Editor's blog Wednesday 13 October 2010: The NHS Information Centre thinks it's the Department of Health

Regular HPI readers will remember my previous exclusives revealing the sale of the NHS Information Centre’s share in commercial joint venture Dr Foster Intelligence to the Secretary of State for Health, and subsequent follow-up piece about Dr Foster’s “put” option on their shareholding in DFI, allowing them to compel the IC or SoS to buy the Dr Foster shareholding at market value until 2013.

In the latter story, I also revealed that the IC had refused to answer various questions on the grounds that it was part of the Department of Health. I appealed their response, and the latest part of our correspondence is as follows below (with their responses in bold)

A quick summary?

The NHS Information Centre, despite being an independent special health authority and an arms' length body (defined in the DH's and IC's own literature), defends its refusal to reply on the grounds that it is part of the Department of Health. This also gives them cover for the 'commercial in confidence' refusal to answer other questions about the DH shareholding in DFI.

The IC claim the £8 million payment between the Secretary of State For Health and the IC was not a payment and claims that the transaction was not a sale, contradicting what I was told by a spokesman from the Shareholder Executive.

In short, they are going a long way and using a financial technicality to refuse to answer questions about their use of public money.

I wonder why they are doing that?

Question 1
You suggest that searching for and extracting the information I request in Question 1 would take one individual 10-12 days.

I am curious to know how this figure is derived.

It is reasonable to assume that IC staff involved in the negotiations kept and filed their relevant documents in electronic format (you are, after all, the NHS Information Centre). One email can be sent to those involved, requesting that the documents etc be attached to their reply by a given deadline. This would take one person a maximum of 15 minutes, and replying would take each person involved the same time or less. The IC has 632 WTE staff (527 permanently employed), according to your last annual report. Assuming 7 hours in a working day, and based on your lower 10 days figure, then to reach your figure of 10 days (allowing a generous 10 hours for getting the information to me) over 270 members of IC staff would have to have been involved in the deal. That level of staff involvement in such a deal is clearly implausible.

Please explain the basis on which you have calculated the searching and extraction would take 12 days.

On receipt of your original request we estimated that searching for the information requested would take between 10-12 days and this estimate was based upon the need to identify, search, locate and extract all relevant information.

This figure was arrived at after taking into consideration:
The length of time the matter has been under discussion
The number of individuals involved in the discussions or who may hold information relating to this matter, this includes individuals external to the NHS IC
Please note that the above also includes Board members who are Non Executive Directors and as such not employees of the organisation. Therefore they have separate filing and electronic systems, which would result in a number of individuals having to search a range of systems for the information they hold
Records within the NHS IC are in both paper and electronic format.

Our original estimate of 10-12 days remains our best estimate. This is four or five times longer than the appropriate limit imposed by the Freedom of Information Act.

Question 3
My main reason for writing to ask you to review your response is because in your reply to Question 3, you suggest that “The NHS IC's stake in Dr Foster Intelligence has not been sold; it has been transferred from one part of DH to another“.

Extensive research indicates that this statement appears to be incorrect because the IC is not part of the DH. (At points below, I have underlined quotes for emphasis.)

The IC is an arms’ length body – specifically a central services to the NHS ALB, as defined here by the DH - http://www.dh.gov.uk/en/Aboutus/OrganisationsthatworkwithDH/Armslengthbodies/Categorisationofarmslengthbodies/DH_063464.

The DH’s definition of ALBs is clear (see http://www.dh.gov.uk/en/Aboutus/OrganisationsthatworkwithDH/Armslengthbodies/index.htm) - “stand-alone national organisations sponsored by the Department of Health … They are accountable to the Department of Health and sometimes directly to Parliament” (my underlinings).

It is therefore clear that ALBs are not part of DH. Monitor is not. NICE is not. The IC is not.

NHS Choices states that special health authorities “have been set up to provide a national service to the NHS or the public under section 9 of the NHS Act 1977. They are independent, but can be subject to ministerial direction in the same way as other NHS bodies” (my underlining) – see http://www.nhs.uk/NHSEngland/thenhs/about/Pages/authoritiesandtrusts.aspx

Your own website does not state that you are part of the DH – see http://www.ic.nhs.uk/about-us/more-about-us.

Page 54 of your 2009-10 Annual Report states that “The NHS IC is a special health authority established under the National Health Service Act 2006 and directions made thereunder by the Secretary Of State For Health. The Department of Health is regarded as a controlling related party”.

I asked the DH media team this direct question: "is the NHS IC part of the Department of Health?" Their written answer is as follows: “The NHS Information Centre for Health and Social Care is an independent special health authority. It is an arms length body of the Department of Health” (Briony Bowen, Media Relations Manager – Informatics).

In summary: the IC is variously “stand-alone”, “accountable to the Department of Health”, and “independent”. The DH is a “controlling related party”.

When the DH themselves were asked the direct question whether the IC was a part of DH, they did not simply answer ‘yes’.

It therefore seems very difficult, if not impossible, to conclude that the IC is part of the DH, as your reply states. There appears to be no evidence for this assertion.

Your 2009-10 annual report states that “On 9 July 2010 the NHS IC shareholding was transferred to the Secretary of State for Health for a consideration of £8 million”. No consideration of £8 million would have been due in relation to an internal transfer of a DH asset. The DH is a department of state, and according to a spokesman for the Shareholder Executive of the Department for Business, Innovation and Skills, cannot acquire commercial assets such as shares in a private company (other than by nationalisation).

This was, therefore, a sale.
As a Special Health Authority in accounting terms the NHS IC is within the Department of Health’ s wider accounting boundary and are ultimately consolidated into their group accounts.

Therefore the NHS IC’s stake in Dr Foster Intelligence was transferred to another part of the same financial group via an accounting entry (the entry was: credit investments, debit revenue resource reserve on the NHS IC’s balance sheet).

The term consideration as used in the annual report and accounts is correct in the legal/accounting sense: “An act or a promise given by one person in exchange for an act or a promise from the other”.

The DH has not acquired commercial assets, as technically they already owned the assets.

Question 4
You suggest that the commercial interest exemption applied to my 2006 request for an unredacted copy of the contract still applies. Given the change of ownership of what was previously the IC’s shareholding as of July 2010, presumably this cannot remain the case form the IC’s point of view.
S43(2) of the Freedom of Information Act 2000 states that:
“Information is exempt if disclosure under this Act would, or would be likely to, prejudice the commercial interests of any person (including the public authority holding it)”

As such the change of ownership does not preclude the NHS IC from using this exemption where still applicable.

Question 5
The same point I made regarding Question 4 also applies in your refusal to answer Question 5.

You also make a disingenuous point in replying to Question 5 about risk to “the commercial interest of DFI and several other unrelated commercial organisations” being considered in your public interest and prejudice tests. These are no longer the remit of the IC, since as of 9 July 2010 the IC no longer owns shares in DFI.

Overall, your refusals to answer in relation to Questions 4 and 5 propose the existence of a Section 43(1) ‘commercial in confidence’ FOI non-disclosure defence on the grounds of shares that the IC no longer holds in an organisation which will face commercial competition according to planned government policy.

This does not appear to be a good or tenable defence against releasing the information I request.
I am sorry that you believe that the previous response to this query was less than straightforward.

As per our response to Q4, S43(2) can be applied to the commercial interests of any person and is not constrained by ownership of an asset.

Question 7
With regards to your reply to Question 7, could you please confirm that the 1 April 2010 £4 million capital reduction / return of cash (which I previously described as a dividend, based on incorrect information by a Dr Foster Intelligence spokesman) was related to Dr Foster Intelligence’s acqusition for non-voting, non-dividend shares of Dr Foster
Research from Dr Foster Holdings? If this is not the case, please explain the reason for the £4 million capital reduction / return of cash.
I can confirm that this is not the case. The capital reduction was not related to the acquisition of Dr Foster Research.

As at the 31 December 2009 year end, Dr Foster Intelligence Ltd had little or no debt and cash available on the balance sheet, and that had been the position for many months. In early 2010, the shareholders agreed that there was £8m cash on the balance sheet that was surplus to requirements, and the surplus cash was returned to the shareholders on 1 April 2010.

The NHS IC's share was £4 million. This was, in accounting terms, a capital reduction.