the local population, and then they get on with it; it could also be very prescriptive—my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt) has talked about the pros and cons of having targets—with a whole litany of targets in the plans. Whether that squares with the Government’s claim to be devolving power, or whether it strikes as a centralising power, depends on how that is done and to what extent the Secretary of State plans to direct it. I would appreciate it if the Minister could talk about that.

As has been said, Sir Andrew Dilnot told the Committee that “we cannot really address many of the fundamental problems facing the NHS if we do not sort out social care.”––[Official Report, Health Public Bill Committee, 16 June 2026; c. 84, Q131.] The Government have asked Baroness Casey to review social care, but they have developed this measure in the meantime. Is that because they have been talking to her and know that it is the sort of thing that she will recommend—or are they putting the cart before the horse, as my hon. Friend the Member for Farnham and Bordon suggested?

Later in the Committee’s considerations, we will come to Healthwatch, its benefits and the concerns that I and, I am sure, many other Committee members have about its abolition. What mechanisms does the Minister envisage there being for local people—local patients—to contribute to the neighbourhood health plans? A local Healthwatch currently contributes to the equivalent, the joint local health and wellbeing strategy, as a way of ensuring that it captures patient and community voices. How will that be done otherwise?

Some 80% of the Government’s new neighbourhood health centres that will deliver these plans are expected to be funded through public private partnerships. Does the Minister have any comments on that, particularly in the light of the expensive private finance initiative that the last Labour Government entered into and left us stuck with?

In March 2026, the Government produced a neighbourhood health framework policy paper, which identified the goal of reducing non elective admissions for those with severe frailty. Given that goal, why are the Government not on track to deliver the fracture liaison service improvements that they promised?

The policy paper also commits to what it calls “a diversion rate of at least 25% by March 2027 for at least 10 high volume specialties”.

What is a “diversion rate”? It essentially requires more GP referrals to be rejected, so let us be clear about what that means. When someone, either hon. Members or constituents, goes to see their GP, they are referred to a consultant for care; I should declare an interest as a consultant in the NHS. The consultant will then review that referral and decide whether they think it is clinically appropriate to see the patient, whether a different specialty may be more appropriate, or whether they can give advice or make suggestions about treatment that could be given in primary care instead.

When a patient is given an appointment in secondary care, it essentially means that the GP has decided that they clinically need it, and the consultant has decided that they clinically need it too. If the Government want a diversion rate of at least 25% by March 2027 for at least 10 high volume specialties, are they suggesting that patients who the GP and consultant agree clinically need an appointment should not get one? If so, why?

It is an honour to serve under your chairship, Sir Jeremy. I have been itching to speak on this new clause, tabled in the name of my hon. Friend the Member for Epsom and Ewell (Helen Maguire)—I am not sure how to pronounce that, but I am sure it is a very beautiful place; I have never been. It would ensure that a certain range of primary care providers were consulted by integrated care boards in the development of the healthcare plans.

The recent King’s Fund report, as well as many others, showed that over 90% of NHS contact with patients is in primary care in all its forms. New clause 70 relates to new clause 60, also tabled by my hon. Friend, which is about having GP representation on integrated care boards. This is an extension of that, so that dentists, pharmacy contractors and providers of ophthalmic services can all feed into integrated care boards’ healthcare plans. That is how most people come into contact with the NHS, which means that those providers have a close and deep understanding of the healthcare issues facing the demographics in their communities.

New clause 70 talks about a certain range of primary care providers being consulted by the ICB. Can the hon. Member clarify whether it is his intention for all providers of those services in a defined area to be consulted, or would it be a representative selection? If it is the latter, how would they be chosen?

The hon. Lady makes a good point. The purpose is to ensure that those who are deeply embedded in community care are consulted by the ICBs, so that they do not miss obvious localised issues in their demographics when developing care plans.

Just to give a brief example from a surgery I held recently, Joanne Cook is an occupational therapist who is campaigning for occupational therapists who have received specific training to be able to prescribe, and crucially de prescribe, medications, in the same way that trained paramedics can. Often, occupational therapists see patients on a daily basis. They give them intimate and regular care, and are even better placed than GPs to notice small changes and adjust medications to keep people out of hospital.

If integrated care boards are not drawing on the experience, knowledge and data from primary care providers in all their forms, any healthcare plans they come up with will not be relevant to those demographics. We will not be keeping people out of hospital or treating them as effectively in the community, and the whole system will not be as efficient or as targeted as it could be. I would appreciate it if the Minister considered accepting the new clause.

I am not convinced that clause 24 delivers the transformation that the Minister claims. At its core, it appears to be little more than a rebranding exercise. It replaces joint local health and wellbeing strategies with neighbourhood health plans, but does remarkably little to strengthen the underlying duties on local authorities or integrated care boards. Merely changing the name of a document does not improve patient outcomes, reduce waiting lists or deliver more integrated care.

The duty created by the clause is also remarkably weak. Local authorities and ICBs need only prepare a plan and then “have regard” to it when exercising their functions. That is one of the least demanding obligations available in legislation. It requires consideration, not compliance. An ICB could acknowledge the plan, but decide to depart from it and still satisfy the legal test. If neighbourhood plans are genuinely intended to drive local health policy, the Bill should do a lot more to require decision makers to act in accordance with them, or at the very least to explain publicly why they have chosen not to.

I am also concerned that the clause creates additional bureaucracy without any clear accountability. It requires the production of another planning document, another consultation exercise and another set of reporting expectations, but provides for no—for want of a better phrase—enforcement mechanism or measurable outcomes against which success can be judged. There is a risk that local systems will spend their time drafting plans rather than delivering services. Public involvement is of course essential, and indeed welcome, as we have heard, but the clause offers no detail about what meaningful involvement looks like and contains nothing to prevent a token consultation from satisfying the statutory requirement. If the objective is genuine neighbourhood led healthcare, the legislation needs to be drafted much more tightly.

Moving on to new clause 70, I do my absolute best not to be flippant when it comes to Lib Dem amendments and new clauses, but once again we have an idea that is fine in principle—in fact, I think we would all support it in principle—yet the hon. Member for Winchester could hardly articulate how the new clause would work and whom it would involve.

For example, new clause 70(2) says:

“In this section, ‘primary care providers’ includes”

—“includes”, not “is limited to”—a list of four different groups of people. The hon. Member then started to talk about occupational therapists. Will occupational therapists, physiotherapists and every possible health and social care provider of any speciality, and none, be included in that list? As the shadow Minister pointed out, how will these people be selected, on what basis, and in what proportion? While great intentions lie behind the new clause, the detail of how it would actually work is, as ever, entirely absent.

New clause 70(3) states:

“Under subsection (1), ‘meaningful involvement’ includes”

a list of four things, which, to be honest, are entirely woolly—things like “opportunities”.

The hon. Member will be aware that the new clause is a probing amendment. It is designed to push the Minister to describe how we will ensure that this range of expertise is taken into account when the plans are put together. We will not press the new clause to a vote, but we want to use it as a discussion point to probe how the range of expertise in the health service will be fully utilised, so that the plans are the best they can be.

I thank the hon. Lady for that clarification. It is helpful to understand that the Liberal Democrats will not press the new clause to a vote, but if we are to use probing amendments effectively, they need to be drawn much more tightly, so that a Minister does not have the opportunity—I am sure that today’s Minister would not do this—to wriggle out of it because it is so poorly drafted.

What we are desperately trying to do is ensure that we are drawing on the expertise of primary care providers. The hon. Member seems not to understand that talking about 40 new hospitals the whole time with no plan to deliver them is looking at the wrong end of the health service. We need to try to keep people healthy and in the community. The new clause is an attempt to refocus thoughts on keeping people healthy in the community, rather than talking about hospitals that never existed.

We can go back to the record in Hansard, but I do not remember mentioning anything to do with hospitals in what I just said; I may have had some sort of amnesia at that point. If the hon. Member is referring to the plan of the last Government, which was fully costed, for 40 new hospitals, then I am afraid I did not mention that. On his wider point, Conservative Members want to understand how local authorities and deliverers of primary care—dental services and so on—will be included and can have influence over the plans and strategies that ICBs draw up. I fully support that ambition; I just feel that, if we are to have that ambition, we need to table amendments and new clauses that the Minister might actually accept, so that we can go forward.

I thank hon. Members for their comments. I accept those made by the hon. Members for Winchester and for North Shropshire. I offer the Liberal Democrats the assurance that the Government fully appreciate the important role that primary care plays in informing ICB decisions, which is why we have retained the requirement that ICBs engage with their system partners, including primary care services, in the exercise of their planning and commissioning activities.

It is universally recognised that full engagement with providers, including primary care, is fundamental to good commissioning, and this is reflected in the strategic commissioning framework. The neighbourhood health framework sets out how neighbourhood health plans should be developed through health and wellbeing boards and with the involvement of system partners. We expect primary care to be fully involved in the process.

In addition, ICBs will continue to engage local representative primary care committees, such as the local medical committees. ICBs must comply with their duty to obtain appropriate advice from persons who have broad professional expertise in prevention, diagnosis or treatment of illness and the protection or improvement of public health. Primary care practitioners will remain key sources of such advice. Although I agree that experience of general practice is fundamental—as a commissioner, I worked very closely with general practitioners, who deal with 90% of patient contacts—I do not believe that placing an additional requirement on ICBs to engage specifically with primary care providers is necessary.

I will take this opportunity to clarify matters. We are moving between the roles of ICBs and local authority health and wellbeing boards. I know this is a subject of great interest and will continue to be debated in relation to those bodies’ commissioning and providing functions. The planning structure will be improved under clause 24, reflecting our commitment to neighbourhood health and making it a reality.

Planning begins with a joint strategic needs assessment developed by health and wellbeing boards; that assessment informs the new neighbourhood health plan, replacing the joint local health and wellbeing strategy. Meanwhile, ICBs will produce population health improvement plans, aligning multiple joint strategic needs assessments, neighbourhood health plans and local priorities. Patient and local voices must, of course, be embedded in ICB decision making and in the planning process. ICBs are being supported to do that. The strategic commissioning framework published on 4 November 2025 clearly set out that user involvement is key to strategic commissioning.

Having proper plans that address the needs of neighbourhoods will help the NHS to deliver for every community in our country. That is where the patient focus is and where people experience healthcare the most, and it is why we have made these commitments in neighbourhood health plans. I commend clause 24 to the Committee as the means to make that a reality.

Question put and agreed to. Clause 24 accordingly ordered to stand part of the Bill. Clause 25 NHS trust accounts Question proposed, That the clause stand part of the Bill.

With this it will be convenient to consider clause 26 stand part.

Clause 25 makes focused but important changes to the accounting and audit arrangements for NHS trusts by amending schedule 4 to the National Health Service Act 2006. It does not put additional burdens on NHS trusts; instead, the aim of the clause is to align the requirements for trusts with the updated accounting arrangements for foundation trusts made elsewhere in the Bill. The changes are needed as a consequence of the abolition of NHS England and the removal of the requirement for foundation trusts to have councils of governors and members.

The amendments the clause makes replicate trusts’ existing duties to keep proper accounts and records about those accounts, and to prepare annual accounts for each financial year. The clause also replicates the Secretary of State’s current power to direct an NHS trust regarding the form of its annual accounts, but extends that power of direction so the Secretary of State may also direct a trust to prepare accounts for a specified period—for example, when part period accounts are needed. That will help to ensure a consistent approach to financial reporting while retaining the flexibility to keep requirements up to date.

The clause also sets out and strengthens how the audit arrangements for NHS trusts should operate, mirroring the approach for foundation trusts and integrated care boards. It provides that NHS trust annual accounts are audited under the Local Audit and Accountability Act 2014, as is the case currently, but it also provides that part period accounts may be audited in accordance with that Act where the Secretary of State so directs.

The clause also enables the Comptroller and Auditor General to examine the accounts and related auditor reports, as is currently the case. To reflect the fact that the Secretary of State will have oversight of providers once NHS England is abolished, it requires the accounts and audit reports to be sent to the Secretary of State.

Taken together, these measures support transparency, consistency and robust financial assurance. They will help to reduce unnecessary divergence in accounting requirements across different types of NHS provider, while maintaining clear oversight of public funds. That is consistent with the Bill’s broader intent to support effective governance and clear accountability for providers.

Clause 26 makes minor technical amendments to ensure that the statute book remains clear and coherent as the Bill aligns the approach to audit and accounts across NHS trusts and foundation trusts. It sits alongside the provisions in the Bill that update the arrangements for the audit of foundation trusts following the abolition of NHS England and the removal of the requirement for NHS foundation trusts to have councils of governors and members.

The clause does that by amending or removing outdated transitory provisions relating to the audit of NHS trust accounts in two places: the NHS Act 2006 and the Local Audit and Accountability Act 2014. Clause 26 therefore supports the effective implementation of the wider measures in this part of the Bill by ensuring that the legislation is up to date, accurate and internally consistent. I commend clauses 25 and 26 to the Committee.

As has been said, clause 25 specifies how NHS trusts should handle their accounting. Paragraph 11A of schedule 4 to the NHS Act 2006 sets out the current obligations, which are that the trust must keep proper accounts, that the Secretary of State may give directions about how the accounts are held, and that the accounts must be prepared annually, may be examined by the Comptroller and Auditor General, and must be submitted to NHS England.

Clause 25 replaces paragraph 11A entirely. Under the new provisions, the reporting goes to the Secretary of State, instead of NHS England—which seems sensible, because the Government are abolishing NHS England—and the Secretary of State may give directions about “methods and principles”, as well as the “form and content”. The Secretary of State may also give directions about specified periods in which accounts are to be prepared.

Will the Minister explain why those provisions are felt to be necessary? There will be suspicion among some more cynical people that the power to specify periods could be used to be more flattering for the Government, or that methods and principles could be used to change the perception of the position. Can the Minister give an example of where she thinks such periods would be useful, and also say why she thinks it is necessary to enable the Secretary of State to give directions about methods and principles, and form and content, in a way that is not done at the moment?

The exception for charitable trusts of which the NHS is a trustee is being removed. Will the Minister explain why she thinks that is important, and in what situation she thinks that power would be used? Finally, will she say whether the financial directors of NHS trusts have been consulted about these changes? If so, what was their feedback?

Clause 26 tidies up relevant provisions in two pieces of legislation, as the Minister has described.

If there are specific examples that are helpful, I will write to the hon. Lady—I am not entirely sure I got the point about charities, but we will pick that up in Hansard. As I outlined in my opening remarks, these clauses are about standardising the key requirements across the NHS provider landscape in relation to annual and other accounts and records in relation to those, and audit and reporting requirements, including keeping those up to date and having a consistent approach across all NHS provider types. Of course, we worked closely with NHS England colleagues and directors of finance in seeking to bring forward those provisions.

Question put and agreed to. Clause 25 accordingly ordered to stand part of the Bill. Clause 26 ordered to stand part of the Bill. Clause 27 Special Health Authorities: establishment and exercise of functions

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to consider clause 28 stand part.

Clauses 27 and 28 make amendments to the legal framework around special health authorities to give the Secretary of State the flexibility to best manage the reliable delivery of healthcare for patients and the public. As the Committee knows, special health authorities are independent bodies established by the Secretary of State, by order, to perform specific functions. They play a key national role in the health system, carrying out specific functions on behalf of the Secretary of State.

Clause 27 does two key things to the special health authority legal framework. First, it amends section 28 of the NHS Act 2006 to increase the scope of functions that a special health authority could be established to deliver. Currently, the Secretary of State can create a special health authority only for the purpose of exercising functions under the 2006 Act. The clause allows a special health authority to be established to exercise functions under any other Act as well.

Secondly, the clause amends section 29 of the 2006 Act, which currently enables regulations to provide for the functions of a special health authority to be carried out flexibly, by another special health authority or jointly with one or more other special health authorities. That applies only to functions that the Secretary of State has directed the special health authority to exercise under section 7 of the 2006 Act. The clause removes that limitation, so that those arrangements can be made for any functions of the special health authority, not just those that it is directed to carry out under section 7.

These changes are needed because the health and care system is underpinned by a range of statutory functions that do not sit exclusively within the 2006 Act. The Secretary of State needs to be able to establish special health authorities to carry out those wider functions, and to give those functions to existing special health authorities. The clause ensures that the Secretary of State has the modern, adaptable tools required to place specialist functions in the right national body, with the appropriate governance and accountability. Equally, special health authorities need to be able to work with other special health authorities across all their functions in a way that best serves the needs of the wider health and care system.

On occasion, it is necessary for Ministers to merge, alter or abolish special health authorities, either because of changing circumstances or to ensure the smooth and effective running of the system. Clause 28 provides the flexibility to transfer and redeploy staff. It allows regulations to be made to enable staff to be transferred to an integrated care board or another special health authority. These changes ensure that staff can be transferred where they may be needed most, allowing for flexibility to direct resources in the health system.

The clause also allows for arrangements to be made for a special health authority’s staff to be made available to another special health authority, a local authority, the Secretary of State or an integrated care board. That may be necessary during an emergency or to provide specialist support to help an organisation achieve a particular outcome. The clause also allows the Secretary of State to give directions to a special health authority to make staff available to another special health authority or integrated care board or the Secretary of State.

Clause 28 also amends the existing power to make regulations about the sharing of information with other bodies, to allow information to be shared with integrated care boards in addition to the Secretary of State and other special health authorities. That allows for information to be shared across the system so that national and local functions can be successfully fulfilled and supports a more joined up health system.

Clauses 27 and 28 provide for future facing updates that will support effective administration and ensure the more reliable delivery of healthcare for patients and the public. I commend them to the Committee.

Special health authorities are, in essence, specialist health authorities set up by the Secretary of State, usually to provide an England wide service of some form. Examples include NHS Blood and Transplant, and the NHS Business Services Authority, which provides NHS pensions—I should declare that I have an NHS pension—admin for prescription exemptions and other such business type functions. We also have NHS Resolution, which deals with clinical negligence claims, and the NHS Counter Fraud Authority.

In principle, special health authorities are useful in some cases, but they are effectively a form of quango. Can the Minister explain when she thinks the Government might want to set up a special health authority, rather than using a department within the DHSC to deliver the same thing? There are plenty of other nationally delivered services, and although the Government have suggested that some services, such as screening, will become localised as part of the Bill, some things will remain national. Can the Minister give some examples of what the new provision will be used for?

I can see there is provision for flexibility, but the special health authorities would require setting up, and there are set up costs and costs associated with branding and those sorts of things. How does the Minister envisage those costs being provided for, and when will it be necessary for the Government to use them rather than just using the Department?

Special health authorities have been created, reconfigured and shelved many times. For example, the National Treatment Agency for Substance Misuse became part of Public Health England in 2013, and the NHS Institute for Innovation and Improvement was closed in the same year. The functions of the National Patient Safety Agency went to the NHS Commissioning Board Special Health Authority, later known as NHS England, in 2012 and then to NHS Improvement in 2016. Widening the scope could leave us with more quangos than are necessary.

Which specific functions do the Government plan to move into special health authorities under this widened power? Have the Government just decided that they need this power and are increasing the scope because they are abolishing NHS England without a proper plan? Is this power just to cover themselves in the event that, as they start to make a plan, they find out they need it?

Clause 28 enables the Secretary of State to make regulations for the transfer of staff from one special health authority to another, or to an ICB. Paragraph 3(8) of schedule 6 to the National Health Service Act 2006 states: “Regulations may provide for the transfer of officers from one Special Health Authority to another”, or to NHS England, “and for arrangements under which the services of an officer…are placed at the disposal of another Special Health Authority”, or NHS England, or a local authority. Paragraph 3(12)(a) states that the Secretary of State may give directions “to place the services of any of its officers at the disposal of another Special Health Authority”, or NHS England. Paragraph 13 states: “Provision may be made by regulations with respect to the recording of information by a Special Health Authority, and the furnishing of information by a Special Health Authority to the Secretary of State, another Special Health Authority”, or NHS England.

Clause 28 modifies that paragraph such that regulations can now provide for the transfer of an officer to an ICB—that is a new power—as well as a special health authority and a local health authority, but no longer to NHS England because NHS England is being abolished. Regulations can now provide for an officer’s services to be placed at the disposal of the ICB and the Secretary of State, which is a new power, as well as the special health authority or local authority, but no longer NHS England. The clause modifies paragraph 3(12)(a) of schedule 6, so that directions may be given about placing the services of officers at the disposal of the special health authority and, newly, the Secretary of State or an ICB, but not NHS England. As the Minister said, the clause also modifies paragraph 13 of schedule 6, so that a special health authority can be required by regulations to pass information to integrated care boards, which is a new power, but no longer to NHS England.

NHS England is to be abolished, so it is sensible to say that staff can no longer be placed there—that seems an entirely reasonable exercise—but the legislation providing for special health authorities essentially contains open ended spending power. Remuneration of the special health authority chairman and staff can be determined by the Secretary of State, with the approval of the Treasury. Does the Minister foresee an upper limit to those sorts of salaries?

People will essentially be able to transfer from one special health authority to another, or to an ICB—or be placed at the disposal of another special health authority, an ICB, a local authority or the Secretary of State. Will the Minister talk about the location, pension and salary of those individuals? We heard yesterday that the future Prime Minister, the right hon. Member for Makerfield (Andy Burnham), may want to move a whole load of civil servants from London up to Manchester. That will clearly be within his gift if he becomes Prime Minister, but for individuals who work in one location to be asked to move to another is disruptive to their family and social lives, and involves significant relocation costs. If people are moved in the way that clause 28 describes, particularly by transfer, what choice will they have? What will happen to their pension, salary and other terms and conditions, and will they have a choice of location or not?

Very briefly, on clauses 27 and 28, I am sure the Committee is aware that special health authorities were initially established under the National Health Service Act 1977. Since then the number of special health authorities has expanded and contracted a number of times over the years to leave us with, currently, NHS Blood and Transplant, and the Business Services Authority, which covers pensions, as my hon. Friend the Member for Sleaford and North Hykeham mentioned—I should declare that I have an NHS pension, albeit a very small one—as well as the NHS Litigation Authority, also known as NHS Resolution, and the NHS Counter Fraud Authority.

The mood music and the direction of travel, certainly since 2006, has been to reduce the number of special health authorities. On my reading, clauses 27 and 28 suggest that the Government are potentially looking to expand the number of special health authorities, given the Secretary of State’s direction under clause 27 and the practical steps for staff transfers in clause 28. Is the Minister looking at, for example, a special health authority to deal with artificial intelligence? Clearly that is something the NHS will have to embrace—or deal with, depending on which end of the AI argument one is on—rapidly over the coming years. Is that a potential area for a special health authority? Perhaps the Minister could outline where she sees the special health authorities acting and what their remits might be.

To be clear, in response to the comments of the Opposition spokesperson, the hon. Member for Sleaford and North Hykeham, it is not currently our intention to set up any new special authorities to deliver any specific functions. We are taking this opportunity to update the legislative framework and ensure that in future the functions that a special health authority could carry out are less limited. The current legislative framework limits the remit of such authorities to their functions under the NHS Act 2006, which is outdated and does not reflect changes since that time. There are functions of the Secretary of State under the Health and Social Care Act 2012 that we may want special authorities to carry out in future. I agree with the Opposition spokesperson that the situation is complex. We have had a lot of changes over many years, as both she and the hon. Member for Farnham and Bordon said. I agree that we need flexibility for future provision, and that is what the clauses provide.

We have no immediate intention to delegate specific functions of the Secretary of State. However, following the abolition of NHS England, a range of functions may need to be established, as the hon. Member for Farnham and Bordon outlined. Those functions could, as an example, include the data and information functions in part 9 of the Health and Social Care Act 2012, which currently sit with the Secretary of State.

I assure the Committee that the clauses do not change the existing processes or scrutiny that exist around setting up a special health authority. They are, as I think the Opposition spokesperson said, about future proofing. I commend the clauses to the Committee.

Question put and agreed to. Clause 27 accordingly ordered to stand part of the Bill. Clause 28 ordered to stand part of the Bill. Clause 29 Constitution of NHS foundation trusts

We now come to group 24, and amendment 73 to clause 29 tabled by Charlie Maynard. Does any Member wish to move amendment 73? With that not being so, the question becomes that clause 29 stand part of the Bill.

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following: Amendment 74, in schedule 3, page 80, leave out paragraphs 5 to 8.

This amendment would retain the requirement for NHS Trusts to have a Council of Governors. Amendment 75, in schedule 3, page 80, leave out paragraph 14.

This amendment would retain the requirement for NHS Trusts to have a Council of Governors. Government amendment 19.

Amendment 36, in schedule 3, page 82, line 3, at end insert— “(1A) The function under sub paragraph (1) must be exercised by a person employed in the civil service of the State, and a Minister of the Crown or a special adviser must not be involved in any decision relating to such an appointment, suspension or removal.”

This amendment would ensure that civil servants are responsible for the decision making and appointment processes for trust and ICB leaders, rather than Ministers or Special Advisers. Schedule 3.

Clause 30 stand part.

New clause 59—Independence of appointments— “The Secretary of State must make provision to ensure that operational decisions regarding the appointment, suspension or removal of— (a) chairs and directors of NHS trusts and NHS foundation trusts, and (b) chief executives of integrated care boards, are made exclusively by persons employed in the civil service.”

Amendment 19 reinstates in primary legislation the requirement in schedule 7 to the National Health Service Act 2006 for an NHS foundation trust board to include one executive director who is a medical or dental practitioner, and another who is a registered nurse or midwife.

I want to be clear to the Committee from the outset that there was never any intention to change the policy on the clinical membership of NHS foundation trust boards. Foundation trusts would still have been expected to have appropriate clinical leadership on their boards, but we had heard from ambulance foundation trusts that the current framing of the requirement for clinicians is not always helpful, and greater flexibility was therefore required. However, we also heard from important stakeholders, including the Royal College of Nursing, that removing the requirement from primary legislation has been perceived as deprioritising clinicians, which is absolutely not the case. We have therefore tabled amendment 19 to remove any doubt.

These roles provide valuable clinical oversight of board governance in decision making in foundation trusts, and are essential to ensuring the safety and quality of patient facing services in the NHS. At the same time, some providers may need different clinical expertise at board level. For example, in ambulance trusts, an experienced paramedic may be better placed to provide the relevant clinical guidance and oversight. The amendment therefore gives the Secretary of State a regulation making power to create exceptions to the requirement following engagement with relevant stakeholders. That preserves the current position in primary legislation while allowing for targeted flexibility for ambulance or patient transport focused foundation trusts where appropriate. I commend amendment 19 to the Committee.

Clause 29 introduces schedule 3, which makes changes to the governance and constitution of NHS foundation trusts. It removes the various statutory roles of foundation trust members and councils of governors, and repeals the requirement for FTs to have them. Amendment 73 to 75 look to oppose that, but I do not think that we are discussing those.

Order. Forgive me; let me interrupt to explain. I asked if anyone wished to move amendment 73, and no one did. We will come to amendments 74 and 75, so the Minister is welcome to speak to those amendments now or at the end of the debate if she wants to. Other members of the Committee may wish to move those amendments subsequently.

Thank you for the clarification, Sir Jeremy. I will come to amendment 75 at the end of the debate.

The Bill’s removal of councils of governors from NHS foundation trusts is part of delivering the 10-year health plan goal of hospitals putting patient experiences and outcomes at the heart of their decision making. That is not because we want to rid the system of local voices in democratic accountability—far from it. Although governors have provided helpful advice and oversight for some foundation trusts, we expect the next generation of NHS foundation trusts to put in place more responsive and flexible arrangements for drawing on patient, staff and stakeholder insight.

Rather than a one size fits all model, providers should develop engagement arrangements that reflect their local populations, geographies and healthcare needs. Foundation trusts will have the option to retain aspects of their engagement model where it is working well, but can take a different approach if needed. Following Royal Assent, foundation trusts will be expected to have those arrangements in place and will be assessed as part of the non statutory advanced foundation trust process.

Schedule 3 makes related changes to governance and decision making, in line with the Government’s policy to streamline oversight of providers and reduce duplication in the system. For example, the legal powers to appoint chairs and non executive directors of foundation trusts and NHS trusts will, in future, both sit with the Secretary of State while supporting the effective use of talent across the NHS. Other functions of the council of governors, such as reviewing plans and major transactions, currently duplicate existing NHS England responsibilities, which will transfer to the Secretary of State through this Bill. Removing those requirements will therefore reduce duplication in the system.

Schedule 3 will also give the Secretary of State responsibility for approving changes to foundation trust constitutions and material changes to private patient income, and deciding chair and non executive remuneration. The Secretary of State will take on the oversight role currently exercised by NHS England, and previously Monitor, including monitoring foundation trust performance, use of resources and governance. That will support system alignment and ensure that appropriate accountability arrangements are in place. Can I seek clarification, Sir Jeremy, that I can speak to clause 30 at this point?

Yes, we are debating all the provisions in this group together, so the Minister is welcome to speak to clause 30 now or later, when she winds up.

Thank you, Sir Jeremy. Clause 30 clarifies how NHS foundation trust status will be applied for and granted following the abolition of NHS England and the removal of the council of governors model. The Government are committed to reinvigorating the foundation trust sector by granting high performing providers greater freedoms and autonomy. The power to authorise foundation trusts originally sat with Monitor and passed to NHS England in 2022. The clause, alongside schedules 3 and 11, sets out how that power will operate when it transfers to the Secretary of State. It also makes consequential amendments to the authorisation process, including removing requirements linked to recruiting members and electing governors. The Secretary of State will also set the criteria for becoming a foundation trust. I commend the clauses and the schedule to the Committee.

This is quite a large group. First, clause 29 introduces schedule 3, which will make changes to the constitution of NHS foundation trusts. Currently, chapter 5 of the National Health Service Act 2006 establishes NHS foundation trusts as public benefit corporations in accordance with schedule 7 to the Act. That schedule, “Constitution of public benefit corporations”, sets out, among other things, the requirements for a constitution, the eligibility for membership, and the council of governors.

Schedule 3 to the Bill, introduced by clause 29, has a number of functions. First, it modifies the 2006 Act so that a foundation trust will no longer be a public benefit corporation, but will now be a body corporate—I would be interested in the Minister’s explanation of that change. It also modifies section 33(4) of the 2006 Act to remove reference to councils of governors, so that trusts no longer need to set those up, and modifies section 37 so that an NHS foundation trust can amend its constitution with the approval of the Secretary of State, where previously, that would have required a vote of more than half the members of the board of directors and more than half the members of the council of governors.

The schedule also deletes section 39A of the 2006 Act, “Panel for advising governors”, because one presumes if there are no governors, they do not need advice. It modifies section 43, “Provision of goods and services”, so that if a foundation trust wishes to raise its non NHS income by 5% or more, the Secretary of State must approve it—previously that would have required local decision making from more than half of the members of the council of governors. It also deletes section 51A, “Significant transactions”, which states that an NHS foundation trust may enter into significant transactions, as defined in its constitution, only if more than half the members of the council of governors voted to approve it.

The schedule also deletes sections 56(1A), 56A(2), 56B(2) and 57A(2) of the 2006 Act. That means that governors will no longer have to approve a trust merging, being acquired, splitting or being dissolved. The Bill’s explanatory notes say that the Secretary of State will take on those approvals via schedule 11. Schedule 3 also deletes section 59, “Conduct of elections”, section 60, “Voting and standing for election” and section 61, “Representative membership” of the 2006 Act, which set out the democratic machinery for foundation trusts.

Schedule 3 also substitutes schedule 7 to the 2006 Act with an entirely new version. Elements of that new schedule 7 are as follows: the Secretary of State will now be able to appoint, suspend or remove the chair and non executive directors—previously that was a governor’s role—and they can set the pay, allowances and terms of non executive directors, and may regulate their tenure. The chief executive will be appointed by the non executive directors, and the other executives will be appointed by a committee of the chair, the chief executive and non executive directors, but the Secretary of State may set when those powers may be used. As the council of governors and its membership will be abolished, there are no members, elections or constituencies anywhere in the new schedule. Constitutional amendments will need the Secretary of State’s approval, not the approval of members and governors. The Secretary of State may make regulations on director eligibility, beyond the standard disqualifications. Directors owe a duty to promote the trust’s success, to maximise benefits for the public, with respective interests, duties and registers of interest. Board meetings must be open to the public. Accounts and audits are aligned with NHS trusts and ICBs. The Secretary of State may direct the form, content and timing as we have talked about before. Annual reports and forward financial plans go to the Secretary of State in the form that the Secretary of State decides, and trusts must publish their constitution, register, accounts and annual reports and hold a public meeting on them.

The council of governors was intended to feed in democratic input. Does the Minister have any comment on where democratic input will be held? Will it be solely through the Secretary of State, or is there any intent for local patient voice, now Healthwatch is being abolished too? How will local decision making be informed, and how will they understand their local area, particularly if it is to be directed largely by the Secretary of State?

Removing the council of governors will save money on administration, as noted in the impact assessment. The impact assessment also notes the Secretary of State does not have the ability to intervene in serious instances of foundation trust failure. Could the Minister comment on that?

Foundation trusts were intended to be independent. If the council of governors is removed and many things, as I have listed, are put under the control of the Secretary of State, they become increasingly more like an ordinary NHS trust, pre foundation. Will they be independent in name only?

Non executive directors are meant to be there to hold the leaders of the trust to account, but the Secretary of State can now appoint, pay and fire every non executive director so a foundation trust’s internal watchdog can now be controlled by an elected politician who is potentially quite remote from that area. Does the Minister have any comment on how she sees that working?

Foundation trusts may have failed to increase democratic involvement in so far as there has not been huge interest in some of these elections for chairs of governors. But the answer to that would be a better version of local involvement rather than removing local input entirely.

The theme right across the schedule and the changes I listed is that foundation trusts are looking up to the Minister rather than out to local communities. Many NHS inquiries have reported back that frontline concerns did not reach the highest tiers of leadership. The Government are now closing an independent channel for sounding the alarm. Will the Minister comment on that?

I welcome Government amendment 19 because the idea that you need medical expertise on the board of a trust that delivers medical care seems to me fairly obvious, because otherwise you will get decisions that are not grounded in medical knowledge. I do recognise what the Minister says about it was not having been her intention to demote the voice of clinicians, but that was the effect. This amendment will go some way to correcting that, by having an executive director who is registered medical practitioner or a dentist, and another who is a registered nurse or midwife. Could the Minister be clear if a foundation trust wanted a nurse and a midwife, perhaps because they had a specific issue with the midwifery area, or a medical practitioner and a registered dentist, could they have both?

The Minister suggested that an exemption would be ambulance care, but there are medical practitioners, consultants, with expertise in out of hospital care. Does the Minister feel their expertise is not useful in some way?

I will speak to amendment 36 once it is moved. On clause 30 stand part, that clause removes the requirement for NHS England to consult prospective members or governors of a prospective foundation trust before its authorisation. Getting a new foundation trust without NHS England because it has been abolished is a consequence of earlier clauses that we have already voted on. Therefore, I will not go further on that issue.

I wish to speak to amendment 36 and new clause 59, which are different ways of seeking to do the same thing. They are aimed at ensuring that “civil servants are responsible for the decision making and appointment processes for trust and ICB leaders, rather than Ministers or Special Advisers.”

In earlier sessions, we spoke about the risk of political capture; the amendment and new clause intend to deal with that. The Government’s intention is to give providers more freedom to design services around local needs, but we are worried that giving the Secretary of State the powers to appoint trust chairs and non executive directors will undermine that local flexibility and agency. It risks creating a bottleneck in the Department for Health and Social Care, leaving foundation trusts waiting for approval to make their arrangements. In theory, the Secretary of State will be responsible for the appointment of 143 foundation trust chairs and roughly 1,000 foundation trust non executives, who themselves will appoint the executive directors. Clearly, there is the potential for a bottleneck there.

We also think that in the hands of the wrong Secretary of State—I cast no aspersions about the current one—there is potential for mass manipulation of the make up of future NHS leadership. I think everybody here would agree that NHS leaders should be the best possible people for the job, not those who best fit the political agenda of the Secretary of State of the day. We are worried that future Secretary of States could abuse their power, intervening unnecessarily and for non clinical reasons in hiring and firing decisions. Their political views could heavily influence the make up of trust and ICB non executives across the country—who are themselves responsible for appointing the chief executive— and lead to the firing and hiring of those who suit their personal vision of what a leader should look like.

From speaking to chief executives and other senior NHS leaders, I know that many already feel that chief executives are subject to the political whims of the day and are too easily scapegoated for wider failures. Holding poorly performing leaders to account is extremely important when there are failures, but sometimes those concerns and the blame culture that can exist in those organisations stops capable, impressive NHS leaders from taking the next step up the ladder to becoming a chief executive. We think a safeguard is necessary there.

We recognise that someone has to hold that power and appoint those people now that NHS England has gone. That is why amendment 36 proposes that in order to ensure there is not political capture of those decisions, they are taken by impartial civil servants who are given a set criteria of what a good leader looks like, rather than by Ministers or their special advisers.

As I mentioned, new clause 59 broadly seeks to do the same thing, but uses a different mechanism for getting that into the Bill.

Will the hon. Lady give way?

I had finished speaking, but I will give way and think of something else to say.

The civil servants will be under the direction of the Minister, so how does the hon. Lady envisage it working? Presumably, civil servants are there to deliver for their Ministers or Secretary of State? Is she suggesting that makes the decision more impartial? Can she give us some detail on how that will work?

As I mentioned in my previous remarks, one imagines that a Secretary of State would set out criteria to ensure that the best people for the job are appointed. We are in a situation where a current Parliament cannot bind a future one, but we do need to set a precedent that political capture of these important leadership roles is not an unintentional consequence of this legislation. I accept that it is unintentional; I think the Secretary of State and the Minister have drafted this legislation with the best of intentions, but this is something we should guard against.

On clause 29 and the relevant amendments, the membership model and the council of governors were originally introduced to give patients, staff and local communities a formal voice in the governance of NHS organisations. I worry that by removing them the clause concentrates power in the hands of the trust board at a local level and, potentially, the Secretary of State at a national level, while reducing opportunities for local scrutiny and public participation. As my hon. Friend the Member for Sleaford and North Hykeham said, there is a real danger that organisations will be independent in name only.

That brings us back to the never ending tension in the Bill between the centralisation of power in the Secretary of State, through the abolition of NHS England and all the other bodies we have talked about, and the Government’s stated desire to have more accountability for decision making at a local level.

I am aware of the role of governors in some of our NHS trusts and the way in which they are appointed, but governors have said to me that they are sometimes disappointed by the level of influence they can in fact have in their trust. Can the hon. Member think of examples of where governors have particularly influenced the activities of individual trusts? I have not found that to be the case in my experience.

The hon. Gentleman’s intervention neatly brings me to my next point. I have some sympathy for his viewpoint—and apparently the viewpoint expressed to him by governors—that in many cases, if not most, governors do not have the teeth, the influence or the ability to change things in the way they would like. My argument is very similar to the one we will expand on later regarding the abolition of the Healthcare Services Safety Investigations Branch and Healthwatch: the Government’s response to something not working as effectively as it could is to abolish it, but why not give those organisations the teeth—the powers—to achieve the things they were set up to do, unless the hon. Gentleman and the Government feel that there is no need, in Healthwatch’s case, for that level of independent scrutiny or, in governors’ case, that level of independent influence on boards?

There is a fundamental difference here: the Conservatives would take something imperfect and make it better; the Government’s response is to take something imperfect and abolish it. That is the wrong way round.

Does my hon. Friend think that this leaves a bit of a gap? The Secretary of State will not have the level of local oversight that the governors had, so how will that local oversight feed into the Secretary of State so that he or she can make the decisions instead?

My hon. Friend is right that there will be a gap in local decision making on these issues. It goes back to that tension I described some moments ago: the Government’s stated intention is to devolve powers locally, but they seem to be pulling so much power up to the Secretary of State that we will lose the ability to make local decisions for the benefit of local populations where appropriate. We have a stated ambition for neighbourhood health, but those neighbourhoods are rapidly expanding in this legislation to become areas of millions of people. Local people who are interested in their local health delivery or local hospital trust would not see that as local decision making, and there is the gap that my hon. Friend describes.

I do not think that amendments 74 and 75 have been moved, so I will not talk about them. Government amendment 19 will require “NHS foundation trusts to have at least one executive director who is a registered medical practitioner or a registered dentist and another who is a registered nurse or a registered midwife.”

As also stated in the explanatory note, and as the Minister mentioned, regulations may create exception—for example, for ambulance trusts. That is the right decision, and it is important that we have medical experience on foundation trust boards. I am interested in understanding from the Minister, first, why she has chosen a medical practitioner or registered dentist. Does she see some equivalence in their expertise that could be substituted? I have great respect for doctors and for dentists, but they have potentially different clinical expertise. If a foundation trust does no oral healthcare or maxillofacial reconstruction, and does no dentistry or allied specialties, would it really satisfy requirements to have a dentist on the board? Likewise, given that the amendment also refers to a registered nurse or midwife, if a trust has no maternity services, would having a midwife on the board really satisfy the requirement of that trust to have nursing care input? I ask those questions, and I would be interested in the answers.

Likewise, there is the exemption for ambulance trusts. Like my hon. Friend the Member for Sleaford and North Hykeham, I would be interested to understand from the Minister why she thinks ambulance trusts do not need a medical practitioner on their boards, given that they are doing medicine. Plenty of consultants work alongside paramedics and in ambulances, so again I am not quite sure why she is making that exemption. I would be interested to hear from her on that.

I understand the intention behind Liberal Democrat amendment 36. Once again, it is trying to soften the Secretary of State’s power grab over decision making—like the hon. Member for North Shropshire, I am not saying anything against the current Secretary of State, but a future Secretary of State could be different. The aim is to try to temper that in some way. Unfortunately for the hon. Member—I have sympathy for the amendment—the stated intention of the Bill is to pull more power to the Secretary of State. The Minister may surprise me, but I fear that the amendment will not find favour with the Government, because the whole Bill is about pulling more power to the centre, certainly when it comes to appointments, and to the Secretary of State.

However, the Minister should think about how future Secretaries of State may have to go through some process whereby their decisions are checked and justified, especially at local level. If we want local people to have influence and say over their local health systems and trusts, there needs to be some sort of bridging legislation or bridging process to ensure that whatever a Secretary of State decides, it has the confidence and support of local people and local service providers.

I think I am almost going to agree with the hon. Gentleman on his final point. It is important that local people have confidence in how their local systems are run and managed and, clearly, in the outcomes.

I will come first to the issue of governors and boards and then move to the amendments. I think we have all had emails, as is quite right, from local board members. Let me say, as I did earlier, that that is with good intent; they are very good people, who have given public service to be part of their local health system. As I said, this provision is no judgment on them; it is, as we heard, about effectively making the really important patient voice and patient experience central to the functions of the organisations delivering our healthcare. As I said in previous sittings, a debate will continue to be had about where we most effectively have that, but our intention throughout the 10-year health plan and this Bill is about devolution to providers and to ICBs and about making boards, as I also said in a previous sitting, responsible and accountable for the outcomes.

Let me outline broadly, because I think this is of interest to people, the impact on governance and the role that governors had. Just to be clear, since the creation of foundation trusts in 2004, NHS England—and, before it, NHS Improvement and Monitor—has had a statutory role to oversee the governance of NHS foundation trusts, including holding the whole board to account and taking steps where it identifies weaknesses in how foundation trusts are being run. The regulatory function is underpinned by the NHS provider licence, which will continue when NHS England’s functions pass to the Secretary of State. That is why we do not consider that the removal of the council of governors will have a negative impact on the governance of FTs, as some hon. Members have suggested.

We are developing an approach that sets out what that might look like in practice. The hon. Member for Farnham and Bordon said that this principle—there is perhaps a disagreement in the Opposition—runs through other areas. For example, a better approach to local engagement would reflect local demographics and geography better than a one size fits all governor model. We would also be more likely to focus on the outcomes of engagement, looking to see if there is evidence that local people are involved in key decisions regarding how care is provided and how their voice is listened to.

To be clear, all NHS trusts and foundation trusts will continue to be expected to put in place effective arrangements for engaging patients, staff and the local community, as set out in section 242 of the NHS Act 2006. To ensure their effectiveness, we will test providers’ engagement arrangements as part of ongoing assurance processes, including provider capability assessments, Care Quality Commission well led assessments and the assessment process for advanced foundation trust status.

On the question of the right level of clinical representation, our amendment 19 is clear that clinical and medical representation is fundamental to the work of those boards. It is important that boards reflect that clinical and medical work, although it will be for them to determine the right balance.

Will the Minister give way?

I will move on, if I may. I think my response will the cover the issues raised in the debate.

On amendment 36 and new clause 59, I note the concern that the Secretary of State could act inappropriately when making appointments to the boards of ICBs and NHS trusts and foundation trusts. We discussed democratic accountability in a previous sitting, and at the end of the day it is up to the British public whom they elect to Parliament and as the governing party.

Transparency and democratic accountability are at the heart of our reforms. It would not be right for the civil service to be given sole legislative responsibility for appointments to NHS trusts, foundation trusts or integrated care boards. Ministers are democratically accountable to Parliament, and civil servants act on their behalf under the Carltona principle. Civil servants serve and advise the Government, and act on behalf of Ministers, but it is for Ministers to take decisions and to be held accountable to Parliament for the performance of the NHS. The civil service will run fair, open and equitable campaigns to fulfil these roles and will recommend appropriate candidates to Ministers.

Ministers are under a duty to comply with public law principles and to act reasonably, and will adhere to the Nolan principles, including objectivity, transparency and integrity, in discharging this function. The practical arrangements for appointments are being developed as part of the transition planning for the integration of NHS England’s functions into the Department, and will be based on these principles. It would therefore be inappropriate to exclude Ministers entirely from the appointments process. I urge hon. Members not to push the amendments to a vote.

Will the Minister give way?

I think the Minister has finished.

Question put and agreed to. Clause 29 accordingly ordered to stand part of the Bill. Amendment made: 19, in schedule 3, page 81, line 10, at end insert— “(1A) Unless or except to the extent that regulations provide otherwise, the executive directors must include— (a) at least one person who is a registered medical practitioner or a registered dentist (within the meaning of the Dentists Act 1984), and (b) at least one other person who is a registered nurse or a registered midwife.”—(Karin Smyth.) This requires NHS foundation trusts to have at least one executive director who is a registered medical practitioner or a registered dentist and another who is a registered nurse or a registered midwife. Regulations may create exceptions (for example, an exception could be created for ambulance foundation trusts). Schedule 3, as amended, agreed to. Clause 30 ordered to stand part of the Bill. Clause 31 NHS foundation trusts etc: audit of accounts Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following: Schedule 4.

Clauses 32 to 34 stand part.

I will address clauses 31 to 34 and schedule 4 together. Clause 31 ensures that NHS foundation trusts are subject to the same robust, transparent audit regimes as other NHS bodies. Together with schedule 4, clause 31 makes provision about the audit of NHS foundation trust accounts, which is needed as a consequence of the abolition of NHS England and the removal of the requirement for NHS foundation trusts to have councils of governors and members. Schedule 4 does that by removing the current bespoke provisions related to the auditing arrangements for the accounts of foundation trusts and amends the Local Audit and Accountability Act 2014 so that foundation trusts are subject to the auditing regime under that Act. This means that foundation trusts will in future be subject to the same auditing requirements as trusts and integrated care boards, ensuring a clear, consistent and transparent framework for local audit across NHS provider organisations. Taken together, these measures strengthen consistency in financial reporting and audit assurance across the NHS provider sector, while preserving the independence of the local audit process.

Clause 32 repeals provisions of the NHS Act 2006, requiring NHS England to maintain a register of NHS foundation trusts and a power to charge fees related to maintaining the register. The register formed a repository of documents that related to how foundation trusts were governed and regulated. However, removing the requirements does not mean there will be no transparency. NHS foundation trusts are already required to publish the information provided on this register, and where a foundation trust is placed into special administration the administrator is required to publish its report. As a result, the additional requirement to maintain a register is unnecessary, burdensome and duplicative, providing the public with no new information. For those reasons we are removing that bureaucratic duty in the Bill.

On clause 33 stand part, the Department of Health and Social Care, like all Departments of State, has a responsibility to diligently and responsibly steward taxpayer’s money in delivering services to the public. Clause 33 updates and strengthens existing legislation to make sure we have the statutory tools we need in order to effectively manage and oversee the finances of the NHS. It does that by updating sections 42B and 42C of the NHS Act 2006 so that the existing last resort statutory capital spending limit for foundation trusts can also apply to revenue expenditure for a given year.

Foundation trusts account for a substantial proportion of NHS revenue spending, at around 40%, and continue to benefit from significant operational autonomy, including the freedom to retain and reinvest surpluses. We remain committed to seeing those freedoms expanded further through our advanced foundation trust programme. However, this strengthened power ensures we have a financial framework that makes it easier to consider additional freedoms. The Department must therefore ensure it has in place robust tools to oversee the finances of the health service, to reassure taxpayers and Parliament that public money is being managed effectively and to ensure that the Department can meet its financial obligations.

The power will remain subject to strong safeguards, including a mandatory consultation period with the foundation trust before any order is made, the requirement for any order made to be published, and detailed statutory guidance setting out the circumstances in which the power would be used and how limits would be determined. Crucially, this is a last resort measure. This power would be used only in exceptional circumstances—for example, when the Secretary State thinks there is a risk of breaching a departmental delegated expenditure limit. I should note that the existing capital backstop on which it builds has never been used. The purpose here is not routine financial management, but assurance. By ensuring that foundation trust freedoms operate within a viable and sustainable framework, the clause helps protect those freedoms rather than undermine them.

Finally, clause 34 makes straightforward but important provision about financial accountability when NHS organisations change legal form. It requires an NHS foundation trust that has been newly authorised, or that has recently acquired an NHS trust or another NHS foundation trust, to prepare the final accounts for its predecessor organisation. As the Committee will appreciate, organisational change, whether through authorisation to foundation trust status or through acquisition, can bring real benefits for local services, but it can also create a practical issue at financial year end. The predecessor body will have ceased to exist in its previous form and so will not be in a position to complete and sign off its final set of accounts. Clause 34 addresses that gap by making clear where responsibility sits—

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.

The Committee consisted of the following Members:

Chairs: Sir Roger Gale, Dr Rupa Huq, Emma Lewell, † Sir Jeremy Wright

† Argar, Edward (Melton and Syston) (Con)

Brackenridge, Sureena (Wolverhampton North East) (Lab)

† Chambers, Dr Danny (Winchester) (LD)

Daby, Janet (Lewisham East) (Lab)

† Foody, Emma (Cramlington and Killingworth) (Lab/Co op)

Irons, Natasha (Croydon East) (Lab)

† Johnson, Dr Caroline (Sleaford and North Hykeham) (Con)

† Joseph, Sojan (Ashford) (Lab)

† Kyrke Smith, Laura (Aylesbury) (Lab)

† Morgan, Helen (North Shropshire) (LD)

† Prinsley, Dr Peter (Bury St Edmunds and Stowmarket) (Lab)

† Robertson, Dave (Lichfield) (Lab)

† Robertson, Joe (Isle of Wight East) (Con)

† Smyth, Karin (Minister for Secondary Care)

† Stafford, Gregory (Farnham and Bordon) (Con)

† Twist, Liz (Blaydon and Consett) (Lab)

† White, Jo (Bassetlaw) (Lab)

Sanjana Balakrishnan, Rob Cope, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 30 June 2026

(Afternoon)

[Sir Jeremy Wright in the Chair]

Health Bill

Clause 31

NHS foundation trusts etc: audit of accounts

Question (this day) again proposed, That the clause stand part of the Bill.

I remind the Committee that with this we are considering the following: Schedule 4.

Clauses 32 to 34 stand part.

I will start where I left off. Clause 34 addresses the gap by making it clear where responsibility sits, so that there is no doubt about who must produce the final accounts and ensure that they are completed properly, and about how those accounts should be audited. We think this is a proportionate provision to ensure continuity and clarity on how NHS money has been managed during organisational transition. I commend the clauses to the Committee.

Clause 31 introduces schedule 4, which essentially makes series of amendments to other Acts. It amends the Public Finance and Accountability (Scotland) Act 2000 to remove a cross reference to other categories, and it amends the Audit and Accountability (Northern Ireland) Order 2003 and the Public Audit (Wales) Act 2004 for similar purposes. It also amends the National Health Service Act 2006 by deleting section 62 and schedule 10, relating to the audit of accounts of NHS foundation trusts, to end the old audit scheme.

Schedule 4 amends section 3 of the Local Audit and Accountability Act 2014 so that foundation trusts are now included in the list of bodies that must keep accounts in the standard way, it amends section 4 to specify which documents count as accounts of foundation trusts for the purpose of auditing, and it amends sections 8 and 10 so that the auditor appointment procedure and the auditor panel’s role now cover foundation trusts.

In addition, schedule 4 rewrites section 13 of the 2014 Act so that if a trust fails to appoint a local auditor, it is the Secretary of State’s job to step in. Previously, that was NHS England’s job; clearly, that needs to change, because NHS England is being abolished. The schedule also amends section 21 so that the auditors’ general duties now apply to foundation trusts too, and it amends section 30, relating to unlawful expenditure and activity, and section 32B, relating to the independence requirement, to remove a now redundant item from the list.

Schedule 4 also amends schedule 2 to the 2014 Act to formally add foundation trusts to the official list of audited bodies; schedule 5 so that the rules on who can be a local auditor now cover foundation trusts too; schedule 6 to remove an outdated segment from the audit practice code rules; schedule 7 to tidy the reporting rules and extend them to foundation trusts; schedule 9 to realign data matching rules that apply to foundation trusts in the new system; and schedule 11, relating to the disclosure of information, to remove a reference to NHS England, which is no longer necessary because NHS England is being abolished. In general, clause 31 aligns the audit process for accounts of foundation trusts with those of standard trusts and integrated care boards.

Clause 32 removes the need for NHS England to maintain a register of foundation trusts and the fees associated with maintaining it. Section 39 of the NHS Act 2006 requires NHS England to maintain a current register of NHS foundation trusts and specifies what must be in that register. Section 50 states that an NHS foundation trust must pay NHS England a fee that NHS England may determine in respect of exercising its functions under section 39, which relates to keeping the register, and section 39A, relating to a panel for advising governors. Clause 32 deletes sections 39 and 50. The explanatory notes say that the requirement to maintain a register does not need to be transferred to the Secretary of State when NHS England is abolished because, the Government argue, the information will already be available centrally, and there is no need for a fee to keep that in place. That seems sensible to me.

Clause 33 enables the Secretary of State to impose limits on a foundation trust’s annual capital or revenue expenditure. Section 42B of the 2006 Act allows NHS England to make an order imposing a limit on the capital expenditure of a foundation trust in a single year. Section 42C sets out that NHS England must publish guidance about the exercise of its power under section 42B, including about the circumstances in which it is likely to make an order and the method it will use to determine the capital expenditure limit. Clause 33 entirely replaces sections 42B and 42C with rewritten sections, with some notable changes. The wording is changed from “capital expenditure” to “expenditure”. The power is therefore widened from capital expenditure limits to limits on any expenditure—capital and revenue. The Secretary of State replaces NHS England as the entity with the power to impose limits, which makes sense, and the subsection requiring an order to specify the trust, the financial year and so on has been removed in full.

The change gives the Government financial control to stop overspending by NHS foundation trusts. I note that in financial year 2023-24, NHS trusts overspent by £1.2 billion, so presumably this is the Secretary of State getting a tighter grip on spending. In some respects that is sensible, but overspending is often due to staffing costs and day to day pressures, not capital expenditure, so there is an argument that the capital limits themselves are not sufficient to deal with the problem. Under the new governance model, the Secretary of State has oversight and responsibility for the health service, and financial control aligns with those changes. The new power could prevent one organisation’s failures from undermining the health service’s wider financial position or impacting other providers.

However, the purpose of foundation trusts is supposed to be that they have greater independence over spending, and the Government have stated that their aim is to create a more devolved and autonomous health system. How does broadening the Secretary of State’s ability to interfere in expenditure devolve power or make foundation trusts more independent? Imposing expenditure limits may control overspending on paper, but it does not address the reasons why it is happening, so limits could lead to a deterioration in the health services delivered by some trusts. What plans does the Minister have to deal with that?

Because the power moves from an arm’s length body to the Secretary of State, interventions could be politically motivated, rather than in the best interests of the NHS. How does the Minister consider that that will be managed?

The power for the Secretary of State to impose expenditure limits at any time during or before the financial year could create uncertainty among trust leadership and undermine long term planning. If a trust is given a budget for the year, it knows what it has to work with, but if somebody says halfway through the year, “Actually, you are going to have to work with less money than that,” it is very difficult for the board to plan its expenditure, because it is always looking the other way. Why does the Secretary of State need that power? Can the Minister clarify that, if there is a change in the expenditure limit during the year, it will always be revised upwards, and never downwards?

My hon. Friend is making a prescient point. Has she thought about the word “limits”? To me, it is not clear from the clause as drafted—perhaps it is clearer to her—whether that is an overall limit on capital and revenue expenditure, or whether the clause is saying that the Secretary of State could impose limits on individual line items or departments. The word “limits”—plural—suggests that he or she may be able to do that.

I do not think the Bill is very clear on that. It says that the Secretary of State “may by order impose limits on the expenditure that may be incurred by an NHS foundation trust in respect of a single financial year.”

However, it does not say whether that is an overall limit, whether it is for capital or revenue or whether it is a limit on a specific item, so the degree to which the Secretary of State has control is not clear. I presume it is an overall limit and that it is for dealing with budgets, but perhaps the Minister can provide some clarity for my hon. Friend.

Clause 34 requires foundation trusts that have been newly authorised, or that have recently acquired another trust or another foundation trust, to prepare the final accounts for their predecessor trust or foundation trust. It does that by modifying section 36 of the NHS Act 2006 to add new provisions that require foundation trusts to prepare accounts for the final period for which they were an NHS trust, establish that part of schedule 7 and part of the Local Audit and Accountability Act 2014 apply in relation to those accounts, and define the final accounting period. It does the same for section 56AA of the 2006 Act.

I thank the shadow Minister for in general, I think, agreeing that the alignment of many of these processes is quite sensible.

The shadow Minister talked in general terms about financial controls. The Government take financial controls and our responsibility for taxpayers’ money very seriously. As I said last week, from very early on, we were very keen to ensure that there is a grip on NHS finances in order to properly deliver the sort of healthcare that all our constituents deserve. We take that very seriously. There has not been that sort of grip at board level and through the system in recent years. As a result of the measures that we have taken, I think this is the first year in six or more years that the NHS has not gone back to the Department for additional funds to get through the year. The Committee can be assured that financial control is important.

The shadow Minister referred to limits. Of course they are overall limits; the Secretary of State does not go line by line through what a trust spends. I understand the point that people are trying to make to conflate some situations, but of course it is an overall limit.

The safeguards in these provisions are designed to protect foundation trusts’ freedoms and not constrain them, but a foundation trust can enjoy such freedoms only if it is in a well overseen and stable NHS financial system. By including a backstop for use in exceptional circumstances, clause 33 helps to safeguard public funds and will help the Department to meet its financial obligations, which I think hon. Members understand. It is a usual process for the Department to go through, as anyone who has sat on the Public Accounts Committee will know. Adherence to the departmental expenditure limit creates and maintains the necessary environment for the foundation trust to exist.

Question put and agreed to. Clause 31 accordingly ordered to stand part of the Bill. Schedule 4 agreed to. Clauses 32 to 34 ordered to stand part of the Bill. Clause 35 Conversion of failing NHS foundation trust into NHS trust Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following: Schedule 5.

Clauses 36 to 38 stand part.

Schedule 6.

During the process of producing our 10-year plan, we were clear that, as much as we will reward the best performing providers with new freedoms to innovate, we will not hesitate to act on poor performance, and this group of measures deal with just that: action in the event of a failing provider.

Clause 35 and schedule 5 insert new provisions into the NHS Act 2006 to enable the Secretary of State to, by order, convert a failing foundation trust to an NHS trust. This is intended to take place only in the most critical circumstances, and where it is in the public’s best interest for the Secretary of State to be able to direct the trust about how it should exercise its functions, to address safety or other issues at the trust. Foundation trust status should be a mark of good performance, and there must be a mechanism to remove it when performance is seriously deficient. This deauthorisation power will help to maintain the integrity of the reinvigorated foundation trust status and provide an additional incentive for challenged foundation trusts to improve.

The power to make a conversion order can be used where the foundation trust has failed to comply with a condition of its provider licence or with another legislative requirement. In deciding whether to make a conversion order, the Secretary of State must consider various factors, including the seriousness of the failure, the health and safety of patients, the quality of the provision by the trust of goods and services, the financial position of the trust, and the way the trust is being run.

The conversion power is also subject to two additional requirements. First, the Secretary of State must publish guidance about the matters they will consider in deciding whether to exercise the conversion power, including the factors I just outlined. They must consult on any such guidance before its publication. Secondly, where the Secretary of State proposes to use the power, they must first consult the foundation trust in question, any integrated care boards in the areas in which the trust operates, and any other person to whom the trust provides goods and services, and whom the Secretary of State considers it appropriate to consult.

Clause 35, together with schedule 5, also inserts new schedule 9A into the NHS Act 2006, which sets out the immediate consequences of a conversion order. Deauthorising a foundation trust has no impact on the property it holds, the contracts it has with commissioners and other groups, or the terms of employment of employees. These powers set clear organisational consequences for significant underperformance and allow the Secretary of State the freedom to take action to protect patients in extreme circumstances.

Clause 36 contains another critical power to allow action in the case of a failing foundation trust. It allows the Secretary of State to add conditions to an NHS foundation trust’s provider licence where they consider that the trust will breach its licence conditions due to issues with its governance. The clause is a consequence of abolishing NHS England and makes changes to the powers currently held by NHS England under section 111 of the Health and Social Care Act 2012, to confer them on the Secretary of State, with additional consequential changes reflecting the abolition of councils of governors.

The clause sets clear expectations for a foundation trust through the licence conditions and provides the Secretary of State with a transparent mechanism to take more urgent, targeted enforcement action to address failures of governance. Should the foundation trust breach any conditions imposed via section 111, the Secretary of State may require it to make changes to the executive directors of its board as necessary, including removing or suspending executive directors, replacing executive directors with interims, and preventing the trust from appointing specific individuals. If the foundation trust fails to take those actions, the Secretary of State may implement the changes.

To reassure the Committee, there are clear safeguards underpinning the clause, which can be used only where there is evidence that failures of governance in the foundation trust will cause it to breach the conditions of its licence. Further, acting under section 111 does not preclude the Secretary of State from using their other regulatory powers, including to require the foundation trust to take steps to address a breach of any condition of the licence, or to accept undertakings from the trust to address the breach.

Finally, the section 111 power was originally granted to Monitor in 2012 under transitional arrangements, as it was anticipated that the power could be withdrawn once governors had transitioned into their roles and could hold boards to account without outside intervention. Over 13 years on, that has proven not to be the case. With the abolition of the foundation trust councils of governors, it makes sense to repeal the provisions under sections 112 to 114 of the same Act that made it transitional.

Clause 37 makes changes to the special administration framework to ensure that it continues to function coherently after the abolition of NHS England. The clause makes focused, technical amendments to the Health and Social Care Act 2012 to amend the framework for establishing a mechanism for financial assistance in cases where a provider is subject to a health special administration order under chapter 5 of that Act. It also amends the Act to remove the duty to establish a mechanism for financial assistance to foundation trusts to which a trust special administrator has been appointed. The duty no longer needs to apply to foundation trusts, because the Secretary of State already has the power under provisions in the NHS Act 2006 to provide financial assistance to NHS foundation trusts if needed.

With the abolition of NHS England, the duty to establish a mechanism for financial assistance for independent providers will be retained and conferred on the Secretary of State. It is worth noting that the provisions related to financial assistance in special administration cases, and chapter 5 of the Health and Social Care Act 2012, which sets out the powers and processes for the making of health special administration orders, have not yet been commenced. However, the amendments made by the clause ensure that the special administration regime can operate smoothly if it is ever needed.

The clause does not create new financial support mechanisms, but ensures that existing ones can be used appropriately in the reformed system. In short, clause 37 ensures that the legal framework reflects the new institutional landscape while retaining the ability to act swiftly to safeguard continuity of services during special administration.

Clause 38 makes changes to the trust special administration framework to ensure that it continues to function coherently after the abolition of NHS England. This clause, together with schedule 6, make targeted changes to the trust special administration process set out in the NHS Act 2006 for NHS trusts and NHS foundation trusts as a consequence of the abolition of NHS England. It also aligns more closely the processes between NHS trusts and foundation trusts.

Trust special administration is, and will remain, a last resort mechanism used only in cases of serious failure. It is used to protect patients, stabilise services and put the organisation back on a sustainable footing. Where deemed necessary, a trust special administrator would be appointed to manage the trust and work with relevant key stakeholders to develop recommendations regarding the organisation and its services.

The amendments made by schedule 6 remove functions that currently sit with NHS England and confer the key decision making functions on the Secretary of State, who will provide clearer lines of accountability and faster decision making when rapid intervention is required. The amendments also simplify the steps involved in the TSA process, with the aim of improving the speed of intervention and providing transparency. They align more closely the processes for trusts and foundation trusts, and set out a simpler process in relation to the administrator’s draft report, consultation and final report. They also require, as is the case now, that key documents and decisions are published and laid before Parliament. That will help ensure proper and meaningful scrutiny of the TSA process and outcomes. It also helps ensure that affected patients, staff and local partners have the opportunity to engage during the process, while maintaining the balance with the need to deliver timely intervention and secure continuity of safe services.

In addition, the amendments in schedule 6 make changes to the role of the Care Quality Commission in trust special administration. The CQC will be able to recommend that a trust special administrator should be appointed. The Secretary of State is also required to consult the CQC before making an order, ensuring that independent expertise on quality and safety informs decisions and that intelligence on service performance is co ordinated.

The provisions in the Bill ensure that the process remains fit for purpose, proportionate, and aligned across NHS trusts and foundation trusts. They support faster, more coherent decision making in the most serious cases, with the aim of protecting patients and securing sustainable, high quality services for the future. Taken together, the clauses provide the necessary tools for the Secretary of State to take proportionate, swift and decisive action in the event of provider failure. I therefore commend these clauses to the Committee.

Clause 35 essentially establishes the right of the Secretary of State to convert a foundation trust into an NHS trust in certain circumstances. Currently, section 25 of the NHS Act 2006 establishes trusts and introduces schedule 4 of the same Act, which makes provision about NHS trusts. Section 56AA sets out how additional requirements concerning acquisitions of a trust or foundation trust are to work. Clause 35 deletes section 25(2), which specifies that an order in this context is referred to as “an NHS trust order”, and amends subsection (3), so that no order under section 25—previously no “NHS trust order”—can be made until any consultation that has been prescribed is complete.

Clause 35 introduces proposed new section 57B into the 2006 Act, “Conversion of failing NHS foundation trust into NHS trust”, which provides the Secretary of State with the power to convert if the foundation trust breaches its licence or other legal duties. The trigger is broad and includes non compliance with any statutory requirement. The proposed new section requires an order to specify when it takes effect and also requires the Secretary of State, when deciding to issue an order, to consider among other things “the seriousness of the failure…the health and safety of patients…the quality of the provision by the trust of goods and services…the financial position of the trust, and…the way that the trust is being run.”

Before making an order, the Secretary of State will be required to consult the trust, any ICB where the trust has facilities and “any other person to whom the trust provides goods or services…whom the Secretary of State considers it appropriate to consult.”

The proposed new section also provides the Secretary of State with the power, when the conversion order is made, to “terminate the appointment of the chair or any executive or non executive director”, and to “appoint a person to be the chair or an executive or non executive director”.

It also time limits the powers to intervene with management to one year after the order is made.

Clause 35 also introduces proposed new section 57C into the 2006 Act, “Guidance about conversion”, which requires the Secretary of State to publish guidance about matters to be considered when deciding to make an order and requires them to consult persons considered appropriate before publishing or revising guidance. The clause removes “NHS trust order” from section 276 of the 2006 Act, “Index of defined expressions”, and updates schedule 4, so that an NHS trust may be established by an ordinary order under section 25 or a conversion order under proposed new section 57B.

Schedule 5 to the Bill inserts proposed new schedule 9A to the 2006 Act, “Conversion of failing NHS foundation trusts”, which provides that, on conversion, the foundation trust’s chair and directors become the initial chair and directors of the new NHS trust, unless they are removed by the Secretary of State under the procedures we have just talked about. The proposed new schedule initially keeps the board the same size, until new arrangements are made. It provides that the foundation trust’s public dividend capital carries over to the NHS trust and that the conversion does not affect continuity of the body —it will remain the same organisation, just with NHS trust status.

The proposed new schedule provides that the trust’s property and liabilities, including criminal liabilities, continue unaffected. It also provides that existing contracts continue and that the trust remains party to them. It clarifies that those contracts do not automatically become NHS contracts under section 9(1) of the 2006 Act, provides that the trust keeps any corporate memberships that it held before the conversion, and clarifies that the continuity provisions do not affect the Secretary of State’s wider powers to make directions.

The Secretary of State will have a direct power to act where the foundation trust has failed—for instance, where there have been patient safety lapses—and there are clear benefits to that. There are also transparency requirements built in: the Secretary of State must publish guidance and consult before issuing guidance or undertaking conversion, and the power to change the management is limited to a year.

However, the last Labour Government said that independence was central to the success of foundation trusts. In 2005, the then Secretary of State, Patricia Hewitt, said: “We know that independence from central Government control and greater freedoms are giving NHS foundation trusts the opportunity to innovate new approaches to healthcare and healthcare services, for the benefit of NHS patients.”—[Official Report, 7 November 2005; Vol. 439, c. 5WS.] The challenge with innovations is that, even with the very best intentions and the very best advice, some will work and some will not. If any failure at all is a reason for trusts to be taken over, will that cause them to be shy about innovating, for fear of their independence being undermined as a result? There is a balance to strike, so I wonder whether the Minister will comment on that.

The change also makes it easy for the Secretary of State to convert a foundation trust for political reasons—for instance, because of pressure from local Members of Parliament. That is a positive in some ways and a negative in others. Again, it could have a chilling effect on the very autonomy and innovation that Ministers want to see, so the question is how they think they will balance that.

My next question is about the continuity of care for patients. The CQC looked into the Cliff Villages medical practice—a practice, rather than a trust, in my constituency—and the surgery was found to be wanting in a number of ways. The CQC removed the licence, which meant that medical services could no longer be provided by the surgery with immediate effect, so patients were immediately left without services at that surgery. The ICB managed, by working very hard, to get the surgery reopened on the Monday morning, but when someone is coming into a trust or a foundation trust—into A&E services and such like—their need may be significantly more acute.

In the event of a failing trust, can the Minister describe how services to patients will be maintained and made safe while that process is ongoing? If something is so unsafe that the trust is considered to have failed, meaning that the service needs to be improved, how does the Minister intend to manage that interim period? A surgery might be able to close for three or four days, but that cannot happen with a hospital, particularly if it is in a more remote location with no immediate alternatives.

I also have a question about how we will manage part of the trust failing. If there is a department within a trust, or if a trust runs several different hospitals—I should declare that I work for a trust that does that—and one hospital or department is thought to be delivering a poor service while the others are delivering a good service, how does this process work? I presume that they would all be taken over, but it is not 100% clear.

Clause 36 gives the Secretary of State powers over failing trust governance. Currently, section 111 in the Health and Social Care Act 2012, “Imposition of licence conditions on NHS foundation trusts”, enables NHS England to impose additional licence conditions on a foundation trust if NHS England

“is satisfied that the governance of an NHS foundation trust is such that the trust will fail to comply with the conditions of its licence”.

For NHS England to intervene, the council of governors, the board of directors or both must be failing

“to secure compliance with conditions in the trust’s licence, or…to take steps to reduce the risk of a breach of a condition in the trust’s licence.”

If they are failing to take steps to reduce the risk of a breach of the licence, NHS England can modify the membership of the council of governors. This section clearly needs amending because of the many references to NHS England.

The clause replaces that section entirely. The key elements include enabling the Secretary of State to introduce governance related licence conditions where they are satisfied that the trust’s governance means it will fail to comply with its licence conditions. The Secretary of State has the power to alter the conditions after they have been imposed. Can the Minister comment on that?

The clause defines poor governance in the same terms as section 111 of the 2012 Act. It enables the imposition of additional conditions where the CQC has issued a warning notice. It allows that, where the trust breaches conditions, the Secretary of State can require the trust to remove executive directors, appoint interim executive directors and suspend or prevent reappointment for a specified period. The Secretary of State can take these actions directly if the trust fails to comply with the notice. The clause also removes sections 112 to 114, which currently ensure that section 111 is time limited. That makes the power a permanent part of the new regime.

NHS England had the power to introduce additional licence conditions and even intervene in the membership of the councils of governors. The direct link to the CQC allows for action when patient safety is at risk. For the health service to be democratically accountable, Governments need the power to act when hospitals fail. Foundation trusts, although more independent, are not immune from failure.

The power also allows the Secretary of State to act if the board were to block action. We heard earlier this week about members of senior leadership teams not engaging in inquiries. I understand that the Government will change the law on that issue, but the clause gives the Government the power to intervene if that were to happen. The Government need to consider the balance in how they define failure and how they ensure that their decisions are not political, but material to the care that is being provided. Can the Minister comment on how that balance will be struck?

Clause 37 removes the special financial assistance provisions for foundation trusts in special administration cases. The provisions are specific to NHS England under section 134 of the Health and Social Care Act 2012, “Duty to establish mechanisms for providing financial assistance”, which sets out that NHS England has a duty to establish mechanisms to provide financial assistance in instances where a health special administration order has been issued.

Clause 37 amends section 134 to remove the requirement for NHSE to maintain financial assistance mechanisms for foundation trusts in special administration. It amends section 134(2)(a) of the 2012 Act to remove a reference to financial assistance provided under section 65D(12) of the NHS Act 2006, and amends section 136(10) of the 2012 Act to change the definition of “special administrator” so that it no longer includes a trust special administrator appointed for a foundation trust. It also amends section 144(3) of the 2012 Act to remove the requirement to review the operation of the foundation trust special administration finance assistance regime. Clause 37 is essentially a consequence of clause 1, which abolishes NHS England, because the Secretary of State is taking over and already has power to provide financial assistance to the foundation trusts in such instances, so NHS England does not need that power as well.

Clause 38 introduces schedule 6, which relates to special administration for trusts and foundation trusts. Essentially, schedule 6 replaces NHS England with the Secretary of State in the trust special administration regime, which seems necessary because of the abolition of NHS England. It gives the Secretary of State responsibility for appointing a trust special administrator for NHS trusts and foundation trusts where serious failure or insolvency related concerns arise. It requires consultation with relevant ICBs, relevant service recipients and the CQC before the appointment of the trust special administrator. It also requires the Secretary of State to lay a report before Parliament that explains the reasons for appointing a trust special administrator.

Schedule 6 provides that once such a trust special administrator is appointed, the trust’s chair and directors are suspended, although that does not affect the executive directors’ employment status. It requires the administrator to produce a draft report, consult relevant parties and then produce a final report with recommendations. It requires the Secretary of State to decide what action to take after receiving the final report, to publish a decision and to give reasons. It clarifies powers relating to the dissolution of trusts, the ending of administrator appointments, and the transfer of property, liabilities or functions where needed. It also removes a separate statutory objective for trust special administration in relation to foundation trusts.

In many ways, these changes align with the new operational structure after the abolition of NHS England. Unlike many things that the Government are doing, there are clear timeframes guaranteeing a clear public record of why intervention was needed: the TSA appointment must be made within five working days of the order being made; the draft report must be produced within 65 days; the final report is due within 15 days after the consultation period; and the Secretary of State must make a decision on what to do within 20 days.

I have a question: the Secretary of State would consult with the CQC but the CQC would no longer be able to initiate the appointment of the TSA and approve the final report. That weakens the role of the regulator, yet in so many other ways the Government wish to strengthen the role of the CQC and give it more and more to do, so why have the Government made that decision? Will the Minister talk about that in her summing up?

I will endeavour to be relatively brief in my reflections, and I will address, particularly, clauses 35 and 38. I can see a logic to what the Minister proposes in them. On clause 35, we know that foundation trusts face challenges. We saw that writ large with the scandal at Mid Staffs, and in my time as a Minister, several foundation trusts required intervention—maybe not on that scale—or required improvement. I pick on them just because they are in my head—I do not know the situation today. I am looking across at the hon. Member for Ashford, because going back some years to when I was a Minister, East Kent hospitals NHS foundation trust faced some considerable challenges. I am not necessarily saying that that meets the bar for intervention, but foundation trusts have challenges from time to time.

I should also declare an interest: I was born in the forerunner of the William Harvey hospital—the old Willesborough hospital—in the hon. Member’s constituency. I recognise that on occasions foundation trusts get into serious, or less serious but still challenging, circumstances. So I can see where the Minister is coming from, but I have a few questions for her.

First, we recognise that although foundation trusts can get into bother, so too can NHS trusts. NHS trusts can underperform, have safety issues or have financial or other performance issues. I am interested to hear the Minister’s reflections on why she believes that removing foundation status and the organisation becoming an NHS trust will necessarily solve those problems, when many NHS trusts can have equally significant challenges. I would welcome the Minister’s reflections on that.

In terms of whether a conversion was to take place—if the Secretary of State determined that that was expedient and it met the criteria—what would the timescales and process be if, further down the line, a foundation trust wished to reapply for its old status, having previously converted to an NHS trust? Would that be possible, and how would it work? I suspect that there would be a significant number of hurdles to get over to prove that it had achieved that status. I would welcome the Minister’s reflections on that point.

Finally, on clause 38, what the shadow Minister, my hon. Friend the Member for Sleaford and North Hykeham, touched on gives me a little cause for concern. Essentially, this appears to be a further centralisation of powers in the Secretary of State’s hands, particularly with the changes to the role of the CQC. It effectively downgrades the CQC’s power as the independent regulator in these matters. Instead of the CQC being able to initiate the appointment of a TSA where, on safety grounds, they consider it to be necessary and the criteria met, that power will sit with the Secretary of State, who will be required to consult the CQC, but it will seemingly lose its ability to take that initiating step irrespective of what they have seen in any inspections. I would be grateful if the Minister addressed and potentially reassured me on those points.

As people who have been listening will know, this is a chunky set of clauses on some technical details. Let me broadly pick up some of the key points.

I want to be very clear about deauthorisation and our seeking to establish, essentially, a more dynamic model. As I said, the coalition Government repealed the legislation on deauthorisation in the 2012 Act. Although other regulatory levers exist to manage poor performance, we are using two core arguments. First, converting foundation trusts into NHS trusts will enable the Secretary of State, if needed, to intervene further through their power of direction over NHS trusts. The Secretary of State will therefore be able to focus on the patient and public interest over preservation of providers’ statutory freedoms in cases of serious failure. I hope that that addresses some of the points that have been raised. Secondly, having a more dynamic environment with the potential for deauthorisation in such cases, and the consequent loss of statutory autonomy, may act as an incentive for challenged foundation trusts to improve, and it would show that there are consequences.

As I think the hon. Member for Sleaford and North Hykeham knows, the usual processes exist for managing performance across various aspects of the provider. They will continue. This is for exceptional circumstances. As I said, this is about maintaining a more dynamic model than the one we have. The purpose behind her questions about continuous service—the purpose of having a range of failure powers—is to ensure continuity of care for patients and the public. The analogy with general practice does not hold; this is a very different set of circumstances. But, obviously, she raises an important point about public concern relating to the service’s provision, and I assure her on that. We need to make sure that we diagnose the situation, provide the trust with support and assess which toolbox is most applicable.

The CQC can recommend that a trust special administrator should be appointed where it is satisfied that there is a serious failure to provide services of a sufficient quality, and it must provide a report on the safety and quality of services following the appointment of an administrator. The Secretary of State must also consult the CQC before making an order to appoint a trust special administrator.

Question put and agreed to. Clause 35 accordingly ordered to stand part of the Bill. Schedule 5 agreed to. Clauses 36 to 38 ordered to stand part of the Bill. Schedule 6 agreed to. Clause 39 Joint working and delegation arrangements

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following: Government new clause 20.

New clause 26—Arrangements between NHS bodies and local authorities: duty to review— “(1) The Secretary of State must conduct a review of the effectiveness of arrangements entered into by NHS bodies and local authorities under section 75 of the National Health Service Act 2006 (arrangements between NHS bodies and local authorities).

(2) In conducting the review, the Secretary of State must consult— (a) NHS bodies, (b) local authorities, and (c) any another person that the Secretary of State considers it appropriate to consult.

(3) Having conducted the review, the Secretary of State must consider whether the power to make regulations in section 75(1) or the power to issue guidance in section 75(6) of the National Health Service Act 2006 should be exercised in order to improve the effectiveness of arrangements under that section.

(4) The Secretary of State must lay before Parliament, and publish, a report of the review.

(5) The report of the review must explain whether the Secretary of State decided to exercise the powers in section 75(1) and (6) of the National Health Service Act 2006 and the reasons for that decision.

(6) The Secretary of State must comply with the requirements of this section before the end of the 12-month period beginning with the day on which this Act is passed.”

This new clause requires the Secretary of State to conduct a review into arrangements under section 75 of the National Health Service Act 2006, and to consider whether to require NHS bodies and local authorities to enter into arrangements with each other if this is likely to lead to an improvement in how their functions are exercised.

Government new clause 20 and clause 39 both look to strengthen joint working arrangements across the health system. Clause 39 is part of the architecture of the Bill that allows the delegation of functions from the Secretary of State to NHS bodies, local authorities or other relevant organisations. The clause builds on the existing delegation powers in section 65Z5 of the National Health Service Act 2006, which already allow NHS bodies to delegate functions and pool resources with one another and with local authorities or other relevant bodies on a voluntary basis. It is a well used voluntary power that enables systems to develop joint working and ensure that health functions are carried out by the most appropriate body or groups of bodies. The result is stronger integration, with better joint working between NHS and local government, and services better tailored to meet local needs.

With the abolition of NHS England and the new functions of the Secretary of State, it is right that the Secretary of State should have the flexibility to delegate their health functions appropriately and efficiently under a voluntary arrangement, as and when necessary. We would not want to exclude the Secretary of State from joint working arrangements, if joint working would bring benefits to patients and the public. The power is therefore purposefully broad to allow that, including allowing the Secretary of State to delegate to a range of public bodies, establish joint committees and pool funds. It also allows the Secretary of State to issue guidance to relevant bodies about the use of their powers under sections 65Z5 and 65Z6.

This proposal is not, however, a means to avoid accountability. Accountability for any function delegated through this power remains with the person delegating it whereas liability rests with the person to whom the function is delegated. Accountability, as opposed to liability, means that the body delegating a function must provide oversight for how their functions are carried out and ensure that any issues are dealt with. Ultimately, the Secretary of State will continue to be accountable to Parliament for the health service in England, including any delegated powers. I am sure that Parliament will relish holding all Ministers to account.

Building on our ambition to support greater local partnership working, as set out in our 10-year plan, we have tabled Government new clause 20 to strengthen section 75 of the NHS Act 2006 by providing much greater scope for combined authorities, combined county authorities and the Greater London Authority to use these arrangements. Section 75 currently supports flexible voluntary partnership arrangements, including the pooling of budgets between NHS bodies and local authorities. These arrangements are a critical tool in supporting local collaboration and ensuring more joined up working within systems.

The new clause looks to strengthen the section 75 guidance making power. At present, that power only covers consultation and applications for consent on section 75 arrangements. The Government’s new clause will extend the guidance power so that it can cover all aspects of section 75, helping us to support the wider and more effective use of partnership arrangements. For those reasons, I commend new clause 20 and clause 39 to the Committee.

I do not think that the Minister addressed new clause 26, so does she wish to do so now? [Interruption.] She need not worry about it, I am told.

Clause 39 broadens the Secretary of State’s ability to delegate or jointly exercise health service functions with NHS bodies and local government. Currently, section 7A of the National Health Service Act 2006 enables the Secretary of State to arrange for any of their public health functions to be exercised by relevant bodies, such as NHS England, ICBs and local authorities. Section 65Z5 sets out how relevant bodies may jointly exercise delegated functions, and section 65Z6 sets out how funds may be pooled for such purposes. Section 65Z7 sets out that NHS England may issue guidance for exercising functions under those two sections and that relevant bodies must have regard to any guidance. Section 75 then sets out that the Secretary of State can make regulations to enable NHS bodies and local authorities to enter into arrangements related to the delivery of health functions.

Clause 39 deletes section 7A, removing the separate power for the Secretary of State to delegate public health functions. It amends section 65Z5 to create a wider power that allows the Secretary of State to arrange for any health service related function in England to be exercised by or jointly with relevant bodies, local authorities, combined authorities, combined county authorities or other prescribed persons. It removes outdated references in section 65Z5 linked to NHS England and updates the wording so that arrangements can be made with a wider range of persons and not just bodies.

Clause 39 also replaces section 65Z6 so that where functions are exercised jointly, the parties can use joint committees and pooled funds. It provides that pooled funds can include payments from relevant bodies and the Secretary of State, and can be used for expenditure connected to jointly exercised functions. It amends section 65Z7 so that guidance on joint working and delegation is issued by the Secretary of State rather than NHS England. It makes consequential amendments to provisions on directors of public health and local authority public health functions, reflecting the removal of section 7A. It also makes consequential amendments to section 75 partnership arrangements and the Local Government Act 1974, again removing references to section 7A.

Once again, it is necessary to move functions to the Secretary of State when NHS England is abolished—somebody else needs to do the work. The changes introduce more flexibility for joined up working between the Secretary of State and other entities in the health system, which could support integration and the shift to place based care, with localised approaches to prevention, integration and service planning in line with the Government’s 10-year plan.

However, the power is very broad, relating to any function in the health service. The Secretary of State could arrange for functions to be exercised by or jointly with any person prescribed, which could mean anyone. How will it be possible to determine who is responsible for things that have gone wrong when joint committees are established and funds are pooled? The Minister has spoken a number of times during our sittings about the importance of clear accountability. In the event that the work, funds and activities are pooled, how will it be made clear who is responsible and therefore accountable for the activity that occurs?

Melanie Williams, the then president of the Association of Directors of Adult Social Services, told the Health and Social Care Committee that we spend “a lot of time debating about who pays, rather than having a conversation about how, in the longer term, we can invest in people’s outcomes to enable better health and wellbeing.”

Is it the Government’s intention to decide the allocation of money for social care and health providers, or that whoever they decide will work together?

The Government have said that this is all about the devolution of power. This morning, we discussed the abolition of integrated care partnerships, on which ICBs and local authorities work together on projects that they choose locally. The Government are now introducing another power that will enable the Secretary of State to direct them to work together on things that he or she chooses. That does not sound terribly like the devolution of power. Could the Minister explain that to me?

I shall leave new clause 26 to the Liberal Democrats. Government new clause 20 ensures that there is a complete list of authorities that may be included. I think some were missing from the first iteration. I just make the point that the more actors there are in the mix, the harder it may be to see who is responsible overall. We also need to discuss how to maintain the balance between clinical need and political priorities in the choice of what healthcare is provided.

New clause 26, tabled by my hon. Friend the Member for Oxford West and Abingdon (Layla Moran) and the hon. Member for Worthing West (Dr Cooper), who both sit on the Health and Social Care Committee, would require the Secretary of State to review the arrangements under section 75 of the National Health Service Act 2006 and consider whether to require NHS bodies and local authorities to enter into new arrangements with one another if that is likely to lead to an improvement in how their functions are exercised.

A recurring theme of Health and Social Care Committee inquiries is the impact of financial flows and how they frustrate attempts to deliver truly integrated care—an issue we discussed in earlier sittings. We all recognise that closer arrangements are needed to properly address discharge delays, which directly lead to corridor care or even unnecessary admissions to hospital. It seems that a consensus has been reached, yet the action to back that up is not there. We feel that, through this Bill, the Government are moving away from closer integration.

Melanie Williams, the then president of the Association of Directors of Adult Social Services, told the Health and Social Care Committee that the NHS and local authorities “spend a lot of time debating about who pays, rather than having a conversation about how, in the longer term, we can invest in people’s outcomes to enable better health and wellbeing.”

She highlighted concerns about the funding of intermediate care and community health services through aftercare under section 117 of the Mental Health Act 1983 and NHS continuing healthcare.

Section 75 of the 2006 Act provides a legal mechanism for NHS bodies and local authorities to pool budgets and jointly commission health and social care services. The Select Committee has heard evidence of positive examples of such arrangements being used to commission integrated services. It also heard that the use of section 75 arrangements is inconsistent.

In October 2023, the Government launched a call for evidence to explore how section 75 could be better utilised to support integration. A summary of responses published in December 2024 identified several areas for improvement, including the need for stronger inter organisation relationships, clearer governance and financial structures, and better data sharing. The Health and Social Care Committee recommended that the Government expand the use of section 75, including the range of services that it will be used to support.

This Bill is a missed opportunity for the Government to reform or promote the use of section 75 arrangements, or to provide an alternative mechanism that they believe would be more effective in addressing the challenges that funding flows present to the integration of health and care services. That is why the Select Committee suggested this new clause to prompt a review of section 72 and the introduction of guidance to support pooled budgets and jointly commissioned health and social care services.

I want to touch briefly on clause 39, Government new clause 20, and new clause 26, tabled by the hon. Member for Oxford West and Abingdon in her role as Chair of the Health and Social Care Committee.

I recognise the intention behind clause 39. Greater collaboration between the NHS, local authorities and other public bodies has the potential to improve the co ordination of services and deliver a more integrated approach to population health, which I think we all welcome. However, it sits slightly uncomfortably with other clauses we have debated that appear to draw local authorities and the NHS further apart. In this case, it looks like they may be brought together.

As the clause expands delegation and joint working powers, I would be interested to understand from the Minister where the oversight and safeguards for accountability for spending the joint budgets would sit. Would it be with the NHS, local authorities or somewhere else? We hope that everything goes well, but if services fail or financial problems emerge, the public deserve to know who precisely is accountable for those budgets. As I have said in debates on numerous other clauses, I continue to be concerned by the broad powers that the Bill gives to the Secretary of State. I have the same concerns about this clause.

On Government new clause 20, bringing health services and wider local government functions together is really important, particularly where combined authorities have responsibilities that affect the wider determinants of health. However, once again, I am concerned about the fact that the new clause further complicates an already crowded accountability landscape. As more functions are delivered through pooled budgets and joint arrangements, it becomes harder to identify who is responsible for outcomes, spending decisions and—hopefully not, but potentially—service failures. I welcome the flexibility, which I think has value, but it must be balanced with transparency and democratic accountability. I am not convinced that the new clause gets that right.

On new clause 26, as I have said before concerning amendments and new clauses that have come from the Health and Social Care Committee, it is often difficult to get entire agreement on these things because of the cross party nature of the Committee. Therefore, new clauses and amendments that come out of the Committee are in some ways aspirational, rather than ones that hit the nail on the head.

The new clause suggests that the Secretary of State carry out a review of how effective section 75 arrangements are—the hon. Member for Winchester outlined evidence that in some cases, the use of section 75 arrangements has not always been effective—consult NHS bodies, local authorities and anyone else considered appropriate; consider whether existing powers should be used to improve those arrangements; publish a report and lay it before Parliament; explain whether the Government intend to use their powers to change regulations or guidance and why; and complete all that within 12 months of the Bill passing, which I think is a reasonable timeframe.

Section 75 arrangements already play an important role in bringing together health and social care. It is reasonable to ask, as the hon. Member for Winchester did, whether they are delivering the benefits in the most effective way possible. I would potentially say that this proposal does not go far enough. The new clause would require a review, a consultation and a report, but would not require any action to follow that. The Secretary of State need only “consider” whether existing powers should be exercised and explain the reasons for any decision. If the review identified significant weaknesses, there is no obligation in the new clause, as far as I understand it, to implement those changes.

I agree that the new clause is well meaning. It has some good recommendations, and I hope the Minister takes on board its sentiment, but it probably does not have the teeth and the power to make it an effective part of the Bill.

I got a little confused at the end, but I think the Opposition generally accept the power in this clause. The hon. Member for Farnham and Bordon contended that this Bill and previous amendments to it will drive local authorities and the NHS further apart; just to have it on the record, I do not accept that that is true at all. Section 75 of the National Health Service Act 2006 and the work that we are doing on this further highlights the effect of some of the things that we are trying to do.

The hon. Member for Winchester raised new clause 26. I have sympathy for the intention behind the new clause. We all want health and care services to work closer together, as I have said repeatedly, and we agree that the partnership framework under section 75 of the National Health Service Act 2006 is a useful tool for doing so. While I understand the new clause, it is not necessary. The Department can review the section 75 framework without needing legislation, and indeed it has already done so. The Department carried out a review of section 75 in 2023, as has been said. Since then, we have continued to consider how these partnership arrangements can best support health and care integration.

The new clause would risk duplicating ongoing work. Furthermore, that work is not a one off exercise but an ongoing process of learning and improvement across the country, and we want something that is responsive and flexible enough to respond to changes in health and care services and to the changing needs of people who use them. For that reason, I do not consider requiring a single statutory review to be the most effective approach.

Hon. Members raised important issues about clarity of accountability and responsibility. To reiterate, the legislation is clear: the legal responsibility or liability for a function being carried out properly rests with the receiving party; however, the delegating party is accountable for that function being carried out, and they must know how it is being carried out and make sure that any issues are addressed. The hon. Member for Sleaford and North Hykeham rightly alluded to one of the examples that we are exploring around section 75, which is how it might support key priorities in delivering neighbourhood health, to make absolutely clear and sure that we bring services closer together.

Both spokespeople outlined a quote from Melanie Williams of ADASS. Although I do not know the whole context of the quote, I understand the frustration of colleagues in social services and this whole area as it is one that I worked in myself. I understand the issue, but it is slightly different because it concerns the what, rather than the how, of what is being discussed. Section 75 is part of the how. We want to make this easier for people who are trying to do the right thing, and these provisions, which I commend to the Committee, do just that.

Question put and agreed to. Clause 39 accordingly ordered to stand part of the Bill. Clause 40 Consolidated accounts Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss clauses 41 and 42 stand part.

We know that robust finances are an essential part of the health service. The financial accounts related to the NHS are of keen interest to His Majesty’s Treasury and indeed to Parliament. The Government are especially mindful of the keen interest of the Public Accounts Committee in this area. Under current arrangements, NHS England prepares a set of financial accounts for all NHS trusts and foundation trusts, and that is audited by the National Audit Office. That is the point at which the National Audit Office conducts its oversight of NHS providers, with that feeding into the National Audit Office’s assurance over the Department of Health and Social Care group.

The financial accounts for integrated care boards are currently included in the NHS England group accounts, which are presented separately and audited by the National Audit Office. With the abolition of NHS England, the Government intend to reduce central administration costs, so financial reporting needs to be proportionate while balancing stakeholders’ keen interest in financial information related specifically to the NHS. Clause 40 therefore replaces the current consolidated accounts of NHS providers with a single set of consolidated accounts for the NHS covering its trusts, foundation trusts and integrated care boards. That consolidated account will continue to be audited by the National Audit Office.

We believe that bringing the accounts together in this way will assist the public, Parliament and the National Audit Office in scrutinising NHS expenditure. Although it is not covered by the clause, it is important for the Committee to be aware that there will be no change to the current requirement for the Department to publish a Department of Health and Social Care group annual report and accounts that will consolidate the NHS accounts with the core Department and other group bodies—for example, its arm’s length bodies.

However, the Government recognise that only reporting figures for the NHS in the overall Department group would reduce transparency compared with the current structure of NHS financial accounts. The clause therefore seeks to prioritise high quality audited financial accounts information being made available while balancing against administrative costs, both of which are important to the Government.

Clause 41 amends the Secretary of State’s existing power to create a scheme allowing NHS bodies to pool funds to cover property losses and legal claims arising from their healthcare activities. They ensure that when liabilities arise, whether from damage to property, negligence or other claims, there is a clear and consistent mechanism through which those liabilities can be managed and resolved. In doing so, they protect the financial stability of the NHS. The clause updates the legislation for the new landscape by removing NHS England from the arrangements and ensuring that responsibility for administrating the schemes rests appropriately with the Secretary of State.

Although the clause is targeted and technical, its effect is essential in that it ensures continuity and legal clarity and continued effective operation of arrangements that underpin confidence and functionality across the health service. Clause 42 is a necessary technical and structural change that supports the new statutory framework following the abolition of NHS England. It removes provisions in the NHS Act 2006 and the Health and Care Act 2022 that relate specifically to NHS England’s funding and financial responsibilities, which will no longer be required once NHS England ceases to exist. The clause avoids duplication and confusion and ensures that financial accountability is clearly defined in the post NHS England system. Under the reformed framework, the Department is responsible for the overall funding of the NHS and for national financial assurance, while integrated care boards and providers continue to operate within defined statutory financial duties and controls.

Clause 42 plays an important housekeeping role, providing legal clarity and underpinning a more transparent and coherent financial framework that is fit for the NHS future operating model. I therefore commend the clause to the Committee.

Clause 40 prepares for the preparation of the annual accounts of NHS trusts and integrated care boards. Existing legislation in section 65Z4 of the NHS Act 2006, “Consolidated accounts for NHS trusts and NHS foundation trusts”, requires NHS England to prepare a set of accounts every financial year and consolidate the accounts of all the trusts and NHS foundation trusts. The Secretary of State can give directions about the content for methods and principles, and the accounts must be accompanied by reports or other information as directed by the Secretary of State. A copy may be sent by NHS England to the Secretary of State and the Comptroller and Auditor General. The latter must then examine and certify those accounts before sending a copy to the Secretary of State and NHS England, and NHS England must then lay a copy of the consolidated accounts and the Comptroller and Auditor General’s report before Parliament. That is how it works at the moment.

Clause 40 rewrites section 65Z4 and the duty to prepare the consolidated accounts every financial year moves to the Secretary of State, and the list of what gets consolidated now includes the ICB accounts. The power to give directions to NHS England about accounts is removed, which is fair enough because there would be no need for it, as the Secretary of State is now preparing them and NHS England will cease to exist. The requirement for the accounts to be accompanied by such reports or other information as the Secretary of State may direct has been removed. The accounts go straight to the Comptroller and Auditor General, who reports back only to the Secretary of State. At the end, the Secretary of State lays the accounts before Parliament. The changes are necessary owing to the abolition of NHS England.

I want to ask about the consolidation, including the ICB accounts, which was not there before, and what impact that will have. Will the accounts be sufficiently detailed so that it is possible to disaggregate that information if people are interested in doing so?

Clause 41 changes which NHS companies can be covered by the scheme that meets certain losses, legal claims and liabilities. Currently, section 71, “Schemes for meeting losses and liabilities etc of certain health service bodies”, of the NHS Act 2006 enables the Secretary of State to establish schemes to meet the losses of NHS England, ICBs, trusts, the National Institute for Health and Care Excellence, the CQC and several other bodies. The list of bodies includes “(ha) a company formed under section 223 and wholly or partly owned by the Secretary of State or NHS England”.

In the new legislation, clause 41 rewrites paragraph (ha) so that it is “a company formed under section 223 other than by an integrated care board by virtue of section 223A”.

That narrows the scope of the liability scheme by preventing ICB created companies from automatically gaining protection, presumably to encourage ICBs to manage risk responsibly.

I have just a couple of questions for the Minister. Could that make ICBs less willing to set up companies for business services or joint ventures, potentially hampering innovation? If an ICB company generates liabilities that an ICB cannot meet, who becomes liable? If it is the ICB, is that not essentially the Government, in any case? If the ICBs need to purchase commercial insurance or hold contingency, which is the Government’s preference and what sort of cost will that entail?

Clause 42 changes parts of the NHS Act 2006 and the Health and Care Act 2022 concerning NHS England’s funding and financial responsibilities. Currently, the NHS Act 2006 contains sections relating to NHS England’s finances, including section 223B, “Funding of NHS England”; section 223C, “Financial duties of NHS England: expenditure”; section 223CA, “NHS England: banking facilities”; section 223D, “Financial duties of NHS England: controls on total resource use”; section 223E, “Financial duties of NHS England: additional controls on resource use”; and section 223F, “Power to establish contingency fund”. There are sections in the Health and Care Act 2022 concerning NHS England’s financial responsibilities and the expansion of its duties in respect of expenditure. Essentially, they are all deleted by clause 42.

I will be relatively brief, turning just to clause 40. I hope the Minister may be able to clarify something for me. I take the opportunity to thank the Minister for the letter that I received this morning, which was a very prompt response to her promise to write to me last week.

In respect of clause 40 and subsequent clauses, I can see the logic of updating the legislation to reflect the abolition of NHS England and the changes that come with that. I can also see the logic of a consolidated set of accounts so that one can see the national, or overall, picture. In the interests of transparency, I would be grateful if the Minister could confirm that that will be in addition to, and in no way replace, every individual trust having to produce granular public accounts that anyone can inspect, so that we can see not only the overall operation and financial health of the system but that of each of its individual component parts sitting beneath.

I wish to carry on the point that my right hon. Friend the Member for Melton and Syston has just raised. He rightly says that there is a transparency element to this, so that the public and any other interested party can look at the individual accounts of an ICB or a trust. Going further than that on the technical elements, my understanding is that NHS England’s own guidance notes suggest that consolidation does not just bring accounting under one set of accounts, one umbrella or one document. Within that accounting, however, adjustments and eliminations of transactions between NHS bodies can happen. Therefore, the aggregated figures do not necessarily reflect the financial reality of individual organisations.

I understand why that might be entirely appropriate from an accounting point of view, but it can make it harder for external observers to understand exactly where the pressures are coming from, where they are concentrated and, in a world where we want accountability, who should be held responsible for addressing them. That is all I need to say on that point.

I am pleased that, in an outbreak of cross party agreement at 3.20 pm on a Tuesday, I completely agree with the comments made by the hon. Member for Farnham and Bordon and the right hon. Member for Melton and Syston. It is a point that I made myself: the ability of Members of Parliament and the public to understand the granularity relating to their local providers and ICBs is very important for transparency and accountability. I hope Committee members recognise that I have tried to drive much more transparency in that system. They are absolutely right that that is separate from this clause, and we will continue to expect providers and ICBs to do that; I hope that addresses that point.

To add further clarity on the wider point the clause deals with, the consolidated accounts we prepare include some analysis by different types of body. That will mean separate information about NHS providers being included in the document, such as a summary of income and expenditure. Separately, providers and ICBs will continue to publish accounts so that people can look at those. The Government will listen to any feedback from users to adapt the nature of this content in future years after the initial publication, recognising that this is a new development following the abolition of NHS England. We are also mindful that too many separate publications add to administrative costs and risk losing focus. The intention is to have transparency at the local level, building that up to do something more sensible and cost effective that is also transparent at national level. I commend the clauses to the Committee.

Question put and agreed to. Clause 40 accordingly ordered to stand part of the Bill. Clauses 41 and 42 accordingly ordered to stand part of the Bill. Ordered, That further consideration be now adjourned. —(Emma Foody.)

Adjourned till Thursday 2 July at half-past Eleven o’clock.

Written evidence reported to the House

HB85 Alder Hey Children’s Charity

HB86 Graham Lake

HB87 Royal College of Speech and Language Therapists

HB88 Association of British HealthTech Industries (ABHI)

HB89 Health Connect Global

HB90 Alexion, AstraZeneca Rare Disease

HB91 The King’s Fund

HB92 Cleft Lip and Palate Action (CLAPA)

HB93 Royal College of Nursing

HB94 Vitanium Healthcare

HB95 The Health Tech Alliance

HB96 Marie Curie

HB97 Association of the British Pharmaceutical Industry (ABPI)

HB98 Rainbow Hospitality

HB99 Together for Short Lives (supplementary)

HB100 Council of Governors of University Hospitals of Morecambe Bay NHS Foundation Trust