March 12, 2012 • 2:35 pm

“On Thursday Shirley Williams led her erstwhile rebels into the government lobby to vote for hospitals’ right to use 49% of beds for private patients.”

Polly Toynbee, The Guardian, 9 March 2012

“There has never been a right for hospitals to offer 49% of their places for private patients. The so-called 49% is a myth or, to put it in non-parliamentary language, a lie…

…Now, I know Polly well. She’s a very able journalist. Either she just did not look at the detail and therefore is able to say that in The Guardian, or she did look at the detail and decided that tribalism should trump truth…

…Labour never had any kind of cap at all – 49%, 80%, 100% – no cap of any kind”

Shirley Williams, at Liberal Democrats Spring Conference 2012

Following a Liberal Democrat Conference dominated – at least in the news reports – by talk about the controversial Health and Social Care Bill, party grandee Baroness Williams lashed out at Guardian journalist Polly Toynbee for her supposedly inaccurate reporting of amendments to the bill voted upon in the House of Lords.

After the Lords debated a raft of amendments last Thursday, the Guardian columnist hit out at Baroness Williams for ‘humiliating’ herself by supporting the bill at the Conference.

The issue at the heart of the debate was whether hospitals were or would be allowed to offer 49 per cent of their services to private patients.

Full Fact looked into both sides of the debate.

Analysis

Clause 163 on page 159 of the current Health and Social Care Bill concerns the issue in question. Section 1 of the clause states:

Goods and services

In section 43 of the National Health Service Act 2006 (authorised services), for subsections (1) and (2) substitute—

(1) The principal purpose of an NHS foundation trust is the provision of goods and services for the purposes of the health service in England

(2) The NHS foundation trust may provide goods and services for any purposes related to

(a) the provision of services provided to individuals for or in connection with the prevention, diagnosis or treatment of illness, and

(b) the promotion and protection of public health.

(2A) The NHS foundation trust does not fulfil its principal purpose unless, in each financial year, its total income from the provision of goods and services for the purposes of the health service in England is greater than its total income from the provision of goods and services for any other purposes.

Part 2A is the source of the 49 per cent controversy. NHS foundation trusts must fulfil their principal purpose (the provision of goods and services for the health service in England). In order to do this, the income from these activities must exceed its income from “other purposes”, which may include private services.

In other words, more than half of income must be generated by NHS provisions – hence the 49 per cent is the figurative maximum that can come from private revenue streams.

To refer to 49 per cent of ‘beds’ is therefore imprecise. The legislation concerns income rather than physical resources specifically.

The particular amendment to which Polly Toynbee was referring was Amendment 220A, moved by Lord Hunt of Kings Heath, which states simply:

“Page 159, leave out lines 36 to 40 [section 2A]“

This amendment was defeated by 212 to 154, with Baroness Williams voting against.

Baroness Williams went onto say:

“We are now laying it out in an amendment that no foundation trust hospital can increase its private patient income by more than 5% – not 49%, 5% – and if they try to go above that figure, they will attract the immediate interest of Monitor, which is now charged by another amendment to say quite clearly that if there are any adverse effects in that region on health provision, then they will not be able to go ahead with it”

This refers in part to Amendment 220BZB, which states:

“An NHS foundation trust which proposes to increase by 5% or more the proportion of its total income in any financial year attributable to activities other than the provision of goods and services for the purposes of the health service in England may implement the proposal only if more than half of the members of the council of governors of the trust voting approve its implementation.”

This amendment was agreed to on Thursday. However, it does not overturn the figurative 49 per cent threshold for private income. Instead, it appears to limit the year-on-year increase in private income share that a foundation trust may undergo, subject to the NHS regulator Monitor.

It is, however, an important point to bear in mind when understanding Polly Toynbee’s reference to hospitals’ “right” to use 49 per cent of their beds for private patients. As the amendment sets out, the actual process a trust must go through to radically increase their private income proportion to this sort of level is not as easy as the article implies.

No cap under Labour?

Baroness Williams goes on to state that, under Labour, there was no cap of any kind.

A further amendment from Thursday that was not, in the end, moved was Amendment 220C. This amendment, crucially, aimed to replace clause 164 of the Bill. This clause sought to repeal a section of the NHS Act 2006 that referred to a “cap on private income”. The amendment, hence, aimed to preserve the cap created in 2006.

The clause from the 2006 Act referring to the cap was added to by Labour in 2009. The original wording of the clause dates back to as early as the Health and Social Care Act 2003. The lastest version of the legislation states:

“The power must be exercised, in particular, with a view to securing that the proportion of the total income of an NHS foundation trust which was an NHS trust in any financial year derived from private charges is not greater than

(a) the proportion of the total income of the NHS trust derived from such charges in the base financial year, or

(b) in the case of a mental health foundation trust designated under subsection (2A), that proportion or 1.5% if greater”

‘Base financial year’ refers to the first such year that the body existed as an NHS foundation trust. A foundation trust’s proportion of income from private charges cannot exceed the proportion it had from private charges in the base financial year. In effect, this means the trust’s private income share is pegged to the share it registered in its first full financial year. Private charges refers to:

“charges imposed in respect of goods and services provided to patients other than patients being provided with goods and services for the purposes of the health service.”

So the ‘cap’ is set equal to the individual foundation trust’s share in its initial financial year of being a trust. Hence, it varies depending on the particular trust in question.

So there is no nationwide ‘cap’ as such but a trust-specific cap that the trusts themselves cannot exceed. This certainly seems to qualify as a cap of some kind, contrary to Baroness Williams’ remarks.

Conclusion

Baroness Williams is correct that the Health and Social Care Bill, in its current form, does not contain any specific mention to a ’49 per cent’ cap. It is, however, figuratively implied in clause 163, section 1, part 2A.

Thanks to clause 164, the wording of Labour’s effective cap from 2003, 2006 and 2009 legislation is removed. As a consequence, reference to the ‘base financial year’ (Labour’s cap method) is taken out and replaced by a requirement that NHS service income consitutes the majority of a trust’s revenue.

This can be seen as effectively raising the cap from trust-relative levels to a national 49.99 level. News reports have previously indicated that the highest proportion for a foundation trust at the moment is around 30 per cent, with most at around the 2 per cent level.

However, Polly Toynbee’s reference to allowing hospitals the right to use 49 per cent of their beds for private patients is imprecise. The Bill as it currently stands refers to the income from private services rather than a resource-by-resource measure.

 

Front page photo thanks to David Spender

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