Health and care warnings over planned legal changes

NHS England and NHS Improvement has proposed a number of legal changes to support the implementation of the NHS long-term plan. These include: changes to competition rules to bring in a new best value test; giving power to NHS England and NHS Improvement to set annual capital spending limits for foundation trusts; and more flexibility in tariff-setting.

The initial engagement on the proposals ended in April, but, in parallel, the Commons Health and Social Care Committee is also running an inquiry into the planned changes.

With recognition that existing legislation acts as a barrier to collaboration and system working, there was support for many of the proposals. But there were also key objections and concerns about unintended consequences.

A hearing held at the end of April ran out of time before it could discuss one of the more controversial proposals – on capital approvals.

However, in written evidence, the NHS Confederation said it was not convinced by the proposal, arguing it would ‘further undermine the autonomy of foundation trusts and confuse governance and accountability arrangements’.

In its written response to the NHS England and NHS Improvement consultation, the HFMA said that there was only a dwindling number of foundation trusts with internal resources available for capital projects. The key constraint for many providers was access to capital funding, not the ability to spend their own resources.

Highlighting the importance of understanding potential consequences of legislative changes, the association pointed out that switching the commissioning of public health services to local authorities under the Health and Social Care Act 2012 had, presumably in an unintended way, added VAT costs for NHS providers.

The NHS Confederation also raised some concerns about proposals to set the tariff as a formula rather than a fixed price, enabling prices to reflect local factors.

‘Where providers and purchasers disagree over the appropriate level of pricing, it will be important to make sure neither side is expected to bear unreasonable levels of risk,’ it said. 

The proposal to remove competitive procurement of contracts for services was discussed at the committee hearing. NHS Clinical Commissioners chief executive Julie Wood (pictured) said more work was needed to define what the test would look like.

‘The key thing for me is that we do not inadvertently end up putting lots of hurdles in the best value test that are as clunky and time-consuming, and expensive in time, as what we are trying to get rid of,’ she said. ‘We have to make sure that it adds value and that we get the right level of scrutiny needed and the right outcome.’

NHS Providers chief executive Chris Hopson said there might be different approaches in different sectors, depending on their contestability. The NHS would not want to tender for A&E services, for example.

But he added that the current system had led to services being retendered too frequently – particularly in community services – and called for a more streamlined system.

Sarah Pickup, Local Government Association deputy chief executive, said the financial position of individual organisations was acting as a barrier to the ambition of closer working outlined in the long-term plan. But she was optimistic this issue could be overcome.

‘If local government is cash strapped and has to cut back its social care services, the health service might worry about bringing it into a formal partnership or pooling,’ she said.

‘Also, I know that some areas are holding back from formally pooling resources because of deficits in the local health system, so it is a barrier. That does not stop you joint commissioning, but you have to have clear rules.’

The NHS Confederation was also concerned that the lack of movement on social care funding was hampering progress.

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