House of Lords refuses to block bill forcing NHS to tender services, and taking away their right to reject dodgy providers

The local elections in May 2013 reminded many Tories that their time at the trough maybe shorter than they had thought. Like children stuffing themselves in an unguarded sweet shop they will have two things on their minds:


1) How to stay in the sweet shop as long as possible, stifling their rustling and their chuckles hoping no-one will hear them.

2) How to take as many sugary delights with them when they are eventually ejected.

The sugary delights in question being the lucrative transfer of public services to the private sector. It is not that the time for privatisation and outsourcing is getting short. Labour governments of recent years were hardly any less enthusiastic under the cover of PFI (Private Finance Initiatives). It is just a question of which political party has its hands on the ladle when the deals are doled out.

With further privatisations and outsourcing likely to be fast-tracked - including the sale of Royal Mail and the sale of government stakes in the banks RBS and Lloyds, as well as various outsourcing contracts - we take a closer look at a little reported skirmish in Parliament in April 2013.

A debate was held in the House of Lords on the 24th April 2013, where peers voted to accept legislation making it a legal requirement for the NHS to contract with private sector suppliers of any odour (or should that be ordure). In particular, it removes the right of the NHS commissioning body to refuse to deal with a company because of its dodgy background:

Here are extracts from the clarification document (extracts highlighted in yellow and red) produce by the Department of Health with annotations by us:

The pre-amble to the Department of Health document states:

These notes relate to the Regulations made under sections 75 to 77 of the Health and Social Care Act 2012. They have been prepared by the Department of Health in order to assist the reader of the Regulations and help inform any debate. These notes should be read in conjunction with the Regulations themselves. Where a regulation does not seem to require any explanation or comment, none is given. 
The specific sections are these:
http://www.legislation.gov.uk/ukpga/2012/7/section/75/enacted
http://www.legislation.gov.uk/ukpga/2012/7/section/76/enacted
http://www.legislation.gov.uk/ukpga/2012/7/section/77/enacted

It goes on to say that those commissioning services from the private sector must:

3(2)..treat providers equally and in a non-discriminatory way, including by not treating a provider, or type of provider, more favourably than any other provider, in particular on the basis of ownership. 

Now we know from his time as Culture Secretary that the current Health Secretary, Jeremy Hunt, has particularly liberal views in terms of the type of owners he is pleased to deal with.


4 (3) A contract notice must include— 
(a) a description of the services required to be provided, and 
(b) the criteria against which any bids for the contract will be evaluated. 

Can't complain about that. Except the "criteria against which any bids for the contract will be evaluated" creates an open door for dodgy providers prepared to be creative in their promises as demonstrated in the following clauses:


5 (1) A relevant body may award a new contract for the provision of health care services for the purposes of the NHS to a single provider without advertising an intention to seek offers from providers in relation to that contract where the relevant body is satisfied that the services to which the contract relates are capable of being provided only by that provider.

So, it is left to the commissioners' discretion whether to award a contract to a favoured provider without advertising it for other potential providers to tender.


5 (3) For the purposes of paragraph (1), a relevant body is not to be treated as having awarded a new contract— 
(a) where the rights and liabilities under a contract have been transferred to the relevant body from the Secretary of State, a Strategic Health Authority or a Primary Care Trust; or 
(b) where there is a change in the terms and conditions of a contract as a result of— 
(i) a change in the terms and conditions drafted by 
the Board under regulation 17 of the 2012 Regulations (terms and conditions to be drafted by the Board for inclusion in commissioning contracts), or 
(ii) new terms and conditions drafted by the Board under that regulation. 

Apparently contracts can be awarded under an open tender and then the terms & conditions can be changed without re-opening the tender. Now, we wonder if that is open to abuse? 


6(1) A relevant body must not award a contract for the provision of health care services for the purposes of the NHS where conflicts, or potential conflicts, between the interests involved in commissioning such services and the interests involved in providing them affect, or appear to affect, the integrity of the award of that contract.

The document helpfully clarifies:

An interest referred to in paragraph (1) includes an interest of— 
(a) a member of the relevant body, 
(b) a member of its governing body, 
(c) a member of its committees or sub-committees or committees or sub-committees of its governing body, or 
(d) an employee.

So the interests of sundry friends and their friends and relatives and partners and ancestors' next door neighbours are not mentioned here.

And here is why publishing the 'criteria' for selection at the outset opens a barn sized door for those who would bend their promises to fit into the criteria, knowing that the terms&conditions can be changed later (as per 5(3) above). No matter how pongy the provider or its owners may be the commissioning body is not forbidden to turn its nose up:

7(3) When taking a decision referred to in paragraph (2)(a), a relevant body may not refuse to include a provider on a list where that provider meets the criteria established by the relevant body for the purposes of that decision


7(4) When taking a decision referred to in paragraph (2)(b), a relevant body may not refuse to include a provider on a list where that provider meets the criteria established by the relevant body for the purposes of that decision

7(5) When taking a decision referred to in paragraph (2)(c), a relevant body may not refuse to enter into a framework agreement with a provider that meets the criteria established by the relevant body for the purposes of that decision

In short:

• All contracts must be put out to tender, except when the commissioners want to give the contract to a specific supplier in which case they don't need to put it out to tender after all.
• Contract terms can be changed after the contract is awarded, without regarding it as a 'new contract' with the scrutiny that would require.
• Conflicts of interest are tightly defined as members and employees of the commissioning bodies. The interests of chums and chums of chums are overlooked.
• Commissioners are specifically not allowed to reject suppliers who claim to be able to meet the "criteria established by the relevant body for the purposes of that decision". So no consideration is allowed to be made of the supplier's reputation and past history, and political affiliations. 

A proposal was moved in the Lords to block this law. The proposal was defeated: the results on the right show how the parties voted. 

One can't blame the Tories for backing this law. It is in their nature just as it is in the nature of a scorpion to sting. However it is more difficult to understand the support of the Liberal Democrats whose votes would have blocked this change in procurement regulations. Regulations that the British Medical Association oppose.

We assume removing the right to refuse to deal with dodgy companies, as legislated above, will become the template for future outsourcing and privatisations.