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Response to Stephen Phillips MP QC's letter to constituents

Response to Stephen Phillips MP QC's letter to constituents

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Published by 38Degrees

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Categories:Types, Business/Law
Published by: 38Degrees on Sep 08, 2011
Copyright:Attribution Non-commercial


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Response to Stephen Phillips MP
I want to thank those constituents who subscribe to the 38 Degrees website who have written tome about the Government’s proposals in relation to the National Health Service and the proposedprimary legislation which has been introduced in Parliament in this regard. I have correspondedwith most of you before on this subject.According to the 38 Degrees website, independent legal advice has been obtained in relation tothe Bill which is currently before Parliament. I have read that advice in its totality, though not theinstructions which were given to the junior Counsel who prepared it, nor the manner in which thiswas supplemented (if at all) orally, neither of which have been made public by 38 Degrees. I haveto say that this calls into question the validity of the advice tendered, since an answer without thequestion and views of those asking it is essentially valueless. In fact however, the advice appearslargely inconsistent with what 38 Degrees have to say about it.In this respect, the 38 Degrees team have published on the website that purports to be theirsummary of what the legal advice says. I am extremely concerned on your behalf that this is not awholly inadequate précis of that advice, but is misleading in a number of respects.
All our summary documents, along with emails about the campaign, press releases and blogposts (including this one) have been checked for accuracy and signed off by our legal advisers.Obviously a short summary can’t include everything raised in over 50 pages of advice – that iswhy we also made the full opinions and executive summaries of those opinions, prepared by thelawyers, publicly available so people can look at the details for themselves.
The discrete concerns which this ‘summary’ to which your emails have referred me drawnattention are, firstly, the removal of the Secretary of State’s ‘duty to provide,’ and secondly,opening the NHS up to competition law. Below, I address these in reverse order, since, as mostof you are aware, it is the latter which has given me cause for concern myself.CompetitionThe summary provided by 38 Degrees states that, “[t]he Bill contains a number of measureswhich will increase competition and integration and/or make it almost inevitable that UK and EUcompetition law will apply as if it [the NHS] were a utility like gas or telecoms.”The first bullet point of the Executive Summary of junior Councel’s [sic] Advice in fact states, inmy view correctly, ‘[t]he current procurement law contained in the Public Contracts Regulations2006…has always applied to NHS purchasing with the effect that any goods or services requiredby NHS health providers to enable them to promote health care themselves are subject to thoseRegulations where the value of the good or services required exceeds the prescribed thresholds.”The final sentence of the second bullet point makes the same point in relation to the non-legislative non-commissioning reforms introduced by the last Government, aboutwhich I imaginefew of those who have written to me protested at the time.
Mr Phillips is quoting from sections of the legal opinion relating to
law. Our quoterefers to
law. It is clear that
law applies at the moment to PCTs. Theimportant point in relation to procurement law is that it will also apply to increased numbers ofinexperienced commissioning consortia. As the legal opinion points out in the executivesummary:
The procurement regime is a complicated and developing body of rules and case law which gives rise to enforceable rights in the High Court and makes available draconian remedies and penalties for breach of the Regulations. The practical and financial implications of ensuring that goods and services are procured compliantly are considerable. There is a real risk that there will be a deficit of incumbent expertise in new consortia to cope with the regulatory burden. It appears however that the government has simply failed to grapple with the frontline issues in procurement, has wholly underestimated the increasing rather than diminishing complexity int eh area and has had no or perhaps little regard to the administrative and financial burdens arising from the regime.” 
It is interesting that Mr Phillips does not deal with this argument.
As junior Councel [sic] concludes in the sixth bullet point, “[a]s regards the applicability ofdomestic and European competition law to the NHS, it is likely that, even as matters stand, and inview in particular of recent non-statutory reforms which increase the involvement of the privateand third sector in health service provision [i.e. the reforms introduced by the last Government],competition law already applies to PCTs and NHS providers.”Whilst it is correct that the next bullet point records that the Bill will serve to reinforce thatconclusion, there is another way entirely of properly summarising this advice which has evidentlyeluded the 38 Degrees team, namely that there is no change between the present competitionregime and that which will be brought into being if and when the Bill becomes law. Competitionlaw applies within the NHS now; it will apply in the future. For the 38 Degrees campaign team tosuggest that it make it almost inevitable that there will be an application of competition law whichis not already present thus both misrepresents the content and conclusions of junior Counsel’sadvice and misstates the position. [1]
It is good to see that Mr Phillips agrees with our legal advice. It is interesting that others, namelythe Department of Health and the Liberal Democrats, take a rather different view from that of MrPhillips. The Department of Health, for example, has argued that PCTs would not now beconsidered as “undertakings” for the purpose of competition law, thereby essentially arguingthat competition law does not currently apply. The Liberal Democrats, on the other hand, seemto think that competition law can be limited in some way, when in fact it is clear that the UKgovernment has no power to limit competition law. The Lib Dems also seem to think FoundationTrusts can be protected from being considered an “undertaking” in some way.It is therefore wrong to suggest, as does Mr Phillips, that the situation is clear cut. The truth isset out in our legal opinion and is that the current position is uncertain. Due to recent reforms itis likely that competition law applies. However, the Bill makes it even more likely. Therefore, thelegal advice stated,
“The reforms introduced by the Bill however will serve to reinforce that conclusion and introduce elements which make it even more likely that domestic and European competition law applies to the NHS. There is nothing in the Bill which has or can have the effect of preventing the application of competition law. Nor can the Act preserve the enforcement of competition law to the sectoral regulator, Monitor, since a breach of the prohibitions on anti-competitive conduct gives rise to actionable claims in the High Court by any person affected.” 
 The important point is that the impact of competition law applying has not yet been properlydebated. In addition, whether something should be done to prevent competition law applyinghas also not been properly debated or thought through.
As paragraph 45 the advice [2] – although I am not entirely sure that any lawyer has sufficientexpertise to offer an opinion in this area – the principal concern is instead a practical one owingthe administrative burden on consortia to comply with a competition regime which alreadyapplies. That is an existing administrative burden, but it follows that the conclusion itself is amillion miles from what you may have been led to believe the advice says by the 38 Degreeswebsite.
Once again, it seems that Mr Phillips has mixed up
competition law 
procurement law 
.Paragraph 45 of the legal opinion is clearly discussing
law. As mentioned above, itis the applicability of procurement law to increased numbers of inexperienced commissioningconsortia where the administrative and financial burden arises. Furthermore, as the legalopinion points out, it is experienced commercial providers with deep pockets that stand to gain.
“Given that there might be no or insufficient expertise in procurement in consortia, there is a very real risk that the functioning of consortia is compromised, at least initially, by the sheer regulatory burden involved, under threat of potentially draconian remedies available to unsuccessful bidders through litigation. Commercial providers on the other hand will already be familiar with and are likely to have had considerably more experience of the procurement regime.” (para.45)
Once again, Mr Phillips fails to deal with either of these points.
The Secretary of StateThe second advice prepared by junior Counsel deals, in essence, with the existing general dutiesof the Secretary of State. The 38 Degrees summary in this regard suggests that there is somefundamental change between what is proposed and the current regime.
Yes we do! There is a fundamental change. Our legal advice supports this:
It is clear that the drafters of the Health and Social Care Bill intend that the functions of the Secretary of State in relation to the NHS in England are to be greatly curtailed. The most striking example of this is the loss of the duty to provide services pursuant to section 3 of the NHS Act 2006, which is currently placed on the Secretary of State. This will be transferred to the commissioning consortia, and reformulated accordingly. In real terms this means that,effectively, the government will be less accountable in legal terms for the services that the NHS provides.” (Bullet 1, executive summary)
In fact however, as paragraph 2 of this opinion makes clear in its first sentence, “Currently, theduty in section 3(1) has been delegated to the Primary Care Trusts.” This duty (in section3(1) ofthe 2006 Act) is a duty as to the provision of ‘certain services.’ It is more specific than the generalor target duty in section 1(1) to promote a ‘comprehensive health service,’ but is still a generalduty as paragraph 9 of the opinion points out. It is, as that paragraph also makes clear, the mainduty in relation to the provision of health services and, as already noted (and as per paragraph 3of the Executive Summary of the opinion), is currently delegated to the PCTs which theGovernment proposes abolishing. [3] That duty will then fall to the commissioning consortia whichwill be established. Other than changing commissioning responsibilities from PCTs to consortia, it

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