Editor's blog Friday 21 January 2011: More on consortia as 'bodies corporate'

Good evening.

Well, that was quite a week. And so as we slide gratefully into the weekend, we bring you the gift of fresh Maynard Doctrine, in which the good Professor addresses significant workforce issues. Somebody needs to.

You should also have a look at the new BMJeditorial on SOS Lansley's NHS reforms, and at the National Audit Office's Landscape Review report for the Commons PAC.

Neither is wholeheartedly complimentary about The Liberator's reforms, you may be surprised to hear.

Anyway. More on the issue we raised of consortia being “bodies corporate”, as opposed to statutory. To state the very obvious, the legal status fo consortia is going to matter A Lot.

I’m indebted to a Parliamentary expert HPI reader, who has emailed in about the Bill’s language and antecedents.

This reader points out that consortia must be deemed to be statutory, since statute – the Bill - will create them.

This correspondent writes, “as you point out, ‘a consortium is not to be regarded as "a servant or agent of the Crown or as enjoying any status, privilege or immunity of the crown" (Health Bill Schedule 2, Part 2, Para 7(2), at p 228).

“However, that is also the case for NHS bodies: they did have Crown immunity from 1948, but section 60 of the NHS and Community Care Act 1990 abolished this from 1 April 1991.

“This also includes foundation trusts, which are designated NHS bodies under s 28(6) of the NHS Act 2006.

“Schedule 4, Part 12, para 129(3) of the new Bill (page 261) makes clear that both consortia and FTs will be NHS bodies under the new system:
""NHS body" means-
(a) the Board,
(b) a commissioning consortium,
(c) a Special Health Authority,
(d) an NHS trust,
(e) an NHS foundation trust, and
(f) a Local Health Board."

“We need to disentangle the terminology and the substantive issues here. Consortia are statutory in the sense that they exist under a statutory power, but the important question is the actual nature of that statutory power.

“Likewise, consortia (as well as FTs and the NHS Commissioning Board) are NHS bodies, but what does it actually mean to be an NHS body in an NHS that's been turned into a regulated market?

“The Government's intention appears to be for consortia to have a great deal of autonomy, with the Board being "less of a hierarchical performance manager than a quasi-regulator of commissioners, operating on the basis of clear and transparent rules, within well-defined statutory powers" (Command Paper, para 4.51).

“It seems apparent from reading clause 21 of the Bill (at pages 25-9), which sets out the Board's powers to authorise consortia, and variations in their constitutions, that the extent of those powers is actually going to be substantially defined in regulations”.

Legal status and competition law
The points are made by someone with extensive experience of the workings on the House. My question in reply was whether the “body corporate” status might relate to a desire to shield consortia from EU competition law and rules.

My correspondent replied, “Surely the whole point of the reforms is to ensure that NHS providers are not protected from competition?

“EU law is a tricky area. The current precedent set by the European Court is that EU competition rules don't apply when an organisation is fulfilling a purely social function, its activity is based on the ‘principle of solidarity’ and it is non-profit making.

“When the last government began introducing choice and contestability into NHS provision it was suggested that this would make the NHS subject to European competition rules. Nick Timmins reported four years ago that Ken Anderson was of the view that "At some point European law will take over and prevail . . . In my opinion, we are at that stage now" ("European law looms over NHS contracts", 16 January 2007) - but this has never been tested.

“The applicability of EU law may well turn out to be a side issue. The real question is: how hard will the new iteration of Monitor batter down the walls of NHS providers' citadels in order to allow the independent sector in? The Government's intentions on this can readily be deduced from the Impact Assessment, I think (see pp 40-4; Table B1 is particularly instructive)”.

There is more to come on this issue.